Genesis Energy Limited · NZX:GNE
Genesis Energy — Non-Deal Roadshow (November 2019)
45 slides from Genesis Energy's roadshow presentation, Nov 1, 2019
Slide 1: Investor Roadshow Presentation (Market Announcement)
MARKET ANNOUNCEMENT Date: 1 November 2019 For personal use only NZX: GNE / ASX: GNE Investor Roadshow Presentation Genesis Energy Limited (Genesis) CEO Marc England and CFO Chris Jewell will be meeting with investors in Asia and North America in November to discuss Genesis’ performance and progress
Slide 2: Investor Roadshow November 2019
For personal use only Investor Roadshow November 2019 Marc England – CHIEF EXECUTIVE OFFICER Chris Jewell – CHIEF FINANCIAL OFFICER GENESIS ENERGY LIMITED Hong Kong, Tokyo, Chicago, Sydney
Slide 3: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Genesis Energy Limited (‘Genesis Energy’) for information purposes only. The information in this presentation is of a general nature and does not purport to be complete nor does it contain all the information required for an inv
Slide 4: Presenters
Presenters For personal use only Marc England Chief Executive - MBA, MENG Marc joined Genesis in May 2016. He is responsible for the leadership, strategic direction and management of all its business interests. Prior to joining Genesis, Marc was Executive General Manager New Energy at AGL Energy in
Slide 5: Why invest in Genesis?
Why invest in Genesis? For personal use only Yield Growth Transformation Our diverse generation A transformed Genesis is accelerating the portfolio ensures stability customer platform is pace of change, powered by and benefits from delivering medium term people, culture and market volatility growth
Slide 6: Strategy to drive a stable yield and medium term growth
This presentation outlines Genesis Energy’s Strategy to drive a stable yield and medium term growth For personal use only The New Zealand Market Investor Financial Strategy Strategy • Yield, plus • $400m+ growth Performing & EBITDAF Transforming by 2021 Business Strategy • Our Vision & Purpose Genes
Slide 7: Agenda
Agenda For personal use only The New Zealand Market Our Investor Strategy Our Financial Strategy And Our Business Strategy Genesis Energy Limited Investor Roadshow November 2019 6.
Slide 8: The New Zealand Market
For personal use only The New Zealand Market Performing & Transforming
Slide 9: About New Zealand
About New Zealand For personal use only Good growth in a stable political and regulatory environment GDP st billion, Ease of doing 2.4% growth business st th Investor Providing Protection Sustainable, Secure Energy rd nd Economic Global Prosperity Freedom Index Source: Economy Rankings 2018 (The Wor
Slide 10: New Zealand's domestic energy market
New Zealand’s domestic energy market For personal use only Deregulated unsubsidised market with nearly 25 years of a free-market competitive operating system Retail 2m electricity customers 270,000 gas customers, 5 major electricity generators 220,000 LPG customers 4 gas fields make up over 80% Abun
Slide 11: NZ's opportunity is to decarbonise energy demand through electrification
NZ’s opportunity is to decarbonise energy demand through electrification For personal use only Leveraging off an already renewable electricity system translates to a greater reduction in carbon emissions International Other Opportunity to decarbonise “The Committee has identified accelerated 22% oil
Slide 12: Core energy markets are stable or growing
Core energy markets are stable or growing For personal use only GRID DEMAND GRID DEMAND FORECASTS (GWH) 65000 4,000 SHOWING SIGNS OF GROWTH (GWH) 60000 Anticipated grid 3,800 55000 3,600 demand growth 50000 3,400 will support 3,200 45000 wholesale value 3,000 40000 35000 2,800 2005 2006 2007 2008 20
Slide 13: Electricity market reflecting tighter capacity margins
…with the electricity market reflecting tighter capacity margins For personal use only Stable Capacity residential and fuel shortages ASX future spot electricity prices are creating prices are reduces regulatory opportunity for significantly intervention wholesale elevated risk margins RESIDENTIAL E
Slide 14: Fuel markets tightening
…and fuel markets tightening For personal use only Declining gas Shift to LPG International oil reserves support import supports price volatility value of existing value of remaining continues reserves LPG reserves FORECAST LPG PRODUCTION PROFILE BRENT CRUDE (USD/BBL) FORECAST GAS PRODUCTION PROFILE
Slide 15: Renewable electricity has grown from 65% to 85% over last decade
Renewable electricity has grown from 65% to 85% over last decade For personal use only Progress towards greater renewable electricity anticipated to continue as wind costs decline Growth in renewable generation has Wholesale electricity and gas prices impacted by progressed without subsidies domesti
Slide 16: New Zealand aluminium smelter review
New Zealand aluminium smelter review For personal use only If smelter closes South Island Generators most impacted – could accelerate industry electrification NEW ZEALAND ELECTRICITY DEMAND (TWH) Upper Geographical North Island Upper diversity of North Island assets has Auckland Demand benefits Cent
