ENERGY. RETAIL BOND OFFER PRESENTATION JUNE 2018 . Joint Lead - PowerPoint PPT Presentation

MERIDIAN ENERGY. RETAIL BOND OFFER PRESENTATION JUNE 2018 . Joint Lead Manager Joint Lead Manager Co-Manager Co-Manager

Important notice. The offer of debt securities by Meridian Energy Limited (Meridian or the Issuer) is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA). The offer of Meridian’s fixed rate bonds, maturing on 27 June 2025 (“2025 Bonds”), is an offer of unsecured, unsubordinated, fixed rate, interest bearing bonds that have identical rights, privileges, limitations and conditions (except for the interest rate and maturity date ) as Meridian’s $150,000,000 bonds maturing on 14 March 2023 and $150,000,000 bonds maturing on 20 March 2024 (together the “Existing Bonds”) which are currently quoted on the NZX Debt Market under the ticker code MEL030 and MEL040 respectively. The 2025 Bonds are of the same class as the Existing Bonds for the purposes of the FMCA and the Financial Markets Conduct Regulations 2014. The Issuer is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (NZX) for the purpose of that information being made available to participants in the market and that information can be found by visiting www.nzx.com/companies/MEL. The Existing Bonds are the only debt securities of Meridian’s that are currently quoted and of the same class as the 2025 Bon ds. Investors should look to the market price of the Existing Bonds (MEL030 and MEL040) (which have a fixed interest rate of 4.53% and 4.88% per annum respectively) to find out how the market assesses the returns and risk premium for those bonds. This document does not constitute a recommendation by the Issuer, ANZ Bank New Zealand Limited and Westpac Banking Corporation (together “Joint Lead Managers”), Deutsche Craigs Limited and Forsyth Barr Limited (together “Co - Managers”), Trustees Executors Limited (Supervisor), nor any of their respective directors, officers, employees, affiliates or agents to subscribe for, or purchase, any of the 2025 Bonds. This document is for preliminary information purposes only and is not an offer to sell or the solicitation of an offer to purchase or subscribe for the 2025 Bonds and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The information in this document is given in good faith and has been obtained from sources believed to be reliable and accurate at the date of preparation, but its accuracy, correctness and completeness cannot be guaranteed. A terms sheet (Terms Sheet) has been prepared by the Issuer in respect of the offer of the 2025 Bonds, which sets out how 2025 Bonds may be applied for. Application has been made to NZX for permission to quote the 2025 Bonds on the NZX Debt Market and all the requirements of NZX relating thereto that can be complied with on or before the distribution of the Terms Sheet have been duly complied with. However, NZX accepts no responsibility for any statement in this document. NZX is a licensed market operator, and the NZX Debt Market is a licensed market under the FMCA. MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 2

Agenda. About Meridian The business • Generation assets • Financial highlights • The NZ industry • Political scene • Current strategic focus • Growth opportunities • Risk management • Key financial metrics • Funding • Credit rating • The offer Key terms, dates and process • Investment highlights MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 3

Meridian. FY2017 RETAIL SALES EXCL TIWAI Over $7bn total market capitalisation, listed in 2013, and 51% Government owned Residential Generation solely from renewable sources • 24% Small/medium The biggest of five vertically integrated retailer 35% • business generators in the NZ market Agricultural 288,500 NZ customers with Meridian and • Corporate/large 15% Powershop business 7% Industrial Further 102,000 Powershop customers in • 19% Australia Source: Meridian 25,000 UK customers through Powershop • franchise with npower GENERATION AND CONTRACTED SALES GWh Diversified NZ customer sales, weighted • towards business, commercial and agricultural 82% 82% 80% 81% 40% of generation covered by Tiwai Point • contract (price guarantee, not supply) 13,707 13,332 13,315 13,148 10,978 10,993 10,765 10,738 Typically hold a long generation position to • manage variable hydro inflows FY2014 FY2015 FY2016 FY2017 Physical generation Contracted sales Source: Meridian MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 4

Meridian. New Zealand’s largest generator, with all production from purely renewable sources • Seven big hydro stations – flexible plant with the country’s largest storage • Typically hold a long generation position to manage variable hydro inflows • With low operating costs and capital needs • Five NZ wind farms, two in Australia • Proven success operating in high wind environments • Backed with more than a decade of construction and operational experience • Recent acquisition of Green State Power assets adding an additional ~300GWh p.a. of renewable generation in Australia MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 5

Financial highlights. Five successive years of earnings and operating cash flow growth EBITDAF 1 OPERATING CASH FLOW $470M $653M $650M $452M $440M $618M $433M $416M $585M $584M $477M $322M 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Financial Year ended 30 June Financial Year ended 30 June Source: Meridian Source: Meridian Source: Meridian 1. Earnings before interest, tax, depreciation, amortisation, changes in fair value of hedges and other significant items Improvement from: Improvement from: • Lift in NZ retail profitability • Earnings growth • Customer growth in Australia • Commissioning of new wind farms • Operating cost discipline MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 6

Earnings. FY18 Interim Result $25M (7%) decrease in EBITDAF from: • Business specific changes EBITDAF Higher business sales • $M Higher corporate sales, lower average price 650 653 • 618 585 from timing of a large customer signing 299 318 294 Some cost expansion to support this 317 • customer growth 354 324 332 329 268 Some transmission cost relief • Tiwai price increase from 1 January 2017 • 2014 2015 2016 2017 2018 Financial Year ended 30 June Interim Final half-year Growth in Australian and UK earnings • Source: Meridian Market and environmental impacts 1,100 GWh less physical generation leading • to more acquired generation Higher market prices on derivative, physical • and acquired generation sales Higher irrigation sales • Higher market costs to purchase customer • load MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 7

The New Zealand industry. Source: Electricity Authority, Meridian wholesale retail 1 large industrial 29 distribution 35 retail 5 main 1 transmission 2 million user businesses generators grid owner companies consumers (Rio (various (5 major (all listed) (state owned) (41TWh pa) Tinto/Sumitomo ownership) retailers) owned) MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 8

NZ demand. Little demand growth in the last 7 years ANNUAL DEMAND CHANGE SINCE 2010 + Economic growth • +1.8% + Positive net migration • +1.2% +1.1% - Industrial and manufacturing closure • - Warmer than average temperatures • - Growing impact of technology and • -0.6% -0.8% efficiency gains -1.4% -1.5% +/- Variable irrigation load depending on • 2011 2012 2013 2014 2015 2016 2017 rainfall Calendar Year ended 31 December Source: Electricity Authority Future demand is expected Likely to be modest, estimated between • 0.5% and 1% pa on average New generation capacity will be needed, • probably after 2020 MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 9

New Zealand political scene. Positive government policy development Conversion of the government car fleet to • electric by 2025/26 is positive Establishment of an independent Climate • Change Commission Target of 100% renewable generation by 2035 • Winter energy payment support to • superannuitants and beneficiaries Electricity price review • Terms of reference finalised and review panel appointed • Looking at all aspects of the sector; technological changes, environmental factors, whether pricing mechanisms are efficient enough, whether consumers are paying fair prices and whether costs are spread equitably across all consumers MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 10

Australian political scene. National energy guarantee • State support is mixed • Further analysis on multiple fronts • Deadline for final agreement is mid 2018 ACCC report • Preliminary report has concerns about national electricity market operation and affordability • Final report with reform recommendations in June 2018 Thwaites review (Victoria) • Victorian government is still considering the review panel’s final report • Appears broad support for the nine recommendations which do not advocate re- regulation and these may be advanced first MERIDIAN ENERGY LIMITED | 2018 Retail Bond Offer 11