Growing.
Investing.
Leading.
2021 Integrated Report
Contact
INTEGRATED
REPORT
2021
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Welcome to our second integrated report. This report explains
how Contact Energy creates value over time, or as we say in our
company vision, how we are building a better New Zealand.
Our leadership team has reviewed the report and our CEO Mike Fuge and the Board have confirmed
it is a true and accurate picture of how Contact Energy created value for our stakeholders in the 12 months
to 30 June 2021.
We expect it to be of interest to our people, customers, investors, suppliers, business partners, local
communities, tangata whenua, legislators, regulators, policymakers and all other stakeholders.
It follows the principles-based approach of the Integrated Reporting Framework and reflects our
ongoing journey towards integrated thinking, focused on value creation.
This report is dated 16 August 2021 and is signed on behalf of the Board of Directors of Contact Energy:
Robert McDonald
Chair
Dame Therese Walsh
Chair, Audit and Risk Committee
Our Chair Robert McDonald and the Board of Directors will host shareholders at the Contact Energy
AGM in mid-November 2021. The notice of meeting and agenda will be provided to shareholders in
October 2021.
More than 98 per cent of Contact Energy shareholders receive digital reports from us. We encourage
shareholders to move to digital, and we’ve also ensured the 2,000 printed reports use environmentally
responsible paper and inks.
Contents
Jargon buster
Key activity in FY21
Chair’s report
CEO’s report
Who we are
Our Board
Our leadership team
Our moral compass
Our operations
Creating value
Our supply chain
What matters most
Contact26 – Our strategy
STRATEGIC THEMES
Grow demand
Study into green hydrogen
Electrification of space heating
Decarbonising process heat
Attracting demand from data centres
Decarbonising road transport
Grow renewable development
Tauhara build proceeding
Beyond Tauhara
North Island battery investigations
Growing demand flexibility
Supplying geothermal process heat
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Thermal portfolio
Thermal asset review
The thermal transition for New Zealand
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Governance matters
Our Board
Code of Conduct and policies
Creating outstanding customer experiences 32
Risk management and assurance
Remuneration report
Additional disclosures
Statutory disclosures
Sustainability disclosures
TCFD index
GRI index
Financial statements
Combined Independent Auditor’s
and Limited Assurance Report
Corporate directory
Growing customer engagement
Supporting customer wellbeing
Managing customer debt
Responding to energy hardship
Privacy
STRATEGIC ENABLERS
ESG
Where we focus
A sustainable supply chain
Supporting community wellbeing
Responding to climate change
Financial implications of climate change
Using water resources sustainably
Protecting biodiversity
TWoW
How we’re transforming ways of working
Changing labour market
Embedding inclusion and diversity
Shaping our Contact Community
Employee health, safety, environment and
wellbeing
Operational excellence
Financial performance
Our regulatory environment
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Contact INTEGRATED REPORT 2021 Jargon buster
ASX
Australian Securities Exchange.
Contact
The company called Contact Energy Limited. Unless otherwise
stated, all activities and indicators in this report are for Contact.
CEN
Contact’s stock ticker on NZX and ASX.
Contact26 Contact’s strategy which sets out the company’s plan of action
for the five years until 2026.
EBITDAF
Earnings before interest, tax, depreciation, amortisation,
and changes in fair value of financial instruments.
ERANZ
ESG
EV
FY19
FY20
FY21
FY22
FTE
GRI
The Electricity Retailers Association represents companies
that sell electricity to New Zealand customers and businesses.
ERANZ’s role is to promote and enhance a sustainable and
competitive retail electricity market that delivers value to
electricity customers.
The environmental, social and governance factors to evaluate
performance.
Electric vehicle.
The financial year ended 30 June 2019.
The financial year ended 30 June 2020.
The financial year ended 30 June 2021.
The financial year ended 30 June 2022.
A ‘full-time equivalent’ is a way to measure the workload of
one person.
The Global Reporting Initiative is an international independent
standards organisation that helps businesses, governments
and other organisations understand and communicate their
impacts on things like climate change, human rights and
corruption.
The Group This is Contact Energy Limited, Contact Energy Trustee
Company Limited (a subsidiary), Simply Energy Limited
(a subsidiary), Western Energy Services Limited (a subsidiary)
and Drylandcarbon One Limited Partnership (an associate).
Hydrology The scientific study of the movement, distribution, and
NZAS
NZX
SDGs
management of water. The ‘hydrologic cycle’ involves the
continuous circulation of water and underpins hydroelectric
generation.
The Integrated Reporting Framework is a principles-based
framework for corporate reporting.
New Zealand’s Aluminium Smelter is the country’s only
aluminium smelter and is located on Tiwai Peninsula, across
the harbour from Bluff in Southland.
New Zealand Stock Exchange.
Sustainable Development Goals are 17 global goals designed
to be a “blueprint to achieve a better and more sustainable
future for all”. The SDGs were set in 2015 by the United Nations
General Assembly and are intended to be achieved by 2030.
Stratford Stratford power station comprises one combined cycle unit
CCGT and two open cycle gas turbine units.
TCFD
The Task Force for Climate-related Financial Disclosures
provides a framework for climate-related financial risk
disclosures.
Terrawatt Unit of power equal to one million million watts.
TRIFR
TWoW
Total Recordable Injury Frequency Rate is a globally
recognised measure of injury rates that can be benchmarked.
Transformative Ways of Working is one of our major strategic
focuses for the coming 12–18 months. It’s about reimagining
our traditional ways of working.
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Contact INTEGRATED REPORT 2021
Key activity this financial year
July
$40m appraisal confirms Tauhara
geothermal field is a world-class,
low-emissions renewable project.
Jacqui Nelson joined the leadership
team as Chief Generation Officer.
August
Announced FY20 results with EBITDAF
of $451m* and net profit of $125m.
Announced we were taking 100%
ownership of energy solution business
Simply Energy.
September
Paid 23c per share FY20 final dividend
to investors, following on from interim
dividend of 16c per share in April 2020.
October
Ngā Kaihautū o te awa o Waikato
presented their assessment of the
cultural impacts of the 2019 Karapiti
incident.
Launched our office/
home rotational
working model for
our customer teams.
First Kiwi company to join
the Nasdaq Sustainable
Bond Network.
*refer to note A2 of the
financial statements.
23c
per share
November
Director Whaimutu Dewes advised
he would retire from the Board in
March 2021.
December
OMV revised down estimates of the
gas it could produce for us from the
Maui/Pohokura fields in 2021.
Fined $162,500 in the Environment
Court for the 2019 Karapiti incident’s
impact on the Waipuwerawera and
Waikato awa.
Announced feasibility study with
Meridian Energy to investigate
green hydrogen in Southland.
January
Agreed to supply a portion of the
Tiwai Point aluminium smelter’s
electricity as its owners confirmed it
would operate until the end of 2024.
February
Announced $580m investment to
develop 152MW geothermal power
station at Tauhara, and began a
strategic review of our thermal assets.
Signed a four-year sustainability-linked
loan with MUFG Bank worth $75m.
FY21 interim results revealed EBITDAF
of $246m and net profit of $78m.
March
Rukumoana Schaafhausen joined the
Board as an independent director.
April
Acquired Taupō-based geothermal
well specialists Western Energy.
Established a new arrangement with
highly regarded wind generation
experts Roaring40s.
Named most trusted electricity/gas
provider in Reader’s Digest Trusted
Brand awards.
Director Dame Therese Walsh advised
she would retire from the Board.
Marked the beginning of the Tauhara
power station construction with a
ceremony hosted by Tauhara Hapū.
Cleared of breaching the
Electricity Authority’s
conduct rules after an
investigation into our
actions when Clutha
River was in flood in 2019.
May
Customers Open Country Dairy and
Nature’s Flame were winners at the
2021 Energy Excellence Awards.
Announced our ‘Thermal Co’ concept as
a potential option to enable low-carbon
security of supply for NZ.
Announced a $400m
equity raise for our
capital investment
programme.
June
Published new verified science-based
climate change targets in line with
limiting global warming to 1.5˚C.
Announced sponsorship of the APEC
CEO Summit 2021.
Rated lowest in Consumer NZ’s 2021
power company satisfaction survey.
Reached 50,000
broadband connection
milestone.
50k
broadband
connections
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Contact INTEGRATED REPORT 2021
Chair’s report
Welcome to Contact’s FY21 integrated report. I’m very pleased to be sharing
some observations on the year, and to be looking ahead to the future
possibilities and opportunities for Contact.
As you read this year’s report, you’ll see that
FY21 has been a year in which we have achieved
a lot, we have delivered good returns for our
shareholders, and we have ensured the business
is well-positioned for future growth. I acknowledge
everyone on the Contact team who has put their
energy in day after day to make this happen.
Even with the unpredictable and unprecedented
challenges of the COVID-19 pandemic, Contact’s
people have consistently delivered.
Strategy
The Contact26 strategy was developed in the second
half of FY21 and sets out the company’s plan of action
for the five years until 2026. This report is structured
around the Contact26 strategic themes and enablers.
It also uses the Global Reporting Initiative (GRI)
standards and the International Integrated Reporting
Council Framework to report on material
environmental, social and governance activities,
and to provide a balanced view of our performance.
Through Contact26, Contact is ushering in a time
of significant change and adaptation, and is being
positioned for growth. The focus is on leading
New Zealand’s decarbonisation.
New Zealand is privileged to start the
decarbonisation journey with a low-carbon
electricity system. As demand for electricity
grows with industry and transport decarbonising,
Contact will bring new renewable projects to
market to meet that increased demand.
To that end we are very pleased to be progressing
with the world-class Tauhara geothermal project.
The final decision to proceed was accompanied by
$580m of additional investment. We are absolutely
delighted that market conditions now allow us to
proceed with this important development – one
which has been in the planning stages for more
than a decade.
We believe the Tauhara geothermal project
is New Zealand’s best low-carbon renewable
electricity opportunity. It will operate 24/7, is not
reliant on the weather and is ideal for displacing
New Zealand is privileged to start the decarbonisation journey
with a low-carbon electricity system. As demand for electricity
grows with industry and transport decarbonising, Contact will
bring new renewable projects to market to meet that increased
demand.
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baseload fossil fuel generation from the national
grid, which will significantly reduce New Zealand’s
carbon emissions.
It was notable that Prime Minister Jacinda Ardern
and the Minister of Energy Hon Dr Megan Woods
joined us in March for the launch ceremony hosted
by Tauhara hapū: Tauhara is not just important for
Contact, but for New Zealand. It is a major post-
COVID-19 private sector investment, and will have a
substantial impact on the country’s goal to become
100 per cent renewable-energy powered by 2030.
In March we successfully completed a $400m
equity raise for our capital investment programme,
to initially reduce net debt and provide financial
flexibility to fund the Tauhara project and other
future growth projects. The capital raise gives
us the flexibility to execute on up to $800m of
additional projects beyond Tauhara.
Looking to future growth projects, this year
we entered an exclusive partnership with wind
generation experts Roaring40s to develop a
pipeline of large-scale wind generation assets,
we acquired specialist geothermal service
company Western Energy, and in July 2021 we
released a report we have been working on with
Meridian Energy that examines the potential to
develop green hydrogen at scale in the South Island.
Contact INTEGRATED REPORT 2021
The Contact26 strategy was developed in the second half of FY21
and sets out the company’s plan of action for the five years until
2026.
Projects like Tauhara and other potential geothermal
developments, the work that Western Energy
does to make geothermal production more
efficient, the work that Simply Energy does
to help customers, examining the potential of
hydrogen, and investigating the best wind projects
are exactly the types of things that will play an
important role in New Zealand’s transition to a
low-carbon future.
Contact26 gives impetus to these important projects
and many others across the company. This includes
using automation and digitisation to simplify
experiences, and expanding into new products
and plans to help our customers. And it includes
embracing transformative ways of working to ensure
we have a highly engaged and productive team.
Contact26 was underpinned by two significant shifts
in our operating environment. Rio Tinto announced
it would extend the operation of New Zealand’s
Aluminium Smelter at Tiwai Point – a major source
of demand for the energy sector – until the end
of 2024. Alongside that we have the continued
acceleration in stakeholder expectations and
regulatory pressure around natural resource
management, particularly climate change, and
the drive for action to reduce New Zealand’s
carbon dioxide emissions.
Contact is pleased to have played its part in helping
to secure the NZAS resolution, which has provided
much-needed certainty that the transition away
from this significant source of demand can be
achieved in an orderly way.
Financials
FY21 has been a year in which we have continued
to deliver solid returns for our shareholders and
made significant moves to ensure the company
is well-positioned for the future.
We delivered a strong financial result in FY21 after
successfully navigating the potential departure of
major energy users, the short-term issues around
low rainfall in the hydro catchments, and the
ongoing challenges around gas supply.
As signalled last year, the dividend policy was revised
to target a payout ratio of between 80 and 100
per cent of the average operating free cash flow
of the preceding four financial years. This saw the
Board approve a final cash dividend of 21 cents
per share which will be paid on 15 September 2021
and deliver investors a 35 cents per share annual
dividend.
People
On a personal note, I would like to acknowledge
the departure in March of independent director
Whaimutu Dewes after more than 10 years on
the Contact Board. Independent director Dame
Therese Walsh will also leave the Contact Board
this year to focus on her other governance roles.
Both Whaimutu and Dame Therese have made
considerable contributions to Contact and I would
like to thank them both very much, and to wish
them both well.
In March we were joined by a new independent
director, Rukumoana Schaafhausen. She holds a
range of governance roles at various organisations
and has strong iwi connections and experience.
We are delighted to have her strong values, diverse
thinking, and passion for Aotearoa on the Contact
Board. We are looking forward to having Sandra
Dodds join the Contact Board in September.
She will bring an international infrastructure
perspective, as well as strong financial skills and
governance experience.
I would also like to formally thank Mike and the
leadership team for consistently demonstrating
strong and clear leadership inside Contact and to
our external stakeholders, and ensuring that we
deliver on our strategy. The results, and the many
other significant accomplishments outlined in
this report, are a testament to this.
I think we can all be proud of the important
contribution Contact is making to New Zealand
and the position the company is in. Contact is
a strong participant in New Zealand’s efficient,
competitive energy market, and is well placed
to be a leader in the country’s decarbonisation.
Over the coming year we will focus on delivering
our Contact26 strategy, as we build a better
future for New Zealand and create value for all
stakeholders, alongside sustainable success over
the long term.
Ngā mihi nui,
Robert McDonald
Chair
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Contact INTEGRATED REPORT 2021
CEO’s report
I’m delighted to be sharing my perspectives on another action-packed and
opportunity-laden year for Contact, after completing my first full year as CEO.
I feel pride and satisfaction at all that we have
achieved over the past year. We have continued
our strong performance and positioned ourselves
well for the future. As we look to FY22 and beyond,
there is a lot more to do – it is a very exciting time
to be involved in the electricity sector.
We have had a significant strategic reset with
Contact26, which was delivered in the second half
of FY21 and has ushered in an exciting new chapter
for the business. At the heart of Contact26 is our
commitment to building a better New Zealand
and leading the country’s decarbonisation.
We will do this by growing demand for New Zealand’s
renewable electricity; developing new, renewable,
flexible electricity generation; decarbonising our
portfolio; and creating outstanding customer
experiences. The key enablers of our strategy will
be our commitment to strong environmental, social
and governance practices, a focus on operational
excellence and the ongoing transformation of how
we work.
We are well-positioned to deliver our strategy.
We have a strong platform with our existing
knowledge and capabilities in decarbonisation.
We have the renewable assets and development
At the heart of Contact26 is
our commitment to building a
better New Zealand by leading
the country’s decarbonisation.
pipeline we need to provide firm and flexible
electricity supply at a reasonable price. And
we have considerable flexibility in our portfolio.
We also have the people with the passion,
capability and commitment to deliver.
Advances in technology and the improving
economics will accelerate the shift toward
electrification across the economy. Fossil fuel
input costs have rapidly risen, with carbon costs
doubling over the past two years. Gas prices are
rising as supply becomes less secure. Meanwhile
the cost of green technologies has fallen, as new
uses like green hydrogen emerge and electric
vehicle production gains scale.
The upshot is that clean, low-cost, renewable
electricity will be increasingly attractive and
in hot demand. And we are ready to respond.
We are more than ready. We are in action.
Tauhara and beyond
Most notably, we made the decision in February
to proceed with the development of the Tauhara
geothermal power station.
An enormous amount of complex work went into
the project ahead of the final investment decision:
research, preparation, discussion, listening and
engineering wizardry must happen before
an investment like this can get off the ground.
It has been a long time coming, with some of the
people involved at Contact since the initial phase
of investigation kicked off more than 10 years ago.
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Another major focus is on
the retail business where our
energy is going into creating
outstanding customer
experiences.
I would like to thank the team for their perseverance,
resilience and patience. I have appreciated the
guidance and passion of our then deputy CEO
James Kilty and the intellectual horsepower and
common sense of Dr Mike Dunstall and our team
of engineers and project managers. We have a
fantastic team from within and beyond Contact
who will ensure the construction of a world-class
power station that everyone can be very proud of.
It does not stop with Tauhara. We are actively
looking at how we can bring more geothermal
development forward in response to the clear
market signals. And we are underway with
innovative options including increased generation
efficiency from our existing assets (for example,
new and improved turbines and refined
geothermal processes) and exploring options
around wind, solar and the potential development
of a battery in the North Island.
Contact INTEGRATED REPORT 2021
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We have a fantastic team,
engagement is high, and we
are building our capability
to support growth.
I am also excited about our work with Meridian
Energy to investigate the potential of a large-
scale, renewable hydrogen production facility
in the lower South Island. This could see a new
industry established that could deliver long-term
economic value for New Zealand while helping to
decarbonise our economy.
Another major focus is on the retail business
where our energy is going into creating outstanding
customer experiences. This commitment has
seen us grow our net promoter score across all of
our customer ‘touchpoints’ by 39 points over the
past five years in a highly competitive market.
Disappointingly we rated lowest in Consumer NZ’s
power company satisfaction survey. We intend to
understand what contributed to this.
In line with our plans to increase customer
connections by expanding into new products
and services, we now have more than 50,000
broadband connections and we are New Zealand’s
fastest-growing broadband provider. We had zero
broadband connections four years ago.
People
Our focus also remains very much on our people.
We know the success of our strategy hinges on
our people being ready and excited to execute.
We have a fantastic team, engagement is high, and
we are building our capability to support growth.
This will see us build on our Transformative Ways
of Working (TWoW) programme to re-engineer
the way we work. We are making work at Contact
more flexible for our people, improving their
experience, helping them to be productive, and
at the same time delivering savings to the bottom
line. Our engagement survey results show we are
moving in the right direction, but we will need to
keep evolving and improving.
We have had some changes to our leadership team
this year. Our Chief Customer Officer Vena Crawley
left the company in April 2021. He was a highly
valued member of the leadership team, and has
delivered on the retail business transformation
and the development of our technology strategy,
and created our digital and data road map.
Deputy CEO James Kilty finished up at Contact in
July 2021, to take up the role of CEO at electricity
distributor Powerco. James has made a huge
contribution to Contact and the New Zealand
electricity industry after nearly 20 years at the
company. He has been instrumental in delivering
countless major strategic initiatives across all areas
of the Contact business – I have enjoyed his keen
strategic mind and wise counsel.
On behalf of the Contact whānau, I would like to
thank both James and Vena and wish them well
for the future.
In July 2020 we announced the appointment of
Jacqui Nelson as Chief Generation Officer with
responsibility for operations and energy market
trading. Jacqui has been with Contact for more
than 15 years in a wide range of roles across
finance, resource management, trading and most
recently as General Manager of Operations.
And in another significant appointment,
Jack Ariel took up the new role of General Manager,
Major Projects in April. Jack is responsible for
overseeing the execution of all major surface
engineering projects, starting with the Tauhara
power station development.
Financial performance
This year we’ve delivered a strong financial
performance with EBITDAF1 up 24 per cent year-on-
year to $553m, and profit up significantly to $187m.
Our results are underpinned by continued smart
channel management of our flexible portfolio
of gas-fired and renewable assets, continued
operational excellence, strong asset availability,
and a strong finanical position.
We have done a very good job in securing gas
supply to ensure we could continue to generate
electricity and help keep the lights on when
renewable generation options were constrained
by weather and restricted gas supply.
In FY21 we will deliver investors a 35 cents per share
annual dividend, down slightly from 39 cents per
share in FY20, and in line with the dividend policy
updated in February.
While we can be proud of our
FY21 performance and results,
and the ground we have taken
to assure future growth, there
is no room for complacency.
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1 EBITDAF is a non-GAAP (generally accepted accounting practice) measure. Information regarding the usefulness, calculation and reconciliation of these measures is provided within note A2
to the financial statements.
Contact INTEGRATED REPORT 2021
We believe consolidating
thermal assets into a new
‘Thermal Co’ could encourage
electricity generation
aligned with New Zealand’s
decarbonisation objectives.
The future
While we can be proud of our FY21 performance
and results, and the ground we have taken
to assure future growth, there is no room for
complacency.
Our retail landscape continues to change with
Trustpower announcing in June that its retail
business (including electricity, gas, fixed and
wireless broadband and mobile phone services)
will be acquired by Mercury Energy, subject to
Commerce Commission approval. We’re looking
forward to the challenges or changes this brings
to the market – after all, competition drives us to
evolve faster and it will bring out the best in us
for our customers.
We continue to see volatility in the wholesale market,
underpinned by the increase in gas shortages and
gas field issues over the past three years and the
impact on investment that accompanied the
Tiwai Point smelter’s threatened closure.
There is no doubt flexible thermal generation will
be required as New Zealand transitions to 100 per
cent renewable. But market stability encourages
investment in sustainable generation and we have
made a good start with more than two terawatt
hours of low-carbon renewable generation projects
set to come on stream across the sector in the next
three years.
As an industry we will need to expedite sensible
decarbonisation, while maintaining security of
supply and affordability.
One action we’ve taken on that front is to
start engaging about an option to consolidate
New Zealand’s thermal generation arrangements
into one entity. As the market transitions to lower-
carbon solutions, we are likely to see sub-optimal
levels of capacity from intermittent renewables,
for example, for demand peaks or dry periods.
Additional flexibility from fast-start thermal
generation will continue to be needed during
the transition, however asset owners will struggle
to make economic returns as the frequency of
use declines. We believe consolidating thermal
assets into a new ‘Thermal Co’ could encourage
electricity generation from coal and gas-fired
plants in ways that are aligned with New Zealand’s
decarbonisation objectives, ensuring affordable,
ongoing stable electricity supply, and we are
talking with stakeholders about this.
There is a further stake in the ground for our
industry with the goals and challenges set out
in the Climate Change Commission’s advice
to the Government in June. Our response at
Contact is unequivocal: we are up for the challenge.
Let’s get moving.
It is a hugely exciting time to be involved in the
electricity sector. As a country and a company
we have some audacious goals. We are confident
we can deliver and we are looking forward to it.
Last, and definitely not least, I would like to thank
everyone at Contact for their hard work throughout
the year. None of this would be possible without
our people.
Ngā mihi nui,
Mike Fuge
Chief Executive Officer
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Contact INTEGRATED REPORT 2021
Who we are
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Contact INTEGRATED REPORT 2021
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Our Board
Jon Macdonald
Victoria Crone
David Smol
Dame Therese Walsh
Robert McDonald
INDEPENDENT
NON-EXECUTIVE DIRECTOR
INDEPENDENT
NON-EXECUTIVE DIRECTOR
INDEPENDENT
NON-EXECUTIVE DIRECTOR
INDEPENDENT
NON-EXECUTIVE DIRECTOR
INDEPENDENT
NON-EXECUTIVE CHAIR
Appointed Nov 2018
Appointed Nov 2015
Appointed Oct 2018
Appointed Sep 2018
Appointed Nov 2015
Chair, People
Committee
Member, Audit and Risk
Committee
Member, Development
Committee
Member, Safety
and Sustainability
Committee
Chair, Development
Committee
Chair, Audit and Risk
Committee
Member, People
Committee
Member, People
Committee
Rukumoana
Schaafhausen
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointed Mar 2021
Member Safety
and Sustainability
Committee
Member Audit and
Risk Committee
Elena Trout
INDEPENDENT
NON-EXECUTIVE DIRECTOR
Appointed Oct 2016
Chair, Safety and
Sustainability
Committee
Member, Development
Committee
Whaimutu Dewes left the Board on 31 March 2021.
Our directors bring broad knowledge, deep understanding and strong experience to the boardroom table. Their governance
sets our strategic course and enables Contact to thrive, succeed, and navigate risk-taking. They ask the hard questions until
they are satisfied with decisions, help us seize the right opportunities, and ensure we balance the interests of all of
our stakeholders.
In Governance matters we include a matrix setting out the Board’s expertise across a range of
strategic skills. You can also find full profiles of the directors on our website.
Contact INTEGRATED REPORT 2021
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Our leadership team
Jan Bibby
CHIEF PEOPLE
OFFICER
Joined 2019
James Kilty
Dorian Devers
Jacqui Nelson
Mike Fuge
Matt Bolton
DEPUTY CHIEF
EXECUTIVE OFFICER
CHIEF FINANCIAL
OFFICER
CHIEF GENERATION
OFFICER
CHIEF EXECUTIVE
OFFICER
CHIEF CUSTOMER
OFFICER (ACTING)
Joined 2002
Joined 2018
Joined 2004
Joined 2020
Joined 2009
Joined leadership
team Mar 2021
Catherine
Thompson
CHIEF CORPORATE
AFFAIRS OFFICER &
GENERAL COUNSEL
Joined 2010
Iain Gauld
Jack Ariel
CHIEF INFORMATION
OFFICER
GENERAL MANAGER
MAJOR PROJECTS
Joined 2017
Joined Apr 2021
Joined leadership
team Mar 2021
Our leadership team implements the strategy approved by the Board. They also ensure the Board receives accurate and
timely information about Contact’s operations, performance, legal obligations, reputation, financial conditions and prospects.
They manage the day-to-day operations of Contact, our people and our resources to ensure these function effectively and
efficiently. They demonstrate strong and clear leadership inside Contact and to our external stakeholders.
You can also find full profiles of our leadership team on our website.
Contact INTEGRATED REPORT 2021
Our moral compass – Ngā Tikanga
Our Tikanga guides our actions, both as individuals and as Contact,
and is our set of principles, commitments and behaviours.
Principles
Commitments
Behaviours
Pointed focus sharpens us
Human kindness connects us
Curiosity propels us
Progressive defines us
We act professionally at all times.
We care about the health and safety
of our people and minimise health,
safety and environmental impacts on
customers and communities.
We put our energy into things that
matter by:
· adding value to resources under
our control
· being inclusive, encouraging
diversity and expression of ideas
and opinions
· creating value for our stakeholders
· ensuring the sustainability of our
business
· looking after natural and shared
resources
· being a good neighbour in
communities.
We’re authentic and make sound
decisions knowing they’ll be subject
to scrutiny.
Creating value for our customers and
communities by developing smart
solutions that make life easier.
Creating a rewarding workplace
for our people by valuing everyone’s
contribution, encouraging personal
development, recognising good
performance and fostering equal
opportunity.
Respecting the rights and interests
of communities by listening, and
understanding and managing the
environmental, economic and social
impacts of our activities.
Respecting the rights and interests
of our business partners so we
work collaboratively to create valued,
rewarding partnerships.
Delivering market-leading
performance for shareholders by
identifying, developing, operating and
growing value-creating businesses.
Staying a step ahead, anticipating the
things that are going to matter to our
business and New Zealand.
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Contact INTEGRATED REPORT 2021
Our operations
Connections
945employees
63k
shareholders
430k
spent in communities
532k
total customer connections at 30 June 2021
0tier 1 process safety incidents 8TWh
contracted electricity sales
$2.9b
net assets
35c
per share dividend
81%
renewable generation
$79m
tax paid
Net Promoter Score 97.6%
+31
gender pay ratio
1,045k
tCO2e Scope 1 Group emissions
All figures at 30 June 2021 or for FY21
5.6k
5.1k
Volume sold GWh
838
780
2021
2020
Electricity
Natural gas
417k
416k
Connections
by energy type
65k
65k
26k
51k
Electricity
Natural gas
Broadband
424k
420k
Connections
by account type
58k
52k
59k
27k
Residential
Business
Other
(including broadband)
These connection figures include Simply Energy connnections.
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Contact INTEGRATED REPORT 2021
Auckland
Te Rapa
Stratford
Poihipi
Levin
Simply
Energy
Te Mihi
Ohaaki
Tauhara
UNDER
CONSTRUCTION
Whirinaki
Western
Energy
Wairākei
Te Huka
2021 generation by station and type
Where we are
8.4 TWh
Total generated
Tauhara (152 MW)
Under construction
3,114
(GWh)
155
299
339
Te Huka (28 MW)
Ohaaki (44 MW)
Poihipi (55 MW)
Wairākei (132 MW)
1,081
Te Mihi (166 MW)
1,240
3,698
(GWh)
Roxburgh (320 MW)
1,667
Clyde (432 MW)
2,031
Hawea
Clyde
Wellington
Simply
Energy
Contact Energy sites
Offices and call centres
Geothermal power station
Hydroelectric power station
Storage lake
Thermal power station
Dunedin
Roxburgh
Subsidiaries
1,592
(GWh)
Simply Energy
Western Energy
Te Rapa and Whirinaki (199MW)
232
Stratford – Peakers (210 MW)
234
Stratford – CCGT (377 MW)
1,126
Geothermal
Hydro
Thermal
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Contact INTEGRATED REPORT 2021
Creating value
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Contact INTEGRATED REPORT 2021 Creating value
This section sets out our business model. We are creating and contributing
to a better New Zealand by putting our energy where it matters.
It includes an overview of the resources and
relationships (or ‘capitals’) that are deployed in
or impact on our business, the influence of the
external environment, and a summary of our
key business activities.
The outputs – and ultimately the outcomes –
that emerge from these interactions are how
we create value for Contact, New Zealand,
communities, our people and all of our other
stakeholders over the short, medium and
long term.
External environment
The external environment we operate in impacts
our value creation. This includes economic
conditions such as the post-COVID-19 recovery,
technological change and the rise of digital
for customers, political activity, regulatory
policymaking such as implementing the
recommendations of the Electricity Price Review,
societal change as the population ages and
diversifies, and environmental factors such as
climate change.
For more detailed observations about the external
environment for Contact in FY21 and beyond,
please read the overviews from our Chair Robert
McDonald, our CEO Mike Fuge and Contact26 –
our decarbonisation strategy.
“New Zealand has one of the
world’s leading energy systems
when it comes to sustainability,
security and affordability. It is
the only country that has had a
triple A grade in all three areas
since 2000.” Business NZ
“COVID-19 has changed patterns
of electricity consumption and
e-commerce, and the recovery
from the pandemic is likely to
be greener, exemplified by
‘build back better’.”
The World Energy Council
The trilemma
The World Energy Council’s energy trilemma is a
three-dimensional problem that involves balancing
the security of energy supply with environmental
sustainability and affordability.
It neatly provides a framework for articulating
the areas where Contact puts its energy to create
sustainable value for New Zealanders; we’re working
hard to improve accessibility, demonstrate reliability
and look after the environment.
The trilemma also demonstrates the competing
demands and trade-offs at play. Pushing harder
on one dimension of the trilemma may require
concessions from the others. For example, a
requirement for all energy production in New Zealand
to be 100 per cent renewable is likely to prove very
expensive, but a more balanced target of 95 per cent
will still deliver excellent environmental outcomes but
avoid the prohibitive costs.
In the Contact context:
• accessibility is focused on customer wellbeing,
energy hardship and tailoring our products and
services to customer needs.
• reliability is focused on the resilience of our
supply chain, the impact of regulation, financial
sustainability, the reliable supply of energy, and
the safety and wellbeing of our people.
• environmental sustainability is focused
on community wellbeing, climate change,
renewable energy, water and biodiversity.