Slide 17: Investor Strategy
For personal use only Investor Strategy Performing & Transforming
Slide 18: A strong yield underpinned by medium term growth opportunities
A strong yield underpinned by medium term growth opportunities For personal use only Strongest sector yield at current prices, 75th percentile across NZX/ASX market NZX 50 / ASX 100 YIELD COMPARISON EBITDAF Mean Yield (LHS) 90th Percentile Yield (LHS) NZ$ MILLIONS 400 - 420 75th Percentile Yield (LH
Slide 19: Our investor strategy and dividend policy
Our investor strategy and dividend policy For personal use only to grow dividends in real-terms over time, up 6.6% from FY15 FY15 TO FY19 DIVIDEND, CENTS PER SHARE Dividends (CPS) 16.9 17.05 • FY19 full year dividend of 17.05 cps, 16.4 16.6 16.0 80% imputed. • Supplementary dividend payable to non-r
Slide 20: Financial Strategy
For personal use only Financial Strategy Performing & Transforming
Slide 21: Our financial strategy is to deliver $400m+ EBITDAF by FY21
Our financial strategy is to deliver $400m+ EBITDAF by FY21 For personal use only Driven by targeted retail growth, optimisation and roll-off of legacy gas contracts $MILLIONS Residential Value Growth A 420 B2B Growth B LPG Growth C 10 - 20 10 - 15 400 15 - 30 3 7 10 - 12 2 363 1 2 3 FY19 EBITDAF IF
Slide 22: Retail growth initiative – Grow Residential Portfolio Value
Retail growth initiative – Grow Residential Portfolio Value 1A For personal use only Investment in loyalty, brand, product innovation and digitisation is driving down churn and cost to serve 1 Engaged and loyal customers will choose to stay, reducing Digitisation is having a positive impact on the c
Slide 23: Retail growth initiative – Grow Business Customer Market Share
Retail growth initiative – Grow Business Customer Market Share 1B For personal use only Focus remains on volume growth but not at the expense of value Netback1 is a key indicator of the value able to be created by Previously under-indexed in the business segment, Genesis is the retail segment, prior
Slide 24: Retail growth initiatives – LPG Growth & Operational Synergies
1C Retail growth initiatives – LPG Growth & Operational Synergies For personal use only LPG plays an important role in growing our multi-fuel customer base and lowering churn of electricity customers LPG sales volume is expected to grow in line with market expansion and netbacks forecast to increase
Slide 25: Optimisation Initiative – Portfolio & Cost Efficiencies
Optimisation Initiative – Portfolio & Cost Efficiencies 2 For personal use only Core to portfolio optimisation is connecting Genesis Wholesale market capability with its customers for mutual benefit, as delivered in our ‘For Dairy’ product launch Current average ASX future spot prices are significan
Slide 26: Legacy gas supply agreement roll-off
Legacy gas supply agreement roll-off 3 For personal use only Benefits arising from GSA roll-off begin in FY21 at an estimated $10-20m TAKE-OR-PAY (ToP) FORWARD GAS PURCHASES1 BENEFITS AND TIMING OF ALTERNATIVE GAS PURCHASE COST 2 ToP gas prices at $8-10/GJ, excluding transmission 7/GJ 8/GJ 40 $80 35
Slide 27: Business Strategy
For personal use only Performing & Transforming Business Strategy
Slide 28: A bit about Genesis
A bit about Genesis For personal use only An integrated energy management company, Genesis is New Zealand’s largest energy retailer, generates electricity from a diverse portfolio of thermal and renewable assets and has a 46% interest in the Kupe gas field. KEY INFORMATION Revenue (FY19): NZ$2.7 bil
Slide 29: Geographically and fuel diverse assets enable stable earnings
Our geographically and fuel diverse assets enable stable earnings For personal use only End-to-end integration, diversity and scale gives us stability of earnings in a volatile renewable energy market Customer base Renewable generation • NZ’s largest energy • 3 hydro catchments retailer, more than a
Slide 30: Diversity of earnings across sectors, fuels and markets
Genesis enjoys diversity of earnings across sectors, fuels and markets For personal use only GROSS MARGIN CONTRIBUTION (FY19) KUPE 19% WHOLESALE 44% CUSTOMER 37% Gas 11% Business Renewable generation 26% Residential electricity 19% electricity 6% Oil 5% LPG 3% Thermal generation 18% LPG 7% Gas 5% El
Slide 31: Performing while transforming towards a new energy future
We’re performing while transforming towards a new energy future For personal use only Our VISION: to be customers’ first choice for energy management Our PURPOSE: to reimagine energy to put control in our customers’ hands Our STRATEGY: to maximise value through our market position Wholesale Market R
Slide 32: Engaging customers through loyalty as we innovate
Engaging customers through loyalty as we innovate to a data-driven future Energy management products and services differentiates us from our competitors For personal use only Action Genesis Energy Limited Investor Roadshow November 2019 31.
