#1EnergyAustralia media day Sydney, 7 December 2016 EnergyAustralia#2Welcome & agenda 1. Strategy - Catherine Tanna, Managing Director 2. Business performance - Catherine Tanna, Managing Director 3. Financial highlights - Alastair McKeown, Chief Financial Officer Q&A Catherine & Alastair 2 EnergyAustralia#3Energy Australia & our portfolio QLD Retail 0.1M accounts AUSTRALIA SA Retail 0.1M accounts NSW/ACT Retail 1.4M accounts Brisbane • 2.6m customer accounts • ~5000MW capacity generation portfolio. • 19% of CLP Group assets Wind (495MW) • Cathedral Rocks (33MW) Mortons Lane (20MW) Waterloo (56MW) Gullen Range (166MW) Boco Rock (113MW) Taralga (107MW) Coal (2,880MW) Yallourn (1,480MW) Mount Piper (1,400MW) Gas (1,592MW) Hallett • Hallett (203MW) Mount Piper Cathedral Rocks Adelaide VIC Retail Sydney Tallawarra Ecogen (966MW) Tallawarra (420MW) Coal power 1.0M accounts Gas power Melbourne Yallourn Wind power Ecogen Hedge EnergyAustralia#4Milestones & achievements - 2014 & 2015 2014 Nov 2015 - Completed bill integration, bringing all customers on to one system Apr May Sep Nov Completed 5-year maintenance & efficiency upgrade at Yallourn - Launched new corporate strategy - Completed internal business restructure; established NextGen unit Sold lona gas storage plant in Victoria for $1.78bn EnergyAustralia#5Milestones & achievements - 2016 Feb - Achieved $100m in annual retail cost savings well ahead of schedule - Established PRISM network D&I initiative - Launched Reconciliation Action Plan & indigenous participation program Jun - Launched embedded networks business Jul Aug Sep Oct Nov - First energy retailer to sign federal government transparency tax code. - Credit rating & outlook upgraded by S&P - Geelong contact centre named best in Victoria - Ranked no.1 partner for small business in Canstar survey - Closed Mill Park contact centre; expanded Geelong & opened Manila - Ranked no.1 by FCRC for service to financially-vulnerable customers - Named Roy Morgan electricity retailer for third month in a row - Signed $9.3m partnership with Redback Technologies - First energy retailer to launch Financial Inclusion Action Plan - Launched Go Neutral, a carbon-neutral product for our existing customers. 5 EnergyAustralia#6Strategy & business performance Catherine Tanna Managing Director e EnergyAustralia#7Strategy • . Fix the basics Focus on retail i.e. put the customer at the heart of everything we do • Lead the next generation of energy products & services • Values: - Customers are our priority - Do the right thing - Lead change 7 EnergyAustralia#8Redback Technologies partnership • • • · Supporting Australian innovation with $9.3m investment in Brisbane-based solar inverter developer System combines smart solar inverter, battery enclosure & "intelligent" energy management software in one package Helps customers maximise energy captured by solar systems; makes households less reliant on the grid & more independent Available to order from Energy Australia in 2017 with battery storage capacity ranging. from 3-12kWh REDBACK TECHNOLOGIES 8 EnergyAustralia#9EnergyAustralia#10Business performance Metric 30 Jun '14 31 Oct '16 Customer accts 2.6m 2.6m Complaints per 10k accts 183 36 Annual churn 17% 16% Strategic NPS -49 -23.1 TIFR 3.12 2.79 Yallourn availability 76.6% 89.4% My Account customers 0 478k Employee engagement 41% 59% 10 EnergyAustralia#11Managing complaints EnergyAustralia#12Business performance managing complaints - 2013 . Information technology reliability impacting customer management system; complaints at all-time high 2014 • ⚫ IT stabilised; committed to confront complaints root cause • Established disciplined, consistent internal complaints process; invested in dedicated, swift-response team comprising 30 of our best agents 2015 • • New company-wide strategy & values launched with customers at the heart. Whole of business mobilised around the customer; each complaint analysed and learnings applied 12 EnergyAustralia#13Business performance managing complaints. - 2016 . - IT & complaints handling process underpin turnaround – fewer complaints & those we get are addressed quickly & consistently • Identified scope for improvement - introduced new operating model to manage. complaints