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Contact INTEGRATED REPORT 2021
We create value by:
deploying financial, natural,
relationship, asset and people capital
factoring in external environment
influences
undertaking business activities in
alignment with our Tikanga, vision
and strategy, overseen by good
governance
delivering outcomes that impact
on accessibility, reliability and
environmental sustainability.
Vision and strategy
Ngā Tikanga
Governance and leadership
Supply chain
Risk and opportunity
Assets
c e ssibility
c
A
t
ple
o
e
P
R
e
l
i
a
b
ility
N
a
t
u
r
al
n
e
m
n
viro
E n
R e l a t i o
Build a better New Zealand by:
Delivering reliable generation of electricity
F
i
n
a
n
c
i
a
l
Growing electricity demand
Growing renewable development
Decarbonising our portfolio
n ships
Creating outstanding customer experiences
Operating with great ESG practices, operational
excellence and transformative ways of working
Capitals – We depend on various forms of capital for our success and the stocks of these increase, decrease or change in the course of our business activity.
Natural
Using, looking after and
managing natural resources
and environmental assets
are fundamental parts of
Contact’s business. This
includes water, geothermal
steam/fluid, gas, air quality,
land, carbon, biodiversity,
pest control and ecosystem
impacts.
People
The experience, expertise,
competence and passion of
our people from our Board
and management team
through to everyone in our
offices and sites. It captures
our ways of working, our
safety culture and our
Tikanga. It includes internal
engagement, development,
risk management,
continuous improvement
and innovation, managing
external relationships and
aligning to deliver strategy.
Relationship
Our social licence to operate
relies on myriad relationships
within and between our
communities, stakeholders
and networks. It includes
the reservoir of goodwill
and trust we earn (or burn)
with stakeholders including
tangata whenua, customers,
communities, shareholders,
local bodies, Government,
regulators, media, suppliers,
partners and our own people.
Financial
We have a pool of funds that
we deploy to produce and
deliver energy, serve our
customers and undertake
all of our other activities.
This has been generated
via our business activities,
investors and debt
arrangements.
Asset
Various physical and
intellectual assets are used in
delivering reliable, affordable
and environmentally
sustainable electricity to
New Zealanders. This includes
11 power stations, offices,
vehicles and transmission/
distribution connectivity. It
also includes our reputation,
website and application
software, IT systems, customer
databases, brands, licences
and internal ‘know-how’
around activities like safety,
transformation and
geothermal engineering.
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Contact INTEGRATED REPORT 2021
Our supply chain
3. We innovate
We create smart solutions that are good for
people (tiaki tangata) and the environment
(tiaki taiao) to help customers, partners, suppliers
and communities have a better quality of life.
We are an innovative, safe and efficient generator,
actively working with our customers, partners
and suppliers to improve energy efficiency,
reduce emissions and fight climate change.
4. We sell and serve
As a retailer we sell products and services to
thousands of individuals and businesses to
meet their energy and broadband needs.
Hydro
CLYDE
ROXBURGH
Geothermal
TE MIHI
WAIRĀKEI
TAUHARA
(UNDER CONSTRUCTION)
OHAAKI
POIHIPI
TE HUKA
Thermal
STRATFORD – CCGT
STRATFORD – PEAKERS
TE RAPA
WHIRINAKI
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A N D SUPPLIERS
B
D
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B
1. We generate
We own and operate 11 power stations
and in FY21 produced 81% of our electricity
from our renewable hydro and geothermal
stations. Our natural gas and diesel-fired
power stations operate to ensure the lights
stay on for New Zealanders when intermittent
renewable plants cannot operate.
2. We trade
We sell the electricity we generate on the
wholesale market. We purchase goods and
services from more than 2,000 suppliers.
We also trade a range of financial products
to manage our risk and create value.
Contact INTEGRATED REPORT 2021
What matters most
We use the Global Reporting Initiative (GRI) standards
(core) and the International Integrated Reporting
Council Framework to report on material
environmental, social and governance activities, and
aim to provide a balanced view of our performance.
We also report our climate change risks using the best
practice guidance of the Task Force for Climate-related
Financial Disclosures (TCFD) framework.
Unless otherwise stated, all activities and indicators are for Contact rather
than the Group.
What we did
We undertook an annual review to help determine the things
our stakeholders care about that we impact on. This assists our
understanding of the most important environmental, social and
governance issues for our business, and the opportunities for
us to create value. This review involves an environmental scan,
a review of internal documents, and what our stakeholders have
told us.
What we heard
The topics identified by each stakeholder group are set out below.
Customers
Affordability,
customer
service, helping
communities,
environmental
protection, safety,
supporting NZ
economy, climate
change, inequality,
reducing costs,
mitigating emissions
trading costs,
business resilience,
decarbonisation and
electrification, energy
efficiency, cash flow,
financial security,
privacy, cybersecurity.
Tangata whenua
Whānau/hapū/
iwi health and
wellbeing,
connection to and
care of natural
resources, respect
for cultural sites and
cultural identity,
jobs, inequality, te
reo and tikanga,
access to resources,
youth development,
cost of living.
Communities
Being a good
neighbour, impact
on the natural
environment,
climate change,
community
connection, jobs,
cost of living,
cost of energy,
mental health,
waste, inequality,
renewable energy,
supporting local
economy.
Investors
Sustainable
dividends, financial
performance,
managing risk
(including climate
change risk),
taking care of our
customers, human
rights, supply
and demand,
environmental
stewardship,
regulatory change,
social licence, ESG
credentials.
Our people
Safety, wellbeing,
professional
development,
inclusion and
diversity, technology
and systems,
flexible working and
work/life balance,
leadership, Tikanga
and company
culture, workload,
connecting with
communities, job
security.
Suppliers/partners
Continuity and
certainty of work,
maintaining supply
chains, health and
safety, natural
environment, cash
flow, access to
energy, technology.
Government
Accelerating
renewables and
electrification,
resource
management
reform, fresh water,
relationships with
tangata whenua,
inequality, regional
development, social
licence, reliability
of supply, energy
hardship and
inequality, just
transitions.
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Contact INTEGRATED REPORT 2021
The material issues matrix
Our materiality matrix maps ‘stakeholder interest’
on the vertical axis, and ‘opportunity for Contact
to create value’ on the horizontal axis. All the topics
are important, but we report on those that rank
highest across both axes and appear in the top-
right corner.
This year we report on 13 topics grouped under
the seven areas of our Contact26 strategy.
Our key observations are:
The top specific issue from stakeholders was
‘protection of children’ – linking to the big theme
of future generations.
The rise in inequality was informed by the #1 issue
of our stakeholder survey – protection of children.
Also the top themes for stakeholders and shown in
national research were social issues such as poverty
and access to housing.
Water moved higher, driven by changing public
sentiment – increased concern on water quality
and supply, additional regulatory risk, focus and
reforms from the Government on this issue, and
continued investor disclosure requirements.
Increase in focus on financial sustainability, being
driven by increasing importance to stakeholders
in the ongoing COVID-19 pandemic. Stakeholders
didn’t mention customer experience much,
potentially reflecting that people are satisfied
with their customer experience. They may be more
focused currently on price and energy hardship.
With changing ways of working, it’s not surprising
that employee wellbeing is increasing in focus.
Compared to the significant focus on resilient
supply chains a year ago (during global lockdowns)
this theme did not feature much this year.
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100
90
80
70
60
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I
Grow demand
Grow renewable
Thermal portfolio
Customer experience
ESG
TWoW
Operational excellence
Inequality
Regulation
Biodiversity
Privacy
Human rights/
rights
Technology
Partnerships
Customer
wellbeing
Energy
hardship
Community
wellbeing
Water
Climate
change
Renewable
energy
Customer
experience
Financial
sustainability
Employee safety
& wellbeing
Resilient
supply chain
Reliable
energy
Workplace culture
Diversity
The arrows show the
direction of movement
for the material topics
compared to FY20.
50
60
70
80
90
100
Significance of the impact or opportunity
United Nations Sustainable
Development Goals
We also mapped the 13 material topics against the
United Nations’ 17 Sustainable Development Goals,
and identified six goals where we believe Contact
can have the greatest positive impact.
You will see these icons in the main report where
they relate to specific sections.
Contact INTEGRATED REPORT 2021
Contact26
Our strategy to lead New Zealand’s decarbonisation
Grow demand
We’re growing demand for
New Zealand’s renewable
electricity in a range of ways.
Grow renewable
development
We’re developing new, renewable,
flexible electricity generation as
the market evolves.
Decarbonise
our portfolio
We’re decarbonising our portfolio of
generation assets (and the New Zealand
electricity market) via an orderly
transition to renewable generation
(managing the balance between
continued security of supply, minimal
emissions and affordability).
Create outstanding
customer experiences
We’re creating outstanding
customer experiences as we build
New Zealand’s leading energy and
services brand to meet more of our
customers’ needs.
This will be underpinned by three key enablers
Environmental,
Social, Governance (ESG)
• Create long-term value through our
strong performance across a broad set of
environmental, social and governance factors.
Transformative
ways of working (TWoW)
• Use technology to modernise our operating model
• Increase employee engagement to attract and
retain talent.
Operational
excellence
• Use innovation to continue to improve business efficiency
• Prudent management of stay-in-business CAPEX to
deliver value
• Capture economies of scale and further digitise our business.
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Contact INTEGRATED REPORT 2021
We are pursuing our long-term vision to create and contribute to a better
New Zealand by playing a leading role in the country’s decarbonisation journey.
Our Contact26 strategy was developed in the second half of FY21 and sets out
our plan of action for the five years until 2026.
The refreshed strategy is underpinned by two
structural shifts:
• Rio Tinto’s announcement that it would extend
the operation of New Zealand’s Aluminium
Smelter (NZAS) at Tiwai Point until at least 2024
provided much-needed certainty that a transition
away from the electricity sector’s reliance on this
significant source of demand (~13 per cent of
total electricity demand in New Zealand) could
be achieved in an orderly way.
• The continued acceleration in stakeholder
expectations and regulatory pressure around
natural resource management, particularly
climate change, and the drive for action to
reduce New Zealand’s carbon dioxide emissions.
Decarbonisation is combining with advances
in technology to accelerate the shift toward
electrification across the economy. Fossil fuel
input costs have rapidly risen, with carbon costs
doubling from $20 to more than $40 per unit over
the past two years. Gas prices are rising as supply
becomes less secure. Meanwhile, the cost of green
technologies has fallen, as new uses like green
hydrogen emerge and electric vehicle production
and availability gains scale (an EV battery is
expected to be 30 per cent cheaper in 2025 than
it is today).
The upshot is that clean, low-cost, renewable
electricity will be increasingly attractive and in
demand. Our strategy will reduce reliance on
NZAS and deliver decarbonisation by electrifying
New Zealand’s energy needs as well as new global
industrial supply chains.
Strategic themes
Our Contact26 strategy has four strategic priorities:
• We’re growing demand for New Zealand’s
renewable electricity in a range of ways.
• We’re developing new, renewable, flexible
electricity generation as the market evolves.
• We’re decarbonising our portfolio of generation
assets (and the New Zealand electricity market)
via an orderly transition to renewable generation
(managing the balance between continued
security of supply, minimal emissions and
affordability).
• We’re creating outstanding customer
experiences as we build New Zealand’s leading
energy and services brand to meet more of our
customers’ needs.
Strategic enablers
These priorities are underpinned by three
programmes of work that are our strategic enablers:
• a renewed commitment to environment, social
and governance outcomes, as we know strong
ESG credentials will help us create long-term value
• the continuation of our operational excellence
programme driving efficiency and best practice
• our transformative ways of working to attract
and retain talented people.
Why will we succeed?
The key capabilities that will allow us to move on
our Contact26 strategy, and set us apart from our
peers include:
• Knowledge and capabilities in decarbonisation
that provide us with a growth platform. For
example, through Simply Energy we provide
commercial and industrial customers with a
package of demand flexibility, long-term power
pricing agreements, and deep knowledge around
electrification options. We were also the first
gentailer to complete a large-scale industrial
electrification, working with our customer
Open Country Dairy on their new boiler.
• Renewable assets and a development pipeline
to back this demand. Our portfolio is able
to provide firm and flexible electricity supply
and low costs. Our hydro power stations deliver
low-cost electricity and flexibility and attract new
demand from new sources (e.g. data centres).
Our geothermal power is the lowest cost baseload
power in the market, and we believe our operating
costs are unmatched. We have a pipeline to build
on this with additional geothermal development
options, and our future pipeline of wind and solar
options is progressing too.
• Commodity risk management. We have
considerable flexibility in our portfolio, with our
hydro assets, demand flexibility capacity, and
thermal plant. This allows us to manage our risk
and make trade-offs between different fuel sources.
This will become more important as renewable
penetration grows and prices become more volatile.
Measuring success
Each of the strategic themes has a set of ambitious
measures that provide insights into the anticipated
areas of activity, and define what success will look like.
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We have set ambitious measures of success across our strategic themes
Grow demand
Grow renewable
development
Decarbonise
our portfolio
Create outstanding
customer experiences
Metrics and measures
• Senior in-house capability to
support industry electrification
partnerships by 2021
• 100 MW of new commercial
and industrial demand by 2025
• Identified 300+ MW of market-
backed demand opportunities,
replacing NZAS in the lower SI
by end of 2024 (e.g. hydrogen).
• Tauhara online by 2023
• Final investment decision on next
renewable build (e.g. Wairākei
geothermal, new wind, new solar)
by 2024
• Decision on North Island battery
by end of 2023, for delivery in 2024
• 100 MW demand response
capacity by 2025.
• Complete thermal review in 2021,
and executed by the end of 2022
• Top 10 ‘most trusted brand’
by 20252
• TCC decommissioned by end
• +650,000 customer connections
of 2023
by 2025
• Reduce Scope 1 and 2 GHG
emissions 45% compared to 2018
baseline by 20261.
• CTS < $120 per connection
• 75% of customer interactions
through digital channels.
1. SBTi target at 1.5 degrees.
2. As per Colmar Brunton Rep Track report, 2021 ranked 44th.
Contact INTEGRATED REPORT 2021
Strategic
themes
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Contact INTEGRATED REPORT 2021Strategic themes Grow demand
We are pushing for accelerated
electrification of New Zealand’s
economy through our own efforts
and investments, and working with
customers, partners and suppliers
to grow demand for renewable
electricity at their end. In this section
we discuss some of the opportunities
that are underway.
Study into green hydrogen
In December 2020 we announced a $2m, three-
part study into the feasibility of producing green
hydrogen in the lower South Island, in conjunction
with Meridian Energy.
The project is now officially called Southern Green
Hydrogen and in July 2021, Contact and Meridian
Energy released the first part of our feasibility
study and announced we are seeking registrations
of interest to develop the world’s largest green
hydrogen plant.
The first part of our study, conducted by McKinsey
and Co, found that the plant has the potential to
earn hundreds of millions in export revenue and
help decarbonise economies here and overseas.
Green hydrogen is regarded as the most promising
energy source to decarbonise sectors such as
heavy transportation and industrial processes that
currently rely on fossil fuels.
More than NZ$200 billion has already been
committed by governments and the private sector
around the world to support the development of
hydrogen economies. The report estimates global
demand could increase more than sevenfold
to 553 million tonnes by 2050.
We believe Southland has the potential to be at the
forefront of this growth opportunity when the Tiwai
Point aluminium smelter closes at the end of 2024,
freeing up large volumes of renewable electricity.
Economic benefits outlined in the report for
a 600 MW green hydrogen export facility include
a one-off addition of up to $800 million to
New Zealand’s GDP and the creation of thousands
of jobs in construction, as well as up to $450 million
and hundreds of additional jobs on an ongoing basis.
Green hydrogen production could support
New Zealand’s transition to a 100 per cent
renewable electricity generation system by
reducing hydrogen production when hydro lakes
are running low, allowing electricity to flow back
into the national grid to support local homes
and businesses. This flexibility would see hydro
generation replace coal and gas-fired generation
and reduce carbon emissions.
The Southern Green Hydrogen feasibility study is
ongoing, with two further reports being produced
later in 2021 – a technical study to understand how
to build and operate a large green hydrogen plant
in a safe and commercial way, and an electricity
market study to work out what role a large facility
might play in helping to manage ‘dry year’ risks
and get New Zealand closer to 100 per cent
renewable electricity.
Registrations of interest from organisations
around the world that may wish to participate
in the project close in October.
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Electrification of space heating
Space heating (e.g. open coal fires, gas radiant/
convective heaters, hot water radiator systems
in homes and commercial buildings) are another
major part of New Zealand’s energy use.
As with process heat, the electrification of this
part of the energy sector is expected to become
more economically enticing and set to accelerate
over the coming years. The Climate Change
Commission expects demand for electric space
heating to have increased by 3 terawatt hours
by 2035.
Our role is to help customers make the transition,
with the biggest wins set to be in large commercial
buildings. There is a lot of activity in this area,
much of it stimulated by the Government Investment
in Decarbonising Industry Fund (GIDI Fund),
a partnership between Government and business
Contact INTEGRATED REPORT 2021Strategic themes to accelerate decarbonisation and shift all building
heat away from reliance on fossil fuel heating.
As carbon prices grow and impact on heating
options, we expect many business and residential
customers to consider the benefits of electrification.
Decarbonising process heat
Process heat comprises 35 per cent of New Zealand’s
energy use, most of which is supplied by burning
high-emission fossil fuels. Through Simply Energy,
we work with companies across a range of industries
as they contemplate and take action to decarbonise
their operations where it makes sense. This includes
investigating and activating options to electrify
the heat required as part of industrial processes.
Our focus is initially on low temperature boilers,
which are most easily electrified.
There is huge potential to remove coal and
gas from these processes and replace it with
renewable electricity: for example, it is estimated
that the electrification of domestic food production
alone would require an additional 12.6 terawatt
hours of electricity and reduce New Zealand’s
carbon emissions by about 3 per cent1.
The Climate Change Commission’s recent
advice suggested all meat, retail food and dairy
production (a combined volume of around
5 terawatt hours) process heat would be converted
away from fossil fuels by 2035. We know that as
carbon costs continue to rise the economics of
electric boilers will become increasingly attractive
for industrial users.
Last year Simply Energy partnered with Open
Country Dairy in their Awarua expansion, providing
a long-term energy supply agreement to support
the installation of a 13 MW unit that is the Southern
Hemisphere’s largest electrode boiler.
With the new boiler, Open Country Dairy can heat
cold water to full steam in less than five minutes,
compared to six hours via a traditional coal-
powered boiler.
1 MBI Process Heat fact-sheet.
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We expect to see more appetite for process heat
electrification as carbon prices continue to rise,
and gas remains scarce. Simply Energy works with
customers on a broader approach too, offering
long-term pricing agreements with stable pricing,
bundled with demand flexibility options and fuel
switching technology. This makes the proposition
more attractive by allowing these assets to support
the grid and provide additional revenue to the
customer’s bottom line.
by manufacturers around the world. This will increase
consumer choice and competition, and the price of
an EV is expected to break even with a conventional
petrol car.
We will launch a lower, EV-targeted overnight tariff
for our customers to help them make the switch,
and we are working with our industrial customers
through Simply Energy to electrify their fleets where
it makes sense to do so. We’ve been electrifying our
own fleet too.
Attracting demand from data centres
As global data processing grows and increases its
electricity requirements, Simply Energy is working
on plans to attract new demand from data centres
in the lower South Island close to clean, low-cost
and reliable electricity.
Over half of our passenger fleet is already electric,
saving us money and emissions. We will be able
to electrify 100 per cent of the passenger fleet by
2023, and 100 per cent of Contact’s company fleet
will be zero emissions by 2030. The company fleet
includes non-passenger vehicles like utes.
Electricity makes up anywhere from 40–80
per cent of a data centre’s total running costs.
Many other countries have data centre industries
and have similar sources of electricity, including
Canada, Norway and Sweden.
There are some challenges around access to major
connections and latency. While this is improving
with increased investment and competition in
undersea cables to Australia and the United States,
this will remain a challenge for New Zealand.
Plans are underway to supply a 10MW data centre
in the lower South Island on a flexible load supply
agreement.
Decarbonising road transport
We are helping electrify and decarbonise
New Zealand’s road transport by supporting the
uptake of electric vehicles (EVs), and potentially
supporting hydrogen-fuelled heavy transport too.
EVs are a major source of new electricity demand,
identified by the Climate Change Commission as
requiring around 6 terawatt hours of electricity
by 2035. Between 2021 and 2025 more than
400 new EV models are expected to be launched
Contact INTEGRATED REPORT 2021Strategic themes Grow renewable development
Tauhara build proceeding
On the generation side, we’re focusing on the
successful build of the Tauhara geothermal power
station. The final decision to proceed was made
in February 2021, accompanied by $580m of
additional investment. We’re delighted that
market conditions now allow us to proceed with
this important development for New Zealand –
one which has been in the planning stages for
more than a decade.
We believe the Tauhara geothermal project
is New Zealand’s best low-carbon renewable
electricity opportunity. It will operate 24/7, is not
reliant on the weather and is ideal for displacing
baseload fossil fuel generation from the national
grid, which will significantly reduce New Zealand’s
carbon emissions.
Japanese engineering, procurement and
construction contractor Sumitomo Corporation is
partnering with New Zealand construction company
Naylor Love and Fuji Electric to complete around
60 per cent of the build activity. The remaining
40 per cent will be completed by a suite of
contractors across New Zealand, including the
central North Island and Taupō.
The development supports New Zealand’s
transition to a low-carbon economy as it provides
a foundation to support the country’s increased
electricity needs over the next decade.
We have 60 years of production experience from
operating the world’s second-oldest electricity-
producing field. Our acquisition of Western Energy
this year builds on these capabilities, and will help
us improve our well service capability and be even
more efficient with our production.
In FY21, 81 per cent of the energy
we generated came from renewable
geothermal1 and hydro sources,
and the remainder from thermal
generation. This was approximately
20 per cent of New Zealand’s total
electricity generation.
We are building new generation on the back of
demand growth, and also substituting baseload
thermal generation in New Zealand’s grid.
We believe investment in renewables will continue
to grow. Declining technology costs make it more
economical than ever to invest in renewables.
The ongoing scarcity of gas in the market also
means new, baseload, flexible generation is
increasingly important to New Zealand as it
delivers reliability and assists with the stability
of electricity supply.
The Government is very clear about its desire to
decarbonise New Zealand’s electricity production.
There is a strong appetite for new renewables to
be built and to displace thermal generation.
We are proven developers and operators of renewable
assets, and we are well-placed to deliver here.
We believe we are New Zealand’s lowest-cost
geothermal operator, and the natural developer
for new geothermal to support New Zealand’s
energy transition.
To continue to strengthen our capacity and
capability for major projects, we have established
a Major Projects Group. This group, headed by a
new General Manager Major Projects, Jack Ariel,
will oversee the execution of all major surface
engineering projects, starting with Tauhara.
Establishing the Major Projects Group is a key part
of our strategy for growth, to ensure projects are
resourced with the capability and skills to win and
are not distracted from their core purpose of safely
delivering projects on time, within budget and to
the specifications required.
1 Geothermal is something of an unsung hero in Aotearoa New Zealand, but it plays a crucial role in our generation mix and the transition away from fossil fuels.
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Contact INTEGRATED REPORT 2021Strategic themes
Beyond Tauhara
We are already thinking beyond Tauhara to our
next developments. This includes a pipeline of
wind, solar and geothermal options to make sure
we are well-positioned to capture the increased
demand for electricity with new, renewable assets.
North Island battery investigations
We are exploring ways to provide more flexibility
to the grid, and we see this becoming increasingly
valuable as the proportion of renewable energy
increases. One investigation is into the potential
development of a 50MW battery in the North Island.
Supplying geothermal process heat
Geothermal process heat is a way to deliver energy
in close proximity to geothermal sites without the
need for heat pumps or power plants. Directly
using geothermal energy is much less expensive
than using traditional fuels and it is also very clean.
In New Zealand there are industrial, commercial,
residential and agricultural applications including
timber drying, aquaculture, horticulture, milk
drying and space heating.
Through Simply Energy, we supply geothermal
process heat to Taupō businesses around our
geothermal power stations, including the Huka
Prawn Park, Tenon Sawmill, Nature’s Flame, Ohaaki
Thermal Kilns, Wairakei Terraces and Wairākei Resort.
In March 2021 we announced the highly regarded
wind generation experts at Roaring40s will work
exclusively with us to develop a pipeline of large-
scale wind farm opportunities in New Zealand over
the next six years. We have signed a contract with
a landowner for a potential wind farm site in the
lower South Island.
The Climate Change Commission believes
New Zealand needs around 10 terawatt hours of
additional wind generation by 2035. Our exclusive
partnership with Roaring40s puts us in a strong
position to meet this need given their experience
developing close to 70 per cent of the country’s
current wind sites.
In solar, we are in the process of securing consents
to build a pipeline of potential sites.
Geothermal energy remains important in the
transition to a low-carbon economy because
it provides low-emission baseload generation,
unlike weather-dependent renewable sources
such as wind, solar or hydro. In geothermal, we
have a range of options to consider. These include
doing nothing further, building a new plant on
the Wairākei field, or potentially extending our
operations on the Tauhara field.
As we work through the options, we will
continue to work closely with iwi, hapū and local
communities. We are sensitive to impacts on land,
waterways and biodiversity; modern adaptive
management techniques help ensure these
are identified early so negative impacts can be
avoided, reduced or mitigated.
The ‘green flexibility’ of a battery is becoming more
favourable as thermal generation capacity exits
the market and is ‘replaced’ by intermittent wind
and solar generation. The costs of technologies
like batteries are falling quickly too, making an
investment like this more attractive.
Growing demand flexibility
Through Simply Energy we continue to grow our
demand flexibility platform – and we now have
more than 30 commercial and industrial customers
signed up providing a total portfolio of 13MW.
Simply Energy has identified 400MW of potential
flexible load, and we expect the demand flexibility
portfolio to grow to 100MW by FY24.
This platform enables commercial and industrial
customers to automatically reduce power
consumption from equipment such as pumps,
fans and compressors during high-electricity
demand periods and reduce fossil fuel generation
as a result. Innovation in technology has reduced
the cost of the associated equipment by around
90 per cent, opening up this market further.
When supply is tight, the platform can provide
a more sustainable option than ramping up
thermal electricity generation to balance the grid.
Customers are paid to reduce grid emissions by
being flexible with the electricity they consume
so it is a win-win.
We know our customers value opportunities that
make it easy for them to contribute to reducing
New Zealand’s emissions by being flexible with their
operations, and to reduce their costs at the same time.
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Contact INTEGRATED REPORT 2021Strategic themes Thermal portfolio
operations; aligning ourselves with decarbonisation
is the best way to create long-term value for our
shareholders and for New Zealand.
We are also cognisant of supply constraints and
the need for an orderly transition away from
thermal generation, without threatening the
stability of supply or affordable access to energy.
In New Zealand there continues to be strong
reliance on thermal generation when intermittent
renewables cannot meet demand.
We expect to close TCC in 2023 when the geothermal
power station at Tauhara is commissioned.
TCC is due for an expensive refurbishment and
input costs will escalate as gas and carbon costs
continue to increase. This closure will reduce our
emissions footprint and help us meet our recently
updated science-based targets.
We need to find the best operating model for
our remaining thermal assets.
The thermal transition for New Zealand
As thermal generation exits the market, pushed
out by lower-cost intermittent renewables,
New Zealand will continue to have sufficient
energy in the grid but may be exposed to sub-
optimal levels of capacity to meet peaks in
demand or dry periods.
Our view is that baseload thermal assets are set
to become less economical with rising gas and
carbon costs, but the flexibility provided by fast-start
thermal ‘peakers’ will remain critically important
over the short and medium term. They will play
an important role in ensuring the orderly transition
to renewables without negative impacts on price
and security of supply. However, these assets will
be used less frequently.
The market’s current operating model for thermal
generation, where many owners hold a broad set
of assets that operate independently, may not be
optimal. Owners of thermal assets will struggle to
make an economic return and the market will see
higher and higher prices to claw back the fixed
costs of running these assets when they are needed.
We lead by example by making
our operations more efficient,
minimising adverse impacts on
communities and the environment,
and walking the talk – if we expect
our customers to decarbonise, we
must take the journey too.
We have led the way by closing higher-carbon
generation assets and developing new, low-
carbon ones. Over the past 13 years we have built
geothermal generation at Te Mihi and Te Huka and
have works in progress at Tauhara. We’ve closed
thermal power stations, developed underground
gas storage and built two highly efficient gas-fired
peaking plants.
In FY21 we put in place arrangements to reduce
carbon emissions through gas tolling with Nova
Energy. This will see a significant tranche of
electricity generation switched away from high-
emissions generation at Nova substituted by
efficient, lower-emissions generation by Contact.
Thermal asset review
In February 2021, we announced plans to review
our portfolio of thermal assets: Taranaki Combined
Cycle (TCC), Stratford Peakers, Te Rapa and the
Whirinaki Peaker Plant.
This ongoing review aims to find the best way for
us to operate these assets. It is grounded in our
desire to create a sustainable future for Contact’s
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We believe there is an opportunity for the market
to reassess the role of thermal generation as
it transitions towards 100 per cent renewable
generation. One idea we have developed is to
consolidate New Zealand’s thermal generation
arrangements into one entity. This new entity
(‘Thermal Co’) would encourage electricity
generation from coal and gas-fired plants
in ways that are aligned with New Zealand’s
decarbonisation objectives, and in an orderly
way that is affordable, ensures ongoing stable
electricity supply and provides risk coverage.
We’re underway with discussing the Thermal Co
idea with various stakeholders.
Contact INTEGRATED REPORT 2021Strategic themes Creating outstanding
customer experiences
We play a vital role for hundreds of
thousands of New Zealand homes
and businesses that rely on the
electricity, gas and broadband that
we supply. We help them warm
their homes, power their businesses,
and connect with their communities
and the world.
We listen to our customers and align our services
and our people capability with this. Access to our
services is fair, easy and customer-inspired.
We offer a broad range of products and services
to meet different customers’ needs. We work with
customers to understand their circumstances and
find the right plan that suits their needs.
Growing customer engagement
We are the largest single-brand electricity provider
in New Zealand. Over the past five years we have
improved our engagement with customers, with
our Net Promoter Score (NPS) at +31 on 30 June 2021.
Another useful indicator of our customer
satisfaction is our customer switch rate, which
measures customers leaving Contact. Our switch
rate for FY21 was 18.1 per cent, which is 13.6 per cent
below the market average. Our switch rate was
up 10.6 per cent compared with FY20 (an atypical
year because of COVID-19) but down 2.4 per cent
compared with FY191.
In April we were pleased to be awarded the
Reader’s Digest Award for the most trusted
electricity/gas provider in the country. On the
flipside, in June we were rated the lowest in
Consumer NZ’s annual power company satisfaction
survey with 42 per cent of our customers ‘very
satisfied’ and 40 per cent ‘somewhat satisfied’.
We have met with Consumer to find out more
and we acknowledged that we want to do better.
What we’ve done
We focus on creating outstanding customer
experiences by simplifying our customer journeys
through digitisation, making it easy for customers
to bundle broadband with their gas and electricity,
and providing smart solutions that create a better
energy future.
Digitisation
Our end-to-end customer journeys programme is
streamlining the experience for customers, making it
easier for them to engage with us digitally, fixing pain
points, and simplifying labour-intensive processes.
More than 60 per cent of our interactions with
customers are now through a digital channel. Many of
our customers now use our apps and website for self
service, with more than 100,000 active monthly users.
1 The statistics do not include former energyclubnz customers who were transferred to Contact in the middle of 2020.
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The Contact mobile apps continue to provide
excellent experiences for our customers, top-rated
among all New Zealand energy companies in the
Apple app store (4.7 stars) and top-rated among
tier one energy providers in the Google Play store
(4.2 stars). This success eases demand on our
traditional phone and email service channels.
Some of the wins on this front include:
• Self-service refunds: Customers can ‘self-serve’
refunds through our apps and website without
having to call us. This has resulted in a 55 per cent
increase in self-service.
