Major renewable build advanced despite 10% earnings dip
Results Announcement
Results for announcement to the market
Name of issuer Mercury NZ Limited (MCY)
Reporting Period 12 months to 30 June 2025
Previous Reporting Period 12 months to 30 June 2024
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$3,498,000 +2%
Total Revenue $3,498,000 +2%
Net profit/(loss) from
continuing operations
$1,000 -100%
Total net profit/(loss) $1,000 -100%
Final Dividend
Amount per Quoted Equity
Security
$0.14400000
Imputed amount per Quoted
Equity Security
$0.05600000
Record Date 04/09/2025
Dividend Payment Date 30/09/2025
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security (in
dollars and cents per
security)
$3.41 $3.38
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to accompanying audited financial statements.
Authority for this announcement
Name of person
authorised
to make this announcement
Howard Thomas, Company Secretary
Contact person for this
announcement
Howard Thomas, Company Secretary
Contact phone number +64 9 308 8200
Contact email address Howard.Thomas@Mercury.co.nz
Date of release through MAP
19/08/2025
Audited financial statements accompany this announcement.
---
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
STOCK EXCHANGE LISTINGS: NZX (MCY) / ASX (MCY)
ANNOUNCEMENT
Mercury advances major renewable build for NZ despite 10% earnings dip
FY25 Financial Results Summary
FY2025 FY2024 Change %
NET PROFIT AFTER TAX ($M) 1 290 -100%
EBITDAF ($M) 786 877 -10%
STAY-IN-BUSINESS CAPITAL EXPENDITURE ($M) 138 142 -3%
ELECTRICITY GENERATION (GWh) 7,906 8,780 -10%
FINAL FULLY IMPUTED ORDINARY DIVIDEND (CENTS PER SHARE) 14.4 14.0 3%
TOTAL ORDINARY DIVIDEND (CENTS PER SHARE), FULLY IMPUTED 24.0 23.3 3%
19 August 2025 – Mercury today reported reduced earnings in the face of tough generating conditions while
reaffirming its commitment to delivering for New Zealanders.
“It’s been a challenging year, but the team has remained focused – advancing a large-scale generation build and delivering
value and care for customers, which will make a meaningful difference to the country’s energy future,” said Mercury Chair Scott
St John.
He said global headwinds including inflation, compounded local challenges as hydro inflows and ongoing gas constraints tested
supply and temporarily pushed spot prices up during periods of peak demand. Mercury was directly impacted by these
challenges.
“Despite this, we remain optimistic about the long-term outlook given the sheer volume of work currently underway. New
Zealand stands to benefit from a new wave of generation development – over 4TWh of new renewables is expected to be
commissioned between now and 2027,” said Mr St John.
“We’re proud to be contributing a significant proportion of this, with 1.1TWh of new renewables under construction and plans to
deliver 3.5TWh over the next five years.
“We want New Zealand to retain its status as a global energy leader with internationally comparable energy prices, and that
means getting more generation built. Just over half our earnings go straight back into building and maintaining the assets
powering this country. We’re backing New Zealand with every dollar we spend,” he said.
Mr St John said it was important to still acknowledge broader challenges: “The way we produce and use energy is changing,
prompting valid questions about what the system requires to keep delivering secure, affordable electricity into the future.”
“The market is developing solutions that will help bridge the gap when weather-dependent renewables fall short, such as the
agreement to establish a strategic energy reserve at Huntly Power Station,” he said.
“Improvements to market and policy settings are also required, including greater transparency of gas market information to
support decision making. Options such as capacity mechanisms or direct government investment should see careful cost-
benefit evaluation,” he said.
“We acknowledge the supply challenges in winter 2024 that affected the broader sector, along with the ongoing challenges of
the energy transition, have impacted confidence. We’re working hard to rebuild that confidence through consistent and
meaningful action.”
FY25 financial overview
Total generation volume for the year was 7,906GWh, 10% lower on the prior year. This was largely driven by reduced hydro
generation, 17% lower at 3,410GWh – the 4th lowest for the Waikato scheme since 1980. Wind generation was 6% lower at
1,936GWh due to lower wind speeds. Meanwhile, geothermal generation was 2% lower at 2,559GWh due to planned outages.
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
Mercury reported a net profit after tax of $1 million, down $289 million from the prior year, primarily due to lower EBITDAF and
changes in unrealised gains/losses on unhedged electricity derivatives. EBITDAF was $786 million, down $91 million from the
prior year. This was mostly driven by the short net position and high electricity prices.
Operating costs increased by $11 million on the prior year, primarily due to increases in generation maintenance and
organisation change costs to enable future cost savings. Stay-in-business capital expenditure (CAPEX) was broadly consistent
with the prior year, down $4 million at $138 million, with good progress made on Mercury’s geothermal drilling campaign.
Meanwhile, growth CAPEX was up $193 million on the prior year to $347 million with the second stage of Kaiwera Downs and
Kaiwaikawe Wind Farms beginning construction.
Powering ahead on generation delivery
“Mercury is doing the heavy lifting on generation development, with $1 billion invested in three major builds, simultaneously
under construction,” said Mercury Chief Executive Stew Hamilton.
The Ngā Tamariki Geothermal Station expansion and the Kaiwera Downs 2 and Kaiwaikawe Wind Farm builds are all tracking
to schedule and budget.
Mercury is also putting the finishing touches on its refurbishment of the Karāpiro Hydro Station. The project will be completed in
September, delivering a 16.5MW capacity uplift. The upcoming upgrades to Maraetai, Ōhakuri, and Ātiamuri Hydro Stations are
believed to be New Zealand’s largest hydro reinvestment programme to date – a $550 million investment that is expected to
increase capacity by 58MW and generation by 87GWh.
Delivering value for customers
Mr Hamilton said Mercury remained acutely aware of the pressures facing households and businesses around New Zealand,
with ongoing cost-of-living challenges across the board.
“Our size and structure give us the ability to make a real difference, from keeping post-pay disconnections at zero for customers
who we’ve identified as being in hardship, to delivering material value to social retailers Nau Mai Rā and Toast Electric to help
them deliver on their goals of eliminating energy hardship,” said Mr Hamilton.
Electricity price increases of approximately 9.7% on average were implemented from 1 April, largely driven by regulated lines
and transmission costs (approximately 6.9% of increases on average). Residential gas prices also increased during the year,
with supply constraints continuing to drive wholesale gas price increases.
“While the retail energy component of residential electricity prices has remained relatively stable in real terms over the past
decade, we know the overall increase will be disproportionately felt by some customers, so we have implemented a range of
measures to help those in hardship,” said Mr Hamilton.
Mr Hamilton said Mercury continued to compete hard for customers in a dynamic retail environment, with total connections up
5% to 906,000. This was driven by strengthened multi-product offerings, with 38% of customers now purchasing two or more
products.
In the Commercial and Industrial segment, Mercury celebrated several achievements including the commencement of a long-
term contract with NZ Aluminium Smelters and the signing of long-term contracts with Fonterra and Visy.
Strategy refresh
Mercury refreshed its strategy over the year to clarify the most critical areas of focus for its future success. Immediate priorities
are to deliver more generation, transform earnings, capture energy transition demand growth, rebuild confidence in the sector
and build a connected and high-performing culture.
Mr Hamilton said this had provided a natural opportunity to refresh Mercury’s Executive Leadership Team structure, ensuring
clear accountability and alignment to strategic priorities.
“I’m pleased to welcome several new executive leaders, bringing a balance of fresh perspectives and deep industry and
technical expertise,” he said.
Full year dividend
The Board has declared a fully imputed final dividend of 14.4 cents per share (cps) to be paid on 30 September 2025. This
brings the full-year ordinary dividend to 24.0 cps, up 3% on prior year (23.3 cps FY24).
FY26 guidance
Mercury’s FY26 EBITDAF guidance has been set at $1 billion. “This ambition reflects significant reinvestment of capital with
about $600 million of growth CAPEX expected to be deployed over the period on major infrastructure works for the benefit of
New Zealand,” said Mr Hamilton.
Guidance may change and remains subject to any material events, significant one-off expenses or other unforeseen
circumstances including changes to hydrological conditions. FY26 stay-in-business CAPEX guidance is $150 million.
The Mercury Building, 33 Broadway, Newmarket 1023
PO Box 90399, Auckland 1142
FY26 ordinary dividend guidance is 25.0 cps, representing a 4% increase on FY25.
Other key operational activities
> Contributions to cross-sector engagement in support of the energy transition, including the Energy Transition Framework.
> Continued rollout of an enterprise-wide programme to lift Health, Safety and Wellbeing performance, with efforts contributing
to a 12-month rolling Total Recordable Injury Frequency Rate of 0.44.
> Maintenance works on the Taupō Control Gates and Arapuni Hydro Station commenced, supporting long-term sustainability
and resilience.
> Governance changes including restructuring of Board committees to put a sharper focus on risk.
> Ongoing progress on climate action, including ongoing progress of Mercury’s non-condensable gas reinjection trial at Ngā
Tamariki and continuous improvements in climate disclosure, across Mercury’s Climate Statement, Climate Action Plan and
Greenhouse Gas Emissions Inventory.
ENDS
Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited
For investor relations queries, please contact:
Paul Ruediger
Head of Business Performance & Investor Relations
027 517 3470
investor@mercury.co.nz
For media inquiries, please contact:
Shannon Goldstone
Reputation and Social Impact Lead
027 210 5337
mercurycommunications@mercury.co.nz
ABOUT MERCURY NZ LIMITED
Mercury’s generation assets produce electricity from 100% renewable sources: hydro, geothermal and wind. We are also a
retailer of electricity, gas, broadband and mobile services. We’re listed on the New Zealand Stock Exchange and the Australian
Stock Exchange with the ticker symbol ‘MCY’, with foreign exempt listed status. The New Zealand Government holds a
legislated minimum 51% shareholding of Mercury.
Visit us at: www.mercury.co.nz
---
BETTER
BUILDING
BRIGHTER
ercur
19 August 2025
STEW HAMILTON RICHARD HOPKINS PAUL RUEDIGER
Chief Executive Chief Financial Officer
Head
of Business Performance & Investor Relations
WHY MERCURY-STRONG INVESTOR PROPOSITION
Superior
Portfolio
Diversified renewable generation with superior
asset location and hydro river peaking
that
matches demand
Customer scale and efficiency unlock value
MERCURY FULL YEAR RESULTS FY25
Growth
Opportunities
Best pipeline of wind prospects, exciting
geothermal options
Team with proven execution in hydro,
geothermal and wind development
Attractive
Returns
Progressive dividends and a strong balance
sheet that supports further investment
Indicative
FY30 EBITDAF aspiration supported
by
value accretive renewable development
3
FY25 business performance
and major events
0 0
00
MERCURY FULL YEAR RESULTS FY25
Steady performance in challenging conditions:
Total renewable generation of 7.9 TWh, 10% lower than PCP primarily from dry
conditions.
AI powered hydro and station upgrades lifts normalised total generation to 8 .8 TWh.
Customer scale and efficiency unlock value:
We competed hard for customers with total connections up 5% to 906k, driven by
growth in our
multi-product offer. Retail scale and integration synergies delivered.
Positive momentum in generation delivery:
Three major builds simultaneously under construction totalling 1.1 TWh and $1 billion.
Long term electricity agreements with Fonterra and Visy. Building a strong sales pipeline.
Strengthening social licence and supply chain with partners:
No post-pay credit disconnections for customers in hardship.
Material value delivered to social retailers, Nau Mai Ra & Toast Electric.
Refreshed strategy that will deliver value:
A capable and multi-disciplined executive team to deliver Mercury's refreshed strategy.
Rebuilding confidence in our ability to deliver on the energy transition with our partners.
Accelerating generation development:
Plan to deliver 3 .5TWh of new generation by 2030 and lift total generation by ~40% pa.
Up to 5TWh
of potential geothermal opportunities beyond 2030.
FY25 EBITDAF
result of $786m.
Ordinary full year
dividend of 24cps
FY25 the 11"' year
of consecutive
dividend growth
FY26 Guidance:
EBITDAF$1b
Dividend 25cps
SIB Capex $150m
4
STRATEGY REFRESH: FOCUS ON PRIORITIES THAT WILL DELIVER VALUE
FY35
ASPIRATIONS
:w:
Mercur~
Strategic Framework
OUR PURPOSE
Tiakina te anamata, ma
~
te tuhono i nga tangata
0 0
me nga wahi o te inamata.
00
'V
Taking care of tomorrow,
connecting
people and
place today.
OQO
~
$
MERCURY FULL YEAR RESULTS FY25
KAITIAKITANGA
Stewardship
Our asset s and t he natural
environment are thriving.
KIRITAKI
Customer
Cust omers are at
the hea
rt of what we do.
KOTUITANGA
Partnerships
We are t he t rust ed part ner
of choice.
NGA TANGATA
Our People
We learn and adapt
t o
realise our full potential.
ARUMONI
Commercial
We are leaders
in commercial growth.
FY30
PRIORITIES
Deliver
more reliable and
renewable energy
Taking care of our generation
a
sset s and actioning opt ions
for growt h.
Accelerate the shift
to a low-carbon future
Leading t he transition by creating
solut ions for cust omers t o electrify
and support t he development
of a smart energy system.
Create success with others
Having a deliberate focus
on deepening
trust with
key relat ionships t o
achieve shared
goals.
Perform with an adaptive
culture enabled by technology
Unleashing an inclusive,
curious and connect ed culture
enabled
by t echnology t o lif t
business performance.
Achieve what matters most
through financial growth
A chieving sust ainable
performance t o invest in the
future and drive value.
STRATEGIC OBJECTIVES
0
~
0 0
w
~
Generation
development
uplift
Capture energy
transition growth
Rebuild sector
confidence
Connected and
high-performing
culture
Earnings
transformation
KEY INITIATIVES
Construct new
renewables
Grow pipeline
Electrify C&l
customers
Increase
flexi
bility
Provide
constructive
contributions
Increase
transparency
Cultural
performance
uplift
Alignment
to strategy
Revenue
growth
Core
optim isation
KEY RESULTS
Plan t o deliver 3.5TWh of
new genera
tion by 2030
Grow pipeline t o
>8TW h by
2030
400GWh C& l
elect rification/ new demand
by
20 27
50 MW of f lexibilit y DER
available f or 2026
Influent ial cont ribut ions
t o
key regulat ory
processes
Increase awareness
of energy
transition
by
2026
Improve t he Cultural
Pe
rformance Index score
from FY26 baseline
1
00% of business units
are
aligned t o St rat egic
O
bject ives and KPis
Lift FY30 EBITDAF
t o $1.15- $1.25 billi on
De
liver operat ing
cost s of $370m p.a.
over FY26-28
5
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
NGA TANGATA I OUR PEOPLE
Health, safety and wellbeing
Moving closer towards our target state of Safety Citizenship, this year we
introduced a renewed focus on wellbeing, supporting improvement of our
contractor performance and creating
leaders
as coaches across our business.
We have made great progress on process safety, through the development and
submissions
of our safety cases and continuing to reduce risk through the
implementation of physical controls around gas and flame detection.
Zero fatality and high severity Health
& Safety incidents occurred in FY25 with the
12-month rolling TRIFR for FY25 at 0.44.
Growing our people
Fostering an inclusive environment that embraces different backgrounds,
perspectives, experiences, and
capabilities will accelerate our performance
improvement and strengthen our ability to deliver on our strategic objectives.
Our gender pay equity ratio for FY25 improved
,... 1% to 97.5%, and is calculated as
the average position in range of female vs. male fixed remuneration.
Recent organisational and workforce changes have impacted the cultural index
score and our progress toward our
target for people leaders of ethnicity.
Internal mobility remains a cornerstone
of our talent strategy, with over half of our
roles filled by existing
team members.
Accelerating performance
We are simplifying our organisational structure to uplift role accountability and
accelerate decision making.
We are simplifying and aligning our company scorecard targets to our refreshed
strategy and developing processes
to better link pay to performance.
We are enhancing our use of AI tools so that our people can focus on the highest
value work.
MERCURY FULL YEAR RESULTS FY25
HEALTH AND SAFETY
1.5
FY18 FY19
FYZO FYZl FY22 FY23 FY24
TRIFR
1
X High Severity Incidents (RHS)
1
TRIFR is the Total Recordable InJury Frequency Rate per 200,000 hours, includes employees and on-site contractors.
EMPLOYEE MEASURES
%
100 FY24 FY25 -Long Term Target
90
80
70
60
50
40
30
20
10
0
r-
46
44
-
60
61
r-
-
-
75
.----
-
-
21
20
r-
-.--
FY25
-
68
r-
-
Women In Leadership Internal Mobility People Leaders Mercury's Cultural Index
of Ethnicity
3
2
7
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CRITICAL AREAS OF FOCUS FOR FUTURE
SUCCESS
Operating Expenses
Operating costs increased by $11 million primarily due to increases in
asset
maintenance costs and organisation change costs to enable future
cost saving
The
Customer
segment delivered $10 million in employee-related cost
savings, achieved by
implementing operating efficiencies and future-
proofing the customer operating model following the integration period.
Increase in employee-related
expenses-other related to salary and wage
uplifts, executive exit costs and organisation change costs
Asset maintenance increase
is attributed to additional risk-based work
needed to address safety
critical work related to geothermal well repairs
($5m for KA52 and $4m for RK37 well repairs)
We are on track to
deliver our
commitment of $370 million p.a. to FY28
Movement in Net Debt-Powering ahead on generation delivery
56% of earnings reinvested in new and existing assets
Strong performance supported continued growth investment
including construction
of a fifth generating unit at the Nga
Tamariki geothermal station, Stage 2
of the Kaiwera Downs wind
farm, and
the Kaiwaikawe wind farm, with net debt lifting $230m
from June 2024
17th year of consecutive growth in ordinary dividends
Investing cash flows include mainly capital expenditure (stay-in-
business and growth capex)
MERCURY FULL YEAR RESULTS FY25
OPERATING EXPENSES
450
400
I 9 I
c:::::(~j=
I (10) I
I
15
I
.-.. 350
E
-{/}-
X
(J)
0...
0 300
396
385
250
200
FY24 Employee costs -Employee costs -Asset maintenance Other FY25
Customer Other
MOVEMENT IN NET DEBT
750
650
550
450
786
(437)
350
E
-{/}-
250
150
(256)
50
(
117)
-50
I
I
(189)
-150
(230)
(17)
-250
EBITDAF Investing Dividends Paid Interest Tax Working Capital Increase in
with Cash Net Debt
10
•
•
•
•
•
•
•
ENHANCING OUR ASSETS
Increases in hydro asset spend offset integration reductions
Stay-in-Business drilling decreased from resources shifted to Nga
Tamariki drilling for
OECS (Growth Capex)
Major hydro resilience projects include strengthening Arapuni
Left Abutment/ Taupo Control Gates
(TCG) and Karapiro hydro
rehabilitation
The conclusion
of the Trustpower integration resulted in reduced
spend in Retail compared
to FY24
FY25 Stay-In-Business
Capex Breakdown
Geothermal drilling relates to the completion of two injection wells at
Kawerau and Rotokawa
Hydro rehabilitation
is primarily driven by refurbishment of the third
generating
unit and the Intake gate replacement at Karapiro
Arapuni Left
Abutment & TCG relate to multi-year projects to strengthen
asset resilience and reduce risk
at our hydro sites
Other generation capex mainly includes ,..,$30m
of minor capex projects
less than $2m. Larger projects include Kawerau turbine refurbishments
($4m) and scope 1 emissions reduction delivery ($3.5m)
MERCURY FULL YEAR RESULTS FY25
STAY-IN-BUSINESS CAPEX
-
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-
X
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a.
ro
u
CO
(/)
I (17) I
142
10
10
FY24 Drilling campaign Major Hydro Other Generation
Resilience
Projects
STAY-IN-BUSINESS CAPEX BREAKDOWN
c
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30
19
17
Reinvestment
I 181 I
138
Other FY25
4 6
26
Geothermal drilling Hydro rehabilitation Arapuni Left Other Generation Enterprise and other
Abutment & TCG Capex
11
•
•
•
•
•
•
•
HYDRO STORAGE AND GAS
AVAILABILITY IMPACT ON
ELECTRICITY PRICES
Increased gas price volatility on declining
availability
Declining gas reserves contributing to decline in
gas production
Increasing correlation
of thermal generation to
gas prices over time/ indicative of a tight gas
market
Coal generation being substituted for gas
generation
at Huntly
Energy security maintained with volatile
hydrology
through FY25
Near record low hydrology in early FY25
coincided with high gas prices/ resulting in high
electricity
spot prices
Strong market response with a
combination of
demand side gas deals/ increased thermal
generation and high hydro inflows
from late
August 2024 led to lower electricity spot prices
for
the remainder of 2024
Record low national inflows over January to April
2025
1
contributing to elevated electricity spot
pnces
Early
focus on winter
2025 energy security from
sector participants and above average inflows
from May 2025 lowered electricity spot prices
MERCURY FULL YEAR RESULTS FY25
Remaining 2P Gas Reserves
2,500
2,000
1,500
2
1,000
500
0
2020 2021 2022 2023 2024 2025
Daily Gas Production (28-day rolling average)
600
500
-20% decline
400
t:2 300
•••••• in FY25
...
···-···"·
···•·····
.....
200
100
0
2020
2021 2022
2023
2024 2025
Quarterly Thermal Generation vs Gas Spot Price
3,000 30
-
...,
2,500
25
C)
........
-
..s::.
-</)-
-
~
C) 2,000
Q)
20 .~
...
-
a..
c
Q)
1,500
C)
~
15
0
a..
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(U
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1,000
...
Q)
Cl)
10
(U
C)
..s::.
Q)
~
tn
(U
500 5
...
Q)
>
<
0 0
2020 2021 2022 2023 2024 2025
Thermal generation -Average Spot
Gas price (RHS)
Source: MBIE, NZXHydro, Gas Industry Company, BGIX, Electricity Authority, Pricing Manager (NZX)
..s::.
~
C)
5,000
4,000
3,000
2,000
1,000
45
40
35
30
ci 25
* 20
15
..s::.
10
5
0
600
500
400
~ 300
........
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200
100
0
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Hydro Daily NZ Storage
>
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FY2025 ---Average (since Aprill999)
Gas Spot Price (28-day rolling average)
+-+-
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FY2024 FY2025
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Electricity Spot Price (28-day rolling average, OTA2201)
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FY2025
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••
•
•
•
HYDRO STORAGE MANAGED THROUGH HIGHLY VOLATILE FY25
LAKE TAUPO STORAGE (since 1 Jul1999)
MinI Max
-Avg
Month End
Hydro Generation -
Delta
to Average
2
(GWh)
Waikato Inflows -
Delta to Average
3
(GWh)
Taupo Storage -
Delta to Average
2
(GWh)
Net Position (GWh)
Spot
Price-
Otahuhu ($/MWh)
Futures Price (M-3
4
)
Otahuhu ($/MWh)
Source: NZHydroJ WITS} ASX
600
500
400
~
~ 300
(.!)
200
100
0
Jul
-7
-137
-190
-3
$355
$247
Aug Sep
-91 -116
-89 -17
-148 -33
-57 -60
$452 $80
$258 $219
Oct Nov Dec Jan Feb
-54 -35 -59 -60 -77
7
-58 -114 -146 -122
62 75 36 -37 -57
-32 -6 -20
5 4
-
$59 $35 $37 $122 $274
$365:
$179 $118 $87 $144
1
Maximum Control Level
2
Monthly average since July 1999
3
Monthly average since July 1927
4
Closing price 3 months prior to end of month
5
To 14 August 2025
Dry FY24 conditions carried through to Q1FY25
Dry conditions in FY24, which saw Taupe storage starting
103GWh below average, persisted into FY25 with Ql
Waikato inflows
at 19th percentile
MERCURY FULL YEAR RESULTS FY25
Hydro storage lifted as national inflows recovered in Q2
Multiple market responses and increased national hydro
inflows
from late Aug-24 saw prices drop
Taupo storage managed despite
3rd percentile inflows over
the first 9
months and utilised during Q3
--·Lake Taupo MCL
Mar Apr May
-54 -24 -61
-125 -60 42
-87 -66 47
-2 -1
13
=
$283 $320 $203
-
$162 $287
$366
>SOGV'Ih above ewe rage
• >SOGV'/~ below average
-FY24
Jun Jul
23 160
148
178
165 155
9
#
$127 $107
-
~
$310 $389
Above $100/MWh
Above $200 I MW h
Strong inflows in Q4 provide FY26 tailwinds
FY25
Aug
5
52
-35
77
#
$166
-
$213
Hydro generation hit a record 566GWh (160GWh above
average)
in Jul-25 due to strong Waikato inflows
Above average hydro generation to date and Taupo storage
providing
.... z90GWh tailwind to FY26 total hydro generation
13
•
•
•
•
•
LONG-TERM DEALS AND
ROBUST SALES PIPELINE
DRIVE RENEWABLES
INVESTMENT
NZ Aluminium Smelter long-term supply
agreement operational from
Jan 2025
A 20-year CFD (contract for difference) signed
in May
2024 took effect from Jan 2025. Initial
baseload volume
of 50 MW will step up to
75MW in 2027
Providing long-term certainty to Visy's industrial
operations:
Mercury signed a long-term power purchase
agreement (PPA) with Visy, a global leader in
packaging,
recycling, and logistics.
Agreement spans 10 and 20-year terms and
will see Visy purchase
~ 115 GWh p.a. of
electricity in the first 10 years, before tapering
down
to about half of this amount in the
succeeding 10 years.
Supporting the electrification of Fonterra:
Mercury agreed a long-term contract with
Fonterra
to support the electrification of their
Edgecumbe and Waitoa operations
Agreement extends for 10 years for each site,
and represents
total
demand of ,...,260 GWh p.a.
across both sites once electrification is
completed
MERCURY FULL YEAR RESULTS FY25
Supply agreements with
NZAS, Visy, and Fonterra
signed in
the last year
Represents a
total of
~ lTWh of electricity
per year
Mercury has a robust
sales pipeline
that will
drive further investment
14
•
•
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•
•
•
•
-
KARAPIRO
REHABILITATION UPDATE
AND THE DIGITAL RIVER
LIFT AVERAGE GENERATION
The Karapiro rehabilitation project
is a $90 million upgrade to the station
1
originally commissioned in 1946
The project will increase station capacity
from 96MW to 112.5MW with an annual
output increase of +32 GWh/year
Final gate in place and commissioning
underwayl on track to complete full
refurbishment by September
2025
The next 3 hydro programmes will add
another
58MW and average generation of
87 GWh per year
The
Digital River platform
is a digital twin of
our Waikato River hydro assets
The platform combines cutting-edge
simulation~ real-time data and user-first design
to optimise the
scheme
1
s assets through
smarter
1
faster
1
and more responsive decision
making. Better decisions on plant dispatch
1
maintenance and peaking have lifted
production and reduced spill.
In the last
financial year
1
it delivered more than 20 GWh
of extra generation
Mean hydro generation
lifted to 4,140 GWh p.a.
MERCURY FULL YEAR RESULTS FY25
FIRST UNIT: SECOND UNIT: THIRD UNIT:
Completion Aug 23 Completion Sept 24 Planned completion Sept 25
15
OUR $18 & 1.1 TWH OF CONSTRUCTION PROJECTS ARE ON TIME AND ON BUDGET
NGA TAMARIKI OEC5 GEO
• Baseload gen adds energy & supports firming
• Leverages existing reservoir and geothermal station
FID
•
Q2 FY24
TIME
COST
QUALITY
HSE
MAJOREQPT
DELIVERIES
•
Q3 FY25
STATUS
•
•
•
•
MERCURY FULL YEAR RESULTS FY25
STARTUP
COD
H1 FY26 H2 FY26
COMMENTS
Risk of small delay due to
equipment delivery and
construction challenges
Current
forecast is on plan
On
track
Zero serious harm to date
KAIWERA DOWNS S2WIND
• Hedged and supporting Tiwai's long-term
commitment to NZ
• Favourable
wind, geotech, civils,
and connection
FID
•
Q4FY24
TURBINE
DELIVERIES
H1FY26
STATUS
STARTUP
H2 FY26
COMMENTS
COD
H1 FY27
•
Civil, electrical, transmission &
TIME
component deliveries are on
plan
COST
•
Current forecast is on plan
QUALITY
•
On track
HSE
•
Zero serious harm to date
KAIWAIKAWE WIND
• Northland location
•
Benefits from diverse wind profile
(geography)
FID
•
Q2 FY25
TIME
COST
QUALITY
HSE
TURBINE
DELIVERIES
H2 FY26
STATUS
•
•
•
•
STARTUP
COD
H1 FY27 H1 FY27
COMMENTS
Civil, electrical, transmission &
component deliveries are on
plan
Current
forecast is on plan
On
track
Zero serious harm to date
16
•
•
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•
•
•
•
•
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•
•
•
•
•
•
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COMMITTED TO A FAIR AND EQUITABLE ENERGY TRANSITION
MERCURY RESIDENTIAL POST PAY CREDIT DISCONNECTIONS JAN 20-JUN 25
Delivering greater clarity.
control and care
Clarity in cost through real-time usage
insights
that help customers understand
and manage
what they are spending
Control through
choice~ providing
flexible plans and tools
that help
customers
manage consumption~ and
get back on track following a set back
2000
1500
1000
500
1808
1347
1234
607
125
0*
Care when it
1
S needed~ through targeted
help for customers experiencing
hardship
to stay connected
0 ~---------------------------------------------------
Mercury Here to Help team
CUSTOMER CARE PROGRAMME APPROACH
Increasing knowledge and understanding
Working with ERGANZ across various programmes, unlocking
insights into sector challenges, and approaches
MERCURY FULL YEAR RESULTS FY25
Direct support
A broader range of propositions such as Time of Use
putting customers in control
of their usage and pricing
Tailored payment solutions supporting customers
in hardship to stay connected while enabling targeted
debt recovery and long-term customer value
JAN-DEC 2020 JAN-DEC 2021 JAN-DEC 2022 JAN-DEC 2023 JAN-DEC 2024 JAN-JUN 2025
*for customers in hardship
Partnerships/collaboration with others
Collaboration with community organisations focussed on lasting
customer care
Material value delivered to social retailers, Nau Mai
Ra and Toast
Electric, to extend
impact beyond Mercury's customer base
19
•
•
•
•
•
WE ARE PLANNING
TO DELIVER 3.5 TWH
BY 2030
We're leveraging our strength in wind I
geo and our advantaged project pipeline
'V35% is being delivered through
projects currently in construction
(OEC5, Kaiwera Downs S2, Kaiwaikawe)
'V 150MW of capacity is targeted for
delivery in FY28 via Whakamaru BESS
We see a role for solar and will maintain
flexibility across buy, build, and partner.
A lower barrier
to entry means we
can scale
for pre-2030 delivery if value-
accretive
Waikokowai, Puketoi, and geo remain
options
for 2030; along with portfolio
high-grading and prospect acceleration
MERCURY FULL YEAR RESULTS FY25
~
~
~
4.0 -
f-HIGHER CONFIDENCE OPTIONS __.
f-OPTIONALITY MAINTAINED__.
PLAN TO DELIVER 3.5 TWh BY 2030
3.5-
I
------------------------------------------------------------,--------------------------------- ------ - - -
3.0
-
WAIKOKOWAI OR
r--
-
PUKETOIWF
WAIKOKOWAI OR
150MW BESS
PUKETOIWF
2.5
-
et~
GEO PROJECT 1
GEO PROJECT 1
1--
t---
2.0
-
3RD PARTY SOLAR
3RD PARTY SOLAR
....--
-
HYDRO REHABS
3RD PARTY SOLAR
f-
-
1.5
-
MH2WF MH2WF MH2WF
IN CONSTRUCTION
-------------------------------------
---
-------------------, --------------------
----------------------
1.0
-
KAIWAIKAWE WF KAIWAIKAWE WF KAIWAIKAWE WF KAIWAIKAWE WF
HYDRO REHABS
KD2WF KD2WF KD2WF KD2WF
0.5-
I
OECSGEO OECS GEO OECS GEO OECS GEO OECS GEO
0.0~-------------------------------------------------------------------------------------
FY26
FY27
FY28 FY29
FY30
Note: TWh 1n th1s chart are delivered by FY year end, not energy generated in that FY
21
✓
✓
✓
✓
▪
✓
✓
✓
✓
OUR FIRMING POTENTIAL IS
SUFFICIENT TO ENABLE OUR
GROWTH AMBITIONS
Renewable diversity
Geographic diversity of wind developments
Geothermal features in Generation Development
pipeline
Hydro refurbishment
programme enhancing
capacity
Portfolio of flex
13k hot water heaters under control in winter
2024i expanding to 50k in FY26 (equivalent to
20MW)
Development of distributed battery model
Mass Market trials including
EV charging and
Time-Of-Use pricing
Contracted flexi bi I ity
Genesis HFO contracting
AWS, Visy and other generation-following sales
Grid-scale battery
300MW Whakamaru BESS option -
co-optimisable with Waikato Hydro System
MERCURY FULL YEAR RESULTS FY25
INDICATIVE FY30 CAPACITY REQUIREMENTS VS. OPTIONS
700-
600-
500_
GRID SCALE BATIERIES
400-
-----------------------------------------------,
300_
CONTRACTED FLEXIBILITY
2
200-
GROWTH PLAN TO 2030
PORTFOLIO OF FLEX
100-
~------------------------------------------------~
COMMITIED GEN DEV
RENEWABLE DIVERSITY
1
0~----~--------------------------~------------~------------------------~-----
Portfolio Need Options
1
Wind diversity only with hydro refurbishments and OEC5 included as offsets in Portfolio Need; includes potential of generation development 1n growth plan to 2030
2
Includes Huntly Firming Options and indicative new customer contracting (such as AWS & Visy)
Portfolio Need
cons1ders the roll-off of the Manawa CFD
22
•
•
•
•
•
•
•
•
•
•
•
•
•
STRONG BALANCE SHEET
TO SUPPORT GROWTH
Capital structure well positioned for growth
Mercury targets Debt I EBITDA between 2x -
3x after adjusting for S&P Global treatment
1
consistent with our BBB+ rating
Debt I EBITDA
1
at 2.5x for FY25
1
driven by
lower EBITDAF and
higher net debt with Nga
Tamariki geothermal station expansion
1
Kaiwera Downs wind farm and Kaiwaikawe
wind
farm in construction
Debt
I EBITDAI based on committed growth
CAPEX
1
is forecast to be at its peak and is
expected to reduce over FY26 -FY27 with
improved hydrology and on EBITDA
contributions from generation development
projects currently in construction
Robust liquidity headroom to fund committed
growth CAPEX
Undrawn
committed facilities of $570m
2
1
net of commercial paper on issue following
AUD
400m (NZD 441m) wholesale bond
issuance in March 2025
Mercury's Dividend Reinvestment Plan to be
available for the FY25 final dividend
Shares offered
at a 2% discount. Treasury
stock exhausted
during the Interim dividend.
An uptake
of ,.,30% is assumed with Crown
participation for the final dividend.
MERCURY FULL YEAR RESULTS FY25
Net Debt and Debt/EBITDA
3
c3 2
~
-
CO
L&J
.......
~
..c
CV
c
-
..c
~
-
~
..c
CV
c
~
CV 1
z
BBB+ Range •Net Debt [::Jliquidity Headroom
3
-Debt/EBITDA
r-----------------1
I I
I I
I I
I I
I I
I I
I I
I I
I I
0 +-~------~--~--~------~~--~------~--~~--------~~--~------~~
FY21 FY22
1
Adjusted for expected S&P Global treatment
2
As at 30 June 2025
3
Undrawn bank facilities net of commercial paper on issue
FY23
FY24
FY25
24
EBITDAF BRIDGE – Angelika/Robbie
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
ercur
9
---
TOGETHER
BRIGHTER
TOMORROW
BUILDING
TODAY
BETTER
2025 INTEGRATED REPORT
MERCURY NZ LIMITED
This year’s theme - Better Today,
Building Tomorrow, Brighter Together -
reflects Mercury’s focus on delivering
value now, investing for future growth,
and partnering for long-term success.
We are committed to being Better Today, by
leveraging our core and scale to lift our performance.
We are focussed on Building Tomorrow, by setting up
for opportunities ahead, including through our high-
quality renewable generation prospects.
We can be Brighter Together, by working
collaboratively with iwi and stakeholders, recognising
our trusted relationships are a major strength.
BE T TER TODAY,
BUILDING TOMORROW,
BRIGHTER TOGETHER
Mahinerangi Wind Farm.MENUMERCURY 2025 INTEGRATED REPORT
CONTENTS
03 HOW WE CREATE VALUE
TĀ MĀTOU UAR A
04 OUR BUSINESS MODEL
05 DELIVERING ON OUR FY25-27 OBJECTIVES
06 INTRODUCING OUR NEW
STRATEGIC FRAMEWORK
08 CHAIR LETTER
10 DELIVERING TO THE ENERGY TRILEMMA
11 CHIEF EXECUTIVE LETTER
13 WHAT MATTERS MOST
TE MEA NUI
14 ENGAGING WITH IWI AND STAKEHOLDERS
15 THE RISKS WE FACE
16 PULLING IT ALL TOGETHER
17 HOW WE DELIVER VALUE
TE PĒWHEA O TĀ MĀTOU TUKU HIRA
18 PERFORMANCE SNAPSHOT
19 KAITIAKITANGA / STEWARDSHIP
21 KIRITAKI / CUSTOMER
23 KŌTUITANGA / PARTNERSHIPS
25 NGĀ TĀNGATA / PEOPLE
27 ARUMONI / COMMERCIAL
29 LOOKING AT THE NUMBERS
TITIRO KI NGĀ TATAU
31 FINANCIAL COMMENTARY
32 FINANCIAL TRACK RECORD
33 INDEPENDENT AUDITOR’S REPORT
36 GROUP FINANCIAL STATEMENTS
40 NOTES TO FINANCIAL STATEMENTS
65 CLIMATE S TATEMENT
TE TAUĀKI ĀHUARANGI
67 INTRODUCTION
68 STRATEGY
82 METRICS & TARGETS
85 GOVERNANCE
89 RISK MANAGEMENT
94 LEADERSHIP AND GOVERNANCE
MANA WHAKAHAERE
95 YOUR BOARD OF DIRECTORS
97 YOUR EXECUTIVE LEADERSHIP TEAM
98 GOVERNANCE AT MERCURY
113 REMUNERATION REPORT
123 NZX CORPORATE GOVERNANCE
CODE INDEX
124 DIRECTORS’ DISCLOSURES
126 SECURITY HOLDER INFORMATION
127 BONDHOLDER INFORMATION
130 COMPANY DISCLOSURES
131 OTHER DISCLOSURES
134 GLOBAL REPORTING INITIATIVE (GRI) INDEX
137 INFORMATION FOR SHAREHOLDERS
138 DIRECTORY
139 GLOSSARY
140 RĀRANGI INGOA LIST OF NAMES
JAMES MILLER
DIRECTOR
SCOTT ST JOHN
CHAIR
This Integrated Report is dated 19 August 2025 and is signed
on behalf of the Board by:
ABOUT THIS REPORT
Mercury is committed to providing the full picture: transparent
disclosures in easily understood, comparable and engaging ways
so that we meet the expectations of our many stakeholders.
This is an Integrated Report which follows the Integrated
Reporting <IR> framework.
We describe Our Business Model, including inputs, outputs,
and the outcomes of our strategic approach across our five FY35
aspirations that determine how we generate long-term value.
We include a specific Global Reporting Initiative (GRI) Index
and comprehensive climate disclosures, which align with the
Aotearoa New Zealand Climate Standards.
We have grouped our reporting into six sections to help you find
areas of particular interest, but they are all part of who we are,
what we do and why. Across all this, our aim is to report openly
and honestly on our performance in a way that shows the
integrated approach we take.
If you have any comments about this report, including things
we could do better, please email investor@mercury.co.nz.
STATEMENT FROM THE DIRECTORS
The directors are pleased to present Mercury NZ Limited’s Integrated
Report and Financial Statements for the year ended 30 June 2025.
The Auditor-General is required to be Mercury’s auditor and has
appointed Emma Winsloe of Ernst & Young to undertake the audit
on his behalf.
MENUCONTENTS1MERCURY 2025 INTEGRATED REPORT |
CONTENTS
KARĀPIRO
ARAPUNI
WAIPĀPA
MARAETAI
I AND II
WHAKAMARU
ŌHAKURI
ĀTIAMURI
AR AT IAT IA
NGĀ AWA
PŪRUA
+
LAKE TAUPŌ
ROTOKAWA
+
MŌKAI
+
KAWERAU
NGĀ TAMARIKI
+++
MAHINERANGI
KAIWERA
DOWNS
+++
TURITEA
TARARUA
WAIPIPI
KAIKAIKAWE
++
Mercury’s generation assets produce
electricity from 100% renewable
sources: hydro, geothermal and
wind. We also retail electricity, gas,
broadband and mobile services.
We have nine hydro power stations along the Waikato
River, five geothermal stations in the northern part
of the Central Plateau and five wind farms in the
Manawatū, South Taranaki, Otago and Southland
regions. The electricity we generate is sold on the
wholesale market. Our retail arm buys electricity from
this market to supply businesses and households
across New Zealand.
During the year we commenced construction
of our new Kaiwaikawe Wind Farm near Dargaville
in Northland, and we expect full generation by the
end of 2026.
We also continued construction of the second stage of
our Kaiwera Downs Wind Farm near Gore and the fifth
generation unit at Ngā Tamariki Geothermal Station.
We sell our multi-product utility services through our
retail operations to residential and small-to-medium-
sized business customers. Our commercial sales team
service industrial and wholesale market customers
offering electricity. Our sub-brand GLOBUG is our
pre-pay electricity product for residential customers.
We are committed to building and maintaining
authentic relationships with iwi/Māori and
stakeholders across our business. This will be achieved
through ongoing conversations and careful listening
to understand where our values and aspirations align.
WHO WE ARE
HYDRO S TATIONS
WIND FARMS
GEOTHERMAL STATIONS
+ not 100% owned by Mercury
++ under construction
+++ expansion under construction
MENU2
HOW WE
CREATE VALUE
TĀ MĀTOU UAR A
In this section we highlight factors that affect our
ability to create value over time (Our Business Model),
and show how we’ve performed against our FY25
objectives. We share how our strategic framework
has evolved and our Chair, Scott St John and
Chief Executive, Stew Hamilton then summarise
our 2025 financial year.
MENUHOW WE CREATE VALUE3MERCURY 2025 INTEGRATED REPORT |
HOW WE CREATE VALUE
OUR BUSINESS MODEL
This diagram shows the key inputs of our business
across our five drivers of value, our business activities
and outputs (products, services and byproducts).
KAITIAKITANGA
STEWARDSHIP
19 generation assets
Natural resources
(water, steam, wind)
Thermal resources
on-sold (gas)
KIRITAKI
CUSTOMER
906K* total customer
connections
- 581K electricity
- 110K gas
- 178K telecommunications
- 37K mobile
KŌTUITANGA
PARTNERSHIPS
2 geothermal joint
ventures with iwi
8 formal iwi relationships
Extensive partnerships
across customer,
supplier and operating
communities
N GĀ TĀN GATA
PEOPLE
1364 permanent employees
- 415 in Auckland
- 449 in Tauranga
- 153 in Hamilton
- 84 in Rotorua
- 19 in Taupō
- 84 in Oamaru
- 160 rest of NZ
ARUMONI
COMMERCIAL
$1b current investment
in renewable generation
development
66k shareholders
3k bondholders
INPUTS
OUTCOMES
OUTPUTS
The outcomes of our activities and outputs are covered in detail
throughout the report. Our broader strategy, how we are working
towards realising our purpose and achieving our FY35 aspirations
is covered on pages 6 and 7.
See page 19.
KAITIAKITANGA
STEWARDSHIP
See page 21.
KIRITAKI
CUSTOMER
See page 23.
KŌTUITANGA
PARTNERSHIPS
See page 25.
N GĀ TĀN GATA
PEOPLE
See page 27.
ARUMONI
COMMERCIAL
3,410
16%
2,559
215K
1,936
217K
5,863
19%
2,353
205K
GWh hydro generation
(As at 30 June 2025)(As at 30 June 2025)
customer market
share (GWh)
GWh geothermal
generation
customers with two
or more services
GWh wind generation
tonnes CO2e Scope 1
emissions produced
tonnes CO2e Scope 1 emissions
captured and reinjected
generation market share
tonnes CO2e Scope 2
emissions produced
tonnes CO2e Scope 3
emissions produced
OUR BUSINESS ACTIVITIES
O
U
R
V
A
L
U
E
S
S
T
R
A
T
E
G
I
C
F
R
A
M
E
W
O
R
K
G
O
V
E
R
N
A
N
C
E
OUR
PURPOSE
Tiakina te anamata, mā te
tūhono i ngā tāngata me
ngā wāhi o te inamata.
Taking care of tomorrow:
connecting people and
place today.
C
A
R
E
•
C
U
R
I
O
U
S
•
C
O
M
M
I
T
•
C
O
N
N
E
C
T
*Includes Commercial & Industrial and mass market connections.
MENUHOW WE CREATE VALUE4MERCURY 2025 INTEGRATED REPORT |
HOW WE CREATE VALUE
DELIVERING ON OUR FY25–27 OBJECTIVES
FY25–27 objectivesMeasuresFY25 progressFY25 outcomesConnection to FY35 aspirations
Providing what
matters most through
financial growth
EBITDAF
EBITDAF of $786m did not meet initial FY25 EBITDAF guidance.
However, after the impacts of low hydrology and wind speeds are accounted for, performance within management
control was better than expected - lifting EBITDAF above hydrology and wind speed normalised levels.
Delivering more reliable
and renewable energy
to power Aotearoa
Generation asset
performance and resilience
Operational performance improved in FY25, however did not achieve target, with geothermal availability of 94%,
hydro 87.4% and wind 96.6%.
Economic generation pipelineKaiwaikawe Wind Farm, Kaiwera Downs 2 Wind Farm and Ngā Tamariki Geothermal Station expansion are tracking
to plan.
Whakamaru grid scale battery resource consent granted. Mahinerangi II, Waikokowai, Puketoi, and Tararua (Repower)
Wind Farms listed in fast-track approvals legislation.
Accelerating the shift
to a low-carbon future
Our contribution to the
Sector Framework
A Sector Framework was launched with key workstreams in progress.
Our own decarbonisation
journey
The CO2 reinjection project at Ngā Tamariki was executed and hit all major milestones in FY25. A full unitised
reinjection system has been commissioned with proven ability to reinject 70% of the gases. 20,079 tonnes of CO2
have been reinjected to date with 98% availability achieved in FY25.
Our contribution to our
customers' decarbonisation
journey (electrification)
Long-term supply arrangements were initiated to enable customer electrification, such as the supply to Fonterra
to support electrification of their Edgecumbe and Waitoa operations but further opportunities remain.
Creating success
with others
Customer care
Zero post-pay disconnections for non-payment were made due to hardship. Stronger ties were formed with
community organisations supporting customers in hardship.
Creating shared valueRefreshed relationship agreements were advanced with a range of partners and stakeholders; further advancements
are underway for agreements to support development pipeline. Broader stakeholder engagement outcomes were
shaped by external pressures.
Performing with
an adaptive and
inclusive culture
Evolve the way we work to lift
organisational performance
Delivered significant change to ways of working within the customer and technology business. While key initiatives
were completed by the end of the financial year, they ran later than originally targeted.
Workforce of the futureA programme of work was delivered to increase employee awareness of critical risk assessment and prevention.
This resulted in our Health, Safety and Wellbeing Factor score in the Employee Voice Survey remaining steady
at 86% (+/- 1%).
Innovating with
technology
Technology innovation
We have actively embraced and developed innovative technologies across operations to enhance value and drive
efficiency. Key innovations include Digital River (an AI-powered decision platform and digital twin of the Waikato
River), an autonomous robot delivering safe real time monitoring and a new customer energy usage platform.
Technology productivityWe have completed our SAP exit and leveraged technology to boost productivity, streamline operations, and achieve
cost reductions across the business, including using AI in software engineering and in the contact centre.
This table shows how we have performed
against our previous three-year (FY25–27)
objectives over the last financial year.
As a result of changes to our strategic framework, this will be the only
year that we monitor performance in this way. However, our updated
measures – explained on pages 6 and 7 – retain core aspects of
these measures.
Key:
Met expectation for FY25 Minor variance from expectation for FY25 Did not meet expectation for FY25
MENU5MERCURY 2025 INTEGRATED REPORT | HOW WE CREATE VALUE
INTRODUCING OUR NEW
STRATEGIC FRAMEWORK
This year we have updated our strategic framework to provide clarity on the
areas that matter most to our business and the work that we are currently
focussed on, to ensure we are set up to succeed over the long-term.
FY35 ASPIRATIONS
FY30 PRIORITIES
STRATEGIC OBJECTIVES
We think about our strategic delivery over different
time horizons, ensuring that our short-term areas
of focus are informed by our long-term direction
of travel.
Our strategic framework shows why we exist
and what we are focussed on to continue to
grow and create value over time.
Maraetai Hydro Station.
Our interconnected FY35 aspirations expand on
our purpose and provide a long-term direction for
our business that reflects the change and growth that
we aspire to achieve over the areas that matter most
to our business.
Our FY30 priorities are aligned with our FY35
aspirations, reflecting the enterprise-wide focus
areas we must deliver to position ourselves for
long-term success.
Our strategic objectives capture the more specific
areas we are focussed on now to take our business
forward. These include key initiatives and results that
we actively monitor to track how we are progressing.
6
ASPIRATIONS
FY35FY30
PRIORITIESSTRATEGIC OBJECTIVESKEY INITIATIVESKE Y RESULTS
Generation
development
uplift
Deliver more reliable and
renewable energy
Taking care of our generation
assets and actioning options
for growth.
KAITIAKITANGA
Stewardship
Our assets and the natural
environment are thriving.
Plan to deliver 3.5TWh of
new generation by 2030
Grow pipeline to
>8TWh by 2030
Construct new
renewables
Grow pipeline
Earnings
transformation
Achieve what matters most
through financial growth
Achieving sustainable
performance to invest in the
future and drive value.
ARUMONI
Commercial
We are leaders
in commercial growth.
Lift FY30 EBITDAF
to $1.15-$1.25 billion
Deliver operating
costs of $370m p.a.
over FY26-28
Revenue
growth
Core
optimisation
Capture energy
transition growth
Accelerate the shift
to a low-carbon future
Leading the transition by creating
solutions for customers to electrify
and support the development
of a smart energy system.
KIRITAKI
Customer
Customers are at
the heart of what we do.
400GWh C&I
electrification/new demand
by 2027
50MW of flexibility DER
available for 2026
Electrify C&I
customers
Increase
flexibility
Connected and
high-performing
culture
Perform with an adaptive
culture enabled by technology
Unleashing an inclusive,
curious and connected culture
enabled by technology to lift
business performance.
N GĀ TĀN GATA
Our People
We learn and adapt
to realise our full potential.
Improve the Cultural
Performance Index score
from FY26 baseline
100% of business units
are aligned to Strategic
Objectives and KPIs
Cultural
performance
uplift
Alignment
to strategy
Rebuild sector
confidence
Create success with others
Having a deliberate focus
on deepening trust with
key relationships to
achieve shared goals.
KŌTUITANGA
Partnerships
We are the trusted partner
of choice.
Influential contributions
to key regulatory
processes
Increase awareness
of energy transition
by 2026
Provide
constructive
contributions
Increase
transparency
MENUHOW WE CREATE VALUE7MERCURY 2025 INTEGRATED REPORT |
SNAPSHOT
SHARPENED FOCUS
We refreshed our strategy and evolved our leadership
structure to better align to our priorities.
COMPETING FOR CUSTOMERS
We strengthened our product and service offerings and
delivered significant support for customers in need.
POWERING AHEAD ON GENERATION DELIVERY
There is a significant renewable build underway nationally.
For Mercury, this currently includes three major new renewable
builds and an extensive hydro refurbishment programme.
EMPOWERING OUR PEOPLE
We refreshed our approach to building a workforce for
the future and continued to roll out our Health, Safety
and Wellbeing programme.
CHAIR LETTER
The future of energy is at an inflection point, with electrification
set to reshape daily life. In a high-cost environment there are ongoing
discussions about how we safeguard affordability while building
renewables at pace – ensuring the transition supports economic
resilience and growth.
COMMITTED TO A FAIR AND EQUITABLE
ENERGY TRANSITION
We continued to demonstrate care and commitment to our
customers, and did not disconnect any post-pay customers
in hardship over the period.
ENERGY TRANSITION COMPLEX, CONSUMER
FOCUS NEEDED
We retained a clear focus on consumer outcomes, working
closely with others to ensure the energy transition will deliver
for all consumers, large and small.
Mercury Chair Scott St John
With a high renewable base, New Zealand is better
positioned than most, but there’s much to do if we
are to succeed through the transition. Mercury has
a key role to play, and we’re committed to shaping
a future that works for all New Zealanders.
Both in New Zealand and globally, delivering a fair
and equitable energy transition for all consumers is
becoming increasingly complex. Greater digitisation,
persistent inflation, rising living costs, and changing
climates are converging to create new challenges.
These global pressures are compounding existing
issues in our local energy landscape and reinforcing
the need for resilience and adaptability.
To this end, the adequacy of New Zealand’s firmed
capacity supply was brought sharply into focus over
the period. For the second consecutive year, we
experienced stubbornly low hydro inflows for most
of the period – particularly in the Taupō catchment
– exacerbating longer-term challenges with gas
supply not meeting expectations. This has placed
considerable pressure on secure supply, contributing
to elevated spot and forward prices.