lifecycle i.e. how they are received, assigned & resolved • Rolled out NPS in January; helps identify unsatisfied customers before issue turns into a complaint: - We ask "was your issue resolved?" If "no", customer is contacted directly - Complaints reduced 49% in six-month trial 13 EnergyAustralia#14Financial highlights Alastair McKeown Chief Financial Officer e EnergyAustralia#15Operating earnings HK$ Local Currency 1H2016 1H2015 1H2016 1H2015 HK$M HK$M A$M A$M EBITDAF (before items affecting comparability) 1,907 1,938 334 322 Depreciation & Amortisation (590) (764) (103) (127) Adjusted Current Operating Income (ACOI) Retail 1,285 1,401 225 233 Wholesale 874 455 153 76 Corporate (842) (682) (147) (114) Total 1,317 1,174 231 195 Fair value adjustments 65 11 11 2 Net finance costs (113) (432) (20) (72) Income tax expense (372) (260) (65) (43) Operating earnings 897 493 157 82 15 EnergyAustralia#16ACOI by business unit A$M 300 250 200 150 100 50 T 195 (29) 166 (8) 106 (33) 231 0 1H2015 lona Adjustment Normalised 1H2015 Retail Wholesale Corporate 1H2016 16 EnergyAustralia#17Better service - lower churn & fewer complaints CUSTOMER CHURN CHURN CUSTOMER ACCOUNTS 30% 25% 20% 15% 10% 5% 3.0m 190 2.5m 160 2.0m 120 1.5m 80 1.0m 40 0.5m OMBUDSMAN COMPLAINTS / 10K ACCT 0% 0.0m 0 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 VIC NSW SA QLD TOTAL Mkt Churn 1h2015 EA Churn 1H2015 Accounts Mkt Churn 1h2016 EA Churn 1H2016 17 EnergyAustralia#18Lowering costs - e-billing & bad debts 100% 95% 90% 85% 80% 75% ENERGYAUSTRALIA E-BILLING UPTAKE 1.4 1.2 1 0.8 0.6 70% 0.4 JAN 15 JUN 15 DEC 15 JUN 16 JAN 15 Mail e-billing 18 RELATIVE PERFORMANCE OF MASS MARKET BAD & DOUBTFUL DEBTS AS A % OF REVENUE (BASE: DEC 2014) JUN 15 DEC 15 JUN 16 40% reduction of Mass Market Bad & Doubtful Debt as a % of Revenue in 18 months EnergyAustralia#19Strong financial position following lona sale. • • . • Late 2015 completed sale of lona gas storage plant to QIC for $1.78bn August 2016 credit rating. upgraded by S&P to BBB with positive outlook Rating could move higher within next couple of years if: - Operational stability maintained -Target leverage sustained BBB investment grade means lower borrowing costs & access to a wider funding universe STANDAR & POOR'S 19 EnergyAustralia#2020 Price ($/MWh) 50 45 40 40 55 35 Wholesale market conditions 70 65 55 60 55 T T Northern power station to close Speculation Hazelwood will close Dec 1, 14 Mar 1, 15 Jun 1, 15 Sep 1, 15 Dec 1, 15 Curve Date Mar 1, 16 Jun 1, 16 Sep 1, 16 Dec 1, 16 NSW, 2018 CAL QLD, 2018 CAL VIC, 2018 CAL EnergyAustralia#21Energy Australia contribution to CLP Group Assets Earnings Increasingly, we're pulling our weight... 21 2014 2016 22% 19% 1% 14% EnergyAustralia#22Outlook & challenges Catherine Tanna Managing Director e EnergyAustralia#2323 Priorities for 2017 SAFETY 1 2 3 Programs - implementing IT & systems which underpin customer service Delivery continue transformation - momentum, focus on quality Differentiation - inspire customers with products, services & through our actions EnergyAustralia#24National Greenhouse & Energy Reporting (NGER) Facility Scope 1 Emissions (tC02e) Yallourn Mt Piper Wallerawang 15,306,758 6,322,955 Tallawarra Hallett Other* Total 51 689,582 34,161 122 22,353,629 Scope 2 Emissions 178,085 26,169 9,990 2,881 2,265 3,281 222,671 (tC02e) Energy Consumed 165,382,839 72,855,311 43,519 13,568,905 685,676 1,759,382 254,295,632 (GJ) Energy Production 203,267,651 26,133,104 6,717,747 119,986 1,720,418 237,958,906 (GJ) 24 EnergyAustralia#25A zero emissions future Planning an orderly transition to cleaner energy starts with the customer. • • Transition must deliver cleaner, reliable and affordable energy for all Australians, not just those who can afford it Energy policy is more likely to deliver those outcomes if done via a consistent, national, bi-partisan approach with clear agreement on the problem i.e. how to lower emissions as quickly as possible at lowest cost Fossil-fuel generation has a critical short-term role: preserving reliability while new generation is introduced, so customers can have confidence in the transition to a zero emissions future 25 EnergyAustralia#26Please, ask a question EnergyAustralia