Genesis Energy Limited · NZX:GNE
Genesis Energy — H1 2014 Earnings Presentation
24 slides from Genesis Energy's earnings presentation, February 2014
Slide 1: 2014 Interim Result
2014 INTERIM RESULT 2014 Interim Result Six months to 31 December 2013 Managing volatility in the electricity market Albert Brantley CHIEF EXECUTIVE OFFICER Andrew Donaldson CHIEF FINANCIAL OFFICER February 2014 1
Slide 2: 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 3: Introduction
Introduction “Genesis Energy responded well in a period marked by challenging retail electricity and gas markets and volatile wholesale electricity prices” Albert Brantley Chief Executive February 2014 3
Slide 4: Highlights of the last six months
Introduction Highlights of the last six months • Retail electricity and gas markets remained competitive • Wholesale electricity prices continued to be volatile and consumer demand was lower • Increase in electricity sales volumes • Increase in gas retail sales volumes • EBITDAF is consistent with r
Slide 5: Market Conditions in H1 2014
Operational Review Market Conditions in H1 2014 Daily Average Wholesale Reference Point Prices and Lake Storage - Jul- Jul-Dec 2013 $140 4500 • In the last six month period significant 4000 $120 rainfall events pushed national hydro 3500 Wholesale Price ($/MWh) storage as high as 68% above long run
Slide 6: Good volume growth, customers steady
Customer Experience Good volume growth, customers steady • H1 2014 customers increased Electricity Sales Volumes Electricity Customers & Market Share Retail Electricity Sales TOU Electricity Sales vs H1 2013, although there has Customer Numbers Share of Total Market (RHS) Rolling 12m total sales (RH
Slide 7: Changing Customer Mix
Customer Experience Changing Customer Mix • Characteristics of Genesis Energy’s customer Geographic Split of Electricity Customers base continue to evolve 600,000 North Island customers South Island share (RHS) South Island customers 18% South Island Share of total customers 16% • Growing South Isla
Slide 8: Better Than Market Switching Rates
Customer Experience Better Than Market Switching Rates • Focus has continued to be on value by leveraging scale of customer numbers to reduce cost to serve, concentrating on reducing switching rates and increasing retention rates • Despite having the largest numbers of electricity and gas customers,
Slide 9: Generation Performance
Energy Management Generation Performance • Total generation down 12% to 3,344GWh (3,786GWh in H1 2013) Genesis Energy Generation Profile • Thermal generation down 17% to 4500 1,875GWh (2,273GWh in H1 2013) 4000 3500 • Renewable generation down 3% to Hau Nui Wind Tekapo A & B 1,468GWh (1,513GWh in H1
Slide 10: Huntly Power Stations
Energy Management Huntly Power Stations • Huntly Power Station generation output showed divergent trends: • Coal-fired generation down 61% to 414 GWh • Gas-fired generation up 21% to 1,462 GWh • This reflected preference for generating from gas over coal, given the need to balance the Company’s gas
Slide 11: Renewable Generation
Energy Management Renewable Generation • Generation of renewable fleet was different by geography • Tekapo A and B up 7% to 601 GWh • Run power stations harder in lead up to canal works and to utilise above average hydro levels • Waikaremoana generation up 22% to 212 GWh • Utilised above average hyd
Slide 12: Tekapo Canal Remediation
Energy Management Tekapo Canal Remediation • Second season of work on 1,800m section of canal called Maryburn Fill began on 7 January 2014 • Work scheduled to take 10 weeks, brought forward due to high lake levels • Stability of canal structure is being reinforced, and this section of the canal is b
Slide 13: Kupe Continued to Deliver
Oil & Gas Kupe Continued to Deliver • Continued to be a consistent source of operating earnings • Genesis Energy’s share of gas sales up 31% to 3.5PJ, oil production up 17% to 273kbbl, and oil sales up 17% to 255kbbl • Mainly reflects growth versus a period (H1 2013) where there was a planned Kupe p
Slide 14: People, Health and Safety
People People, Health and Safety • The Company remains committed to a zero harm work environment Genesis Energy Safety Statistics • TRIFR* of 2.43 was 59% lower Total Recordable Injuries 12 Month Rolling Total Recordable Incident Frequency Rate (RHS) than previous year 10 30 Number of Incidents per
Slide 15: Financial Overview
Financial Overview “In a challenging and competitive market EBITDAF has remained in a similar range to the previous six month period” Andrew Donaldson Chief Financial Officer February 2014 15
Slide 16: Profit and Loss
Financial Highlights Profit and Loss Profit and Loss H1 2014 $m H1 2013 $m Change $m Change % • Revenues 6% lower due to lower wholesale Revenue (1) 973.1 822.5 1,031.3 835.4 -58.2 -12.8 -6% -2% Total operating expenses electricity and lower generation EBITDAF (2) 150.5 195.9 -45.4 -23% Depreciation
Slide 17: Significant items
Financial Highlights Significant items • Recently Genesis Energy announced it had terminated a contract to import coal from its offshore supplier • As a result contracts for the transportation of coal to the Huntly West mine and storage at the Port of Tauranga have been reviewed • Consequently Genes
Slide 18: EBITDAF Performance
Financial Highlights EBITDAF Performance EBITDAF comparisons H1 2014 vs H1 2013 H1 2013 H1 2014 • Customer Experience EBITDAF increased in H1 $180m $160m $155m 2014 due to increased electricity and gas sales $140m $120m volumes $100m $82m $80m • Lower Energy Management EBITDAF reflects: $60m $36m $4
Slide 19: Balance Sheet
Financial Highlights Balance Sheet Balance Sheet as at 31-Dec-13 $m 30-Jun-13 $m Change $m Change % • Net debt is 4% lower than 30 June 2013 at Total current assets Total non-current assets 345.5 3,322.0 393.5 3,357.8 -48.0 -35.7 -12% -1% $958m despite reduced operating earnings Total assets 3,667.5
Slide 20: Debt profile
Financial Highlights Debt profile • Recent restructuring of debt book has led to reduced finance expenses Genesis Energy Debt Profile $1,400m • Capital Bonds were modified in July 2013: $1,200m Retail Bonds Rolling Bank Debt • Amount reduced from $275m to $1,000m Bank Debt Wholesale Domestic Bonds $
Slide 21: Cashflow Statement
Financial Highlights Cashflow Statement Cashflow Statement H1 2014 H1 2013 Change Change $m $m $m % • Operating cashflow down 24% due to Net operating cashflow Net investing cashflow 164.6 -32.5 217.9 -93.2 -53.3 60.7 -24% -65% lower operating earnings Net financing cashflow -106.4 -110.6 4.2 -4% Ne
Slide 22: H1 2014 Dividend Up 12%
Financial Highlights H1 2014 Dividend Up 12% • Interim dividend of $64m declared • Compares with interim dividend in Genesis Energy Dividend versus EBITDAF 2013 of $57m Interim Dividend Final Dividend Annual EBITDAF (RHS) $120m $450m • Represents a significant conversion $100m $400m of EBITDAF into
Slide 23: Summary
Conclusion Summary • Recent retail electricity market conditions have been challenging, the wholesale electricity price has been volatile and consumer demand has been lower • Genesis Energy has continued to effectively manage the impact of market volatility on earnings through a diverse and integrat
Slide 24: Thank you
genesisenergy.co.nz Thank you February 2014 24