Mercury’s performance was impacted, with hydro
generation down on the previous period. Our team
worked hard to mitigate the full impact, leveraging
technology to optimise the Waikato River hydro
scheme and maintain reliability.
SECURING OUR ENERGY FUTURE
These challenges have prompted scrutiny of the
system’s ability to deliver secure, affordable energy
through the transition; with multiple regulatory
processes now underway.
MENUHOW WE CREATE VALUE8MERCURY 2025 INTEGRATED REPORT |
The full year ordinary dividend is consistent with
Mercury’s dividend policy targeting a payout of
70% – 85% of free cash flows on average over time.
Our FY26 ordinary dividend guidance is 25.0
cps, representing a 4% increase on FY25 and
the eighteenth consecutive year of ordinary
dividend increases.
IN CLOSING
This has been a big year for Mercury. I want to close
by acknowledging Stew Hamilton, who took up the
role of Chief Executive on 31 August. His leadership
has already made a material impact, and we look
forward to the continued momentum and progress
under his leadership.
I also want to thank our investors and shareholders for
their continued trust. Your support enables us to think
long term, invest with conviction, and navigate periods
of uncertainty with confidence. Looking ahead, our
refreshed strategy positions Mercury to take advantage
of a once-in-a-generation energy transition — and to
do so in a way that reflects our enduring commitment
to commercial leadership and strong governance.
Ngā mihi nui,
SCOTT ST JOHN
CHAIR
THIS HAS BEEN ONE OF THE
MORE CHALLENGING YEARS FOR
MERCURY SINCE LISTING. IT HAS
ALSO DEMONSTRATED THE
RESILIENCE AND ADAPTABILITY
OF OUR BUSINESS AND PEOPLE.
It is entirely appropriate to ask questions of
any system during a time of such fundamental
change. Yet, it is also important to acknowledge
New Zealand’s energy system is well regarded
globally. We rank in the top ten of the World Energy
Council’s Trilemma Index, which measures how
countries balance energy security, affordability,
and sustainability. Importantly, affordability remains
on par with our peers, despite us being much further
along the transition than many.
Balancing the trilemma is challenging, particularly
with more intermittent renewables (the sustainability
arm) impinging on our ability to keep security and
affordability in check. The sector has taken several
steps to address this, including working together to
establish a strategic energy reserve centred on Huntly
Power Station and securing demand flexibility
options with large industrial users.
We are also developing renewable energy projects
at historic scale and pace as the market responds
to changing context, including certainty of Tiwai’s
continued operation and changes in demand
outlook. An estimated $10 billion in new generation
investment is projected through to 2030, with over
4TWh of new renewables expected to be
commissioned between now and 2027. Mercury is
proud to be a major contributor to this, as our Chief
Executive Stew Hamilton notes in his update on
page 11.
In short, the market is largely functioning as it should,
and over time we expect to see the benefits of this
new wave of infrastructure development. To retain
our world-class energy system though, we must
continue with thoughtful evolution of market and
policy settings. We support changes that preserve
what is working well while enabling a smooth and
secure transition.
A key priority is getting the right settings in place to
support firming, bridging the gap when intermittent
renewables fall short. This should include
maintaining existing thermal generation (which the
market is already helping solve), improving access to
key information to help decision making (for example
gas price and production information) and providing
clear investment signals for new firming solutions.
Equally, we must keep a clear focus on consumers,
especially our most vulnerable, as we shape the next
phase of New Zealand’s energy journey. Mercury is
actively working with the sector on whole-of-system
solutions to support this.
SHARPENING OUR FOCUS
This year has brought significant challenges for our
country and our customers. It’s been a testing time
for Mercury as well, but it has highlighted the
resilience and adaptability of our business and our
people – and the care and commitment our teams
show toward our customers.
During the year, we refreshed our strategy to
clarify the most critical areas of focus for Mercury’s
future success.
Our immediate priorities are:
sDeliver more generation
sTransform earnings
sCapture energy transition demand growth
sRebuild confidence in the sector
sBuild a connected and inclusive culture
The Board remains deeply attuned to our obligation
to deliver sustainable value for our owners. We believe
these priorities are foundational to achieving that goal.
Our Chief Executive, Stew Hamilton, also made
changes to his leadership team during the year,
with the Board’s endorsement. We are confident
the new structure and leadership strength positions
Mercury well to deliver on our strategic ambitions.
GOVERNANCE CHANGES
This year also brought important changes at a
governance level, including restructuring our Board
committees effective 1 January 2025 to put a
sharper focus on risk. The Risk Assurance and Audit
Committee has been replaced with two new
committees: the Audit and Financial Risk Committee,
and the Safety and Enterprise Risk Committee.
We welcomed Rob Hamilton to the Board (and
Audit and Financial Risk Committee) in April, bringing
extensive governance, leadership, and advisory
experience. At the same time, we acknowledge the
upcoming departures of Lorraine Witten, James Miller,
and Mike Taitoko. I want to sincerely thank each of
them for their significant contributions during their
tenures with Mercury.
FULL-YEAR DIVIDEND
We are pleased to declare a fully-imputed final
dividend of 14.4 cents per share (cps). This brings
the full-year ordinary dividend to 24.0 cps, up 3% on
prior year (from 23.3 cps), marking our seventeenth
consecutive year of ordinary dividend growth.
14.4
CPS
FINAL DIVIDEND DECLARED
MENUHOW WE CREATE VALUE9MERCURY 2025 INTEGRATED REPORT |
Sustainability
s Participation in establishing a strategic energy reserve
centred on Huntly Power Station (page 24)
s Arapuni Hydro Dam and Taupō Control Gates enhancements
for ongoing reliability (page 19)
s Proactive engagement on market and policy evolution (and
potential solutions) to strengthen security of supply (page 23)
s AI optimisation to maximise existing hydro generation
output (page 28)
DELIVERING TO THE ENERGY TRILEMMA
SNAPSHOT: MERCURY'S CONTRIBUTION
s Zero post-pay disconnections for customers in hardship
(page 22 )
s Material support for social retailers Nau Mai Rā and
Toast Electric (page 22)
s Commercial & Industrial milestones – long-term contracts
with New Zealand Aluminium Smelters, Visy and Fonterra
celebrated (page 22)
s $1b, 1.1 TWh new renewables under construction (page 27)
s Ambitions to deliver 3.5TWh new renewables by 2030
(page 27)
s $550m, 58MW capacity increase for next three hydro station
upgrades – NZ’s biggest hydro reinvestment (page 19)
s $147m investment on geothermal drilling campaign (page 19)
s Continued progress on non-condensable gas reinjection trial
(page 20)
Security
Affordability
MENUHOW WE CREATE VALUE10MERCURY 2025 INTEGRATED REPORT |
CHIEF EXECUTIVE LETTER
SNAPSHOT: MERCURY'S CONTRIBUTION
This is my first update as Chief Executive of Mercury, having stepped into
the role last September.
$1M
NET PROFIT
$396M
OPERATING EXPENDITURE
$786M
EBITDAF
Mercury Chief Executive Stew Hamilton.
What has stood out most to me is the strength
of our foundations – a diverse generation portfolio
with premium development prospects, deep
partnerships, a highly engaged customer base,
responsible resource management, and a talented,
committed team. We have a proud legacy of bold
choices, and a hunger for this to continue.
I have also had opportunities to be out in the
communities we operate in, listening to our
customers and partners and hearing firsthand the
challenges many are facing. These insights inform
how we think about the role Mercury plays in New
Zealand, and where we can have an impact.
In a period of challenge, I believe our foundations
give us confidence to move forward with purpose, not
just for our company but New Zealand as a whole.
STEADY PERFORMANCE IN CHALLENGING
CONDITIONS
Performance over the period was negatively impacted
by low generation output, offset by periods of high
electricity prices.
Total generation volume for the year was 7,906 GWh,
down 874 GWh or 10% on the prior year, mostly driven
by lower hydro and wind generation. Hydro generation
was 3,410GWh, down 17% on the prior year. This was
the 4th lowest for the Waikato scheme since 1980,
driven by 12th percentile inflows and a lower-than-
average starting level at Lake Taupō. Wind generation
was 1,936GWh, down 6% from prior year from lower
wind speeds. Meanwhile, geothermal generation of
2,559GWh was 2% lower than the prior year due to
planned outages.
We reported a net profit after tax of $1 million, down
$289 million from the prior year. This was primarily
due to lower EBITDAF and changes in unrealised
gains/losses on unhedged financial instruments.
EBITDAF was $786 million, down $91 million from
the prior year.
The reduction in EBITDAF is mostly driven by
Mercury’s trading margin of $1,153 million being
down $75 million from the previous year, resulting
from a short net position and high electricity prices.
Operating costs increased by $11 million on the
prior year, primarily due to increases in generation
maintenance and organisation change costs to
enable future cost saving. Stay-in-business capital
expenditure (CAPEX) was broadly consistent with the
prior year, down $4 million to $138 million, with
good progress made on Mercury’s geothermal drilling
campaign. Meanwhile, growth CAPEX was up $193
million on the prior year to $347 million with the second
stage of Kaiwera Downs Wind Farm continuing and
Kaiwaikawe Wind Farm beginning construction.
Our FY26 EBITDAF guidance has been set at $1 billion.
Guidance may change and remains subject to any
material events, significant one-off expenses or other
unforeseen circumstances including changes to
hydrological conditions. FY26 stay-in-business CAPEX
guidance is $150 million.
BETTER TODAY, BUILDING TOMORROW,
BRIGHTER TOGETHER
As Scott noted, we have refreshed our strategy to
sharpen our focus on the areas that matter most to
Mercury’s long-term value. Starting with our purpose,
the strategy aligns our activity to the areas of –
Better Today, Building Tomorrow, Brighter Together:
s We are committed to being Better Today,
by leveraging our core and scale to lift
our performance.
s We are focussed on Building Tomorrow, by setting
up for opportunities ahead, including through
our high-quality renewable generation prospects.
s We can be Brighter Together, by working
collaboratively with iwi and stakeholders,
recognising our trusted relationships are
a major strength.
To bring our strategy to life, we are progressing an
enterprise-wide programme to shape and activate
our identity – deepening our shared sense of purpose
and aligning our culture to strategy.
This provided a natural opportunity to refresh our
Executive Leadership Team structure, ensuring clear
accountability and strong alignment to our strategic
priorities. I’m pleased to welcome several new executive
leaders, bringing a balance of fresh perspectives and
deep industry and technical expertise. I’m confident
these changes position Mercury well to successfully
navigate the next phase of our journey.
We recognise the importance of delivering not just
on our strategic priorities but also on investor
expectations. Our programme of generation delivery,
cultural transformation, and technology enablement
is designed to translate ambition into long-term
shareholder value. As we progress these initiatives,
execution and performance remain our focus.
POWERING AHEAD ON GENERATION
DELIVERY
It is widely understood that New Zealand needs more
generation. We are clear what needs to be done and
we are moving forward at pace.
Mercury is doing the heavy lifting on generation
development delivery, with three major builds
simultaneously under construction—the Ngā Tamariki
KEY FINANCIALS
MENUHOW WE CREATE VALUE11MERCURY 2025 INTEGRATED REPORT |
We also continued the rollout of our enterprise-wide
Health, Safety and Wellbeing (HSW) programme,
with the goal of reaching the gold standard of safety
culture by the end of calendar year 2026. Our 12-month
rolling Total Recordable Injury Frequency Rate was
0.44, a reflection of the continued focus we have
in this space.
CLOSING REMARKS
As we look ahead, I am optimistic about the role
Mercury can play in shaping a resilient, low-carbon
economy. We have great people, great opportunity,
and a great plan – Better Today, Building Tomorrow,
Brighter Together.
Thank you to our people, partners, and owners for
your continued belief in our purpose and potential.
Your support is what powers our progress.
Ngā mihi nui,
STEW HAMILTON
CHIEF EXECUTIVE
We are disappointed by this and are working
extremely hard to rebuild confidence in our ability
to deliver on the energy transition.
Confidence is not restored through words alone,
but through consistent and meaningful action.
We are prioritising tangible steps like ensuring fair
and equitable access to electricity, and building the
infrastructure needed to power New Zealand’s future.
In parallel, we are actively engaging in broader
conversations about the transition including via
the Energy Transition Framework.
We want to help shape solutions that address the
core challenges – including the need for firming
to support intermittent renewables and enduring
arrangements to support social retailers.
We remain optimistic the sector is well positioned
to navigate current and future transition challenges,
and help unlock a resilient, low-carbon, high growth
economy and the many opportunities that come
with it.
BACKED BY A STRONG, COHESIVE TEAM
This has been a big year for our team, and I’m
proud of what we’ve achieved.
Over the period, we refreshed our approach
to building a workforce of the future – one that
reflects who we are today, where we want to go,
and the culture that will get us there.
We have delivered $34 million in synergies secured
from the Mercury and Trustpower retail integration
as of the end of FY25, including $30 million in OPEX
savings. We are on track to exceed our original $35
million synergy target, with an additional $5 million
expected in FY26.
Our size and structure give us the ability to make
a real difference, from keeping post-pay disconnections
at zero for customers who we have identified as being in
hardship, to delivering material value to social retailers
Nau Mai Rā and Toast Electric to help them deliver on
their goals of eliminating energy hardship.
From 1 April we implemented electricity price
increases of approximately 9.7% on average, largely
driven by regulated lines and transmission costs
(approximately 6.9% of increases on average).
Residential gas prices also increased during the year,
with supply constraints continuing to drive wholesale
gas price increases.
While the retail energy component of residential
electricity prices have remained relatively stable in
real terms over the past decade, we recognise that
the overall increase will be disproportionately felt by
some customers, so we have implemented a range
of measures to further help those in hardship. Looking
forward, transparency and clarity on pricing, along with
tools to help customers manage their consumption
and care for those in need, remain key priorities.
In the Commercial and Industrial (C&I) segment,
we continued to foster a thriving industrial customer
base. We celebrated several C&I achievements
including the commencement of a long-term
contract with NZ Aluminium Smelters and the signing
of long-term contracts with Fonterra and Visy.
REBUILDING CONFIDENCE
We acknowledge the supply challenges in winter
2024 that affected the broader sector, along with
the ongoing challenges of the energy transition,
have impacted confidence.
Ngā Tamariki Geothermal Station.
Geothermal Station expansion and the Kaiwera Downs
2 and Kaiwaikawe Wind Farms. Together, these
projects represent $1 billion in investment and
will deliver 1.1TWh of renewable energy, a significant
proportion of New Zealand’s current generation build.
All projects are tracking to schedule and budget.
Our premium development prospects are at varying
stages of readiness and underpins our ambition to
deliver 3.5TWh of generation by 2030. I believe we
have the most capable generation development team
in New Zealand, spanning geothermal, wind, and hydro.
They are match fit and in a strong position to deliver.
Our assets are long-dated, and the decisions we make
are across multi-decade horizons. Our development
prospects extend well beyond 2030 and will be guided
by technology fundamentals and leveraging our core
strengths. In addition to onshore wind, we are advancing
early-stage geothermal opportunities into post-2030
development options.
We also undertook significant maintenance activity,
including refurbishment of the Karāpiro Hydro Station.
This project will be completed in September,
delivering a 16.5MW capacity uplift. We commenced
the Taupō Control Gates and Arapuni Hydro Station
left abutment projects, supporting long-term
sustainability and resilience of these important assets.
Maraetai, Ōhakuri and Ātiamuri Hydro Stations are
next in line in our significant hydro refurbishment
programme – representing approximately $550
million in investment that is expected to increase
capacity by 58MW and generation by 87GWh.
COMPETING HARD FOR CUSTOMERS
Turning to our customers, we competed hard to grow
and retain our base. Total connections were up 5%
to 906,000, driven by strengthened multi-product
offerings, with 38% of customers now on two or
more products.
MERCURY IS DOING THE
HEAVY LIFTING ON GENERATION
DEVELOPMENT DELIVERY,
WITH THREE MAJOR BUILDS
SIMULTANEOUSLY UNDER
CONSTRUCTION.
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Ngā Tamariki Geothermal Station.
W HAT
MATTERS MOST
TE MEA NUI
In this section we look at how we have engaged with iwi
and stakeholders and then responded to what we have
learned, as well as the trends we have seen in our key
risk areas in FY25. We then cover how these risks and
insights, as well as key opportunities and other external
factors, combine to form a view of what’s material
to our business.
MENUWHAT MATTERS MOST13MERCURY 2025 INTEGRATED REPORT |
WHAT MATTERS MOST
Notable activity during the year included:
s A larger programme of community engagement
in line with the scale and pace of our generation
development programme.
s The introduction of Executive Leadership
Team roadshows, giving as many employees as
possible the opportunity to interact with leaders
face-to-face.
s An Investor Day, which focussed on providing
insight into our refreshed strategy.
s A larger programme of government
engagement, reflecting a period of heightened
focus on the sector.
The feedback we have received through
engagements has helped inform the business
activities covered in How We Deliver Value.
These insights, shared through key relationship
holders across our business, have also formed
the base of our FY25 Materiality Assessment.
ENGAGING WITH IWI AND STAKEHOLDERS
TUHONO KI NGĀ IWI ME TE HUNGA WHAI PĀNGA
Building and maintaining relationships with iwi/Māori and stakeholders
across our business is fundamental to our ability to create value and
contributes to our long-term success.
We aim to understand the needs and priorities of iwi/
Māori and key stakeholders. This guides our resource
allocation to business activities and informs our
strategy and business plans.
By customising engagement methods to meet
specific needs and preferences, we are able to
enhance accessibility and inclusivity and gather
richer, more meaningful data than taking a
one-size-fits-all approach.
These engagement methods include:
s Personalised one-on-one meetings in person
and/or online.
s Group meetings in person, such as community
co-design forums and stakeholder events.
s Online surveys and audits, such as our Employee
Voice and Voice of Customer surveys.
s Regular written updates, such as project updates
to local communities and quarterly operating
updates to investors.
Building and maintaining enduring relationships
with suppliers who share our values and can help
us to deliver on our priorities is key to our success.
During the year, we updated our Supplier Code of
Conduct, which sets out our expectations across
social and environmental responsibility, supply
chain, business integrity and speaking up. This
includes clear expectations in line with our own
Modern Slavery Statement, which we also include
in all supplier agreements.
To support this, we have been working with
suppliers to understand any modern slavery risks
in their supply chains and address these
appropriately. This includes ensuring their parent,
KEY GROUPS WE WORK WITH:
CUSTOMERSEMPLOYEESPARTNERS
INVESTORS
GOVERNMENT
AND REGULATORS
INDUSTRY
PARTICIPANTS
COMMUNITY
SUPPLIERSIWI
subsidiaries, affiliates and subcontractors comply
with applicable laws and regulations, and uphold
high standards of ethical conduct in areas such as
human rights, labour standards, health and safety,
environmental management and anti-corruption.
In addition, we have implemented a new
framework which more clearly defines the level
of contribution suppliers make to our generation
arm. As a result, we have changed the nature
of some agreements, to be more robust and
transparent around the value we each provide.
The framework has also been a key input into our
tender processes, helping improve clarity on both
sides and drive efficiencies. We intend to roll this
framework out more widely.
REFRESHING HOW WE WORK WITH SUPPLIERS
We’ve proudly supported Kāhui Whetū
the past two years, which is held in Gore,
near our Kaiwera Downs Wind Farm.
MENUMERCURY 2025 INTEGRATED REPORT | WHAT MATTERS MOST
THE RISKS WE FACE
A comprehensive summary of our key risks and how we manage them
is included in Governance at Mercury.
HEALTH SAFETY
AND WELLBEING
COMPLIANCE
& REGUL ATORY
REPUTATION OPERATIONALFINANCIALPEOPLE
This page provides a summary of the trends we have seen this year in
our key risk areas. We take these into account in our view of what matters
most and to shape our focus for how we create value over time.
KEY RISK AREAS
FACTORS IMPACTING CURRENT TRENDS
• Health, Safety and Wellbeing
(HS&W) continues to be one of
the major risks that could affect
our employees, contractors,
customers and the public.
• Our Key Risks and Lifesaving
Controls (the 11 key risks that can
kill or badly injure), Leadership
Routines, the successful delivery
of Enforceable Undertaking
activities, and the uplifting of
HS&W capability and maturity
have been priorities for us this year.
• Our focus on process safety
also continues as a priority at
our generating assets. Our three
Major Hazard Facility (MHF) sites
have continued process safety
projects to reduce risk. Safety case
resubmissions to WorkSafe for our
MHF sites were completed in FY25.
• We continue on our programme
to meet new Dam Safety
Regulations that will be
implemented later in 2025.
• FY25 also saw the continuance
of several large development
projects relating to wells/drilling,
major hydro refurbishments,
wind farm construction and
geothermal turnarounds.
• Compliance with resource
consents, along with key generation
and retail regulations, is important
for our continued ability to operate.
• Possible regulatory change and
intervention continues to present
a significant risk. We seek to
influence outcomes to ensure
that any intervention does not
undermine the important balance
between reliability, affordability
and renewable sources of supply.
This balance will be a key
challenge as the energy sector
transition progresses.
• In FY25, several regulatory
processes have progressed
(e.g. Fast Track Approvals Act, EA
market rules and settings, MBIE
Electricity Market Performance
review, Energy Competition Task
Force) that have the potential for
significant impact on Mercury.
• The Energy Transition Framework
is a key mechanism for the sector
participants to collaborate on
shared challenges and opportunities
related to the energy transition.
• In FY25, regulators continued
to take various actions to hold
businesses accountable for
regulatory breaches, demonstrating
a clear willingness to be actively
enforcing compliance.
• Maintaining the trust of Mercury
investors, iwi partners, customers,
policy makers and the broader
community is a key priority.
• Ensuring that our fuel
resources, plants and systems
don’t have negative impacts
on others is critical.
• The level and sophistication of
cyber-attacks continue to increase
globally. We continue to implement
a comprehensive and multi-
faceted security uplift programme
to improve Mercury’s security
maturity across our IT, Operational
Technology and Internet Service
Provider (ISP) environments.
• We approach the introduction
of AI into our organisation with
the same risk assessment and
management as we apply to all
our critical operational elements.
We know that AI has the potential
to disrupt our business in ways
which are novel, while also
acknowledging AI’s potential for
improved efficiencies, process
improvement, customer satisfaction
and stakeholder engagement.
• Operational risks have a potentially
significant impact on our ability
to generate electricity, provide
telco and ISP services and
create revenue.
• The key operational risks include;
asset management and availability,
fuel availability, market exposure,
and business interruption events
(such as natural disasters or global
pandemics). Our two major
operational risks continue to be the
risk of a significant and extended
plant outage (primarily baseload
geothermal) and the risk of an
extended drought (impacting on
lake levels, water flows and plant
operations/outages).
• During FY25 we saw significantly
weaker inflows than expected into
our hydro scheme and, although
improving later in the year, this has
impacted on our financial results.
Over FY25, our geothermal plants
maintained strong availability and
generation, which has partially offset
the impact of lower hydro storage.
• In managing operational risk,
we continue to progress our
programme of major hydro
refurbishments and significant
geothermal turnarounds.
• The energy transition is driving
high demand for renewable
technologies and skilled labour,
creating several risks to Mercury
ranging from supply chain
constraints, construction delays,
and rising costs. These pressures
are intensified by geopolitical
tensions, growing global
competition, and New Zealand’s
market remoteness.
• Managing financial risk is crucial
because it helps us safeguard our
assets, earnings and overall financial
stability in the face of unpredictable
internal and external challenges.
• Key financial risks include: climate
change impacts, appropriate
insurance cover and our ability
to execute on projects and
new growth initiatives.
• A core element of financial risk is
project failure risk. This risk revolves
around our ability to successfully
execute significant business
initiatives and thereby maintain or
deliver growing financial returns.
• Increased inflation, interest rates
and supply chain costs can all
impact us through increased
funding costs and reduced
profitability. If these factors remain
elevated, they can also put future
generation development and new
business opportunities at risk.
• Mercury faces both supply-side
and demand-side financial
risks and opportunities as the
energy transition increases
demand for additional renewable
energy. Through portfolio
management, we actively control
these opportunities and risks.
• We continue our strategy to
embrace adaptive learning and
challenge mindsets to lift Mercury’s
productivity and performance
and grow enterprise value. We are
focussed on having an inclusive work
environment where contributions
and diverse perspectives are valued
and all of our people can thrive.
• Attracting, developing and
retaining capable, adaptable and
high performing people who can
successfully deliver our strategic
priorities remains critical.
• We face the challenge of an ageing
workforce in several key operational
areas and attracting capability
and talent to ensure succession
also remains a key priority.
• We take aggressive behaviours
to our frontline staff very seriously
and have implemented a
Wellbeing Programme targeting
training in de-escalation, trauma-
informed care and ongoing
psychological support to deal with
incidents, and support our people.
MENUWHAT MATTERS MOST15MERCURY 2025 INTEGRATED REPORT |
PULLING IT ALL TOGETHER
Materiality assessment
<IR> CapitalsOur FY35 aspiration areasWhat’s important to us and our stakeholders
Natural Manufactured
Kaitiakitanga/Stewardship
Optimising our physical assets
Improving the natural environment
Resilience to climate change
Leading on electrification
Social and Relationship
Kiritaki/Customer
Building trust
Customer experience and value
Customer loyalty
Innovative services
Kōtuitanga/Partnerships
Building trust, mana-enhancing practices
Creating shared value and holistic outcomes
Forming strong, long-term relationships
Innovation
Career pathways
Human Intellectual
Ngā Tāngata/People
Being a learning and adaptive organisation
Health, safety and wellbeing
Transparency
Recognition
Financial
Arumoni/Commercial
Sustainable commercial growth
Renewable generation development
Operational excellence
Our five aspiration categories, established in 2016,
represent the key drivers of material value creation
for our business. These align to the six capitals of
the Integrated Reporting <IR> framework.
We use these categories to understand how different
resources (input capitals) can either create or erode
value. It also helps us take a holistic view of our
business and understand the broader environment
we operate in.
When thinking about materiality, we need to consider
both what matters most to our business and what
matters most to iwi/Māori and stakeholders. Together,
these considerations help inform the framework for our
long-term strategy and near-term business planning.
Reporting on what’s important to us and our
stakeholders also forms the basis of this
Integrated Report.
REVIEWING OUR MATERIAL TOPICS
We continuously review our strategy against a
broad context and keep up to date with changes.
When we consider whether our most material topics
have changed, we also evaluate how our approach
needs to evolve to ensure we continue to create value.
The flowchart below outlines the process we have
taken to determine our most material topics.
OUR MATERIAL TOPICS
Following careful consideration of the data points
noted above, we have determined our material topics
and grouped them by value drivers. These will be
taken into account over the next financial year as
we progress activity against our strategic priorities.
The materiality topics are largely unchanged from
FY24. New topics are denoted in bold.
GATHER DATA
We consider data points including:
• Iwi and stakeholder perspectives (page 14)
• External environmental considerations (pages 8-12)
• Risk assessment insights (page 15)
• Any other factors
REVIEW MATERIAL TOPICS
We review our most material topics, grouped
under our five long-term aspirations:
• Kaitiakitanga/Stewardship
• Kiritaki/Customer
• Kōtuitanga/Partnerships
• Ngā Tāngata/People
• Arumoni/Commercial
UPDATE MATERIAL TOPICS
Our material topics for FY25 are
outlined above and are reflected in our
strategic processes and the activity
we undertake during the year.
CONTINUOUS APPROACH TO EVALUATING MATERIAL TOPICS
CONTINUED ENGAGEMENT
AND MONITORING
We continue to engage with iwi
and stakeholders and monitor the
internal and external environment.
MENUWHAT MATTERS MOST16MERCURY 2025 INTEGRATED REPORT |
HOW WE
DELIVER VALUE
TE PĒWHEA O TĀ MĀTOU TUKU HIRA
In this section, we report on material activity
from the past year which has supported
us to reach our FY35 aspirations.
We reflect on our progress, share successes
and how we have responded to challenges
we have encountered.
MENUHOW WE DELIVER VALUE17MERCURY 2025 INTEGRATED REPORT |
HOW WE DELIVER VALUE
+ KEY TOPICS
• Setting households
up for the future
• Evolving our Commercial
and Industrial offers
• Supporting an equitable
energy transition
– KEY RISK AREAS
• Safety and wellbeing
• Compliance
and regulatory
• Reputation
2. KIRITAKI
CUSTOMER
CONNECTIONS WITH:
+ KEY TOPICS
• Looking after our assets
• Reducing our emissions
– KEY RISK AREAS
• Safety and wellbeing
• Compliance and
regulatory
• Reputation
• Operational
• Financial
1. KAITIAKITANGA
STEWARDSHIP
CONNECTIONS WITH:
+ KEY TOPICS
• Rebuilding confidence
in the energy sector
• Working collectively
for better outcomes
• Our partnership with Te
Roroa at Kaiwaikawe
– KEY RISK AREAS
• Compliance
and regulatory
• Reputation
• Operational
• Financial
3. KŌTUITANGA
PARTNERSHIPS
CONNECTIONS WITH:
DELIVERING TO OUR
FY35 ASPIRATIONS
+ KEY TOPICS
• Progressing our
generation prospects
• Revolutionising our
management of
the Waikato River
Hydro System
• Generating geothermal
electricity more
efficiently and reliably
+ KEY TOPICS
• Accelerating
performance
• Growing our people
• Continuing to pursue
Safety Citizenship
• Defining our identity
and culture
– KEY RISK AREAS
• Operational
• Financial
• Compliance and
regulatory
– KEY RISK AREAS
• Safety and wellbeing
• Operational
• People
5. ARUMONI
COMMERCIAL
4. N GĀ TĀN GATA
PEOPLE
CONNECTIONS WITH:CONNECTIONS WITH:
PERFORMANCE
SNAPSHOT
MENUHOW WE DELIVER VALUE18MERCURY 2025 INTEGRATED REPORT |
1. KAITIAKITANGA STEWARDSHIP
The Waikato Hydro System has been helping to keep New Zealand powered
for almost 100 years. Our nine hydro stations on the Waikato River play a
critical firming role in our electricity supply while our five geothermal power
stations generate electricity 24/7, ensuring a constant supply regardless
of the weather. We are investing heavily in projects that maintain, enhance
and modernise our generation assets so they can continue to supply the
country with power for many years to come.
LOOKING AFTER OUR ASSETS
Our investment programmes and campaigns aimed
at ensuring the longevity of our hydro and geothermal
activities have made significant progress.
We are in the final stages of completing the $90
million Karāpiro Hydro Station rehabilitation project,
with 80% complete on the third and final generation
unit. This is part of our ongoing programme to
refurbish our nine hydro stations on the Waikato River.
The entire refurbishment programme will allow our
hydro stations to generate more electricity from the
same volume of water. It will also ensure each station
can operate for another 50 years, with a mid-life
refurbishment at 25 years, so the hydro system can
reliably help meet the renewable energy demands
of the country.
So far, we have completed upgrades or planned work
on five hydro stations to enhance their resilience and
performance. That includes the Karāpiro upgrade,
which will provide an additional 32GWh annually.
In the coming years, we are investing $550 million on
planned upgrades at Maraetai 1, Ōhakuri and Ātiamuri
hydro stations which are expected to increase capacity
by 58MW and generation by 87GWh.
This significant long-term investment recognises
the important role the Waikato Hydro System plays in
delivering renewable energy for New Zealand.
The nine hydro stations were constructed from 1924
to 1970, and they have helped to keep the country
powered for many decades, and we’re working to
ensure that legacy continues.
About 47% of the electricity we produce is generated
by the Waikato Hydro System, delivering around 10%
of New Zealand’s electricity, an average of 4140GWh
each year.
Secondly, we are progressing business cases for
enhancement projects at the Arapuni Hydro Dam
and at the Taupō Control Gates.
At Arapuni, we have spent almost a year completing
early works investigations, which will allow us to make
improvements to the left abutment of the hydro dam.
The abutment needs new, long-term seepage controls,
and a team of internationally recognised experts is
being assembled to lead the work. We expect the
main works to start in 2026 and take about 18-24
months to complete.
At Taupō, we completed erosion repair work
on the banks of the Waikato River, up and down stream
of the Control Gates during 2024-2025. We continue
to engage with our partners and stakeholders on the
future of the gates structure and expect to develop
a list of options in 2026.
Karāpiro Hydro Station.
MENUHOW WE DELIVER VALUE19MERCURY 2025 INTEGRATED REPORT |
Thirdly, our geothermal drilling campaign has
successfully delivered three new production wells
and three new reinjection wells, representing
a $147 million investment.
These new wells will be used to increase fuel supply
for the expansion of our Ngā Tamariki Geothermal
Station and to maintain supply for our Rotokawa and
Kawerau stations. We have two additional wells to be
drilled in 2026, taking total investment in this drilling
campaign to $175 million.
REDUCING OUR EMISSIONS
Our Climate Action Plan represents our commitment
to a low-emissions, climate-resilient future. It describes
the measures and targets we have set, and the
actions we are taking to reduce our greenhouse
gas emissions from sources that are operationally
controlled by us, such as geothermal generation,
company vehicle fleet, backup generators, and
other equipment.
Our Carbon Reduction Programme supports the Action
Plan, by focussing on reducing geothermal emissions.
We have five geothermal power stations in the Central
North Island; two use flash plant technology to generate
energy while the other three use a binary system.
It’s simpler to reduce emissions in a binary system, so
our initial focus is on our three binary system stations;
Rotokawa, Mōkai and Ngā Tamariki.
We started at Ngā Tamariki where we successfully
trialled a method to reinject non-condensable gases
(NCGs), which are mostly from carbon dioxide, back
into geothermal reservoirs, rather than releasing the
gas into the atmosphere.
Ngā Tamariki has four generation units and a fifth
is expected to be commissioned in early 2026.
Since 2022, we have been reinjecting NCGs from the
station’s fourth unit which has reduced the station’s
emissions by up to 25%.
During this time, we monitored the effect NCG
reinjection had on the reservoir and tested scenarios
to ensure that it did not have an adverse impact
on the reservoir and plant.
In 2025, we were able to reinject NCGs at various
quantities across all four units at Ngā Tamariki.
We are now moving to commission new reinjection
pumps which will allow us to reinject NCGs at higher
levels for longer periods. This could reduce the
station’s overall geothermal emissions by 80%.
We were the first in the industry to undertake NCG
reinjection at a geothermal power station.
Our results at Ngā Tamariki show we have reinjected
41% of our carbon emissions from the station since
2021. It means we have avoided releasing 20,079
tonnes of carbon emissions into the atmosphere
and in turn, offset about $1 million in Emissions
Trading Scheme (ETS) costs.
In FY26, we plan to introduce the reinjection workstream
to the fifth generation unit at Ngā Tamariki, to complete
the $3.3 million reinjection programme.
We’re also planning for reinjection capability at the
two other binary system stations, Rotokawa and Mōkai.
And we continue to investigate options to reduce
emissions at our flash system geothermal stations,
Ngā Awa Pūrua and Kawerau.
Heat exchanger being lifted into position at the
Ngā Tamariki Geothermal Station expansion.
MENUHOW WE DELIVER VALUE20MERCURY 2025 INTEGRATED REPORT |
We are committed to helping our customers, both small and large, navigate
the energy transition. This includes driving innovation and adoption of clean
energy solutions, and supporting customers’ unique and changing needs.
2. KIRITAKI CUSTOMER
SETTING HOUSEHOLDS UP FOR
THE FUTURE
We continue to focus on enabling our residential
customers to play an active role in the energy
transition by providing the platforms, solutions and
information that enables them to shift consumption
and lower their costs. This activity is also aimed at
supporting efficient use of energy across the system.
We have built our smart energy management
capability in recent years through several projects and
trials, and investment in technology that enables us to
undertake smart energy management in partnership
with customers and network companies at scale.
In late FY25, we began the phased roll out of
‘time-of-use’ solutions, which have pricing that
better reflects the underlying costs of electricity
at particular times (for example, daytime versus
nighttime). These solutions give customers greater
control over their energy spend and encourage them
to shift their energy use away from peak periods,
which, in turn, helps manage load on the national
grid. We intend to mature these solutions over time.
Meanwhile, we are working to scale our smart
hot water control programme, following multiple
successful trials. The programme involves switching
cylinders’ electricity supply off for short time
periods, helping customers make savings. It also
helps reduce pressure on the grid at peak times.
Another key area of focus is supporting our gas
customers to make well-considered decisions about
their energy future. We have established an
information hub about the future of gas, including the
challenges ahead and actions users may wish to take.
We also continue to progress opportunities to offer
solutions that will enable customers to transition to
electric alternatives, beginning with the addition of heat
pumps to our popular Samsung YouChoose catalogue.
More broadly, we continue to focus on enhancing value
for customers with a range of smarter propositions,
benefits and service features. Our efforts were
recognised when we were named Retailer of the Year
at the 2024 New Zealand Energy Excellence Awards
for our transformative integration of the Trustpower
retail business (now complete) and responsive
customer solutions portfolio.
EVOLVING OUR COMMERCIAL AND
INDUSTRIAL OFFERS
We recognise it has been a challenging period for
some industrials, including those coming off contracts
who are juggling multiple cost pressures. We have
taken action to support emerging needs, and intervene
early where we identify a need. We are also supportive
of measures to enable large industrial consumers
to further participate in the electricity system.
We have seen increased appetite for longer-term
electricity supply agreements, which we see as
mutually beneficial during a transitional period
in the wholesale market.
In addition to avoiding market volatility, longer-term
agreements provide businesses certainty of cost
and a guaranteed fuel source for the operations.
They also give us confidence to continue investing
and building more renewables for New Zealand.
Image credit to come
MENUHOW WE DELIVER VALUE21MERCURY 2025 INTEGRATED REPORT |
In January, we commenced a 20-year contract with
our now largest customer, New Zealand Aluminium
Smelters. This long-term agreement is broadly
equivalent to the annual output of the entire
Kaiwera Downs Wind Farm (658GWh p.a.), a
material contribution to the aggregate 5,000GWh
p.a. of electricity needs for the smelter to produce
low-carbon aluminium.
We are also focussed on helping businesses to electrify
(where it makes sense), and participate in demand
management – helping them achieve their climate
change goals and supporting the supply and demand
balance of the electricity system.
During the year, we signed a long-term agreement
with Fonterra to support the electrification of their
Edgecumbe and Waitoa operations. These supply
agreements extend for ten years for each site, with
Waitoa commencing from August this year and
Edgecumbe from July 2026. This represents total
demand of around 260GWh per year (about the size
of a large wind farm) once the electrification of both
sites is completed.
We were also pleased to sign a long-term agreement
with Visy, a global leader in packaging, recycling and
logistics. The agreement spans 10 and 20-year terms
and will see Visy purchase approximately 115GWh p.a.
of electricity for the first ten years before tapering
down to about half of this amount in the last ten years.
SUPPORTING AN EQUITABLE ENERGY
TRANSITION
We are focussed on ensuring electricity remains
affordable and accessible for households, and are
taking action across our business to support this.
This includes intervening early and providing tailored
support to households in need.
This is one of our biggest priorities, with cost
increases, such as from critical investment in lines
infrastructure, flowing through to consumers.
Our approach includes providing improved clarity
(on pricing and consumption), control through
choice (flexible plans and tools that help customers
manage consumption and payments) and care.
Our comprehensive customer care programme
encompasses direct support and energy-saving
education, delivering through partnerships and
continuously increasing our knowledge and
understanding of hardship.
We have had no post-pay disconnections for
non-payment due to hardship this financial year,
a significant benchmark of success for our customer
care programme. This is a result of both changes to our
internal processes and collaboration with community
partners to deliver comprehensive, wraparound support
for those in most need.
At the same time, we have worked with community
to improve our onboarding process for customers
with adverse credit to access post-pay plans.
This includes ensuring the necessary budget and
financial support is available to help customers stay
on top of their energy costs.
Our work with community to deliver lasting customer
care was a finalist for Community Initiative of the Year
at the 2025 New Zealand Energy Excellence Awards.
Looking beyond our own customers, we deliver
material value to social retailers, Nau Mai Rā and
Toast Electric, to help them deliver on their goals
of eliminating energy hardship. This included 61GWh
volume sold to them over the period.
We also continue to support industry-wide consumer
care action through the Electricity Retailers’ and
Generators’ Association, and the Energy Transition
Framework, which we cover in Kōtuitanga/Partnerships,
and advocate for government support of targeted,
comprehensive solutions.
Members of our Here to Help team.
Top: Jayne Mizen, Glenata Ikitule, Talisa Reynolds.
Bottom: Deshini Senanayake, Helen Taylor, Tricia Tautali-Ah-Sei.
22
3. KŌTUITANGA PARTNERSHIPS
We continue to focus on creating success with others, including providing
constructive contributions to New Zealand’s energy future.
REBUILDING CONFIDENCE IN
THE ENERGY SECTOR
We recognise confidence in the energy sector’s ability
to deliver on the transition was impacted by the energy
shortage and subsequent high spot and wholesale
prices in August 2024. We are working hard to rebuild
confidence through solutions-focussed engagement
with the sector, decision makers and the wider public.
For our largely renewable electricity system to deliver
on the big opportunity – shifting our broader energy
system to more renewables, the system needs to be
secure and affordable to give others the confidence
to switch to electricity. Our focus areas include:
s Working collaboratively to enhance security of
supply for winter 2025 and beyond. We expand
on this in the following section.
s Actively shaping and contributing to solutions
for firming to support New Zealand’s increasingly
renewable electricity supply, including encouraging
more flexibility.
s Actively shaping and contributing to solutions
for affordability, including enduring arrangements
to support social retailers, and exploring other
targeted, out of market arrangements.
More information about our own customer care
programme is available in Kiritaki/Customer.
We know market and policy settings need to evolve
for the transition and have actively participated in
identifying the problems underpinning current
transition challenges and potential solutions to these.
This includes through sector groups such as the
Energy Transition Framework, covered in the following
section, and by supporting industry experts to
provide independent perspectives.
We are currently awaiting the Government’s
Ministerial Review of electricity markets, anticipated
before the end of the year.
In the meantime, we continue to actively engage
on this and the Energy Competition Task Force,
focussing on solutions that could help further
strengthen performance of the electricity market.
We recognise considerable action is needed if
New Zealand is to continue to have a secure and
affordable energy supply as our system transforms.
However, we believe some of the Task Force’s proposals
could have significant knock-on effects that undermine
the wider system. This includes potentially greater costs
for consumers and the delay of investment in new
renewable generation. This is particularly true of
the level playing field measures which would require
generator-retailers to provide electricity contracts
on effectively the same terms as internal transfers.
Resource management reform also continues
to progress, and we are actively engaging on this
as a critical enabler of the transition, supporting
the scale and pace of investment required in
electricity infrastructure.
Ngā Awa Pūrua Geothermal Station.
MENUHOW WE DELIVER VALUE23MERCURY 2025 INTEGRATED REPORT |
WORKING COLLECTIVELY FOR BETTER
OUTCOMES
We are proud to be a signatory of the Energy
Transition Framework, which brings together 32
organisations working collectively to ensure New
Zealand’s energy system remains secure, affordable
and supports a high-growth economy as it transforms.
Launched in April, the Framework represents
the sector committing to collective action and
transparency as the energy system undergoes
significant change. Its members include industry
participants across generation, retail, transmission
and distribution companies. There are also
independent consumer and advisory members.
The Framework will help the sector co-ordinate,
share responsibility and act with urgency on the
biggest priorities. The initial priority focus areas
include affordability, energy and capacity mix,
and electrification.
It is also working to publish and share information
about the energy transition so New Zealanders can
understand its progress.
Already the Framework has opened pan-sector
discussions and helped design solutions to respond
to the rapidly changing energy landscape. This has
included a comprehensive review of the security
of supply situation for 2025 and future years.
Separate to this, we are pleased to have signed
agreements with Genesis and others to support
the continued operation of the Huntly Power Station’s
Rankine Units and a strategic fuel reserve from 2026.
This will help ensure we can continue powering
New Zealand as we add more renewables to the system.
The arrangements cover a term of up to 10 years
out to 2035.
A range of other activity is underway to help deliver
secure and affordable electricity. This includes
significant sector investment in new renewable
generation, which we are materially contributing
to, as covered in Arumoni/Commercial.
OUR PARTNERSHIP WITH TE ROROA
AT KAIWAIKAWE
Our relationships with iwi are based on shared values
with a long-term focus on working together in a
range of ways, whether it be commercial partnerships
or to support educational, environmental or
ecological outcomes.
We recognise and respect the intimate connection
iwi have with natural resources, including those
which support our business and New Zealand’s
transition to renewable energy.
This approach formed the base for the way we
partnered with Te Iwi o Te Roroa in the development
of the Kaiwaikawe Wind Farm in Northland.
The rohe of Te Roroa stretches along the north-west
coast from the Hokianga to Tokatoka maunga in the
Kaipara, Maunganui Bluff, Waipoua Forest and Kai Iwi
Lakes. Kaiwaikawe Wind Farm sits within this rohe,
on rural land north-west of Dargaville.
Underpinning this relationship is early and
transparent engagement, and we worked with
Te Roroa at the initial project planning stages.
This included discussing the development with their
management team and running information sessions
with the wider iwi as the project progressed. Te Roroa
undertook cultural and archaeological studies and
reviewed environmental assessments. This resulted
in a set of recommendations that were included
in the project’s plans.
The insight that Te Roroa has provided has been
deeply valuable to the project team and we were
honoured to have them lead a dawn site blessing
in January to clear the pathway for work to begin.
In March, Te Roroa iwi member Snow Tane led the
whakatau to welcome everyone at our groundbreaking
event to mark the official start of construction.
Te Roroa representatives were on site daily during
our initial site preparation work to ensure any
archaeological or cultural finds were appropriately
identified and managed. Several historical finds
associated with gum digging were identified and
are in the process of being documented.
It has been important to establish a strong working
relationship with Te Roroa and their people which
enables the exercise of kaitaikitanga and the
application of mātauranga Māori to protect the
natural environment.
We have established a sustainability fund and
educational grants to support the work Te Roroa is
leading in this space as kaitiaki for the environment.
The sustainability fund will resource projects and
programmes of work that support Te Roroa’s
intergenerational planning and sustainability,
while the grant will help advance education in
environmental management for iwi members.
The iwi will continue to be involved with the wind farm
as it is constructed. This includes growing native plant
species to be used for mitigation projects involving
wetland construction and enhancement through the
wind farm site.
Te Roroa takes a long-term approach to its planning,
initiatives and projects for the benefit of future
generations. We hope to have a long and enduring
relationship with Te Roroa and look forward to the
opportunities to drive shared value that it may bring.
Northland MP Grant McCallum, Mercury Chief Executive Stew Hamilton, Mercury Chair Scott St
John, Minister for Energy Hon Simon Watts, Te Roroa General Manager Snow Tane and Pāmu Chief
Investment Officer Andrew Sliper at the Kaiwaikawe groundbreaking ceremony in March.
MENUHOW WE DELIVER VALUE24MERCURY 2025 INTEGRATED REPORT |
4. NGĀ TĀNGATA PEOPLE
At the heart of our success is our people. We are committed to establishing
a culture anchored on purpose and performance where everyone can
thrive and contribute. We know that when our people feel a strong sense
of purpose, they are better equipped to deliver exceptional outcomes
for our customers, communities, and shareholders.
ACCELERATING PERFORMANCE
Mercury is in a significant phase of growth as
we accelerate the supply of reliable, renewable
and affordable energy for New Zealand. As noted
elsewhere, it has been a challenging year with
our performance impacted by low generation
output principally due to prolonged dry conditions.
We are mindful that this year has also been
challenging for our customers and shareholders.
As we balance the need to deliver our investment
for the future with the need to deliver value for
our customers and shareholders, we will continue
to evolve how we operate to ensure that we can
lift our performance.
Over the course of the year, we have simplified
our organisational structure to provide clearer
accountability, enable faster decision making
and ensure that our people can focus on higher
value work. We have also simplified our performance
scorecard to align closely with our refreshed strategy
and commenced a work programme to understand
how we can better link pay for performance.
In parallel, we are supporting our people to build
their capability and confidence to make use of AI
tools so that they can be more productive. As we
roll out new tools, we can see further opportunities
for our business to both accelerate delivery and
improve performance through the responsible use
of AI. We are focussed on ensuring that AI is used
across Mercury in a systematic way that encourages
a ‘test and learn’ approach while also appropriately
ensuring risk is managed responsibly.
GROWING OUR PEOPLE
We have undertaken multiple initiatives during
the year to grow and support our people to deliver
on what matters most.
Internal mobility remains a cornerstone of our talent
strategy with over half of roles in FY25 filled by
existing team members. This reflects our belief
that more often our best performers can be found
and grown from within our business by providing
meaningful opportunities for development and
investing in their training.
In the last year we refreshed our talent strategy
and completed a thorough assessment of our current
and future leadership capability needs resulting in a
new leadership framework. In FY26, we will continue
this focus by strengthening our talent system to
ensure we are equipped for the future. This includes
taking a cross-functional approach to how we
identify, grow, and retain high-potential talent across
the organisation.
We will continue to refine our recruitment and
selection processes, striking the right balance between
internal development and external hiring, and build a
leadership pipeline that is responsive to the demands
of a rapidly evolving market.
Developing our talent pipelines begins with
nurturing early career talent and drawing on diverse
backgrounds. We are proud of the strides we have
made through apprentice and intern programmes
and other partnerships.
Brodie Cook and Benjamin Whitaker-Roberts.
MENUHOW WE DELIVER VALUE25MERCURY 2025 INTEGRATED REPORT |
We are mindful these efforts are not yet showing
up in our diversity numbers and further focus is
required. One of the ways we are addressing this
issue is by prioritising partnerships, internships
and apprenticeships.
We hosted seven interns through our continued
partnership with TupuToa, 15 engineering interns,
two technology interns and one direct placement.
We have also welcomed four new apprentices to
our Generation team who are working towards an
engineering qualification. These initiatives provide
hands-on learning experiences, career development
opportunities for participants and strengthens
our workforce resilience and helps grow capability
in the sector.
CONTINUING TO PURSUE SAFETY
CITIZENSHIP
Safety is a core value that underpins our performance,
culture, and care for people. In FY25, we continued
to embed a safety citizenship mindset in which safety
is a shared responsibility and an everyday practice
across all levels of the organisation.
Our approach focuses on proactive leadership,
structured routines, and real-time insights to
strengthen safety performance and resilience.
We are shifting from a compliance-based model
to one that empowers individuals and teams to take
ownership of safety outcomes. This is key as we
continue to move into collaboration and towards our
goal of safety citizenship in late 2026. These efforts
are building a culture of trust, accountability,
and continuous learning.
We also strengthened our assurance framework
to ensure safety systems are effective in real-world
conditions. This includes the integration of our
critical risk programme which provides a structured
view of risk exposure and control effectiveness,
enhancing decision-making and system
improvements with a focus on using real time
data to test and verify controls.
We continue to lead in process safety management.
We apply rigorous standards across all generation
sites with a focus on understanding major accident
risks, strengthening critical controls, and embedding
safety into frontline operations. Our commitment
extends to our contractors and partners.
During the year, we launched a targeted hazard
identification programme to uplift awareness and
responsiveness, supporting a safer, more mindful
work environment.
As we move into FY26, we’re launching a safety
intelligence programme to uplift health, safety
and wellbeing by building a shared safety language
and aligning systems, symbols, and behaviours with
day-to-day attitudes and actions. This programme
includes the wellbeing initiative being piloted in the
Customer Services team, with the aim to expand
the programme across the rest of the business.
Together, these initiatives reflect our long-term
commitment to building a high-performing,
safety-focussed workforce. Safety citizenship is
not just about systems—it is about our environment,
people, and a culture where everyone plays a role
in keeping each other safe.
DEFINING OUR IDENTITY AND CULTURE
During the year we made significant progress
on an enterprise-wide programme to understand
and shape our identity. Rooted in the idea of going
beyond the surface, Project Tuakiri is about
understanding who we are, where we have come
from, and where we are headed.
We have identified three cultural enablers that are
essential to unlocking our full potential. These will
shape how and what we do, ensuring we deliver on
our focus of being Better Today, Building Tomorrow
and Brighter Together:
s One powerful team – We are a business made
up of many people, parts and pasts. We back
each other to grow together as one.
s Leading what matters – We take pride in being
a trusted industry leader. Our success is New
Zealand’s success.
s Enriching relationships – Relationships are
foundational. We have a responsibility to build
healthy internal and external relationships based
on mutual respect and trust.
A full launch of our identity statement is planned
for early FY26.
At the same time, we continue to drive performance
by cultivating a connected and inclusive culture.
Recent feedback from our people, through our
Employee Voice Survey in June, tells us that a strong
sense of belonging is felt within teams - supported
by approachable leaders, a growth mindset, and
a commitment to innovation and shared learning.
These are encouraging signs that our efforts to foster
an adaptive culture, one where we are flexible and can
adapt quickly to change, are having a positive impact.
As we look ahead, our focus will shift towards
strengthening connections and collaboration across
teams through alignment with our refreshed strategy.
This next phase will be underpinned by continued
investment in building the capability and performance
of our people through initiatives such as a new leader
Induction programme and people leader interactive
webinar series.
Maraetai Hydro Station.
MENUHOW WE DELIVER VALUE26MERCURY 2025 INTEGRATED REPORT |
5. ARUMONI COMMERCIAL
We are reinvesting our earnings into new generation development
in wind, geothermal, solar and our first Battery Energy Storage
System (BESS). In tandem with this, we are developing modern tools
and systems that will help us manage our generation assets more
efficiently and enable us to deliver more reliable energy for New Zealand.
