THE LONG RUN M E R I D I A N E N E R G Y L I M I T E D 2 0 1 8 A N N U A L R E S U L T S P R E S E N T A T I O N INTRODUCTION Meridian Energy Limited 2018 Annual Results Presentation 2 A S N A P S H O T O F O U R P E R F O R M A N C E Meridian Energy Limited 2018 Annual Results Presentation 3 OUR PEOPLE Engaged and committed people (cid:1) 78% of our people are highly engaged (cid:1) 50% of our people are shareholders. Directors and officers hold 1.9m shares (cid:1) No serious injuries during the year (cid:1) Physical and mental health is top of mind (cid:1) Targeting 40% of women in people leadership and senior specialist positions (cid:1) Currently 98% gender pay parity (cid:1) Voluntary increase in parental leave to 22 weeks (cid:1) Rainbow Tick accreditation supports our diversity and inclusion (cid:1) Conventional remuneration framework: (cid:1) Fixed: base salary and KiwiSaver (cid:1) STI: cash, profit-based (cid:1) LTI: equity, relative TSR-based (cid:1) Enduring partnerships with KidsCan and Kākāpō Recovery Meridian Energy Limited 2018 Annual Results Presentation EMPLOYEE MEASURES FY18 Target Global top 10% benchmark 84% 78% 98% 100% 42% 40% 33% % 120% 100% 80% 60% 40% 20% 0% Women in the business Women in senior roles Engagement Gender pay parity Source: Meridian TOTAL SHAREHOLDER RETURN Meridian Peer group median 33% 31% 19% 17% 14% % 35% 30% 25% 20% 15% 10% 5% 0% 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Meridian 4 OUR SUSTAINABILITY LEADERSHIP Climate change (cid:1) Meridian now net zero carbon across Group operations (cid:1) Pursuing greater decarbonisation of NZ’s energy system1 (41% of carbon emissions) (cid:1) Potential to add 75% to electricity demand (cid:1) Pathway to higher renewable participation has to address potential dry period energy deficit (cid:1) Meridian Australia’s green credentials are well ahead of the wider market Affordable and clean energy (cid:1) Hardship programme to support vulnerable customers (cid:1) Advocate for distribution pricing reform (cid:1) Supporter of some industry change and broader social policy reform (cid:1) Converting ourselves to electric vehicles Meridian Energy Limited 2018 Annual Results Presentation 1Largely non-renewable fuelled road transport, manufacturing, construction and domestic heating 5 OUR MARKETS Meridian Energy Limited 2018 Annual Results Presentation 6 NEW ZEALAND DEMAND 0.8% growth in FY18 (cid:1) Continued economic and population growth during FY18 (cid:1) Generally above average temperatures during the financial year (cid:1) Periods of cold conditions during the current winter (cid:1) Growth in most regions and irrigation Different, positive views on future demand (cid:1) Medium term economic growth expected (cid:1) Policy settings should encourage decarbonisation (cid:1) Assumptions vary on rate of electrification of the wider energy system (cid:1) Electrification of the whole light vehicle fleet represents 19% demand growth (cid:1) Smelter’s 50MW contract represents 1% demand growth ANNUAL DEMAND CHANGE SINCE 2010 +1.1% % 3% 2% 1% 0% -1% -2% +2.6% +0.3% +0.8% -0.1% -0.9% -0.6% -1.7% 2013 2012 2011 Financial Year ended 30 June 2014 DEMAND FORECASTS TWh 90 NZ Historical Demand Transpower MBIE - High MBIE - Low Productivity Comm. - High Productivity Comm. - Low Meridian - High Meridian - Low 80 70 60 50 40 30 2015 2016 2017 2018 Source: Electricity Authority Source: Meridian Meridian Energy Limited 2018 Annual Results Presentation 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050 7 NEW ZEALAND SUPPLY High FY18 North Island inflows (cid:1) North Island storage was above average for all but 33 days of FY18 (cid:1) Varying South Island storage; two successive dry periods in 1H FY18, storage above average through all of Q4 FY18 (cid:1) ASX futures prices finished FY18 lower than June 2017 (cid:1) 82% renewable generation in FY18 New generation needs (cid:1) 0.5%-1% demand growth in the short term is possible (cid:1) Medium term growth could be higher with greater electrification and plant retirement (cid:1) Depending on views, equivalent of two or more mid-sized wind farms needed annually over the longer term (cid:1) Consent maturity is near dated NEW ZEALAND LAKE STORAGE Actual Average GWh 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 South Island North Island 0 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Source: NZX NZ CONSENT MATURITY GWh Geothermal Gas Wind Tidal Hydro 15,000 12,000 9,000 6,000 3,000 0 Meridian Energy Limited 2018 Annual Results Presentation 2018 2020 2022 2024 2026 2028 2030 2032 2034 Source: Meridian 8 NEW ZEALAND POLICY AND REGULATION Zero Carbon New Zealand by 2050 (cid:1) Agriculture means NZ has one of the highest per capita rates of emissions (cid:1) 32 million tonnes of carbon emissions from the wider (non-agricultural) sectors could be removed through electrification (cid:1) Converting all fossil fuel based energy use to renewables could add 75% to electricity demand Renewable electricity grid (cid:1) Potential hydro inflow deficit is currently managed through thermal capacity and fuel storage (cid:1) Industry shift needed to manage risk as renewable levels increase and coal exits the system (cid:1) Current battery technology is not suited to long-term energy storage needs Meridian Energy Limited 2018 Annual Results Presentation NZ 2016 SECTOR EMISSIONS 3% 5% 6% Electricity Road transport Stationary energy* Agricultural Industrial processes Waste 49% 17% 20% *manufacturing (including milk processing), construction and commercial sectors and domestic heating HYDRO INFLOW DEFICIT CHALLENGE Source: Ministry for the Environment Swing energy sources 5,000 GWh inflow deficit extreme dry winter 1-3,000 GWh storage and import potential storage and additional supplies 1,500 GWh Worst case dry deficit Coal storage Gas storage Potential energy deficit ex-coal 1,000 GWh potential Demand response Source: Meridian 9 NEW ZEALAND POLICY AND REGULATION Electricity price review (cid:1) Review will examine whether prices are efficient, fair and equitable (cid:1) Review will be forward looking and consider the entire electricity market (cid:1) Issues paper to be published in September (cid:1) Followed