Meridian Energy Limited 2024 Full Year Financial Results
Release
M e r i d i a n E n e r g y L i m i t e d ( A R B N 1 5 1 8 0 0 3 9 6 ) A c o m p a n y i n c o r p o r a t e d i n N e w Z e a l a n d
L e v e l 2 , 9 8 C u s t o m h o u s e Q u a y , W e l l i n g t o n 6 0 1 1
m e r i d i a n e n e r g y . c o . n z
Stock Exchange Listings NZX (MEL) ASX (MEZ)
Meridian lifts financial performance and lays foundation for
future growth
28 August 2024
Meridian Energy has reported operating cash flows of $667 million for the year ending 30 June 2024,
up from $509 million the previous year, with net profit after tax up from $95 million to $429 million.
The growth in net profit after tax was influenced significantly by net gains on hedge instruments of
$249 million in the 2024 financial year. In the prior year the company recorded net losses on hedge
instruments of $351 million.
EBITDAF
1
was up 16% to $905 million and underlying net profit
2
rose 14% to $359 million. Both of
these are non-GAAP measures.
“This is a strong and improved operating result that allowed us to invest $349 million in new and
existing generation assets during the year,” says Chief Executive Neal Barclay.
The Board declared a final ordinary dividend of 14.85 cents per share. This brings the total ordinary
dividends declared in FY24 to 21.00 cents per share. The Board has approved the continuation of the
Dividend Reinvestment Plan at a 2% discount.
The company notes that, while the operating result for the last financial year was strong, the operating
environment shifted dramatically during May as a drought emerged. Inflows into Meridian’s hydro
catchments from May 2024 through to mid-August 2024, have been the lowest on record and, as a
result, the 2025 financial year currently looks to be far more challenging.
“Record low inflows have combined with a shortage of gas and unseasonally low wind, causing
wholesale prices to lift materially. As a result, Meridian called on hedge arrangements to ensure our
hydro lakes were managed within consent conditions to maintain security of supply,” says Neal
Barclay.
1
Earnings before interest, tax, depreciation, amortisation, unrealised changes in fair value of hedges, impairments and gains or
losses on sale of assets. EBITDAF is a non-GAAP financial measure but is commonly used within the electricity industry as a
measure of performance as it shows the level of earnings before impact of gearing levels and non-cash charges such as
depreciation and amortisation. Market analysts use the measure as an input into company valuation and valuation metrics used
to assess relative value and performance of companies across the sector.
2
Net profit after tax adjusted for the effects of changes in fair value of unrealised hedges, electricity option premiums and other
non-cash items and their tax effects. Underlying net profit after tax is a non-GAAP financial measure. Because they are not
defined by GAAP or IFRS, Meridian’s calculation of such measures may differ from similarly titled measures presented by other
companies and they should not be considered in isolation from, or construed as an alternative to, other financial measures
determined in accordance with GAAP. Although Meridian believes they provide useful information in measuring the financial
performance and condition of Meridian’s business, readers are cautioned not to place undue reliance on these non-GAAP
financial measures. A reconciliation of underlying net profit after tax is included on page 5.
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“The wider sector took several steps to address the situation, including exercising demand response
options, buying gas from Methanex for electricity generation and securing access to contingent hydro
storage, should we need it. These actions have already resulted in wholesale prices reducing by more
than half from their peaks, although they are still sitting above $300/MWh.”
“While a very small number of electricity users have direct exposure to the wholesale market,
unfortunately some of them have been significantly impacted. It’s a tough economic environment and
this is not an outcome this sector wants for any business,” says Neal Barclay.
“Less than 0.01% of Meridian’s customers have been impacted by these wholesale prices because
the Company offers fixed prices to all customers. Meridian has also taken steps to look after our
larger commercial and industrial customers rolling off their existing contracts, by offering to extend
their current pricing through to 1 November 2024.”
“We are a renewable energy company so, when nature doesn’t deliver our fuel, we must buy energy
from other sources and pull all the levers available to meet our customer commitments. This affects
us financially and the impact of this activity will show up in our operating results over the next few
months. Ideally, the rain forecast for our catchments over the next week or so will arrive, but
regardless Meridian’s ability to manage through this situation is sound and our balance sheet is
geared to provide for this eventuality. We are looking after our customers by insulating them from high
wholesale prices and we’re contributing financially into the whole system.”
The Year in Review
“We had a year of milestones. The signing of 20-year agreements with New Zealand Aluminium
Smelters (NZAS), the commissioning of Harapaki wind farm, construction underway on our first grid
scale battery and the development of exciting new strategies across our Retail and Generation
businesses, all combined to create a strong platform for us to execute on our strategy and deliver
future growth,” says Neal Barclay.
Retail
Meridian grew customer connections by 2% and customer sales volume (GWh) by 4% during the
year. We remain the country’s largest supplier of retail electricity, with sales of more than 9,500 GWh.
“This is another strong Retail result, but rather than resting on our laurels we have developed a new
strategy to stimulate demand and further accelerate our growth, while also protecting the wellbeing of
our most vulnerable customers,” says Neal Barclay.
“We are testing new ways to support customers to further electrify their energy use and to pass value
onto customers where they can manage their demand flexibility and avoid the electricity system’s
peak demand periods.”
Meridian’s Process Heat Electrification Programme has made a real difference for many industrial
customers. To date, a cumulative 525 GWh of process heat conversion from fossil fuels to electric is
complete or under MOU. These projects will remove around 140,000 tonnes of CO
2
from the
atmosphere each year. The company is targeting total conversion of 1,000 GWh by 2030.
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Meridian’s Energy Wellbeing Programme was expanded this year with the goal of helping 5,000
Meridian and Powershop households out of energy hardship through a $5 million investment. To date,
the programme has helped over 1,400 households to improve energy efficiency and sustainably
manage their bills.
For the seventh time in 10 years, Powershop took the top spot in the Consumer NZ customer survey,
earning it the People’s Choice award. The Meridian retail brand also saw an improvement in its
satisfaction score from 46% in 2023 to 57% in 2024, putting it ahead of all the other large retailers.
Renewable Development
Meridian remains focussed on its goal to develop enough new renewable energy to support the
country’s transition to a resilient net zero economy and retain a generation market share of at least
30%.
Harapaki, the 176 MW wind farm in the Hawke’s Bay, began generating on schedule and was
completed in July. The 100 MW grid-scale Battery Energy Storage System (BESS) at Ruakākā
Energy Park near Whangārei is progressing well and is expected to be online by early 2025.
“We have close to 700 MWs of wind, solar and battery projects at the advanced stage of design and
close to being consented, and we expect to invest more than $3 billion in new renewable energy by
2030, that’s the equivalent of more than 5% of current system demand,” says Neal Barclay.
“We will need all of that because we estimate that for Meridian to meet our share of the country’s
renewable energy needs by 2050, we will have to build the equivalent of 20 Harapaki-sized renewable
generation assets. That is an important challenge that our business needs to tackle. We have
resourced up accordingly and we are getting on with it.”
Meridian applied for direct referral to the Environment Court, supported by Environment Canterbury,
to reconsent the Waitaki Power Scheme for another 35 years. The process for public submissions on
the reconsenting application closed on 21 August.
Southern Green Hydrogen
The Southern Green Hydrogen project has been put on hold. The economics of producing green
hydrogen at scale in New Zealand have become more challenging and this is consistent with what we
are seeing in other hydrogen projects overseas. Markets have been slow to resolve the gap between
the cost of producing green hydrogen and potential customers’ willingness to pay for it.
“So, the project will hit pause, and we have agreed to conclude our partnership with Woodside. We
will continue to actively monitor our target markets as we believe Southern Green Hydrogen remains
well placed to be a competitive green hydrogen opportunity, compared to other projects and
jurisdictions. We will review the opportunity to progress the project when the time is right,” says Neal
Barclay.
Electricity Generation
Maintaining asset availability is critical to Meridian’s success and this year our Generation team
adopted an innovative approach to managing scheduled maintenance, using more people to
compress maintenance windows and moving as much maintenance as possible outside of peak
periods.
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In addition, Generation set a goal of delivering 500 MW of restored and new capacity over the next
four years from Meridian’s generation portfolio. Initial progress this year included an increase to the
maximum capacity of the Benmore Power Station (from 540 MW to 552 MW) and the capacity of each
of the seven Manapōuri units (from 125 MW to 128 MW).
“These are very positive innovations, but we have also had setbacks this year with transformers. A
prolonged outage of one of the transformers at West Wind Farm in Wellington has reduced capacity
to 98 MW from the usual 143 MW. We expect to have this resolved by October 2024. We also have
two Manapōuri units parked due to transformer failures. One replacement transformer will be
delivered late this calendar year and a second is due late 2025,” says Neal Barclay.
New Zealand Aluminum Smelters
It was very pleasing to settle the uncertainties around the aluminium smelter at Tiwai Point. At the end
of May 2024, Meridian announced a package of long-term contracts with NZAS covering part of their
electricity needs for a further 20 years. These agreements ended a long and stressful period of
uncertainty for many people in Southland and provide much needed certainty for the electricity sector
to invest in renewable energy.
“The smelter’s ability to reduce consumption when the energy sector is stressed is already making a
material contribution to resolving the current energy challenges the sector is managing. But they are,
to some extent, a last resort and as a sector we need to find solutions to increase gas availability to
support continued growth in renewable generation,” says Neal Barclay.
Sustainability
This year Meridian set a target to reach net zero by 2050. This has been submitted to the Science
Based Targets initiative for independent verification in FY25. The target is consistent with the
company’s purpose, strategy and focus on doing its bit to limit global warming to within 1.5 degrees.
It is a natural extension of Meridian’s ‘Half by 2030’ operational emissions reduction target.
“Our Half by 2030 programme created the impetus to this year purchase the world’s first electric
hydrofoil ferry to replace our current boat at Manapōuri in late 2025. Other areas of our Half by 2030
goal remain more challenging, like managing the growth of emissions in our supply chain and further
reducing our emissions from travel,” says Neal Barclay.
Meridian was also included in the Dow Jones Sustainability Asia Pacific Index for the ninth successive
year. The index provides independent validation of the Company’s ESG performance for investors
and other stakeholders.
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ENDS
Neal Barclay
Chief Executive
Meridian Energy Limited
For investor relations queries, please contact:
Owen Hackston
Investor Relations Manager
021 246 4772
For media queries, please contact:
Lachlan Forsyth
Media & Content Manager
021 243 5342
---
A shift
in energy
MERIDIAN ENERGY LIMITED
INTEGRATED REPORT 2024
Our purpose is clear
The transition to a resilient net zero
economy is gathering pace. Meridian
took several steps during the year
to deliver on our strategy – from
securing the long-term future of
New Zealand’s Aluminium Smelter
(NZAS) with an agreement that
supports a more renewable
and flexible electricity system,
to significantly growing our
renewable pipeline and enhancing
the performance of our assets.
Our confidence in delivering on
our purpose has grown. We’ve
progressed work to shape our new
future as a retailer of electricity,
putting our customers at the heart
of our goal to deliver cleaner,
cheaper energy solutions. We’ve
set a nature-positive ambition and
we're growing our cultural capability
to maximise the positive impacts
for people and the planet as we
deliver clean energy for a fairer
and healthier world.
A SHIFT IN ENERGYMERIDIAN INTEGRATED REPORT 2024
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02
Contents
04About this report
06Chair and Chief Executive Report
07A strong return on our
climate-focused strategy
08Grow renewable generation
10Deliver cleaner, cheaper energy
11Deliver operational excellence
12Grow capability and culture
14Overview and Strategy
14The right resources
16Our strategy
18Grow renewable generation
22Our path to a resilient,
net zero future
22A new growth curve emerges
23Delivering on 7 in 7
24Increasing our national capacity
26Continued net zero commitment
supports our strategy
27Securing long-term access
to water
28Groundbreaking new
contract with NZAS
28Our partnership with
Southern Green Hydrogen
30 Case study: Innovating how
we meet peak demand
32Deliver cleaner, cheaper energy
36Evolving our retail role
36Electrifying transport and heat
38Our Decarbonisation Fund grows
39Setting our compass on customers
and increasing social good
41Digital and data driven
customer experiences
42Deliver operational excellence
46Hedging products in demand
46Getting more from our assets
47Advocating for the planet
48Flux refocuses
48Data is key to delivering
competitive market offerings
50 Case study: Harapaki is
already proving a success
52Grow capability and culture
56A culture of care
58Investing in safety
60Enriching our worldview
62Sustaining our competitiveness
65Forever Forests on track
66About us
68Our Board
69Our Executive Team
70How we create value
71Our commitment to
effective governance
72Our material impacts
74 Policies, commitments
and targets' progress table
81Remuneration Report
82 Report from the Chair of
the People, Remuneration
and Culture Committee
84 Remuneration governance
84 Remuneration policy
87 Key performance summary
90 Chief Executive remuneration
94Meridian share ownership
94 ESG disclosures
95 Remuneration bands
96 Director remuneration
98Further disclosures
114Financial statements
168Assurance reports
168Financial statements
audit report
172Sustainability disclosures
assurance report
174GRI content index
178Directory
A SHIFT IN ENERGYMERIDIAN INTEGRATED REPORT 2024
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About
this report
Our strategy reflects the
urgency we feel to play our
part to advance our country’s
transition to a net zero future.
This Integrated Report reviews
our financial, economic, social and
environmental performance for the
year ended 30 June 2024 (FY24)
and how we’ve created value for
the short, medium and long term.
This year, in line with our strategic
aim to take an all-encompassing
focus on climate action, we've
delivered on our ambitions to
develop more renewable generation,
provide cleaner, cheaper energy,
operate with excellence, and grow
our capability and culture.
The Board has established processes to
ensure the quality and integrity of the
annually produced Integrated Report,
and has entrusted Management with
preparing and presenting it.
The Report covers the performance
of all members of the Meridian
Group
1
, which comprises of our
Meridian Energy and Powershop
brands, Dam Safety Intelligence in
New Zealand and Flux Federation, our
electricity retailing software business
that operates in New Zealand and
Australia. For the most part, the focus
is on Group performance. Many of
the topics discussed also centre on
the parent company, mainly because
the other businesses are smaller
(representing less than 10% of the
Group’s overall revenue).
1 See Note E1 Subsidiaries and other
interests of the Financial Statements.
This Integrated Report is dated 27 August 2024 and
has been signed on behalf of the Board by:
Mark Verbiest
Chair
Julia Hoare
Chair, Audit and Risk Committee
A SHIFT IN ENERGYMERIDIAN INTEGRATED REPORT 2024
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04
A SHIFT IN ENERGYMERIDIAN INTEGRATED REPORT 2024MENU
05
This Report has been prepared
using the International Integrated
Reporting Framework and the 2021
Global Reporting Initiative (GRI)
Standards. Deloitte has provided
limited assurance for GRI disclosures
as identified in the GRI Content
Index. The financial statements have
been prepared using appropriate
financial reporting standards and
have been assured by Deloitte on
behalf of the Auditor-General.
OTHER DOCUMENTS IN OUR
INTEGRATED REPORTING SUITE
Integrated Report Data Pack
bit.ly/4devDzs
Climate Action Plan
bit.ly/4fyAbBZ
Climate-related Disclosures
bit.ly/3SzilVK
Corporate Governance Statement
bit.ly/3Wy4sse
Greenhouse Gas Emissions
Inventory bit.ly/3LUqgcs
Modern Slavery Statement
bit.ly/3LUdSJw
Technicians working at West Wind Farm, Te Whanganui a Tara Wellington.
MARK VERBIEST
Chair
NEAL BARCLAY
Chief Executive
Aligning
all our
actions
CHAIR AND CHIEF EXECUTIVE REPORTMERIDIAN INTEGRATED REPORT 2024
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This year we’ve made significant progress
on our strategic commitment to an
all-encompassing focus on climate action.
DIVIDEND DATES
5 September 2024
Record date
4–10 September 2024
Dividend Reinvestment Plan
price determination period
20 September 2024
Dividend paid and new
shares issued under the
Dividend Reinvestment Plan
Our ‘7 in 7’ renewable build
programme is well advanced,
with the Harapaki Wind Farm now
completed, the Ruakākā Battery
Energy Storage System (BESS) due
for completion in early 2025 and
several other wind and solar projects
at advanced stages of development.
We’ve finalised groundbreaking
new contracts with New Zealand’s
Aluminium Smelter (NZAS) that
provide much-needed certainty
for the entire electricity sector and
will underpin further investments in
renewable energy. We’ve continued
the work to shape what the next
generation of retail means for
our customers and our business.
And we’ve set long-term emission
reduction targets and advanced work
on our nature-positive ambition, that
anchors our sustainability performance
to ambitious long-term goals.
2 Earnings before interest, tax, depreciation, amortisation, unrealised changes in fair value of hedges, impairments and gains or losses on sale of assets.
3 Net profit after tax adjusted for the effects of changes in fair value of unrealised hedges, electricity option premiums and other non-cash items and their tax effects.
A strong return on our
climate-focused strategy
The business continues to deliver
well for our shareholders. Increased
electricity generation, prudent
wholesale pricing and trading by
our wholesale team, and increased
growth in retail customer sales have
all contributed to a great financial
result. Meridian Energy has reported
operating cash flows of $667 million
for the year ending 30 June 2024,
up from $509 million the previous
year, with net profit after tax up
from $95 million to $429 million.
The growth in net profit after tax
was influenced significantly by net
gains on hedge instruments of
$249 million in the 2024 financial
year. In the prior year the company
recorded net losses on hedge
instruments of $351 million. EBITDAF
2
was up 16% to $905 million and
underlying net profit
3
rose 14%
to $358 million. Both of these are
non-GAAP measures.
The strong and improved operating
result was driven by higher customer
sales and positive wholesale trading
results. At the same time, the
company invested $349 million in
new and existing generation assets.
The Board declared a final ordinary
dividend of 14.85 cents per share.
This brings the total ordinary
dividends declared in FY24 to
21.00 cents per share.
The Board has approved continuation
of the Dividend Reinvestment Plan at
a 2% discount.
The company notes that, while the
operating result for the last financial
year was strong, the operating
environment shifted dramatically
during June as an extended drought
emerged. Inflows into Meridian’s
hydro catchments from May 2024
through to mid-August 2024 have
been the lowest on record. As a result,
the 2025 financial year currently looks
to be far more challenging.
2 Earnings before interest, tax, depreciation,
amortisation, unrealised changes in fair value
of hedges, impairments and gains or losses
on sale of assets.
3 Net profit after tax adjusted for the effects
of changes in fair value of unrealised hedges,
electricity option premiums and other
non-cash items and their tax effects.
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GROW RENEWABLE
GENERATION
A groundbreaking 20-year
agreement with Rio Tinto
It was very pleasing to settle the
uncertainties around the aluminium
smelter at Tiwai Point. At the end of
May 2024 we announced a package
of long-term contracts with NZAS
for part of the smelter’s electricity
needs for a further 20 years. These
contracts end a long and very
stressful period of uncertainty
for many people in Southland.
They also provide much needed
certainty for the electricity sector
and will facilitate more investment in
renewable energy across the motu.
Importantly, the smelter owners
are showing how large industrial
businesses can thrive in Aotearoa,
leveraging our highly renewable
electricity system to create low-
carbon sustainable products,
high-value jobs and economic
growth for New Zealand.
The package itself comprises two key
elements: a long-term, fixed-price
contract for wholesale electricity; and
a demand response agreement.
The core fixed-price energy contract
will reduce in stages from a net
472MW to 377MW as at 1 January
2025. NZAS has negotiated directly
with two other parties to meet the
remainder of its energy needs. The
pricing in the contract is sustainable
and allows for price escalation at
CPI if the international market for
aluminium also escalates.
The demand response element of this
new agreement is groundbreaking, as
it will provide new levels of flexibility
to support the electricity system
when the country’s hydro storage is
low. Flexibility of this scale advances
decarbonisation because it reduces
the country’s reliance on burning coal
to meet seasonal electricity demand.
Our ambitious development
programme is on track
This year, and against the odds
given the challenges of cyclones
and storms, Harapaki, the 176MW
wind farm located in Hawke’s Bay,
and the first of our 7 in 7 projects,
began generating on time and was
delivered within budget. The 100MW
peak and 200MWh (2 hours) grid-
scale BESS at Ruakākā Energy Park,
near Whangārei, is expected to be
online by early 2025. Its introduction
will support stable grid operations by
enabling us to store energy during
low-demand times of the day then
inject it back into the grid at peak
demand times.
We have a range of other wind,
solar and battery projects at the
advanced stages of design. This is
important because we estimate
that by 2050, for Meridian to deliver
our share of the country’s renewable
energy needs, we’ll need to build
the equivalent of 20 Harapaki-sized
renewable generation assets. That’s
a huge and exciting challenge for
our business. We’ve resourced
up accordingly and we're getting
on with it.
The importance of
collaboration and partnership
Most ambitious large infrastructure
projects have an inherent tension
between the localised effects of the
projects and the national priorities
and/or economic advantages they
create. Our experience at Meridian
tells us clearly that the current
Resource Management System has
become far less efficient in the past
decade or so and burns unnecessary
time and money. So, while we note
the credible public concerns about
the new Fast-track Approvals Bill
for new infrastructure, we must see
a more efficient decision-making
process for the allocation of natural
resources in New Zealand. We
believe the Bill can deliver a more
efficient process whilst still ensuring
adequate environmental and
community safeguards.
The most significant project Meridian
currently has in the consenting
process is the reconsent of the
Waitaki Hydro Scheme. We lodged
the reconsent application with
Environment Canterbury (ECAN) in
July 2023. This project was publicly
notified in July 2024 and ECAN has
formally agreed to refer the project
directly to the Environment Court.
Before lodging we worked with a
wide range of people.
... we estimate that, for Meridian to meet its
share of the country’s renewable energy needs
by 2050, we’ll need to build the equivalent of
20 Harapaki-sized renewable generation assets.
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This collaboration has been
valuable in building rapport and
aligning interests. It’s important
that we address the key impacts of
this important scheme and grow
our relationships with both iwi,
communities and other stakeholders
to ensure it remains a corner-stone
of the country’s electricity system
long into the future for the benefit
of all New Zealanders.
Partnership itself is a learning curve
and as a modern New Zealand
company we understand that
partnership is a commitment for the
long term. We also recognise the
unique positions that iwi and hapū
play in our various developments,
and we note they have been
generous and welcoming in their
manaakitanga. Our projects are all
the better for their involvement.
The most significant
project Meridian
currently has in the
consenting process
is the reconsent of the
Waitaki Hydro Scheme.
View of Lake Benmore from Benmore Peninsula, Waitaki Valley.
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DELIVER CLEANER,
CHEAPER ENERGY
Aiming to lift 5,000
households out of hardship
In the pursuit of decarbonisation, as a
country we must ensure the transition
does not disadvantage people who
are struggling with energy hardship.
We are committed to supporting
our most vulnerable customers, so
this year we’ve expanded our Energy
Wellbeing Programme beyond its
initial pilot, with the goal of helping
5,000 Meridian and Powershop
households out of energy hardship.
This has built on the Board’s signing
off of a $5 million investment over a
minimum of two years to assist those
who are finding it difficult to pay for
their power and heat their homes.
To date, through this programme,
we’ve helped over 1,400 customers.
This project aligns well with the ‘fairer’
part of our company purpose, and
we’re immensely proud of the work
we’re doing to make a meaningful
and sustainable difference for
households in hardship.
Rewarding residential
customers who work with us
As the electricity system evolves
into an even more renewable one,
it creates opportunities for customers
to participate by enabling them
to move energy use throughout
the day or removing energy use
completely. The new demand
response agreement with NZAS is
a great example and these kinds of
opportunities are also becoming
available for small business and
residential customers. We’re putting
a lot of effort into introducing a new
retail model, using new technology
to evolve our retail propositions.
We're creating opportunities for all
our customers to be involved by way
of reducing consumption sensibly
at times when they don’t necessarily
need to consume all the power they
normally would, and using that power
to balance demand across the grid.
Importantly, where customers can be
flexible they can also be financially
rewarded, reducing their overall
energy costs.
Industrial decarbonisation
beats our target
The industrial use of fossil-based
fuels, particularly for process heat
(where heat is used in industrial
processes), remains a significant
contributor to our country’s
greenhouse gas profile.
Fortunately, more and more
companies are making a
commitment to decarbonisation.
A great example is Meridian’s
partnership with Fonterra,
announced in January 2024.
The agreement will assist Fonterra
to replace a coal-fired boiler with
a new, 20MW electrode boiler at
its Edendale site in Southland. All
up, our Process Heat Electrification
Programme has exceeded targets
again this year, with 525GWh (to
date) of process heat conversion
from fossil fuels to electricity now
fully committed. The pipeline for
further conversions is substantial
and by 2030 we expect to support
enough electric conversions to
remove around 140,000tCO
2
e
annually from the environment,
when all contracts are completed.
In the past year, 168 companies have
purchased more than 863GWh
of Renewable Energy Certificates
(RECs) from Meridian. This is an
increase of 35% on the last financial
year, with no signs of slowing.
Through the purchase of RECs, our
customers’ consumption volume is
matched to our 100% renewable
generation, allowing the customers
to offset the RECs against their
Scope 2 emissions. To round out the
environmental benefits, Meridian
has committed to invest 100% of
the net proceeds from the sale of
RECs into community and business
decarbonisation funds. This year our
funds distributed $1.42 million to
decarbonisation projects nationwide.
...by 2030 we expect
to support enough
electric conversions
to remove around
140,000tCO
2
e
annually from the
environment...
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DELIVER OPERATIONAL
EXCELLENCE
Important gains in
our existing capacity
Alongside our renewable development
programme, we’ve been making
important changes in how we
operate our generation assets.
We’ve increased peaking capacity
at both our Manapōuri and
Benmore Power Stations, giving
us more than 15MW of additional
capacity to support the electricity
system over daily peak periods.
We’re also changing our maintenance
regimes to, wherever possible, avoid
outages in peak periods of the day
and optimise the flexibility of outages
to undertake maintenance and ensure
electricity supply over winter. And
we’re looking at our existing assets
through a new lens to establish where
major enhancements can deliver more
peak megawatts and more energy.
We’re optimistic that there is significant
further peaking capacity and energy
to be extracted from more of our
existing assets in the years ahead.
Our Manapōuri automation and
mechanical programmes became
complex with transformer failures
in November 2022 and July 2023.
We secured a new transformer with
expedited delivery, and worked with
the manufacturer to establish the
root cause of the failures and where
possible undertake improvements or
repairs. Unfortunately the root cause
remains unclear and improvements
were not successful, so we’re now
pursuing additional replacements.
Post financial year –
winter update
While the operating result for the
last financial year was strong, the
operating environment shifted
dramatically during June as an
extended drought emerged. As a
result, the 2025 financial year currently
looks to be far more challenging.
Record low inflows into Meridian’s
hydro catchments from May 2024
through to mid-August 2024 have
combined with a shortage of gas
and unseasonally low wind, causing
wholesale prices to lift materially.
Meridian quickly called on the
hedge arrangements available to us
to ensure our lakes were managed
within consent conditions and to
maintain the security of supply.
The wider sector took several
steps including exercising demand
response options, buying gas from
Methanex for electricity generation,
and securing access to contingent
hydro storage should we need it.
At the time of publication, these
actions resulted in wholesale prices
reducing by more than half from
their peaks, although prices were
still sitting above $300/MWh.
While a very small number of
electricity users have direct
exposure to the wholesale market,
unfortunately, some have been
significantly impacted. It’s a tough
economic environment and this is
not an outcome this sector wants
for any business. Less than 0.01%
of Meridian customers have been
affected by these wholesale prices.
Meridian’s residential customers,
being on fixed prices, were shielded
from wholesale market fluctuations.
Meridian looked after our larger
commercial and industrial customers
rolling off their existing contracts
by offering to extend their current
pricing through to 1 November 2024.
The impact of this activity will be
outlined in future operating results.
Meridian’s ability to manage through
this situation is sound and our
balance sheet is geared to provide
for this eventuality.
We’ve increased peaking capacity
at both Manapōuri and Benmore,
giving us more than 15MW of
additional capacity...
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GROW CAPABILITY
AND CULTURE
Focusing on ESG
performance for the long term
This year we set a target to reduce
our scope 1 and 2 GHG (greenhouse
gas) emissions by 90% by FY40 from
an FY21 base year. We also set a target
to reduce our scope 3 emissions by
90% by FY50 from the same base
year. These targets are consistent
with our purpose, our strategy and
our focus on doing our part to limit
global warming. While a challenge,
it was a natural extension of our
‘Half by 30’ operational emissions
reduction target.
The Half by 30 programme gave us
the impetus to purchase the world’s
first electric hydrofoil ferry to replace
our current boat at Manapōuri. This
will arrive in the next financial year
and will remove around 240 tCO
2
e
from our operations. Other areas of
our Half by 30 programme remain
more challenging, and include
managing the growth of emissions in
our supply chain and from flying and
further reducing the emissions on
farmland we own. The culture of the
Meridian team, however, is such that
we continue to push hard to innovate
and adapt our behaviours to meet
these important mid-term goals.
This year we advanced work
supporting our nature-positive
ambition, developing the roadmap
to guide our work and choices from
here. Our investment in nature
to date has been significant, but
we believe we can do better. If
achieved, this commitment will
support our consenting processes
and give investors, customers
and communities even greater
confidence in Meridian as a leader
in sustainability and a developer
of new renewable generation.
Pleasingly, Meridian was again
included in the Dow Jones
Sustainability Asia Pacific Index, an
independent global S&P Index that
ranks our ESG performance against
like companies in that region. It
provides independent validation
of our ESG performance for our
stakeholders and assists in attracting
a cohort of international institutional
investors to our share register.
Adapting our ways of working
to deliver on our strategy
Like all businesses, at Meridian
we need to be increasingly agile to
keep pace with what our customers
need to help drive the transition
to a net zero future. We need
to make the best use of highly
engaged teams, technology and
data to grow our market share and
intelligently meet the increasing
demands on the electricity system.
Not surprisingly, data and artificial
intelligence (AI) are starting to
drive more of our processes and
accelerate our decision-making.
Customers are demanding efficient
and smart digital service propositions
to save them time and money.
And as we discussed earlier, a new
raft of technology solutions will
help customers to manage their
demands within the overall system
in ways that improve system
efficiency and ultimately save
them money.
Our wholesale business will benefit
from digital solutions that help us
better manage transactions and
automate more of our trading and
hydraulic management decisions to
achieve more efficient outcomes.
Similarly, for our Generation teams,
we’re starting to use data to better
target asset management and to
co-ordinate downtime with fewer
impacts on customers. As we
push our generation assets to do
more, the ability to make informed
decisions on asset management has
all sorts of potential payoffs in the
ways that we best use the natural
resources that power our business.
Ultimately, aligning our retail,
development, wholesale, ICT and
corporate functions is all about
synchronising the many moving
parts it takes to speed up our
delivery. One of our core values at
Meridian is to ‘Be in the waka’.
It signals we are one team and
when we all pull in the same
direction we create great outcomes.
Experienced leadership
We continue to have a stable,
experienced and highly capable
Executive team at Meridian. There
has been only one change in
our Executive Team in the past
year: Nic Kennedy resigned as
CEO of Meridian’s subsidiary,
Flux Federation. Meridian’s Chief
Information Officer, Bharat Ratanpal,
has been seconded as Interim CEO
to lead the Flux business through
the next phase of its development.
While Bharat works with the Flux
business, Edna Maddocks, one of
our ICT team leaders, has stepped
in to lead Meridian’s ICT team. We
would like to acknowledge Nic’s hard
work in getting Flux to this point.
The Board members are also highly
experienced governors with extensive
and varied sector experience that
enables them to bring a range of
perspectives to the oversight of
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Meridian’s strategy. For the Board,
we were pleased to welcome
David Carter as a Non-Executive
Director. Our thanks and best wishes
to Mark Cairns who, after a long
tenure, retired at our last Annual
Shareholder Meeting.
Everyone stands to gain
The strengthening of our commitment
to deliver on our strategy and help
decarbonise Aotearoa’s economy is
changing how we do business on
many fronts. Our teams are tackling
issues in new and refreshing ways.
The use of data is enabling much of
the change and helping us to enhance
our brand, our customer propositions
and our generation assets.
Extending demand response
opportunities to smaller business and
residential customers will incentivise
many Kiwis to change how they
manage power consumption whilst
assisting greatly with the management
of system demand peaks.
In a global trading environment
where energy use is under
increasing scrutiny, more than ever
we are convinced that Aotearoa’s
highly renewable electricity system
can be a significant source of
competitive advantage for our
country. New Zealand has a once-
in-a-generation opportunity to
grow our economy by leveraging
our renewable energy advantage
to build low carbon intensive
products for export, delivering
more high-value jobs and greater
prosperity for all Kiwis. At Meridian
we’re determined to play a role in
this transition by fostering long-term
partnerships with the iwi, industry,
customers and communities, who
remain the key to building a
shared future.
Finally, our investors should take
from our results that the pursuit
of our purpose can indeed be
achieved with competitive returns.
On behalf of the Board and the
Executive Team, ngā mihi to our
customers, the communities in
which we work, our partners and
our investors. And to our talented
Meridian team, thanks for doing
the mahi to ensure we continue
to deliver on our purpose and
aspiration to deliver “clean energy
for a fairer and healthier world”.
...our investors should take from our
results, the message that the pursuit
of our purpose can indeed be
achieved with competitive returns.
Solar installation at Waipuna Community Services, Ōtautahi Christchurch.
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The right resources
Meridian Energy is a 100% renewable energy
generator. We’re one of Aotearoa New Zealand’s
largest organisations, employing over 1,000 people.
WINDWATERSUN
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Highlights
NET ASSETSFY24 OPERATING REVENUETOTAL MARKET CAPITALISATIONFY24 EBITDAF*
$8.2b $4 .9b $16.3b $905m
ONE OF AOTEAROA NEW ZEALAND’S LARGEST ORGANISATIONS
Kiwi
MAJORITY OWNED
BY THE NZ GOVERNMENT
NZX + ASX
LISTED
10%
LEGISLATED MAXIMUM
NON-CROWN OWNERSHIP
BY ANY PERSON
* EBITDAF is a non-GAAP financial
measure of earnings before interest,
tax, depreciation, amortisation,
unrealised changes in fair value of
hedges, impairment and gains or
losses on sales of assets.
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Our
strategy
Meridian’s purpose,
Clean Energy for a Fairer
and Healthier World,
means we are committed
to contributing meaningfully
to the transition to a net zero
and climate-resilient future.
Meridian’s business model is focused
on creating short-, medium- and long-
term value by generating electricity
from renewable energy sources (wind,
water and sun) and retailing electricity
to customers. We’ve continued to
build on our electricity-generation
heritage with further renewable
generation investments and targeted
decarbonisation offers to customers
to help reduce their emissions in
transport and process heat.
Climate-related risks and opportunities
for Meridian are driven by two factors:
physical impacts such as storms and
floods and more gradual climatic
changes; and the economic and
societal transitional effects of the
world moving towards a lower-carbon
future. We also see great potential in
the opportunities that transitioning
to a low-carbon economy will
provide for New Zealand. We’re in a
unique position here in Aotearoa, as
our renewable-energy abundance
gives us a significant advantage
when it comes to this transition. Our
climate-related disclosures provide
comprehensive analysis of the risks
and opportunities for Meridian’s
business as a result of the transition.
Climate-related Disclosures
bit.ly/3SzilVK
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Our strategy map
Te kaupapa
Our purpose
Clean energy for a fairer and healthier world
Te rautaki
Our strategy
An all-encompassing focus on climate action
Te kaupapa
matua
Our priorities
Grow renewable
generation
Deliver cleaner,
cheaper energy
Deliver operational
excellence
Grow capability
and culture
Te arotahinga
Our focus
To speed our path to a
resilient, net zero future
Through innovation that
unlocks value for customers
So everything we do aligns
to deliver on our goals
Because how we do the mahi is
what will make the real difference
Te mahi
Our key
initiatives
• Accelerate Aotearoa New Zealand’s
decarbonisation by delivering scale
energy projects at pace:
–Build renewable
generation options.
–Deliver on our 7 in 7.
–Secure long-term access
to water.
–Accelerate electrification of
transport and process heat.
• Grow system flexibility:
–Grow our dispatchable
MW capacity.
–Bring dispatchable
customer capacity to market.
• Develop an innovation culture
that delivers digital, and data
driven customer experiences.
• Expansion of the energy product
set that unlocks the value of
transport electrification, process
heat and demand flex.
• Continued investment in energy
hardship and community
programmes that promotes
equitable access to the benefits
of the energy transition.
• Policy advocacy that promotes
climate action and supports
New Zealanders through the
energy transition.
• Build operational flex and agility
while sustaining excellent asset
productivity.
• Modern data and digital systems
to promote collaboration,
operational efficiency, innovation
and data-driven decisions.
• Grow a diverse and inclusive,
skilled workforce that reflects
the country we live in.
• Nurture leadership capability to
support the cultural and digital
maturity of a future Meridian.
• Our developing understanding of
the Māori world view helps build
long term relationships with tangata
whenua and better outcomes for all.
• Safety leadership that grows in
maturity as we build into the
energy transition.
• Sustainability culture and leadership
that benefits people and planet,
inspires climate action, and attracts
investors.
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STRATEGIC PRIORITY
Grow renewable
generation
Harapaki Wind Farm in full operation, Hawke’s Bay.
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WHY READ THIS SECTION
Read this section to better
understand how we intend
to protect and expand our
renewable generation portfolio
to deliver clean energy for a
fairer and healthier world.
IN THIS SECTION
Our path to a resilient, net zero future
A new growth curve emerges
Delivering on 7 in 7
Increasing our national capacity
Continued net zero commitment supports
our strategy
Securing long-term access to water
Groundbreaking new contract with NZAS
Our partnership with Southern Green Hydrogen
Case study: Innovating how we meet peak demand
MATERIAL TOPICS
Renewable energy generation
Affordability
Ngā Tukinga o Te Ao Tūroa –
the impacts on the natural world
Climate-related impacts
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SUMMARY
On track with
our developments
~70,000
HOMES ABLE TO BE POWERED
BY HARAPAKI ANNUALLY
Harapaki
NOW OPERATIONAL
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SUMMARY
Ruakākā
BESS SCHEDULED TO BE
OPERATIONAL IN EARLY 2025
Mt
Munro
CONSENT LODGED
(HEARING IN SEPTEMBER)
Waitaki
RECONSENT APPLICATION
SUCCESSFULLY LODGED
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OUR PATH TO
A RESILIENT,
NET ZERO FUTURE
Electrification remains the most
obvious catalyst for Aotearoa
New Zealand to achieve a net
zero economy. With the long-
term viability of NZAS now certain
after the signing of a new 20-year
agreement, Meridian, and more
broadly the sector, can confidently
progress in developing our
renewable generation pipeline.
Undertaking the full electrification
of the Aotearoa New Zealand
economy will take a collective effort
and long-term partnerships with
customers large and small. From
an economic perspective, the long-
term target of Net Zero Emissions
by 2050 is expected to require
around $30 billion of investment
in new renewable generation from
the energy sector, with around
$10 billion from Meridian alone.
A NEW GROWTH
CURVE EMERGES
For more than a decade, electricity
consumption in our country has
been steady, with little or no growth
in demand. New Zealand currently
uses around 40 terawatt hours (TWh)
of electricity per year, but more
recently rising consumer demand
from the electrification of transport
and the conversion of industrial
processes has caused electricity
consumption predicted to rise
significantly, by as much as 70%
to 100% by 2050.
This level of growth over a relatively
short period of time would be the
greatest in our country’s history.
And to deliver on this increased
demand, the sector will need to
build the equivalent of three to four
medium-sized wind farms every year.
Fortunately there’s no shortage
of good renewable options and
capable, well capitalised businesses
wishing to develop them.
Meridian is well placed to support
Aotearoa’s transition to a low-carbon
society. We currently generate around
30% of the country’s electricity
and we’re the biggest supplier of
retail electricity. We aim to maintain
our leadership position and have
resourced up accordingly.
Configuring all our
energy for reliability
In addition to building new
generation options, a successful
transition to a low-carbon economy
requires the electricity generation
sector to enhance its existing
renewable-generation assets.
A critical challenge will be to secure
enough flexible resources and peak-
management products to ensure a
reliable transition. This flexibility sits
alongside and supports our ongoing
focus on managing dry-year risk.
Because wind and solar are
intermittent energy sources –
meaning that the amount of energy
they supply depends on whether it’s
windy or sunny – we’re adapting the
way we use our hydro assets to help
smooth the gaps.
Flexible generation assets and flexible
demand are as important as ever
ensuring that the system remains
reliable, especially in times of national
peak demand. Traditionally, gas
and coal have played key roles in
complementing the country’s hydro
and geothermal generation. But with
the carbon intensity of coal making
that less desirable and gas supplies
proving to be less dependable and
less immediately available than
expected, the whole sector is having
to think harder about how we
configure all our systems to be reliable
and flexible at the same time as
demand is increasing. Meridian’s first
Battery Energy Storage System (BESS)
will play a key role in managing this.
Hydrogen is an option for the
future that could enable another
scaled energy development to be
turned down or off to manage the
security of the country’s energy
supply. This makes it an important
potential addition to our demand-
flexibility portfolio and the country’s
electrification drive. At this stage,
that’s a little way off.
Flexible generation assets and flexible
demand are as important as ever in ensuring
that the system remains reliable, especially in
times of national peak demand.
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DELIVERING ON 7 IN 7
Our target is to complete the
equivalent of 20 wind farms – each
the size of our newest Harapaki Wind
Farm in Hawke’s Bay – by 2050.
We’ve made this more real for our
teams and the communities we serve
by committing to an ambitious goal
of 7 in 7, which will see seven new
large-scale renewable generation
developments underway by 2030.
Our pipeline of projects amounts
to 5 gigawatts (GW) (12TWh) of
development options. Those
projected developments include
wind generation at Mt Munro and
Te Rere Hau (a joint venture with
NZ Windfarms), Waiinu (Taranaki)
and solar capacity at Ruakākā,
Swannanoa, Waikato, Waiinu and
Western Bays (on the western
side of Lake Taupō).
We’ve checked that our renewable
development programme while
ambitious, is affordable and
compatible with delivering
attractive shareholder returns.
Most importantly we’re ramping
up our rate of build to ensure we
remain on target to deliver it.
A significant expansion
The Harapaki Wind Farm was
fully commissioned in July this
year and is now powering up to
70,000 households. We expect to
commission a 100MW peak and
200MWh (2 hours) grid-scale Battery
Energy Storage System (BESS) at
Ruakākā Energy Park near Whangārei
in early 2025. This is a little later than
our initial plan to commission the
project by the end of the calendar
year. The hold-up relates to the
challenge of connecting this new
infrastructure to the grid. The $186
million BESS will support stable grid
operations as it stores energy during
low-demand times of the day, then
injects that energy back into the grid
at peak times. We’ve worked through
the compatibility issues of integrating
the lithium-ion batteries with the
grid. While the batteries are the latest
versions of proven technology, they’re
new to us, and at this scale they’re
also new for the national grid.
We’ve lodged consent applications
for three more projects, including a
120MW solar farm at Ruakākā that
will share the BESS grid connection
infrastructure, and a new, 90MW
wind farm at Mt Munro, in Wairarapa.
We’ll lodge three more consent
applications in FY25, and aim to take
two new projects to final investment
decision (FID) stage during the year.
We’re progressing the detailed
design and procurement for Te Rere
Hau under the terms of the joint
venture with NZ Windfarms. We
expect to reach FID, on this project,
this financial year.
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INCREASING OUR
NATIONAL CAPACITY
Increasingly, our development,
generation, wholesale and retail
teams are working together to
innovate and develop new ways
to create greater capacity during
peak times and dry years.
Historically, generators have focused
on energy output and efficiency.
However, that focus is changing, as
intermittent sources like wind and
solar are becoming more available
and coal and gas generation is
being decommisioned or limited
by supply issues.
Our teams are looking at new ways
to increase the capacity of our
existing hydro assets and optimise
the associated maintenance work.
We’ve also introduced new initiatives
that have not only improved the
way customers consume electricity,
but saved them money and made
our grid more resilient – projects
like our virtual power plant, in which
customers with electric vehicles
(EVs) are rewarded for using energy
stored in those vehicles to help
us take pressure off the grid at
peak times. We believe that the
collective potential of these virtual
power plants will quickly add up
to something significant.
The future focus for our retail
business will be on providing cleaner,
cheaper solutions in homes that have
the added benefit of making our
electricity grid even more flexible.
Working with customers in this way
aligns with the improvements we’re
making at our renewable asset sites
like the Benmore and Manapōuri
Power Stations, and the work we’re
doing to smooth supply fluctuations
(adding what we call firming capacity)
through our Ruakākā grid battery
(BESS) project.
Undertaking work at Manapōuri Power Station, Fiordland.
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GENERATION (GWH)
KEY
Hydro
Wind
*Waitaki Power Station total generation capacity updated following restoration.
** Benmore Power Station total generation capacity upgraded and Harapaki Wind Farm commissioned.
CAPACITY (MW)
KEY
Hydro
Wind
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CONTINUED NET ZERO
COMMITMENT SUPPORTS
OUR STRATEGY
The Government has reiterated its
commitment to achieving Net Zero
Emissions by 2050, with a doubling in
renewable electricity a contributing
goal. It seems likely that there’ll
continue to be separate approaches
to tackling methane and carbon
dioxide emissions.
Work on the NZ Battery Project,
including a pumped hydro scheme
at Onslow, has been cancelled.
The Government has stopped
further investment in the
Decarbonising Industry (GIDI) Fund
and removed clean car discounts
in favour of allowing the market
to deliver the solutions without
subsidies. The Government also
aims to accelerate its investment in
EV infrastructure, which includes
providing funding for a nationwide
public charging network.
The Government’s confirmation of
its continued commitment to the
2050 Net Zero Emissions target, the
expansion of renewable electricity,
the expansion of the EV infrastructure
and the policy developments relating
to resource consenting aligns directly
with our strategy, helping us to
proceed with confidence and at pace
with our electrification programme.
The removal of GIDI funding affected
some of our larger customers, given
that the underlying economics
of their projects were contingent
on access to the funding. These
opportunities will still be offered
but most likely they will be delayed
at least until the New Zealand and
international emissions trading
schemes start to project more
consistent and reliable future prices.
Time to change the
pace of decision-making
Ongoing hold-ups in resource-
consent processes are seeing
consent decisions for our projects take
considerable time. This is typical of the
challenges all New Zealand energy
developers are facing as they navigate
this country’s current Resource
Management Act 1991 (RMA). We
welcome the Government’s review
of the settings and believe the right
balance must be struck between
localised effects and community
views and the national and climate
advantages associated with large-
scale renewable-electricity projects.
While it will always be important
to work with communities, there’s
also a need to change the pace of
decision-making. We’ve submitted in
support of the Fast-track Approvals Bill
for infrastructure and development
projects with significant regional
or national benefits.
One of our 328 Zero EV charge points, Days Bay, Te Whanganui a Tara Wellington.
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SECURING LONG-TERM
ACCESS TO WATER
New Zealand is relying on its
renewable electricity system to
achieve its climate change, social
and economic goals, and provide
security of supply for homes and
businesses. The Waitaki Hydro
Scheme consists of eight power
stations from Lake Takapō to Lake
Pūkaki. Meridian owns and operates
six of these stations, making it a vital
part of this system, providing around
16% of the country’s electricity needs.
It’s so important to the country’s
energy system that it’s protected
under current legislation.
Given that the existing consent
conditions are set to expire in April
2025, we submitted an application to
Environment Canterbury to reconsent
the scheme for an additional 35
years in July 2023. Our existing
consents will remain in place until
the reconsenting application has
been granted and all appeals have
been determined. We’re only asking
for the operational flexibility we
currently have – not a drop more
water, but also not a drop less.
In preparing our application, Meridian
sought agreement from a number
of interested parties. Those with
which we worked included the three
Ngāi Tahu Waitaki Rūnaka (Moeraki,
Waihao and Arowhenua), Te Rūnanga
o Ngāi Tahu, the Department of
Conservation (DOC), Waka Kotahi
and Fish & Game New Zealand, all
of which share interests in this
important catchment.
These agreements set out plans for
us to work together in supporting
the long-term operation of New
Zealand’s largest renewable hydro
scheme, and achieve meaningful,
long-term environmental and cultural
outcomes for the catchment, such
as through our annual programme in
partnership with Ngāi Tahu to move
thousands of tuna (eels) by trapping
and transferring the elver (young
tuna) upstream from our dams and
moving the tuna heke (migrant adult
eels) back downstream to spawn.
Through this partnership, other
initiatives that will focus on improving
cultural and environmental outcomes
for iwi in their takiwā will be developed
over the 35-year period of the
consent. Many of these activities will
not only benefit iwi, but in their nature
be positive for all New Zealanders.
A fast-track process might become an
option in future if suitable amendments
can be integrated with the Fast-track
Approvals Bill to handle reconsenting
applications, but currently we believe
the existing RMA process best serves
all parties as we seek consent for the
Waitaki Hydro Scheme.
Our Integrated Report Data Pack
contains information on our use
of water, including for withdrawal,
discharge and consumption.
Integrated Report Data Pack
bit.ly/4devDzs
Aviemore Power Station, Waitaki Valley.
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GROUNDBREAKING
NEW CONTRACT
WITH NZAS
NZAS remains a significant customer,
drawing the equivalent of around
36% of our total generation output
and 12% of the national demand.
On 31 May 2024 we announced
that we had successfully negotiated
and signed a package of conditional
20-year contracts for part of the
NZAS Tiwai Point aluminium smelter’s
electricity needs. The package
includes a long-term, fixed-price
contract for electricity and a significant
demand response agreement that will
provide critical dry-year cover, further
supporting the decarbonisation of
New Zealand’s economy. The new
arrangements, which came into
force on 3 July 2024, will replace all
the current arrangements between
Meridian and NZAS.
The package is commercially
sustainable, delivers value for our
shareholders and removes significant
uncertainty for the electricity sector
and the people of Southland. It also
provides Meridian with confidence to
make the right investments to deliver
on its renewable energy goals.
The key terms of the long-term
contracts are:
• 472MW base load volume
from the date the contract
takes effect to the end of 2024
• 377MW base load volume
from 2025
• Pricing that begins on 1 July 2024,
with a 20-year term up to and
including 31 December 2044.
The pricing includes an
opportunity for annual price
escalation from the start of 2028
• Four demand response options
that incentivise the smelter to
reduce consumption, ranging
from 25MW to 185MW.
Demand response will
provide dry-year cover
The demand response element of
our new agreement with NZAS is
groundbreaking, not only for this
country but globally. The level of
flexible demand offered by NZAS
will support the electricity system
to become even more renewable,
while relying less on coal and gas
when the hydro lakes are low.
A maximum of approximately
800GWh of demand response is
available in any given year, with an
average of approximately 400GWh
per annum in the 20-year term of
the contract. This will be important
during periods of low lake inflows,
providing critical dry-year cover
to the electricity system.
When NZAS reduces its
consumption of electricity, that
power can effectively be made
available to other users. The net
result will be a reduction both in
carbon emissions from burning
less coal and the avoidance of
needing more expensive hydro
firming solutions.
We look forward to continuing
to work with NZAS in the years
ahead, and are very mindful of
the value of the Smelter to the
Southland region and the liveli-
hoods of many Southlanders.
OUR PARTNERSHIP
WITH SOUTHERN
GREEN HYDROGEN
Southern Green Hydrogen (SGH)
is a unique opportunity to leverage
New Zealand’s renewable resources
globally, supporting markets to
decarbonise their economies and
meet international commitments.
The SGH opportunity has faced some
headwinds in the past 18 months,
with global inflationary pressures
increasing the cost of renewable
energy, the key input to green
hydrogen production, and capital
costs relating to building hydrogen
facilities increasing substantially.
These factors have put pressure on
SGH economics, consistent with
challenges other hydrogen projects
are experiencing overseas. Markets
have been slow to resolve the
significant gap between the cost
of producing green hydrogen and
potential customers’ willingness to
pay for green hydrogen.
As a result, Meridian has decided to
put the project on hold. We have also
agreed to conclude our partnership
with Woodside. From here, Meridian
will continue to actively monitor our
target markets as we believe Southern
Green Hydrogen remains well placed
to be a competitive green project
opportunity in the future. We will
review the opportunity to progress
SGH when the time is right.
The level of flexible demand offered by
NZAS will support the system to become
even more renewable, while relying less on
coal and gas when the hydro lakes are low.
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Manapōuri Power Station, Fiordland.
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CASE STUDY
Innovating
how we
meet peak
demand
It began the way these things
often do, with two people chatting
after work on a Tuesday afternoon.
Manapōuri Power Station, Fiordland.
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The topic of conversation was how
to make the most of Manapōuri’s
capacity in order to meet demand
peaks – when consumer demand
for energy is highest.
“We knew that Manapōuri had
a greater capacity than we were
accredited for. The question was, with
managing winter peaking on both
our minds, could we somehow access
that?” says Mat Bayliss, Meridian’s
Head of Generation Strategy.
That exchange kicked off a
mechanical analysis to see if higher
output could indeed be achieved in
safe margins and what the effects
would be in terms of acceleration
on wear and tear. “We were literally
looking to redefine the parameters
within which Manapōuri could work,”
says Mat.
To do the work, they needed a
dispensation from Transpower to
operate above the connection code
conditions. Once that had been
granted, the Generation team was
able to start running the plant at
128MW per turbine, up from 125MW.
Today, and with the five turbines
currently operating, that amounts to
another 15MW of peaking capacity.
