Genesis Energy Limited · NZX:GNE
Genesis Energy — FY2021 Earnings Presentation
44 slides from Genesis Energy's earnings presentation, Aug 26, 2021
Slide 1: Financial year 2021 results presentation
Financial year 2021 results presentation 26 August 2021 Marc England – Chief Executive Officer Chris Jewell – Chief Financial Officer
Slide 2: Agenda
Agenda 1. Highlights 2. Financial performance 3. Operational performance 4. Strategic outlook 5. FY22 guidance
Slide 3: 1. Highlights
1. Highlights genesis
Slide 4: Results at a glance
Results at a glance EBITDAF 1 Group m Genesis Energy concluded a five-year strategic plan to grow earnings through optimising, innovating and investing across our business. Supported the New Zealand electricity and gas markets through one of the most challenging periods in the last twenty years
Slide 5: Five year transformation programme has delivered underlying growth
Five year transformation programme has delivered underlying growth Strategy outlined in November 2016 Optimise Cost savings through our Retail and Wholesale segments and additional value from existing market share. Innovate Growth and synergies in our LPG business together with a strategic focus on
Slide 6: 2. Financial performance
2. Financial performance
Slide 7: EBITDAF performance driven by Retail and Wholesale growth
EBITDAF performance driven by Retail and Wholesale growth FY20 FY21 1,247 1,276 $ MILLIONS 1 418 356 358 308 324 271 250 168 191 17.2 cps 17.4 cps 1 1 118 77 89 84 75 46 34 53 EBITDAF NPAT Underlying Earnings Controllable 2 Operating Cashflow Free Cash Flow Capital Expenditure Dividend Net Debt 3 Op
Slide 8: Full year dividend of 17.4 cps representing a 6.8% gross yield
Full year dividend of 17.4 cps representing a 6.8% gross yield 1 FY17 TO FY21 DIVIDEND PER SHARE & PAY-OUT HISTORY 2 Dividends (CPS) % of Free Cash Flow Adjusted FY21 17.20 17.40 Dividends continue to grow, with FY21 16.60 17.20 17.05 130% dividend of 17.40 cps - a 1.2% increase over 106% FY20. Th
Slide 9: In-year profitability, offset by investment in carbon and settlement of arbitration
In-year profitability, offset by investment in carbon and settlement of arbitration $ MILLIONS $ MILLIONS 1 Favourable Unfavourable 418 361 369 356 358 333 418 356 358 FY17 FY18 FY19 FY20 FY21 1 Additional costs have been incurred in FY21 as a result of the decision to utilise the carbon FPO ($27m)
Slide 10: EBITDAF performance driven by Retail and Wholesale growth
EBITDAF performance driven by Retail and Wholesale growth Favourable Unfavourable $ MILLIONS Retail Wholesale 418 356 358 • Wholesale: Declining fuel prices, increased transfer price 1 and higher electricity spot prices led to improved trading margins. The Waipipi wind farm provided additional value
Slide 11: NPAT and Underlying Earnings
NPAT and Underlying Earnings Favourable Unfavourable NPAT $ MILLIONS Lower depreciation in FY21 following half year asset revaluation. Lower interest costs, due to declining interest rates and introduction of commercial paper programme. Average interest rate down 1.0% to 4.4%. Downward reval
Slide 12: Strategically aligned initiatives driving increased investment costs
Strategically aligned initiatives driving increased investment costs Favourable Unfavourable $ MILLIONS 271 250 2 Strategic Investment: Investing to support strategic pillars including data management, business energy services, LPG operations and Future-gen. Core Business: Increased Software and
Slide 13: Continued improvement in optimising capital spend
Continued improvement in optimising capital spend CAPITAL EXPENDITURE1 3 Stay in business capital of $55m includes: $ MILLIONS On time completion of Tekapo A intake gate to provide additional seismic resilience. Investing in our new head office, the six-star green, Kenehi at 89 89 ² Wynyard. 84
Slide 14: Capital structure
Capital structure FY17 TO FY21 NET DEBT AND NET DEBT/EBITDAF RATIO1 S&P reaffirmed BBB+ credit rating in January 2021. 1,247 1,276 1,212 1,240 4.0 Net debt elevated due to carbon FPO 1,183 1200 investment. 3.3 3.5 With increased earnings profile from FY21 1000 3.2 3.1 the Net Debt/EBITDAF rati
Slide 15: 3. Operational performance
3. Operational performance
Slide 16: Continuing to outperform in Retail
Continuing to outperform in Retail RETAIL OPERATING METRICS Genesis continues to grow value and drive efficiencies in FY17 FY20 FY21 our Retail segment. Electricity Netback ($/MWh) $105 $112 $124 Delivery of targeted growth in high value areas such as duel Gas Netback ($/GJ) $9 $10 $11 fuel cust
Slide 17: Engaging with our Customers to provide a better, more efficient service and grow value
Engaging with our Customers to provide a better, more efficient service and grow value Successfully migrated over 300,000 residential customers to new energy plans, removing prompt payment discounts and unifying pricing structures, 275k 11.6 million whilst giving customers more ways to save on the
Slide 18: Supporting our customers through a challenging year
Supporting our customers through a challenging year 1,500 Te Tira Manaaki o Kenehi was established as part of our customer care strategy to support customers identified as vulnerable due to age, health and hardship status. 40% customers contacted per month reduction in disconnections By understa
Slide 19: Empowering large businesses to make sustainable choices
