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2020 Full Year Results Presentation Twelve Months Ended 30 June 2020

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2020 Full Year Results Presentation Twelve Months Ended 30 June 2020 2020 Full Year Results Presentation Twelve months ended 30 June 2020 Putting our energy where it matters Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 1 Disclaimer and important information This presentation may contain projections or forward-looking statements regarding a variety of items. Such forward-looking statements are based upon assumptions at a point in time, and carry significant risks if relied upon. Actual results may differ materially from those stated Furthermore, while all reasonable care has been taken in any forward-looking statement based on a number of in compiling this presentation, Contact accepts no important factors and risks. responsibility for any errors or omissions. Although management may indicate and believe that the This presentation does not constitute investment advice. assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove Numbers in the presentation have not all been rounded inaccurate or incorrect and, therefore, there can be no and might not appear to add. assurance that the results contemplated in the forward- All logos and brands are property of their respective looking statements will be realised. owners. All company, product and service names used in EBITDAF, underlying profit, free cash flow and operating this presentation are for identification purposes only. free cash flow are non-GAAP (generally accepted All references to $ are New Zealand dollar. accounting practice) measures. Information regarding the usefulness, calculation and reconciliation of these measures is provided in the supporting material. Contact EnergyContact / EnergyFY20 Full / FY20 Year FinalResults Results Presentation / 10 August / 10 2020 August 2020 2 PRESENTATION AGENDA 1 FY20 Highlights and Progress on Strategy / Mike Fuge, CEO 4-19 2 Operational Performance and Financial Results / Dorian Devers, CFO 20-31 3 Market Update and Outlook / Mike Fuge, CEO & Dorian Devers, CFO 32-44 4 Supporting Materials 45-59 ContactContact EnergyEnergy // FY20 FullFull YearYear ResultsResults PresentationPresentation // 1010 AugustAugust 20202020 3 FY20 highlights and progress on strategy Mike Fuge, CEO Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 4 4 SUMMARY OF KEY FINANCIAL PERFORMANCE MEASURES Twelve months ended Comparison against Twelve months ended 30 June 2020 continuing operations3 30 June 2019 Operating earnings (EBITDAF) were down by $54m when compared to (FY20) FY19 (FY19) continuing operations in FY19, a period which included: • Stronger hydro generation EBITDAF1 $451m ↓ -11% from $505m ↓ -13% from $518m • Higher wholesale prices The operating conditions in FY20 were characterised by: Profit $125m ↓ -26% from $170m ↓ -64% from $345m • Rising costs of thermal generation which include gas, carbon and gas storage. Underlying profit1 $129m ↓ -22% from $166m ↓ -27% from $176m • Disciplined and active commodity risk management and a reduction in fixed priced sales. Dividend per share 39.0 cps - 39.0 cps • Transmission constraints during planned HVDC outage impacting market making. • Global pandemic. Operating free cash flow2 $290m ↓ -13% from $334m ↓ -15% from $341m Despite the difficult operating conditions, Contact delivered strong Operating free cash flow cost control with other operating costs from continuing 40.4 cps ↓ -13% from 46.5 cps ↓ -15% from 47.5 cps per share2 operations down by $9m (4%) and SIB capital spend down by $7m (12%). Our high quality renewable generation assets and portfolio structure deliver strong cash flows. Stay-in-business (SIB) $51m - -12% from $58m ↓ 15% from $60m capital expenditure (cash) Economics of baseload thermal generation are looking challenged long-term; The Taranaki Combined Cycle (TCC) plant asset useful life 1 Refer to slides 54-55 for a definition and reconciliation of EBITDAF and underlying profit has been reassessed with depreciation accelerated, reducing profit in 2 Refer to slides 29 for a reconciliation of operating free cash flow FY20 vs prior comparative period. 