“That extra capacity makes a big
difference,” says Mat. “It dampens
high wholesale prices, which is
good for consumers, and it gives
us greater peaking capacity, which
is good for revenue. We estimate
that, in just over four months, we’ve
saved around 1,700 tonnes of carbon
that would otherwise have been
generated from coal and gas.”
Mat says that lifting the capacity and
remixing the way that hydro supports
solar and wind have transformed the
generation profile for Meridian. “It
works for customers and our investors
and it gives us access to additional
flexible capacity, which is just what
the country needs.”
Globally, the world is realising the
advantages of using hydro this way.
For Meridian, it provides unparalleled
flexibility in re-orienting the base
energy contribution and filling
peak-demand gaps. Mat says that
more capacity is possible, particularly
as Transpower implements its grid
upgrade strategy. “Seeing past what
we’ve assumed has been the key
to accelerating electrification,” he
says. “We’ve started an asset-by-
asset analysis, and fully expect to
be able to do more with the assets
we already have.”
“It works for customers and our
investors and it gives us access to
additional flexible capacity, which
is just what the country needs.”
Manapōuri Power Station, Fiordland.
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STRATEGIC PRIORITY
Deliver cleaner,
cheaper energy
Meridian customers embracing solar generation for their home and EV, Waitaki Valley.
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WHY READ THIS SECTION
In this section we discuss our
progress in electricity retailing,
our support for the electrification
of transport, and how and
why we link these to our
social licence to operate.
IN THIS SECTION
Evolving our retail role
Electrifying transport and heat
Our Decarbonisation Fund grows
Setting our compass on customers
and increasing social good
Digital and data-driven customer experiences
MATERIAL TOPICS
Customer decarbonisation
Affordability
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SUMMARY
Electrification
starts at home
328
ZERO NETWORK
EV CHARGE POINTS
1,400
HOUSEHOLDS OF OUR
TARGET ARE NOW PART
OF MERIDIAN’S ENERGY
WELLBEING PROGRAMME
1ST
POWERSHOP ONCE AGAIN
TOOK THE TOP SPOT IN
CONSUMER NZ’S PEOPLE’S
CHOICE AWARD
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SUMMARY
18,000
THE EQUIVALENT OF CARS
REMOVED FROM NZ ROADS
BY MERIDIAN’S PROCESS
HEAT ELECTRIFICATION
PROGRAMME THIS YEAR
2,030GWh
OF RENEWABLE ENERGY
CERTIFICATES HAVE
BEEN PURCHASED BY
191 COMPANIES
$3M
ON TRACK TO BE INVESTED IN
MERIDIAN’S DECARBONISATION
FUND IN THE NEXT TWO YEARS
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E VO LVI N G
OUR RETAIL ROLE
In the past 12 months our residential
brands have delivered a 2% growth
in customer connections and 4% in
customer sales volume (GWh).
We remain the country’s biggest
supplier of retail energy, with sales
in excess of 9,500GWh. This year
we’ve added around 6,000 new
connections, with connections for
Powershop rising by around 2,600
and connections for our Meridian
brand rising by around 3,700.
We now have 370,000 customer
connections, representing around
16% of Aotearoa New Zealand’s
households and businesses.
Making flexibility
valuable for customers
Given that electrification is a national
issue, it makes sense to broaden
the ways that Kiwis can participate
in, and interact with, the country’s
energy system. As we build more
generation, we’ll be better off if
we’re smarter about how we use
energy and manage capacity.
With our retail business continuing
to look for and find ways to pass
value on to customers, we’re looking
to expand our residential customer
base. The power of customers large
and small in being able to participate
actively in the electricity market,
and through more flexible energy
options, will support the delivery of
cleaner, cheaper electricity, support
our electricity system to become
even more renewable and reduce
the average cost to consumers.
ELECTRIFYING
TRANSPORT AND HEAT
Our Process Heat Electrification
Programme continued to deliver
this year, with a cumulative 525GWh
of process heat being converted
from fossil fuels to electricity for
big businesses under agreement
and further memorandums of
understanding being worked
through. This level of conversion
will prevent around 140,000tCO
2
e
annually being emitted into the
atmosphere, the equivalent of
removing around 69,000 cars from
our country’s roads.
The programme complements our
initiatives in demand flexibility,
enabling customers to be part of
the electrification solution by
rewarding their flexibility. This
year, Mataura Valley Milk has
commissioned an electric boiler.
Enabling demand flexibility in large
industries is critical to a smooth
transition. But it can’t stop there:
dynamic load control is about
offering households and small
businesses rewards for responding
to load demands, and using the
power they already have stored
in different ways.
This year we’ve been trialling a
demand-flexibility product that
enables households with EVs to be
paid for participating in a ‘virtual
power plant’ that will alleviate strain
on the grid during peak periods.
This smart-charging trial involves
50 Tesla and BMW EV owners
testing new vehicle-to-grid and
smart charging technology to
optimise how they charge their
EVs in response to market demand
and pricing. We’ve also been
trialling a bidirectional charger
at our Christchurch office that
highlights the huge potential from
the large number of EV batteries
that will be parked and available
during peak times, by showing
that the technical solution can be
incorporated into a fleet that is in
everyday use. We expect this to
become a solution that works well
for both customers and the energy
system as hardware becomes
more available and affordable.
The ability of EVs to store electricity
means there is energy potentially
available during peak periods that
could be replenished when there is
less pressure on the grid. The stored
power could also be combined with
the use of other customer-owned
sources, such as hot-water cylinders
and home solar and industrial
heating and cooling processes.
EV charging is an important element
in overall transport electrification.
Our Zero EV charging network is
the second largest in the country,
with 328 charge points available for
those using the Zero app, up from
235 Zero charge points last year. The
ongoing expansion of Zero is helping
to address a lack of EV charging
infrastructure nationally.
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CUSTOMER SATISFACTION (NET PROMOTER SCORE)
*
KEY
Meridian
Powershop
NZ industry average
**
*Powershop New Zealand and Meridian New Zealand residential customers only. Net Promoter Score is
calculated from a survey asking customers using a 0–10 scale “How likely is it that you would recommend
Meridian/Powershop to a friend or colleague?” then subtracting the percentage of detractors from the
percentage of promoters. A positive value indicates that more customers are promoters versus detractors
(and vice versa). Results are a 12-month moving averages from July to June each financial year.
**Perceptive Group Limited: New Zealand NPS Industry Benchmarks. FY23 updated since last report.
FY24 data currently unavailable.
RETAIL CUSTOMER CONNECTIONS
*
(ICPs)
KEY
Meridian
Powershop
*Excludes the Tīwai Point aluminium smelter; <10 of the above ICPs are connected to the transmission
network; around 4,700 customer connections have distributed generation metering.
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OUR DECARBONISATION
FUND GROWS
To date, over 191 companies have
signed up to purchase more than
2,030GWh of Renewable Energy
Certificates (RECs). Meridian’s Certified
Renewable Energy product allows our
customers to match the electricity they
use from the grid with an equivalent
amount of electricity produced by
some of Meridian’s hydro stations
and wind farms – which have been
independently verified as producing
100% renewable energy.
Meridian has committed to reinvest
all of the net proceeds that we
receive from customers when they
purchase RECs into a decarbonisation
fund. What’s more, the popularity of
Certified Renewable Energy has meant
we’re on track to invest more than
$3 million into our Decarbonisation
Fund over the next two years. This will
advance decarbonisation and energy-
efficiency projects nationwide.
Our first round of fund contributions
saw $333,310 awarded to Waipuna
Community, Youth and Child
Services, St John of God Hauroa
Trust, EcoMatters Bike Hubs, Ngā
Manu Nature Reserve, KidsCan and
South Island Rowing. Round two saw
$1,087,187 awarded to Satisfy Food
Rescue, Tread Lightly, Everybody Eats,
Electrifying Conservation (Southern
Lakes Sanctuary), Blue Light Youth
Driver, Te Ahi Kaa Training & Social
Services, Kairos Food Rescue,
Te Kāhu Tiu’s kōhanga, Ngā Manu
Nature Reserve, Rānui Apartments,
Ōtorohanga Kiwi House, EquiGEN,
Featherston Community Centre and
Northern Southland Community Pool.
You can access more information on
the fund and its impact on our website.
Impact and Transparency Report
bit.ly/3A8UiXx
Meridian has committed to reinvest
all of the net proceeds that we receive
from customers when they purchase
Renewable Energy Certificates into
a decarbonisation fund.
EcoMatters Bike Hub, Tāmaki Makaurau Auckland.
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SETTING OUR COMPASS
ON CUSTOMERS
AND INCREASING
SOCIAL GOOD
Aotearoa New Zealand’s electricity
industry is high performing by global
standards. The World Energy Council
ranks New Zealand 9th in the world
on measures of energy security,
energy equity and environmental
sustainability, and ours is the only
country outside Europe and
North America in the top 10.
Nevertheless, the cost of living,
including energy, has affected
regular household spending.
We’re proud to have fully complied
with the Electricity Authority’s
Consumer Care Guidelines; we build
them into all our customer processes,
especially in the way we support
medically dependent and financially
vulnerable customers to access the
electricity they need. Meridian’s
disconnections for non-payment
are consistently low compared with
the industry average. Disconnection
is a last resort and we will only
disconnect for non-payment where
a customer refuses to engage with
us. We aim to enable customers
to take control of their energy
through flexible payment products
such as LevelPay, and access usage
information on customer apps.
Goal to get 5,000
households out of hardship
The long-term, sustainable use
of energy in this country is about
balancing energy sustainability,
energy supply and energy equity –
helping people to get themselves
back on track and enabling them to
access the energy they need.
We’ve expanded our Energy
Wellbeing Programme beyond its
initial pilot, with a goal of helping
5,000 Meridian and Powershop
households in energy hardship via
a dedicated $5 million fund over a
minimum of two years. To do this,
we look at four things: energy supply;
housing quality; energy efficiency;
and financial situation.
The programme provides tailored,
flexible support to Meridian
customers who are experiencing
energy hardship. By partnering with
community energy organisations,
we aim to reduce the likelihood of
energy hardship in the future.
An independent ‘GoodMeasure
Report’ by ImpactLab, released
in November 2023, considered
the programme’s social return on
investment. The Report found that
for every $1 spent, we can provide
$5.20 of measurable good to
Aotearoa New Zealand.
GoodMeasure Report
bit.ly/3WSvmw8
We’ve now supported 1,467
households through the programme.
We’ve also established a dedicated
Hardship Team and broadened
our geographical coverage to
75% of the country, supported
by 12 community energy partners.
These partners provide energy
assessments, education and energy-
efficient goods such as light bulbs,
heaters and curtains, as well as large-
scale interventions such as insulation
and heat pumps in line with the EECA
Warmer Kiwi Homes programme.
Energy hardship itself is a complex
subject. What we’ve learnt through
the Energy Wellbeing pilot and
in the past year is that hidden
hardship is a very real barrier to
understanding the extent of energy
hardship in New Zealand, and that
deeper data will be needed if we’re
to better identify and quantify the
real situation.
We’ve also come to realise that
high levels of intervention and case
management are needed to support
people in the right ways with the
best interventions. This takes time –
in fact it can take up to six months to
assess, agree on and schedule the
work required.
Securing the services of partners
is helping us to identify energy
hardship situations and interventions,
and their long-term commitment is
needed for our Energy Wellbeing
Programme to be truly effective.
We’re proud to
have fully complied
with the Electricity
Authority’s Consumer
Care Guidelines; we
build them into all our
customer processes,
especially in the way
we support medically
dependent and
financially vulnerable
customers to access the
electricity they need.
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People’s Choice for
customer service
Consumer NZ released its annual
power company consumer
satisfaction survey in May. It’s been
a competitive year, with the cost
of living still on people’s minds and
big players from other sectors now
offering power. However, for the
seventh time in 10 years, Powershop
took the top spot in the survey,
earning it the People’s Choice award.
The Meridian satisfaction score
increased from 46% in 2023 to 57%
in 2024, putting it ahead of all the
other large retailers. Regardless of
the channel of choice, a Meridian
customer can expect to be supported
by a knowledgeable service agent
within an average of 45 seconds
of contacting us.
Campaign image from Powershop advertising.
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DIG ITAL AN D DATA
DRIVEN CUSTOMER
EXPERIENCES
It’s critical that our retail business
takes an agile and lean operating
approach that’s future fit and future
focused. This will deliver a stronger
retail performance and continue
improving customer experiences.
This year we’ve started building a
new technology architecture for
our customers. Our aim is to run a
world-class cost-to-serve model
that significantly lowers our costs
of acquiring new customers and,
through providing demand flexibility,
enables us to sell customers energy
when the price is low. This approach
will help us reduce the cost of
energy and enable us to work
closely with our customers as we
electrify transport and innovate
to meet their changing needs.
Generation Control at our Te Whanganui a Tara Wellington office.
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STRATEGIC PRIORITY
Deliver
operational
excellence
Our Te Whanganui a Tara Wellington office.
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WHY READ THIS SECTION
Read this section for more on how
we’re building operational flexibility
and agility into the ways we operate.
Aligning everything we do to deliver
on our goals requires clear policy
positions and, increasingly, the ability
to make data-driven decisions.
IN THIS SECTION
Hedging products in demand
Getting more from our assets
Advocating for the planet
Flux refocuses
Data is key to delivering competitive
market offerings
Case study: Harapaki is already proving a success
MATERIAL TOPICS
Renewable energy generation
Cyber security
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SUMMARY
Better, bigger,
more informed
100%
RENEWABLE
ENERGY TARGET
2.2%
INCREASED GENERATION
CAPACITY AT BENMORE
HYDRO STATION – FROM
540MW TO 552MW
AI
AND MACHINE LEARNING
BECOMING MAINSTREAM
ACROSS THE BUSINESS –
CAPTURING EFFICIENCIES AND
ENHANCING INNOVATIONS
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SUMMARY
15MW
MORE THAN 15MW OF
ADDITIONAL CAPACITY
AVAILABLE DURING
PEAK PERIODS
2.4%
INCREASED GENERATION
CAPACITY AT MANAPŌURI
HYDRO STATION – FROM
125MW TO 128MW
FLUX
BUSINESS REFOCUSES ON
AUSTRALASIAN MARKET
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HEDGING PRODUCTS
IN DEMAND
Overall, energy trading volumes
have been up this year, alongside
growth in solar and wind power.
While these trends are healthy for
the industry, they do mean the type
of energy being offered into the
market and the wholesale price of
electricity is becoming more volatile.
If there’s no wind or no sun, if capacity
is down because of planned outage
schedules or if there’s an issue with
transmission capacity, a supply
shortage could result, leading to a
rapid increase in wholesale prices.
To help smooth out this potential
instability, we’re able to use the
inherent flexibility in our hydro assets
to supply hedging products to help
industry participants cover their risks,
including flat and peak products.
Hedges work like a counterbalance
to spikes in market prices. They add
predictability to what participants
can expect to pay.
The demand for these products
has increased this year, in response
to dry-then-wet-then-dry weather
patterns that have added volatility
to peak-time pricing, and a faster-
than-expected reduction in gas
availability, which has been used
to help smooth out price spikes.
GETTING MORE
FROM OUR ASSETS
In addition to increasing capacity,
it’s important that we maximise
our use of existing assets. Our
goal, which we set last year, is to
deliver 500MW of restored and
new capacity from our generation
portfolio by the end of FY28.
There’s no doubt that our existing
hydro assets will play a critical, ever-
evolving role in the years ahead.
As demand ramps up and more
generation comes online, our hydro
stations will need to produce as
much reliable energy as possible
while being flexible enough to act as
energy stores for times when other
sources can’t deliver what’s required.
Achieving this requires rethinking
not just how we add capacity, but
also how we think about asset
health, how we schedule our
planned maintenance work and
outages and how we use data to
speed up decision making and
problem solving.
We’ve continued to grow and take
to market our dispatchable capacity
by increasing the installed capacity
of our power stations at Manapōuri
and Benmore.
Last year we reported problems with
two transformers at Manapōuri. They
had to be taken out of service, and
this meant two generating units were
unable to operate. This year we’ve
worked very hard, with the support
of the manufacturer, to investigate
the fault and see if we can undertake
repairs on site. Unfortunately though,
while on-site improvements have
been completed, they’ve not been
successful. A new transformer is due
to arrive at the end of calendar year
2024, and this will enable six units to
be operational. We’re also pursuing
options to purchase additional new
transformers to ensure we have
seven operational generating
units and a spare transformer.
This year we’ve successfully
reassessed the maximum capacity of
Benmore, from 540MW to 552MW.
This 12MW increase, which has been
available since May 2024, has been
made possible by the changes
we’ve made to the Benmore turbines
in recent years. The extra station
capacity will only be available when
all six Benmore units are operating.
Our overall station output is still
constrained by water discharge
limitations embedded in our
resource consents.
We’ve increased the capacity of
each of the seven Manapōuri units,
from 125MW to 128MW. These
enhancements have added the
equivalent of a mid-sized wind
farm to our outputs.
This year, we’ve also experienced
a prolonged outage of one of the
transformers at our West Wind
Farm. This means that its capacity
is currently constrained to 98MW
instead of the usual 143MW. We
expect to have this resolved by
mid-August 2025.
We’ve increased the capacity of
each of the seven Manapōuri units,
from 125MW to 128MW. These
enhancements have added the
equivalent of a mid-sized wind
farm to our outputs.
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ADVOCATING
FOR THE PLANET
A lot remains unresolved with
regards to policies that will promote
climate action and support New
Zealanders through the energy
transition. Pivotal to understanding
expectations is the second Emissions
Reduction Plan, which will be part of
the Government’s policy package to
achieve national emissions budgets
and targets.
Overall, we endorse the
direction and proposed pace for
decarbonisation identified by the
Climate Change Commission.
Looking beyond the ETS
The Emissions Trading Scheme
(ETS) alone is unlikely to be enough
to reduce emissions. The current
settings do not, in our view, provide
sufficient financial incentives for
change, and the withdrawal of the
GIDI Fund only adds hesitancy to
many looking to invest and convert
to electric. The ETS is supposed
to target emitters but seems to
encourage exotic forest planting
rather than carbon reduction.
The volume of exotic forestry
planting also affects the value of
New Zealand Units and has meant
that auction prices are not rising in
accordance with the Climate Change
Commission’s advice. The current
form of the ETS therefore raises a
number of questions, and clarification
is needed on whether the present
settings are working – or if New
Zealand wants to see more emission
reductions at source in line with
the Climate Change Commission’s
advice. We need to address the ETS
in a bipartisan way if we want to
avoid climate policy swings between
governments and a disorderly
transition. Meridian will continue
to advocate for the Government
adopting the Commission’s advice.
The Government’s support of the
electrification of transport is moving
away from the vehicles themselves
and towards charging networks.
Support for charging infrastructure
aligns with our aim to expand our
own Zero network, but with the
Clean Car Discount gone, EV uptake
has slowed.
RMA changes to our development
options are uncertain
Streamlining resource consenting
will help our assets to come online
and grow electrification nationally,
but how we’ll apply it across our
7 in 7 strategy remains to be seen.
For example, while fast-tracking
would be an attractive option for
the electricity infrastructure we’re
planning in Taranaki and Waikato,
two of our other developments – the
300GWh wind farm at Mt Munro, just
south of Eketāhuna, and the Ruakākā
solar project in Northland – are
already in the current RMA process.
Ongoing areas
of potential regulation
Financial hedges have caught the
attention of the Electricity Authority,
with a Risk Management Review
underway. The review will consider
whether the availability and pricing
of risk-management contracts, and
other risk-management options,
are creating any problems for
competition.
The Electricity Authority, New
Zealand’s electricity regulator, is
gathering data on hedge transactions
and other risk-management options.
We expect it to issue draft findings
for consultation later in the year, then
decide on whether any regulatory
settings should change. We think that
small retailers have the same access
to risk-management options as any
other retailers. Meridian already offers
a wide range of hedge products to
other parties, and anyone can invest
in physical generation as an alternative
to hedging.
Another area of investigation for the
Electricity Authority is the mandating
of its Consumer Care Guidelines, the
adoption of which has to date been
voluntary. The guidelines ask retailers
to deliver to minimum standards of
customer care. They also include
detailed rules on how to work with
consumers experiencing hardship
and for disconnection processes.
Meridian already meets the
proposed mandatory standards
and we welcome this development,
as it will ensure all retailers lift their
performance and deliver minimum
levels of support for all customers.
We need to address
the ETS in a bipartisan
way if we want to
avoid climate policy
swings between
governments and a
disorderly transition.
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Bharat Ratanpal, Interim
Chief Executive Flux Federation.
FLUX REFOCUSES
Our subsidiary Flux Federation
continues to offer its quality, flexible
billing platform to the New Zealand
and Australian energy markets.
The platform has strong security
credentials in the form of ISO 27001
certification and PCI compliance.
Until November 2023, Flux was
focused on building the Flux
platform as a global business.
However, following a review in May,
the Flux Board took the pragmatic
decision to focus Flux’s efforts back
on the Australasian market in service
of its existing customers. Meridian,
including Powershop, is the largest
customer of Flux and the platform
is critical for our service delivery.
Meridian’s Chief Information Officer,
Bharat Ratanpal, has been seconded
as Interim Chief Executive to lead the
business through this next phase.
DATA IS KEY TO
DELIVERING COMPETITIVE
MARKET OFFERINGS
A drive to use data smarter has
dominated Meridian’s efforts to
modernise our systems, with the
aims of promoting collaboration,
capturing operational efficiencies
and driving innovation. The use of
advanced technologies such as AI
and machine learning is becoming
mainstream across the business.
We’ve started using a data lake –
a large repository of continually
refreshing data – to process large
volumes of data and run innovative
data science models that are
changing our decision-making
at all levels.
For example, applying data science
helps us to better forecast how
quickly and in what volumes water
will shift from the hills to the lakes
after rainfall. Through this, we can
better determine the volume of
water we can expect for generation.
We’re using data to better model our
risks and the maintenance required
for our generation assets. Shifting
our wind turbine assessments
from manual inspections on site to
electronic inspections via computers
has reduced the time required and
the chances of human error, and
helped us to construct a more
fulsome view of the overall health
of our wind and hydro assets.
We’ve also started using generative
AI to humanise and simplify the
ways our people interact with our
technology. Our plan is to extend
this use to our customers so that
they can interact effectively with
our technology.
Data models are pivotal to our
evolving retail focus, through which
we’re looking to take to market
innovative products that will help
customers to improve energy
efficiency and increase savings.
We have systems to protect
customer and company data
Our strong focus on data will
improve our efficiencies and help us
provide better value – but to do that
responsibly, the data must be safe
and secure. Strong foundational data
combined with a data governance
framework will help with automation.
At Meridian, safeguarding customer
and company data is fundamental.
We adhere to industry regulations
and standards and proactively
manage cyber risks.
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Our comprehensive programme
fosters a culture of awareness and
resilience in ensuring the security of
our information and communications
technology and operational
technology infrastructure. Cyber
security is a component of Meridian’s
employee performance expectations,
as outlined in our Code of Conduct.
We enhanced our governance by
creating a dedicated Cybersecurity
Board Committee in June 2024.
Our FY24–25 cybersecurity road-
map aligns with the National Cyber
Security Centre’s Cyber Security
Framework and the Australian
Energy Sector Cyber Security
Framework as well as Meridian’s
strategy. The roadmap emphasises
risk assessment, governance, security
culture, awareness, incident response,
compliance and metrics.
We take a multi-layered approach
to cyber defence that includes
continuously monitoring our
environments. Our Managed Cyber
Defence provides real-time threat
detection and response. Third-party
vulnerability analysis and penetration
testing further strengthen our security
position. Our security incident
management is integrated with
the company-wide emergency
response framework to ensure swift
restoration during cyber incidents.
We have a supplier assurance
programme that ensures suppliers
adhere to our policies, which
include continuous monitoring
and robust supply chain security
risk management. Our internal
programme delivers comprehensive
education, training and awareness-
raising. Through e-learning modules
and phishing exercises, we foster a
proactive and positive cyber security
culture, with a clear escalation
process for reporting suspicious
events that has resulted in phishing
failure rates averaging below 1%.
In FY25 we’ll enhance our
information-protection controls,
asset management and identity
and access governance. Targeted
awareness and training programmes
will empower employees, and
collaboration across business teams
will strengthen our cyber defences
against evolving threats.
Undertaking an E-learning module.
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CASE STUDY
Harapaki
is already
proving
a success
The first of our 7 in 7 deliverables,
Harapaki, achieved full power in
July 2024. All the civil works at the
Hawke’s Bay site have now been
completed and the project village
has been removed.
Harapaki Wind Farm, Hawke’s Bay.
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One of the great advantages of
Harapaki was that we were able
to generate power from the time
the first turbine was successfully
installed, meaning we didn’t need
to wait until the end of the project
for it to start contributing to the grid.
In November, the first five turbines
were generating power. As of the
end of June, the pre-assembly of
all the turbines was complete and
36 turbines (154.8MW) were
available to generate electricity.
Total production to the end of
June was 134,861 kilowatt hours.
We introduced a number of
sustainability initiatives throughout
the project to lower our impacts
on the environment, including the
re-use of as much as we could from
the site within the community. This
was our most sustainable project yet.
Everything we learned from it will
be carried to the next project with
the support of a passionate team
of sustainability specialists.
On average, around 75% of the
waste that would once have gone to
landfill is instead being recycled or
reused within the local community.
On Harapaki we set key performance
indicators for local employment and
local spend for both Meridian and
our contractors.
The project exceeded its target for
local employment, which is currently
sitting at 49% after peaking at 57%
during civil works, against a target
of 40%. That’s around 1,400 local
employees.
The local spend was surpassed in
quite a dramatic style. Our goal was
to exceed $40 million in local spend
in the life of the project, and we’re
already around $100 million.
A novel foundation design that
required less concrete, coupled
with an on-site concrete plant,
significantly decreased the
transportation needs from Napier.
An avian monitoring team also
visited every six weeks during
construction, and will do so for
three years post construction
(the frequency is set at the end
of construction), a total of seven
years of monitoring.
Nominations are also open for panel
members and suitable projects for the
Power Up Harapaki community fund.
Harapaki exceeded its target for
local employment, which is currently
49% after peaking at 57% during
civil works, against a target of 40%.
That’s around 1,400 local employees.
Harapaki Wind Farm, turbine foundation under construction, Hawke’s Bay.
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STRATEGIC PRIORITY
Grow
capability
and culture
Our Te Whanganui a Tara Wellington office.
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WHY READ THIS SECTION
Read this section to find out about
our commitment to delivering a
culture and leadership that benefit
people and the planet, inspire
climate action and attract investors.
IN THIS SECTION
A culture of care
Investing in safety
Enriching our worldview
Sustaining our competitiveness
Forever Forests on track
MATERIAL TOPICS
People
Ngā Tukinga o Te Ao Tūroa –
the impacts on the natural world
Business emissions and waste
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SUMMARY
How we do the mahi is what
will make the real difference
75%
EMPLOYEE ENGAGEMENT
2024 RESPONSE – UP 2%
ON THE PREVIOUS YEAR
2024
LAUNCHED A WELLBEING
STRATEGY TO ENHANCE
SUPPORT FOR OUR PEOPLE
DOW
JONES
INCLUDED IN THE
DOW JONES SUSTAINABILITY
ASIA PACIFIC INDEX
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SUMMARY
~450k
TREES PLANTED IN OUR
FOREVER FORESTS BY
END OF FY24
$150,000
IWI FUND CREATED TO
SUPPORT THOSE IMPACTED
BY CYCLONE GABRIELLE
11
YEARS CELEBRATED AS
PRINCIPAL PARTNER OF
KIDSCAN AND 8 YEARS
SUPPORTING THE KAKAPO
RECOVERY PROGRAMME AS
THE NATIONAL PARTNER
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A CULTURE OF CARE
To deliver on our ambitious plans
in the context of a rapidly changing
sector, we need a strong, diverse
workforce that reflects the country
in which we live.
Our all-encompassing focus
on climate action requires us to
empower our people to deliver
powerful, cumulative change.
Knowing that our business
opportunities and challenges are
dynamic, our focus on culture is all
about tapping in to our ability to
deliver on our purpose and strategy.
Delivering value
through our people
To do that, we need to do three things:
1. Ensure our workforce is diverse
and sustainable, with gender and
ethnic diversity that reflects our
country’s demographics, including
Māori representation.
2. Make sure our people have the
capability and support to achieve
our business aspirations.
3. Be deliberate in the way our
culture evolves through change,
by considering how we reward
and recognise behaviours and
performance, foster wellbeing
and connect to Te Ao Māori as
a bicultural organisation.
Employee engagement increases
The overall employee engagement
in the Meridian Group (excluding
Flux) has increased again this year,
to 75%, which means we’re firmly
in the top quartile of New Zealand
companies of a comparable size.
We were pleased to see a very high
voluntary response rate of 95%,
which signals that our people
value this process and know
their feedback will be heard.
Working differently
Change has become a constant in
this environment, so to succeed we
need to think differently about how
work is organised. We’re continuing
to embed a new operating model in
the Generation team, which focuses
on building a culture of innovation
and experimentation.
Following a successful trial this year
in Retail, we’re building greater
business agility into the design of
our Retail operating model to enable
a more focused, flexible, engaged
workforce that will work iteratively
to deliver what our customers need.
Wellbeing is our commitment
This year we’ve formalised an
approach to wellbeing that focuses
on thriving employees, families and
communities. Our wellbeing focus
addresses four risks: the design and
prioritisation of work; change; complex
projects; and social connectivity in a
hybrid world.
In addition, we continue to ensure
that many of our wellbeing services
are available to the whānau of our
employees, as we acknowledge the
importance of family and community
for our people. This industry-leading
strategy is another way in which
we’re setting our people up to
succeed, as well as attracting new
talent, so that we can continue to
work towards a net zero future.
Our Ōtautahi Christchurch office.
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EMPLOYEE ENGAGEMENT
*
KEY
Meridian
Global Top 25%
NZ Top 25%
DIVERSITY BY GENDER
**
KEY
Female
Male
DIVERSITY BY ETHNICITY
**
KEY
MāoriPacific PeoplesAsian
Middle Eastern/Latin American/African
EuropeanOtherNo information stored
*Measured by ’level of agreement’ – the percentage of staff who ’agree’ or ’strongly agree’ with the five
questions that collectively determine our Engagement Index (previously calculated as a weighted mean).
**Includes casuals and Flux UK.
Our Integrated Report Data Pack contains
more information on our workforce
Integrated Report Data Pack
bit.ly/4devDzs
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INVESTING IN SAFETY
Protecting our people, including
our contractors, is our first priority.
Our people – particularly those
involved in building new renewable
projects and maintaining our existing
assets – often work in technically
challenging environments. Keeping
our teams safe as we grow our
business requires us to address all
risks and potential hazards, which
range in frequency, consequences
and probability.
Reportable injuries steady
Our reportable injuries have held
steady this year. Our total recordable
injury frequency rate for employees
and contractors per 200,000 hours
worked was 1.81 (compared with
1.76 in FY23), with 18 people hurt (10
contractors and 8 employees). The
main types of injury were once again
sprains, strains and superficial injuries.
There were no significant instances
of non-compliance with health
and safety laws and regulations,
and we paid no fines during the
reporting period. We determine the
significance of non-compliance with
reference to the severity of impacts
and sectoral benchmarks. There
were also no significant instances
of injury that required reporting.
A multi-level
approach to safety
We continue to grow and strengthen
our safety culture. This requires us
to use a mix of safety leadership,
shared responsibilities and improve
outcomes through learning to further
mature our approach. It also involves
having shared attitudes, beliefs and
values when it comes to safety and
motivating and inspiring our people
to work safer. To this end, we’ve
established a Safety Leadership Forum
with our Generation team that brings
representatives together to share
We continue to
strengthen our safety
culture. This requires
us to use a mix of
safety leadership,
shared responsibilities
and improve
outcomes through
learning to further
mature our approach.
TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR
*
)
KEY
Meridian employees
Meridian onsite contractors
Meridian onsite employees and contractors combined
*The TRIFR is calculated per 200,000 hours and includes all lost-time, medical treatment and restricted
work injuries for Meridian New Zealand employees and contractors only. While we have incident
numbers for Powershop New Zealand and offsite contractors, the TRIFR cannot be calculated, as the
number of hours worked for those periods has not been recorded.
**FY22 and FY23 data excludes Flux.
***Restated due to an error in previous reporting period. Previously reported as 1.76.
Our Integrated Report Data Pack contains more
information on our health and safety metrics
Integrated Report Data Pack
bit.ly/4devDzs
learnings and improve our overall safe
practice. Our site committees continue
to meet every month to identify
hazards and share learnings.
Turbines bring inherent risk to our
wind farms, because their operation
and maintenance see teams working
at height and in tight spaces. We
use our Critical Risk Framework to
examine situations like this, especially
where there is real potential for
serious injury or worse, and look
to reduce any inherent risks. Firstly,
we provide education and risk
assessments, and implement safety
controls to reduce the risks of
working in these spaces. Secondly,
the teams themselves examine their
work protocols to identify ways to
make every day on site as safe as
possible. This includes identifying
new opportunities to reduce risks
– for instance, using physiotherapy
to support people’s musculoskeletal
health when they’re working in
tight spaces in turbines. We’re
now expanding our occupational
health service to include proactive
physiotherapy to support our people
undertaking this type of work.
As our business continues to evolve,
we’re also factoring in new risks to our
Risk Framework. For example, installing
EV chargers and implementing solar
projects create new risks that sit
alongside established risks, such
as those around public safety, lakes,
waterways and access.
Learning Teams go from
strength to strength
Our Learning Team process, with its
focus on learning and improving,
is proving to be a successful way to
bring everyone together to improve
our collective safety knowledge and
processes. Involving all those doing
the work, including our contractors, it
lifts our understanding of how issues
arise and how we can respond with
safety improvements.
Our goal is to normalise reporting as
a safe and encouraged process within
our culture. Our Safety Observation
system, in addition to our network
of health and safety representatives,
encourages our people to be active
safety observers and to initiate
conversations if they see anything
that concerns them or if they
encounter situations where they see
opportunities for improvement.
Mesh as a source of truth
A year since it was introduced, our
health and safety management
system, Mesh, has become a
powerful source of truth. The
software is configured to enable
us to better capture information,
report events, make observations
and identify hazards across the
organisation (including work by
our contractors), then share that
information with our people
quickly and easily.
We also remain an active member
of and contributor to StayLive, an
electricity industry forum focused
on working together.
National approach to dam safety
The introduction of a nationally
consistent approach to dam safety
this year means the country now has
an operative dam safety framework.
The new dam safety regulations
require owners of some dams to
have in place effective Dam Safety
Assurance Programmes including
regular inspection, review and
emergency response plans.
Dams that exceed certain height and
storage volume criteria are required
to be registered with the relevant
Regional Authority. These dams
must also be classified in terms of
their potential to cause harm in the
event of failure. Owners of dams
classified as having medium to
high potential impacts are required
to have appropriate Dam Safety
Assurance Programmes for each dam.
Compliance with elements of the
dam safety assurance programme
will be independently audited
annually from 2026.
As a responsible dam owner
Meridian has Dam Safety Assurance
Programmes that include covering
all its hydro dams since its inception.
This programme aligns with the
requirements of the Building (Dam
Safety) Regulations 2022, the NZ
Dam Safety Guidelines and the
New Zealand Society of Large
Dams’ Dam Safety Guidelines.
All of Meridian’s hydro dams and
canals are classifiable dams in terms
of the Dam Safety Regulations, and
most are High Potential Impact
Classification dams, so will be
registered. Meridian is also reviewing
all dam structures located on our
wind farm sites to determine if any
are required to be registered.
Work is underway to establish the
process required to allow annual
independent audits of each of
Meridian’s dams and their associated
Dam Safety Assurance Programmes.
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ENRICHING OUR
WORLDVIEW
We continue to develop strong
working partnerships with iwi. To
ensure we do these relationships
justice, it’s important that we build
a deep understanding of the
Māori world view. Strengthening
our understanding will help us to
meet the expectations of Māori
and improve the way we think
about the use of, and access to,
precious natural resources. We have
a company-wide cultural education
programme that aims to lift our
collective perspectives, and we’re
on a journey to apply what we learn
to different areas of our business.
We’d like to acknowledge and
thank those with whom we have
partnerships.
• We work with Ngāti Hineuru
and the Maungaharuru-Tangitū
Hapū at the Harapaki Wind Farm.
• We’ve engaged with local
hapū Patuharakeke at Ruakākā
in Northland, and Te Parawhau
hapū who are working as cultural
monitors for the project.
• We recognise the mana whenua
of Ngāi Tahu, particularly in
relation to our hydro schemes in
the Ngāi Tahu takiwā. We also
benefit from having a Ngāi Tahu-
affiliated director on our Board.
• Four Murihiku rūnaka, who
collectively are the Murihiku
Hapū, hold mana whenua and
mana moana over the Murihiku/
Southland region. We work
closely with local Murihiku
rūnunga (Awarua, Hokonui,
Ōraka Aparima and Waihōpai)
through Te Ao Marama and
the Waiau Working Party.
• We work closely with Waitaki
rūnaka (Arowhenua, Moeraki
and Waihao) through the Waitaki
Governance Group, as well as
trusts, to protect mahinga kai
and native fish in the Waitaki
and Waiau catchments.
This year we’ve begun developing a
Te Tiriti approach for the organisation,
and establishing ways to support
social wellbeing and economic
development for our iwi partners.
You can find the scope of our
focus in our recently published
Code of Conduct.
Code of Conduct
bit.ly/4dvYpuU
An example of this commitment
in action was the creation of the
Cyclone Recovery Fund, created for
iwi residing in the wake of Cyclone
Gabrielle. The $150,000 fund
provided practical financial support
for clean-up activities for those
directly affected by the cyclone.
Deep Cove, Fiordland National Park.
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Funds were allocated to help with
the recovery and restoration of
taonga from the devastated Tangoio
marae in Hawke’s Bay and to support
efforts to provide emergency food
and shelter in Wairoa.
We also expanded the criteria for
our Power Up Harapaki community
fund to provide a more active
representation of the iwi on the
panels that allocate the funding,
and greater access for iwi who are
affiliated with the area but may not
reside there, so they can apply for
projects in their official takiwa.
Our Kōkiri Tangata workstream is
looking at how we can best grow our
understanding of tikanga Māori and
weave this mātauranga (knowledge)
into our people processes. As well
as reviewing our processes, we
have re-established the Matakahi
cadetship programme with Ngāi
Tahu to introduce Ngāi Tahu cadets
to our business in the year ahead.
For iwi in our new development
areas, we’ve been learning about
and identifying the initiatives in
which they’re most interested –
be they training, Forever Forests
partnerships, scholarships or work
opportunities. Of course different iwi
will always have different aspirations,
but our goal is to provide enough
opportunities to encourage dialogue
and find ways to work together.
Powerful Partnerships
We’ve worked with partners to deliver
our Forever Forests programme: one
with the Christchurch Foundation
for our Tūī Corridor Christchurch
plantings, others with private
landowners near our wind farms,
and iwi-based trusts.
We signed a new agreement for
the Waitaki catchment biodiversity
mitigation programme with DOC
and Fish & Game New Zealand
alongside co-funder Genesis Energy.
We celebrated eight years of
supporting the Kākāpō Recovery
programme in partnership with
DOC and Ngāi Tahu, doubling the
kākāpō population in this time.
Our 11th year as principal partner of
KidsCan has also been a privilege
as we support tamariki living in
hardship to reach their full potential.
We celebrated eight
years of supporting
the Kākāpō Recovery
programme in
partnership with DOC
and Ngāi Tahu...and our
11th year as principal
partner of KidsCan
Guy Waipara, GM Development Meridian and Justin Tipa, Kaiwhakahaere (Chair) of Te Rūnanga Ngāi Tahu.
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SUSTAINING OUR
COMPETITIVENESS
Since committing to only renewable
generation, we’ve evolved our
sustainability focus to prioritise climate
action and recognise the social,
environmental and economic factors
that underpin our success. Our Climate
Action Plan includes ambitious targets
for growing renewable electricity
generation, increasing customer
decarbonisation and managing our
own resilience and emissions. Our
climate-related disclosures cover
these targets, as well as the risks
and opportunities for Meridian as a
result of the transition to net zero.
Climate Action Plan
bit.ly/4fyAbBZ
Climate-related Disclosures
bit.ly/3SzilVK
As part of our continuous
improvement, our Code of Conduct
has been updated to sharpen our
focus on conduct, ethics and human
rights and align with the principles
of Te Tiriti. We’ve also introduced a
new environment policy.
Code of Conduct
bit.ly/4dvYpuU
Environment Policy
bit.ly/3YtqxKT
Ambitious goal
for ESG performance
We were again included in the
Dow Jones Sustainability Asia Pacific
Index, an independent global
Standard & Poor’s (S&P) index that
ranks our environmental, social and
governance (ESG) performance
against like companies in our region.
We performed well in the renewables
and governance categories. Our
work to advance how we deliver
on our Nature Positive ambition will
grow our focus on biodiversity, while
also supporting us to increase our
ranking in the Index. Our near-term
goal is to move from the Asia Pacific
Index to the Global Index, which sets
the highest standards and provides
further independent validations of
our ESG performance for investors
and other stakeholders.
Aiming for net zero
We’ve set our long-term emission
reduction targets this year which have
been submitted for independent
Net Zero verification. This is a natural
extension of our Half by 30 business
emissions-reduction target, and we’ll
build out the plan to achieve this
ambitious goal in the year ahead.
During the year we’ve focused on
embedding sustainability priorities
into our business planning process
with the Board and the Executive
Team, engaging leadership teams
in further focusing on performance
objectives, and continuing to
provide coaching and learning and
development support. See our
Climate Action Plan and Climate-
related Disclosures for information
on reaching this target.
Climate Action Plan
bit.ly/4fyAbBZ
Climate-related Disclosures
bit.ly/3SzilVK
Being nature positive
We know that Aotearoa New
Zealand is highly vulnerable to the
impacts of climate change, having
one of the world’s highest rates of
habitat loss and degradation, and
the highest proportion of native
species at risk of extinction.
Our Land 2024, MFE
bit.ly/4chEw9U
Following the setting of our
biodiversity and deforestation
commitment, and our nature positive
ambition, we developed a roadmap
to guide our choices from here.
Biodiversity Commitment
bit.ly/3A56Ui8
This work will have a multi-year
focus, using different approaches
to better define our impacts and
dependencies on nature. Ultimately
we want communities, customers
and investors to better understand
our impacts on nature and the
actions we’re taking to mitigate
those impacts. These actions will
increasingly become part of our
licence to operate. Our nature
focus will support our consenting
processes and give communities
confidence in us as a leader in
sustainability and a developer of
new renewable generation.
During the year we focused on
embedding sustainability priorities
into our business planning process with
the Board and the Executive Team...
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Upholding human rights
Human rights speak to the inherent
value of all people, regardless of
background, and span everything
from the right to live to the right to
work and the right to rest and leisure.
This year we’ve finished our first
human rights risk assessment. This
has helped us to reflect on our current
practices, identify areas on which
to focus our attention and identify
ways to build on the practices and
commitments we have in place. This
programme of work has broadened
the due diligence around modern
slavery that we’ve had in place for a
number of years to mitigate the risks
of impacts on people, particularly
those in our global supply chain. Our
Modern Slavery Statement contains
our reporting on our modern slavery
due diligence.
Modern Slavery Statement
bit.ly/3LUdSJw
Setting our sights on supply
chain improvements
We’ve also initiated a dedicated
supply chain – good energy
programme to enhance sustainability
outcomes throughout our supply
chain. This project aims to give our
suppliers confidence in our direction
and encourage collaboration, so we
can realise this objective together.
Having set up the programme, we’ll
spend the year ahead looking at
emissions and climate risks, training
for our key buyers and strengthening
our contracts. We’ll then start a
multi-year journey in which we’ll
review the project annually to
determine progress and next steps.
Half by 30 targets elusive
Half by 30 is the part of our
Climate Action Plan that focuses
on reducing emissions.
Our ability to hit our Half by 30 goal
is uncertain. We’re doing everything
we can to get there, but some
actions, such as managing flights and
commuter emissions and reducing
supply-chain emissions are proving
challenging due to the growth that
our business and the sector are
experiencing.
We’ve signed a deal with Swedish
company Candela to bring the
world’s first electric hydro-foiling
ferry to Lake Manapōuri. The ferry
will provide daily transport for
staff and contractors servicing the
country’s largest hydro power station.
It’ll save 240 tonnes of carbon
emissions annually and is expected
to begin operating in 2025.
We’ve also focused on lowering
emissions and reducing our need for
highly potent greenhouse gases like
SF
6
(sulfur hexafluoride), which are
found in things like our transformers.
Eradicating these is not something
we can achieve on our own, so we’ll
be looking to collaborate with the
industry to make these wider changes
possible more quickly. For more
detail, see our Climate Action Plan.
Climate Action Plan
bit.ly/4fyAbBZ
Simulation of our electric hydro-foiling ferry currently under construction.
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HALF BY 30 EMISSIONS PROGRESS (tCO
2
e)
KEY
Adverse movement to forecastPositive movement to forecast
Forecast trajectory (prior to FY24)Abatement required across all focus areas
Horizon 1Horizon 2Horizon 3
This chart shows performance to date and movement against Horizon 1 targets.
New spend-based emissions factors became available in FY24 (previously
published in 2023, and now updated annually). The adoption of these factors
resulted in a >5% change of our total emissions for the base year, driven by
impact to balance emissions. As a result we have restated Balance emissions
for each year using these factors (an increase in FY21 and FY22, and decrease
in FY23), and our Horizon 2 and 2030 target accordingly.
MERIDIAN GROUP GHG EMISSIONS
tCO
2
eFY21FY22FY23FY24
Scope 11,0206431,1911,060
Scope 2 (market based)14222
Scope 3 operational31,81233,92032,15636,848
Total Group operational emissions
*
32,84634,56533,3493 7,9 1 0
Scope 3 one-time construction and upgrades2848,24214,29575,291
Total Group value chain emissions
**
33,13042,80747, 6 4 4113,201
*Meridian’s operational emission boundary includes all scope 1, 2 and 3 categories, excluding all one-time
construction emissions from major projects and all activities that are capitalised as part of renewable energy
projects. Our FY21, FY22 and FY23 operational emissions were restated in FY24 due to change in source for
spend-based emission factors.
**
Group emissions are offset, using Gold Standard Voluntary Emissions Reductions (GS VERS) after taking into
account credits cancelled by suppliers against their own emissions.
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TOTAL OPERATIONAL GHG BY SCOPE (tCO
2
e
*
)
KEY
Scope 1
Scope 2 (market based)
Scope 3 operational
Meridian’s generation emissions intensity is zero (tCO
2
e/GWh of total
generation). As a generator of 100% renewable energy, the fuel source
for the electricity generated has no emissions.
*Meridian’s operational emission boundary includes all scope 1, 2 and 3 categories, excluding all one-
time construction emissions from major projects and all activities that are capitalised as part of renewable
energy projects. Our FY21 baseline, FY22 and FY23 emissions were restated in FY24 due to a change in
source for spend-based emission factors.
FOREVER FORESTS
ON TRACK
Since 2019 we’ve invested in
planting permanent forests in
Aotearoa through our Forever
Forests programme, to create
our own carbon sink for our
operational emissions out to 2030.
Forever Forests is deliberately sized
to soak up the carbon that’s left
after we’ve removed all we can
against our Half by 30 target.
We remain on track to deliver on
our target of growing the carbon
credits we need for offtake in 2030.
Currently our operational emissions
are offset via Gold Standard Verified
Emission Reduction units. In taking
responsibility for the carbon in our
operational footprint, of which more
than 95% is from our suppliers, we’re
helping them to take climate action
and we’re leaving a lasting legacy in
nature for future generations.
Climate Action Plan
bit.ly/4fyAbBZ
Forever Forest planting at West Wind Farm, Te Whanganui a Tara Wellington.
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GROW CAPABILITY AND CULTURE
The power
to make
a difference
We harness nature to
generate electricity through
Wind, Water and Sun.
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An overview of
our operations
GENERATIONOPERATION
30%
We generate around 30% of
New Zealand’s electricity through:
• 7 Hydro stations
• 6 Wind farms
• 1 Grid-scale solar array underway.
936
We have 936 employees –
124 at our power stations and
development sites – throughout
5 offices across New Zealand.
CUSTOMERSFLUX
16%
We have 370k customer
connections, around 16%
New Zealand’s households
and businesses (Meridian
Energy and Powershop).
126
A presence in 3 countries
(Australia, NZ and UK).
126 Employees.
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Our Board
GRAHAM COCKROFTNAGAJA SANATKUMARTANIA SIMPSONJULIA HOAREDAVID CARTERMICHELLE HENDERSONMARK VERBIEST
Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director Chair and
Independent Director
Our Directors’ biographies
bit.ly/3YxZQ7Y
v
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v
Our Executive Team
LISA HANNIFINGUY WAIPARACLAIRE SHAWMIKE ROANBHARAT RATANPAL
Chief Customer OfficerGeneral Manager DevelopmentGeneral Manager Corporate Affairs & SustainabilityChief Financial OfficerChief Information Officer
JASON WOOLLEYNEAL BARCLAYTANIA PALMERCHRIS EWERSJASON STEIN
General Counsel & Company SecretaryChief ExecutiveGeneral Manager GenerationGeneral Manager WholesaleChief People Officer
Our Executive Team's biographies
bit.ly/3WzB5ph
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HOW WE CREATE VALUE
Meridian generates electricity
through 100% renewable sources –
wind, water and sun. We believe it’s
the only way forward for people
and the planet.
The ways in which Meridian uses
the natural forces at its disposal and
takes care of its customers, people,
local communities, iwi and the
environment are helping to renew
our future, both as a business and
collectively. Our approach strengthens
Meridian’s ability as a significant
publicly listed company to deliver
attractive shareholder returns and to
deliver value to all our stakeholders
and the planet.
We’re a vertically integrated company
and our Group’s activities range from
the generation and development of
new assets to retail.
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OUR COMMITMENT TO
EFFECTIVE GOVERNANCE
Our Board closely monitors the way
we manage aspects of our business
that we consider long-term drivers
of value. These include retaining
access to water, building employee
engagement, investing in new
assets, enhancing environmental
performance, advancing climate-
related opportunities, satisfying
customers and building our
reputation and brand.
Strategy days and regular meetings
allow directors to question and
challenge the Executive Team on
the direction it wishes to take the
business. These occasions provide
opportunities to advance the Board’s
collective knowledge on sustainable
development, which is highly relevant
to Meridian’s operations and strategy
given our commitment to helping
shift Aotearoa to a net zero future.
Our commitment to sustainable
development is embedded at a
governance level through policies
such as our new Environment
Policy. Our approach to managing
our impacts on the economy, the
environment and people is evident
throughout this report.
Environment Policy
bit.ly/3YtqxKT
The Board sets Meridian’s overall
appetite for risk and approach to risk
management. Our FY24 Corporate
Governance Statement summarises
our key risks.
Corporate Governance Statement
bit.ly/3Wy4sse
Meridian complies with the NZX
Corporate Governance Code
recommendations in all material
respects (with the exception of
recommendation 3.6).
Corporate Governance Code,
NZX bit.ly/3WwBatS
Processes for managing conflicts
of interest are found in the Board
Charter and supported by the
Meridian Whistleblowing Policy.
The number of Code of Conduct
breaches is disclosed annually in our
Corporate Governance Statement.
Our key governance charters and
policies are on our website.
A wide range of internal stakeholders
are typically involved in the design
and iteration of Meridian policies
such as the Code of Conduct and
Whistleblowing. All Meridian policies
are subject to regular review and
iteration in the light of feedback from
stakeholders across the business.
Our Human Rights programme
will look to continuously improve
our grievance and remediation
processes, including how we engage
stakeholder feedback in their design,
operation and improvement.
Whistleblowing Policy
bit.ly/3LRXIjT
Code of Conduct
bit.ly/4dvYpuU
Governance Charters
bit.ly/3LU0WDA
Our Board structure
Meridian recruits Board members
with a range of skills and experience.
There are currently four female
members and three male members,
meaning we have a healthy gender
balance. While the company’s
constitution does not require it,
our Board has a view that the
relationship with Ngāi Tahu, which
has mana whenua (authority) over
the majority of the South Island
where most of our assets are located,
is so important that a position on the
Board for someone with connections
to Ngāi Tahu is always considered.
This role is currently undertaken by
Tania Te Rangingangana Simpson.
Biographies of our directors and
the Management team are available
on our website. All directors are
independent.
Meridian Directors’ biographies
bit.ly/3YxZQ7Y
Further information on the skills,
composition and tenure of Board
members can be found in the FY24
Corporate Governance Statement.
More information on the nomination
and selection process, including
the criteria used, for Board and
committee appointments is provided
in the Meridian constitution and
Board Charter.
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OUR MATERIAL IMPACTS
Meridian is committed to identifying
both positive and negative, actual
and potential impacts that we have
on the environment, society and the
economy, including human rights.
We take a double materiality
approach, which means we
consider our impacts on society,
the environment and stakeholders
as well as their potential impacts
on our bottom line.
Governance
Our Board approves our material
topics annually. This is done through
the Safety and Sustainability
Committee and at a subsequent
Board meeting. In addition, progress
updates on key initiatives related
to our management of material
impacts are provided in our quarterly
Safety and Sustainability Committee
meetings.
How we measure
material impacts
We measure our actual and potential
material impacts in line with the
updated Global Reporting Index
(GRI) Standards. We begin the
process by taking a high-level
view of our business activities and
business relationships (including
our joint ventures and suppliers).
We also consider the sustainability
context in which they occur and
the stakeholders affected (including
their human rights).