Slide 33: A product-led strategy is coming to life
A product-led strategy is coming to life Investment in loyalty products, data platforms and algorithm fueled innovation is reducing churn and driving For personal use only value Digital customer interactions up 41% in one year Customer Lifetime Value up 12%, from FY17 Residential Dual Fuel customers
Slide 34: Maximising portfolio value as NZ transitions to low carbon
Maximising portfolio value as NZ transitions to a low carbon future For personal use only Future-Gen, transitioning our generation portfolio Economically displace baseload thermal Enhance the value of our flexible thermal with renewable generation in an increasingly renewable market Progressing Cons
Slide 35: Seasonal demand gap requires thermal back-up
New Zealand’s unique seasonal demand gap requires thermal back-up For personal use only Demand is highest in winter, when southern inflows are the lowest Seasonal Storage Challenge 4,000 400 Thermal flexes with demand and hydro variability 3,500 350 5 TWh of thermal flexibility needed Solar Monthly
Slide 36: Well positioned to provide flexible energy as NZ transitions
Genesis is well positioned to provide flexible energy as NZ transitions For personal use only Increased wind penetration will shift the role of hydro, but seasonal flexibility still required Energy Resource Impact of transition on value Baseload / non-dispatchable • Wind generation increases as cost
Slide 37: Enabling a more sustainable future
Enabling a more sustainable future For personal use only Sustainability at Genesis means caring for the environment, supporting our people to succeed and building strong communities while powering New Zealand towards a positive, sustainable future Our people are engaged and diverse in experience and
Slide 38: Appendices
Appendices For personal USe Only GENESIS ENERGY LIMITED genesis
Slide 39: FY19 Results at a glance
FY19 Results at a glance For personal use only 1 Both gross and net churn is expressed on the basis of a 12 month rolling average. 2 Installation Connection Point (ICP), a connection point that is both occupied and has not been disconnected. 3 Netback is defined as Retail EBITDAF by fuel type plus r
Slide 40: Financial statements
Financial statements Income Statement FY19 FY18 Variance Balance Sheet FY19 FY18 Variance For personal use only ($m) ($m) ($m) ($m) Revenue 2,700.7 2,302.5 +17.3% Cash and Cash Equivalents 61.9 49.3 Total Operating Expenses (2,337.3) (1,942.1) +20.3% Other Current Assets 416.4 339.4 EBITDAF 363.4 36
Slide 41: Diversified funding profile
Diversified funding profile For personal use only GENESIS DEBT PROFILE Debt Information FY19 FY18 Variance ($m) ($m) Total Debt $ 1,289.8 1,255.4 $m Cash and Cash Equivalents $ 61.9 49.3 $300 Headline Net Debt $ 1,227.9 1,206.1 +1.8% $250 USPP FX and FV Adjustments $ 41.7 23.2 $200 Adjusted Net Debt
Slide 42: Operational metrics
Operational metrics Retail Key Information FY19 FY18 Variance Retail Key Information FY19 FY18 Variance For personal use only EBITDAF ($ millions) 122.5 109.7 +11.7% Customer Electricity Sales (GWh) 6,067 5,980 +1.5% Customer Gas Sales (PJ) 8.2 7.5 +9.3% Customers with > 1 Fuel 117,138 109,710 +6.8%
Slide 43: Operational metrics
Operational metrics Wholesale Key Information FY19 FY18 Variance Kupe Key Information FY19 FY18 Variance For personal use only EBITDAF ($ millions) 177.6 178.0 (0.2%) EBITDAF ($m) 108.8 115.3 (5.6%) Renewable Generation (GWh) 2,834 3,056 (7.3%) Field Production (PJ) 25.7 25.5 +0.8% Thermal Generatio
Slide 44: Genesis' share register
Genesis’ share register For personal use only 90-day average trading volume of 550,000 shares equates to NZD1.75m per day, or approximately USD1.1m HOLDER BY TYPE HOLDER BY GEOGRAPHY SUM OF REGISTER HOLDING BY % 6% 2% 6% 30% 34% 51% 51% 51% 35% 10% 19% 5% Crown Institutional Retail Crown New Zealand
Slide 45: For personal use only
For personal use only