• Faster CSR journeys: New digital journeys for our
Customer Service Representatives have reduced
the average handling time for customers looking
to join Contact or change their account to a new
address.
Contact INTEGRATED REPORT 2021Strategic themes • Improved billing emails: We made these easier
to understand and highlighted important
information. In the first month of using the
new emails we saw customers using our website
increase by 48 per cent and app use increase
by 10 per cent.
• Online messaging: We introduced new customer
service channels using Facebook Messenger and
WhatsApp. These instant messaging tools help us
respond faster as we can talk customers through
issues in real time and they are fully integrated
with our call centre platform. The project has
seen a 16 per cent efficiency increase in our
service delivery, alongside a 20 per cent reduction
of inbound email.
We are rapidly shifting our customer sales activity
from traditional to digital channels. This helps
ensure customers sign up for the most suitable
products and services at the right price, while
helping us reduce customer acquisition costs.
We have also stopped door-to-door sales.
Credit checking
We have introduced comprehensive credit
reporting. This ensures we consider good payment
behaviour alongside any issues. For example, we may
now take on a customer who has an unpaid bill from
several years ago but has since paid all their bills on
time. As a result we are now onboarding more than
50 additional customers each week.
Customers who fail a credit check are all still able
to use our PrePay product, which enables them
to access most of the same products, prices,
discounts and rewards as other customers.
Success in broadband
In the past four years we have grown broadband
from zero to more than 50,000 customer
connections. We are New Zealand’s fastest-
growing broadband provider.
our provider Devoli. This ensures customers
are connected faster and improves the overall
customer experience.
Our success in broadband is the result of
continually improving our broadband products and
delivering the best possible customer experience,
supported by a commitment to staff training and
dedicated marketing and IT support.
Supporting customer wellbeing
We’re committed to being accessible to all
New Zealanders and businesses, with a focus on
how we can best support our customers, and we
make every effort to ensure no customers will be
left without power. We know we have an important
role in helping those most in need to keep their
lights on and their homes warm. We also know
that ‘one-size-fits-all’ isn’t the best way to serve
our customers or New Zealand.
If anyone needs help paying their bill, we
encourage them to get in touch so we can discuss
their options, including our range of plans and
ways to pay that may help manage energy use.
We help customers having a tough time financially
to maintain their credit rating and we deploy a
wide range of tools to help people stay connected.
This includes early and proactive intervention,
different payment options, PrePay services, health
and welfare checks for customers, EnergyMate
energy assessment referrals, and working with
support agencies including the FinCap budgeting
service and Work and Income.
We’re also involved in ERANZ’s Vulnerable and
Medically Dependent Consumer Working Group,
which brings together people from across the
electricity sector, government departments,
regulators, and community organisations to drive
continuous improvement in the support provided
to customers in need.
This year we enabled automation of broadband
orders from customers straight through to
Our range of payment options make it easy for
customers to smooth out the cost of their bills,
1 Note these numbers do not include customers on prepay.
align bills and due dates with pay days, or to opt
for PrePay for more control. We also check whether
customers are on the right plan to meet their
needs and whether switching to a different plan
or payment option might help.
More than 5,500 customers are now on weekly or
fortnightly payment plans, up from 602 two years ago.
We’ve also had more than 5,000 customers sign
up for PrePay since it launched in September 2018.
About 30 per cent of these customers would
previously have been unable to access energy
from us because of their credit history.
For some customers, PrePay helps them to retain
access to energy by repaying debt at a rate and
timeline that suits their budget, with no additional
charges or fees.
We made a simple change to our automated
disconnection process in June to help PrePay
customers who are on welfare benefits. Moving
automated disconnections to a different day
of the week saw the volume of weekly PrePay
disconnections fall by between 70 and 100 and
ensured more of our customers stayed connected
(and avoided reconnection fees).
Managing customer debt
We know complex issues are at play when it comes
to customer debt, and we take a responsible
approach. We help customers manage their existing
debt with repayments over a period that works for
them, and without debt-related fees or charges.
We only move to disconnection as an absolute last
resort, and for this small proportion of residential
customers their average balance in the final
quarter of FY21 was $549, down from $600 in
the same period of FY20.
We work hard to help customers who are
disconnected get reconnected. In the final quarter
of FY21, 53 per cent of customers were reconnected
within 24 hours, up from 45 per cent a year ago1.
This year our net bad debt write-offs were less
than $1.2m, compared to $3.4m last year.
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Contact INTEGRATED REPORT 2021Strategic themes Responding to energy hardship
We are proud of our work with ERANZ on
EnergyMate, a free in-home energy coaching
service for consumers at risk of energy hardship,
struggling to pay their power bills or to keep
their homes warm. The programme is funded by
electricity retailers like us, as well as lines companies
and the Energy Efficiency and Conservation
Authority (ECCA), and delivered by community
organisations.
In 2019, ERANZ piloted EnergyMate in 150 homes
in Auckland, Wellington and Rotorua. In April 2021
the Government announced plans to help expand
the programme tenfold to reach more than 1,500
families this year. A key element of this expansion is
a greater focus on Māori and Pasifika communities,
through Whānau Ora and Pasifika services
affiliated with FinCap.
Privacy
Privacy is very important and is becoming more
so as the world becomes increasingly reliant on
digital communication. We are guided by our
Tikanga and take responsibility for looking after
and respecting all personal information that we
manage. We expect our people to comply with
the Privacy Principles set out in the Privacy Act
2020 and we have two Privacy Officers to assist
in driving and managing our privacy practices.
Over the past year, we have been focused on
getting ready for the changes brought into effect
from December 2020, while improving our overall
privacy policies, procedures and training.
We are reporting on privacy complaints and
breaches in our Sustainability disclosures.
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Contact INTEGRATED REPORT 2021Strategic themes Strategic
enablers
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Contact INTEGRATED REPORT 2021Strategic enablers ESG
We know enhancing our strong environmental,
social and governance credentials will help us
create long-term value. It will also ensure we are
focused and not spread too thin – deliberately
pursuing some things, and also being deliberate
about what we are not pursuing.
We have renewed our effort on ESG over the past
12 months. We are in a good place here – we have
many ESG factors built into the DNA of the company.
This starts with our Tikanga – our commitment to
being a responsible organisation – and our built-in
reliance on natural resources and good people and
strong communities to sustain our operations.
It includes our market-leading efforts around
decarbonisation, integrated reporting, science-
based targets, carbon disclosure, diversity and
inclusion, site-based environmental management,
sustainability policies and our green borrowing
programme.
So when we say a renewed effort, it has been about
adding rigour and resources to many of the things
we have been doing for many years. It’s being
clearer and more deliberate. It has seen ESG factors
integrated into our priorities and recognised as a
key enabler – alongside operational excellence and
the way we work. We want to keep leading and
being recognised as a leader on this front.
Where we focus
The Contact26 strategy is grounded in a sustained,
conscious effort to lead decarbonisation for
New Zealand – and that means we will operate
in a sustainable way, and ensure a bright future
for the next generation.
For New Zealand, this means that we are acting
as good stewards of our environment and helping
As a significant New Zealand
company there is an increasing
expectation for us to pull our weight,
to understand our impact on the
environment, society and future
generations, and measure
our progress.
And we anticipate that the next generation will
have even higher standards and expectations of
companies like Contact.
Our families, our teams and our communities
expect us to actively demonstrate that we are good
corporate citizens who care about New Zealand.
In fact it’s more than actively demonstrating – it’s
living and breathing these things, and contributing
to making New Zealand a better place.
We know too that many – if not most – investors
are increasingly considering non-financial
sustainability-based measures, in combination
with traditional financial measures, when assessing
every company’s performance.
And of course, although these factors are labelled
non-financial, how they are managed or not
managed has measurable financial consequences
in terms of things like access to capital, risk and
reputation management, and efficiency.
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communities to thrive. We’ll do this by being
responsible asset managers, lowering our carbon
emissions, and investing into communities.
In practical terms, it means we help make good
things happen – an example of this is ensuring
access for the Central Otago Rail Trail near the
Clyde Dam. It means building a bioreactor to reduce
our impact on waterways. It means working hard
to look after our native species such as kiwi and
tuna (freshwater eels). And sometimes it means
making tough calls to close power stations, reduce
emissions and embrace the shift to renewable energy.
For our customers, it means giving them access to
affordable, clean and reliable electricity. It means
we value our customers, will work to ensure their
needs are met and will treat them fairly. A good
example of this is our set of customer pricing
principles where ESG has had a strong influence.
Contact INTEGRATED REPORT 2021Strategic enablers This includes making sure the prices paid by new
customers and existing customers are never too
far apart.
For our Contact people, this is about being a fair
and equitable workplace where people are proud
to work. Our people also want to be a part of a
successful organisation, they want us to walk the
talk and want to help us drive positive change.
Our strategy to decarbonise New Zealand provides
an exciting challenge for us all on that front.
Setting ESG metrics
We have a comprehensive set of metrics to track
our ESG performance set out in the table below.
A sustainable supply chain
Maintaining and developing a sustainable and
resilient supply chain is increasingly important,
especially as COVID-19 has led to greater
restrictions on access to international markets
and resources, and increased pressure on the
sustainability of local businesses and suppliers.
We must maintain access to the resources we
need to run our business, while also driving more
sustainable outcomes with our supply chain partners.
Contact purchases a wide variety of goods and
services. Our biggest purchases are electricity to
sell on to our customers and transmission charges
relating to transporting that electricity to our
customers. We also use a range of national and
international suppliers to help us maintain our
power stations and electricity supply, support our
connection to customers, and support the running
of our offices and overall business.
We have around 2,000 suppliers and approximately
5 per cent are offshore. In the past 12 months
we have developed a more robust approach to
sustainable procurement. We have developed a
Supplier Code of Conduct that we ask suppliers
to sign up to and have started to embed this
procurement approach into Contact. This
includes resources to help our people make more
sustainable and balanced decisions in purchasing,
assist with identifying key suppliers to partner with
to improve environmental and social reporting and
impacts, and increase understanding of our supply
chain and its dependencies. Data on supply chain
impacts is in our Sustainability disclosures.
Environment
Social
Governance
• We will reduce our Scope 1 and 2 carbon
emissions by 45% by 2026, compared to 2018
when we first set our targets.
• We will displace 1PJ of industrial heat with
electricity by 2022.
• We will move our geothermal generation
operations off the Waikato River, reducing
our impact on the river system by 2026.
• We are electrifying our fleet. 100% of Contact’s
company fleet will be zero-emissions by 2030.
The company fleet includes non-passenger
vehicles like utes.
• Through our partnership with Drylandcarbon,
we will plant 20,000 hectares of economically
marginal land by 2024. This equates to
30 million tonnes of carbon dioxide removal
over the lifetime of the 40-year partnership.
• We will plant an additional 100,000 native
trees by 2024.
• We want to be a world leader in renewable
energy development. Our goal is to be 95%
renewable by 2025.
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• We will support a minimum of 100 community
initiatives and organisations each year. In FY21
we supported 123 through sponsorship,
donations, grants, and volunteer time.
• We directly spent $163,000 on energy hardship
initiatives in FY21.
• We have products that suit a range of customers
and do not discriminate on the basis of credit
history. Our target is to on-board 96% of
customers who come to us for energy services.
• We will work to try and ensure that no modern
slavery exists in our supply chains. In March
we signed an open letter calling on the
government to legislate against the use of
slave labour.
• We are ensuring Contact employees and
contractors are paid a fair and equitable wage.
• We are ensuring a minimum 40:60 gender split
throughout the company – Board, leadership
team, senior managers and across all of our
people. We are also focusing on STEM and
technical trades to ensure a 40:60 gender
balance in our apprenticeship and training
programmes.
• We will actively work to remove bias from our
recruiting processes and systems.
• We will maintain our Rainbow Tick accreditation
as an inclusive workplace for LGBTTQIA+ people.
• We have converted all of our bilateral lending
facilities to sustainability-linked loans and
certified all debt as green.
• We are targeting inclusion in the Dow Jones
Sustainability Asia Pacific Index by FY22.
Contact INTEGRATED REPORT 2021Strategic enablers Supporting community wellbeing
We live, work and operate in communities across
New Zealand, and we know our actions impact on the
people and environment around us. Our philosophy
is to ‘be the neighbour you’d want to have’.
tangata tiaki (guardians) of their cultural resources.
Delivering on these agreements is important to
maintaining our social licence to operate. While
they outline the minimum we should be doing, we
always aim to do more – as a good neighbour would.
This means respecting the rights of others,
ensuring the safe and best practice operation
of our sites, and making a positive contribution
to the communities we call home. It’s all part of
being a responsible New Zealand company.
As a good neighbour, our approach is to be upfront
and transparent, and to invest locally into issues
that matter to our people and our communities.
We have community engagement plans for 100
per cent of our operational sites. These plans guide
our approach to stakeholder engagement, identify
our key stakeholder groups, and include initiatives
such as regional partnerships and site sponsorship
programmes. We also have a staff volunteer
initiative called Community Contact, so our people
can contribute time to community initiatives that
they care about.
This year we spent $430,000 in the community
and supported 123 organisations and initiatives
through sponsorship, donations, partnerships,
and staff volunteering. Our people spent 733 hours
volunteering.
As we begin construction of the Tauhara power
station, re-consent our Wairākei operations and our
peakers in Stratford, and look to new renewable
development opportunities, we will ensure we
minimise our impacts on the communities
around these projects, and maximise the benefits.
Community buy-in is critical in obtaining and
renewing consents.
We have mitigation agreements in place with
various community organisations and tangata
whenua where we operate, which outline our
commitments to offset our impacts on stakeholder
groups. For example, agreements with tangata
whenua outline how we will mitigate cultural
impacts and engage with tangata whenua as
Our project teams also have comprehensive
stakeholder engagement processes in areas where
we have new developments or re-consenting
underway. These processes are about identifying
our impacts and looking at how we avoid, offset
or mitigate any issues that arise.
In Taupō, we have established a new employment
and training programme. Ka Hiko (this means ‘to
spark’) is an initiative we are running in partnership
with our contractors, which came about as a result
of feedback from tangata whenua that they want
training and employment opportunities for whānau.
We foster open, respectful, reciprocal relationships
using our Tikanga to guide us. We work hard to
understand the needs and aspirations of our local
communities, and to ensure they understand how
our business works – and how we tick as people too.
We don’t always get it right but we front up to
explain our approach and apologise where we
have made a mistake. For example, we accepted
responsibility for the accidental, unauthorised,
unlawful discharge into the Waikato River in
February 2019, for which we were fined $162,500
by the Environment Court in December 2020.
Although we could not undo the incident, we have
put a lot of effort and resources (including more
than $2.5m) into putting things right as best we can.
As part of our sentencing, we committed to a
restorative justice process, and have been working
collaboratively with local authorities, iwi and
others in the local community to address their
concerns. In particular we worked alongside Ngāti
Tūwharetoa to understand the deep and wide-
ranging impacts of the incident on the stream and
river, their cultural connections to these taonga,
and their community.
We agreed to a suite of actions to respond to the
issues Ngāti Tūwharetoa highlighted in the cultural
impact assessment, including improvements to our
current ways of operating and interacting with iwi,
a wide-ranging environmental restoration effort
on the affected areas, and long-term initiatives to
strengthen our relationship and cultural competency.
We also apologised for upsetting the local
community, tangata whenua and environmental
groups near Reporoa following aerial spraying of
the Torepatutahi Wetland, a restoration project
we have been working on since 2014. The spraying
targeted invasive willow, however native plants
were damaged in the process. We have committed
to be more inclusive and collaborative in our
approach to managing this restoration project.
The Waikato Regional Council issued us with an
abatement notice to be more selective with our
restoration methods in the future.
We want to hear from our neighbours when times
are good and not-so-good. In addition to our social
media and website channels we have an 0800
number for communities around our geothermal
and hydro operations, which people can call 24/7
if they need us. We also have a formal complaint
process for environmental and community events
embedded in our risk reporting system.
Caring for kiwi
We entered an exciting new partnership with
Taranaki Kiwi Trust this year to help protect and
grow western brown kiwi populations and raise
awareness of their plight.
Without help, New Zealand’s most iconic bird
is likely to be extinct in the wild within two
generations. Community involvement and
engagement is essential for kiwi conservation,
and that’s the focus of the Taranaki Kiwi Trust.
Through our partnership, we are the main supporter
for the Trust’s education programme, where
secondary students create educational resources
to teach primary students about kiwi conservation.
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Contact INTEGRATED REPORT 2021Strategic enablers The programme encourages inquiry learning –
enabling students to get hands-on experiences
that will foster an interest in kiwi conservation,
and to create educational resources to pass on
the information to other schools.
The partnership aligns with our sponsorship of
the educational category in the Taranaki Regional
Council environmental awards, and enhances
our sponsorship of the Kiwi Contact education
programme in Wairākei.
Planting with a purpose
We joined forces with Ngāti Tūwharetoa to plant
300 native trees near a stream culvert on Huka
Falls Road in Taupō in September 2020.
More than 30 of our Wairākei team took part in
the planting through our Contact Community
Volunteer programme – alongside 50 students
from a local kura kaupapa and intermediate.
One of the things that made the planting extra
special was that we planted 16 different varieties
of tree, each with a purpose in traditional medicine
or kai – from beer-making (kawakawa, tī kōuka)
through to healing herb properties (makomako,
korokio, mānuka, patete).
This initiative followed on from our massive
planting of more than 6,500 mānuka seedlings
last year at the Waipuwerawera Stream, impacted
by the Karapiti slip at Wairākei.
Another epic Contact Epic
We hosted the Contact Epic – New Zealand’s
ultimate mountain biking challenge – at Lake
Hawea again in April. The Contact Epic is a 125km
race that attracts riders to the Queenstown Lakes
from around New Zealand each year. It is the
longest and most scenic mountain bike race in
New Zealand.
This year 620 riders competed in the Epic and the
shorter Classic and Traverse events. Among them
were seven of our own team wearing the Contact
jersey.
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$1,500 at the now famous Dingleburn Station tea
and scones aid station and the Girl Guides raised
$1,900 at the end-of-race bike wash.
Responding to climate change
Momentum to limit the extent and impacts of
global warming continues to grow in New Zealand.
This includes the projected physical impacts of
climate change and the transitional risks such as
regulatory change and shifting consumer behaviour.
As an energy company, climate change is a
material issue for our business. While more
than 80 per cent of the electricity we generate
at Contact comes from low-carbon renewable
resources, we contribute to climate change
through the burning of fossil fuels in our thermal
power stations, our vehicles and through other
indirect sources (such as energy use and travel).
We are a participant in the New Zealand Emissions
Trading Scheme, which means we purchase and
surrender units to cover our obligations.
In 2019 we commissioned the National Institute
for Weather and Atmospheric Research (NIWA)
to model the potential climate-change impacts
around our power stations and operational
sites based on two scenarios developed by the
Intergovernmental Panel on Climate Change
(IPCC). This information was used by our teams
to help identify the physical and transitional risks
and opportunities that climate change presents
to our business. We found that climate change
exacerbates existing risks in some areas, while also
posing new risks and opportunities. Our Contact26
strategy positions us well to respond to these.
The key risks and opportunities identified over
the short, medium, and long term are outlined in
Climate-related risks. We believe that as a business,
we can help fight climate change through both
reducing our own emissions, and supporting
decarbonisation of energy in New Zealand (see
Grow renewable development). This benefits our
communities, and also creates an opportunity to
grow demand for renewable energy, which as a
generator and retailer we are well-positioned to meet.
The race is known for challenge and adventure and
this year was no exception, with Mother Nature
shaking things up. Large inflows into Lake Hawea
just before the event meant part of the course
was impassable and the route had to be changed
– adding to the challenge for organisers as well as
riders.
A large part of the success of this event, which
Contact has supported since 2008, comes from the
efforts of the many volunteers that make it happen.
This year around $15,000 has been raised for the
volunteer groups and the Contact Epic Community
Fund, which will benefit individuals and not-for-
profit groups in the Hawea Community. On top
of that, during the race the local pony club raised
Contact INTEGRATED REPORT 2021Strategic enablers Reducing our carbon emissions
We are a member of the Climate Leaders Coalition,
and we’re committed to playing a role in the
decarbonisation of New Zealand.
In June 2021 we committed to ambitious new climate
change targets aligned with the goal of minimising
global warming to 1.5˚C and approved by the
Science Based Targets initiative. This sees the Group
aiming to reduce our Scope 1 and 2 emissions by
more than 45 per cent – a reduction of more than
500,000 tonnes of carbon dioxide on 2018 emissions.
The targets are one thing, but more importantly
they will be accompanied by action. We are well
underway with several projects and activities that
will reduce our emissions. This includes building
the low-emission, renewable geothermal power
station at Tauhara, as well as reviewing the future
of our thermal portfolio.
We are walking the talk with our TWoW programme
of flexible working, which has seen travel and
commuting emissions across the Group reduce by
57 per cent year-on-year (a reduction of 756 tonnes
of carbon emissions).
Since 2012 we have reduced our emissions from
generation by 57 per cent by closing down high-
emission power plants, prioritising low-emission fuel
options for electricity generation, and completing
emission reduction projects across our sites.
Details of our science-based targets
We use the Greenhouse Gas Protocol to measure
and report on our Group emissions. Scope 1
emissions are direct emissions from operations,
Scope 2 emissions are from the purchase and use
of electricity, and Scope 3 emissions are created
throughout our supply chain.
Our Group commitments are:
• to reduce absolute Scope 1 and 2 GHG emissions
45 per cent by 2026 from a 2018 base year
• to reduce absolute Scope 1 and Scope 3 emissions
from all sold electricity 45 per cent by 2026 from
a 2018 base year
• reduce Scope 3 emissions from use of sold
products 34 per cent by 2026 from a 2018 base year.
Achieving these targets will require us to displace
thermal generation with low-carbon renewable
generation, which will take time and investment.
Our Tauhara project is set to play an important role
in helping us meet these long-term targets too.
In FY21 our Group Scope 1 and 2 emissions were
13 per cent higher than the previous year. This was
due to a nationwide dry year, with low lake levels
meaning we ran our thermal power stations more.
Compared to our 2018 base year, our Scope 1 and 2
emissions were 11 per cent lower in FY21.
Our Group Scope 3 emissions increased year-on-year
by 100 per cent, mainly as a result of an increased use
of our swaption with Huntly power station.
There is a slight increase in emissions per MWh
for the period as a result of using more thermal
generation. Further detail on our emissions is
in Sustainability disclosures or in our GHG inventory
on our website.
Leading by example
Contact was the first New Zealand company
to sign up as a supporter of the Task Force on
Climate-related Financial Disclosures. We have
used their guidelines to guide our climate-related
reporting and have included a TCFD index in this
report to identify where material is reported.
We were also the first company in New Zealand
to establish a green borrowing programme. This
year we have expanded by establishing additional
sustainability-linked loans.
And in 2020 we became the first company in the
Asia-Pacific region to list our bonds on Nasdaq’s
Sustainable Bond Network.
We were also pleased to be recognised again
as one of the companies working hard to be a
sustainability leader in the 2021 edition of Colmar
Brunton’s Better Futures report.
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Contact INTEGRATED REPORT 2021Strategic enablers Emissions from electricity generation (tCO2e)
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2
1
Y
F
3
1
Y
F
4
1
Y
F
5
1
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
1
2
Y
F
Total group greenhouse gas emissions by Scope
(tCO2e) 2021
65.2%
Scope 1
34.7%
Scope 3
0.1%
Scope 2
Scope 1 – produced directly through our operations.
Scope 2 – emissions from purchased electricity.
Scope 3 – emissions in our wider supply chain.
Financial implications of climate change
In 2021, we reviewed and updated our scenario
analysis, based on the latest information such as
the Climate Change Commission’s recent research,
to further understand the financial implications of
climate-related risk on our business.
We formulated 12 potential scenarios using a
business-as-usual, 1.5˚C future, and 4˚C future to
help us understand the impacts of climate change
on revenue, assets, expenditure, capital financing
and lending.
We mapped this over the short, medium, and long
term looking at inputs such as the impact of the
Tiwai Point aluminium smelter closure, changes
to solar uptake, increasing carbon costs, changes
to demand, generation asset mix and more. This
analysis tells us that under all scenarios EBITDAF
will remain relatively flat in the short term, before
lifting again in line with assumptions on increasing
demand as a result of electrification post-2024
when the electricity supply contract for the Tiwai
Point smelter ends. Our analysis also suggests
that mobilising to help decarbonise New Zealand,
and limiting global warming to 1.5˚C, yields better
financial outcomes for Contact than a situation
where temperatures increase above 1.5˚C.
Our Contact26 strategy helps position us to take
advantage of the opportunities that decarbonisation
presents to our business, while also reducing
emissions from electricity in New Zealand in the
short to medium term. We have more detail in
Strategic themes. While there are many unknowns,
we believe our current strategy positions us well
to drive change, while maximising opportunity
for our stakeholders now and in the long term.
We have more detail on our climate-related risks
in our Sustainability disclosures.
Using water resources sustainably
Water is a precious resource that we share with
all New Zealanders. We rely significantly on access
to water to run our power stations and generate
electricity. Water holds both a practical and cultural
significance in New Zealand. Our stakeholders
want to know that we are using our water resources
in a sustainable way, ensuring that fresh water is
protected for future generations.
At our hydro facilities, water is passed through
our dams to generate electricity, which impacts on
river flow, freshwater species migration upstream
and downstream, and sediment. At geothermal,
we use geothermal fluid to generate electricity.
Through Simply Energy we also provide
geothermal fluid to other downstream users, such
as the Wairakei Terraces and Huka Prawn Park.
Cooling water is used at all of our power stations
to keep things running safely and efficiently. This
is reused or returned to the stream or river it was
taken from (and some evaporates). We also use
water in our offices, like most other businesses.
We have a Commitment to Water, which outlines
our principled approach to sustainable and shared
use of this resource. We maintain a water impacts
register at our operational sites and from that
we identify projects for improvement each year.
We measure our water usage dynamically and
also produce a holistic water dashboard each year
which measures our performance on a range of
water-related impacts from ecological integrity
to water security, water quality and more.
This financial year we used 15,435,820 megalitres
of water, 99 per cent of which is returned to rivers
or to geothermal reservoirs (non-consumptive),
with the remainder discharged in line with our
resource consents.
In FY21, we had a target to undertake four water
improvement projects. We completed two at our
Wairākei geothermal power-station, which resulted
in reducing our potable water-use at the site by
approximately a third. We undertook a number
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Contact INTEGRATED REPORT 2021Strategic enablers of ecological studies on the Waikato River to
understand our impacts, to work towards improving
them. We also completed a review at Whirinaki Power
Station to identify the most sustainable options
for our water discharges from the plant. We have
a project underway at Stratford power station to
improve the water treatment plant performance.
Protecting biodiversity
Biodiversity simply means the variety of all life on
Earth. It is important to us because our operations
have wide-ranging impacts on species and
habitats, which differ depending on the type of
generation, the region we are operating in, and
the local environment.
We had no water-related incidents in the financial
year, although we continue to address the impacts
of the Karapiti incident in 2019, whereby a large
amount of sediment was discharged into the
Waikato River (see Protecting biodiversity).
Non-consumptive water
usage (ML)1
Source/water use
2021
(ML)1
2020
(ML)1
Clutha Mata-Au River water2
15,098,980 16,624,902
Geothermal reservoir
69,180
75,992
Geothermal cooling water2
336,840
330,047
Total
15,435,820 17,030,941
Our Biodiversity Statement of Intent sets out our
intent and responsibility to protect the indigenous
species and unique ecosystems we impact. Our goal
is to have thriving and sustainable ecosystems
within all habitats that we influence. We do this
by ensuring that all of our sites have site-specific
biodiversity management plans and we engage
with local communities, work with external
partners and experts in biodiversity management,
and support community groups to achieve their
biodiversity goals.
The diversity of our operations results in a range
of different impacts.
At our geothermal operations in the Taupō region,
we impact on species that rely on warm ground,
such as thermotolerant vegetation, and our
discharges to freshwater can negatively affect
Total water usage3
2021
2020
Source/water use
Geothermal reservoir
River and surface water2
Water from third parties2
Council2
Discharge from all sources
Total
Withdrawal (ML)1
Discharge (ML)1 Withdrawal (ML)1
Discharge (ML)1
103,177
33,997
114,805
38,8134
2,509
321
7,594
113,601
1,536
283
34
116,658
18,727
52,724
15,476
54,2894
water quality. At our hydro operations on the
Clutha River, our greatest impacts are on fish passage.
At our thermal stations, our impacts on biodiversity
are minimal, however, we actively contribute to the
needs and aspirations of our community.
Our approach to biodiversity management is to
first look for opportunities under our control and
influence, then to support grassroots community
groups doing work in these areas. We invest in
youth near our operations by providing them
with hands-on experiences to educate and inspire.
For example, in Taupō, we support Kids Greening
Taupō and Kiwis for kiwi and enable local schools
to follow the life of kiwi from egg incubation to
release back into the wild.
We have established plans to mitigate our
biodiversity impacts for all our operational sites
and we report on our progress to the Board’s
Health, Safety and Environment Committee.
In collaboration with Waikato Regional Council,
we have continued to remove wilding pines from
geothermally significant land across Taupō, taking
the total area to approximately 78 hectares. We have
also planted 64 hectares with indigenous species
to boost indigenous flora and fauna across the
areas we operate in.
Across our sites in 2021 we caught 3,354 pests,
planted 29,068 trees, transferred 330 tuna
(freshwater eels) downstream in the Clutha
catchment (including 19 migrant tuna), and
transferred 51.8kg of elvers upstream of the
Roxburgh Dam. We have planted more than
125,000 native trees over the past three years.
To ensure their survival, this year we hand-released
(weeded and cleared by hand) around some of
the existing native plants.
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1 ML = Megalitres.
2 Fresh water.
3 Management of the use and impact on water is largely done through our resource consent compliance activities.
4 FY20 figure restated due to reporting error.
Contact INTEGRATED REPORT 2021Strategic enablers
TWoW
The success of our strategy relies
on our people being ready, willing,
able and excited to get things done.
We have great people, our employee
engagement is high, and we are
building our capability to support
growth.
A key enabler of our strategy is our Transformative
Ways of Working (TWoW) programme. This is
about making work at Contact more flexible for
our people, improving their work experience,
engagement, and productivity, and delivering
savings to the bottom line.
Our aspiration for a OneContact culture has
been fundamental to our approach with TWoW.
OneContact is about all of our people being
connected and inspired to support the delivery
of our strategy in a united way. How we support
and enable the success of our people is consistent
and inclusive – We are OneContact.
How we’re transforming ways of working
The ways in which we live and work have
fundamentally changed over the past 18 months
as we have responded to the COVID-19 pandemic.
Rather than go back to the pre-COVID-19 normal, we
are being deliberate about continually reimagining
and redesigning Contact towards the ‘next normal’.
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This is the basis of the TWoW programme. It is
much broader than just ‘working from home’.
At Contact we have the choice to work from
anywhere, as long as it works for the role and
we can do so safely and securely.
It’s not just about location either – we are also
redesigning what we work on, who we work with,
how we work and when we work.
We know that technology and digitisation
underpin TWoW and we have completed a highly
successful upgrade of our platform, moving to
Windows 10 and providing new equipment to
allow our people to work more efficiently. We have
also used RealWear VR technology to undertake
specialist inspections remotely where we haven’t
been able to bring global experts into New Zealand.
We are continuously watching out and adjusting
for any unintended consequences of TWoW too,
gathering data and insights to understand what’s
working and what needs more or different support.
As travel bubbles open, we support our people to
take leave to recharge and reconnect with family
and friends. If anyone finds themselves stranded
because of temporary travel bubble closures, we
will work with them and their leaders to minimise
any impacts. With the technology we have in place,
many of our team can continue to work while
offshore subject to certain restrictions.
We know from research that companies that
embrace flexible work practices are likely to be
well-positioned to sustain their operations, attract
more diverse talent, futureproof their culture,
create competitive advantage and succeed over
the longer term.
