Genesis Energy Limited · NZX:GNE
Genesis Energy — Non-Deal Roadshow (May 2017)
28 slides from Genesis Energy's roadshow presentation, May 2017
Slide 1: Investor Roadshow
GENESIS ENERGY Investor Roadshow May/June 2017 Marc England, Chief Executive Chris Jewell, Chief Financial Officer
Slide 2: Market Overview
Market Overview
Slide 3: Overview of the NZ Energy Sector
Overview of the NZ Energy Sector New Zealand Energy Sector May 2017 Update Presentation 3
Slide 4: NZ Electricity Market
NZ Electricity Market 85% renewable, mainly hydro, but with limited storage 45,000 Generation Volume Mix (%) Annual Generation vs Hydro Storage 100% 40,000 (GWh) 90% 35,000 80% 30,000 70% 25,000 60% Hydro 50% Thermal 20,000 Geothermal 40% 15,000 Wind 30% 10,000 20% 5,000 10% - 0% Total Generation Hy
Slide 5: NZ Gas Market
NZ Gas Market Natural gas produced in one region with stable supply • Currently 15 producing fields in Taranaki NET NATURAL GAS PRODUCTION • The decline in oil price has led to a decline in wells drilled since the 2011 peak • There is currently an oversupply of gas, but this may become more balanced
Slide 6: NZ LPG Market
NZ LPG Market New Zealand is historically an exporter of LPG but is becoming more balanced1 1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition May 2017 Update Presentation 6
Slide 7: Energy Retailing
Energy Retailing Competitive retail landscape however traditional retailers still dominate ACTIVE RETAILERS (>100 ICPS) • 1 in 5 customers switch each year as the number 35 of energy participants continues to increase 30 29 25 − Price led competition but loyalty becoming 20 increasingly important 15
Slide 8: Genesis Energy Overview
Genesis Energ BY ake Overview
Slide 9: About Genesis Energy
About Genesis Energy Largest electricity and gas retailer with a flexible generation portfolio and integrated fuel position May 2017 Update Presentation 1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition 9
Slide 10: About Genesis Energy
About Genesis Energy Only fully integrated energy management company in New Zealand Market Share1 39% 25% 19% Electricity Gas LPG Production Generation Retail May 2017 Update Presentation 1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition 10
Slide 11: Financial Overview
Financial Overview A growing dividend stream over time with a BBB+ credit rating EBITDAF1 • $156 million of EBITDAF delivered in first half of $ MILLION 350 FY17 in line with expectations and guidance 300 250 • EPS up 4% over the first half 200 150 • 8.2cps dividend declared and paid representing 10
Slide 12: Strategy and Performance Update
Strategy and Performance Update
Slide 13: Genesis Energy Highlights
Genesis Energy Highlights A reinvigorated strategy in place Announced Reset Vision and Transformation Acquisition of an Strategy Journey Underway Additional 15% Interest in Kupe Strong Announced FY17 EBITDAF Health & Safety Acquisition of Guidance Range Performance with Nova Energy Retail $320 to $3
Slide 14: Strategy: Our plan on a page
Strategy Our plan on a page REIMAGINING ENERGY Vision to be customers’ first choice for energy management Strategic Themes OPTIMISE INVEST INNOVATE To improve short term return For medium term growth In long-term value creation Priorities Strategic Maximise Leverage data, Create enduring Deploy Enha
Slide 15: Strategic Themes
Strategic Themes To Energy Management 1. Optimise generation 2. Optimise “Traditional Retail “ Optimise − Deliver best in class cost to serve To improve short term − Drive loyalty into the customer base return − Win and keep valuable customers 3. Seeking corporate efficiency gains 1. Enable products
Slide 16: Optimise
Optimise To improve short term returns COST TO ACQUIRE PER CUSTOMER SALES BY ACQUISITION CHANNEL Door-to-door Outbound HY17 HY16 60 110 160 210 260 2012 2013 2014 2015 2016 Cost to acquire down 15% $6 million in cost savings Online acquisitions from lower and less delivered in HY17 channels growing
Slide 17: Innovate
Innovate For medium term growth LPG CUSTOMERS 18,000 16,000 14,000 12,000 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Agile way of working LPG customers up 25% Implemented C&I bottle embedded in business year on year management solution Held an inaugural Launched NZ’s first real world SM
Slide 18: Invest
Invest In long term value creation Kupe – building on our LPG – investing to grow retail integrated fuels strategy and and bulk market share with creating a flexible fuels acquisition of Nova Energy strategy with 15% share Retail LPG business acquisition from NZOG Distributed generation and Foundati
Slide 19: Acquisition of 15% stake in Kupe
Acquisition of 15% stake in Kupe Greater fuel flexibility and JV influence 1. Enhances ‘Integrated Fuels Strategy’ to create value from production through to generation and retail: ‒ Ownership of more uncontracted gas volumes ‒ Additional LPG volumes, 21% of national production, to boost position in
Slide 20: Nova Energy Retail LPG Acquisition
Nova Energy Retail LPG Acquisition Pivotal moment in customer centric-growth strategy with $192 million acquisition Significant LPG distribution network covering key demand centres in New Zealand and complementary to Genesis Energy’s existing footprint Well established customer base across resid
Slide 21: Nova LPG Benefits for Genesis Energy
Nova LPG Benefits for Genesis Energy Creating value in our LPG business in an attractive market whilst supporting the strategy of delivering a superior offering of integrated energy management solutions Becoming a LPG Improved Unlocking new Capturing Scale capability retailer of scale customer custo
Slide 22: Customer Performance Update
Customer Performance Update Retail prices are up whilst LPG growth remains strong • Whilst electricity demand remains subdued, prices have been increasing up 1.7% this year for mass market customers and 4.4% for time of use (TOU) customers • Gas prices have also been increasing up 1.7% with sales up
Slide 23: Wholesale Performance Update
Wholesale Performance Update Current wholesale conditions favourable to Genesis • Wet in the North but dry in the South means North Island hydro is running hard and thermal generation is ramping up • Genesis Energy has the most diverse generation portfolio in the market to capture the benefits of di
Slide 24: Kupe Performance Update
Kupe Performance Update Moved to 46% ownership from 1 January 2017 • Gas production up 17% for the year due to increased ownership percentage • Oil sales down as the joint venture has moved towards larger and less frequent oil shipments to seek cost benefits from economies of scale • Oil prices rema
Slide 25: Outlook
Outlook
Slide 26: Outlook
Outlook Targeting an upper quartile TSR of >14% • FY17 EBITDAF guidance range of $320 to $330 million including increased share of Kupe and transaction costs associated with acquisition of Nova Energy Retail LPG business1 • Target earnings profile remains to deliver $400+ million of EBITDAF in FY21
Slide 27: Why Genesis Energy?
Why Genesis Energy? Yield plus growth strategy in motion as Genesis Energy transforms • Brand strength and largest customer base provides strong platform for growth Customer • Obsession with customer experience will drive increased loyalty and lower costs Centric • Leveraging technology to improve t
Slide 28: Thank You
Thank You Ww j ENERGY