by consultation in early 2019 on options to address any problems (cid:1) Findings and recommendations are due to Ministers by May 2019 Transmission pricing (cid:1) Beneficiaries pay approach to be central to EA’s new TPM proposal – for all future and at least some recent major investment (cid:1) Now preparing their policy proposal including new cost benefit analysis (cid:1) Update from EA in December 2018 (cid:1) Status quo cost reduction signalled by Transpower Meridian Energy Limited 2018 Annual Results Presentation AVERAGE RESIDENTIAL ELECTRICITY COST % change 10% 8% 6% 4% 2% 0% -2% -4% Energy & other component Lines component Total +3.2% +3.5% +7.0% +4.3% +2.9% +2.8% +6.6% +0.9% +0.2% +2.4% +3.6% +1.4% +0.8% +2.9% -0.7% -1.7% -2.6% -0.5% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Source: Ministry of Business, Innovation and Employment TRANSPOWER HVDC REVENUE $M 180 160 140 120 100 80 60 40 20 0 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Source: Transpower, Meridian 10 AUSTRALIAN MARKET Struggling with policy to coordinate energy affordability, reliability and decarbonisation (cid:1) Liberal National coalition in power, election between late 2018 and mid 2019 (cid:1) More interventionist approach to energy (cid:1) NEG is the Federal Government’s attempt to coordinate energy and climate policy, Federal and State negotiations continue (cid:1) Dealing with Liberal Party right wing that is pro-coal and anti-renewables (cid:1) Different degrees of support for renewables at State Government level (cid:1) Upcoming elections in Victoria (November 2018) and NSW (March 2019) (cid:1) Regulatory reviews on affordability and transparency: (cid:1) ACCC (Federal) (cid:1) Thwaites (Victoria) (cid:1) Greater transparency is good for consumers Meridian Energy Limited 2018 Annual Results Presentation RESIDENTIAL PRICE COMPARISON Average 2018 prices, Nominal, Including GST 2008-2018 Average annual increase, Real, Including GST AUSTRALIA NEW ZEALAND 40.76 NZD c/kWh 29.03 NZD c/kWh 5.1% per annum 1.4% per annum Source: ACCC, Ministry of Business, Innovation and Employment, Meridian 11 THE UNITED KINGDOM MARKET RESIDENTIAL PRICE COMPARISON Average 2017 prices, Nominal, Including GST/VAT 2004-2014 Average annual increase, Real, Including GST/VAT UNITED KINGDOM NEW ZEALAND 30.37 NZD c/kWh 28.79 NZD c/kWh 6.8% per annum 3.0% per annum Source: Competition and Markets Authority, Ministry of Business, Innovation and Employment, Meridian Legislated price controls are imminent (cid:1) The Competition and Markets Authority (CMA) report has made recommendations to improve customer engagement and responsiveness to price (cid:1) The CMA recommended a temporary price cap for prepayment meter customers only (cid:1) Stated that broader price controls would undermine competition and product innovation (cid:1) Electricity prices became an election issue in 2017 and the new government put pressure on the regulator to impose price control (cid:1) The regulator refused, so a Bill was prepared forcing the regulator to implement price controls (cid:1) Implementation is expected in late 2018 Meridian Energy Limited 2018 Annual Results Presentation 12 OUR CAPITAL MANAGEMENT Meridian Energy Limited 2018 Annual Results Presentation 13 CAPITAL MANAGEMENT Existing programme (cid:1) Existing five-year, $625M programme commenced in August 2015 (cid:1) A special, unimputed dividend of 2.44 cps declared today (cid:1) Brings distributions to $437.5M to date (cid:1) Board will consider shareholder returns again under the existing programme in: (cid:1) February 2019 (cid:1) August 2019 (cid:1) February 2020 EXISTING CAPITAL MANAGEMENT $M $437.5M to date 80 60 40 20 0 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Source: Meridian Meridian Energy Limited 2018 Annual Results Presentation 14 CAPITAL MANAGEMENT New programme (cid:1) Expectation we would update the market on capital management during 2018 (cid:1) Announcing a new two-year, $250M programme commencing in August 2020 (cid:1) Signals the Board’s continued willingness to return capital where possible and give certainty in advance (cid:1) Allows the company to address investment opportunities in the medium term (cid:1) Manages credit metrics to a level reflective of Meridian’s hydrology risk (cid:1) Subject to the Board's regular review and consideration of structural industry risks (cid:1) No change to the existing ordinary dividend policy of 75%-90% payout of free cash flow NEW CAPITAL MANAGEMENT Existing programme 5 years, $625M New programme 2 years, $250M Board will consider returns six monthly Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Source: Meridian Meridian Energy Limited 2018 Annual Results Presentation 15 OUR BUSINESSES Meridian Energy Limited 2018 Annual Results Presentation 16 OUR NEW ZEALAND CUSTOMERS 5% growth in customers in FY18 CUSTOMER SALES (cid:1) Supported by a change in portfolio position (cid:1) Both Meridian (4%) and Powershop (8%) sales volume growth (cid:1) In all segments, except Residential (cid:1) MoU with Kiwi Property to install 650kW of solar across four major shopping malls (cid:1) Converted 50% of Meridian’s passenger fleet to electric (cid:1) New EV tariff pricing plans (cid:1) Flux Federation (software development) separated from Powershop (cid:1) Decision made to migrate Meridian’s 225,000 customers to the Flux platform ($30M, three year programme) (cid:1) New Powershop offerings CUSTOMER NUMBERS SALES VOLUME (GWH) AVERAGE PRICE1 ($/MWH) FY18 Residential 194,671 1,370 Small medium business 38,137 936 Agricultural Large business 37,752 1,085 17,807 432 Total Residential/SMB 288,367 3,823 Corporate 2,389 2,158 $117 $83 FY17 Residential 186,165 1,391 Small medium business 35,626 865 Agricultural 36,510 1,029 Large business 16,220 Total Residential/SMB 274,521 Corporate 2,246 425 3,710 2,017 $119 $86 17 Meridian Energy Limited 2018 Annual Results Presentation 1Volume weighted average price in $/MWh OUR NEW ZEALAND CUSTOMERS 4% increase in retail energy margin (cid:1) Higher customer sales lifting revenue and purchase costs (cid:1) Cost per customer down, overall stable spend supporting a growing customer base (cid:1) Overall 5% increase