Genesis Energy Limited · NZX:GNE
Genesis Energy — Non-Deal Roadshow (November 2019)
44 slides from Genesis Energy's roadshow presentation, November 2019
Slide 1: Investor Roadshow November 2019
Investor Roadshow November 2019 Marc England – CHIEF EXECUTIVE OFFICER Chris Jewell – CHIEF FINANCIAL OFFICER GENESIS ENERGY LIMITED Hong Kong, Tokyo, Chicago, Sydney
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Genesis Energy Limited (‘Genesis Energy’) for information purposes only. The information in this presentation is 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 i
Slide 3: Presenters
Presenters Marc England Chief Executive - MBA, MENG Marc joined Genesis in May 2016. He is responsible for the leadership, strategic direction and management of all its business interests. Prior to joining Genesis, Marc was Executive General Manager New Energy at AGL Energy in Australia and also pre
Slide 4: Why invest in Genesis?
Why invest in Genesis? Yield Growth Transformation Our diverse generation A transformed Genesis is accelerating the portfolio ensures stability customer platform is pace of change, powered by and benefits from delivering medium term people, culture and market volatility growth opportunities agile pr
Slide 5: This presentation outlines Genesis Energy's Strategy to drive a stable yield and medium term growth
This presentation outlines Genesis Energy’s Strategy to drive a stable yield and medium term growth The New Zealand Market Investor Financial Strategy Strategy • Yield, plus • $400m+ growth Performing & EBITDAF Transforming by 2021 Business Strategy • Our Vision & Purpose Genesis Energy Limited Inve
Slide 6: Agenda
Agenda The New Zealand Market Our Investor Strategy Our Financial Strategy And Our Business Strategy Genesis Energy Limited Investor Roadshow November 2019 6.
Slide 7: The New Zealand Market
The New Zealand Market Performing & Transforming
Slide 8: About New Zealand
About New Zealand Good growth in a stable political and regulatory environment GDP st billion, Ease of doing 2.4% growth business st th Investor Providing Protection Sustainable, Secure Energy rd nd Economic Global Prosperity Freedom Index Source: Economy Rankings 2018 (The World Bank), The Heritage
Slide 9: New Zealand's domestic energy market
New Zealand’s domestic energy market Deregulated unsubsidised market with nearly 25 years of a free-market competitive operating system Retail 2m electricity customers 270,000 gas customers, 5 major electricity generators 220,000 LPG customers 4 gas fields make up over 80% Abundant resources of gros
Slide 10: NZ's opportunity is to decarbonise energy demand through electrification
NZ’s opportunity is to decarbonise energy demand through electrification Leveraging off an already renewable electricity system translates to a greater reduction in carbon emissions International Other Opportunity to decarbonise “The Committee has identified accelerated 22% oil price electrification
Slide 11: Core energy markets are stable or growing
Core energy markets are stable or growing GRID DEMAND GRID DEMAND FORECASTS (GWH) 65000 4,000 SHOWING SIGNS OF GROWTH (GWH) 60000 Anticipated grid 3,800 55000 3,600 demand growth 50000 3,400 will support 3,200 45000 wholesale value 3,000 40000 35000 2,800 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 12: …with the electricity market reflecting tighter capacity margins
…with the electricity market reflecting tighter capacity margins Stable Capacity residential and fuel shortages ASX future spot electricity prices are creating prices are reduces regulatory opportunity for significantly intervention wholesale elevated risk margins RESIDENTIAL ELECTRICITY PRICE (C/KW
Slide 13: …and fuel markets tightening
…and fuel markets tightening Declining gas Shift to LPG International oil reserves support import supports price volatility value of existing value of remaining continues reserves LPG reserves FORECAST LPG PRODUCTION PROFILE BRENT CRUDE (USD/BBL) FORECAST GAS PRODUCTION PROFILE $120 12 250 $100 10 2
Slide 14: Renewable electricity has grown from 65% to 85% over last decade
Renewable electricity has grown from 65% to 85% over last decade Progress towards greater renewable electricity anticipated to continue as wind costs decline Growth in renewable generation has Wholesale electricity and gas prices impacted by progressed without subsidies domestic and international dr
Slide 15: New Zealand aluminium smelter review
New Zealand aluminium smelter review If smelter closes South Island Generators most impacted – could accelerate industry electrification NEW ZEALAND ELECTRICITY DEMAND (TWH) Upper Geographical North Island Upper diversity of North Island assets has Auckland Demand benefits Central Huntly Power Stati
Slide 16: Investor Strategy
Investor Strategy Performing & Transforming
