WHERE WE VE COME FROM.

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Alexandrina Jackson
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ERM POWER UPDATE. WHERE WE VE COME FROM. ERM Power is breaking records and setting higher standards for service and value in the supply of energy to business customers across Australia.

1 ERM POWER UPDATE. WHERE WE VE COME FROM. ERM Power is breaking records and setting higher standards for service and value in the supply of energy to business customers across Australia. Is just as important as where we re going. At ERM Power, innovation has always been at the core of our business. It is the criterion against which we measure every aspect of our business and it is the key to our success. Plenty of companies claim to be innovative but we have a proven track record over more than 30 years. Our journey began in 1980 when ERM Power was founded as a boutique energy consultancy. After identifying opportunities in generation arising from the privatisation of the electricity market, we evolved into a power station developer in the mid-1990s. A key event was the construction of the Oakey power station (Oakey), which was to be the first of many we developed across the nation. We retain interests in Oakey and the Neerabup power station (Neerabup). Recognising the impact of potential changes in the electricity market, we developed a strategy to diversify into electricity sales and gas exploration to protect and supplement our generation business. A key event in our continuing evolution was the establishment of our electricity sales business in 2007 to sell electricity to large customers in the commercial and industrial (C&I) segment of the market. Since then our sales business has grown strongly and been independently recognised as the leading electricity retailer to business customers with record levels of customer satisfaction. Another important milestone was achieved in late 2010 when we listed on the ASX. Our focus has since shifted from generation to electricity sales but we maintain development approval for four power stations. Our decision to diversify into gas exploration was rewarded in 2010 and 2011 when we made successive gas discoveries in Western Australia, culminating in gas and condensate sale agreements with Alcoa and BP. Looking back over more than 30 years, we have grown to become a dynamic Australian energy company with interests in electricity sales and generation, and in gas production and exploration. We are the fourth largest electricity retailer 1 in the National Electricity Market. We have equity interests in 442 megawatts of low emission, gas-fired peaking power stations, sell conventional gas and condensate, and have gas exploration operations in Western Australia and New South Wales. 1 Based on ERM Power s forecast league table for volume of electricity sold in the National Electricity Market for FY2013. The analysis draws on 2011 SRES scheme liability data, ERM Power signed contracts and broad assumptions about the market and participants. This is not an independently verified forecast.

2 ON THE UP AND UP. We are well on our way to achieving our aspiration of being the preferred energy supplier to businesses across Australia. ERM Power is the only electricity retailer licensed to operate in all states, the Australian Capital Territory and Northern Territory. C&I Market Share Rest of market 87% Moving into the SME market In early 2013, we won the right to supply more than 10,000 small sites in New South Wales. This three year contract with the NSW Government, starting July , represents more than $150 million in forward sales. Our SME business is forecast to achieve EBITDAIF of more than $30 million in three to five years. Electricity Sales in NSW & VIC (TWh) ERM Power 13% NSW Victoria Since launching in 2007, our electricity sales business, which operates as ERM Business Energy, has secured a 13% share 2 of the C&I market. The remaining 87% of this market represents a significant growth opportunity for us Electricity Sales (TWh) FY2013 FY2012 FY Australian Electricity Market Totalling 210TWh FY2014 (Forecast) FY2013 FY2012 FY2011 Residential 30% C&I and SME 70% 63TWh 147TWh As the only truly national electricity retailer, we continue to expand our customer base across Australia, with significant growth in New South Wales and Victoria. We have also diversified our electricity sales business by branching out into the higher-margin small to medium enterprise (SME) market segment. We think it s time that SME businesses had access to the experience and service of the only energy retailer in Australia dedicated to serving business customers. In the coming financial year we will establish a gas retailing operation in the eastern states and an electricity metering business. 2 ERM Power estimate of the Australian Electricity Market size = 210 TWh, comprising 40% (or 84 TWh) for C&I market and 30% (or 63 TWh) for SME market and residential market respectively. Indicative numbers adapted by ERM Power from AEMO 2011 published data.

3 SECOND-TO-NONE SERVICE. LITERALLY. We ve excelled with our service offering, scoring higher ratings than our competitors. We are dedicated to offering customers the highest level of service in the industry. In fact, we ve been rated the number 1 business energy retailer for the past two years in the Utility Market Intelligence (UMI) survey conducted by independent research company NTF Group. The key findings of the 2012 UMI survey were: A record customer satisfaction rating of 93%, versus a 52% average for other retailers. Our customers were five times more likely to be very satisfied. We have also achieved outstanding billing accuracy (99.94%) and billing collection rates (99.98%). CASE STUDY: Norton Gold Fields Paddington Gold Mine We saved Norton Gold Fields Paddington Gold Mine in Western Australia more than $500,000 per year by negotiating with the Independent Market Operator of Western Australia to change the mine s electricity capacity charges. We have been retailing electricity to the Paddington mine since 2011, and in June 2013, we re-signed the mine as a customer for another three years. By analysing historical consumption data, we identified that the Paddington processing plant s electricity load was not dependant on temperature and was able to stay within regulated limits. Customers like this can achieve substantial savings on their energy bills because they don t place additional strain on the electricity grid during hot season peaks. We arranged for Paddington to change its official status to non-temperature dependent, leading to ongoing reduced charges. Our proactive approach has resulted in major savings that the customer would not have otherwise enjoyed. UMI Overall Customer Satisfaction 93% Very Satisfied and Satisfied 55% ERM Power 1 55% 50% 47% 2 3 Other retailers 4 CASE STUDY: Sunstate Cement Sunstate Cement, one of Australia s leading manufacturers and suppliers of cement, was looking to change from a variable spot-price contract and move to an energy provider that could provide more flexible options. We developed a unique three-part, fixed-priced deal that enabled Sunstate to move production to the lower cost shoulder and off-peak pricing periods. This option, which no other retailer offered, enables Sunstate to reduce electricity costs. It s just another way that we work with customers using our expertise and initiative to provide flexible energy solutions that directly benefit their bottom lines. Independent 2012 UMI Customer Benchmarking Survey, comprising approximately 100 commercial and industrial customers from each of the five major retailers.