in retail segment EBITDAF (cid:1) Meridian churn and disconnection rates remain below market average (cid:1) Powershop disconnection rate also below market average (cid:1) Powershop churn rate above market average, reflects customer demographics RETAIL COST TO SERVE1 FY2018 FY2017 Retail costs excl metering $65M $65M Other segment cost allocation $15M $15M Year-end customer numbers 290,756 276,767 Cost to serve per customer $275 $290 MOVEMENT IN RETAIL SEGMENT EBITDAF1 $M 100 Energy margin +$6M (4%) 90 80 70 60 50 73 +15 -10 +1 -1 -1 77 EBITDAF 30 Jun 2017 Retail contracted sales Costs to supply contracted sales Other market revenue Other revenue Operating costs EBITDAF 30 Jun 2018 Source: Meridian ANNUAL ICP CHURN 40% 35% 30% 25% 20% 15% 10% 5% 0% Meridian Powershop Industry 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Electricity Authority 18 Meridian Energy Limited 2018 Annual Results Presentation 1FY17 restated for adoption of NZ IFRS 15 OUR NEW ZEALAND GENERATION Lowest NZ generation since 2013 (cid:1) Despite 98% of average inflows (cid:1) Reflecting the timing of those inflows (low 1H FY18 inflows) and a lower wind year (cid:1) Healthy storage at end of July 18: (cid:1) Waitaki 19% (255GWh) above average (cid:1) Manapōuri and Te Anau together 57% (146GWh) above average NEW ZEALAND GENERATION GWh Hydro Wind 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2004 2006 2008 2010 2012 2014 2016 2018 Financial Year ended 30 June Source: Meridian MERIDIAN'S WAITAKI STORAGE FY2018 FY2017 Average GWh 2,500 2,000 1,500 1,000 500 Meridian Energy Limited 2018 Annual Results Presentation 01-Jul 01-Sep 01-Nov 01-Jan 01-Mar 01-May Source: Meridian 19 OUR NEW ZEALAND GENERATION Despite lower generation, NZ energy margin up by $4M (cid:1) Reflects the impact of the change in portfolio position, allowing: (cid:1) 5% uplift in retail volumes sold (cid:1) 43% increase in derivative volumes sold (cid:1) Without additional exposure to high spot prices (cid:1) CPI increase on NZAS pricing and one month of price escalator AVERAGE GENERATION PRICE $/MWh 68 60 57 51 83 90 80 70 60 50 40 30 20 10 0 2014 2015 2016 2017 Financial Year ended 30 June AVERAGE DAILY LME PRICES NZD 2018 Source: Meridian 3,600 3,400 3,200 3,000 2,800 2,600 2,400 Meridian Energy Limited 2018 Annual Results Presentation Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Source: London Metal Exchange, Reserve Bank of New Zealand 20 OUR AUSTRALIAN CUSTOMERS A year of customer consolidation (cid:1) While further generation support was acquired (cid:1) Gas now launched in Victoria, sales of 4,800 GJ’s in June and July 2018 (cid:1) Market is highly competitive and has scale in VIC, NSW, SA and South East QLD (cid:1) 7.2M residential (60% disengaged) (cid:1) 1.6M SMB customers (cid:1) C&I load equivalent to residential and SME combined (cid:1) Test bed of innovation for the Meridian Group AUSTRALIAN CUSTOMERS CONNECTIONS 120,000 100,000 80,000 60,000 40,000 20,000 0 100,524 100,545 77,970 48,208 13,246 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Meridian Meridian Energy Limited 2018 Annual Results Presentation 21 OUR AUSTRALIAN GENERATION A growing portfolio (cid:1) GSP assets acquired (cid:1) Several renewable offtake agreements (cid:1) Record wind year, FY18 generation 8% above FY17 (cid:1) Wholesale prices have moderated from a peak in early FY18 (cid:1) LGC prices have been stable (cid:1) Expected to fall with further renewables penetration HUME Capacity 5 year average output 58MW 203GWh Typical seasonal generation August to April BURRINJUCK Capacity 5 year average output 27.2MW 83GWh Typical seasonal generation September to April KEEPIT Capacity 5 year average output 7.2MW 3GWh Typical seasonal generation August to February Meridian Energy Limited 2018 Annual Results Presentation 22 OUR UNITED KINGDOM CUSTOMERS Main milestones now delivered (cid:1) 25,000 customers at 30 June 2018 (cid:1) Grown by more than 30% in the six weeks since (cid:1) FY18 milestones delivered: (cid:1) Gas functionality (cid:1) White label (cid:1) Powershop Lite (cid:1) Data protection regulation requirements (cid:1) Further product development underway (cid:1) Complex merger proposed between npower (our franchisee) and SSE’s domestic retail business (cid:1) Subject to review by the Competition and Watchdog Authority, decision in October 2018 Meridian Energy Limited 2018 Annual Results Presentation 23 OUR FINANCIAL PERFORMANCE Meridian Energy Limited 2018 Annual Results Presentation 24 DIVIDENDS 1.5% growth in full year dividends (cid:1) Final ordinary dividend declared of 8.94 cps, 86% imputed (cid:1) Brings FY18 full year ordinary dividend declared to 14.32 cps, 86% imputed (cid:1) Represents 87% payout of free cash flow (cid:1) Capital management final special dividend of 2.44 cps, unimputed (cid:1) Brings capital management distributions to $437.5M since the programme began in August 2015 (cid:1) FY18 TSR of 14% from a 7% share price increase and 18.96 cps of dividends paid during the year Meridian Energy Limited 2018 Annual Results Presentation DIVIDENDS DECLARED CPS 25 Ordinary dividends Special dividends 18.23 5.35 18.38 4.88 18.91 4.88 19.20 4.88 12.88 13.50 14.03 14.32 20 15 10 5 0 13.01 2.00 11.01 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Meridian DIVIDENDS DELCARED CPS IMPUTATION FY2018 Ordinary dividends Capital mgt special dividends Total FY2017 Ordinary dividends Capital mgt special dividends Total 14.32 4.88 19.20 14.03 4.88 18.91 86% 0% 88% 0% 25 FY17 RESTATEMENT FOR IFRS 15 Early adoption of IFRS 15 (cid:1) Has resulted in a change to the accounting policy for customer incentives and acquisition and retention costs (cid:1) Previous policy was to recognise these costs as discounts to sales and expenses (cid:1) New policy results in customer incentives and incremental costs being deferred to the balance sheet (cid:1) Then amortised over the expected average customer contract tenure (cid:1) FY17 results reported in August 2017 have been restated with minor changes (cid:1) Pages 34-35 and 46 have more detailed restatements YEAR ENDED 30 JUNE 2017 INCOME STATEMENT Operating revenue Operating expenses EBITDAF Income tax expense NPAT