POWERING AHEAD ON GENERATION
PROSPECTS
We have delivered three wind farm projects and
reached Final Investment Decision on two others
in the last five years, and plan to deliver 3.5TWh
of new generation by 2030, to lift our total generation
by about 40% per year.
Most of that lift will come from the three new generation
projects currently under construction; the Kaiwaikawe
Wind Farm in Northland, the Kaiwera Downs Wind Farm
stage 2 in Southland and the Ngā Tamariki Geothermal
Power Station expansion near Taupō.
Construction on Kaiwaikawe began in January 2025,
with first generation planned for mid-2026 and full
generation by the end of 2026. The 12-turbine wind
farm will have an installed capacity of 77MW, and
an average annual output of 221GWh.
The first of the new 36 turbines for Kaiwera Downs
stage 2 are expected to arrive on site in early 2026.
First generation is planned for mid-2026 and full
generation by November that year. Stage 2 will have
an installed capacity of 155MW, providing an average
annual output of 525GWh.
We are entering the final stage of the two-year
expansion project at Ngā Tamariki. The uplift will
provide an additional 46MW, generating an average
annual output of 390GWh.
The three projects combined will generate an annual
average of 1136GWh, enough to power the equivalent
of 142,000 average homes. It also represents a $993
million investment in new, renewable energy.
We see solar playing an important role in the energy
transition. We’re keeping our options open by using
a mix of buying, building, and partnering to access
low-cost solar solutions and to scale up as market
conditions change.
We recently ran an Expression of Interest (EOI)
process for a 100MW solar Power Purchase
Agreement (PPA) and have shortlisted two projects
for due diligence. We expect to investigate more
options in solar development over the coming years.
Other projects in the pipeline include our 150MW
Battery Energy Storage System (BESS) project at
Whakamaru, which was granted resource consent
in FY25. We expect to make a financial investment
decision on the BESS in FY26.
We are also advancing stage 2 of our Mahinerangi
Wind Farm project in Otago. Resource consent
applications (variations to existing and new)
are being prepared and will be submitted to
the Fast-track Approvals Bill process in Q1 FY26.
Stage 2 has the potential to provide an additional
550GWh per year, and we expect to make a financial
investment decision on this project in FY26 too.
Other options for development include the Waikokowai
Wind Farm west of Huntly and the Puketoi Wind Farm
near Pahiatua.
We’re also in the early stages of evaluating new
geothermal development options, which could add
up to 5TWh of baseload generation to our pipeline
for development beyond 2030.
Kaiwera Downs Wind Farm.
MENUHOW WE DELIVER VALUE27MERCURY 2025 INTEGRATED REPORT |
REVOLUTIONISING OUR MANAGEMENT
OF THE WAIKATO RIVER HYDRO SYSTEM
Hydropower forms the backbone of the country’s
renewable energy infrastructure. And we know that
managing our nine hydro power stations on the
Waikato River is crucial to ensuring we can optimise
the natural resources of the awa and provide
a reliable energy supply for New Zealand.
But we also know that it is a complex operation. That’s
why we have developed the Digital River, a decision
management platform that enhances our energy
generation operation of the Waikato Hydro System.
The Digital River leverages artificial intelligence
to simulate, plan, and optimise critical decisions
while effectively navigating the complexities of
hydrology, operations, sustainability, and our
strategic partnerships.
At its core, it simulates real-world scenarios and
supports smarter, faster decision-making. Unlike
traditional methods that relied heavily on experience
and intuition, Digital River introduced a data-driven,
collaborative platform.
It brings together hydro controllers, traders, engineers,
and managers, enabling them to explore complex
links and constraints across hydrology, operations,
sustainability, and stakeholder needs.
The heart of the system is a hybrid optimisation
algorithm, blending computer science with experience
and expertise of the hydro sector. It powers a simulator
capable of half-hourly hydrological modelling,
generates multi-day operational plans in minutes,
and even full-year forecasts in just hours.
These plans integrate real-time data, inflow and price
forecasts, and engineering best practices.
Hydro controllers have been involved in the Digital
River’s development. This has ensured the tools are
not only technically robust but also intuitive and
practical, tools that people responsible for looking
after the hydro system wanted to use.
The Digital River is now used across Mercury for
everything from unit rehabilitation planning to
stakeholder engagement and generation reviews.
It allows us to not only enhance our hydro operations
but also set a new standard for digital transformation
in the energy sector.
The Digital River was a finalist for the Innovation
in Energy Award at the 2025 New Zealand Energy
Excellence Awards.
GENERATING GEOTHERMAL ELECTRICITY
MORE EFFICIENTLY AND RELIABLY
Learning from our Digital River, we have been trialling
a Geothermal Optimisation project at our Kawerau
Geothermal Station, to develop advanced tools and
models to improve how geothermal power stations
operate. The goal is to generate more electricity, more
efficiently and reliably.
It involves using live data and machine learning
to make better decisions, such as adjusting control
settings, like steam pressure, in real time to get the
most power out of the system. It will also identify
inefficiencies quickly and continuously recommend
changes needed to optimise power output.
Real-time dashboards will help operators monitor
performance and make adjustments, and an app
can be used for simulations, forecasts, and historical
analysis. It will also detect issues like faulty flow
meters early by comparing different data sources.
It will help avoid power loss or prevent the power
station from operating outside safe limits.
Geothermal Optimisation will be an important
development tool to help generate more electricity
from the same amount of geothermal steam. It will
equip our people to make informed choices quickly
and will work as an early problem detector,
preventing bigger issues by catching sensor errors
or misreadings early.
The trial sets us up for wider applications of the
project to our other geothermal sites in the future.
Kawerau Geothermal Station.
MENUHOW WE DELIVER VALUE28MERCURY 2025 INTEGRATED REPORT |
LOOKING
AT T H E
NUMBERS
TITIRO KI NGĀ TATAU
This section explains how our integrated thinking,
our decisions and actions play out in financial results.
We provide commentary on our financial performance
for the year to the end of June 2025 compared with
prior years, as well as our auditor’s report and our
financial statements. Segment reporting has been
set out so you can clearly see the financial dynamics
of our generation operations as distinct from our
retail operations.
MENULOOKING AT THE NUMBERS29MERCURY 2025 INTEGRATED REPORT |
LOOKING AT THE NUMBERS
CONTENTS
31 FINANCIAL COMMENTARY
32 FINANCIAL TRACK RECORD
33 INDEPENDENT AUDITOR'S REPORT
GROUP FINANCIAL STATEMENTS
36 CONSOLIDATED INCOME STATEMENT
36 CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
37 CONSOLIDATED BALANCE SHEET
38 CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
39 CONSOLIDATED CASH FLOW STATEMENT
D. FUNDING
50 D1. SHARE CAPITAL AND DISTRIBUTION
51 D2. BORROWINGS
52 D3. NET INTEREST
53 D4. COMMITMENTS AND CONTINGENCIES
54 D5. RECONCILIATION OF PROFIT TO
OPERATING CASH FLOWS
E. GROUP STRUCTURE
54 E1. ASSOCIATES AND JOINT
ARRANGEMENTS
55 E2. RELATED PARTY TRANSACTIONS
F. RISK
56 F1. DERIVATIVE FINANCIAL INSTRUMENTS
60 F2. FINANCIAL RISK MANAGEMENT
G. OTHER
64 G1. SHARE-BASED PAYMENTS
64 G2. SUBSEQUENT EVENTS AND
OTHER MATTERS
NOTES TO THE FINANCIAL STATEMENTS
40 GENERAL INFORMATION
A. FINANCIAL PERFORMANCE
41 A1. REVENUE
41 A2. SEGMENT REPORTING
44 A 3. TA X AT ION
B. OPERATING ASSETS
45 B1. PROPERTY, PLANT AND EQUIPMENT
47 B2. INTANGIBLE ASSETS
C. WORKING CAPITAL AND PROVISIONS
48 C1. RECEIVABLES
49 C2. INVENTORIES
49 C3. PROVISIONS
Ngā Tamariki Geothermal Station.
MENULOOKING AT THE NUMBERS30MERCURY 2025 INTEGRATED REPORT |
FINANCIAL COMMENTARY
Mercury’s FY2025 EBITDAF of $786 million (down 10% from $877 million)
reflects the lowest hydro generation in 10 years coinciding with high pricing
and market volatility. This meant that Mercury moved from a net long to
a net short position for the financial year which was only partially offset
by higher customer yields.
Operating costs increased by $11 million on the
prior year, primarily due to increases in generation
maintenance costs and organisation change costs
to enable future cost saving.
PROFIT FOR THE YEAR
Mercury’s net profit after tax of $1 million was down
by $289 million from the prior year, primarily due to
the lower EBITDAF (decrease of $91 million), changes
in unrealised gains/losses on unhedged financial
instruments ($340 million), partially offset by the
tax expense ($125 million favourable to prior year).
CAPITAL STRUCTURE AND DIVIDENDS
Net debt was $2,183 million 30 June 2025, an increase
of $230 million from the prior year. The increase in net
debt is attributable to growth CAPEX relating to
construction of a fifth generating unit at Ngā Tamariki
Geothermal Station, stage 2 of the Kaiwera Downs
Wind Farm and the Kaiwaikawe Wind Farm.
Treasury stock of $15 million was re-issued through
FY2025 in relation to Mercury’s dividend
reinvestment programme (DRP). The company’s
gearing level is calculated at 2.5 times debt/EBITDAF
after adjusting for S&P Global treatment of Mercury’s
hybrid debt and provisions, at the middle of Mercury’s
target range of 2.0x to 3.0x debt/EBITDAF
supporting our S&P Global credit rating of BBB+.
At year end, Mercury had exhausted all treasury
stock, had available debt headroom of $570 million
net of short-term commercial paper on issue
and held cash and cash equivalents of $86 million.
This continues to provide balance sheet flexibility
for growth over and above current commitments.
A fully imputed ordinary dividend of 14.4 cents
per share (cps) final dividend has been declared.
This brings the full-year ordinary dividend to 24.0
cps, up 3% on prior year (from 23.3 cents per share),
marking our seventeenth consecutive year of ordinary
dividend growth. The full year ordinary dividend
payment is consistent with Mercury’s dividend policy
targeting a payout of 70% – 85% of free cash flows
on average over time. Under the terms of Mercury’s
DRP, dated 22 February 2022, shareholders may
elect to receive the dividend either wholly or partially
by receiving Mercury ordinary shares in lieu of cash.
The Board has determined that shares issued under
the DRP in respect of the 2025 final ordinary
dividend will be issued at a discount of 2.0% to the
daily volume weighted average share price calculated
in accordance with the DRP terms and conditions.
CASH FLOWS FROM OPERATING
ACTIVITIES
Net cash provided by operating activities represents
cash flows from the sale of electricity, gas and
telecommunications, along with the costs associated
with their sale and the cash costs of interest and taxes.
Cash flows from operating activities were down $129
million this year, driven by a decreased EBITDAF and
higher income tax paid.
BALANCE SHEET
Total assets of the company increased by $163 million,
due mainly to higher property, plant and equipment
resulting from continued investment in generation
development and an uplift in fair value of $323
million. Offsetting this is a reduction in receivables
and derivative financial instruments as a result of lower
forward electricity prices than June of the prior period.
Stay in business CAPEX was broadly consistent
with the prior year, down $4 million at $138 million,
with good progress made on the drilling campaign,
which will continue into the next financial year. Growth
CAPEX was up $193 million on the prior year to $347
million with the second stage of Kaiwera Downs Wind
Farm continuing, with completion scheduled for
late FY26; and Kaiwaikawe Wind Farm beginning
construction, which is expected to be fully operational
in the first half of FY27.
OPERATIONAL ACTIVITY
Total generation volume for the year was 7,906GWh,
down 874GWh or 10% on the prior year, mostly driven
by lower hydro and wind generation. At 3,410GWh,
Mercury’s hydro generation was down 686GWh on
the prior year’s generation. This generation was the
4th lowest for the Waikato scheme since 1980, driven
by 12th percentile inflows and a lower than average
Lake Taupō starting level. Lake Taupō ended the
year with storage above average by 169GWh.
Wind generation was 1,936GWh, down 125GWh from
prior year due to lower wind speeds. Geothermal
generation of 2,559GWh was 63GWh lower than
prior year due to planned outages.
The decreased generation meant that net position
decreased from 362GWh long last year to 149GWh
short for FY2025. In our customer business, we again
saw lifts in customer yields across all customer
segments. Yields in the commercial and industrial
segment (physical and financial) increased by $13/
MWh over the period. Average mass market yields
also increased $6/MWh.
OPERATING EARNINGS (EBITDAF)
Mercury’s EBITDAF of $786 million was down
$91 million from the previous year.
Mercury’s trading margin of $1,153 million was
down $75 million from the previous year’s trading
margin, driven by the short net position and high
electricity prices.
MENULOOKING AT THE NUMBERS31MERCURY 2025 INTEGRATED REPORT |
For the year ended 30 June ($ million)20252024202320222021
Income statement
Trading margin1,1531,2281,163745616
EBITDAF786877841581463
Net profit for the year1290112469141
Balance sheet
Total shareholders' equity4,9034,8494,8634,7524,186
Total assets9,9589,7959,4199,6317,978
Total liabilities5,0554,9464,5564,8793,792
Cash flow
Operating cash flow483612578352338
Investing cash flow(437)(366)(271)(534)(296)
Financing cash flow(4)(277)(297)8442
CAPEX
Total CAPEX4852962961,420250
Growth CAPEX3471541771,352194
Stay-in-business CAPEX1381421196856
Other financial measures
Free cash flow345470459284282
Ordinary and special declared dividends 337 325302275231
Ordinary dividends per share (cents) 24.0 23.321.820.017.0
Basic and diluted earnings per share0.0720.858.1134.3210.36
Net debt 2,183 1,9531,9071,9611,329
Gearing (net debt/net debt + equity, %)30.828.728.229.224.1
Debt/EBITDAF 2.5 2.02.02.92.5
Operational measures
Total recordable injury frequency rate (TRIFR)
1
0.44 0.430.490.600.64
Sales to customers (FPW, GWh) 6,340 6,6696,7495,1054,522
Electricity customers ('000) 578 576590574328
Electricity generation (GWh) 7,906 8,7809,0387,4996,205
1
Per 200,000 hours; includes on-site employees and contractors.
FINANCIAL TRACK RECORD
Jahmeel Nowell.MENULOOKING AT THE NUMBERSMERCURY 2025 INTEGRATED REPORT | 32
A member firm of Ernst & Young Global Limited
Independent
auditor’s report
To the shareholders of Mercury NZ limited
The Auditor-General is the auditor of Mercury
NZ Limited and its subsidiaries (the Group). The
Auditor-General has appointed me, Emma Winsloe,
using the staff and resources of Ernst & Young, to
carry out the audit of the consolidated financial
statements of the Group on his behalf.
Opinion
We have audited the consolidated financial
statements of the Group on pages 36 to 64, that
comprise the consolidated balance sheet as at
30 June 2025, the consolidated income statement,
consolidated statement of comprehensive income,
consolidated statement of changes in equity and
consolidated cash flow statement for the year then
ended, and the notes to the consolidated financial
statements, including a summary of material
accounting policy information.
In our opinion, the consolidated financial statements
present fairly, in all material respects, the
consolidated financial position of the Group as at 30
June 2025, and its consolidated financial performance
and its consolidated cash flows for the year then
ended in accordance with New Zealand equivalents
to International Financial Reporting Standards and
International Financial Reporting Standards.
Basis for our opinion
We conducted our audit in accordance with the
Auditor-General’s Auditing Standards, which
incorporate the Professional and Ethical Standards
and the International Standards on Auditing (New
Zealand) issued by the New Zealand Auditing and
Assurance Standards Board. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the
consolidated financial statements section of our
report. We are independent of the Group in
accordance with the Auditor-General’s Auditing
Standards, which incorporate Professional and Ethical
Standard 1: International Code of Ethics for Assurance
Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New
Zealand Auditing and Assurance Standards Board,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.
In addition to the audit we have carried out
engagements in the areas of interim financial
statements review, agreed-upon procedures and
other assurance engagements, which are compatible
with those independence requirements. Partners and
employees of our firm may deal with the Group on
normal terms within the ordinary course of trading
activities of the business of the Group. Other
than the audit and these engagements, we have no
relationship with or interests in Mercury NZ Limited
or any of its subsidiaries.
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
for the current year. These matters were addressed
in the context of our audit of the consolidated
financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below,
our description of how our audit addressed the
matter is provided in that context.
We have fulfilled the responsibilities described
in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of the audit
report, including in relation to these matters.
Accordingly, our audit included the performance
of procedures designed to respond to our assessment
of the risks of material misstatement of the
consolidated financial statements. The results
of our audit procedures, including the procedures
performed to address the matters below, provide
the basis for our audit opinion on the accompanying
consolidated financial statements.
A member firm of Ernst & Young Global Limited
Why significantWhy significant
Valuation of generation assetsValuation of level 3 derivative financial instruments
How our audit addressed the key audit matterHow our audit addressed the key audit matter
Generation assets are recorded at $7,973 million at
30 June 2025 as set out in note B1 of the consolidated
financial statements. The generation assets represent
approximately 80% of the Group’s total assets.
The Group engages an external valuation specialist
(“valuer”) to estimate the fair value of generation
assets using a discounted cash flow model. The most
significant inputs used to estimate this value include
the forecast wholesale electricity price path,
generation volumes and the discount rate as
described in note B1 of the consolidated financial
statements.
The forecast wholesale electricity price path and
discount rate assumptions are estimated by the
Group’s valuer. Forecast generation volumes are
based on the Group’s own forecast average
generation volumes and are assessed by the valuer.
We consider the valuation of generation assets to be
a key audit matter given the significance of the assets
to the Group and because the inputs to the valuation
models are inherently subjective
The Group’s activities expose it to certain risks which
are managed using derivative financial instruments.
At 30 June 2025, the fair value of derivative assets
total $271 million and derivative liabilities total $598
million as set out in note F1 of the consolidated
financial statements.
These balances include certain electricity price
derivatives for which the valuation inputs are not
readily observable in active primary or secondary
markets and require the use of more complex
valuation assumptions, including the Group’s internal
forecast wholesale electricity price path. Derivatives
for which the valuation inputs are not readily
observable are referred to as ‘level 3’ derivatives as
disclosed in note F1 of the consolidated financial
statements.
We consider the valuation of level 3 derivatives to be a
key audit matter as the inputs to the valuation models
are inherently subjective.
In obtaining sufficient appropriate audit evidence we:
• met with the valuer to understand the valuation
methods adopted and the significant inputs and
assumptions used by the valuer to estimate the fair
value of the generation assets as at 30 June 2025;
• compared forecast generation volumes to
historical generation volumes;
• involved our own valuation specialists to assess
the appropriateness of:
– the forecast wholesale electricity price path; and
– the discount rate.
• assessed the competence, capabilities and
objectivity of the valuer;
• assessed whether the valuation adjustments made
to the recorded asset values were in accordance
with the Group’s accounting policy; and
• assessed the adequacy of the related financial
statement disclosures in note B1.
As a result of the above procedures, we considered
the valuation techniques and key assumptions
reasonable in forming our opinion on the financial
statements as a whole.
In obtaining sufficient appropriate audit evidence we:
• involved our valuation specialists to assess, on a
sample basis, the models used to estimate the fair
value of the level 3 derivatives as at 30 June 2025,
including the appropriateness of:
– the valuation methodologies; and
– the key assumptions applied in the valuation
models being:
– the forecast wholesale electricity price path
with reference to the generation asset
valuation procedures detailed above; and
– the discount rate.
• on a sample basis, agreed key contract terms,
including contract start and maturity dates,
expected volumes and electricity strike prices
applied in the valuation models to the relevant
contract.
• assessed the adequacy of the related financial
statement disclosures in notes F1 and F2.
As a result of the above procedures, we considered
the valuation techniques and key assumptions
reasonable in forming our opinion on the financial
statements as a whole.
A member firm of Ernst & Young Global Limited
Other information
The Directors are responsible on behalf of the Group
for the other information. The other information
comprises the information included on pages 1 to 32
and 65 to 140, but does not include the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements
does not cover the other information and we do not
express any form of audit opinion or 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 to be 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.
Directors’ responsibilities for the consolidated
financial statements
The Directors are responsible on behalf of the Group
for the preparation and fair presentation of the
consolidated financial statements in accordance with
New Zealand equivalents to International Financial
Reporting Standards and International Financial
Reporting Standards, and for such internal control
as the Directors determine is necessary to enable the
preparation of consolidated financial statements that
are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements,
the Directors are responsible on behalf of the Group
for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
The Directors’ responsibilities arise from the
Financial Markets Conduct Act 2013.
Auditor’s responsibilities for the audit of the
consolidated financial statements
Our objectives are 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
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 the Auditor-General’s Auditing
Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
influence the economic decisions of shareholders taken
on the basis of these consolidated financial statements.
As part of an audit in accordance with the
Auditor-General’s Auditing Standards, we exercise
professional judgement and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the consolidated financial
statements, whether due to fraud or error, design
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
management.
• Conclude on the appropriateness of the use of the
going concern basis of accounting by the directors
and, based on the audit evidence obtained,
whether a material uncertainty exists related
to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our
auditor’s report to the related disclosures in
the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the
consolidated financial statements represent
the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence
regarding the financial information of the entities
or business activities within the Group to express
an opinion on the consolidated financial
statements. We are responsible for the direction,
supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the Directors regarding,
among other matters, the planned scope and timing
of the audit and significant audit findings, including
any significant deficiencies in internal control that
we identify during our audit.
We also provide the Directors with a statement that
we have complied with relevant ethical requirements
regarding independence, and to communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with the Directors,
we determine those matters that were of most
significance in the audit of the consolidated financial
statements of the current period and are therefore
the key audit matters. We describe these matters
in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that
a matter should not be communicated in our report
because the adverse consequences of doing so would
reasonably be expected to outweigh the public
interest benefits of such communication.
Our responsibilities arise from the Public Audit
Act 2001.
Emma Winsloe
Ernst & Young
On behalf of the Auditor-General
Auckland, New Zealand
19 August 2025
The accompanying notes form an integral part of these financial statements.
GROUP FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2025
Note
2025
$M
2024
$M
RevenueA1, A23,4983,424
ExpensesA2(2,917)(2,704)
Depreciation and amortisationB1, B2(357)(350)
Change in the fair value of financial instrumentsF1(148)172
Change in the fair value of carbon units held for tradingC2118
Share of profit/(loss) from associates and joint venturesE113(1)
Gain on disposal of carbon units18-
Interest incomeD346
Interest expenseD3(121)(140)
Profit before tax1415
Tax exp e nseA3-(125)
Profit for the period attributable to owners of the parent1290
Basic and diluted earnings per share (cents)D10.07 20.85
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2025
Note
2025
$M
2024
$M
Profit for the period attributable to owners of the parent1290
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Change in asset revaluation reserve323138
Change in cash flow hedge reserve transferred to balance sheet7(2)
Share of movements in associates' and joint ventures' reservesE1(9)(6)
Tax ef fe c t(91) (37)
Items that may be reclassified subsequently to profit or loss
Change in cash flow hedge reserve101(180)
Tax ef fe c t(23) 50
Other comprehensive income/(loss) for the period, net of taxation308(37)
Total comprehensive income for the period attributable
to owners of the parent309253
MENULOOKING AT THE NUMBERS36MERCURY 2025 INTEGRATED REPORT |
CONSOLIDATED BALANCE SHEET
For the year ended 30 June 2025
Note
2025
$M
2024
$M
SHAREHOLDERS’ EQUITY
Issued capital 416 378
Treasury sharesD1 - (15)
Reserves4,487 4,486
Total shareholders’ equity4,903 4,849
ASSETS
Current assets
Cash and cash equivalents86 44
Trade and other receivablesC1498 638
Contract assets and costs33 35
InventoriesC2126 120
Derivative financial instrumentsF1172 313
Total current assets915 1,150
Non-current assets
Property, plant and equipmentB18,715 8,222
Intangible assetsB2102 132
Investment in and advances to associates and joint venturesE195 69
Advances to joint operationsE24 4
Contract assets and costs28 15
Derivative financial instrumentsF199 203
Total non-current assets9,043 8,645
Total assets9,958 9,795
Note
2025
$M
2024
$M
LIABILITIES
Current liabilities
Payables and accruals377 462
ProvisionsC3- 3
BorrowingsD2233 383
Derivative financial instrumentsF1234 371
Taxation payableA38 73
Total current liabilities852 1,292
Non-current liabilities
ProvisionsC389 82
BorrowingsD22,046 1,558
Derivative financial instrumentsF1364 296
Deferred taxA31,704 1,718
Total non-current liabilities4,203 3,654
Total liabilities5,055 4,946
Net assets4,903 4,849
The financial statements were authorised on behalf of the Mercury NZ Limited Board of Directors
on 19 August 2025.
The accompanying notes form an integral part of these financial statements.
SCOTT ST JOHN
CHAIR OF THE BOARD OF DIRECTORS
JAMES MILLER
CHAIR OF THE AUDIT AND FINANCIAL
RISK COMMITTEE
MENULOOKING AT THE NUMBERS37MERCURY 2025 INTEGRATED REPORT |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2025
Note
Issued
capital
$M
Retained
earnings
$M
Asset revaluation
reserve
$M
Cash flow hedge
reserve
$M
Other
reserves
$M
Total
equity
$M
BALANCE AS AT 1 JULY 2023378 364 4,235 (80)(34) 4,863
Movement in asset revaluation reserve, net of taxation - - 99 - - 99
Movement in cash flow hedge reserve, net of taxationF1 - - - (130) - (130)
Share of movements in associates’ and joint ventures’ reservesE1 - - - (6) - (6)
Other comprehensive income/(loss) - - 99 (136) - (37)
Net profit for the period - 290 - - - 290
Total comprehensive income for the year - 290 - (136) - 253
DividendD1 - (311) - - - (311)
Distribution of treasury shares for dividend reinvestment programmeD1 - 26 - - 18 44
Balance as at 30 June 2024378 369 4,334 (216)(16)4,849
BALANCE AS AT 1 JULY 2024 378 369 4,334 (216) (16) 4,849
Movement in asset revaluation reserve, net of taxation - - 232 - - 232
Movement in cash flow hedge reserve, net of taxationF1 - - - 85 - 85
Share of movements in associates’ and joint ventures’ reservesE1 - - - (9) - (9)
Other comprehensive income/(loss) - - 232 76 - 308
Net profit for the period - 1 - - - 1
Total comprehensive income for the year - 1 232 76 - 309
DividendD1 - (330) - - - (330)
Issuance of new shares for dividend reinvestment programmeD1 38 - - - - 38
Distribution of treasury shares for dividend reinvestment programmeD1 - 20 - - 15 35
Other movements - - - - 2 2
Balance as at 30 June 2025 416 60 4,566 (140) 1 4,903
The ‘Other reserves’ category includes treasury shares, the foreign currency translation reserve and the share based payment reserve.
The accompanying notes form an integral part of these financial statements.
MENULOOKING AT THE NUMBERS38MERCURY 2025 INTEGRATED REPORT |
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2025
Note
2025
$M
2024
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers3,806 3,116
Payments to suppliers and related parties(2,848) (2,094)
Payments to employees (169) (165)
Interest received 4 6
Interest paid (121) (130)
Taxes paid(189) (121)
Net cash provided by operating activitiesD5 483 612
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of property, plant and equipment (437)(295)
Payments for acquisition of intangibles (30)(39)
Payments for investments in associates and joint ventures (31) -
Proceeds from sale of intangibles 33 -
Distributions received from/(advances paid to) associates and joint ventures 9 4
Net (lodgements)/return of prudential deposits 19 (36)
Net cash used in investing activities (437)(366)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings*3,0852,332
Repayment of borrowings*(2,816)(2,328)
Principal repayment of lease liabilities (17) (13)
Dividends paid (256) (268)
Net cash used in financing activities (4)(277)
Net increase/(decrease) in cash and cash equivalents held 42 (31)
Cash and cash equivalents at the beginning of the period 44 75
Cash and cash equivalents at the end of the period 86 44
Cash and cash equivalents balance comprises:
Cash held at bank at the end of the period 66 44
Term deposits held at the end of the period20-
Total cash and cash equivalents at the end of the period8644
Waipipi Wind Farm.
The accompanying notes form an integral part of these financial statements.
* Refer to General Information.
MENULOOKING AT THE NUMBERSMERCURY 2025 INTEGRATED REPORT | 39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
GENERAL INFORMATION
General information
These consolidated financial statements (“Group
financial statements”) are for Mercury NZ Limited
Group (“the Group”). The Group financial statements
comprise Mercury NZ Limited (“the Company”) as
the parent, and its subsidiaries and its investments
in associates and interests in joint arrangements.
The Company is incorporated in New Zealand and
registered under the Companies Act 1993. It is listed
on the NZX Main Board and on the ASX, with foreign
exempt listed status. It also has bonds quoted on
the NZX debt market. Mercury NZ Limited is an FMC
reporting entity under the Financial Markets Conduct
Act 2013.
The Company is a mixed ownership model company,
majority owned by the New Zealand Government, and
is bound by the requirements of the Public Finance Act
1989. The liabilities of the Group are not guaranteed
in any way by the New Zealand Government or by any
other shareholder.
Basis of preparation
The Group financial statements have been prepared:
sIn accordance with the Financial Markets Conduct
Act 2013 and Generally Accepted Accounting
Practice in New Zealand (“GAAP”). They comply
with New Zealand equivalents to International
Financial Reporting Standards (“NZ IFRS”)
and International Financial Reporting Standards
(“IFRS”) as appropriate for profit-oriented entities.
sOn a historical cost basis, with the exception
of certain fair value measurements.
sUsing the same accounting policies for
all reporting periods presented.
sWith presentation in millions of New
Zealand dollars, unless otherwise stated.
sExclusive of GST, with the exception of payables
and receivables that include GST invoiced.
Estimates and judgements
The preparation of financial statements requires
judgements and estimates that impact the application
of policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may
differ from these estimates.
The areas of significant estimates and judgements
are as follows:
sFair value of generation plant and
equipment (refer note B1).
sValuation of derivative financial instruments
(refer note F1).
Comparative information - Consolidated
Cash Flow Statement
The Group reviewed its disclosure of cash flows
from financing activities. The disclosure of “Proceeds
from borrowings” and “Repayment of borrowings”
now includes gross cash flows for amounts drawn
and repaid in the year relating to the Group’s bank
facilities and commercial papers. Cash flows for
the year ended 30 June 2024 were also restated
for comparability purposes, as these were previously
disclosed on a net basis. The impact of the
restatement on total cash flows from financing
activities is nil.
Accounting standards, interpretations
and amendments not yet effective
In May 2024, the External Reporting Board (XRB)
introduced NZ IFRS 18
Presentation and Disclosure in
Financial Statements
(effective for reporting periods
beginning on or after 1 January 2027). NZ IFRS 18
introduces new requirements on presentation within
the statement of profit or loss, including specified
totals and subtotals. It also requires disclosure of
management-defined performance measures,
and includes new requirements for the aggregation
and disaggregation of financial information based
on the identified ‘roles’ of the primary financial
statements and the notes. This standard replaces
NZ IAS 1
Presentation of Financial Statements. The
Group has not yet assessed the impact of NZ IFRS 18.
Contracts Referencing Nature Dependent Electricity
-
Amendments to NZ IFRS 9 and NZ IFRS 7 was
issued in May 2025 by the XRB, effective for reporting
periods beginning on or after 1 January 2026.
These amendments introduce requirements
addressing contracts referencing nature-dependent
electricity. The amendments include clarifying the
application of the ‘own-use’ requirements; permitting
hedge accounting if these contracts are used as
hedging instruments; and adding new disclosure
requirements to enable investors to understand
the effect of these contracts. The Group has not
yet assessed the impact of these amendments.
There are no other accounting standards, that are
not yet effective, that will have a material impact
on the Group’s financial statements.
Maraetai Hydro Station.MENU40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
NOTE A2. SEGMENT REPORTING
Identification of reportable segments
The operating segments are identified by
management based on the nature of the products
and services provided. Discrete financial information
about each of these operating segments is reported
to the Chief Executive, being the chief operating
decision-maker, on a monthly basis, who assesses
the performance of the operating segments on
a measure of EBITDAF.
EBITDAF is a non-GAAP measure that is used
internally to assess the operating performance of
the Group without the impact of non-cash and one-
off or infrequent transactions. Segment EBITDAF
represents earnings before net interest expense,
tax expense, depreciation, amortisation, unrealised
change in the fair value of financial instruments,
gain/(loss) on disposal and impairments by each
segment inclusive of an allocation of central
operating revenue and costs. Operating segments
are aggregated into reportable segments only if
they share similar economic characteristics.
The segment report includes a Derivatives category
within the Electricity margin. This represents the
settlement (realised gains or losses) of both hedged
and unhedged electricity swaps, as well as premiums
related to electricity options.
Realised gains or losses (settlements) on unhedged
electricity swaps are reported within Electricity margin
for the purposes of EBITDAF, but are reported within
the change in fair value of financial instruments
in the income statement. Realised gains or losses
(settlements) on hedged electricity swaps and
premiums on electricity options are reported within
Electricity margin for the purposes of EBITDAF,
and within revenue or expenses as appropriate in the
income statement. Unrealised gains or losses on both
hedged and unhedged electricity swaps are not
included in EBITDAF and are reported in either
change in fair value of financial instruments in the
income statement or in other comprehensive income.
A reconciliation of EBITDAF to profit before tax can be
found in the summary table of the note.
Identified segments
Generation/Wholesale
The generation/wholesale market segment
encompasses activity associated with electricity
production, electricity trading and generation
development activities and the Company’s share of
associates’ earnings in TPC Holdings Limited (refer to
note E1). It includes revenue from the sale of electricity,
to both commercial and industrial customers and the
customer segment, net settlement of energy hedges
and sale of trading emissions units to third parties.
It also includes transfer revenue from the customer
segment to the generation/wholesale segment for
the purchase of electricity.
Customer
The customer market segment encompasses
activity associated with the sale of electricity, gas,
telecommunication products and services and other
related products and services to mass market
customers in New Zealand.
Other
Represents corporate support services which
are not directly attributable to the generation/
wholesale or customer segments and the Company’s
share of associates’ earnings in EnergySource LLC,
EnergySource Minerals LLC and Forest Partners
Limited Partnership (refer to note E1).
Inter-segment
Transactions between segments represent transfer
charges by the generation/wholesale segment to the
customer segment for the purchase of electricity.
NOTE A1. REVENUE
Mercury earns revenue from the following sources:
Revenue streamDescription and revenue recognition
Electricity generation,
net of hedging
Revenue is received from:
• Electricity generated and sold through the New Zealand electricity spot
market and physical power purchase agreements (PPAs). Revenue is
recognised at the time of generation and at the spot price or contract price.
• Net settlement of hedged energy contracts sold or bought on the futures
market, and to generators, retailers and commercial and industrial
customers and recognised at the time of hedge settlement.
Electricity and gas sales
to customers
• Electricity and gas sales to customers are recognised when the energy
is supplied for customer consumption.
• Acquisition incentives such as credits and appliances are offered to new
customers and treated as individual performance obligations and a portion
of the expected revenue over the life of the total contract is allocated to
the performance obligation based on their standalone selling price and
recognised immediately. Corresponding contract assets are recognised on
the balance sheet and amortised to the income statement over the contract
period as the future consideration is billed. Incremental costs to obtain and
retain customers are recognised on the balance sheet as contract costs
and amortised to the income statement on a straight-line basis
over the expected average mass market customer tenure.
Telco revenueCustomers consume mobile and broadband services which are measured and
billed according to monthly billing cycles and are recognised when the service
has been provided. Acquisition incentives are treated the same as above.
Other incomeIncome is received from:
• Insurance proceeds. Income is recognised at the time the insurance proceeds
are virtually certain to be received.
• External management fees. Revenue is recognised at the time the services
have been delivered.
• Sale of emission units sold to third parties. The sale is recognised at the point
in time that the emission unit is confirmed as being transferred into the
acquirer’s emission unit account.
MENULOOKING AT THE NUMBERS41MERCURY 2025 INTEGRATED REPORT |
Segment results
Year ended 30 June 2025
Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Total
$M
Generation1,418 - - - 1,418
Sales to customers493 1,336 - - 1,829
Inter-segment sales638 - - (638) -
Derivatives114 - - - 114
Electricity purchases(1,452) (638) - 638 (1,452)
Transmission and distribution (134) (543) - - (677)
Metering (4) (61) - - (65)
Electricity margin1,07394 - - 1,167
Gas revenue - 122 - - 122
Gas purchases - (47) - - (47)
Transmission and distribution - (43) - - (43)
Metering - (10) - - (10)
Gas margin - 22 - - 22
Telco revenue - 187 - - 187
Cost of sales - (131) - - (131)
Telco margin - 56 - - 56
Other direct cost of sales (44) (48) - - (92)
Trading margin1,029124 - - 1,153
Other income26 3 - - 29
Employee compensation and benefits (58) (84) (33) - (175)
Maintenance expenses (74) (22) - - (96)
Other expenses (48) (38) (39) - (125)
Allocation of corporate overheads (38) (34) 72 - -
Total operating expenses (218) (178) - - (396)
Segment EBITDAF837 (51) - - 786
Segment results
Year ended 30 June 2024
Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Total
$M
Generation1,435 - - - 1,435
Sales to customers464 1,291 - - 1,755
Inter-segment sales615 - - (615) -
Derivatives84 - - - 84
Electricity purchases (1,347) (615) - 615 (1,347)
Transmission and distribution (136) (500) - - (636)
Metering (5) (60) - - (65)
Electricity margin1,110 116 - - 1,226
Gas revenue - 103 - - 103
Gas purchases - (38) - - (38)
Transmission and distribution - (39) - - (39)
Metering - (8) - - (8)
Gas margin - 18 - - 18
Telco revenue - 170 - - 170
Cost of sales - (121) - - (121)
Telco margin - 49 - - 49
Other direct cost of sales (28) (37) - - (65)
Trading margin1,082 146 - - 1,228
Other income32 4 (2) - 34
Employee compensation and benefits (52) (94) (24) - (170)
Maintenance expenses (67) (20) - - (87)
Other expenses (51) (49) (28) - (128)
Allocation of corporate overheads (23) (29) 52 - -
Total operating expenses (193) (192) - - (385)
Segment EBITDAF921 (42) (2) - 877
NOTE A2. SEGMENT REPORTING CONT.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS42MERCURY 2025 INTEGRATED REPORT |
Year ended 30 June 2025
Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Total
$M
Summary and reconciliation
to net profit before tax
Revenue2,4881,648 - (638)3,498
Expenses (1,852)(1,699) - 638 (2,913)
Premiums for electricity
options within derivatives
(4)---(4)
Realised gain/(loss) on unhedged
electricity swaps
192 - - - 192
Share of profit/(loss) from associates
and joint ventures
13 - - - 13
Segment EBITDAF 837 (51) - - 786
Gain on disposal of carbon units 18
Change in fair value of carbon
units held for trading
11
Unrealised gain/(loss) on unhedged
derivatives and hedge ineffectiveness
through income statement
(340)
Interest income 4
Interest expense (121)
Depreciation and amortisation (357)
Profit before tax1
Year ended 30 June 2024
Generation/
Wholesale
$M
Customer
$M
Other
$M
Inter–
segment
$M
Total
$M
Summary and reconciliation
to net profit before tax
Revenue2,471 1,568 - (615) 3,424
Expenses (1,709) (1,610) - 615 (2,704)
Realised gain/(loss) on unhedged
electricity swaps
158 - - - 158
Share of profit/(loss) from associates
and joint ventures
1 (2) - (1)
Segment EBITDAF921 (42) (2) - 877
Change in fair value of carbon
units held for trading
8
Unrealised gain/(loss) on unhedged
derivatives and hedge ineffectiveness
through income statement
14
Interest income 6
Interest expense (140)
Depreciation and amortisation (350)
Profit before tax 415
NOTE A2. SEGMENT REPORTING CONT.
Audit Fees
Mercury NZ Limited (the Company) is a public entity as defined in the Public Audit Act 2001.
The Auditor-General is the auditor of every public entity. The Auditor-General has appointed
Emma Winsloe of EY to carry out the audit on his behalf from 1 July 2023. NZX Listing Rules
and Mercury’s Audit Independence Policy requires that the signing partner performing the audit
rotate every five years.
Audit fees
2025
$000
2024
$000
Audit of financial statements867 756
Review of interim financial statements83 80
Total audit or review of the financial statements950836
Audit of telecommunications development levy calculation schedule66
Total audit related services66
Limited assurance report: compliance with bond trust deed33
Limited assurance report: climate-related disclosures and greenhouse
gas emissions inventory
149129
Total other assurance services152 132
Agreed upon procedures for directors’ compliance certificates22
Total other services2 2
Total fees paid to auditors1,110976
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS43MERCURY 2025 INTEGRATED REPORT |
NOTE A3. TAXATION
2025
$M
2024
$M
INCOME TA X
Tax expense
Profit before tax1415
Prima facie tax expense at 28% on the profit before tax- (116)
Adjusted for the tax effect of the following items:
Share of associates’ and joint ventures’ tax paid earnings 1 (1)
Other differences(1)-
Removal of building depreciation - (8)
Tax expense attributable to profit- (125)
Represented by:
Current tax expense (128)(152)
Deferred tax recognised in the income statement 128 27
The effective tax rate for the financial year, when not rounded in millions, is 21% (30 June 2024: 30%).
The income tax expense charged to the income statement includes both the current year’s provision
and the income tax effect of:
staxable temporary differences, except those arising from initial recognition of goodwill; and
sdeductible temporary differences to the extent that it is probable that they will be utilised.
The income tax charged to other comprehensive income relates to transactions or other events
recognised outside of the income statement, including certain transactions relating to revaluation
of assets and changes in cash flow hedge reserve.
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between
the tax and accounting bases of the assets and liabilities. A deferred tax asset is only recognised
to the extent that there will be future taxable profit to utilise the temporary difference.
Property, plant and equipment is held on capital account for income tax purposes. Where assets are
revalued, with no similar adjustment to the tax base, a taxable temporary difference is created that
is recognised in deferred tax.
OECD Global Anti-Base Erosion (GloBE) Pillar Two
The New Zealand Government has enacted legislation to implement the OECD Global Anti-Base Erosion
(GloBE) Pillar Two rules which address the tax challenges arising from the digitalisation of the global
economy. The Pillar Two rules seek to apply a 15% minimum tax across all jurisdictions in which the
Group reports income.
The Group has applied a temporary mandatory relief from deferred tax accounting in respect of the Pillar
Two rules and it will be accounted for as a current tax when it is incurred. An assessment of the Group’s
exposure to the Pillar Two legislation indicates that no top-up tax would have arisen for the Group using
the most recent financial information for the Group. Therefore the Group has not recognised any current
tax expense related to Pillar Two income taxes for the year ended 30 June 2025.
Movement in deferred tax
Property,
plant and
equipment
$M
Financial
instruments
$M
Employee
entitlements
$M
Other
$M
Total
$M
Asset/(liability) balance as at 1 July 2023
(1,756) (29) 4 24 (1,757)
Charged/(credited) to the income statement
33 9 1 (8) 35
Charged/(credited) to other
comprehensive income
(38) 50 - - 12
Deferred tax associated with the
removal of building depreciation
(8) - - - (8)
Asset/(liability) balance as at 30 June 2024
(1,769) 30 5 16 (1,718)
Asset/(liability) balance as at 1 July 2024 (1,769) 30 5 16 (1,718)
Charged/(credited) to the income statement 32 99 2 (5)128
Charged/(credited) to other
comprehensive income
(91) (23) - - (114)
Asset/(liability) balance as at 30 June 2025 (1,828) 106 7 11 (1,704)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS44MERCURY 2025 INTEGRATED REPORT |
NOTE B1. PROPERTY, PLANT AND EQUIPMENT
Year ended 30 June 2024
Generation
assets at
fair value
$M
Other assets
at cost
$M
Right-of-
use assets
$M
Capital work
in progress
at cost
$M
Total
$M
Opening net book value 7,7 73 47 87 192 8,099
Additions - 3 30 260 293
Transfers 164 11 - (175) -
Disposals (1) (1) - - (2)
Gain on revaluation 137 - - - 137
Depreciation charge for the year (276) (15) (14) - (305)
Closing net book value 7,797 45 103 277 8,222
Balance at 30 June 2024
Cost or valuation 7,797 159 150 277 8,383
Accumulated depreciation - (114) (47) - (161)
Closing net book value 7,797 45 103 277 8,222
Year ended 30 June 2025
Generation
assets at
fair value
$M
Other assets
at cost
$M
Right-of-
use assets
$M
Capital work
in progress
at cost
$M
Total
$M
Opening net book value 7,797 45 103 277 8,222
Additions2 3 22 465 492
Transfers 141 3 - (144)-
Disposals(1) - (3) - (4)
Gain on revaluation323 - - - 323
Depreciation charge for the year(289) (12) (17) - (318)
Closing net book value7,973 39 105 598 8,715
Balance at 30 June 2025
Cost or valuation7,973 165 169 598 8,905
Accumulated depreciation- (126) (64) - (190)
Closing net book value7,973 39 105 598 8,715
Assets carrying values
All assets, except generation plant and equipment, are recognised at cost less accumulated depreciation.
Fixed assets, excluding land, are depreciated on a straight-line basis over their expected useful lives.
Generation plant and equipment is originally recognised at cost and subsequently measured at fair
value less subsequent accumulated depreciation. An independent valuation is completed annually
to determine the fair value of these assets. Any surplus on revaluation is recognised in the asset
revaluation reserve, except where it offsets a previous decrease in value that was recognised in the
income statement. Any accumulated depreciation or impairment recognised between revaluations
is eliminated against the gross carrying amount of the asset at the date of the revaluation and the
net amount is adjusted to the revaluated amount of the asset.
The Group’s leases relate to properties, geothermal steam royalties, office equipment, and transmission
equipment. These leases are recognised as a right-of-use asset and a corresponding liability. The initial
value of the asset and liability represent the present value of all future lease payments. Lease payments
are recorded as a repayment of the lease obligation and interest expense. Lease assets are depreciated
on a straight-line basis over the term of the lease.
The most significant leases relate to office buildings in Auckland and Tauranga. The weighted average
incremental borrowing rate applied to lease liabilities in 2025 was 5.62% (2024: 5.53%). The Group’s
lease interest was $7m (2024: $7m) and lease liability is disclosed in note D2.
As at 30 June 2025, the capital work in progress balance is largely made up of the following projects:
sThe addition of a fifth generating unit at Ngā Tamariki Geothermal Station;
sStage 2 of Kaiwera Downs Wind Farm;
sKaiwaikawe Wind Farm;
sKarāpiro Hydro Station rehabilitation project (3rd unit);
sGeothermal drilling.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS45MERCURY 2025 INTEGRATED REPORT |
AREA OF KEY JUDGEMENT
Generation asset valuation
The key assumptions used in the valuation include the forecast of the future wholesale electricity price
path, generation volumes, projected operational and capital expenditure and asset life assumptions
and discount rates. In all cases there is an element of judgement required as valuations make use of
unobservable inputs including wholesale electricity prices over time of between $89/MWh and $217/
MWh (2024: $79/MWh and $192/MWh), average operational expenditure of $279m p.a. (2024: $256m
p.a.), net average production volumes of 8,913GWh p.a. (2024: 9,015GWh p.a.), a post-tax discount rate
of between 7.2% and 7.6% for wind assets backed by long-term Power Purchase Agreements (2024:
6.9% to 7.3%) and between 7.9% and 8.3% for other assets (2024: 7.8% to 8.2%). The valuation also
assumes the on-going operation of large industrial customers, no material changes to the wholesale
market regulatory regime, hydro and geothermal fuel supply being sustained over the modelled horizon
and no material changes to generation consent conditions. The discounted cash flow valuation approach
assumes 100% control and consequently a control premium should be applied if using an equity
valuation technique to derive comparative asset values.
The risk type, time horizon, likelihood and materiality of potential climate change impacts were
considered in the valuation. Only physical risks were considered relevant for the purposes of the
valuation, however the expected financial impact of these risks fell within the valuation range.
Generation assets are classified as Level 3 in the fair value hierarchy due to the use of non-market
observable inputs in the valuation. The following table outlines the valuation impact of changes
to assumptions, keeping all other valuation inputs constant, that the valuation is most sensitive to.
SensitivityValuation impact
2025
$M
2024
$M
Future wholesale electricity price path+/- 10%$1,241/($1,238)$1,125/($1,119)
Discount rate+/- 0.5%($555)/$646($478)/$556
Operational expenditure+/- 10%($193)/$193($189)/$189
The carrying amount of revalued generation assets, had they been recognised at cost, would have been
$2,877m (2024: $2,783m).
NOTE B1. PROPERTY, PLANT AND EQUIPMENT CONT.
Depreciation
Depreciation is calculated on a straight-line basis on all property, plant and equipment other than
freehold land and capital work in progress, so as to write down the assets to their estimated residual
value over their expected useful lives.
The annual depreciation rates are as follows:
2025 2024
Office fixture and fittings, including fit-out2-33%2-33%
Generation assets1-20%1-20%
Computer hardware5-33%5-33%
Other plant and equipment2-33%2-33%
Vehicles5-33%5-33%
Right-of-use assets2-50%2-50%
Assets carried at fair value
All generation assets shown at valuation were revalued using a net present value methodology by PwC,
an independent valuer, as at 30 June 2025. This resulted in increases of $190m, $87m and $46m
to the carrying values of the geothermal, wind and hydro portfolios, respectively. As a consequence
of the revaluation, accumulated depreciation on these generation assets has been reset to nil.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS46MERCURY 2025 INTEGRATED REPORT |
NOTE B2. INTANGIBLE ASSETS
Year ended 30 June 2024
Intangible
software
$M
Acquired
intangible
assets
$M
Rights
$M
Carbon
units
$M
Work in
progress
$M
Total
$M
Opening net book value 50 22 14 42 10 138
Additions––– 14 32 46
Transfers 25 ––– (25)–
Surrendered units––– (7)– (7)
Amortisation for the year (33) (11) (1)–– (45)
Closing net book value 42 11 13 49 17 132
Balance at 30 June 2024
Cost 233 46 34 49 17 379
Accumulated amortisation (191) (35) (21) - - (247)
Closing net book value 42 11 13 49 17 132
Year ended 30 June 2025
Opening net book value 42 11 13 49 17 132
Additions - - - 10 20 30
Transfers 13 - - - (13) -
Disposals - - - (16) - (16)
Surrendered units - - - (5) - (5)
Amortisation for the year (27) (11) (1) - - (39)
Closing net book value 28 - 12 38 24 102
Balance at 30 June 2025
Cost 246 46 34 38 24 388
Accumulated amortisation (218) (46) (22) - - (286)
Closing net book value 28 - 12 38 24 102
Software
Acquired computer software licenses and internally developed software assets are recognised at cost
and amortised over their estimated useful lives of 1 - 15 years (2024: 1 - 15 years).
Acquired intangible assets
As part of the acquisition of NOW in FY2023, the Group allocated part of the purchase price to the
customer list acquired ($30m, assessed useful life of 2.5 years).
Rights
Rights, of which land access rights are the most significant, acquired to further the Group’s generation
development programme are stated at cost less accumulated amortisation and any accumulated
impairment losses. Rights, which have a finite life, are amortised over the life of the rights, which
range from 5 to 60 years (2024: 5 to 60 years).
Carbon units and emissions obligations
Purchased carbon units are recorded at cost (purchase price). At 30 June 2025, the Group held a
total of 1,200,886 units within intangible assets (2024: 1,657,297 units). Carbon units, when allocated
or purchased for purposes other than trading units, are recorded as intangible assets and are not
revalued subsequent to initial recognition.
Carbon units that are surrendered to the government in compensation for the Group’s emissions
obligations are recognised as an expense in the income statement and a reduction to intangible
assets in the balance sheet, based on the weighted average cost of the units surrendered.
Emissions obligations are recognised as a current liability as the obligation is incurred. Up to the level
of units held, the liability is recorded at the carrying value of those units intended to settle the liability.
Contracts for the purchase of carbon units are recognised when they are settled.
In 2025, the Group sold 522,650 units with an original cost of $16m, for a total of $33m (2024: nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS47MERCURY 2025 INTEGRATED REPORT |
NOTE C1. RECEIVABLES
2025
$M
2024
$M
Receivables
Trade receivables and revenue accruals395 508
Allowance for credit loss(9) (6)
Net trade receivables and accruals386 502
ASX prudential deposits77 96
Prepayments35 40
498 638
Trade receivables are measured at amortised cost using the effective interest method. Customers are
typically invoiced on a monthly basis. Large commercial and industrial customers are billed on a
calendar month basis, while for most mass market customers billing occurs on a rolling cycle over the
year. Revenue accruals for unbilled telecommunication services and unread gas and electricity meters
at balance date involves an estimate of consumption for each unread meter based on past
consumption history.
Generation revenue accruals are derived mostly from generation sales to the New Zealand wholesale
market at the prevailing spot price at the grid injection point. Revenue is invoiced by the Wholesale
Market Clearing Manager on a calendar month basis reflecting actual metered generation at the stations.
Trade receivables are non-interest bearing and are generally on 30 day terms for large commercial
and industrial customers and mass market customers are on 18 day terms. For terms and conditions
of related party receivables, refer to note E2.
