A Toyota car is running along the coast

Directors' statement

Our commitment to effective governance

This integrated report reviews our financial, economic, social and environmental performance for the year ended 30 June 2020 (FY20).

About this report

This integrated report reviews our financial, economic, social and environmental performance for the year ended 30 June 2020 (FY20).

It reflects our deeply held view that the way in which Meridian uses the natural forces at its disposal and takes care of its customers, people, local communities, iwi and the environment renews our future, both as a business and collectively. Our approach strengthens Meridian’s ability as a significant publicly listed company to deliver attractive shareholder returns and to deliver value to all our stakeholders.

The Meridian Group is listed on both the New Zealand Stock Exchange (NZX) and the Australian Stock Exchange (ASX), and we’re substantial in scale in a New Zealand context, with operating revenue in FY20 of $3,405 million, EBITDAF of $854 million and net assets of $5,083 million, although we have a modestly sized workforce of around 1,100 people who are directly employed by or contracted to us, and third parties who provide us with ICT, facilities’ management and meter-reading services. We’re one of New Zealand’s largest companies on the NZX, with a total market capitalisation in excess of $12 billion.

We are majority owned by the New Zealand Government, and we are precluded by legislation from having any other significant shareholders (i.e. more than 10% holding).

This report covers the performance of the Meridian Group, including the Parent Meridian Energy entity, Powershop and Dam Safety Intelligence in New Zealand, Meridian Energy Australia and Powershop Australia, and Flux Federation (our electricity retailing software business which operates in New Zealand and the United Kingdom). Unless otherwise stated the information in this report covers the Group, although for many of the topics discussed the Parent company is the primary focus as the other businesses are smaller in size (less than 10% of Group revenue). Powershop New Zealand has been operationally included in the Meridian Parent company results, and as such is no longer reported on separately in terms of non-financial information.

To ensure all data in this report is as accurate as possible, the financial information has been prepared in accordance with appropriate financial reporting standards and audited by Mike Hoshek for Deloitte Limited on behalf of the Auditor-General (see the Independent Auditor’s Report on page 173). The non-financial information has been prepared in accordance with the Core requirements of the Global Reporting Initiative’s (GRI’s) Sustainability Reporting Standards and the sustainability content has been subjected to a limited assurance engagement by Deloitte Limited (see the Independent Accountant’s Assurance Report on page 177).

The Meridian Group Greenhouse Gas Inventory Report FY20 is summarised on pages 47 and 48 of the Integrated report, and has been subjected to a reasonable assurance engagement by Deloitte Limited New Zealand.

Our commitment to effective governance

Boards have an important role in directing companies’ activities. Strategy days and regular meetings allow the Meridian Energy Board members to share their thoughts and challenge Management on the direction they wish to take the business.

The Board closely monitors how the company is managing the various long-term drivers of value, such as retaining access to water, building employee engagement, investing in new assets, enhancing environmental performance, satisfying customers and building the Company’s reputation and brand.

The Board also sets Meridian’s overall appetite for risk and its approach to risk management. A summary of Meridian’s key risks can be found in the FY20 Corporate Governance Statement and they are discussed throughout this report. Information on the remainder of the risks and how we manage them are also detailed where relevant throughout this report.

Meridian complies with the NZX Corporate Governance Code recommendations in all material respects (other than in respect of recommendation 3.6 - see page 122 for more details.

Our Board structure

Meridian recruits Board members with a range of skills and experience. Biographies of our Directors and the Executive Team are available at meridianenergy.co.nz/who-we-are. All Directors are independent directors.

While the Company’s Constitution does not require it, this Board has a collective view that Ngāi Tahu, who have mana whenua (authority over the land) over the majority of the South Island where Meridian’s assets are, is such an important stakeholder that a position on the Board should always be considered. This role is currently undertaken by Anake Goodall, the former Chief Executive Officer of Te Rūnanga o Ngāi Tahu (Ngāi Tahu's governing body).

