Slide 1: FY16 Results Presentation
FY16 Results Presentation FY16 Results Presentation 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Genesis Energy Limited (‘Genesis Energy’) for information purposes only. The information in this presentationis of a general nature and does not purport to be complete nor does it contain all the information required for an investor to evaluate an in
Slide 3: Agenda
Agenda 1 FY16 2 Operational Overview Performance Dame Jenny Shipley Marc England Chairman Chief Executive 3 Financial 4 Vision and Strategy Performance Refreshed Chris Jewell Marc England Chief Financial Officer Chief Executive FY16 Results Presentation 3
Slide 4: FY16 Overview
FY16 1 Overview Dame Jenny Shipley Chairman FY16 Results Presentation 4
Slide 5: FY16 Overview: A year of transition
FY16 Overview A year of transition • Appointment of Marc England as Chief Executive • A resilient performance in challenging conditions • Total Shareholder Return of 32% • Extension of the Rankine units • Significant upgrade to Kupe reserves • Restructuring of the long fuel book • Energy Online bran
Slide 6: 2016 Operational Performance
2016 2 Operational Performance Marc England Chief Executive FY16 Results Presentation 6
Slide 7: FY16 Highlights
FY16 Highlights A resilient performance in challenging conditions EBITDAF NPAT $335.3m $184.2m 3% lower year on year 76% higher driven by the Kupe reserves upgrade and a revaluation of the generation assets FREE CASH FLOW TOTAL DIVIDENDS Energy Management: resilient under pressure $200.2m 16.4cps Oi
Slide 8: Generation
Generation Stable production in a soft market ANNUAL GENERATION PROFILE ANNUAL GENERATION PROFILE GWh 9,000 • Generation volumes of 6.7 TWh – in line with FY15 8,000 7,000 • Average price of $64/MWh – 15% lower than FY15 6,000 5,000 • Hydro inflows of 192 GWh – 7% below average 4,000 3,000 • Changed
Slide 9: Huntly's Rankine Units
Huntly’s Rankine Units Operational extension until at least December 2022 • Swaption contracts cover operational and capital costs until 2022 • Remain an effective thermal peaking option with fuel storage • Removes concerns of supply side constraints beyond 2018 USE OF GAS VS COAL USE OF GAS VS COAL
Slide 10: Tiwai Point Impact
Tiwai Point Impact De-risking the business for a Tiwai exit scenario • Genesis Energy has worked hard to mitigate the impact of any future closure of the Tiwai aluminium smelter • Most likely scenario in the event of Tiwai exit would be to close Rankine units • Built carve-out clauses for Tiwai exit
Slide 11: Fuel Management
Fuel Management Optimised working capital HUNTLY COAL STOCKPILE AND COAL USED IN GENERATION HUNTLY COAL STOCKPILE AND COAL USED IN GENERATION COAL STOCKPILE (’000 TONNES) COAL USED IN GENERATION (PJ) by reshaping fuel position 1,800 1,600 14 12 1,400 • A focus on optimising the fuel position resulti
Slide 12: Oil and Gas
Oil and Gas Sustained production in a KUPE ROLLING KUPE ROLLING 12M 12M GAS GAS PRODUCTION PJ GAS AND PRODUCTION (PJ) OIL PRODUCTION OIL PRODUCTION KBBL challenging global oil market 30 600 25 500 • Kupe gas production down 3% due to a three yearly 20 400 major plant outage. 15 300 • Production was
Slide 13: Kupe reserves upgraded
Kupe reserves upgraded Significant reserves upgrade GENESIS ENERGY SHARE OF KUPE RESERVES FY16 FY15 Variance Genesis Energy share of Kupe reserves (PJ) (PJ) (%) • Developed reserves 35% higher than 30 June 2015 Developed Reserves (2P) 73.8 54.7 35% Undeveloped Reserves (2P) 46.4 39.2 18% • Total res
Slide 14: Retail Markets
Retail Markets Stable against price competition Retail Customers and Volumes FY16 FY15 Variance (%) Electricity Customers 523,174 516,574 1% • Competition and warm weather offset by C&I Gas Customers LPG Customers 107,121 15,890 106,263 13,839 1% 15% and LPG volumes Total Customer Accounts 646,185 6
Slide 15: Improving Customer Conversations
Improving Customer Conversations Focus on the cost to acquire and serve GENESIS ENERGY CALL VOLUMES CALL VOLUMES CALLS 1,600,000 • Process improvement enhances customer experience 1,400,000 1,200,000 • Implementation of Customer Relationship –5% 1,000,000 Management System 800,000 —— Agile approach