The Group applies the simplified approach permitted under NZ IFRS 9 to measure expected credit
losses (ECL) for trade receivables. This approach requires recognition of a lifetime ECL for all receivables,
with the provision assessed at each reporting date. Trade receivables are grouped by ageing category
and expected credit losses are calculated using historical credit loss experience, adjusted where
necessary for forward-looking information and known customer-specific risks. Impairment losses are
recognised in the income statement, with a corresponding loss allowance recognised on the balance
sheet. No ECL is calculated on unbilled revenue accruals.
Prudential deposits act as security to cover mark-to-market movement in the ASX futures position.
Not due
Less than
30 days
past due
More than
30 days
past due
More than
60 days
past dueTotal
Expected loss rate%0%4%13%59%
Gross carrying amount
– trade receivables
$M 89 15 3 13 120
Expected credit loss$M - 1 - 8 9
2025
$M
2024
$M
Movements in the allowance for impairment loss were as follows:
Balance at beginning of the year 6 7
Charge for the year 7 3
Amounts written off (4) (4)
Balance at end of the year 9 6
The following tables detail the loss allowance at 30 June 2025:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS48MERCURY 2025 INTEGRATED REPORT |
NOTE C2. INVENTORIES
2025
$M
2024
$M
Consumable stores 48 53
Carbon units – at fair value less cost to sell 78 67
Inventories 126 120
Carbon units – at fair value less cost to sell
2025
units
000
2025
value
$M
2024
units
000
2024
value
$M
Opening balance 1,229 67 954 40
Purchases - - 275 19
Sales (5) - - -
Revaluation movement - 11 - 8
Closing balance 1,224 78 1,229 67
Cost of consumable stores is determined on a weighted average basis and includes expenditure
incurred in acquiring consumable stores and bringing them to their final condition and location.
Consumable stores include consumables held to service and repair operating plants and finished
goods relating to the customer business.
Inventories also include carbon units (NZUs) which management has identified as held for trading.
These are measured at fair value less cost to sell. When there is a change in fair value, the gain or loss
on revaluation is recognised in the income statement. Fair value is calculated based on the CommTrade
spot price at the valuation date. As a result, the units are classified as Level 1 in the fair value hierarchy.
NOTE C3. PROVISIONS
2025
$M
2024
$M
Balance at the beginning of the year8584
Provisions made/(used) during the year - (3)
Discounting movement4 4
Balance at the end of the year89 85
Current - 3
Non-current89 82
89 85
Provisions have been recognised for the abandonment and subsequent restoration of areas from
which geothermal resources have been utilised. The provision is calculated based on the present value
of management’s best estimate of the expenditure required, and the likely timing of that expenditure.
Changes in these estimates made during the year are reported as an increase in provisions and a
reduction in revaluation reserves. The increase in provision resulting from the passage of time (the
discount effect) is recognised as an interest expense. The provision will be utilised when the individual
wells are abandoned. The wells are estimated to have an average useful life of 19 years.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS49MERCURY 2025 INTEGRATED REPORT |
NOTE D1: SHARE CAPITAL AND DISTRIBUTION
As at 30 June 2025, the Company had 1,406,965,167 ordinary shares on issue (30 June 2024:
1,400,012,517). These shares are fully paid, do not have a par value, have equal voting rights and share
equally in dividends and any surplus on winding up. The weighted average number of ordinary shares
used in the earnings per share measure was 1,400,001,969 (2024: 1,390,795,153) reflecting the timing
of the dividend reinvestment programme (DRP) and treasury share movements.
Treasury shares
2025
Number
of shares
(M)
2025
$M
2024
Number
of shares
(M)
2024
$M
Balance at the beginning of the period 6 15 13 34
Distribution of treasury shares for dividend
reinvestment programme
(6) (15) (7) (18)
Distribution of treasury shares for long-term incentive scheme - - – (1)
Balance at the end of the period-- 6 15
Treasury shares were distributed and fully exhausted during the financial year for the following purposes:
sA total of 66,793 treasury shares worth $171,393 were issued for management
long-term incentive payments (30 June 2024: 375,302); and
sThe DRP continued with the transfer of 5,889,992 treasury shares (30 June 2024: 6,887,550).
After the treasury shares were fully exhausted, the Group issued a further 6,952,650 new ordinary
shares to provide the remaining number of shares to shareholders that elected to reinvest the net
proceeds of cash dividends payable under the DRP.
Dividends declared and paid
Cents
per share
2025
$M
2024
$M
Final dividend for 2023 13.1 - 182
Interim dividend for 2024 9.3 - 129
Final dividend for 2024 14.0 195 -
Interim dividend for 2025 9.6 135 -
330 311
Dividends of $330m were declared during the year (2024: $311m), however only $256m was paid in cash
to shareholders in 2025 (2024: $268m). The remainder relates to amounts reinvested under the DRP.
The imputation credit account was in a surplus balance at 31 March 2025, as legally required. At 30 June
2025, the imputation credit account had a surplus of $29m (2024: a deficit of $36m).
Earnings per share2025 2024
Profit for the year attributable to owners of the parent ($M)1 290
Weighted average ordinary shares1,402 1,400
Less weighted average treasury shares(2) (9)
Weighted average ordinary shares for earnings per share (millions)1,400 1,391
Basic and diluted earnings per share (cents)0.0720.85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
Ngā Tamariki Geothermal Station.MENULOOKING AT THE NUMBERSMERCURY 2025 INTEGRATED REPORT | 50
Changes in borrowings from financing activities
2025
$M
2024
$M
Borrowings at the start of the year1,941 1,898
Net cash borrowed/(repaid)270 62
Cash paid on principal of lease liability(18) (13)
Cash financing costs capitalised to the balance sheet(4) -
Non-cash change in lease obligations22 21
Non-cash change in fair value adjustment66 (28)
Non-cash change in deferred financing costs2 1
Borrowings at the end of the year2,279 1,941
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Some borrowings are in fair value hedge relationships and have
fair value adjustments to their carrying amounts, attributable to the risk being hedged through interest
rate swaps (IRS) and cross currency IRS. Fair value is calculated using the discounted cash flow method,
with applicable market yield curves adjusted for the Group’s credit rating. Fair value adjustments as at
30 June 2025 totalled a $10m increase to carrying amount (30 June 2024: $56m decrease).
The Group is required to comply with certain financial covenants in respect of its borrowings.
During the 2025 and 2024 financial years, the Group was in compliance with all of its financial covenants.
Current borrowings include all drawn bank facilities, borrowings with a contractual maturity of less than
one year, accrued interest (2025: $19m, 2024: $10m) and current lease liabilities (2025: $13m, 2024:
$16m). Undrawn borrowing facilities at 30 June 2025 totalled $570m, net of commercial paper on
issue (2024: $340m).
Bank facilities
The Group has $700m of committed and unsecured bank loan facilities as at 30 June 2025
(30 June 2024: $700m).
Commercial paper programme
The Group has a $400m commercial paper programme which is fully backed by committed and
undrawn bank facilities. Notes issued under the programme are short-term money market instruments,
unsecured and unsubordinated and targeted at professional investors. The programme is rated A2 by
S&P Global.
NOTE D2. BORROWINGS
2025
$M
2024
$M
Borrowing
currency
denominationMaturityCoupon
Carrying
amount
Carrying
amount
Debt measured at amortised cost
Bank facilitiesNZDVariousFloating- 50
Commercial paper programmeNZD< 3 monthsFloating129 307
Capital bonds – MCY020NZDJul-20493.60%- 302
Debt in fair value hedge relationships
USPP - US$45mUSDDec-20254.60%73 72
Green retail bonds - MCY040NZDSep-20262.16%197 186
Green retail bonds - MCY030NZDSep-20271.56%194 181
Green retail bonds - MCY060NZDJun-20285.64%160 157
Green wholesale bondsAUDNov-20282.92%206 197
Green wholesale bondsNZDOct-20301.92%138 127
Green wholesale bondsAUDMar-20315.25%444 -
Capital bonds - MCY050NZDMay-20525.73%256 248
Capital bonds - MCY070NZDJul-20546.42%368 -
Lease liabilities125 121
Deferred financing costs(11) (7)
Total carrying value of loans2,279 1,941
Current233 383
Non-current2,046 1,558
2,279 1,941
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS51MERCURY 2025 INTEGRATED REPORT |
Green bonds
The Group has $1,360m of green bonds (including accrued interest) as at 30 June 2025 (30 June 2024:
$911m) . The green bond proceeds have been tracked in accordance with the Green Financing Framework.
USPP
The Group has $59m of United States Private Placement (USPP). The Group uses cross currency interest
rate swaps (CCIRS) to manage foreign exchange and interest rate risks on the USPP notes. While the
NZ dollar amount required to repay the USPP is fixed as a result of the CCIRS, the USPP is required to
be translated to NZD at the spot rate at the reporting date. Any revaluation of the USPP as a result of this
translation is offset by the change in the value of the CCIRS.
Deeds
The Group has entered into a Master Trust Deed and Supplementary Trust Deeds for all its NZD
denominated Senior Fixed and Floating Rate Bonds, with The New Zealand Guardian Trust Company
Limited acting as trustee for the holders. The Group has agreed, subject to certain exceptions,
not to create or permit to exist a security interest over or affecting its assets to secure indebtedness,
and to maintain certain financial covenants. There has been no breach of the terms of these deeds.
The Group has entered into a Negative Pledge Deed in favour of its bank financiers in which the Group
has agreed, subject to certain exceptions, not to create or permit to exist a security interest over
or affecting its assets to secure its indebtedness, and to maintain certain financial ratios in relation
to the Group. These undertakings and covenants also apply to the USPP terms and conditions.
There was no breach of the terms of this deed or the terms and conditions of the USPP.
Lease liabilities
The Group has entered into various lease contracts for the right to use land and buildings and office
equipment and is also deemed to be a lessee of transmission equipment. The most significant leases
relate to office buildings in Auckland and Tauranga. Lease payments of $24m were made in 2025,
including lease interest expense of $7m (2024: payments of $19m, lease interest expense of $7m).
NOTE D2. BORROWINGS CONT.NOTE D3. NET INTEREST EXPENSE
Net interest expense
2025
$M
2024
$M
Interest expense on borrowings124 135
Interest expense on lease liabilities7 7
Unwind of discount on provisions4 4
Less capitalised interest(14) (6)
Total interest expense121 140
Interest income(4) (6)
Net interest expense117 134
Interest costs related to the construction of new generation assets are capitalised. The average rate
used to determine the amount of borrowing costs eligible for capitalisation as at 30 June 2025 was
5.33% (30 June 2024: 6.67%).
Turitea Wind Farm.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERSMERCURY 2025 INTEGRATED REPORT | 52
NOTE D4. COMMITMENTS AND CONTINGENCIES
2025
$M
2024
$M
Within one year 545 263
One to five years 56 454
Later than five years - -
Capital commitments 601 717
Capital commitments
Capital commitments include purchases of both property, plant and equipment (PP&E) and
intangibles. PP&E commitments include contracts for construction of Kaiwera Downs Stage II and
Kaiwaikawe Wind Farms, contracts for construction of an additional geothermal OEC unit at Ngā
Tamariki, and geothermal drilling campaigns at the Kawerau, Ngā Tamariki and Rotokawa fields.
Intangible commitments are contracts to purchase New Zealand emissions trading scheme (NZ ETS)
units. In the event the NZ ETS is terminated, the existing purchase agreements, which cover the two
year period from the end of the reporting period, will also terminate.
Operating commitments
As part of its day-to-day operations, the Group enters various operating arrangements and
commitments with third parties to support and enhance the Group’s long-term licence to operate,
provide access to land, and use of natural resources. These operating arrangements may be short-,
medium-, or long-term in nature.
Contingencies
On 7 June 2021, the Kawerau geothermal power station experienced an unplanned outage as a result
of a mechanical failure. An outage was completed in June 2023 to install replacement equipment.
The Group received an initial payment of $26m recorded as income in 2022 and a second payment of
$16m in the 2025 financial year which was recognised as income in the 2024 financial year. The Group
considers it reasonably likely to receive additional insurance proceeds in the 2026 financial year once
the total loss to the Group as a result of the incident has been confirmed. This will be recognised as
revenue when it is virtually certain to be received.
The Group holds land and has interests in fresh water and geothermal resources that are subject
to claims that have been brought against the Crown. The Group discloses these claims as contingent
liabilities as the value, timing and likelihood of the claims being successful are all uncertain.
The Pouākani Claims Trust No 2 and a group of kaumātua have filed a claim in the Māori Land Court
seeking a declaration that certain parts of the Waikato riverbed on which Mercury operates hydro
assets are Māori customary land, including the riverbed beneath the Whakamaru, Maraetai I and II
and Waipapa dams and the related power stations. The claim has been amended to include interests
in the water flowing over the riverbed. Mercury holds the fee simple or beneficial title to those parts
of the Waikato riverbed beneath the Whakamaru, Maraetai I and II and Waipapa dams and the
related power stations, and has received advice that if the outcome of the claim adversely affects
the Group’s title to, or ability to access or operate its hydro assets, Mercury may bring a claim seeking
compensation against the Crown. The claim is currently subject to a judicial review challenge to the
Māori Land Court’s decision to decline Mercury’s application to strike out parts of the claim.
The applicants have also filed a related claim in the Waitangi Tribunal under the Treaty of Waitangi
Act 1975, but have not yet taken any further steps in relation to that claim.
A claim by the New Zealand Māori Council relating to fresh water and geothermal resources was
lodged in 2012 with the Waitangi Tribunal. The inquiry was divided into three stages. In earlier stages,
the Tribunal concluded that Māori have residual (but as yet undefined) proprietary rights in fresh
water and geothermal resources, and it will be for the Government to determine how any such rights
and interests may best be addressed. Stage three will consider law reform, including what Māori
rights and interests in geothermal resources are guaranteed and protected by the Treaty of Waitangi,
whether current law in respect of geothermal resources is consistent with the principles of the Treaty
of Waitangi and, if not, what recommendations should be made for the reform of the current law.
Relatedly, individuals representing hapū affiliated with Ngāti Tūwharetoa have filed a claim in
the Tribunal asserting customary interests in certain geothermal resources, including the Mōkai,
Rotokawa and Kawerau geothermal fields. Similar claims asserting customary rights in the Rotokawa
and Ngā Tamariki geothermal fields have now been filed in the Tribunal by entities associated with
Ngāti Tahu- Ngāti Whāoa. The impact of these claims on the Group’s operations, and consequently
the amount of any claim or recourse the Group may have should that impact be adverse to the
Group’s interests, are unknown at this time.
From time to time the Group will issue letters of credit and guarantees to various suppliers in the
normal course of business. However, there is no expectation that any outflow of resource relating
to these letters of credit or guarantees will be required.
The Group has no other material contingent assets or liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS53MERCURY 2025 INTEGRATED REPORT |
NOTE D5. RECONCILIATION OF PROFIT TO OPERATING CASH FLOWS
2025
$M
2024
$M
Profit for the year1290
Adjustments for non-cash movements:
Depreciation and amortisation 357 350
Amortisation of contract assets and costs to profit or loss 50 42
Net (gain)/loss on sale of property, plant and equipment (18) -
Change in the unrealised fair value of financial instruments 340 (14)
Change in the fair value of carbon units held for trading (11) (8)
Movement in effect of discounting on long-term provisions 4 4
Share of earnings of associate and joint venture companies (13) 1
Increase/(decrease) in deferred tax(126) 37
Net cash provided by operating activities before
change in assets and liabilities
584 702
Change in assets and liabilities during the year:
(Increase)/decrease in trade and other receivables and prepayments 136 (199)
(Increase)/decrease in inventories 5 (21)
(Increase)/decrease in contract assets and costs, net of amortisation (58) (45)
Increase/(decrease) in trade payables and accruals(120) 146
Increase/(decrease) in provision for tax(64) 29
Net cash inflow from operating activities 483 612
NOTE E1. ASSOCIATES AND JOINT ARRANGEMENTS
The Group financial statements include the following:
Interest held
Name of entityPrincipal activityType20252024Country
TPC Holdings LimitedInvestment holdingAssociate
1
25.00%25.00%New Zealand
RotokawaSteamfield operationJoint operation64.80%64.80%New Zealand
Nga Awa PuruaElectricity generationJoint operation65.00%65.00%New Zealand
EnergySource LLCInvestment holdingJoint venture
1
20.86%20.86%United States
EnergySource Minerals LLCMineral extractionJoint venture
1
11.37%17.73%United States
Forest Partners
Limited Partnership
Forestry managementAssociate
1
10.00%-New Zealand
1
Associates and joint ventures are equity accounted under NZ IAS 28 Investments in Associates and Joint Ventures.
In January 2025, the Group acquired a 10% interest in Forest Partners Limited Partnership (FPLP).
The Group’s ownership share in FPLP entitles it to appoint one member to the Advisory Committee
with equal voting rights to all other members. The Group has determined that this results in significant
influence over the financial and operational decisions of FPLP and has classified the investment as an
associate under NZ IAS 28. The initial investment was measured at cost and subsequently accounted
using the equity method in accordance with NZ IAS 28.
AssociatesJoint ventures
2025
$M
2024
$M
2025
$M
2024
$M
Balance at the beginning of the period 63 72 6 8
Additional investment during the year 31 - - -
Share of earnings/(losses) 13 1 - (2)
Share of movement in other comprehensive income and reserves (9) (6) - -
Distributions received during the year (9) (4) - -
Balance at the end of the period 89 63 6 6
At the end of the year the Group had outstanding advances to its Rotokawa joint operation partner
of $1m (2024: $3m) and its associate TPC Holdings Limited of $4m (2024: $4m). For terms and
conditions of these related party receivables, refer to note E2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS54MERCURY 2025 INTEGRATED REPORT |
NOTE E2. RELATED PARTY TRANSACTIONS
Majority shareholder
The majority shareholder of Mercury NZ Limited is the New Zealand Government. Transactions cover a
variety of services including energy, postal, travel and tax with various other Government-owned entities.
Transactions with related parties
The Group entered into a number of contracts with other Crown-controlled entities to hedge against
wholesale electricity price risk, the most significant being a contract for difference with Genesis Energy
Limited for generation produced at the Waipipi Wind Farm.
Mercury NZ Limited also has investments in subsidiaries, associates and joint arrangements, all of
which are considered related parties.
As these are consolidated financial statements, transactions between related parties within the Group
have been eliminated. Consequently, only those transactions between entities which have some
owners external to the Group have been reported below:
Transaction value
2025
$M
2024
$M
Associates
Management fees and service agreements received 22 26
Energy contract settlements (paid)/received 17 31
Joint operations
Management fees and service fees received and paid 30 31
Energy contract settlements (paid)/received (15) 12
An advance to TPC Holdings Limited of $4m (2024: $4m) is interest free and is repayable on demand
subject to certain conditions being met.
The long-term advance to our Rotokawa joint operation partner of $1m (2024: $3m) carries a floating
interest rate. Repayments under the advance are linked to the level of receipts under the geothermal
energy supply agreement. There is no fixed repayment date; the agreement will terminate on receipt
of any outstanding balances.
No related party balances have been written off, forgiven, or any impairment charge booked.
Transaction value
2025
$000
2024
$000
Key management personnel compensation (paid and payable) comprised:
Directors' fees1,164 1,102
Benefits for the Chief Executive and Chief Financial Officer:
Salary and other short-term benefits 4,271 3,211
Share-based payments 284 392
5,7194,705
The increase in salary and other short-term benefits compared with the prior period arises from the
departures and new appointments of the Chief Executive and Chief Financial Officer during the year.
Other transactions with key management personnel
Key management personnel are those people with responsibility and authority for planning, directing
and controlling the activities of the Group. Key management personnel for the Group are considered
to be the Directors, the Chief Executive and the Chief Financial Officer. The table has been restated
to align with the updated interpretation of Key Management Personnel.
Some Directors also provide directorship services to other third party entities.
The Chief Executive and the Chief Financial Officer provide directorship services to subsidiaries, associates
and joint operations as part of their employment without receiving any additional remuneration.
The Group purchases directors and officers insurance for the benefit of key management personnel
in relation to the services they provide to the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS55MERCURY 2025 INTEGRATED REPORT |
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS
The Group uses a range of derivative contracts in order to manage risk and hedge against cash flow
and fair value volatility. It is the Group’s policy to apply hedge accounting to reduce volatility in profit
or loss, and where possible, derivatives are designated into hedging relationships under NZ IFRS 9
Financial Instruments as either cash flow or fair value hedges.
The fair values of derivative financial instruments are summarised in the following table:
2025
$M
2024
$M
CURRENT ASSETS
Electricity price derivative 143 308
Interest rate derivative 9 4
Cross currency interest rate derivative 20 -
Foreign exchange derivative - 1
172 313
CURRENT LIABILITIES
Electricity price derivative 197 327
Interest rate derivative 23 36
Cross currency interest rate derivative 5 8
Foreign exchange derivative 9 -
234 371
NON-CURRENT ASSETS
Electricity price derivative 83 183
Interest rate derivative 16 6
Cross currency interest rate derivative - 14
99 203
NON-CURRENT LIABILITIES
Electricity price derivative 326 235
Interest rate derivative 35 54
Cross currency interest rate derivative 3 7
364 296
Interest rate and cross currency interest rate derivatives
Interest rate and cross currency swaps are used to manage interest rate risks. Interest rate swaps
where we pay-fixed, and receive-floating interest rates are designated as cash flow hedges in a
relationship with a portion of floating rate debt exposure. Interest rate swaps where we receive-fixed,
and pay-floating interest rates are designated as fair value hedges in a relationship with the swap rate
on fixed rate bonds. Cross currency swaps are designated as both fair value and cash flow hedge
relationships with the USPP and Australian denominated green wholesale bonds (refer note D2)
depending on the component of the debt being hedged: the risk free (swap) rate as a fair value
hedge; and the credit margin as a cash flow hedge.
Foreign exchange derivatives
Foreign exchange forward contracts are designated as cash flow hedges in a relationship with
forecast purchases of inventory and capital equipment, mainly for maintenance and construction
of generation assets.
Electricity contracts
Where possible, electricity price derivatives are designated as cash flow hedges in a relationship
with forecast electricity sales and purchases. Exceptions are swaps and options used for trading
(electricity futures, options and financial transmission rights) as well as other contracts that have
been deemed not eligible for hedge accounting due to price reset mechanisms, termination options
or variable volume structures (e.g. wind and solar power purchase agreements).
Change in fair value of financial instruments
2025
$M
2024
$M
Realised gain/(loss) on unhedged electricity swaps 192 158
Unrealised gain/(loss) on unhedged derivatives and
hedge ineffectiveness through income statement
(340) 14
Change in fair value of derivative financial
instruments per income statement
(148) 172
The unrealised changes in fair values of all financial instruments recognised in the income statement
and other comprehensive income are summarised below:
Income statementOther comprehensive income
2025
$M
2024
$M
2025
$M
2024
$M
Interest rate and cross currency
interest rate derivatives
2 (7) (16) 2
Electricity price derivatives(347) (175) 127 211
Foreign exchange rate derivatives- - (10) (1)
Ineffectiveness of cash flow hedges
recognised in the income statement
5 17 - -
Total unrealised change in fair value
of derivative financial instruments
(340) (165) 101 212
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS56MERCURY 2025 INTEGRATED REPORT |
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS CONT.
Movement in cash flow hedge reserve on hedged unrealised gains/losses
2025
$M
2024
$M
Opening balance (217) (80)
Effective portion of cash flow hedges recognised in the reserve 101 (180)
Amount transferred to balance sheet 7 (2)
Equity accounted share of associates’ movement in other
comprehensive income
(8) (6)
Tax effect of movements (23) 51
Closing balance(140) (217)
Unrealised gains and losses on hedged derivatives are recognised in the cash flow hedge reserve and
other comprehensive income. When the gains or losses are realised, they are released from the cash
flow hedge reserve to the balance sheet or profit and loss in line with the underlying hedged item.
Aratiatia Hydro Station.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS57MERCURY 2025 INTEGRATED REPORT |
AREA OF KEY JUDGEMENT
Fair value estimation
Valuation techniques
All fair value balances are assigned to a fair value hierarchy level as defined by NZ IFRS 13
Fair Value
Measurement.
No transfers occurred between hierarchy levels in the period ended 30 June 2025.
The following table provides a breakdown of the fair value of derivatives by the source of key
valuation inputs:
30 June 2025
Quoted
market price
Market
observable
inputs
Non-market
observable
inputsTotal
Valuation technique
Level 1
$M
Level 2
$M
Level 3
$M
$M
Financial assets
Derivative instruments
Electricity price derivatives 13 - 213 226
Interest rate derivatives - 25 - 25
Cross currency interest rate derivatives - 20 - 20
Foreign exchange rate derivatives - - - -
13 45 213 271
Financial liabilities
Derivative instruments
Electricity price derivatives 97 - 426 523
Interest rate derivatives - 58 - 58
Cross currency interest rate derivatives - 8 - 8
Foreign exchange rate derivatives - 9 - 9
97 75 426 598
Net financial asset/(liability) (84) (30)(213)(327)
30 June 2024
Quoted
market price
Market
observable
inputs
Non-market
observable
inputsTotal
Valuation technique
Level 1
$M
Level 2
$M
Level 3
$M
$M
Financial assets
Derivative instruments
Electricity price derivatives 36 – 455 491
Interest rate derivatives– 10 –10
Cross currency interest rate derivatives– 14 –14
Foreign exchange rate derivatives– 1 –1
36 25 455 516
Financial liabilities
Derivative instruments
Electricity price derivatives 72 – 490 562
Interest rate derivatives– 90 –90
Cross currency interest rate derivatives– 15 –15
Foreign exchange rate derivatives–––-
72 105 490 667
Net financial asset/(liability) (36) (80) (35) (151)
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS CONT.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS58MERCURY 2025 INTEGRATED REPORT |
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS CONT.
Valuation of Level 1 financial instruments
Level 1 financial derivatives include ASX futures and financial transmission rights with fair values
determined using quoted prices. These prices represent regularly occurring market transactions
on an orderly basis.
Valuation of Level 2 financial instruments
The fair values of Level 2 derivatives are determined using discounted cash flow models.
Listed below are the Level 2 derivatives and the key inputs to the valuation model.
DerivativeValuation input
Cross Currency Interest Rate Swaps (CCIRS)Forward interest rate price curve and
foreign exchange rate curve
Interest rate swapsForward interest rate curve
Foreign exchange contractForward foreign exchange rate curves
Valuation of Level 3 financial instruments
The Group uses various methods in estimating the fair value of an electricity financial derivative.
Where the fair value of a derivative is calculated as the present value of the estimated future cash
flows of the instrument, there are two key inputs being used:
20252024
Price path $100/MWh to $182/MWh$84/MWh to $221/MWh
Discount rate12.10% to 3.2%10.3% to 4.1%
The wide range in discount factors are driven by entering into longer term derivative contracts.
Forward electricity spot prices in the front end of the curve in FY25 were lower, driven by futures
prices, thus resulting in a lower maximum price of $182/MWh in FY25 compared to $221/MWh
in F Y24.
The selection of valuation inputs requires significant judgement, and therefore there is a range
of reasonably possible assumptions in respect of these inputs that could be used in estimating
the fair values of these derivatives. Maximum use is made of observable market data when
selecting inputs and developing assumptions for the valuation technique.
Reconciliation of Level 3 unrealised fair value movements
The unrealised Level 3 fair value movements in the Group’s Consolidated Income Statement are
recognised within ‘change in the fair value of financial instruments’, along with realised gains/losses
on financial instruments not in a hedging relationship.
Financial
instruments in a
hedging relationship
Financial
instruments not in a
hedging relationshipTotal
2025
$M
2024
$M
2025
$M
2024
$M
2025
$M
2025
$M
Opening balance sheet position (271) (78) 236 211 (35) 133
New contracts (3) (48) 3 (4) - (52)
Matured contracts 102 (12) - (6) 102 (18)
Gains, losses, and ineffectiveness - -
Through the income statement 8 (12)(297) 35 (289) 23
Through other
comprehensive income
9 (121) - - 9 (121)
Closing balance sheet position (155) (271)(58) 236 (213) (35)
Sensitivity of Level 3 fair value measurements
The Group uses unobservable inputs to measure the fair value of Level 3 electricity derivatives.
These inputs are most sensitive to changes in electricity forward prices. These electricity price
derivatives are in a net liability position on the balance sheet. The Group has a net exposure that,
if there was an increase in the forward price, would likely result in an increase in fair value, and
a decrease in the forward price would likely result in a decrease in fair value. Refer to note F2 for
sensitivity analysis on all electricity derivatives.
Impact on post tax profit
2025
$M
2024
$M
Electricity forward price increased by 10% (73) (28)
Electricity forward price decreased by 10% 67 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS59MERCURY 2025 INTEGRATED REPORT |
Deferred ‘inception’ gains/(losses) on Level 3 derivatives
There is a presumption that, when derivative contracts are entered into at an arm’s length basis,
the fair value at inception is zero. The contract price of non exchange traded electricity derivative
contracts are agreed on a bilateral basis, the pricing for which may differ from the prevailing
derived market price curve for a variety of reasons. In these circumstances, an inception
adjustment is made to bring the initial fair value of the contract to zero at inception.
This inception adjustment is amortised over the life of the contract by adjusting the future price
path used to determine the fair value of the derivatives by a constant amount to return the initial
fair value to zero.
The table below details the movements in inception value gains/(losses) included in the fair
value of derivative financial assets and liabilities:
Electricity price derivatives
2025
$M
2024
$M
Opening deferred inception gains/(losses) (1) 39
Deferred inception gains/(losses) on new hedges 4 (23)
Deferred inception (losses)/gains realised during the year (20) (17)
Closing inception gains/(losses) (17) (1)
NOTE F1. DERIVATIVE FINANCIAL INSTRUMENTS CONT.NOTE F2. FINANCIAL RISK MANAGEMENT
The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to proactively manage these risks with the aim of protecting shareholder wealth. Exposure to
price, credit, foreign exchange, liquidity and interest rate risks arise in the normal course of the Group’s
business. The Group’s principal financial instruments comprise cash, trade receivables and accruals
(not prepayments), advances, payables and accruals, borrowings and derivative financial instruments.
(A) Market risk
Nature of risk exposureRisk Management Policy
Electricity price
The Group is exposed to movements in the
spot price of electricity arising from the sale
and purchase of electricity in the market.
The Group enters into electricity derivative
contracts, including swaps, futures, options and
PPAs that establish a fixed price at which future
quantities of electricity are purchased and sold.
The electricity contracts are periodically settled
with any difference between the contract price
and the electricity spot price settled between the
parties. Cash flow hedge accounting is applied.
Foreign exchange
The Group is exposed to foreign exchange risk as
a result of transactions denominated in a currency
other than the Group’s functional currency. The
currencies giving rise to this risk are primarily US
Dollar, Japanese Yen, Euro, Yuan and AU Dollar.
The Group’s policy is to enter into forward
exchange contracts to hedge its committed
foreign denominated expenditure programme.
Interest rate
The Group has exposure to interest rate
risk to the extent that it borrows for fixed
terms at floating interest rates.
The Group uses mostly interest rate swaps and rarely
interest rate options to manage this exposure.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS60MERCURY 2025 INTEGRATED REPORT |
NOTE F2. FINANCIAL RISK MANAGEMENT CONT.
Derivatives in designated hedging relationships
ElectricityForeign exchangeInterest rate
2025
$M
2024
$M
2025
$M
2024
$M
2025
$M
2024
$M
Notional amount 986 1,108 215 202 3,432 2,766
Maturity1-9 years1-10 years0-1 year0-1 year0-15 years0-10 years
Carrying amount – asset 44 76 - 1 45 24
Carrying amount – liability (202) (360) (9) - (66) (105)
Recognised in OCI 127 (171) (6) - (16) (9)
Ineffectiveness 7 (13)- - (2) (5)
Hedge Ratio1:11:11:11:11:11:1
At inception, each hedge relationship is formalised in hedge documentation. Hedge accounting is
discontinued when the hedge instrument expires or is terminated, exercised or no longer qualifies
for hedge accounting. The Group determines the existence of an economic relationship between the
hedging instrument and the hedged item based on the amount and timing of respective cash flows,
reference interest rates, currency, maturities and notional amounts. The Group assesses whether the
derivative designated in each hedging relationship is expected to be, and has been, effective in
offsetting the changes in cash flows of the hedged item using the hypothetical derivative method.
The Group’s policy is to designate derivatives in hedge relationships on inception when their fair value
is zero, applying a hedge ratio of 1:1. Hedge ineffectiveness for electricity derivatives arises when fair
value movements in the hedged item are not fully offset by fair value movements in the hedging
instrument. These differences can relate to locational price differences or price reset mechanisms.
For interest rate derivatives, the weighted average interest rate for cash flow hedges (receive floating,
pay fixed rate) is 4.2% (2024: 4.0%) and for fair value hedges (pay floating, receive fixed rate) is
3.9% (2024: 3.4%).
Market risk sensitivity analysis
The following summarises the potential impact of increases or decreases in the relevant market risk
exposures of the Group on profit (unhedged derivatives) and on other components of equity (hedged
derivatives) from the change in the derivative valuation. The analysis does not take into account
dynamic market response over time, which could be material. The electricity sensitivities disclosed
below include Level 1 derivatives.
Impact on profitImpact on equity
2025
$M
2024
$M
2025
$M
2024
$M
Electricity forward price increased by 10% (70)(30) (60)(77)
Electricity forward price decreased by 10% 63 26 60 76
Forward foreign exchange rates increased by 10% - - (14) (12)
Forward foreign exchange rates decreased by 10% - - 17 17
Interest rates higher by 100 bps (44)(38)19 11
Interest rates lower by 100 bps 46 40 (19) (11)
(B) Credit risk
Nature of risk exposureRisk Management Policy
The carrying amounts of financial
assets recognised in the balance
sheet best represent the Group’s
maximum exposure to credit risk
at the reporting date without
taking account of any collateral
held by way of customer bonds.
The Group manages its exposure to credit risk under policies
approved by the Board of Directors. The Group performs credit
assessments on all electricity customers and normally requires
a bond from commercial customers who have yet to establish a
suitable credit history. In the event of a failure by a retailer to settle
its obligations to the Energy Clearing House, following the exhaustion
of its prudential security, a proportionate share of the shortfall will
be assumed by all generator class market participants. The Group
would be impacted in the event that this occurs. It is the Group’s
policy to only enter into derivative transactions with banks that it has
signed an ISDA master agreement with, and which have a minimum
long-term Moody’s (or equivalent) credit rating of A- or higher.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS61MERCURY 2025 INTEGRATED REPORT |
NOTE F2. FINANCIAL RISK MANAGEMENT CONT.
(C) Liquidity risk
Nature of risk exposureRisk Management Policy
Liquidity risk is the risk that the
Group will not be able to meet its
financial obligations as they fall due.
The Group manages its exposure to liquidity risk under policies
approved by the Board of Directors. Policies require that prescribed
headroom is available in undrawn and committed facilities to cover
unplanned needs and that a limited amount of facilities mature
over the immediate 12 month forward-looking period. The Group’s
objective is to maintain a balance between continuity of funding
and flexibility through the use of various funding sources.
The following liquidity risk disclosures reflect all contractually fixed payoffs, repayments and interest
from recognised non-derivative financial liabilities.
The timing of cash flows for non-derivative financial liabilities is based on the contractual terms
of the underlying contract.
The information on contractual cash flows are presented on an undiscounted basis, consequently
the totals will not reconcile with the amounts recognised in the balance sheet.
s Net settled derivatives include interest rate derivatives and electricity price derivatives.
s Gross settled derivatives relate to foreign exchange derivatives that are used to hedge future
purchase commitments.
s Foreign exchange derivatives may be rolled on an instalment basis until the underlying transaction
occurs. While the maturity of these derivatives are short-term the underlying expenditure is
forecast to occur over different time periods.
sWhile the following tables give the impression of a liquidity shortfall, the analysis does not take
into account expected future operating cash flows or committed and undrawn debt facilities that
will provide additional liquidity support. The expectation of cash receipts in relation to derivative
assets should also be considered when assessing the ability of the Group to meet its obligations.
30 June 2025
Less than
6 months
$M
6 to 12
months
$M
1 to 5 years
$M
Later than
5 years
$M
Total
$M
Liquid financial assets
Cash and cash equivalents 86 - - - 86
Receivables 498 - - - 498
Non derivative financial liabilities
Payables and accruals(377) - - - (377)
Borrowings (233) (44) (1,051) (2,231) (3,559)
Lease liabilities (12) (12) (79) (86) (189)
Derivative financial liabilities
Derivative liabilities – net settled
Electricity price derivatives (85) (124) (346) (114) (669)
Interest rate derivatives (11) (12) (36) (3) (62)
Cross currency interest rate derivatives (2) (1) - - (3)
Derivative liabilities - gross settled
Foreign exchange derivatives inflows 207 - - - 207
Foreign exchange derivatives outflows (215) - - - (215)
Net outflows(144) (193) (1,512) (2,434)(4,283)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS62MERCURY 2025 INTEGRATED REPORT |
NOTE F2. FINANCIAL RISK MANAGEMENT CONT.
30 June 2024
Less than
6 months
$M
6 to 12
months
$M
1 to 5
years
$M
Later than
5 years
$M
Total
$M
Liquid financial assets
Cash and cash equivalents 44 - - - 44
Receivables 638 - - - 638
Non derivative financial liabilities
Payables and accruals (462) - - - (462)
Borrowings (341) (33) (1,041) (1,794) (3,209)
Lease liabilities (11) (11) (74) (56) (152)
Derivative financial liabilities
Derivative liabilities - net settled
Electricity price derivatives(166)(147)(343)39 (616)
Interest rate derivatives(19)(14)(54)(8) (94)
Cross currency interest rate derivatives (4) (4) (6) - (13)
Derivative liabilities - gross settled
Foreign exchange derivatives inflows 202 - - - 202
Foreign exchange derivatives outflows (202) - - - (202)
Net outflows (320) (208) (1,517) (1,819) (3,865)
(D) Capital risk management
The Board policy is to maintain a sustainable financial structure for the Group, recognising Mercury’s
targeted long-term credit rating of BBB+ assigned by S&P Global and the risks from predicted short-
and medium-term economic, market and hydrological conditions along with estimated financial
performance. Capital is managed to provide sufficient funds to undertake required asset reinvestment
as well as to finance new generation development projects and other growth opportunities to increase
shareholder value at a rate similar to comparable private sector companies.
Consistent with other companies in the industry, the Group uses the gearing ratio as one of its metrics
to monitor capital. This ratio is calculated as net debt divided by total capital. Net debt is calculated as
total borrowings (both current and non-current) less cash. Total capital is calculated as shareholders’
equity plus net debt.
The gearing ratio is calculated below:
2025
$M
2024
$M
Borrowings at carrying value2,279 1,941
Add back: fair value adjustments(10)56
Less cash and cash equivalents(86)(44)
Net debt2,183 1,953
Total equity4,9034,849
Total capital7,0866,802
Gearing ratio30.8%28.7%
Under the Negative Pledge Deed in favour of its bank financiers the Group must, in addition to not
exceeding its maximum gearing ratio, exceed minimum interest cover ratios and a minimum
shareholder equity threshold.
The Group seeks to maintain a debt to EBITDAF ratio of between 2.0 and 3.0 times, on average
through time, to maintain credit metrics sufficient to support its credit rating on an on-going basis.
For the purpose of calculating this ratio and consistent with the rating agency treatment, adjustments
are made to net debt and EBITDAF based on the definitions provided by the rating agency. For the
year ended 30 June 2025, the Group had a debt to EBITDAF ratio of 2.5 times (2024: 2.0 times).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
MENULOOKING AT THE NUMBERS63MERCURY 2025 INTEGRATED REPORT |
NOTE G1. SHARE-BASED PAYMENTS
Long-term incentive plan
The Group operates an equity-settled share based long-term incentive (LTI) plan for senior
management. The plan is designed to enhance the alignment between shareholders and those
senior managers most able to influence the performance of the Group.
Under the plan senior managers are granted the shares at nil cost if certain market performance
conditions are met. Performance is measured against a combination of: (i) other electricity
generators who are listed on the NZX; and (ii) out-performance against the Group’s internal return
on capital hurdles.
Each LTI plan represents the grant of in-substance nil-price options to senior managers. The cost of
the share-based payment is recognised over the period in which the performance or service conditions
are fulfilled. The total amount expensed is based on the Group’s best estimate of the number of equity
instruments that will ultimately vest, taking into consideration the likelihood that service conditions will
be met, multiplied by the initial fair value of each share. Performance is measured over a three-year
period, with vesting occurring in July following the performance period.
For the FY23–FY25 grant, performance was assessed at 30 June 2025 as 0%, and testing completed
in July 2025 confirmed that performance conditions were not met. Accordingly, no shares will vest for
this tranche. In accordance with NZ IFRS 2
Share Based Payments, the cumulative expense recognised
for this tranche remains in equity, and no further expense will be recognised in future periods.
During the year the Group expensed $637,518 in relation to equity-settled share based payment
transactions (2024: $779,312).
Movements in the number of share options are as follows:
20252024
Balance at the beginning of the year 827,556 930,241
Options granted 207,091 255,843
Options forfeited(413,552) -
Options exercised (241,339) (358,528)
Balance at the end of the year379,756827,556
No options were exercisable at the end of the year (2024: 241,339) with the remaining options under
the plan having a weighted average life of 1.5 years (2024: 1 year).
Waipipi Wind Farm.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2025
NOTE G2. SUBSEQUENT EVENTS AND OTHER MATTERS
The Board of Directors has approved a fully imputed final dividend of 14.4 cents per share to be paid
on 30 September 2025. The Group plans to continue with its dividend reinvestment programme, with
a strike price to be determined by the average of daily volume weighted average sale price for a share,
calculated on all price setting trades of shares that took place through the NZX Main Board over
a period of five trading days starting on 8 September 2025, less a 2% discount.
There are no other material events subsequent to balance date that would affect the fair presentation
of these financial statements.
MENULOOKING AT THE NUMBERSMERCURY 2025 INTEGRATED REPORT | 64
C L I MAT E
S TAT EM EN T
2025
TE TAUĀKI ĀHUARANGI
In this section we cover how we consider climate
change, across our strategy, risk management,
and metric and targets, and how our governance
bodies oversee and manage the associated
climate-related risks and opportunities.
MENUCLIMATE STATEMENT 202565MERCURY 2025 INTEGRATED REPORT |
CLIMATE STATEMENT 2025
CONTENTS
67 INTRODUCTION
67 SUMMARY OF KEY POINTS
68 STRATEGY
68 TRANSITION PLAN ASPECTS
OF OUR STRATEGY
71 OUR CLIMATE-RELATED RISKS
AND OPPORTUNITIES
76 OUR CLIMATE TARGETS
77 SCENARIO ANALYSIS
81 OUR APPROACH TO ASSESSING
MATERIALITY
82 METRICS AND TARGETS
82 MEASURING OUR IMPACT – EMISSIONS
83 MEASURING OUR IMPACT – CROSS
INDUSTRY MEASURES AND OTHER
ACTIVITY METRICS
83 FUGITIVE EMISSIONS
83 EXPOSURE OF OUR ASSETS
AND ACTIVITIES TO CLIMATE
RISKS AND OPPORTUNITIES
MERCURY AND CLIMATE CHANGE
Mercury NZ Limited is a Climate Reporting Entity
under the Financial Markets Conduct Act 2013.
This Climate Statement has been prepared in
compliance with the Aotearoa New Zealand Climate
Standards (NZ CS) and is for the 2025 Financial Year.
FY25 Climate Statement
JAMES MILLER
CHAIR, AUDIT AND FINANCIAL RISK COMMITTEE
19 AUGUST 2025
SCOTT ST JOHN
CHAIR
85 GOVERNANCE
85 BOARD OVERSIGHT OF CLIMATE-
RELATED RISKS AND OPPORTUNITIES
85 MANAGEMENT’S ROLE IN ASSESSING
AND MANAGING CLIMATE-RELATED
RISKS AND OPPORTUNITIES
88 OVERVIEW AND RELATIONSHIP BETWEEN
RESPONSIBILITIES OF OUR BOARD,
SUB-COMMITTEES AND MANAGEMENT
89 RISK MANAGEMENT
89 PROCESSES FOR IDENTIFYING
AND ASSESSING CLIMATE-RELATED RISKS
89 RISK MANAGEMENT FRAMEWORK
89 MANAGING CLIMATE-RELATED RISKS
IMPORTANT INFORMATION FOR READERS
Mercury has used best efforts in the preparation of
this Climate-Related Disclosure to provide accurate
information as at 19 August 2025 but cautions
reliance being placed on representations that are
necessarily subject to significant risks, uncertainties
or assumptions.
This Climate-Related Disclosure contains forward looking
statements, including climate-related metrics, climate
scenarios, estimated climate projections, targets,
assumptions, forecasts and statements of Mercury’s
future intentions. These statements necessarily involve
assumptions, forecasts and projections about Mercury’s
present and future strategies and the environment in
which Mercury will operate in the future, which are
inherently uncertain and subject to limitations,
particularly as to inputs, available data and information
which is likely to change. Mercury has used its best
efforts to provide a reasonable basis for forward looking
statements but is constrained by the novel and
developing nature of this subject matter. Climate-
related forward-looking statements may therefore be
less reliable than other statements Mercury may make
in its annual reporting.
Descriptions of the qualitative and quantitative current
and anticipated financial and other impacts of climate
change draw on and/or represent estimated figures
only. In particular, the risks and opportunities
described in this report, and the forecast emissions
reductions, may not eventuate or may be more or less
significant than anticipated. There are many factors
that could cause Mercury’s actual results, performance
or achievement of climate-related metrics (including
targets) to differ materially from that described,
including climatic, government, consumer, and market
factors outside of Mercury’s control.
Nothing in this Climate-Related Disclosure should be
interpreted as capital growth, earnings or any other
legal, financial tax or other advice or guidance.
MENUCLIMATE STATEMENT 202566MERCURY 2025 INTEGRATED REPORT |
CLIMATE STATEMENT 2025
Key changes since our FY24
climate statement
sWe have reordered our Climate Statement
to improve the flow of information.
sWe introduced a new Purple scenario
(replacing our previous Blue scenario),
reflecting a decarbonising world
that is geopolitically fragmented,
undergoing rapid technological
advancement, and rising inequality.
sWe expanded our scope 3 emissions
reporting to include capital goods, purchased
goods and services, and investments.
sWe progressed quantifying the financial
impact of our CRROs, including initial
estimates and assessment methodologies.
Our scenarios have four
different pathways
sTeal where global temperature increase is
limited to 1.5 ̊C (after an overshoot to 1.6 ̊C).
sPurple where global temperature
increase is limited to 2.5 ̊C.
sAmber where global temperature
increase is limited to 3 ̊C.
sMaroon where global temperature
increase is greater than 3 ̊C.
Based on these scenarios
sWe identified material CRROs
that could affect our business and
captured our view of material climate-
related current impacts to us.
Our material climate-related
risks are those arising from
sGreater variability in weather patterns
(including more frequent high inflow
events and droughts) that reduces hydro
generation flexibility and profitability
and heightens trading risk.
sGrowing intensity of atmospheric
conditions (including storm events)
that cause asset damage.
sMarket and policy settings failing to
balance the energy trilemma as we
transition to a low-carbon future.
sGlobal decarbonisation causing
supply chain and labour constraints
delaying development.
Our material climate-related
opportunities are those
arising from
sThe low-carbon transition lifting
electricity demand.
sCapital markets tilting towards investing
in low-carbon operations.
sThe low-carbon transition driving
demand for smart energy solutions
and new products and services.
We are continuing to explore our activity
to reduce our own emissions and mitigate
climate change. Further details are outlined
in our FY25 Climate Action Plan.
INTRODUCTION
This Climate Statement outlines how we’re delivering
on our purpose in the face of climate change, by
identifying and responding to climate-related risks
and opportunities (CRROs) across our business.
We see ourselves as a key enabler of the transition
to a low-carbon future. Climate change is integrated
into our purpose and strategy, influencing our
investment decisions, risk management, and the
way we work with our customers, partners, and other
stakeholders. The transition requires a transformation
of the energy system, and we are playing a leading
role in building that future through our renewable
generation pipeline, demand-side innovation,
and partnerships.
Since our 2024 Climate Statement, the environment
that we operate within has evolved. There is growing
evidence that the world has already surpassed a 1.5°C
future, with significant changes required at pace to
bring activity in line with this future. We are also seeing
rapid growth in artificial intelligence, with opportunities
across our business as we understand the potential
requirement for more electricity and explore
opportunities to improve our operations. The regulatory
and policy landscape is also changing, with increased
focus on ensuring that security of supply and access
to affordable energy is maintained while the sector
navigates the transition to a low-carbon future.
As we transition to a low carbon future and introduce
more renewables into the broader New Zealand
energy system, we are conscious that electricity
supply needs to stay reliable and affordable. In the
near-term, our energy system faces challenges to
security of supply, including a shortage in domestic
natural gas and a risk of prolonged dry weather
leading to lower hydro lake levels. This means that
thermal fuel, such as coal, is likely to continue to play
a supporting role to ensure the security of the broader
energy system in the near-term, particularly in those
dry years when our hydro lakes are low.
While the energy Mercury’s generation assets
produce is from 100% renewable sources, we may
from time-to-time support system-wide initiatives to
ensure security and resilience of supply from a range
of sources which may include non-renewable sources.
To play our part in supporting the broader New Zealand
energy system security and affordability, we have
signed agreements with Genesis and others to support
the continued operation of the Huntly Power Station’s
Rankine Units and establishment of a strategic fuel
reserve from 2026. Solutions like these, and others,
will enable New Zealand to transition to a low-carbon
future in a more confident and affordable way.
We are also focussed on ensuring that our business
is resilient and successful through the transition.
This means actively identifying and managing the
climate-related risks we face, while pursuing the
opportunities that the energy transition unlocks.
This Climate Statement outlines our approach
across strategy, risk, governance, and metrics,
in line with the Aotearoa New Zealand Climate
Standards, and reflects our evolving understanding
of climate change on our business.
OUR PURPOSE
Tiakina te anamata, mā te tūhono
i ngā tāngata me ngā wāhi o te inamata.
Taking care of tomorrow:
connecting people and place today.
SUMMARY OF KEY POINTS
MENUCLIMATE STATEMENT 202567MERCURY 2025 INTEGRATED REPORT |
STRATEGY
Our strategy is shaped by the risks and opportunities
of climate change. As we transition to a low-carbon
future, our focus is on delivering reliable and affordable
renewable energy while supporting customers,
communities, and shareholders through this change.
TRANSITION PLAN ASPECTS
OF OUR STRATEGY
We are well set up to navigate the energy transition,
and our business model and strategy are resilient to
our climate-related risks and set us up well to pursue
our climate-related opportunities.
Our generation assets produce electricity from 100%
renewable sources: hydro, geothermal and wind.
We are also a retailer of electricity, gas, broadband
and mobile services. We serve over 906,000 customer
connections across electricity, gas, telecommunications,
and mobile, supported by 1,364 permanent employees
and 19 power stations nationwide. For more
information on Our Business Model see page 4
of our FY25 Integrated Report.
Climate change considerations have shaped the
development of key aspects of our strategy – our
purpose, FY35 Aspirations, FY30 Priorities and
ASPIRATIONS
FY35FY30
PRIORITIESSTRATEGIC OBJECTIVES
Rebuild sector confidence
Create success with others
Having a deliberate focus on deepening trust with key
relationships to achieve shared goals.
Kōtuitanga/Partnerships
We are the trusted partner of choice.
Connected and
high-performing culture
Perform with an adaptive culture enabled by technology
Unleashing an inclusive, curious and connected culture enabled
by technology to lift business performance.
Ngā Tāngata/Our People
We learn and adapt to realise our full potential.
Capture energy
transition growth
Accelerate the shift to a low-carbon future
Leading the transition by creating solutions for customers to electrify
and support the development of a smart energy system.
Kiritaki/Customer
Customers are at the heart of what we do.
Earnings transformation
Achieve what matters most through financial growth
Achieving sustainable performance to invest in the future
and drive value.
Arumoni/Commercial
We are leaders in commercial growth.
Generation development uplift
Deliver more reliable and renewable energy
Taking care of our generation assets and actioning options
for growth.
Kaitiakitanga/Stewardship
Our assets and the natural environment are thriving.
our strategic objectives. Our strategy is aligned
to our key value drivers, namely, Kaitiakitanga/
Stewardship, Kiritaki/Customer, Ngā Tāngata/
Our People, Kōtuitanga/Partnerships and Arumoni/
Commercial. These areas guide our transition plan,
by focussing action on the area’s most critical to our
business as we navigate the low-carbon transition.
We are aware that the most significant contributions
we can make to the energy transition is to deliver more
reliable and renewable energy to power Aotearoa,
and to accelerate the shift to a low-carbon future
by working with our customers and supporting them
in their efforts to decarbonise. We also need to play
our part in reducing our own emissions, ensuring
our approach to financial growth is aligned with
the transition, and developing a high-performing
workforce with the right capabilities we need
to successfully deliver.
MENUCLIMATE STATEMENT 202568MERCURY 2025 INTEGRATED REPORT |
THE TRANSITION PLAN ASPECTS OF OUR STRATEGY ARE:
KAITIAKITANGA STEWARDSHIP
Delivering more reliable and renewable
energy.