ORIGINAL 2017 $M ADJUST MENT $M RESTATED 2017 $M 2,319 (1,666) 653 (80) 197 1 3 4 (1) 3 2,320 (1,663) 657 (81) 200 YEAR ENDED 30 JUNE 2017 BALANCE SHEET ORIGINAL 2017 $M ADJUST MENT $M RESTATED 2017 $M Customer contract assets - Deferred tax liability (1,710) 18 (5) 18 (1,715) Retained earnings 738 (13) 725 Meridian Energy Limited 2018 Annual Results Presentation 26 EARNINGS $9M (1.4%) increase in EBITDAF Business specific changes (cid:1) Higher business, lower residential sales volumes at slightly lower average price (cid:1) Higher corporate sales volumes (cid:1) Higher irrigation sales (cid:1) Higher wholesale volumes (cid:1) Some NZ cost expansion, mainly asset refurbishments (cid:1) Higher NZAS price on indexation (cid:1) Growth in Australia and UK earnings, some cost growth to support this Market and environmental impacts (cid:1) 787GWh less physical generation (cid:1) Higher aluminum prices 1,009 1,014 1,030 ENERGY MARGIN $M 1,050 1,000 950 900 850 954 924 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Meridian EBITDAF $M 700 650 600 585 550 650 657 666 618 Meridian Energy Limited 2018 Annual Results Presentation Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers 27 2014 2015 2016 2017 2018 Financial Year ended 30 June Source: Meridian COSTS 5% increase in operating costs (cid:1) Refurbishment spend on Te Āpiti wind farm and the Ōhau hydro stations (cid:1) Transformer replacements at the Manapōuri power station (cid:1) Maintaining a similar level of promotional spend to FY17, supporting NZ customer acquisition (cid:1) Higher Australian customer service costs from higher average customer numbers (cid:1) Costs associated with introduction of gas offer in Victoria (cid:1) Maintenance costs associated with GSP hydro assets (cid:1) Flux expansion and preparation for Meridian customer migration (cid:1) Stable stay in business capex (cid:1) Total capex of $235M in FY18 includes GSP hydro acquisitions in Australia OPERATING COSTS $M FY18 FY17 300 250 200 150 100 50 0 259 246 84 82 96 95 38 33 41 36 NZ Wholesale NZ Retail Australia Other Total STAY IN BUSINESS CAPEX $M 70 60 50 40 30 20 10 0 58 61 50 48 47 Meridian Energy Limited 2018 Annual Results Presentation Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers 28 2014 2015 Financial Year ended 30 June 2016 2017 2018 BELOW EBITDAF Flat NPAT (cid:1) $4M (2%) increase in depreciation from FY17 revaluations (cid:1) FY18 impairments of $2M (Central Wind consent), compared with $10M in FY17 (cid:1) Asset sale gains of $7M in FY18, compared with losses of $4M in FY17 (farm land sales) (cid:1) $23M reduction to NPBT from fair value of electricity hedges from changing forward electricity prices ($76M reduction in FY17) (cid:1) $3M reduction to NPBT from fair value of treasury instruments from increases in forward interest rates ($55M increase in FY17) (cid:1) $4M (5%) increase in net financing costs (cid:1) Tax expense includes stamp duty on GSP acquisition (cid:1) $15M (7%) decrease in underlying NPAT with this duty and higher depreciation and interest, some offset from higher EBITDAF NET PROFIT AFTER TAX $M 230 247 185 200 201 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 Financial Year ended 30 June UNDERLYING NPAT $M 195 209 233 221 206 250 200 150 100 50 0 2014 2015 2016 2017 2018 Financial Year ended 30 June Meridian Energy Limited 2018 Annual Results Presentation Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers 29 DEBT AND FUNDING Successful retail bond issue in FY18 (cid:1) Total borrowings as at 30 June 2018 of $1,473M (cid:1) Up $281M from 3o June 2017 (cid:1) Includes $200M, seven year, fixed-rate retail bonds issue in June 2018 (cid:1) Committed bank facilities of $1,914M of which $486M were undrawn (cid:1) Expiry of these facilities from FY19 to FY27 (cid:1) Net debt of $1,529M, up 22% from FY17 NET DEBT/EBITDAF TIMES DEBT MATURITY PROFILE AS AT 30 JUNE 2018 $M Drawn debt maturing (face value) Available facilities maturing 50 230 282 205 499 75 85 183 160 600 500 400 300 200 100 0 2019 2020 2021 2022 2023 2024+ Financial Year ended 30 June SOURCES OF FUNDING AT AT 30 JUNE 2018 1.8 1.7 1.8 1.9 2.3 NZ$ bank facilities drawn/ undrawn EKF - Danish export credit Retail Bonds Floating rate notes 8% 23% 34% June 2014 June 2015 June 2016 June 2017 June 2018 Financial Year ended 30 June Meridian Energy Limited 2018 Annual Results Presentation US private placement 5% Commercial paper 26% 4% 30 3 2 1 0 O U R C L O S I N G C O M M E N T S (cid:1) Good current catchment storage (cid:1) Increasing pace of change in NZ’s climate change actions (cid:1) NZ electricity price review issues paper expected in September 2018 (cid:1) Followed by consultation in early 2019 (cid:1) Update on NZ transmission pricing due in December 2018 (cid:1) Progress on Australian NEG and ACCC recommendations Meridian Energy Limited 2018 Annual Results Presentation 31 Q U E S T I O N S Meridian Energy Limited 2018 Annual Results Presentation 32 OUR FINANCIAL PERFORMANCE IN DETAIL Meridian Energy Limited 2018 Annual Results Presentation 33 FY17 SEGMENT RESTATEMENT $M NZ WHOLESALE 2017 IRFS 15 Other NZ RETAIL AUSTRALIA 2017 2017 IRFS 15 Other 2017 2017 IRFS 15 Other Contracted sales Virtual asset swap margins Net cost of acquired generation Generation spot revenue Inter-segment electricity sales Costs to supply contracted sales Other market revenue/(costs) Energy margin Other revenue Dividend revenue Energy transmission expense Gross margin Operating expenses EBITDAF $M Contracted sales Virtual asset swap margins Net cost of acquired generation Generation spot revenue Inter-segment electricity sales Costs to supply contracted sales Other market revenue/(costs) Energy margin Other revenue Dividend revenue Energy transmission expense Gross margin Operating expenses EBITDAF reported 354 4 (4) 684 506 (753) (6) 785 4 (125) 664 (82) 582 restated reported 612 354 4 (4) 684 506 (753) (6) 785 4 (125) 664 (82) 582 (460) 1 153 11 164 (89) 75 restated reported 72 614 (1) 48 (45) 75 (1) (5) 70 (36) 34 (1) 3 2 (460) 1 155 13 168 (95) 73 2 2 (6) (4) 2 2 2 2 OTHER AND UNALLOCATED 2017 IRFS 15 Other 2017 INTER-SEGMENT 2017 IRFS 15 Other 2017 TOTAL GROUP 2017 IRFS 15 Other reported restated