We then use a mix of internal and
external stakeholder engagements
to help us identify the impacts
that are important to Meridian
and our stakeholders. It is from this
stakeholder engagement, and a
review of internal processes such as
grievance mechanisms and internal
risk assessments, that we identify
our most significant potential and
actual impacts and our involvement
with those impacts (whether we
cause them, contribute to them or
are directly linked to them). Closely
related material impacts are grouped
into material topics.
Our material topics for FY24 are:
• Renewable energy generation
• Ngā Tukinga o Te Ao Tūroa –
impacts on the natural world
• Customer decarbonisation
• Climate-related impacts
• Affordability
• Cyber security
• People
• Business emissions and waste
• Supporting communities.
Forever Forest planting at West Wind Farm, Te Whanganui a Tara Wellington.
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Our scoring methodology to
assess the most significant
impacts for reporting
We prioritise impacts by determining
their significance. The significance of
each impact is scored by considering
its severity and likelihood. For
severity, we consider the scale
(how grave the impact is), scope
(how widespread it is) and each
impact’s irremediable character
(how hard it is to put the impact
right). Potential impacts are then
multiplied by the likelihood of their
impact occurring.
In addition to impact materiality, we
determine a significance score for
financial materiality. We do this by
surveying a mix of internal impact,
finance and risk experts to rate the
potential financial implications of
each impact over time.
In order to prioritise impacts for
reporting we apply a minimum
threshold to the significance scores.
Impacts that exceed the threshold
for either financial materiality or
impact materiality are reported in
the Integrated Report.
4 FY23 stakeholder engagement included: customers, customer insights researchers, tangata whenua,
community groups, regional economic development agencies, energy industry experts and researchers,
environmental regulators and equity analysts
Our FY24 material impacts
(review year)
To review our FY24 material
impacts, we:
• Conducted internal surveys
with subject matter, financial
and risk experts in order to
score significance (as per the
methodology described). We
also considered the stakeholder
feedback from the most recent
round of stakeholder engagement
(in this case FY23)
4
for ranking
the impacts.
• Conducted a workshop with all
impact owners to discuss any
changes to our business and
market context, and validate the
outcomes of the survey scores
(i.e. new rankings of impacts).
• Obtained the approval of the
Safety and Sustainability Committee
and Meridian Board for the topics
to be included in this report.
• The material topics that were
reported in FY23 but did not meet
the FY24 threshold for reporting
were: ‘Ethics, Governance and Trust’,
‘Supply Chain’ and ‘Sustainability
Thought Leadership’.
MATERIALITY MATRIX
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POLICIES, COMMITMENTS AND TARGETS’ PROGRESS TABLE
The table below outlines our material impacts for the year ending 30 June 2024 in a prioritised form. Material topics (used to group related impacts) are also identified in the table.
100% RENEWABLE GENERATION MATERIAL TOPIC: RENEWABLE ENERGY GENERATION
Impact Description Relevant Policies and Commitments SDG
Meridian directly minimises New Zealand’s greenhouse gas emissions by generating 100% renewable
energy, which represents approximately 30% of New Zealand’s total electricity consumption.
Committed to only generating electricity from 100% renewable sources
• Committed to improving and sustaining the health of our renewable
generation assets
• Committed to delivering operational flexibility while sustaining asset productivity.
Key Actions in FY24Targets and Progress
We’ve undertaken a range of initiatives to maximise the availability of our assets. These have included:
• Returning to service approximately 20MW of failed turbines at our White Hill Wind Farm
• Returning to service 15MW from Unit 2 at our Waitaki Hydro Station after a generator failure
• Returning to service 43MW at Manapōuri Power Station by mitigating the impacts of a de-rating applied
to Unit 4
• Returning 6MW of capacity for Unit 6 at Ōhau A, which had been de-rated following bypass value issues
• Flexible and off-peak outage scheduling
• Approximately 58 fewer annual routine outage days through maintenance innovation, review
and rationalisation
Also see:
• Getting more from our assets (page 46).
To maintain generation market share of at least 30% (30% achieved in FY24).
To achieve the following levels of plant availability:
• Hydro 94% (89% achieved in FY24)
• Wind 92% (90% achieved in FY24).
To increase peak supply from existing assets:
• Deliver 500MW of capacity from our current generation portfolio by end
of FY28 from a FY23 baseline.
Also refer to the GRI index (page 174).
INCREASING RENEWABLE GENERATION MATERIAL TOPIC: RENEWABLE ENERGY GENERATION
Impact Description Relevant Policies and Commitments SDG
Meridian is directly helping New Zealand to make further emission reductions by building new energy
generation and storage assets.
• Committed to having seven generation projects underway by 2030
(one per year from 2023).
Key Actions in FY24Targets and Progress
Construction and commissioning of Harapaki Wind Farm on track for full commissioning in July 2024.
Construction of Ruakākā battery on track for completion in early 2025.
Consent application lodged for Ruakākā solar farm.
Progression of consenting processes for Mt Munro Wind Farm.
Signed 50-50 joint venture with New Zealand Wind Farms to redevelop Te Rere Hau Wind Farm
(already partially consented).
Inclusion of two large-scale projects on the Government’s fast-track list (pending passing of
fast-track legislation).
Achieved increases in the installed capacity of our hydro power plants
• Additional 21MW from Manapōuri
• Additional 30MW from Benmore.
As included in our Strategy Map (page 17).
Grow Renewable Generation:
• 2,000GWh p.a. of new renewable generation and 200MW of BESS capacity delivered
by FY31 (176MW Harapaki Wind Farm and 100MW Ruakākā battery on track for completion
in early 2025)
• Deliver 500MW of capacity from our current generation portfolio by end of FY28 from a
FY23 baseline (up to 20MW achieved in FY24).
Also refer to the GRI index (page 174) and see our FY24 Climate Related Disclosure for our
targets and progress against these in FY24.
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Key Actions in FY24 continuedTargets and Progress
Also see:
• Delivering on 7 in 7 (page 23)
• Continued net zero commitment supports our strategy (page 26)
• Time to change the pace of decision making (page 26)
• Increasing our national capacity (page 24).
IMPACT ON CULTURAL WELLBEING MATERIAL TOPIC: NGĀ TUKINGA O TE AO TŪROA – IMPACTS ON THE NATURAL WORLD
Impact Description Relevant Policies and Commitments SDG
Meridian is directly helping New Zealand to make further emission reductions by building new energy
generation and storage assets.
Meridian directly affects the cultural wellbeing of some iwi and their relationships with the land, water,
biodiversity and other taonga through the construction and operation of generation assets.
• Committed to meaningfully engagement with mana whenua in
asset catchments to address cultural and environmental impacts
• Meridian’s Biodiversity Commitment: to minimise our impact on
biodiversity by applying avoidance, remediation, mitigation, restoration
and compensation approaches in line with all environmental legislation
and resource consent conditions
• Inclusion of a commitment to Te Tiriti o Waitangi in the FY24 update of
the Employee Code of Conduct.
Key Actions in FY24Targets and Progress
Began implementation of the 35-year agreement (Kawenata) signed in FY23 with Waitaki Rūnaka.
Also see:
• Securing long-term access to water (page 27).
Engaged with local hapū at Ruakākā and Harapaki, including as cultural monitors for development projects.
Evolved the criteria of our Power Up Harapaki community fund to provide more active representation
of iwi on the panels that allocate the funding, and greater access for iwi who are affiliated with the area but
may not reside there.
Updated our Employee Code of Conduct to include a commitment to Te Tiriti o Waitangi, which
we believe will help support social wellbeing and economic development among our iwi partners.
Continuation of our mitigation elver trap and transfer programme.
Continuation of our mitigation and remediation partnership commitment to the Te Waiau Mahika Kai Trust.
Also see:
• Enriching our world view (page 60).
As included in our Strategy Map (page 17).
Grow capability and culture:
• By FY29 to have achieved tangible outcomes of the Kawenata, with key actions
of value identified, shared and carried over to other iwi relationships.
For progress, refer to the GRI index (page 174).
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IMPACTS ON RIVER SYSTEMS MATERIAL TOPIC: NGĀ TUKINGA O TE AO TŪROA – IMPACTS ON THE NATURAL WORLD
Impact Description Relevant Policies and Commitments SDG
Meridian directly impacts the health of certain river systems (including impacts on biodiversity) as a result of
modified water flows caused by hydro structures and water management.
Meridian’s operations do not introduce any contaminants (chemicals or heat) to the water systems. As hydro
generation impacts the water flow and water levels of waterways, there is an indirect impact on the ability of
the water body to dilute the contaminants from other sources (for example, land-use runoff and dairy effluent).
• Committed to minimising our impact on biodiversity by applying avoidance,
remediation, mitigation, offsetting, restoration and compensation approaches,
in line with all environmental legislation and resource consent conditions, as
per Meridian’s Biodiversity Commitment
• Committed to complying with all applicable local and international
environmental laws and regulations, as per Meridian’s Environment Policy.
Key Actions in FY24Targets and Progress
Maintained full compliance with consented and regulatory requirements regarding water use.
Continuation of our mitigation elver trap and transfer programme.
Continuation of our mitigation and remediation partnership commitment to the Te Waiau Mahika Kai Trust.
Submitted an application to Environment Canterbury to reconsent the Waitaki power scheme for
an additional 35 years with no increase in our current water flows.
Seeking resource consent for a deeper channel behind Manapōuri Lake Control Structure to improve
flushing flow delivery to the lower Waiau River.
Also see:
• Enriching our world view (page 60)
• Securing long-term access to water (page 27).
100% compliance with consented and regulatory requirements regarding water use
(achieved in FY24).
By FY29 tangible outcomes of kawenata with Ngāi Tahu are in play. Key actions of value
are identified, shared and carried over to other iwi relationships (on track).
Also refer to the GRI index (page 174).
REDUCING CUSTOMER EMISSIONS MATERIAL TOPIC: CUSTOMER DECARBONISATION
Impact Description Relevant Policies and Commitments SDG
Meridian is directly helping customers to reduce their emissions by creating new products and/or
supporting the introduction of technology to replace fossil fuels or improve energy efficiency.
• Committed to a focus on transport, distributed generation and storage,
demand flexibility, process heat and Certified Renewable Energy to enable
customer decarbonisation (as per our Climate Action Plan).
Key Actions in FY24Targets and Progress
Key initiatives included:
• Continued process heat electrification programme
• Expanded Zero public EV charging network
• Development of home and business EV charging solution
• Increased sales of Renewable Energy Certificates and used our Community Decarbonisation Fund to
distribute the net proceeds to support customer and community group decarbonisation projects.
Also see:
• Electrifying transport and heat (page 36)
• Our Decarbonisation Fund Grows (page 38)
• T01 in our FY24 Climate Related Disclosure.
As included in our Strategy Map (page 17).
Grow renewable generation:
• 1,000GWh of process heat under contract by 2030 .
Deliver cleaner cheaper energy:
• Install additional 75 fast chargers by the end of FY25
• Increase Community Decarbonisation distributions to $1.5m in FY25.
For progress, see our FY24 Climate Related Disclosure (T01).
Also see our FY24 Climate Action Plan.
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GREATER SECURITY OF SUPPLY MATERIAL TOPIC: CLIMATE-RELATED IMPACTS
Impact Description Relevant Policies & Commitments SDG
Meridian has a direct ability to enhance New Zealand’s security of supply through how we manage
operational risks related to climate change (e.g. physical damage to generation infrastructure).
• Committed to annually assessing, managing and disclosing our climate-
related risks in compliance with the Aotearoa New Zealand Climate Standards.
Key Actions in FY24Targets and Progress
Published a comprehensive disclosure on risks related to climate-related impacts and associated
management actions (see our FY24 Climate Related Disclosure).
Note PR1 (flood events), PR3 (severe weather events) and PR4 (supply chain disruptions).
See our FY24 Climate Related Disclosure (PR1, PR3 and PR4) for our targets
and progress against them in FY24.
MORE AFFORDABLE ENERGY MATERIAL TOPIC: AFFORDABILITY
Impact Description Relevant Policies & Commitments SDG
Meridian can directly reduce the overall cost of energy through new products and innovations.
• Committed to creating a more flexible energy system that enables a
smarter use of electricity in a way that delivers value for customers.
Key Actions in FY24Targets and Progress
Started building a new flexible technology architecture and operating model to meet
customers evolving energy needs.
Trialled a Virtual Power Plant demand-flexibility product in households using EVs.
Also see:
• Electrifying transport and heat (page 36)
• FY24 Climate Action Plan.
As included in our Strategy Map (page 17).
Grow renewable generation:
• 20,000 residential customers using on-demand flex products by end of FY26.
Also:
• Virtual power plant live by FY25 (completed trial in FY24).
In addition, refer to the GRI index (page 174) and our FY24 Climate Action Plan.
REDUCED CYBER SECURITY IMPACTS MATERIAL TOPIC: CYBER SECURITY
Impact Description Relevant Policies & Commitments SDG
Meridian can directly lessen the impacts of cyber attacks on its operations, customers,
suppliers and business partners through its cyber security approach.
• Commitment to aligning with Australian energy sector and New Zealand
National Cyber Security Centre cyber security frameworks
• Committed to adhering to industry regulations and standards, and
proactively managing cyber risks.
Relevant policies:
• Cyber Security Policy for Third Parties
• Information Classification & Protection Policy.
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Key Actions in FY24Targets and Progress
As per our Cyber Security Strategy 2024–2025, our key actions in FY24 were:
• Strengthening security governance by creating a dedicated Cyber Security Board Committee
• Enhancing our third-party and supply-chain cyber security risk programme to ensure suppliers adhere
to our policies and that Meridian continually monitors and manages supply chain security risks
• Advancing our security culture and awareness through industry best practices and a security
awareness maturity model that ensures Meridian continually improves its security posture and
human-cyber risk management
• Conducted a cyber security crisis simulation exercise.
Also see:
• We have systems to protect customer and company data (page 48).
Number of serious cyber security incidents (KPI 0 cases, progress 0 cases).
Number of notifiable privacy breaches (KPI 0 cases, progress 0 cases).
Refer also to the GRI index (page 174).
SUPPORTING CUSTOMERS IN HARDSHIP MATERIAL TOPIC: AFFORDABILITY
Impact Description Relevant Policies and Commitments SDG
Meridian is directly improving the wellbeing of customers experiencing energy hardship.
• Commitment to supporting 5,000 customers in hardship through our
Energy Wellbeing Programme
• Committed to continued connection for customers in debt who are actively
engaging with us in line with our Consumer Care Policy
• Committed to full alignment with Electricity Authority Consumer
Care Guidelines.
Key Actions in FY24Targets and Progress
Maintained full compliance with the Consumer Care Guidelines.
Formed a partnership with the Community Energy Network, expanding our Energy Wellbeing
Programme’s coverage to 75% of the nation.
Enabled customers to take control of their energy through flexible payment products such
as LevelPay and the use of information available on customer apps.
Also see:
• Setting our compass on customers and increasing social good (page 39).
As included in our Strategy Map (page 17).
Deliver cleaner cheaper energy:
• Support 5,000 customers in hardship by June 2028 (1,467 at 30 June 2024).
Also:
• Full compliance with the Consumer Care Guidelines (100% compliance in FY24)
In addition, refer to the GRI index (page 174).
ENHANCED EMPLOYEE WELLBEING MATERIAL TOPIC: PEOPLE
Impact Description Relevant Policies and Commitments SDG
Meridian may directly enhance the physical and mental wellbeing of staff and contractors
through its health, safety, employment and wellbeing practices.
• Committed to world-class performance in safety, health and wellbeing
• Committed to alignment with ISO 45003 (risk management for
psycho-social risk)
• Committed to alignment with ISO 45001 (occupational health and safety
management system).
Relevant policies:
• Safety and Wellbeing Policy
• People Policy.
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Key Actions in FY24Targets and Progress
Key initiatives in FY24 included:
Safety:
• Embedded a comprehensive health and safety management system
• Introduced new forums to enable greater levels of worker participation
• Embedded Learning Teams as the preferred method for investigating incidents and near misses.
Wellbeing:
• New Wellbeing Strategy approved by the Board
• Refreshed employee benefits to include free health insurance, unlimited ‘Wellbeing Leave’
and continued counselling services.
As included in our Strategy Map (page 17).
Grow capability and culture:
• By end FY25 grow the maturity of the Safety Culture through improvements in lead
indicators while managing lag indicators (new target for FY25)
• Deliver new Wellbeing Strategy in FY25 (new).
Also:
• Positive improvement in Engagement Surveys results by June 2025 from a FY24
baseline (new)
• Reduction in high risk potential of our safety events related to our Critical Risks due
to effective controls by June 2025 from a FY24 baseline (new).
IMPACTS OF EMISSIONS AND WASTE MATERIAL TOPIC: BUSINESS EMISSIONS AND WASTE
Impact Description Relevant Policies and Commitments SDG
Meridian directly causes environmental harm from greenhouse gas emissions and waste to landfill
as a result of its construction, generation and corporate activities.
• Half by 30 commitment, including waste reduction targets (see Climate Action Plan)
• Long-term emission reduction targets (submitted to Science Based Targets
initiative for Net Zero verification)
• Committed to offsetting 100% of business emissions (see FY24 Greenhouse
Gas Inventory)
• Committed to having emission and waste reduction KPIs included in the
Sustainability Management Plans of all development and construction projects.
Relevant policy:
• Environment Policy.
Key Actions in FY24Targets and Progress
Implemented a range of emission-reduction initiatives in a range of focus areas, including:
• Setting and monitoring travel emission budgets for all business units
• Signing a deal with Swedish company Candela to bring the world’s first electric hydrofoiling ferry
to Lake Manapōuri (for staff transport)
• Undertaking work to reduce our need for highly potent greenhouse gases like SF6 (found in transformers)
• Appointing a Farming Engagement and Climate Action lead to work on farm emission reductions.
Repurposed, re-used and recycled materials from a failed transformer at West Wind Farm, including
36,000 litres of oil being regenerated.
Set sustainability KPIs relating to carbon impact reports, waste diversion, transport emissions targets and
the delivery of continuous improvement initiatives.
See our FY24 Climate Action Plan for more initiatives.
As included in our Strategy Map (page 17).
Grow capability and culture:
• Half FY21 emissions by 30 (Half by 30). See FY24 Climate Action Plan for detailed
progress against targets by focus area.
Delivery against waste KPIs in project-specific Sustainability Management Plans:
• Harapaki – 75% waste diversion (currently 89%)
• Ruakākā Battery – 80% waste diversion (currently 99%).
Delivery against project-specific emission KPIs. See our FY24 Climate Related Disclosure
(reduction of emissions for one-off renewable energy projects) for our targets and progress
on each construction project.
SUPPORTING COMMUNITIES MATERIAL TOPIC: SUPPORTING COMMUNITIES
Impact Description Corresponding Material TopicRelevant Policies and Commitments
We directly enhance the wellbeing of communities in which we operate
through employment opportunities and by supporting initiatives and
groups that foster community wellbeing.
Supporting communities • Committed to having Sustainability Management Plans for all development
and construction projects, including KPIs for local employment and local spend
• Committed to maintaining our Power Up fund, which supports local not-for-
profit projects in the areas near our generation assets.
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Key Actions in FY24Targets and Progress
Distributed $557,999 and supported 85 projects through our Power Up funds in FY24.
Delivered the Sustainability Management Plans for the Harapaki Wind Farm and Ruakākā battery,
and developed plans for Te Rere Hau and Ruakākā Energy Park.
Supported active recreation events around our assets, including Meridian Swim Ruataniwha in Twizel,
Meridian Twizel Hard Labour Weekend and Meridian Hydro Half Marathon in Fiordland.
Full allocation of Power Up funds (all funds fully allocated in FY24).
Delivery against KPIs in Sustainability Management Plans:
Harapaki:
• Local Employment KPI 40% (achieved 47%)
• Local Spend KPI >$40m (exceeded $110m).
Ruakākā Battery:
• Local Employment KPI 50% (currently 95%)
• Local Spend KPI 15% (currently 8.86%).
Also see:
• Harapaki is already proving a success (page 50).
EQUAL EMPLOYMENT OPPORTUNITIES MATERIAL TOPIC: PEOPLE
Impact Description Relevant Policies and Commitments SDG
Meridian can directly enhance the opportunities available within the company to individuals
from under-represented communities (e.g. based on gender, ethnicity or sexual orientation).
As outlined in Meridian’s Belonging Strategy, we are committed to:
• Accessibility – to welcome people with disabilities and neurodiversity
• Gender – to achieve gender balance with a focus on leadership and
senior roles
• Rainbow – to encourage LGBTQIA+ diversity
• Ethnicity – to encourage ethnic diversity
• Inclusion – in our culture, people, systems, processes and procedures.
Relevant policies:
• Belonging Policy
• People Policy
• Remuneration Policy
• Gender Identity Expression and Sexual Diversity Guidelines
• Non-Discrimination and Anti-Harassment Policy.
Key Actions in FY24Targets and Progress
We formalised an approach to wellbeing that focuses on thriving employees, families and communities.
See A culture of care (page 56).
In FY24 we also:
• Continued to promote development options to support lifting our female leaders in the business
• Gained Gender Tick accreditation, receiving ‘advanced’ accreditation
• Refreshed our benefits package to include:
• Free period products for all sites and offices
• Flexible working arrangements
• New wellbeing leave (including for menopause and gender transitioning)
• Enhanced parental leave policy.
As included in our Strategy Map (page 17).
Grow capability and culture:
• 30% women in senior roles by FY26, from a 21.4% baseline.
Also:
• Maintain new placements/recruits at Meridian at 40% female, 40% male
and 20% any gender (FY24 performance: 49% female, 51% male)
• Increase proportion of women in leadership roles to 40% (40% in FY24)
• To be representative of the ethnic make-up of Aotearoa, benchmarked against 2018
census data (2018). See the diversity and inclusion page of our website for progress.
Also refer to the GRI index (page 174).
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Remuneration
Report
Attracting, retaining and
motivating talented people, and
rewarding them for delivering
desired business performance
and long-term shareholder value,
is key to Meridian’s success.
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REPORT FROM THE
CHAIR OF THE PEOPLE,
REMUNERATION AND
CULTURE COMMITTEE
Dear Shareholders
As Chair of Meridian’s People,
Remuneration and Culture
Committee, I am pleased to
present our Remuneration Report
for the year ended 30 June 2024.
Remuneration Report content
In December 2023 the NZX
released a suggested template for
the remuneration sections of listed
companies’ Annual Reports, to which
Meridian had provided some input.
Our previous Remuneration Reports
had already contained most of the
content suggested in the 2023
NZX template. However, for 2024
we have followed the content and
layout recommended in the NZX
template, and continued to provide
additional disclosures to meet other
external requirements, e.g. those
of the New Zealand Shareholders
Association, the Global Reporting
Initiative and the Dow Jones
Sustainability Index. We believe
this year’s Remuneration Report
represents a further positive step in
transparent and consistent reporting.
This report outlines Meridian’s strategy
and approach to remuneration for
Meridian employees generally, and in
particular for its Chief Executive
and Executive Team, and Directors.
I would like to highlight a few areas
of particular focus this year.
Remuneration Policy
Meridian’s Remuneration Policy has
continued to stand us in good stead
in terms of its overarching principles.
These principles have continued to
guide all elements of our Employee
Value proposition, including
remuneration and how it is applied.
Attracting, retaining and motivating
talented people, and rewarding
them for delivering desired
business performance and long-
term shareholder value, are key to
Meridian’s success.
However, during 2024, and following
external advice, the Board approved
an addition to the Remuneration
Policy so that it now covers more
explicitly how Chief Executive and
Executive Team remuneration
is determined and reviewed. As
Meridian is a major listed company
in New Zealand, the Board has
determined that it is appropriate for
Chief Executive and Executive Team
remuneration to be set in reference
to relevant market information on
fixed and total remuneration for
comparable roles within NZX-listed
companies of comparable scale
and complexity to Meridian, and
including similar organisations in the
same sector. We have agreed that
the fixed remuneration for the Chief
Executive and Executive Team roles
will normally be within an 80%–120%
range of the median for comparable
New Zealand roles, dependent
also on individual capability and
experience and other relevant factors.
For Chief Executive and Executive
Team roles, Meridian targets the
upper quartile of the market for
total remuneration, in the context
of strong organisational and
individual performance.
Our remuneration philosophy
is guided by the principles that
remuneration will:
• be clearly aligned with our
company values, culture
and strategy;
• support us to attract, retain
and engage employees;
• be fair, equitable and flexible;
• appropriately reflect
market conditions and the
organisational context;
• recognise and reward high
performance;
• align with creating
shareholder value.
Chief Executive remuneration
increase for FY24
In early FY24 the Board agreed on a
salary increase to be applied to the
Chief Executive from July 2023, based
on the relevant and conservative
market data that was available at the
time. However, further into the FY24
year we requested an independent
external review of Meridian Chief
Executive remuneration against our
Remuneration Policy for the Chief
Executive role, and against the latest
publicly available remuneration
disclosures for comparable Chief
Executive roles. The result showed
clearly that the Meridian Chief
Executive remuneration had fallen
well behind the level of remuneration
payable for Chief Executive roles in
relevant major listed companies. In
light of this, and in recognition of the
Chief Executive’s strong performance
in leading Meridian, the Board
approved a revised remuneration
increase for the Chief Executive,
which was backdated to July 2023.
This is outlined in the Chief Executive
remuneration table on page 90.
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Chief Executive
remuneration elements
With external remuneration input,
the Board has been considering
the growing international trend in
Chief Executive remuneration of
introducing a deferred element
into the Chief Executive short-term
incentive (STI) plan including ESG
measures in the long-term incentive,
and introducing a mandatory
shareholding requirement. However,
advice received to date is that such
practices are not yet prevalent
or appropriate within the New
Zealand market context for Chief
Executive packages, so the Board has
decided not to make such changes
to the Meridian Chief Executive
remuneration package at this stage.
The Board will, however, continue
to review market Chief Executive
remuneration practices in the New
Zealand context, and may change
the structure of Chief Executive
remuneration in the future.
Flexing our
remuneration practices
Meridian’s workforce is made up of a
diverse range of role types – people
leadership, engineering and technical
trades, financial trading, contact
centre support, sales, IT and various
other professions – all of which
currently share a largely common
remuneration framework.
During 2024, Meridian took
the brave step of making our
remuneration ranges transparent to
our people, so that they now know
their role levels, the remuneration
ranges applicable to them and the
remuneration ranges available for
other roles. This was only achievable
after considerable planning and
preparation and included investing
in upskilling our leaders to be
confident in understanding Meridian’s
remuneration, framework, and
managing it well. This transparency
further demonstrated our
commitment to being as open as
possible with our people about
their employment.
Management also revisited the
appropriateness of our current
practice of offering STIs to
employees at all levels of the
organisation rather than just
senior employees in an economic
environment where cost-of-living
pressures remain challenging for
people. We have retained this
element of our remuneration, as
incentives are still seen as a useful
lever for employee attraction,
performance and engagement.
In the year ahead and beyond,
Meridian will consider the extent to
which we need to build further flex
into our remuneration framework
to meet the emerging new ways
of working, new types of roles,
new work challenges, changing
market and talent environments
and diverging business needs.
Tania Simpson
Chair People, Remuneration
and Culture Committee
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REMUNERATION GOVERNANCE
The Meridian People, Remuneration and Culture Committee comprised the
following members, for the following durations, during FY24. All Committee
members are independent directors. Management only attends Committee
meetings by invitation.
Name of directors
Period of People, Remuneration
and Culture Committee membership
FromTo
Tania Simpson (Chair)5 October 2021
(Chair, effective
17 October 2022)
30 June 2024
Mark Verbiest28 April 201630 June 2024
Graham Cockroft26 July 202230 June 2024
Nagaja Sanatkumar1 January 202030 June 2024
The Committee operates under
a written Charter, and has
responsibilities and processes
as outlined in the charter.
People, Remuneration and
Culture Committee Charter
bit.ly/4cfu8Qb
The internal governance policy
that provides context for the
remuneration outcomes is the
Remuneration Policy.
Remuneration Policy
bit.ly/3yqFjaK
Meridian’s Corporate Governance
Statement outlines how Meridian
meets the requirements of the
NZX Corporate Governance Code,
and in particular its Principle 3.3
(Remuneration Committee) and
Principles 5.1–5.3. (Director, Chief
Executive and Executive Team
Remuneration).
Corporate Governance Statement
bit.ly/3Wy4sse
Meridian’s Trading in Securities
Policy ensures that Meridian and
its subsidiaries’ directors, senior
managers, employees, contractors
and secondees comply with the law
prohibiting insider trading and that
all dealings in Meridian Securities
and Other Financial Products by
such persons are beyond reproach.
Trading in Securities Policy
bit.ly/4d8CvhH
Meridian does not require a
mandatory minimum shareholding
for directors, the Chief Executive
or Executives. However, all are
encouraged to purchase and hold
Meridian shares. The Chief Executive
and Executives have all been issued
performance share rights under
the Meridian Long Term Incentive
scheme which will convert to shares
upon vesting in accordance with that
scheme. The Meridian shareholdings
of the Meridian Chief Executive and
Executives is provided on page 94.
REMUNERATION POLICY
Meridian’s Remuneration Policy
covers remuneration for Directors, its
Chief Executive and the nine other
members of the Meridian Executive
Team, and all Meridian employees.
The People, Remuneration and Culture
Committee regularly reviews Meridian’s
Remuneration Policy and practice
and provides recommendations to
the Board. The Board approves the
Remuneration Policy two-yearly,
and the Executive Team balanced
scorecard objectives, company
financial performance targets and
outcomes on an annual basis.
In 2024 an additional section was
added to the Remuneration Policy
to make it more explicit about the
parameters for the determination
of Chief Executive and Executive
remuneration.
Remuneration Policy
bit.ly/3yqFjaK
External and independent advice
The People, Remuneration and Culture
Committee refers to external and
independent remuneration market
information provided by EY and PWC
in order to gauge actual and forecast
movements within the market, and to
assess the levels of fixed and target
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total remuneration to pay its Chief
Executive and Executive Team.
Meridian also seeks market
remuneration information from
independent external sources to
guide processes for determining
the remuneration of all other
Meridian employees.
Fixed remuneration
Fixed remuneration includes base
salary and matched KiwiSaver
contributions of up to 4%. It’s
benchmarked to independent
market remuneration data obtained
from multiple external sources.
As a minimum, Meridian pays the
Living Wage for all permanent
and fixed-term employees.
The People, Remuneration and
Culture Committee reviews and
approves proposed remuneration
packages for the Executive Team.
Remuneration for the remainder
of the employees is determined
and reviewed by managers in
accordance with the Remuneration
Policy and framework, and is
subject to one-up approval.
Salaries are reviewed annually,
with the budget and parameters
for the company’s annual
remuneration review approved by
the Board. Market Information from
independent remuneration providers
inform these remuneration decisions.
Individual performance
assessment
All employees, including the Chief
Executive and Executive Team, have
performance objectives aligned to
the organisation’s business plan and
priorities, and individual performance
is formally assessed at least annually.
Chief Executive performance is
assessed and approved by the Board,
Executive performance is assessed by
the Chief Executive and approved by
the People, Remuneration and Culture
Committee. For all other employees,
performance is assessed by the one-
up manager, and approved by the
next level of management.
Variable pay
Meridian has an STI scheme and LTI
plan, which are variable, performance-
based incentives awarded only if
specific financial and non-financial
performance hurdles are met, and
at the discretion of the Board.
Short-term incentive (STI)
The Chief Executive, Executive
Team, and all permanent employees
may participate in variable pay via
an STI scheme at the discretion
and invitation of the Board. The STI
opportunity within Total Remuneration
reflects the complexity and level of the
roles. In FY24 the Chief Executive had
an STI opportunity of 50% of salary,
and the other Executives STI
opportunity was 30%. The employee
STI opportunity is 10–25% of salary
depending on role level.
The STI is an at-risk incentive, which
may be offered for a specific year by
invitation from the Board. Potential
STI payments are wholly discretionary
and reflect the achievement of
pre-determined Board-approved
company profit levels, individual
achievements of performance
objectives aligned to business strategy
and goals, and employee behaviour
compliant with the Meridian Code of
Conduct. If criteria are met, payment
is made in cash after the end of the
qualifying company year. Payment
is not made in shares, and is not
deferred for a subsequent period.
Long-term incentive (LTI)
The Chief Executive, Executive Team
and selected Tier 3 leaders also have
the opportunity to participate in an
LTI plan. An LTI plan is offered at the
discretion of the Board to align senior
management and shareholders’
interests and optimise long-term
shareholder returns. An LTI plan is
not otherwise available to Meridian
employees.
Meridian has a policy that ensures
participants in the LTI plan are not
able to enter transactions (whether
through the use of derivatives or
otherwise) that limit the economic
risk of their participating in the Plan.
The LTI opportunity is 40% of
salary for the Chief Executive,
30% of salary for the Executive Team
and 15% of salary for eligible Tier
3 leaders. Vesting of the LTI plan is
contingent on their meeting absolute
and relative Total Shareholder Return
(TSR) performance hurdles at the
conclusion of a three-year period.
Under Meridian’s LTI plan, the
company issues rights to acquire
ordinary shares in the company
(Performance Share Rights) to eligible
participants who accept the offer
to participate in the LTI plan. Each
Performance Share Right entitles the
holder to one ordinary share in the
company and an additional number
of shares equal to the value of gross
cash dividends per share that would
have been paid to a New Zealand
tax resident who held a share for
the duration of the vesting period,
calculated using a 10-day volume-
weighted average price.
The number of Performance Share
Rights that vest is dependent on the
following Vesting Conditions:
• Meridian’s total shareholder return
over a three-year performance
period (Performance Period)
relative to Meridian’s cost of equity
and the total shareholder return
over the Performance Period of
a defined group of NZX Main
Board and ASX listed companies
(Performance Hurdles).
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• Whether the participant continues
to be employed by Meridian
during the vesting period
(Employment Condition).
LTI Performance Hurdles
As at 30 June 2024, there were
three LTI plan cycles underway.
These plans have performance
period which end as follow:
• The FY22 Plan: 30 June 2024
• The FY23 Plan: 30 June 2025
• The FY24 Plan: 30 June 2026.
The three plans have slightly
different performance hurdles,
as the market has evolved over
this period.
The peer group against which relative
TSR performance was measured for
the FY22 Plan comprised AGL Energy,
Origin Energy, Contact Energy,
Mercury NZ, Manawa Energy and
Genesis Energy. The vesting period
for the FY22 LTI scheme ends on
31 October 2024.
The following applies to the FY22
Plan, the performance period for
which ends on 30 June 2024:
• Absolute Return Performance
Share Rights
• Relative Return Performance
Share Rights.
Performance Share Rights lapse if
the holder ceases to be employed by
Meridian during the vesting period,
subject to the Board’s discretion.
For Absolute Return Performance
Share Rights to vest, the company’s
TSR must be greater than the
absolute TSR benchmark that
was set at the beginning of the
vesting period with regard to the
company’s cost of equity (Absolute
TSR Benchmark) on a compounding
annual basis over the Performance
Period. If the company’s TSR is
equal to or lower than the Absolute
TSR Benchmark, no Absolute
Performance Share Rights will vest.
If the company’s TSR is greater than
the Absolute TSR Benchmark, 100%
of the Absolute Return Share Rights
will vest.
The number of Relative Return
Performance Share Rights that vest
is determined by the company’s
TSR over the Performance Period
relative to the peer group. For any
of the Relative Return Performance
Share Rights to vest, the company’s
TSR must be greater than or equal
to the 50th percentile/median TSR
of the peer group. 100% of the
Performance Share Rights will vest
on meeting the 75th percentile TSR
of the peer group, with vesting on
a straight-line basis between these
two points.
For each three-year plan, an
independent external expert
measures the TSR of Meridian and
the peer group of companies along
with the outcome on the progressive
vesting scale. Performance Share
Rights will lapse if the Vesting
Conditions are not satisfied
(although this is subject to the
Board’s discretion in relation to
the Employment Condition).
Employee benefits
Meridian offers a wide range of
other benefits and provisions for
all permanent Meridian employees,
including for the Chief Executive
and Executive Team. Benefits
include an employee share scheme,
company-funded employee life,
income protection, trauma and
healthcare insurances, enhanced
parental leave provisions, wellbeing
leave, three days company leave,
the ability to purchase additional
leave, access to purchasing discounts
and various part-time, remote and
hybrid working arrangements where
possible. These benefits are an
important aspect of our Employee
Value Proposition, enabling us
to attract and retain our highly
engaged workforce in a highly
competitive market.
Other disclosures
Neal Barclay has been employed on
an ongoing basis by Meridian Energy
since July 2008, and was appointed
by the Board to the position of Chief
Executive from November 2017.
Pursuant to the employment
agreement, the Chief Executive
and Meridian have mutual rights of
termination on the provision of six
months’ written notice. Meridian
may also terminate the Chief
Executive’s employment on the
grounds of redundancy or serious
misconduct or where an act of
bankruptcy is committed.
With the support of the Board,
Meridian’s practice is that for Chief
Executive and Executive Team roles:
• no ‘clawbacks’ are required except
if salary overpayment occurs
• no retirement benefits are payable
• no sign-on bonuses are offered
• termination payments –
redundancy compensation is
payable to permanent employees
whose employment is terminated
as a result of redundancy.
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KEY PERFORMANCE
SUMMARY
As outlined in other sections of
this Integrated Report, FY24 was a
pleasing year for Meridian, with major
achievements in asset development
and a strong financial performance.
The above performance led to,
and was reflected in the following
remuneration outcomes for the
Chief Executive and Executive Team.
Short-term incentive
Financial performance
For FY24, Meridian’s financial
performance impacted 60% of
the FY24 STI for the Chief Executive
and Executive Team. The measure,
EBITDAF less capital charge,
exceeded target for FY24.
As a result, the Board approved
an FY24 outcome of 140.7% for
this component of the STI.
Scorecard performance
For FY24, a Board-approved
scorecard impacted 40% of the
STI for the Chief Executive and
Executive Team. The scorecard
included a mix of measures, outlined
below. It illustrates that a large
proportion of the remuneration of
the Chief Executive and Executive
Team is directly impacted by their
management of the organisation,
and its impact on the economy,
environment and people.
Based on outcomes and
achievements of the scorecard
measures, for FY24 the Board
approved a scorecard outcome of
85%. A summary of the scorecard
targets follows. A breakdown of the
scoring on each measure is included
under Chief Executive Remuneration
STI Outcomes, page 92.
FY24 was a pleasing year for
Meridian, with major achievements
in asset development, and a strong
financial performance.
Our Twizel office.
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FY24 Executive Scorecard Measures
MeasureFY24 Target
Weighting
(of 40% of STI)
NZAS closure
mitigation
Have confidence in 1,000GWh of new
consumption while finding ways to conclude
NZAS and support meaningful progress of a scale
hydrogen facility in Southland.
20%
(8% of STI)
Decarbonisation-
led growth
Complete Harapaki project and deliver the FY24
stage of the Ruakākā battery project within the
revised cost, time and quality envelope (while
completing the project safely). Lodge two more
consents and have a clear line of consent paths for
other development sites.
20%
(8% of STI)
CustomerMeet Retail EBITDAF, customer number targets
(including targets for those on an energy
innovation offers or products), retention rate and
cost per ICP (retail customer connection) targets.
Demonstrate clear business improvement that was
driven by a change in data utilisation.
20%
(8% of STI)
Optimise
business
performance
Meet targeted lift in peaking capacity across
wind and hydro fleet in FY24, deliver a prioritised
list of generation asset capacity and operational
flexibility options, initiate a trial predictive
management system and demonstrate clear
business improvements driven by a change in
data utilisation.
20%
(8% of STI)
SustainabilityDJSI ranking trending upwards in the Asia index
and towards a ‘top global company position’
position by end of FY26.
Target climate action plan milestones to be met.
10%
(4% of STI)
Investment
stability
Regulatory influence shapes continued
decarbonisation of the economy at speed through
electricity market.
Land demonstrable progress with the Te Ao Māori
programme.
10%
(4% of STI)
The sum of the above may also be varied based
on workplace safety culture, overall workplace
engagement and individual performance.
Long-term incentive
Despite changing and challenging
economic conditions in the FY22–24
period, Meridian met the absolute
and relative Total Shareholder
Return target against its Australia
and New Zealand energy company
competitor group.
• Absolute Return Performance
Share Rights vest if the
company’s TSR is greater than the
Absolute TSR Benchmark on a
compounding annual basis over
the Performance Period. For the
FY22 scheme the Absolute TSR
Benchmark was 7.35% cost of
equity plus 1% compounded over
3 years (27.20% Total Absolute
TSR Benchmark).
• Relative Return Performance
Share Rights vest if the company’s
TSR is greater than or equal to
the 50th percentile (median) TSR
of the Peer Group. In addition to
exceeding the 50th percentile TSR
of the Peer Group, the Relative
TSR outcome was greater than the
75th percentile TSR of the Peer
Group, so 100% vesting applied.
As both the above hurdles were
met, the LTI available to the Chief
Executive and eligible Executive Team
participants for this three-year period
ended June 2024 will be payable. For
the LTI plan performance period to the
end of June 2024, the level of vesting
was 100% (2023: 0%). Therefore
418,384 shares (excluding shares for
dividends) will be transferred to the
eligible participants for the FY22 LTI
plan (2023: 0 shares vested).
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REMUNERATION REPORT
FIVE-YEAR SUMMARY – THREE-YEAR ROLLING TSR
PERFORMANCE (MERIDIAN ENERGY VS PEER GROUP
*
)
KEY
Meridian
Peer group median
This graph shows Meridian’s
historical TSR performance,
against a peer group of companies
between 30 June 2020 and 30
June 2024. TSR performance
outcomes are independently
validated by external experts.
Up until FY24, for LTI scheme
calculations, Meridian’s total
shareholder return was assessed
with a peer group of New Zealand
and Australian listed energy
companies.
*
Since FY23, with
changes in the New Zealand energy
market and Meridian’s withdrawal
from Australia, the Board has
determined that a comparison
against the NZX 50 Index is
more appropriate. Like many
companies worldwide, Meridian’s
TSR performance was negatively
impacted by the economic
downturn in FY22 and FY23.
*The peer group comprised AGL Energy, Origin Energy, Contact Energy, Mercury NZ, Manawa Energy and Genesis Energy.
CHIEF EXECUTIVE REMUNERATION
Chief Executive remuneration outcomes
(a) Overall FY24 and FY23 remuneration
Fixed remuneration earned
Variable cash-based
remuneration earned
Other
remuneration
earnedLong Term incentive earned
Total
remuneration
earned
YearBase salary
KiwiSaver on
base salary
Total fixed
remuneration
Short term
incentive
earned
(including
KiwiSaver)
Amount
earned
as a % of
maximum
award
Total
variable
cash-based
remuneration
earned MyShare
Number of
shares vested
% of maximum
awarded
for the
performance
period
Market
price of
vested shares
at 30 JuneLTI plan value
Fixed
remuneration
+ STI plan
+ Other
remuneration
+ LTI plan
Earned
FY24$1 , 3 7 7, 8 8 5$55,115$1,433,000$848,47983.4%$848,479$2,500153,049100%$6.29$962,678$3,246,657
FY23$1,136,250$45,450$1,181,700$690,46782.3%$690,467$2,500––––$1,874,667
• Taxable benefits within Fixed Remuneration are 4% company KiwiSaver contributions on salary.
• Fixed remuneration is salary plus company KiwiSaver contributions.
• MyShare is gross value of award shares received in the applicable period.
• STI is the potential payment based on performance achieved for the applicable period and includes 4% company KiwiSaver contributions.
• The vesting period for the FY22 LTI scheme ends on 31 October 2024. Share rights lapse if a holder ceases to be employed by Meridian during the vesting period subject to the Board’s discretion.
• The STI and LTI amounts above were earned during the FY24 and FY23 periods above, but paid in the following applicable periods (i.e. FY25 and FY24).
The Chief Executive is entitled to receive a matching employer KiwiSaver contribution of 4% of gross taxable earnings. The company’s KiwiSaver
contributions for the Chief Executive that were paid within the FY24 period (including on the FY23 STI plan which was paid in FY24) were $81,922.
REMUNERATION REPORTMERIDIAN INTEGRATED REPORT 2024
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CHIEF EXECUTIVE FY24 REMUNERATION SCENARIOS
KEY
Fixed remuneration
Annual variable
LT I
The chart shows how the amounts and proportions of the Chief Executive’s
total remuneration may vary under various scenarios. Note, however, that the
LTI value depends on share price, and the resulting LTI remuneration may
exceed the illustrative scenario.
CHIEF EXECUTIVE FIVE-YEAR
REMUNERATION SUMMARY
Year
Single figure
remuneration
% STI against
maximum
% vested LTIs
against maximum
Span of LTI
performance period
FY24$3,246,65883.4%100.0%FY22–FY24
FY23$1,874,66782.3%0.0%FY21–FY23
FY22$2,134,37278 .9%48.8%FY20–FY22
FY21$2,308,44666.7%100.0%FY19–FY21
FY20$2,039,84178.7%100.0%FY18–FY20
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91
(b) FY24 CEO STI outcomes earned
(with payment in August 2024,
which is within FY25)
For the FY24 year, the Chief
Executive had an STI opportunity
of 50% of base salary, with the
potential STI payment being a
maximum of 142% of the target
STI opportunity
• 60% was based on Meridian
financial performance
• 40% was based on
scorecard performance.
The full amount of STI earned
and approved was paid as cash
remuneration in August FY25, as
calculated below, resulting in an STI
payment of 118% of target.
The STI payment earned for FY24
equated to 59.2% of salary (58.4% for
FY23), and 83.4% of the maximum
possible STI award (82.3% for FY23).
STI
componentMeasure
STI TargetOutcome
STI Earned
and Awarded
Weighting
% $* Achievement on STI Target
%
awarded
for STI
measure
$
awarded
for STI
measure
*
FinancialEBITDAF less
capital charge
60%
$429,900EBITDAF less capital charge achieved was 114.5%
of target, resulting in a 140.7% outcome against the
financial measure.
140.7%$604,869
Scorecard
of other
STI
measures
NZAS closure
mitigation
8%
$ 5 7, 3 2 0The successful finalisation of New Zealand’s Aluminium
Smelter contract now provides some commercial certainty
in place of a previous inherent risk. In addition, process heat
demand has been secured.
100%
$ 5 7, 3 2 0
Decarbon-
isation-led
growth
8%$ 5 7, 3 2 0The successful completion of the Harapaki wind project and
additional Te Rere Hau (Wind) development. The Ruakākā
battery project will be commissioned in early 2025.
Other consents are progressing.
75%$ 42,990
Customer8%$ 5 7, 3 2 0All measures were delivered ahead of plan.100%$ 5 7, 3 2 0
Optimise
business
performance
8%$ 5 7, 3 2 0Peaking capacity has lifted, and progress is being made
on portfolio capacity. The predictive trial has been deferred
until FY25.
75%$ 42,990
Sustainability4%$28,660Meridian’s Dow Jones Sustainability Index overall rating for
FY23 reduced, although we retained our position on the Asia
Pacific index. We took actions to improve this position for FY24.
Progress was made on our Half by 30 initiatives, including
strategic projects to achieve scope 3 emissions abatement
later in the decade. But overall, our FY24 emissions exceeded
our end of year target (driven by scope 3 increases).
50%$14,330
Investment
stability
4%$28,660The current regulatory setting was stable and provides
for continuing decarbonisation and the deployment of
Meridian’s development options.
Our Te Ao Māori education programme delivered by
Education Perfect tracked well within the business.
100%$28,660
Scorecard
subtotal
40%$286,600The Board considered that the requirements for a
workplace safety culture, overall workplace engagement
and individual performance were met, and therefore
no adjustment of the scorecard result was applied.
STI Scorecard achievement85%$243,610
Total STI target100%$716,500Total STI payment against target (Incl KiwiSaver)118%$848,479
*Including Kiwisaver
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92
(c) FY24 CEO LTI Outcomes (Awarded)
For the three-year period ended
FY24, the Chief Executive was
eligible for an LTI based on a grant
of Performance Share Rights set at
40% of base salary at the start of the
three-year performance period (1
July 2022). The vesting of shares at
the end of the vesting period was
subject to TSR performance hurdles,
at right.
Performance hurdlesLTI weightingOutcome
Weighted
Outcome
Absolute TSR – Must be greater than the company’s cost of equity
benchmark on a compounding basis
50%Hurdle met100%
Relative TSR against the peer group
*
:
• Below the 50th percentile, 0% vests
• 50th percentile TSR of peer group, at least 50% vests
• ≥ 75th percentile TSR, 100% vests
• Between the 50th and 75th percentile TSRs of peer group,
50–100% vests, calculated on a straight-line pro rata basis.
Share rights lapse if the holder ceases to be employed by Meridian
during the vesting period, subject to the Board’s discretion
50%Relative TSR was greater
than the 75th percentile TSR
of the peer group
100%
* The peer group comprises AGL Energy, Origin Energy, Contact Energy, Mercury NZ, and Genesis Energy. The vesting period for the FY22 LTI scheme ends on 31 October 2024.
Upon vesting, each Performance Share Right is eligible for one ordinary share, which is issued from Treasury Shares to
the Chief Executive.
Performance Share Rights [PSRs] held by the Chief Executive (as at 30 June 2024)
Grant
name
PSR
Award dateVesting date
Balance
of PSRs at
30 June
2023
Awarded during the
reporting period
PSRs
lapsed
during the
reporting
period
PSRs Vested during
the reporting period
Shares issued/transferred
during the reporting period
Balance
of PSRs at
30 June
2024
PSRs
awarded
Market
price at
award
PSRs
vested
Market
price at
vesting
date
Vesting
date
Shares
issued
Market
price at
issue date
Issue
date
F Y21 LTI9 March 202111 October 2023142,759––(142,759)––11/10/2023––––
F Y2 2 LTI21 October 202121 October 2024136,98 4–––––––––136,98 4
F Y23 LTI3 November 20223 October 2025166,165–––––––––166,165
F Y24 LTI24 October 202324 October 2026–142,1805.45–––––––142,180
Meridian has a policy to ensure that the participants of the Executive LTI plan are not permitted to enter into transactions
(whether through the use of derivatives or otherwise) that limit the economic risk of participating in the plan.
REMUNERATION REPORTMERIDIAN INTEGRATED REPORT 2024
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93
MERIDIAN SHARE OWNERSHIP
Chief Executive
and Executive Team
Meridian does not have a share
ownership requirement for the Chief
Executive and Executive Team, but
the Board does encourage them to
have Meridian Energy shareholdings.
The Chief Executive and Executives
have all been issued performance
share rights under the Meridian Long
Term Incentive scheme which will
convert to shares upon vesting in
accordance with that scheme.
The current individual shareholdings
are affected by employee tenure,
with longer-serving Executives having
had longer timeframes in which to
accumulate Meridian shares.
The current individual Meridian
shareholdings of the Chief Executive
and two of the longer-serving
Executive Team members is below.
Number of Meridian
shares owned
(excludes Performance
Share Rights)
Value of
shares as at
30 June 2024
Value of
shares as a
% of
FY24 Salary
Chief Executive5 30,925$3,339,518242%
Chief Financial Officer254,303$1,599,566244%
General Manager
Development
290,913$1,829,843332%
Remainder of Executive
Team, combined
196,636$1,236,84039%
Employee share ownership
Employees are invited to join
Meridian’s employee share ownership
plan, MyShare. Under MyShare,
Meridian shares are purchased for
participating employees, funded by
monthly pay deductions of between
$500 and $5,000 per annum. After
three years, participants may be
eligible for award shares subject
to ongoing employment (Tenure
Award Shares) and the company
TSR outperforming a peer group of
competitors (Performance Award
Shares). From the start of FY24, 54% of
employees participated in MyShare.
For FY25, 55% of employees have
enrolled to MyShare.
ESG DISCLOSURES
Chief Executive/
Employee pay gap
This pay gap represents the number
of times greater the Chief Executive’s
remuneration is than the remuneration
of the median of all Meridian
employees.
For the purposes of determining
median employee pay, all
permanent full-time, permanent
part-time and fixed-term employees
below the Chief Executive are
included, with part-time employee
remuneration adjusted to a full-
time-equivalent amount.
As at the balance date (30/6/24),
the Chief Executive’s base salary
of $1,377,885 was 12.5 times the
median employee salary of $109,995
per annum (FY23 11.2 times).
5
The Chief Executive’s Total
Remuneration, including STI Earned
and LTI Vested, of $3,246,658 was
26.8 times the median employee
total remuneration of $121,311 (FY23
16 times).
5
5 Median employee Salary and Total Remuneration excludes Flux UK and casual employees.
Chief Executive/Other employee
remuneration increase ratio
The Chief Executive’s salary
increased by 21% between FY23
and FY24 (for commentary about
the rationale for this, see page 82).
The median employee salary in FY24
increased by 8.2% from the median
employee salary in FY23, resulting
in a ratio of 2.58:1 Chief Executive to
median employee salary increase
(FY23 0.34:1).
The Chief Executive’s Total
Remuneration earned increased
by 73% from FY23 to FY24, largely
due to there being no LTI award
for FY23, but 100% vesting in
FY24. Median employee Total
Remuneration in FY24 increased by
8.2% from the median employee
Total Remuneration in FY23. This
resulted in a ratio of 16.9:1 Chief
Executive to median employee Total
Remuneration increase (FY23 -1.04:1).
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94
Gender Pay Gap
The table below shows the difference
between full-time, full-year
equivalent median and average base
salaries and the total remuneration
of Meridian employees by gender –
regardless of the nature or seniority
of work. The overall FY24 gender pay
gap, while still large, has improved
from FY23.
Meridian has an ongoing focus
on increasing the number and
proportion of women at senior,
higher-paying levels of the
organisation. This will help to address
the overall current gender pay gap,
which is largely an outcome of
gender representation differences
in roles at different levels.