DIVERSIFICATION. Generation and gas operations are a big part of the ERM Power story.

capacity. These projects represent more than $2 billion of investment along with another $4 billion of associated gas purchases.

In addition to our ownership interests, we also operate Oakey, Neerabup and the Kwinana power station in Western Australia, each of which has outstanding reliability and availability.

4 DIVERSIFICATION. Generation and gas operations are a big part of the ERM Power story. Generation ERM Power is Australia s leading developer of gas-fired power stations and has safely led the development of six projects representing about 5% of Australia s grid-connected generation capacity. These projects represent more than $2 billion of investment along with another $4 billion of associated gas purchases. We retain interests in two high-quality peaking power stations, Oakey in Queensland, and Neerabup in Western Australia. In addition to our ownership interests, we also operate Oakey, Neerabup and the Kwinana power station in Western Australia, each of which has outstanding reliability and availability. Neerabup Power Station Oakey will come off contract in January 2015 at which time it will also be debt free. Subject to market conditions improving we will likely utilise the product internally and leverage vertical integration benefits and merchant operating opportunities. In time Oakey will crystallise its full value via vertical integration within ERM Power or via recontracting or sale when supply and demand tightens. Oakey Power Station We have development approval for four new power station projects, two in Queensland and one each in New South Wales and Western Australia, which are ready to proceed when required by the market. Gas Our gas business has made two successive gas and condensate discoveries in Western Australia with the Gingin West and Red Gully wells and has more than 10,000km 2 of exploration tenements in Western Australia and New South Wales. Red Gully Processing Facility We produce and sell gas and condensate to Alcoa and BP respectively from the Red Gully and Gingin West fields.

OUR CULTURE IS EVERYTHING. At ERM Power our culture is the foundation of our success. Three core values underpin our business: people, planet and performance.

We focus on employing quality staff who embody our core values. We have about 170 employees working in four offices and operating three power stations across five states.

Andy Murray at the Brisbane International Our performance places us as an industry leader with outstanding customer service, billing accuracy and collection rates.

5 OUR CULTURE IS EVERYTHING. At ERM Power our culture is the foundation of our success. Three core values underpin our business: people, planet and performance. Our people are encouraged to deliver excellence and our performance demonstrates that they are successful. They work in a safe workplace with no permanent injuries over our history. We focus on employing quality staff who embody our core values. We have about 170 employees working in four offices and operating three power stations across five states. We care for the planet by ensuring we minimise our impact on the environment and we have had no environmental incidents. Andy Murray at the Brisbane International Our performance places us as an industry leader with outstanding customer service, billing accuracy and collection rates. It s not just about business at ERM Power. We also give back to the communities in which we operate through sponsorships, partnerships and other support programs across a range of areas including the arts, sport and education. For example, we ve brought the Queensland Symphony Orchestra, Camerata of St John s Chamber Orchestra and the Queensland Ballet to communities in Toowoomba for a number of years. School children at Oakey In 2013 we also sponsored the Brisbane International tennis tournament and the Mater Foundation Climb for Cancer in Brisbane. Climb for Cancer Sponsorship 2013

6 TABLING OUR SUCCESSES. People FY2013 FY2012 FY2011 Employees Number of offices Lost time injuries Electricity Sales Electricity sales (terawatt hours) Customers (meters in June) 8,457 4,545 2,059 Contracted sales in current year at 31 July (terawatt hours) Total national market share (%) Overall customer satisfaction rating (%) n/a Billing accuracy (%) Billing collection (%) Generation Generation (equity interests) (megawatts) Oakey power station availability (%) Neerabup power station availability (%) Financial Results Revenue and other income ($m) 1, After significant items: EBITDAIF after significant items ($m) Underlying net profit after tax and significant items ($m) Underlying earnings per share after significant items (cents) Underlying: Underlying net profit after tax ($m) Underlying earnings per share (cents) Statutory: EBITDAIF ($m) Net profit after tax ($m) Earnings per share (cents) Dividends per share (cents) Net cash flows from operating activities ($m) Borrowings and cash Corporate and other borrowings ($m) Limited recourse borrowings ($m) Total borrowings ($m) Cash and cash equivalents ($m) Gearing (%) Gearing excluding limited resource borrowings (%) Key ratios Electricity sales growth (%) Revenue and other income growth (%) EBITDAIF after significant items growth (%) Dividends per share growth (%) For definitions of any of the terms used in this document, please refer to the definitions contained in either the ERM Power Limited 2013 Annual Report or the Management Discussion and Analysis document which was lodged with our 2013 annual results on 22 August These documents can be found on our website at Head office Level 52, 111 Eagle Street Brisbane Qld 4000 Tel: (07) Fax: (07)

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