Delivery of more renewable generation is one of
the most meaningful ways we can contribute to a
low-carbon economy. We are focussed on developing
a diverse pipeline of wind, solar, and geothermal
projects to support future demand and electrification,
while continuing to invest in existing assets that
remain critical to reliable energy supply.
Bringing large-scale projects to market involves
navigating consenting challenges, policy and regulatory
change, supply chain constraints, demand, and global
competition for renewable technology. Our decisions
are also guided by our emissions reduction targets
and include initiatives such as non-condensable gases
re-injection at our geothermal sites.
Examples of how our strategy and business model
are evolving include:
sBuilding a project pipeline that is diverse in
both location and renewable energy source.
In FY25, this included starting development
of Kaiwaikawe Wind Farm, which will generate
up to 77MW once complete in 2026.
sOffering Power Purchase Agreements (PPAs)
to support electrification and attract new load.
sUpgrading our assets, such as the ~$90 million
Karāpiro Hydro Station refurbishment and
climate-informed dam safety improvements.
sCapturing and re-injecting non-condensable
gases at Ngā Tamariki Geothermal Station,
to reduce our scope 1 emissions. To date
we have invested approximately $4.5 million
on this initiative, with an estimated 13,000
tCO2e abated in the last two years.
sBuilding workforce and asset
management capability to support long-
term sustainable performance.
sStrengthening supply chain resilience
through supplier collaboration.
sWorking with regulators and sector partners
to improve consenting processes and align
renewable development with environmental
and planning standards.
In FY25, 100% of our growth capital expenditure
(CAPEX) i.e. $347 million, was allocated to renewable
generation development, demonstrating our
commitment to building more renewable generation
in New Zealand. We have dedicated teams focussed
on generation development and the management
of our portfolio.
KIRITAKI CUSTOMER
Accelerating the shift to a low-carbon
future.
We are committed to supporting customers through
the energy transition, recognising that electrification,
affordability, and access to new technologies affect
people in different ways. As demand increases,
particularly from electric vehicles and new electricity
uses, we focus on empowering customers with the
tools, information, and support they need to
successfully navigate this shift.
N GĀ TĀN GATA OUR PEOPLE
Performing with an adaptive and inclusive
culture enabled by technology.
Developing a capable, resilient, high performance
and inclusive workforce is essential to our long-term
success in a low-emissions future. As CRROs evolve,
so must our people, through the development of
future skills, climate literacy, and strong engagement
with our Identity, Attitude and Purpose. We are
committed to attracting and growing talent from
the widest possible pool to build the workforce of
the future, one that reflects the communities we
serve and brings a diversity of perspectives to guide
and deliver meaningful change.
Examples of how our strategy and business model
are evolving include:
sInvesting in learning and development to grow
climate-related capability across roles and functions.
sSupporting the wellbeing, inclusion, and adaptability
of our people through targeted programmes.
sEmbedding our climate priorities through
ongoing education and engagement.
sCreating pathways to attract, retain and grow talent,
with a focus on leadership and high performance.
We have dedicated teams focussed on talent
development, organisational capability, and internal
engagement, working to ensure people are
empowered to deliver a resilient, low-carbon future.
Examples of how our strategy and business model
are evolving include:
sDelivering a retail gas strategy that supports
the reduction of our scope 3 emissions by
providing customers with information about
their energy options.
sDeveloping customer energy management
capabilities by enabling smart control of household
appliances, beginning with hot water cylinders
to optimise energy use, maintain network
stability, and unlock future demand flexibility.
sEntering long-term electricity supply agreements
with industrial customers, including Fonterra,
to support their electrification of process heat
and contribute to industrial emissions reductions.
sProviding usage monitoring tools and tips,
empowering customers to make informed
decisions about their energy consumption.
sStrengthening customer care through
increased understanding of hardship, direct
support, and partnerships with others.
sCollaborating across the sector provide
transparency around price changes during the
transition and participating in sector wide initiatives
to provide solutions to the affordability challenge.
We have dedicated teams focussed on new propositions,
hardship support, and community engagement to
ensure our services meet evolving needs.
MENUCLIMATE STATEMENT 202569MERCURY 2025 INTEGRATED REPORT |
KŌTUITANGA PARTNERSHIPS
Creating success with others.
Strong partnerships are essential to our climate
transition. We work closely with iwi, regulators,
communities, and industry to navigate the complexity
of the energy transition. By working together, we aim
to enable effective policy, maintain social licence, and
ensure the benefits of decarbonisation are shared –
ultimately supporting long-term value creation for
our shareholders and broader stakeholders.
Examples of how our strategy and business model
are evolving include:
sDeepening engagement with iwi and hapū
across our asset footprint to support long-
term, values-aligned relationships.
sAdvocating for policy settings that enable
renewable development, operational flexibility
and equitable transition outcomes.
sParticipating in sector forums to support resilience,
security of supply and system-level planning.
sStrengthening partnerships with community
providers that support customers.
sSupporting new and existing customers
with decarbonisation opportunities
as well as new demand sources.
We have dedicated teams focussed on building
and maintaining trusted partnerships. This includes
teams focussed on iwi relationships, regulatory
affairs, and community engagement, working across
the business to deliver outcomes aligned to our
strategy that benefit both our shareholders and
the communities we serve.
ARUMONI COMMERCIAL
Achieving what matters most through
financial growth.
Our commercial strategy reflects shifting market
dynamics and growing demand for sustainable,
low-emissions operations. Our long-term earnings
growth is driven by investments in new renewable
generation to meet growing electricity demand,
while actively managing risks such as market
volatility, weather-related variability, and policy
uncertainty. We observe capital markets’ preference
for climate-aligned investments, which is expanding
access to green finance and reinforcing the value
of sustainable operations.
Examples of how our strategy and business model
are evolving include:
s Exploring green financing options to support
eligible projects and aligning with evolving
investor expectations.
sConsidering CRROs when making investment
decisions and evaluating our portfolio.
sStrengthening financial management to better
address weather, regulatory, and market volatility.
sBuilding commercial capability to identify revenue
opportunities from new and emerging sources
of electricity demand.
We are investing in the tools and processes needed
to manage climate-related financial risks and capture
emerging opportunities. We have commercial teams
focussed on pricing and forecasting, contributing
toward our long-term financial resilience and ability
to thrive in a low-carbon economy.
Ground breaking with Ngāti Tahu-Ngāti
Whaoa in preparation for a Pou (carving)
to be erected near Ohakuri Hydro Station.
MENUCLIMATE STATEMENT 202570MERCURY 2025 INTEGRATED REPORT |
The tables on the following pages detail material
CRROs and their anticipated unmitigated impacts.
The term unmitigated refers to the potential financial
impact if no management actions are taken, and
the risk materialises without additional interventions.
The likelihood and anticipated impact of these is
based upon our risk matrix. We have calculated the
reasonably expected anticipated financial impact of
each material CRRO, considering a range of factors
outlined in the following tables. Where an impact
pathway would be material but not reasonably
expected to occur, or if the information available
is highly uncertain, we have provided commentary
to explain what we have considered. The anticipated
impact range for our CRROs have been aligned to
the financial impact ranges in our Risk Management
Framework to support consistency across reporting
periods. These ranges are less than $75k,
$75k-$750k, $750k-$7.5m, $7.5m-$75m,
$75m-$750m, greater than $750m. This approach
reflects indicative estimates intended to show the
general quantum of impact, rather than precise
forecasts, helping to inform decision-making while
avoiding a false sense of accuracy. For more
information on risks, please see the Risk section of
this Climate Statement. CRROs have been identified
by considering our four scenarios over a 30-year time
horizon; in doing this, we considered all parts of our
value chain – including upstream, operation and
downstream activities (without any exclusions).
Kaiwera Downs Wind Farm.
OUR TIME HORIZONS FOR SCENARIO ANALYSIS AND CRROS ALIGN WITH OUR BUSINESS PLANNING AND STRATEGY PROCESSES:
CURRENT:
LESS THAN 1 YEAR
SHORT-TERM:
1 TO 3 YEARS
MEDIUM-TERM:
3 TO 10 YEARS
LONG-TERM:
10 TO 30 YEARS
Aligning with our 3-year business planning cycle.Aligning with our strategy and strategic scenarios.Aligning with the expected useful life of new
generation development.
Aligning to immediate planning and operational
considerations.
CRROs influence strategic business decisions across
multiple functions and are reflected into our planning
processes through:
sthe setting of strategic objectives and
performance incentives in the Executive
Scorecard each financial year;
sthe application of our Risk Management
Framework to assess physical risks to generating
plant and assets and prioritising any required
mitigation work in business plans;
sthe deployment of capital and funding for the
development of new renewable generation; and
sthe consideration of portfolio risks when
progressing new generation development.
When allocating capital, we consider climate-related
transition impacts, such as decarbonisation initiatives
and emissions reductions pathways, given their
significance on future electricity demand growth.
We also account for CRROs over multiple time
horizons in developing our capital investment plans.
All of our material CRROs are relevant to the energy
sector in New Zealand.
OUR CLIMATE-RELATED RISKS AND OPPORTUNITIES
MENUCLIMATE STATEMENT 202571MERCURY 2025 INTEGRATED REPORT |
OUR CLIMATE-RELATED RISKS
IMPLICATIONS:
More volatile catchment inflows from changing and
increasingly extreme weather patterns makes it more
difficult to optimally manage hydro storage. This manifests
through increased risk of spill during high inflow events
and reduced generation volumes during low inflow periods
and droughts and potential biosecurity and water quality
challenges (e.g., algal blooms or invasive species). During
low inflow periods and droughts this is further heightened
as other stakeholders along the catchment may also seek
access to water. More volatile catchment inflows may
also have an impact on spot prices in a highly renewable
market. Volatile and high prices heighten our trading risk.
IMPLICATIONS:
Increasing intensity of storm events, floods and high
wind events may lead to physical damage to generation
assets and telco assets resulting in costs to repair and
lost generation revenue. Increasing storm intensities
and/or higher likelihood of heating and fires and/or
other extreme atmospheric conditions may lead
to severe damage to electricity transmission and
distribution systems resulting in us being unable
to export from stations.
GREATER VARIABILITY IN WEATHER PATTERNS (INCLUDING MORE FREQUENT HIGH
INFLOW EVENTS AND DROUGHTS) REDUCES HYDRO GENERATION FLEXIBILITY AND
PROFITABILITY AND HEIGHTENS TRADING RISK
GROWING INTENSITY OF ATMOSPHERIC CONDITIONS (INCLUDING STORM EVENTS)
THAT CAUSE ASSET DAMAGE
MANAGEMENT RESPONSE:
• We manage our peak customer sales commitments by
adopting a portfolio approach that integrates generation
development, existing operations and financial hedging,
aiming to balance sales with our physical generation
and financial contract purchases.
• Our environmental and planning teams engage with
governing and consenting bodies to manage the
operational impacts of lake storage levels and ensure
we have the operational flexibility that we need on
the Waikato Hydro System. We also maintain close
relationships with iwi to understand their view and
work together on solutions.
• We are collaborating with other sector participants to explore
options to improve security of supply and grid flexibility.
MANAGEMENT RESPONSE:
• We regularly assess physical risks to generating plant
and assets as a reasonable and prudent asset owner/
operator and will mitigate risks of damage as they arise.
• We have a dam safety programme, including annual
and 5-yearly (external) reviews, and continue to work
to gain insight into the impacts of climate change
on flood risks.
• We maintain a geographically dispersed and
fuel diverse generation fleet which reduces
impacts arising from locational-specific storm
events that could cause asset damage.
• We carry insurance cover that mitigates some of
the financial impacts of replacing damaged assets
and for significant business interruption events.
MATERIAL CURRENT IMPACTS:
• The recent dry year sequence reduced inflows across
key catchments, limiting hydro generation output
and resulting in an estimated ~$100 million impact
on energy margin. We note however, that dry year
sequences have always occurred and it is not feasible
to determine the extent attributable to climate change.
• Low inflows and increased reliance on renewables have
heightened market volatility, leading to elevated trading
risk and pricing uncertainty as well as a reliance
on thermal back-up across the electricity market.
• There were no material impacts on repairs and
maintenance or additional upgrade capital costs
related to this event for the year.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
TIME HORIZON: Current, short, medium, long-term.TIME HORIZON: Current, short, medium, long-term.
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Short to long-term (1–30 years).
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Medium to long-term (3–30 years).
LIKELIHOOD: This risk is assessed as being
probable (1–10% probability in any given year)
to materialise.
LIKELIHOOD: This risk is assessed as being
probable (1–10% probability in any given year)
to materialise.
RISK TYPE: Chronic Physical.RISK TYPE: Acute Physical.
CURRENTCURRENTSHORTSHORTMEDIUMMEDIUMLONG-TERMLONG-TERM
ASSESSMENT METHODOLOGY:
We considered two impact pathways - drought and
extreme wet events. For droughts, our methodology
estimated lost revenue from reduced hydro generation
due to projected increases in dry days (<1mm rainfall)
around Taupō, based on NIWA’s RCP 4.5 climate
projections. Generation loss is calculated against
precipitation projection and using national average
wholesale electricity prices from EA data (2004–2025).
For extreme wet events (>25mm rainfall), our approach
considered both potential increased short-term
generation energy margin impacts and associated
increased spillway repair, maintenance and spillway
upgrade costs. Inputs included projected rainfall
from NIWA’s Zone 1 data, historical price trends,
and internal CAPEX and maintenance estimates.
Both approaches assumed nominal impacts
using average prices, which may have masked
intra-year volatility. Limitations included reliance
on regional RCP data (rather than SSPs), internal
assumptions, and a lack of granularity, making
outputs more suitable for sensitivity analysis and
indicative planning than precise forecasting.
ASSESSMENT METHODOLOGY:
We considered several impact pathways to assess
the risk based on internal data and historical
climate events - transmission line failure,
transformer failure, compromised units or
stations, and catastrophic cascade dam failure.
For transmission line failure, we modelled the impact
of the transmission line connecting to our largest hydro
station failing. Lost generation revenue was calculated
by multiplying average output by wholesale prices and
a 1.5-month outage period.
For transformer failure due to flooding, we used
a similar approach, extending the outage period
to 3.5 months for conservatism, as well as considering
additional spillway capital reinvestment required as
a result of increased spilling during high flow events.
We also considered compromised units or stations,
and catastrophic cascade dam failure. However,
these pathways were not reasonably expected
and deemed too rare for financial quantification
but underscore the criticality of maintenance
and compliance with safety standards. These are
not included in our anticipated impact range.
Across all pathways, outputs are directionally
indicative, relying heavily on internal data
due to limited external benchmarks.
ANTICIPATED IMPACT RANGE: Significant:
$7.5m-75m annualised over the medium
to long-term.*
ANTICIPATED IMPACT RANGE:
Significant: $7.5m-75m annualised
over the short to long-term.
FINANCIAL METRICS: An aggregate of:
Net decrease in energy margin, increase in
spillway repairs, maintenance and upgrade costs.
FINANCIAL METRICS: An aggregate of:
Decrease in energy margin, increase in
spillway repairs and maintenance and increase
in CAPEX reinvestment (frequency).
* This year the anticipated impact range has been updated and is an
annualised figure, rather than per event as previously disclosed in FY24.
MENUCLIMATE STATEMENT 202572MERCURY 2025 INTEGRATED REPORT |
OUR CLIMATE-RELATED RISKS CONT.
IMPLICATIONS:
Without clear and considered policy settings, the rate
of electrification of industrial process heat and transport
could fall behind projections or other policy reforms could
adversely impact our ability to progress our generation
pipeline, such as RMA reforms could favour other
environmental protection over mitigating climate impacts.
Specifically, this could include declining demand growth,
loss of investor confidence, increased costs, delayed or
declined renewable generation consents, delayed renewable
electricity generation capacity development, security
of supply issues, and market intervention that negatively
impacts asset valuations. We also recognise the role that
we and the broader market have to play in contributing to
balancing the energy trilemma as we navigate the transition.
IMPLICATIONS:
Constrained global supply of renewable generation
technology (i.e. wind turbines, substation equipment
and solar panels) and skilled labour shortage causes
construction delays and capital cost overruns. This may
be exacerbated by geopolitical tensions and the recent
uptick in renewable generation investment globally making
it challenging for manufacturers to meet that demand.
In this context, the NZ market is unattractive compared
to larger countries due to its relatively small market
and remoteness. On a local level, grid constraints may
impact our ability to connect new renewable generation.
MARKET AND POLICY SETTINGS FAIL TO BALANCE THE ENERGY TRILEMMA AS WE
TRANSITION TO A LOW-CARBON FUTURE
GLOBAL DECARBONISATION CAUSING SUPPLY CHAIN
AND LABOUR CONSTRAINTS DELAYING DEVELOPMENT
MANAGEMENT RESPONSE:
• Engage on policy settings that will support a
successful transition for New Zealand.
• Supporting decarbonisation opportunities with existing
and new commercial and industrial (C&I) customers
as well as new demand sources, such as data centres.
• Maintain a broad range of renewable electricity
generation development options that can be brought
to market in different demand scenarios.
• Actively engage with regulators and other external
stakeholders to increase the understanding that
renewable electricity is a key enabler of the transition to
a low-carbon economy and promote regulatory settings
that support the development of renewable electricity.
MANAGEMENT RESPONSE:
• Manage our generation development pipeline to
time procurement and development at
favourable periods and with sufficient lead
time to minimise unplanned delays.
• Key supplier relationship planning and management.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
TIME HORIZON: Short, medium and long-term.TIME HORIZON: Short, medium, long-term.
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Short to long-term (1-30years).
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Short to long-term (1–30 years).
LIKELIHOOD: This risk is assessed as being
highly likely (10-30% probability in
any given year) to materialise.
LIKELIHOOD: This risk is assessed as being
probable (1–10% probability in any given year)
to materialise.
RISK TYPE: Transition.RISK TYPE: Transition.
CURRENTCURRENTSHORTSHORTMEDIUMMEDIUMLONG-TERMLONG-TERM
ASSESSMENT METHODOLOGY:
We considered the following impact pathways -
constrained demand from electrification, delays
in consenting new renewable generation projects,
and government-imposed price caps.
For constrained demand from electrification, lost revenue
was estimated by modelling reduced electricity uptake
across transport and industrial sectors, using internal
demand forecasts and national electrification scenarios.
The impact was expressed as a range, reflecting
uncertainty in demand outcomes and price responses.
For delays in consenting new renewable generation
projects, we used qualitative insights due to limitations
in quantifying the financial impact. Directionally, the
potential cost was assessed by estimating foregone
revenue from delayed project commissioning using
internal forecasts of generation output and wholesale
price assumptions. However, this result is shared for
information only, given the high uncertainty around
timing, project prioritisation, and regulatory outcomes.
It is not included in our anticipated impact range.
For government-imposed price caps, we used
qualitative insights as quantification was limited by the
unpredictability of price cap levels and duration. We note
that price caps would likely reduce market revenues and
undermine investment signals. This result is shared for
information only, given the high uncertainty of information
available and would not be reasonably expected to occur.
It is not included in our anticipated impact range.
Across all impact pathways, financial outcomes are
indicative only, subject to evolving policy direction
and market responses, and best used for
stress testing and strategic planning.
ASSESSMENT METHODOLOGY:
We considered the following impact pathways - longer
lead times to commission projects and constraints
in transmission and distribution infrastructure
by third parties.
For longer lead times to commission projects,
we calculated the foregone revenue and delayed
capital expenditure from postponed generation due
to global supply shortages and long-lead times,
constraints in skilled labour and geopolitical tensions.
Generation volumes were based on internal forecasts,
while wholesale prices were derived from historical
demand-weighted averages published by the
Electricity Authority. Capital overruns were informed by
industry reports and historical project performance.
For constraints in transmission and distribution
infrastructure by third parties, our methodology
similarly estimated the revenue loss from delayed
grid connections, factoring in timing assumptions
from regulatory approvals and infrastructure investment
commitments (e.g. Transpower’s $392.9 million
grid investment). However, this result is shared for
information only given insufficient information available,
and is not included in our anticipated impact range.
Our pathways considered the financial impact of
inflationary pressures on capital expenditure. Limitations
included reliance on internal data, variability in delay
duration, and lack of granular external data on future
infrastructure readiness, making outputs indicative
for strategic planning rather than precise forecasting.
ANTICIPATED IMPACT RANGE: Significant:
$7.5m-75m annualised over the short to long-term.*
ANTICIPATED IMPACT RANGE:
Significant: $7.5m-75m p.a.
FINANCIAL METRICS: Net decrease in
energy margin.
FINANCIAL METRICS: An aggregate of:
Net decrease in energy margin, potential repairs
and maintenance for existing assets and
increase capital expenditure due to overruns.
* The disclosed financial impact range for this risk was revised between
FY24 and FY25 from $75–$750 million to $7.5–$75 million. The change
in FY25 is because we financially quantified reasonably expected
pathways only. We provided information only on pathways where
there was high uncertainty of information and/or were not reasonably
expected to occur.
MENUCLIMATE STATEMENT 202573MERCURY 2025 INTEGRATED REPORT |
IMPLICATIONS:
Our profile as a renewable electricity generator leads
to reduced capital costs and favourable valuation
premium as capital markets reflect societal desire to
invest in the transition to a low-carbon economy.
IMPLICATIONS:
Increased demand for renewable electricity due
to decarbonisation of transport and process heat
and increased data centres in New Zealand, may
provide greater opportunities to build renewable
generation capacity and increase sales volumes.
CAPITAL MARKETS TILT TOWARDS INVESTING IN LOW-CARBON OPERATIONSTHE LOW-CARBON TRANSITION LIFTS ELECTRICITY DEMAND
MANAGEMENT RESPONSE:
• We have looked to leverage our renewable
profile in issuing Green Bonds and promote
our low-carbon generation profile to research
analysts and sustainability rating agencies.
• We continue to engage with investors, research
analysts, and sustainability rating agencies
to ensure our low-carbon profile remains
relevant in evolving capital markets.
• We monitor developments in sustainable finance to
identify new funding mechanisms beyond Green Bonds.
MANAGEMENT RESPONSE:
• We look to secure resource consents for generation
development projects ahead of expected increases
in demand.
• Ensure a broad pipeline of development
opportunities and maintain strong relationships
with generation equipment suppliers.
• We continue to explore additional sources of demand,
actively partnering with existing and new stakeholders
to support our social licence to operate and develop.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
TIME HORIZON: Short, medium and long-term.TIME HORIZON: Medium and long-term.
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Long-term (10–30 years).
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Medium to long-term (3–30 years).
LIKELIHOOD: This opportunity is assessed as
being likely (1-10% probability in any given year)
to materialise.
LIKELIHOOD: This opportunity is assessed
as being almost certain (>30% probability
in any given year) to materialise.
OPPORTUNITY TYPE: Transition.OPPORTUNITY TYPE: Transition.
CURRENTCURRENTSHORTSHORTMEDIUMMEDIUMLONG-TERMLONG-TERM
ASSESSMENT METHODOLOGY:
We considered two impact pathways as to how our
renewable energy profile could positively influence
investor sentiment, namely, lower capital costs,
and a favourable valuation premium.
For lower capital costs, we modelled a reduction in basis
points for bond issuances and loans, reflecting investor
preference for low-emissions-aligned investments.
This assumption was based on internal assessments
of market trends and stakeholder engagement. Our
modelling calculated the savings from these basis
point reductions over our expected debt portfolio.
For a favourable valuation premium from stronger
climate positioning, our Enterprise Value (EV)/EBITDAF
multiple was benchmarked against peers with higher
renewable exposure and stronger ESG alignment. EV
was calculated using market capitalisation and net debt,
and EBITDAF was sourced from public disclosures
and analyst consensus. The resulting multiple gap
(e.g., 1.5x–2.0x) was applied to our EBITDAF to estimate
the potential uplift in enterprise value. A conservative
realisation factor (e.g., 10–30%) has been applied
to reflect execution risk and market variability and is
anticipated to materialise medium to long-term horizon.
However, our assessment was limited by the lack
of consistent external benchmarks, structural
business differences and broader market
factors unrelated to ESG strategy and relies
heavily on internal data and judgement.
ASSESSMENT METHODOLOGY:
We considered four key impact pathways:
process heat electrification, demand stimulation
(including from data centres), uptake of biogas
and biomass, and low-emissions solutions.
For process heat, we used Transpower growth
forecasts alongside expected average wholesale
electricity prices to estimate incremental revenue.
For demand stimulation, we considered the additional
demand from electrification and the increase in
data centres in a highly electrified scenario.
For biomass, our modelling focussed on industrial
uptake (EECA projection) and their potential to either
supplement or compete with electricity demand,
depending on policy and technology developments.
For biogas, our modelling focused on transitioning
mass market gas customers to biogas.
For low emissions solutions, we considered the
increased uptake of renewable energy certificates
(RECs), and the evolution of carbon markets.
Across these pathways, we have leveraged on internal
price path assumptions, and strategic insights from
external and internal analysis. Limitations include
forward-looking nature of assumptions, uncertainties
in demand timing, pace of technology adoption, and
future pricing dynamics, making outputs most suitable
for directional planning and investment prioritisation
directional planning and investment prioritisation.
ANTICIPATED IMPACT RANGE:
Major: $75m-750m - prolonged impact.
ANTICIPATED IMPACT RANGE:
Major: $75m-750m p.a.
FINANCIAL METRICS: An aggregate of: decrease
in cost of capital and favourable valuation premium.
FINANCIAL METRICS: Increase in electricity margin.
OUR CLIMATE-RELATED OPPORTUNITIES
MENUCLIMATE STATEMENT 202574MERCURY 2025 INTEGRATED REPORT |
Ngā Tamariki Geothermal Station.
IMPLICATIONS:
The electrification of industry and growing demand for smart
energy solutions is driving demand for tailored energy
solutions and creating opportunities for new products
and services that help customers optimise their electricity
use. Solutions for our industrial customers can create new
business models, increase electricity sales, and support
further renewable generation development, strengthening
collaboration between energy providers
and industrial users.
Enabling demand-side flexibility for customers can reduce
cost of sales, enhance customer value, and support a
more efficient, renewables-based electricity system.
THE LOW-CARBON TRANSITION DRIVES DEMAND FOR SMART ENERGY SOLUTIONS
AND NEW PRODUCTS AND SERVICES
MANAGEMENT RESPONSE:
• We are developing an electrification
strategy for our C&I customers.
• We are investing in capability to manage
energy/demand-side flexibility.
• We are actively seeking out new
innovation opportunities.
MATERIAL CURRENT IMPACTS:
• There have been no material current impacts in FY25.
TIME HORIZON: Medium and long-term.
TIME HORIZON OVER WHICH RISK
BECOMES MATERIAL: Long-term (10–30 years).
LIKELIHOOD: This opportunity is assessed
as being almost certain (>30% probability
in any given year) to materialise.
OPPORTUNITY TYPE: Transition.
CURRENTSHORTMEDIUMLONG-TERM
ASSESSMENT METHODOLOGY:
We considered two impact pathways: energy
management services from electric vehicles (EVs),
and distributed energy resources (DERs).
For EVs, we projected the growth rate for EVs based on
government adoption targets and historical uptake rates.
Our analysis considered load shifting benefits, vehicle-
to-grid solutions and accelerated EV customer growth.
For DERs - such as energy management solutions,
and flexible demand - our analysis considered the
load shifting benefits of these.
Across the pathways, we have leveraged on internal
estimates, price path assumptions, and external and
internal analysis. Key limitations include forward-
looking nature of assumptions, uncertainties in
policy incentives and technology uptake, customer
adoption rates, DER integration costs, and evolving
regulatory frameworks, making this assessment most
suitable for scenario testing and strategic planning.
ANTICIPATED IMPACT RANGE:
Significant: $7.5m-75m p.a.
FINANCIAL METRICS: Increase in energy margin.
OUR CLIMATE-RELATED OPPORTUNITIES CONT.
MENUCLIMATE STATEMENT 2025MERCURY 2025 INTEGRATED REPORT | 75
*Base year for our emissions is FY22.
* *Our 2040 scope 1 emissions intensity target is equivalent to our 2030 scope 1 emissions intensity target as the targeted 2030
emissions reduction will already reduce our Scope 1 emissions intensity to the level required by the SBTi for our 2040 target.
Note: These targets are subject to change through the validation process with SBTi. We do not currently use emissions offsets
and, in alignment with the SBTi framework, we do not intend to use offsets to achieve interim targets. Offsets may be used for
persistent emissions that are unable to be abated for final targets, or for broader purposes outside of achieving interim targets.
Please see our FY25 Climate Action Plan for more information on the actions we are taking to reduce our emissions.
In the last three years, our progress against these targets was:
SCOPESCOPESCOPE
Use of Sold Products
(Natural Gas Sales)
42% absolute reduction
from base year
42% absolute reduction
from base year
70% reduction in
emissions intensity
(in kgCO2e/kWh)
from base year*
90% absolute reduction
from base year
90% absolute reduction
from base year
70% reduction** in
emissions intensity
(in kgCO2e/kWh)
from base year
Near-term/
Interim Target
FY30
Long-term
Target FY40
321
SCOPE
SCOPESCOPE
Use of Sold Products
(Natural Gas Sales)
3
21
• 4.7 tCO2e/GWh
decrease from base year
• 18.39% decrease in
emissions intensity
from base year
• 747 tCO2e decrease
from base year
• 35.19% absolute
reduction from base year
• 2,369 tCO2e decrease
from base year
• 1.71% absolute reduction
from base year
• 1.7 tCO2e/GWh
decrease from base year
• 6.45% decrease in
emissions intensity
from base year
• 11 tCO2e decrease
from base year
• 0.52% absolute
reduction from
base year
• 3,168 tCO2e decrease
from base year
• 2.29% absolute
reduction from
base year
• 2.3 tCO2e/GWh
decrease from base year
• 8.90% decrease in
emissions intensity
from base year
• 230 tCO2e increase
from base year
• 10.83% absolute
increase from
base year
• 14,418 tCO2e decrease
from base year
• 10.43% absolute
reduction from
base year
FY23
FY24
FY25
Our Climate Action Plan outlines in detail the actions
that we are taking to work towards a 1.5-degree
future and play our part in reducing greenhouse gas
emissions by reaching Net Zero by 2040.
Our targets cover emissions across our value chain.
This includes:
sScope 1: direct GHG emissions from sources
that are operationally controlled by Mercury
We have committed to setting both near-term
and long-term company-wide emissions reduction
targets in line with science-based net-zero, using the
Science Based Targets initiative (SBTi). These targets
were developed using SBTi tools and approved by
the Board. The SBTi framework applies a sectoral
decarbonisation approach, aligning emissions
reductions across industries with a global pathway
that limits warming to 1.5°C above pre-industrial
levels. It is our view that by meeting SBTi criteria
we are playing our part in contributing to the global
effort to limit warming to 1.5°C.
IMPACT OF ADDITIONAL SCOPE 3 EMISSIONS
FY22
Tonnes CO2e
FY23
Tonnes CO2e
FY24
Tonnes CO2e
Total Scope 3
Original138,591137,159136,335
Updated165,746183,396174,597
sScope 2: indirect emissions from the generation
of electricity consumed at Mercury’s facilities
s Scope 3: indirect emissions that occur from gas
we sell to customers
In FY25, we completed a full materiality assessment
of our scope 3 emissions categories, in line with the
New Zealand Climate Standards. This led to the
inclusion of emissions from capital goods, purchased
goods and services, and investments in our inventory.
These additions have improved the completeness and
transparency of our reporting, resulting in an increase in
disclosed scope 3 emissions for the year. This broader
view will support a more informed approach to
managing emissions across our value chain.
We are currently in the process of verifying our targets
with SBTi. We anticipate that our targets may change
because of this verification process as well as our
efforts to expand the scope 3 emissions that we report
on. As we navigate this process, we will continue to
ensure we are playing our part in contributing to a
successful transition.
OUR CLIMATE TARGETS
MENUCLIMATE STATEMENT 202576MERCURY 2025 INTEGRATED REPORT |
OUR SCENARIOS
TEAL SCENARIO
1
Global temperature increases are limited to 1.5
degrees by 2100 (after an overshoot to 1.6 degrees)
PURPLE SCENARIO*
2
Global temperature increases are limited
to 2.5 degrees by 2100
AMBER SCENARIO
3
Global temperature increases are limited
to 3 degrees by 2100
MAROON SCENARIO
4
Global temperature increases by 3+ degrees
by 2100
Scenario narrative
A globally coordinated push for climate action
has managed to limit warming to below 1.5°C,
after an overshoot to 1.6°C. Historic inaction,
and increasing climate impacts, forced rapid
emissions cuts, driven by strong-handed policy.
This policy fuelled tensions over equity and social
licence, as well as significant innovation. A global
carbon price accelerated renewable investment,
with early demand-driven equipment cost spikes
eventually giving way to better access and
affordability as supply caught up. While the path
has not been smooth, New Zealand gradually
built a more sustainable and socially supported
energy system through electrification and the
adoption of smart demand technologies.
A fractured world and rising inequality shaped
a polarised transition. New Zealand initially
balanced East–West tensions but ultimately
aligned with Western powers, impacting trade.
Rapid tech advances benefited wealthier nations
and households, while energy volatility and grid
instability deepened inequity. Deindustrialisation
accelerated as fossil fuels exited and Methanex
closed by 2030. AI-driven energy optimisation
cut costs for some, but others faced price shocks,
prompting rushed government intervention.
Job losses from automation fuelled distrust in AI
and social unrest. Climate impacts were widely
felt, especially in poorer areas lacking access
to new technologies. Though the energy system
transformed, its benefits were uneven, shaped
by fragmentation and division.
Global climate cooperation continued, but
technological progress slowed, driving a costly,
strained path to a low-carbon future. A global
carbon market lifted prices and drove action but
surging global demand triggered supply shortages
and cost blowouts, slowing New Zealand’s
renewables rollout. Capital retreated and opposition
grew, so the government underwrites offshore
wind, built large-scale batteries, and restructures
the market. Intensifying storms strained ageing
infrastructure. High living costs pushed skilled
workers offshore, while climate refugees arrived.
Rising inequity shifted power - co-governance
partners gained ground, while those without
iwi relationships faltered. The transition ground
forward, shaped by intervention, disruption,
and growing social and economic divides.
Global cooperation unravelled as war and
protectionism stalled climate action. Emissions
climbed, pushing warming beyond 3°C.
New Zealand was hit hard - trade shrank, climate
shocks battered infrastructure, and food and
energy insecurity rose. With multilateralism gone,
governments acted alone. NZ centralised energy
assets like large-scale batteries to manage
volatility, but political fragmentation blocked
long-term planning. Affordability dominated
policy, not emissions. Workforce tensions
and unresolved iwi rights added pressure.
Vulnerable customers became the majority.
The energy system adapted reactively - not
through innovation or strategy, but through
crisis response - as worsening climate impacts
outpaced fragmented, short-term governance.
Key datapoints – global impacts
Temperature increase (2081 –
2100, relative to 1850 – 1900)
1
1.4°C (after an
overshoot to 1.6 °C)
2.2°C2.7°C3.6°C
Technology change
2
FastFastSlowSlow
Negative emissions technologiesMedium–high useMedium useLow–medium useLow use
Key datapoints –
New Zealand impacts
Average number of hot days
(above 25°C) (for the period 2031
– 50, average across regions)
3
25 hot days27 hot days27 hot days30 hot days
Renewable energy percentage
of total consumption in 2050
4
89%87%74%46%
Reference scenarios/
data sources
SSP1-1.9
RCP2.6
CCC Tailwinds
NGFS Net Zero 2050
SSP4-3.4
RCP4.5
CCC Further Technology Change
NGFS Delayed Transition
SSP2-4.5
RCP4.5
CCC Headwinds
NGFS Nationally Determined
Contributions
SSP3-7.0
RCP8.5
CCC Current Policy Representation
NGFS Current Policies
SCENARIO ANALYSIS
We recognise the importance of scenario analysis in assessing CRROs and testing the resilience of our strategy across different time horizons, our scenarios can be found below.
To support transparency and informed decision-making, we update our scenarios quarterly and conduct an annual in-depth review of climate-related aspects.
1
Shared Socioeconomic Pathways (SSP) information sourced from IPCC, 2021: Summary for Policymakers. In: Climate
Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the
Intergovernmental Panel on Climate Change [Masson-Delmotte, V. et al (eds.)]. Cambridge University Press, Cambridge,
United Kingdom and New York, NY, USA, p. 14. (ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_SPM.
pdf) and SSP Public Database, Version 2.0 (tntcat.iiasa.ac.at/SspDb/dsd?Action=htmlpage&page=welcome)
2
Network for Greening the Financial System (NGFS) scenario information from the Scenarios Portal (ngfs.net/ngfs-scenarios-portal/explore)
3
RCP (Representative Concentration Pathways) information applied to New Zealand by Ministry for the Environment 2018. Climate Change
Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington:
Ministry for the Environment (environment.govt.nz/assets/Publications/Files/Climate-change-projections-2nd-edition-final.pdf)
4
CCC (Climate Change Commission) as in ‘Chapter 12:Long Term Scenarios to meet the 2050 target’
(climatecommission.govt.nz/public/Evidence-21/Evidence-CH-12-Long-term-scenarios-to-meet-the-2050-target.pdf)
* For more information on the change of this scenario from Blue to Purple, please see the Scenario Development Process section of this
Climate Statement.
MENUCLIMATE STATEMENT 202577MERCURY 2025 INTEGRATED REPORT |
OUR SCENARIOS
TEAL SCENARIO
1
PURPLE SCENARIO
2
AMBER SCENARIO
3
MAROON SCENARIO
4
Climate impacts
Extreme weather is more frequent, causing
damage and loss of life. New technologies
have helped adaptation, but disruption persists.
Pre-emptive relocation is underway, but it is
politically sensitive. Climate-resilient housing
contributes to densification as communities
move from high-risk zones. Insurance retreat
and affordability concerns rise in vulnerable
areas. Communities shape retreat plans, but
the pace of causes tension.
We have been able to navigate to a less than
2.5-degree future and new technologies have
emerged to help mitigate disruption caused by
climate change. However, the impacts of climate
change are widely felt, particularly in poorer
areas where these technologies are not in use.
Insurers increasingly withdraw from high-risk
areas. Investment occurs in well-planned,
resilient areas, driving growth and wealth
creation for those positioned to benefit. There
is increased water scarcity as the hydrological
cycle changes, leading to contestability for uses.
We have been able to navigate to a less than
3 degrees future, however, significant climate
events are expensive and disruptive as
technological solutions are not adequate and
there is little government support. There is greater
water scarcity as the hydrological cycle changes,
leading to contestability for uses. Investors pull
back from at-risk areas, resulting in a decline
in property values and deteriorating housing
stock. Poor land use regulation results in energy
shortages in rural areas, where renewable
generation and network support is limited. Insurer
withdrawals and costly managed retreat place
economic stress on communities, increasing
pressure on the Government to respond.
Highest physical climate risk, with warming
on track for a 3+ degree future. Disruptive and
expensive events that damage infrastructure are
frequent. The retreat from the ocean has begun,
and wealthier individuals move to climate-resilient
areas, driving up housing costs due to limited
planning and coordination from the government.
Extreme weather events are very common, with
worsening drought and flooding conditions, which
puts the resilience of natural capital and energy
systems under stress. Insurance is no longer
available in high-risk areas. Those who could
afford to move have relocated, while others are
left behind. Hydrological changes cause water
scarcity, increasing competition for non-hydro
uses and reducing year-round hydro generation.
Energy pathways: Grid demand
High demand is driven from industry, transport
decarbonisation and AI adoption (including
increase in data centres). Peak shaving
and demand response (smart Distributed
Energy Resources (DER)) are used efficiently
to help manage the grid effectively.
Grid electricity use is down (despite AI uptake
driving additional grid demand) due to an
increase in DER and loss of industry. Smart grid
management optimises supply and demand,
reducing reliance on centralised power generation.
High demand is driven by transport
decarbonisation. Demand-side flexibility is minimal
and only used in emergencies (much like today).
Electricity demand has been stagnant-to-declining
due to a lack of industry decarbonisation,
slow EV uptake and low adoption of AI.
Gas is still used quite extensively.
Energy pathways: Grid supply
Fossil fuels are phased out, but the energy
transition in New Zealand is initially tempered
as high global demand drives up the cost of
renewable energy equipment. As equipment
costs rise, large-scale storage projects become
more economically viable and attract renewed
interest. The lights stay on, but wholesale prices
remain volatile until storage solution technology
catches up to requirements and then prices
level off to become internationally competitive.
Fossil fuels and thermal generation have been
retired. The system is under resourced and
unreliable, with security of supply remaining a
concern in dry years. Retail prices are moderate
to low due to price regulation, however wholesale
price volatility has increased and adds to the cost
to supply customers. This keeps New Zealand
prices internationally competitive, however,
has a negative impact on competition.
A low-carbon energy system has been achieved
with grid scale wind and other renewable
solutions enabling this. Blended fossil and bio-
gas is used to help manage extreme peaks and
security, though security of supply remains
a concern in dry years. Wholesale volatility
increases with intermittent renewables
resulting in wholesale pricing increasing in
excess of global trends and New Zealand
becoming increasingly less competitive.
Fossil fuels remain with limited growth in
renewables. Security of supply is undermined
by global conflict and extreme weather, which
disrupt supply chains, delay new generation and
maintenance, and increase the risk of outages.
Wholesale volatility remains, Government funded
large-scale storage will be used to help meet
peak demand and cover dry years once they
have been built. Prices are low and managed
through long-term central buyer contracts.
Average wholesale prices rise with uncertainty
around delivery of new supply and increasing
thermal fuel cost. This increase and uncertainty
around the future state of the market sees
industry close and move offshore.
Macroeconomic trends:
Resource and
technology constraints
Global competition and supply chain pressures
increase costs. New Zealand faces skills shortages,
infrastructure bottlenecks, and cost-of-living
pressures, though long-term investment continues.
In response, New Zealand begins to innovate,
developing local capabilities and smarter deployment
strategies to mitigate supply chain constraints
and build greater resilience into the transition.
There are significant supply chain disruptions,
limiting access to critical materials for clean
energy technologies. Access to natural resources
is often contested and involves a drawn-out
process. Adaptation through technology
is prioritised over emissions mitigation,
progressing steadily but nearing its limits.
Physical resources were challenging to access due
to global demand, however, are now available from
global sources, but are still costly. Strong focus
on iwi rights and interests makes co-
governance essential to accessing water or
steam. Limited technology reduces the ability
to adapt to climate events effectively.
Access to knowledge and technology is
difficult and expensive. Physical resources
are challenging to access due protectionism,
war-time supply chain constraints and global
demand, and take longer to arrive at higher
prices. Limited technology reduces the
ability to adapt to climate events at pace.
Policy and socioeconomic
assumptions:
Consumer needs
Consumers value climate solutions, but cost-
of-living pressures dominate decision-making.
Demand exists, but affordability leads to slow
widespread adoption of green products.
Significant wealth divide in society between
rich and poor, with vastly different needs.
Demand for green products is divided.
As the wealth gap increases, demand for green
products is divided.
Financial hardship has created a large price
sensitive segment focussed on the basics. There
is a culture of conserving, repairing, and reusing
limited resources. Demand for green products is
low, and only adopted by those that can afford it.
Continued over page
MENUCLIMATE STATEMENT 202578MERCURY 2025 INTEGRATED REPORT |
OUR SCENARIOS
TEAL SCENARIO
1
PURPLE SCENARIO
2
AMBER SCENARIO
3
MAROON SCENARIO
4
Policy and socioeconomic
assumptions:
International climate
commitments
Off the back of delayed implementation
countries are coordinating and increasing
their ambition to achieve net zero targets.
Some global agreements and commitments are
achieved, but not all. Coordination across nations
faces challenges. New Zealand Emissions Budgets
are met but involve additional costs or delays.
Countries are working towards agreements
and commitments, but progress is slower
than expected. New Zealand Emissions
Budgets are met at considerable expense,
with significant trade-offs required.
Countries work individually without a globally
coordinated response. Progress is slow or non-
existent, and commitments may have been
abandoned. New Zealand Emissions Budgets
are not met or have been revised to the point
of losing significance.
Policy and socioeconomic
assumptions:
Government and policy settings
for renewable energy
Governments introduce strong handed policies
to achieve a 1.5-degree future, creating
uncertainty for industry and communities.
In New Zealand, rapid regulatory shifts drive
emissions reductions, including enabling fast-
track renewable energy development.
Social licence is impacted as a result.
International and New Zealand regulatory settings
for renewable energy somewhat constrain
development and further drive uptake of DER.
Wealthier nations invest in energy research and
renewable technology. New Zealand‘s government
introduced price caps in the energy sector to help
the growing vulnerable segment. Government
policy drives technology uptake to increase
electrification in select areas, but costs are
impacting customers at an uncontrolled rate.
International and New Zealand regulatory
settings for renewable energy delay development.
Large-scale batteries and underwritten offshore
wind are operated to achieve government
objectives, and government has forcibly split
gentailers. Supply chains are impacted by
uncoordinated international incentives to invest
in clean energy. Emissions Trading Scheme (ETS)
policy settings fail to reward decarbonisation,
and government policy is slow to enable a
cost-effective and coordinated transition.
International regulatory settings for renewable
energy obstruct development. There is a lack
of coordination and cooperation internationally.
Geopolitical tensions increase driving
protectionism, impacting supply chains and
the development of renewable technology.
Government centralises ownership of
key infrastructure, including energy and
telecommunications. Reactive, poorly executed
regulation generates unintended consequences.
Limited alternatives for gas within the sector
exacerbate challenges, prompting government
intervention to ensure New Zealand’s security
of supply.
Policy and socioeconomic
assumptions:
Energy sector social licence
Relationships between iwi, communities, the energy
sector, and government are tested by the pace
and scale of change. While Indigenous rights and
input remain a focus, engagement processes are
sometimes rushed, leading to contested outcomes
and challenges to social licence. Consenting
becomes more politicised as pressure to meet
climate targets grows, and trust is challenging
to maintain. Social licence varies across projects
and regions, requiring increased investment
in relationship building and transparency.
Input from iwi, local community and other
stakeholders are considered, though not fully
integrated into decision making processes.
This partial engagement leads to challenges
in navigating consenting processes,
requiring trade-offs. Social licence is partially
established, but lingering concerns limit the
pace of progress in the energy transition.
Stakeholder engagement is fragmented and
inconsistent, with limited coordination across
diverse groups, including iwi, local communities,
and regulatory bodies. Frequent reforms
to consenting processes create uncertainty.
However, as inequity rises, Iwi influence
strengthens and co-governance partners move
ahead, while others lose social licence. As a result,
electrification and renewable development is
slow and costly, with ongoing effort required.
Engagement with stakeholders such as
local community and iwi, is minimal and
often contentious. A lack of recognition for
diverse rights and perspectives contributes
to adversarial relationships. Consenting
processes are disrupted, highly contested,
and prone to repeal. The absence of social
licence, results in widespread opposition
delaying renewable generation development.
Carbon sequestration
from afforestation
Carbon sequestration from afforestation is
used extensively to offset emissions during the
transition, with a heavy reliance on fast-growing
exotic species. While this provides a quick fix
for meeting short-term targets, it raises growing
concerns about negative impacts on biodiversity,
water systems, and rural communities.
Carbon sequestration from afforestation
has been utilised for emissions reduction,
along with technological and nature-based
solutions as they become available.
Carbon sequestration from afforestation has
been widely deployed, being gradually superseded
by technological and nature-based solutions.
Carbon sequestration from afforestation
is utilised at a local level, without effective
global coordination and certification.
Nature-based solutions
Nature-based solutions have been developed
and form part of a broad portfolio of
emissions reduction solutions.
Nature-based solutions have been developed
and form part of a broad portfolio of
emissions reduction solutions.
Nature-based solutions have been developed
and form part of a broad portfolio of
emissions reduction solutions.
Nature-based solutions will be neither
reliable nor scalable for meaningful climate
mitigation. They become fragile, reactive
tools with localised benefits, not dependable
levers for global decarbonisation.
Negative emissions technology
Effective negative emissions technology has
been developed and widely deployed.
Effective negative emissions technology
has been developed and deployed.
The development of negative emissions
technology was slower than expected, leading
to its delayed deployment.
Negative emissions reduction technology
has not been developed.
MENUCLIMATE STATEMENT 202579MERCURY 2025 INTEGRATED REPORT |
SCENARIO DEVELOPMENT PROCESS
We have a single, integrated set of scenarios to
explore a range of plausible futures in order to assess
the resilience of our business model and strategy to
climate-related risks and opportunities. In line with
NZ CS, we consider four scenarios: one limiting global
temperature increase to 1.5 ̊C, one exceeding 3 ̊C, and
two that assess alternative pathways for New Zealand’s
transition to a low-carbon future. These are reviewed
annually and monitored quarterly to reflect new
developments and signals. These scenarios have been
selected to reflect a range of plausible futures across
macro drivers, such as geopolitical tensions, technology
advancements and inequity within New Zealand.
We have chosen to have four scenarios so that we do
not default to a central or ‘most likely’ pathway when
considering what could occur in the future.
The climate aspects of these scenarios were initially
developed with support from third party consultants
and continue to be refined by our Climate Working
Group. We collaborated with external stakeholders,
including through the Energy and Telecommunications
Sector climate-related scenarios development, to test
and validate our scenarios, risks and opportunities
and identify any gaps in our analysis.
Our scenario analysis is guided by the focal question:
“What climate-related risks and opportunities are
affecting Mercury now and could plausibly affect
Mercury over the short, medium and long terms?”
We apply the STEEP (Social/Technological/
Economic/Environmental/Political) framework
to structure thinking, supported by external data,
published reference scenarios and models to enrich
our scenarios (captured in the Datasets and Models
Used section on the following page). We did not
undertake our own modelling in the construction
of our scenarios.
The boundary for our scenario analysis includes
all of our New Zealand operations, subsidiaries, joint
ventures and investments. Our investment in Energy
Source LLC and ES Minerals LLC was not considered
to meet our materiality threshold. We assess upstream
and downstream value chain impacts, including key
suppliers, partners, and customers.
Each year, we undertake a comprehensive review of the
climate-related aspects of our scenarios as part of our
annual scenario cycle. This is led by the Sustainability
Team and involves a cross-functional Climate Working
Group, which includes representatives from Finance,
Wholesale Markets, People Experience and Technology,
Customer, Generation, and Generation Development.
It also includes the strategy function, ensuring that
the fundamental objective of climate-related scenario
analysis to bolster the resilience of our strategy is
achieved, and includes team members who engage
externally with suppliers, customers, iwi partners,
councils, and industry groups. Insights from this
process can inform and influence strategic investments
and operational decisions.
This process included multiple workshops with internal
subject matter experts across business units to:
sReview and update our driving forces and
make amendments to our scenarios.
sAssess and revise CRROs including
identifying new ones.
sSense-check time horizons, initial materiality
assessments, and management actions with
risk and opportunity owners.
sReflect on real-world events and whether
any anticipated impacts have begun
to materialise (current impacts).
sConduct financial quantification of material risks,
opportunities and impacts with the Finance
team to inform final materiality assessment.
This process also saw the replacement of the FY24
Blue scenario with a new Purple scenario to better
capture a plausible future where geopolitical
fragmentation, rapid technology advancement,
and rising inequity occur. This decision was based
on observed shifts in global trends.
OUR TIME HORIZONS FOR BOTH SCENARIO ANALYSIS AND CRROS ALIGN WITH OUR BUSINESS PLANNING:
CURRENT:
LESS THAN 1 YEAR
SHORT-TERM:
1 TO 3 YEARS
MEDIUM-TERM:
3 TO 10 YEARS
LONG-TERM:
10 TO 30 YEARS
Aligning with our 3-year business planning cycle.Corresponding to our long-term strategy and
strategic scenarios.
Aligning with the expected useful life of new
generation development.
Tying to immediate planning and operational
considerations.
Waikato River.
MENUCLIMATE STATEMENT 202580MERCURY 2025 INTEGRATED REPORT |
DATASETS AND MODELS USED
In undertaking scenario analysis, we considered
several external data sources and models to inform
our understanding of CRROs. These datasets
supported both qualitative insights and quantitative
assessments, including financial quantification.
Key sources included:
sShared Socioeconomic Pathways (SSPs) in
the IPCC Sixth Assessment Report on Climate
Change to inform our consideration of global
socioeconomic changes and data points
such as global temperature changes.
sRepresentative Concentration Pathways (RCPs)
in the IPCC Fifth Assessment Report on Climate
Change and Ministry for the Environment
and NIWA Climate Change Projections for
New Zealand to inform our consideration of
New Zealand-specific impacts under different
pathways. These provided data points such
as the increased number of hot days and were
a key input to our financial quantification.
sClimate Change Commission Long Term
Scenarios to meet the 2050 target to
inform our consideration of how different
scenarios could play out in New Zealand,
including the role of renewable energy.
sNetwork for Greening the Financial
System (NGFS) Scenarios and analysis
to inform our consideration of global
physical climate risks and policy and
technology trends in different scenarios.
sClimate Change Projections for New Zealand
from NIWA, the Ministry for the Environment
and Stats NZ, including localised precipitation
and wet day projections, which supported the
identification and assessment of CRROs.
s Historical wholesale price trends from the
Electricity Authority New Zealand and economic
modelling from BERL (Business and Economic
Research Limited) on the economic impact
of electricity price changes, which informed
our understanding of market and customer-
related risks.
sResearch commissioned by the
Parliamentary Commissioner for the
Environment on the economics of electricity
pathways, which provided insights into
long-term system costs and transitions.
sGlobal analysis of renewable energy project
commissioning timelines from ScienceDirect
to inform expectations around average
delivery durations and common causes of
delay across technologies and jurisdictions.
sChallenges impacting the delivery of renewable
energy projects from McCullough Robertson
to support our understanding of current
infrastructure constraints and external risks
to timely project delivery.
sThe impact of planning and regulatory delays
for major energy infrastructure from Econstor to
highlight system-wide consenting and regulatory
barriers that affect infrastructure rollout.