Slide 16: Digital innovation drives customer self service
Digital innovation drives customer self service Measurable progress • Self service adoption growing in both brands • Four iterations of a mobile app with new features including: —— Get an estimate of your next electricity bill —— View graphs of electricity usage —— Order LPG bottle in two taps • Som
Slide 17: Relaunch of Energy Online
Relaunch of Energy Online Brilliantly simple BEFORE • New Brand, Website, Mobile Apps • 14% Customer Growth • No. 1 NZ Energy company on Facebook • Digital only viral brand campaign —— “Door knocking is so last century”; and “Get great deals online anytime” —— Speedy Sign ups. Online, Anytime AFTER
Slide 18: Retail LPG
Retail LPG 15% YoY Growth, ambitious plans ahead GENESIS ENERGY RETAIL LPG GROWTH RETAIL LPG GROWTH CUSTOMER CONNECTIONS TONNES 18,000 4,500 • Genesis Energy remains focused on growing its LPG 16,000 4,000 customers and retail volumes, delivering new LPG 14,000 3,500 12,000 3,000 products and levera
Slide 19: Retail Electricity
Retail Electricity Stable in a high churn market ELECTRICIT Y CUSTOMER CONNECTIONS AND MARKET SHARE ELECTRICITY CUSTOMER CONNECTIONS AND MARKET SHARE CUSTOMERS BY CONNECTIONS SHARE OF TOTAL MARKET 600,000 28.5% • 26% market share 550,000 27.5% 26.5% • Stable connections of 523,174 at 30 June 500,000
Slide 20: Retail Natural Gas
Retail Natural Gas Stable in a high churn market GAS CUSTOMER CONNECTIONS AND MARKET SHARE GAS CUSTOMER CONNECTIONS AND MARKET SHARE CUSTOMERS BY CONNECTIONS SHARE OF TOTAL MARKET 120,000 46.5% • 39% market share 115,000 41.5% • Total connections of 107,121 — 1% higher 110,000 36.5% • Energy Online
Slide 21: Health & Safety
Health & Safety The safety of our employees is a priority • Genesis Energy is committed to a zero harm work environment • No serious incidents and only one lost time incident in FY16 (3 in FY15) • TRIFR* of 2.57 was slightly up on FY15 but still significantly lower than FY12 • Industry wide collabor
Slide 22: 2016 Financial Performance
2016 3 Financial Performance Chris Jewell Chief Financial Officer FY16 Results Presentation 22
Slide 23: Financial Overview
Financial Overview FY16 delivers consistent cashflow Financial Highlights Operational drivers of financial results • Operating Cashflow – 2% higher (+$6.3m) • Opex – $4.4m lower • Net Debt – $71.5m lower • Coal stockpile – $35m (43%) lower • Final dividend of 8.2cps – 2.5% higher • Stay in business
Slide 24: EBITDAF FY16 vs FY15
EBITDAF FY16 vs FY15 Global oil markets impact result • Global oil prices impact; • Kupe plant maintenance outage and yield decline —— Lower wholesale and retail gas pricing • Restructured fuel book meant less loss making wholesale gas sales —— Lower wholesale oil & LPG prices • Higher retail acquis
Slide 25: Operating Costs
Operating Costs Focused on operational efficiency REDUCTIONS IN OPERATING REDUCTION IN OPERATING $ MILLION COSTS* COSTS* 350 • Reduction of $32m in operating costs since FY14 300 • Operating costs – $7.3m lower in FY16 250 200 —— Write back of Rankine inventory (–$6.9m) 150 —— Change in provisions –
Slide 26: Cashflow and Capital Expenditure
Cashflow and Capital Expenditure Focus on working capital and capex CAPITAL EXPENDITURE PROFILE CAPITAL EXPENDITURE PROFILE CAPITAL EXPENDITURE $ MILLION 180 • Continuing to generate increasing free cashflow 160 despite challenging trading conditions 140 120 • Operating cashflow – 2% higher – suppor
Slide 27: Funding Profile
Funding Profile Headroom for investment in growth GENESIS ENERGY DEBT PROFILE DEBT PROFILE $ MILLION • Strong balance sheet provides flexibility to deploy for 250 investment in growth whilst maintaining dividends 200 • Net debt – $71.5m (8%) lower 150 100 • Current debt levels well within S&P BBB+ k
Slide 28: Dividends
Dividends Increasing year on year • Final dividend of 8.2cps • Net yield of 7.7% based on share price at 30 June 2016 • Total dividends declared in FY16 of 16.4cps • FY16 dividends equate to 82% of Free Cash Flow —— 2.5% higher than FY15 (compared to NZ inflation • Total Shareholder Return of 32% in
