Genesis Energy Limited · NZX:GNE
Genesis Energy — FY2012 Earnings Presentation
28 slides from Genesis Energy's earnings presentation, Aug 27, 2012
Slide 1: Results for Full Year
FULL YEAR RESULT Results for Full Year 12 months to 30 June 2012 Strong result driven by sound strategy Albert Brantley CHIEF EXECUTIVE Andrew Donaldson CHIEF FINANCIAL OFFICER 27 August 2012 1
Slide 2: Contents
Contents Introduction 04 Strategic approach 05 Performance overview 09 Albert Brantley Financial results 19 Andrew Donaldson Conclusion 28 Albert Brantley 27 August 2012 2
Slide 3: Disclaimer
DISCLAIMER This presentation may contain projections or forward looking information (“Forward Looking Statements”). Such Forward Looking Statements are based on current expectations and involve risks, uncertainties and assumptions. Forward Looking Statements are not guarantees of future performance
Slide 4: Introduction: Strong result, sound strategy
Introduction Strong result, sound strategy Albert Brantley Chief Executive 29 February 2012 4
Slide 5: Strategic overview
Strategic overview • Largest New Zealand energy retailer • 668,684 customers • 27% electricity market share; 43% gas market share • Also growing LPG market share • Strategic focus on growing value • Reducing churn by delivering choice and control to customers • Reducing our cost to serve • Optimisin
Slide 6: Strategic overview
Strategic overview • Diverse, flexible and strategic generation portfolio • 18 to 20% of New Zealand generation • Generation plant in both islands • Geographic and fuel diversity means we can respond positively to varied market or hydrology conditions • Stable output in dry and wet years • Leader in
Slide 7: Strategic overview
Strategic overview • Upstream fuel integration from Kupe Oil and Gas Field • 31% interest • Kupe delivers 15% of NZ’s annual gas demand, and 50% of NZ’s LPG demand • Diversifies earnings, strong cash flows and excellent return on investment • Gives strategic position in gas industry – a significant
Slide 8: Strategic overview
Strategic overview • Excellent underlying financials • Strong and diversified cash flows • Disciplined approach to capital expenditure • Sound balance sheet • BBB+ investment grade by S&P • Strong management team • CEO – significant industry and listed company experience • CFO and COO roles now full
Slide 9: Strategy delivering results
Business snapshot Strategy delivering results • NPAT increased to $90m from loss of $17m in 2010/2011* • EBITDAF up 34% at $393m – up $100m from $293m last year • Share of total electricity market stable at 26.6% • Share of total gas market down slightly from 43.9 to 42.7% • LPG customer numbers up
Slide 10: Successful retailer
Customer Experience Successful retailer • Overall customer numbers stable in a competitive market • Ahead of target for electricity and LPG customers in South Island at 69,655 • Customer satisfaction score improved - 93% rating our service good or excellent • Advanced Meters – 267,675 now installed
Slide 11: Diverse portfolio
Energy Management Diverse portfolio • Total generation up by 30% to 8,467GWh (6,526GWh in 2010/11) • Thermal up 29% to 5,654GWh (4,387GWh) • Renewable up 32% to 2,812GWh (2,138GWh) • Huntly Power Station impacted by Maui outage and December loss of Grid connection • Coal-fired generation up 167% • C
Slide 12: Huntly Power Stations
Energy Management Huntly Power Stations • Six separate power stations • 4 x 250MW coal/gas fired units • 1 x 400MW gas fired CCGT • 1 x 48MW gas fired peaker (OCGT) • Strategic location – • Access to coal, gas, water and transmission • Proximity to retail customers • Scope for future development • G
Slide 13: Huntly Power Stations
Energy Management Huntly Power Stations • Highly commercial approach – only run if price covers cost • Long term storage planned for two 250MW units: • First unit stored from end of November 2012 – this is locked in • Second unit forecast to be stored from December 2014 • Market demand for dry year
Slide 14: Successful integration of portfolio
Energy Management Successful integration of portfolio • Successful integration of Tekapo stations • Achieving excellent water optimisation by balancing South Island hydro storage and North Island thermal capacity • 12 months of output from Tekapo A and B added 885GWhs to generation volumes 27 August
Slide 15: Kupe delivering
