Genesis Energy Limited · NZX:GNE
Genesis Energy — H1 FY23 Earnings Presentation
40 slides from Genesis Energy's earnings presentation, Feb 27, 2023
Slide 1: H1 FY23 Results Presentation
H1 FY23 Results Presentation Presenters: Tracey Hickman Interim Chief Executive James Spence Chief Financial Officer 27 February 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Genesis Energy Limited (‘Genesis While all reasonable care has been taken in compiling this presentation, to Energy’) for information purposes only. This disclaimer applies to this the maximum extent permitted by law, Genesis Energy accepts no docume
Slide 3: Agenda
1. Performance highlights 2. Financial performance 3. Operational performance 4. Strategic outlook 5. Guidance 6. Appendix
Slide 4: Performance highlights
Performance highlights Financial Operational Sustainability EBITDAF 1 Growth in Customers in H1 FY23 Carbon Emissions lower by $298m 10,273 852 kt CO2e 46% decrease in total emissions 42% increase on H1 FY22. Total customers 481,285 relative to H1 FY22 2 NPAT Progress on Future-gen with PowerShout h
Slide 5: Financial Performance
Financial Performanée - Le .
Slide 6: H1 FY23 Financial Summary
H1 FY23 Financial Summary H1 FY23 H1 FY22 Variance % Movements $m $m $m Revenue 1,155.1 1,382.4 (227.3) (16%) EBITDAF 298.3 210.3 88.0 42% NPAT 145.3 84.7 60.6 72% Operating Expenses1 156.6 144.3 12.3 9% Free Cash Flow2 214.7 152.4 62.3 41% Capital Expenditure 30.4 38.1 (7.7) (20%) Inter
Slide 7: H1 FY23 EBITDAF
($m) H1 FY23 EBITDAF 350 300 250 200 150 100 50 210 H1 FY22 EBITDAF 107 Electricity Gross Margin 14 Gas Gross Margin (a) LPG Gross Margin (8) Other Gross Margin (a2) kupe Gross Margin (12) Operating Costs 298 Ha FY23 EBITDAF
Slide 8: Gross Margin movements
Gross Margin movements Electricity: ELECTRICITY GROSS MARGIN GAS GROSS MARGIN • Strong hydro inflows enabled lower thermal generation and consequently lower fuel and carbon 30 400 26 costs. 358 350 25 • Strong performance across hedge and active trading 300 drove an improvement in derivatives settle
Slide 9: Net Profit After Tax
Net Profit After Tax 200 180 160 140 120 20 H1 FY22 NPAT 88 Change in EBITDAF (14) Depreciation (DDA) (9) Net Finance Costs 19 Fair Value & Other Gains / Loss (24) Income Tax Expense 145 Hi FY23 NPAT
Slide 10: Operating Expenditure
Operating Expenditure Recurring Costs Non-Recurring Costs • Staff costs – higher staff costs especially in customer facing roles. Return to non-COVID working increased travel and other costs. • Marketing costs – relaunch of the Genesis brand in H1 FY23 and promotion of EV plan resulting in higher co
Slide 11: Capital Expenditure
Capital Expenditure Stay In Business capital expenditure1 of $24m includes: • Investment in the Huntly units to maintain long term reliability and flexibility. 106 • Commenced the second Tuai generator refurbishment to enable 91 continued reliable generation and increase unit capacity by 81 2 MW. Th
Slide 12: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet FIXED INTEREST RATE PROFILE • The strong performance enabled a debt reduction over the period, 8.0% 81% 90% with adjusted net debt declining by $45 million. 74% 72% 75% 73% 72% 7.0% 61% 70% • Cash payments were made to build inventory and invest in 55% associates, primari
Slide 13: Dividend imputation increased to 100%
Dividend imputation increased to 100% DIVIDEND PER SHARE & PAY-OUT HISTORY 130% 8.525 8.60 8.70 8.80 • Interim Dividend of 8.8 cps, 100% imputed with a 8.30 8.45 110% record date of 23 March 2023 will be paid on 6 April 93% 2023. 78% 90% 64% 70% 57% 60% • The stronger free cash flow enabled Genesis
Slide 14: Operational Performance
Operational Performance
Slide 15: Strong growth in customers and loyalty