reported (506) 506 (7) (1) (8) 7 (1) 11 1 12 (49) (37) (2) (2) 6 4 9 1 10 (43) (33) restated reported 1,038 4 (4) 732 (506) 506 (7) (1) (8) 7 (1) (752) (5) 1,013 19 (130) 902 (249) 653 1 1 1 3 4 2017 restated 71 48 (45) 74 (5) 69 (33) 36 2017 restated 1,039 4 (4) 732 (752) (5) 1,014 19 (130) 903 (246) 657 Meridian Energy Limited 2018 Annual Results Presentation 34 FY18 OPERATING INFORMATION RESTATEMENT FY18 OPERATING INFORMATION New Zealand Contracted Sales Retail contracted sales volume (GWh) Average retail contracted sales price ($/MWh) NZAS sales volume (GWh) Sell side derivative volumes (GWh) Wholesale contracted sales average price ($/MWh) Total New Zealand customer connections New Zealand Generation Hydro generation volume (GWh) Wind generation volume (GWh) Total generation volume (GWh) Average generation price ($/MWh) Acquired generation volume (GWh) Cost of acquired generation ($/MWh) Acquired generation revenue average price ($/MWh) Future contract close outs ($m) Contracted sales supply volume (GWh) Cost to supply contracted sales ($/MWh) Australia Wind generation volume (GWh) Hydro generation volume (GWh) Retail contracted sales volume (GWh) Powershop Australia customer connections Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017 Jan 2018 Feb 2018 Mar 2018 Apr 2018 May 2018 Jun 2018 519 $114.6 426 95 $60.9 278,595 529 $115.9 426 100 $59.0 279,967 491 $109.4 411 111 $58.1 280,209 475 $99.0 426 142 $54.9 280,211 539 $96.0 412 194 $57.6 281,314 589 $93.3 426 125 $58.5 282,396 503 $96.8 426 182 $63.0 283,724 438 $101.6 384 239 $61.3 285,611 459 $100.2 426 294 $58.7 287,167 442 $107.0 412 272 $60.1 288,538 496 $112.5 426 244 $62.5 289,431 502 $115.9 412 280 $60.5 290,756 739 108 847 $156.5 282 $77.4 $138.8 ($0.7) 1,067 $155.0 831 118 949 $83.4 206 $70.1 $84.1 ($0.6) 1,077 $88.2 867 116 983 $55.0 158 $62.5 $55.6 ($0.7) 1,053 $59.2 985 106 1,091 $53.1 164 $60.6 $54.4 ($0.3) 1,054 $54.4 1,000 82 1,082 $95.5 178 $64.9 $99.7 $0.1 1,174 $100.1 867 118 985 $128.4 200 $69.9 $114.2 ($0.4) 1,163 $126.8 888 80 968 $127.2 234 $75.4 $114.2 ($0.3) 1,140 $130.2 878 102 980 $64.8 156 $65.0 $65.5 ($0.4) 1,086 $69.1 1,049 105 1,154 $55.2 152 $63.6 $59.8 ($0.0) 1,205 $59.8 994 118 1,112 $54.3 163 $63.9 $57.7 ($0.0) 1,150 $57.5 1,037 113 1,150 $56.1 169 $63.2 $56.5 ($0.2) 1,191 $58.4 1,131 96 1,227 $91.1 160 $63.4 $93.2 ($0.0) 1,225 $95.3 69 60 67 42 32 35 40 37 59 58 not disclosed not disclosed 50 39 101,096 not disclosed not disclosed 43 40 39 101,460 not disclosed not disclosed 43 44 2 39 100,773 33 22 38 51 2 47 not disclosed not disclosed 43 2 53 100,545 Meridian Energy Limited 2018 Annual Results Presentation 35 FULL YEAR SEGMENT RESULTS FY17 restated for segment changes (cid:1) Flux Federation (Powershop platform development) now included in other segment (previously retail segment) (cid:1) Powershop UK now included in other segment (previously international segment) $M WHOLESALE RETAIL AUSTRALIA OTHER/ UNALLOCATED INTER- SEGMENT 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 FINANCIAL YEAR ENDED 30 JUNE Energy margin Other revenue Dividend revenue 783 785 2 - 4 - 161 12 - - 155 13 - - 86 74 1 - - - (5) (5) - 20 46 - Energy transmission expense (122) (125) Operating expenses EBITDAF (84) 579 (82) 582 (96) (95) (38) (33) (49) 77 73 44 36 17 - 9 1 - (43) (33) - (13) (46) - 8 - (7) (1) - 7 (51) (1) Meridian Energy Limited 2018 Annual Results Presentation 36 SIX MONTHLY RESULTS 7% decrease in 1H FY18 EBITDAF, 11% increase in 2H FY18 $M Contracted sales Virtual asset swap margins Net cost of acquired generation Generation spot revenue Costs to supply contracted sales Other market revenue/(costs) Energy margin Other revenue Energy transmission expense Gross margin Operating expenses EBITDAF Depreciation and amortisation Impairment of assets Gain/(loss) on sale of assets Net change in fair value of electricity and other hedges Operating profit Finance costs Interest income Net change in fair value of treasury instruments Net profit before tax Interest tax expense Net profit after tax Underlying net profit after tax 2018 568 (4) 31 598 (682) (2) 509 10 (63) 456 (127) 329 (134) (2) 6 (2) 197 (41) (2) 154 (45) 109 104 1H 2017 CHANGE 74 494 (9) 5 35 (4) 248 350 (372) (310) 0 (2) (24) 533 1 9 3 (66) (20) 476 (5) (122) (25) 354 (2) (132) (2) 8 73 52 (2) (1) (65) (16) 0 (16) (2) (75) 145 (39) 1 63 170 (45) 125 2018 594 2 10 513 (596) (2) 521 12 (64) 469 (132) 337 (134) 0 1 (21) 183 (41) 1 (1) 142 (50) 92 2H FULL YEAR 2017 CHANGE 49 545 3 (1) 10 0 131 382 (154) (442) 1 (3) 40 481 2 10 0 (64) 42 427 (8) (124) 34 303 (2) (132) 10 (10) (2) 3 (20) (1) 25 158 (1) (40) 0 1 7 (8) 31 111 (14) (36) 17 75 2018 1,162 (2) 41 1,111 (1,278) (4) 1,030 22 (127) 925 (259) 666 (268) (2) 7 (23) 380 (82) 1 (3) 296 (95) 201 2017 CHANGE 123 1,039 (6) 4 45 (4) 379 732 (526) (752) 1 (5) 16 1,014 3 19 3 (130) 22 903 (13) (246) 9 657 (4) (264) 8 (10) 11 (4) 53 (76) 77 303 (3) (79) (1) 2 (58) 55 15 281 (14) (81) 1 200 131 (27) 102 90 12 206 221 (15) Meridian Energy Limited 2018 Annual Results Presentation 37 NEW ZEALAND RETAIL Customers (cid:1) 5% increase in customers since June 2017 Residential, Business, Agri segment (cid:1) 3% increase in overall volumes (cid:1) 1.5% decrease in residential volumes (cid:1) 8% increase in small business volumes (cid:1) 2% increase in large business volumes (cid:1) 5% increase in agri volumes, irrigation- driven (cid:1) 1% decrease in average sales price Corporate segment (cid:1) 7% increase in volumes (cid:1) 3% decrease in average sales price NEW ZEALAND CUSTOMER NUMBERS ICP (000) 350 300 250 200 150 100 50 0 Meridian North Island Meridian South Island 277 55 114 276 56 116 275 56 117 277 59 115 Powershop 291 66 119 108 104 102 103 106 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 RETAIL SALES VOLUMES GWh Residential, SMB, Agri 5,754 2,344 5,967 5,969 2,276 2,188 Corporate 5,727 2,017 5,981 2,158 3,410 3,691 3,781 3,710 3,823 2014 2015 2016 2017 2018 Financial Year ended 30 June 6,000 5,000 4,000 3,000 2,000 1,000 0 Meridian Energy Limited 2018 Annual Results Presentation 38 NEW ZEALAND HYDROLOGY Inflows (cid:1) Inflows for FY18 were 98% of historical average (cid:1) July 2018 inflows were 161% of