Kupe Kupe delivering • Genesis Energy share of oil sales down 6% to 531kbbl • Gas volumes up 8.5% to 5.9PJ from 5.5PJ • Genesis Energy share of total sales up 11% to $134m • Kupe joint venture signed a two year agreement with BP Singapore for the sale and marketing of Kupe light crude. Kupe producti
Slide 16: Creating options
Development Creating options • Generation market is fully developed for near term market demand growth • Our generation development projects will give us future options • We only invest in new plant if it’s more economic than buying from the wholesale market • Our focus is on business development an
Slide 17: People are our Heart
People People are our Heart • Committed to growing our people in a way that helps each person to reach their potential • Low churn rates in employees, well below industry norms in technical, operational and customer service areas • Workplace among industry leaders in terms of health and safety and w
Slide 18: Our results are strong
Financial results Our results are strong Andrew Donaldson, CFO 29 February August 2012 27, 2012 18 18
Slide 19: Strong result driven by diversity
Financial results Strong result driven by diversity • Geographical rebalancing of customer business achieved Genesis Energy’s strategies of focusing • Retail market share holds firm on customer value • South Island customers reached 69,000+ combined with optimising its • Diverse generation portfolio
Slide 20: Financial Highlights
Financial results Financial Highlights • NPAT of $90m Full Year Results to 30 June 2012 FULL YEAR 2012 • EBITDAF of $393m $m • Generation volumes up 30% at 8,467GWh OPERATING REVENUE 2,270 OPERATING EXPENSES 1,878 • Full year of operations for Tekapo A and B EBITDAF 393 • Full year of Kupe operation
Slide 21: Profit and Loss comparatives
Financial results Profit and Loss comparatives • Full year of operations for Tekapo A and B • Net profit after tax up at $90m YEAR 2012 2011 2010 2009 from loss of $17m in 2011* $m $m $m $m • EBITDAF up by $100m (34%) OPERATING REVENUE 2,270 1,835 1,895 1,957 OPERATING EXPENSES 1,878 1,542 1,646 1,7
Slide 22: Segment analysis (EBITDAF)
Financial results Segment analysis (EBITDAF) $300 $277 $250 • Improved Energy Management result due $200 $177 to: $150 • Increased generation, $m $92 $95 $100 $55 $53 including Tekapo $50 Corporate • Coal burn up on $- Customer Energy Oil & Gas previous year Experience Management -$50 -$31 -$32 2011
Slide 23: Consistent growth in EBITDAF over last 2 years
Financial results Consistent growth in EBITDAF over last 2 years Wholesale price is a less $m 250 significant driver than in 2008 and 2009 200 • Higher prices in 2nd half 150 more significant in South Island (Long position is in 100 North Island) 50 • Consistency reflects return on Kupe and 0 Tekapo
Slide 24: EBITDAF movement
Financial results EBITDAF movement Tekapo is major driver • Addition of Tekapo A and $m 800 B main driver of increased 700 EBITDAF 600 500 • Higher electricity prices 400 offset by higher cost of 300 purchases 200 393 100 293 • Higher fuel purchase - volumes offset by lower fuel cost per GWh due to
Slide 25: Stronger Balance Sheet and Cash Flow
Financial results Stronger Balance Sheet and Cash Flow • Debt down by $198m • Debt re-profiled with lower YEAR 2012 2011 2010 2009 interest cost and longer $m maturity Total assets 3,636 3,677 2,532 2,585 • BBB+ rating maintained Total liabilities 1,835 1,965 1,087 1,192 Total debt 1,019 1,218 552 6
Slide 26: Leader in energy risk management
Financial results Leader in energy risk management • Greater use of hedging arrangements to reduce earnings volatility • Active ASX trading Genesis Energy has an enterprise-wide risk • Mitigate oil price fluctuation risk through swaps management framework to • Manage foreign currency risk through fo
Slide 27: Consistent earnings going forward
Financial results Consistent earnings going forward • Some growth through better portfolio optimisation and growth in retail margins 500 80% • Demand growth expected to remain flat 400 60% • Costs under control 40% 300 • Gearing expected to improve further $m 20% % 200 0% • Return to regular dividen
Slide 28: Conclusion: We have a sound, unique business strategy
Conclusion We have a sound, unique business strategy We are focused on New Zealand and New Zealanders - Albert Brantley Chief Executive 29 February 2012 28 28