Slide 29: Vision and Strategy Refreshed
Vision and 4 Strategy Refreshed Marc England Chief Executive FY16 Results Presentation 29
Slide 30: Genesis Energy: A new beginning, a new vision
Genesis Energy: A new beginning, a new vision Reimagine Energy to be customers’ first choice for Energy Management An integrated energy fuels business intersected by evolving technologies, focused on engaging customers with agile and innovative products and services to offer relevant and low cost en
Slide 31: Strategies that drive long term growth
Strategies that drive long term growth A reorientation toward customers and a focus on value with three themes Evolving Genesis Energy from Energy Supplier to Energy Manager • New organisation design including lean corporate center Optimise • Operational and value excellence focus in generation the
Slide 32: Timetable to communicate strategy
Timetable to communicate strategy The table below identifies the upcoming events where further details of the Company’s strategic direction will be provided. EVENT DATE Annual Results Announcement 24 August 2016 Annual Report 2 September 2016 Investor Roadshow 1–18 September 2016 Annual General Meet
Slide 33: Outlook
Outlook Q1 FY17 will be focused on embedding new strategy and team • FY17 guidance to be provided at the Annual Shareholders Meeting on 19 October 2016 • Trading conditions since start of FY17 have been consistent with Q4 FY16 —— Spot prices remain suppressed although Genesis Energy hydro storage is
Slide 34: Supplementary information
Supplementary information FY16 Results Presentation 34
Slide 35: Financial Statements
Financial Statements PROFIT AND LOSS BAL ANCE SHEET FY16 FY15 Variance FY16 FY15 Variance Profit and Loss Balance Sheet ($m) ($m) (%) ($m) ($m) (%) Revenue $ 2,011.3 $ 2,097.6 (4)% Cash and cash equivalents $ 34.9 $ 21.0 66% Total operating expenses (1) (1,676.0) (1,752.8) (4)% Other current assets
Slide 36: Operational Data
Operational Data Market Information FY16 FY15 % Variance Variance Generation FY16 FY15 % Variance Variance Customer-‐focus Generation Electricity Market Share (%) 1 25.6% 25.7% (0)% (0)% Gas (GWh) 3,232 2,772 17% 460 Gas Market Share (%) 1 39.3% 39.9% (1)% (1)% Coal (GWh) 9 811 1,277 (36)% (466) To
Slide 37: Reconciliation of EBITDAF to NPAT
Reconciliation of EBITDAF to NPAT • EBITDAF is a non-GAAP item but is used as a key Cashflow Statement FY16 FY15 Variance ($m) ($m) (%) metric by management to monitor performance at a EBITDAF $ 335.3 $ 344.8 (3)% business segment and group level Depreciation, depletion and amortisation $ (127.5) $
Slide 38: Deferred Acquisition Costs
Deferred Acquisition Costs • In FY16 Genesis Energy changed the accounting Deferred Acquisition Costs FY16 FY15 Variance Variance ($m) ($m) ($m) (%) treatment of its customer acquisition costs Gross Acquisition Costs $ 18.3 $ 10.8 $ 7.5 70% Deferred Acquisition Costs $ (13.7) $ 0.0 $ (13.7) N/A • Th
Slide 39: Free Cash Flow
Free Cash Flow • Free Cash Flow (FCF) is a key metric showing ability to Free Cash Flow FY16 FY15 Variance ($m) ($m) (%) pay cash dividends EBITDAF $ 335.3 $ 344.8 (3)% Less finance expense 65.2 68.0 (4)% • Calculated using EBITDAF, finance expense tax paid, Less income tax expense 68.8 35.5 94% and
Slide 40: Debt Profile
Debt Profile • $100 million of retailable bonds issued in March 2016 GENESIS ENERGY DEBT PROFILE DEBT PROFILE $ MILLION 250 —— Coupon of 4.14% compared well to 7.65% for $105 million of bonds maturing at the same time 200 150 • Revolving credit facilities restructured in early 2016: 100 —— Increasin
Slide 41: Net Debt to EBITDAF ratio
Net Debt to EBITDAF ratio • Net Debt to EBITDAF ratio is the key metric focused GENESIS NET DEBT TOENERGY EBITDAF NET DEBT TO EBITDAF on by credit ratings agencies including Standard and NET DEBT TO EBITDAF RATIO 5.0 Poors 4.5 4.0 • In order to maintain a BBB+ rating the target range for 3.5 the EBI
Slide 42: Thank you
Thank you FY16 Results Presentation 42