average Storage (cid:1) Meridian’s Waitaki catchment storage at 30 June 2018 was 113% of historical average (cid:1) By 31 July 2018, this position was 119% of historical average MERIDIAN'S TOTAL CATCHMENT INFLOWS GWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Financial year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 84 year average June YTD MERIDIAN'S WAITAKI STORAGE GWh 2,500 2,000 1,500 1,000 500 Meridian Energy Limited 2018 Annual Results Presentation 0 1-Jan Average 1979- 1-Mar 1-May 1-Jul 1-Sep 2013 2014 2015 2016 1-Nov 2017 2018 39 NEW ZEALAND GENERATION Volume (cid:1) FY18 generation was 6% lower than FY17 (cid:1) Reflected both lower hydro and wind generation (cid:1) 1H FY18 generation 16% lower, 2H FY18 generation 5% higher NEW ZEALAND GENERATION GWh Hydro Wind Total 13,148 1,245 13,333 1,422 13,707 1,456 13,315 1,341 15,000 12,000 9,000 6,000 11,903 11,911 12,251 11,974 12,528 1,263 11,265 Price (cid:1) FY18 average price Meridian received for its generation was 61% higher than FY17 (cid:1) FY18 average price Meridian paid to supply contracted sales was 57% higher than FY17 3,000 0 2014 2015 2016 2017 2018 Financial Year ended 30 June AVERAGE GENERATION PRICE $/MWh 68 60 57 51 83 90 80 70 60 50 40 30 20 10 0 Meridian Energy Limited 2018 Annual Results Presentation 40 2014 2015 2016 2017 2018 Financial Year ended 30 June AUSTRALIAN RETAIL Customers (cid:1) Flat customer numbers since June 2017, in response to higher wholesale market prices Sales volume (cid:1) 12% increase in sales volumes AUSTRALIAN CUSTOMERS CONNECTIONS 120,000 100,000 80,000 60,000 40,000 20,000 0 100,524 100,545 77,970 48,208 13,426 2014 2015 2016 2017 2018 Financial Year ended 30 June RETAIL SALES VOLUMES GWh 600 500 400 300 200 100 0 493 549 345 26 167 2014 2015 2016 2017 2018 Financial Year ended 30 June Meridian Energy Limited 2018 Annual Results Presentation 41 AUSTRALIAN GENERATION Volume (cid:1) FY18 generation was 14% higher than FY17 (cid:1) FY18 includes 28GWh of seasonal generation from the GSP hydro assets (cid:1) FY18 wind generation was 8% higher than FY17 Price (cid:1) FY18 average price Meridian received for its generation was 15% higher than FY17 700 600 500 400 300 200 100 0 285 285 AUSTRALIAN GENERATION GWh Wind Hydro Total 519 519 510 28 519 519 510 581 553 2014 2015 2016 2017 2018 Financial Year ended 30 June AVERAGE GENERATION PRICE $/MWh 99 86 106 96 110 120 100 80 60 40 20 0 Meridian Energy Limited 2018 Annual Results Presentation 42 2014 2015 2016 2017 2018 Financial Year ended 30 June FY18 EBITDAF MOVEMENT IN EBITDAF Energy margin +$4M (0.4%) +45 -6 +81 -132 $M 800 760 720 680 640 600 +15 657 EBITDAF 30 Jun 2017 Retail contracted sales Wholesale contracted sales Net VAS position Net cost of acquired generation Net spot exposed revenue Meridian Energy Limited 2018 Annual Results Presentation +3 +3 -13 +1 +12 Other market costs Australian energy margin Other revenue Transmission expenses 666 EBITDAF 30 Jun 2018 Employee & other operating expenses 43 EBITDAF TO NPAT FY18 EBITDAF TO NPAT RECONCILIATION XXXX $M 700 600 500 400 300 200 100 -268 666 -13 -81 -98 +5 +13 +3 206 -26 EBITDAF Depreciation and amortisation Premiums paid on electricity options net of interest Net finance costs Tax Underlying NPAT Net change in fair value of hedges/ instruments Loss on sale of assets/ impairments Premiums paid on electricity options net of interest 201 Tax NPAT Meridian Energy Limited 2018 Annual Results Presentation 44 NEW ZEALAND ENERGY MARGIN ENERGY MARGIN (cid:1) A non-GAAP financial measure representing energy sales revenue less energy related expenses and energy distribution expenses (cid:1) Used to measure the vertically integrated performance of the retail and wholesale businesses. (cid:1) Used in place of statutory reporting which requires gross sales and costs to be reported separately, therefore not accounting for the variability of the wholesale spot market and the broadly offsetting impact of wholesale prices on the cost of retail electricity purchases (cid:2)(cid:5)(cid:6)(cid:7)(cid:8)(cid:5)(cid:4)(cid:1)(cid:3)(cid:9)(cid:10)(cid:1) (cid:1) Revenues received from sales to customers net of distribution costs (fees to distribution network companies that cover the costs of distribution of electricity to customers), sales to large industrial customers and fixed price revenues from derivatives sold (Contract sales revenue) (cid:1) The net position of virtual assets swaps with Genesis Energy and Mercury (cid:1) The fixed cost of derivatives acquired to supplement generation and manage spot price risks, net of spot revenue received for generation acquired from those derivatives (Net cost of acquired generation) (cid:1) Revenue from the volume of electricity that Meridian generates that is in excess of volumes required to cover contracted customer sales (Spot exposed revenues) (cid:1) Other associated market revenues and costs including Electricity Authority levies and ancillary generation revenues (i.e. frequency keeping) (cid:1) Meridian Energy Limited 2018 Annual Results Presentation 45 NEW ZEALAND ENERGY MARGIN FY18 VOLUME1 VWAP2 LWAP:GWAP FY18 1.04 FY17 1.11 $117.3 $83.4 $105.1 $59.7 $87.6 ($67.7) Residential/SMB contracted sales Corporate contracted sales Retail contracted sales NZAS sales Sell side CfDs Wholesale contracted sales Net VAS position Acquired generation revenue Cost of acquired generation Future contract close outs Net cost of acquired generation Generation revenue Cost to supply retail sales Cost to supply wholesale sales 3,823 2,158 5,981 5,011 2,278 7,289 1,099 2,222 2,222 12,528 6,297 7,289 $83.0 1,039 $M 449 180 629 435 (2) 195 (150) (4) 41 FY173 VOLUME1 VWAP2 $118.9 $85.7 $107.2 3,710 2,017 5,727 5,011 1,597 6,608 $53.5 $61.1 ($62.0) $51.4 1,148 1,564 1,564 13,315 6,002 6,608 $M 441 173 614 354 4 96 (97) (3) (4) 684 Cost to supply contracted sales 13,586 ($87.8) (1,194) 12,610 ($56.1) (707) Net spot exposed revenue Other market costs Energy Margin (155) (4) 944 Meridian Energy Limited 2018 Annual Results Presentation 1GWh 2Volume weighted average price in $/MWh 3Restated for IFRS 15 (23) (5) 940 46 NEW ZEALAND ENERGY MARGIN NEW ZEALAND ENERGY MARGIN $M 2,400 Contracted