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  • 2020 Interim Results Presentation

    26 FEBRUARY 2020

  • 2020 INTERIM RESULTS PRESENTATION 226 FEBRUARY 2020

    Progress on strategy

  • 2020 INTERIM RESULTS PRESENTATION 326 FEBRUARY 2020

    Progress on strategy

  • 4

    Financial performance

    2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

  • 5

    Dividends

     Interim ordinary dividend declared of 5.70 cps, 86% imputed, unchanged from 1H FY19

     Capital management interim special dividend of 2.44 cps, unimputed

     Capital management distributions to $625M since the programme began in August 2015

     Ordinary dividend and capital management update later in 2020

    Dividends declared 1H FY20 1H FY19

    cents per share imputation cents per share imputation

    Ordinary dividends 5.70 86% 5.70 86%

    Capital management special dividends 2.44 0% 2.44 0%

    Total 8.14 8.14

    Source: Meridian

    2020 INTERIM RESULTS PRESENTATION

    5.10 5.33 5.38 5.70 5.70

    2.44 2.44 2.44 2.44 2.44

    7.54 7.77 7.82 8.14 8.14

    0 1 2 3 4 5 6 7 8 9

    10

    2015 2016 2017 2018 2019

    CPS

    Six Months ended 31 December

    Interim dividend declared Ordinary dividend Special dividend Total

    26 FEBRUARY 2020

  • 598

    510

    +30

    +49

    +8

    -85 +92 -67 +65 -3 -1

    300

    400

    500

    600

    700

    Energy Margin 31

    Dec 18

    Res, SMB, Agi sales

    C&I sales NZAS sales Generation spot

    revenue

    Cost to supply

    customers

    Derivative sales and purchases

    Cost of derivative sales and purchases

    Net VAS Other Energy Margin 31

    Dec 19

    $M New Zealand energy margin movement

    6

    New Zealand energy margin

     Customer and sales volume growth across all segments

     Mass market average price flat, upward price pressure in corporate

     Financial contract, spot generation and hedging revenues all reflected lower wholesale prices

     Those lower prices also reduced costs in the portfolio

     Higher net physical and lower net financial positions

    Refer to pages 38-39 for a further breakdown of New Zealand energy margin

    Source: Meridian

    2020 INTERIM RESULTS PRESENTATION

    Physical +$94M

    Financial -$5M

    26 FEBRUARY 2020

  • New Zealand customers

     5% sales volume growth in residential and 10% in small medium business while maintaining average sales price

     Residential, business, agri revenue increased $30M (13%)

     39% growth in corporate sales volume at a 13% higher average sales price

     Corporate sales revenue increased $49M (57%)

     Powershop was the top ranked electricity provider in Consumer NZ’s annual survey

     Meridian was the top ranked large retailer

    Customer sales Customer numbers (ICPs)

    Sales volume (GWh)

    Average price ($/MWh)

    1H FY20

    Residential 205,712 801

    Small medium business 42,308 546

    Agricultural 40,661 592

    Large business 21,605 248

    Total Residential/SMB 310,286 2,187 $116

    Corporate 3,313 1,474 $93

    1H FY19

    Residential 198,740 762

    Small medium business 38,781 496

    Agricultural 37,978 455

    Large business 18,658 223

    Total Residential/SMB 294,157 1,936 $116

    Corporate 2,426 1,063 $82

    72020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

  • 57 44

    93 124

    101

    0

    50

    100

    150

    2015 2016 2017 2018 2019

    $/MWh

    Six Months ended 31 December

    NZ average generation priceNew Zealand generation

     Record levels of hydro and wind generation for a first half financial year

     Major flood event in early December 2019 lifted Meridian’s 1H FY20 inflows to 136% of average

     Some moderation in wholesale prices during 1H FY20, concerns around gas supply remain

     Major outages on the HVDC between January and April 2020 for reconductoring and replacement works

     Meridian’s North Island position managed through wind generation and financial contracting

     Actual level of HVDC transfer depends on North Island reserve availability and pricing

