Genesis Energy Limited · NZX:GNE
Genesis Energy — H1 2012 Earnings Presentation
26 slides from Genesis Energy's earnings presentation, Feb 29, 2012
Slide 1: Interim Result: Results for Half Year
INTERIM RESULT Results for Half Year Six months to 31 December 2011 Strong result driven by diverse earnings Dame Jenny Shipley Albert Brantley CHAIRMAN CHIEF EXECUTIVE Andrew Donaldson CHIEF FINANCIAL OFFICER 29 February 2012 1
Slide 2: Contents
Contents Introduction 03 Strategic approach 04 Dame Jenny Shipley Performance overview 09 Albert Brantley Financial results 20 Andrew Donaldson Conclusion 25 Albert Brantley 29 February 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: Sound result, sound strategy
Introduction Sound result, sound strategy Dame Jenny Shipley DNZM Chairman 29 February 2012 4
Slide 5: Genesis Energy - 'Quiet Achiever'
Strategic overview Genesis Energy - ‘Quiet Achiever’ • Largest New Zealand energy retailer • 676,000 customers • 27% electricity market share; 44% gas market share • Also growing LPG market share • Strategic focus on growing value by improving customer experience • Reducing churn by delivering choic
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 to varied market or hydrology conditions • Leader in risk management • Experienced internal risk man
Slide 7: Strategic overview: Kupe upstream integration
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 • Strong cash flows and excellent return on investment • Gives strategic position in gas industry – a significant advantage when contrac
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 • New CFO and COO • Real dep
Slide 9: We are a disciplined commercial business with strong value drivers
Performance We are a disciplined commercial business with strong value drivers Albert Brantley, Chief Executive 29 February 2012 9 9
Slide 10: Business snapshot: Strategy Delivering Results
Business snapshot Strategy Delivering Results • NPAT more than doubled to $38.3m for six months • EBITDAF at $190.5m – up from $139.3m for same six months last year • Share of total electricity market up slightly at 26.9% • Share of total gas market up to 43.9% • LPG customers up 94% 29 February 201
Slide 11: Enhancing the customer experience
Customer Experience Enhancing the customer experience Electricity, gas and LPG • A successful electricity and gas retailer • Campaign to acquire electricity and LPG customers in South Island is ahead of target • Held North Island customer numbers and concentrating on value-adding customers • Custome
Slide 12: Retail strategy
Customer Experience Retail strategy • Reduce our cost to serve • Maintain and strengthen customer loyalty (less Although competition churn) with more customer choice and control remains intense, our core • Optimise retail tariffs over time to reflect cost of value growth over time will generation wh
Slide 13: Energy Management
Energy Management Diverse portfolio has edge in the market • Total generation up by 12.7% to 3983GWh from 3535GWh in same period of 2010 • Thermal up 4.5% to 2524GWh (2415GWh) • Renewable up 30.4% to 1460GWh (1120GWh) • Huntly Power Station impacted by Maui outage and December loss of Grid connectio
Slide 14: Huntly Power Stations
Energy Management Huntly Power Stations • Huntly is, in fact, 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 fu
Slide 15: 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 16: 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 • Six months of output from Tekapo A and B added 493GWhs to generation volumes 29 Febru
Slide 17: Investment in Kupe is delivering
Kupe Investment in Kupe is delivering Kupe diversifies earnings and gives strategic position in upstream production • Production of oil increased 18.2% • Genesis Energy share of oil increased to 279kbbl from 236kbbl • Gas volumes rose 7% to 3PJ from 2.8PJ • Genesis Energy share of total sales rose 2
Slide 18: Creating options
Development Creating options Generation market saturated • In our view, the 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 mar
Slide 19: Our long-term strategy is unique
Strategic vision Our long-term strategy is unique • Focus is on New Zealand • Future growth in fundamental value driven by increasing margins and reducing churn Genesis Energy is focused on transforming itself into • Geographic and fuel diversity in generating the leading customer- capacity provides
Slide 20: Our results are strong
Financial results Our results are strong Andrew Donaldson, CFO 29 February February 29,2012 2012 20 20
Slide 21: Strong result driven by diversity
Financial results Strong result driven by diversity • Geographical rebalancing of customer business succeeding Genesis Energy’s • South Island customers reached 60,000+ strategies of focusing on • 2% growth in customer numbers despite very customer value combined strong competition with optimising i
Slide 22: Overview of Half Year Results
Financial results Overview of Half Year Results • Revenue increased due mainly to increased use of Half Year Results to 31 December thermal units with HALF YEAR 2011 2010 2009 2008 contribution from Tekapo $000’s OPERATING REVENUE 1,111,777 948,648 961,352 1,042,099 • Expenses are up due to OPERATIN
Slide 23: Total operating revenue
Financial results Total operating revenue Revenue Revenue dominated by 4% 1% Electricity $929m electricity sales, but gas 11% and petroleum revenues Gas $125m are steadily increasing. Petroleum $43m 84% Other $15m 29 February 2012 23
Slide 24: Total operating expenses
Financial results Total operating expenses Expenses $m Electricity purchases, Electricity and gas transmission and distribution purchases, and Gas purchases and transmission petroleum production 40 104 costs up, but fuel Petroleum production, marketing and distribution consumption down and Fuels con
Slide 25: 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 25 25
Slide 26: Thank you
genesisenergy.co.nz Thank you 29 February 2012 26