sales revenue $1,064M Spot exposed revenue -$155M Net cost of acquired generation $41M 2,000 1,600 1,200 800 400 0 629 1,039 -1,194 435 195 -2 -4 -150 -4 944 Retail Contracted Sales (net) Wholesale Contracted Sales Meridian Generation Spot Revenue Cost to Supply Contracted Sales Cost of Acquired Generation Future Contract Close Outs Acquired Generation Spot Revenue Net VAS Position Market Related Costs Energy Margin Meridian Energy Limited 2018 Annual Results Presentation 47 NEW ZEALAND ENERGY MARGIN MOVEMENT NEW ZEALAND ENERGY MARGIN $M Contracted sales revenue +$96M Spot exposed revenue -$132M Net cost of acquired generation +$45M 1,500 1,300 1,100 900 700 +355 -487 +15 +81 940 -53 -1 +1 +99 -6 Energy Margin 30 Jun 17 Retail Contracted Sales (net) Wholesale Contracted Sales Meridian Generation Spot Revenue Cost to Supply Contracted Sales Cost of Acquired Generation Future Contract Close Outs Acquired Generation Spot Revenue Net VAS Position Market Related Costs Meridian Energy Limited 2018 Annual Results Presentation 944 Energy Margin 30 Jun 18 48 OTHER REVENUE FINANCIAL YEAR ENDED 30 JUNE $M 20181 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED Retail service revenue (field services revenue etc) Arc Innovations Damwatch Miscellaneous2 Farming Lease income Total other revenue 6 15 1 22 6 2 11 0 19 6 5 5 1 17 8 3 5 7 1 1 25 10 6 5 2 3 1 27 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers 2Includes revenue related to Flux Federation. Also includes settlement of insurance proceeds in the year ended 30 June 2015 Meridian Energy Limited 2018 Annual Results Presentation 49 FUNDING METRICS Net debt/EBITDAF (cid:1) Net debt/EBITDAF is the principal metric underpinning S&P credit rating (cid:1) S&P calculation of net debt/EBITDAF includes numerous adjustments to reported numbers; (cid:1) Borrowings adjusted for the impact of finance and operating leases (cid:1) Cash balances adjusted for restricted cash (cid:1) A cash buffer at 25% of unrestricted cash and cash equivalents FINANCIAL YEAR ENDED 30 JUNE $M 20181 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED Drawn borrowings Finance lease payable Operating lease commitments Less: cash and cash equivalents Add back: restricted cash Add back: cash buffer Net debt EBITDAF Net debt to EBITDAF (times) 1,428 48 76 (60) 29 8 1,529 666 2.3 1,158 47 71 (80) 51 7 1,254 657 1.9 1,136 48 59 (118) 18 25 1,168 650 1.8 991 52 37 (69) 22 12 1,146 49 42 (276) 7 67 1,045 1,035 618 1.7 585 1.8 50 Meridian Energy Limited 2018 Annual Results Presentation 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers FAIR VALUE MOVEMENTS NET CHANGE IN FAIR VALUE OF FINANCIAL INSTRUMENTS $M 50 0 -50 -100 18 -33 -21 -26 -83 2014 2015 2016 2017 2018 Financial Year ended 30 June On electricity and other hedges and treasury instruments (cid:1) Meridian uses derivative instruments to manage interest rate, foreign exchange and electricity price risk (cid:1) As forward prices and rates on these instruments move, non-cash changes to their carrying value are reflected in NPAT (cid:1) Accounting standards only allow hedge accounting if specific conditions are met, which creates NPAT volatility (cid:1) $3M negative change in fair value of treasury instruments in FY18 from rising forward interest rates (cid:1) $23M negative change in fair value of electricity and other hedges in FY18 from changing forward electicity prices Meridian Energy Limited 2018 Annual Results Presentation 51 INCOME STATEMENT FINANCIAL YEAR ENDED 30 JUNE $M New Zealand energy margin Australia energy margin Other revenue Energy transmission expense Employee and other operating expenses EBITDAF Depreciation and amortisation Impairment of assets Gain/(loss) on sale of assets Net change in fair value of electricity and other hedges Net finance costs Net change in fair value of treasury instruments Net profit before tax Income tax expense Net profit after tax 20181 944 86 22 (127) (259) 666 (268) (2) 7 (23) (81) (3) 296 (95) 201 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers Meridian Energy Limited 2018 Annual Results Presentation 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED 940 74 19 (130) (246) 657 (264) (10) (4) (76) (77) 55 281 (81) 200 941 68 17 (128) (248) 650 (236) 4 (1) (15) (78) (68) 256 (71) 185 900 54 25 (123) (238) 618 (239) (38) 19 (1) (78) (32) 249 (2) 247 891 33 27 (129) (237) 585 (220) - 7 (9) (73) 27 317 (87) 230 52 UNDERLYING NPAT RECONCILIATION FINANCIAL YEAR ENDED 30 JUNE $M Net profit after tax Underlying adjustments Hedging instruments Net change in fair value of electricity and other hedges Net change in fair value of treasury instruments Premiums paid on electricity options net of interest Assets (Gain)/loss on sale of assets Impairment of assets Total adjustments before tax Taxation Tax effect of above adjustments Release of capital gains tax provision Tax depreciation on powerhouse structures 20181 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED 201 200 185 247 230 23 3 (13) (7) 2 8 (3) 76 (55) (12) 4 10 23 15 68 (12) 1 (4) 68 (2) (20) - - 1 32 (15) (19) 38 37 (13) (28) (34) 209 9 (27) (20) (7) - (45) 10 - - 195 53 Underlying net profit after tax 206 221 233 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers Meridian Energy Limited 2018 Annual Results Presentation CASH FLOW STATEMENT FINANCIAL YEAR ENDED 30 JUNE $M 20181 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED Receipts from customers 2,765 2,250 2,348 2,348 2,083 Interest and dividends received 1 2 2 8 9 Payments to suppliers and employees (2,152) (1,596) (1,723) (1,742) (1,480) Interest and income tax paid Operating cash flows Sale of property, plant and equipment Sales of subsidiaries and other assets Purchase of property, plant and equipment Stamp duty/capitalised interest Purchase of intangible assets and investments Investing cash flows Term borrowings drawn Term borrowings repaid Shares purchased for long-term incentive Dividends and finance lease paid Financing cash flows (187) 427 23 - (33) (10) (204) (224) 462 (200) - (487) (225) (186) 470 - 2 (33) - (21) (52) 158 (136) - (478) (456) 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers Meridian Energy Limited 2018 Annual