Meridian also reviews its salary
data to ensure that there is no
inappropriate pay gap (i.e. not due
to performance, skills, experience
etc) between men and women
doing roles of similar size, type and
seniority. Comparing the median
salary of men and women in roles
of a comparable size and nature,
Meridian has a minimal (<2.5%)
gender pay gap at most job levels.
All
employees
(excluding
CEO)
Males
(excluding
CEO) Females
Gender Pay
Gap FY24
Previous year
Gender Pay
Gap FY23
Median salary$109,995$125,535$84,00033.1%35.2%
Average salary$118,292$132,514$103,05622.2%25.4%
Median Total
remuneration
$121,311$146,510$94,95235.2%39.0%
Average Total
Remuneration
$13 8 ,930$156,932$119,6 4123.8%26.8%
Pay gap: 1 – (Females $ / Males $)
REMUNERATION BANDS
The following table notes the
number of employees and former
employees of Meridian and its
subsidiaries, not being directors of
the issuer, who, during the reporting
period, received remuneration and
any other benefits in their capacity as
employees, the value of which was
or exceeded $100,000 per annum,
in brackets of $10,000.
They include 181 employees who are
no longer employed by Meridian
Energy Limited and its subsidiaries.
$10k bandTotal Group
100,000–109,99972
110,000–119,99956
120,000–129,99957
130,000–139,99951
140,000–149,99981
150,000–159,99952
160,000–169,99948
170,000–179,99925
180,000–189,99924
190,000–199,99920
200,000–209,99922
210,000–219,99918
220,000–229,99911
230,000–239,99910
240,000–249,9996
250,000–259,9996
260,000–269,9991
270,000–279,9992
280,000–289,9995
290,000–299,9994
300,000–309,9992
$10k bandTotal Group
310,000–319,9994
320,000–329,9994
330,000–339,9995
340,000–349,9994
350,000–359,9991
360,000–369,9991
410,000–419,9992
420,000–429,9991
430,000–439,9991
440,000–449,9991
450,000–459,9991
500,000–509,9991
530,000–539,9991
560,000–569,9992
670,000– 679,9991
680,000–689,9991
710,000–719,9991
730,000–739,9991
900,000–909,9991
2,120,000- 2,129,9991
608
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95
DIRECTOR
REMUNERATION
Approved director
remuneration for FY24
As Meridian is an NZX-listed
company, directors fees (Board
remuneration) must be approved by
a majority of shareholders voting at
a shareholders’ meeting. Meridian
amended its Remuneration Policy
to include how the remuneration
of directors is set. A copy of the
Remuneration Policy is on our
website.
Remuneration Policy
bit.ly/3yqFjaK
Shareholders are kept informed of
any changes in the way the company
allocates the pool of approved
director fees. Refer Corporate
Governance Statement.
Corporate Governance Statement
bit.ly/3Wy4sse
Director remuneration is paid from
the total director fee pool that was
last approved by shareholders at
the Annual Meeting on 6 October
2021. Prior to the meeting and vote,
Meridian had consulted a number
of shareholder representatives
to gain their input, and engaged
independent consultants PwC to
prepare a benchmarking report of
Meridian’s director fees against those
of comparable companies. Further
details of that report are available
on the NZX website.
Benchmarking summary
report, NZX bit.ly/4ccj9a0
Prior to 2021, the last previous
change to directors’ fees was in 2016.
In November 2022, Meridian
established an independent board
for one of its subsidiary companies
Flux Federation Limited. The
directors of Meridian resolved, in
accordance with Listing Rule (LR)
2.11.3, to increase the overall director
fee pool by the amount necessary to
pay the new Flux directors no more
than the average paid to the current
directors of Meridian. Consistent
with LR 2.11.3 and the resolution,
the director fee pool was increased
in FY23 to pay Kenneth Tunnicliffe
and Jodi Mitchell. Mike Roan is the
other director of Flux Federation
(appointed by Meridian) and does
not receive additional remuneration
for that role.
During FY24, the Board reverted to
having only Meridian executives on
the Flux Board. Kenneth Tunnicliffe
and Jodi Mitchell resigned with effect
from 14 June 2024 and were replaced
by Neal Barclay and Jason Woolley,
neither of whom receive additional
remuneration for the role.
The total pool for Board fees is set out in the following table.
Annual director fee pool
FY23
FY24 to
14 June 2024
FY24 from
15 June 2024
Board fees$1,090,000$1,090,000$1,090,000
Committee fees$109,000$109,000$109,000
Flux Board fees$134,000$134,000–
Total pool$1,333,000$1,333,000$1,199,000
From 1 July 2024 the fees allocated to Directors will increase by $146,200.
This will be funded from within the existing Director fee pool of $1,199,000
approved by shareholders in 2021.
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96
Director remuneration received in FY24
Name of directorBoard fees
Audit and
Risk Committee
People, Remuneration
and Culture Committee
Safety and
Sustainability Committee
Additional ad hoc
committeesTotal remuneration
Mark Verbiest
6
(Chair)$212,000–––$10,000$222,000
Mark Cairns
7
$3 8 ,917––$7,000 $3,000$48,917
David Carter
8
$109,633––$ 8 ,921$5,000$123,554
Graham Cockroft$116,750$10,500$9,500–$5,000$141,750
Michelle Henderson$116,750$10,500–$9,500–$136,750
Julia Hoare$116,750$25,000 (Chair)––$5,000$146,750
Nagaja Sanatkumar
9
$116,750–$9,500$18,125 (Chair)–$144,375
Tania Simpson$116,750–$21,000 (Chair)$9,500–$147,250
Total$944,300$46,000$40,000$53,046$28,000$1,111,346
Directors are reimbursed for all reasonable and properly documented expenses incurred in performing their duties as Meridian directors.
No additional payments, shares or benefits were received by directors in FY24.
Individual Meridian Board-approved annual fee breakdown
6 Does not receive additional fees for committee membership.
7 Ceased to be a director, effective 12 October 2023.
8 Appointed to the Board, effective 25 July 2023.
9 Appointed as Chair of the Safety and Sustainability Committee, effective 12 October 2023,
so does not represent a full year.
Position heldFY23FY24
Chair$212,000$212,000
Director$116,750$116,750
Audit and Risk Committee Chair$25,000$25,000
Audit and Risk Committee member$10,500$10,500
Safety and Sustainability Committee Chair$21,000$21,000
Safety and Sustainability Committee member$9,500$9,500
People, Remuneration and Culture Committee Chair$21,000$21,000
People, Remuneration and Culture Committee member $9,500$9,500
Flux Board annual fee breakdown
Position heldFY23FY24
Flux Chair$84,000$84,000
Flux independent director$50,000$50,000
Flux director remuneration received
Name of directorFY23FY24
Kenneth Tunnicliffe (Chair)
10
$49,000$84,000
Jodi Mitchell
10
$29,167$50,000
Mike Roan (Meridian Executive)––
Neal Barclay (Meridian Executive)
11
––
Jason Woolley (Meridian Executive)
11
––
Total$78,167$134,000
Meridian employees appointed as directors of Meridian subsidiaries do not
receive any directorship fees.
10 Kenneth Tunnicliffe and Jodi Mitchell resigned with effect from 14 June 2024.
11 Neal Barclay and Jason Woolley appointed with effect from 4 June 2024.
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Further
Disclosures
Further disclosures required
by the NZX Listing Rules,
the Companies Act 1993 and
other legislation and rules.
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2024
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98
Meridian Energy
The table outlines the current directors of Meridian Energy Limited. During
FY24 there were two changes to the directors of Meridian Energy Limited:
Mark Cairns ceased to be a director; and David Carter was appointed as
a director.
Company nameDirectors
Meridian Energy LimitedDavid Carter, Graham Cockroft, Michelle Henderson, Julia
Hoare, Nagaja Sanatkumar, Tania Simpson, Mark Verbiest
The Board has determined that as at
30 June 2024, all Meridian directors
are independent. The factors
relevant to this determination are
that no director:
• is currently, or has been within the
past three years, employed in an
executive role by the issuer or any
of its subsidiaries;
• is currently deriving, or has within
the past 12 months derived a
substantial portion of their annual
revenue from the issuer;
• is currently, or has in the past 12
months been in a senior role in a
provider of material professional
services (other than an external
auditor) to the issuer or any of its
subsidiaries;
• is currently, or has in the past three
years been employed by the
external auditor to the issuer or any
of its subsidiaries;
• currently has, or has had within the
last three years, a material business
relationship (e.g. as a supplier or
customer) with the issuer or any of
its subsidiaries;
• is a substantial product holder of
the issuer, or a senior manager of,
or a person otherwise associated
with, a substantial product holder
of the issuer;
• is currently, or within the last
three years, has been in a material
contractual relationship with the
issuer or any of its subsidiaries,
other than as a director;
• has close family ties or personal
relationships (including close social
or business connections) with
anyone in the categories listed; and
• has been a director of the entity for
a period of 12 years or more.
Current Board and Executive Team gender composition
In accordance with NZX Listing Rules, the gender make-up of Meridian’s
directors and officers as at 30 June 2024 is:
As at 30 June 2024 As at 30 June 2023
FemaleMaleGender
diverse
FemaleMaleGender
diverse
Number of directors43–43–
Percentage of directors57%43%0%57%43%0%
Number of officers47–47–
Percentage of officers36%64%0%36%64%0%
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2024
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Meridian subsidiaries
The following tables list the
subsidiaries of Meridian Energy
Limited during the accounting
period, the subsidiaries of those
subsidiaries, and any changes to
those subsidiaries and among the
people who held office as directors.
New Zealand subsidiaries
Company nameCompany numberDirectorsFurther information
Dam Safety Intelligence Limited6152623Neal Barclay, Jason Stein No changes
Flux Federation Limited6292491Michael Roan, Neal Barclay,
Jason Woolley
Neal Barclay was appointed
director on 4 June 2024
Jason Woolley was appointed
director on 4 June 2024
Kenneth Tunnicliffe ceased to
be a director on 14 June 2024
Jodi Mitchell ceased to be a
director on 14 June 2024
Meridian Energy Captive
Insurance Limited
1612020Neal Barclay, Michael Roan No changes
Meridian Energy International Limited1114014Neal Barclay, Michael Roan No changes
Meridian Limited863312Neal Barclay, Michael Roan No changes
Powershop New Zealand Limited8184062Neal Barclay, Michael Roan No changes
Kōkako SPV Ltd8967098Michael Roan, Guy WaiparaRegistered on the Companies
Office register on 18 October 2023
UK subsidiary
Company nameDirectorsFurther information
Flux-UK LimitedNicola Kennedy, Rush Bhatt,
Bharat Ratanpal
Bharat Ratanpal was appointed
director on 10 June 2024
Rush Bhatt was appointed director
on 10 June 2024
Kenneth Tunnicliffe ceased to
be a director on 14 June 2024
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2024
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Particulars of entries in the
interests register made during
the accounting period
Shareholders can review
Meridian Energy Limited’s full
interests register on request.
In accordance with sections 140 and
211(1)(e) of the Companies Act 1993,
the table lists the general disclosures
of interest by directors of Meridian
Energy Limited.
NamePositionDisclosures
Mark CairnsDirector, Meridian Energy Limited
(ceased to be a director on
12 October 2023)
Auckland Airport International Limited, Director
Freightways Limited, Chair
David CarterDirector, Meridian Energy Limited
(appointed as a director on
25 July 2023)
Beca Group Limited, Director and Employee*
Beca Group Holdings Limited, Director*
Beca Insurance Company Pte Limited, Director*
BGL Depositary No. 2 Limited, Director*
BGLIR Trustee Limited, Director*
BGL Nominees Limited, Director*
BGCF Trustee Limited, Director*
OMI Beca Limited, Director**
Beca Holding (Thailand) Co., Ltd, Director*
Beca (Thailand) Co., Ltd, Director*
Beca – PT Bimatekno Karyatama Konsultan, President Commissioner*
Graham CockroftDirector, Meridian Energy LimitedAGL Energy Limited, Director
Tuatahi First Fibre Limited, Director
UFF Holdings Limited, Director
First Fibre MidCo Limited, Director
First Fibre BidCo Limited, Director
Michelle HendersonDirector, Meridian Energy LimitedFulton Hogan Limited, Director**
Fulton Hogan Land Development Limited, Director**
Fulton Hogan Australia (Management) Pty Ltd, Director**
Fulton Hogan Australia Pty Ltd, Director**
Fulton Hogan Construction Pty Ltd, Director**
Fulton Hogan Industries Pty Ltd, Director**
Fulton Hogan Quarries Pty Ltd, Director**
Fulton Hogan Transport Pty Ltd, Director**
Fulton Hogan Utilities Pty Ltd, Director**
South Port NZ Limited, Director
Awarua Holding Limited, Director
* Entries added by directors and effective during the year ended 30 June 2024.
** Entries removed by directors during the year ended 30 June 2024.
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Particulars of entries in the
interests register made during
the accounting period continued
NamePositionDisclosures
Julia HoareDirector, Meridian Energy Limited Auckland International Airport Limited, Director
Comvita Limited, Director
Port of Tauranga Limited, Director
Northport Limited, Director
Primeport Timaru Limited, Director
Nagaja SanatkumarDirector, Meridian Energy LimitedCawthron Institute, Director
Foodstuffs North Island Limited, Director
Groov Ltd, Director**
Imagen8 Limited, Director
New Zealand Post Limited, Director
Southern Cross Healthcare Limited, Director*
Southern Cross Medical Care Society, Director*
Southern Cross Health Trust, Trustee*
Tuatahi First Fibre Limited, Director
First Fibre Midco Limited, Director
First Fibre Bidco NZ Limited, Director
UFF Holdings Limited, Director
Tania SimpsonDirector, Meridian Energy LimitedAuckland International Airport Limited, Director
Tainui Group Holdings Limited, Director
Ukaipo Limited, Director
Waikato Tainui Fisheries Limited, Director
Waste Management NZ Limited, Director*
Tui Topco Limited, Director*
Tui Bidco Limited, Director*
WMNZ Holdings Limited, Director*
Mark VerbiestDirector, Meridian Energy Limited MBIE Crown Monitor for Worksafe**
Summerset Group Holdings Limited, Chair
Willis Bond & Co Limited, adviser to Property Income Fund Limited
* Entries added by directors and effective during the year ended 30 June 2024.
** Entries removed by directors during the year ended 30 June 2024.
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Particulars of entries in the interests
register made during the accounting
period – subsidiaries
In accordance with sections 140 and
211(1)(e) and (2) of the Companies
Act 1993, the table lists the general
disclosures of interest by directors of
Meridian Energy Limited’s subsidiaries.
NamePositionDisclosures
Neal Barclay
*^
Employee – Chief ExecutiveMeridian Energy Limited
Mike Roan
*^
Employee – Chief Financial OfficerMeridian Energy Limited
Jason Woolley
^
(director of Flux Federation Limited) Employee – General CounselMeridian Energy Limited
Jason Stein
^
(director of Dam Safety Intelligence Limited)Employee – Chief People OfficerMeridian Energy Limited
Guy Waipara
^
(director of Kōkako SPV Limited, appointed
on incorporation on 18 October 2023)
Employee – GM – Development Meridian Energy Limited
Bharat Ratanpal
^
(director of Flux-UK Limited, appointed
10 June 2024)
Employee – Chief Information
Officer and Interim Chief Executive
of Flux Federation Limited
Meridian Energy Limited
Nicola Kennedy
^
(director of Flux-UK Limited)Employee – Chief ExecutiveFlux Federation Limited
Rush Bhatt (director of Flux-UK Limited, appointed 10 June 2024)Employee – Chief Financial OfficerFlux Federation Limited
Jodi Mitchell
(director of Flux Federation Limited, ceased 14 June 2024)
Independent director Flux Federation Limited
Ken Tunnicliffe
(director of Flux Federation Limited, ceased 14 June 2024)
Independent directorFlux Federation Limited
* This person is a director of more than one Meridian Energy Limited subsidiary, see the ’Meridian subsidiaries’ section above.
^
This person has equity holdings in Meridian Energy Limited, see ’Executive Team equity holdings’ below.
During FY24, the following
disclosures were made in
accordance with section 148
of the Companies Act 1993.
Director
Nature of
relevant interestDateAcquisition/DisposalClass
Number
acquired*
Consideration
received
per share
David CarterBeneficial interest1 August 2023 –
Initial disclosure
AcquisitionShares18,000n/a
Julia HoareLegal interest22 September 2023Acquisition –
Dividend Reinvestment Plan
Shares164$5.2039
Legal interest26 March 2024Acquisition –
Dividend Reinvestment Plan
Shares78$5.7681
Tania SimpsonBeneficial interest4 September 2023AcquisitionShares849*$5.269
Mark VerbiestBeneficial interest22 September 2023Acquisition – Dividend
Reinvestment Plan
Shares1,104$5.1953
Beneficial interest26 March 2024Acquisition – Dividend
Reinvestment Plan
Shares526$5.7644
* Rounded to the nearest whole number.
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Directors’ indemnity
and insurance
Pursuant to section 162 of the
Companies Act 1993, as permitted
by Meridian’s constitution, Deeds
of Indemnity have been given to
directors for potential liabilities and
costs they might incur for actions
or omissions in their capacity
as directors. From 1 May 2024,
Meridian’s directors’ and officers’
liability insurance was renewed to
cover risks normally covered by such
policies. Insurance is not provided for
dishonest, fraudulent, malicious or
wilful acts or omissions.
Donations
The Meridian Energy Group made
donations totalling $2,032,363
during FY24. Meridian does not
make donations to political parties.
All donations must be approved
by the Board.
Auditor
Meridian’s auditor is the Auditor-
General who has appointed Mike
Hoshek of Deloitte to carry out the
audit of the Meridian Energy Ltd
and its subsidiaries on behalf of
the Auditor-General.
The fees for other services
undertaken by Deloitte during
FY24 totalled $0.3 million (2023:
$0.2 million). Other assurance
services undertaken by Deloitte
Limited during the year included
reviews of greenhouse gas inventory
and sustainability reporting
assurance, audit of the securities
registers, agreed-upon procedures
for insurance purposes, vesting
of the Executive Team long-term
incentive plan, the solvency return of
Meridian Energy Captive Insurance
Limited and supervisor reporting.
Other fees paid to Deloitte during
the year include $69,200 for climate
related disclosure gap analysis,
$11,000 for cyber security services
and $14,000 (2023: $14,000) to
Deloitte Limited for administrative
and other advisory services to the
Corporate Taxpayers Group, of which
Meridian, alongside a number of
other organisations, is a member.
Interests in
Meridian securities
In accordance with NZX Listing
Rule 3.7.1(d), as at 30 June 2024
Meridian Energy Limited directors
had the following relevant interests
in Meridian Energy Limited Quoted
Financial Products:
Director
Number
of shares*
Number
of bonds
David Carter**18,000100,000
Graham Cockroft40,000–
Michelle Henderson7, 3 3 5*–
Julia Hoare8,406–
Nagaja Sanatkumar8,769*–
Tania Simpson5,140–
Mark Verbiest49,828–
* Rounded to the nearest whole number.
** David Carter, appointed director on 25 July 2023.
Executive Team
equity holdings
As at 30 June 2024, the Executive
Team had relevant interests in
Meridian Energy Limited shares
as follows:
Executive
Team
Number
of shares
Unvested
Performance
Share Rights
Neal Barclay5 30,925445,328
Chris Ewers 42,088118,611
Lisa Hannifin20,304138,487
Nic Kennedy14,449–
Tania Palmer20,34814 5,960
Bharat Ratanpal19,9057 7, 5 52
Mike Roan254,3031 83 ,98 5
Claire Shaw13,259102,795
Jason Stein81,506101,764
Guy Waipara290,913149,906
Jason Woolley–104,74 5
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Twenty largest registered
holders of Quoted Financial
Products as at the balance date
The table opposite lists the
company’s 20 largest registered
shareholders as at 30 June 2024.
NamesNumber of shares% of issued shares
The Sovereign in Right of New Zealand acting by and through their
Minister of Finance and Minister for State Owned Enterprises
1,321,595,58751.01
HSBC Nominees (New Zealand) Limited – NZCSD 158,571,794
6.12
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD 123 ,650,989
4.77
JPMorgan Chase Bank NZ NZ Branch-Segregated Clients Acct – NZCSD 114,327,875
4.41
Citibank Nominees (New Zealand) Limited – NZCSD 94,186,838
3.63
Custodial Services Limited 8 7,947, 496
3.39
BBP Paribas Nominees (NZ) Limited – NZCSD 81,708,735
3.15
Accident Compensation Corporation – NZCSD 46,643,610
1.80
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited – NZCSD 30,481,228
1.17
TEA Custodians Limited Client Property Trust Account – NZCSD 26,686,005
1.03
JBWere (NZ) Nominees Limited 26,597,522
1.02
New Zealand Depository Nominee Limited 18,696,224
0.72
ANZ Wholesale Australasian Share Fund – NZCSD 17,843,344
0.68
BNP Paribas Nominees (NZ) Limited – NZCSD 16,668,854
0.64
Forsyth Barr Custodians Limited 16,334,246
0.63
FNZ Custodians Limited 15,044,700
0.58
Simplicity Nominees Limited – NZCSD 12,452,897
0.48
PT (Booster Investments) Nominees Limited 9,894,4 49
0.38
ANZ Custodial Services New Zealand Limited – NZCSD 7, 7 5 4 , 4 47
0.29
HSBC Custody Nominees (Australia) Limited 7,471,777
0.28
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
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The table opposite lists the
company’s 20 largest registered
holders of MEL050 retail fixed-rate
bonds as at 30 June 2024.
NamesNumber of bonds% of issued bonds
Custodial Services Limited
41,722,00020.86
Forsyth Barr Custodians Limited
26,170,00013.08
FNZ Custodians Limited
22,659,00011.32
TEA Custodians Limited Client Property Trust Account – NZCSD
19,384,0009.69
BNP Paribas Nominees (NZ) Limited – NZCSD
11,900,0005.95
ANZ Fixed Interest Fund – NZCSD
5,500,0002.75
BNP Paribas Nominees (NZ) Limited – NZCSD
5,409,0002.70
HSBC Nominees (New Zealand) Limited – NZCSD
4,877,0002.43
JBWere (NZ) Nominees Limited
4,610,0002.30
Citibank Nominees (New Zealand) Limited – NZCSD
4,577,0002.28
Investment Custodial Services Limited
4,335,0002.16
MT Nominees Limited – NZCSD
4,000,0002.00
Forsyth Barr Custodians Limited
3,671,0001.83
NZX WT Nominees Limited
3,318,0001.65
ANZ Wholesale NZ Fixed Interest Fund – NZCSD
3,000,0001.50
Forsyth Barr Custodians Limited
2,397,0001.19
FNZ Custodians Limited
1,306,0000.65
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD
1,200,0000.60
JBWere (NZ) Nominees Limited
1,000,0000.50
Dunedin City Council
800,0000.40
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
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The table opposite lists the
company’s 20 largest registered
holders of MEL060 retail fixed-rate
bonds as at 30 June 2024.
NamesNumber of bonds% of issued bonds
Custodial Services Limited44,612,00022.30
Forsyth Barr Custodians Limited34,809,0001 7. 4 0
JBWere (NZ) Nominees Limited18,955,0009.47
FNZ Custodians Limited18,655,0009.32
HSBC Nominees (New Zealand) Limited – NZCSD12,300,0006.15
BNP Paribas Nominees (NZ) Limited – NZCSD8,777,0004.38
Investment Custodial Services Limited4,968,0002.48
Queen Street Nominees ACF Pie Funds – NZCSD4,800,0002.40
Southland Building Society – NZCSD3,800,0001.90
Forsyth Barr Custodians Limited2,821,0001.41
HSBC Nominees (New Zealand) Limited A/C State Street –NZCSD2,020,0001.01
ANZ Fixed Interest Fund – NZCSD1,825,0000.91
JBWere (NZ) Nominees Limited1,800,0000.90
MT Nominees Limited – NZCSD1,700,0000.85
JBWere (NZ) Nominees Limited1,500,0000.75
ANZ Wholesale NZ Fixed Interest Fund – NZCSD1,500,0000.75
PIN Twenty Limited1,400,0000.70
FNZ Custodians Limited1,368,0000.68
NZX WT Nominees Limited1,321,0000.66
Adminis Custodial Nominees Limited1,255,0000.62
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
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The table opposite lists the
company’s 20 largest registered
holders of MEL070 retail fixed-rate
bonds as at 30 June 2024.
NamesNumber of bonds% of issued bonds
Custodial Services Limited 71,898,00023 .96
Forsyth Barr Custodians Limited 37,512,00012.50
BNP Paribas Nominees (NZ) Limited – NZCSD 29,104,0009.70
NZPT Custodians (Grosvenor) Limited – NZCSD 21,730,0007. 24
FNZ Custodians Limited 19,267,0006.42
Generate KiwiSaver Public Trust Nominees Limited NZCSD15,714,0005.23
TEA Custodians Limited Client Property Trust Account – NZCSD14,343,0004.78
JBWere (NZ) Nominees Limited 11,400,0003.80
ANZ Fixed Interest Fund – NZCSD 10,300,0003.43
HSBC Nominees (New Zealand) Limited – NZCSD 9,540,0003.18
Citibank Nominees (New Zealand) Limited – NZCSD7,920,0002.64
BNP Paribas Nominees (NZ) Limited – NZCSD 7,320,0002.44
ANZ Wholesale NZ Fixed Interest Fund – NZCSD 7,270,0002.42
Forsyth Barr Custodians Limited 5,085,0001.69
HSBC Nominees (New Zealand) Limited A/C State Street –NZCSD 2,900,0000.96
Investment Custodial Services Limited 2,120,0000.70
Mint Nominees Limited – NZCSD 2,075,0000.69
Dunedin City Council 2,070,0000.69
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct – NZCSD1,593,0000.53
MT Nominees Limited – NZCSD 1,590,0000.53
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
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Substantial security holder
The following information is given
pursuant to section 293 of the
Financial Markets Conduct Act 2013
(FMCA). According to notice given
pursuant to section 280 of the
FMCA, the substantial security
holder in the company and its
relevant interests as at the date
of the notice are noted opposite.
The total number of voting
products in the class as at
30 June 2024 was 2,590,459,452.
12
12 As at 30 June 2024, the total number of ordinary shares was 2,588,594,444, which excludes 1,865,008 ordinary shares held by Meridian as treasury stock.
Ordinary shares
Relevant interest
in number of shares
% of shares held
at the date of noticeDate of notice
The Sovereign in Right of New Zealand1,321,595,58751.016 July 2015
Distribution of share-
holders and holdings
as at 30 June 2024
The table opposite provides
information on the distribution
of shareholders and holdings of
Meridian Energy Limited ordinary
shares as at 30 June 2024.
Size of holding
Number of holders% Number of sharesHolding quantity %
1 to 1,000
7,83618.865, 259,5 490.20
1,001–5,000
20,08148.345 4,323 ,94 82.10
5,001–10,000
7,49718.0456,616,2182.19
10,001–50,000
5,55313.36108,119,5564.17
50,001–100,000
3800.9126,664,5591.03
100,001–500,000
1460.3528,125,5041.09
>500,000
600.142,311,350,11889. 22
Total
41,5531002,590,459,452100
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The table opposite provides
information on the distribution
of MEL050 retail fixed-rate
bonds as at 30 June 2024.
Size of holding
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
1,001 to 5,000295.28145,0000.07
5,001 to 10,0009216.76856,0000.43
10,001 to 50,00029854.298,313,0004.16
50,001 to 100,0007213.115,540,0002.77
100,001 to 500,000285.16,328,0003.16
>500,000305.46178,818,00089.41
Tot al549100200,000,000100
The table opposite provides
information on the distribution
of MEL060 retail fixed-rate
bonds as at 30 June 2024.
Size of holding
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
1,001 to 5,000315.48155,0000.08
5,001 to 10,0001562 7. 5 61,443,0000.72
10,001 to 50,00026747.1 76,559,0003.28
50,001 to 100,000468.133,483,0001.74
100,001 to 500,000335.837,450,0003.73
>500,000335.83180,910,00090.45
Tot al566100200,000,000100
The table opposite provides
information on the distribution
of MEL070 retail fixed-rate
bonds as at 30 June 2024.
Size of holding
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
1,001 to 5,000215.85104,0000.03
5,001 to 10,0003910.86372,0000.12
10,001 to 50,0002085 7.946,097,0002.03
50,001 to 100,0003710.312,738,0000.91
100,001 to 500,000328 .918,448,0002.82
>500,000226.13282,241,00094.09
Tot al359100300,000,000100
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Waivers from NZX
On 31 January 2020, NZX Regulation
published a waiver decision in
respect of Listing Rules 5.2.1 and 8.1.5,
which re-documented a prior waiver
decision dated 18 September 2013.
A copy of this waiver decision and a
summary of all waivers granted and
published by the NZX or relied on
by Meridian during the 12 months
preceding 30 June 2024 are
available on Meridian’s website
NZX Waivers
bit.ly/3LPqwJM
Non-standard designation
In New Zealand, Meridian Energy
Limited has a ‘non-standard’ (NS)
designation on the NZX Main Board.
This is due to particular provisions of
the company’s constitution, including
requirements that regulate the
ownership and transfer of Meridian
securities. The NS designation is also
required as a condition of any NZX
waivers and approvals.
13 In broad terms, a person has a ‘relevant interest’ in a share if the person (a) is the registered holder or beneficial owner of the share; or (b) has the power to exercise, or control the exercise of, a right to vote attached to the share or
has the power to acquire or dispose of, or to control the acquisition or disposition of, that share. A person may also have a ‘relevant interest’ in a share in which another person has a ‘relevant interest’ depending on the nature of the
relationship between them.
Credit rating as
at 30 June 2024
S&P Global Ratings reaffirmed
Meridian Energy Limited’s credit
rating of BBB+/stable/A-2 on
1 November 2023.
Registration as
a foreign company
Meridian has registered with the
Australian Securities and Investments
Commission as a foreign company
and has been issued with an
Australian Registered Body
Number of 151 800 396.
ASX disclosures
Meridian holds a foreign exempt
listing on the ASX. As a requirement
of admission Meridian must make
the following disclosures:
• Meridian’s place of incorporation
is New Zealand.
• Meridian is not subject to
Chapters 6, 6A, 6B and 6C of
the Australian Corporations Act
dealing with the acquisition of
shares (including substantial
holdings and takeovers).
Shareholding restrictions
The Public Finance Act 1989 was
amended in June 2012 to include
restrictions on the ownership of
certain types of security issued by
each mixed-ownership-model
company (including Meridian) and
the consequences of breaching
those restrictions. The constitution
incorporates these restrictions and
mechanisms for monitoring and
enforcing them.
A summary of the restrictions on the
ownership of shares under the Public
Finance Act and the constitution is
set out below. If the company issues
any other class of shares, or other
securities confer voting rights, in the
future, the restrictions summarised
below will also apply to those other
classes of shares or voting securities.
51% holding
The Crown must hold at least 51%
of the shares on issue.
The company must not issue, acquire
or redeem any shares if such issue,
acquisition or redemption would
result in the Crown’s holding falling
below this 51% holding.
10% Limit
No person (other than the Crown)
may have a ‘relevant interest’
13
in
more than 10% of the shares on
issue (10% Limit).
The company must not issue,
acquire, redeem or transfer any
shares if it has actual knowledge
that such issue, acquisition,
redemption or transfer will result
in any person other than the
Crown exceeding the 10% Limit.
Ascertaining whether
a breach has occurred
If a holder of shares breaches the
10% Limit or knows or believes that a
person who has a relevant interest in
shares held by that holder may have
a relevant interest in shares in breach
of the 10% Limit, the holder must
notify the company of the breach
or potential breach.
Meridian may require a holder of
shares to provide the company with
a statutory declaration if the Board
knows or believes that a person is,
or is likely to be, in breach of the
10% Limit. That statutory declaration
is required to include, where
applicable, details of all persons
who have relevant interests in
shares as a result of the shares held
by or on behalf of that holder.
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Determining whether
a breach has occurred
The company has the power to
determine whether a breach of
the 10% Limit has occurred.
In broad terms, if:
• the company considers that
a person may be in breach
of the 10% Limit; or
• a holder of shares fails to lodge
a statutory declaration when
required to do so or lodges a
declaration that has not been
completed to the reasonable
satisfaction of the company,
Meridian is required to determine
whether or not the 10% Limit has
been breached and, if so, whether
or not that breach was inadvertent.
The company must give the affected
shareholder the opportunity to make
representations to the company
before it makes a determination
on these matters.
Effect of exceeding the 10% Limit
A person who is in breach of
the 10% Limit must:
• comply with any notice that
they receive from the company
requiring them to dispose of
shares or their relevant interest
in shares, or take any other steps
that are specified in the notice,
for the purpose of remedying the
breach and reducing their holding
below the 10% Limit
• ensure that they are no longer
in breach within 60 days after
the date on which they became
aware, or ought to have been
aware, of the breach. If the
breach is not remedied within
that timeframe, the company may
arrange for the sale of the relevant
number of shares on behalf of
the relevant shareholder. In those
circumstances the company will
pay the net proceeds of sale, after
the deduction of any other costs
incurred in connection with the
sale (including brokerage and the
costs of investigating the breach
of the 10% Limit), to the relevant
shareholder as soon as practicable
after the sale has been completed.
If a relevant interest is held in any
shares in breach of the 10% Limit, then,
for as long as that breach continues:
• no votes may be cast directly by
a shareholder in respect of any
of the shares in which a relevant
interest is held in excess of the
10% Limit
• a registered holder of shares in
which a relevant interest is held
in breach of the 10% Limit will not
be entitled to receive, in respect
of the shares in which a relevant
interest is held in excess of the
10% Limit, any dividend or other
distribution authorised by the
Board in respect of the shares.
However, if the Board determines
that a breach of the 10% Limit was
not inadvertent, or that it does
not have sufficient information to
determine that the breach was
not inadvertent, the restrictions on
voting and entitlement to receive
dividends and other distributions
described in the preceding
paragraphs will apply in respect
of all of the shares (as applicable)
held by the relevant shareholder
or holder (and not just the shares
in which a relevant interest is held
in excess of the 10% Limit).
The Board may refuse to register
a transfer of shares if it knows
or believes that the transfer will
result in a breach of the 10% Limit
or where the transferee has failed
to lodge a statutory declaration
requested from it by the Board
within 14 days of the date on
which the company gave notice
to the transferee to provide such
statutory declaration.
Crown directions
The Crown has the power to direct
the Board to exercise certain of the
powers conferred on it under the
constitution. For example, where the
Crown suspects that the 10% Limit
has been breached but the Board
has not taken steps to investigate
the suspected breach, the Crown
may require the company to
investigate whether a breach of
the 10% Limit has occurred or to
exercise a power of sale of the
relevant share that has arisen as
described under the heading ‘Effect
of exceeding the 10% Limit’ above.
Trustee corporations
and nominee companies
Trustee corporations and nominee
companies (that hold securities on
behalf of a large number of separate
underlying beneficial holders) are
exempt from the 10% Limit provided
that certain conditions are satisfied.
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Share cancellation
In certain circumstances shares
can be cancelled by Meridian
through a reduction of capital,
share buyback or other form of
capital reconstruction approved by
the Board and, where applicable,
shareholders.
NZX Corporate
Governance Code
Meridian complied with the NZX
Corporate Governance Code
recommendations in all material
respects during FY24, other than
in respect of recommendation
3.6, as the Board has determined,
given Meridian’s status as a mixed-
ownership model company, it
is not appropriate or necessary
for Meridian to adopt a takeover
protocol, although there are
protocols to ensure compliance
with the constitution. Meridian has
a separate Corporate Governance
Statement available on its website.
The Corporate Governance
Statement outlines in detail
Meridian’s compliance with the
NZX Corporate Governance Code
and is current as at 28 August 2024.
Corporate Governance Statement
bit.ly/3Wy4sse
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Financial
performance
Tasman River delta running in to Lake Pukaki.
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Meridian Energy has reported
operating cash flows of $667 million
for the year ending 30 June 2024,
up from $509 million the previous
year, with net profit after tax up
from $95 million to $429 million.
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115
Financial performance contents
GROUP FINANCIAL
STATEMENTS
117Income Statement
The income earned and operating
expenditure incurred by the
Meridian Group during
the financial year.
117Comprehensive
Income Statement
Items of income and operating
expense, that are not recognised
in the income statement and
hence taken to reserves in equity.
118Balance Sheet
A summary of the Meridian
Group assets and liabilities at the
end of the financial year.
119Statement of
Changes in Equity
Components that make up
the capital and reserves of the
Meridian Group and the changes
of each component during the
financial year.
120Statement of Cash Flows
Cash generated and used
by the Meridian Group.
NOTES TO THE GROUP
FINANCIAL STATEMENTS
122About this report
124S Significant matters
in the financial year
128A Financial performance
A1. Segment performance
A2. Income
A3.Expenses
A4. Taxation
135B Assets used to generate
and sell electricity
B1. Property, plant
and equipment
B2. Intangible assets
140C Managing funding
C1.Capital management
C2.Share capital
C3.Earnings per share
C4.Dividends
C5.Cash and cash equivalents
C6.Trade receivables
C 7.Borrowings
C8.Green financing
C9.Lease liabilities
C10.Commitments
150D Financial instruments
used to manage risk
D1.Financial risk management
162E Group structure
E1.Subsidiaries and
other interests
163F Other
F1. Share-based payments
F2. Related parties
F3. Auditor’s remuneration
F4. Contingent assets
and liabilities
F5. Subsequent events
F6. Changes in financial
reporting standards
168Signed report
Independent auditor’s report
KEY
Subsequent events
Key judgements
and estimates
Risks
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Income Statement
FOR THE YEAR ENDED 30 JUNE 2024
Note
2024
$M
2023
$M
Operating revenueA2 4,856 3,222
Operating expensesA3(4,102) (2,397)
Depreciation and amortisationA3(334) (294)
Asset related adjustmentsA3(18) (10)
Net change in fair value of energy hedgesD1 253 (375)
Finance costsA3(69) (55)
Interest incomeA2 12 11
Net change in fair value of treasury hedgesD1(4) 24
Net profit before tax 594 126
Income tax expenseA4(165) (31)
Net profit after tax attributed
to the shareholders of the parent company 429 95
Earnings per share (EPS) attributed to
ordinary equity holders of the parent Cents Cents
Basic and diluted EPSC3 16.6 3.7
Comprehensive Income Statement
FOR THE YEAR ENDED 30 JUNE 2024
Note
2024
$M
2023
$M
Net profit after tax 429 95
Other comprehensive income
Items that will not be reclassified to profit or loss:
Asset revaluationS3, B13,152 1,111
Deferred tax on the above itemA4(883)(311)
2,269 800
Items that may be reclassified to profit or loss:
Net (loss)/gain on cash flow hedges(7) (11)
Income tax on the above items 2 3
(5) (8)
Other comprehensive income for the year, net of tax2,264 792
Total comprehensive income for the year, net of tax
attributed to shareholders of the parent company2,693 887
The notes to the Group financial statements form an integral part of these financial statements.
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Balance Sheet
AS AT 30 JUNE 2024
Note
2024
$M
Restated
*
2023
$M
Current assets
Cash and cash equivalentsC5 221 212
Trade receivablesC6 536 334
Customer contract assets 12 13
Financial instrumentsD1, S2 233 86
Other assets 49 47
Total current assets 1,051 692
Non-current assets
Property, plant and equipmentB112,192 8 ,989
Intangible assetsB2 62 73
Financial instrumentsD1, S2224 186
Other assets 14 –
Total non-current assets12,492 9,248
Total assets13,543 9,940
Note
2024
$M
Restated
*
2023
$M
Current liabilities
Payables and accrualsS2565 293
Employee entitlements 21 20
Customer contract liabilities 10 14
Current portion of borrowingsC7 234 214
Current portion of lease liabilitiesC9 3 3
Financial instrumentsD1, S2 86 75
Current tax payable 85 46
Total current liabilities1,004 665
Non-current liabilities
BorrowingsC7 1,113 1,022
Deferred taxA42 ,949 2,103
Lease liabilitiesC9 27 24
Financial instrumentsD1142 111
Term payablesS2 62 28
Total non-current liabilities4,293 3,288
Total liabilities5,297 3,953
Shareholders’ equity
Share capitalC2 1,729 1,700
Reserves6,517 4,287
Total shareholders’ equity8,246 5,987
Total liabilities and shareholders’ equity13,543 9,940
* The Balance Sheet has been restated due to a change in presentation in the current year.
Refer to the Significant matters section Note S2 for more information.
For and on behalf of the Board of Directors who authorised
the issue of the financial statements on 27 August 2024.
Mark Verbiest
Chair
27 August 2024
Julia Hoare
Chair, Audit and Risk Committee
27 August 2024
The notes to the Group financial statements form an integral part of these financial statements.
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Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2024
$MNote
Share
capital
Share
option
reserve
Revaluation
reserve
Cash flow
hedge
reserve
Retained
earnings
Total
equity
Balance at 1 July 2022 1,671 2 5,079 13 (1,242) 5,523
Net profit for the 2023 financial year – – – – 95 95
Other comprehensive income
Asset revaluation B1, S3 – – 1,111 – – 1,111
Net gain (loss) on cash flow hedges – – – (11) – (11)
Income tax relating to other comprehensive incomeA4 – – (311) 3 – (308)
Total other comprehensive income, net of tax – – 800 (8) – 792
Total comprehensive income for the year, net of tax – – 800 (8) 95 887
Share-based transactionsC2, F1(1) 1 – – – –
Dividend reinvestment planC4 30 ––– – 30
Dividends paid/reinvestedC4 – – – – (453) (453)
Balance at 30 June 2023 and 1 July 2023 1,700 3 5,879 5 (1,600) 5,987
Net profit for the 2024 financial year – – – – 429 429
Other comprehensive income
Asset revaluation B1, S3 – – 3,152 – – 3,152
Net gain (loss) on cash flow hedges – – – (7) – (7)
Income tax relating to other comprehensive incomeA4 – – (883) 2 – (881)
Total other comprehensive income, net of tax – – 2,269(5) –2,264
Total comprehensive income for the year, net of tax – – 2,269(5)4292,693
Recycling of asset revaluation to retained earnings––(5) – 5 –
Income tax relating to recycling of asset revaluation reserve – – 2 – – 2
Share-based transactionsC2, F1(2) – – – 1 (1)
Dividend reinvestment planC4 31 – – – – 31
Dividends paid/reinvestedC4 – – – – (466) (466)
Balance at 30 June 2024 1,729 3 8,145 – (1,631) 8,246
The notes to the Group financial statements form an integral part of these financial statements.
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Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2024
Note
2024
$M
2023
$M
Operating activities
Receipts from customers4,614 3,354
Interest received 12 11
Payments to suppliers and employees(3,719)(2,637)
Interest paid(80) (65)
Income tax paid(160) (154)
Operating cash flowsC5 667 509
Investing activities
Sale of property, plant and equipment– 2
Purchase of property, plant and equipment(281) (316)
Purchase of intangible assets(40) (13)
Sale of subsidiaries 8 –
Purchase of other assets(14) –
Investing cash flows(327) (327)
Financing activities
Borrowings drawnC7 467 255
Borrowings repaidC7(357) (160)
Lease liabilities repaidC7(3) (3)
Dividends paid C4(436) (423)
Shares purchased for long-term incentiveC2(2) (2)
Financing cash flows(331) (333)
Net increase/(decrease) in cash and cash equivalents 9 (151)
Cash and cash equivalents at beginning of year 212 363
Cash and cash equivalents at end of yearC5 221 212
The notes to the Group financial statements form an integral part of these financial statements.
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Harapaki Wind Farm, Hawke’s Bay.
FINANCIAL PERFORMANCEMERIDIAN INTEGRATED REPORT 2024
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121
Notes to the Group financial statements
About this report
IN THIS SECTION
The notes to the financial
statements include information
which is considered relevant
and material to assist the reader
in understanding changes in
Meridian’s financial position or
performance. Information is
considered relevant and material if:
the amount is significant
because of its size and nature;
it is important for
understanding the
results of Meridian;
it helps to explain changes
in Meridian’s business; or
it relates to an aspect of
Meridian’s operations
that is important to
future performance.
Meridian Energy Limited (Meridian)
is a for-profit entity domiciled and
registered under the Companies Act
1993 in New Zealand. It is an FMC
reporting entity for the purposes of
the Financial Markets Conduct Act
2013. Meridian’s core business activities
are the generation, trading and
retailing of electricity and the sale of
complementary products and services.
The registered office of Meridian is
Level 2, 98 Customhouse Quay,
Wellington. Meridian is dual listed on
the New Zealand Stock Exchange (NZX)
and the Australian Securities Exchange
(ASX). As a mixed ownership company,
majority owned by His Majesty the
King in Right of New Zealand, it is
bound by the requirements of the
Public Finance Act 1989.
These financial statements have
been prepared:
• in accordance with Generally
Accepted Accounting Practice
(GAAP) in New Zealand and
comply with IFRS Accounting
Standards issued by the International
Accounting Standards Board, and
the New Zealand equivalents, as
appropriate for a for-profit entity;
• in accordance with the requirements
of the Financial Markets Conduct
Act 2013;
• on the basis of historical cost,
modified by revaluation of certain
assets and liabilities;
• in New Zealand dollars (NZD),
with all values rounded to millions
($M) unless otherwise stated; and
• using accounting policies as
provided throughout the notes
to the financial statements.
Basis of consolidation
The Group financial statements comprise
the financial statements of Meridian and
its subsidiaries and controlled entities,
outlined in Note E1 Subsidiaries and
other interests.
The financial statements of members of
the Group are prepared for the same
reporting period as the parent company,
using consistent accounting policies.
In preparing the Group financial
statements, all material intra-group
transactions, balances, income and
expenses have been eliminated.
Subsidiaries are consolidated from
the date on which control is obtained
to the date on which control is lost.
ABOUT THIS REPORTNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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122
Foreign currency
Transactions denominated in foreign
currencies are converted at the
exchange rates at the date of the
transactions. Foreign currency monetary
assets and liabilities are translated at
the rate prevailing at balance date,
30 June 2024.
The assets and liabilities of any
international subsidiaries are translated
to NZD at the closing rate at balance
date. The revenue and expenses of
these subsidiaries are translated at
rates approximating the exchange
rates at the dates of the transactions.
When the financial statements of
subsidiaries are translated into NZD,
exchange differences can arise. These
are recorded in the foreign currency
translation reserve (within equity). If an
international subsidiary is disposed of,
these cumulative translation differences
are recognised in the Income Statement
in the period in which that occurs.
The principal functional currencies
of international subsidiaries is British
pounds; the closing rate at 30 June 2024
was 0.4814 (30 June 2023: 0.4822).
A full list of international subsidiaries and
their functional currencies are provided
in Note E1 Subsidiaries and other interests.
Key judgements and estimates
In the process of applying the Group’s
accounting policies and application
of accounting standards, Meridian
has made a number of judgements
and estimates. The estimates and
underlying assumptions are based
on historical experience and various
other factors that are considered
to be appropriate under the
circumstances. Actual results may
differ from these estimates.
Judgements and estimates which are
considered material to understanding
the performance of Meridian are
found in the following notes:
• A2: Income;
• B1: Property, plant and equipment;
and
• D1: Financial risk management
SIGNIFICANT MATTERS IN THE FINANCIAL YEARNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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123
S Significant matters in the financial year
IN THIS SECTION
This section outlines significant
matters that have impacted
Meridian’s financial performance.
S1 New Zealand
Aluminium Smelter (NZAS)
On 31 May 2024, Meridian announced
that it has signed a package of
conditional, 20-year contracts with
NZAS, for part of NZAS electricity
needs. On 26 June 2024, Meridian
announced the contracts were
unconditional and would come into
effect from 3 July 2024 (meaning the
old NZAS contracts would come to an
end at midnight on 2 July 2024).
The new contract package includes
a long-term fixed price contract for
wholesale electricity price cover (base
contract) and a demand response
agreement (DRA).
Key terms of the contracts are as follows:
• 472MW base contract volume from
3 July 2024 to 31 December 2024, then
377MW from 1 January 2025 onward;
• four demand response options,
ranging from 25MW to 185MW. Three
quarters of a called option will come
off Meridian contracted volume;
• pricing that begins 1 July 2024, up
to and including 31 December 2044;
• pricing includes links to Consumer
Price Inflation (CPI) from 1 January
2028 subject to London Metal
Exchange Aluminium prices in the
previous year being higher than the
year before the previous year; and
• a termination clause, whereby
NZAS may provide two years’
notice of termination any time from
31 December 2032 onwards, but
must make an irrevocable payment
of $180 million to Meridian when
providing that notice.
Meridian will account for these as follows:
• the base contract will be accounted
for as a derivative, with its impacts
presented on Balance Sheet within
financial instruments and in the
Income Statement in net change in
fair value of energy hedges;
• the DRA will be accounted for as an
executory contract, meaning that
premium payments will be recognised
in the Income Statement in
Operating expenses as incurred;
• an embedded derivative will be
recognised in respect of the CPI
pricing terms in the DRA, with its
impacts presented on Balance Sheet
within Financial instruments and in
the Income Statement in Net change
in fair value of energy hedges; and
• hedge accounting will not be applied
to either the base contract or the DRA
embedded derivative.
SIGNIFICANT MATTERS IN THE FINANCIAL YEARNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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This will mark a significant change in
Meridian’s accounting for the NZAS
contracts. In recent years, Meridian
has accounted for the NZAS contracts
as follows:
• the old base contract has been
accounted for as an executory
contract, meaning that fixed-price
receipts from NZAS were recognised
in the Income Statement in Operating
income as incurred, and floating price
payments to NZAS were recognised
in the Income Statement in Operating
expenses as incurred; and
• the old DRA has been accounted
for as a derivative asset (in respect
of future call value to Meridian),
with accompanying amortised cost
liability (in respect of premiums
payable to NZAS). Each period, the
derivative asset unwinds to the Income
Statement in Net changes in fair value
of energy hedges and the amortised
cost liability reduces as premium
payments are made to NZAS.
In terms of impact to the current financial
year, the most material impact is on
our valuation of generation structures.
Meridian holds generation structure
assets at fair value, and until 31 May 2024
that fair value was calculated on the
assumption NZAS would cease operating
by 31 December 2024. The new contracts
mean that the assumed end date shifts
to 31 December 2044 and the forward
curve assumptions used in our valuation
includes the impact of the new contract
pricing. Refer to notes S3 and B1 for
more information on the fair value of
generation structures.
For future financial years, the new
contracts will mean the following impacts
compared to previous financials years:
• in the Income Statement, Operating
income and Operating expenses will
reduce, as the NZAS base contract
related components of these cease
to exist;
• in the Income Statement, Operating
expenses will increase, as DRA
premium expenses and DRA call fee
expenses are recorded as incurred;
• in the Income Statement, Net
changes in fair value of energy
hedges may become more volatile,
impacted by realised settlements
on the base contract, unrealised
fair value movements on the base
contract, and remeasurements of the
DRA embedded derivative; and
• in the Balance Sheet, Financial
instrument balances will become
more volatile, impacted by unrealised
fair value movements on the base
contract, and remeasurements of
the DRA embedded derivative.
S2 Restatement of presentation of
Financial Transmission Rights (FTRs)
Meridian has amended its balance
sheet presentation of FTRs. FTRs are
Level 1 energy hedges used to manage
locational price risk. Meridian previously
disclosed FTRs gross, with:
• acquisition cost classified as a liability
(in Payables and accruals for current
amounts due, and in Term payables
for non-current amounts due); and
• the hedge value classified as assets
(in Financial instruments).
As FTRs are net settled, the Group has
changed its Balance Sheet presentation
in the current period and restated the
prior year. The effects of this change in
presentation on the consolidated balance
sheet are shown in the following table.
BALANCE SHEET
2023
Restated
$M
2023
$M
Change
$M
Financial instruments (current asset)86141 (55)
Financial instruments (non current asset)186213 (27)
Financial instruments (current liability)7571 4
Payables and accruals293352 (59)
Term payables2855 (27)
SIGNIFICANT MATTERS IN THE FINANCIAL YEARNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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125
S3 Property, plant and equipment
Within property, plant and equipment,
generation structures and plant
are carried at fair value for financial
reporting purposes. Revaluations are
performed with sufficient regularity
to ensure that carrying value does not
differ materially from that which would
be determined using fair values at
balance date.
At 30 June 2024, a valuation of
Meridian’s generation structures and
plant assets has been undertaken to
determine the fair value of the assets as
at this date. The valuation has resulted
in a net increase of $3,152 million (2023:
increase of $1,111 million). As noted earlier
in the Significant Matters section, the
rise in value is driven mainly by the
change in price forecast and a reduction
in Meridian’s Weighted Average Cost
of Capital (WACC). Since 2021, the
price path used for valuation purposes
was based on NZAS closing the Tiwai
Point Aluminium Smelter, whereas it
is now based on NZAS keeping that
smelter open. Management calculates a
valuation on which the Board’s ultimate
decision is based. The valuation is set
using discounted cashflow (DCF) analysis
and assumes NZAS continues to operate
until 31 December 2044.
Refer to Note B1 Property, plant and
equipment for more information.
West Wind Farm, Te Whanganui a Tara Wellington.
SIGNIFICANT MATTERS IN THE FINANCIAL YEARNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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Significant matters in the financial year
IN THIS SECTION
This sections sets out significant
matters which have impacted
Meridian’s financial performance
and an explanation of non-GAAP
measures within the notes to the
financial statements.
Non-GAAP measures
Meridian refers to non-GAAP financial
measures within these financial
statements and accompanying notes.
