Slide 1: FY18 Result Presentation
FY18 Result Presentation 29 August 2018 Marc England – CHIEF EXECUTIVE Chris Jewell – CHIEF FINANCIAL OFFICER GENESIS ENERGY LIMITED
Slide 2: Agenda
AGENDA Year in Financial Review Performance Strategic Update Supplementary and Outlook Information FY18 RESULT PRESENTATION 2
Slide 3: 1. Year in Review
1. Year in Review
Slide 4: Results at a glance
Our VISION is to be customers’ first choice for energy management Results at a glance EBITDAF Total generation Record Up Up Up $ 8% 11% 5% m , GWh supports volatile market PJ Kupe gas production FY17 $333m NPAT FY18 total dividend Brand revitalised Up $ Down 83% 2% “With You, Energy IQ m cps For you
Slide 5: Earnings growth
Earnings growth — EBITDAF growth of 8%, and continued growth in FY18 dividends at a 6.9% net yield1 EBITDAF DIVIDEND CENTS PER SHARE & PAYOUT HISTORY 2 Dividends (CPS) % of Free Cash Flow $ MILLIONS 16.4 16.6 16.9 130% 16.0 92% 110% 13.0 87% 91% 90% 74% 70% 70% 345 335 361 308 333 50% 30% 10% 0 -10%
Slide 6: Brand performance
Brand performance — a focus on brand and loyalty initiatives is shifting perceptions and reducing churn versus market BRAND METRIC RESIDENTIAL ELECTRICITY CHURN (EXCL EOL, ROLLING 3 MONTH) Genesis Genesis Genesis vs Genesis Market (excl Genesis) 27% May 17 May 18 Competitors 25% First to market with
Slide 7: Product innovation
Product innovation — providing knowledge and insight to customers to help them manage their bills > 100,000 > 280,000 DAILY ENERGY IQ USERS / NEW USERS SINCE LAUNCH (MAY 2018) 25,000 Daily Unique IQ Users (LHS) New Energy IQ Users (RHS) 40,000 Total unique users for Power Shouts System migration/out
Slide 8: Customer service efficiency
Customer service efficiency — digital transformation gaining momentum, focus on customer service and efficiency CUSTOMER INTERACTIONS 100,000 + ↑46 % Phone Email Digital EOL customers migrated onto 1.3m total digital self FY16 51% 14% 35% Genesis’ single billing platform serve interactions FY17 42%
Slide 9: B2B growth
B2B growth — building momentum with stable netback while growing electricity volumes 19% and gas volumes 6% C&I ELECTRICITY SME ELECTRICITY Electricity Volume Electricity Netback Electricity Volume Electricity Netback 2,000 1,811 $90 2,000 $110 Electricity Volume (GWh) Electricity Volume (GWh) $104.
Slide 10: Value through integration
Value through integration — integrated Kupe position driving value through Wholesale flexibility and LPG Customer growth potential KUPE PRODUCTION (GENESIS SHARE, PJe) NEW ZEALAND LPG SUPPLY/DEMAND (BY CALENDAR YEAR) Gas Oil LPG Demand Export 18 Supply Import Linear (Supply Decline) Linear (Demand I
Slide 11: Generation flexibility
Generation flexibility — flexible assets and fuels portfolio delivers value in volatile hydro conditions 7,105 GWh $92 ↑ 51% NEW ZEALAND HYDRO CONDITIONS 1.5 Normal Storage Band National Storage as % of Average Generation up 11% to Average price received for National Storage as % of 1.3 support vola
Slide 12: 2. Financial Performance
2. Financial Performance
Slide 13: FY18 financial highlights
FY18 financial highlights — EBITDAF up 8%, investment in operating and capital expenditure up, free cash flow up 1%, net debt down $29m FINANCIAL HIGHLIGHTS $ MILLIONS FY17 FY18 1,212 1,183 361 333 331 305 284 249 182 184 170 166 119 74 80 58 47 20 1 EBITDAF NPAT 2 Underlying Earnings Operating Cost
Slide 14: Underlying earnings
Underlying earnings — investing in foundation systems and growth UNDERLYING EARNINGS BRIDGE Favourable Unfavourable $ MILLIONS 7 5 4 74 58 3 FY17 Underlying Earnings Brand and marketing Staff investment 2 Other movements FY18 Underlying Earnings investment 1 Change in underlying earnings reflects in
Slide 15: FY18 EBITDAF waterfall
FY18 EBITDAF waterfall — EBITDAF growth of 8% driven by record Kupe gas production, strong thermal generation and acquisitions FY18 vs FY17 EBITDAF Favourable Unfavourable $ MILLIONS 5 2 12 13 32 364 361 333 FY17 EBITDAF Acquisitions FY18 Baseline Customer Wholesale Kupe Corporate FY18 EBITDAF EBITD
Slide 16: Segment EBITDAF
Segment EBITDAF — stable performance in Customer and Wholesale, strong Kupe outcome CUSTOMER EBITDAF FY17 TO FY18 Favourable Unfavourable 4 11 7 4 13 9 110 110 110 FY17 EBITDAF One-Offs 1 LPG acquisition Volumes FY18 Baseline Margin Investment in Volumes (ICP FY18 EBITDAF (temperature EBITDAF expans
Slide 17: Operating expenses