Slide 17: A strong yield underpinned by medium term growth opportunities
A strong yield underpinned by medium term growth opportunities Strongest sector yield at current prices, 75th percentile across NZX/ASX market NZX 50 / ASX 100 YIELD COMPARISON EBITDAF Mean Yield (LHS) 90th Percentile Yield (LHS) NZ$ MILLIONS 400 - 420 75th Percentile Yield (LHS) 25th Percentile Yie
Slide 18: Our investor strategy and dividend policy
Our investor strategy and dividend policy to grow dividends in real-terms over time, up 6.6% from FY15 FY15 TO FY19 DIVIDEND, CENTS PER SHARE Dividends (CPS) 16.9 17.05 • FY19 full year dividend of 17.05 cps, 16.4 16.6 16.0 80% imputed. • Supplementary dividend payable to non-resident shareholders (
Slide 19: Financial Strategy
Financial Strategy Performing & Transforming
Slide 20: Our financial strategy is to deliver $400m+ EBITDAF by FY21
Our financial strategy is to deliver $400m+ EBITDAF by FY21 Driven by targeted retail growth, optimisation and roll-off of legacy gas contracts $MILLIONS Residential Value Growth A 420 B2B Growth B LPG Growth C 10 - 20 10 - 15 400 15 - 30 3 7 10 - 12 2 363 1 2 3 FY19 EBITDAF IFRS16 Impact Kupe Produ
Slide 21: Retail growth initiative – Grow Residential Portfolio Value
Retail growth initiative – Grow Residential Portfolio Value 1A Investment in loyalty, brand, product innovation and digitisation is driving down churn and cost to serve 1 Engaged and loyal customers will choose to stay, reducing Digitisation is having a positive impact on the cost to churn costs, gr
Slide 22: Retail growth initiative – Grow Business Customer Market Share
Retail growth initiative – Grow Business Customer Market Share 1B Focus remains on volume growth but not at the expense of value Netback1 is a key indicator of the value able to be created by Previously under-indexed in the business segment, Genesis is the retail segment, prior to paying for energy
Slide 23: Retail growth initiatives – LPG Growth & Operational Synergies
1C Retail growth initiatives – LPG Growth & Operational Synergies LPG plays an important role in growing our multi-fuel customer base and lowering churn of electricity customers LPG sales volume is expected to grow in line with market expansion and netbacks forecast to increase 26% of Genesis’ Resid
Slide 24: Optimisation Initiative – Portfolio & Cost Efficiencies
Optimisation Initiative – Portfolio & Cost Efficiencies 2 Core to portfolio optimisation is connecting Genesis Wholesale market capability with its customers for mutual benefit, as delivered in our ‘For Dairy’ product launch Current average ASX future spot prices are significantly ASX future spot ab
Slide 25: Legacy gas supply agreement roll-off
Legacy gas supply agreement roll-off 3 Benefits arising from GSA roll-off begin in FY21 at an estimated $10-20m TAKE-OR-PAY (ToP) FORWARD GAS PURCHASES1 BENEFITS AND TIMING OF ALTERNATIVE GAS PURCHASE COST 2 ToP gas prices at $8-10/GJ, excluding transmission 7/GJ 8/GJ 40 $80 35 $70 30 $60 25 $50 20
Slide 26: Business Strategy
Performing & Transforming Business Strategy
Slide 27: A bit about Genesis
A bit about Genesis An integrated energy management company, Genesis is New Zealand’s largest energy retailer, generates electricity from a diverse portfolio of thermal and renewable assets and has a 46% interest in the Kupe gas field. KEY INFORMATION Revenue (FY19): NZ$2.7 billion , EBITDAF (FY19):
Slide 28: Our geographically and fuel diverse assets enable stable earnings
Our geographically and fuel diverse assets enable stable earnings End-to-end integration, diversity and scale gives us stability of earnings in a volatile renewable energy market Customer base Renewable generation • NZ’s largest energy • 3 hydro catchments retailer, more than across both North 500k
Slide 29: Genesis enjoys diversity of earnings across sectors, fuels and markets
Genesis enjoys diversity of earnings across sectors, fuels and markets GROSS MARGIN CONTRIBUTION (FY19) KUPE 19% WHOLESALE 44% CUSTOMER 37% Gas 11% Business Renewable generation 26% Residential electricity 19% electricity 6% Oil 5% LPG 3% Thermal generation 18% LPG 7% Gas 5% Electricity Gas LPG Oil
Slide 30: We're performing while transforming towards a new energy future
We’re performing while transforming towards a new energy future Our VISION: to be customers’ first choice for energy management Our PURPOSE: to reimagine energy to put control in our customers’ hands Our STRATEGY: to maximise value through our market position Wholesale Market Retail Market Maximisin
Slide 31: Engaging customers through loyalty as we innovate to a data-driven future
Engaging customers through loyalty as we innovate to a data-driven future Energy management products and services differentiates us from our competitors Action Genesis Energy Limited Investor Roadshow November 2019 31.