The limited use of non-GAAP measures
is intended to supplement GAAP
measures to provide readers with
further information to broaden their
understanding of Meridian’s financial
performance and position. They are
not a substitute for GAAP measures.
As these measures are not defined
by NZ GAAP, IFRS, or any other body
of accounting standards, Meridian’s
calculations may differ from similarly
titled measures presented by other
companies. The measures are described
below, including note references for
reconciliations to the financial statements.
EBITDAF
Earnings before interest, tax, depreciation,
amortisation, unrealised changes in fair
value of hedges, impairments and gains
or losses on sale of assets.
Segment performance note
EBITDAF is reported in Note A1 Segment
Performance, allowing the evaluation
of Meridian’s operating performance
without the non-cash impacts of
depreciation, amortisation, unrealised
fair value movements of hedging
instruments and other one-off or
infrequently occurring events and the
effects of Meridian’s capital structure
and tax position. This allows the reader
to compare operating performance
with that of other electricity industry
companies.
Energy margin
Energy margin provides a measure of
financial performance that, unlike total
revenue, accounts for the variability of
the wholesale electricity market and the
broadly offsetting impact of wholesale
prices on the cost of Meridian’s retail
electricity purchases and revenue from
generation. Meridian uses the measure
of energy margin within Meridian’s
segmental financial performance in
Note A1 Segment performance.
Net debt
Net debt is a metric commonly used
by investors as a measure of Meridian’s
indebtedness that takes account of
liquid financial assets. Meridian uses this
measure within its capital management
and this is outlined in Note C1 Capital
management.
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A Financial performance
IN THIS SECTION
This section explains the financial
performance of Meridian, and
provides additional information
about individual items in the
Income Statement, including:
accounting policies,
judgements and estimates
that are relevant for
understanding items
recognised in the Income
Statement; and
analysis of Meridian’s
performance for the year
by reference to key areas
including: performance by
operating segment, revenue,
expenses and taxation.
A1 Segment performance
The Chief Executive (the chief operating
decision-maker) monitors the operating
performance of each segment for the
purpose of making decisions on resource
allocation and strategic direction.
The Chief Executive considers the
business according to the nature of the
products and services and the location of
operations, as set out further on this page:
Wholesale
• Generation of electricity and
its sale into the New Zealand
wholesale electricity market.
• Purchase of electricity from the
wholesale electricity market and its
sale to the Retail segment and to large
industrial customers, including NZAS
representing the equivalent of 37%
(30 June 2023: 36%) of Meridian’s
New Zealand generation production.
• Development of renewable
electricity generation opportunities
in New Zealand.
Retail
• Retailing of electricity and
complementary products through
two brands, Meridian and Powershop,
in New Zealand.
• Electricity sold to residential,
business and industrial customers
on fixed price variable volume
contracts is purchased from the
Wholesale segment at an average
annual fixed (transfer) price of
$133 per megawatt hour (MWh)
(2023:$104 per MWh). The transfer
price is set in a similar manner to
transactions with third parties.
• Electricity sold to business and
industrial customers on spot
(variable price) agreements is
purchased from the Wholesale
segment at prevailing wholesale
spot market prices.
• Agency margin from spot sales is
included within “Contracted sales,
net of distribution costs”.
Other and unallocated
• Other operations, that are not
considered reportable segments,
include licensing of the Flux
developed electricity and gas
retailing platform.
• Activities and centrally based costs
that are not directly allocated to
other segments.
The financial performance of the
operating segments is assessed using
energy margin and EBITDAF (a definition
of these measures is included within
significant matters in the financial year)
before unallocated central corporate
expenses. Balance Sheet items are not
reported to the Chief Executive at an
operating segment level.
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A1 Segment performance continued
Wholesale Retail
Other and
Unallocated Inter-segment Total
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
Contracted sales, net of distribution costs and hedging 633 530 1,363 1,208 – – – – 1,996 1,738
Cost to supply customers, net of hedging (3,487) (1,549) (1,326) (1,006) – – 1,507 1,065 (3,306) (1,490)
Net cost of other hedges 285 (121) – – – – – – 285 (121)
Generation spot revenue, net of hedging 2,319 1,020 – – – – – – 2,319 1,020
Inter-segment electricity sales 1,507 1,065 – – – – (1,507) (1,065) – –
Virtual asset swap margins (9) (7) – – – – – – (9) (7)
Other market revenue/(costs) (9) (9) – 1 – – – – (9) (8)
Energy margin (see reconciliation on next page) 1,239 929 37 203 – – – – 1,276 1,132
Other revenue 4 3 18 16 23 23 (9) (13) 36 29
Energy transmission expenses (73) (80) – – – – – – (73) (80)
Hosting expenses – – – – (4) (3) – – (4)(3)
Electricity metering expenses – – (49) (46) – – – – (49) (46)
Gross margin 1,170 852 6 173 19 20 (9) (13) 1,186 1,032
Employee expenses (31) (27) (38) (36) (65) (56) – – (134) (119)
Other operating expenses (67) (65) (40) (34) (48) (38) 8 7 (147) (130)
EBITDAF 1,072 760 (72) 103 (94) (74) (1) (6) 905 783
Depreciation and amortisation (334) (294)
Asset related adjustments (18) (10)
Net change in fair value of energy hedges (see reconciliation on next page) 102 (333)
Finance costs (69) (55)
Interest income 12 11
Net change in fair value of treasury hedges (4) 24
Net profit before tax 594 126
Income tax expense (165) (31)
Net profit after tax attributed to the shareholders of the parent company
429 95
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A1 Segment performance continued
RECONCILIATION OF ENERGY MARGINNote
2024
$M
2023
$M
Energy sales to customersA2 2,487 2,140
Generation revenueA2 2,333 1,053
Energy expensesA3 (2 ,956) (1,331)
Energy distribution expensesA3 (739) (688)
Realised energy hedges (see below) 151 (42)
Energy margin 1,276 1,132
RECONCILIATION OF EBITDAFNote
2024
$M
2023
$M
Operating incomeA2 4,856 3,222
Operating expensesA3 (4,102) (2,397)
Realised energy hedges (see below) 151 (42)
EBITDAF 905 783
RECONCILIATION OF NET CHANGE IN FAIR VALUE OF ENERGY HEDGES
2024
$M
2023
$M
Realised energy hedges shown within energy margin (see above) 151 (42)
Unrealised changes in the fair value of energy hedges (as noted on previous page) 102 (333)
Net change in fair value of energy hedges, per the Income Statement 253 (375)
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A2 Income
OPERATING REVENUE
2024
$M
2023
$M
Energy sales to customers 2,487 2,140
Generation revenue 2,333 1,053
Energy-related services revenue 11 10
Other revenue 25 19
Total operating revenue 4,856 3,222
2024
$M
2023
$M
Interest income 12 11
Operating revenue
All revenue was generated in New Zealand.
Energy sales to customers
Revenue received or receivable from residential, business and industrial customers.
This revenue is influenced by customer contract sales prices and their demand
for electricity.
Generation revenue
Revenue received from electricity generated and sold into wholesale markets.
This revenue is influenced by the quantity of generation and the wholesale spot
prices. It is recognised at the time of generation.
Revenue
Electricity consumption
Meridian exercises judgement in
estimating retail electricity sales,
where customer electricity meters
are unread at balance date. These
estimates of customer electricity
usage in the unread period are
based on the customers’ historical
consumption patterns.
Revenue is recognised at the time of
supply and customer consumption.
Elements of the sale price such as
discounts and credits given to
customers and any incremental
costs incurred obtaining or retaining
a customer contract are deferred to
customer contract assets on the
Balance Sheet on a portfolio basis
and released to the Income Statement
over the contract tenure.
Supply contract with NZAS
The current agreement with
NZAS has been recognised in these
financial statements in a manner
consistent with fixed price supply
agreements with other industrial
customers. Revenue is recognised as
electricity sales revenue in the Income
Statement and the estimated future
cash flows are included in the fair
value of generation structures and
plant assets on the Balance Sheet.
Refer to the Significant Matters
section on how this will change
under the new NZAS contracts.
Discounts and payment terms
Where a discount is offered,
revenue is initally recognised net
of estimated discount based on
accumulated experience used to
estimate the amount of discounts
taken by customers.
There are no significant differences
between the payment terms and
this policy.
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A3 Expenses
OPERATING EXPENSES
2024
$M
2023
$M
Energy expenses 2 ,956 1,331
Energy distribution expenses 739 688
Energy transmission expenses 73 80
Hosting expenses 4 3
Employee expenses 134 119
Energy metering expenses 49 46
Other expenses 147 130
Total operating expenses 4,102 2,397
DEPRECIATION AND AMORTISATIONNote
2024
$M
2023
$M
Depreciation of property, plant and equipmentB1 304 266
Amortisation of intangiblesB2 30 28
Total depreciation and amortisation 334 294
FINANCE COSTSNote
2024
$M
2023
$M
Interest on borrowings 83 67
Interest on electricity option premiums 1 1
Interest on lease liabilitiesC9 2 2
Less: Capitalised interest(17) (15)
Total finance costs 69 55
ASSET RELATED ADJUSTMENTS
2024
$M
2023
$M
Impairment of property, plant & equipment and other assets 18 8
Write down of inventory to net realisable value – 2
Loss on disposal of property, plant & equipment 8 –
(Gain) on sale of subsidiaries(8) –
Total 18 10
Operating expenses
Energy expenses
The cost of:
• energy purchased from wholesale
markets to supply customers; and
• related charges and services.
Energy expenses are influenced by
quantity and timing of customer
consumption and wholesale spot prices.
Energy distribution expenses
The cost of distribution companies
transporting energy between where
energy is transmitted/stored and
customers’ properties.
Energy transmission expenses
Meridian’s share of the cost of the
high voltage direct current (HVDC)
link between the North and South
Islands of New Zealand and the cost
of connecting Meridian’s generation
sites to the national grid.
Energy metering expenses
The cost of electricity meters, meter
reading and data gathering of retail
customer electricity consumption.
Employee expenses
Provisions are made for benefits owing
to employees in respect of wages and
salaries, annual leave, long service leave
and employee incentives for services
rendered. Provisions are recognised
when it is probable they will be settled
and can be measured reliably.
They are carried at the remuneration
rate expected to apply at the time
of settlement.
Contributions to defined contribution
plans (largely KiwiSaver) were $5 million
in 2024 (30 June 2023: $5 million).
Finance costs – capitalised interest
During the financial year, Meridian
capitalised interest costs relating to
the build of development sites.
The average rate used to determine
the amount of borrowing costs eligible
for capitalisation during the year was
5.53% (2023: 5.36%).
Impairment of non-financial assets
Meridian reviews the recoverable amount
of its tangible and intangible assets at
each balance date. They are grouped into
cash-generating units with separately
identifiable cash flows. The recoverable
amount is the higher of an asset’s fair
value less costs to sell, and present value
of future cash flows expected to be
generated by the assets (also known as
value in use). If the carrying value of an
asset exceeds the recoverable amount,
an impairment expense is recognised in
the income statement. For assets that are
revalued refer to Note B1 Property, plant
and equipment for specific treatment.
The current year impairment expense
relates to software assets, refer to Note B2
Intangible assets for more information.
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A4 Taxation
TAX EXPENSE
2024
$M
2023
$M
Current income tax expense 198 167
Other permanent differences – 4
Adjustments to tax of prior years – (3)
Total current tax expense 198 168
Deferred tax(34) (131)
Adjustments to tax of prior years 1 (6)
Total tax 165 31
Reconciliation to profit before tax
Profit before tax 594 126
Income tax at applicable rates 166 35
Expenditure not deductible for tax(2) –
Income tax (over)/under provided in prior year – (3)
Other 1 (1)
Tax expense 165 31
Current tax expense
Tax expense components are current
income tax and deferred tax.
Current income tax expense is the
income tax assessed on taxable profit
for the year. Taxable profit differs
from profit before tax reported in the
Income Statement as it excludes items
of income and expense that are taxable
or deductible in other years, and also
excludes items that will never be taxable
or deductible. Meridian’s liability for
current tax is calculated using tax rates
enacted at balance date, being 28%
(2023: 28%).
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A4 Taxation continued
DEFERRED TAX LIABILITIES
2024
$M
2023
$M
Balance at beginning of year 2,103 1,932
Temporary differences in income statement:
Depreciation and amortisation(66)(59)
Term payables3 5
Financial instruments29(86)
Customer contract assets(1)(1)
Other payables and receivables 1 4
(34) (137)
Temporary differences in other comprehensive income:
Revaluation reserve movements883 311
Other(3) (3)
Balance at end of year2 ,949 2,103
Made up of:
Property, plant and equipment2,899 2,084
Term payables(9)(12)
Financial instruments47 19
Customer contract assets 3 4
Other payables and receivables9 8
Deferred tax liability2 ,949 2,103
Total deferred tax2 ,949 2,103
Deferred tax liabilities
Deferred tax is income tax which is
expected to be payable or recoverable
in the future as a result of the unwinding
of temporary differences.
These arise from differences in the
recognition of assets and liabilities for
financial reporting and from the filing
of income tax returns. Deferred tax
is recognised on all temporary differences,
other than those arising from the initial
recognition of assets and liabilities in
a transaction (other than in a business
combination) that affects neither the
accounting nor taxable profit or loss.
The majority of Meridian’s deferred
tax balance is made up of temporary
differences on the revaluation of
property, plant and equipment.
This balance will only reverse if the
fair value of these assets declines back
to their original historical cost.
Deferred tax is calculated at the tax rates
that are expected to apply to the year
when the liability is settled or the asset
realised, based on tax rates and tax laws
that have been enacted or substantively
enacted at balance date.
During the reporting period, the New
Zealand government passed legislation to
remove commercial building depreciation
for tax purposes. This did not have a
material impact on Meridian’s deferred tax
liability balance or income tax expense.
Offsetting deferred tax balances
Deferred tax assets and liabilities
are offset only if there are legally
enforceable rights to set off current
tax assets against current tax liabilities
and when they relate to the same
taxable entity and taxation authority.
Pillar Two
Meridian is within the scope of the
Organisation for Economic Co-operation
and Development Pillar Two Model
Rules on Base Erosion and Profit Shifting.
The intention of the Pillar Two rules is to
ensure a minimum global effective tax
rate of 15% is paid across all jurisdictions
and is expected to apply to Meridian
from 1 July 2024.
Meridian has applied the exception to
recognising and disclosing information
about deferred tax assets and liabilities
related to Pillar Two income taxes. The
Pillar Two rules are enacted in countries
in which Meridian operates but not
yet in effect. Since Meridian does not
have significant operations in low-tax
jurisdictions, the rules are not expected
to have a material impact.
B Assets used to generate and sell electricity
IN THIS SECTION
This section shows the assets
Meridian uses in the production
and sale of electricity to
generate operating revenue.
In this section of the notes
there is information about:
property, plant and
equipment; and
intangible assets.
B1 Property, plant and equipment
$M
Generation
structures
and plant at
fair value
Land and
buildings
at cost
Other
plant and
equipment
at cost
Right of
use lease
assets
Work in
progress
at cost Total
Cost or fair value 7, 47 2 56 148 48 232 7,9 5 6
Less accumulated depreciation – (7) (105) (12) (2) (126)
Net book value at 30 June 2022 7, 47 2 49 43 36 230 7, 8 3 0
Additions – – – – 328 328
Transfers – work in progress 5 1 10 – (16) –
Adjustment of Right of use lease assets – – – (1) – (1)
Disposals – – (1) – – (1)
Impairments – – (3) (9) – (12)
Generation structures and plant revaluations:
Increase (decrease) taken to revaluation reserve 1,111 – – – – 1,111
Depreciation expense(254) (1) (9) (2) – (266)
Net book value at 30 June 2023 8,334 49 40 24 542 8,989
Cost or fair value 8,334 55 139 35 544 9,107
Less accumulated depreciation
14
– (6) (99) (11) (2) (118)
Net book value at 30 June 2023 8,334 49 40 24 542 8,989
Additions – – – 7 368 375
Transfers – work in progress 426 11 12 – (449) –
Adjustment of Right of use lease assets – – – (3) – (3)
Disposals(10) (4) (3) – – (17)
Impairments – – – – – –
Generation structures and plant revaluation:
Increase (decrease) taken to revaluation reserve3,152 – – – – 3,152
Depreciation expense(293) (1) (8) (2) – (304)
Net book value at 30 June 202411,609 55 41 26 461 12,192
Cost or fair value11,609 60 120 39 461 12,289
Less accumulated depreciation
14
–(5) (79) (13) – (97)
Net book value at 30 June 2024 11,609 55 41 26 461 12,192
14 Includes the reversal of accumulated depreciation on generation structures and plant at revaluation date.
At 30 June 2024, had the generation
structures and plant been carried
at historical cost less accumulated
depreciation and accumulated
impairment losses, their carrying amount
would have been approximately
$1.4 billion (30 June 2023: $1.2 billion).
14 Includes the reversal of accumulated
depreciation on generation structures
and plant at revaluation date.
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B1 Property, plant and equipment continued
Recognition and measurement
Generation structures and plant assets
(including land and buildings) are
held on the Balance Sheet at their fair
value at the date of revaluation, less
any subsequent depreciation and
impairment losses. All other property,
plant and equipment are stated
at historical cost less accumulated
depreciation and any accumulated
impairment losses.
Included in work in progress at cost
in 2024 are costs in relation to the
reconsenting of Meridian’s Waitaki Hydro
Scheme which provide for mitigation of
environmental effects under agreements
entered into with various stakeholders
as part of the reconsenting process.
This reflects Meridian’s long term
commitment to the region and aims
to address existing and future adverse
effects on those stakeholders of the
continuing ongoing operation of the
Waitaki Hydro Scheme.
Fair value and revaluation of
generation structures and plant
Revaluations are performed with sufficient
regularity to ensure that the carrying
amount does not differ materially from
that which would be determined using
fair values at balance date.
Meridian uses DCF analysis to establish
a valuation range on which the Board’s
ultimate valuation decision is based.
Any increase arising on revaluation is
credited to the revaluation reserve, except
to the extent that it reverses a revaluation
decrease for the same asset previously
recognised in the Income Statement.
In that case the increase is credited to
the Income Statement to the extent
of the decrease previously charged.
A decrease in carrying amount arising
on revaluation is charged to the
Income Statement to the extent that it
exceeds the balance, if any, held in the
revaluation reserve relating to a previous
revaluation of that asset.
Accumulated depreciation at revaluation
date is eliminated against the gross
carrying amount so that the carrying
amount after revaluation represents the
revalued amount.
Subsequent additions to generation
structures and plant assets are recorded
at cost, which is considered fair value,
including costs directly attributable to
bringing the asset to the location and
condition necessary for its intended
purpose, and financing costs where
appropriate.
Where a generation asset is partly
completed over a reporting period,
revaluation is only applied to the
completed portion of the generation
asset. Value relating to uncompleted
assets remains in work in progress and
is held at cost.
Meridian performed a valuation
assessments of its plant assets at
30 June 2024.
The revaluation resulted in a net
increase of $3,152 million (2023: increase
of $1,111 million) in the carrying value
of our generation structures and plant
assets. The impact of the revaluation
was recognised as an increase of
$3,152 million (2023: increase of
$1,111 million) in the revaluation reserve.
As a consequence of the revaluation,
accumulated depreciation on generation
assets is reset to nil. There was no
depreciation impact of this revaluation
in the Income Statement.
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B1 Property, plant and equipment continued
Generation structures and plant valuation techniques and key inputs
The Board uses its judgement to
decide on the appropriateness of key
valuation techniques and inputs for
fair value measurement. Judgement is
also used in determining the estimated
remaining useful lives of assets. As the
valuation of generation structures and
plant utilises some unobservable (non-
market data) inputs, it continues to be
classified as level 3 under Meridian’s
fair value hierarchy defined in Note D1
Financial risk management. As discussed
on the previous page, Meridian uses
DCF analysis to establish a valuation
range. The DCF methodology involves
calculating the present value of future
cash flows expected to be produced
over a projection period, including
forecast revenues, forecast future
generation output, current and forecast
reconsenting costs and NZAS continuing
to operate until 31 December 2044.
The forward curve assumptions used in
our valuation include the impact of the
new NZAS contract pricing.
The DCF valuation was prepared using
a 35 year time period (2023: 20 year
time period) in line with New Zealand
Treasury forward inflation curve.
Meridian has a mature modelling
framework which is a forward looking,
long-term analysis of the fundamentals
underpinning the New Zealand
wholesale electricity market. This
modelling framework includes forward-
looking climate change impacts, both
physical in nature (such as hydrological
seasonality and variability) and
transitional (such as energy demand
changes as New Zealand decarbonises).
As part of its valuation process, Meridian
ensures that the inputs used are in line
with the anticipated impacts identified
as part of its climate-related risk and
opportunity assessment.
The table below describes the key
inputs and their sensitivity to changes.
20242023
Key input to
measure fair valueDescription
Range of
unobservable inputsSensitivity
Impact on
valuation
Range of
unobservable inputsSensitivity
Impact on
valuation
Future NZ wholesale
electricity prices
The price received
for NZ generation
$68MWh to $129MWh between
FY25 and FY59 (in real terms)
+$3MWh
-$3MWh
$444M
($444M)
$43MWh to $150MWh between
FY24 and FY43 (in real terms)
+$3MWh
-$3MWh
$456M
($456M)
New Zealand
generation volume
Annual generation
production
13,232 GWh p.a. to
13,732 GWh p.a.
+250GWh
-250GWh
$333M
($333M)
13,304 GWh p.a. to
13,804 GWh p.a.
+250GWh
-250GWh
$210M
($210M)
Operating expenditure
(excluding electricity
purchase costs or
transmission charges)
Meridian’s cost
of operations
Inflated at appropriate
escalation rates
+$10M
-$10M
($134M)
$134M
$154M in FY24, $163M in FY25
(in real terms) and inflated at
appropriate escalation rates
from FY26 onward
+$10M
-$10M
($116M)
$116M
Weighted Average
Cost of Capital (WACC)
The discount rate
considers the time value
of money and relative
risk of achieving the
cash flow forecast
7. 6 8 %+0.75%
-0.75%
($1,187M)
$1,523M
8.40%+0.5%
-0.5%
($585M)
$683M
Sensitivities show the movement in fair value as a result of a change in each input (keeping all other inputs constant).
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B1 Property, plant and equipment continued
Depreciation
Depreciation of property, plant
and equipment assets, other than
freehold land, is calculated on a
straight-line basis. This allocates
the cost or fair value amount of an
asset, less any residual value, over
its estimated remaining useful life.
Useful lives
Meridian uses its judgement in
determining the remaining useful
lives and residual value of assets,
which are:
• generation structures and plant –
up to 80 years;
• buildings – up to 67 years;
• other plant and equipment –
up to 20 years; and
• right of use lease assets –
up to 26 years.
The residual value and useful lives
are reviewed, and, if appropriate,
adjusted at each balance date.
Disposals or retirement
The gain or loss arising on the
disposal or retirement of an item
of property, plant and equipment
is determined as the difference
between the sale proceeds and
the carrying amount of the asset
and is recognised in the Income
Statement. Any balance attributable
to the disposed asset in the asset
revaluation reserve is transferred
to retained earnings.
Benmore Power Station, Waitaki Valley.
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B2 Intangible assets
$MSoftware
Cost or fair value 224
Less accumulated amortisation(139)
Net book value at 30 June 2022 85
Additions 18
Impairment(2)
Amortisation expenses(28)
Net book value at 30 June 2023 73
Cost or fair value 236
Less accumulated amortisation(163)
Net book value at 30 June 2023 73
Additions 37
Impairment(18)
Amortisation expenses(30)
Net book value at 30 June 2024 62
Cost or fair value 263
Less accumulated amortisation(201)
Net book value at 30 June 2024 62
Software
Acquired computer software licences
(that are not considered an integral part
of related hardware) are capitalised on
the basis of the costs incurred to acquire
and bring to use the specific software.
Additionally, costs directly associated with
the production of identifiable and unique
software products that will generate
economic benefits beyond one year are
also recognised as intangible assets.
All these costs are amortised over their
useful lives on a straight-line basis.
Costs associated with maintaining
computer software programs are
recognised as an expense as incurred.
The current year impairment is in relation
to Flux Federation Limited’s billing
platform and the Flux Board’s decision
to refocus global efforts back to the
Australasian market.
Useful lives
Meridian uses its judgement in
determining the remaining useful lives
and residual value of intangible assets,
which are:
• electricity and gas retail platform –
up to five years;
• generation control – up to 10 years; and
• other software – up to three years.
These are reviewed, and, if appropriate,
adjusted at each balance date.
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MANAGING FUNDINGNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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C Managing funding
IN THIS SECTION
This section explains how
Meridian manages its capital
structure and working capital,
the various funding sources and
how dividends are returned to
shareholders. In this section of the
notes there is information about:
equity and dividends;
net debt;
receivables and payables;
and
leases and commitments.
C1 Capital management
Capital risk management objectives
Meridian’s objective when managing
capital is to provide appropriate returns
to shareholders whilst maintaining a
capital structure that safeguards its
ability to remain a going concern and
optimise the cost of capital.
Capital is defined as the combination
of shareholders’ equity, reserves and
net debt.
Meridian manages its capital through
various means, including:
• adjusting the amount of
dividends paid to shareholders;
• raising or returning capital; and
• raising or repaying debt.
Meridian regularly monitors its capital
requirements using various measures
which consider debt facility financial
covenants and credit ratings. The key
measures are net debt to EBITDAF and
interest cover. The principal external
measure is Meridian’s credit rating from
Standard & Poor’s.
Meridian is in full compliance with
debt facility financial covenants.
Note
2024
$M
2023
$M
Share capitalC2 1,729 1,700
Retained earnings(1,631) (1,600)
Other reserves8,148 5,887
8,246 5,987
Drawn borrowingsC7 1,331 1,221
Lease liabilities payableC9 30 27
Less: cash and cash equivalentsC5(221) (212)
1,140 1,036
Net capital9,3 86 7,0 2 3
Note
2024
$M
2023
$M
Net debt to EBITDAF
Drawn borrowingsC7 1,331 1,221
Lease liabilities payableC9 30 27
Less: cash and cash equivalentsC5(221) (212)
Add back: restricted cashC5 134 196
Net debt (A) 1, 274 1,232
EBITDAF (B) 905 783
Net debt to EBITDAF (times) (A/B) 1.4 1.6
Note
2024
$M
2023
$M
EBITDAF Interest cover
EBITDAF (B) 905 783
Interest on borrowingsA3 83 67
Interest on lease liabilitiesA3 2 2
Interest (C) 85 69
EBITDAF interest cover (times) (B/C) 10.6 11.3
Standard & Poor’s rating BBB+ BBB+
MANAGING FUNDINGNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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C2 Share capital
SHARE CAPITAL
20242023
Shares$MShares$M
Shares issued 2,590,459,452 1,738 2,584,734,122 1,708
Treasury shares held(1,865,008) (9) (1,565,008) (8)
Share capital 2,588,594,444 1,729 2,583,169,114 1,700
All shares issued are fully paid and have equal voting rights. All shares participate equally in any dividend distribution or any surplus
on the winding up of the company.
The movement in shares issued relates to the dividend reinvestment plan. Refer to Note C4 Dividends for further information.
The movement in treasury shares relates to the purchase and issue of shares to participants in the long-term equity settled incentive
plan for New Zealand based senior executives (refer to Note F1 Share-based payments) and for hedging of the Long-Term Incentive
(LTI) scheme.
C3 Earnings per share
BASIC AND DILUTED EARNINGS PER SHARE (EPS)20242023
Net profit after tax attributed to the shareholders of the parent company $429M $95M
Weighted average number of shares used in the calculation of EPS 2,587,596,787 2,581,801,567
Basic and diluted EPS (cents per share) 16.6 3.7
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C4 Dividends
DIVIDENDS DECLARED AND PAID
2024
$M
2023
$M
Interim ordinary dividend 2024: 6.15cps (cents per share) (2023: 6cps)159155
Final ordinary dividend 2023: 11.9cps (2022: 11.55cps) 307 298
Total dividend expense 466 453
Dividends declared and not recognised as a liability
Final ordinary dividend 2024: 14.85cps (2023: 11.90cps)384 307
Imputation credit balance
Imputation credits available for future use at 30 June 202483 71
Dividend policy
The Board approved a new dividend
policy on 27 August 2024. Under the new
policy Meridian is to make distributions
at a dividend payout ratio within an
average over time of 80% to 100% of
Operating Free Cash Flow (defined as
Operating Cash Flow, less the annual
cost of maintaining Meridian’s asset
base and systems). This is subject to the
Board’s due consideration of working
capital requirements, the medium-term
investment programme, maintaining a
BBB+ credit rating and risks from short
and medium-term economic, market,
catchment hydrology conditions and
expected financial performance.
Meridian’s previous dividend policy
considers free cash flow, working
capital requirements, the medium-term
investment programme, maintaining a
BBB+ credit rating and risks from short
and medium-term economic, market
and hydrology conditions.
Dividend Reinvestment Plan (DRP)
Meridian operates a DRP under which
shareholders can elect to receive
dividends in additional shares rather
than cash.
For the September 2023 final dividend
payment, new shares were issued
at the prevailing market price of
Meridian shares around the time of
issue. Meridian investors were issued
3,838,342 new shares with a value of
$19 million (2023: 3,864,321 shares
with a value of $19 million).
For the March 2024 interim dividend
payment, new shares were issued
at the prevailing market price of
Meridian shares around the time of
issue. Meridian investors were issued
1,886,988 new shares with a value of
$11 million (2023: 2,000,790 shares
with a value of $11 million).
Shares issued in lieu of cash are
excluded from dividends paid in
the Statement of Cash Flows.
Imputation credit balance
Imputation credits allow Meridian to
pass on to its shareholders the benefit
of the New Zealand income tax it has
paid by attaching imputation credits
to the dividends it pays, reducing the
shareholders’ net tax obligations.
The imputation credits available for
future use reflect the balance at the end
of 30 June 2024. It does not recognise
any tax payments between balance
date and 27 August 2024.
Dividend declared
On 27 August 2024 the Board
declared a partially imputed
final ordinary dividend of
14.85 cents per share.
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C5 Cash and cash equivalents
CASH AND CASH EQUIVALENTS
2024
$M
2023
$M
Current account 221 212
Cash and cash equivalents 221 212
Cash and cash equivalents are made up of cash on hand, on-demand deposits
and other short-term, highly liquid investments that are readily convertible to a
known amount of cash and are not subject to a significant risk of change in value.
Restricted cash
Meridian trades electricity hedges on the ASX using Macquarie as a broker. As a
result, a proportion of the funds it holds on deposit are pledged as margin which
varies depending on market movements and contracts held.
At 30 June 2024, this collateral was $134 million (30 June 2023: $196 million).
All other cash and cash equivalent balances are available for use.
RECONCILIATION OF NET PROFIT AFTER TAX
TO CASH FLOWS FROM OPERATING ACTIVITIES
2024
$M
2023
$M
Net profit after tax 429 95
Adjustments for operating activities’ non-cash items:
Depreciation and amortisation 334 294
Movement in deferred tax(33) (137)
Net change in fair value of financial instruments(98) 308
Electricity option premiums(24) (19)
Non-cash finance costs 5 –
Other non-cash items in working capital(48)(23)
Share-based payments 2 1
138 424
Items classified as investing activities:
Loss on disposal of property, plant & equipment 8 –
(Gain) on sale of subsidiaries(8) –
– –
Changes in working capital items:
(Increase)/decrease in accounts receivable(202) 65
(Increase)/decrease in customer contract assets 1 3
(Increase)/decrease in other assets(2) 2
Increase/(decrease) in payables and accruals/employee entitlements273(95)
Increase/(decrease)in customer contract liabilities(4) 2
Increase/(decrease) in current tax payable 39 15
Working capital items in financing activities(5) (2)
100 (10)
Cash flow from operating activities 667 509
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C6 Trade receivables
TRADE RECEIVABLES
2024
$M
2023
$M
Accrued receivables 493 303
Current billed 27 16
Past due 1 to 30 days 16 15
Past due 31 to 60 days 2 2
Past due 61 to 90 days 1 1
Past due greater than 90 days 1 1
Less: credit loss allowance(4) (4)
Total trade receivables 536 334
Accounts receivable past due less credit loss allowance 16 15
Movement in provision for credit loss allowance
Opening provision(4) (8)
Provision released (created) in the year(1) 3
Provision used in the year 1 1
Closing provision for credit loss allowance(4) (4)
Trade receivables,
measurement and recognition
Trade receivables are measured on
initial recognition at fair value, and are
subsequently carried at amortised cost.
The overdue amounts are largely related
to energy sales to retail customers.
Trade receivables written off during
the year were $1 million (30 June 2023:
$1 million).
Receivables are written off at the point
where Meridian believe there is no
reasonable expectation of recovery,
which is typically a combination of an
overdue amount, no communication
or response from the debtor, and no
payments received. Receivables written
off are handed to collection agencies
for enforcement.
Credit losses
The allowance for credit losses are an
estimate of the Group’s expected credit
losses over the lifetime of the current
amounts receivable. Or rather, it is the
difference between the face value of
trade receivables and the future cash
flows we expect to receive. Additions
to the provision are recognised in the
Income Statement.
We estimate collective future cash flows
by considering customer credit history,
historical recovery performance and
trends, through which we build default
matrices that apply a probability of
default given the ageing of debtors.
Forward-looking employment
statistics are also monitored for New
Zealand, with a large rise in forecast
unemployment acting as a trigger for
us to reconsider the probability rates
in our matrices.
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C7 Borrowings
$M
2024 2023
Currency
borrowed in
Drawn facility
amount
Transaction
costs paid
Fair value
adjustment
Carrying
amount
Drawn facility
amount
Transaction
costs paid
Fair value
adjustment
Carrying
amount
Current borrowings
Unsecured borrowings NZD 235 (1) – 234 215 (1) – 214
Total current borrowings 235 (1) – 234 215 (1) – 214
Non-current borrowings
Unsecured borrowings NZD 510 – – 510 420 – – 420
Unsecured borrowings USD 586 (1) 18 603 586 (1) 17 602
Total non-current borrowings 1,096 (1) 18 1,113 1,006 (1) 17 1,022
Total borrowings 1,331 (2) 18 1,347 1,221 (2) 17 1,236
Borrowings, measurement
and recognition
Borrowings are recognised initially at the
fair value of the drawn facility amount
(net of transaction costs paid) and are
subsequently held at amortised cost
using the effective interest method. Any
borrowings which have been designated
as hedged items (USD borrowings) are
carried at amortised cost plus a fair value
adjustment under hedge accounting
requirements – refer to Note D1 Hedge
accounting section for further detail on
this. Any borrowings denominated in
foreign currencies are retranslated to the
functional currency at each reporting
date. Any retranslation effect is included
in the “Fair value adjustment” column
in the table, along with any amounts
relating to fair value hedge adjustments.
Meridian uses cross-currency interest
rate swap (CCIRS) hedge contracts to
manage its exposure to interest rates
and borrowings sourced in currencies
different to that of the borrowing entity’s
reporting currency. More information on
Meridian’s risk management and hedge
accounting practices can be found in
Section D Financial instruments used to
manage risk.
Security
Meridian borrows under a negative
pledge arrangement, which does not
permit it to grant any security interest
over its assets, unless it is an exception
permitted within the negative pledge.
2024
$M
2024
$M
2023
$M
2023
$M
FAIR VALUE OF ITEMS HELD AT AMORTISED COST
Carrying
value
Fair
value
Carrying
value
Fair
value
Retail bonds700 701550 543
Unsecured term loan (EKF facility)20203031
Within borrowings there are longer dated
instruments which are not in hedge
accounting relationships. The carrying
values and estimated fair values of these
instruments are noted in the table above.
Fair value is calculated using a discounted
cash flow calculation and the resultant
values would be classified as Level 2
within the fair value hierarchy. The Retail
Bonds are listed instruments; however,
a lack of liquidity on the NZX precludes
them from being classified as Level 1 (a
definition of hierarchy levels is included in
Note D1 Financial instruments).
Carrying value approximates fair value for
all other instruments within borrowings.
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C7 Borrowings continued
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
2024
$M
Balance at
30 June 2023
Borrowings
drawn
Borrowings
repaid
Valuation
adjustments
Foreign
Exchange
Lease liability
remeasurement
Lease
liabilities
repaid
Lease
recognition
(derecognition)
Unwind of
discounting
Balance at
30 June 2024
Unsecured borrowings – NZD 634 467 (357) – – – – – – 744
Unsecured borrowings – USD 602 – – (3) 4 – – – – 603
Lease liabilities 27 – – – – (3) (3) 7 2 30
Total 1,263 467 (357) (3) 4 (3) (3) 7 2 1,377
2023
$M
Balance at
1 July 2022
Borrowings
drawn
Borrowings
repaid
Valuation
adjustments
Foreign
Exchange
Lease liability
remeasurement
Lease
liabilities
repaid
Lease
recognition
(derecognition)
Unwind of
discounting
Balance at
30 June 2023
Unsecured borrowings – NZD 539 255 (160) – – – – – – 634
Unsecured borrowings – USD 624 – – (34) 12 – – – – 602
Lease liabilities 41 – – – – (2) (3) (11) 2 27
Total 1,204 255 (160) (34) 12 (2) (3) (11) 2 1,263
2024 2023
SOURCES OF FUNDING ($M)
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Undrawn
facility
amount
Facility
amount
Drawn
facility
amount
Undrawn
facility
amount
Bank facilities
New Zealand bank facilities
15
NZD 625 – 625 550 15 535
EKF funding
16
NZD 20 20 – 30 30 –
Total bank facilities 645 20 625 580 45 535
Other sources of borrowing
Retail bonds
17
NZD 700 700 – 550 550 –
Fixed rate bonds
18
USD 586 586 – 586 586 –
Commercial paper
19
NZD 25 25 – 40 40 –
Total other sources of borrowing 1,311 1,311 – 1,176 1,176 –
Total sources of funding 1,956 1,331 625 1,756 1,221 535
15 Facilities bear interest at the relevant market floating rate plus a margin – unsecured NZD borrowing.
16 EKF facility is an unsecured amortising term loan, provided by the official export credit agency of Denmark, for the construction of
Te Uku wind farm – unsecured NZD borrowing.
17 Retail bonds are senior unsecured retail
bonds bearing interest rates of 4.21%, 4.88% and 5.91% (2022: 4.53%, 4.88% and 4.21% ) – unsecured NZD borrowing.
18 USD fixed rate bonds are unsecured fixed rate bonds issued in the United States Private Placement Market – unsecured USD borrowing
19 NZD commercial paper comprises senior unsecured short-term debt obligations paying a fixed rate of return over a set period of time.
15 Funding bears interest at the relevant market floating
rate plus a margin – unsecured NZD borrowing.
16 EKF facility is an unsecured amortising loan, provided
by the official export credit agency of Denmark, for
the construction of Te Uku Wind Farm – unsecured
NZD borrowing.
17 Retail Bonds are senior unsecured retail bonds bearing
interest rates of 4.21%, 5.91% and 5.40% (FY23: 4.88%,
4.21% and 5.91%) – unsecured NZD borrowing.
18 USD fixed rate bonds are unsecured fixed rate bonds
issued in the United States Private Placement Market –
unsecured USD borrowing.
19 NZD commercial paper comprises senior unsecured
short-term debt obligations paying a fixed rate of return
over a set period of time – unsecured NZD borrowing.
MANAGING FUNDINGNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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C8 Green financing
To recognise Meridian’s commitment,
leadership and investment in renewable
energy, Meridian has designed a Green
Finance Programme which covers both
existing and future issuances of debt
instruments (Programme).
The Programme Framework (Framework)
sets out the process, criteria and guidelines
under which Meridian intends to issue
and/or manage existing and future bonds
and loans under the Programme which
contribute towards achieving Meridian’s
sustainability objectives.
DNV Business Assurance Australia Pty
Ltd (DNV) has been commissioned by
Meridian to provide an external review
of the Programme through verification
of the Wind Pool and the Green Debt
allocated (directly or notionally) to the
Wind Pool under the Climate Bonds
Standard (CBS); and a second party
opinion of the Hydro Pool and the
Green Debt allocated (directly or
notionally) to the Hydro Pool under
the Green Bond Principles (GBP) and
Green Loan Principles (GLP).
The conclusion of DNV’s external
reviews is provided within the following
documents (also available on Meridian’s
website via link below):
• DNV Periodic Assurance Opinion
2024, Climate Bonds Standard Project
Pool (Wind) 12 August 2024; and
• DNV Periodic Second Party Opinion
2024, Green Bond & Loan Principles
Project Pool (Hydro) 12 August 2024.
The proceeds of Meridian’s debt
instruments, outlined in the tables on
the following page, have been allocated
(directly or notionally) to refinance
eligible wind and hydro projects and
assets that meet the market standards.
Further information on the Green
Finance Programme, including the
Programme framework document,
opinions from DNV, CBS Certification
and Green Asset and Debt registers
are available on Meridian’s website.
Green finance
bit.ly/3M429bx
Aviemore Unit intakes with Lake Waitaki in the background, Waitaki Valley.
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C8 Green financing continued
Green Debt Instruments under Meridian’s Green Finance Programme
20 Verified as meeting the criteria established for Meridian by DNV which align with the stated definition of Green Bonds and Loans within the Green Bond/Loan Principles.
21 United States private placement (USPP) Notes are included as the NZD equivalent under the Cross-Currency Interest Rate Swaps related to the Issue.
22 Committed Bank facilities are included at the face value of the facilities.
23 Commercial Paper is included as the amount on issue.
24 Certification by the Climate Bonds Standard Board on behalf of the Climate Bonds Initiative.
Green Debt allocated to the Hydro Pool
20
30 June 202430 June 2023
TYPE ($M)CUSIP/NZX Code
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Facility
amount
Drawn
facility
amount
USPP Series 2014-1 Tranche B
21
Q5995#AH7USD147147147147
USPP Series 2019-1 Tranche A
21
Q5995#AE4USD183183183183
USPP Series 2019-1 Tranche B
21
Q5995#AF1USD183183183183
USPP Series 2019-1 Tranche C
21
Q5995#AG9USD73737373
Total Fixed Rate Bonds586586586586
New Zealand Bank Facilities
22
NZD625–55015
Commercial Paper
23
NZD25254040
Total Green Debt allocated to the Hydro Pool 1,236 611 1,176 641
Green Debt allocated to the Wind Pool
24
30 June 202430 June 2023
Type ($ M)CUSIP/NZX Code
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Facility
amount
Drawn
facility
amount
Retail Bond (Mar-24)MEL040NZD––150150
Retail Bond (Jun-25)MEL050NZD200200200200
Retail Bond (Sep-28)MEL060NZD200200200200
Retail Bond (Mar-30)MEL070NZD300300––
Total Domestic Bonds700700550550
EKF Amortising FacilityNZD20203030
Total Green Debt allocated to the Wind Pool 720 720 580 580
Total Green Debt 1,956 1,331 1,756 1,221
MANAGING FUNDINGNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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C9 Lease liabilities
LEASE LIABILITIES ANALYSIS
2024
$M
2023
$M
Minimum lease payments
Not later than 1 year 3 3
Later than 1 year and not later than 3 years 7 6
Later than 3 years and not later than 5 years 7 6
Later than 5 years 28 22
Gross future lease payables 45 37
Less future finance costs(15) (10)
Present value of lease liabilities 30 27
Analysed as:
Not later than 1 year 3 3
Later than 1 year and not later than 3 years 6 5
Later than 3 years and not later than 5 years 5 4
Later than 5 years 16 15
Present value of lease liabilities 30 27
Comprising:
Current 3 3
Non-current 27 24
Present value of lease liabilities 30 27
Lease liabilities, measurement
and recognition
Meridian recognises the present value
of expected lease payments under
lease arrangements as a lease liabilities
payable. Subsequent repayments are
split between principal and interest
expense. The interest reflects a constant
periodic charge over the expected term
of the lease.
A number of our lease arrangements
contain options to extend. Where we are
reasonably certain of taking up those
options, they are included in the lease
liability. If there is any uncertainty around
whether a lease extension will be taken
up, it is excluded from the liability value.
Lease liabilities are classified as financial
liabilities at amortised cost.
The weighted average discount rate
applied in the calculation of lease
liabilities is 4.10% (30 June 2023: 3.41%).
Lease details
The current leases relate to office
spaces and a transmission connection
asset at Mill Creek.
Meridian reported interest expense on
lease liabilities of $2 million (30 June 2023:
$2 million) in the Income Statement.
Refer to Note B1 Property, plant and
equipment for details of the related
right of use lease assets.
C10 Commitments
Group
CAPITAL EXPENDITURE COMMITMENTS
2024
$M
2023
$M
Property, plant and equipment 74 333
Intangibles 2 –
Total capital expenditure commitments 76 333
Guarantees
Various entities within the Group
provide guarantees to external
counterparties, with these mostly
relating to security for energy market
clearing and property lease agreements.
The maximum liability under
these guarantees is $200 million
(30 June 2023: $80 million).
FINANCIAL INSTRUMENTS USED TO MANAGE RISKNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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D Financial instruments used to manage risk
IN THIS SECTION
This section explains the financial
risks Meridian faces, how these
risks affect Meridian’s financial
position and performance, and
how Meridian manages these
risks. In this section of the notes
there is information:
outlining Meridian’s
approach to financial risk
management; and
analysing financial
(hedging) instruments
used to manage risk.
D1 Financial risk management
Meridian’s activities expose it to a
variety of financial risks. Its financial risk
management framework focuses on
the unpredictability of financial markets
and wholesale energy markets. The
Board approves policies including Group
Treasury, Energy Hedging and Credit
Policies which set appropriate principles
and risk tolerance levels to guide
management in carrying out financial
risk management activities to minimise
potential adverse effects on the financial
performance and economic value of
the Group. The key risks managed are
discussed further below.
In order to help balance certain risk
exposures, Meridian uses a variety of
financial instruments (hedges). Hedges
are categorised as either “Treasury”
or “Energy” related, based on their
underlying nature. A small number
of Treasury hedges are designated in
hedge accounting relationships (refer
to the Hedge accounting section for
further detail). Meridian does not enter
into speculative trades.
Financial instrument recognition
Meridian designates or classifies financial
hedging instruments as:
• Fair value hedge, hedges of the fair
value of recognised assets or liabilities
or a firm commitment; or
• Cash flow hedge, hedges of a
particular cash flow associated with a
recognised asset or liability or a highly
probable forecast transaction; or
• Held for trading, financial instruments
which have not been designated in a
hedging relationship.
Meridian accounts for derivative and
certain designated financial instruments as
fair value through the Income Statement.
Hedges are initially recognised at
fair value on the dates the contracts
are agreed, and are subsequently
remeasured on a periodic basis.
Remeasurement is recognised in the
Income Statement except for effective
cash flow hedges.
Fair value changes are recognised in the
Income Statement as “Net change in
the fair value of energy hedges” or “Net
change in fair value of treasury hedges”,
depending on the underlying business
nature of the hedge.
Calculation of fair value
for financial instruments
Meridian uses quoted prices and/or
a discounted cash flows approach in
order to calculate fair values for financial
instruments. Fair value measurements are
grouped within a three-level fair value
hierarchy based on the observability of
inputs to the valuation process:
• Level 1 Inputs: quoted prices
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at reporting date;
• Level 2 Inputs: either directly (i.e. as
prices) or indirectly (i.e. derived from
prices) observable inputs other than
quoted prices included in Level 1; and
• Level 3 Inputs: inputs that are not
based on observable market data
(i.e. unobservable inputs).
Meridian has a number of energy
hedges that require management
estimation and judgement in order to
generate a fair value at each reporting
date. These estimates can have a
significant risk of material adjustment
in future periods. This is discussed in
more detail later in this section.
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D1 Financial risk management continued
Credit risk
Meridian is exposed to the risk of
default in relation to energy sales
to wholesale and retail customers,
hedging instruments, guarantees and
deposits held with banks and other
financial institutions.
For retail customers, credit checks are
carried out before new customers are
accepted. The credit team oversees
the collection of receivables and works
with customers to minimise the chances
of bad debts occurring. Management
monitors the size and nature of retail
customer exposures on a regular basis
and acts to mitigate the risk if deemed
to exceed acceptable levels.
For banks and financial institutions, only
independently related parties with a
minimum rating of ’A’ are accepted.
For wholesale customers, individual
credit limits are set based on internal
or external credit ratings in accordance
with limits set by the Board. Where
customers are not independently credit
rated, an assessment of credit quality
is made, taking into account financial
position, past experience and other
relevant factors. If appropriate, letters
of credit/guarantees are obtained from
counterparties to reduce credit risk to
acceptable levels. These assessments
and the utilisation of credit limits
and security provided by wholesale
customers are reviewed and monitored
by the Chief Financial Officer.
The carrying amounts of financial assets
recognised on the balance sheet best
represent Meridian’s maximum likely
exposure to credit risk at the date of
this report. Refer to Note C6 Trade
receivables for a description of how
we provide for any credit losses.
Liquidity risk
Meridian is exposed to the dynamic
nature of energy markets and weather
patterns, which can affect liquidity.
Meridian ensures flexibility in funding
by maintaining committed surplus
credit lines available of at least $200
million (refer to Note C7 Borrowings
for details of undrawn facilities). This
helps ensure Meridian has sufficient
headroom under both normal and
abnormal hydrological conditions.
Meridian manages its borrowings
requirements on a portfolio basis. To
reduce concentration risk on any one
lender or funding type, Meridian uses
a range of different funding sources
and currencies. Meridian also monitors
contractual maturities and ensures
these are well spaced (or laddered) so
that refinancing risks are manageable.
In addition to borrowings, Meridian
has entered into a number of letters
of credit and guarantee arrangements
which provide credit support of
$200 million for Meridian’s general
operations (30 June 2023: $80 million).
Meridian indemnifies the obligations
of the bank in respect of the letters of
credit and performance guarantees
issued by the bank to counterparties of
Meridian.
FINANCIAL INSTRUMENTS USED TO MANAGE RISKNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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D1 Financial risk management continued
Liquidity risk –
contractual maturities
The following tables are an analysis
of the contractual undiscounted cash
flows (settlements expected under the
contracts) relating to financial liabilities
and a reconciliation from total
undiscounted cash flows to carrying
amounts. Meridian expects to meet
its future obligations from operating
cash flows and debt financing.
2024
$M
Due
within
1 year
Due in
1 to 2 years
Due in
3 to 5 years
Due after
5 years
Total
undiscounted
cash flows
Impact of
other
non–cash
items
Impact of
interest/FX
discounting
2024
carrying
value
Borrowings 301 66 703 630 1,700 (3) (350) 1,347
Lease liabilities 3 7 7 28 45 – (15) 30
Payables, accruals, provisions
and option premiums596 10 18 126 750 – (92) 658
Treasury hedges 18 1 5 – 24 – 4 28
Energy hedges 65 35 48115263 – (63)200
983 119 7818992,782(3)(516)2,263
2023
$M
Due
within
1 year
Due in
1 to 2 years
Due in
3 to 5 years
Due after
5 years
Total
undiscounted
cash flows
Impact of
other
non–cash
items
Impact of
interest/FX
discounting
2023
carrying
value
Borrowings 274 258 270 741 1,543 (2) (305) 1,236
Lease liabilities 3 6 6 22 37 – (10) 27
Payables, accruals, provisions
and option premiums 328 11 19 – 358 – (3) 355
Treasury hedges 19 – 5 2 26 – 1 27
Energy hedges55 44 71 – 170 – (11) 159
679 319 371 765 2,134(2) (328) 1,804
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D1 Financial risk management continued
Market risk
Meridian is involved in both the energy
and financial markets and as such is
exposed to rises and falls in those
markets and the subsequent income
statement volatility this can cause. The
main sub-types of market risk that we
are exposed to are discussed below.
Commodity price risk
Meridian trades in the wholesale energy
markets and so is exposed to volatility in
forward energy prices.
Being both a generator and a retailer
of energy means that Meridian has a
natural hedge for most of the exposure
to future energy prices.
Meridian also uses derivatives to help
manage its net energy position, some
of which are traded in quoted markets,
and some of which are traded directly
with other energy market participants.
Energy hedges are not placed in hedge
accounting relationships.
Foreign exchange risk
Meridian is exposed to foreign exchange
risk arising from sales and procurement
of goods and services denominated
in foreign currencies and also from
borrowings raised in foreign currencies.
For exposures resulting from Meridian’s
general operations, foreign exchange
spot or forward contracts are used to fix
the value in reporting currency terms.
Material items may be placed in hedge
accounting relationships and can be
either fair value hedges or cash flow
hedges, depending on the nature of
the transaction/underlying exposure.
For borrowings raised in US Dollars,
cross currency interest rate swaps
(CCIRS) are used to convert the
proceeds back to functional currency.
These derivatives minimise foreign
exchange risk on both the notional
and the coupon flows over the life of
the debt. CCIRS are placed in both fair
value and cash flow hedge accounting
relationships.
Interest rate risk
Meridian is exposed to interest rate risk
arising from its funding portfolio, which is
a mix of fixed and floating rate debt.
Meridian issues debt on both a fixed
and a floating basis and is thus exposed
to changes in interest rates over time.
A portfolio of interest rate swaps (IRS) is
then used to manage the net exposure
to interest rate risk, in line with a Board
approved hedging policy and profile.
Refer to the Foreign Exchange section
for derivatives used for term debt raised
in foreign currencies.
Meridian swaps a significant portion of
its borrowings to floating rates at loan
inception, and hedges the resulting
interest rate exposure over a tenure
based profile of fixed IRS. This is achieved
using a combination of CCIRS and IRS
hedges. Where Meridian borrows
in foreign currency it uses CCIRSs to
swap all foreign currency denominated
interest and principal repayments to the
reporting currency. This results in floating
rate borrowings in the entity’s reporting
currency. Meridian uses IRS hedges to
fix floating interest rates in line with the
Board approved hedging policy and
profile.