That has been our experience so far too. In our
people engagement survey tool, Peakon, Contact
was rated highly for ability to work flexibly (8.5/10)
and ability to work remotely (8.6/10). We have been
able to hire people who live in parts of New Zealand
where we do not have a physical office or site.
And we have also had minimal business disruption
during further regional COVID-19 alert level changes.
TWoW is also delivering financial benefits. It has
enabled us to downsize our offices in Auckland,
Levin, Wellington, and Dunedin, while still
providing space for people who prefer to work
from the office. In Wellington, where we’ve had
the biggest change, we have moved from
occupying four floors to just one.
In the past year, TWoW-related initiatives have
delivered $1.8m of recurring savings.
Contact INTEGRATED REPORT 2021Strategic enablers
Changing labour market
COVID-19 has changed the labour market and
we have seen fluctuations in the talent available.
In the initial stages we saw applications spike
for entry-level roles such as customer service
representatives. Conversely, the market has
become tighter for specialist talent and skills,
such as geothermal and digital expertise.
While we can no longer employ global talent as
easily as in the past, we are leveraging TWoW to
attract talent from previously untapped areas in
New Zealand and we are developing our current
people. In the long term we are optimistic the
international talent market will reopen and we are
working alongside Immigration New Zealand to
address talent shortages in the short term where
possible.
Embedding inclusion and diversity
We have an equitable work environment where
inclusion is deeply embedded and our people are
encouraged to be themselves.
Underpinned by our Inclusion and Diversity Policy
and Strategy, we have a wide range of initiatives to
drive greater inclusion and support for our rainbow
community, Māori, women and young people.
We have retained our Rainbow Tick accreditation
and are preparing for reassessment in August 2021.
The reassessment will give us insights into how
well we are doing at supporting and including our
rainbow community, and will help us keep building
an inclusive culture.
We celebrated Pride this year
with an internal campaign,
Pride in Contact. This built
on the great work we have
done to make sure we have
good policies, processes,
and systems to support our
rainbow community. It was
centred around our Pride
Flower, which symbolises unity and represents our
Rainbow Community, and we provided tangible
ways for our people to connect with and celebrate
Pride with a library of assets.
Gender FY21
Female
426
We continue to partner with Global Women on
the Champions for Change reporting initiative.
The Champions for Change 2020 Diversity Report
was published in late March 2021. The aggregate
2018 – 2020 data for the Champions group (those
organisations that participate) shows that female
representation has increased both proportionally
and in absolute numbers across work categories.
For Contact specifically, we achieved the gender
balance target of 40:60 women to men across half
of our work categories, but we need to improve
across the ‘Other Executives’, ‘General Managers’
and ‘Other Managers (tier 3 and 4)’ categories.
We continue to ensure that our systems are free
from bias and that our processes support inclusion
and diversity, and we know there is more work
to do. It’s a long-term strategy working toward
gender balance across all work categories.
Our work with iwi on our Māori Summer Internship
Programme continues. This programme
strengthens our bonds with iwi, and helps to
develop their people. For the 2020 programme
we had seven interns work with us during their
summer break – three from Ngāi Tahu, two from
Ngāti Tūwharetoa and two from Ngāti Tahu.
We continue to support our people’s participation
in WING. WING is a not-for-profit international
organisation promoting education, professional
development and advancement of women in the
geothermal industry. This year the focus areas
for WING are Equality, Industry Visibility and
Community Engagement. The members involved
from our Wairākei team have been supporting
the WING focus areas by launching a pilot for a
WINGwomen task force, participating in a WING
event during New Zealand Geothermal Week in
July, and hosting college-level internships (two in
Rotorua, two in Taupō).
Male
518
Undisclosed 1
Age diversity FY21
Undisclosed 1%
Under 30
19%
Over 50
33%
30–50
47%
Ethnicity1 FY21
40%
35%
30%
25%
20%
15%
10%
5%
0%
i
r
o
ā
M
n
a
i
s
A
a
k
fi
i
s
a
P
n
a
e
p
o
r
u
E
r
e
h
t
O
2
A
L
E
M
A
l
d
e
s
o
c
s
i
d
n
U
This year our Stratford site participated in the
Gateway programme with Stratford High School and
Hamilton Girls’ High School. Gateway programmes
1 Total % adds up to more than 100%. This is because
individuals can choose to identify multiple ethnicities.
2 African, Middle Eastern & Latin American.
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Contact INTEGRATED REPORT 2021Strategic enablers are for Year 11 to 13 learners who want to explore
job options while studying towards NCEA. The
students experienced different roles around the
site to see how learning at school can be practically
applied in the workforce, and were supported to
think about their career paths after school. We also
had a group of engineering student interns at our
Stratford site over summer, to help with projects
and gain practical experience towards their study.
Connexis ITO’s Girls with Hi-Vis (GWHV) is a
programme that aims to attract more women into
the trades by giving them the opportunity to see
options in the energy sector first-hand. In June this
year, our Wairākei team hosted the annual GWHV
event for the second time. Twenty-four students
attended the event, which gave them a peek
into the world of geothermal energy generation,
including a site visit to our Te Mihi station.
Students were able to learn about the geothermal
generation process and see the steam turbines
up close, followed by some group experiments
demonstrating the magic of geoscience.
Our culture and commitment to living our Tikanga
and behaviours across Contact are mentioned as a
strength through our people engagement survey
tool, Peakon. The average score for “People from all
backgrounds are treated fairly at Contact” is 8.7/10.
New leadership framework:
‘Shaping our Contact Community’
We know that great leadership is a critical
ingredient in the success of how we work, so we
have developed a new leadership framework called
Shaping our Contact Community.
This defines what leadership means at Contact
supports our OneContact culture, and is deeply
anchored to our Tikanga, behaviours, purpose
and vision.
We recognise that we are all leaders at Contact
and Shaping our Contact Community defines
how we constructively lead with open and honest
conversations, invest deeply in knowing ourselves
and others, openly and optimistically explore all
ideas, helpfully stand in the role of teacher and
student, and unanimously connect as OneContact.
The framework will help all of our people put their
energy where it matters, bringing our strategy to
life through great leadership – no matter where
they are working or what sort of work they do.
‘OneContact’ learning strategy
To be the leader that we aspire to be, we need our
people to be propelled by curiosity and to become
lifelong learners. We embrace learning as part of
our DNA and through our OneContact culture.
Our OneContact Learning Strategy is about lifting
our capability – identifying, mapping and planning
for the critical skills that are needed now and for
the future.
Over the next 12 months we will continue to build
on this new learning experience, providing the
tools and training to enable our people to focus
on their growth, and to help us deeply understand
our skills and capability gaps.
The OneContact Learning Strategy correlates
with what we have heard through our people
engagement survey tool, Peakon – our people
want more access to training and development.
When asked about their personal growth across
a number of factors including professional growth,
career pathways, opportunities to learn new skills
and a supportive manager or mentor, we achieved
a collective score of 7.2/10.
Employee health, safety, environment
and wellbeing
Our people, plant, communities and the environment
are our most important assets, so we have a robust,
world-class Health, Safety and Environmental
Management System (HSEMS) to ensure we have
plans and processes to keep them safe.
Our Peakon engagement survey tool enables us to
understand how our people feel about their health,
safety and wellbeing at work. Is it a priority? Can they
manage the impacts of work on their personal life?
Controlled TRIFR
FY18
FY19
FY20
FY21
1.3
2.1
2.1
3.3
Note: We have removed Rockgas from our data for comparative
purposes.
Monitored TRIFR
FY18
FY19
FY20
FY21
6.6
5.4
Process safety
Tier 1
Tier 2
Tier 3
18.8
21.5
FY21 FY20 FY19 FY18
0
3
0
2
0
2
0
0
49
24
58
56
Tier 1 – a significant loss of containment of hazardous material
or energy.
Tier 2 – a lesser loss of primary containment or a significant
degradation of barriers.
Tier 3 – learning event where issues have been identified in our
process safety barriers or controls.
Note: This table represents the number of process safety incidents
across our operations. The figures exclude any incidents occurring
in the Ahuroa Gas Storage or Rockgas LPG facilities.
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Contact INTEGRATED REPORT 2021Strategic enablers Does their mental and physical health allow them
to perform effectively at work? Looking across these
three indicators, we have a cumulative score of 8/10.
From the survey feedback we can see our people
feel well supported in managing their mental
and physical wellbeing, however, we need to put
more attention into health, safety and wellbeing
initiatives and programmes.
Measuring our HSE performance
We track our safety performance with two key
measures, our Total Recordable Injury Frequency
Rate (TRIFR) and Total Incident Severity Rate (TISR).
Total Recordable Injury Frequency Rate (TRIFR)
is a global measure that can be benchmarked
and monitors injury rates. However, it is a lagging
indicator that looks back rather than taking the
potential risk into account. As our TRIFR reduces,
it becomes less relevant to understanding how
our systems and culture are working effectively,
so while we continue to monitor and report TRIFR
we no longer set targets based on this measure.
We also measure Total Incident Severity Rate (TISR),
a leading indicator measure that gives us a much
better idea of exposure to risk by assessing the
potential severity of HSE and process safety incidents.
Our year-to-date TRIFR for controlled activity (work
done under our HSE management system, e.g. at
our sites or by our people) was 2.1. This included five
injuries. There were two minor and three moderate
injuries. Our TRIFR measure is calculated based on
hours worked (2.40m in FY21) and number of injuries.
Our TRIFR for monitored activity (work done by
our service delivery partners under their own HSE
systems) was 21.5, representing five minor injuries
and one moderate injury.
TISR assesses all HSE and process safety events and
considers both actual and potential consequences
so that we get a view of how well our defences are
working for our critical risks. TISR was 2,088 within
controlled activity in FY21.
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Contact INTEGRATED REPORT 2021Strategic enablers Operational
excellence
Our focus on Operational Excellence
enables us to make our operations
much more efficient. We have a
strong track record of being good
operators, and taking cost out of
the business where it makes sense.
Operational Excellence is underpinned by our culture
which is safe, innovative and brave. That includes
keeping our people safe; keeping our plant safe to
run; and fostering an environment where it’s safe to
challenge, innovate and fail, and to learn and evolve.
We continue to innovate to become more efficient,
including using digitisation and analytics to transform
operations across our trading, generation, and
customer businesses.
Some of the ways we’ve increased Operational
Excellence have included:
• using predictive modelling in the build of Tauhara
to help us to understand and plan for the right
maintenance, and improve the operation of
our assets
• piloting a ‘matrix’ type of working in our geothermal
business with outcome-based teams, linked to
TWoW
• working with Western Energy and Solenis on
mechanical and chemical geothermal well clean-
out technologies – improving the reliability of
these methods and reducing costs by as much
as 60 per cent compared with using a rig
• delivering better data for the optimisation of
our steamfields
• conducted robotics experiments to replace
manual and repetitive processes
• building on augmented reality/VR technology
(initially used to respond to COVID-19 restrictions)
for safety risk reductions, competency building
and training
• using analytics to understand our customers’
energy use and personalise what we offer them.
Financial performance
In FY21 we have continued to deliver solid returns
for our shareholders and made significant moves to
ensure the company is well-positioned for the future.
We successfully navigated the potential departure
of major energy users, the short-term issues
around low rainfall in the hydro catchments,
and the ongoing challenges around gas supply
to deliver a very strong financial performance.
• modelling hydrology and competitor behaviour
to start to simulate the market and optimise our
trading position
Our statutory profit for FY21 was $187m, up from
$125m last year, and EBITDAF1 was up significantly
to $553m in FY21.
• securing third-party gas tolling arrangements
to ensure that available gas is used efficiently,
thereby freeing up gas for industrial customers
The results are underpinned by smart channel
management to mitigate risks regarding access
to fuel, our flexible portfolio of gas-fired and
renewable assets, continued operational excellence,
strong asset availability, and a strong financial position.
We secured gas supply and leveraged our access
to stored gas to ensure we could continue to
generate electricity and help keep the lights
on when renewable generation options were
affected by weather and restricted gas supply.
Our ability to meet the grid’s demands for
generation from higher-cost fuel sources in a
constrained environment saw elevated wholesale
prices flow through to our financial performance.
We expect there will be continued reliance on
higher cost fuel sources over the short term, but
these will be displaced over the next two years
as 2 terawatt hours of low-carbon, renewable
generation plants, including our geothermal
development at Tauhara, come on stream.
An interim ordinary dividend of 14 cents per
share was paid in April 2021 and in August 2021
the Board approved a final ordinary dividend
of 21 cents per share (imputed by up to 14 cents
per share for qualifying shareholders) and this
will be paid to investors on 15 September 2021.
This means we are delivering investors a 35 cents
per share annual dividend, down slightly from
39 cents per share in FY20. The dividend policy
was updated by the Board in February 2021 and
targets a payout ratio of between 80 per cent
and 100 per cent of the average operating free
cash flow of the preceding four financial years.
Dividends (cps) – declared
FY17
11
15
26
FY18
13
19
32
FY19
FY20
16
16
23
23
39
39
FY21
14
21
35
1 EBITDAF is a non-GAAP (generally accepted accounting practice) measure. Information regarding the usefulness,
calculation and reconciliation of these measures is provided within note A2 and A3 of the financial statements.
Interim dividend
Final dividend
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Contact INTEGRATED REPORT 2021Strategic enablers In March we completed a $400m equity raise for
our capital investment programme as we look
ahead to other exciting renewable generation
developments. This injection of capital provides us
with the flexibility to execute on up to $800 million
of additional projects and we are actively looking
at how we can bring more development forward
in response to the clear market signals for more
renewable electricity.
We are excited about the future for Contact.
We’re a strong company with a clear strategy
and a host of opportunities in front of us. We have
a robust balance sheet, a portfolio of high-quality
and flexible assets and a very capable team.
Our regulatory environment
New Zealand’s regulatory environment provides
the framework within which our business operates,
and requires high standards of health, safety,
labour and environmental compliance.
We proactively monitor legislative and policy
changes to ensure we meet our obligations and
manage risks and opportunities. We also work hard
to maintain broad relationships across the political
divide, pull our weight with industry and business
organisations, and ensure our voice is heard by
regulators on behalf of our customers and investors.
Our approach is straightforward, open-minded and
evidence-based, in line with our Tikanga. We aim
to build sustained and trusted relationships with
external stakeholders who shape and influence
the environment in which we operate.
The last five years in review
For the year ended 30 June
Unit
Revenue
Expenses
EBITDAF
Profit/(loss)
Profit per share – basic
Operating free cash flow
Operating free cash flow per share
Dividends declared
Dividends paid
Total assets
Total liabilities
Total equity
Gearing ratio
$m
$m
$m
$m
cps
$m
cps
cps
$m
$m
$m
$m
%
20171
2,079
1,578
501
151
21.0
305
42.6
26
186
5,455
2,677
2,778
36
20182
2,275
1,794
481
132
18.4
301
42.0
32
201
5,311
2,584
2,727
35
20192
2,519
2,001
518
345
48.2
341
47.5
39
251
4,954
2,172
2,782
28
2020
2,073
1,627
446
125
17.5
290
40.4
39
280
4,896
2,275
2,621
31
2021
2,573
2,020
553
187
25.3
371
50.2
35
274
5,028
2,101
2,927
23
1 Restated figures reflecting the adoption of NZ IFRS 15 Revenue from Contracts with Customers and NZ IFRS 16 Leases.
2 Figures reflect the combined result and position for continuing and discontinued operations.
Some of the main themes that potentially affect
the business environment we operate in include:
• Climate change. The collective responsibility
of New Zealand to reduce carbon emissions and
meet local and international climate change
commitments, for example, Climate Change
Commission recommendations, and the
opportunities for the electricity sector to
support New Zealand’s decarbonisation.
• Energy hardship. This includes the Government’s
response to the Electricity Price Review and
associated recommendations and energy
efficiency initiatives such as ERANZ’s EnergyMate
programme and Hardship Fund.
• Renewable energy. This includes opportunities
to accelerate renewable generation investment
and remove thermal generation for the
New Zealand generation mix.
• Energy transition. This includes the Emissions
Trading Scheme, increased momentum around
electric vehicles, incentivising investment in
renewable developments and the electrification
of industry away from fossil fuels, and longevity
of demand from major industrial users.
• Sectors in transition. This includes the future
and longevity of demand from major industrial
users, electrification of agriculture and other
industrial processes, and the long process of
reworking transmission pricing.
• Improving environmental outcomes. This includes
new climate change legislation, ongoing reviews
of the Resource Management Act, the National
Policy Statement for Freshwater Management,
the National Policy Statement for Indigenous
Biodiversity and Three Waters Reform.
We are also committed to supporting New Zealand’s
economic recovery from the COVID-19 pandemic,
and we are ensuring stakeholders are aware of
our desire to reduce carbon, create jobs and invest
in electrification and renewable generation. This
extends to exploring green hydrogen opportunities,
as well as our Tauhara geothermal project.
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Contact INTEGRATED REPORT 2021Strategic enablers environmental bottom lines are set reasonably,
and that practical recourse to environmental
restoration, offsetting, and compensation for
unavoidable effects is provided. We are also aware
that our relationships with tangata whenua will
become even more important in light of their
increased role in natural resource management.
2019 ‘Undesirable trading situation’ claim
In December 2020, the Electricity Authority found
that an undesirable trading situation (UTS) had
occurred in the wholesale electricity market in
December 2019 due to the confluence of factors
that resulted in water being spilt by generators in
the South Island. At the time there was more water
than we could use for generation, given the Clutha
River was in significant flood. Our focus in extreme
flood events is always to operate the Clutha system
to ensure the safety of communities downstream,
our people and assets, and to manage our resource
consent obligations. The Electricity Authority is
now consulting on actions to correct the UTS.
In April 2021, the Electricity Authority closed a
separate High Standards of Trading Conduct
investigation that related to the same event with no
further action, having found no breach of the rules.
Resource management reforms
A fundamental reform of New Zealand’s resource
management system has been well signalled
by the Government and is proceeding quickly;
key provisions in the proposed Natural and Built
Environments Act (NBEA) were released in late
June 2021. This is set to be the primary replacement
legislation for the Resource Management Act 1991
and is expected to be enacted in 2022.
It is important that sufficient weight be given
to the role of renewable electricity generation in
decarbonising the economy and that effective
consenting pathways for renewable projects
are provided. There are many other issues and
opportunities arising from such an enormous reform
of environmental law and natural resource allocation,
including in relation to water and geothermal energy,
and we will continue to engage with government
and policymakers as the reforms progress.
At the same time the Wai 2358 Waitangi Tribunal
Inquiry into the Crown’s current and proposed
future handling of rights to geothermal resources
is recommencing, and Contact is registered as an
interested party to those proceedings. The outcomes
are likely to influence the approach taken to the
allocation of geothermal energy in the proposed
new resource management system and the role of
tangata whenua in its sustainable management.
Another significant new regulation for Contact
is the proposed National Policy Statement for
Indigenous Biodiversity (NPSIB). Many of our current
or potential future renewable energy projects affect
native plants, fish and fauna, and these are carefully
assessed, managed and mitigated by way of consent
conditions and our own environmental initiatives.
It is important that any new NPSIB finds the right
balance between the importance of biodiversity
protection and the need for new and protection
of existing renewable energy developments.
We remain engaged across national and local
resource management regulation changes
with particular emphasis on facilitating new
and existing renewables, ensuring that any new
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Contact INTEGRATED REPORT 2021Strategic enablers Governance matters
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Contact INTEGRATED REPORT 2021Governance matters Governance matters
Good corporate governance protects the interests of all stakeholders and
enhances short-term and long-term value.
We regularly review our corporate governance
systems and always look for opportunities to improve.
At 30 June, we comply with the recommendations of
the NZX Corporate Governance Code in all material
respects. You can see our full reporting in our
Corporate Governance Statement on our website.
Board composition
The Board consists of seven directors, all of whom
are independent (i.e. none of the factors described
in the NZX Corporate Governance Code that may
impact a director’s independence apply to any
Contact director).
Our Board
The Board’s role and responsibilities
The Board is responsible for Contact’s governance,
direction, management and performance.
Specific responsibilities include:
• Setting and approving Contact’s strategic
direction
• Approving major investments
• Monitoring financial performance
• Appointing the CEO and monitoring CEO and
senior management performance
• Ensuring appropriate systems to manage risk
• Reviewing and approving compliance systems
• Overseeing our commitment to our Tikanga,
sustainable development, the community and
environment, and the health and safety of our
people.
In March 2021, Whaimutu Dewes retired from
the Board and was replaced by Rukumoana
Schaafhausen. Rukumoana brings valuable
skills that complement the expertise of the other
directors on the Board. In March 2021, Dame Therese
Walsh announced her resignation from the Board
this year. Contact’s succession planning process
culminated in the appointment of Sandra Dodds
to replace Dame Therese as Chair of the Audit and
Risk Committee.
Following an independent review by Korn Ferry
in 2021, the Board refreshed Contact’s director
skills matrix, which sets out the skills necessary
for Contact’s success and assesses each director
against this. It’s not expected that every director
will be an expert in every area, but all skills should
be represented in the Board as a whole.
The matrix shows a good spread of expertise
and secondary skills among current directors.
In addition to the skills in the matrix, all seven
Contact directors have strong governance expertise.
“Contact’s strong governance systems and the robust process to
ensure discussion and deep dives on key risks.” Dame Therese Walsh, Director
“Developing and approving the
new Contact26 strategy, which
underpins our plan of action
for the company’s success over
the next five years. At the same
time the TWoW programme
has ensured a massive change
to embrace a more flexible
workplace while improving
productivity and the bottom line.”
Robert McDonald, Chair
Board performance
We regularly review the performance of the Board
to ensure the Board as a whole and individual
directors are performing to a high standard.
An independent review was carried out by Propero
late in 2019. The results were reported in confidence
to the Board in early 2020. The next independent
review is scheduled to be carried out in early 2022.
We recognise the value of professional
development and the need for directors to remain
current in industry and corporate governance
matters. Contact assists directors with their
professional development in a number of ways,
including an induction programme for new
directors, briefings to upskill the Board on new
developments, deep-dive workshops on key issues
and Board study tours.
A fund is available for director development
opportunities, and the Chair may approve
allocations from the fund for opportunities that
benefit both Contact and an individual director.
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Contact INTEGRATED REPORT 2021Governance matters Strategic Focus
Director Expertise
Governance Capabilities
Brand value and
customer experience
Brand identity and value. Deep customer insight and advocacy including in energy poverty. Understands
generational shift and the impact on customer drivers. Retail growth and transformation expertise including
customer-centric experience design, data analytics, digital marketing, sales, and agile retail. Skills to support and
challenge progress towards improving the customer experience and reducing cost to serve.
Energy sector including generation,
renewables, and wholesale energy
markets
Leadership experience across the energy sector including in a generation portfolio of geothermal, hydro and
thermal, energy markets, supply/demand and commercial and industrial customers. Core understanding of
key drivers in value creation and prediction of market needs, moving towards a sustainable renewable energy
business model. Operational risk management including health and safety.
Primary
Secondary
Asset infrastructure
Portfolio efficiency
Capital markets, investment
community and ESG
Government and regulation
Experience successfully leading energy sector or adjacent companies (e.g. physical infrastructure, new
technologies, engineering and construction), large scale projects, investment and management. Skills to
support and challenge in project investment, build and industrial maintenance.
Expertise in cost base reduction and increasing flexibility of an asset portfolio with sustainability at the forefront.
Proven track record in cost out, improving reliability and resource utilisation while maintaining safety. Ideally
experience in process improvement in resource environments.
Significant investment community experience. This spans finance, communications and securities law to enable
the most effective two-way understanding of, and communication between, the company and the financial
community, contributing to fair valuation and ability to gain buy-in for future strategic shifts. Experienced in
sustainable investing and with the ESG data toolkit for identifying risks, informing solutions and impacting
valuations, brand value and reputation.
Ability to engage effectively and collaboratively with key government stakeholders. Brings an understanding of
legal, policy, and regulatory environments that Contact operates in. Insight into non-financial risks around climate
change, natural resources scarcity, pollution/waste and ecological opportunities.
Iwi connection and relationships
Iwi connection and relationships to develop shared understanding of kaitiakitanga and collaborative investment
into resources.
Executive experience
Financial expertise
IT, digital and new technologies
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Former CEO or C-suite executive with excellent track record of growing value, leading with purpose, strategy
development and execution, including investing in people, leadership of culture, and effective delegation.
Experience in international markets.
Finance and accounting experience of large companies including transformation and cost optimisation.
Expertise in M&A, project financing and/or wholesale commodity markets. The skills to chair the Audit and
Risk Committee.
Contemporary digital ecosystem platforms and systems to support lean operations, automation, security
management and customer innovation. Skills to support and challenge in capital investment plans, technology-
enabled operational efficiencies and service improvements. Strong exposure to trends in new energy
technologies, cleantech and new products that support decarbonisation including the developments in
transmission and changing nature of the ‘energy corridor’.
Contact INTEGRATED REPORT 2021Governance matters “The increasing recognition
of the role that ESG plays in
Contact’s success and the focus
on strong governance for ESG
matters. As Chair of the Safety
and Sustainability Committee,
one thing that stood out in
particular was the HSE Culture
review with its focus on the
wellbeing of our people.”
Elena Trout, Director
Board committees
The Board has four standing committees to
perform work and provide specialist advice in
certain areas. Our Board works to the principle that
committees should enhance effectiveness in key
areas, while still retaining Board responsibility.
This financial year, we carried out a review of
Contact’s governance systems, to ensure the
Contact Board receives the right information in
a timely manner to help enable good decisions
to be made (the Governance Review). Part of
the Governance Review involved looking at the role
of the Board and Board committees, ensuring that
the right committee receives the right information
at the right time and that the flow of information
and decisions through the committees to the
Board contributes to effective decision-making.
This resulted in some changes to the way we
do things, effective from 1 July 2021.
The Audit and Risk Committee (ARC) helps the
Board fulfil its responsibilities relating to Contact’s
external financial reporting, internal control
environment, business assurance and external
audit functions, and risk management.
The Safety and Sustainability (HSE) Committee
supports the Board in relation to HSE objectives
and monitoring HSE performance. For FY22, the
mandate of this committee has been widened to
include oversight of ESG matters and it has been
renamed the Safety and Sustainability Committee.
This reflects the importance Contact places on ESG
performance. The committee also has oversight of
climate related risks and opportunities.
The People Committee advises and supports the
Board in fulfilling its responsibilities across all aspects
of Contact’s people and capability strategies, risks,
policies and practices. In FY21, this Committee
also had responsibility for Board composition,
performance and remuneration, but those
functions will move to the full Board from FY22.
In FY20, the Board established the Tauhara Board
Committee, reflecting the strategic importance of
the Tauhara power station project. In October 2020,
this Committee’s mandate was widened to include
all major growth projects and opportunities.
The current members of the committees are:
Committee
Members
Audit and Risk
Safety and Sustainability
People
Development
Dame Therese Walsh (Chair)
Victoria Crone
Rukumoana Schaafhausen
Elena Trout (Chair)
David Smol
Rukumoana Schaafhausen
Jon Macdonald (Chair)
Robert McDonald
Dame Therese Walsh
David Smol (Chair)
Elena Trout
Jon Macdonald
Code of Conduct and policies
We expect all of our people to act honestly,
with integrity, in Contact’s best interests and
in accordance with the law, all the time. This
expectation, along with our Tikanga, is enshrined
in our Code of Conduct, which underpins our
corporate policy framework. We set new corporate
policies to address key risks and set expected
standards of behaviour for our people. Information
about how our key policies operate is in our
Corporate Governance Statement and the policies
themselves are on our website.
In FY21, we refreshed our Protected Disclosure
(Whistleblowing) Policy, which offers protections
for employees who disclose serious wrongdoing
in accordance with the process in the policy, and
we replaced our old whistleblower hotline with a
new online portal to help ensure we’re aware of
any breaches of the Code of Conduct, our policies
or any other illegal or unethical activity. This portal
is easily accessible and user friendly – anyone at
Contact who is concerned about any incident or
behaviour can use the whistleblower portal to
report that matter, anonymously if they choose.
Any whistleblower disclosures are reported to the
General Counsel and CEO and where appropriate,
the Chair.
In March this year, we published our first Modern
Slavery Statement, which sets out the steps we
have taken to identify, manage and mitigate the
specific risks of modern slavery in our operations
and supply chain. We have also implemented
a Supplier Code of Conduct, which outlines the
behaviours we expect from suppliers, particularly
regarding ethical, social and environmental
business practices.
“The success of retail adjacency with Contact’s broadband
product and recently hitting the milestone of 50,000 broadband
connections.” Victoria Crone, Director
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Contact INTEGRATED REPORT 2021Governance matters “Approving the Tauhara geothermal power station project –
an investment decision that was a long time in the planning
and is New Zealand’s best low-carbon renewable electricity
opportunity.” David Smol, Director
“Completing the acquisition of
Simply Energy, as an important
step towards our progress in
helping customers be smarter
with their electricity consumption,
and watching them succeed
– for example, the expansion
of demand flexibility and the
partnership with US-based
smart plug company Sapient.”
Jon Macdonald, Director
Approving
strategic direction,
monitoring of
performance
Board
Governance
structures, policies
and objectives,
identification of
significant risk
Strategic
Direction
Risk Capacity
& Tolerance
Monitor the environment, respond to
stakeholder material issues, anticipate
long-term threats and opportunity
Auditors
We recognise that the role of our external auditor
is critical for the integrity of our financial reporting.
Our external auditor is KPMG. The Audit and Risk
Committee ensures that the audit partner is
changed at least every five years.
Our External Audit Independence Policy sets out
the framework we use to ensure the independence
of our external auditors is maintained and their
ability to carry out their statutory audit role is not
impaired. Under this policy, the external auditor
may not do any work for Contact that compromises,
or is seen to compromise, the independence and
objectivity of the external audit process. In addition,
KPMG confirms their continuing independent
status to the Board every six months.
The Chair of the Audit and Risk Committee approved
KPMG to perform additional engagements this year,
including assuring our green borrowing programme,
greenhouse gas emissions and Global Reporting
Index (GRI) indicators.
Representatives from KPMG attend Contact’s
annual shareholder meeting, where they’re
available to answer shareholders’ questions
relating to the audit.
“Hosting the Prime Minister at the opening of the Tauhara
project site and seeing the impact the project will have
for the Taupō area and New Zealand’s decarbonisation efforts.”
Rukumoana Schaafhausen, Director
Risk management and assurance
Risk management
Our risk management framework enables the
Board to set an appropriate risk strategy and
ensure that risk is managed throughout the
organisation. The framework ensures we have
appropriate systems in place to identify material
risks and that, where applicable, the Board
sets appropriate tolerance limits. We assign
responsibility to individuals to manage identified
risks and we monitor any material change to
Contact’s risk profile.
Assurance
Our business assurance team fulfils our internal
audit function and provides objective assurance of
the effectiveness of our internal control framework.
The team is based in-house, and draws on external
expertise where required.
The team brings a disciplined approach to
evaluating and improving the effectiveness of risk
management, internal controls and governance
processes. We use a risk-based assurance approach
driven by our risk management framework.
The team also assists external audits by making
findings from the internal assurance process
available for the external auditor to consider
when providing their opinion on the financial
statements. The team has unrestricted access to
all other departments, records and systems of
Contact, and to the external auditor and other third
parties as it deems necessary.
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Contact INTEGRATED REPORT 2021Governance matters Remuneration report
Dear fellow shareholders
I am pleased to present Contact’s
remuneration report for FY21 on behalf
of the Board’s People Committee.
FY21 Financial results and remuneration
Contact has delivered a solid financial result for
shareholders this year with profit of $187 million,
EBITDAF of $553 million, and operating free cash
flow of $371 million. Operating costs and capital
expenditure have been managed prudently, while
contending with ongoing gas shortages and low
hydro lake levels.
Our discretionary short-term incentive pool
reflects Contact’s performance in FY21 and any
payments under these arrangements will be
made in September 2021. Given the company’s
performance over the past year, we consider
executive remuneration is appropriate.