Slide 32: A product-led strategy is coming to life
A product-led strategy is coming to life Investment in loyalty products, data platforms and algorithm fueled innovation is reducing churn and driving value Digital customer interactions up 41% in one year Customer Lifetime Value up 12%, from FY17 Residential Dual Fuel customers up 11%, from FY17 Cos
Slide 33: Maximising portfolio value as NZ transitions to a low carbon future
Maximising portfolio value as NZ transitions to a low carbon future Future-Gen, transitioning our generation portfolio Economically displace baseload thermal Enhance the value of our flexible thermal with renewable generation in an increasingly renewable market Progressing Considering PPA Considerin
Slide 34: New Zealand's unique seasonal demand gap requires thermal back-up
New Zealand’s unique seasonal demand gap requires thermal back-up Demand is highest in winter, when southern inflows are the lowest Seasonal Storage Challenge 4,000 400 Thermal flexes with demand and hydro variability 3,500 350 5 TWh of thermal flexibility needed Solar Monthly Total (GWh) 3,000 300
Slide 35: Genesis is well positioned to provide flexible energy as NZ transitions
Genesis is well positioned to provide flexible energy as NZ transitions Increased wind penetration will shift the role of hydro, but seasonal flexibility still required Energy Resource Impact of transition on value Baseload / non-dispatchable • Wind generation increases as costs decline, new builds
Slide 36: Enabling a more sustainable future
Enabling a more sustainable future Sustainability at Genesis means caring for the environment, supporting our people to succeed and building strong communities while powering New Zealand towards a positive, sustainable future Our people are engaged and diverse in experience and Underpinning our work
Slide 37: Appendices
Appendices GENESIS ENERGY LIMITED genesis
Slide 38: FY19 Results at a glance
FY19 Results at a glance 1 Both gross and net churn is expressed on the basis of a 12 month rolling average. 2 Installation Connection Point (ICP), a connection point that is both occupied and has not been disconnected. 3 Netback is defined as Retail EBITDAF by fuel type plus respective fuel purchas
Slide 39: Financial statements
Financial statements Income Statement FY19 FY18 Variance Balance Sheet FY19 FY18 Variance ($m) ($m) ($m) ($m) Revenue 2,700.7 2,302.5 +17.3% Cash and Cash Equivalents 61.9 49.3 Total Operating Expenses (2,337.3) (1,942.1) +20.3% Other Current Assets 416.4 339.4 EBITDAF 363.4 360.4 +0.8% Non-Current
Slide 40: Diversified funding profile
Diversified funding profile GENESIS DEBT PROFILE Debt Information FY19 FY18 Variance ($m) ($m) Total Debt $ 1,289.8 1,255.4 $m Cash and Cash Equivalents $ 61.9 49.3 $300 Headline Net Debt $ 1,227.9 1,206.1 +1.8% $250 USPP FX and FV Adjustments $ 41.7 23.2 $200 Adjusted Net Debt1 $ 1,186.2 1,182.9 +0
Slide 41: Operational metrics
Operational metrics Retail Key Information FY19 FY18 Variance Retail Key Information FY19 FY18 Variance EBITDAF ($ millions) 122.5 109.7 +11.7% Customer Electricity Sales (GWh) 6,067 5,980 +1.5% Customer Gas Sales (PJ) 8.2 7.5 +9.3% Customers with > 1 Fuel 117,138 109,710 +6.8% Customer LPG Sales (t
Slide 42: Operational metrics
Operational metrics Wholesale Key Information FY19 FY18 Variance Kupe Key Information FY19 FY18 Variance EBITDAF ($ millions) 177.6 178.0 (0.2%) EBITDAF ($m) 108.8 115.3 (5.6%) Renewable Generation (GWh) 2,834 3,056 (7.3%) Field Production (PJ) 25.7 25.5 +0.8% Thermal Generation (GWh) 3,987 4,049 (1
Slide 43: Genesis' share register
Genesis’ share register 90-day average trading volume of 550,000 shares equates to NZD1.75m per day, or approximately USD1.1m HOLDER BY TYPE HOLDER BY GEOGRAPHY SUM OF REGISTER HOLDING BY % 6% 2% 6% 30% 34% 51% 51% 51% 35% 10% 19% 5% Crown Institutional Retail Crown New Zealand Australia North Ameri
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