Strong growth in customers and loyalty ROLLING CUSTOMER CHURN RATE • Genesis continued to show strong momentum in our retail business, with customers growing by over 10,000 in the period across the mass market 20.0% brands of Genesis and Frank Energy. Net churn rate 15.0% • This increase has been dr
Slide 16: Leading the way with electric vehicle propositions
Leading the way with electric vehicle propositions GENESIS CUSTOMERS ON AN EV PRODUCT • Genesis is taking a leading role in supporting New Zealand’s transition to 4,000 electric vehicles. • In September 2022 Genesis launched an energy roaming proposition 3,000 'EVerywhere', which allows EV Energy Pl
Slide 17: Delivering value across customer channels
Delivering value across customer channels RESIDENTIAL NETBACK $150 $20 • Netbacks continued to grow across business segments in electricity and gas. $140 $18 $130 • The market continues to experience wholesale price elevation across $16 electricity, gas and carbon. The C&I segment is able to reflect
Slide 18: Flexibility in volatile market conditions
Flexibility in volatile market conditions • In H1 FY23 the wholesale market saw incredible volatility with prices fluctuating from OTAHUHU AVERAGE SPOT PRICES over $2,000/MWh to $0/MWh through the half. 300 • Genesis was able to respond to market conditions through the period, with monthly 250 gener
Slide 19: Assets to support a flexible portfolio
Assets to support a flexible portfolio GENESIS DAILY SHORT/LONG VOLUME 2 • Genesis continued to exercise the flexibility of its thermal units in H1 FY23 in response to the low spot prices seen from August onwards. 0 This enabled the portfolio to run short during overnight periods of low prices. -2 •
Slide 20: Sustainability and our People
Sustainability and our People Leadership Progression Gap 2.0% FY22 Male 58% Female 42% • 46% reduction in carbon emissions relative to H1 57% 43% A low carbon FY23. Pay Equity Gap future for all • Supported Tokaanu Stream restoration project to eradicate willow, enhance water quality and FY22 1.3% i
Slide 21: Strategic Outlook
Strategic Outlook 21.
Slide 22: Lauriston Solar Farm
Lauriston Solar Farm • Genesis launched a Joint Venture partnership with FRV Australia in February 2022. Lauriston Solar Farm The Joint Venture announced the first project of 52MW that is expected to be Location Lauriston, Canterbury operational in late 2024. Area 93 Ha 52 MWp Capacity c. 47 MW AC •
Slide 23: An active enabler of New Zealand's energy transition
An active enabler of New Zealand’s energy transition SOLAR DEVELOPMENT PIPELINE • In addition to Lauriston, the Joint Venture is in negotiations for three solar sites in the North Island with potential capacity of 400MW. 52 MW • Inflationary pressures have increased costs of renewable development an
Slide 24: Trial demonstrates Huntly can operate on 100% Biomass
Trial demonstrates Huntly can operate on 100% Biomass Test Result • In February 2023 Genesis completed a technical viability trial using 100% Reclaim and Movement of fuel into Successful internal transfer renewable biomass in the Huntly Rankine Units. The trial demonstrated that Storage internal bun
Slide 25: A new Leadership Team in place for future growth
A new Leadership Team in place for future growth Malcolm Johns Tracey Hickman James Spence Chief Executive Chief Customer Officer Chief Financial Officer BMS MA (Hons), AMP (Harvard) BSc, CA Joins as Chief Executive on Over 28 years energy sector Experience as CFO at three 6 March 2023. Previously e
Slide 26: Kupe – supporting the transition
Kupe – supporting the transition • Genesis and our joint venture partners have committed to invest in a development within the existing permit area to access undeveloped fuel reserves ("KS-9"). The project is subject to EPA approval. • Initial drilling is targeted for Q2 FY24 and a suitable rig has
Slide 27: Guidance
Guidance
Slide 28: Guidance