Climate risk
Meridian is exposed to future changes
in climate, which may impact on our
industry, our business and our customers.
Future impacts may be physical, such
as changes in weather patterns or
rising temperatures, or they may be
more transitional in nature, such as
amendments to government policy
and regulation, or changes in
customer energy needs and demands.
Meridian actively assesses the operating
environment in New Zealand, in
respect of the potential future impacts
that changes in climate may have on
Meridian. We report formally on this
process each year in our Climate-
related Disclosure.
Climate-related Disclosures
bit.ly/3SzilVK
As part of preparing this report,
Meridian considers climate-related risk
and whether it may have any impact on
our financial statements and associated
disclosures. The most material area
we see climate risk potentially having
a future impact is on our valuation
of generation structures, which we
account for at fair value. Refer to Note B1
of the financial report for further detail
on this asset class, including a sensitivity
analysis indicating how much their
value may change with variations in key
inputs, such as generation volumes and
wholesale market prices.
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D1 Financial risk management continued
Meridian groups its financial instrument into two categories –
Treasury hedges and Energy hedges.
Fair value on the balance sheet
2024 2023
$MAssetsLiabilitiesAssetsLiabilities
Treasury hedges 77 (28) 85 (27)
Energy hedges380(200) 187 (159)
Total financial instruments457(228) 272 (186)
of which:
Current 233 (86) 86 (75)
Non-current224(142) 186 (111)
Total financial instruments457(228) 272 (186)
Further disclosure and analysis of these two categories are noted on the following pages.
Benmore Power Station, Waitaki Valley.
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D1 Financial risk management continued
Treasury hedges
Hedges in the Treasury category generally relate to management of the interest rate
risk and foreign exchange risk that arise from Meridian’s funding activities and from
general Group operations.
The instruments used are CCIRS, IRS and forward exchange contracts (FX).
Fair value on the balance sheet
Fair value
movements
in the income
statement
Outstanding
aggregate
notional
principals
25
2024
$M
2023
$M
2024
$M
2023
$M
2024
$M
2023
$M
TREASURY HEDGESLevelAssetsLiabilitiesAssetsLiabilities
CCIRS
Interest Rate Risk
26
(39) (13) (34) (15) – 1
Basis and Margin Risk
27
– (1) – – – –
Foreign Exchange Risk
28
71 – 66 – –
2 32 (14) 32 (15) – 1 586 586
IRS
29
2 44 (14) 46 (12) (4) 23 1,475 1,365
FX
30
2 1 – 7 – – – 38 152
Treasury hedges 77 (28) 85 (27) (4) 24
Meridian uses CCIRS to hedge risks involved with borrowings issued in USD. In the
above table the CCIRS are separated into component parts as follows:
25 These cover multiple legs including offsetting legs and maturities out to 2034.
26 Interest rate risk: this is the movement in value of the CCIRS due to changes in benchmark interest rates. The
other side of this movement is recorded in the Income Statement in the ‘Net change in fair value of treasury
instruments’, together with changes in the fair value hedge adjustments on the designated USD borrowings.
27 Basis and margin risk: this is the movement in the value of the CCIRS due to changes in basis (excluding
foreign exchange) and credit margin. The other side of this movement is recorded in the Income Statement
in the ‘Net change in fair value of treasury instruments’, together with cash flow hedge accounting
adjustments that transfer effective hedge portions to the Cash Flow Hedge Reserve within Equity.
28 Foreign exchange risk: this is the movement in value of the CCIRS due to changes in spot foreign exchange
rates. The impact of retranslation is recorded in the Income Statement in ‘Net change in fair value of treasury
instruments’ and is offset by equal and opposite retranslation effects on the related borrowings.
29 Changes in fair value of IRS are recognised in the Income Statement within ‘Net change in fair value
of treasury instruments’.
30 Changes in fair value of FX contracts are recognised in the Income Statement within ‘Net change in fair value
of treasury instruments’, together with cash flow hedge accounting adjustments that transfer effective hedge
portions to the Cash Flow Hedge Reserve within Equity.
In the previous table, fair value movements in the Income Statement are shown net of any
related hedge accounting adjustments and retranslation of foreign currency borrowings.
Refer to the Hedge Accounting section of Note D1 Financial risk management for
further detail on fair value and cash flow hedge relationships.
Treasury hedges – sensitivity analysis
The table below summarises the impact of changes in significant inputs (assuming all
other variables are held constant) on the valuation of Treasury Hedges and therefore on
Meridian’s after tax profit and equity.
Note that changes in the fair value of the CCIRS are fully offset by opposite impacts from
hedge accounting entries and the FX retranslation of the USD debt. Therefore the CCIRS
P&L sensitivity is nil and is not shown in the below table.
The majority of the FX portfolio are designated in cash flow hedge relation-ships.
Changes in spot exchanges rates are fully offset by opposite impacts from hedge
accounting entries in the P&L, for these contracts the P&L sensitivity is nil.
Impact on after tax
profit & equity
Sensitivity
2024
$M
2023
$M
Interest rates
New Zealand benchmark bill rate-100 basis points (bps)(9) (24)
+100 bps 8 21
Foreign exchange rates
Effect of movement in foreign exchange
rates on foreign exchange contracts
-20% – (1)
+20% – 1
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D1 Financial risk management continued
Energy hedges
Hedges in this category relate to Meridian’s management of risk arising from the
generation, purchase and sale of energy.
These hedges are generally longer-term, larger volume contracts that manage specific
risks that can not be managed through exchange-based markets.
Meridian is exposed to changes in the spot price of electricity it receives for electricity
generated, or pays to buy electricity and gas to supply customers. Additionally, inflows
into Meridian’s storage lakes are variable, therefore the volume of electricity required to
supply customers may exceed (or fall short of) generation production.
Meridian’s hedging strategy focuses on its net exposure by estimating both expected
generation and energy purchases required to support contracted sales. Execution of this
strategy is guided by Board approved parameters. Changes in the fair value of energy
hedges are recognised in the income statement within “Net change in fair value of
energy hedges”. Hedge accounting is not applied to Energy Hedges.
The “Market traded electricity hedges” category contains instruments that are
traded on various exchange-based markets.
The “Other electricity hedges” category contains over-the-counter (OTC) derivatives
with other energy market participants. These hedges are generally contracts for
difference (CFDs).
The “Electricity options” category contains OTC derviatives that Meridian trades with
other energy market participants. These are used to support the management of
inflow and storage variability in the catchments where Meridian generates electricity.
The “NZAS” category contain two instruments, the 20-year CFD through which
Meridian provides NZAS with a fixed price for part of its energy consumption, and
an embedded derivative value in respect of the NZAS DRA, where the embedded
derivative measures the expected forward impact of inflationary changes on the DRA.
Fair value on the balance sheet
Fair value
movements in the
income statement
Outstanding aggregate
notional volumes
31
2024
$M
2023
$M
2024
$M
2023
$M
20242023
ENERGY HEDGESLevelAssetsLiabilitiesAssetsLiabilities
Market traded electricity hedges 1 79 (15) 51 (52) 53 (230) 19,459 GWh 20,383 GWh
Other electricity hedges 3 152 (111) 102 (107) 154 (121) 6,046 GWh 9,532 GWh
Electricity options 3 93 – 34 – 65 (24) 952 GWh 1,345 GWh
NZAS 3 56(74) – – (19) – 68,180 GWh 0 GWh
Energy hedges380(200) 187 (159) 253 (375)
31 These cover multiple legs including offsetting legs and maturities out to 2028.
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D1 Financial risk management continued
Energy hedges – sensitivity analysis
The table below summarises the impact of changes in significant inputs (assuming all
other variables are held constant) on the valuation of Energy Hedges and therefore
on Meridian’s after tax profit and equity.
Impact on after tax
profit & equity
ENERGY HEDGESSensitivity
2024
$M
2023
$M
Energy prices-10% 147 (74)
+10%(147) 74
Discount rates-100 bps(1) –
+100 bps1 –
Call volumes-10%(6) (2)
+10%7 3
Consumer Price Inflation (CPI)-1%(63) –
+1% 67 –
NZAS CPI probability factor-5%(12) –
+5% 12 –
Analysis of fair value movements on energy hedges
The following table provides an analysis of fair value movement on energy hedges. In A1 Segments, realised movements on energy hedges are presented within Energy Margin.
2024 2023
$M
Market
traded
electricity
hedges
Other
electricity
hedges
Electricity
optionsNZASTotal
Market
traded
electricity
hedges
Other
electricity
hedges
Electricity
optionsNZASTotal
Realised movement in energy hedges2 135 14 – 151(22) (21) 1 – (42)
Unrealised movement in energy hedges 51 19 51 (19) 102(208) (100) (25) – (333)
Total fair value movements on energy hedges 53 154 65 (19) 253 (230) (121) (24) – (375)
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The table below describes any additional key inputs and techniques used in the valuation of Level 3 energy hedges.
Financial asset
or liabilityDescription of input
Range of significant
unobservable inputsRelationship of input to fair value
Other electricity
hedges and
NZAS valued
using DCFs
Where quoted prices are not available or not relevant
(i.e. for long-dated, discounted contracts), Meridian’s best
estimate of long-term forward wholesale electricity price is
used. This is based on a fundamental analysis of expected
demand and the cost of new supply and any other relevant
wholesale market factors. It takes into account any fixed
discount applicable at inception. The initial fair value of the
NZAS contract was assessed at nil at inception.
$56/MWh to $77/MWh
(in nominal terms),
excludes observable ASX
prices (2023: $29/MWh
to $55MWh)
An increase in the forward wholesale electricity
price increases the fair value of buy hedges and
decreases the fair value of sell hedges.
A decrease in the forward wholesale electricity
price has the opposite effect.
NZASThe NZAS CFD and DRA contain price adjustments for
inflation, subject to movements in average annual aluminium
price. Actual and forecast Consumer price inflation (CPI),
as published by New Zealand Treasury, is used as an input.
This is adjusted for the probability of CPI increases applying
to the contracts. Meridian assesses probability of CPI
increases by historic analysis of aluminium prices.
CPI: 0%–2%,
Probability 54%
(2023: not applicable)
For the CFD, as CPI rises, its value increases.
A decrease in CPI has the opposite effect.
For the DRA embedded derivative, as CPI rises,
the value decreases. A decrease in CPI has the
opposite effect.
D1 Financial risk management continued
Fair value technique
and key inputs
In estimating the fair value of an
asset or liability, Meridian uses market-
observable data to the extent that
it is available. The Audit and Risk
Committee determines the overall
appropriateness of key valuation
techniques and inputs for fair value
measurement. The Chief Financial
Officer explains fair value movements
in his report to the Board.
Where the fair value of a financial
instrument is calculated as the present
value of the estimated future cash
flows of the instrument (DCFs), a
number of inputs and assumptions
are used by the valuation technique.
These are:
• forward price curves referenced to
the ASX for electricity, published
market interest rates and published
forward foreign exchange rates;
• Meridian’s best estimate of
electricity volumes called over
the life of electricity options;
• discount rates based on market
wholesale interest rate curves,
adjusted for counterparty risk;
• calibration factor applied as
a consequence of initial
recognition differences;
• NZAS continues to operate
until 31 December 2044; and
• contracts run their full term.
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D1 Financial risk management continued
Level 3 financial instrument analysis
The following provides a summary of the movements through EBITDAF as referred to in Note A1 Segment performance and movements in the fair value of Level 3 financial instruments
2024 2023
RECONCILIATION OF LEVEL 3 FAIR VALUE MOVEMENTS
$M
Other
electricity
hedges
Electricity
optionsNZAS Total
Other
electricity
hedges
Electricity
optionsNZAS Total
Net change in fair value of energy hedges:
Unrealised movements 19 51 (19) 51 (100) (25) (125)
Realised movements 135 14 – 149 (21) 1 (20)
Total fair value movement in the Income Statement on energy hedges 154 65 (19) 200 (121) (24) – (145)
Balance at the beginning of the period(5) 34 – 29 110 39 – 149
Fair value movements in the Income Statement 154 65 (19) 200 (121) (24) – (145)
Remeasurement(108)(13) – (121) 6 (1) – 5
Disposals and derecognition – (3) – (3) – – – –
New hedge recognised – 10 – 10 – 20 – 20
Balance at the end of the year41 93 (19)115 (5) 34 – 29
Fair value movements of Level 3 energy hedges in 2024 which are held at balance date total $45 million (30 June 2023: ($107) million).
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D1 Financial risk management continued
Hedge accounting
Meridian makes use of hedge accounting
for USD borrowings, certain highly
probable forecast transactions and the
financial instruments that are used to
economically hedge these exposures.
Refer to the start of the Risk Management
section for a description of the key risks
Meridian manages.
Meridian only designates hedge
accounting relationships where the
underlying exposure and the hedge
are eligible for hedge accounting and
are an economic match, where credit
risk is not expected to dominate the
fair value of the hedge, and where we
expect the hedge relationship to remain
effective over its life.
The USD borrowings (hedged items)
and the CCIRS (hedging instruments)
present Meridian with risks which we
account for in the following ways:
Interest rate risk
The USD borrowings are fixed rate
liabilities and thus present interest
rate risk, should benchmark interest
rates change. This risk is neutralised by
receiving the same fixed rate on the
USD leg of the matching CCIRS.
Meridian designates the interest
rate risk on USD borrowings in fair
value hedge accounting relationships.
This means:
• the carrying value of the USD
borrowings are adjusted for changes
in the fair value of the hedged
risk noted as “hedge accounting
adjustments” in Note C7
Borrowings; and
• the CCIRS are revalued to the
Income Statement for this same risk.
As long as the hedge accounting
relationships remain effective, the
revaluations of both the hedged item
and hedging instrument should net
to a minimal amount in the Income
Statement. This residual difference is
referred to as hedge ineffectiveness.
Note that the accumulated life to date
hedge accounting adjustments on the
USD borrowing decrease the carrying
value of the borrowing by $53 million
(2023: decrease by $50 million).
Basis and margin risk
The combination of USD borrowings
and CCIRS economically results in
Meridian having floating rate NZD
borrowings. This presents a risk of
variability in future cash flows. As
such, Meridian designates basis risk
(excluding FX) and margin risk into
cash flow hedge relationships.
This means:
• the CCIRS are revalued to the
Income Statement for basis risk
and margin risk; and
• the effective portions of the
hedge are moved from the
Income Statement to the Cash
Flow Hedge Reserve within Equity.
As noted earlier, there may be small
differences between the above entries
which result in hedge ineffectiveness
in the Income Statement.
Refer to:
• Note C7 Borrowings for the
carrying value of the hedged
items (USD borrowings);
• Note D1 Treasury hedges for
further information on the hedging
instruments (CCIRS), including
notionals and changes in fair
value during the period; and
• The Statement of Changes in
Equity for the balance of the
Cash Flow Hedge Reserve and
movements during the period.
Note that on the Balance Sheet,
USD borrowings are included within
Borrowings and CCIRS are included
within Financial Instruments.
Foreign exchange risk
Meridian has hedged highly
probable forecast capital expenditure
denominated in currencies other than
NZD using forward exchange contracts.
The foreign currency exposures give
rise to the risk of variability to future
cashflows. To mitigate this risk, forward
foreign exchange contracts have been
entered into. The cash flows associated
with these contracts are timed to mature
when the payment for the capital
expenditure is made. For contracts
designated as cash flow hedges for
accounting purposes, when the cash
flows occur Meridian adjusts the
carrying value of the asset acquired.
Hedge ineffectiveness
The below table summarises hedge
ineffectiveness. This is included within
“Net change in fair value of Treasury
Hedges” in the Income Statement.
IMPACT ON
INCOME STATEMENT
2024
$M
2023
$M
Hedge ineffectiveness
gain (loss)– 1
Ineffectiveness is primarily caused by
credit counterparty risk on CCIRS. This
risk is part of the CCIRS fair value but is
not included in the hedged item.
Hedge ineffectiveness will net to zero
over the life of the hedge relationships.
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D1 Financial risk management continued
Future cash flows
The below table estimates the contractual undiscounted future cash flows that we expect on hedge accounted items.
Amounts noted include coupons and repayment/exchange of notionals on maturity.
2024
$M
2023
$M
CURRENCY AS INDICATED BELOW
Due within
1 year
Due within
1–2 years
Due within
2–5 years
Due after
5 years
Due within
1 year
Due within
1–2 years
Due within
2–5 years
Due after
5 years
USD Borrowings (shown in USD)(16) (16) (260) (194) (16) (16) (140) (330)
CCIRS
USD leg (coupons and maturity flow – shown in USD) 16 16 260 194 16 16 140 330
Functional currency leg (coupons and maturity flow – shown in NZD)(42)(37) (406) (298) (42) (41) (236) (503)
Foreign Exchange Contracts
Foreign currency leg (shown in NZD) 37 – – – 134 24 – –
NZD leg(36) – – – (128) (24) – –
Functional currency coupons are set quarterly based on NZ benchmark rates. They are shown in this table based on market forward interest rates. The foreign currency leg of
foreign exchange contracts is translated to NZD using spot exchange rates at reporting date.
Financial instruments which are offset
In certain circumstances Meridian offsets the fair value of financial instruments where it has legal agreements in place that permit netting of positions and net settlement.
2024
$M
2023
$M
Gross value Value offsetCarrying value Gross value Value offsetCarrying value
Financial instrument assets
Energy hedges608(228) 380 352 (165) 187
Treasury hedges 77 – 77 85 – 85
Total financial instrument assets685(228) 457 437 (165) 272
Financial instrument liabilities
Energy hedges(428) 228 (200)(324) 165 (159)
Treasury hedges(28) – (28) (27) – (27)
Total financial instrument liabilities(456) 228 (228)(351) 165 (186)
Net financial instruments 229 – 229 86 – 86
GROUP STRUCTURENOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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E Group structure
IN THIS SECTION
This section provides information
to help readers understand
the Meridian Group structure
and how it affects the financial
position and performance of
the Group. In this section of
the notes there is information
about Meridian’s Subsidiaries
and other interests.
E1 Subsidiaries
and other interests
The consolidated financial statements
include the financial statements of
Meridian Energy Limited, subsidiaries
and other interests listed on the
following table.
Subsidiaries have share capital consisting
solely of ordinary shares that the Group
holds directly, and the proportion of
ownership interests held equals the
Group’s voting rights.
Meridian Energy Limited provides
support to its subsidiaries where
necessary in order to ensure they
meet their obligations as they fall due.
Interest held
by the Group
Name of entityPrincipal activityFunctional currency20242023
Meridian Energy Limited
32
Flux Federation Limited
33
Software developmentNew Zealand dollar100%100%
Flux-UK Limited
33
License holderBritish pound100%100%
Dam Safety Intelligence Limited
33
Professional servicesNew Zealand dollar100%100%
Meridian Energy Captive Insurance Limited
33
Insurance New Zealand dollar100%100%
Meridian Limited
33
Non-trading entityNew Zealand dollar100%100%
Meridian Energy International Limited
33
Non-trading entityNew Zealand dollar100%100%
Powershop New Zealand Limited
33
Non-trading entityNew Zealand dollar100%100%
Kōkako SPV Limited
33
Non-trading entityNew Zealand dollar100%0%
Te Rere Hau Holdings Limited
34
Non-trading entityNew Zealand dollar50%0%
Te Rere Hau Limited
34
Non-trading entityNew Zealand dollar50%0%
Te Rere Hau Holdings (2023) Limited Partnership (LP)
34
Non-trading entityNew Zealand dollar50%0%
Te Rere Hau Project LP
34
Development entityNew Zealand dollar50%0%
Te Arawaru o Te Waitaki Tapui Limited
34
Non-trading entityNew Zealand dollar20%0%
32 Member of the guaranteeing group as at 30 June 2024.
33 Subsidary
34 Other interest
Meridian and NZ Windfarms Limited
(NZWF) have agreed to form a 50-50
joint venture to repower and extend the
Te Rere Hau Wind Farm. Meridian has
incorporated the new company “Kōkako
SPV Limited” to manage its ownership
in the joint venture.
During the period Meridian purchased
a 19.9% shareholding in NZWF at a cost
of $11 million. This investment was initially
recorded as an investment in associate
as significant influence existed and
the equity method of accounting was
applied. This is classified as an other
non-current asset on the Balance Sheet.
On 19 June 2024, Meridian surrendered
it’s representation on the Board of
NZWF. Without representation, Meridian
is deemed to no longer hold significant
influence and ceased equity accounting
for its 19.9% shareholding in NZWF and
measures the asset at fair value through
profit or loss.
32 Member of the guaranteeing
group as at 30 June 2024.
33 Subsidiary.
34 Other interest.
F Other
IN THIS SECTION
This section includes the
remaining information relating to
Meridian’s financial statements
which is required to comply with
financial reporting standards.
F1 Share-based payments
Long-term incentive (LTI)
The Chief Executive, Executive Team
and selected tier three leaders have the
opportunity to participate in the LTI plan.
A LTI plan is offered at the discretion of
the Board, to align senior management
and shareholders’ interests, and optimise
long-term shareholder returns. The
LTI plan is not otherwise available to
Meridian employees.
Meridian has a policy that ensures
participants in the LTI plan are not able
to enter transactions (whether through
the use of derivatives or otherwise)
that limit the economic risk of their
participating in the plan.
The LTI opportunity is 40% of salary for
the Chief Executive, 30% of salary for
the Executive Team and 15% of salary
for eligible tier three leaders. Vesting
of the LTI is contingent on meeting
absolute and relative Total Shareholder
Return (TSR) performance hurdles at the
conclusion of a three-year period.
LTI plan
Under Meridian’s LTI plan, the company
issues rights to acquire ordinary shares in
the company (Performance Share Rights)
to eligible participants who accept the
offer to participate in the LTI plan. Each
Performance Share Right entitles the
holder to one ordinary share in the
company and an additional number of
shares equal to the value of gross cash
dividends per share which would have
been paid to a New Zealand tax resident
who held a share for the duration of the
vesting period, calculated using a 10-day
volume weighted average price.
The number of Performance Share
Rights that vest is dependent on:
• Meridian’s TSR over a three-year
performance period (Performance
Period) relative to Meridian’s cost
of equity;
• Meridian’s TSR over the Performance
Period relative to a defined group of
NZX Main Board and ASX listed peer
companies (Performance Hurdles);
and
• if the participant continues to be
employed by Meridian during the
vesting period (Employment Condition).
OTHERNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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F1 Share-based payments continued
Performance hurdles
As at 30 June 2024, there were three
LTI plan cycles underway. These plans
have Performance Periods which end
as follows:
• FY22 Plan: 30 June 2024;
• FY23 Plan: 30 June 2025; and
• FY24 Plan: 30 June 2026.
The three plans above all have slightly
different Performance Hurdles, as the
market has evolved over this period.
The following applies to the FY22 Plan
the Performance Period for which ends
30 June 2024:
• The Peer Group against which relative
TSR performance was measured for
the FY22 Plan comprised AGL Energy,
Origin Energy, Contact Energy,
Mercury NZ, and Genesis Energy.
• The vesting period for the FY22 LTI
scheme ends on 31 October 2024.
Performance Share Rights lapse if
the holder ceases to be employed by
Meridian during the vesting period,
subject to the Board’s discretion.
Performance Share Rights are granted
in two tranches:
• Absolute Return Share (ABS) Rights; and
• Relative Return Share (REL) Rights.
For ABS Rights to vest, the company’s
TSR must be greater than the absolute
TSR benchmark which is set at the
beginning of the vesting period
with regard to the company’s cost of
equity (Absolute TSR Benchmark) on
a compounding annual basis over the
Performance Period. If the company’s
TSR is equal to or lower than the
Absolute TSR Benchmark, no ABS Rights
will vest. If the company’s TSR is greater
than the Absolute TSR Benchmark,
100% of the ABS Rights will vest.
The number of REL Rights that vest is
determined by the company’s TSR over
the Performance Period relative to the
peer group. For any of the REL Rights to
vest, the company’s TSR must be greater
than or equal to the 50th percentile /
median TSR of the peer group. 100% of
the REL Rights will vest on meeting the
75th percentile TSR of the Peer Group,
with vesting on a straight-line basis
between these two points.
For each three year plan, an independent
external expert measures the TSR
of Meridian and the Peer Group of
companies along with the outcome on
the progressive vesting scale. Performance
Share Rights will lapse if the Vesting
Conditions are not satisfied (although
this is subject to the Board’s discretion in
relation to the Employment Condition).
For the LTI plan performance period to
the end of 2024, the level of TSR met
will result in 100% of Performance Share
Rights vesting (2023: 0%). Performance
Share Rights totalling 418,360 will be
transferred to the eligible participants
for that LTI after balance date (2023: nil)
During the period, 866,246 Performance
Share Rights were issued to eligible staff,
433,123 being ABS Rights and 433,123
being REL Rights.
The fair value of the ABS Rights at grant
date of $1.76 (2023: $2.66) was estimated
by a modified form of the standard Black-
Scholes option pricing model, including
dividend adjustment. The fair value of the
REL Rights at grant date of $2.79 (2023:
$3.22) was estimated by using a Monte
Carlo simulation of the possible future
performance of Meridian’s TSR and of the
TSR of each company in the Peer Group
from the grant date using correlation and
volatility input estimates. The fair value of
the rights, multiplied by the number of
instruments likely to vest, is recognsied as
an expense over the relevant three year
service period.
OTHERNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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F1 Share-based payments continued
Movement in zero–priced share optionsNumber of options/rights
Grant dateVesting dateLTI scheme and type
Weighted
average
fair value of
option
Balance at
the start
of the year
Granted
during
the year
Vested
during
the year
Forfeited
during
the year
Balance at
the end of
the year
2024
24/10/2325/10/26ABS$1.76 – 433,123 – – 433,123
24/10/2325/10/26REL$2.79 – 433,123 – – 433,123
27/ 1 0/2 23/10/25ABS$2.66 470,887 – – – 470,887
27/ 1 0/2 23/10/25REL$3.22 470,887 – – – 470,887
21/10/2121/10/24ABS$2.14 209,180 – – – 209,180
21/10/2121/10/24REL$2 .93 209,180 – – – 209,180
Total 1,360,134 866,246 – – 2,226,380
2023
27/ 1 0/2 23/10/25ABS$2.66 – 470,887 – – 470,887
27/ 1 0/2 23/10/25REL$3.22 – 470,887 – – 470,887
21/10/2121/10/24ABS$2.14 209,180 – – – 209,180
21/10/2121/10/24REL$2.93 209,180 – – – 209,180
9/03/2130/06/23ABS$3.53 212,421 – – (212,421) –
9/03/2130/06/23REL$3.75 212,421 – – (212,421) –
7/10/2019 & 28/2/207/ 1 0/2 2ABS$3.54 – – – – –
7/10/2019 & 28/2/207/ 1 0/2 2REL$3.36 204,834 – (204,834) – –
Total 1,048,036 941,774 (204,834) (424,842) 1,360,134
OTHERNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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F2 Related parties
Meridian transacts with other Government-owned or related entities independently
and on an arm’s-length basis. Transactions cover a variety of services including trading
energy, transmission, postal, travel and tax.
Directors of the Group may be directors or officers of other companies or
organisations with which members of the Group may transact.
Compensation of key management personnel
The remuneration of directors and other members of key management
during the year was as follows:
2024
$M
2023
$M
Directors’ fees1 1
CEO, senior management team and subsidiary chief executives
Salaries and short-term benefits9 8
Post-employment benefits – –
Redundancy benefits – –
Long-term benefits – 1
9 9
F3 Auditor’s remuneration
Auditor’s remuneration to Deloitte Limited for:
2024
$M
2023
$M
Audit and review of New Zealand-based
companies’ financial statements 0.7 0.7
Total audit fees 0.7 0.7
Other assurance fees 0.2 0.2
Other fees 0.1 –
Total auditor remuneration 1.0 0.9
The Board has adopted a policy to
maintain the independence of the
Company’s external auditor, including a
review of all other services performed
by Deloitte Limited and a requirement
of the Office of the Auditor-General
that there be lead partner rotation
after a maximum of five years. The
Auditor-General has appointed Mike
Hoshek of Deloitte Limited as auditor
of the company. The audit fee includes
Office of the Auditor-General overhead
contribution of $37,932 (2023: $37,750).
Other assurance services undertaken by
Deloitte Limited during the year included
reviews of greenhouse gas inventory and
sustainability reporting assurance, audit
of the securities registers, agreed upon
procedures for insurance purposes,
vesting of the executive long-term
incentive plan, the solvency return of
Meridian Energy Captive Insurance
Limited and supervisor reporting.
Other fees paid to Deloitte during the
year include $69,200 for climate related
disclosure gap analysis, $11,000 for
cyber security services and $14,000
(2023: $14,000) to Deloitte Limited
for administrative and other advisory
services to the Corporate Taxpayers
Group, of which Meridian, alongside
a number of other organisations, is
a member.
OTHERNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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F4 Contingent assets
and liabilities
There were no contingent assets or
liabilities at 30 June 2024 (2023: Nil).
F5 Subsequent events
There are no subsequent events other
than dividends declared on 27 August
2024 (refer to Note C4 Dividends for
more information).
F6 Changes in financial
reporting standards
All mandatory amendments and
interpretations have been adopted in the
current year. None have had a material
impact on these financial statements.
Meridian is not aware of any standards
issued but not yet effective that would
materially affect the amounts recognised
or disclosed in the financial statements.
NZ IFRS 18 Presentation and Disclosure in
Financial statements was issued in May
2024 (effective from 1 January 2027).
This Standard sets out requirements
for the presentation and disclosure of
information in financial statements
to help ensure they provide relevant
information that faithfully represents an
entity’s assets, liabilities, equity, income
and expenses. Meridian has not yet
completed its assessment on the
impact of this standard.
OTHERNOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2024MERIDIAN INTEGRATED REPORT 2024
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INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF MERIDIAN ENERGY LIMITED
The Auditor-General is the auditor
of Meridian Energy Limited and its
subsidiaries (the Group). The Auditor-
General has appointed me, Mike Hoshek,
using the staff and resources of Deloitte
Limited, 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 117 to 167, that comprise the
consolidated balance sheet as at 30 June
2024, the consolidated income statement,
consolidated comprehensive income
statement, consolidated statement of
changes in equity and consolidated
statement of cash flows 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 IFRS Accounting
Standards (“NZ IFRS”) as issued by
the External Reporting Board and
IFRS Accounting Standards (“IFRS”) as
issued by the International Accounting
Standards Board.
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, our firm has
carried out other assurance assignments
for the Group in the areas of greenhouse
gas inventory assurance, limited
assurance of the sustainability content
in the integrated report prepared in
accordance with the Global Reporting
Initiative Sustainability Reporting
Standards, review of the interim financial
statements, audit of the securities
registers, audit of the fixed rate bond
registers, vesting of the executive long-
term incentive plan, the solvency return
of Meridian Captive Insurance Limited,
and supervisor reporting. We also carried
out non-assurance assignments for the
Group relating to cyber security services,
a gap analysis in regards to climate
related disclosures readiness programme,
and the Corporate Taxpayers Group
of which Meridian Energy Limited is a
member, which are compatible with
those independence requirements.
In addition, principals and employees
of our firm deal with the Group on
arm’s length terms within the ordinary
course of trading activities of the Group.
These services have not impaired our
independence as auditor of the Group.
Other than these engagements and arm’s
length transactions, and in our capacity as
auditor acting on behalf of the Auditor-
General, we have no relationship with, or
interests in, the Group.
Audit materiality
We consider materiality primarily in terms
of the magnitude of misstatement in the
consolidated financial statements of the
Group that in our judgement would make
it probable that the economic decisions
of a reasonably knowledgeable person
would be changed or influenced (the
’quantitative’ materiality). In addition,
we also assess whether other matters
that come to our attention during the
audit would in our judgement change or
influence the decisions of such a person
(the ’qualitative’ materiality). We use
materiality both in planning the scope
of our audit work and in evaluating the
results of our work.
We determined materiality for the
Group consolidated financial statements
as a whole to be $24.5 million.
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 period. 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.
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Key audit mattersHow our audit addressed the key audit matters
Valuation of Generation Structures and Plant
As explained in Note B1 in the Group financial statements, generation structures and
plant are carried at fair value less any subsequent accumulated depreciation and
impairment losses at balance date.
The net book value of generation structures and plant as reflected in Note B1 is
$11,609 million (2023: $8,334 million).
The Group performs a valuation every year to ensure that the carrying value does not
differ significantly from the fair value at balance date.
As a result of this valuation, generation structures and plant have been revalued this
year as at 30 June 2024. The revaluation resulted in an increase in value by $3,152
million (2023: increase of $1,111 million) through other comprehensive income and the
revaluation reserve. The valuation methodology is based on a discounted cashflow
(’DCF’) approach. The key inputs into the DCF are:
• the future New Zealand wholesale electricity price path (including consideration
of the impact of the New Zealand Aluminium Smelter (’NZAS’) remaining in
operation and the NZAS contract pricing on the wholesale price path);
• forecasted future generation volumes; and
• the weighted average cost of capital (’WACC’).
Changes to these forecasts could significantly change the fair value of the generation
assets. The inputs do not fully use observable market data and require significant
judgement and estimates to be made by the valuer. As outlined in note B1, the
valuation has considered the impact of climate change, and the New Zealand
Aluminium Smelter (’NZAS’) remaining in operation on the valuation.
We include valuation of generation structures as a key audit matter because of the
financial significance of the generation plant to the financial statements and the
inherent technical and judgemental complexity associated with determining the
fair value.
Our audit procedures focused on assessing the key inputs into the model used to
estimate the fair value of the generation structures and plant. This included:
• The reasonableness of the future NZ wholesale electricity price path
(including the consideration of any impacts of NZAS remaining in operation
and its contract pricing);
• The reasonableness of the future forecasted generation volumes; and
• The reasonableness of the applied WACC rate.
Our procedures included but are not limited to:
• Evaluating the Group’s processes and controls for the valuation of the
generation structures and plant;
• Reviewing the valuation methodology and the reasonableness of the significant
underlying assumptions as well as challenging whether the forecast was in line
with internal data;
• Assessing the competence, objectivity and integrity of the valuation team;
• Utilising our in-house valuation specialists to assess the appropriateness of the
valuation methodology and the reasonableness of the valuation determined
by the Group, including the WACC rate and forward price path;
• Assessing the reasonableness of the forecasted future expenses (including
any allowance for consenting costs, climate change and the impacts of NZAS
remaining in operation);
• Performing sensitivity analysis on the key assumptions within the model;
• Performing a retrospective review of budgets compared to actual data for prior
periods to assess the accuracy and robustness of the forecasting process; and
• Evaluating the adequacy of the Group’s disclosures in respect of the valuation
of generation structures and plant.
As a result of the above procedures, we are satisfied that the valuation and key
assumptions applied to estimate the fair value of the generation structures and
plant and the disclosures included in Note B1 are reasonable.
Valuation of Level 3 Electricity Derivatives
As explained in Note D1, the Group’s activities expose it to commodity price, foreign
exchange and interest rate risks which are managed using derivative financial instruments.
These instruments are carried at their fair value as at 30 June 2024. Fair value
measurements are grouped into three categories based on their inputs into the valuation,
with level 3 derivatives being the most complex valuations, given that they use significant
inputs that do not use directly observable market data.
At 30 June 2024, level 3 electricity derivative assets totalled $301 million (2023: $136
million) and level 3 electricity derivative liabilities were $185 million (2023: $107 million).
Our audit procedures focused on:
• The reasonableness of the future NZ wholesale electricity price paths (including the
consideration of any impacts relating to climate change and the impacts of NZAS
remaining in operation);
• The reasonableness of the initial recognition and valuation of the NZAS Contract, and
the associated embedded derivative value in the Demand Response Agreement;
• The reasonableness of the future forecasted generation volumes; and
• The reasonableness of the applied discount rate.
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Key audit mattersHow our audit addressed the key audit matters
We include valuation of level 3 electricity derivatives as a key audit matter for the
following reasons:
• The forecast price path used in the valuation of electricity hedges is based on
the Group’s best estimate of the long-term forward wholesale electricity price,
which involves significant judgement and estimates regarding discount factors,
expected demand, cost of new supply, and other relevant market factors; and
• The complexity and judgement involved in the valuation techniques and the
judgement involved in evaluating the long-term expected call volumes and
discount factor used to determine the fair value of electricity options and swaps.
Our procedures included:
• In conjunction with our internal experts, evaluating the appropriateness of the
methodology applied in the valuation models for these electricity hedges, options
and swaps and ensuring that the methodology has been consistently applied
compared with the prior year where appropriate;
• Challenging the key assumptions applied, including the long-term forward
wholesale electricity price, long-term expected call volumes, fair value of the
transaction prices and discount rates;
• Agreeing underlying data to contract terms, specifically the contract term, price and
volumes; and
• Evaluating the adequacy of the Group’s disclosures in respect of the valuation of
level 3 electricity derivatives.
As a result of the above procedures, we are satisfied that the valuation and key
assumptions applied to estimate the fair value of the level 3 electricity derivatives and the
disclosures made in note D1 are reasonable.
Other information
The Directors are responsible on
behalf of the Group for the other
information. The other information
comprises the information in the
Integrated Report and the Climate
Statement, 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 NZ IFRS
and IFRS, 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 t
hat 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.
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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 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.
Mike Hoshek, Partner
for Deloitte Limited
On behalf of the Auditor-General
Christchurch, New Zealand
27 AUGUST 2024
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INDEPENDENT ASSURANCE REPORT TO THE DIRECTORS OF MERIDIAN ENERGY LIMITED
REPORT ON SUSTAINABILITY DISCLOSURES
The Integrated Report of Meridian
Energy Limited and its subsidiaries
(‘Meridian’ or the ‘Group’) for the year
ended 30 June 2024 (the ‘Integrated
Report’) includes the Global Reporting
Initiatives disclosures (‘GRI disclosures’)
within the GRI Standards content
index (the ‘GRI index’) on pages 174 to
177 prepared in accordance with the
Global Reporting Initiative Sustainability
Reporting Standards and with reference
to Global Reporting Initiative G4 Sector
Disclosures Electric Utilities (collectively
known as the ‘GRI Standards’).
Additionally, the Group have identified
sustainability indicators that are not
covered in the GRI topic standards
(referred to as ‘Own Measures’) within
the GRI index and were prepared using
the methodology listed in the FY24
Data Pack on tab ‘methods’ that was
internally developed by the Group
(‘additional criteria’).
The subject of our limited assurance
engagement are the Group’s GRI
disclosures and Own Measures
referenced in the GRI index (collectively
the ‘sustainability disclosures’) and
presented within either the Integrated
Report or the FY24 Data Pack for the year
ended 30 June 2024 that accompanies
the Integrated Report (the ‘IR data pack’),
prepared in accordance with the GRI
Standards and additional criteria.
Our report does not cover any forward-
looking statements made by the Group,
hyperlinked documents (other than to the
IR data pack) and Meridian’s Own Measures
for actions to improve information security
and support for customers' climate actions.
Conclusion
This conclusion has been formed on
the basis of, and is subject to, the
inherent limitations outlined elsewhere
in this independent assurance report.
Based on the evidence obtained from
the procedures we have performed;
nothing has come to our attention that
causes us to believe that the Group’s
sustainability disclosures referenced
within the GRI index on pages 174 to 177
of the Integrated Report, have not been
prepared, in all material respects, in
accordance with the GRI Standards
and additional criteria.
Basis for Conclusion
Our engagement has been conducted
in accordance with International
Standard on Assurance Engagements
(New Zealand) 3000 (Revised):
Assurance Engagements Other than
Audits or Reviews of Historical Financial
Information (‘ISAE (NZ) 3000 (Revised)’)
issued by the New Zealand Auditing
and Assurance Standards Board.
We believe that the evidence we have
obtained is sufficient and appropriate
to provide a basis for our conclusion.
Directors’ Responsibility
The Directors are responsible for:
• determining the basis of preparation
for the Own Measures included within
the GRI index;
• ensuring that the sustainability
disclosures listed in the GRI index are
prepared in accordance with the GRI
Standards and the additional criteria;
• determining the Group’s objectives
in respect of sustainability reporting;
• selecting the material topics and
determining whether the disclosures
are presented in the Integrated
Report or in the IR data pack;
• establishing and maintaining
appropriate performance
management and internal control
systems in order to derive the
sustainability disclosures listed
in the GRI index; and
• ensuring the completeness, accuracy
and availability of the sustainability
disclosures within the Integrated
Report and IR data pack.
Our Independence
and Quality Management
We have complied with the independence
and other ethical requirements of
Professional and Ethical Standard 1
International Code of Ethics for Assurance
Practitioners (including International
Independence Standards) (New Zealand)
(‘PES-1’) 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.
Our firm is the statutory auditor of the
financial statements on behalf of the
Auditor-General. In addition to our
role as the statutory auditor and this
engagement, our firm also does other
engagements including: greenhouse
gas inventory assurance, review of the
interim financial statements, audit of the
securities registers, audit of the fixed rate
bond registers, vesting of the executive
long-term incentive plan, the solvency
return of Meridian Captive Insurance
Limited, and supervisor reporting. We also
carried out non-assurance assignments
for the Group relating to cyber security
services, gap analysis in regards to climate
related disclosures readiness programme,
and to the Corporate Taxpayers Group
of which Meridian Energy Limited is a
member, which are compatible with those
independence requirements. In addition
to this, partners and employees of our
firm deal with the Group on normal terms
within the ordinary course of trading
activities of the business of the Group.
Our firm has no other relationship with, or
interests in the Group.
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,
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172
which requires the firm to design,
implement and operate a system of
quality management including policies
and procedures regarding compliance
with ethical requirements, professional
standards and applicable legal and
regulatory requirements.
Our Responsibility
Our responsibility is to conduct a limited
assurance engagement in order to
express an opinion whether, based on
the procedures performed, anything has
come to our attention that causes us to
believe that the Group’s sustainability
disclosures listed within the GRI index
have not been prepared, in all material
respects, in accordance with the GRI
Standards and additional criteria.
In a limited assurance engagement,
the assurance practitioner performs
procedures, primarily consisting of
discussion and enquiries of management
and others within the entity, as
appropriate, and observation and walk-
throughs, and evaluates the evidence
obtained. The procedures selected
depend on our judgement, including
identifying areas where the risk of material
non-compliance with the GRI Standards
or additional criteria is likely to arise.
Our procedures included:
• Obtaining an understanding of the
internal control environment, risk
assessment process and information
systems relevant to the sustainability
reporting process;
• Obtaining an understanding of the
materiality process applied by the
Group to determine the material
topics chosen for inclusion in the
Integrated Report and the IR data
pack respectively;
• Analytical review and other test
checks of the information presented;
• Checking whether the appropriate
indicators have been reported in
accordance with the GRI Standards or
additional criteria; and
• Evaluating whether the information
presented is consistent with our overall
knowledge and experience of Group’s
sustainability reporting processes.
We did not evaluate the security and
controls over the electronic publication of
the Integrated Report and IR data pack.
The 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. Accordingly, we do not
express a reasonable assurance opinion
about whether the Group’s sustainability
disclosures referenced in the GRI index
have been prepared, in all material
respects, in accordance with the GRI
Standards or additional criteria.
Inherent Limitations
Because of the inherent limitations
of a limited assurance engagement,
it is possible that fraud, error or
non-compliance may occur and not
be detected. A limited assurance
engagement is not designed to detect
all instances of non-compliance with
the GRI Standards or additional criteria
as it generally comprises making
enquiries, primarily of the responsible
party, and applying analytical and other
review procedures. The conclusion
expressed in this report has been
formed on the above basis.
A limited assurance engagement does not
provide assurance on whether compliance
with the GRI Standards or additional
criteria will continue in the future.
Use of Report
Our assurance report is made solely
to the Directors of Meridian Energy
Limited in accordance with the terms of
our engagement. Our work has been
undertaken so that we might state to
the Directors those matters we have
been engaged to state in this assurance
report and for no other purpose. To
the fullest extent permitted by law, we
do not accept or assume responsibility
to anyone other than the Directors of
Meridian Energy Limited for our work,
for this assurance report, or for the
conclusions we have reached.
Christchurch, New Zealand
27 AUGUST 2024
This limited assurance report relates to the sustainability disclosures of Meridian Energy Limited and its subsidiaries
(‘Meridian’ or the ‘Group’) , referenced within the GRI Standards content index on pages 174 to 177 (the ‘GRI index’)
of the Group’s Integrated Report for the year ended 30 June 2024 (‘the Integrated Report’), and presented on
the specified pages (as referenced in the GRI index) of the Integrated Report or the FY24 Meridian Integrated
Report ESG data pack (‘the IR data pack’) (collectively the ‘sustainability disclosures’). Meridian’s Board is responsible
for the maintenance and integrity of the Group’s website. Deloitte Limited have not been engaged to report on
the integrity of the Group’s website. We accept no responsibility for any changes that may have occurred to the
Integrated Report or IR data pack since they were initially presented on the website.
The limited assurance report refers only to the Integrated Report and IR data pack accompanying the Integrated
Report named above. It does not provide an opinion on any other information which may have been hyperlinked
to/from the Integrated Report or the IR data pack. If readers of this report are concerned with the inherent risks
arising from electronic data communication, they should refer to the published hard copy of the Integrated Report,
IR data pack accompanying the Integrated report and related limited assurance report dated 27 August 2024 to
confirm the information included in the Integrated Report and the IR data pack presented on this website.
INDEPENDENT ASSURANCE REPORTMERIDIAN INTEGRATED REPORT 2024
MENU
173
GRI Standards content index
Meridian Energy Limited has reported in accordance with the GRI Standards for the period 1 July 2023 to 30 June 2024. GRI 1: Foundation 2021 has been used.
References are to FY24 Integrated Report (AR), FY24 Data Pack – tab (DP – tab reference), Climate Related Disclosure FY24 (CRD), Climate Action Plan FY24
(CAP), Modern Slavery Statement FY24 (MSS), Corporate Governance Statement FY24 (CGS), Board Charter (approved date April 2024) (BC); Code of Conduct
2024 (COC); Supplier Code of Conduct (SCOC) (dated January 2024), Greenhouse Gas Inventory FY24, Good Energy Programme Guidance (July 2024);
Modern Slavery Guidance (December 2023), Whistle Blowing Policy (approved date August 2023), Constitution of Meridian Energy Limited (2019 update)
(Constitution).
Own measures – some disclosures are additional or alternatives to those covered in the GRI Standards and have been self-determined by management.
See DP – Methods tab for the disclosure criteria for Own Measures. We have additional ESG disclosures reported in the Integrated Report Data Pack which
are not included in our GRI content index – refer to DP – Other ESG Information tab.
General disclosuresReferenceComments
GRI 2: General Disclosures 2021
2-1Organisational detailsAR Front cover,
p.122, 178
2-2 Entities included in the organisation’s
sustainability reporting
AR p.4
2-3 Reporting period, frequency
and contact point
AR p.4, 178
2-4 Restatements of informationDiscussed where
relevant throughout the
report and data pack.
2-5 External assuranceAR p.4–5,
168–173
2-6 Activities, value chain and
other business relationships
AR p.67, 70;
MSS p.3
2-7EmployeesDP – Our People
2-8 Workers who are not employeesDP – Our People
2-9Governance structure
and composition
AR p. 68, 71,
78–79, 99; CGS
Recommendation
2.5; BC p.3–5;
S&S Committee
Charter p.1
General disclosuresReferenceComments
2-10 Nomination and selection of
the highest governance body
AR p.71;
Constitution
p.13–15; BC
p.2 and CGS
Recommendation
2.2 & 3.4
2-11 Chair of the highest
governance body
AR p.6; CGS
Recommendation
2 .9
2-12 Role of the highest governance
body in overseeing the
management of impacts
AR. p.72Further information
available on our
material impacts
page on our website.
2-13 Delegation of responsibility for
managing impacts
AR p.72, 87–88The Board delegates
responsibility for
managing impacts
on people, the planet
and the economy
via our Delegation of
Authority Policy, which
applies to the Board,
staff of Meridian and
subsidiaries
GRI INDEXMERIDIAN INTEGRATED REPORT 2024
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174
General disclosuresReferenceComments
2-14Role of the highest governance
body in sustainability reporting
AR p.72
2-15 Conflicts of interestAR. p.71; BC p.6;
CGS Additional
Disclosures table
2-16 Communication of critical concernsDP –
Communities
2-17 Collective knowledge of the highest
governance body
AR p.71; BC p.5
2-18Evaluation of the performance
of the highest governance body
AR p.96; CGS
Principle 2.7 & 5.1;
BC p.5
2-19Remuneration policiesAR p.84–86
2-20 Process to determine remunerationAR p.82–85
2-21Annual total compensation ratioAR p.94
2-22 Statement on sustainable
development strategy
AR p.7–13
2-23Policy commitmentsAR p.62–65;
COC p.9-10, 23;
SCOC p.1–2;
MSS p.2;
CAP p.10
We use a range
of methods to
communicate our
Group commitments
and policies to
Meridian, and our
supply chain and
stakeholders. This
includes through
Meridian's COC and
SCOC expectations, as
well as via guidance
documents, such as
our Good Energy
Programme Guidance
(p.1–2).
2-24 Embedding policy commitmentsAR p.62–63;
SCOC;
MSS p.2, 7–8
2-25Processes to remediate
negative impacts
AR p.63, 71;
CGS Principle 1.1;
MSS – Grievance
and remediation
section p.7.
General disclosuresReferenceComments
2-26 Mechanisms for seeking
advice and raising concerns
AR p.178; COC p.4;
Whistle Blowing
Policy p.1–2
2-27 Compliance with laws
and regulations
There have been no
significant instances of
non-compliance with
laws and regulations
and we’ve paid no fines
during the reporting
period.
2-28Membership associationsDP – Renewable
Energy
2-29 Approach to stakeholder
engagement
AR p.72–73See throughout report
where relevant. We
take a purpose driven
approach.
2-30Collective bargaining agreementsNo staff are covered by
collective bargaining
agreeements.
Material topics and associated disclosuresReferenceComments
GRI 3: Material Topics 2021
3-1Process to determine material topicsAR p.72–73
3 -2List of material topicsAR p.74–80
Affordability
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.77–78
Own Measures
DisconnectionsDP – Customers
Business emissions and waste
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.79
GRI 302: Energy 2016
302-1Energy consumption within the
organisation
DP – Climate
and Environment
302-4Reduction of energy consumption
GRI INDEXMERIDIAN INTEGRATED REPORT 2024
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175
Material topics and associated disclosuresReferenceComments
GRI 305: Emissions 2016
305-1Direct (Scope 1) GHG emissionsAR 63–64; DP
– Climate and
Environment
See also Meridian
Greenhouse Gas
Inventory FY24.
305 -2Energy indirect (Scope 2)
GHG emissions
305-3Other indirect (Scope 3)
GHG emissions
305-4GHG emissions intensity
305-5Reduction of GHG emissions
GRI 306: Waste 2020
306-2Management of significant
waste-related impacts
AR p.79; DP -
Climate and
Environment
306-3Waste generatedDP – Climate
and Environment
306-4Waste diverted from disposal
306-5Waste directed to disposal
Own Measures
Operational emissions
reduction target
AR p.62–63;
CAP p.7 footnote
number 2
Meridian Energy’s
Target Validation
Report is submitted
to SBTi in July 2022.
The submission of
the targets have
been submitted
and registered on
the website and this
can be accessed in
sciencebasedtargets.
org/companies-taking-
action#dashboard.
Climate-related impacts
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.77
GRI 201: Economic Performance 2016
201-2Financial implications and other
risks and opportunities due to
climate change
AR p.16; DP –
Climate and
Environment
See also CRD pp.17–28,
39–40.
Material topics and associated disclosuresReferenceComments
Customer decarbonisation
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.76
Own Measures
Support for customers’
climate actions
*
AR p.10, 36;
CAP p.5–6
Cyber security
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.77–78
Own Measures
Actions to improve
information security
*
AR p.48–49
Ngā whakaaweawe o Te Ao Tūroa – impacts on the natural world
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.75–76
GRI 303: Water and Effluents 2018
303-1Interactions with water
as a shared resource
AR p.27, 75–76
303-3Water withdrawalDP – Climate
and Environment
303-4Water discharge
303-5Water consumption
GRI 304: Biodiversity 2016
304-2Significant impacts of activities,
products and services on biodiversity
AR p.75–76
People
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.78–79
GRI 401: Employment 2016
401-1New employee hires
and employee turnover
DP – Our People
401-3Parental leave
* Not within scope of assurance
GRI INDEXMERIDIAN INTEGRATED REPORT 2024
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176
Material topics and associated disclosuresReferenceComments
GRI 403: Occupational Health and Safety 2018
403-1Occupational health and
safety management system
AR p.58–59;
DP – Our People
100% employees and
contractors working
on Meridian sites and
assets are covered by
and work within the
parameters of the OHS
management system,
which is outlined in our
Safety and Wellbeing
Manual. Contractors
are covered but do
not have access to the
OSH management
system. Flux permanent
employees and
contractors are fully
covered by Flux’s
health and safety
management system.
403 -2Hazard identification, risk assessment,
and incident investigation
403-3Occupational health services
403-4Worker participation, consultation,
and communication on occupational
health and safety
403-5Worker training on occupational
health and safety
403-6Promotion of worker health
4 03 -7Prevention and mitigation of
occupational health and safety
impacts directly linked by business
relationships
403-8Workers covered by an
occupational health and
safety management system
403-9Work-related injuries
GRI 404: Training and Education 2016
404-1Average hours of training per year
per employee
DP – Our People
404-3Percentage of employees receiving
regular performance and career
development reviews
All Meridian employees
take part in the
performance appraisal
process, which
contributes to incentive
and pay outcomes.