3 Continuing operations excludes the discontinued Rockgas LPG business sold on 30 November 2018 Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 5 FOCUS ON OPERATIONAL IMPROVEMENT Maintaining financial discipline Safe and engaged employees Rewarding shareholders Other operating costs and SIB capex ($m) Total recordable injury frequency rate Distributions ($m) (Recordable injuries per million hours worked) 391 357 5.2 301 272 248 286 280 280 3.3 3.2 2.1 1.3 100 229 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 186 165 165 136 Building customer advocacy Employee engagement (%) 107 107 Net promoter score - NPS (Promoters less detractors) 77% 68% 75% 74% 36 56% 115 115 26 93 Buyback 20 79 79 15 Final dividend 3 Interim dividend FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 6 FOCUS ON SUSTAINABILITY Total generation emissions intensity Customers with impaired credit now accepted Gender diverse workforce tCO2-e / MWh % of impaired credit customers accepted % of total workforce 19% 20% 0.175 21% 0.156 41% Female 0.136 52% 0.134 54% 56% 0.123 59% 63% 0.111 0.108 63% Science based target 81% 80% (2026) 79% Male 48% 46% 44% 41% 37% FY14 FY15 FY16 FY17 FY18 FY19 FY20 37% 22% FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 Renewable generation Corporate Customer Generation % of total generation 82% 80% 79% 83% 83% Māori 69% 76% Pasifika Asian European 2% 2% 1% Other AMELA FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Undisclosed FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20 NB. Individuals can choose to identify multiple ethnicities 7 Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 7 MARKET DEMAND Regional change (%) (3%) National electricity demand (TWh) FY20 vs FY19 5% Demand flat. Indicates 0% underlying demand growth (3%) 0% once the impact of COVID is (1%) included 41.2 40.9 41.3 41.4 41.2 1% 0% (6%) 0% North Island 25.9 25.9 26.1 26.1 25.8 0% 0% South Island 5% 10.2 10.0 10.1 10.1 10.3 0% (ex NZAS) NZAS curtailed the production from the 4th potline (50MW) from 3 April 2020. 2% NZAS 5.0 5.0 5.0 5.2 5.1 NZAS have given notice of termination of their remaining electricity contract FY16 FY17 FY18 FY19 FY20 8% (572MW), with closure expected on 31 August 2021. 1% 1% Source: EMI, Contact Source: EMI, Contact 2% Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 8 MARKET FUEL SUPPLY Production from the major fields (PJ) Demand from key sectors (PJ) -3 166 166 162 163 162 163 149 149 31 33 25 26 87 79 82 33 28 38 76 24 Maui Petrochemical Mangahewa Electricity Pohokura 65 61 56 Retail and other 62 Kupe 44 41 39 34 Turangi Kowhai 26 27 24 23 40 39 38 40 11 3 11 5 11 5 12 3 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Source: OATIS Source: OATIS, EMI, Contact estimate Total production has recovered with increases from McKee Gas used in electricity generation in line with the last two years. Concerns around Mangahewa, and Maui. Pohokura performing well. future delivery have resulted in cautious management of hydro storage. Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 9 FUEL SUPPLY Generation by type (TWh) National hydro storage against mean storage (TWh) Generation from generator retailers Mean storage 1927 – 2020 4.5 5.1 5.3 Gas Despite high inflows in 4.0 1.6 1.7 Coal November and December 2019, hydro generation was 3.5 slightly down compared with FY19 following a 3-month 3.0 HVDC outage limiting the ability to generate from South 2.5 25.0 24.0 Hydro Island hydro catchments. 2.0 The increase in gas fired generation reflects a recovery 1.5 in gas volumes from the Jul Jan Jul Jan Jul Pohokura field following an 2018 2019 2019 2020 2020 1.6 1.9 Wind extended outage in late 2018. Production from the Maui and Mean Geothermal 7.3 7.3 Pohokura fields are still below Actual Wood historical levels. 0.2 0.3 Hydro generators stored more water than historically seen to cover potential 2020 winter exposure in an uncertain gas FY19 FY20 supply environment, while the HVDC outage limited South Island hydro during the first quarter of calendar 2020. Source: EMI Source: NZX Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 10 FUEL SUPPLY AND SHORT-TERM PRICE IMPACT Short-term external factors that Wholesale and futures electricity pricing ($/MWh) can influence the market NZAS running below their contracted volumes. 7July 2020 closure 220 announced by 31 August 2021. 200 Long-dated futures (>12 months) 180 Short-dated futures (<12 months) Aluminium Methanol pricing at Coal prices only ~$2-4/GJ gas 160 Monthly average spot price reducing equivalent, economics of 140 Short-term Methanol challenging wholesale 120 electricity 100 Long-term prices average 80 spot price = $83.86/MWh 60 Thermal fuel cost will 40 COVID-19 impacts continue to remain on demand being felt elevated. 20 throughout mass 0 market and C&I Gas availability Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun channels improved over the 10 11 12 13 14 15 16 17 18 19 20 second half of FY20. Long-term pricing is linked to the long-run marginal costs of new renewable projects Both long-dated and short-dated prices remain well above long-term averages, reflecting to meet demand plus costs associated with firming renewable intermittency higher thermal fuel costs. Source: EMI wholesale pricing Contact Energy / FY20 Full Year Results Presentation / 10 August 2020 11 MARKET Change in customer connections (000s) 139% Tier 1: -15k customers Tier 2: +128k customers 126% 50 Retail competition remains intense.
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