OUR APPROACH TO ASSESSING
MATERIALITY
Under NZ CS3, information is material if omitting,
misstating or obscuring it could reasonably be
expected to influence decisions that primary users
(existing and potential investors, lenders and other
creditors) make on the basis of an entity’s Climate-
Related Disclosures (CRDs).
The principle of considering the impact of information
on capital allocation decisions of end users is broadly
consistent with the materiality principle applicable
to preparing financial statements and the continuous
disclosure rules under the NZX Listing Rules.
Our approach to assessing the materiality of
information included in this Climate Statement,
including CRROs, is to consider whether the
information or the way in which information is
presented, could influence the decisions of users of
our Climate Statement. When assessing materiality,
we evaluate both quantitative and qualitative factors
using our risk matrix:
sQuantitative assessment: any quantitative
impact using 2% of EBITDAF (Earnings before
net interest expense, tax expense, depreciation
and amortisation, unrealised change in the fair
value of financial instruments, gain on sale and
impairments) (rounded up, this equates to $20
million), as a threshold figure for materiality.
This is the same quantitative materiality threshold
used for preparing our financial statements.
sQualitative assessment: whether the information
could influence the decisions of primary
users, regardless of its quantitative impact,
due to the nature of the information and/
or our circumstances. Aligned to our risk
framework, we consider impacts to:
—Health and safety
—Legal requirements
—Regulatory and environmental compliance
—Our reputation
—Operations and people
And more broadly, we consider the general
interpretation of the type of information and whether
the lack of information could be material.
We follow a four-step process to assess materiality
of information in the preparation of Climate-
Related Disclosures:
1. Identify: information that is potentially material
using our risk matrix, considering both
requirements of the NZ CS and knowledge
and information needs of primary users.
2. Assess: both qualitative and quantitative factors.
3. Organise: prepare clear and concise disclosures.
4. Review: internally (and externally if useful).
MENUCLIMATE STATEMENT 202581MERCURY 2025 INTEGRATED REPORT |
METRICS AND TARGETS
SCOPE
3
SCOPE
(Location-
based)
2
SCOPE
1
FY23
(tCO2e)
FY24
(tCO2e)
FY25
(tCO2e)
183,396
174,597
205,443
165,746
1,376
2,112
2,353
2,123
213,645
239,574
216,995
222,736
Base year
FY22
(tCO2e)
Our gross emissions continue to be primarily driven
by scope 1 emissions, which represent approximately
51% of our total emissions profile. In FY25, our gross
emissions were 424,791 tCO2e and our scope 1
emissions were 216,995 tCO2e. Over the past decade,
our gross emissions have declined significantly,
driven by the closure of our Southdown gas-fired
power station in FY16, the natural decline in fugitive
geothermal emissions, and our continued investment
in our geothermal non-condensable gas reinjection.
MEASURING OUR IMPACT – EMISSIONS
We produce an annual Greenhouse Gas Emissions
Inventory Report in accordance with The Greenhouse
Gas Protocol: A Corporate Accounting and Reporting
Standard (revised edition) and the Corporate Value
Chain (Scope 3) Accounting and Reporting Standard,
which are available on our website. This provides
further information on the methods, assumptions,
and limitations used in calculating our emissions,
including the uncertainties inherent in our approach.
A summary of our FY25 emissions, with
comparisons to our base year, is shown below:
A summary of our FY25 and previous years’ GHG emissions and emissions intensity are shown in the graphs below:
0
100,000
532,171425,625323,687292,436290,314266,827245,131222,736213,645239,574216,995
2,1231,3762,1122,353
165,746183,396174,597205,443
200,000
300,000
400,000
500,000
600,000
FY25FY24FY23FY22FY21FY20FY19FY18FY17FY16FY15
TONNES CO2e
Scope 1
Scope 2
Scope 3
EMISSIONS INTENSITY
(kg CO2e/kWh)
GENERATION (
GWh)
FINANCIAL YEAR
0.02
0.04
0.00
0.06
0.08
0.10
0.12
0.14
0
2,000
4,000
6,000
8,000
10,000
12,000
FY24FY25FY23FY22FY21FY20FY19FY18FY17FY16FY15
Total Generation (RHS)Mercury Generation Emissions IntensityNZ Grid Emissions Intensity
Our emissions intensity for FY25 was 0.023kg
CO2e/kWh, representing an 8.9% decrease compared
to our base year, and 66.5% decrease since FY15.
As in previous years, our emissions intensity has
continued to trend downward, supported by a growing
share of wind generation from both newly constructed
and acquired sites.
FY25 data also reflects the completion of our scope 3
materiality assessment and an updated methodology
for calculating scope 2 emissions. These changes have
led to revisions in our reported emissions and improved
the accuracy of our overall greenhouse gas inventory.
FY24 scope 3 emissions increased by 38,262 tCO2e,
representing a change of approximately 28% on our
previous scope 3 inventory. This is primarily due to
the inclusion of emissions from purchased goods and
services, and capital goods following our completed
scope 3 materiality assessment under the New Zealand
Climate Standards (NZCS). Capital goods alone now
accounts for 66,192 tCO2e of our scope 3 emissions,
capturing the embodied emissions from the
development of Mercury’s renewable generation
assets, supporting infrastructure, and other major
capital projects.
Scope 3 emissions from total gas sales now make up
approximately 29% of our total gross emissions. In FY25,
scope 3 emissions from total gas sales were 123,861
tCO2e, representing a year-on-year decrease of
8.33% from FY24.
Under the New Zealand Emissions Trading Scheme
(NZ ETS), we surrender certified forestry-backed
New Zealand Units (NZUs) to cover our geothermal
emissions. These units have historically been sourced
through long-term agreements with forestry owners,
which are now nearing the end of their term and will
be phased out. To support future NZU supply, we have
invested in Forest Partners, a forestry investment fund.
Gas sales-related emissions are covered through NZU
surrender by our gas suppliers.
METHODS, ASSUMPTIONS AND LIMITATIONS
sOur emissions intensity calculation is based on
gross scope 1 emissions and total generation
Data from FY2015 to FY2021 presented in this graph has not been subject to assurance procedures.Data from FY2015 to FY2021 presented in this graph has not been subject to assurance procedures.
output across all sites under our operational
control. We do not adjust for part-ownership
of geothermal stations or for any carbon credit
surrenders or trading under the NZ ETS.
sIn FY25, emissions from capital goods and
purchased goods and services were calculated for
the first time, and previous years’ emissions were
restated to include these categories. A spend-
based method was used for purchased goods
and services, while a hybrid approach was applied
to capital goods, combining financial data with
supplier-provided emissions estimates. While
these methods provide valuable insights, they
carry a higher degree of uncertainty. We are
continuing to refine our approach by improving
data quality and increasing the use of supplier
or quantity-based information where possible.
For full details of our emissions data, methodology,
consolidation approach, emission factors, global
warming potentials, and exclusions, please refer
to Sections 10 to 14 of our FY25 Greenhouse Gas
Emissions Inventory Report.
EMISSIONSEMISSIONS INTENSITY
MENUCLIMATE STATEMENT 202582MERCURY 2025 INTEGRATED REPORT |
MEASURING OUR IMPACT – CROSS
INDUSTRY MEASURES AND OTHER
ACTIVITY METRICS
In addition to emissions metrics, we continue to use
the International Sustainability Standards Board
(ISSB) sector metrics for Electric Utilities and Power
Generators to guide how we report on activity metrics
relevant to the management of CRROs. These metrics
have been assessed for their materiality to us, and the
relevant metrics are disclosed in the table below.
Our geothermal generation relies on the careful
management of geothermal fluid, extracting it for
electricity generation and reinjecting it underground
to help sustain the resource.
In FY25, we updated how we measure geothermal
water use to improve accuracy and better align
with how we report under our resource management
consents. We now use measured flow data for each
geothermal field. Water take and injection volumes
are derived from flow meter data at station
separators and individual injection wells, measured
in tonnes. Previously, these figures were based on
estimates from emissions data, measured in Mm
3
.
This update also addresses a gap in the previous
method, which excluded brine, resulting in under
reporting volumes. Additionally, we switched to a
mass-based unit of measurement to provide a more
accurate view of geothermal water use, especially
given the varying temperatures and two-way nature
of the flows.
We are a non-consumptive user of water through our
hydro power stations. Water passes through turbines
or is spilled, continuing its journey downstream.
The first half of 2023 saw significant rainfall across
parts of the North Island, resulting in a temporary
increase in hydro water use in FY23. Since FY23,
non-consumptive water use has returned to typical
levels, with FY25 usage falling below FY22.
Hydro water flow is measured using a combination
of turbine flow and spill flow. Turbine flow is calculated
based on megawatt output and flow ratings, while spill
flow is estimated using water level measurements and
the position of spill gates when water bypasses the
turbines. Both are combined to report total
non-consumptive water use.
We do not extract water from regions with High
or Extremely High Baseline Water Stress, and there
were no incidents of non-compliance with water
quantity permits from operational sites during FY25.
FUGITIVE EMISSIONS
Fugitive emissions are unplanned gas releases, mainly
from our geothermal operations and small amounts of
sulphur hexafluoride (SF6) and refrigerant gases used
in equipment. We report these emissions each year
through our greenhouse gas inventory, which follows
the Greenhouse Gas Protocol to make sure we’re
consistent and transparent.
Most of our fugitive emissions come from geothermal
activity. These can vary depending on how our
stations are running, especially during maintenance
or changes in the geothermal field. SF6 and refrigerant
gas emissions are much smaller.
The numbers below show the total fugitive emissions
from all sources and our focus remains on finding
ways to reduce them over time. Note the fugitive
emissions table below doesn’t include emissions
from refrigerant gases between FY22 - FY24.
Fugitive
emissions
FY22
(tCO2e)
FY23
(tCO2e)
FY24
(tCO2e)
FY25
(tCO2e)
Scope 1222,397212,785236,312212,558
EXPOSURE OF OUR ASSETS AND
ACTIVITIES TO CLIMATE RISKS AND
OPPORTUNITIES
We acknowledge the impact of physical risks,
transition risks, and climate-related opportunities
on our assets and therefore business activities.
Unless otherwise stated, these impacts have not
changed over the preceding two years.
All, i.e. 100%, of our generation assets and related
business activities are vulnerable to the physical risks
of climate change such as extreme rainfall and
flooding, which may impact access to sites and
asset performance. Assets may also be affected
by extreme wind events, drought, fire risk (including
electrical faults or surrounding vegetation), and
damage to transmission infrastructure. We are
continuing to enhance our understanding of how
these risks may evolve over time. Details on identified
material risks are disclosed in the Strategy section
of this Climate Statement.
Our assets and business activities are vulnerable
to transition risks as described below:
sAll of our geothermal generation assets, comprising
22% of our generation assets recognised in our
FY25 financial statements, produce fugitive
emissions that are vulnerable to transition
risks in the form of rising NZU carbon prices
in the event that geothermal emissions are
unable to be captured and/or reinjected.
sAll of our generation portfolio is vulnerable to
climate transition risk from regulatory settings
impacting the energy trilemma, e.g. through
influencing carbon pricing in the NZ ETS which
directly impacts the spot price of electricity. Our
generation development portfolio is vulnerable
to risks arising from regulatory settings
constraining renewable electricity development.
sAll of our gas sales activities, comprising ~3%
of FY25 revenue, are vulnerable to transition
risks in changes in regulatory settings and/or
changes in consumer preferences away from
fossil fuels. This impact increased in FY22
following the acquisition of the Trustpower retail
business, including its gas customer base.
All, i.e. 100%, of our existing electricity generation
assets are considered aligned with climate-related
opportunities as enablers in New Zealand’s low-
carbon transition. Increasing demand for renewable
electricity has been identified as a material climate-
related opportunity from which 100% of our renewable
generation assets stand to benefit.
Water useFY22FY23FY24FY25
Geothermal
Total take (tonnes)7 7,525, 29673,333,71680,693,87781,372,706
Total injection (tonnes)65,738,23062,505,56668,195,04768,761,444
Hydro
Non-consumptive water use (Mm
3
)6,52710,7857, 2006,075
MENUCLIMATE STATEMENT 202583MERCURY 2025 INTEGRATED REPORT |
The majority of our capital deployment is aligned
with climate-related opportunities. Growth capital
expenditure allocated to new renewable generation
development totalled $155 million in FY23, $153
million in FY24, and $347 million in FY25 (100%
of growth CAPEX in FY25). We are also pursuing
climate-related opportunities to reduce emissions
through developing reinjection of geothermal
non-condensable gases.
We use the Carbon NZU spot price to value our
inventory of carbon units. The monthly prices as of
30 June were FY25: 59/t, FY24: $50/t, FY23: $41/t.
We also have an internal emissions price forecast –
a metric representing the cost per metric tonne
of CO2e, which guides decision-making within our
operations. This forecast informs strategic decisions
related to buying and selling carbon units and serves
as an input for business cases where they impact our
GHG profile. We assess opportunities across various
carbon forward curve scenarios for up to 15 years into
the future. These ranges, adjusted for inflation, were
FY25: $46/t - $130/t, FY24: $44/t - $127/t, FY23:
$41/t - $117/t.
The volatile carbon prices over the past years have
been primarily due to heightened regulatory measures
and balancing market demand and supply for carbon
units. Long term, the carbon price is expected to
increase, reflecting a growing emphasis on reducing
greenhouse gas emissions.
The alignment of management remuneration to our
CRROs is discussed in the Governance section of this
Climate Statement.
Waikato River.MENU84
GOVERNANCE
BOARD OVERSIGHT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES
The Board’s responsibilities include approving clear
strategic goals and the associated capital allocation,
monitoring management's successful delivery against
the strategy, ensuring there is integrity in the statutory
reporting and establishing and overseeing effective
audit, risk management and compliance processes.
The Board oversees our scenarios and discusses
the scenarios, external environment developments
(including relevant climate-related changes) and
progress towards our FY30 Priorities. This happens
on a quarterly basis with reference to Strategic
Monitoring Reports prepared by management and
in more detail at bi-annual Strategy Days. The Board
also receives quarterly updates from the Chief
Sustainability Officer, covering progress against
our scope 1, 2 and 3 emissions reduction targets.
For more detail on these targets, refer to the Metrics
and Targets section of this Climate Statement.
Quarterly, management reviews our strategic
framework with oversight from the Board. In doing
so, they consider climate change trends, including
our CRROs. These reviews are a key mechanism for
assessing significant market changes, leading to the
identification of new strategic risks and opportunities
or a re-assessment of existing ones, and reflecting
those appropriately into our strategy. Climate
considerations informed the reset of our long-term
aspirations in FY23, and our three-year objectives
in FY24. In FY25, we reset our strategy, introducing
strategic objectives that reflect the current areas
of focus for the organisation. Our climate-related
opportunities are reflected in our FY30 Priorities
to “Deliver more reliable and renewable energy”,
and “Accelerate the shift to a low-carbon future”.
As outlined below, two committees of the Board
assist with Board oversight of CRROs and CRDs: the
Audit and Financial Risk Committee and the Safety
and Enterprise Risk Committee. The Board approves
charters for the AFRC and SERC to govern their annual
programme of work. The AFRC and SERC are required
to confirm to the Board annually that they have fulfilled
the requirements set out in their Charter. In addition, at
each Board meeting, the Board receives verbal updates
from Committee Chairs on relevant discussions and
decisions reached at committee meetings, and the
minutes of each committee meeting are provided
to all directors.
BOARD COMMITTEES
The Audit and Financial Risk Committee (AFRC)
and the Safety and Enterprise Risk Committee (SERC)
assist with Board oversight of CRROs and CRDs. This is
a change from FY24, when the previous Risk Assurance
and Audit Committee (RAAC) oversaw CRROs
and CRDs. The SERC and AFRC were established
and replaced the RAAC effective on 1 January 2025.
The AFRC plays a key role in overseeing CRROs and
CRDs. The AFRC has delegated authority from the
Board to oversee all CRDs, considering compliance
with the NZ Climate Standards. The AFRC considers
the CRROs identified by management when it reviews
the CRDs. The AFRC also oversees the establishment
and maintenance by management of a suitable
system of controls for managing climate-related risks,
including the keeping of proper CRD records.
While the Board has responsibility for climate-related
opportunities in connection with its wider strategic
oversight, the AFRC has delegated authority to oversee
the identification of climate-related opportunities
in connection with the CRDs.
Members of the Sustainability Team attend quarterly
AFRC meetings, where necessary, to provide updates
on CRROs, support discussion on CRDs, and facilitate
feedback and discussion.
The SERC more widely oversees and monitors our
Risk Management Framework and risk assurance
and internal audit activity. Climate-related risks are
incorporated into our risk registers and are reviewed
by the SERC as part of its oversight of our top
enterprise risks. In FY25, climate-related risks were
considered by the SERC at its May meeting as part
of the annual Risk Management Framework review
and management’s Consolidated Risk Reporting.
We do not currently see a need for a separate
sustainability sub-committee of the Board as
Sustainability and Kaitiakitanga/Stewardship are
embedded in our operating model and strategy
and addressed within existing governance structures.
SKILLS AND COMPETENCIES TO PROVIDE
OVERSIGHT OF CLIMATE-RELATED RISKS
AND OPPORTUNITIES
The Board Skills Matrix includes ‘Climate Change
and natural resource management (including water)’
as a key skill of the Board. Through the Nominations
and Corporate Governance Committee, the Board
regularly assesses its skills and competencies and
monitors skills required for succession planning
purposes. In FY25, 3 directors were assessed as
having ‘substantial’ competency in this area as well as
2 directors with ‘medium’ competency and 3 directors
with ‘some’ competency.
In FY21, when we first began reporting against Task
Force on Climate-related Financial Disclosures (TCFD)
framework, the Board held an externally facilitated
deep dive into the regulatory, economic, and legal
aspects of CRROs.
The Board draws on internal and external expertise
and advice as required to stay up to date with current
information to enable appropriate and informed
oversight of CRROs. In FY25, management engaged
PwC to support the financial quantification of
climate-related risks and to build internal capability
in assessing their potential organisational impacts.
This work was reported back to directors and the Board
through the AFRC.
Management also includes updates on climate-related
trends, data and information as part of quarterly
Strategic Monitoring Reports presented to the Board.
This aims to ensure that the Board receives and
discusses key changes in this area and stays abreast
of the latest information and trends.
Currently, one director holds the Institute of Directors
Climate Governance Credential, demonstrating
commitment to climate governance learning.
Additionally, two of our directors have previously
served on the steering committee of Chapter
Zero New Zealand, a global network of directors
committed to climate action. Two directors have
also completed the Governing Natural Capital Course
hosted by hosted Deloitte and the Aotearoa Circle.
MANAGEMENT’S ROLE IN ASSESSING
AND MANAGING CLIMATE-RELATED RISKS
AND OPPORTUNITIES
The Board delegates responsibility for developing
and recommending strategies to identify, assess
and manage CRROs to the Chief Executive and
the ELT. The ELT also focuses on improving climate-
related reporting and disclosure, including identifying
proposed metrics and targets. These processes are
facilitated by the Chief Sustainability Officer and
their team.
MENUCLIMATE STATEMENT 202585MERCURY 2025 INTEGRATED REPORT |
in FY23 and FY24, and 10% in FY25. This change
was due to an increased STI weighting on Commercial
initiatives reflecting the Board's focus for FY25,
of which climate remains a priority.
The approach to executive remuneration, including
the incorporation of climate-related KPIs in the STI
scorecard, is overseen by a committee of the Board,
the People and Performance Committee (PPC).
Progress against the scorecard is monitored by the
Finance team and reported to the PPC quarterly.
The PPC reviews annual STI performance appraisal
outcomes for all members of the ELT, including the
Chief Executive, and endorses these for Board approval.
Management is responsible for ensuring that CRROs
and their current impacts are effectively identified,
assessed, and managed across the business.
Our annual CRDs are prepared by management
with a primary governance pathway, via the AFRC,
to the Board.
The key inputs this year were:
sanalysis by the cross-functional Climate Working
Group, which conducted workshops to update
and refine our scenarios, risks, opportunities
and current impacts; and
sfinancial quantification of our risks and
opportunities, supported by independent
third-party advice and guidance.
FY25 – 27
Three-Year Objective
FY22 – 24
Three-Year Objective
FY25 KPIFY26 KPI
FY24 KPI
Delivering more reliable
and renewable energy
to power Aotearoa
Play a leading role in New Zealand’s successful
transition to a low carbon economy
Create executable options for new growth
Accelerating the shift
to a low-carbon future
Generation availability target met
Deliver two of three outcomes of:
• advancements of new
demand or Commercial and
Industrial electrification
• Progress emission reduction
• Sector and Government
Energy Transition Framework
Delivery of generation
development projects
Role in electricity sector
transition progress
Progress on non-condensable
gas reinjection
CO2e emissions, firming
and demand capacity from
electricity and energy system
RISK MANAGEMENT COMMITTEE
The Risk Management Committee (RMC) is
accountable for implementing the Board approved
Risk Management Policy. The RMC's mandate is
to establish and promote risk awareness among
all staff, implement and communicate effective
risk management and internal control frameworks,
regularly monitor, report, and review risk activities,
and ensure sufficient business resources for effective
risk management. Where material, risks and issues
are escalated to the RMC.
The RMC includes the ELT, the Risk Assurance Officer
and the General Counsel and is chaired by the Chief
Executive. The RMC meets approximately 10 times per
year, including prior to each AFRC and SERC meeting,
the relevant meetings are on the following page.
MANAGEMENT REMUNERATION IS LINKED
TO MANAGEMENT OF CLIMATE-RELATED
RISKS AND OPPORTUNITIES
The remuneration of the Chief Executive and the ELT
is linked to our strategic objectives, purpose and goals.
The Short-Term Incentive (STI) component of
remuneration is set as a percentage of the executive’s
base salary and for FY25 was set at 50% for the Chief
Executive and up to 40% for other ELT members.
This compares to 60% and 35% respectively in FY24
and FY23. A proportion (70% for the Chief Executive
and 50% for other ELT members in FY25) of the STI
is related to a shared set of Group Key Performance
Indicators (KPIs) that form our scorecard and are
aligned with our three year objectives. Climate-related
KPIs have been a consistent component of this
scorecard, comprising 15% of the total STI weighting
Turitea Wind Farm.
MENUCLIMATE STATEMENT 202586MERCURY 2025 INTEGRATED REPORT |
MANAGEMENT AND GOVERNANCE MEETINGS IN FY25
Review and
endorsement of
the FY24 Climate
Statement
Review of our
approach to
CRDs against
market practice
Review of our
approach to
CRDs against
market practice
Update and
endorsement of
the FY25 Climate
Scenario Analysis and
risk and opportunity
identification
Initial review of
the FY25 Climate
Statement and
Climate Action Plan
Further review of
the FY25 Climate
Statement and
Climate Action Plan
Final review of
the FY25 Climate
Statement, GHG
Inventory and
Climate Action Plan
Board Meeting;
discuss scenarios,
external changes and
progress toward our
three-year objectives,
approve FY24
Climate Statement
Strategy Day; discuss
scenarios, external
changes and
progress toward our
three-year objectives,
discuss strategic
opportunities,
including climate-
related ones
Board Meeting;
discuss scenarios,
external changes and
progress toward our
three-year objectives
Board Meeting;
discuss sustainability
quarterly update
Strategy Day; discuss
scenarios, external
changes and
progress toward our
three-year objectives,
discuss strategic
opportunities,
including climate-
related ones
Board Meeting;
approval of the
FY25 Climate
Statement, GHG
Inventory and
Climate Action Plan
RAACAFRC
BOARD
OCT 24JAN 25APR 25JUN 25AUG 24NOV 24FEB 25MAY 25AUG 25
RMC
Update on FY25
Climate Scenario
Analysis and risk
and opportunity
identification
Initial review of
the FY25 Climate
Statement and
Climate Action Plan
Further review of
the FY25 Climate
Statement and
Climate Action Plan
Final review and
endorsement of
the FY25 Climate
Statement, GHG
Inventory and
Climate Action Plan
MENUCLIMATE STATEMENT 202587MERCURY 2025 INTEGRATED REPORT |
OPERATIONS
MANAGEMENT
COMMITTEES
BOARD
• Embeds climate change into
risk management, business
strategy and planning, budgeting
processes and frameworks
• Identify, consider, and monitor CRROs,
reporting to the AFRC, SERC and the Board
• Ensures business areas identify, manage,
and escalate risks appropriately
• Implement risk mitigation strategies
• Reviews quarterly sustainability updates
• Monitors emerging risks and opportunities
• Prepares and presents climate-
related risk reports to the SERC and
AFRC (as appropriate), including
actions taken to mitigate risks
• Committee of the ELT and Risk
Assurance Team, General Counsel,
chaired by the Chief Executive
• Oversees risk reporting from the
Risk Assurance Team (reports to
the Chief Financial Officer)
• Promotes risk awareness and
appropriate risk management
• Monitors and reviews risk activities at
approximately 10 meetings each year
• Reporting of business risk is coordinated
through the Risk Assurance Team and
Risk Assurance Officer. Climate-related
risks and opportunities are reported to
the RMC by the Sustainability Team
• Engages third-party experts for services
such as auditing, specific climate
research or strategic management
consulting when appropriate
S TAFF
Identification and day-to-day management of climate-related risks is dispersed throughout Mercury
OUR BOARD
AUDIT AND FINANCIAL RISK
COMMITTEE (AFRC)
• Oversees CRROs and CRDs
• Oversees controls for managing climate-related
risks and keeping of CRD records
CHIEF EXECUTIVE AND EXECUTIVE LEADERSHIP TEAM (ELT)RISK MANAGEMENT COMMITTEE (RMC)
SAFETY AND ENTERPRISE RISK
COMMITTEE (SERC)
• Oversees Risk Management Framework and
risk assurance and internal audit activity
• Oversees enterprise risks
PEOPLE AND PERFORMANCE
COMMITTEE
• Oversees climate-related KPIs in the
management STI scorecard
• Endorses STI outcomes for Board approval
• Approves scenarios,
strategy, Risk Management
Policy and targets.
• Receives quarterly updates on
progress against emissions
reductions targets
• Receives updates from
Committee Chairs
• Approves statutory reporting,
including Climate-related
Disclosures (CRDs)
• Approves management
STI outcomes
OVERVIEW AND RELATIONSHIP BETWEEN RESPONSIBILITIES OF OUR BOARD, SUB-COMMITTEES AND MANAGEMENT
MENUCLIMATE STATEMENT 202588MERCURY 2025 INTEGRATED REPORT |
RISK MANAGEMENT
PROCESSES FOR IDENTIFYING AND
ASSESSING CLIMATE-RELATED RISKS
Risk management is integral to our business. Our
Risk Management Policy, supported by a suite of risk
management tools and practices, embeds risk
management competence across the enterprise. This
ensures a consistent method of identifying, assessing,
controlling, monitoring and reporting on potential risks
to our business and to the achievement of its plans.
Our Climate Working Group supports the identification
of climate-related risks through scenario analysis,
internal stakeholder engagement, and external data
reviews (see the Scenario Analysis section in this
Climate Statement) as well as the relevant business
owners of these risks. The risk owners then assess risks
using defined enterprise impact and likelihood criteria,
and relevant data to understand whether potential risks
are material and to inform our view of the likelihood
and impact of these risks. In FY25, we made progress
towards a more detailed financial quantification
process, which informed the assessment of our
CRROS. The anticipated financial impacts ranges
disclosed for our CRROs, are aligned to the financial
ranges in our Risk Management Framework.
Annually, climate-related risks are classified and
assessed alongside other types of risks using a
common methodology (our risk matrix, which assigns
risk levels based on a combination of likelihood and
impact scoring – shown below). Our risk matrix
requires consideration of both estimated quantitative
impacts, such as loss of revenue or increases in costs,
and qualitative impacts, such as loss of social licence,
or reputational impacts. The likelihood is measured
against the probability of a risk taking place in any
given year.
To determine materiality of CRROs, we assess whether
the information or the way in which information is
presented, could influence the decisions of users of
our Climate Statement, considering both quantitative
(financial impacts) and qualitative factors (non-
financial impacts).
Climate-related risks disclosed in our Climate
Statement are integrated into our enterprise risk
management framework via the risk register.
These are assigned to relevant business units, which
are responsible for developing mitigation strategies
and reporting on progress.
RISK MANAGEMENT FRAMEWORK
Our Board approved Risk Management Framework
aligns with Aotearoa New Zealand standard AS/NZS
ISO 31000 Risk Management – Principles and
Guidelines. It helps us to identify different categories
of risk – health, safety and wellbeing, compliance,
operational, reputational, financial and people risks.
Climate-related risks are fully integrated into our
enterprise Risk Management Framework with oversight
from the Risk Management Committee, AFRC
and SERC, this ensures they are actively monitored
and managed across the business. These risks are
monitored using our risk register and are reassessed on
an ongoing basis to reflect changes in external factors,
regulatory developments, and business conditions.
More information on our risk management approach
can be found in the Assurance and Managing Risk
section of our Corporate Governance Statement.
MANAGING CLIMATE-RELATED RISKS
The day-to-day management of climate-related
risk occurs across various business units such
as Wholesale Markets, Generation, Generation
Development, Customer, Finance and Sustainability
with escalating responsibilities up to the RMC.
The SERC and AFRC oversee the appropriate
management of our climate-related risks and the
implementation of effective systems of control,
assurance, reporting, policies and procedures in place.
In relation to markets, our Wholesale Markets and
Finance teams manage risks and opportunities
presented by:
sthe electricity market – we continually
model scenarios of resource availability,
electricity market supply and demand
and adjust our approach accordingly.
sthe carbon market – we are involved
in forest carbon investments and have
long-term contracts in place.
Regulatory risks and opportunities are managed
by the Sustainability team. In FY25, we made a
submission to the Ministry for the Environment
regarding the government’s proposals for the second
Emissions Reduction Plan. We have engaged in
broader Electricity Authority work programmes to
transition the existing market arrangements to enable
a more renewable future. Alongside this, we maintain
active involvement in ongoing government processes
to create a framework for climate adaptation.
Physical risks and opportunities from climate change
fall into acute (event-driven, such as increased severity
of extreme weather events) and chronic (longer-term
shifts in precipitation and temperature and increased
variability in weather patterns, such as sea level rise).
We continue to monitor proposed methodologies
for climate change risk assessment and adaptation
planning, both nationally and internationally.
We have models of storm events experienced within
the Waikato Hydro System (WHS) and we work in
partnership with the Waikato Regional Council to
engage in training exercises and flood simulations
to educate and familiarise our staff and council staff
on the management of storms and flood risks.
We continue to refine and mature our climate-related
scenario analysis to assess the impacts of our
changing climate on our assets and business while
working with research organisations to improve the
quality of our climate data including potential future
inflows to the WHS.
IMPACT
InsignificantMinorModerateSignificantMajorFundamental
LIKELIHOOD
Almost Certain
Highly Likely
Probable
Possible
Unlikely
Rare
MENUCLIMATE STATEMENT 202589MERCURY 2025 INTEGRATED REPORT |
A member firm of Ernst & Young Global Limited
Independent limited
assurance report
To the Shareholders of Mercury
NZ Limited
Under section 461ZH(3) of the Financial Markets
Conduct Act 2013, the Auditor-General is the
assurance practitioner of Mercury NZ Limited
(the Company) and its subsidiaries (the Group).
The Auditor-General has appointed me, Matthew
Cowie, using the staff and resources Ernst & Young
Limited, to carry out a limited assurance engagement,
on his behalf, on the greenhouse gas (GHG) emissions
information disclosed in the Group’s Climate
Statement (GHG disclosures) and additional
disclosures (as described in ‘scope of the engagement’
section below), for the year ended 30 June 2025.
Scope of the engagement
The GHG disclosures below are within the scope
of our mandatory limited assurance engagement:
• The gross emissions, in metric tonnes of carbon
dioxide equivalent, classified as Scope 1, Scope 2
(calculated using the location-based method) and
Scope 3, on page 82 of the Climate Statement.
• The statement describing that GHG emissions have
been measured in accordance with The Greenhouse
Gas Protocol: A Corporate Accounting and Reporting
Standard (revised edition) and the Corporate Value
Chain (Scope 3) Accounting and Reporting Standard
on page 82 of the Climate Statement.
• The approach used to consolidate GHG emissions
(operational control) on page 7 of the GHG
Emissions Inventory report.
• The sources (or references to sources, where
applicable) of emission factors and the global
warming potential rates used, on pages 11 to 12
and pages 15 to 16 of the GHG Emissions
Inventory report.
• The summary of specific exclusions of Scope 1,
Scope 2 (calculated using the location-based
method) and Scope 3 emissions sources, including
facilities, operations or assets with a justification
for their exclusion, on page 13 of the GHG Emissions
Inventory report.
• The description of the methods and assumptions
used (including the rationale for doing so, where
applicable) to calculate or estimate Scope 1, Scope 2
(calculated using the location-based method) and
Scope 3 GHG emissions, and the limitations of those
methods, on page 82 of the Climate Statement
and pages 11 to 12 and page 14 of the GHG Emissions
Inventory report.
• The description of any uncertainties relevant to
the Group’s quantification of its Scope 1, Scope 2
(calculated using the location-based method) and
Scope 3 GHG emissions, including the effects of
these uncertainties on GHG disclosures, on page
82 of the Climate Statement and pages 11 to 12 and
page 14 of the GHG Emissions Inventory report.
• The explanation for base year GHG emissions
restatements (where applicable) relating to Scope 1,
Scope 2 (calculated using the location-based
method) and Scope 3 emissions, on page 76 and 82
of the Climate Statement and page 4 of the GHG
Emissions Inventory report.
As agreed in accordance with our letter of engagement
on 09 June 2025, the scope of our limited assurance
engagement also includes the following disclosures
on pages 65 to 89 of the Climate Statement
(‘additional disclosures’):
• The disclosures in Mercury’s Climate Statement
required by NZ CS which are not subject to
mandatory assurance.
Conclusion
Based on the procedures we have performed and
the evidence we have obtained, nothing has come
to our attention that causes us to believe that the
Group’s GHG disclosures and additional disclosures
within the scope of our limited assurance engagement
for the year ended 30 June 2025, are not fairly
presented and prepared, in all material respects,
in accordance with Aotearoa New Zealand Climate
Standards, issued by the External Reporting Board.
Other matter
The comparative information, being the restated
2022 – 2024 GHG disclosures Scope 3, Category 1
– Purchased Goods and Services and Category 2 –
Capital Goods on page 76, has not been subject
to assurance. As such, it is not covered by our
assurance conclusion.
Key matters
Key matters are those matters that, in our
professional judgement, were of most significance
in carrying out this limited assurance engagement
on the GHG disclosures and the additional disclosures
for the current year.
Key matters were addressed in the context of our
limited assurance engagement on the GHG disclosures
and the additional disclosures, and in forming our
conclusion thereon. We do not provide a separate
conclusion on these matters.
The key matters are described on the following page:
A member firm of Ernst & Young Global Limited
Description of key matterDescription of key matter
Spend-based methods used in measurement of Scope 3 purchased
goods and services and capital goods
Scope 1 – Geothermal emissions
How we addressed this matterHow we addressed this matter
As disclosed on page 76 and 82 of the Climate
Statement and page 4 of the GHG Emissions Inventory
report, the Group measured the GHG emissions from
Scope 3 – Purchased goods and services and Capital
goods, in part, using the spend-based calculation
method per the GHG Protocol. These Scope 3
components make up approximately 19% of the
Group’s total GHG emissions and approximately 39%
of Scope 3 emissions for the period ended 30 June
2025. This method estimates emissions by multiplying
the value of purchased goods and services and capital
good with relevant emission factors.
This approach carries an inherent uncertainty which
may result in significant differences between
estimated and actual emissions.
Future changes to the calculation method or
assumptions could lead to material changes and
restatements of previously reported amounts.
Geothermal generation is a material source of
electricity generation for the Group and accounts
for approximately 50% of the Group’s total GHG
emissions for the period ended 30 June 2025. These
emissions are calculated by measuring the volume
of steam flows by plant and applying a Unique
Emissions Factor (UEF) for each plant.
Since the Group owns and operates the geothermal
plant infrastructure, it conducts the steam flow
measurements.
The UEFs used are calculated internally based on
the properties of the geothermal steam for each plant.
The steam properties are determined by testing of
samples taken throughout the year by a third party.
Where the properties of a plant’s geothermal
steam deviates more than 5% from the prior year,
these emissions factors are externally assured
by a third party.
In reviewing the Group’s measurement and disclosure
of Scope 3 emissions using spend-based methods, we:
• Gained an understanding of the spend-based
calculation method, assumptions and estimation
uncertainties through enquiries of management.
• Considered the alignment of the Group’s
methodology with the GHG Protocol.
• Considered the reasonableness of the selected
emission factors and their application.
• Reviewed the categorisation of the Group's
expenditures on goods and services and
capital goods.
• Reviewed the adequacy of the disclosures related
to the calculation method, assumptions and
uncertainties in estimating this emission source,
included on page 12 and 14 of the GHG Emissions
Inventory report.
In reviewing the Group’s measurement and disclosure
of Scope 1 – geothermal emissions, we:
• Gained an understanding of the calculation
method, assumptions and estimation uncertainties
through enquiries of management.
• Performed analytical review procedures on the
steam flow data which is collated from meters
at each relevant plant.
• Compared the relationship between external
electricity generation volumes to the steam flow
data and obtained explanation from management
on any unexpected patterns or anomalies.
• Considered the UEFs used, including reviewing any
changes in the properties of the geothermal steam.
• Reviewed the capabilities, competence and
objectivity of the third party which performs
the testing of the geothermal steam properties.
• Reviewed the adequacy of the disclosures related
to the calculation method, assumptions and
uncertainties in estimating this emission source,
included on page 11 and 14 of the GHG Emissions
Inventory report.
A member firm of Ernst & Young Global Limited
The board of directors’ responsibilities
Subparts 2 to 4 of the Financial Markets Conduct
Act 2013 set out requirements for a climate
reporting entity in preparing a climate statement,
which includes proper record keeping, compliance
with the climate-related disclosure framework
and subjecting it to assurance.
The Aotearoa New Zealand Climate Standards have
been issued by the External Reporting Board as the
framework that applies for preparing and presenting a
climate statement. The board of directors of the Group
is therefore responsible for preparing and fairly
presenting a climate statement for the year ended
30 June 2025, in accordance with those standards.
The board of directors is also responsible for the
design, implementation, and maintenance of internal
control relevant to preparing the climate statement
that is free from material misstatement, whether
due to fraud or error.
Our responsibilities
Section 461ZH of the Financial Markets Conduct
Act 2013, requires the GHG disclosures included
in the Group’s Climate Statement to be the subject
of an assurance engagement.
NZ CS1 Climate-related disclosures, paragraph 25
requires such an assurance engagement at a minimum
to be a limited assurance engagement, and paragraph
26 specifies the scope of the assurance engagement
on GHG disclosures. We also agreed to provide limited
assurance on the additional disclosures in accordance
with our letter of engagement on 09 June 2025.
To meet these responsibilities, we planned and
performed procedures (as summarised below),
to provide limited assurance in accordance with
New Zealand Standard on Assurance Engagements 1
Assurance Engagements over Greenhouse Gas
Emissions Disclosures, International Standard on
Assurance Engagements (ISAE) (NZ) 3000 (Revised),
Assurance Engagements other than Audits or
Reviews of Historical Financial Information and
International Standard on Assurance Engagements
(NZ) 3410 Assurance Engagements on Greenhouse
Gas Statements, issued by the New Zealand Auditing
and Assurance Standards Board.
Summary of Work Performed
The procedures we performed were based on
our professional judgement and included enquiries,
observation of processes performed, inspection
of documents, analytical procedures, evaluating
the appropriateness of quantification methods
and reporting policies, and agreeing or reconciling
with underlying records.
Given the circumstances of the engagement,
in performing the procedures listed above:
• We obtained, through enquiries, an understanding
of the Group’s control environment, processes
and information systems relevant to the preparation
of the Scope 1, Scope 2, Scope 3 and additional
disclosures. We did not evaluate the design of
particular control activities or obtain evidence
about their implementation.
• We evaluated whether the Group’s methods for
developing estimates are appropriate and had
been consistently applied. Our procedures did not
include testing the data on which the estimates are
based or separately developing our own estimates
against which to evaluate the Group’s estimates.
• We evaluated whether the assumptions applied
when developing estimates are appropriate
and had been consistently applied.
• We performed analytical procedures on particular
emission categories and additional disclosures
by comparing the expected GHG emissions and
additional disclosures to recorded GHG emissions
and additional disclosures and made inquiries
of management to obtain explanations for
any significant differences we identified.
• We evaluated the appropriateness of a limited
number of emission factors applied in the Scope 1,
Scope 2 and Scope 3 measurement process.
• We evaluated the overall presentation and
disclosure of the Scope 1, Scope 2, Scope 3 and
additional disclosures against the requirements
of the Aotearoa New Zealand Climate Standards.
• Obtained director representation.
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. Consequently, the level of assurance
obtained in a limited assurance engagement is
substantially lower than the assurance that would
have been obtained had a reasonable assurance
engagement been performed.
We believe that the evidence obtained is sufficient
and appropriate to provide a basis for our limited
assurance conclusion.
Inherent limitations
As outlined on page 82 of the Climate Statement
and pages 11 to 12 and page 14 of the GHG Emissions
Inventory report, GHG quantification is subject to
inherent uncertainty because of incomplete scientific
knowledge used to determine emissions factors
and the values needed to combine emissions
of different gases.
As discussed on page 66 of the Climate Statement,
climate-related risk management is an emerging area,
and often uses data and methodologies that are
developing and uncertain. The Climate Statement
contains forward looking statements, including
climate-related scenarios, targets, assumptions,
climate projections, forecasts, statements of future
intentions and estimates and judgements that have
not yet occurred and may never occur. We do not
provide assurance on the achievability of this
prospective information.
Other information
The Integrated Report contains information other
than the GHG disclosures and additional disclosures
and the assurance report thereon. The board of
directors is responsible for the other information.
Our assurance engagement does not extend to any
other information included, or referred to, in the
Integrated Report on pages 01 to 64 and 94 to 142
and therefore, no conclusion is expressed thereon
apart from our opinion on the financial statements.
We read the other information identified above and,
in doing so, consider whether the other information
is materially inconsistent with the GHG disclosures
and additional disclosures, or our knowledge obtained
in the assurance engagement, or otherwise appears
to be materially misstated.
Where such an inconsistency or misstatement
is identified, we are required to discuss it with the
board of directors and take appropriate action under
the circumstances, to resolve the matter. There
are no inconsistencies or misstatements to report.
A member firm of Ernst & Young Global Limited
Independence and quality management
We complied with the Auditor-General’s independence
and other ethical requirements, which incorporate the
requirements of Professional and Ethical Standard 1
International Code of Ethics for Assurance
Practitioners (including International Independence
Standards) (New Zealand) (PES 1) issued by the New
Zealand Auditing and Assurance Standards Board.
PES 1 is founded on the fundamental principles of
integrity, objectivity, professional competence and
due care, confidentiality and professional behaviour.
These principles for example, do not permit us to
be involved in the preparation of the current year’s
GHG information as doing so would compromise
our independence.
We have also complied with the Auditor-General’s
quality management requirements, which incorporate
the requirements of Professional and Ethical
Standard 3 Quality Management for Firms that
Perform Audits or Reviews of Financial Statements,
or Other Assurance or Related Services Engagements
(PES 3) and Professional and Ethical Standard 4
Engagement Quality Reviews issued by the New
Zealand Auditing and Assurance Standards Board
(PES 4). PES 3 requires our firm to design, implement
and operate a system of quality management
including policies or procedures regarding compliance
with ethical requirements, professional standards
and applicable legal and regulatory requirements.
PES 4 deals with an engagement quality reviewer’s
appointment, eligibility, and responsibilities.
In addition to this engagement, we have carried
out assignments in the areas of financial statement
audit, interim financial statements review, agreed-
upon procedures and other assurance engagements
which are compatible with those independence
requirements. Other than this engagement and these
assignments, we have no relationship with or
interests in the Group.
Matthew Cowie
Ernst & Young Limited
On behalf of the Auditor-General
Auckland, New Zealand
19 August 2025
LEADERSHIP
AND GOVERNANCE
MANA WHAKAHAERE
In this section we introduce our Board and Executive Leadership
Team and present our corporate governance statement.
We also share our remuneration policy and report, directors and
other disclosures, information for security holders, sustainability
index, directory information and a glossary.
MENULEADERSHIP AND GOVERNANCE 94MERCURY 2025 INTEGRATED REPORT |
LEADERSHIP AND GOVERNANCE
SCOTT ST JOHN
CHAIR
Tenure:
First appointed: 1 Sep 2017
(Chair since Jan 2024)
Last elected: 19 Sep 2023
Key skills*: M&A and capital structure;
stakeholder relationships; commercial
experience; people leadership.
Scott has an extensive background in
investment advisory and capital markets.
Scott is Chair of ANZ New Zealand and
a director of ANZ Group and Next
Foundation. He was formerly a director
of Fonterra Cooperative Group, Chair of
Fisher & Paykel Healthcare Corporation,
a member of the Capital Markets
Development Taskforce and the Financial
Markets Authority Establishment Board
and was Chancellor of the University
of Auckland. He was the Chief Executive
of First NZ Capital from 2002 to 2017.
MARK BINNS
DIRECTOR
Tenure:
First appointed: 1 Sep 2023
Last elected: 19 Sep 2023
Key skills*: Energy industry; wholesale
markets trading; commercial experience;
major project investment.
Mark was CEO of Meridian Energy from
2012 – 2017 and before that spent 22
years with Fletcher Building, including
15 years as CEO of the Construction
and Infrastructure division. He currently
chairs Crown Infrastructure Partners
and Hynds Limited and is a director
of Auckland International Airport.
HANNAH HAMLING
DIRECTOR
Tenure:
First appointed: 1 Feb 2020
Last elected: 19 Sep 2023
Key skills*: Natural resource management
(including water and climate change);
health and safety; risk management.
Hannah is an environmental scientist
with a particular interest in sustainable
development and resilience. Until January
2020, she was President of the Asia Pacific
Region and Global Sustainable Development
Leader for Golder, a Canadian global ground
engineering and environmental science
company. Before joining Golder, Hannah
was Managing Director of New Zealand
environmental consultancy firm Kingett
Mitchell. Hannah has extensive background
in consulting, management and board roles
across various sectors including electricity,
construction and water management.
ROB HAMILTON
DIRECTOR
1
Tenure:
First appointed: 1 Apr 2025
Key skills*: M&A and capital structure;
investment analysis; audit and risk
management; commercial experience.
Rob is an experienced business leader
and director and an experienced chair of
audit and risk committees. He is currently
a director of Westpac New Zealand,
Oceania Healthcare, Tourism Holdings and
Cyprus Enterprises. Rob has more than
three decades’ experience in finance and
capital markets, including as a Managing
Director and Head of Investment Banking
at Jarden, and Chief Financial Officer
for SkyCity Entertainment Group. Rob’s
experience includes advising several
major New Zealand energy companies.
* Key Skills are defined as the particular skills each director brings to the Mercury Board, and which we consider
in our succession planning.
1
Rob Hamilton joined the Board on 1 April 2025 and will stand for election at the 2025 ASM in September.
Committee Membership key:Tenure key:
N
A
A A A N P P S S S S
Nominations and Corporate Governance Committee
P
S
People and Performance Committee
Safety and Enterprise Risk CommitteeAudit and Financial Risk Committee< 3 years
6
+
years
3-6 years
Chair of the committee
YOUR BOARD OF DIRECTORS
ADRIAN LITTLEWOOD
DIRECTOR
Tenure:
First appointed: 1 Aug 2023
Last elected: 19 Sep 2023
Key skills*: Commercial experience;
large organisation and cultural
leadership experience; major project
investment; stakeholder relationships.
Adrian has deep executive experience
including 12 years at Auckland International
Airport, nine of these as CEO. Before that he
held senior roles across strategy, operations,
product and marketing with Telecom
New Zealand. Previous governance roles
include acting as the New Zealand Chair
of the Australia/New Zealand Leadership
Forum, Chair of the NZ Airports Association
and a director of North Queensland
Airports and Tourism Industry Aotearoa.
MENULEADERSHIP AND GOVERNANCE 95MERCURY 2025 INTEGRATED REPORT |
YOUR BOARD OF DIRECTORS CONT.
JAMES MILLER
DIRECTOR
2
Tenure:
First appointed: 2 May 2012
Last elected: 22 Sep 2022
Key skills*: M&A and capital structure;
investment analysis; audit and risk
management; energy industry.
James is an experienced non-executive
director and chair and an experienced
chair of Audit and Risk Committees. He has
specialist expertise in utility economics and
15 years’ experience in capital markets. He
is currently Chair of Channel Infrastructure
NZ and is a director of Vista Group, Ryman
Healthcare and Fletcher Building. James’
prior roles have included Chair of NZX,
Deputy Chair of Accident Compensation
Corporation and board positions with
Auckland International Airport, the
Financial Markets Authority and Vector.
James is a qualified Chartered
Accountant and is a Fellow of the
Institute of Chartered Accountants and
Institute of Finance Professionals.
SUSAN PETERSON
DIRECTOR
Tenure:
First appointed: 1 Sep 2022
Last elected: 22 Sep 2022
Key skills*: Large organisation and people
leadership; AI; data and digitisation;
customer relationships; governance.
Susan is an experienced non-executive
director, board chair and chair of People
and Remuneration and Audit and Risk
Committees. As a business leader, Susan
has helped companies to drive growth
through technology, innovative customer
solutions and organisational culture. She
currently chairs Vista Group and is an
independent director of Xero. Susan is
also an independent director of
Craigs Investment Partners.
Susan was previously a member of the
New Zealand Markets Disciplinary Tribunal
and a past director of Trustpower, ASB
Bank, Arvida and Property for Industry.
Susan also served on the Board of Global
Women and has been a past Ministerial
appointee to the National Advisory
Council for the Employment of Women.
MIKE TAITOKO
DIRECTOR
3
Tenure:
First appointed: 28 Aug 2015
Last elected: 19 Sep 2024
Key skills*: Iwi and other stakeholder
relationships; natural resource
management (including water and
climate change); digitisation.
Mike is a leading advisor on Māori
economic development and has well-
established networks in Māoridom.
Mike has strong commercial skills in the
application of digital technologies. He is the
co-founder and CEO of Takiwā NZ Limited
and a co-founder and director of Toha
Foundry Limited, technology companies
commercialising cloud-based geospatial
analytics services. He was formerly a
director of Auckland Tourism Events
and Economic Development (ATEED).
LORRAINE WITTEN
DIRECTOR
4
Tenure:
First appointed: 1 Sep 2022
Last elected: 22 Sep 2022
Key skills*: Governance; commercial
experience; audit and risk
management; innovation.
Lorraine is an experienced non-executive
director, chair and chair of Audit and Risk
Committees. She is a business leader
with an extensive background in the telco,
technology, and ICT sectors. Lorraine
currently chairs Rakon and her prior roles
include director and chair of the Audit
and Risk Committees for Department of
Corrections, Horizon Energy Group, Pushpay
Holdings and WREDA, and director and chair
of MOVE Logistics Group and Kordia Group.
Lorraine is a Chartered Accountant and
is a Fellow of the Institute of Chartered
Accountants and Institute of Directors.
NICOLE ROSIE
PAST FUTURE DIRECTOR
Term: 1 May 2024 to 13 May 2025
Key skills*: Networked infrastructure
(delivery and operation), regulation,
public and private sector, cultural
change, health and safety and
sustainability/climate change.
Nicole is an experienced Chief
Executive and director. Nicole
completed her term as Chief
Executive of Waka Kotahi NZ
Transport Agency in February
2025. She has over 20 years of
experience in executive and senior
leadership roles including senior
executive roles in Fonterra, KiwiRail,
Vector and Fletcher Challenge
Forests, and 3 years as Chief
Executive of WorkSafe. Nicole has
expertise across the public and
private sectors including in cultural
change, transformation, health
and safety and climate change.
As a Future Director, Nicole was
invited to attend and participate
in Mercury Board and Committee
meetings, although she did not
participate in decision making.
* Key Skills are defined as the particular skills each director brings to the Mercury Board, and which we consider
in our succession planning.
2
James Miller will resign as a director following the 2025 ASM on 19 September 2025.
3
Mike Taitoko will resign as a director following the 2025 ASM on 19 September 2025.
4
Lorraine Witten will resign as a director on 15 September 2025.
A P N N A P A
Committee Membership key:Tenure key:
N
A
Nominations and Corporate Governance Committee
P
S
People and Performance Committee
Safety and Enterprise Risk CommitteeAudit and Financial Risk Committee< 3 years
6
+
years
3-6 years
Chair of the committee
MENULEADERSHIP AND GOVERNANCE 96MERCURY 2025 INTEGRATED REPORT |
YOUR EXECUTIVE
LEADERSHIP TEAM
The Executive Leadership Team leads our business to deliver on
strategy, ensuring we continue to succeed while also positioning
us for future opportunities and challenges. The team bring
enterprise-wide leadership capability, together with deep subject
knowledge expertise. Together, they provide leadership for our
people and more widely, in a changing environment.