Operating expenses — up 7%, following acquisitions and investment in growth OPERATING EXPENSES1 OPERATING EXPENSE BRIDGE $ MILLIONS $ MILLIONS Favourable Unfavourable 5 7 5 7 328 305 11 305 289 294 284 284 FY17 LPG Brand Staff FY17 Other FY18 FY14 FY15 FY16 FY17 FY18 operating acquisition investment
Slide 18: Cash flow
Cash flow — operating cash flow up 33% and free cash flow up $2m OPERATING CASH FLOW FREE CASH FLOW1 $ MILLIONS $ MILLIONS 304 319 325 331 198 186 182 184 172 249 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Higher operating cash flow reflects growth Free cash flow has increased $2m on FY17, in
Slide 19: Capital expenditure
Capital expenditure — increase reflects a year of investment in integration of LPG operations and platform investment in Customer CAPITAL EXPENDITURE1 • Stay in business capex (SIB) includes ($51m, FY18 $ MILLIONS guidance issued was $50-60m): 82 80 ₋ Tekapo G3 refurbishment, EOL billing migration,
Slide 20: Capital structure
Capital structure — net debt has reduced by $29m, debt/EBITDAF down 0.3 to 3.0 NET DEBT AND NET DEBT/EBITDAF RATIO1 • S&P reaffirmed BBB+ credit rating post acquisitions 1,212 5.0 1,183 in January 2018 1200 4.5 966 4.0 • Dividend reinvestment plan (DRP) announced at 1000 905 833 3.3 3.5 HY18. A 23%
Slide 21: 3. Strategy Update and Outlook
3. Strategy Update and Outlook
Slide 22: Delivery of priority strategic actions
Delivery of priority strategic actions — significant progress made towards strategic goals – more work to do in FY19 FY18 Actions Status Deliver operational • Simplify operating model – billing system amalgamation/ back-office Ongoing excellence and value • Grow self and assisted service through dig
Slide 23: Strategy: We are Performing while Transforming
Strategy: We are Performing while Transforming — an update to be provided at Genesis’ Investor Day 7th November 2018, in Hamilton Our VISION is to reimagine energy to be customers’ first choice for energy management Our PURPOSE is to put control in our customers’ hands Our STRATEGY is to use our int
Slide 24: Outlook and guidance
Outlook and guidance — guidance for FY19 EBITDAF is $350 to $370 million • FY19 EBITDAF guidance range is $350 to $370 million subject to hydrological conditions, any material events, one-off expenses or other unforeseeable circumstances. Key assumptions include: • $10 million negative impact from H
Slide 25: 4. Supplementary Information
4. Supplementary Information
Slide 26: Financial statements
Financial statements Income Statement FY18 FY17 Variance Balance Sheet FY18 FY17 Variance ($m) ($m) ($m) ($m) Revenue 2,304.5 1,951.1 18.1% Cash and Cash Equivalents 49.3 27.8 Total Operating Expenses (1,944.0) (1,618.6) 20.1% Other Current Assets 343.8 344.5 EBITDAF 360.5 332.5 8.4% Non-Current Ass
Slide 27: Diversified funding profile
Diversified funding profile GENESIS DEBT PROFILE Debt Information FY18 FY17 Variance $m ($m) ($m) $400 Total Debt $ 1,255.4 1,259.8 $350 Cash and Cash Equivalents $ 49.3 27.8 $300 Headline Net Debt $ 1,206.1 1,232.0 (2.1%) $250 USPP FX and FV Adjustments $ 23.2 20.5 $200 Adjusted Net Debt1 $ 1,182.9
Slide 28: Operational highlights
Operational highlights Customer Key Information FY18 FY17 Variance Wholesale Key Information FY18 FY17 Variance EBITDAF ($ millions) 109.8 109.6 +0.2% EBITDAF ($ millions) 178.0 176.1 +1.1% Electricity Netback ($/MWh) $97.84 $102.84 (4.9%) Renewable Generation (GWh) 3,056 3,154 (3.1%) Gas Netback ($
Slide 29: Key metrics
Key metrics Increase value share of residential FY16 FY17 FY18 Operational excellence & value FY16 FY17 FY18 category optimisation % of residential customer with > 1 fuel 21.3% 21.5% 22.9% Customer cost to serve (per ICP) $165 $161 $158 product Customer assisted interactions (per ICP) 2.28 2.25 2.67
Slide 30: Additional disclosures
Additional disclosures TAKE-OR-PAY FORWARD GAS PURCHASES1 CARBON HEDGE POSITION $7.50 - $8.00 - Hedged Emission Unhedged Volume 40 $8.50 $9.00 Estimated price per unit (NZD/NZU) 35 $6 $9-14 $15-20 $17-22 $17-22 $19-24 $20-25 $20-25 $8.00 - $9.00 30 NZUnits as % of potential exposure 25 $8.00 - $9.00
Slide 31: LPG integration and growth
LPG integration and growth — 16% growth in customers and lower churn metrics support strategic rationale of acquisition INTEGRATION UPDATE LPG VOLUME GROWTH FY17 Activity Status 20,000 FY18 LPG volume (tonnes) Staff • >75 staff migrated 15,000 • 74% employee engagement rating • LPG Operations TRIFR
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