Results Presentation (175) 452 - 5 (42) - (19) (56) 634 (478) (1) (502) (347) (174) 440 19 29 (131) - (16) (99) 366 (527) (2) (385) (548) (179) 433 41 21 (284) (9) (23) (254) 134 (154) (1) (261) (282) 54 BALANCE SHEET FINANCIAL YEAR ENDED 30 JUNE $M 20181 2017 RESTATED1 2016 REPORTED 2015 REPORTED 2014 REPORTED Cash and cash equivalents Trade receivables Customer contract assets Other current assets Total current assets Property, plant and equipment Intangible assets Other non-curent assets Total non-current assets Payables, accruals and employee entitlements Current portion of term borrowings Other current liabilities Total current liabilities Term borrowings Deferred tax Other non-current liabilities Total non-current liabilities Net assets Meridian Energy Limited 2018 Annual Results Presentation 60 261 19 109 449 7,941 60 182 80 260 18 91 449 7,961 58 215 118 194 94 406 7,771 47 314 69 191 74 334 276 183 64 523 7,097 6,929 47 183 54 84 8,183 8,234 8,132 7,327 7,067 297 450 96 843 1,023 1,683 260 2,966 311 170 98 579 1,022 1,715 272 3,009 220 214 79 513 1,000 1,617 358 2,975 208 213 57 478 863 1,400 172 2,435 236 133 97 466 959 1,350 181 2,490 4,634 1Where applicable, includes effects from the adoption of NZ IFRS 15 Revenue from Contracts with Customers 5,050 4,748 5,095 4,823 55 G L O S S A R Y Acquired generation volumes buy-side electricity derivatives excluding the buy-side of virtual asset swaps Average generation price the volume weighted average price received for Meridian’s physical generation Average retail contracted sales price volume weighted average electricity price received from retail customers, less distribution costs Average wholesale contracted sales price volume weighted average electricity price received from wholesale customers, including NZAS Combined catchment inflows combined water inflows into Meridian’s Waitaki and Waiau hydro storage lakes Cost of acquired generation volume weighted average price Meridian pays for derivatives acquired to supplement generation Cost to supply contracted sales volume weighted average price Meridian pays to supply contracted customer sales Contracts for Difference (CFDs) an agreement between parties to pay the difference between the wholesale electricity price and an agreed fixed price for a specified volume of electricity. CFDs do not result in the physical supply of electricity Customer connections (NZ) number of installation control points, excluding vacants FRMP GWh financially responsible market participant gigawatt hour. Enough electricity for 125 average New Zealand households for one year Historic average inflows the historic average combined water inflows into Meridian’s Waitaki and Waiau hydro storage lakes over the last 84 years Historic average storage the historic average level of storage in Meridian’s Waitaki catchment since 1979 HVDC ICP ICP switching MWh high voltage direct current link between the North and South Islands of New Zealand New Zealand installation control points, excluding vacants the number of installation control points changing retailer supplier in New Zealand, recorded in the month the switch was initiated megawatt hour. Enough electricity for one average New Zealand household for 46 days National demand Electricity Authority’s reconciled grid demand www.emi.ea.govt.nz NZAS Retail sales volumes Sell side derivatives New Zealand Aluminium Smelters Limited contract sales volumes to retail customers, including both non half hourly and half hourly metered customers sell-side electricity derivatives excluding the sell-side of virtual asset swaps Virtual Asset Swaps (VAS) CFDs Meridian has with Genesis Energy and Mercury. They do not result in the physical supply of electricity Meridian Energy Limited 2018 Annual Results Presentation 56 D I S C L A I M E R THE INFORMATION IN THIS PRESENTATION WAS PREPARED BY MERIDIAN WITH ANY PURCHASE OF MERIDIAN ENERGY SECURITIES. ENERGY WITH DUE CARE AND ATTENTION. HOWEVER, THE INFORMATION THIS PRESENTATION CONTAINS A NUMBER OF NON-GAAP FINANCIAL IS SUPPLIED IN SUMMARY FORM AND IS THEREFORE NOT NECESSARILY MEASURES, INCLUDING ENERGY MARGIN, EBITDAF, UNDERLYING NPAT COMPLETE, AND NO REPRESENTATION IS MADE AS TO THE ACCURACY, AND GEARING. BECAUSE THEY ARE NOT DEFINED BY GAAP OR IFRS, COMPLETENESS OR RELIABILITY OF THE INFORMATION. IN ADDITION, MERIDIAN'S CALCULATION OF THESE MEASURES MAY DIFFER FROM NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS, EMPLOYEES, SIMILARLY TITLED MEASURES PRESENTED BY OTHER COMPANIES AND SHAREHOLDERS NOR ANY OTHER PERSON SHALL HAVE LIABILITY THEY SHOULD NOT BE CONSIDERED IN ISOLATION FROM, OR CONSTRUED WHATSOEVER TO ANY PERSON FOR ANY LOSS (INCLUDING, WITHOUT AS AN ALTERNATIVE TO, OTHER FINANCIAL MEASURES DETERMINED IN LIMITATION, ARISING FROM ANY FAULT OR NEGLIGENCE) ARISING FROM ACCORDANCE WITH GAAP. ALTHOUGH MERIDIAN BELIEVES THEY THIS PRESENTATION OR ANY INFORMATION SUPPLIED IN CONNECTION PROVIDE USEFUL INFORMATION IN MEASURING THE FINANCIAL WITH IT. PERFORMANCE AND CONDITION OF MERIDIAN'S BUSINESS, READERS ARE THIS PRESENTATION MAY CONTAIN FORWARD-LOOKING STATEMENTS CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE NON-GAAP AND PROJECTIONS. THESE REFLECT MERIDIAN’S CURRENT FINANCIAL MEASURES. EXPECTATIONS, BASED ON WHAT IT THINKS ARE REASONABLE THE INFORMATION CONTAINED IN THIS PRESENTATION SHOULD BE ASSUMPTIONS. MERIDIAN GIVES NO WARRANTY OR REPRESENTATION AS CONSIDERED IN CONJUNCTION WITH THE COMPANY’S FINANCIAL TO ITS FUTURE FINANCIAL PERFORMANCE OR ANY FUTURE MATTER. STATEMENTS, WHICH ARE INCLUDED IN MERIDIAN’S INTEGRATED REPORT EXCEPT AS REQUIRED BY LAW OR NZX OR ASX LISTING RULES, MERIDIAN FOR THE YEAR ENDED 30 JUNE 2018 AND IS AVAILABLE AT: IS NOT OBLIGED TO UPDATE THIS PRESENTATION AFTER ITS RELEASE, EVEN IF THINGS CHANGE MATERIALLY. WWW.MERIDIANENERGY.CO.NZ/INVESTORS/ THIS PRESENTATION DOES NOT CONSTITUTE FINANCIAL ADVICE. FURTHER, THIS PRESENTATION IS NOT AND SHOULD NOT BE CONSTRUED ALL CURRENCY AMOUNTS ARE IN NEW ZEALAND DOLLARS UNLESS AS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY MERIDIAN STATED OTHERWISE. ENERGY SECURITIES AND MAY NOT BE RELIED UPON IN CONNECTION Meridian Energy Limited 2018 Annual Results Presentation 57