GRI 405: Diversity and Equal Opportunity 2016
405-1Diversity of governance bodies
and employees
AR p.57, 71;
DP – Our People
405-2Ratio of basic salary and
remuneration of women to men
Material topics and associated disclosuresReferenceComments
GRI 406: Non-discrimination 2016
406 -1Incidents of discrimination
and corrective actions taken
There was one incident
of harassment during
the reporting period.
The incident is no longer
subject to action.
Renewable energy generation
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.74
G4 Sector Disclosures – Electric Utilities
EU1Installed capacityAR p.25; DP
– Renewable
Genereration
EU2Net energy output
EU10Planned capacity against demandAR p.23,
CAP p.3
Pipeline projections
are estimations subject
to internal funding
approval and final
design (which includes
resource consent
conditions).
EU30Plant availability factorDP – Renewable
Genereration
Supporting communities
GRI 3: Material Topics 2021
3-3Management of material topicsAR p.79–80
GRI 204: Procurement Practices 2016
204-1Proportion of spending
on local suppliers
DP –
Communities
GRI 413: Local Communities 2016
413-1Operations with local community
engagement, impact assessments,
and development programs
AR p.8–9,
27, 39; DP –
Communities
GRI 414: Supplier Social Assessment 2016
414-1New suppliers that were screened
using social criteria
DP – Supply
Chain
See also Modern
Slavery Guidance
p.1–3; and Good
Energy Programme
Guidance p.1–2 .
414 -2Negative social impacts in the
supply chain and actions taken
GRI INDEXMERIDIAN INTEGRATED REPORT 2024
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177
Directory
Directors
Mark Verbiest, Chair
Mark Cairns
David Carter
Graham Cockroft
Michelle Henderson
Julia Hoare
Nagaja Sanatkumar
Tania Simpson
E xecut ive Team
Neal Barclay,
Chief Executive
Chris Ewers,
General Manager Wholesale
Lisa Hannifin,
Chief Customer Officer
Tania Palmer,
General Manager Generation
Bharat Ratanpal,
Acting Flux Chief Executive
Mike Roan,
Chief Financial Officer
Claire Shaw,
General Manager Corporate
Affairs and Sustainability
Jason Stein,
Chief People Officer
Guy Waipara,
General Manager Development
Jason Woolley,
General Counsel and Company
Secretary
Registered office
Level 2, 98 Customhouse Quay
Wellington 6011
New Zealand
T +64 4 381 1200
Share Registrar New Zealand
Computershare/
Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
Private Bag 92119
Victoria Street West
Auckland 1142
New Zealand
T +64 9 488 8777
enquiry@computershare.co.nz
investorcentre.com/nz
Share Registrar Australia
Computershare Investor
Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford
VIC 3037
Australia
GPO Box 3329
Melbourne VIC 3001
Australia
T 1800 501 366 (within Australia)
T +61 3 9415 4083 (outside Australia)
enquiry@computershare.co.nz
Auditors
Deloitte Limited
Auditor of the Group Financial
Statements on behalf of the
Auditor-General
Banker
Westpac Wellington
New Zealand
Get in touch
Customer enquiries
0800 496 496
hello@meridianenergy.co.nz
You can also find us on Facebook,
Instagram and LinkedIn.
Investor relation enquiries
Owen Hackston
investors@meridianenergy.co.nz
Sustainability enquiries
sustainability@meridianenergy.co.nz
DIRECTORYMERIDIAN INTEGRATED REPORT 2024
MENU
178
Meridian is committed to updating
and improving the accessibility of our
information. We have worked to apply
accessibility standards to this document
to improve the reader experience.
MERIDIAN ENERGY LIMITEDINTEGRATED REPORT 2024
meridian.co.nz
---
2024
Annual Results
Presentation
MERIDIAN ENERGY LIMITED28 August 2024
2024 ANNUAL RESULTS PRESENTATION
2
MERIDIAN ENERGY28 August 2024
Neal Barclay –Chief Executive
Meridian’s completed Harapaki Wind Farm in Hawke’s Bay
2024 ANNUAL RESULTS PRESENTATION
3
MERIDIAN ENERGY28 August 2024
Key points
2024 ANNUAL RESULTS PRESENTATION
4
MERIDIAN ENERGY28 August 2024
0
1,000
2,000
3,000
4,000
5,000
GWh
Total Meridian inflows 1 May to 15 August (ranked)
Fuel scarcity
Dry and calm winter conditions see hydro storage at
record August lows.
Meridian has experienced record low May to August
inflows.
Acquired 800GWh of hedges ($258/MWh average cost) to
manage a 1,000GWh hydro inflow deficit to average.
Possible earlier access to up to 832GWh of contingent
hydro storage in the next 2 months.
Majority of that is up to a further 5 metres of storage at
Lake Pūkaki.
Successive years of declining gas production and reserves
estimates.
Large industrial gas demand reduction in the short term in
response to supply shortages.
Longer term focus is on improving upstream investment
conditions and consideration of LNG importation.
Source: Ministry of Business, Innovation and Employment, Hīkina Whakatutuki
2024
64% of
average
91-year av er age
0
50
100
150
200
250
300
20002003200620092012201520182021202420272030203320362039
PJ
Calendar Year
Gas production
actu alforecas t
2024 ANNUAL RESULTS PRESENTATION
5
MERIDIAN ENERGY28 August 2024
0
100
200
300
400
500
200
300
400
500
Jul 24Aug 24Sep 24Oct 24Nov 24Dec 24Jan 25Feb 25Mar 25Apr 25May 25
NZAS demand response volumes
MEL-NZAS Contract Volume (MW)MEL MWBase ContractCalled GWh (RHS)
NZAS demand response
Option 2 (37.5MWh per hour) called on 26 June, then Option 4 (138.75MWh per hour) on 17 July.
NZAS has subsequently accelerated Option 4 ramp down and reduced consumption by a further 20MWh per
hour more than Option 4 volume.
1 Jan 25
bas e contract volume
reduces to 377MW
today
469GWh cumulative volume
plus another 155GWh under C ontact
Energy DR A since 1 July
90 day stand down before
Option 2 can be called
365 day stand down before
Options 3 or 4 can be called
additional 20MW
2024 ANNUAL RESULTS PRESENTATION
6
MERIDIAN ENERGY28 August 2024
72%
73%73%
75%75%
0%
20%
40%
60%
80%
100%
May-22Nov-22May-23Nov-23May-24
Employee engagement
1.03
2.41
1.01
1.12
1.08
2.94
5.46
4.71
4.68
3.91
0
1
2
3
4
5
6
20202021202220232024
per 200k hours
Financial Year ended 30 June
Total recordable injury frequency rate
Meridian employeesMeridian on-s ite contractors
Our people
Further increase in employee engagement, top
quartile of New Zealand companies.
New operating models established in Generation
and Retail teams.
Formalised wellbeing approach addressing work
design and prioritisation, change, complex projects
and social connectivity.
Steady level of reportable injuries, mainly minor in
nature.
Learning teams process an established part of
safety culture.
New health and safety management system
implemented to better capture and share
information.
●
●Indus try average
2024 ANNUAL RESULTS PRESENTATION
7
MERIDIAN ENERGY28 August 2024
Our customers
Developing new propositions for customers to
participate through shifting their energy use.
1,400 customers supported by Meridian’s Energy
Wellbeing Programme.
525GWh of process heat conversion now
committed – targeting double that by FY30.
35% increase in customer purchases of Renewable
Energy Certificates(863GWh).
Rolling C&I customers and managing contract
terms to alleviate short-term wholesale market
price pressures.
0
10
20
30
40
201320142015201620172018201920202021202220232024
c/KWh
Calendar Year ended 31 March
Unit electricity costs (real)
Residential
(incl GST)
Commercial
(excl GST)
Indus trial
(excl GST)
Source: Ministry of Business, Innovation and Employment, Hīkina Whakatutuki
Solar installation at Waipuna Community Services in Canterbury
2024 ANNUAL RESULTS PRESENTATION
8
MERIDIAN ENERGY28 August 2024
0
500
1,000
1,500
2,000
2,500
201620172018201920202021202220232024202520262027202820292030
$M 2025 real
EDB default price path revenues
1
DPP2DPP3DPP4DPP4 (no smoothing)
5,780
4,661
4,043
303
282
270
324
319
145
94
3,000
4,000
5,000
6,000
RC P2 2015-20RC P3 2020-25Higher R ABOp exEV acc ountCPIReturn on
capital
Inc rem ental
capex
Inc rem ental
opex
RC P4 2025-30
$M
Transpower maximum allowable revenue
Transmission and distribution costs
Draft Commerce Commission proposal issued in
May 2024 on 2026-30 regulated revenues for
Transpower and distribution companies.
Regulated revenue increases are significant, more
than 40% in real terms above the current
regulatory period.
Most of the increase is attributable to inflation and
higher regulated cost of capital.
Some of the increase is attributable to increased
network investment.
The Commission is proposing smoothing to reduce
the step change in costs to consumers on 1 April
2025.
The Commission’s final decisions are expected in
November 2024.
$240M for increased investment
$1,498M for
WACC and CPI
increas es and
RCP3
investment
Source: Commerce Commission New Zealand Te Komihana Tauhokohoko
Source: Commerce Commission New Zealand Te Komihana Tauhokohoko
1
All default price path electricity dis tribution businesses excluding Aurora
2024 ANNUAL RESULTS PRESENTATION
9
MERIDIAN ENERGY28 August 2024
Our sustainability
Half by 30 is Meridian’s goal to cut operational
emissions in half by 2030.
This represents a challenging target with
construction and Scope 3 emissions.
Long-term net zero target to reduce absolute Scope
1-3 emissions by 90% by FY50.
Climate-related Disclosures published in compliance
with Aotearoa NZ Climate Standards.
3rd annual Climate Action Plan published.
Impression of the electric hydro-foiling ferry Meridian will bring to Lake Manapōuri
2024 ANNUAL RESULTS PRESENTATION
10
MERIDIAN ENERGY28 August 2024
Ruakākā BESS construction
All 80 battery containers now installed on site.
Transpower works delay to connection to Bream
Bay substation will push commissioning into early
2025.
Project costs expected to be at the $186M budget.
Pre-commissioning of battery strings now
underway.
Consent application submitted for a second battery
located in the Manawatū.
Completed container installation at Meridian’s Ruakākā Battery Energy Storage system near Whangārei
2024 ANNUAL RESULTS PRESENTATION
11
MERIDIAN ENERGY28 August 2024
Investment in a low carbon future
$2B invested into new and existing assets in the last 10
years.
Stable returns on assets and equity (3%-5% per
annum).
New generation investment of $3B to deliver at least 7
projects by 2030.
With a total investment envelope of $10B+ for 20
projects by 2050.
physical -$27M
financial +$172M
Lake Pūkaki, Mackenzie Basin, South Canterbury
total
2024 ANNUAL RESULTS PRESENTATION
12
MERIDIAN ENERGY28 August 2024
2024 ANNUAL RESULTS PRESENTATION
13
MERIDIAN ENERGY28 August 2024
Mike Roan – Chief Financial Officer
Ōhau A hydro s tation in the Mackenzie Basin, South Canterbury
2024 ANNUAL RESULTS PRESENTATION
14
MERIDIAN ENERGY28 August 2024
787
692
709
783
905
0
200
400
600
800
1,000
20202021202220232024
$M
Financial Year ended 30 June
EBITDAF
Cash flow and EBITDAF
+31% increase in operating cash flows.
With a +13% increase in other operating expenses.
604
431
461
509
667
0
200
400
600
800
20202021202220232024
$M
Financial Year ended 30 June
Operating cash flows
2024 ANNUAL RESULTS PRESENTATION
15
MERIDIAN ENERGY28 August 2024
Meridian’s new ordinary dividend policy
Meridian’s ordinary dividend policy is to make distributions at a dividend payout
ratio, within an average over time, of 80% to 100% of Operating Free Cash Flow,
subject to the Board’s due consideration of:
▪Meridian’s working capital requirements and its medium-term
investmentprogramme;
▪a sustainable financial structure from Meridian,recognisingthe Company’s
targeted long-term credit rating of BBB+ by S&P; and
▪the risks from short and medium term economic, market and catchment
hydrology conditions and expected financial performance.
Operating Free Cash Flow is calculated as Operating Cash Flow, less the annual
capital cost of maintaining Meridian’s asset base and systems (Stay in Business
Capital Expenditure).
16.9016.90
17.40
17.90
21.00
2.44
0
5
10
15
20
25
20202021202220232024
cps
Financial Year ended 30 June
Total dividends declared
Ordi nary dividendsSpecial dividends
Dividend
Change to an operating free cash flow-based dividend
policy.
Final ordinary dividend declared of 14.85cps (+25%),
80% imputed.
Brings FY24 full year ordinary dividend declared to
21.00cps (+17%), 80% imputed.
Dividend reinvestment plan will apply to this final
dividend at 2% discount.
Dividend Reinvestment Plan Dates
Ex dividend date4 SepStrike price announced11 Sep
Record date5 SepDividend paid/shares issued20 Sep
Elections close10 Sep
2024 ANNUAL RESULTS PRESENTATION
16
MERIDIAN ENERGY28 August 2024
905
783
+144
+7
+7
-1
-3
-32
500
600
700
800
900
1,000
EBITDAF
30 Jun 23
Energy marginOther revenueTransmission
expenses
Hosting
expenses
Metering
expenses
Operating
expenses
EBITDAF
30 Jun 24
$M
Movement in EBITDAF
Movement in EBITDAF
FY24 EBITDAF +16% increase on FY23.
4% higher retail contracted sales revenue.
2% lower generation volumes at 133% higher
average price.
114% increase in the average price paid to supply
customers.
Increased financial energy margin from higher
financial contract and hedging volumes at higher
wholesale prices.
Other revenue increases from R&D tax incentive
and Te Rere Hau recoverable costs.
+$32M (+13%) increase in FY24 operating costs.
2024 ANNUAL RESULTS PRESENTATION
17
MERIDIAN ENERGY28 August 2024
Energy margin
Sales volume growth in all mass market segment, with
corporate sales -0.2%.
Lift in both mass market and corporate average pricing.
2% lower physical at generation (hydro -5%, wind +20%
including 135MWh from Harapaki).
Generation spot, financial contract and hedging
revenues all reflected higher wholesale prices.
Those higher wholesale prices increased supply and
hedging costs.
Higher hedging volumes and contracted sales
increased costs.
+$12M net benefit of contract close outs in FY24 (FY23
+$46M).
Wholesale physical and financial sales and purchases
reasonably balanced.
1,276
1,132
+105
+50
-1
+1,299
-1,480
+724
-550
-2
-1
500
1,000
1,500
2,000
2,500
Energ y
Mar gin
30 Jun 23
Res, SMB,
Ag i sales
C&I sa lesNZA S salesGenera tion
spot
revenue
Cost to
suppl y
customers
Der ivat ive
sales and
purchases
Cost of
deriva tive
sales and
purchases
VA S m arg insMar ket
costs
Energ y
Mar gin
30 Jun 24
$M
Energy margin movement
physical -$27M
financial +$172M
Refer to page 43 for a further breakdown of ener gy margin
-$9m wholesale
physical and
financial sales and
purchases
2024 ANNUAL RESULTS PRESENTATION
18
MERIDIAN ENERGY28 August 2024
1
Volume weighted average electricity price received from retail customers, less distribution costs
Retail customers
Sales volumes growth in residential (+2%), small
medium business (+2%), large business (+8%),
agricultural (+18%).
Higher mass market net average sales price.
Mass market revenue increased +$105M (+15%).
-0.2% decrease in corporate sales volume at a
higher net average sales price.
Corporate sales revenue increased +$51M (+10%).
2024 ANNUAL RESULTS PRESENTATION
19
MERIDIAN ENERGY28 August 2024
0
5,000
10,000
15,000
2009201020112012201320142015201620172018201920202021202220232024
GWh
Financial Year ended 30 June
Meridian's combined catchment inflows
90 year average
89
173
130
73
171
0
50
100
150
200
20202021202220232024
$/MWh
Financial Year ended 30 June
Meridian average generation price
Generation
FY24 inflows were 93% of average, lowest annual
inflows in seven years.
FY24 hydro generation decreased 5%.
Increased station capacity of Benmore (540MW to
552MW) and increased capacity of each of the seven
Manapōuri units (125MW to 128MW).
Manapōuri transformer failures in November 2022
and July 2023. New transformer is due at the end of
calendar year 2024 and a second transformer in late
2025.
FY24 wind generation increased 20% from higher wind
speeds and asset availability.
Prolonged transformer outage at West Wind Farm is
constraining capacity to 98MW. Return to full 143MW
expected in October 2024.
2024 ANNUAL RESULTS PRESENTATION
20
MERIDIAN ENERGY28 August 2024
281
249
+11
+4
+8
+6
+2
+1
200
220
240
260
280
300
FY23Remunerati on
uplift
New sta ffi ngContra ctorsICTInsura nceOtherFY24
$M
FY24 operating cost movement
199
207
218
249
281
0
100
200
300
20202021202220232024
$M
Financial Year ended 30 June
Operating expenses
Operating costs
FY24 operating costs at top end of the February 2024
revised $276M-$282M guidance range.
Original guidance range was $268M-$274M.
+$32M (+13%) increase in FY24 operating costs from:
6% average remuneration increase;
Additional staff and contract resources in
development, consenting, retail transformation;
Finance system upgrade; and
Insurance costs.
281
249
+14
+9
+6
+2
+1
200
220
240
260
280
300
FY23Staff costsContractorsICTIns uranceOtherFY24
$M
FY24 operating cost movement
2024 ANNUAL RESULTS PRESENTATION
21
MERIDIAN ENERGY28 August 2024
112
100
50
13
2
7
18
19
24
4
0
20
40
60
80
100
120
Ha rapakiRuakākā BESSDevelopment
costs
Retail systemsManapōuri
electric ferry
Development
costs
Workplace
facilities
ICTAsset
maintena nce
Retail systems
$M
Capital expenditure
19
64
135
300
277
45
38
40
46
72
64
102
175
346
349
0
100
200
300
400
20202021202220232024
$M
Financial Year ended 30 June
Capital expenditure
GrowthStay in businessTotal
Capital expenditure
FY24 capital expenditure at bottom end of the
February 2024 revised $345M-$370M guidance
range.
Original guidance range was $420M-$445M.
Project construction and land purchases are the
bulk of growth capex.
Lift in FY24 stay in business capex from premises
and vehicle costs.
Growth $277MStay in Business $72M
2024 ANNUAL RESULTS PRESENTATION
22
MERIDIAN ENERGY28 August 2024
Current Meridian consenting
2024 ANNUAL RESULTS PRESENTATION
23
MERIDIAN ENERGY28 August 2024
281
+5
+9
+6
+5
+1
200
220
240
260
280
300
320
FY24
actual
Salary upliftICTGenerationDevelopmentOtherFY25
guidance
$M
FY25 operating cost guidance
308
↑
302
Cost guidance
$302M-$308M FY25 operating costs.
Increases from consenting costs, retail transformation,
finance system upgrade and remuneration increases.
$295M-$325M FY25 capex costs.
Growth capex includes completion of BESS and
commencement of solar build at Ruakākā and further
phase on retail transformation.
SIB capex includes generation control system replacement and gravel removal at Lake Manapōuri control
structure.
2024 ANNUAL RESULTS PRESENTATION
24
MERIDIAN ENERGY28 August 2024
1
Net profit before tax
2
Net changes in the fair value of unrealised energy hedges and treasury hedges
3
Net profit after tax
4
Net profit after tax adjusted for the effects of changes in fair value of unrealised hedges, electricity option
premiums and other non-cash items and their tax effects
A reconciliation of NPAT to Underlying NPAT is on page 50
316
231
233
315
359
0
100
200
300
400
20202021202220232024
$M
Financial Year ended 30 June
Underlying NPAT
175
415
451
95
429
0
100
200
300
400
500
20202021202220232024
$M
Financial Year ended 30 June
Net profit after tax (continuing operations)
Below EBITDAF
$98M increase in NPBT
1
from the net change in fair
value of hedges
2
($309M decrease in FY23).
$18M for impairment of software assets.
+$13M increase in net finance costs from higher levels
of net debt.
Higher tax expense on higher NPBT.
Resulted in a $334M (+352%) increase in NPAT
3
.
$44M (+14%) increase in Underlying NPAT
4
largely
from higher cash flows with higher depreciation,
financing and tax costs.
$3,152M increase in generation and plant asset
valuation.
2024 ANNUAL RESULTS PRESENTATION
25
MERIDIAN ENERGY28 August 2024
32%
1%
36%
30%
1%
Sources of funding as at 30 June 2024
NZ$ bank facilities drawn/undrawn
EKF - Danish export credit
Retail Bonds
US private placement
Commercial paper
210
35
148
383
556
450
150
0
200
400
600
202520262027202820292030+
$M
Financial Year ended 30 June
Debt maturity profile at 30 June 2024
Drawn debt maturing (face value)Available facilities maturing
Debt and funding
June 2024 total borrowings of $1,347M
1.
Total funding facilities of $1,956M, of which $625M
were undrawn.
All facilities classified under Meridian’s Green
Finance Programme.
FY24 net debt of $1,274M, up +3% from FY23.
FY24 net debt to EBITDAF at 1.4x (FY23: 1.6x).
Credit rating maintained at BBB+/Stable.
Successful $300M issue of 6-year unsecured,
unsubordinated, fixed rate green bonds in March
2024.
1
Including $18M fair value adjustment
2024 ANNUAL RESULTS PRESENTATION
26
MERIDIAN ENERGY28 August 2024
0
200
400
600
800
1,000
Q1
2024
Q2
2024
Q3
2024
Q4
2024
Q1
2025
Q2
2025
Q3
2025
Q4
2025
Q1
2026
Q2
2026
Q3
2026
Q4
2026
Q1
2027
Q2
2027
Q3
2027
Q4
2027
$/MWh
Benmore ASX futures settlement price
28 June 202415 July 202431 July 20245 August 2024
23 August 2024peak spot pri cecurrent spot pri ce
0
150
300
450
600
750
900
Q1
2024
Q2
2024
Q3
2024
Q4
2024
Q1
2025
Q2
2025
Q3
2025
Q4
2025
Q1
2026
Q2
2026
Q3
2026
Q4
2026
Q1
2027
Q2
2027
Q3
2027
Q4
2027
$/MWh
Benmore ASX futures settlement price
28 June 202415 July 202431 July 2024
5 August 202423 August 2024peak spot pri ce
current spot pri ce
0
1,000
2,000
3,000
4,000
5,000
6,000
JanFebMarAprMayJunJulAugSepOctNovDec
GWh
National hydro storage (26 August 2024)
range (1927-2023)Average storage (91yr)2024
July operating results
Total Meridian inflows were 78% of average, lowest
July inflows since 2011.
Waitaki hydro storage at 45% of average, snow
storage at 65% of average at 31 July.
National hydro storage at record low August levels,
currently 51% of 91-year average.
Meridian’s physical generation volumes slightly
below retail and NZAS contracted sales in July.
Near-term ASX prices falling with further NZAS and
Methanex announcements.
Accounting treatment of new NZAS base contract is
changing to be recognised as a derivative in the
income statement.
2024 ANNUAL RESULTS PRESENTATION
27
MERIDIAN ENERGY28 August 2024
Neal Barclay – Chief Executive
Maintenance work at Meridian’s West Wind Farm near Wellington
2024 ANNUAL RESULTS PRESENTATION
28
MERIDIAN ENERGY28 August 2024
FY25 targets
2024 ANNUAL RESULTS PRESENTATION
29
MERIDIAN ENERGY28 August 2024
Final thoughts
Manapōuri hydro station in the F iordland National Park
FY24 was a year of milestones.
Challenging start to FY25 with
record dry winter conditions.
Leaning on hedge arrangements to
manage lake levels.
Unprecedented demand response
from NZAS.
Support for our C&I customers with
current high wholesale price
volatility.
MERIDIAN ENERGY LIMITED28 August 2024
Questions
2024 ANNUAL RESULTS PRESENTATION
31
MERIDIAN ENERGY28 August 2024
Additional
information
2024 ANNUAL RESULTS PRESENTATION
32
MERIDIAN ENERGY28 August 2024
Segment results
2024 ANNUAL RESULTS PRESENTATION
33
MERIDIAN ENERGY28 August 2024
EBITDAF reconciliation to the income statement
2024 ANNUAL RESULTS PRESENTATION
34
MERIDIAN ENERGY28 August 2024
Six monthly results
2024 ANNUAL RESULTS PRESENTATION
35
MERIDIAN ENERGY28 August 2024
Earnings from continuing operations
2024 ANNUAL RESULTS PRESENTATION
36
MERIDIAN ENERGY28 August 2024
235
241
248
246
250
75
89
117
117
120
310
330
365
363
370
0
100
200
300
400
Jun-20Jun-21Jun-22Jun-23Jun-24
ICPs
Customer connections
MeridianPowershopTotal
4,342
4,819
5,012
5,258
5,603
3,034
3,586
3,929
3,917
3,908
7,376
8,405
8,941
9,175
9,511
0
2,000
4,000
6,000
8,000
10,000
12,000
20202021202220232024
GWh
Financial Year ended 30 June
Retail sales volumes
Residential, SMB, AgriCorporateTotal
Retail
Customers
+2% increase in customers since June 2023.
Residential, business, agri segment
+2% increase in residential volumes.
+2% increase in small business volumes.
+18% increase in agri volumes.
+8% increase in large business volumes.
+8% increase in average sales price.
Corporate segment
-0.2% decrease in volumes.
+10% increase in average sales price.
2024 ANNUAL RESULTS PRESENTATION
37
MERIDIAN ENERGY28 August 2024
0
500
1,000
1,500
2,000
2,500
JanJanFebMarMarAprMayMayJunJulJulAugSepSepOctNovDecDec
GWh
Meridian's Waitaki storage
Averag e 1979-2018201920202021202220232024
0
5,000
10,000
15,000
2009201020112012201320142015201620172018201920202021202220232024
GWh
Financial Year ended 30 June
Meridian's combined catchment inflows
90 year average
Hydrology
Inflows
FY24 inflows were 93% of historical average.
July 2024 inflows were 78% of average.
Storage
Meridian’s Waitaki storage at 30 June 2024 was
63% of historical average.
By 31 July 2024, this position was 45% of average.
2024 ANNUAL RESULTS PRESENTATION
38
MERIDIAN ENERGY28 August 2024
89
173
130
73
171
0
50
100
150
200
20202021202220232024
$/MWh
Financial Year ended 30 June
Meridian average generation price
12,758
11,297
12,271
12,701
12,125
1,465
1,395
1,285
1,202
1,441
14,224
12,692
13,556
13,903
13,566
0
4,000
8,000
12,000
16,000
20202021202220232024
GWh
Financial Year ended 30 June
Generation
HydroWindTotal
Generation
Volume
FY24 generation was -2% lower than FY23 with
lower hydro generation and higher wind
generation.
Price
FY24 average price Meridian received for its
generation was +133% higher than FY23.
FY24 average price Meridian paid to supply
customers was +114% higher than FY23.
2024 ANNUAL RESULTS PRESENTATION
39
MERIDIAN ENERGY28 August 2024
905
783
+156
+103
+1,299
-1,816
+406
-2
-2
+7
+7
-1
-3
-32
0
500
1,000
1,500
2,000
2,500
EBITDAF
30 Jun 2023
Retail
contracted
sales
Wholesale
contracted
sales
Generation
spot revenue
Cost to supply
customers
Net cost of
hedges
Virtual asset
swaps
Other market
costs
Other revenueTransmission
expenses
Hosting
expenses
Metering
expenses
Other
operating
expenses
EBITDAF
30 Jun 2024
$M
Movement in EBITDAF
FY24 EBITDAF
Energy margin $+144M
2024 ANNUAL RESULTS PRESENTATION
40
MERIDIAN ENERGY28 August 2024
359
429
905
-334
-23
-57
-132
+98
-18
+23
-33
0
200
400
600
800
1,000
EBITDAFDepreciation and
amortisation
Premiums paid on
electricity options
net of interest
Net finance costsTaxUnderlying
NPAT
Net c hange in fair
value of hedges*
Asset related
adjustments
Premiums paid on
electricity options
net of interest
TaxNPAT
$M
EBITDAF to NPAT reconciliation
EBITDAF to NPAT
*Net changes in the fair value of unrealised ener gy hedges and treasury hedges
2024 ANNUAL RESULTS PRESENTATION
41
MERIDIAN ENERGY28 August 2024
1,276
+820
+543
+633
+2,319
-2,723
-583
-766
+1,039
+12
-9
-9
0
1,000
2,000
3,000
4,000
5,000
Res, SMB, Agi salesC&I salesFinancial contract
sales (incl NZAS)
Generation spot
revenue
Cost to supply
customers
Cost to supply
financial contrac ts
Hedging fixed c ostsHedging spot
revenue
Contract close outsVAS marginsMarket costsEnergy Margin
$M
Energy margin
Energy margin
2024 ANNUAL RESULTS PRESENTATION
42
MERIDIAN ENERGY28 August 2024
1,276
1,132
+105
+50
+103
+1,299
-1,480
-336
-180
+620
-34
-2
-1
0
1,000
2,000
3,000
Energy Margin 30
Jun 23
Res, SMB, Agi
sales
C&I salesFinancial contract
sales (incl NZAS)
Generation spot
revenue
Cost to supply
customers
Cost to supply
financial contrac ts
Hedging fixed
costs
Hedging spot
revenue
Contract close
outs
VAS marginsMarket costsEnergy Margin 30
Jun 24
$M
Energy margin movement
Energy margin
2024 ANNUAL RESULTS PRESENTATION
43
MERIDIAN ENERGY28 August 2024
Energy margin
2024 ANNUAL RESULTS PRESENTATION
44
MERIDIAN ENERGY28 August 2024
Defined as:
Revenues received from sales to customers net of
distribution costs (fees to distribution network companies
that cover the costs of distribution of electricity to
customers), sales to large industrial customers and fixed
price revenues from financial contracts sold (contract sales
revenue).
The volume of electricity purchased to cover contracted
customer sales and financial contracts sold (cost to supply
customers).
The fixed cost of derivatives used to manage market risks,
net of spot revenue received from those derivatives (net
cost of hedging).
Revenue from the volume of electricity that Meridian
generates (generation spot revenue).
The net margin position of virtual asset swaps with Genesis
Energy and Mercury New Zealand.
Other associated market revenues and costs including
Electricity Authority levies and ancillary generation
revenues, such as frequency keeping.
Energy margin
A non-GAAP financial measure representing energy
sales revenue less energy related expenses and
energy distribution expenses.
Used to measure the vertically integrated
performance of the retail and wholesale
businesses.
Used in place of statutory reporting which requires
gross sales and costs to be reported separately,
therefore not accounting for the variability of the
wholesale spot market and the broadly offsetting
impact of wholesale prices on the cost of retail
electricity purchases.
2024 ANNUAL RESULTS PRESENTATION
45
MERIDIAN ENERGY28 August 2024
NZAS Demand Response Agreement
Summary of demand response options
Option
Equivalent
reduced
consumption
(MWh per
hour)
ExercisableReduction
from Meridian demand
response agreement
(MWh per hour)
Usual
Ramp-
Down
Notice
Period
DR Period
(equivalent
number of days)
Usual Ramp-Down
Period
(equivalent
numberof days)
Usual Ramp-Up
Notice Period
(equivalent
number ofdays)
Usual Ramp-Up
Period
(equivalent
number ofdays)
Maximum Calls
12518.75
3 Business
Days
Minimum 10 days,
maximum 150days
5 days3 days15 days
Unlimited, but the Option
cannotbe exercised more
than 4 times inany 12-
month period
250 37.5
3 Business
Days
Minimum 15days,
maximum145 days
10 days3 days30 days
Unlimited, but the Option
cannotbe exercised more
than 2 times inany 18-
month period
3100 75
3 Business
Days
Minimum 22days,
maximum137days
18 days5 days100 days
The Option cannot be
exercisedmore than 8
times over the Term
4185 138.75
5 Business
Days
Minimum 30days,
maximum75 days
25 days5 days200 days
The Option cannot be
exercisedmore than 4
times over the Term
Stand down periods apply between the exercise of Options.
2024 ANNUAL RESULTS PRESENTATION
46
MERIDIAN ENERGY28 August 2024
Funding metrics
Net debt/EBITDAF is the principal metric underpinning S&P credit rating.
S&P calculation of net debt/EBITDAF includes numerous adjustments to reported numbers:
Borrowings adjusted for the impact of leases; and
Cash balances adjusted for restricted cash.
2024 ANNUAL RESULTS PRESENTATION
47
MERIDIAN ENERGY28 August 2024
-161
236
402
-351
249
-400
-300
-200
-100
0
100
200
300
400
500
20202021202220232024
$M
Financial Year ended 30 June
Net change in fair value of hedges
Meridian uses derivative instruments to manage
interest rate, foreign exchange and electricity price
risk.
As forward prices and rates on these instruments
move, non-cash changes to their carrying value are
reflected in NPAT.
Accounting standards only allow hedge accounting
if specific conditions are met, which creates NPAT
volatility.
$253M increase in NPBT from fair value of energy
hedges from higher forward electricity prices
($375M decrease in FY23).
$4M decrease in NPBT from fair value of treasury
hedges from lower forward interest rates ($24M
increase in FY23).
Fair value movements
2024 ANNUAL RESULTS PRESENTATION
48
MERIDIAN ENERGY28 August 2024
Financial years ended 30 June 2020-2021 restated for change in presentation of realised energy hedge balances
Proforma income statement
2024 ANNUAL RESULTS PRESENTATION
49
MERIDIAN ENERGY28 August 2024
Segment earnings statement
2024 ANNUAL RESULTS PRESENTATION
50
MERIDIAN ENERGY28 August 2024
Underlying NPAT reconciliation
2024 ANNUAL RESULTS PRESENTATION
51
MERIDIAN ENERGY28 August 2024
Cash flow statement
2024 ANNUAL RESULTS PRESENTATION
52
MERIDIAN ENERGY28 August 2024
Balance sheet
2024 ANNUAL RESULTS PRESENTATION
53
MERIDIAN ENERGY28 August 2024
Hedging volumesbuy-side electricity derivatives excluding the buy-side of virtual asset swaps
Average generation pricethe volume weighted average price received for Meridian’s physical generation
Average retail contracted sales pricevolume weighted average electricity price received from retail customers, less distribution costs
Average wholesale contracted sales pricevolume weighted average electricity price received from wholesale customers (including NZAS) and financial contracts
Combined catchment inflowscombined water inflows into Meridian’s Waitaki and Waiau hydro storage lakes
Cost of hedgesvolume weighted average price Meridian pays for derivatives acquired
Cost to supply contracted salesvolume weighted average price Meridian pays to supply contracted customer sales and financial contracts
Contracts for Difference (CFDs)an agreement between parties to pay the difference between the wholesale electricity price and an agreed fixed price for a specified volume of
electricity. CFDs do not result in the physical supply of electricity
Customer connectionsnumber of installation control points, excluding vacants
GWhgigawatt hour. Enough electricity for 125 average New Zealand households for one year
Historic average inflowsthe historic average combined water inflows into Meridian’s Waitaki and Waiau hydro storage lakes over the last 84 years
Historic average storagethe historic average level of storage in Meridian’s Waitaki catchment since 1979
HVDChigh voltage direct current link between the North and South Islands of New Zealand
ICPNew Zealand installation control points, excluding vacants
ICP switchingthe number of installation control points changing retailer supplier in New Zealand, recorded in the month the switch was initiated
MWhmegawatt hour. Enough electricity for one average New Zealand household for 46 days
National demandElectricity Authority’s reconciled grid demand www.emi.ea.govt.nz
NZASNew Zealand Aluminium Smelters Limited
Retail sales volumescontract sales volumes to retail customers, including both non half hourly and half hourly metered customers
Financial contract salessell-side electricity derivatives excluding the sell-side of virtual asset swaps
Virtual Asset Swaps (VAS)CFDs Meridian has with Genesis Energy and Mercury New Zealand. They do not result in the physical supply of electricity
Glossary
2024 ANNUAL RESULTS PRESENTATION
54
MERIDIAN ENERGY28 August 2024
The information in this presentation was prepared by Meridian Energy with
due care and attention. However, the information is supplied in summary
form and is therefore not necessarily complete, and no representation is
made as to the accuracy, completeness or reliability of the information. In
addition, neither the company nor any of its directors, employees,
shareholders nor any other person shall have 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 forward-looking statements and projections.
These reflect Meridian’s current expectations, based on what it thinks are
reasonable assumptions. Meridian gives no warranty or representation as to
its future financial performance or any future matter. Except as required by
law or NZX or ASX listing rules, Meridian is not obliged to update this
presentation after its release, even if things change materially.
This presentation does not constitute financial advice. Further, this
presentation is not and should not be construed as an offer to sell or a
solicitation of an offer to buy Meridian Energy securities and may not be
relied upon in connection with any purchase of Meridian Energy securities.
This presentation contains a number of non-GAAP financial measures,
including Energy Margin, EBITDAF, Underlying NPAT and gearing. Because
they are not defined by GAAP or IFRS, Meridian's calculation of these
measures may differ from similarly titled measures presented by other
companies and they should not be considered in isolation from, or construed
as an alternative to, other financial measures determined in accordance with
GAAP. Although Meridian believes they provide useful information in
measuring the financial performance and condition of Meridian's business,
readers are cautioned not to place undue reliance on these non-GAAP
financial measures.
The information contained in this presentation should be considered in
conjunction with the company’s financial statements, which are included in
Meridian’s integrated report for the year ended 30 June 2024 and is available
at:
www.meridianenergy.co.nz/investors
All currency amounts are in New Zealand dollars unless stated otherwise.
Disclaimer
---
This year we made
significant progress
on our strategic
commitment to an
all-encompassing focus
on climate action.
A shift
in energy
MERIDIAN ENERGY LIMITED
INVESTOR LETTER FOR THE YEAR ENDING 30 JUNE 2024.
Our “7 in 7” renewable build programme is well advanced
with Harapaki wind farm now completed, the Ruakākā BESS
due for completion early next year and several other wind
and solar projects at an advanced stage.
DIVIDEND DATES
5 September 2024
Record date
4–10 September 2024
Dividend Reinvestment Plan
price determination period
20 September 2024
Dividend paid and new
shares issued under the
Dividend Reinvestment Plan
We finalised ground-breaking
new contracts with New Zealand
Aluminium Smelters Limited
(NZAS) that provides much needed
certainty for the entire electricity
sector and will underpin further
investment in renewable energy.
We continued the work to shape
what the next generation of retail
means for our customers and our
business. And we made net zero
2050 and net nature positive
commitments that further anchor
our sustainability performance
towards ambitious, long-term goals.
A strong return on
our climate-focused strategy
The business has delivered well for
our shareholders. Increased capacity,
strong wholesale pricing and trading
by our wholesale team, and our
momentum with increasing retail
customer sales all contributed to an
unprecedented financial result.
Meridian Energy has reported
operating cash flows of $667 million
for the year ending 30 June 2024,
up from $509 million the previous
year, with net profit after tax up
from $95 million to $429 million.
1 Earnings before interest, tax, depreciation, amortisation, unrealised changes in fair value of hedges, impairments and gains or losses on sale of assets.
2 Net profit after tax adjusted for the effects of changes in fair value of unrealised hedges, electricity option premiums and other non-cash items and their tax effects.
The growth in net profit after tax
was influenced significantly by net
gains on hedge instruments of
$249 million in the 2024 financial
year. In the prior year the company
recorded net losses on hedge
instruments of $351 million.
EBITDAF
1
was up 16% to $905 million
and underlying net profit
2
rose 14%
to $359 million. Both of these are
non-GAAP measures.
The strong and improved operating
result was driven by higher customer
sales and positive wholesale trading
results. At the same time, the
company invested $349 million in
new and existing generation assets.
The Board declared a final ordinary
dividend of 14.85 cents per share.
This brings the total ordinary
dividends declared in FY24 to
21.00 cents per share. The Board
has approved continuation of the
Dividend Reinvestment Plan (DRP)
at a 2% discount.
While the operating result for the
last financial year was strong, the
operating environment shifted
dramatically during June as an
extended drought emerged. As
a result, the 2025 financial year
currently looks to be far more
challenging.
Record low inflows into Meridian’s
hydro catchments from May 2024
through to mid-August 2024 have
combined with a shortage of gas
and unseasonally low wind, causing
wholesale prices to lift materially.
Meridian quickly called on the
hedge arrangements available to us
to ensure our lakes were managed
within consent conditions and to
maintain the security of supply.
The wider sector took several
steps including exercising demand
response options, buying gas from
Methanex for electricity generation,
and securing access to contingent
hydro storage should we need it.
At the time of publication, these
actions resulted in wholesale prices
reducing by more than half from
their peaks, although prices were
still sitting above $300/MWh.
While a very small number of
electricity users have direct
exposure to the wholesale market,
unfortunately, some have been
significantly impacted. It’s a tough
economic environment and this is
not an outcome this sector wants
for any business. Less than 0.01%
of Meridian customers have been
affected by these wholesale prices.
Meridian’s residential customers,
being on fixed prices, were shielded
from wholesale market fluctuations.
Meridian looked after our larger
commercial and industrial customers
rolling off their existing contracts
by offering to extend their current
pricing to 1 November 2024.
While we work through this issue
in real time, it is worth noting that
the system is continually building
resilience from investment in new
renewables, greater collaboration
through demand response, and
better access to contingent storage
if we need it.
The impact of all this activity will
be outlined in future operating
results. Meridian’s ability to manage
through this situation is sound and
our balance sheet is geared to
provide for this eventuality.
INVESTOR LETTER 2024MERIDIAN ENERGY LIMITED
1
GROW RENEWABLE
GENERATION
Groundbreaking 20-year
agreement with Rio Tinto
It was very pleasing to settle the
uncertainties around the aluminium
smelter at Tiwai Point. At the end
of May 2024, we announced a
package of long-term contracts
with NZAS for part of the smelter’s
electricity needs for a further 20
years. These agreements end a
long and very stressful period of
uncertainty for many people in
Southland. They also provide much
needed certainty for the electricity
sector that will facilitate more
investment in renewable energy
across the motu. And importantly,
the smelter owners are showing
how large industrial businesses can
thrive in Aotearoa, leveraging our
highly renewable electricity system
to create low carbon sustainable
products, high value jobs and
economic growth for New Zealand.
The package itself comprises two
key elements, a long-term fixed
price contract and a demand
response agreement.
The core fixed price energy
agreement will reduce in stages
from 572MW to 377MW as at
1 January 2025. NZAS has
negotiated directly with two other
parties to meet the remainder of
their energy needs. The pricing
in the contract is sustainable
and allows for price escalation
at Consumer Price Index if the
international market for aluminium
also escalates.
The demand response element
of this new agreement is
groundbreaking. It will provide
new levels of flexibility to support
the electricity system when the
country’s hydro storage is low.
Flexibility of this scale advances
decarbonisation because it reduces
the country’s reliance on burning
coal to meet seasonal electricity
demand.
Our ambitious development
programme is on track
This year, and against the odds
given the challenges of cyclones
and storms, Harapaki, the 176MW
wind farm located in the Hawke’s
Bay, and the first of our 7 in 7
projects, began generating on time
and was delivered within budget.
The 100MW peak and 200MWh
(2 hours) grid-scale Battery Energy
Storage System (BESS) at Ruakākā
Energy Park near Whangārei is
expected to be online by early
2025 and its introduction will
support stable grid operations by
enabling us to store energy during
low demand times of the day and
then inject it back into the grid at
peak demand times.
We have a range of other wind,
solar and battery projects at the
advanced stage of design and
close to being consented. This is
important, because we estimate
that by 2050, for Meridian to
meet our share of the country’s
renewable energy needs, we
will need to build the equivalent
of 20 Harapaki-sized renewable
generation assets. That is a huge
and exciting challenge for our
business. We have resourced up
accordingly and we are getting
on with it.
The Southern Green Hydrogen
(SGH) opportunity has faced some
headwinds over the past 18 months
with global inflationary pressures
increasing the cost of renewable
energy, the key input to green
hydrogen production, and capital
costs relating to building hydrogen
facilities increasing substantially.
These factors have put pressure
on SGH economics, consistent with
challenges other hydrogen projects
are experiencing overseas. Markets
have been slow to resolve the
significant gap between the cost
of producing green hydrogen and
potential customers’ willingness to
pay for green hydrogen.
As a result, the project has been put
on hold. We will continue to actively
monitor our target markets as we
believe SGH remains well-placed to
be a competitive green project
opportunity, especially compared
to other projects and jurisdictions.
We will review the opportunity to
progress it when the time is right.
Construction underway at Ruakākā BESS.
INVESTOR LETTER 2024MERIDIAN ENERGY LIMITED
2
DELIVER CLEANER,
CHEAPER ENERGY
Aiming to lift 5,000
households out of hardship
As a country in pursuit of
decarbonisation, we must ensure
the transition does not further
disadvantage those people who are
struggling with energy hardship.
We believe companies need to
take action to support their most
vulnerable customers and so this
year, we continued to expand our
Energy Wellbeing Programme
beyond its initial pilot with the
goal of helping 5,000 Meridian
and Powershop households out
of energy hardship. This followed
the Board signing off a $5 million
investment over 2 years to assist
those who are finding it difficult
to pay for their power and heat
their homes. To date, through this
programme, we have helped over
1,400 households. This project
aligns well with the ‘fairer’ part of
our company purpose, and we are
immensely proud of the work we
are doing to make a meaningful
and sustainable difference for
households in hardship.
Rewarding residential
customers who work with us
As the electricity system evolves
into an even more renewable
one it creates the opportunity
for customers to participate by
being able to move energy use
throughout the day. The new
demand response agreement
with NZAS is a great example and
these kinds of opportunities are
also becoming available for small
business and residential customers.
We are putting a lot of effort into
introducing a new retail model,
using new technology to evolve
our retail propositions. We aim
to create opportunities for all our
customers to be involved by way of
reducing consumption sensibly at
times when they don’t necessarily
need to consume all of the power
they normally would, so this power
can be used to balance demand
across the grid. Importantly, where
customers can be flexible, they
can also be financially rewarded,
reducing their overall energy costs.
Decarbonising industry
Industrial use of fossil-based fuels,
particularly for process heating,
remains a significant contributor to
the country’s greenhouse gas profile.
Fortunately, more and more
companies are making the
commitment to decarbonise.
A great example is Meridian’s
partnership with Fonterra,
announced in January 2024. That
agreement will assist Fonterra to
replace a coal-fired boiler with a
new 20MW electrode boiler at
their Edendale site in Southland. All
up, our Process Heat Electrification
Programme exceeded targets
again this year, with 525GWh of
process heat conversion (to date)
from fossil fuels to electricity now
fully committed. The pipeline for
further conversions is substantial
and by 2030 we expect to support
enough electric conversions to
remove around 140,000 tCO
2
e
annually from the environment.
Over the past year, 168 companies
have purchased more than
863GWh of Renewable Energy
Certificates (RECs) from Meridian.
This is an increase of 35% on the
last financial year with no signs of
slowing. Through the purchase of
RECs, our customers’ consumption
volume is matched to our 100%
renewable generation, allowing
customers to offset the RECs
against their Scope 2 emissions.
To round out the environmental
benefits, Meridian has committed
to invest 100% of the net proceeds
into community and business
decarbonisation funds. This year
our funds distributed $1.42 million
to decarbonisation projects
nationwide.
DELIVER OPERATIONAL
EXCELLENCE
Important gains in
our existing capacity
Alongside our renewable
development programme, we
have been making important
changes to how we operate
our generation assets.
We have increased peaking
capacity at both Manapōuri and
Benmore, giving us more than
15MWs of additional capacity
available to support the electricity
system over daily peak periods.
We are also changing our
maintenance regimes to, wherever
possible, avoid outages over peak
periods of the day and minimise
outages over winter full stop. And
we are taking a new lens to the
existing assets to establish where
major enhancements can deliver
more peak megawatts. We’re
optimistic that there is significant
further peaking capacity to be
extracted from more of our
existing assets in the years ahead.
INVESTOR LETTER 2024MERIDIAN ENERGY LIMITED
3
GROW CAPABILITY
AND CULTURE
Focusing on ESG performance
for the long term
This year we set a target to reach
Net Zero by 2050 and we’ve sought
independent verification of this goal
from the Science Based Targets
initiative, due in FY25. This target
is consistent with our purpose, our
strategy and our focus on doing our
part to limit global warming. While
a challenge, this new commitment
is a natural extension of our ‘Half
by 2030’ operational emissions
reduction target.
The Half by 2030 programme
created the impetus to purchase
the world’s first electric hydrofoil
ferry to replace our current boat at
Manapōuri. This will arrive and go
into testing in the next financial year
and will remove around 240tCO
2
e
from our operations. Other areas
of our Half by 2030 goal remain
more challenging, like managing the
growth of emissions in our supply
chain and further reducing our
emissions on our farms and from
flying. The culture of the Meridian
team, however, is such that we
continue to push hard to innovate
and adapt our behaviours to meet
these important mid-term goals.
This year we also made a
commitment for Meridian to drive
for nature positive outcomes in all
that we do. This commitment will
guide us to better articulate our
impact on biodiversity and explore
areas where we can increase
positive impact. Our investment
in nature to date is significant, but
we believe we can do better. If
done well, this commitment will
support our consenting processes
and give investors, customers
and communities even greater
confidence in Meridian as a leader
in sustainability and a developer of
new renewable generation.
Pleasingly, Meridian was again
included in the Dow Jones
Sustainability Asia Pacific Index,
an independent global S&P Index
that ranks our Environmental, Social
and Governance (ESG) performance
against like companies in that
region. This provides independent
validation of our ESG performance
for investors and other stakeholders
and assists to attract a cohort of
international institutional investors
to our share register.
Experienced leadership
We continue to have a stable,
experienced and highly capable
Executive team at Meridian. There
was only one change in our Executive
team in the last year. Nic Kennedy
resigned as CEO of Meridian’s
subsidiary, Flux Federation. And
Meridian’s Chief Information Officer,
Bharat Ratanpal has been seconded
as Interim CEO to lead the Flux
business through the next phase
of its development. We would like
to acknowledge Nic’s hard work
in getting Flux to this point. While
Bharat works with the Flux business,
Edna Maddocks, one of our ICT
team leaders, has stepped in to
lead Meridian’s ICT team.
The Board are also highly
experienced governors with
extensive and varied sector
experience that enables them to
bring a range of perspectives to
the oversight of Meridian’s strategy.
For the Board, we were pleased to
welcome David Carter as a Non-
Executive Director. Our thanks and
best wishes to Mark Cairns who,
after a long tenure, retired at our
last Annual Shareholder meeting.
Everyone stands to gain
The strengthening of our
commitment to deliver on our
strategy and help decarbonise
Aotearoa’s economy is changing
how we do business on many fronts.
Our teams are tackling issues in new
and refreshing ways. The use of data
is enabling much of the change and
helping us to enhance our brand,
our customer propositions and
our generation assets.
Extending demand response
opportunities to smaller business
and residential customers will
incentivise many kiwis to change
how they manage power
consumption whilst assisting
greatly in the management of
system demand peaks. In a global
trading environment where energy
use is under increasing scrutiny,
more than ever we are convinced
that Aotearoa’s highly renewable
electricity system can be a
significant source of competitive
advantage for our country.
Finally, our investors should take
from our results that the pursuit of
our purpose can indeed be achieved
with competitive returns.
On behalf of the Board and the
Executive team, ngā mihi to our
customers, the communities we work
in, our partners and our investors.
And to our talented Meridian team,
thanks for doing the mahi to ensure
we continue to deliver on our
purpose of ‘clean energy for a
fairer and healthier world’.
Visit meridian.co.nz/investors to download the full Meridian Integrated Report for the year ended 30 June 2024.
INVESTOR LETTER 2024MERIDIAN ENERGY LIMITED
4
FY24 DIVIDENDUNDERLYING NET PROFIT AFTER TAXHARAPAKI WIND FARM
21
cps
$359
M
176
MW
FULLY OPERATIONAL AND ON BUDGET
EMPLOYEE ENGAGEMENTNZAS AGREEMENTSFAST TRACK APPROVAL BILL
75% 20
years
WAIINU ENERGY PARK &
WESTERN BAYS SOLAR PROJECTS
LODGEDLODGEDCOMMITMENT
RUAKĀKĀ SOLAR &
MANAWATŪ BESS CONSENTS
WAITAKI RECONSENT APPLICATION
REFERRED TO ENVIRONMENT COURT
TO MANAPŌURI ELECTRIC
HYDROFOIL FERRY
Underlying net profit after tax reconciliation
Financial year ended 30 June
$M FY24FY23
Net profit after tax42995
Underlying adjustments
Hedging instruments
Net change in fair value of energy hedges(102)333
Net change in fair value of treasury hedges4(24)
Premiums paid on electricity options net of interest(23)(17)
Assets
Asset related adjustments1810
Total adjustments before tax(103)302
Taxation
Tax effect of above adjustments33(82)
Underlying net profit after tax359315
$M
1,000
800
600
400
200
0
709
2023
783
2024
905
2020
787
2021
692
2022
EBITDAF
0
$M
200
100
300
400
500
700
600
461
2023
509
2024
667
2020
604
2021
431
2022
Operating cash flow
INVESTOR LETTER 2024MERIDIAN ENERGY LIMITED
5
---
Results announcement
Results for announcement to the market
Name of issuer Meridian Energy Limited
Reporting Period 12 months to 30 June 2024
Previous Reporting Period 12 months to 30 June 2023
Currency NZD
Amount (NZ$m) Percentage change
Revenue from continuing
operations
$4,856 51%
Total Revenue $4,856 51%
Net profit/(loss) from
continuing operations
$429 352%
Total net profit/(loss) $429 352%
Interim/Final Dividend
Amount per Quoted Equity
Security
NZ $0.14850000 Final Ordinary Dividend
Imputed amount per Quoted
Equity Security
NZ $0.04620000
Record Date 5/09/2024
Dividend Payment Date 20/09/2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$3.01
$2.17
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
For commentary on the operational results please refer to the
media announcement and final results presentation.