    Source: Meridian

    82020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

    Source: Transpower

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1 Jan

    8 Jan

    15 Jan

    22 Jan

    29 Jan

    5 Feb

    12 Feb

    19 Feb

    26 Feb

    4 Mar

    11 Mar

    18 Mar

    25 Mar

    1 Apr

    8 Apr

    15 Apr

    22 Apr

    29 Apr

    MW 2020 HVDC capacity

    Pole 2 Out DC Max: 780MW

    Earth Electrode Out

    DC Max: 400MW

    Pole 3 Out DC Max: 500MW

    today

  • 9

    Australian customers

     Electricity and gas customer growth in all states and white label channels

     Reported average electricity sales price decline reflects higher amounts paid to customers for solar export

     Average gas sales price decline reflects competitive repositioning

     Powershop Australia winner of Roy Morgan’s Electricity Provider of the Year

    Source: Meridian

    2020 INTERIM RESULTS PRESENTATION

    -500

    500

    1,500

    2,500

    3,500

    4,500

    5,500

    Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-

    Powershop Australia net customer changes

    electricity gas

    26 FEBRUARY 2020

  • 6566

    +6 +10 -11

    -12 +19 -13

    0 10 20 30 40 50 60 70 80 90

    Energy Margin 31

    Dec 18

    Electricity sales

    Gas sales Generation spot revenue

    Cost to supply

    customers

    Derivative sales and purchases

    Cost of derivative sales and purchases

    Energy Margin 31

    Dec 19

    $NZ M Australian energy margin movement

    10

    Australian energy margin

     Electricity and gas sales have lifted physical margin

     Drought conditions and wind farm availability impacted total generation, 13% lower than 1H FY19

     Higher net financial position

    Physical -$7M

    Financial +$6M

    Refer to page 40 for a further breakdown of Australian energy margin

    Source: Meridian

    2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

  • 48 50

    25 20

    44

    49

    24 18

    0

    10

    20

    30

    40

    50

    60

    NZ Wholesale NZ Retail Australia Other

    $M

    Six Months ended 31 December

    Operating costs

    2019 2018

    11

    Operating costs

     Operating costs 6% higher in 1H FY20  Ōhau refurbishment programme expanded,

    now $75M (multi-year opex and capex) and allows a 10-year deferral of other works

     Growth in Flux UK spend, revenue recovery  FY20 operating costs expected at the top of

    the $280M to $286M range previously indicated

     FY20 capex expected at the lower end of the $70M to $80M range previously indicated

     IFRS 16 reduction in full year FY20 operating costs of $6M (compared to FY19)

     Offsetting increase in lease costs and depreciation (below EBITDAF)

    Source: Meridian

    Total 31 December 2019 $143m Total 31 December 2018 $135m

    2020 INTERIM RESULTS PRESENTATION26 FEBRUARY 2020

  • 465

    389

    +88 -1 -3

    -8

    200

    300

    400

    500

    EBITDAF 31 Dec 18

    NZ energy margin

    Aus energy margin

    Other revenue Transmission expenses

    Operating expenses

    EBITDAF 31 Dec 19

    $M Group EBITDAF movement

    12

    EBITDAF  Record level of 1H FY20 EBITDAF1, +20% on

    1H FY19 supported by higher customer sales  Higher asset maintenance/refurbishment costs

    and lower Australian generation  Transmission costs include $5M Clutha Upper

    Waitaki Lines Project support  Lower 2H FY20 wholesale prices and HVDC

    outages will weigh on NZ earnings run rate

    Source: Meridian

    2020 INTERIM RESULTS PRESENTATION

    332 354 329 389 465

    318 303 337 449

    650 657 666

    838

    0

    200

    400

    600

    800

    1,000

    2016 2017 2018 2019 2020

    $M

    Financial Year ended 30 June

    Group EBITDAF Interim Final half-year Total

    Source: Meridian

    26 FEBRUARY 2020

    1Earnings before interest, tax, depreciation, amortisation, changes in fair value of hedges and other significant items

    0

  • 122 131 104 144

    184

    111 90 102

    189 233 221 206

    333

    0

    100

    200

    300

    400

    2016 2017 2018 2019 2020

    $M

    Financial Year ended 30 June

    Underlying npat Interim Final half-year Total

    13

    Below EBITDAF

    1Net profit before tax 2Net profit after tax adjusted for the effects of non-cash fair value movements and other one-off items

    Source: Meridian

     15% increase in depreciation from June 2019 revaluation (+$1B)

     $6M decrease in NPBT1 from fair value of electricity hedges from changing forward electricity prices ($20M increase in 1

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