FIONA SMITH
CHIEF PEOPLE EXPERIENCE OFFICER
STEW HAMILTON
CHIEF EXECUTIVE
KE VIN TAYLOR
CHIEF OPERATING OFFICER
– GENERATION
CATHERINE THOMPSON*
CHIEF SUSTAINABILITY OFFICER
TIM THOMPSON
EXECUTIVE GENERAL
MANAGER – WHOLESALE
MATT TOLCHER
EXECUTIVE GENERAL MANAGER
GENERATION DEVELOPMENT
RICHARD HOPKINS
CHIEF FINANCIAL OFFICER
CRAIG NEUSTROSKI
CHIEF STRATEGY AND
TRANSFORMATION OFFICER
*Catherine Thompson joined Mercury after FY25 year end.
MENULEADERSHIP AND GOVERNANCE 97MERCURY 2025 INTEGRATED REPORT |
CORPORATE GOVERNANCE FRAMEWORK
This corporate governance statement (comprising
pages 94 to 112 of this report) has been prepared in
accordance with NZX Listing Rule 3.8.1 and was
approved by the Board of Mercury NZ Limited on
19 August 2025. The information contained in this
corporate governance statement is current as at that
date. Some information in the corporate governance
statement is expressed to be current at another date,
for example the FY25 balance date of 30 June 2025.
This corporate governance statement reports against
the NZX Corporate Governance Code dated
31 January 2025.
At Mercury, we are committed to the highest
standards of corporate governance, business
behaviour and transparency to protect and enhance
the interests of our owners. Our corporate governance
framework includes robust policies and processes
which are fundamental to all of Mercury’s foundational
pillars. Our corporate governance framework
underpins the maintenance of strong relationships
with our stakeholders and our ability to create
long-term value. It also ensures Board accountability
to our shareholders and provides for an appropriate
delegation of responsibilities to our people.
The Board regularly reviews our corporate governance
policies and practices to ensure compliance with
NZX and ASX standards (Mercury is an ASX Foreign
Exempt Listed company) as well as reflecting positive
contemporary corporate governance trends in
New Zealand and Australia.
Over the reporting period, our corporate governance
practices were in substantial compliance with the NZX
Corporate Governance Code. The only exception relates
to Recommendation 3.3 (Remuneration Committee),
where the governance of remuneration at Mercury is
split between the People and Performance Committee
and the Nominations and Corporate Governance
Committee (see the Board Committees section of
this report for a full explanation of this exception).
While not required due to our ASX foreign exempt
listing status, we also endeavour to comply with ASX
Corporate Governance Principles and
Recommendations (fourth edition).
SHAREHOLDERS
CHIEF EXECUTIVE
EXECUTIVE
LEADERSHIP TEAM
MERCURY PEOPLE
MERCURY BOARD
AUDIT &
FINANCIAL RISK
COMMITTEE
SAFETY &
ENTERPRISE RISK
COMMITTEE
PEOPLE &
PERFORMANCE
COMMITTEE
NOMINATIONS
& CORPORATE
GOVERNANCE
COMMITTEE
MENULEADERSHIP AND GOVERNANCE 98MERCURY 2025 INTEGRATED REPORT |
MERCURY’S BOARD
BOARD COMPOSITION
AND CHARACTERISTICS
Structure of the Board
The Board typically comprises eight directors although
this number may vary as required to ensure effective
succession. To enable Mercury to achieve its strategic
goals, the Board strives to include an effective
combination and diversity of skills, backgrounds
and experiences. The Board also focusses on ensuring
that its culture reflects Mercury’s values, to foster
alignment with the wider business.
There is a brief bio of each director at the beginning
of this section.
Chair
Scott St John is the Chair of the Board. First
appointed as a director in 2017, he was appointed as
Chair in 2024. Scott is an independent, non-executive
director. The Chair’s overarching responsibilities are
to provide leadership to the Board and to ensure
the Board is well informed and effective. More
information about the role of the Chair is contained
in the Mercury Board Charter (found on the Corporate
Governance section of our website).
Future Director
The Institute of Directors’ Future Directors Programme
provides people with governance potential and
ambition with mentorship and the opportunity
to participate on a board. It aims to increase the next
generation of board-ready directors in New Zealand.
The Mercury Board is a supporter and active
participant in the programme, having welcomed five
future directors. Nicole Rosie was Mercury’s latest future
director, with her term ending on 13 May 2025. Mercury
is currently undertaking a future director search.
Future Directors are invited to attend, and actively
participate in, Mercury Board and Committee meetings,
although they do not participate in decision making.
INDEPENDENCE
All of Mercury’s directors, including the Chair, are
considered by the Board to be ‘independent’ directors,
in that they are non-executive directors who are not
substantial shareholders and who are free of any
interest, business or other relationship that would
materially interfere with, or could reasonably be seen
to materially interfere with, the independent exercise
of their judgement.
The Mercury Board takes director tenure into account
in considering independence. The NZX recommends
that issuers consider the effect of tenure on
independence after 12 years’ service. The Board has
determined James Miller to be independent. Mercury
values the experience and deep understanding
of Mercury’s business, energy markets and major
capital investment which James brings to the Board.
James has been on the Board since 2012, but in light
of the considerable value that he provides to the
Board, his ability to challenge and hold management
to account and the fact that he has been Chair of
the Audit and Financial Risk Committee (previously
the Risk Assurance and Audit Committee) only since
2022, the Board has determined that James’
independence is not affected by his tenure. James
will retire from Mercury following the 2025 Annual
Shareholders’ Meeting.
RESPONSIBILITIES
The Board is responsible for Mercury’s strategic
direction and operation and has delegated certain
responsibilities to the Chief Executive and the
Executive Leadership Team (ELT).
The Board’s responsibilities are set out in the Board
Charter, which is reviewed at least every two years,
and include:
Strategy and Planning
sEstablishing clear strategic goals with appropriate
supporting business plans and resources.
sMonitoring strategy implementation.
Environmental and Health, Safety and Wellbeing
sEstablishing Mercury’s environmental and health,
safety and wellbeing culture and practices comply
with all legal requirements, reflect best practice
in New Zealand and are recognised by employees
and other stakeholders as key priorities.
Financial Performance and Integrity
sMonitoring financial performance and the
integrity of reporting.
Executive Oversight
sAppointing the Chief Executive and overseeing
the appointment of ELT.
sSetting delegated authority levels for the Chief
Executive and ELT.
Risk and Audit
sApproving Mercury’s Risk Management Framework,
including the Risk Appetite Statements.
sOverseeing that effective audit, risk management
and compliance systems are in place and monitored
to protect Mercury’s assets and to minimise the
possibility of Mercury operating beyond legal
or regulatory requirements or beyond acceptable
risk parameters as determined by the Board.
Ethics, Culture and Corporate Behaviour
sSetting the expectations for a healthy, inclusive
and high performance culture.
sMercury’s adherence to high standards of
corporate behaviour, responsibility and ethics.
The Chief Executive and ELT are responsible for:
sDeveloping and making recommendations
to the Board on Mercury strategies and associated
initiatives.
sManaging and implementing strategies approved
by the Board.
sFormulating and implementing policies and
reporting procedures for management.
sDecision making compatible with Mercury’s
Delegations Policy.
sManaging business risk.
sThe day-to-day management of Mercury.
The Chief Executive and ELT have appropriate
employment agreements setting out their roles
and conditions of employment. Chief Executive
and ELT performance are reviewed regularly against
objectives and measures set by the Board in annual
performance scorecards. The Chief Executive’s and
each ELT member’s performance were evaluated
during the reporting period on this basis. Further
details are contained in the Remuneration Report.
CONFLICTS
Mercury maintains a directors’ interests register. The
interests register is reviewed at each Board meeting
to ensure it is up to date and to determine if any
directors are interested in any current or proposed
transaction in which Mercury is or may become
involved. If a director is interested in a transaction,
this is discussed with the Chair and the Company
Secretary and actively managed. A management plan
is established and periodically reviewed as necessary.
More details on the Board’s approach to conflicts
of interest can be found in Mercury’s Board Charter.
MENULEADERSHIP AND GOVERNANCE 99MERCURY 2025 INTEGRATED REPORT |
MERCURY’S BOARD CONT.
1
As at 30 June 2025. Nicole Rosie (past Future Director) is
not included in this data.
KEY BOARD STATS
1
TENUREGENDERETHNICITY
KEY:
6+ years (33%)
3-6 years (33%)
< 3 years (33%)
Information on current directors’ interests can be
found under Directors’ Disclosures.
ACCESS TO ADVICE AND COMPANY
SECRETARY
Directors may access such information and seek
such independent advice as they consider necessary
or desirable, individually or collectively, to fulfil their
responsibilities and permit independent judgement
in decision making. They are entitled to have access
to internal and external auditors without management
present and, with the Chair’s consent, seek
independent professional advice at Mercury’s expense.
All directors have access to the advice and services of
the Company Secretary for the purposes of the Board’s
affairs. The Company Secretary is appointed on the
recommendation of the Chief Executive and must
be approved by the Board. The Company Secretary
is accountable to the Board, through the Chair, on all
governance matters. As at the date of this Corporate
Governance Statement, Howard Thomas is the
Company Secretary.
SELECTION, NOMINATION
AND APPOINTMENT
All directors are elected by Mercury’s shareholders
(other than directors appointed by the Board to fill
casual vacancies, who must retire and stand for
election at the next meeting of shareholders) with
rotation and retirement determined in line with the NZX
Listing Rules. The Board is responsible for considering
and appointing directors to the Board after candidates
have been identified by the Nominations and Corporate
Governance Committee (see Board Committees).
Mercury notifies shareholders of their right to nominate
a candidate for election as a director by notice on the
NZX and ASX. Where any director election or re-election
is to occur at a shareholder meeting, the Notice of
Meeting includes all information on candidates for
director election or re-election that the Board considers
may be useful to shareholders. Directors must retire
every three years and, if desired, seek re-election.
Susan Peterson, having served for three years since
her last re-election, will retire at the September 2025
Annual Shareholders’ Meeting (ASM) and stand for
re-election in accordance with the NZX Listing Rules.
Scott St John will also step down as a director at the
2025 ASM and stand for re-election. James Miller,
Mike Taitoko and Lorraine Witten will retire as
directors in September 2025.
The Board and Nominations and Corporate
Governance Committee carry out appropriate due
diligence before appointing a director or nominating
a candidate for election as a director in accordance
with our governance processes.
Mercury has a written agreement with each director
set out in a letter of appointment containing the terms
and conditions of their appointment. A copy of the
standard form of this letter is available in the Corporate
Governance section of our website. In addition, Mercury
also indemnifies, and effects insurance for, directors
to cover acts or omissions of those persons in carrying
out their duties and responsibilities as directors in
accordance with the Companies Act 1993.
INDUCTION AND DEVELOPMENT
All new directors participate in a comprehensive
induction programme to familiarise them
with Mercury’s business and the energy and
telecommunications industries. The induction
programme covers key Mercury policies and internal
frameworks and includes sessions run by ELT
members on their business areas and important
projects happening within Mercury. New directors
may request further induction training as needed.
The Board receives regular briefings on Mercury’s
business operations from senior managers. Regular
Board strategy days are held to consider matters
of strategic importance to Mercury, and Board and
management run scenario thinking sessions for key
issues. Visits to Mercury’s facilities keep the Board
informed of Mercury’s assets and operations and
in particular with respect to health, safety and
wellness matters.
The Board has an ongoing programme to enhance
the effectiveness of directors. This involves both
deep-dives into aspects of Mercury’s business,
and sessions focussing on the broader environment
including future trends and innovation. During FY25
there were sessions run on geothermal fuel, price
paths and pricing, treasury, AI and insurance.
Directors are also encouraged and supported
to continue their own professional development
through individual learning opportunities. It is
essential to Mercury that directors commit sufficient
time to prepare and perform their duties properly and
effectively. The Board has considered this issue during
the reporting period and is satisfied that, taking into
account all of their commitments, each director had
sufficient time to perform their duties for Mercury.
KEY:
Female (33%)
Male (66%)
Gender diverse (0%)
KEY:
Maori (11.1%)
European/Other
(88.9%)
MENULEADERSHIP AND GOVERNANCE 100MERCURY 2025 INTEGRATED REPORT |
Skill and experience categoryCollective BoardSkill and experience categoryCollective BoardSkill and experience categoryCollective Board
Strategy and risk settingsStakeholdersGovernance and risk management
Significant commercial
experience across
different industries
and economic cycles
Community relationships
across market segments
and demographics
Governance experience,
including listed companies
Major project investment
and experience
Partner relationships
Finance/accounting/audit
committee experience
M&A and capital
structure experience
Government relationships
Risk management process
and experience, including
cyber security, climate related,
structural asset integrity
AI, automation and digitisation
Shareholder/investment
community relationships
People leadership
Health, safety and
wellbeing governance
Disruption and innovation
in energy and other sectors
Iwi relationships/connectivity
Large organisation and cultural
leadership experience
Climate Change and natural
resource management
(including water)
Energy industry
Energy industry experience
Retail
Wholesale markets
trading (energy and/or
other commodities)
Understanding and maximising
value in retail distribution
networks at scale
BOARD SKILLS MATRIX
Through the Nominations and Corporate Governance
Committee, the Board regularly assesses its skills
and competencies in the context of key outputs
required, including:
sSetting risk parameters for both value creation
and value protection.
sCultural leadership to reflect our values,
environmental kaitiakitanga and social licence
to operate.
sStrategy development in an environment
of disruption, requiring courage to challenge,
resilience and agility to respond.
During the reporting period, the Nominations and
Corporate Governance Committee has considered
and reviewed the skills of the Board and updated the
Board skills matrix. The skills matrix has been reviewed
in FY25 to align with Mercury’s updated strategic
framework. Recognising that how well the Board
performs is a function of the skills and experience
of individual directors and how the directors work
together as a whole, we consider that addressing
the level of skills and experience collectively is a better
indicator of overall Board capability.
Although the Board fosters collaborative and open
discussion and each director is expected to contribute
broadly, the key skills which individual directors
contribute to the Mercury Board are indicated in the
director profiles. The purpose of identifying key skills
at an individual level is to signal the skills which would
need to be considered when a director retires. This
is important for succession planning purposes.
MERCURY’S BOARD CONT.
KEY:
None
Some
Medium
Substantial
The skills matrix presented here includes data for all current
directors as at 30 June 2025.
MENULEADERSHIP AND GOVERNANCE 101MERCURY 2025 INTEGRATED REPORT |
REVIEWING PERFORMANCE
The performance of the directors (individually and
collectively), and the effectiveness of Board processes
and committees, are regularly evaluated using a
variety of techniques including external consultants,
questionnaires and Board discussion. A performance
review was carried out by an external facilitator during
2024. A performance review led by the Chair will be
carried out during the 2025 calendar year.
DIRECTORS’ MERCURY SHAREHOLDINGS
The Board encourages the alignment of directors’
interests with those of shareholders and with
Mercury’s strategic aims. Non-executive directors
are encouraged, within three years of the date the
Non-executive Director Remuneration Policy was
first approved or three years of their appointment
(whichever is later), to purchase and hold Mercury
shares equivalent to the non-executive director’s
fixed annual base fee after tax. Further details of
directors’ shareholdings in Mercury are set out in
Directors’ Disclosures.
BOARD COMMITTEES
The Board has four standing committees: the
Audit and Financial Risk Committee (AFRC),
the Safety and Enterprise Risk Committee (SERC)
the People and Performance Committee, and the
Nominations and Corporate Governance Committee.
The previous Risk Assurance and Audit Committee
was replaced by the AFRC and SERC effective 1
January 2025. Each committee focusses on specific
areas of governance. Together, they strengthen the
Board’s oversight of Mercury.
Committee meetings are scheduled to coordinate
with the Board meeting cycle. Each committee
reports to the Board at the subsequent Board
meeting and makes recommendations to the Board
for consideration as appropriate. The minutes of each
committee meeting are provided to all directors.
As an exception to the NZX Corporate Governance
Code, Mercury does not comply with Recommendation
3.3 because it does not have a separate remuneration
committee. This exception has been approved by the
Board. The functions that would ordinarily be allocated
to a remuneration committee are shared between
the People and Performance Committee in respect
of the Chief Executive and the ELT, and the
Nominations and Corporate Governance Committee
in respect of the directors. These responsibilities are
reflected in the Committee Charters.
Each standing Committee operates in accordance
with a written Charter approved by the Board and
reviewed as required and at least every two years.
Each committee is required to confirm to the Board
annually that they have fulfilled the requirements
set out in their Charter. The Committee Charters
are available in the Corporate Governance section
of our website.
ADDITIONAL COMMITTEES
Mercury assesses on a regular basis whether additional
standing or ad hoc committees are required.
Additional temporary committees are established
from time to time, including as required to provide
governance oversight on short-term projects. As at
the date of this statement, Mercury has considered
that no other standing committees are required.
MERCURY’S BOARD CONT.
People and Performance Committee
Membership and Meetings
Members as at 30 June 2025:
At least three directors, majority
independent non-executives.
Meetings in FY25: At least 3 annually
Aug 24Nov 24Apr 25Jun 25Out of cycle
1
Susan Peterson (Chair)1
Mike Taitoko
-1
Adrian Littlewood
1
Scott St John
1
Rob HamiltonN/AN/AObserverN/AN/A
Purpose
Assist the Board to fulfil its responsibilities relating to:
• Mercury’s people and culture strategy and plan.
• The remuneration and performance of the Chief Executive.
• People and culture policies and practices.
In addition, the Committee will monitor and provide guidance to management on human resources related matters.
1
There was one out of cycle People and Performance Committee meeting during the period in relation to executive remuneration.
Nominations and Corporate Governance Committee
Membership and Meetings
Members as at 30 June 2025: At least three
directors, majority independent non-executives.
Meetings in FY25: At least annually
Dec 24Apr 25Jun 25Out of cycle
2
Scott St John (Chair)1
James Miller
1
Susan Peterson
1
Adrian LittlewoodN/AN/AObserverN/A
Purpose
Assist the Board to ensure that:
• the Board and its committees are structured appropriately and composed of suitably qualified individuals
to support the Board’s effectiveness in discharging its duties and responsibilities; and
• the Board adheres to high standards of corporate governance, reflecting governance principles and best practice.
While directors are elected by shareholders, the NCGC has an important role to identify people with the necessary
range of skills, experience, knowledge and perspectives for selection as candidates for shareholder vote.
2
There was one out of cycle Nominations and Corporate Governance Committee meeting during the period in relation to the new
committee structure.
COMMITTEE ATTENDANCE TABLE
P
N
MENULEADERSHIP AND GOVERNANCE 102MERCURY 2025 INTEGRATED REPORT |
MERCURY’S BOARD CONT.
Risk Assurance and Audit Committee
(disestablished 1 January 2025)
Membership and Meetings
Members as at 30 June 2025: At least three directors, all
independent non-executives. At least one with accounting/
financial background. Board Chair not eligible to be RAAC Chair.
Meetings in FY25:
At least 3 annually
Aug 24Nov 24
James Miller (Chair)
Hannah Hamling
Mark Binns
Lorraine Witten
Scott St John
Susan PetersonObserverN/A
Purpose
Until 1 January 2025: Oversee, review and advise the Board on Mercury’s:
• Risk management policy and processes (which include oversight of health and safety assurance and climate-related
risks and opportunities).
• Internal control mechanisms and internal and external audit functions.
• Compliance with legislation and regulation.
• Financial information prepared by management for publication.
Management only attend RAAC meetings by invitation.
Safety and Enterprise Risk Committee
(established 1 January 2025)
Membership and Meetings
Members as at 30 June 2025: At least three
directors, all independent non-executives.
Meetings in FY25:
At least 3 annually
Feb 25May 25
Hannah Hamling (Chair)
Adrian Littlewood
Mark Binns
Scott St John
Rob HamiltonN/AObserver
Purpose
From 1 January 2025: Assist the Board to fulfil its corporate governance role and responsibilities relating to health
and safety and enterprise risks, including overseeing and monitoring Mercury’s Risk Management Framework and
risk assurance and internal audit activity as it relates to non-financial risk.
Audit and Financial Risk Committee
(established 1 January 2025)
Membership and Meetings
Members as at 30 June 2025: At least three
directors, all independent non-executives.
At least one with accounting/financial background.
Board Chair not eligible to be AFRC Chair.
Meetings in FY25:
At least 3 annually
Feb 25May 25Out of cycle
3
James Miller (Chair)1
Hannah Hamling
1
Lorraine Witten
1
Susan Peterson
1
Scott St John
1
Rob HamiltonN/A
1
Mark BinnsObserverN/AN/A
Purpose
From 1 January 2025: Assist the Board to fulfil its corporate governance role and responsibilities relating to external
audit, integrated reporting (including financial statements and climate-related disclosures) and risk assurance and
internal audit as it relates to financial and climate-related risk.
Management only attend AFRC meetings by invitation.
3
There was one out of cycle Audit and Financial Risk Committee meeting during the period in relation to climate-related disclosures.
R
S
A
Lalicia Kok and Rahul Sharma.
MENULEADERSHIP AND GOVERNANCE 103MERCURY 2025 INTEGRATED REPORT |
ASSURANCE AND MANAGING RISK
AUDIT PLAN AND ROLE OF AUDITOR
As a public entity under the Public Audit Act 2001,
the Auditor-General is the independent auditor of
Mercury and each of our subsidiaries (together, the
‘Group’). The Auditor-General appointed Emma
Winsloe of Ernst & Young (EY) to conduct the FY25
audit on his behalf. The NZX Listing Rules require
rotation of the key audit partner at least every five
years. Ernst & Young were first appointed as auditors
in May 1999, with Emma being appointed as the key
audit partner for the FY24 audit. The provision of
external audit services is guided by the Audit
Independence Policy available on the Corporate
Governance section of our website. The external
auditor attends the Annual Shareholders’ Meeting
and is available to shareholders to answer questions
relevant to the audit.
INTERNAL AUDIT AND RISK ASSURANCE
Mercury has a comprehensive internal audit and risk
assurance plan, which takes a holistic view of Mercury’s
culture, practices and procedures and includes periodic
reviews of relevant areas of Mercury’s operations. The
internal audit plan is designed, updated and approved
by the Safety and Enterprise Risk Committee (SERC)
and the Audit and Financial Risk Committee (AFRC)
in consultation with the Risk Assurance Officer and
the Internal Audit function. The Internal Audit function
(currently made up of an internal team, Deloitte and
other internal audit and process specialists appointed
on an outsourced basis) reports on progress and the
results of internal audit reviews at each SERC or AFRC
meeting (as applicable). The Internal Audit function
has access to management and the right to seek
information and explanations.
The SERC and AFRC meets with the Internal Audit
function as required without management present.
During FY25, the audit and risk assurance focus of
the SERC and AFRC was compliance (regulatory),
reputation, financial (including climate), operational
and health, safety and wellbeing. Assurance reviews
were undertaken for the following areas: Dam Safety,
Process Safety, Key Financial Controls, Environmental
Resource Compliance, Nature-based reporting and
Cyber Security.
The SERC and AFRC meet quarterly to undertake
their respective programmes of internal review and
risk assurance work. The SERC has its meetings on site
to facilitate its oversight of operational and safety risks.
TIMELY AND BALANCED DISCLOSURE
Shareholders and markets
Mercury is committed to maintaining a fully informed
market through effective communication with the NZX
and ASX, our shareholders and investors, analysts,
media and other interested parties. Mercury provides
all stakeholders with equal and timely access to
material information that is accurate, balanced,
meaningful and consistent. Where Mercury provides
a new and substantive investor and analyst
presentation, these materials are released to the NZX
and ASX ahead of the presentation.
The Market Disclosure Policy is designed to ensure
this occurs in compliance with Mercury’s continuous
disclosure obligations under the NZX Listing Rules.
The Policy is available in the Corporate Governance
section of our website.
The Board has appointed the Company Secretary
as the Disclosure Officer who is responsible for
administering the Policy. The Disclosure Committee
(made up of the Board Chair, AFRC Chair, Chief
Executive, Chief Financial Officer and Disclosure
Officer) is responsible for ensuring that Mercury
complies with its disclosure obligations.
The Chief Executive and ELT are responsible for
providing the Disclosure Officer with all material
information relating to their areas of responsibility.
Information which, in the opinion of the Disclosure
Officer, may require disclosure is provided to the
Disclosure Committee for decision.
Disclosures relating to the annual and interim
financial statements must be reviewed by the AFRC
before being approved by the Board. Once approved
for disclosure, the Disclosure Officer is responsible
for releasing material information to the market.
Directors consider at each Board meeting whether
there is any material information which should
be disclosed to the market.
Integrity of reporting
The Chief Executive and the Chief Financial Officer are
required each half year and full year to provide a letter
of representation to the Board confirming that the
financial statements have been prepared in accordance
with legal requirements, comply with generally
accepted accounting practice, and present fairly, in
all material respects, the financial position of Mercury
and the results of its operations and its cash flows.
A letter of representation confirming those matters
was received by the Board with respect to the Group’s
FY25 financial statements. The Board has provided
a similar letter of representation to EY as the Auditor.
Mercury’s Integrated Report follows the Integrated
Reporting <IR> framework. It covers financial and
non-financial information, including material
environmental, social and governance matters.
Mercury includes a specific Global Reporting Initiative
(GRI) Index and comprehensive climate-related
disclosures, that are aligned with the Aotearoa
New Zealand Climate Standards. We obtained
an independent limited assurance opinion from EY
on our FY25 Climate Statement and Greenhouse
Gas Emissions Inventory.
RISK MANAGEMENT FRAMEWORK AND
COMMITTEE RESPONSIBILITIES
Risk management is an integral part of our business.
Responsibility starts with the Board who oversee that
effective audit, risk management, and compliance
frameworks and policies are in place and operating
effectively. These frameworks and policies are
monitored to protect Mercury’s assets and earnings,
and to mitigate the possibility of operating beyond
legal or regulatory requirements or beyond acceptable
risk parameters. The Board delegates this oversight
responsibility to the SERC, AFRC and People and
Performance Committee (PPC). The SERC and AFRC
oversee the overall audit, risk management, and
compliance systems and responsibility for certain
people-related risks is delegated to the PPC (e.g.
culture and psychological safety).
The SERC, AFRC and PPC Charters set out the role,
responsibilities, composition, structure, and procedures
of each Committee. The Charters provide guidance
for the effective oversight of risk assurance and audit
matters by the Committees on behalf of the Board.
Mercury has an overarching Risk Management Policy
in place (see the Corporate Governance section of our
website) supported by a suite of risk management tools
appropriate for our business, including our Risk
Appetite Statement, the Mercury Code, an Energy
Markets Risk Management Policy, a Treasury Policy
and a Delegations Policy.
The purpose of the Risk Management Policy is
to embed a comprehensive, holistic, Group-wide
capability in risk management, which provides
a consistent method of identifying, assessing,
controlling, monitoring, and reporting existing
and potential risks to our business and its plans.
The Policy sets out the risk management objectives
and requirements of Mercury within which
management is expected to operate. The Policy applies
to all business activities of the Group including
Mercury-controlled joint ventures and is reviewed
annually by the SERC and approved by the Board.
The risk management framework supports a
comprehensive approach to risk, encompassing
financial, strategic, environmental, operational,
regulatory, reputational, social and governance risks.
This approach includes assessing and managing
climate-related risks.
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ASSURANCE AND MANAGING RISK CONT.
The framework involves actively identifying and
managing risk and taking measures to reduce the
likelihood of risk, contain potential hazards and take
mitigating action to reduce impacts in line with risk
tolerances. This approach is consistent with the
precautionary principle whereby, when an action
has the potential to cause serious harm and there
is reasonable uncertainty about the risks involved, it is
prudent to take preventive measures to avoid harm.
Underpinning all of Mercury’s risk management
committees, frameworks, policies and process is
a strong culture based on integrity, transparency,
and accountability. The Board explicitly links culture
to the organisation’s capacity to identify, escalate,
and mitigate risk, embedding this connection within
its governance framework. The Risk Management
Policy further assigns clear responsibility to every
employee to observe, report, and control potential
threats across the business. When these values
are enacted through open information-sharing,
issues surface promptly, constructive challenge
is encouraged, and decisions remain aligned
with Mercury’s defined risk appetite.
We must accept some risks to achieve our strategic
objectives and to deliver shareholder value.
Our tolerance for risks is embodied in our Risk
Appetite Statement which are set and regularly
reviewed by the Board. As part of the current Risk
Appetite Statement, Mercury targets a long-term
credit profile of BBB+ (bbb on a stand-alone basis)
from S&P Global (or its equivalent).
We have a Risk Assurance Officer who has the
independence to determine the effectiveness of risk
management, assurance and internal audit. The Risk
Assurance Officer has multiple reporting lines to the
Chief Financial Officer, the SERC Chair and the AFRC
Chair. Both the SERC and AFRC task the Risk
Assurance Officer to ensure healthy and robust
debate and interaction between management,
risk assurance and audit providers.
The Chief Executive operates a Risk Management
Committee, whose mandate is to establish, promote
and implement risk awareness and adequate risk
management controls to all staff. It also aims to
monitor and review risk activities as circumstances
and our strategic and operational goals change.
Membership of the Risk Management Committee
is made up of representatives from the Executive
Leadership Team and is chaired by the Chief Executive.
The Risk Management Committee meets up to 10
times a year.
In addition to these risk management processes,
several measures are employed to manage risks.
These include employee awareness, incident training,
due diligence, financial risk mitigation tools, active
involvement in the regulatory environment and
established whistle blower policy and procedures.
As noted above, the SERC is responsible for
overseeing, reviewing and providing advice to the
Board on Mercury’s risk management frameworks,
policies and processes. The Risk Assurance Officer
reports regularly to the SERC on the effectiveness
of our management of material business risks.
In addition, the SERC annually reviews the risk
management framework. The last review of the risk
management framework took place in May 2025.
Mercury’s Constitution, and relevant Charters and
Policies are available in the Corporate Governance
section of Mercury’s website.
OUR KEY RISKS
Mercury’s key risks are categorised as safety and
wellbeing, compliance, reputation, operational,
financial and people risks.
SAFETY AND WELLBEING
Mercury undertakes activities that potentially involve
significant safety risks. When we think about safety
and wellbeing risks at Mercury we focus on our 11
critical safety risks: driving, electricity, confined spaces,
stored energy, working around water, mental wellbeing,
dropped or falling objects, hazardous substances,
mobile plant and equipment, working alone, and
working at heights. A critical safety risk is something
that has the potential to kill or seriously hurt our
people, our partners or a member of the public.
There are several factors that can create wellbeing
risk for our people and our customers. Mercury has
implemented specific internal and external initiatives
(e.g. a suite of staff wellbeing tools, Customer Care
programme for Vulnerable and Medically Dependent
customers, Here to Help programme for affordability
issues) to address this risk and alleviate impacts.
Mercury operates three stations (Rotokawa, Mokai and
Ngā Tamariki) that are designated as Upper-Tier Major
Hazard Facilities (MHF) which have unique safety risks
beyond those found in our other generation plants. As
an operator of a designated MHF, we work closely with
WorkSafe and Fire and Emergency NZ and have regular
contact with local councils and communities. We have
a strong focus on Process Safety management and
our Safety Cases demonstrate how we manage and
operate safely to ensure that risks to personnel are
reduced and that any potential damage to property,
the environment and the community is minimised.
COMPLIANCE
Legislative and regulatory changes
Managing the energy trilemma (reliability, affordability
and renewability) is a key challenge as the energy sector
transition progresses and this in turn creates an
increased risk of possible regulatory intervention.
Fuel constraints arising from reduced gas availability at
times of extremely low hydro storage can result in high
energy market volatility which in turn impacts the price
that New Zealand businesses pay for their energy.
When energy prices are high, there is an increased risk
of regulatory intervention by policy makers. Regulatory
intervention has the potential to impact on Mercury’s
wholesale/commercial sales and profitability.
Regulatory changes to the wholesale and retail
market structure and pricing regimes may also affect
how Mercury manages its integrated business model
of generation and retailing electricity, gas and telco
service and could adversely impact on Mercury’s ability
to create long-term, sustainable value. Legislative
or regulatory changes, relating to Treaty of Waitangi
claims and iwi-related litigation with the Government,
changes to consent conditions, or levies on the use
of natural resources, may result in Mercury facing
significant direct or indirect restrictions, conditions
or additional costs on Mercury’s access to freshwater
or geothermal resources and its hydro, wind and
geothermal generation activities.
REPUTATION
Maintaining the trust of Mercury’s investors, iwi
partners, customers, policy makers and the broader
community is a key priority. In addition to the risks
mentioned elsewhere in this statement, the following
circumstances could threaten Mercury’s reputation
and could lead to a loss of business revenues and
an associated reduction in Mercury’s enterprise value:
sErrors in customer connections, billing or general
customer communications.
sMistakes by directors, management, contractors
or related industry operators.
sAdverse environmental impact caused by, or
perceived to be caused by, Mercury’s operations.
sHealth and safety incidents under the operational
control of Mercury.
sA reduction in standards of the respect that we
show to the communities that we operate in.
Many of these reputational risks have the potential
to impact on the maintenance of Mercury’s social
licence to operate.
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ASSURANCE AND MANAGING RISK CONT.
OPERATIONAL
Fuel security and supply
Mercury’s generation depends upon the availability of
water for hydro generation, wind for wind generation,
and geothermal fluid for geothermal generation.
The principal risks relating to fuel security and supply
include the inability to generate expected levels of
electricity due to either temporarily or permanently
reduced fuel supplies, loss of access to supply, or
increased costs to secure the necessary fuel, all
of which may adversely affect Mercury’s earnings.
Supply chain
Mercury is exposed to both international and domestic
supply chain risks (e.g. wind turbines, geothermal
turbines, generators, transformers) that can impact
on our ability to successfully deliver our generation
development pipeline projects and major plant
refurbishment programme.
Electricity market exposure
In the short run, our ability to manage our electricity
portfolio risk depends upon our ability to purchase
and sell electricity in the wholesale electricity market
which could be impacted by:
sShort-term changes in supply and demand.
sNational fuel availability based on hydrological
and thermal conditions (including extended
national drought).
sCompetitor behaviour.
sSignificant reduction or ceasing of electricity
consumption (e.g. by large industrial companies).
sConstrained transmission and distribution
of electricity.
In the long run, wholesale prices are determined by the
level of national demand relative to supply from power
generation. Prices can be affected by levels of activity
in the industrial sector, population size, economic
conditions, competitor behaviour, generation build and
retirement, technological changes and new sources
of energy, and regulatory changes. We could also be
adversely impacted if a large group of customers, one
or more major customers, or a New Zealand market
participant were to default on payment for electricity
provided or for hedge settlements.
Broadband and mobile services
Mercury retails broadband and mobile
telecommunication services to residential and
commercial customers. Broadband and mobile both
introduce different operational challenges
(e.g. network availability, cyber-security) that if not
well managed can jeopardise Mercury’s capacity to
supply telecommunication services to customers.
Power station availability
Our ability to generate electricity depends upon the
continued efficient operation of our power stations.
The viability, efficiency or operability of our power
stations could be adversely affected by a range
of factors including:
sCatastrophic events such as a major earthquake,
volcanic eruption, or other natural perils that could
cause failure of one or more of our power stations.
sMaterial failure of turbines, transformers, key
infrastructure or geothermal wells that results
in unplanned power station outages that require
replacement or repair and could be influenced
by supply chain delays.
sUnexpected events impacting the short-term
availability of key people required to operate
stations, provide hydro control or trading oversight.
sCyber-attacks upon our power stations that could
result in a plant failure or sustained loss of control.
Information security
We depend on many different IT systems for our
continued operations. There is a risk that the security
of critical systems may be compromised and/or
information accessed, copied, deleted or corrupted,
impacting on our ability to operate critical systems.
Such an event could result in costs to resolve or repair;
potential downtime of operations; potential breaches
of our customers’ and our people’s privacy, including
unauthorised access and disclosure of their personal
information; and reputational impacts from any loss
of service, or resulting impacts on safety, our
environment or community.
FINANCIAL
Insurance
Mercury is insured through a comprehensive
programme including cover for generation property,
plant and equipment and business interruption with
a combined limit of $1 billion. Some catastrophic
events are uninsurable, or we have chosen not to
insure against them as the cost of cover is prohibitive
and the likelihood of occurrence is extremely rare.
This is a common approach in our industry.
In the event of a severe catastrophic event, it is possible
that the insurance portfolio will not provide sufficient
cover, impacting future operational performance and
the financial condition of Mercury. We estimate that
the maximum foreseeable loss to which the Group
could potentially be exposed to (cascade dam failure
causing significant flooding, business interruption,
direct reinstatement costs and potential loss of life)
is approximately $13 billion with an assessed likelihood
of occurrence of 1 in 100,000 years.
We review the level and nature of our insurance cover
annually. Following a third-party risk tolerance analysis
which considered several key financial metrics specific
to Mercury, the decision was previously made to retain
additional financial risk (e.g. deductibles, shared
primary level cover, caps, waiting periods, etc.) in the
event of an insurable loss to our generation assets.
Side C cover, which insures the company against
liabilities arising out of securities market conduct
breaches, was also previously removed from our
directors’ and officers’ insurance policy.
Climate change
For details of our key climate-related risks and how we
manage them, please refer to our Climate Statement.
Growth and development
Growth and development projects are subject to risks
that may affect expected financial returns or outcomes:
sMajor generation development projects during
construction give rise to risks including cost
overruns, commissioning delays, environmental
impacts and employee/contractor safety.
sPolitical and regulatory uncertainty, high interest
rates and poor economic conditions may limit
our development choices or adversely affect
the viability or costs of future developments.
Liquidity and access to capital
A deterioration of our financial condition or instability
in capital markets could increase our cost of capital,
affect our ability to raise debt, or reduce our cash
liquidity thereby impacting our financial performance,
pursuit of our strategic objectives or result in
insolvency. The Crown’s shareholding and the
provisions of the Public Finance Act limits our ability
to raise equity capital.
PEOPLE
Attracting, developing, and retaining capable,
adaptable and high performing people who can
contribute to our strategic priorities remains a focus
for Mercury. Mercury also faces the challenge of an
aging workforce in several key operational areas and
attracting capability and talent to provide succession
remains a key priority.
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ASSURANCE AND MANAGING RISK CONT.
BOARD APPROVED RISK MANAGEMENT FRAMEWORK
Mahinerangi Wind Farm.
OPERATIONS
MANAGEMENT
COMMITTEES
BOARD
RISK MANAGEMENT POLICYRISK APPETITE STATEMENTS
CONSOLIDATED RISK REPORTRISK MATRIX
• Chief Executive accountable to
the Board, SERC and AFRC and
responsible for managing risk
• ELT oversees and owns Business
Unit risks and controls
• Oversees implementation of
risk management framework,
promotes risk awareness and
mitigations, and tests key controls
• Establishes, promotes and implements
risk management (processes,
controls, systems and awareness)
BOARD
AUDIT AND FINANCIAL RISK
COMMITTEE (AFRC)
CHIEF EXECUTIVE AND EXECUTIVE
LEADERSHIP TEAM (ELT)
RISK ASSURANCE OFFICER
BUSINESS UNITS
RISK MANAGEMENT COMMITTEE
SAFETY AND ENTERPRISE
RISK COMMITTEE (SERC)
PEOPLE AND PERFORMANCE
COMMITTEE
Accountable for governing risk
Oversees and monitors risk management
Owns and manages day to day risks and controls
MENULEADERSHIP AND GOVERNANCE MERCURY 2025 INTEGRATED REPORT | 107
ENGAGING WITH INVESTORS
OUR INVESTOR RELATIONS PROGRAMME
We are committed to open and effective
communication with our stakeholders and owners
by providing comprehensive relevant information.
We take the steps set out in our Market Disclosure
Policy to achieve this.
We communicate with our investors in various ways,
including the Investor section of our website, annual
shareholders’ meetings (ASM) and webcasts, our
annual and interim reports, regular information
disclosures, and analyst and investor briefings and road
shows. Our aim is to clearly communicate our strategic
direction, including articulating our strategic priorities
and how these leverage our competitive advantages.
We also run a programme to build understanding and
appropriate measurement of our performance among
investors and research analysts. That programme aims
to be responsive, clear, timely, consistent, even-handed
and accurate, and is designed to ensure appropriate
access to management and directors.
Summary records of matters discussed at meetings
with investors and analysts are kept for internal use,
unless a recording or transcript of the presentation
is published on our website.
WEBSITE
Our website contains a comprehensive set of
investor-related information and data including stock
exchange and media releases, interim and annual
reports, investor presentations and webcasts, and
shareholder meeting materials. We will continue to
build environmental, social and governance (ESG)
website content to meet the increasing demand for
transparent disclosures of its performance across
these areas and the management of long-term risks
and opportunities.
Shareholders can direct questions and comments
to Mercury through the website or contact:
investor@mercury.co.nz
MERCURY INVESTOR DAY 2025
Mercury hosted a two-day investor event for
institutional investors in Rotorua on 10 and
11 June 2025.
Day one included presentations from management
on Mercury’s strategy refresh and how Mercury will
be Better Today, Building Tomorrow and Brighter
Together. Day two included a visit to Mercury’s Ngā
Tamariki OEC5 geothermal site. Mercury’s Chair,
Scott St John, and directors Adrian Littlewood
and Susan Peterson attended the investor event.
Feedback from the event was positive and Mercury
intends to hold another Investor Day in FY27.
GOVERNANCE ROADSHOW
Mercury held a series of investor meetings during
August 2025, primarily with institutional investors.
The governance roadshow aims to provide an
overview of Mercury’s activities and significant
governance matters during the year. Materials
from the roadshow can be found on our website.
ANNUAL SHAREHOLDERS’ MEETING AND
WEBCAST
An ASM is held in New Zealand at a time and location
which aims to maximise participation by shareholders.
Mercury’s 2025 ASM will be held in Auckland on
19 September 2025 and once again will be held
in a hybrid format (in person and online). This approach
was successful at the 2022-24 ASMs and is considered
by the New Zealand Shareholders’ Association as
the most effective approach to enable meaningful
shareholder participation.
ELECTRONIC COMMUNICATIONS
We encourage shareholders to provide email
addresses to enable them to receive shareholder
materials electronically. Communicating electronically
is faster and more cost effective. Most of our
shareholders receive information electronically.
However, we understand that this does not suit
everyone. We also provide a hard copy Integrated
Report to shareholders who wish to receive it.
Mokai Geothermal Station.
MENULEADERSHIP AND GOVERNANCE 108MERCURY 2025 INTEGRATED REPORT |
ACTING ETHICALLY AND RESPONSIBLY
TIKANGA MATATIKA ME TE TAKOHANGA
The Mercury Code and the policy framework described
below support our promises to each other and define
our commitment to our customers, our people and
community, and our investors. The Mercury Code,
Modern Slavery Statement, and all Policies referred to
in the table on the following page are available on the
Corporate Governance section of our website.
THE MERCURY CODE
Mercury people strive to do what’s right. We have put
in place the Mercury Code to ensure that our people
know what the ‘right thing to do’ is. The Mercury Code
is our version of a code of conduct and ethics and
documents the behaviours we require to embed and
sustain our culture to successfully deliver our strategy
and achieve our Purpose of taking care of tomorrow:
connecting people and place today.
The Mercury Code underpins everything we do.
It requires all Mercury people, including directors
and employees, to act honestly and with integrity
and fairness at all times, and to strive to foster those
standards within Mercury.
A Mercury employee is expected to apply the
Mercury Attitude. This attitude shapes our decisions,
our actions and our interactions with each other.
Our Mercury Attitude aligns our direction to achieve
our Purpose.
The Mercury Code is reviewed by our Board at least
every two years. All Mercury employees are required
to complete an annual re-certification training on
applying the Mercury Code. This is an interactive
e-learning module which tests employees on their
understanding of applying the Mercury Code in
different situations. A 100% score is required to pass
the module.
CARE/TAURIMA
Doing what's right.
Te mahi i te mea tika.
COMMIT/KĪ TAURANGI
Taking ownership.
Rangatiratanga.
CONNECT/HONONGA
Working together.
Te mahi tahi.
CURIOUS/PĀKIKI
Exploring possibilities.
Te wherawhera i ngā āheinga.
Directors are required, in the performance of their
duties, to give proper attention to the matters before
them and to act in the best interests of Mercury
at all times.
SUPPLIER CODE OF CONDUCT
We also want to ensure that we work with suppliers
who share our commitment to acting ethically and
doing the right thing. Our Supplier Code of Conduct
describes the way we work with our suppliers and what
we expect in return. The Supplier Code of Conduct
includes our commitments and our expectations
in relation to social responsibility, health and safety,
compliance with all applicable modern slavery laws,
environmental responsibility, and business integrity.
MODERN SLAVERY
Mercury acknowledges the importance of assessing
and addressing the risk of modern slavery in our
operations and supply chain. We continue to publish
a modern slavery statement, in line with our obligations
under the Australian Modern Slavery Act 2018.
Our FY24 statement outlines the work undertaken
during FY24 to assess and address the risk of modern
slavery in our operations and supply chain and
identified the following key focus areas for FY25.
The areas set out in the table on the following page
are of fundamental importance to Mercury to ensure
good governance and responsible business practices
are followed.
MENULEADERSHIP AND GOVERNANCE 109MERCURY 2025 INTEGRATED REPORT |
Our governance and responsible business practices
ConflictsConflicts of interest must be avoided, except with the prior consent of Mercury.
Mercury people are required to declare conflicts of interest and are encouraged to
proactively discuss potential conflicts with their manager. Mercury takes practical,
preventative action wherever possible—for example, by substituting project managers
in circumstances of possible conflict with contractors and suppliers.
Our directors declare all potential conflicts of interest prior to appointment and,
if applicable, at each Board meeting in relation to specific agenda items.
Bribery and corruptionThe acceptance of bribes, including gifts or personal benefits of material value which
could reasonably be perceived as influencing decisions, is prohibited under the Mercury
Code. Under Mercury’s Delegations Policy, donations to political parties are prohibited.
Anti-corruption awareness is also covered in finance training required to be completed
by all Mercury employees and contractors, with further in-depth training required for
anyone holding commitment authority on behalf of Mercury. In addition, we hold fraud
and corruption awareness training for finance and key procurement staff and in
FY25 we held our first Mercury fraud awareness week education campaign. Our Risk
Assurance plan approved by the SERC and AFRC also includes periodic internal
finance-related assurance reviews designed to identify any areas of fraud and
corruption risk.
Use of Mercury assetsThe Mercury Code places restrictions on the use of corporate information, assets
and property. All persons covered by the Mercury Code are encouraged to report
any breach or suspected breach of the Code.
WhistleblowingWe provide a framework for the protection of employees wishing to disclose serious
wrongdoing. This is described in Mercury’s Whistleblowing Policy. In FY25 we updated
the Whistleblowing Policy and engaged Deloitte to provide an external and
independent disclosure reporting platform and supporting services.
Employees are also encouraged to voice concerns with their manager, the HR team,
the General Counsel, other managers or directors regarding any ethical or irresponsible
behaviour, even if it does not meet the threshold of serious wrongdoing.
Trading in company
securities
Mercury’s Trading in Company Securities Policy sets out the rules and restrictions
relating to trading in Mercury securities by directors, employees and contractors,
including the prohibition on insider trading. The Policy is closely monitored by
the Company Secretary and overseen by the SERC.
The Chief Executive and ELT members are prohibited, by the Trading in Company
Securities Policy, from entering into transactions in associated products which limit
the economic risk of participating in unvested entitlements under Mercury’s
Long-Term Incentive Plans.
Our governance and responsible business practices
Market disclosuresOur Market Disclosure Policy ensures we maintain a fully informed market through
communication with the markets, investors and stakeholders and by giving them
equal and timely access to material information.
PrivacyWe are committed to the safeguarding and proper use of personal information. We have
a comprehensive Privacy Policy, which is reviewed every two years, and a robust privacy
framework. Privacy is afforded significant consideration within Mercury and is managed
in accordance with our risk management framework.
Our General Counsel is Mercury’s Privacy Officer and is responsible for implementing
our Privacy Policy, promoting awareness of privacy matters, monitoring matters
on a day-to-day basis, and escalating matters as required to our Chief Executive, with
notification to our Risk Management Committee.
Privacy issues are reported to the Risk Management Committee on a quarterly basis.
We also have a Group Information Security Manager who is responsible for ensuring
that appropriate systems and processes are in place for the storage and security
of personal information.
Sustainability and
Environmental Policy
Our Sustainability and Environmental Policy sets out the core principles and
values that we apply to ensure sustainable decision-making across the business.
We recognise that we operate in a complex environment where strong, enduring
relationships with partners and stakeholders are essential to achieving our business
objectives and creating long-term value. It is through deep understanding of what
matters materially to these stakeholders that informs our approach. Under the Policy,
we commit to integrating sustainability through principles relating to our five-pillar
strategy: Kaitiakitanga | Stewardship, Kiritaki | Customer, Ngā Tāngata | Our People
and Kōtuitanga | Partnerships, Arumoni | Commercial.
Takeover Response PolicyWe have a Takeover Response Policy to guide the Board and management if the
Company receives a takeover notice or the Company becomes aware that a takeover
offer in respect of the Company (or an analogous scheme of arrangement) is,
or is likely to be, proposed by another person.
ACTING ETHICALLY AND RESPONSIBLY CONT.
MENULEADERSHIP AND GOVERNANCE 110MERCURY 2025 INTEGRATED REPORT |
WORKFORCE
OF THE FUTURE
We are proud to be building a future-ready workforce grounded in inclusivity,
belonging, purpose and performance. Research shows that diverse
perspectives drive innovation, strengthen decision-making, and enhance
performance. This knowledge underpins our strategic commitment to
attracting, retaining, and developing talent that reflects the communities
we serve, to build our workforce resilience.
Our approach is guided by our Workforce of the Future
Policy and Framework, available in the Corporate
Governance section of our website. This framework
supports our long-term ambition to access, grow,
and retain the best talent and create a workplace
where everyone can thrive.
To deliver on our workforce of the future roadmap,
we have identified three key priorities:
sInclusive Leadership – Equipping our leaders
with the mindset and capabilities to foster
inclusive environments and lead diverse teams.
sEvolving Our Talent Ecosystem – Creating
pathways that support growth, representation,
and development at all levels.
sA Connected and Inclusive Culture – Cultivating
a workplace where people feel seen, heard,
and valued.
These priorities inform how we design our people
systems, taking a systemic approach to realise the
long-term benefits of our framework. In addition,
we are progressing a range of specific initiatives.
These include forming new partnerships (i.e. Toi Ki
Tua to support Māori interns in the Bay of Plenty),
updating our policies (i.e. domestic violence-free),
targeted leadership development and mentoring
for underrepresented groups, cultural recognition,
employee-led groups, engagement and education.
We actively participate in cross-sector initiatives to
scale diversity efforts and drive industry-wide progress.
Our progress is governed by measurable objectives set
and reviewed by the Board, including specific targets
and industry benchmarks to ensure transparency and
accountability. Where appropriate, we set aspirational
goals to drive performance.
Our key priority for next year is to ensure our workforce
is representative of New Zealand. This will be achieved
through focussed actions to enhance our young talent
pathways (interns, apprentices, early careers, and
graduates), developing inclusive leaders and talent
acquisition practices to ensure that our workforce
representation is reflective of our long-term targets.
We recognise that this an aspirational goal for
the future.
We maintain a zero-tolerance approach to harassment
and discrimination, guided by our comprehensive
Anti-Bullying, Harassment and Discrimination Policy.
As we continue to invest in our people and culture,
our focus remains on building a workforce that reflects
New Zealand and creates long-term value for all
our stakeholders.
Gemma Smith.111
ObjectivesFuture years - targets
Gender
We have clear and simple targets for gender diversity
of 40:40:20 at all levels.
This means we aim for a minimum of 40% female
and 40% male, with the balance being any gender.
Pay equity
We ensure that everyone is rewarded fairly for their work.
Employee groupOur long-term targetsJune 2024 actuals (female/male)June 2025 actuals (female/male)
Progress
against
targets
All employees40:40:20
49%51%
51%49%
●
People leaders40:40:20
46%54%
45%55%
●
ELT40:40:20
29%71%
25%75%
●
Board40:40:20
37.5%62.5%
33%67%
●
Gender pay equityOur target is 100% pay equity96.7%97.5%
●
Ethnicity
Aligned to our goal of having clear and simple targets,
we have simplified long-term targets for ethnicity of
15:15:10. This means we aim for a minimum of 15% Māori,
15% Asian and 10% Pasifika at all levels (these are closely
aligned to our population demographics
and are minimums).
EthnicityOur long-term targetsJune 2024 actualsJune 2025 actuals
Māori
Employees
People leaders
15%
15%
7%
7%
7%
8%
●
●
Asian
Employees
People leaders
15%
15%
19%
11%
20%
10%
●
●
Pasifika
Employees
People leaders
10%
10%
5%
2%
4%
2%
●
●
Age
To ensure our business is diverse in a range of ways,
we monitor our age profile to check that we are aligned
to the national median.
The median age of the NZ workforce is 41 years (National Labour Force
projections, 2024). Benchmark against national median age of the
labour force in New Zealand National Labour Force projections.
41.942.2
●
At 30 June 2025, the proportion of women on the ELT (who represent Mercury's Officers, including the Chief Executive) was 25% or two out
of eight (as at 30 June 2024 this was 28.6% or two out of seven). The proportion of women on the Board at balance date was 33.3%, or three
out of nine, including the Chair (as at 30 June 2024 this was 37.5%, or three out of eight). No Directors or ELT/Officers self-identify as gender
diverse (also the case as at 30 June 2024).