A detailed overview of current employee
remuneration is set out in Employee remuneration.
Review of remuneration framework
As signalled last year, we reviewed our
remuneration framework to ensure remuneration
remains transparent, fair and enables Contact to
attract, reward and retain high-performing people.
We are committed to paying appropriate market
rates for all roles, and making sure people are
rewarded for their performance and experience.
Following this review, we made changes to our
short-term incentive scheme and our equity
scheme that will apply from FY22:
• we are buying out the short-term incentive (STI)
for people below senior management level and
therefore increasing their fixed remuneration
• we are applying a consistent weighting of the
• senior managers invited to participate in the
equity scheme through Performance Share Rights
(PSRs) will now receive their full eligibility of PSRs
• we have reduced the test dates of PSRs to one test
at the third anniversary, and introduced a second
hurdle linked to decarbonisation and achieving
our Contact26 strategy
• the leadership team's cash STI has been reduced,
and their participation in Contact's Deferred
Share Rights (DSRs) scheme has been increased
by an equal amount.
The changes aim to provide more clarity and
certainty for our people, as well as increasing
alignment with company performance.
Inclusion and diversity
Activity aligned with Contact’s inclusion and
diversity strategy underpins the company’s work
environment, inclusion is embedded, and people
are encouraged to be themselves. In our people
engagement survey, the average score for “People
from all backgrounds are treated fairly at Contact”
is a very strong 8.7/10 which is good to see.
A wide range of initiatives drive greater inclusion and
support for the rainbow community, Māori, women
and young people. This includes Rainbow Tick
re-certification for the fourth consecutive year,
our Māori Summer Internship programme, and
support for the WING organisation to lift the
presence of women in the geothermal industry.
Contact also supports the Champions for Change
initiative and participated in its third Diversity and
Inclusion Impact report (published in March 2021).
The data from participating organisations shows
female representation increased both proportionally
and in absolute numbers between 2018 and 2020.
In FY21 Contact achieved gender balance (40:60
women to men) across half of our work categories,
but there are several categories where we need to
improve. We’ve reported on gender composition
across these categories in our sustainability
disclosures.
corporate and individual performance outcomes
for senior employees who remain in the STI scheme
Pay equity analysis examines whether females
and males within the same role grade are paid
equitably. At Contact
the FY21 pay equity
is 97.6 per cent – this is
above our stated target
of 97 per cent (and FY20’s
96 per cent result) but we
remain committed to further reducing this gap.
An additional remuneration disclosure has been
included for the first time this year, including the
ratio between the total annual compensation of
the CEO and the median employee compensation
– a ratio of 20:1.
TWoW
Contact has embraced the choice for its people to
work from anywhere as long as their role allows, and
the work can be done safely and securely. Embracing
flexible work practices helps build engagement,
attract more diverse talent, and will help Contact
succeed over the longer term. This is echoed by
strong results around working flexibly and working
remotely in recent people engagement surveys.
More flexibility around location, and a greater use of
technology rather than travel has also contributed to
our ambition for less emissions. An additional benefit
of TWoW has been a recurring cost reduction of over
$1.8m per year, as a result of a range of initiatives but
primarily through a reduction in our property, travel
and technology costs. On a related note, the Contact
team has proven resilient and flexible in ensuring
minimal business disruption during further regional
COVID-19 alert level changes in FY21.
Contact is continuously looking to improve as
part of its overall commitment to being a good
employer. There is always more to do.
Jon Macdonald
Chair, People Committee
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Contact INTEGRATED REPORT 2021Governance matters
Directors’ remuneration
The total directors’ fee pool is $1,500,000 per
year. It has not increased since it was approved
by shareholders in 2008. Actual fees paid to
directors are determined by the Board on the
recommendation of the People Committee.
There were no increases in the level of director
fees between FY20 and FY21. On 19 April 2020,
the Board approved a 20 per cent reduction
in all directors’ fees for the period 1 April to
30 September 2020 in light of the developing
situation around COVID-19.
Directors’ fees exclude GST, where appropriate.
In addition, Board members are reimbursed for
costs directly associated with carrying out their
duties, such as travel costs.
FY21
Chair
per annum
Member
per annum
Board of Directors
$285,000*
$138,000
Audit and Risk
Committee
Safety and Sustainability
Committee
$46,000
$23,000
$26,000
$13,000
People Committee
$26,000
$13,000
Development Committee
$20,000
$10,000
* No additional fees are paid to the Board Chair for committee roles.
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Audit
and Risk
Committee
Safety and
Sustainability
Committee
People
Committee
Development
Committee
Total
remuneration
Directors*
Board fees
Robert McDonald
$270,750
Victoria Crone
$131,100
$21,850
Whaimutu Dewes
$96,600
$16,100
$9,100
$270,750
$152,950
$121,800
Jon Macdonald
$131,100
$24,700
$9,500
$165,300
Rukumoana
Scaafhausen
David Smol
Elena Trout
$46,000
$5,750
$3,250
$55,000
$131,100
$131,100
$12,350
$24,700
$17,000
$160,450
$11,500
$167,300
Dame Therese Walsh
$131,100
$43,700
$12,350
$187,150
Total
* Notes:
$1,068,850
$87,400
$49,400
$37,050
$38,000
$1,280,700
Amounts paid during the period 1 April to 30 June 2020 reflect a 20 per cent reduction, as described above.
Rukumoana Scaafhausen joined the Board on 1 March 2021.
Whaimutu Dewes resigned from the Board on 31 March 2021.
The mandate of the Tauhara Committee widened and it was renamed the Development Committee on 1 October 2020.
The mandate of the Health Safety and Environment Committee was widened and it was renamed the Safety and Sustainability
Committee on 1 July 2021.
David Smol replaced Elena Trout as Chair of the Development Committee on 1 October 2020.
In June 2021, the Board agreed certain changes to its committees to ensure it has the optimum governance structures in place for the
changing environment. We describe these changes in Board committees.
Whaimutu Dewes was paid $6,250 for consultancy services from 1 April 2021 (i.e. after his resignation from the Contact Board).
Details of remuneration paid to non-executive
directors of Contact subsidiaries for FY21 are as
follows:
Subsidiary
Simply Energy
Limited
Western Energy
Services Limited
Non-executive
director
Total
remuneration
Chris Seel
$20,000
Dane Coppell
$6,000
Contact INTEGRATED REPORT 2021Governance matters Chief Executive Officer and Executive
Team remuneration
The CEO and Executive Team remuneration
is reviewed by our Board each year. The Board
works closely with and is advised by Contact’s
People Committee.
The remuneration reflects the complexity of the
roles and the wide-ranging skills needed to do
them well. We also consider market remuneration
data benchmarks, look at the achievement of
performance goals and factor in creating long-term
sustainable shareholder value.
The total remuneration is made up of a fixed
remuneration component, which includes cash
salary and other employment benefits, and pay-
for-performance remuneration containing short-
term incentives (cash and equity awarded through
deferred share rights) and long-term incentives
(equity awarded through performance share rights).
The following table details the nature and amount
of remuneration paid to Mike Fuge for his time as
CEO during the year.
CEO remuneration for the period ended 30 June 2021
Position
Fixed remuneration
Pay-for-performance remuneration
Salary
paid $
Benefits
$
Subtotal
$
Cash
STI $
Equity
STI $
Equity
LTI $
Subtotal
$
Total
remuneration
$
FY21
1,150,000
38,3401
1,188,340
431,2502
258,7503 402,5004
1,092,500
2,280,840
Pay-for-performance remuneration breakdown for the year ended 30 June 2021
All discretionary payments were calculated and paid based on period employed in FY21.
Scheme
Description
Performance measures
Cash STI5
Cash STI is a discretionary scheme
based on achievement of KPIs.
Maximum potential set at 50% of
base salary.
Equity STI
(awarded
as deferred
share rights)
Equity STI allows the participant
to acquire shares at a $0 exercise
price subject to the time-bound
exercise hurdle being achieved.
Maximum potential set at 30% of
base salary for CEO.
Equity LTI
(awarded as
performance
share rights)
Equity LTI allows the participant
to acquire shares at a $0 exercise
price subject to the exercise
hurdle being achieved.
Set at 35% of base salary for CEO.
70% based on corporate shared KPIs:
• 50% financial results (Operating
Free Cash Flow, EBITDAF, OPEX)
• 40% transformation targets
• 10% safety targets
30% based on individual KPIs
including corporate reputation,
demand growth, transformation,
strategy development and
executive capability.
The participant’s performance
rating influences the Equity STI
awarded by the Board.
The exercise hurdle to receive these
is to remain employed by Contact
2 years from the grant date.
The exercise hurdles to receive
these are:
• 50% Contact’s relative total
shareholder return (TSR) ranking
within an energy industry peer
group of other New Zealand
NZX50 listed utilities companies.
• 50% internal hurdle related
to our strategic priority of
decarbonisation.
Tested once, at year 3.
Percentage of
maximum potential
75%
(Paid September 2021)
75%
$258,750 based on fair value
allocation
(To be granted 1 October
2021 and tested October
2023)
100%
$402,500 based on fair value
allocation
(To be granted 1 October
2021 and tested October
2024)
1 Benefits include 3% KiwiSaver contribution calculated on remuneration amounts including cash STI, and health insurance.
2 STI for FY21 period, paid in FY22.
3 Equity, based on fair value allocation, performance hurdles tested 2023.
4 Equity, based on fair value allocation, performance hurdles tested 2024.
5 The Cash STI performance weightings changed in FY21 to 70% corporate and 30% individuals KPIs from the previous 60% corporate and
40% individual KPIs.
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Contact INTEGRATED REPORT 2021Governance matters
CEO remuneration
The scenario chart below demonstrates the elements of Mike Fuge’s CEO remuneration design.
Base salary & benefits
Cash STI
Equity STI
Equity LTI
Maximum potential remuneration
On-plan remuneration
Fixed remuneration
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Five-year CEO remuneration summary
Financial
year
Mike Fuge
FY21
FY202
Dennis Barnes
FY203
FY19
FY18
FY17
Total
remuneration
paid1
Percentage
Cash STI
awarded against
maximum
Percentage
vested Equity
STI against
maximum
Span of Equity
STI performance
period
Percentage vested
Equity LTI against
maximum
Span of Equity
LTI performance
period
$2,280,840
$669,641
$995,566
$1,787,816
$3,031,608
$2,081,641
75%
40%
32%
78%
55%
50%
0%
0%
100%
n/a
n/a
0%
0%
n/a
n/a
2017–2019
2018–2019
2015 Options/PSR 89.54%
2016 Options/PSR 50%
100%
2016–2018
2013 Options 100%4
2014 Options 100%
100%
0%
2015–2017
n/a
0%
0%
1 Total remuneration paid includes
salary, benefits, Cash STI, and value
of STI and LTI Equity (paid in shares).
2 24 February 2020 – 30 June 2020
3 1 July 2019 – 28 February 2020
2015–2020
2016–2020
2013–2018
2014–2019
n/a
n/a
4 100% of STI and LTI Equity vested as a
result of Origin selling its shareholding
in Contact triggering vesting of equity
due to the change of control.
Five-year summary TSR1 performance graph
40%
30%
20%
10%
0%
-10%
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30 June 2017
30 June 2018
30 June 2019
30 June 2020
30 June 2021
1 TSR calculated using the volume-weighted average price for the
3 months prior to year end.
2 Peer group is a simple average of Meridian, Genesis, Mercury,
Vector and Trustpower, with Trustpower only in the group from
FY18.
31.92%
29.59%
28.89%
Company
NZX50
Peer group2
Contact INTEGRATED REPORT 2021Governance matters Contact employee remuneration
We’re committed to paying appropriate market
rates for all our roles, and ensuring our people are
rewarded for their performance and experience.
There are three parts to employee remuneration
– fixed remuneration, pay-for-performance
remuneration, and other benefits. These combine
to attract, reward and retain high-performing
employees.
Fixed remuneration
Fixed remuneration is based on the role
responsibilities, individual performance and
experience, and current market remuneration
data. Contact targets fixed remuneration at the
median of the market range.
Pay-for-performance remuneration
Pay-for-performance remuneration recognises
and rewards high-performing employees and
comprises short-term incentives (cash and
deferred share rights) and long-term incentives
(performance share rights).
Short-term incentives (STI)
STIs are designed to recognise and reward high
performance with cash incentives and deferred
share rights through Contact’s equity scheme for
some higher-level roles and key talent. STIs have a
maximum potential level set reflecting the person’s
position grade, and are based on performance
measured against key performance indicators
(KPIs), which generally consist of company and
individual objectives. The Board reserves the right
to adjust STI awards if company targets are not met.
Long-term incentives (LTI)
Contact provides awards of performance share
rights through Contact’s equity scheme to our
senior people and key talent. This aims to encourage
and reward longer-term decision-making and align
participants’ interests with Contact’s shareholders.
These are subject to performance hurdles.
Equity scheme
At 30 June 2021 there were 94 participants in Contact’s
equity scheme. For further details on the equity
scheme and the number of performance share rights
and deferred share rights granted, exercised, lapsed
and on issue at the end of the reporting period,
see note E10 of the financial statements.
Other benefits
We know that rewards mean more than just
money, so we offer our people a range of other
benefits too. Some of these have eligibility criteria
and include: discounts for home energy and
broadband; employer-subsidised health insurance;
an employee share ownership plan called ‘Contact
Share’ (see note E10 in financial statements for
more detail); and additional benefits and offers
from retailers and service providers.
Additional Contact remuneration
disclosures
• Pay equity is monitored and reported on,
comparing pay by gender in roles at the same
grade levels (i.e. roles requiring a similar level
of skills, knowledge, and accountabilities).
At 30 June 2021 our pay equity was at 97.6 per
cent for women to men. We make adjustments to
individual salaries where appropriate to address
pay equity while applying our grade structure.
• CEO-to-employee pay ratio, 20:1. The ratio
between the total annual compensation of the
CEO and the median employee compensation.
• Contact does not implement any clawback
practices on employee remuneration other
than in situations permitted by New Zealand
legislation (e.g. for correction of overpayments).
• Contact has remediated underpayments to our
current and ex-employees following a review of
how we applied the regulations in the Holidays
Act 2003.
• Contact does not have a share ownership
requirement for the CEO or Executive Team.
• The notice period for Mike Fuge in his role as
CEO is six months.
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Contact INTEGRATED REPORT 2021Governance matters Group1 employees who earn over $100k
The table shows the number of our people
(including any who have left) who received
remuneration and other benefits during FY21 of
at least $100,000 for the year ended 30 June 2021.
The value of remuneration benefits analysed includes:
• fixed remuneration including allowance/overtime
payments
• employer superannuation contributions
• short-term cash incentives relating to FY20
performance but paid in FY21 (Contact and
Simply Energy)
• the value of equity-based incentives at fair value
allocation received during FY21 (Contact)
• the value of Contact Share received during FY21
(Contact)
• redundancy and other payments made on
termination of employment.
The figures do not include; amounts paid after
30 June 2021 that relate to the year ended
30 June 2021, the remuneration (and any other
benefits) of the Contact CEO, Mike Fuge, as they
are disclosed in CEO remuneration.
Table of employees who earn over $100k
Remuneration band
Number of employees
$100,001–$110,000
$110,001–$120,000
$120,001–$130,000
$130,001–$140,000
$140,001–$150,000
$150,001–$160,000
$160,001–$170,000
$170,001–$180,000
$180,001–$190,000
$190,001–$200,000
$200,001–$210,000
$210,001–$220,000
$220,001–$230,000
$230,001–$240,000
$240,001–$250,000
$250,001–$260,000
$260,001–$270,000
$270,001–$280,000
$280,001–$290,000
$290,001–$300,000
$300,001–$310,000
$320,001–$330,000
$330,001–$340,000
$370,001–$380,000
$380,001–$390,000
$390,001–$400,000
$400,001–$410,000
$430,001–$440,000
$480,001–$490,000
$490,001–$500,000
$530,001–$540,000
$550,001–$560,000
$640,001–$650,000
$720,001–$730,000
$960,001–$970,000
47
42
61
53
53
39
33
14
17
13
19
14
6
4
3
6
3
6
3
2
1
3
4
2
1
1
1
1
2
1
1
1
1
1
1
1
4612
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1 Excludes Drylandcarbon.
2 Includes 29 former employees across the group
(excluding Drylandcarbon).
$1,120,001–$1,130,000
Contact INTEGRATED REPORT 2021Governance matters Additional
disclosures
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Contact INTEGRATED REPORT 2021Additional disclosures Statutory disclosures
David Smol
Disclosures of interests by directors
The table below lists the general disclosures of interest by directors of Contact
Energy Limited in accordance with section 140 of the Companies Act 1993.
Robert McDonald
Fletcher Building Limited
AIA Limited
Chartered Accountants Australia & New Zealand
University of Auckland Business School Advisory Board
University of Auckland Council
McDonald Family Trust
Victoria Crone
Statistics New Zealand
Callaghan Innovation
Figure.NZ
Jon Macdonald
Director
Director
Director
Chair
Member
Trustee
Chair
Chief Executive
Officer
Co-Chair
Sharesies Limited and various subsidiaries
Director
Titan Parent New Zealand Limited (Parent company of Trade Me Ltd) Director
Mitre 10 (New Zealand) Ltd and various subsidiaries
NZ Technology Training Trust
My Food Bag Group Limited
The Champ Trust
Rukumoana Schaafhausen
AgResearch Limited
KGS Limited
Te Waharoa Investments Limited
Miro (Hautupua) Limited
Water Governance Board, Waikato District Council
Tindall Foundation
Princes Trust NZ
Equippers Church Trust
Director
Trustee
Director
Trustee/Beneficiary
Director
Director
Director
Director
Director
Trustee
Trustee
Trustee
New Zealand Growth Capital Partners Limited
Department of Internal Affairs’ External Advisory Committee
Ministry of Social Development’s Risk and Audit Committee
Capital & Coast District Health Board
Hutt Valley District Health Board
New Zealand Transport Agency
The Co-operative Bank Limited
Victoria Link Limited
Rimu Road Consulting Limited
Elena Trout
Callaghan Innovation
Chair
Chair
Chair
Chair
Chair
Board Member
Director
Chair
Director
Director
Ngapuhi Asset Holding Company Limited and various subsidiaries Director
Joint NZ Defence Force and Ministry of Defence Capability
Governance Board
External Member
Energy Efficiency and Conservation Authority (EECA)
Low Emission Vehicles Contestable Fund (a fund from EECA
budget)*
Harrison Grierson Holdings Limited and various subsidiaries
Motiti Investments Limited
Ara Ake Limited
Interim Establishment Board for the Construction and
Infrastructure Workforce Development Council
Chair
Chair
Director
Director
Director
Chair
* Fund expired mid-2021.
Dame Therese Walsh
Air New Zealand
ASB Bank
Antarctica NZ
On Being Bold
Wellington Homeless Women’s Trust
Climate Change Commission Nominations Panel
Therese Walsh Consulting Limited
*Will become Chair effective 1 September 2021.
Chair
Director*
Director
Director
Ambassador
Member
Director
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Contact INTEGRATED REPORT 2021Additional disclosures Information used by directors
No director issued a notice requesting to use information received in his
or her capacity as a director that would not otherwise be available to the
director.
Securities dealings of directors
During the year, the directors disclosed in respect of section 148(2) of the
Companies Act 1993 that they acquired or disposed of a relevant interest in
securities as follows:
Date of
acquisition
Nature of
transaction
Consideration
per share
Number
of shares
acquired
Director
Robert
McDonald
12/03/21
Victoria Crone
12/03/21
Whaimutu
Dewes
12/03/21
Jon Macdonald
12/03/21
David Smol
12/03/21
Acquisition under
retail equity offer
Acquisition under
retail equity offer
Acquisition under
retail equity offer
Acquisition under
retail equity offer
Acquisition under
retail equity offer
29/03/21
On-market purchase
Elena Trout
12/03/21
Dame Therese
Walsh
12/03/21
Acquisition under
retail equity offer
Acquisition under
retail equity offer
$6.74
4,602
$6.74
1,483
$6.74
3,070
$6.74
3,068
$6.74
2,316
$6.85
$6.74
3,134
1,186
$6.74
2,225
Indemnity and insurance
In accordance with section 162 of the Companies Act 1993 and the
constitution of the company, Contact has continued to indemnify and insure
its directors and officers, including directors of subsidiaries, against potential
liability or costs incurred in any proceeding, except to the extent prohibited
by law.
Directors’ security participation
Directors are required to hold a minimum of 20,000 shares within three years
of appointment.
Securities of the company in which each director has a relevant interest
at 30 June 2021
Director
Robert McDonald
Victoria Crone
Jon Macdonald
David Smol
Elena Trout
Dame Therese Walsh
Bonds
35,000
Ordinary shares
34,602
21,533
23,068
20,550
21,186
17,225
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Contact INTEGRATED REPORT 2021Additional disclosures Shareholder statistics
Twenty largest shareholders at 30 June 2021
Number of
ordinary shares
% of ordinary
shares
HSBC Nominees (New Zealand) Limited
HSBC Nominees (New Zealand) Limited
Citibank Nominees (NZ) Limited
National Nominees New Zealand Limited
JP Morgan Chase Bank
Accident Compensation Corporation
Tea Custodians Limited
FNZ Custodians Limited
Forsyth Barr Custodians Limited
New Zealand Superannuation Fund Nominees
Limited
BNP Paribas Nominees NZ Limited
JB Were (NZ) Nominees Limited
Cogent Nominees Limited
Custodial Services Limited
BNP Paribas Nominees NZ Limited
New Zealand Depository Nominee
Custodial Services Limited
JP Morgan Nominees Australia Pty Limited
Premier Nominees Limited
Private Nominees Limited
Total for top 20
60,890,712
53,969,790
51,298,979
49,101,052
40,784,092
30,073,733
27,606,067
27,273,298
23,511,944
19,942,072
18,000,856
17,431,762
15,694,541
15,047,438
13,240,049
10,896,540
10,514,072
9,987,014
9,372,306
7,942,624
7.85
6.95
6.61
6.33
5.25
3.87
3.56
3.51
3.03
2.57
2.32
2.25
2.02
1.94
1.71
1.40
1.35
1.29
1.21
1.02
512,578,941
66.04
Distribution of ordinary shares and shareholders at 30 June 2021
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001 and over
Number of
shareholders
% of
shareholders
Number of
ordinary
shares
% of
ordinary
shares
28,166
28,633
3,559
2,428
203
127
44.63
18,095,094
45.37
53,154,526
5.64
3.85
0.32
25,127,742
46,704,015
14,084,931
2.33
6.85
3.24
6.02
1.81
0.20
618,955,762
79.75
Total
63,116
100.00
776,122,070
100.00
Substantial product holders
According to notices given under the Financial Markets Conduct Act 2013,
the following persons were substantial product holders of the company as
at 30 June 2021:
Substantial product
holder
Number of ordinary shares in
which relevant interest is held
Date of notice
The Vanguard Group, Inc.
38,806,275 18 June 2021
BlackRock Inc. and related
bodies corporate
38,912,275 4 May 2021
The total number of voting securities of Contact at 30 June 2021 was
776,122,070 fully paid ordinary shares.
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Contact INTEGRATED REPORT 2021Additional disclosures
Bondholder statistics
Twenty largest CEN030 bondholders at 30 June 2021
Number of
CEN030 bonds
% of CEN030
bonds
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Hobson Wealth Custodian Limited
Citibank Nominees (NZ) Limited
Commonwealth Bank of Australia
NZ Permanent Trustees Limited
Custodial Services Limited
Tea Custodians Limited
Cogent Nominees Limited
Custodial Services Limited
National Nominees New Zealand Limited
Southern Cross Medical Care Society
Custodial Services Limited
ANZ National Bank Limited
Custodial Services Limited
Private Nominees Limited
Pin Twenty Limited
Forsyth Barr Custodians Limited
Investment Custodial Services Limited
University Of Otago Foundation Trust
16,440,000
15,249,000
14,439,000
10,622,000
7,859,000
7,439,000
4,565,000
4,097,000
4,096,000
3,779,500
3,624,000
3,400,000
3,159,500
3,034,000
2,748,000
2,638,000
2,500,000
2,350,000
2,109,000
1,985,000
10.96
10.17
9.63
7.08
5.24
4.96
3.04
2.73
2.73
2.52
2.42
2.27
2.11
2.02
1.83
1.76
1.67
1.57
1.41
1.32
Total for top 20
116,133,000
77.44
Distribution of CEN030 bonds and bondholders at 30 June 2021
Size of holding
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001 and over
Total
Number of
bondholders
% of
bondholders
Number of
bonds % of bonds
53
120
292
28
50
543
9.76
22.10
53.78
5.16
9.21
265,000
1,128,500
7,886,500
2,341,000
0.18
0.75
5.26
1.56
138,379,000
92.25
100.00
150,000,000
100.00
Twenty largest CEN040 bondholders at 30 June 2021
Citibank Nominees (NZ) Limited
FNZ Custodians Limited
Cogent Nominees Limited
HSBC Nominees (New Zealand) Limited
Custodial Services Limited
Forsyth Barr Custodians Limited
Westpac Banking Corporation
Private Nominees Limited
Southern Cross Medical Care Society
Custodial Services Limited
Custodial Services Limited
Custodial Services Limited
BNP Paribas Nominees NZ Limited
Investment Custodial Services Limited
Forsyth Barr Custodians Limited
Hobson Wealth Custodian Limited
FNZ Custodians Limited
Custodial Services Limited
Forsyth Barr Custodians Limited
JB Were (NZ) Nominees Limited
Number of
CEN040 bonds
% of CEN040
bonds
20,738,000
12,007,000
20.74
12.01
7,585,000
7,038,000
4,073,000
3,909,000
3,250,000
3,159,000
3,000,000
2,681,000
2,612,000
2,394,000
2,330,000
2,313,000
1,444,000
1,375,000
1,129,000
1,075,000
936,000
850,000
7.59
7.04
4.07
3.91
3.25
3.16
3.00
2.68
2.61
2.39
2.33
2.31
1.44
1.38
1.13
1.08
0.94
0.85
Total for top 20
83,898,000
83.91
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Contact INTEGRATED REPORT 2021Additional disclosures Distribution of CEN040 bonds and bondholders at 30 June 2021
Distribution of CEN050 bonds and bondholders at 30 June 2021
Size of holding
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001 and over
Total
Number of
bondholders
% of
bondholders
Number of
bonds % of bonds
Size of holding
Number of
bondholders
% of
bondholders
Number of
bonds % of bonds
34
70
161
17
35
317
10.73
22.08
50.79
5.36
170,000
675,000
4,285,000
1,286,000
0.17
0.68
4.29
1.29
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
11.04
93,584,000
93.58
100,001 and over
100.00
100,000,000
100.00
Total
6
44
104
23
32
209
2.87
21.05
49.76
11.00
15.31
30,000
426,000
2,824,000
1,702,000
0.03
0.43
2.82
1.70
95,018,000
95.02
100.00
100,000,000
100.00
Twenty largest CEN050 bondholders at 30 June 2021
HSBC Nominees (New Zealand) Limited
11,800,000
11.80
Number of
CEN050 bonds
% of CEN050
bonds
FNZ Custodians Limited
Citibank Nominees (NZ) Limited
BNP Paribas Nominees NZ Limited
Custodial Services Limited
HSBC Nominees (New Zealand) Limited
Cogent Nominees Limited
Tea Custodians Limited
New Zealand Permanent Trustees Limited
Custodial Services Limited
Forsyth Barr Custodians Limited
JB Were (NZ) Nominees Limited
Custodial Services Limited
Custodial Services Limited
Custodial Services Limited
Mt Nominees Limited
Investment Custodial Services Limited
Private Nominees Limited
Woolf Fisher Trust Inc
FNZ Custodians Limited
Total for top 20
9,895,000
9,330,000
7,550,000
6,324,000
4,730,000
4,576,000
4,550,000
4,540,000
4,264,000
3,953,000
3,302,000
3,173,000
2,556,000
1,297,000
1,241,000
1,175,000
1,000,000
950,000
906,000
9.90
9.33
7.55
6.32
4.73
4.58
4.55
4.54
4.26
3.95
3.30
3.17
2.56
1.30
1.24
1.18
1.00
0.95
0.91
87,112,000
87.12
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Directors of Contact Energy Limited and subsidiaries
The following people held office as directors of Contact Energy Limited
as at 30 June 2021: Robert McDonald, Victoria Crone, Jon Macdonald,
Rukumoana Schaafhausen, David Smol, Elena Trout and Dame Therese
Walsh. Whaimutu Dewes held office as a director during the reporting
period until 31 March 2021.
The following people held office as directors of Contact’s subsidiaries as at
30 June 2021:
Simply Energy Limited
Dorian Devers
Murray Dyer
James Kilty
Stephen Peterson
Chris Seel
Catherine Thompson*
*Appointed 28 April 2021.
Western Energy Services Limited
Dane Coppell
Dorian Devers*
Mike Dunstall*
James Kilty*
Catherine Thompson*
*Appointed 31 March 2021.
Contact INTEGRATED REPORT 2021Additional disclosures
NZX waivers
There were no waivers granted by NZX or relied on by Contact in the
12 months preceding 30 June 2021.
Sustainability disclosures
Memberships of associations or advocacy organisations
Stock exchange listings
Contact’s ordinary shares are listed and quoted on the NZX Main Board
and the Australian Securities Exchange (ASX) under the company code
‘CEN’. Contact has three issues of retail bonds listed and quoted on the NZX
Debt Market under the company codes ‘CEN030’, ‘CEN040’ and ‘CEN050’.
Contact’s listing on the ASX is as a Foreign Exempt Listing. For the purposes
of ASX listing rule 1.15.3, Contact confirms that it continues to comply with
the NZX listing rules.
Exercise of NZX disciplinary powers
NZX did not exercise any of its powers under Listing Rule 9.9.3 in relation
to Contact during FY21.
Auditor fees
KPMG has continued to act as auditors of the company. The amount
payable by Contact and its subsidiaries to KPMG as audit fees in respect of
FY21 was $541,000. The fees for other services undertaken by KPMG during
FY21 totalled $57,250. These related to other assurance activities: reviews of
Contact’s green borrowing programme, greenhouse gas emissions and GRI
(sustainability), and supervisor reporting.
Donations
In accordance with section 211(1)(h) of the Companies Act 1993, Contact
records that it donated $36,642 in FY21 including charitable donations,
provision of free energy and where we have given a koha. Donations are
made on the basis that the recipient is not obliged to provide any service
such as promoting Contact’s brand and are separate from Contact’s
sponsorship activity. No political contributions were made during the year.
Credit rating
Contact Energy Limited has a Standard & Poor’s long-term credit rating
of BBB/stable and short-term rating of A-2.
The $150 million unsubordinated, unsecured fixed rate bonds issued
in September 2015 are rated BBB by Standard & Poor’s.
The $100 million unsubordinated, unsecured fixed rate bonds issued
in February 2017 are rated BBB by Standard & Poor’s.
The $100 million unsubordinated, unsecured fixed rate bonds issued
in March 2019 are rated BBB by Standard & Poor’s.
Holds a position on the governance body
Electricity Retailers’ Association of New Zealand (ERANZ)
Gas Industry Company
Participates in projects or committees
Business New Zealand
(Energy Council Major Companies Group, Corporate Affairs Group, Corporate
Taxpayers Group)
Sustainable Business Council
Australasian Investor Relations Association
Climate Leaders Coalition
Champions for Change
Drive Electric
Electricity Authority Market Development Advisory Group
Hugo Group
Liquefied Petroleum Gas Association
NZ Initiative
ERANZ Retailer Revenue Assurance Advisory Forum
ERANZ Retailers’ Operational Forum
ERANZ Vulnerable Customer & Medically Dependent Customer (VCMDC) Working Group
ERANZ Policy Committee
ERANZ Communications Committee
ERANZ Data Working Group
NZ Hydrogen Association
Generator Forum
ENA Technical Implementation Working Group
ENA Joint Implementation Working Group
Wellington Chamber of Commerce
Women in Geothermal
International Geothermal Association
NZ Geothermal Association
Aotearoa Circle
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Contact INTEGRATED REPORT 2021Additional disclosures External commitments
Organisation/Group Date of
Commitment
Climate Leaders
Coalition
adoption
July 2019
• To measure our greenhouse gas emissions,
have them independently verified and
publicly report on them.