This announcement should be read in conjunction with the
attached Annual Financial Statements for the year ended 30
June 2024.
Authority for this announcement
Name of person
authorised
to make this announcement
Jason Woolley
Contact person for this
announcement
Jason Woolley
Contact phone number +64 21 309 962
Contact email address Jason.Woolley@meridianenergy.co.nz
Date of release through MAP
28/08/2024
Audited financial statements accompany this announcement.
---
Distribution Notice
Section 1: Issuer information
Name of issuer Meridian Energy Limited
Financial product name/description Ordinary Shares
NZX ticker code MEL
ISIN (If unknown, check on NZX
website)
NZMELE0002S7
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies X
Record date Close of trading on 05/09/2024
Ex-Date (one business day before the
Record Date)
04/09/2024
Payment date (and allotment date for
DRP)
20/09/2024
Total monies associated with the
distribution
1
$384,406,275
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.19470000
Gross taxable amount
3
$0.19470000
Total cash distribution
4
$0.14850000
Excluded amount (applicable to listed
PIEs)
$0.00000000
Supplementary distribution amount $0.02096471
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Partial imputation
If fully or partially imputed, please
state imputation rate as % applied
6
80%
Imputation tax credits per financial
product
$0.04620000
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Resident Withholding Tax per
financial product
$0.01805100
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2.0%
Start date and end date for
determining market price for DRP
04 September 2024 10 September 2024
Date strike price to be announced (if
not available at this time)
11 September 2024
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New Issue
DRP strike price per financial product
$TBC
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
06 September 2024
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Jason Woolley
Contact person for this
announcement
Jason Woolley
Contact phone number +64 21 309 962
Contact email address jason.woolley@meridianenergy.co.nz
Date of release through MAP
28/08/2024
=== IR PAGE TRANSCRIPT: Annual Results Announcement Transcript (PDF) ===
TRANSCRIPTION
Company: Meridian Energy
Date: 28 August 2024
Duration: 58:28
Reservation Number: 10040485
[START OF TRANSCRIPT]
Neal Barclay: Tēnā koutou katoa. Good morning, everyone. Welcome to Meridian's profit
announcement. I'm Neal Barclay, Meridian's Chief Executive. I have with me
our Chief Financial Officer, Mike Roan. We'll talk through aspects of the
financial results for the last year and we'll also provide perspective and context
for the current market conditions.
On balance, we think the business performed strongly during FY24 across the
board and we knocked off several major milestones. The top of that list was the
long-term deal struck with the New Zealand Aluminium Smelter, or NZAS. The
two standout features of the deal were firstly the 20-year term. That has
removed massive uncertainty for the sector and allowed us to reset both our
dividend policy and renewable build programme. And secondly, the Demand
Response Agreement, and we're seeing just now how valuable that has turned
out to be.
We delivered the Harapaki Wind Farm on budget and on time. The wind farm is
now fully operational and early wind yields are absolutely fantastic. And we've
well progressed on our grid scale battery at Ruakākā in Northland. I'll talk about
our renewable pipeline shortly, but at a headline level, we have a line of sight
now to $3 billion investment in renewable projects and we intend to make that
through the remainder of this decade.
We've also lodged our re-consent application for the Waitaki Hydro Scheme.
This will be the largest consent ever granted under the RMA in New Zealand.
We have support for the key affected parties, and we are confident in the
outcome and that is essential to this country's low-carbon future and security of
supply. And we've made the decision to put on hold our Southern Green
Hydrogen project, or SGH.
Global inflationary pressures have presented significant headwinds for SGH
and we will not progress to detailed design until the economic prospects for the
project have improved. All up though, financially it was a great result. And over
the course of the year, we continued our excellent momentum in customer
sales and hydro inflows turned up with almost impeccable timing throughout the
year. That was obviously too good to last and that is my segue into some
comments on the current conditions.
Now, droughts are insidious things. They come on slowly, but then the effects
start to compound rapidly as they extend. As shown on the top right graph,
between May and mid-August, inflows were the lowest on record across the two
catchments that we manage. That has led to unprecedented low storage levels
in the Waitaki Scheme. The story is similar in all other hydro catchments across
the country and that's turned into quite a challenge for the sector.
But the reason why wholesale prices have been so high in recent weeks is
because of the scarcity of gas, which is a key backup fuel for when the system
is short on hydro. There is just not enough domestic gas available for either gas
users or electricity generators at present. And what is available is very
expensive.
Prices peaked three weeks ago in the electricity market and they reflected the
fact that the diesel generator at Whirinaki was running during that week. But the
industry is clearly responding and several significant actions have been taken in
recent weeks. These include creating the opportunity for early access to
contingent hydro storage if we need it, buying gas off Methanex to use in
electricity generation and calling demand response options with NZAS so they
reduce consumption and make that energy available to the market.
Meridian is investing heavily in each of these actions to ensure security of
supply. As a result, we've slowed the drawdown on the hydro lakes and
wholesale prices have moderated, although they are still hovering between
$200 and $300 per megawatt hour on average.
For Meridian C&I customers who have or are coming off contract between July
and the end of October, we are rolling their contract pricing through to 1
November. Hopefully some of the heat will have come out of the wholesale
market by then. We're also offering extended duration contracts with levelised
fixed prices to take the sting out of the current prices when customers do
recontract.
So we're doing all we can to insulate our customers from wholesale volatility.
We still believe wholesale prices will soften considerably over the next few
years as more renewable projects come to market. And clearly current market
prices do not impact the vast majority of our mass market customers as our
internal transfer price has built up over a number of years.
Back to the position today. The inflow deficit over the last few months amounted
to about 1,000 gigawatt-hours compared to average and Meridian's combined
storage presently sits around 710 gigawatt-hours less than average. The rain
events over the last week have brought welcome relief, but we still have work to
do to restore the lake levels and we're relying on the ends of demand response
and financial contracting to do that.
The hedges we have invested in total around 800 gigawatt-hours, so if we get
anywhere near average inflows from here, they should do the job. Now, the
average cost of those hedges is around $258 per megawatt-hour and that will
impact our bottom-line over the next few months.
Lake Pūkaki is New Zealand's largest hydro storage lake by far. Contingent
storage represents up to five metres of water for Meridian or 545 gigawatts of
energy. This is material and at this stage we're not likely to have to use it, but
we do have a plan in action in case we do. That plan includes layering in
26,000 tonnes of rock to armour the lower reaches of the Pūkaki High Dam as
we drop into the contingent zone. We've previously stockpiled most of the
necessary rock near the dam for this eventuality and we have the team on
standby.
I think FY25 will be a battle of inches. A few of us in the business have seen
something like it before and we are well prepared for it. And of course,
everything changes if we get a decent amount of rain.
Now, when we signed the demand response agreement for NZAS in May, we
did not expect we'd be asking them just one month later to reduce electricity
consumption by the maximum amount and the team at the smelter certainly
weren't expecting it either. So, I would like to acknowledge the NZAS team,
because operationally it's a considerable task to turn off a pipeline. They
managed it well and in fact, they managed it faster than was contractually
required.
We have agreed with NZAS that they will make an additional 20 megawatts of
demand response available. So, they are leaning in heavily to help manage the
effects of this drought. All up, the amount of curtailed demand at the smelter will
be around 650 gigawatt hours and that's material in the context of the current
energy challenges. Obviously, we don't want to make a habit of this and the
historic weather patterns suggest we won't. But this is a great example of the
value that well-organised and well-compensated demand response can bring to
the market. This arrangement makes financial sense for the smelter, as they
are compensated for the reduction in demand.
No one is losing their jobs. In fact, their employees and suppliers are busier
than ever and the electricity system will rely less on gas and coal to fill the
energy gap.
And from Meridian's perspective, as a risk management tool, customer demand
response can be more reliable than thermal swap type agreements. Thermal
swaps typically have suspension clauses that cover instances where fuel is not
available or plant failure occurs. So, we're working with other customers who
can flexibly manage their demand to strike similar demand response
agreements.
We've embarked on considerable operational change at Meridian over the last
couple of years. We've reshaped the operating model in our generation
business, and we're in the process of adopting a more agile operating model in
retail. But putting the buzzword bingo to the side, what we're really trying to
achieve is speed to market, speed of decision-making and ultimately more
efficient outcomes that benefit our customers.
The change can create uncertainty for people, so it has been pleasing that staff
engagement continues to steadily trend upwards, and that reflects our focus on
creating an inclusive, high-performing and safe work environment for our
people. On this slide, we've highlighted a few areas of focus and improvements
to our approach to wellbeing and our overall health and safety management
systems.
At our June Investor Day, our Chief Customer Officer, Lisa Hannifin, unpacked
the retail opportunities we intend to pursue. That evolution will enable a
fundamental shift, we believe, in the role customers can play in our industry.
Where customers can shift their demand to less congested parts of the day, or
year as it turns out, we can pay them for that flexibility and save them money.
We can also point to good progress on operational outcomes, like our Energy
Wellbeing Programme, new demand through process heat conversions, and
sales of renewable energy certificates. But right now, our customer focus is on
the impact of these high wholesale prices.
Spot-exposed consumers have experienced significant price increases and that
is hurting them, the employees and the communities where they operate. But
spot prices during extended droughts tend to be high, and these are
sophisticated businesses who have assessed the risk and chosen to take
exposure to the spot market.
The Electricity Authority requires businesses who take spot exposure to
complete a financial stress test each quarter to demonstrate their resilience to
high prices. The stress test case for this current quarter was assuming a $400
average price for three months.
That's probably higher than what will actually transpire. Fortunately, 99.9% of
our customers are on fixed prices and this demonstrates the value that a
vertically integrated business like Meridian can offer. We remove risk for our
customers by managing wholesale price volatility over time.
And today that is very clear and present for most of them. And as I mentioned
earlier, where we have C&I customers whose contracts are ending, we've
chosen to support them by rolling their contracts through to 1 November this
year. The thing that will put most pressure on retail prices in the near term is the
significant uplift the sector faces in transmission and distribution costs.
The Commerce Commission are determining a significant increase in costs
from 1 April 2025. While increased network investment is one factor in that,
much of the forecast uplift is driven by the increased cost of capital due to high
inflation and interest rates that we're all experiencing. The ComCom's draft
proposals include smoothing to reduce the extent of a step change in any one
year.
But even so, the average distribution cost increase for our customers next year
equates to around 9% of their total bill. The ComCom will finalise its decision in
November. We are working through what that means for customers, but I think
we will see the prolonged period of sub-inflation price increases coming to an
end, or at least paused until the next ComCom regulatory pricing period for the
monopoly parts of the system also comes to an end.
This year we published our first climate-related disclosures under the newly
mandated reporting standards. That contains more detail than is probably
helpful. But if I boil it down, we remain sharply focused on our Climate Action
Plan, which delivers a significant renewable pipeline, customer decarbonisation,
and manages our own emissions reductions as we do it. In the year ahead, we
will build out how we deliver on our new net-nature-positive commitment.
While our existing approach to mitigating the impacts of our operations is
already robust, we will better define and enhance our contribution. And this
work should enhance the consenting processes by giving communities
confidence in us as a leader in sustainability and a developer of new renewable
generation. And on that score, we are making good progress on our battery at
the Ruakākā BESS, and we expect it to land it inside our original budget.
The delay in Transpower's work programme is likely to push commissioning to
the first quarter of 2025, but it will be in place well before next winter for sure.
We've also progressed the consent of our Manawatū battery project, and we
note our competitors are now also seeing value in grid scale batteries, and I
think that's good for everyone. The sector does seem to cop criticism for a lack
of investment in new generation.
That is a story that is entirely baseless and flies in the face of facts. The facts
are there's been no real or sustained demand growth in New Zealand since
2010, and so the electricity system is the same size as it was then. But in that
time, around $10 billion of new generation investment has occurred, and
virtually all of that has replaced ageing coal and gas-fired plant.
In 15 years, the industry has replaced around a quarter of current capacity,
mostly through geothermal and wind developments. In a sense, all of that
investment has just got us to the start of the energy transition, but to suggest
the sector has not invested is just plain wrong. Also, as a country, we only took
up the challenge of zero carbon by 2050 in 2019, but well before that, the
electricity system was evolving rapidly towards 90% plus renewables, and we'll
hit that milestone this decade.
Because of the intermittent nature of renewables, and this country's relatively
low hydro storage capacity, we will have periods where we will still have to rely
on coal and gas like right now. Wholesale prices will be high during those
periods, but the trend towards a highly renewable and lower cost system will
happen.
If we look at the recent past, the last five years alone, Meridian has invested $1
billion on existing new renewable assets, and we will increase that level of
investment threefold by the end of this decade, creating renewable energy as
our core business, and it's a great business to be involved in with huge growth
potential. But the competitive nature of the market has ensured that investment
returns are modest and stable. Since listing in 2013, Meridian has delivered an
average return on assets of 3% and return on equity of around 5% per annum.
Now I've talked plenty about the long-term investment required by the sector to
deliver New Zealand's low-carbon future. It's that imperative that underpins our
development pipeline at Meridian. We continue to prospect and develop a set of
options that will ultimately double the size of the generation capacity we have
today.
And finally, before I pass over to Mike, I'll quickly talk to our decision to pause
work on our hydrogen option. SGH is a unique opportunity to leverage
Aotearoa’s renewable resources and support global markets to achieve their
carbon reduction commitments. But the economics of green hydrogen have
become challenged over the last couple of years.
And globally, markets have been slow to resolve the gap between the cost of
producing the product and the potential customer's willingness to pay for it. So
SGH will go on hold, and we've agreed to conclude our partnership with
Woodside. We have built up considerable IP in green hydrogen, however, and
we will continue to actively monitor our target markets in case the prospects
improve.
I'll now hand over to Mike to delve into the numbers.
Mike Roan: Nga mihi nui and Kia ora koutou. Thanks for joining the call this morning. As
you now know, we had one heck of a year last year delivering $667 million of
operating cash and $905 million of EBITDAF, both records for our business.
And the timing of the result is fortunate, as the last couple of months, and most
likely the next couple have been tough by comparison.
In fact, the only analogues that come to mind to describe the challenge the
industry is working through right now are 2012, and before that maybe '91, '92.
While the story of 2024 has yet to be finalised, there are some very unfortunate
outcomes for those who took spot exposure. These large businesses may be
sophisticated and will have understood the risk they were taking, but that
certainly doesn't help their employees, their suppliers and the communities
caught up in the situation.
It's times like these that being a customer of a business like ours is really
valuable, because not only can you rely on the fixed prices that we offer, but if
you're unfortunate to come off contract right now, we will see you through, given
the commitment you've made to us over the years. But enough of that for now.
I'll come back to the current conditions as I close, but I want to unpick the
financial year '24 result, as it deserves some attention, even if it was so last
year.
As this slide shows, it was another year of strong performance, and the first for
some time where the weather didn't interrupt our plan until near the very end. In
fact, way back in February, I noted that we had a chance to deliver stronger
second half performance for the first time in five years, and that is exactly what
the operating teams did.
Alongside the result, and as Neal mentioned, we had a couple of pretty other
special things happen during the year as well. First, we delivered the Harapaki
project, and it's now producing 176 megawatts of renewable energy while
adding a new and in my view graceful dimension to the ridgeline above Napier.
And, of course, the NZAS contracts. They are important as they brought
certainty for the smelter, the electricity sector, Southland, and our nation.
Certainty is a new thing for our industry, and I think that some may have
forgotten that, but it's very important as it unlocks investment. And now that we
have it, that is what we'll do, invest faster.
As Neal noted, we're already out of the blocks, having committed over $1 billion
to new renewable energy assets, but certainty is also supporting new entrants
invest in our sector. While collectively our traditional competitors have also
committed another 2 billion to new renewable generation assets, others like
New Zealand Windfarms have arguably the largest wind farm development that
New Zealand has seen in front of them at Te Rere Hau.
We're helping out there, but the team at New Zealand Windfarms is doing some
very heavy lifting, and we're pleased to see that through fast-track legislation,
the Aoketere consent has been granted, subject to conditions, and this should
result in a larger wind farm being developed.
Ka pai team. And Nova, Lodestone, Final Solar, Ranui Generation and many
others are tapping into New Zealand's solar generation resource and building at
scale. In fact, 69% of committed and actively pursued developments in the
Electricity Authority's investment pipeline are being pursued by new entrants to
the sector. My rough estimate suggests that combined, they've committed to or
proposed to invest upwards of 1.6 billion across their sites.
My point is, the market is working to encourage both traditional and non-
traditional investors to invest in our sector. And given the scale of the challenge
through 2050, there's plenty of space for everyone. And the investment is not
one-dimensional. We're also investing in non-traditional relationships that will
reduce the impact of dry years.
The new demand response agreement with NZAS is just the start and while I've
heard suggestions that asking businesses to temporarily shut production lines
when energy supply is tight is a poor outcome, I think that sentiment is
misguided.
My conversations suggest that these types of arrangements improve the
financial wellbeing of those businesses as they get paid to reduce consumption
and only enter into such agreements to the extent these payments add to their
bottom line. Demand response products may not be for everyone, but we're
talking to plenty of customers looking for additional revenue streams right now,
so I can see a bright future for these types of products.
If I was to summarise the last couple of minutes, it'd be to say that certainty is a
good thing for investment and for customers, which gives me a perfect segue to
dividends, as certainty is good for investors as well. For the last three years,
I've said that we'd review both dividend levels and the dividend policy when Rio
Tinto makes a clear decision on the smelter's future. It's done that emphatically.
So, the lift in final and full year dividend shouldn't be a surprise, but I do hope
it's satisfying as you, our investors, have been patient. This morning, we're
declaring a final ordinary dividend of $0.1485 per share. This is a 25% lift on the
financial year '23 final ordinary dividend, and brings the full year dividends to
$0.21 per share. And we're lifting the dividend reinvestment plan discount from
0% to 2%, as we're hopeful that this new era of certainty will accelerate
development plans. The final ordinary dividend will be imputed at 80% and paid
to shareholders on the 20th of September.
We're also adjusting the dividend policy. Specifically, we're moving that policy
to an operating cash flow-based measure to make sure dividend payment
levels align fully with operating cash flows. Other elements of the dividend
policy remain, the key ones being payouts will be between 80% and 100% of
operating cash flows over time, after assessing wider business needs and the
Board's commitment to a BBB+ credit rating.
On to EBITDAF. You would have seen on Slide 14 that both EBITDAF and
operating cash flows continue to grow as our teams improve performance. As
you can see from the graph here, the 16% year-on-year lift in EBITDAF was
largely driven by increases in energy margin, even as lifts in operating
expenses offset some of that gain. And while I'll talk to the net profit after tax
figure that comes later in the pack soon, as it's driven by large non-cash
movements, it doesn't offer useful insight into operating performance.
So EBITDAF and operating cash flows remain the key performance metrics for
our business, and they both show that our operating teams delivered superbly
last year. If we jump over to the energy margin slide, you can see that the lift in
performance was once again driven by our retail team. Well, that may not be as
easy as I just stated, but to help you get to the same answer, I'm going to do
some on-the-fly math gymnastics to help out.
If you deduct the cost to supply customers from increases in generation spot
revenue and then remove the cost of derivative purchases from the value of
those derivatives, you'll get a net number of negative 9 million. That is, the
portfolio of wholesale, physical and financial sales and purchases were
reasonably balanced. So, what really drove the uplift again this year was retail
team performance.
I'm not saying the wholesale and generation teams didn't do a superb job. They
did, as they generated enough energy to meet customer needs while securing
financial cover that managed risk. It's just that when you compare their
performance to financial year '23, the result was similar or similarly excellent.
And thus our expectations of their performance during the current drought are
also very high.
But the retail team stole the show again and they continue to work hard to
secure and grow valuable relationships across customer segments. And you
can see some of that mahi here. Total sales volumes continue to grow across
mass market channels and pricing improved as well. But the team balanced this
growth by holding corporate sales volumes steady even as they lifted price.
I've said it before, I'll say it again. We're very fortunate to have the best retail
team in the sector and they improved their performance again while continuing
to grow our business. Now I mentioned our generation team a little earlier. And
as you can see from the bottom graph on this slide, financial year '24 was not
particularly wet. In fact, inflows were the lowest on average in seven years. And
as a result, hydro generation volumes were down on financial year '23.
However, wind generation made up for that reduction.
Now the generation team don't make the wind blow or influence rainfall
patterns, but they do make sure the generation fleet is available for use by the
wholesale team. And as financial year '24 wholesale prices were more than
double those in financial year '23, that job was particularly important. And while
they did their job admirably, we had two disappointments during the year, both
related to transformers.
The Manapōuri transformer challenges continued and we lost one of the two
transformers at West Wind. Interestingly, with low inflows, the Manapōuri
transformer outages did not impact generation volumes or energy margin
delivery at all. However, the West Wind constraint cost $6 million in lost energy
margin during the year.
The good news is that the West Wind constraint will be unwound in October as
Transpower is lending us a transformer for 10 or so months, after which a new
transformer will have been installed and the situation at Manapōuri will improve
in March '25 as the new transformer is brought to bear down that way.
As the Manapōuri transformers have been a challenge for our business since
2011, the generation team will buy a spare for Manapōuri. But with global
demand for transformers high, that spare and the transformer for the seventh
unit aren't expected until September 2025. And then we'll need 12 weeks for
installation and commissioning.
We laid out most of the above information in our recent Investor Day, but the
key point is that the generation team is tireless in its efforts to make sure we
have maximum generation available while tackling the transformer challenges
that have confronted us for some time.
Now, I'm not sure whether anyone truly appreciates this slide, particularly the
top graph that shows increases in costs for all the reasons I've previously
explained. But it's here to provide transparency on what we spend investors'
money on.
The first thing I'll note is that operating costs fell within the guidance range
presented in February. And while they say explaining is losing, the second
graph shows the elements that drove the uplift in operating costs. Rem
increases drove a 6% uplift in salaries and recruiting a new staff was focused
primarily on Flux's growth, Meridian's development pipeline, and properly
resourcing our team that supports vulnerable customers.
While I expect Flux staffing to fall this year given the change in strategy for that
business, the growth within the development team now means that it will be
able to construct at least two new assets at any one time. That's not something
Meridian has achieved historically, but it's a sign of the times and it does signal
that we continue to prepare for substantial investment in the coming years.
The increased contractor spend was also driven by a development team in
Flux. I'd make the same comment for Flux as I did a minute or so ago, and I
expect development team costs to stabilise this year. The increase in ICT
spend was driven entirely by the new finance system that's being introduced
into the business. In total, that will cost us approximately $17 million, the
majority flowing into financial year '25.
I'll finish with insurance. As while costs lifted again last year, we did adjust our
insurance programme, and those changes will see costs held flat in financial
year '25. To be clear, we didn't reduce insurance coverage, rather we found
new insurance products that will work for us.
On to capital costs. At $349 million, capital costs landed at the bottom of the
forecast range. This is down on initial estimates as we were unable to secure a
consent for the 130-megawatt Ruakākā solar development within the window
that had been expected. That was disappointing for our business, and no doubt
to those of us who also worry about energy security.
There's a reasonable backstory to this consent, but we don't have time to
present it here, so to steal a phrase from Neal, it looks like it will take longer to
get that consent than it will to build the asset. That said, we did deliver
Harapaki, and the development team is progressing a number of initiatives
outside of Northland, some of which have been announced and some that have
not.
Stay in business capex was also reasonably elevated, with the new office that
we're broadcasting from being built out during the year and being captured as a
component of the workplace facility spend. If I jump to the next slide, you can
see the level of investment that's directly in front of us. You can also see how
challenging it is to navigate new investment consenting. Now, realise that this
slide is a bit of a word salad, but that's the point.
I mentioned certainty earlier in my talking points and how that supports
investment, but as you can see here, there's little certainty in regards to
consents or the best pathway to obtain one. In simple language, there are eight
paths you can take to consent new investment, and we're using five of them to
move seven development projects that collectively cost $3 billion forward. Each
process has different requirements, timeframes, and costs, and they each have
different risk profiles.
There's no certainty that we'll obtain a consent from any pathway, which is part
of the reason we diversify the approach. That's why we welcome this
Government's intention to remove the regulatory barriers to support investment
and get the job done. If we're able to achieve consent inside 12 months for
projects that meet environmental and economic hurdles, then that will be a
material accomplishment.
But back to more solid financial ground. As presented in this slide, I expect
operating costs to land between $302 million and $308 million this financial
year. That suggests operating costs will lift between $21 million and $27 million.
This is the third successive year of large operating cost increases, but there's
always good reason for them, and the waterfall chart shows where we intend on
investing that cash.
Salaries will continue to lift or be under half the rate of last year. There's
another slug of cash being spent on the finance system deployment, and now
that Harapaki is finished, the operating contract has been crystallised, and that
lifts generation maintenance costs.
Finally, we continue to expand our development activities. The increase you
can see here is twofold. First, it is money we're investing in Te Rere Hau and
the New Zealand Windfarms joint venture.
Second, it was money set aside for Southern Green Hydrogen. Given we've put
Southern Green Hydrogen on hold, some of that cash will not be spent, but the
team on that project are now focused on other activities. A couple of other
notes from this slide.
I'm also forecasting total capital expenditure of between $295 million and $325
million this financial year. That largely reflects cash being invested in the battery
at Ruakākā, as well as anticipated cash supporting a solar farm at that same
site. But it's also driven by lift and stay in business capex, given there's a
generation control system replacement project that is getting underway.
We need to pay for the transformers I mentioned before, and there are a couple
of other generation projects, including gravel removal at the Manapōuri Lake
Control Structure, and replacement of the electrical and automation technology
at Manapōuri Power Station. So, Manapōuri will continue to be a busy site
probably through 2028. I will, of course, update you if anything changes.
The graphs on this slide show the difference between net profit after tax and
underlying net profit after tax. The reason we present both is that underlying net
profit after tax removes items like unrealised fair value movements on
derivatives, as they are not cash costs, whereas net profit after tax is a gap
measure that by definition includes these elements. As you can see, the
difference between the two can be stark.
So, understanding why that difference plays out each year is really important to
those who put our performance in perspective. To help you with this, Slide 50 of
this pack shows the reconciliation, and while we don't put that up on this slide, a
positive $98 million fair value movement in the unrealised portion of derivatives,
and an $18 million impairment in Flux are those drivers. I tend to suggest
investors look beyond net profit after tax when it comes to operating results, but
both measures have value.
What the underlying net profit after tax chart shows is that business
performance lifted again last year. The net profit after tax graph simply shows
that unrealised gains and losses on derivatives change materially year-on-year.
The above differences are also a key part of the reason why I've elevated the
conversation on operating cash flows and why we change the basis of the
dividend policy is working through accounting measures can be a bit like
mumbling at people and hoping that they get it at times.
I like to present measures that are simple and that reflect business performance
and it's hard to look past operating cash flows. Last but not least, there was a
$3.15 billion lift in the value of generation assets over the year. You might say
this deserves more than just a cursory bullet in the presentation, but all it really
reflects is that the accounting value of assets is catching up to the market value
of those same assets and the reason for this is NZAS decided to stay in New
Zealand.
Now, this slide continues to show that our balance sheet remains flexible. Net
debt to EBITDAF -- net debt has lifted on financial year '23, but the key S&P
rating metric net debt to EBITDAF remains well below the bottom of the BBB+
threshold of 2x. The reason for the lift in net debt is that we issued a new $300
million green bond during the year as an existing $150 million green bond
expired. This cash was used to support delivery of Harapaki.
We have another $200 million green bond expiring this year. And it's likely that
we'll replace that one as well. If we can accelerate the development programme
in some way, it could be that we enter debt markets twice in financial year '25.
Of course, that would be a positive if it plays out.
As I don't have too much more to add, I'll finish where I started. Financial year
'24 was a strong year, but we're currently focused on navigating the drought.
This makes for tough operating conditions for a renewable energy business.
But droughts are inevitable. And while they can be tough, you learn a lot from
them as well.
As investors, you know our business well enough to know that we carry balance
sheet headroom specifically to cover these types of events. And while operating
cash flows will vary, dividend stability will and can be maintained. And to our
residential and small business customers out there, you don't have exposure to
the high wholesale prices, your electricity prices are fixed.
You can see the impact of the drought in the storage graph on the right.
National hydro storage has never been as low at this time of year as it is now.
So, the generation, wholesale and retail teams have work to do to navigate a
tricky period. But that's why they get out of bed. There will likely be a financial
year '25 financial impact.
But with near term ASX prices having peaked on the 5th of August and since
fallen by approximately $190 a megawatt hour, it could be that the worst is
behind us. I'm not saying it has and prices remain elevated. But if markets are
right, then we'll turn our attention to winter 2025.
It is going to take quite a bit of rain to return New Zealand's hydro lakes to more
normal levels. And our job ultimately is to satisfy shareholders while delivering
energy security for this fine land we live in. And while we navigate these
challenges, the lift in both the dividend and the dividend reinvestment plan
discount suggest that the business is in good health and focused on
investment.
I'll hand back to Neal so he can make a few closing comments of his own.
Neal Barclay: Cheers, Mike. In many ways, the focus for FY25 is continuing the momentum
we have built over the last couple of years. And that includes getting
development projects through the consenting processes and into the build
phase, delivering the transformer replacements of both Manapōuri and West
Wind, as well as adding incremental generation from our existing assets.
Adding to our customer demand flex and process heat tally. And we will
continue to develop our team capability and culture, focussing on digital
maturity, diversity, wellbeing and safety. And Mike has a very new and
expensive financial system to deliver, it turns out.
Plus, we'll begin the chunky work involved in replacing our existing generation
control system. So, there's plenty to do, but the entire team are aligned behind
a clear strategy and a sound plan. So, to wrap up, FY24 was a successful year
for the business. We got a very significant strategic issue resolved and made
good progress on the other key aspects of our strategy.
As we've discussed, the FY25 is shaping up to be a different challenge entirely,
at least at an operational level. Every hydro catchment in the country has
received much lower-than-normal inflows over the last four months. That
situation has started to abate over the last week or so, but the lakes remain at
very low levels.
Meridian is investing heavily in hedge arrangements with the smelter and
thermal generators, and that is incentivising physical responses that are helping
to manage security of supply. We've also advocated for better access to
contingent storage, and we've been listened to.
There are unfortunately some large businesses or more importantly the people
who rely on them for their livelihoods, badly affected by direct exposure to
current wholesale prices. That is not an outcome that anyone wants, but the
vast majority of consumers do not have that same wholesale market exposure,
and the Meridian customer team is making sure our C&I customers coming off
contracts are being supported through this high price volatility.
All up, I'm confident we're doing all we can to support system security and to
insulate our customers from the current high wholesale prices. But the key
issue remains that there's simply not enough domestic gas available to meet
either the needs of gas consumers or gas electricity generators and as a sector.
We need to solve that problem and we need to solve it quickly.
LNG import may be the fastest and best way to ensure we have adequate
renewable firming fuels available when it doesn't rain much, and the upfront
infrastructure investment seems very manageable. So Meridian is engaging
directly in this opportunity through the gas security response group.
Delivered LNG will not be cheap, possibly more than $20 a gigajoule or
between $200 and $300 a megawatt hour. So, it is not a replacement for
domestic gas consumption nor is it a base-load electricity generation option, but
it does lend itself to seasonal electricity firming. It will be reliable, flexible, and
diversifies system risks.
It'll also likely increase competition for firming options, and hopefully help
improve transparency in the gas sector in New Zealand. If you're not intimately
involved in the gas industry, it can be very challenging to understand exactly
what is going on.
For example, understanding when gas-backed hedge arrangements may be in
danger of being suspended. If the sector invests in the infrastructure to enable
LNG imports, but never has to use it, it will still reduce risk and ultimately prices.
And in my view, it'll be money well spent. The government's announcement on
Monday to support the consenting of a project is very good news.
Looking to the long term, the solution is the deployment of more diversified
renewable generation throughout the country. That will ultimately reduce the
reliance on South Island Hydro and whilst we will still see low hydro sequences
in the years ahead, they will become less impactful.
For those of us old enough to remember, when the lakes were last this low in
1992, the country saw rolling brownouts and that was not acceptable. In 2008,
the lakes were nowhere near as low as they are now and yet we had a public
savings campaign. This is certainly not where we're at today, and I think the
sector deserves some credit for that.
And lastly, these near-term challenges are not blunting our intention nor our
effort to drive our development pipeline forward and enhance our customer
product set.
So that's it from us. Thank you all for your attention. We can now move to some
questions, and I think we'll start with questions from anyone here in the room
this morning. Okay, so we've got a microphone.
Analyst: Tim Mowbray, Macquarie, Asset Management. Just one question for me. If you
– there's the announcements yesterday kind of from the government, there's a
few bullet points. One of them in there was the transmission line companies
being able to potentially develop generation.
Just more of a broader question kind of leading from that, in terms of if you
think about New Zealand's requirement to build generation, is capital actually a
constraint or do you think there's constraints more in other places like
consenting supply chains, people etcetera is bringing more capital and other
players actually benefit?
Neal Barclay: Well, having more players involved doesn't hurt, but capital is not the constraint.
There's plenty of money globally looking for high-value renewable projects.
We've got a well-positioned balance sheet to contribute most of the other
gentailers have. But as Mike indicated, we've seen other parties come into the
sector as well. So capital is not a constraint, yes. The key constraint in this
country at this moment time is your ability to get things consented in a timely
and efficient manner and that's been worked on clearly by the government. So
the improvements in that consenting regime from a New Zealand perspective, I
think will be the key catalyst to unleashing investment at a faster rate than what
we've seen today.
Analyst: And so just a follow-on question. In terms of your current pipeline?
Neal Barclay: Sorry, I should probably add to that, when we look at the growth required
between now and 2050 to decarbonise the country, we don't have enough
people in the industry at the moment. There's a lot more engineers, Wintec,
trade staff, eroding construction teams that will be required to meet that
demand lift. So that's a challenge.
That's something we're very mindful of as a sector, but -- and I'm not calling it
out as a constraint but it's probably more of an opportunity actually for the
people of New Zealand to really climb into this in great careers in a sector that's
going to grow dramatically from this point.
Analyst: There's my follow-on question which was if your current pipeline about 2030,
when you think about that, is that kind of based on what you know now with
consents? Or is it assuming some kind of improvement in that if content issues
resolved, could that bring the pipeline forward? Are those kind of issues talked
about people potentially?
Neal Barclay We've got two of the projects that are in part of the pipeline are on -- we've put
them on the fast-track consenting list, don't know if they've been accepted yet.
but it would be helpful if they got a relatively quick consent through that
process, and that would enable us to get on and get them built. Anyone else in
the room? No? Okay. Well, I think we can open up the phone lines.
Operator: Thank you. If you'd like to ask a question, please press star one on your
telephone and wait for your name to be announced. If you'd like to cancel your
request, please press star two. If you are on a speakerphone, please pick up
the handset to ask a question.
Your first question comes from Grant Swanepoel from Jarden. Please go
ahead.
Grant Swanepoel: Good morning, Team. Mike, this question is for you and I know explaining is
losing, but 14%, 13% deference and an 8% to 9% increase in opex. Are we
getting close to a cost out program? $308 million is the midpoint. It seems quite
eye-watering. Or is there something that $308 million that has one ICT costs
coming down?
Mike Roan: I think you see it flatten ground. That's what I was alluding to. I think you'll see
ongoing lifts and salaries. There are -- we're always trying to run the business
as efficiently as we can. But our focus -- if you go back over those last three
years, where that money has gone, has gone into the development team and
really trying to accelerate our investment pipeline. Outside of that, the corporate
costs of largely, and outside of salaries as the corporate costs have held
reasonably flat.
So, I think you'll see it plateau grant as opposed to coming back, but I do agree.
Those cost increases have been significant over the last three years. That's
why I point them out to people, but they've been for a very good reason. You
come back to what we're talking about generally today is being able to, and
actually investing in, new facilities, there are concerns, which is typically the
holdup, but as Neal mentioned, we need good people to deliver those assets.
And so we've invested in that capability to make sure that we can do it.
Grant Swanepoel Next one, on stay in business capex. So still well above, I think it's $55 million is
your long-term guidance. When does that revert back to a $55 million type
number?
Mike Roan: That's a great question, Grant. I know that this financial year '25, you can see it
sitting at $100 million. Financial year '26 some of those programs that we -- that
I mentioned will roll into '26. So I would expect that you'll start to see that
reversion 27, 28 as we come out of the implementation of the generation
control system.
Well, I don't have the numbers up there and we haven't run up by our Board.
The costs of that initiative are substantially larger than what we've spent in the
past. And it takes about three years to run through that cost profile. So, I think
once you get through that, that happens once a decade sort of stuff, is then
you'll start to see those standard business capex costs come back to the levels
that we've seen historically.
Now, the only thing that I'd add to that is, of course, we're adding new wind
farms to our business. We're adding, hopefully solar arrays and, we've got a
battery coming at us. So, there will be capex requirements for those new
investments as well, but I'll be sure to point them out, as we step forward.
Grant Swanepoel: Thanks, Mike. And then at your strategy day, you had three or four projects that
you're moving towards FID on. Have you got any updates for us on cost to build
those projects? Are you still on track your [$150 per megawatt real wholesale
power prices real wholesale prices over the next 15 years?
Mike Roan: Yes, Grant, we're still working those projects through. There's no real new info
that we've got since Investor Day. We're -- touch wood on some of the
consenting process. I feel like we're pretty close on the solar development up
Northern way. There's a lot of hard yards being put into Mt Munro over in the
Wairarapa. And we're working through the construction costs and programme
for Te Rere Hau, but again, all going well there. We're approaching FID middle
of the year -- next year.
So, I guess no real update on what you did here back at Investor Day, either in
terms of cost profile or ability to accelerate those projects. But what I did note,
and you heard us talk to is there are plenty of new entrants looking at the
sector. And so, we're not just exploring the activities that we might undertake.
We're looking to support and accelerate plans that others might have. So, if we
do get any good news on that front, we will let you know.
Grant Swanepoel: Thanks, Mike. My final question, just a question on clarification. When you talk
about hydro inflows being done 1,000 gigawatt hours, is that from May or from
the 1st of July?
Neal Barclay: So that was from May, Grant. So, May, June, July, through August, mid-August,
I think, was when we took that measure.
Grant Swanepoel: And at 800 gigawatt hours of cover, is that also from May or is that from 1st of
July?
Neal Barclay: That's kicked in more recently, yes, from about July.
Grant Swanepoel: And can you just give us an idea of what hydro inflows are down from the 1st of
July?
Mike Roan: Not off the top of my head. They're the lowest on record, Grant. And they're on
that slide. There's a slide that we've got in the pack.
Neal Barclay: That's from May through. So, we can give you more concentrated recent hydro
inflows, if you'd like, but we'll give it to you after the meeting. Sorry, Owen was
just calling out 70% odd, Grant.
Grant Swanepoel: Thanks.
Operator: Thank you. Your next question comes from Stephen Hudson from Macquarie
Securities. Please go ahead.
Stephen Hudson: Morning, Neal. Morning, Mike. Just a few from me. Just firstly on Harapaki. Can
you give us an update on what you're expecting the capacity factor for that farm
to land at? Seems to be travelling a little bit ahead of the numbers that you
were getting sort of a year or two back.
Neal Barclay: It's early days, so we wouldn't revise the business case assumptions, but what
we are seeing is that wind farm maxing out capacity in recent times. So, it is
performing exceptionally well. In the nick of time, I might add. So yes, the signs
look good, but we wouldn't call a change in our long-term assumptions around
that until we've actually seen some, at least a year of real-life experience.
Stephen Hudson: Okay, and my numbers may be old, but I think I've got in there sort of 35% or
something like that?
Neal Barclay: Well, it's looking well north of that, but, we have seasonal, things to take out of,
so. We'll keep an eye out, but we're pretty optimistic the way it's playing out.
Mike Roan: Steve, if you're not above 40%, then change your numbers.
Stephen Hudson: That's my margin of error. Contingent hydro -- just on contingent hydro,
obviously, there's some temporary relief in the offering, but I just
wondered whether or not you foresee any permanent change at the
trigger levels there?
Neal Barclay: Yes. Well, look, the government called that out in their announcement earlier in
the week, and we need to work with the consenting authorities. But, from my
perspective, Lake Pūkaki is a hydro lake. It was created purely for hydro
generation. It's not used for any social amenity. We can actually stretch the like
-- it's currently got a standard operating range of 14 meters.
But if we can extend that to create an extended operation range of around 19
meters, it will mean on average, we produce more hydro generation in this
country. And that will also go towards reducing price pressures over time. So, I
think there's a strong case to normalising the consented level and bringing the
contingent back into the standard lake levels.
So that's the conversation we want to progress with – we're not only consenting
authorities but also government to the extent that they can help facilitate that
end outcome.
Mike Roan: I think the only thing I'd add to that, Huddy, is in the absence of gas that we
expected to show, I think Neal's point is more important than it would have
otherwise been. And so, normalising the use of that contingent storage,
particularly in the short term, while we look at whether LNG as a longer-term
opportunity or domestic gas arrives, is something that is within the control of the
country.
And as Neal said, it's a hydro storage facility, and that storage looks like its
increasingly valuable as compared to where we were even a year ago. So, I
think if you were prioritising it as something to do, it would be a good one to
have near the top of the list.
Neal Barclay: And you might take a different approach with contingencies around Hawea, for
example, which does have more of a social impact or so but Pūkaki we think
needs looking at.
Stephen Hudson: Very good. Thank for that. Just two more quick ones, sort of boring accounting
on this, unfortunately. I think you're alluding to a change in the Option premium
accounting to take that cost above the line. Mike, if that's the case, can you
confirm that? And what would a sensible number for FY25 be noting that I think
FY24 was about 23 million. Could we use sort of 30 million, 35 million for FY25
as Broad estimate?
Mike Roan: Yes. Thanks, Steve. So, one, yes, we've changed the accounting treatment of
the option premiums, they sit below EBITDAF, and now we've moved them
back into energy margin. So, it's, I think, a useful change. This year is a funny
one. And that if you look deeply at those ends contracts, we only pay the
premium for the demand response beginning the first of January 2025. So,
we're only paying half of the option premium. And I think heard you say '23,
Steve, I think if you cut that number in half, you're not going to be far from the
mark.
Stephen Hudson: Thanks, Mike. And sorry, last one for me. Just on the re-val, I know you've said
sort of the accountants catching up with the market. Can you just break down
the $315 into, I don't know wholesale price or WACC or just some sort of broad
buckets?
Mike Roan: Wholesale price and cost to capital. Those would be the three pieces. So, a
small change in cost of capital, Steve, but it really was, I mentioned -- and I
think we've said it before, is we've used index price path for the valuation of our
generation assets to date and that we wouldn't make that change until contracts
were struck. So, what you have seen is that we've changed the price path that
we use. So, the majority of it is wholesale price.
Stephen Hudson: Very good. Thanks, team.
Operator: Thank you. Your next question comes from Peter Wakeman, a private investor.
Please go ahead.
Peter Wakeman: Good morning. I was just wondering if there's been any warranty issues
with transformers or anything like that and how things are shaping up on
that require bearing in mind how long it takes to replace these items, first
question.
Neal Barclay: Yes, Peter. I mean, we're looking at the warranty relationship around all the
transformers that have failed, and that's an ongoing conversation with the
providers of those transformers.
Peter Wakeman: And so that hasn't been concluded yet?
Neal Barclay: Not, entirely no.
Peter Wakeman: Right. And with respect to the government fast tracking, have they given you
any idea when they will come up with such a decision?
Neal Barclay: I'm not better informed than anyone else, Peter, on that. We'll see the bill go
through the parliamentary process in due course. And what we're interested in,
as I mentioned earlier, has seen a couple of our key and very significant
projects are on that first list, so they can be considered by the expert panel and
hopefully, consented at a rapid pace.
Peter Wakeman: Right. And with respect to insurance, what sort of -- for example, as the
government ever offered you or have you ever asked the government for
insurance in the sense that when 9/11 happened, the government provided an
insurance to Air New Zealand because of the private industry wouldn't do it.
And I just wondered if the government would insure Meridian an event of an
Alpine fault or Wellington fault or whatever it happens to be a whatever. Have
you had any sort of agreements because I think if again would it actually lower
the cost of insurance or how significant would that be for balance sheet?
Mike Roan: So, Peter, the answer is no. We don't ask for government support as it relates
to insurance. What we do, do is we ensure our properties against the events
that you mentioned. So, we do take our insurance cover. But as the costs have
lifted over time is what we've done is we've explored new products from an
insurance perspective.
Typically, we've gone to the global reinsurance market. But we've actually
entered into arrangements with a new entity for us in any event that provides
insurance called Everen. And they effectively consolidate a number of
companies, insurance, not just in New Zealand but across the globe, and as a
result, can provide premium to us that reduces our overall cost. So what I'd say
to you is we like to explore further arrangements similar to that with Evren and
other types of insurances as opposed to stepping back to the government and
asking for support from that perspective.
Peter Wakeman: All right. And the last question has to do with the some panels and their
degradation over time and what age and technology are they for Whangarei?
Mike Roan: Peter, have those questions might be beyond my technical means. I'm not sure
about Neal.
Neal Barclay: We haven't contracted them yet, Peter. We're working with various suppliers
understanding is they've got at least a 20-year life frame. But we could provide
a bit more information. In fact, we will provide more information when we get
the project to financial close, and we announce it as a committed project that
we're getting on with.
Peter Wakeman: Okay, well, thank you very much.
Neal Barclay: Thank you, Peter.
Operator: Thank you. Your next question comes from Cameron Parker from Craig's
Investment Partners. Please go ahead.
Cameron Parker: Morning, guys, and congrats on a really strong performance. Just wondering if
you could talk to the transmission and distribution price increases we're
expected to see come through and also the impact on your underlying customer
increases, and also in the context of what your intentions are in growing into the
North Island, given your supply arrangements are growing in that geography as
well.
Neal Barclay: Well, Cam, I mean, we've laid it out in the pack. The ComCom are looking at
distribution pricing across the whole sector. They've come out with a proposed -
- set of proposals that see those costs increasing reasonably dramatically. And
in fact, the increases into next year on the current proposals look like about
23% on average across our customer base. It will depend on who your
customers are, but that's how we've modelled it.
Now they do have a smoothing mechanism because those cost increases
would be more rapid than that if they didn't smooth it. But when we take that
23% and spread it across the whole customer bill, the increases are between
north of 8.5% to 9%. So that's pretty, I mean that's significant.
We haven't quite worked out exactly how we're going to manage that with our
customers. Obviously, we're doing a lot of work on new product sets and Lisa
will be talking a bit more to the market about that in the coming days, but we do
have products coming to market or they're actually being trialled in market
today that if customers can provide a bit more flexibility and shift their usage
and the demand around we can actually help them save money overall, not
only on the distribution side of the bill, but also the energy component.
So, we're doing everything we can to drive minimise the impact of those costs
as they flow through. In terms of our position in the North Island, yes, as we
grow our position and we get access to not only more generation in the North,
but also through PPAs and other hedge arrangements, we're still focused on
growing the size of our retail business.
Most of the customers in New Zealand are in the North Island. So, we will
continue to actively seek out growing our market share in the North as well. We
understand the risk, obviously, and we manage those through various
instruments and product types.
Cameron Parker: Yes, great. Okay. Then just the last one for me is just around gas risk and gas-
fired swaptions at the moment that you have. Are you able to talk to that. Any
detail?
Neal Barclay: Well, I guess, and I alluded to this in the presentation, but as these gas issues
emerged, it's very difficult to get a handle on them. And what I can tell you is all
the gas-backed swaptions that we had to some degree were suspended and in
relatively short order. So, we had to do a lot of work behind the scenes to get
that hedge position back into some sort of shape and that's why we were
leaning on the NZAS demand response quite heavily.
We also bought hedges on the back of Whirinaki and we've been right and
behind the Methanex deals as well. So took a bit of work. I guess the thing that
concerns us most is just the line of sight a customer those hedge transactions
has through to the fuel source and when it's running scarce and visibility or
transparency in that regard is poor I would put it, absolutely poor for our sector
in that that scenario we do need to improve.
I think quite interested in the -- and I've just had a quick read of it, but the
government review into the electricity sector. I think we welcome that. I think it's
appropriate. I do wonder whether they’ve missed the point a touch because
they've indicated that the high prices are driven by low hydro inflows. We know
that and gas availability.
But the gas that's about the last time it's mentioned in the scope for that piece
of work. So, I think we'd all benefit if the scope of that review was extended to
include regulation in the gas sector and how that impacts through to electricity
prices. I think it's a must-have and it's a bit of a missing in that scope at the
moment, but we'll be giving that feedback.
Cameron Parker: Great stuff. Cool. Thanks Neal.
Operator: Thank you. Your next question comes from Andrew Harvey-Green from Forsyth
Barr. Please go ahead.
Andrew Harvey-Green: Morning, Neal and Mike, just a couple of questions from me. First of all, in
terms of typical structure going forward under the new dividend policy, do you
have a particular sort of EBITDA – net debt ratio that you're looking at, so we
can have the – it's now that you finalised?
Mike Roan: Andrew we would like to get back into BBB+ territory. So between 2x and 3x
net debt to EBITDAF is where we would look to trend. It's probably the simplest
estimate that I'd have. I think we felt we're trending that way, although our
operating performance has been as strong as you've seen. So that EBITDAF
figure from last year means that that net debt to EBITDAF ratio is a little lower
than we expected it might have been, but that's the track we're headed towards
is between two and three times.
Andrew Harvey-Green: Yes. Great. Okay, thanks. Next question is just around the Manapōuri
transformers, and I guess those of us that were able to go and see them a
couple of months ago. Are you able to give us any update on progress in terms
of finding out what the actual issues are? And I think there was a suggestion
you're going to be pulling them apart to have a closer inspection. Has that
actually thrown up yet?
Neal Barclay: We're still working through the process to do that, Andrew. But, yes, we will be
pulling the two that are out of service apart. We're just trying to work out the
arrangements between the original manufacturer and how we do that effectively
without having to ship them back off to Australia.
And we will have the right level of expertise involved in that process so we can
get to the root cause. We've got another – of those two, there was another two
Transformers that were in part of the same batch. They are not mis-performing
at all, but we certainly need to understand the root cause just so we can get
comfortable around their likely longevity. In the meantime, though, we've
committed to and we've got a new transformer. It should hit the water later this
month and be installed well before Christmas. We're looking at two others
which will leave us with a spare for delivery sort of backend of next year.
Andrew Harvey-Green: Yes. Great. Thanks. Next question is just around demand response and the
opportunity there. And then I guess we've seen what the smelter's been able to
do, which has been great and very well-timed. Can you give us a sense of sort
of the target for yourselves?
I assume it probably relates to some of the South Island demand that's
transforming load away from coal potentially. But are you able to give us a
sense of the size of demand response you might be able to get?
Neal Barclay: Look, not clearly, but we're working with at least two milk processing
businesses in the South Island for a decent chunk. You're talking sort of
potentially between the two of them 50 to 75 megawatts. And I think that's...
And we're only just starting this conversation. I mean, I noticed Pan Pac
through this whole process has slowed down operations. I mean, if they had a
demand response agreement with someone like us through this period that
would actually make that a profitable exercise for them. So, there is a lot of
demand, we think around the country that can be tapped into. But we're too
early in the process, Andrew, to call out exactly how much. But we think it's
significant. And you're talking hundreds of megawatts.
Andrew Harvey-Green: Yes. And last question, just to follow on from Steve's questions, I guess, around
the contingent hydro. So, if we were to move that contingent hydro into
standard operations, I assume you'll probably still look to keep a chunk down
there as a reasonable contingency. But what sort of uplift in annual generation,
hydro generation, could we be looking at?
Neal Barclay: We'd have to run that through all the models. And we haven't done that yet
because we don't have that agreement. But we'll provide a bit more insight,
Andrew, if we actually get that change through to the sort of the consent
processes.
Mike Roan: Yes. And there were announcements, Andrew, that we made. I can't remember
the year but they're on our website around that contingent storage utilisation.
So the range from 518m to 516m reasonably easy to access and operate other
than the 26,000 tonnes of rock that you need to put into Pūkaki. Beyond that, it
gets tougher given the configuration of Ōhau A power station. And you've got to
be careful around how you actually run water down the Pūkaki Canal.
So you've got a couple of metres, I think of water that would be
reasonably easy to operationalise. And then the other storage, it's about
three metres of additional water lower, would need to take more time and
effort if we were to use that. And that two metres is an additional couple
of 100 gigawatt hours. So as Neal says, we have to run it through our modeling,
but that's the type of storage that's down there that's -- I'll say, reasonably easy
to access.
Neal Barclay: I just add, sorry, Mike. But the engineers are doing more work, and we think we
can get into those -- the meters below those two as well, reasonably
productively. That's why I was sort of hesitating to give you a number because
we've still got to work that through -- but it's a chunk. It's a decent chunk of
generation.
Andrew Harvey-Green: That's great. Thanks. That's all from me.
Operator: Thank you. Unfortunately, that does conclude our time for questions today. I'll
now hand back to the presenters for any closing remarks.
Neal Barclay: Well, thank you all for your attention. Hopefully, that was informative,
interesting times, clearly. We're all very, very busy, and we will catch up
with as many investors in the coming weeks as we can in person as we
tap. So, thank you all for your attention, and good morning.
[END OF TRANSCRIPT]
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