Three new female Board members have all joined our Board this financial year, bringing gender balance to the Board as well as contributing to the Board’s expertise. Michelle Henderson brings electricity industry, engineering and safety experience. Julia Hoare is a former financial audit partner at PwC where she established and led PwC’s sustainability and climate change practice while remaining a tax partner. And Nagaja Sanatkumar brings extensive retail business insights, particularly from her leadership roles more recently at Amazon and Icebreaker, another New Zealand business with a strong brand based on sustainability.

Mark Verbiest portrait photo

Mark Verbiest

Chair, Independent Director, LLB, CFInstD

Peter Wilson portrait photo

Peter Wilson

Deputy Chair, Independent Director, MNZM, CA (CAANZ)

Jan Dawson portrait photo

Jan Dawson

Independent Director, CNZM, BCom, FCA (CAANZ), FINSTD

Julia Hoare portrait photo

Julia Hoare

Independent Director, BCom, FCA, CMInstD

Anake Goodall portrait photo

Anake Goodall

Independent Director, BA, MBA, MPA (Harvard)

Mark Cairns portrait photo

Mark Cairns

Independent Director, BE (Hons), BBS, MMGT, FIPENZ

Michelle Henderson portrait photo

Michelle Henderson

Independent Director - BE (Hons) and CMinstD

Nagaja Sanatkumar portrait photo

Nagaja Sanatkumar

Independent Director, MBA, BTech CEIndependent Director, MBA, BTech CE

The role of committees

Committees support the Board by providing detail on specific issues and having subject matter experts provide insights and advice. The Committees, and the Board as a whole, cover the spectrum of resources on which we depend for our business success, feed into the Company’s overall strategy and direction and keep the Board well informed of day-to-day operations.

The Board and Committees also oversee progress on our SDGs. The Safety and Sustainability Committee has responsibility for our progress on SDG7 Affordable and Clean Energy and SDG13 Climate Action. The Board as a whole oversees our progress as a responsible generator, particularly as it pertains to the Waitaki reconsenting process. Our Remuneration and Human Resources Committee oversees Meridian’s maintenance and development of being a great place to work. Our Audit and Risk Committee assists the Board in fulfilling its responsibilities in matters related to risk management, financial accounting and reporting.

Resources Board oversight
Financial and manufactured capital
(our cash and assets)
Audit and Risk Committee
Technology Full Board
Human capital
- Our people and expertise
- Health and Safety
 
Remuneration and Human Resources Committee
Safety and Sustainability Committee
Relationships and reputation
- Our people
- All other groups
 
People and Remuneration Committee
Safety and Sustainability Committee and full Board
Natural resources Safety and Sustainability Committee
Significant risks around resources, including risks due to climate change Audit and Risk Committee
Committee table

Our Executive team

A picture of Meridian excutive team

(L-R) Neal Barclay Chief Executive, Tania Palmer Chief People Officer, Mike Roan Chief Financial Officer, Lisa Hannifin Chief Customer Officer, Guy Waipara General Manager, Generation and Natural Resources, Jason Woolley General Counsel and Company Secretary, Claire Shaw General Manager, Corporate Affairs and Sustainability, Jason Stein Chief Executive, Meridian Energy Australia Pty Limited, Powershop Australia Pty Limited, Nic Kennedy Chief Executive, Flux Federation Limited, Chris Ewers General Manager, Wholesale.

The role of people and culture

Our people are critical to the successful delivery of our strategic goals, policies and processes.

The Board has approved a wide range of policies that Management are required to adhere to and incorporate in the company’s operations, including a Code of Conduct, the content of which all employees agree to honour. The Code provides guidance to staff on the behaviours that are expected and how to handle the issues and challenges they may face. Our approach to remunerating our people can be found in the Integrated report, page 96.

If you would like further information

As a business with a significant retail shareholder base, we're constantly looking for ways to be as accessible and open as possible.

We hope you’ll be able to attend the 2020 annual shareholder meeting in person. The Board has a policy of rotating the location of the meeting between Auckland, Wellington and Christchurch, and our 2020 meeting will be held in Wellington. We’ll provide you with more information closer to the time in the Notice of Meeting. If you can’t attend, you’ll find a link to a live webcast on the Meridian website.

In the meantime, if you are a shareholder, please feel free to ask questions, request information or comment on this report via Meridian’s website or by directly contacting the Investor Relations Manager at investors@meridianenergy.co.nz