• Adopt targets grounded in science that will
deliver substantial emissions reductions so
organisations contribute to being carbon
neutral by 2050. These targets will be
considered in current planning cycles.
• Assessing our climate change risks and
publicly disclosing them.
• Proactively support our people to reduce
their emissions.
• Proactively support our suppliers to reduce
their emissions.
• Committed to the Paris Agreement
Target to keep warming below 2°C and to
further pursue efforts to limit temperature
increases to 1.5°C.
Science Based Targets
initiative – Committed
March 2018
We commit to progressing emission
reduction in line with verified target.
Climate-related risks and opportunities
The following table presents an overview of Contact’s most material
climate-related risks and opportunities in the short, medium and long term.
We review these annually.
In 2019, we commissioned NIWA to model the potential impacts of climate
change on our operations. We modelled two scenarios: a business-as-
usual scenario where greenhouse gas concentrations continue unabated
(Representative Concentration Pathway 8.5); and a mitigation scenario with a
global effort to heavily reduce concentrations (RCP 2.5). Under either scenario
used we saw that most sites will experience a tripling of the number of hot
days, with spring and summer expected to become drier and winter wetter.
Our hydro catchment is likely to have increased inflows, with potential
for hydro generation increasing – especially under the business-as-usual
scenario.
Given this, and also what we know about the transitional risks of climate
change, such as changing regulation, stakeholder expectations and market
dynamics, we have identified a range of risks which we have then rated as
low, medium, or high based on the likelihood, time-horizon and potential
impact/size of the opportunity or risk.
We use our existing risk management systems to capture, monitor and
report on climate-related risks. Risks rated high are also monitored by the
leadership team and the Board Audit and Risk Committee. The Board Health,
Safety and Environment Committee, who have formal oversight of climate-
related issues, also review the climate-related risks. The full Board, when
setting strategy, also considers a wide range of risks and environmental
factors, and the work that our teams do to understand issues such as
climate change contributes to their decision-making.
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Contact INTEGRATED REPORT 2021Additional disclosures Short term (now–2023)
Medium term (2023–2035)
Long term (2035–onwards)
These may impact near-term financial results,
including those that may materialise within the
current reporting cycle.
Market transition risks and opportunities
May materially impact financial results over the
longer term and may require us to adjust our strategy.
Risks that could fundamentally impact the long-term
strategy and business model.
Contact’s
emissions
profile
Leading the
market to
decarbonise
Thermal
transition
• Reputational impact of continued use of thermal and
• National imperative to reduce carbon emissions
• Stakeholder rejection of fossil fuels including natural
high-emissions generation.
through policy and other means.
gas.
• Heightened scrutiny from customers and investors on
environmental, social, governance (ESG) performance
of businesses.
• Rising gas and carbon costs.
• Rising stakeholder expectations increase the pace of
change in which businesses must adapt/respond to
climate-related issues.
• Increased opportunity for renewable developments.
• New opportunities and markets developed to
support low-carbon transition activities.
• Opportunity to deepen relationships with customers
who are looking to decarbonise.
• Opportunity for renewable generation to displace
thermal.
• Potential for high-emissions industries to favour gas
as a transition fuel, resulting in increased gas use and
emissions in the short term.
• Continued requirement for thermal peaking plant in
New Zealand to ensure affordable security of supply.
• Heightened scrutiny of emissions from geothermal
energy generation.
• Leadership of decarbonisation initiatives including
delivering on science-based targets.
• Transition to lower-carbon economy creates more
• Wider options for new generation development.
demand for electricity.
• Opportunities for innovative customer and
technology solutions.
• Increased electricity demand.
• Increased demand for green energy products/
certification.
• Opportunity to develop Thermal Co.
• Ensuring an orderly transition to a low-emissions
energy sector.
• Potential for significant renewable overbuild, and
massive distributed generation.
New
technology
• Customer adoption of new technologies and/or
energy efficient solutions impacts on demand for
grid connected electricity.
• Customer adoption of new technologies and/or
energy efficient solutions impacts on demand for
grid connected electricity.
• New technology makes current generation
redundant and/or impacts demand significantly.
• Opportunity for smart-solutions for customers to
• Opportunity for innovative new energy sources e.g.
assist decarbonisation.
hydrogen.
• Increase in demand due to changing industry energy
requirements.
Regulation
• Changes to regulation impacts on costs of business
• New regulation requires Contact to offset or reduce
and/or licence to operate.
emissions faster than planned.
• New Zealand’s costs become higher relative to globe
which results in production moving offshore and
reduced demand.
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Contact INTEGRATED REPORT 2021Additional disclosures
Short term (now–2023)
Medium term (2023–2035)
Long term (2035–onwards)
These may impact near-term financial results,
including those that may materialise within the
current reporting cycle.
May materially impact financial results over the
longer term and may require us to adjust our strategy.
Risks that could fundamentally impact the long-term
strategy and business model.
Physical risks and opportunities
Temperature
increases
• Changes to maintenance requirements as
• Impacts on operational plant may require change in
temperatures increase.
design.
• Changes to electricity demand as temperatures
change.
• Health, safety and wellbeing impacts on people
working in warmer conditions.
• Impacts on the efficiency and availability of
generation plants.
• Implications on resource consent requirements
which may increase costs and/or impact on licence
to operate.
Access to
natural
resources
Intensity of
storms
• Changes to hydro inflows impact on our renewable
• Increased demand and competition for natural
generation.
• Consent renewal required for Wairākei in 2026.
• Changes in regulation may impact on access to
water, consent conditions and/or costs.
• Increased potential for erosion issues.
• Disruption to physical works during storms.
• Stormwater systems require redesign and/
or replacement to meet changing capacity
requirements.
resources, including fresh water, impacts on access
to natural resources for generation.
• Drilling programme requires access to significant
volumes of water.
• Consents required for new developments.
• Potential for increased power outages due to
transmission failure caused by storms.
• Water storage requirements change.
• Increased hydro inflows create opportunities to
increase generation output, but may also increase
flood risk and require spilling at hydro.
• Increased flood risk around rivers and lakes impacts
on generation operations.
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Contact INTEGRATED REPORT 2021Additional disclosures
Group Scope 1 emissions
Emissions (tCO2e)
Thermal
Generation
Emission Intensity
(tCO2e per MWh)
Total Generation
Emission Intensity
(tCO2e per MWh)
FY21
FY20
FY21
FY20
FY21
FY20
Fuel used
for thermal
generation
Fuel used for
geothermal
generation
Total fuel used
for generation
Fuel used in
vehicles
Fugitive
emissions – SF6
866,013
722,8341
178,524 199,9651
1,044,536 922,7981
0.544
0.532
0.124
0.109
178
270
29
4
Total Scope 1
1,044,744 923,0721
1. FY20 figure updated due to finalised data becoming available (estimates were used previously).
Group Scope 2 and 3 emissions
For more details on our emissions please refer to our GHG inventory
on our website.
KPMG have provided an unmodified limited assurance opinion as to
whether anything has come to their attention to indicate that Contact
Energy’s Greenhouse Gas emissions inventory report has not been prepared
in accordance with the Greenhouse Gas Protocol’s Corporate Standard
requirements for the period 1 July 2020 – 30 June 2021.
Supply chain impacts
Number of suppliers assessed for environmental and social impacts.
Number of suppliers identified as having significant actual and potential
negative environmental and social impacts.
Percentage of suppliers with which improvements have been agreed upon as a
result of assessment.
Percentage of suppliers with which relationships have been terminated as a
result of assessment, and why.
5
1
0%
0%
Our supplier reviews identified one supplier that had potential negative
environmental and social impacts. These potential impacts were effects
on marine life, effects on ecology and fisheries resource, and cultural
and community concerns. Our review found that these impacts were
appropriately managed by the supplier through their resource consenting
and consultation processes.
Scope
Category
FY21 tCO2e
FY20 tCO2e
Safety data at 30 June 2021
Indirect Emissions
(Scope 2)
Electricity Consumption
1,300
1,258
Simply Energy – electricity
consumption (location based)
Subtotal
Indirect Emissions
(Scope 3)
Purchased Goods and
Services
Capital Goods
Fuel and Energy
Upstream Transportation
Waste
Business Travel
Employee Commuting
3
N/A
1,303
16,699
41,726
330,207
27
149
263
306
1,258
11,9151
18,052
91,857
14
123
719
606
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Use of Sold Products
165,259
166,310
Downstream Leased Assets
399
306
Total (Scope 1, 2 and 3)
Subtotal
1. Figure restated due to methodology correction.
555,036
277,987
1,601,083
1,202,317
Employees
Non-employees
Number
Rate Number
Rate
Fatalities
High-consequence work-related
Recordable work-related injuries
0
0
1
0
0
0.52
0
0
4
Number of hours worked
1,914,213
N/A
465,707
0
0
8.59
N/A
The main types of work-related injuries
Foreign body in eye
Strains and sprains
Work-related hazards that pose a risk
of high-consequence injury
Energy sources, hazardous substances, working
at height, working in confined spaces, lifting
heavy loads, working with mobile plant, working
around water, excavations, fitness for work,
staying safe while driving, scope of work change.
The hazards listed above have been determined through identification of critical tasks and based
on consequences of injuries that happen in these areas.
Our hazard ID processes cover actions taken to eliminate these hazards and minimise risks.
Rates have been calculated based on 1,000,000 hours worked.
Monitored contractors are excluded because the work is contracted and takes place off sites.
Contact INTEGRATED REPORT 2021Additional disclosures
Contact Green Borrowing Programme
In line with our commitment to a low-carbon economy, Contact has a Green
Borrowing Programme to finance Contact’s past and future renewable
energy generation investments. This is a progressive approach to financing
and provides investors and lenders with an opportunity to access a broad
range of accredited green debt instruments where proceeds have been
applied to eligible green assets.
The Green Borrowing Programme is described in Contact’s Green Bond
Framework (Framework), which aligns with the Green Bond Principles and is
certified by the Climate Bonds Initiative (CBI) under Climate Bond Standard
V3.0 with assurance from KPMG.
The Framework, CBI certification and KPMG’s annual assurance statement
are available on our website. The Framework articulates which of
Contact’s debt instruments and assets qualify as green, and provides for a
comprehensive compliance and disclosure regime to ensure the Climate
Bonds Standard V3.0 is always met, in turn ensuring that the existing CBI
certification remains in place. A key compliance metric is the Green Ratio
whereby the total green asset value must be at least equal to total green
debt instruments (i.e. a ratio of 1.0 minimum). This indicator is reported on
a half-yearly basis.
The following table sets out the total green asset value and total green debt
instruments for the current reporting period, and confirms that the Green
Ratio is met at 1.45. Contact confirms to the best of its knowledge that its
Green Borrowing Programme continues to remain in compliance with the
CBI certification in place, including the requirements of the Climate Bonds
Standard V3.0.
Geothermal assets data as at 30 June 2021
Book value
$m
Generation
(GWh)
Emissions
(tCO2e)
Emissions
intensity
(gCO2e/
KWh)
Compliance
with CBI
standards
(< 100
gCO2e/KWh)
Poihipi
Tauhara
Te Mihi
Te Huka
Wairākei
Tenon and Nature’s Flame1
Ohaaki2
Geothermal portfolio total/average
Eligible Green Asset total/average
Total Green Debt Instruments
Green Asset Ratio
339
12,830
–
–
1,240
47,248
155
8,109
1,081
19,812
198
299
1,597
88,930
3,312
178,526
3,013
89,595
38
N/A
38
52
18
8
298
54
30
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
147
223
496
109
758
9
105
1,847
1,742
1,203
1.45
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1 Includes direct heat sold to Tenon and Nature’s Flame.
2 Ineligible green asset in relation to Contact’s Green Borrowing Programme.
Contact INTEGRATED REPORT 2021Additional disclosures
Workforce by gender and employment type at 30 June1
Employment contract and type by gender
FY20
Officers2
Corporate
Customer
Generation
Total
FY21
Officers2
Corporate
Customer
Development
Generation
and trading
Total
Total
headcount
Women
Men
Fixed
term Permanent
Part
time Full time
FY20
Women
Men
Total
6
69
516
343
934
2
42
324
71
439
4
27
192
272
495
0
5
25
11
41
6
64
491
332
893
0
13
72
28
113
6
56
444
315
821
Permanent employees
Fixed-term employees
Total
Full-time employees
Part-time employees
Total
417
22
352
87
476
19
469
26
893
41
934
821
113
934
Total
headcount
Women
Men
Undisclosed
Fixed
term Permanent
Part
time Full time
FY21
Women Men Undisclosed Total
9
72
505
55
304
3
46
309
18
50
6
26
195
37
254
945
426
518
0
0
1
0
0
1
0
5
23
3
11
42
9
67
482
52
293
0
15
70
2
24
9
57
435
53
280
903
111
834
Permanent
employees
Fixed-term
employees
Total
Full-time
employees
Part-time
employees
Total
405
497
21
21
339
494
87
24
1
0
1
0
903
42
945
834
111
945
Board diversity at 30 June
Men Women
Total
Under 30
30–50
Over 50
Total
Board of directors FY20
4
57%
Board of directors FY21
3
3
43%
4
7
100%
7
43%
57%
100%
0
0
0
0
3
43%
4
57%
4
7
57%
100%
3
7
43%
100%
European/
Pākehā
Māori
Pasifika
Total
6
6
1
1
1
1
7
7
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1 Gender is recorded by self-identification.
2 ‘Officers’ means the CEO and members of Contact’s Leadership Team.
Contact INTEGRATED REPORT 2021Additional disclosures
Employee diversity at 30 June, by business unit1
FY20
Officers
Corporate
Customer
Generation
Total
FY21
Officers
Corporate
Customer
Development
Generation
and trading
Women
Men Under 30
30–50
Over 50 Undisclosed
Māori Pasifika
Asian European
Other
AMELA Undisclosed
33%
61%
63%
21%
47%
67%
39%
37%
79%
53%
0%
12%
29%
8%
20%
33%
62%
47%
44%
47%
67%
23%
23%
47%
32%
0%
3%
1%
1%
1%
0%
7%
9%
6%
8%
17%
0%
3%
1%
2%
0%
7%
9%
5%
7%
50%
35%
36%
39%
37%
33%
33%
25%
35%
29%
0%
0%
2%
1%
1%
17%
29%
33%
25%
29%
Women
Men Under 30
30–50
Over 50 Undisclosed
Māori Pasifika
Asian European
Other
AMELA Undisclosed
33%
64%
61%
33%
16%
67%
36%
39%
67%
84%
0%
11%
27%
9%
9%
33%
67%
49%
58%
40%
67%
21%
23%
33%
50%
0%
1%
1%
0%
1%
1%
0%
7%
11%
5%
6%
9%
0%
0%
3%
4%
1%
2%
0%
10%
10%
4%
6%
8%
44%
35%
39%
45%
39%
33%
26%
24%
31%
35%
39%
28%
11%
0%
1%
2%
1%
1%
11%
32%
28%
24%
24%
26%
Total
45%
55%
19%
48%
33%
Employee diversity at 30 June, by employee category
FY21
KMP2
Other Execs/
GMs
Senior
Management
Other
Managers
Non-
Managers
Total
Women
Men Under 30
30–50
Over 50 Undisclosed
Māori Pasifika
Asian European
Other
AMELA Undisclosed
33%
33%
67%
67%
42%
58%
32%
68%
0%
0%
0%
2%
33%
83%
67%
17%
70%
30%
47%
50%
47%
53%
22%
47%
30%
45%
55%
19%
48%
33%
0%
0%
0%
1%
1%
1%
0%
0%
3%
6%
9%
9%
0%
0%
0%
1%
2%
2%
0%
0%
3%
6%
9%
8%
44%
33%
33%
25%
11%
0%
48%
45%
45%
32%
38%
27%
39%
28%
0%
0%
1%
1%
11%
42%
18%
21%
27%
26%
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1 Ethnicity total % adds up to more than 100%. This is because individuals can choose to identify multiple ethnicities.
2 Key managerial personnel.
Contact INTEGRATED REPORT 2021Additional disclosures Customer privacy
Energy consumption
Total energy consumption
FY18
FY19
FY20
FY21
Non-renewable fuels (nuclear fuels,
coal, oil, natural gas, etc.) purchased
and consumed (MWh)
4,863,611 3,892,222 3,521,375 3,990,948
Total solid waste disposed
(i.e. not recycled, reused or incinerated waste for energy recovery)
Total waste generated (metric tonnes)
109
126.1
108.6
132
Total waste used/recycled/sold (metric tonnes)
0
3.4
3.6
6.0
FY18
FY19
FY20
FY21
We do not track used/recycled/sold waste for all our sites of operation, figures
indicate recycled waste where tracked.
Number of complaints received from outside parties
Number of complaints received from regulatory bodies
Total number of identified leaks, thefts, or losses of customer data
1
0
28*
* We started recording the number of privacy breaches from 1 December 2020. While the number
appears high, most of the privacy breaches were considered minor in nature (for example, affected
one or two customers causing little or no harm) and did not require being reported to the Office of
the Privacy Commissioner.
The Privacy Act 2020 came into force on 1 December 2020 and introduced,
among other things, mandatory privacy breach reporting for notifiable
privacy breaches. A notifiable privacy breach is a privacy breach where serious
harm has been caused or is likely. One breach met this threshold. We do not
expect any further action to be taken in respect of that breach.
Contributions and other spending
Annual total monetary contributions to and spending for political campaigns,
political organisations, lobbyists or lobbying organisations, trade associations
and other tax-exempt groups:
$NZD
FY18
FY19
FY20
FY21
Lobbying, interest representation
or similar
Local, regional or national political
campaigns/organisations/
candidates
Trade associations or tax-exempt
groups
Other (e.g. spending related to
ballot measures or referendums)
146,642
161,852
169,540
167,986
0
0
0
0
0
0
0
0
0
0
0
0
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Contact INTEGRATED REPORT 2021Additional disclosures
Habitat protection and restoration work at 30 June 2021
Habitat protected or restored
Location
Size (ha) Status
Partnerships
Torepatutahi Wetland, willow wetland restored to natives
Taupō region
36.9 Ongoing weed control and
replacement planting
Ngati Tahu – Ngati Whaoa Runanga,
Fish and Game, Department of
Conservation, landowners
Elliot Lake, farmland replanted in natives
Taupō region
1.6 Planting complete, ongoing
None
maintenance
Wairākei Power Station entrance, replanted in natives and fruit
trees for community garden
Taupō region
0.5 Planting complete, ongoing
Greening Taupō
maintenance
Karapiti Pines, wilding pine removal
Taupō region
8.4 Ongoing maintenance
Oruanui Pines, wilding pine removal
Taupō region
4.3 Ongoing maintenance
Wai-ora Hill, pest plant control
Taupō region
64.8 Ongoing maintenance
None
None
Waikato Regional Council,
Ministry for Primary Industries
Oruanui, retired thermo-tolerant vegetation site from pastoral
agriculture
Taupō region
3.5 Ongoing maintenance
None
Karapiti, mānuka and native planting
Taupō region
17.5 Ongoing maintenance and pest control None
Rakaunui and Otumuheke Block, stormwater drain and
stream planting
Taupō region
2.0 Planting complete, ongoing
maintenance
Ohaaki Bund, scrubland replanted in natives
Taupō region
1.2 Ongoing maintenance
None
None
Waipuwerawera stream restoration, removing pest plants and
planting natives
Taupō region
3.2 Ongoing maintenance and pest control Tuwharetoa Maori Trust Board,
Taupō District Council,
Department of Conservation
Te Rau o Te Huia stream restoration
Taupō region
6.6 Systematic removal of pest plants and
Ngāti Te Rangiita Ki Oruanui
annual planting programme
Huka Quarry block, removal of weeds and planting natives
Taupō region
1.3 Ongoing maintenance and pest control None
Wairākei Drive strip, aesthetic planting
Taupō region
0.5 Annual Greening Taupō planting,
aligned with community desires
None
Ex Keegan Stratford, riparian native planting
Gladstone Gap, community plantings
Stratford,
Taranaki
Hawea,
Central Otago
– Annual planting programme, ongoing
Taranaki Regional Council
maintenance
0.5 Irrigation of native plants, partially
Hawea Community Association
restored area
Independent assurance has been undertaken for the Torepatutahi Wetland restoration work. Other restoration and protection work has not been assured.
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Contact INTEGRATED REPORT 2021Additional disclosures
TCFD index
Disclosure
Describe the board’s oversight of climate-related risks and opportunities.
Describe management’s role in assessing and managing climate-related risks and opportunities.
Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term.
Describe the impact of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning.
Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2 degree or lower scenario
Describe the organisation's processes for identifying and assessing climate-related risks.
Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation's overall risk management.
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.
Disclose Scope 1, 2 and if appropriate 3 greenhouse gas (GHG) emissions, and the related risks.
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.
Page
number
p. 53
p. 54
p. 68
p. 41
p. 41
p. 41
p. 54
p. 25
p. 40
p. 25
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Contact INTEGRATED REPORT 2021Additional disclosures Page No.
Information
Description
Page No.
Information
GRI index
Description
Strategy and analysis
102–14
Statement from the most
senior decision maker
6–10
Organisational profile
102–1
102–2
102–3
102–4
102–5
102–6
102–7
102–8
102–41
102–9
102–10
Name of the organisation
Contact Energy Limited
Brands, products, and/or
services
Headquarter location
Locations of operations
Ownership and legal form
Markets served
Scale of the organisation
Employee statistics
Employees covered by
collective bargaining
agreements
15–16
111
16
82
15
15–16
73–74
9.8% of total Contact employees
were covered by collective
bargaining agreements as at
30 June 2021. Contractor data
not collected.
Organisation’s supply
chain
Significant changes
regarding size, structure,
or ownership
20
86
102–11
Precautionary approach
54 Not specifically addressed.
Potential adverse
environmental impacts are
addressed through adapative
management including
official (often publicly notified)
resource consent assessments.
ISO 14001
67–68
82
21–22
102–12
102–13
External charters,
principles, or other
initiatives
Memberships in
associations and
advocacy organisations
Identified material aspects and boundaries
102–45
Entities included in the
organisation’s consolidated
financial statements
102–46
Process for defining the
report content
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102–47
List of material topics
21–22 For the majority of our material
topics, the impacts occur within
the operational boundary.
For some topics, Biodiversity,
Water, Climate Change and
Energy Hardship, impacts can
be felt downstream of our
operational boundary, or we are
contributing to a larger issue.
Health and safety impacts are
also created by companies in
our supply chain. In all cases,
our focus is on areas which we
can control or influence.
102–48
102–49
Restatements of
information
71
Significant changes
of aspect boundaries
compared to previous years
41 GHG emissions now include
Simply Energy and Western
Energy.
Stakeholder engagement
102–40
102–42
102–43
102–44
Report profile
102–50
102–51
102–52
102–53
102–54
102–56
Governance
102–18
Stakeholder groups
Stakeholder identification
and selection
Approaches to stakeholder
engagement
Key topics and concerns
raised by stakeholders
Reporting period
Date of most recent
previous report
Reporting cycle
Contact point for questions
Chosen ‘In accordance’
option, GRI index
21–22
21
21
21–22
2
2
2
111
This report has been
developed in accordance with
the core GRI 2018 guidelines.
External assurance for the
report
106– 110
Governance structure.
Committee responsible
for decision-making on
economic, environmental
and social topics
53
Contact INTEGRATED REPORT 2021Additional disclosures Description
Page No.
Information
Description
Page No.
Information
Ethics and integrity
102–16
Organisation’s values,
principles, standards and
norms of behaviour, and
codes of ethics
Specific Standard Disclosures
Category: environmental
DMA Water
303–3
303–4
Total water withdrawal by
source
Total water discharge by
destination
303–5
Total water consumption
DMA Biodiversity
304–3
Habitats protected or
restored
DMA Emissions
305–1
305–2
305–3
305–4
305–5
Direct (Scope 1)
greenhouse gas emissions
Gross location based
Scope 2 emissions
Gross Scope 3 emissions
GHG emissions intensity
Reduction of GHG
emissions
DMA Reliable renewable energy
Own measure Percentage of renewable
generation
Category: social
DMA Occupational health and safety
403–9
Work–related injuries
Self-selected
TISR
Self-selected Process safety data
DMA Diversity and equal opportunity
14
42
42
42
76
71
71
71
71
40
15
71
45
45
405–1
Gender, age and ethnicity
statistics
Self-selected
Staff engagement
73–74
43
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DMA Local communities
413–1
Community engagement
and development
38
DMA Customer experience
Own measure Customer satisfaction
32
(Net Promoter Score)
DMA Customer wellbeing
Own measure Description of activities
undertaken to support
customer wellbeing
DMA Energy hardship
33
Own measure Reduction of customer
33
debt expressed as a
percentage
DMA Supply chain
308–2
414–2
Negative environmental
impacts in the supply
chain and actions taken
Negative social impacts
in the supply chain and
actions taken
DMA Compliance
307–1
419–1
Non-compliance with
environmental laws and
regulations
Non-compliance with laws
and regulations in the
social and economic area
71
71
38 No cases brought through
dispute resolution
mechanisms.
49
DMA Financial sustainability
Own measure Financial performance in
47
FY21
DMA Privacy
418–1
Substantiated complaints
concerning breaches of
customer privacy and
losses of customer data
75
Contact INTEGRATED REPORT 2021Additional disclosures Financial
statements
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Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021 Financial statements
Contents
About these financial statements
Statement of comprehensive income
Statement of cash flows
Statement of financial position
Statement of changes in equity
Notes to the financial statements
82
83
83
84
85
86
A. Our performance
A1. Segments
A2. Earnings
A3. Free cash flow
B. Our funding
B1. Capital structure
B2. Share capital
B3. Distributions
B4. Borrowings
B5. Net interest expense
C. Our assets
C1. Property, plant and equipment and
intangible assets
E. Other disclosures
E1. Tax
E2. Operating expenses
E3. Inventory
E4. Trade and other receivables
E5. Provisions
E6. Profit to operating cash flows
E7. Hedging activities
E8. Financial instruments at fair value
98
98
99
99
99
100
100
100
101
E9. Financial instruments at amortised cost
102
E10. Share-based compensation
E11. Related parties
E12. New accounting standards
102
104
105
86
86
86
88
88
88
88
89
89
90
91
91
C2. Goodwill and asset impairment testing
93
D. Our financial risks
D1. Market risk
D2. Liquidity risk
D3. Credit risk
94
94
97
98
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Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021 About these
financial statements
For the year ended 30 June 2021
These financial statements are for Contact,
a group made up of Contact Energy Limited,
the entities over which it has control and its
associate.
Contact Energy Limited is registered in New Zealand under the Companies
Act 1993. It is listed on the New Zealand Stock Exchange (NZX) and the
Australian Securities Exchange (ASX) and has bonds listed on the NZX debt
market. Contact is an FMC reporting entity under the Financial Markets
Conduct Act 2013.
Contact’s financial statements are prepared:
• in accordance with New Zealand generally accepted accounting practice
(GAAP) and comply with New Zealand equivalents to International Financial
Reporting Standards (IFRS) and IFRS as appropriate for profit-oriented entities
• in millions of New Zealand dollars (NZD) unless otherwise noted
• on a historical cost basis except for financial instruments held at fair value
• using the same accounting policies for all reporting periods presented
• with certain comparative amounts reclassified to conform to the current
year’s presentation.
Estimates and judgements are made in applying Contact’s accounting
policies. Areas that involve a higher level of estimation or judgement are:
• useful lives of property, plant and equipment and intangible assets (note C1)
• impairment testing of cash-generating units (CGUs) and future generation
development capital work in progress (note C2)
• fair value measurement of financial instruments (notes D1 and E8)
• provision for future restoration and rehabilitation obligations (note E5).
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The financial statements were authorised on behalf of the Contact Energy
Limited Board of Directors on 13 August 2021.
Robert McDonald
Chair
Dame Therese Walsh
Chair, Audit and Risk Committee
Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021
Statement of
comprehensive income
For the year ended 30 June 2021
Statement of
cash flows
For the year ended 30 June 2021
$m
Revenue and other income
Operating expenses
Net interest expense
Depreciation and amortisation
Change in fair value of financial instruments
Profit before tax
Tax expense
Profit
Items that may be reclassified to profit/(loss):
Change in hedge reserves (net of tax)
Comprehensive income
Profit per share (cents) – basic
Profit per share (cents) – diluted
Note
A2
A2
B5
C1
D1
E1
E7
2021
2,573
2020
$m
Note
2,073
Receipts from customers
(2,020)
(1,627)
Payments to suppliers and employees
(50)
(249)
7
261
(74)
187
(2)
185
25.3
25.3
(55)
Interest paid
(220)
Interest received
–
Tax paid
171
Operating cash flows
(46)
Purchase and construction of assets
125
Capitalised interest
Investment in joint venture/associate
(10)
Acquisition of subsidiaries
115
17.5
17.4
Acquisition of Energyclub NZ
Investing cash flows
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Net proceeds from share issue
Financing cash flows
Net cash flow
2021
2,524
2020
2,058
(1,970)
(1,598)
(43)
(49)
–
–
E6
E11
B3
(79)
432
(129)
(8)
(8)
(31)
(1)
(177)
(274)
356
(623)
(70)
341
(94)
(6)
(3)
–
(3)
(106)
(280)
226
(184)
392
–
(149)
(238)
106
44
150
(3)
47
44
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Add: cash at the beginning of the year
Cash at the end of the year
B4
Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021
Statement of
financial position
At 30 June 2021
$m
Cash and cash equivalents
Trade and other receivables
Inventories
Intangible assets
Derivative financial instruments
Total current assets
Property, plant and equipment
Intangible assets
Goodwill
Investments in joint venture/associate
Derivative financial instruments
Total non-current assets
Total assets
Trade and other payables
Tax payable
Borrowings
Derivative financial instruments
Provisions
Total current liabilities
Borrowings
Derivative financial instruments
Provisions
Deferred tax
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Share capital
Retained earnings
Hedge reserves
Share-based compensation reserve
Shareholders’ equity
Note
B4
E4
E3
C1
D1
C1
C1
C2
E11
D1
B4
D1
E5
B4
D1
E5
E1
B2
E7
2021
150
255
69
24
56
554
3,961
213
220
10
70
4,474
5,028
305
39
163
92
23
622
693
84
51
635
16
1,479
2,101
2,927
1,922
1,048
(51)
8
2020
44
191
56
3
37
331
4,026
227
179
14
119
4,565
4,896
190
28
220
53
10
501
978
74
58
653
11
1,774
2,275
2,621
1,528
1,134
(49)
8
2,927
2,621
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Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021
Statement of
changes in equity
For the year ended 30 June 2021
$m
Balance at 1 July 2019
Profit
Change in hedge reserves (net of tax)
Change in share-based compensation reserve
Change in share capital
Dividends paid
Balance at 30 June 2020
Profit
Change in hedge reserves (net of tax)
Change in share-based compensation reserve
Change in share capital
Dividends paid
Balance at 30 June 2021
Note
Share
capital
Retained
earnings
Other
reserves
Shareholders’
equity
1,523
1,288
(29)
2,782
E7
E10
B2
B3
E7
E10
B2
B3
–
–
–
5
–
1,528
–
–
–
394
–
125
–
125
–
–
–
(280)
1,134
187
–
–
–
(274)
(10)
(2)
–
–
(41)
–
(2)
–
–
–
(10)
(2)
5
(280)
2,621
187
(2)
–
394
(274)
1,922
1,048
(43)
2,927
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Contact INTEGRATED REPORT 2021Financial statements for the year ended 30 June 2021
Notes to the financial statements
A. Our performance
A1. Segments
Contact reports activities under the Wholesale segment and the Customer
segment.