In order to maintain consistency of measurement against our targets, we have adopted the Stats NZ prioritised ethnic groups. This involves each
person being allocated to a single ethnic group based on the groups they have identified with, which are, in order of priority: Māori, Pacific, Asian
and European/Other.
At 30 June 2025, our gender pay equity was 97.5% (as at 30 June 2024 this was 96.7%). Gender pay equity is calculated as the average position
in range (relative to the role’s band midpoint) of female fixed remuneration compared with the average position in range of male fixed remuneration.
Our gender pay gap which compares the median hourly rate between males and females was 34.4% (as at 30 June 2024 this was 37%).
Pay equity by ethnicity compared to “other” ethnicity was Māori 98.2%; Asian 98.8% and Pasifika 97.4% (as at 30 June 2024 this was Māori 98.8%;
Asian 98.2% and Pasifika 96.7%). The ethnicity pay gap which compares the median hourly rate between each ethnicity and “other” ethnicity was
Māori 25.4%; Asian 9.1% and 38.5% for Pasifika (as at 30 June 2024 this was Māori 22.2%; Asian 2% and Pasifika 37.9%).
The Board believes that for this reporting period Mercury has continued to make progress towards achieving our Workforce of the Future objectives.
However, the Board notes that continued focus is required.
WORKFORCE OF THE FUTURE CONT.
MENULEADERSHIP AND GOVERNANCE 112MERCURY 2025 INTEGRATED REPORT |
Dear Shareholder
It is my pleasure to present our Remuneration
Report on behalf of Mercury’s People and
Performance Committee (PPC).
Mercury is in a significant phase of growth, building
and expanding critical national infrastructure to
support New Zealand’s electrification ambitions and
economic prosperity. Our committee is focused on
ensuring that Mercury can attract, retain and develop
a high-performance workforce who has the capability
to successfully deliver on our purpose.
PERFORMANCE AND PAY
It has been a challenging year for Mercury, with
performance impacted by low generation output.
This was particularly pronounced for hydro generation,
with prolonged dry conditions in the Taupō catchment
for much of the period. Despite this, our people have
delivered value by optimising our generation capability.
Through their commitment and expertise, we’ve been
able to maximise performance and efficiency, ensuring
reliable output even with the tough year of weather.
As noted elsewhere in this report, we reported a net
profit after tax of $1 million, down $289 million from
the prior year. EBITDAF was $786 million, down $91
million on the prior year.
Operating costs increased by $11 million on
the prior year, reflecting increases in generation
maintenance and organisation change costs
which will deliver future cost saving.
The remuneration outcomes across our short-term
incentive (STI) and long-term incentive (LTI) plans
reflect our performance against ambitious targets.
The FY25 Group Scorecard outcome was assessed
at 94% of target (58.75% of maximum opportunity).
Following his individual performance assessment, this
resulted in the Chief Executive (CE) being awarded
58.9% of his STI target opportunity.
REMUNERATION REPORT
The remuneration outcome for the FY23-FY25 LTI
was assessed at 0% as a result of the performance
hurdles not being met. As a result, there was no
vesting of Share Rights for our CE, Executives and
senior managers under this grant.
The Board did not consider it appropriate to exercise
any discretion in respect of the FY25 STI and LTI
outcomes. More detailed information can be found
on pages 116-119.
LEADERSHIP APPOINTMENTS
As Scott noted in his letter, the Board was delighted
to appoint Stew Hamilton as CE in September 2024.
We said farewell to William Meek as our CFO, Philip
Gibson as our Executive GM Strategic Affairs and
Lucie Drummond as our Chief Sustainability Officer.
William, Philip and Lucie have each made significant
contributions to the success of Mercury. We thank
them for their passion and commitment and wish
them well for their future.
We were delighted to appoint Richard Hopkins as
our new CFO this year. Richard brings over 25 years'
experience across finance and industry, including more
than a decade as CFO for significant New Zealand
companies. In order to secure a CFO of Richard's
calibre, the Board agreed to pay $190,000 as his
FY25 STI.
In addition, we welcomed several new executive
leaders. It was pleasing to see the strength of our
internal succession planning, which saw the
promotions of Matt Tolcher and Tim Thompson
to the Executive Leadership Team (ELT) as Executive
GM Generation Development and Executive GM
Wholesale, respectively.
We also welcomed Kevin Taylor as our Chief Operating
Officer - Generation and Catherine Thompson as
Chief Sustainability Officer. Both bring deep industry
and leadership experience to our team.
EXECUTIVE REMUNERATION
During the year, the committee engaged an
external and independent review on compensation
and pay levels at Mercury and the connection
between pay and performance. The review
highlighted areas of opportunity for improvement.
We are therefore, reviewing our executive
remuneration construct to ensure it incentivises
the level of performance needed to deliver our
refreshed strategy and long-term shareholder
value. Over the coming months we plan to seek
investor input ahead of making any changes.
Any Board approved changes will be reflected
in our FY26 Remuneration Report.
The remuneration review for both the CE and
CFO will occur after Stewart Hamilton and
Richard Hopkins have been in their roles for a year.
The outcome of these reviews will be included
in our FY26 Remuneration Report.
FY26 GROUP SCORECARD
The committee has undertaken a review of the
Group Scorecard for FY26 to ensure that it aligns
more closely with our top five strategic priorities.
By focusing on what matters most, we’ve reduced
the number of KPIs to ensure greater clarity, sharper
focus, and stronger alignment across Mercury.
More detailed information can be found on page 115.
Turitea Wind Farm.
MENULEADERSHIP AND GOVERNANCE 113MERCURY 2025 INTEGRATED REPORT |
Mercury’s Board is committed to a remuneration framework that promotes
a high-performance culture and that aligns executive reward to the
achievement of strategies and objectives to create sustainable value for
our shareholders. The Board is committed to demonstrating transparency
in its remuneration policy and practice.
The purpose of the People and Performance
Committee (PPC) is to assist Mercury’s Board
in fulfilling its responsibilities relating to Mercury’s
People Experience strategy, policies and practices
and the remuneration and performance plan
of the Chief Executive and executives. More
information on the responsibilities of the PPC
and members of the Committee can be found
in the ‘Board Committees’ section of our Corporate
Governance Statement on page 102 of this report.
The PPC operates under a written charter, which
is available to view on our website.
The PPC reviews the annual performance appraisal
outcomes for all members of the Executive Leadership
team and recommends the outcomes for approval by
the Board. Annual remuneration reviews take into
account external benchmarking to ensure
competitiveness with comparable market peers, along
with consideration of an individual’s performance,
skills, expertise and experience.
USE OF DISCRETION
The Board retains 100% discretion in the assessment
of performance based remuneration, including
in respect of whether performance hurdles for
short-term Incentives (STI) and long-term incentives
(LTI) have been met. This includes malus provisions
should an adverse event occur, enabling the Board to
reduce or extinguish STI or LTI outcomes. The Board
also retains 100% discretion on how to treat variable
remuneration in a cessation of employment scenario.
The Board did not apply discretion with respect
to either the FY25 STI or FY23-25 LTI outcomes.
All outcomes reflect the performance results of the
FY25 STI Group Scorecard and the FY23-25 LTI plan.
Mercury did not pay any sign on bonuses for
Stewart Hamilton going into the CE role. Previous
CE, Vince Hawksworth, agreed to remain available
for 4 months following Stew Hamilton's appointment,
as required, to ensure a smooth CE transition
process. Other than annual leave entitlements,
no other severance payments were made to Vince
on his departure.
The Board agreed that the remuneration package
for the new CFO, Richard Hopkins, would include
$190,000 as his FY25 STI. Departing CFO,
William Meek, was paid $603,500 in contractual
entitlements. Other than annual leave entitlements,
no other severance payments were made to William
on his departure.
EXTERNAL AND INDEPENDENT ADVICE
During FY25, Mercury sought external and
independent advice from PricewaterhouseCoopers
(PwC) to support elements of a comprehensive
review of executive remuneration at Mercury.
EXECUTIVE REMUNERATION
EXECUTIVE REMUNERATION GOVERNANCE
REMUNERATION REPORT CONT.
FUTURE OF WORK
At Mercury, we recognise that a diverse and inclusive
workforce is essential to successfully delivering on
our purpose.
We are focused on three key priorities: adaptive
leadership, evolving our talent ecosystem, and
a connected and inclusive culture, as outlined in the
Ngā Tangata/People section. Through our sustained
commitment, we aim to shape a future-ready
organisation where every individual has the opportunity
to contribute and thrive in the future. We recognise that
there is more work to be done to deliver the results
that we need, and we've outlined some of the actions
we are taking in Ngā Tangata/People.
We are excited about our programme of work
underway to systematically support our people with
the tools necessary to enable them to focus on the
highest value work. Recent advances in AI will help
our people to be significantly more productive.
We will leverage AI to enhance our internal processes
and find new ways to generate value.
PAY EQUITY
As part of our continued dedication to fostering a
fair and equitable workplace, the committee oversaw
a comprehensive review of Mercury’s gender pay
equity. This review resulted in minor compensation
adjustments for approximately 60 employees.
We are also providing greater support to our leaders
so they may make more informed salary decisions
during recruitment and promotions.
DIRECTORS’ REMUNERATION
Mercury’s directors are remunerated in accordance
with our Non-Executive Director Remuneration Policy.
Following an independent and external review from
PwC, and shareholder approval at the 2024 Annual
Shareholders meeting, the Directors’ Fee Pool was
increased on 1 October 2024. Fees were adjusted
during FY25 to reflect our new committee structure
(the Risk Assurance and Audit Committee having
been replaced by the Audit and Financial Risk
Committee and Safety and Enterprise Risk Committee
from 1 January 2025). However, the total fees paid
to Non-Executive Directors remained within the limit
of the shareholder approved Directors' Fee Pool.
More detail can be found on page 122.
NOTE OF APPRECIATION
I want to thank everyone at Mercury for their
continued commitment and support throughout
the year. It is warmly appreciated and it is a privilege
to work with you all as we seek to deliver sustainable
long-term value for our shareholders.
SUSAN PETERSON
CHAIR, PEOPLE AND PERFORMANCE COMMITTEE
MENULEADERSHIP AND GOVERNANCE 114MERCURY 2025 INTEGRATED REPORT |
SIMPLICITY
Design is kept simple and
easy
to understand
ALIGNMENT TO PERFORMANCE
Remuneration for ELT reflects the level
of performance and delivery of
successful outcomes
SUSTAINABLE SHAREHOLDER VALUE
Remuneration is aligned to long-term
sustainable shareholder value
1
2
3
EXECUTIVE REMUNERATION POLICY
Mercury’s Executive Remuneration Policy
is available to view on our website.
Mercury’s current Executive Remuneration
Policy is founded on three guiding principles:
We are currently reviewing this policy as part
of the Remuneration Framework review that
is currently underway.
In addition, PwC provided independent executive
benchmarking data and undertook LTI volume
weighted average share price calculations to support
the determination of grant date allocations, and LTI
vesting outcomes.
This Remuneration Report contains disclosure of the
employees who received remuneration and any other
benefits in their capacity as employees, the value
of which was or exceeded $100,000 per annum, in
brackets of $10,000, as required by the Companies
Act 1993. This can be found on page 121.
REMUNERATION BENCHMARKING
As part of our work to link pay to performance
appropriately and to attract talent to enable Mercury
to execute on strategy, the PPC engaged PwC to
help identify an appropriate comparator group of
companies on which to benchmark performance
and pay.
PwC provided Mercury with benchmark remuneration
data from this core comparator group which
encompassed Australasian listed companies.
The comparator group primarily reflects companies
of a comparable scale and complexity and/or industry
to Mercury, and is comprised of Australasian energy
sector companies, utility companies and companies
with a retail customer focus. The peer group of
companies include: AGL Energy; APA Group; Auckland
International Airport; Channel Infrastructure; Chorus;
Contact Energy; Genesis Energy; Meridian Energy;
Origin Energy; Spark and Vector. PwC’s approach
EXECUTIVE REMUNERATION
Fixed remunerationShort-term incentiveLong-term incentive
PurposeAttract and retain Executives with the experience
and leadership capability required to deliver our
strategy.
To motivate and reward performance against the
Group Scorecard together with individual
performance over the financial year.
Equity opportunity in the form of Performance
Share Rights to incentivise and reward the
delivery of long-term shareholder value.
FY25 approachFixed remuneration consists of base salary and
benefits including insurance and KiwiSaver/
Superannuation as applicable.
Performance assessed against a Group Scorecard
based on business priorities for the next 12 months.
Performance measured by total shareholder
return against (1) an industry peer group and (2)
the cost of equity plus 1%, in each case over the
three year vesting period.
EXECUTIVE REMUNERATION CONT.
in selecting proposed role comparators for Mercury
within the comparator group was to match each
Mercury executive role with roles in the comparator
group with broadly similar accountabilities to the
Mercury roles. PwC also provided benchmarking
data from other selected NZX companies to ensure
broad alignment.
EXECUTIVE REMUNERATION COMPONENTS
Total remuneration for all ELT members is made up
of three components: fixed remuneration, short-term
performance incentive and long-term performance
incentive. Mercury’s remuneration philosophy is to
align pay with performance.
SHORT-TERM PERFORMANCE INCENTIVE
The STI is an at-risk payment designed to motivate
and reward for delivery against the Group Scorecard
and individual performance fairly in that financial year.
The target value of an STI payment is set annually
as a percentage of the ELT member's base salary.
The relevant FY25 target percentage for the CE
was 50% and 30% for other ELT members. The CFO
had a seperate arrangement for his FY25 STI, as
noted elsewhere.
A proportion (70% for the CE and 50% for other ELT
members) of the STI is related to the Group Scorecard
which includes the business priorities for the next
12 months, with the objective of aligning the ELT's
focus with the company's priorities. The balance of
the STI for the CE is related to individual performance
assessment by the Board. In the case of other ELT
members, the balance is related to business unit and
individual performance measures. Consistent with
our pay for performance philosophy, the minimum
STI opportunity is 0%, the target STI opportunity
is 100% and maximum STI opportunity is 160%.
No STI payment will be made if there is a fatality
or the normalised hydrology adjusted EBITDAF does
not reach 80%.
MENULEADERSHIP AND GOVERNANCE 115MERCURY 2025 INTEGRATED REPORT |
FY25KPIsAlignment to 3 year objectivesKPI outcome
Commercial 50%1. EBITDAF target achieved
1
2. EBITDAF target exceeded
Providing what matters most through
financial growth
EBITDAF target achieved, however stretch target
not achieved.
OUTCOME 100% of target; 62.5% of maximum.
Generation growth 10%3. Generation availability target met
4. Advancement of pipeline activity
exceeded
Delivering more reliable and renewable
energy
to power Aotearoa
Not achieved. Geothermal target availability
of 95% not met.
OUTCOME 0% of target; 0% of maximum.
Climate 10%5. Deliver two of three outcomes of:
— Advancement of new demand or
commercial and industrial electrification
— Progress emission reduction
— Sector and Government Energy
Transition Framework in place
6. Deliver all three outcomes above
Accelerating the shift to a low-carbon futureTwo out of three outcomes delivered.
OUTCOME 100% of target; 62.5% of maximum.
Relationships 10%7. Deepening of iwi relationships
8. Broadening of iwi relationships
Creating success with othersPartially achieved. Key milestones met
however further work remains.
OUTCOME 80% of target; 50% of maximum.
Adaptive organisation 10%9. Maintain health, wellbeing and safety
employee voice scores; and deliver
integration synergies
10. Progress operational excellence
and productivity
Performing with an adaptive and
inclusive culture
Maintained top quartile results for Health,
Wellbeing and Safety scores. More progress
required against the operational excellence
and productivity stretch targets.
OUTCOME 100% of target; 62.5% of maximum.
Technology 10%11. Deliver enhanced technology solutions
12. Deliver performance improvement
use cases
Innovating with technologyCore operational solutions delivered on target.
Performance improvement use cases met
stretch target.
OUTCOME 160% of target; 100% of maximum.
1
EBITDAF normalised for positive and negative annual variations in hydrology and wind. For FY25 normalised EBITDAF was $909 million.
FY25 STI GROUP SCORECARD OUTCOMES
Key Performance Indicators (KPIs) aligning to our
FY25-27 three year goals were selected for the
FY25 Group Scorecard. The Scorecard consisted
of on-target KPIs (aligned to 100% of the KPI) and
maximum KPIs (aligned to 160% of the KPI) and were
appropriately weighted in terms of value. The Board
carefully considered delivery and achievement
against each KPI.
The Board approved Group Scorecard outcome for
FY25 was 94% of target which equates to 58.75%
of maximum opportunity.
The Board determined that the Commercial,
Climate and Adaptive Organisation targets were
met, the Technology stretch target was met,
the Relationship target was partially met, and the
Generation Growth target was not met. The Board
did not exercise any discretion in determining
the FY25 Group Scorecard outcomes.
EXECUTIVE REMUNERATION CONT.
MENULEADERSHIP AND GOVERNANCE 116MERCURY 2025 INTEGRATED REPORT |
FY26 GROUP SCORECARD
We have undertaken a review of the FY26 Group
Scorecard to ensure that it aligns to our refreshed
strategy. We have reduced the number of KPIs to five
to ensure greater clarity, sharper focus and stronger
alignment to those things that create the most value.
In the event there is a fatality or the normalised
hydrology adjusted EBITDAF does not reach 80%
then no STI payment will be made. The Stay in
Business CAPEX target will not be to the material
detriment of quality or safety outcomes.
The Board retains 100% discretion to ensure the final
outcome of STI payments fairly reflects performance
over the relevant financial year.
STI outcomes can range between 0% and 160%
depending on performance.
Financial growth
GOALWEIGHTINGKPI
50%
Deliver more reliable and renewable energy20%
10%
10%
10%
Accelerate shift to low-carbon future
Rebuild sector and customer confidence
Our people
FY26 GROUP SCORECARD
EBITDAF
2
TOTEX (OPEX + Stay in Business CAPEX)
Delivery of generation development projects
CO2e emissions, firming and demand capacity from
electricity and energy system
Perceived confidence in the sector’s ability to meet
NZ’s energy transition needs
Safety and culture performance
6
5
4
3
2
1
2
EBITDAF normalised for positive and negative annual variations in hydrology and wind.
EXECUTIVE REMUNERATION CONT.
MENULEADERSHIP AND GOVERNANCE 117MERCURY 2025 INTEGRATED REPORT |
KEY TERMS OF CHIEF EXECUTIVE’S EMPLOYMENT AGREEMENT
TranchePerformance hurdle
Tranche 150% of the grant is based on Mercury’s
Total Shareholder Return (TSR) relative
to the performance of an industry peer
group comprising Meridian Energy, Genesis
Energy, Contact Energy and Manawa
Energy. There is no positive
TSR performance gate on this tranche
but Mercury’s TSR must be at the 50th
percentile of the comparator group for
any award to be made on this component.
Tranche 250% of the grant is based on Mercury’s
absolute TSR against the company’s cost
of equity over the vesting period, plus 1%.
CHIEF EXECUTIVE’S REMUNERATION
Chief Executive’s remuneration (FY24 and FY25)
Chief ExecutiveSalary
3
$
Benefits
4
$
Subtotal
$
Pay for performance
$
Total
remuneration
$
STILTISubtotal
Stewart Hamilton
FY251,129,18044,3841,173,564456,1060
5
456,106 1,629,670
Vince Hawksworth
(departed)
FY251,172,25866,6481,238,90600
5
01,238,906
F Y241,371,00279,2211,450,223773,241358,015
6
1,131,2562,581,479
3
Actual salary paid includes holiday pay paid as per NZ legislation. FY25 actual salary for Vince Hawksworth includes approximately four
months notice in lieu paid out on termination as agreed by the Board. As part of ensuring a smooth CE transition process, Vince agreed
to be available during this four month period as required. The base salary for Stewart Hamilton for FY25 in the CE role was $1,100,000
and the base salary for Vince Hawksworth for FY24 and FY25 was $1,349,460. Stewart Hamilton started in the CE role from 31 August 2024.
4
Benefits include KiwiSaver and insurance.
5
The FY25 LTI value relates to the grant for the FY23 – FY25 performance period ending 30 June 2025. Performance against the
LTI measures for FY23 – FY25 was assessed as 0%. No share rights will transfer to Stewart or Vince for the FY23-FY25 grant.
6
The FY24 LTI value relates to the grant for the FY22 – FY24 performance period ending 30 June 2024. The value shown is the market
value of the vested shares at the 22 August 2024 transfer date. The value was calculated using the number of vested share rights including
dividend shares multiplied by the volume weighted average price over the 5 trading days prior to the share transfer date. This value has
been updated following the FY24 integrated report as the market value could not be calculated until the transfer date. Total Chief Executive
remuneration reported in the FY24 integrated report was $2,544,762, with the LTI value reported as $321,298, being the value of the share
rights issued to Vince at the time of the grant on 9 September 2021. The value of share rights on the grant date is calculated using the
volume weighted average price of Mercury shares over the 10 trading days from the commencement date of the grant.
LONG-TERM PERFORMANCE INCENTIVES
Long-term performance incentives (LTIs) provide
an equity opportunity designed to incentivise ELT
members to deliver shareholder value.
Under the LTI plan, grants of Performance Share Rights
are made annually and performance is measured
over a three-year period. The LTI plan is a dividend
protected share rights plan and ELT members
are granted a number of Performance Share Rights
determined by dividing the face value of the grant by
the value of one Mercury share at the date of the grant.
EXECUTIVE REMUNERATION CONT.
Subject to meeting the performance hurdles, each
Performance Share Right is converted to one ordinary
share at the time of vesting. The LTI outcome
opportunity is capped at 100%, though ELT members
may also receive additional shares representing the
value of dividends paid over the vesting period as
applicable. The Executive is responsible for all personal
tax obligations on the shares received at this point.
For the FY25 grant period commencing 1 July 2024
(or 1 September 2024 for the CE), the value
represented 40% of the CE's base salary and between
25-35% of base salary for other ELT members.
Richard Hopkins, CFO, was not included in this grant
as he joined Mercury after the grant was made.
The Board retains 100% discretion over the final
outcome of the LTI plan to enable appropriate
adjustments where unanticipated circumstances
may impact performance, positively or negatively,
over a three-year period.
The FY25-FY27 grant under the LTI plan has two
tranches with different performance hurdles:
ItemIndividual conditions
Employment agreementOngoing individual employment agreement
Base salarySubject to annual review
Performance payEligible to participate in Mercury’s STI and LTI schemes
Notice period6 month notice period
Termination of employment 6 months' notice
Post employment restraint of trade6 months
MENULEADERSHIP AND GOVERNANCE 118MERCURY 2025 INTEGRATED REPORT |
Five-year summary – Chief Executive’s remuneration
Chief ExecutiveTotal remuneration paid
$
Percentage
STI against
maximum
8
%
Percentage
vested LTI
against
maximum
%
Span of LTI
performance
period
Stewart HamiltonFY251,629,67058.902022 – 2025
Vince Hawksworth
(departed)
FY251,238,906002022 - 2025
F Y242,581,479
7
60352021 – 2024
FY233,846,111811002020 – 2023
FY222,072,44377Not eligibleNot eligible
FY211,799,51550Not eligibleNot eligible
7
Total remuneration paid including salary, benefits, STI and LTI payments. The FY24 value has been updated following the FY24 integrated
report as the market value of LTI could not be calculated until transfer date. Total Chief Executive remuneration reported in the FY24
integrated report was $2,544,762.
8
For FY22 to FY25 the maximum STI was 160% of ‘on-target’ performance pay. For FY21 the maximum STI was 178% of ‘on-target’
performance pay. For FY25, Stewart Hamilton's STI includes a combined assessment against the maximum he could achieve for the two
months that he was in the Executive GM Generation role and ten months in the Chief Executive role.
Chief Executive’s long-term performance incentives
LTI
12
Performance
period
Grant
year
Share rights
issued date
Number of
share rights
issued on
grant
Value of
share rights
on grant
date $
13
Number
of share
rights vested
including
dividend
shares
14
Value of
shares on
transfer date
$
15
Share
transfer
date
F Y22-
F Y24
1 July 2021
to 30 June
2024
FY229
September
2021
17,723118,74 46,99046,30922 August
2024
FY23-
FY25
1 July 2022
to 30 June
2025
FY2316
September
2022
21,194122,24700Not
applicable
F Y24-
FY26
1 July 2023
to 30 June
2026
F Y2425
September
2023
19,570127,000To be
determined
after vesting
date
To be
determined
on transfer
date
August
2026
FY25-
FY27
1 September
2024 to 30
June 2027
FY2522 October
2024
69,730439,996To be
determined
after vesting
date
To be
determined
on transfer
date
August
2027
FY26-
FY28
1 July 2025
to 30 June
2028
FY26To be
determined
on issue
To be
determined
on issue
To be
determined
on issue
To be
determined
after vesting
date
To be
determined
on transfer
date
August
2028
12
The above table includes the LTI grants made to Stewart Hamilton both during and prior to his appointment as Chief Executive.
The grant for the FY26-28 LTI will be made during the course of FY26. Details will be included in the FY26 Remuneration Report.
13
The value of share rights on the grant date is calculated using the volume weighted average price of Mercury shares over the 10 trading
days from the commencement date of the grant.
14
Vesting is subject to the performance hurdles being met. See page 118 for the performance hurdles.
15
The value of share rights on the transfer date is calculated using the number of vested share rights including dividend shares multiplied
by the volume weighted average price of Mercury shares over the 5 days prior to the share transfer date.
Breakdown of Chief Executive’s pay for performance (FY25)
DescriptionPerformance measuresPercentage achieved
by Stewart Hamilton
STI
9
Set at 50% of base salary. Based
on a combination of key financial and
non- financial performance measures
70% based on the six company
shared goals (weighted 10-50%)
94%
30% based on individual measures94%
LTI
10
FY23-FY25 grant set at 25% of
base salary. Share rights issued
at 16 September 2022 with value
of $122,247. Volume weighted
average price (VWAP)
11
of $5.768
50% relative TSR performance against
peer group
0%
50% absolute TSR against the company’s
cost of equity over the vesting period, plus 1%
0%
9
The above STI percentages achieved by Stewart Hamilton is the percentage STI against target. The percentage achieved by Stewart
Hamilton against the maximum STI percentage of 160% for both measures is 58.75%. The above STI for FY25 will be paid in FY26.
The performance achieved by Stewart Hamilton against the individual measures is for the period in the CE role.
10
The above LTI outcome for FY23-FY25 was assessed as 0%. Therefore, no share rights transferred to Stewart under this grant.
11
The volume weighted average price calculated across the 10 trading days from the Commencement Date of 1 July 2022.
EXECUTIVE REMUNERATION CONT.
MENULEADERSHIP AND GOVERNANCE 119MERCURY 2025 INTEGRATED REPORT |
KIWISAVER
The Chief Executive is a member of KiwiSaver. As a
member of this scheme, the Chief Executive is eligible
to contribute and receive a company contribution of
3% of gross taxable earnings (including short-term
incentives). For FY25, the company’s contribution for
Stewart Hamilton was $38,104.
Ohakuri Hydro Station.
0
10
20
30
40
50
30 June 202530 June 202130 June 202230 June 202330 June 2024
-20
-10
TSR %
FIVE-YEAR SUMMARY – TSR PERFORMANCE (COMPANY VS PEER GROUP)
KEY:
Mercury
Peer
0.5
1.0
1.5
($millions)
2.0
2.5
FixedTargetMaximum
FIXED VS PERFORMANCE PAY FOR CHIEF EXECUTIVE
KEY:
Fixed pay
Base salary and benefits
Performance pay
Annual variable with
performance hurdles
Long-term incentives
performance pay
granted (2028 vesting)
EXECUTIVE REMUNERATION CONT.
FY26 CHIEF EXECUTIVE’S
REMUNERATION REVIEW
The Board will undertake a review of the Chief
Executive's remuneration package once he
has been in the role for 12 months.
MENULEADERSHIP AND GOVERNANCE 120MERCURY 2025 INTEGRATED REPORT |
CHIEF FINANCIAL OFFICER’S REMUNERATION
In the interests of providing greater transparency of executive remuneration, the Board has elected to provide
details regarding total remuneration paid to the Chief Financial Officer in FY25. During FY25, Richard Hopkins
was CFO from 14 April 2025 to 30 June 2025 and William Meek was CFO from 1 July 2024 to 31 March 2025.
FY25
Salary
18
$
Benefits
19
$
Subtotal
$
Pay for
performance
20
$
Total
remuneration
$
STILTISubtotal
Chief Financial
Officer – Richard Hopkins
134,6154,438139,053
190,000Not
applicable
190,000
329,053
Chief Financial Officer –
William Meek (departed)
1,008,44044,458 1,052,899 149,100 0
21
149,100 1,201,999
18
Actual salary paid includes holiday pay paid as per NZ legislation. Departed CFO William Meek's salary amount includes $603,500 in
contractual entitlements. Other than annual leave entitlements, no other severance payments were made to William on his departure.
19
Benefits for William Meek include superannuation and insurance. Benefits for Richard Hopkins include KiwiSaver and a one-off home
office set up payment (as is offered to all permanent employees).
20
The STI payment for Richard Hopkins relates to FY25 but paid in FY26. William Meek’s STI payment relates to FY25 and paid in FY25 on his exit.
21
Performance against the LTI measures for FY23-FY25 was assessed at 0%. No share rights will transfer to William Meek for the FY23-FY25 grant.
SHARE OWNERSHIP
The Chief Executive and Chief Financial Officer’s ownership of Mercury shares as at 30 June 2025 are:
ExecutiveNumber of shares owned
(excludes shares held in
trust for the LTI scheme)
Change in shares owned since
30 June 2024
Chief Executive – Stewart Hamilton
22
7,823 +7,823
Chief Financial Officer – Richard Hopkins
23
0
N/A
Balance of ELT
24
46,457
-49,54 4
22
Stewart Hamilton became Chief Executive on 31 August 2024. Mercury’s former Chief Executive, Vince Hawksworth, owned 296,276
shares (including shares held in trust) as at 13 September 2024 (the date of his last NZX Ongoing Disclosure Notice), which reflects a change
of +32,964 shares owned since 30 June 2024. Vince also had a beneficial interest in 100,000 MCY040 bonds and 30,000 MCY060 bonds
held in trust as at 13 September 2024 (the date of his last NZX Ongoing Disclosure Notice), which reflects no change since 30 June 2024.
23
Richard Hopkins became Chief Financial Officer on 14 April 2025. Mercury’s former Chief Financial Officer, William Meek did not hold any
Mercury shares or bonds as at 31 March 2025 (his final day as Chief Financial Officer), which reflects no change since 30 June 2024.
William Meek disclosed in an NZX Ongoing Disclosure Notice to the market dated 12 September 2024 a transfer of 10,301 shares to Tracey Meek,
the Chief Financial Officer’s wife. The Chief Financial Officer ceased to have a relevant interest in these shares upon transfer to Tracey Meek.
24
Balance of shares owned by other ELT members as at 30 June 2025, excluding shares owned by the Chief Executive and Chief Financial
Officer. This includes shares in which a beneficial interest is held and includes shares owned by Phil Gibson who left Mercury in April 2025.
Remuneration band
25
Currently
employed
No longer
employed
Total
$100,001-$110,000621375
$110,001-$120,00063669
$120,001-$130,000821092
$130,001-$140,000958103
$140,001-$150,000691079
$150,001-$160,00053558
$160,001-$170,00054660
$170,001-$180,000371047
$180,001-$190,00034943
$190,001-$200,00017522
$200,001-$210,00013417
$210,001-$220,00017623
$220,001-$230,00011415
$230,001-$240,000538
$240,001-$250,000628
$250,001-$260,00014115
$260,001-$270,00011112
$270,001-$280,00022
$280,001-$290,00033
$290,001-$300,000426
$300,001-$310,00077
Remuneration band
25
Currently
employed
No longer
employed
Total
$310,001-$320,00033
$320,001-$330,000314
$340,001-$350,000224
$350,001-$360,00011
$360,001-$370,000112
$370,001-$380,00022
$380,001-$390,00011
$390,001-$400,00022
$410,001-$420,00022
$420,001-$430,00011
$560,001-$570,00011
$630,001-$640,00011
$740,001-$750,00011
$980,001-$990,00011
$1,360,001-$1,370,00011
$1,450,001-$1,460,00011
$1,460,001-$1,470,00011
$2,360,001-
$2,370,000
11
Total680114794
EMPLOYEE REMUNERATION
During the FY25 year the Group paid remuneration in excess of $100,000 including benefits
to 794 employees (not including directors) in the following remuneration bands:
TOTAL REMUNERATION RATIO
The total remuneration ratio for FY25 between employee (median) and
Chief Executive was 1:17. This is based on, for employees, actual remuneration
paid in FY25 (employee median was $93,810) and for the Chief Executive,
the amount specified in the table on page 118, $1,629,670.
1:17
25
The remuneration bands above include 82 employees who
received redundancy payments in FY25.
EXECUTIVE REMUNERATION CONT.
MENULEADERSHIP AND GOVERNANCE 121MERCURY 2025 INTEGRATED REPORT |
DirectorBoardRisk Assurance &
Audit Committee
(disestablished
1 January 2025)
Audit & Financial
Risk Committee
(established
1 January 2025)
Safety & Enterprise
Risk Committee
(established
1 January 2025)
People &
Performance
Committee
Nominations
& Corporate
Governance
Committee
Total
1
No. of meetings92
2
3
3
25
4
4
5
Fees
$
Meetings
attended
Fees
$
Meetings
attended
Fees
$
Meetings
attended
Fees
$
Meetings
attended
Fees
$
Meetings
attended
Fees
$
Meetings
attended
Fees
$
Scott St John
6
221,250
(Chair)
9–2
–3–2
–5–4221,250
Mark Binns110,25096,5002–1
(observer)
5,0002––––121,750
Robert Hamilton
Joined as a director on 1 April
2025. Fees are representative
of part-year payments.
28,5003––1,6252–1
(observer)
–1
(observer)
––30,125
Hannah Hamling110,25096,50026,500310,000
(Chair)
2
––––133,250
Adrian Littlewood110,2509––––5,000210,5005–1
(observer)
125,750
James Miller110,250914,000
(Chair)
214,000
(Chair)
3––––6,0004144,250
Susan Peterson110,2509–1
(observer)
6,5003––21,200
(Chair)
56,0004143,950
Mike Taitoko110,2509––––––10,5004––120,750
Lorraine Witten110,25096,50026,5003––––––123,250
Total1,021,500 33,500 35,12520,00042,200 12,0001,164,325
7
DIRECTOR REMUNERATION
Mercury has a Non-Executive Director Remuneration
Policy which can be found on the Corporate
Governance section of our website.
The directors’ remuneration is paid in the form of
directors’ fees. Additional fees are paid to the Chair
and in respect of work carried out by directors on
various Board committees to reflect the additional
time involved and responsibilities of these positions.
The total pool of directors’ fees includes headroom
which may be used to pay ad hoc compensation to
directors for significant additional work performed
outside usual Board and committee responsibilities
(e.g. special projects). No additional compensation
was paid in FY25.
The total pool of fees able to be paid to directors is
subject to shareholder approval and currently stands
at $1,231,450. Directors’ fees were last reviewed in
2024, with the increase taking effect from 1 October
2024. These fees are set following consultation with
key stakeholders and having considered independent
remuneration benchmarking advice provided by PwC.
The comparator group used by PwC in 2024 is
summarised in PwC's summary report which can
be found on the Investor section of our website.
Under the NZX Listing Rules, the size of the total pool
of directors’ fees may increase from time to time as
the number of directors on the Board increases.
Mercury meets directors’ reasonable travel and other
costs associated with Mercury business. Mercury does
not pay any retirement benefits and does not offer
share incentives or share options to directors.
The following people held office as directors during
the year to 30 June 2025 and the remuneration
set out in the table was received during the period.
The number of meetings and attendance rate
by directors during the year to 30 June 2025 was
as follows:
For reference: Future Director Nicole Rosie was paid $20,000 in
relation to her role as future director in FY25. Nicole Rosie’s position
as future director ended on 13 May 2025.
1
Disclosure Committee is not reported on as these occur as ad-hoc
and on an as required basis.
2
This includes two regular Risk Assurance and Audit Committee
meetings. The Risk Assurance and Audit Committee was
disestablished effective 1 January 2025.
3
This includes two regular Audit and Financial Risk Committee
meetings and one out of cycle meeting relating to climate-
related disclosures.
4
This includes four regular People and Performance Committee
meetings and one out of cycle meeting relating to executive
remuneration.
5
This includes three regular Nominations and Corporate Governance
Committee meetings and one out of cycle meeting relating to the
new committee structure.
6
Scott St John’s fees cover attendance at all Committee meetings.
7
The total directors’ fee pool as at 30 June 2025 was $1,231,450.
Under NZX Listing Rule 2.11.3, the Board may, without shareholder
approval, proportionately increase the total pool of directors’ fees
to accommodate an increase in the number of directors from the
number of directors in office when the fee pool was last approved by
shareholders (on 19 September 2024). During FY25, the number of
directors on the Board increased from eight to nine when Robert
Hamilton became a director. The total directors’ fee pool, as
adjusted for the changing number of directors throughout FY25,
was not fully exhausted.
DIRECTOR REMUNERATION
MENULEADERSHIP AND GOVERNANCE 122MERCURY 2025 INTEGRATED REPORT |
NZX CORPORATE GOVERNANCE CODE INDEX
NZX CGC RecommendationSection titleLocation
Principle 1 – Ethical Standards
1.1 Code of ethicsActing Ethically and Responsibly
The Mercury Code and Our Governance and
Responsible Business Practices, p109-110
1.2 Financial product
dealing policy
Acting Ethically and Responsibly
Our Governance and Responsible
Business Practices, p110
Principle 2 – Board Composition and Performance
2.1 Board charterMercury’s Board
Responsibilities, p99
2.2 Board nomination
and appointment
Mercury’s Board
Selection, Nomination and
Appointment, p100
2.3 Director agreementsMercury’s Board
Selection, Nomination and Appointment, p100
2.4 a. Director profiles, tenure
and ownership interests
Your Board of Directors
Directors’ Disclosures
p95-96
Interests register, p124
b. Director meeting
attendance
Remuneration Report
Director Remuneration, p122
c. Director independenceMercury’s Board
Independence, p99
2.5 Diversity policyWorkforce of the Future
p111
2.6 Director trainingMercury’s Board
Induction and Development, p100
2.7 Director performanceMercury’s Board
Board Skills Matrix, p101
Reviewing Performance, p102
2.8 Majority independent
directors
Mercury’s Board
Independence, p99
2.9 Independent chairMercury’s Board
Independence, p99
2.10 Chair/CEO separationYour Board of Directors
Your Executive
Management Team
p95-96
p97
Principle 3 – Board Committees
3.1 Audit committeeMercury’s Board
Board Committees, p102-103
3.2 Attendance at audit
committee by employees
by invitation
Mercury’s Board
Board Committees, p103
3.3 Remuneration committeeMercury’s Board
Board Committees, p102
As an exception to the NZX Corporate Governance Code,
Mercury does not comply with Recommendation 3.3 because
it does not have a separate remuneration committee.
See the
Board Committees section of this report for a full
explanation of this exception.
3.4 Nomination committeeMercury’s BoardBoard Committees, p102
3.5 Other standing committeesMercury’s Board
Board Committees, p102
NZX CGC RecommendationSection titleLocation
3.6 Takeover protocolActing Ethically and Responsibly
Our Governance and Responsible
Business Practices, p110
Principle 4 – Reporting and Disclosure
4.1 Continuous disclosure policyActing Ethically and Responsibly
Our Governance and Responsible
Business Practices, p110
4.2 Code of ethics, charters
and policies on website
Acting Ethically and Responsibly
www.mercury.co.nz/investors/
corporate-governance
The Mercury Code and Our Governance and
Responsible Business Practices, p109-110
4.3 Balanced, clear and objective
financial reporting
Notes to the Consolidated
Financial Statements
p40-64
4.4 Non-financial disclosureClimate Statement
p65-93
Principle 5 - Remuneration
5.1 Director remuneration policyRemuneration Report
Director Remuneration, p122
5.2 Executive remuneration
policy
Remuneration Report
Director Remuneration, p113-121
5.3 CEO remunerationRemuneration Report
Chief Executive’s Remuneration, p118-121
Principle 6 – Risk Management
6.1 Risk managementAssurance and Managing Risk
The Risks We Face
Our Key Risks, Risk Management
Framework and Committee Responsibilities,
p104-106
The Risks We Face, p15
6.2 Health and safety risksThe Risks We Face
4. Ngā Tāngata/People
The Risks We Face, p15
Continuing to Pursue Safety Citizenship, p26
Principle 7 - Auditors
7.1 Audit frameworkAssurance and Managing Risk
Audit Plan and Role of Auditor, p104
7.2 External auditor attends
annual meeting
Assurance and Managing Risk
Audit Plan and Role of Auditor, p104
7.3 Internal auditAssurance and Managing Risk
Internal Audit and Risk Assurance, p104
Principle 8 – Shareholder Rights and Relations
8.1 Investor websitewww.mercury.co.nz/investors
8.2 Shareholder communicationsEngaging With Investors
p108
8.3 Right to voteOther Disclosures
Information About Mercury NZ
Limited Ordinary Shares, p131
8.4 Pro rata offersN/A during the reporting period
8.5 Notice of meetingThe Notice of Meeting for
2025 will be released on NZX
and posted on our website
MENULEADERSHIP AND GOVERNANCE 123MERCURY 2025 INTEGRATED REPORT |
DIRECTORS’ DISCLOSURES
INTERESTS REGISTER
Disclosure of directors’ interests
Section 140(1) of the New Zealand Companies Act 1993 requires a director of a company to disclose certain
interests. Under subsection (2) a director can make disclosure by giving a general notice in writing to the
Company of a position held by a director in another named company or entity. The following are particulars
included in the Company’s Interests Register as at 30 June 2025:
Mark Binns
Crown Infrastructure Partners LimitedChair
Hynds LimitedChair
Auckland International Airport LimitedDirector
Meridian Energy Limited Shareholder
Manawa Energy Limited Shareholder
Contact Energy Limited Shareholder
Genesis Energy Limited Shareholder
Vector Limited Shareholder
Robert Hamilton
Westpac New Zealand LimitedDirector
1
Tourism Holdings LimitedDirector
1
Oceania Healthcare LimitedDirector
1
Cyprus Enterprises LimitedDirector
1
Hannah Hamling
ArcActive LimitedShareholder
Adrian Littlewood
Craigs Investment Partners LimitedDirector/Shareholder
1
CIP Holdings LimitedDirector/Shareholder
Contact Energy LimitedShareholder
Spark New Zealand LimitedShareholder
James Miller
Channel Infrastructure NZ Limited Chair
Vista Group International LimitedDirector
Ryman Healthcare LimitedDirector
Fletcher Building LimitedDirector
1
Susan Peterson
Vista Group International LimitedChair/Shareholder
Craigs Investment Partners LimitedDirector/Shareholder
1
CIP Holdings LimitedDirector/Shareholder
Xero LimitedDirector/Shareholder
Arvida Group LimitedDirector
2
/Shareholder
2
Scott St John
Next Foundation (and associated vehicles)Director
ANZ Bank New Zealand LimitedChair
Australia and New Zealand Banking Group LimitedDirector
ANZ Group Holdings LimitedDirector
Nominating Committee of the Climate Change CommissionMember
1
Fisher & Paykel Healthcare Corporation LimitedChair
2
Mike Taitoko
Waiora Consulting LimitedDirector/Shareholder
Toha Foundry LimitedDirector/Shareholder
Takiwā NZ LimitedDirector/Shareholder
Toha Network LimitedDirector/Shareholder
Toha Aotearoa 2030 LimitedDirector/Shareholder
Lorraine Witten
Rakon LimitedChair/Shareholder
Rakon PPS Trustee LimitedDirector/Shareholder
VWORK LimitedDirector
2
/Shareholder
2
MOVe Logistics Group Limited (and other group entities)Director
2
/Shareholder
2
1
Entries added by notices given by the directors during the year ended 30 June 2025.
2
Entries removed by notices given by the directors during the year ended 30 June 2025.
MENULEADERSHIP AND GOVERNANCE 124MERCURY 2025 INTEGRATED REPORT |
DIRECTORS’ AND OFFICERS’ INDEMNITIES
Indemnities have been given to, and insurance has been effected for, directors and senior managers of the
Group to cover acts or omissions of those persons in carrying out their duties and responsibilities as directors
and senior managers.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE AND BOND TRANSACTIONS
Directors disclosed, pursuant to section 148 of the New Zealand Companies Act 1993, the following
acquisitions and disposals of relevant interests in Group shares and bonds during the period to
30 June 2025:
Name of directorDate of acquisition/
disposal of
relevant interest
Nature of transaction
and relevant interest
Consideration
(NZD)
Securities in which
a relevant interest
was acquired/
(disposed)
James Miller15 July 2024Acquisition of beneficial interest
in 20,000 MCY070 capital
bonds upon allotment
$20,00020,000
Scott St John2 October 2024Acquisition of beneficial interest
in ordinary shares as a result
of participation in Mercury's
Dividend Reinvestment Plan
$6,849.741,168
Susan Peterson14 April 2025Acquisition of beneficial interest
in ordinary shares as a result
of participation in Mercury's
Dividend Reinvestment Plan
$482.4086
DIRECTORS’ DISCLOSURES CONT.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARES AND BONDS
Directors disclosed the following relevant interests in Group shares and bonds as at 30 June 2025:
DirectorNumber of
shares in which
a relevant
interest is held
Nature of
relevant interest
Number of
bonds in which
a relevant
interest is held
Nature of
relevant interest
Change since
30 June 2024
Mark Binns28,240Beneficial150,000 MCY050
Capital Bonds
Beneficial-
Robert Hamilton-----
Hannah Hamling16,300Beneficial---
Adrian Littlewood4,160Beneficial---
James Miller40,320Beneficial20,000 MCY070
Green Bonds
Beneficial+20,000 MCY070
Green Bonds
Susan Peterson5,486Beneficial--+86 shares
Scott St John 50,099Beneficial--+1,168 shares
Mike Taitoko2,200Beneficial---
Lorraine Witten-----
DISCLOSURE OF SUBSIDIARY DIRECTORS’ INTERESTS
The following are particulars included in the interests Register for Mercury’s subsidiary companies
as at 30 June 2025:
DirectorInterest Entity
Stewart Hamilton
1
Chief Executive OfficerMercury NZ Limited
Richard Hopkins
1
Chief Financial OfficerMercury NZ Limited
Howard Thomas
1
Nil
Kevin TaylorNil
Craig NeustroskiNil
1
This person is a Director of more than one subsidiary of Mercury NZ Limited, please refer to Company Disclosures.
MENULEADERSHIP AND GOVERNANCE 125MERCURY 2025 INTEGRATED REPORT |
SECURITY HOLDER INFORMATION
SHAREHOLDER INFORMATION
Twenty largest registered shareholders as at 30 June 2025
1
NameNumber
of shares
% of shares
2
The Sovereign in right of New Zealand acting by and through their
Minister Of Finance And Minister For State Owned Enterprises
7 19,696,978 51.15
HSBC Nominees (New Zealand) Limited 66,04 4,975 4.69
HSBC Nominees (New Zealand) Limited A/C State Street 57,624,072 4.10
Custodial Services Limited 47,907, 258 3.41
BNP Paribas Nominees (NZ) Limited 38,472,047 2.73
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct 32,693,241 2.32
Citibank Nominees (New Zealand) Limited 32,073,209 2.28
Forsyth Barr Custodians Limited 31,622,508 2.25
Tea Custodians Limited Client Property Trust Account 30,365,582 2.16
Accident Compensation Corporation 24,454,100 1.74
FNZ Custodians Limited 14,833,207 1.05
New Zealand Depository Nominee Limited 14,532,018 1.03
JBWere (NZ) Nominees Limited 12,153,571 0.86
PT (Booster Investments) Nominees Limited 10,188,299 0.72
ANZ Wholesale Australasian Share Fund 8,919,298 0.63
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited 8,850,083 0.63
Generate Kiwisaver Public Trust Nominees Limited 8,228,981 0.58
Simplicity Nominees Limited 7,831,098 0.56
BNP Paribas Nominees (NZ) Limited 4,417,032 0.31
Forsyth Barr Custodians Limited 3,936,419 0.28
Total 1,174,843,976 83.50
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 1,406,965,167 ordinary shares on issue as at 30 June 2025.
Distribution of shareholders and holdings as at 30 June 2025
Size of holdingNumber of
shareholders
% of
shareholders
1
Number of
shares
Holding
quantity %
1
1 to 1,00026,20539.55 17,671,365 1.26
1,001 to 5,00031,85348.08 74,234,655 5.28
5,001 to 10,0005,1307.74 37,599,425 2.67
10,001 to 100,0002,9554.46 60,960,593 4.33
100,001 and above1100.17 1,216,499,129 86.46
Total66,253100 1,406,965,167 100
1
Rounding applied.
Substantial product holders as at 30 June 2025
Class of securitiesNumber of securities
in substantial holding
Total number of
securities in class
The Sovereign in Right of New ZealandOrdinary shares728,615,061
1
1,406,965,167
2
1
This comprises (a) 719,696,978 shares held by the Crown on its own account; (b) 8,850,083 shares forming part of the New Zealand
Superannuation Fund which are the property of the Crown; and (c) 68,000 shares held by Public Trust on trust for the Crown and certain iwi.
2
As at 30 June 2025, Mercury had 1,406,965,167 ordinary shares on issue.
MENULEADERSHIP AND GOVERNANCE 126MERCURY 2025 INTEGRATED REPORT |
BONDHOLDER INFORMATION
Twenty largest registered holders of MCY030 green bonds (1.56%) as at 30 June 2025
1
NameNumber of MCY030
green bonds
% of MCY030
green bonds
2
Custodial Services Limited 36,840,000 18.42
Tea Custodians Limited Client Property Trust Account 26,619,000 13.31
HSBC Nominees (New Zealand) Limited 15,000,000 7.50
Forsyth Barr Custodians Limited 12,297,000 6.15
ANZ Wholesale NZ Fixed Interest Fund 12,250,000 6.13
BNP Paribas Nominees (NZ) Limited 12,166,000 6.08
FNZ Custodians Limited 9,678,000 4.84
JBWere (NZ) Nominees Limited 7,222,000 3.61
Citibank Nominees (New Zealand) Limited 6,331,000 3.17
Adminis Custodial Nominees Limited 6,080,000 3.04
HSBC Nominees (New Zealand) Limited A/C State Street 5,611,000 2.81
FNZ Custodians Limited 5,399,000 2.70
MT Nominees Limited 4,448,000 2.22
NZX WT Nominees Limited 4,199,000 2.10
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct 3,200,000 1.60
Forsyth Barr Custodians Limited 3,028,000 1.51
Forsyth Barr Custodians Limited 2,212,000 1.11
BGLIR Trustee Limited 2,000,000 1.00
Mint Nominees Limited 1,551,000 0.78
Bank Of New Zealand - Treasury Support 1,520,000 0.76
Total 177,651,000 88.83
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed separately.
2
Percentage calculated on the basis of Mercury having 200,000,000 MCY020 green bonds on issue as at 30 June 2025.
Distribution of MCY030 (1.56%) green bondholders and holdings as at 30 June 2025
Size of holdingNumber of
MCY030 green
bondholders
% of MCY030
green bonds
Number of
MCY030 green
bonds
Holding
quantity %
1
1,001 to 5,000155.88 75,000 0.04
5,001 to 10,0005320.78 493,000 0.25
10,001 to 100,00013552.94 4,937,000 2.47
100,001 and above5220.39 194,495,000 97. 25
Total255100 200,000,000 100
1 Rounding applied.
Twenty largest registered holders of MCY040 green bonds (2.16%) as at 30 June 2025
1
NameNumber of MCY040
green bonds
% of MCY040
green bonds
Custodial Services Limited 45,548,000 22.77
FNZ Custodians Limited 25,998,000 13.00
BNP Paribas Nominees (NZ) Limited 14,998,000 7.50
Westpac Banking Corporate NZ Financial Markets Group 14,101,000 7.05
Forsyth Barr Custodians Limited 10,237,000 5.12
Bank Of New Zealand - Treasury Support 9,331,000 4.67
Southland Building Society 9,250,000 4.63
Commonwealth Bank of Australia 9,240,000 4.62
Citibank Nominees (New Zealand) Limited 8,473,000 4.24
NZX WT Nominees Limited 5,794,000 2.90
Accident Compensation Corporation 5,000,000 2.50
Dunedin City Council 3,000,000 1.50
MT Nominees Limited 3,000,000 1.50
Forsyth Barr Custodians Limited 2,930,000 1.47
JPMorgan Chase Bank NA NZ Branch-Segregated Clients Acct 2,807,000 1.40
Forsyth Barr Custodians Limited 2,588,000 1.29
ANZ Bank New Zealand Limited 2,327,000 1.16
JBWere (NZ) Nominees Limited 2,013,000 1.01
Investment Custodial Services Limited 1,786,000 0.89
FNZ Custodians Limited 1,684,000 0.84
Total 180,040,000 90.02
1
As required by the NZX Listing Rules, New Zealand Central Securities Depository (NZCSD) holdings are included above and not detailed
[TRUNCATED]
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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