Guidance FY23 EBITDAF has been updated to around $515 million from around $500 million, subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances; • Guidance includes an allowance in operating costs relating to the implementation of the new
Slide 29: Appendix
Appendix
Slide 30: Carbon hedge position
Carbon hedge position CARBON HEDGE PRICES CARBON HEDGE POSITION 100% 140 90% 120 80% 100 70% 60% ($/NZU) 80 50% 60 40% 30% 40 20% 20 10% 0 0% FY23 FY24 FY25 FY26 FY27 FY28 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Carbon Forward Curve Hedge Price Hedged Unhedged GREENHOUSE GAS EMISSIONS 4 3 Emissions (MtCO
Slide 31: Electricity and Gas gross margin breakdown
Electricity and Gas gross margin breakdown H1 FY23 H1 FY22 Variance Volume Rate per unit $m Volume Rate per unit $m Volume Rate per unit $m Electricity Retail Sales C&I 888GWh $156/MWh 138.6 1,037GWh $140/MWh 145.1 (149)GWh $16/MWh (6.5) Retail Sales Mass Market 2,038GWh $264/MWh 538.3 2,084GWh $259
Slide 32: LPG and other Gross Margin breakdown
LPG and other Gross Margin breakdown H1 FY23 H1 FY22 Variance Volume Rate per unit $m Volume Rate per unit $m Volume Rate per unit $m LPG Retail Sales 24.6 kt $2,103/t 51.8 24.0 kt $1,909/t 45.7 0.6 kt $194/t 6.1 Wholesale Sales 2.7 kt $1,117/t 3.0 8.3 kt $1,182/t 9.9 (5.6) kt $(65)/t (6.9) Emission
Slide 33: Kupe Gross Margin and Reconciliation to EBITDAF
Kupe Gross Margin and Reconciliation to EBITDAF H1 FY23 H1 FY22 Variance Kupe Gross Margin Volume Rate per unit $m Volume Rate per unit $m Volume Rate per unit $m Oil Sales 94 kbbl $122.9/bbl 11.5 147 kbbl $93.2/bbl 13.7 (53) kbbl $29.7/bbl (2.2) Gas Sales 4.3 PJ $7.2/GJ 31.3 5.4 PJ $7.1/GJ 38.1 (1.
Slide 34: Financial statements
Financial statements H1 FY23 H1 FY22 Variance H1 FY23 FY22 Variance Income Statement Balance Sheet ($m) ($m) ($m) ($m) Revenue 1,155.1 1,382.4 (16)% Cash and Cash Equivalents 114.0 105.6 Other Current Assets 584.7 626.0 Expenses (856.8) (1,172.1) (27)% Non-Current Assets 5,003.1 4,540.8 EBITDAF 298.
Slide 35: Debt Information
Debt Information GENESIS DEBT PROFILE AT 31 DECEMBER 2022 Debt Information H1 FY23 FY22 Variance $300 ($m) ($m) Total Debt $ 1,434 1,493 $250 Cash and Cash Equivalents $ 114 106 $200 Headline Net Debt $ 1,320 1,387 -4.8% $m $150 USPP FX and FV Adjustments $ 12 35 $100 Adjusted Net Debt1 $ 1,308 1,35
Slide 36: Operational metrics
Operational metrics Retail Key Information H1 FY23 H1 FY22 Variance Retail Netback by Segment & Fuel H1 FY23 H1 FY22 Variance EBITDAF ($ millions) (3.6) 34.1 (110.6)% Residential - Electricity ($/MWh) $133.26 $140.79 (5.3)% Customers with > 1 Fuel 140,587 129,920 8.2% Residential - Gas ($/GJ) $16.85
Slide 37: Operational metrics
Operational metrics Wholesale Key Information H1 FY23 H1 FY22 Variance Kupe Key Information H1 FY23 H1 FY22 Variance EBITDAF ($ millions) 296.2 160.2 84.9% EBITDAF ($ millions) 27.8 40.3 (31.0)% Power Purchase Agreements Gas Production (PJ) 4.3 5.4 (20.4)% Wind (GWh) 227 242 (6.2)% Oil Production (k
Slide 38: Glossary – Gross Margin breakdown
Glossary – Gross Margin breakdown ELECTRICITY Retail Sales C&I Sale of electricity to commercial and industrial customers. Retail Sales Mass Market Sale of electricity to residential and small business customers. Wholesale Sales Sale of generated electricity onto spot market, excluding PPA settlemen
Slide 39: Glossary – Operational metrics
Glossary – Operational metrics RETAIL Customers Electricity and gas customers are defined by single customer view, regardless of number of connections (ICP’s). ICP Installation Connection Point, a connection point that is both occupied and has not been disconnected (Active-Occupied). Resi, SME, C&I
Slide 40: Investor Relations Enquiries
Investor Relations Enquiries Tim McSweeney GM Investor Relations & Market Risk +64 27 200 5548