The Wholesale segment includes revenue from the sale of electricity to the
wholesale electricity market, to Commercial and Industrial (C&I) customers
and to the Customer segment, less the cost to generate and/or purchase
the electricity and costs to serve and distribute electricity to C&I customers.
The results of Simply Energy Limited and Western Energy Services Limited,
following their acquisition on 31 August 2020 and 31 March 2021 respectively,
have been included within the Wholesale segment, within the relevant line items.
Prior to acquisition date, Contact’s share of net earnings of Simply Energy Limited
as an associate were included in ‘Unallocated’ other operating expenses.
The Customer segment includes revenue from delivering electricity, natural
gas, broadband and other products and services to mass market customers
less the cost of purchasing those products and services, and the cost to serve
customers.
‘Unallocated’ includes corporate functions not directly allocated to the
operating segments, and Contact’s share of earnings from associates and
joint ventures.
The Customer segment purchases electricity from the Wholesale segment
at a fixed price in a manner similar to transactions with third parties.
A2. Earnings
The tables on the next pages provide a breakdown of Contact’s revenue and
expenses, earnings before interest, tax, depreciation and amortisation, and
changes in fair value of financial instruments (EBITDAF) by segment, and
a reconciliation from EBITDAF to profit reported under NZ GAAP. EBITDAF
is used to monitor performance and is a non-GAAP profit measure.
The significant items category has been removed in the current financial year.
The increase in Holidays Act provision recognised in the reporting period
ended 30 June 2020 has been reclassified to other operating expenses,
reducing EBITDAF by $5 million with no overall impact to profit.
The key revenue categories are:
• Electricity and gas
Electricity and gas revenue (including mass market electricity, C&I electricity
and gas) is recognised when energy is supplied for customer consumption.
Mass market electricity includes net revenue for AA Smartfuel rewards.
Revenue is initially recognised net of prompt payment discounts.
• Wholesale electricity, net of hedging
Revenue received from electricity generated and sold through the wholesale
market, the net settlement of electricity hedges sold on the electricity
futures markets and to generators, other retailers and industrial customers.
Revenue is recognised as the energy is delivered.
• Electricity-related services
Revenue from the sale of complementary products and services to the
wholesale market for the provision of instantaneous reserves, frequency keeping
and other ancillary services. Revenue is recognised as the services are provided.
• Broadband and steam
Revenue from the sale of steam is recognised as the steam is delivered.
Broadband revenue is recognised as the broadband services are provided.
Revenue recognition involves the calculation of unbilled revenue accruals for
mass market, C&I electricity and gas, as well as the recognition of contract
assets (note E4).
Simply Energy Limited revenue for electricity supply and billing services is
included in the ‘C&I electricity – fixed price’, ‘C&I electricity – pass through’ and
‘Wholesale electricity, net of hedging’ revenue lines. Revenue is recognised when
energy is supplied for customer consumption and as billing services are provided.
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021 $m
Mass market electricity
C&I electricity – fixed price
C&I electricity – pass through
Wholesale electricity, net of hedging
Electricity-related services revenue
Inter-segment electricity sales
Gas
Steam
Geothermal services
Broadband
Total revenue
Other income
Total revenue and other income
Electricity purchases, net of hedging
Electricity purchases – pass through
Electricity-related services cost
Inter-segment electricity purchases
Gas and diesel purchases
Gas storage costs
Carbon emissions costs
Generation transmission & levies
Electricity networks, levies & meter costs – fixed price
Electricity networks, levies & meter costs – pass through
Gas networks, transmission & meter costs
Geothermal service costs
Broadband costs
Other operating expenses
Total operating expenses
EBITDAF
Depreciation and amortisation
Net interest expense
Change in fair value of financial instruments
Tax expense
Profit
Wholesale Customer Unallocated Eliminations
Total
Wholesale
Customer
Unallocated Eliminations
Total
2021
2020
–
249
44
1,285
8
338
2
28
3
–
1,957
4
1,961
(974)
(30)
(7)
–
(126)
(24)
(41)
(28)
(82)
(13)
(7)
(1)
–
(101)
(1,434)
527
839
–
–
–
–
–
74
–
–
32
945
6
951
–
–
–
(338)
(24)
–
(4)
–
(378)
–
(37)
–
(33)
(81)
(895)
56
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30)
(30)
(30)
861
–
–
–
–
–
74
–
–
17
952
5
957
–
–
–
(332)
(24)
–
(4)
–
(414)
–
(37)
–
(17)
(79)
(907)
50
(1)
–
–
–
–
(338)
–
–
–
–
838
249
44
1,285
8
–
76
28
3
32
–
275
16
791
8
332
1
26
–
–
(339)
2,563
1,449
–
10
–
(339)
2,573
1,449
–
–
–
338
–
–
–
–
–
–
–
–
–
(974)
(30)
(7)
–
(150)
(24)
(45)
(28)
(460)
(13)
(44)
(1)
(33)
(635)
(14)
(7)
–
(90)
(22)
(24)
(32)
(95)
(2)
(9)
–
–
1
(211)
(93)
339
(2,020)
(1,023)
426
–
553
(249)
(50)
7
(74)
187
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30)
(30)
(30)
(1)
–
–
–
–
(332)
–
–
–
–
860
275
16
791
8
–
75
26
–
17
(333)
2,068
–
5
(333)
2,073
–
–
–
332
–
–
–
–
–
–
–
–
–
(635)
(14)
(7)
–
(114)
(22)
(28)
(32)
(509)
(2)
(46)
–
(17)
1
(201)
333
(1,627)
–
446
(220)
(55)
–
(46)
125
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021 A3. Free cash flow
Free cash flow is a non-GAAP cash measure that shows the amount of cash
Contact has available to distribute to shareholders, reduce debt or reinvest in
growing the business. A reconciliation from EBITDAF to NZ GAAP operating
cash flows and to free cash flow is provided below.
$m
EBITDAF
Tax paid
Change in working capital net of investing and
financing activities
Non-cash items included in EBITDAF
Net interest paid, excluding capitalised interest
Operating cash flows
Stay-in-business capital expenditure
Operating free cash flow and free cash flow
Operating free cash flow per share (cents)
Note
A2
E6
B3
2021
2020
553
(79)
3
(2)
(43)
432
(61)
371
50.2
446
(70)
7
7
(49)
341
(51)
290
40.4
Stay-in-business capital expenditure is required to maintain our business
operations and includes major plant inspections and replacements of
existing assets.
B. Our funding
B1. Capital structure
Contact’s capital includes equity and net debt. Our objectives when managing
capital are to ensure Contact can pay its debts when they are due and to
optimise the cost of our capital.
To manage the capital structure, the Board of Directors may adjust the
amount and nature of distributions to shareholders, issue new shares and
increase or repay debt.
Contact manages its capital structure to support an investment grade credit
rating and a gearing ratio suitable to our operating environment.
$m
Borrowings
Shareholders’ equity
Total capital funding
Gearing ratio
Note
B4
2021
856
2,927
3,783
22.6%
2020
1,198
2,621
3,819
31.4%
B2. Share capital
Share capital comprises ordinary shares listed on the NZX and ASX. Certain
ordinary shares are held in trust on behalf of employees under the Contact
Share scheme (note E10). All shareholders are entitled to receive distributions
and to make one vote per share.
Contact undertook a $400 million equity raise during the year ended
30 June 2021. Direct, incremental costs associated with the equity raise
of $8 million were deducted from share capital.
Balance at 30 June 2020
Share capital issued
Balance at 30 June 2021
Comprises:
Ordinary shares
Contact Share
Note
Number
718,131,884
57,990,186
$m
1,528
394
776,122,070
1,922
775,854,408
1,923
E10
267,662
(1)
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
B3. Distributions
Earnings and operating free cash flow per share
cps
50
40
30
20
10
0
.
3
5
52
7
1
.
Profit
(basic)
Weighted average
Number of shares (basic)
Number of shares (diluted)
B4. Borrowings
Borrowings are recognised initially at fair value less financing costs and
subsequently at amortised cost using the effective interest rate method.
Some borrowings are designated in fair value hedge relationships, which
means that any changes in market interest and foreign exchange rates result
in a change in the fair value adjustment on that debt.
Borrowings denoted with an asterisk (*) are Green Debt Instruments under
Contact’s Green Borrowing Programme, which has been certified by the
Climate Bonds Initiative. At 30 June 2021 Contact remains compliant with
the requirements of the programme. Further information is available on the
Sustainability section on Contact’s website.
2021
2020
$m
Maturity
Coupon
2021
2020
.
2
0
45
0
4
.
.
3
5
2
.
4
7
1
Profit
(diluted)
Operating free
cash flow
(basic)
2021
2020
* Commercial paper
< 3 months
Floating
Bank overdraft
< 3 months
Floating
738,614,475
717,652,455
739,042,889
718,964,789
The basic earnings per share calculation uses the weighted average number
of shares on issue over the period.
The diluted weighted average number of shares takes into account the number
of share options, performance share rights and deferred share rights that
are currently exercisable or will become exercisable depending on likelihood
of meeting vesting conditions.
Dividends paid
Paid during the year ended
2019 final
2020 interim
30 June 2020
2020 final
2021 interim
30 June 2021
Cents
per share
23.0
16.0
23.0
14.0
$m
165
115
280
165
109
274
On 13 August 2021, the Board resolved to pay a 65% imputed final dividend
of 21 cents per share on 15 September 2021. On 13 August 2021, Contact had
$27 million of imputation credits available for use in future periods.
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* Drawn bank facilities
Lease obligations
* USPP notes – US$56m
* Retail bonds – CEN030
* Retail bonds – CEN040
* USPP notes – US$22m
* USPP notes – US$51m
* USPP notes – US$42m
* Retail bonds – CEN050
* USPP notes – US$58m
* USPP notes – US$43m
Various
Floating
Various
Various
Dec 2020
Nov 2021
Nov 2022
Dec 2023
Dec 2023
Dec 2023
Aug 2024
Dec 2025
Dec 2025
3.46%
4.40%
4.63%
4.19%
4.09%
3.63%
3.55%
4.33%
3.85%
* Export credit agency facility
Nov 2027
Floating
* USPP notes – US$15m
* USPP notes – US$23m
* USPP notes – US$30m
Face value of borrowings
Deferred financing costs
Dec 2027
Dec 2028
Dec 2028
3.95%
4.44%
4.51%
Total borrowings at amortised cost
Fair value adjustment on hedged borrowings
Carrying value of borrowings
Current
Non-current
–
–
–
21
–
150
100
28
64
61
1
120
64
22
70
150
100
28
64
61
100
100
73
62
47
22
29
38
795
(3)
792
64
856
163
693
73
62
54
22
29
38
1,058
(4)
1,054
144
1,198
220
978
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
Changes in borrowings
$m
Borrowings at the start of the year
Net cash borrowed/(repaid)
Non-cash change in lease obligations
Non-cash change in deferred financing costs
Non-cash change in fair value adjustment
Borrowings at the end of the year
2021
1,198
(267)
3
1
(80)
856
2020
1,096
42
1
1
58
1,198
Short-term funding
Contact uses bank facilities for general corporate purposes including to
manage its liquidity risk (note D2). While drawings under our bank facilities
are typically for periods of three months or less, the amounts drawn down can
be rolled for the term of the facility. Drawn facilities are classified as current
when the facility will expire within one year of the reporting period end.
Security
Contact’s Deed of Negative Pledge and Guarantee and its United States
Private Placement (USPP) note agreements restrict Contact from granting
security interest over its assets, subject to certain permitted exceptions.
Because of these restrictions, Contact’s borrowings are all unsecured, except
for lease obligations secured over the leased assets. The Deed of Negative
Pledge and Guarantee and the USPP note agreements contain various debt
covenants, all of which Contact complied with during the reporting period.
Cash and cash equivalents
Cash and cash equivalents exclude bank overdrafts which are included within
borrowings. Contact trades electricity price derivatives on the ASX market using
a broker that holds collateral on deposit for margin calls. At 30 June 2021, this
collateral was $109 million (2020: $44 million) and is included within cash.
B5. Net interest expense
$m
Note
Contact’s total bank facilities have a range of maturities as follows:
Interest expense on borrowings
Maturity $m
Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
More than 3 years
2021
2020
–
–
–
50
380
430
325
195
110
630
Interest expense on finance leases
Unwind of discount on provisions
E5
Unwind of deferred financing costs
Capitalised interest
Interest income
Net interest expense
All of these bank facilities form part of Contact’s Green Borrowing Programme.
Lease obligations
Contact’s leases predominately relate to property and connections to the
national electricity grid. These assets are included in the carrying value of
property, plant and equipment (note C1).
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90
2021
(52)
(1)
(5)
(1)
8
1
(50)
2020
(53)
(2)
(5)
(1)
6
–
(55)
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
C. Our assets
Property, plant and equipment
$m
Cost
Generation
plant and
equipment
Other land,
buildings,
plant and
equipment
Capital
work in
progress
Leased
assets
Total
Balance at 1 July 2019
5,627
111
Additions
Transfers from capital work in progress
Disposals
16
18
(3)
4
4
–
156
63
(22)
–
60
5,954
1
–
–
84
–
(3)
Balance at 30 June 2020
5,658
119
197
61
6,035
Additions
Acquisitions
Transfers from capital work in progress
Disposals
7
1
124
12
1
–
53
–
–
–
Balance at 30 June 2021
5,718
132
Depreciation and impairment
Balance at 1 July 2019
Depreciation charge
Disposals
Balance at 30 June 2020
Depreciation charge
Acquisitions
Disposals
(1,698)
(177)
3
(1,872)
(200)
–
–
(98)
(4)
–
(102)
(4)
(6)
–
Balance at 30 June 2021
(2,072)
(112)
3
3
–
–
67
(31)
(3)
–
(34)
(4)
–
–
135
16
–
(2)
6,184
(1,828)
(184)
3
(2,009)
(208)
(6)
–
(38)
(2,223)
(53)
(2)
267
(1)
–
–
(1)
–
–
–
(1)
Carrying value
At 30 June 2020
At 30 June 2021
3,786
3,646
17
20
196
266
27
29
4,026
3,961
C1. Property, plant and equipment
and intangible assets
Contact’s property, plant and equipment (PP&E)
and intangible assets include:
• Generation plant and equipment: hydro,
geothermal and thermal power stations and
geothermal wells and pipelines.
• Computer software: our SAP system that is
used for customer service and billing, finance
functions and generation asset management,
which has a carrying value of $169 million (2020:
$194 million) and a remaining life of nine years.
All assets are recognised at cost less accumulated
depreciation or amortisation and impairments.
Generation plant and equipment acquired before
1 October 2004 is recognised at deemed historical
cost, which is the fair value of those assets at
1 October 2004, less accumulated depreciation
and accumulated impairment losses.
Included within additions for the year ended
30 June 2021 is capitalised interest of $8 million
(2020: $6 million) in relation to the build of the
Tauhara geothermal plant and steamfield.
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
The useful economic life of certain Wairākei plant and steamfield assets
was reassessed during the reporting period ended 30 June 2021 to reflect
management's current best estimate that the existing Wairākei A&B stations
will be replaced around 2026. As a change in accounting estimate, this was
applied prospectively from 1 January 2021 and has resulted in a $12.9 million
increase in depreciation in the year ended 30 June 2021.
Computer
software and
capital work
in progress
Carbon
emission
units
Other
Total
within its interim reporting for the six months ended 31 December 2021. Based on
the review completed to date, no material changes are expected to arise.
Capital commitments
At 30 June 2021, Contact was committed to $334 million of capital expenditure
(2020: $8 million) and $60 million of carbon-forward contracts (2020: $33 million),
of which $249 million is due within one year of balance date.
Cost
Contact capitalises the costs to purchase and bring assets into service. When
Contact develops an asset, employee time and other directly attributable costs are
capitalised and held as capital work in progress until the asset is commissioned.
Contact capitalises costs to obtain resource consents and to drill geothermal
exploration wells. These costs are expensed if the existing area of operations
that they relate to is unsuccessful or abandoned. All other geothermal
exploration costs are expensed.
Carbon emission units are purchased to offset our emissions under the
New Zealand Emissions Trading Scheme (ETS). The units are measured at
weighted average cost. They are classified as current assets when they will
be used to offset our ETS obligations at balance date or obligations expected
to be incurred within one year of balance date.
Depreciation and amortisation
The cost of Contact’s assets is spread evenly over their useful lives (straight
line method) or, for certain thermal assets, over the equivalent operating
hours (EOH) those assets are expected to be of benefit to Contact.
Management estimates an asset’s useful life or EOH and this is reviewed annually.
Land, capital work in progress and carbon emission units are not depreciated
or amortised. The depreciation and amortisation rates for all other assets are:
Asset
Generation plant and equipment
Straight line
Equivalent operating hours
24
213
Other buildings, plant and equipment
Computer software
Rate/hours
1 – 33%
40,000 – 100,000
2 – 33%
5 – 50%
467
17
(2)
482
19
–
–
501
(221)
(36)
1
(256)
(40)
(296)
226
205
–
205
14
15
(26)
3
68
–
(47)
24
–
–
–
–
–
–
3
24
24
–
–
1
–
1
–
8
–
9
–
–
–
–
(1)
(1)
1
8
–
8
481
33
(28)
486
87
8
(47)
534
(221)
(36)
1
(256)
(41)
(297)
230
237
Intangible assets
$m
Cost
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June 2020
Additions
Acquisitions
Disposals
Balance at 30 June 2021
Amortisation
Balance at 1 July 2019
Amortisation charge
Disposals
Balance at 30 June 2020
Amortisation charge
Balance at 30 June 2021
Carrying value
At 30 June 2020
At 30 June 2021
Current
Non-current
Contact is in the process of completing a review of its software assets in light
of the IFRIC agenda decision Configuration or Customisation costs in a Cloud
Computing Arrangement (published in April 2021), which will be concluded
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
C2. Goodwill and asset impairment testing
Contact has two cash-generating units (CGUs): Wholesale and Customer.
The Customer CGU includes goodwill of $179 million (2020: $179 million),
and the Wholesale CGU includes provisional goodwill of $41 million,
following the acquisition of Simply Energy Limited and Western Energy
Services Limited in the year. Capital work in progress (CWIP) includes
$223 million (2020: $140 million) related to future generation developments
not allocated to a CGU.
The key inputs to CGU and future generation development cash flows, and
their method of determination, are:
Customer CGU
Post-tax discount rate and
inflation
External WACC report prepared by Cameron Partners
and implicit inflation rate.
Customer numbers and churn
Actual customer numbers adjusted for historical
churn data and expected market trends.
Further information on the acquisition of Simply Energy Limited and
Western Energy Services Limited is provided in note E11.
Margin per customer
Actual margin per customer adjusted for expected
market changes.
The recoverable amount of an asset or CGU is calculated as the higher of its
value in use and fair value less costs to sell. Every reporting period management
estimates the value in use expected to be recovered from Contact’s CGUs and
future generation development in CWIP. An impairment is recognised when
the value in use or fair value less costs to sell is lower than the carrying value.
Determining value in use involves estimating future cash flows for each CGU.
These cash flows are adjusted for future growth based on historical inflation
and discounted at a post-tax discount rate between 6 per cent and 7 per cent to
arrive at the present value, or value in use, of each CGU. The future generation
development is assessed separately, however, key inputs are the same as for
the Wholesale CGU plus an estimate of plant commissioning costs.
No impairments were recognised in the current or prior period.
Estimated future capital
expenditure and operating costs
Budgeted capital and operating expenditure,
reflecting historical levels and known differences.
Cost of purchased energy
ASX future electricity prices adjusted for location and
seasonal shape.
Wholesale CGU and future generation development
Post-tax discount rate and
inflation
External WACC report prepared by Cameron Partners,
and implicit inflation rate.
Wholesale electricity price path Modelled wholesale prices based on ASX future
electricity prices adjusted for location and seasonal
shape, and price estimates based on an analysis of
expected demand and cost of new supply for periods
not quoted on the ASX market.
Generation volume and mix
Generation strategy based on expected demand,
hydro volumes and expected market pricing.
Estimated future capital
expenditure and operating costs
Budgeted capital and operating expenditure,
reflecting historical levels and known differences.
Gas price
Contracted gas prices otherwise Contact’s best
estimate of future prices.
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93
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021 Sensitivities
The calculation of the value in use for the CGUs is most sensitive to the inputs
for wholesale electricity prices and the post-tax discount rate.
Wholesale electricity prices are influenced by a number of factors that are
difficult to predict, in particular, weather, which can impact short-term prices.
Wholesale electricity prices may also be adversely affected by a reduction
in demand, the availability of fuel and generation capacity in the wholesale
electricity market, and competitor and transmission system availability.
The post-tax discount rate is an estimate of Contact’s weighted average cost
of capital and is influenced by a number of external factors such as the risk-
free rate and inflation.
The sensitivity of the valuation model to the wholesale electricity prices and
discount rate, where all other inputs remain constant, is as follows:
Significant unobservable inputs
Sensitivity
Impact $m
Post-tax discount rate
Wholesale electricity price path
- 0.5%
+ 0.5%
+ 10%
- 10%
+ 822
- 655
+ 364
- 364
The value in use exceeded the carrying value for all sensitivities carried out.
There is interrelation between the key inputs in the valuation. Any changes
in the price path and post-tax discount rate would not occur in isolation and
would drive other changes which could also impact the value in use.
D. Our financial risks
Contact’s financial risk management system mitigates exposure to market,
liquidity and credit risks by ensuring that material risks are identified, the
financial impact is understood, and tools and limits are in place to manage
exposures. Written policies provide the framework for Contact’s financial risk
management system.
D1. Market risk
Interest rate risk
Contact has fixed and floating rate debt and is exposed to movements
in interest rates. For fixed rate debt the exposure is to falling interest rates,
as Contact could have secured that debt at lower rates, while for floating
rate debt there is uncertainty of future cash interest payments.
Contact manages these risks through the use of interest rate swaps (IRS)
and cross-currency interest rate swaps (CCIRS) to ensure that the total debt
portfolio has an appropriate amount of fixed and floating rate exposure.
The risk is monitored by assessing the notional amount of debt on a fixed
and floating basis and ensuring this is in accordance with set policies.
Foreign exchange risk
Contact is exposed to movements in foreign exchange rates through its
commitments to pay certain suppliers and United States Private Placement
(USPP) note holders.
To mitigate this risk, forward foreign exchange contracts are used to fix future
cash flows in NZD terms. Foreign debt is hedged through the use of CCIRS,
which converts foreign currency principal and interest payments to NZD at
a fixed exchange rate.
Commodity price risk
Contact is exposed to electricity price risk through the sale and purchase of
electricity on the wholesale electricity market. Contact’s integrated Wholesale
and Customer businesses provide a natural hedge for most of this exposure.
Derivatives may be used to fix the price at which Contact buys or sells any residual
exposure to electricity price risks. In addition, Contact is party to a fixed-price
swaption to provide cover in extreme price situations.
Contact is also exposed to natural gas price risk on purchases of natural gas.
Short- and long-term gas purchase contracts are used to fix the price of gas.
These are not derivative financial instruments.
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94
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
Related to this, Contact is exposed to carbon price risk on its carbon
obligations. Spot purchases, forward purchases and auction participation
are used to manage the price risk relating to carbon.
Summary of derivative financial instruments
A summary of the exposures from derivatives and the impact on Contact’s
financial position is provided below, grouped by type of hedge relationship.
$m
2021
Notional amount of derivatives
Maturity years
Average rate/price2
Carrying value of derivatives – asset
Carrying value of derivatives – liability5
Carrying value of hedged borrowings
Fair value adjustments to borrowings
2020
Fair value
hedge
Cash flow
and fair value
hedge
IRS
188
CCIRS
376
IRS
800
Cash flow hedge
Electricity
price
derivatives
Foreign
exchange
contracts
No hedge
relationship
Electricity
price
derivatives1
6,160 GWh
179
1,220 GWh
2021 – 2024
2023 – 2028
2021 – 2027
2021 – 2025
2021 – 2026
2021 – 2024
1.7%
2.5%/0.75USD3
3.2%
$83/MWh
Various4
$128/MWh
5
–
192
(5)
59
(5)
436
(59)
5
(53)
–
–
32
(93)
–
–
3
(2)
–
–
22
(24)
–
–
Notional amount of derivatives
188
447
660
5,247 GWh
9
385 GWh
Maturity years
Average rate/price2
Carrying value of derivatives – asset
Carrying value of derivatives – liability5
Carrying value of hedged borrowings
Fair value adjustments to borrowings
2021 – 2024
2020 – 2028
2020 – 2026
2020 – 2024
2020 – 2022
2020 – 2023
1.7%
2.4%/0.76USD
3.9%
$70/MWh
0.76USD
$96/MWh
12
–
199
(12)
131
(1)
578
(132)
–
(90)
–
–
8
(33)
–
–
–
–
–
–
5
(3)
–
–
Total
126
(176)
628
(64)
156
(127)
777
(144)
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95
1 Notionals, maturities and average prices for electricity price hedges not in hedge relationships do not include options not yet called.
2 Average interest rates for IRS and CCIRS are based on their pay legs. For pay-float swaps (CCIRS and IRS in fair value hedges), the rate comprises the floating base rate plus the margin.
3 The NZD/USD closing spot rate at 30 June 2021 was 0.70 (2020 – 0.65)
4 Average exchange rates include 0.92 AUD, 0.58 EUR, 0.71 USD and 75.56 JPY.
5 The CCIRS liability arises from the cash flow hedge component.
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021 The change in fair value of derivatives recognised in the Statement of
Comprehensive Income is provided below, grouped by type of hedge
relationship. Further information on hedging activities and fair value
of derivatives is provided in notes E7 and E8.
$m
2021
Change in fair value recognised in profit/(loss)
• Hedge ineffectiveness
• Hedge effectiveness
• Non-hedge movements
• Fair value adjustments to hedged borrowings
Total change in fair value of financial instruments
Hedge effectiveness recognised in OCI
Amounts reclassified to profit/(loss)
2020
Change in fair value recognised in profit/(loss)
• Hedge ineffectiveness
• Hedge effectiveness
• Non-hedge movements
• Fair value adjustments to hedged borrowings
Total change in fair value of financial instruments
Hedge effectiveness recognised in OCI
Amounts reclassified to profit/(loss)
Fair value
hedge
Cash flow
and fair value
hedge
IRS
CCIRS
IRS
Cash flow hedge
Electricity
price
derivatives
Foreign
exchange
contracts
No hedge
relationship
Electricity
price
derivatives
–
(7)
–
7
–
–
–
–
4
–
(4)
–
–
–
–
(73)
–
73
–
(3)
–
–
54
–
(54)
–
2
–
8
–
–
–
8
27
7
2
–
–
–
2
(20)
5
–
–
–
–
–
(61)
25
–
–
–
–
–
(19)
19
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
–
(1)
–
(1)
–
–
–
(2)
–
(2)
–
–
Total
8
(80)
(1)
80
7
(37)
32
2
58
(2)
(58)
–
(37)
24
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96
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
Sensitivities
The graph (right) summarises the impact on
derivative valuations of possible changes in
forward wholesale electricity prices and forward
interest rates. The analysis assumes that all
variables were held constant except for the
relevant market risk factor.
Hedging impact on CFHR
$m (Unfavourable)
$m Favourable
2021 Forward electricity prices
(+/-10%)
2020 Forward electricity prices
(+/-10%)
2021 Forward interest rates (+100/-25bps)
2020 Forward interest rates (+100/-25bps)
Hedging impact on post-tax profit/(loss)
2021 Forward electricity prices
(+/-10%)
2020 Forward electricity prices
(+/-10%)
2021 Forward interest rates (+100/-25bps)
2020 Forward interest rates (+100/-25bps)
D2. Liquidity risk
To manage liquidity risk, Contact maintains a diverse
portfolio of funding, debt maturities are spread
over a number of years, and any new financing or
refinancing requirements are addressed with an
appropriate lead time. Contact maintains a buffer
of undrawn bank facilities over its forecast funding
requirements to enable it to meet any unforeseen
cash flows.
Management monitors the available liquidity buffer
by comparing forecast cash flows to available
facilities to ensure sufficient liquidity is maintained
in accordance with internal limits.
$m
2021
Trade and other payables
Borrowings
Electricity price derivatives – net settled
IRS – net settled
Foreign exchange derivatives – inflow
Foreign exchange derivatives – outflow
Information on contracted cash flows in the table
below is presented on an undiscounted basis.
2020
(30)
(25)
(20)
(15)
(10)
(5)
0
5
10
15
20
25
30
Increase in rate/price Decrease in rate/price
Total
contractual
cash flows
Less than
1 year
1–2 years
2–5 years
More than
5 years
(197)
(911)
(64)
3
178
(180)
(197)
–
–
–
(193)
(139)
(27)
(8)
93
(93)
(23)
(3)
74
(75)
(463)
(14)
13
11
(12)
(465)
(116)
–
1
–
–
(115)
(1,171)
(425)
(166)
CCIRS cash flows are included within Borrowings
in the table (right). US dollar inflows on the CCIRS
offset the US dollar outflows on the USPP notes.
Trade and other payables
Borrowings
Electricity price derivatives – net settled
IRS – net settled
Foreign exchange derivatives – inflow
Foreign exchange derivatives – outflow
(163)
(1,226)
(39)
(20)
6
(6)
(163)
–
–
–
(303)
(195)
(448)
(280)
(29)
(10)
(6)
(6)
(4)
(4)
–
–
6
–
–
–
(6)
–
–
–
(1,448)
(505)
(207)
(456)
(280)
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
D3. Credit risk
Total credit risk exposure is measured by the financial instruments in an asset
position of $476 million (2020: $374 million). To minimise credit risk exposure,
Contact has a policy to only transact with creditworthy counterparties and
do not exceed internally imposed exposure limits to any one counterparty.
Where appropriate, collateral is obtained. Further information on customer-
related credit risk is provided in note E4.
E. Other disclosures
E1. Tax
Tax expense is made up of current tax expense and deferred tax expense.
Current tax expense relates to the current financial reporting period while
deferred tax will be payable in future periods.
Tax is recognised in profit, except when it relates to items recognised directly
in OCI.
$m
Profit before tax
Tax at 28%
Tax effect of adjustments:
• Prior period adjustments
• Reinstatement of tax depreciation on buildings
• Other
Tax expense – continuing operations
Current
Deferred
2021
261
(73)
–
–
(1)
(74)
(91)
17
2020
171
(48)
(1)
5
(2)
(46)
(67)
21
Contact’s deferred tax liability is calculated as the difference between the
carrying value of assets and liabilities for financial reporting purposes and the
values used for taxation purposes.
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98
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021 $m
PP&E and
intangible
assets
Derivative
financial
instruments
E4. Trade and other receivables
Other
Total
$m
Balance at 1 July 2019
Recognised in profit/(loss)
(728)
16
30
–
22
5
Recognised in OCI
–
4
–
Recognised in other reserves
–
–
Balance at 30 June 2020
(712)
Recognised in profit/(loss)
Recognised in balance sheet
Recognised in OCI
Recognised in other reserves
16
(1)
–
–
Balance at 30 June 2021
(697)
34
(2)
–
2
–
34
(2)
25
3
(1)
–
1
28
17
(2)
2
1
(635)
(676)
Trade receivables
21
4
(2)
Unbilled receivables
Provision for impairment
Net trade receivables
(653)
Contract assets
Prepayments
2021
168
76
(2)
242
9
4
255
2020
102
75
(3)
174
13
4
191
E2. Operating expenses
Other operating expenses (note A2) include total labour costs of $111 million
(2020: $99 million). Labour costs include contributions to KiwiSaver of $3 million
(2020: $3 million).
Audit fees paid to Contact’s auditor (KPMG) amounted to $541,000 for review
of the interim, and audit of the year end, financial statements (2020: $560,000).
Other fees paid to the auditor were $53,750 for other assurance work (2020:
$44,500), and $3,500 for supervisor reporting (2020: $3,500). Other assurance
work relates to review of greenhouse gas emissions reporting, Global
Reporting Initiative indicators and our Green Borrowing Programme.
E3. Inventory
Contact’s inventories comprise gas in storage for use in thermal generation,
consumables and spare parts for power stations, and diesel fuel for use in the
Whirinaki power plant. Inventory gas is measured at weighted average cost.
All other inventories are stated at cost.
$m
Inventory gas
Consumables and spare parts
Diesel fuel
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99
2021
2020
56
10
3
69
41
11
4
56
Trade and unbilled receivables are recognised net of discounts based on past
experience of the amount of discounts taken up by customers.
Unbilled receivables represent Contact’s best estimate of unbilled retail sales
at the end of the reporting period. The estimate uses smart meter data to
determine the relevant unbilled amount for the period. Consumption history
is used if smart meter data is not available.
As a high proportion of the data now reflects actual usage recorded by smart
meters, unbilled receivables is no longer considered to be an area of higher
estimation or judgement within the financial statements.
Ageing of trade receivables past due but not impaired are:
$m
Less than one month
Greater than one month
2021
2020
12
4
16
9
2
11
When Contact has been unable to collect amounts due from customers
those debts are written off. Trade receivables, net of recoveries, of $1 million
(2020: $3 million) were written off during the reporting period.
Contract assets
Contact capitalises the incremental costs incurred to acquire new customers
and amortises these costs to operating expenses over the expected life of the
customer relationship. Incentives given to customers are also capitalised as a
contract asset and amortised to revenue over a period of one to three years.
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
$m
Opening balance
Additions
Amortised to revenue
Amortised to operating expenses
Closing balance
2021
2020
13
8
(10)
(2)
9
16
8
(8)
(3)
13
Of the total contract assets balance, $7 million (2020: $9 million) is expected to
be amortised within one year of the reporting period end and the remainder
between one to three years of the reporting period end.
E5. Provisions
Contact recognises restoration and environmental rehabilitation provisions for
the expected costs to abandon and restore geothermal wells and generation
sites and to remove asbestos from properties.
Other provisions includes $7 million for remediation of the Holidays Act non-
compliance (2020: $5 million) and $8 million for Simply Energy performance
payments (2020: nil).
The restoration provision was reduced by $16 million in the year ended
30 June 2021 due to a lower estimated future cost to abandon and restore
wells. The lower cost estimate results from the acquisition of Western Energy
Services Limited, who provide well abandonment and restoration services.
$m
Balance at 1 July 2020
Created
Released
Utilised
Unwind of discount
Balance at 30 June 2021
Current
Non-current
Restoration/
environmental
rehabilitation
Other
Total
(59)
(5)
16
3
(5)
(50)
(4)
(46)
(9)
(15)
–
–
–
(24)
(19)
(5)
(68)
(20)
16
3
(5)
(74)
(23)
(51)
These provisions are based on estimates of future cash flows to make good
the affected sites at the end of the assets’ useful lives. The expected future
cash flows are discounted to their present value using a pre-tax discount
rate equivalent to a post-tax rate of between 6 per cent and 7 per cent.
E6. Profit to operating cash flows
A reconciliation of profit to operating cash flows is provided below.
$m
Profit
Depreciation and amortisation
Amortisation of contract assets
2021
187
249
11
2020
125
220
11
Change in fair value of financial instruments
(7)
–
Movement in provisions
Deferred finance costs
Bad debt expense
Share-based compensation
Share of profit/loss in joint venture/associate
Changes in assets and liabilities, net of non-cash,
investing and financing activities
Trade and other receivables
Inventories and intangible assets
Trade and other payables
Tax payable
Deferred tax
Operating cash flows
2
1
2
2
1
(68)
(35)
92
11
(16)
432
10
1
5
3
–
(8)
(3)
1
(6)
(18)
341
E7. Hedging activities
Contact has designated derivatives used to manage market risks into fair
value and cash flow hedge relationships. A hedge ratio of 1:1 is applied for
all hedge relationships, as the notional value of the derivative matches the
notional value of the hedged item.
Fair value hedges
Interest rate risk
The derivatives (IRS) Contact uses to manage its interest rate risk meet the criteria
for hedge accounting where they directly relate to issued debt. The hedge is
against future fair value movements in the debt and can be for a portion of the
debt. Contact has designated $188 million of retail bonds into fair value hedge
relationships with receive-fixed, pay-floating IRS. The fixed interest rates and
other terms match the relevant bond to create an economic relationship.
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
The bonds are recognised at amortised cost. Both the hedged risk and the
hedging instrument (IRS) are recognised at fair value. The change in the fair
value of both items is recognised in profit/(loss) and will offset to the extent the
hedging relationship is effective. There are no material sources of ineffectiveness.
Combined fair value and cash flow hedges
Contact has designated all its USPP notes into both fair value and cash flow
hedge relationships with CCIRS, depending on the component of the USPP
note being hedged:
Cash flow hedges
The derivatives Contact uses to manage exposure to wholesale electricity
prices, floating interest rate risk and foreign exchange rates usually qualify
for cash flow hedge accounting. For cash flow hedges, only the derivative
is recognised at fair value with the effective portion of all changes in fair
value recognised in the cash flow hedge reserve. Any ineffective portion is
recognised immediately in profit/(loss). Amounts recognised in the cash flow
hedge reserve are reclassified to profit/(loss) or the Statement of Financial
Position according to the nature of the hedged item.
The movement in hedge reserves is reconciled below.
Note
2021
2020
$m
Opening balance
Effective portion of cash flow hedges
D1
Transferred to revenue
Transferred to deferred tax
Closing balance
(49)
(37)
33
2
(51)
(39)
(37)
23
4
(49)
Included in the closing balance at 30 June 2021 is $3 million relating to the
cost of hedging reserve (2020: $2 million).
Commodity price risk
Contact designates forecast electricity sales and purchases into cash flow
hedges with electricity price derivatives. Volumes are matched to create an
economic relationship. There are no material sources of ineffectiveness.
Interest rate risk
Contact designates a certain level of its floating rate exposure into cash flow
hedges with receive-floating, pay-fixed IRS in line with set internal policies.
An economic relationship exists between the floating rate exposure and the
IRS based on the reference interest rate. Ineffectiveness arises due to IRS that
have been designated into hedge relationships part way through their term.
These IRS were designated on 1 July 2018 on adoption of NZ IFRS 9.
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101
• For the fair value hedges the change in fair value of the USPP note is
recognised in profit/(loss) to offset the change in fair value of the relevant
CCIRS component.
• For the cash flow hedges the change in fair value of the CCIRS component
is recognised in the cash flow hedge reserve.
• The cost to convert foreign currency cash flows under CCIRS is excluded
from the hedge relationship and recognised in the cost of hedging reserve.
An economic relationship exists based on the reference interest rates, exchange
rate and other terms. There are no material sources of ineffectiveness.
Derivatives not in hedge relationships
These are electricity price derivatives purchased and sold as part of a
requirement to participate in the ASX futures electricity market, electricity
derivatives entered into for profit making, financial transmission rights and
electricity price options. All changes in fair value of these derivatives are
recognised directly in profit/(loss).
E8. Financial instruments at fair value
Fair value
Contact uses discounted cash flow valuations with market observable data, to
the extent that it is available, in estimating the fair value of all derivatives and
borrowings. The key variables used in these valuations are forward prices (for
the relevant underlying interest rates, foreign exchange rates and wholesale
electricity prices) and discount rates (based on the forward IRS curve adjusted
for counterparty risk).
All inputs are sourced or derived from market information except for forward
wholesale electricity prices which are:
• derived from ASX market quoted prices adjusted for Contact’s estimate
of the effect of location and seasonality, or
• when quoted prices are not available or relevant (i.e. long-dated and large
contracts), Contact’s best estimate of the cost of new supply is used. This is
derived using key unobservable inputs, relevant wholesale market factors
and management judgement.
Additional key inputs and assumptions used to determine the fair value
of electricity derivatives include Contact’s best estimate of volumes called
over the life of electricity options and forward-quoted commodity prices
(e.g. adjustments as a consequence of initial recognition differences).
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
The following table provides a breakdown of the fair value of derivatives
by the source of key valuation inputs:
The change in calibration adjustment is provided in the table below:
$m
Sourced from market data
Derived from market data
Electricity price estimates
2021
2020
$m
Opening difference
(20)
12
(42)
(50)
(15)
55
(11)
29
Initial differences in new hedges
Volumes expired and amortised
Changes for future prices and time
Closing difference
2021
2020
6
(5)
(2)
(1)
(2)
(1)
7
4
(4)
6
The electricity price derivatives most affected by estimates are reconciled
below:
$m
Opening balance
Gain/(loss) in profit/(loss):
• wholesale electricity revenue
Gain/(loss) in OCI
Instruments issued
Closing balance
2021
(11)
10
(4)
(37)
(42)
2020
(23)
13
(3)
2
(11)
For these derivatives a 10 per cent increase in the electricity price would result
in an unfavourable movement in fair value of $20 million (2020: $33 million)
and a 10 per cent decrease would result in a favourable movement in fair value
of $21 million (2020: $29 million).
Initial recognition difference
An initial recognition difference arises when the fair value of a derivative at
inception differs from its transaction price. The difference is accounted for
by recalibrating the fair value by a fixed percentage to arrive at a value at
inception equal to the transaction price.
The calibration adjustment is applied to future valuations and reflects
the estimated future gains or losses yet to be recognised in the Statement
of comprehensive income over the remaining life of the agreement.
E9. Financial instruments at amortised cost
The value of financial instruments carried at amortised cost is provided in the
table below.
$m
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Borrowings
2021
150
207
(197)
(792)
2020
44
174
(163)
(1,054)
The fair value of borrowings is $852 million (2020: $1,215 million). This fair value
is derived from market data.
E10. Share-based compensation
Equity Scheme
Contact provides an equity award to certain eligible employees made up of
options, performance share rights (PSRs) and deferred share rights (DSRs).
If performance hurdles are met, or there is a company change in control, the
awards vest and become exercisable. On exercise, PSRs and DSRs convert to
ordinary shares at no cost to the employee and options convert on payment
of the agreed exercise price or by utilising the option of a facility which
cancels the options in return for an equivalent value in issued shares. There
are no loans available. There are no holding/retention periods or ownership
requirements for employees who exercise equity rights. The awards lapse if
the performance hurdles are not met, if they are not exercised by the lapse
date or if an employee voluntarily leaves Contact. The scheme continues on
redundancy but the entitlements are adjusted.
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
The table below provides a reconciliation of the number of outstanding
options and their weighted average exercise price.
Balance at 1 July 2019
Exercised
Lapsed
Balance at 30 June 2020
Exercised
Lapsed
Balance at 30 June 2021
Options
Number
outstanding
2,620,181
(1,110,849)
(9,678)
1,499,654
Price
$5.17
$4.94
$5.54
$5.33
–
–
(555,559)
944,095
$4.97
$5.54
At 30 June 2021, no share options were exercisable.
The table below provides a reconciliation for the number of outstanding PSRs
and DSRs. The exercise price of these awards is nil.
Contact Share
Contact Share is Contact’s employee share ownership plan that enables
eligible employees to acquire a set number of Contact’s ordinary shares.
The shares are acquired on market and legally held by a trustee company
for a restrictive period of three years, during which time the employee is
entitled to receive distributions and direct the exercise of voting rights that
attach to shares held on their behalf.
At the end of the restrictive period the shares are transferred to the employee.
Employees who leave Contact due to redundancy, and in certain other
circumstances, may have their shares transferred at that time; all other
employees who leave Contact have their shares transferred to an unallocated
pool. Shares in the unallocated pool can be used by the trustee company for
future allocations under Contact Share.
Number outstanding
Balance at 1 July 2019
Shares purchased and issued
Transferred to employees
Balance at 30 June 2020
Transferred to employees
Balance at 30 June 2021
PSRs
DSRs
Shares purchased and issued
791,841
1,030,898
154,164
244,404
(314,638)
(581,968)
(44,852)
(23,155)
586,515
670,179
228,761
301,355
–
(434,021)
These shares have a weighted average remaining life of 1 year and 4 months
(2020: 1 year and 2 months).
Share-based compensation reserve
The movement in the share-based compensation reserve is reconciled below:
Contact Share
319,841
61,015
(102,701)
278,155
87,741
(98,234)
267,662
Number outstanding
Balance at 1 July 2019
Granted
Exercised
Lapsed
Balance at 30 June 2020
Granted
Exercised
Lapsed
(151,518)
(33,141)
$m
Note
2021
2020
Balance at 30 June 2021
663,758
504,372
Opening balance
Share options had a weighted average remaining life of 5 months
(2020: 1 year and 1 month), PSRs had 1 year and 11 months (2020: 1 year
and 11 months) and DSRs had 11 months (2020: 9 months).
Exercised share scheme awards
Share-based compensation expense
Current tax on share scheme
Deferred tax on share scheme
E1
Closing balance
8
(4)
3
–
1
8
10
(6)
4
2
(2)
8
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Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
The share-based compensation expense is based on the fair value of the
awards granted, adjusted to reflect the number of awards expected to vest.
The air values of awards granted during the reporting period are:
Identifiable assets acquired and liabilities assumed
The table below summarises the fair value of the assets acquired and liabilities
assumed at the date of acquisition.
$ per
share
9
8
7
6
5
4
3
2
1
0
PSRs
DSRs
Contact Share
Key inputs in determining the fair values are:
Risk-free interest rate
Expected dividend yield
Expected share price volatility
E11. Related parties
2021
0.1%
6%
25%
2020
1%
7%
18%
Simply Energy Limited
Simply Energy Limited (Simply) is based in Wellington, New Zealand
and provides energy solutions to independent generators, retailers and
commercial energy users.
Contact Energy Limited increased its shareholding in Simply to 100 per cent
on 31 August 2020, as part of its efforts to accelerate decarbonisation and
provide commercial and industrial customers with valuable, innovative energy
solutions. From this date, Simply became a subsidiary of Contact with its
results consolidated into the group.
In addition to the remaining $2 million payable for the initial 49.9 per cent
shareholding, $7 million is to be paid over the next 18 months. This will be
followed by a variable performance-based payment in December 2022 that
is linked to decarbonisation and earnings targets. Contact has recorded a
provision of $8 million for the performance payment reflecting its fair value
(possible range of $nil to $15 million).
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$m
Cash and cash equivalents
Derivatives – asset
Receivables and prepayments
Property, plant and equipment
Inangible assets
Payables and accruals
Derivatives – liability
Deferred tax
2021
2020
Total identifiable net assets acquired
2021
1
2
5
2
8
(5)
(2)
(2)
8
Goodwill
The fair value of the existing investment and purchase consideration, less the
fair value of the net identifiable assets acquired is reconciled below.
$m
Consideration for option to acquire
Fair value of existing investment
Fair value of identifiable net assets
Goodwill
2021
15
10
(8)
17
The goodwill is attributable mainly to the capabilities that Simply provides
and the synergies expected to be achieved from integrating Contact’s C&I
business with Simply’s innovative technology, data solutions and agile
customer engagement platform. None of the goodwill recognised is expected
to be deductible for tax purposes.
Western Energy Services Limited
On 31 March 2021, Contact Energy Limited acquired a 100 per cent
shareholding in Western Energy Services Limited (Western) for a purchase
price of $32 million. On that date, Western became a subsidiary as Contact
gained a controlling interest in the company.
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
Western is based in Taupō, New Zealand and provides geothermal well
services domestically and internationally. Working closely with Western allows
Contact to add to our geothermal capability and continue to be innovative in
geothermal technology development.
Identifiable assets acquired and liabilities assumed
The table below summarises the provisional fair value of the assets acquired
and liabilities assumed at the date of acquisition.
$m
Receivables and prepayments
Property, plant and equipment
Payables and accruals
Total identifiable net assets acquired
2021
3
8
(2)
8
Received/(paid) $m
Simply Energy Limited
Electricity contracts
Drylandcarbon is accounted for as an associate, as Contact has significant
influence through its participation in Drylandcarbon’s financial and operating
policy decisions being equivalent to the other three foundational investors.
Contact applies the equity method of accounting for its investment in
Drylandcarbon. The initial investments are recognised at cost and are
subsequently adjusted for Contact’s share of the entity’s profits or losses.
Related party transactions
Contact’s related parties also include its directors and leadership team (LT).
Transactions with Simply up until acquisition date are disclosed below.
Goodwill
The fair value of the purchase consideration less the fair value of the net
identifiable assets acquired has been provisionally recorded below.
$m
Consideration
Fair value of identifiable net assets
Provisional goodwill
Drylandcarbon One Limited Partnership
Capital contributions
Key management personnel
Directors’ fees
2021
32
(8)
24
LT – salary and other short-term benefits
LT – share-based compensation expense
Balances payable at end of the year
Key management personnel
2021
2020
1
(7)
(1)
(5)
(1)
(2)
2
(4)
(1)
(5)
(2)
–
The goodwill is attributable mainly to synergies expected to be achieved
from integrating Western’s innovative geothermal technology and service
techniques, along with conventional well services, into Contact’s existing
steamfield operations. None of the goodwill recognised is expected to be
deductible for tax purposes.
The purchase price allocation for Western will be finalised within 12 months
of the acquisition date, which may result in the allocation of a proportion
of provisional Goodwill to identifiable intangible assets such as brand and
intellectual property.
Drylandcarbon One Limited Partnership
Contact owns a 16.5 per cent share of Drylandcarbon One Limited Partnership
(Drylandcarbon) and at 30 June 2021 is committed to invest up to $9 million
over the next three years. Drylandcarbon is based in Wellington, New Zealand
and is focused on long-term carbon farming and afforestation on economically
marginal land in New Zealand, which will offset some of Contact’s carbon
obligations.
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Members of the leadership team and directors purchase goods and services
from Contact for domestic purposes on normal commercial terms and
conditions. For members of the leadership team this includes staff discount
available to all eligible employees.
E12. New accounting standards
There are no new accounting standards issued but not yet effective which
materially impact Contact.
Contact INTEGRATED REPORT 2021Notes to the financial statements for the year ended 30 June 2021
Combined Independent Auditor’s
and Limited Assurance Report
General
Our assurance procedures consisted of the audit of the Consolidated
Financial Statements of Contact Energy Limited and limited assurance
procedures in relation to Contact Energy Limited’s selected Global Reporting
Initiative (‘GRI’) indicators within Contact Energy Limited’s Annual Report.
Our scope can be summarised as follows:
Consolidated Financial Statements
Selected GRI Indicators
Audit Scope
Reasonable assurance
Assurance Scope
Limited assurance
Other Information in Contact Energy Limited’s Annual Report
Consider consistency with Consolidated Financial Statements
No assurance
Independent Auditor’s Report
To the shareholders of Contact Energy Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying
consolidated financial statements
of Contact Energy Limited (the
’company’), the entities over which
it has control and its investment in
associate (the ‘group’) on pages 81 to 105:
• present fairly in all material respects
the Group’s financial position as
at 30 June 2021 and its financial
performance and cash flows for the
year ended on that date; and
• comply with New Zealand Equivalents
to International Financial Reporting
Standards and International Financial
Reporting Standards.
We have audited the accompanying
consolidated financial statements
which comprise:
• the consolidated statement of
financial position as at 30 June 2021;
• the consolidated statements of
comprehensive income, changes in
equity and cash flows for the year
then ended; and
• notes, including a summary of
significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (New Zealand) (‘ISAs (NZ)’). We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and
Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) issued by the New Zealand
Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (‘IESBA Code’),
and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s
responsibilities for the audit of the consolidated financial statements section
of our report.
Please refer to the section of our report entitled “Our independence and
quality control” below for detail of the other services we have provided to
the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to
be able to give an opinion on the consolidated financial statements as a whole,
taking into account the structure of the group, the financial reporting systems,
processes and controls, and the industry in which it operates. The context for our
audit is set by the group’s major activities being wholesale electricity generation
and an electricity retailer in the financial year ended 30 June 2021.
Materiality
The scope of our audit was influenced by our application of materiality.
Materiality helped us to determine the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality
for the consolidated financial statements as a whole was set at $10 million
determined with reference to a benchmark of group profit before tax.
We chose the benchmark because, in our view, this is a key measure of
the group’s performance.
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Contact INTEGRATED REPORT 2021
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 in the current period. We summarise below those matters
and our key audit procedures to address those matters in order that the
shareholders as a body may better understand the process by which
we arrived at our audit opinion. Our procedures were undertaken in the
context of and solely for the purpose of our statutory audit opinion on the
consolidated financial statements as a whole and we do not express discrete
opinions on separate elements of the consolidated financial statements.
The key audit matter
How the matter was addressed in our audit
Future generation capital work in progress – Note C1 and C2 of the financial
statements
We considered the
recoverability of capital work in
progress, with a particular focus
on the Tauhara geothermal
project which is currently in
development.
We consider this a key audit
matter due to the recoverability
assessment being based on
Management’s intention for
continued investment in the
project; the impact of future
developments in the electricity
generation sector and the level
of judgement involved in the
assumptions modelled.
We satisfied ourselves that the recoverability
of Tauhara related capital work in progress was
supported by appropriate project plans, construction
contracts and modelled future cash flows at year end.
We considered Contact’s generation asset portfolio
strategy and known third-party future generation
developments and the potential impact of these on
the Tauhara project as well as the wholesale
generation market as a whole.
We tested the significant judgements in the Tauhara
project modelled cash flows by comparing:
• Forward electricity prices to external market data;
• Future generation volumes, operating costs
and asset renewal costs to budgets and signed
construction contracts; and
• The model’s discount rates to our own
independently determined rates.
We challenged the assumptions by performing
a sensitivity analysis, considering a range of likely
outcomes.
The key audit matter
How the matter was addressed in our audit
Carrying value of cash-generating units – Note C1 and C2 of the financial statements
The Group separates its business
into two cash-generating units
(CGUs) for the purpose of asset
impairment testing. The value
of each CGU, including any
allocated goodwill, is supported
by a discounted cash flow model
which is inherently subjective.
In terms of the Wholesale CGU
we focus on the generation
assets due to the significance
of the assets relative to the
Group’s financial position and
goodwill related to recent
acquisitions.
Our focus for the customer
CGU is the valuation of goodwill
of $179 million.
The key judgements in
determining the CGUs’ value
in use are: forward electricity
prices, future generation
volumes, customer transfer
price and margin, forecast
operating and asset costs, the
terminal growth rate and the
discount rate applied to the
future cash flows.
Our work to assess whether the Group should
recognise any impairment to the CGUs included
ensuring the methodology adopted in the model
is consistent with accepted valuation approaches.
We also assessed whether the modelled cash flows
appropriately reflect the Group’s strategy and budget.
We tested the significant judgements in the
modelled cash flows by comparing:
• forward electricity prices to external market
projections;
• future generation volumes to historical volumes;
• Customer transfer price and margin to budget and
historic data;
• operating costs and asset renewal costs to historical
levels and budgets; and
• the modelled terminal growth and discount rates
to our own independently determined rates.
We challenged the assumptions by performing
a sensitivity analysis, considering a range of likely
outcomes based on various scenarios. We are satisfied
that the key assumptions are within acceptable
ranges and in line with current market view.
As an overall test we compared the market-based
enterprise value of $7.2 billion to the Group’s
carrying value at 30 June 2021 of $4.1 billion.
Other information
The Directors, on behalf of the group, are responsible for the other information
included in the entity’s Annual Report. Other information includes Key
activity this year, Who we are, Creating value, Strategic themes, Strategic
enablers, Governance matters and Additional disclosures. Our opinion on
the consolidated financial statements does not cover any other information
and we do not express any form of 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 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.
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Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as
a body. Our audit work has been undertaken so that we might state to
the shareholders those matters we are required to state to them in the
independent auditor’s 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 shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated
financial statements
The Directors, on behalf of the company, are responsible for:
• the preparation and fair presentation of the consolidated financial
statements in accordance with generally accepted accounting practice in
New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
• implementing necessary internal control to enable the preparation of
a consolidated set of financial statements that is fairly presented and
free from material misstatement, whether due to fraud or error; and
• assessing the ability to continue as a going concern. This includes
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless they either intend to liquidate
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated
financial statements
Our objective is:
• 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 independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs (NZ) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated
financial statements is located at the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-
responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
Independent limited assurance report on the selected GRI
Indicators included in the Annual Report
To the Directors of Contact Energy Limited
Conclusion
Our limited assurance conclusion has been formed on the basis of the matters
outlined in this report.
Based on our limited assurance engagement, nothing has come to our attention
that would lead us to believe that the selected Global Reporting Initiative (‘GRI’)
indicators of Contact Energy Limited (the ‘company’) within the Annual Report have
not, in all material respects, been prepared in accordance with the Global Reporting
Initiative Standards ('GRI Standards'), for the period 1 July 2020 to 30 June 2021.
Basis for conclusion
We have performed an engagement to provide limited assurance in relation
to whether anything has come to our attention to indicate the selected GRI
indicators have not been prepared in all material respects in accordance with
the GRI Standards for the year ended 30 June 2021.
The selected GRI indicators covered by this assurance report include:
102-8 Employee statistics (page 73–74)
303-3 Total water withdrawal by source (page 42)
303-4 Total water discharge by destination (page 42)
303-5 Total water consumption (page 42)
304-3 Habitats protected or restored (page 76)
403-9 Work-related injuries (page 71)
405-1 Gender, age and ethnicity statistics (page 73–74)
413-1 Community engagement and development (page 38)
308-2 Negative environmental impacts in the supply chain and actions
taken (page 71)
414-2 Negative social impacts in the supply chain and actions taken (page 71)
307-1 Non-compliance with environmental laws and regulations (page 38)
419-1 Non-compliance with laws and regulations in the social and economic
area (page 49)
418-1 Substantiated complaints concerning breaches of customer privacy
and losses of customer data (page 75)
Contact INTEGRATED REPORT 2021
We conducted our limited assurance engagement in accordance with
International Standard on Assurance Engagements (New Zealand) 3000
(Revised) Assurance Engagements other than audits or reviews of historical
financial information and Standard on Assurance Engagements SAE 3100
(Revised) Assurance Engagements on Compliance. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis
for our conclusion. In accordance with those standards we have:
• used our professional judgement to plan and perform the engagement to
obtain limited assurance that the information subject to assurance is free
from material non-compliance, whether due to fraud or error;
• considered relevant internal controls when designing our assurance
procedures, however we do not express a conclusion on the effectiveness
of these controls; and
• ensured that the engagement team possess the appropriate knowledge,
skills and professional competencies.
Use of this limited assurance report
Our report should not be regarded as suitable to be used or relied on by
any parties other than Contact Energy Limited for any purpose or in any
context. Any party other than Contact Energy Limited who obtains access
to our report or a copy thereof and chooses to rely on our report (or any part
thereof) will do so at its own risk.
To the fullest extent permitted by law, we accept or assume no responsibility
and deny any liability to any party other than Contact Energy Limited for our
work, for this independent limited assurance report, or for the conclusions
we have reached.
Management’s responsibility for the GRI indicators
Management of the company are responsible for the preparation and
fair presentation of the selected GRI indicators in all material respects in
accordance with the GRI standards, and the information and assertions
contained within the Annual Report.
This responsibility includes determining the company’s objectives in respect
of sustainable development performance and reporting, including the
identification of stakeholders and material issues, and for establishing and
maintaining appropriate performance management and internal control
systems from which the reported performance information is derived.
Management is responsible for preventing and detecting fraud and
for identifying and ensuring that the company complies with laws and
regulations applicable to its activities.
Management is also responsible for ensuring that staff involved with the
preparation and presentation of the GRI indicators are properly trained,
information systems are properly updated and that any changes in reporting
encompass all significant business units.
Our responsibility
Our responsibility is to express a conclusion to the directors on whether
anything has come to our attention that the selected GRI indicators of
Contact Energy Limited have not, in all material respects, been prepared
in accordance with the GRI standards for the year ending 30 June 2021.
Procedures performed
A limited assurance engagement consists of making inquiries, primarily
of persons responsible for the preparation of information presented in
the selected GRI indicators, and applying analytical and other evidence
gathering procedures, as appropriate. These procedures included:
• Inquiries of management to gain an understanding of Contact Energy
Limited’s processes for determining the material issues for Contact Energy
Limited’s key stakeholder groups;
• Interviews with senior management and relevant staff concerning
sustainability strategy and policies for material issues, and the
implementation of these across the business;
• Interviews with relevant staff responsible for providing the information
in the selected GRI indicators;
• Comparing the information presented in the selected GRI indicators to
corresponding information in the relevant underlying sources to determine
whether all the relevant information contained in such underlying sources
has been included in the GRI indicators; and
• Reading the information presented in the selected GRI indicators
to determine whether it is in line with our overall knowledge of, and
experience with, the sustainability performance of Contact Energy Limited.
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, and consequently the level of assurance obtained
in a limited assurance engagement is substantially lower than the assurance
that would have been obtained has a reasonable assurance engagement
been performed.
Due to the inherent limitations of any internal control structure it is possible
that errors or irregularities in the information presented in the GRI indicators
may occur and not be detected. Our engagement is not designed to detect
all weaknesses in the internal controls over the preparation and presentation
of the GRI indicators, as the engagement has not been performed continuously
throughout the period and the procedures performed were undertaken on a
test basis.
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Contact INTEGRATED REPORT 2021
Our independence and quality control
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) issued by the New Zealand Auditing and Assurance Standards
Board, which is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional
behaviour.
The firm applies Professional and Ethical Standard 3 (Amended) and
accordingly maintains a comprehensive system of quality control including
documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory
requirements.
Our firm has provided services to Contact Energy Limited in relation to
statutory audit, trustee reporting and other assurance for Greenhouse Gas
Emissions reporting, Green Borrowing Programme reporting and Global
Initiative Reporting indicators. Subject to certain restrictions, partners
and employees of our firm may also deal with the Contact Energy Limited
on normal terms within the ordinary course of trading activities of the
business of the Contact Energy Limited. These matters have not impaired
our independence as assurance providers of Contact Energy Limited for this
engagement. The firm has no other relationship with, or interest in, Contact
Energy Limited.
The partner on the engagement resulting in this Combined Independent
Auditor’s and Limited Assurance Report is Sonia Isaac.
Sonia Isaac
KPMG
Wellington
13 August 2021
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Contact
INTEGRATED
REPORT
2021
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Corporate directory
Registered office
Contact Energy Limited
Harbour City Tower
29 Brandon Street
Wellington 6011
New Zealand
T +64 4 499 4001
Find us on Facebook, Twitter, LinkedIn and
YouTube by searching for Contact Energy
Company numbers
NZ Incorporation 660760
ABN 68 080 480 477
Auditor
KPMG
PO Box 996
Wellington 6140
Board of Directors
Robert McDonald (Chair)
Victoria Crone
Rukumoana Schaafhausen
Jon Macdonald
David Smol
Elena Trout
Dame Therese Walsh
Leadership team
Mike Fuge
Chief Executive Officer
Jack Ariel
General Manager Major Projects
Jan Bibby
Chief People Officer
Dorian Devers
Chief Financial Officer
Jacqui Nelson
Chief Generation Officer
Catherine Thompson
Chief Corporate Affairs Officer and General Counsel
Matt Bolton
[acting] Chief Customer Officer
Iain Gauld
Chief Information Officer (acting on LT)
Registry
Change of address, payment instructions and
investment portfolios can be viewed and updated
online:
investorcentre.linkmarketservices.co.nz
investorcentre.linkmarketservices.com.au
New Zealand Registry
Link Market Services Limited
PO Box 91976, Auckland 1142
Level 30, PWC Tower
15 Customs Street West
Auckland, 1010
contactenergy@linkmarketservices.co.nz
T + 64 9 375 5998
Australian Registry
Link Market Services Limited,
Locked Bag A14, Sydney
South, NSW 1235
680 George Street, Sydney, NSW 2000
contactenergy@linkmarketservices.com.au
T +61 2 8280 7111
Investor relations enquiries
Matthew Forbes
GM Corporate Finance
investor.centre@contactenergy.co.nz
Sustainability enquiries
Nakia Randle
Sustainability Advisor
nakia.randle@contactenergy.co.nz
contact.co.nz
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