Empowering large businesses to make sustainable choices COMMERCIAL AND INDUSTRIAL ELECTRICITY SALES Genesis grew in the commercial and industrial sector by providing services 2,400 alongside energy while maintaining sales margins above wholesale electricity prices. 2,200 Our large business energ
Slide 20: Growing and optimising our LPG business throughout New Zealand
Growing and optimising our LPG business throughout New Zealand TOTAL LPG SALES 51,000 Genesis’ LPG business grew to over 80,000 customer connections at the end of FY21, up from 56,000 in FY18. Sales volumes continued to grow, despite some 41,000 impact on small businesses due to the COVID-19 lockd
Slide 21: Expanding role for thermal generation in the stressed wholesale market
Expanding role for thermal generation in the stressed wholesale market WHOLESALE OPERATING METRICS FY17 FY20 FY21 Genesis’ assets and portfolio supported the market through a period of low hydro inflows and an energy sector wide gas shortage. Total Thermal (GWh) 3,268 4,461 5,501 Improved tradin
Slide 22: Delivering Future-gen ensures that coal use has peaked
Delivering Future-gen ensures that coal use has peaked COAL PROVIDED ESSENTIAL ENERGY BACK-UP IN FY21 COAL GENERATION EXPECTED TO RAPIDLY DECLINE FROM FY22 4,000 1,600 3,500 Waipipi 1,400 3,000 1,200 CEN 2,500 GNE 1,000 GWh 2,000 MCY 800 kT 1,500 600 MEL 1,000 400 500 200 0 0 Average Coal Lower Lowe
Slide 23: Huntly provides the backbone of New Zealand's seasonal energy security
Huntly provides the backbone of New Zealand’s seasonal energy security METHANEX GAS ENABLED TRADING ACROSS ENERGY MARKETS AS WELL AS SEASONAL SHAPING OF GAS PORTFOLIO Gas swaps to Future generation future 120 Baseline Future gas sales Gas purchased gas supply Incremental gas 100 from Methanex Wholes
Slide 24: Optimising our carbon hedge position
Optimising our carbon hedge position FORECAST EMISSIONS COST Genesis elected to make use of the $35 per tonne Carbon FPO to meet its calendar year 2020 carbon obligations under the New Zealand Emissions $30 Trading Scheme (ETS). $25 Electing to use the FPO allowed Genesis to retain 2.2 million N
Slide 25: Reviewing Kupe's full potential concluded further development opportunities exist
Reviewing Kupe’s full potential concluded further development opportunities exist KUPE OPERATING METRICS FY17 FY20 FY21 Concluded a strategic review of our ongoing ownership of Kupe in FY21 and Gas Production (PJ) 9.3 10.7 10.6 concluded that maintaining ownership is in the best interest of shareh
Slide 26: Aligning and empowering our people is enabling an adaptive and engaged workforce
Aligning and empowering our people is enabling an adaptive and engaged workforce GENDER PAY METRICS Genesis has continued to work to reduce the Pay Equity Gap, Leadership Pay Equity Gap: Progression Gap and Total Gender Gap. We continue to drive positive shifts Total pay: Total Gender Gap: 1.7 % 3
Slide 27: 4. Strategic outlook
4. Strategic outlook
Slide 28: Refreshed purpose, strategies and vision for the 2020's
Refreshed purpose, strategies and vision for the 2020’s Our refreshed retail strategy emphasises six key priorities, delivering more for our core whilst building for the future 1 Create residential experiences that build customer loyalty 2 Grow our market share of small business customers 3 LPG #1 o
Slide 29: Committed to a Science Based Target aligned to 1.5C
Empowering New Zealand’s Sustainable Future: Committed to a Science Based Target aligned to 1.5⁰C Target Year 1: Reduce direct emissions Scope 1 & 2 Reduce indirect emissions Scope 3 % % New Auckland Home – Genesis will be moving to new 6-Green Star building in Wynyard Quarter Reduce emissions2 Octo
Slide 30: Committing to three major PPAs and plan to build solar
Committing to three major PPAs and plan to build solar Genesis has committed to three major renewable projects to progress our Future-gen strategy: FUTURE-GEN COST SAVINGS The Waipipi Wind Farm became fully operational in March 2021 and is 60 expected to provide 430 GWh of energy. Kaiwaikawe w
Slide 31: Targeting 500 MW of solar co-development
Targeting 500 MW of solar co-development Genesis is to become co-developer of large scale solar in New Zealand and intends to build up to 500MW of solar capacity. Solar is uniquely suited to Genesis’ flexible generation portfolio and will support generation during Huntly river heating periods.
Slide 32: Contributing alternatives to the Lake Onslow project
Contributing alternatives to the Lake Onslow project The Huntly Power Station is ideally located for major electricity generation, located near to demand, with high voltage connection and an abundant local workforce. Genesis has partnered with a number of external experts to test the viability o
Slide 33: Retail Digital Transformation
Retail Digital Transformation Digital Transformation delivery is progressing Mahi Tahi; new platform is live with Data Mart build underway, three Data Marts live by end of 2021. Rubiks; due diligence to select Rubiks vendor has started, expecting to commence implementation early 2022. Genesis En
Slide 34: 5. FY22 guidance
5. FY22 guidance
Slide 35: Outlook and guidance
Outlook and guidance FY22 EBITDAF guidance is $420 million to $440 million subject to normal hydrological conditions, any material one-off expenses or other unforeseen circumstances; Key drivers are; Increased renewable generation delivered through a full year of Waipipi wind farm in operation a
Slide 36: Dividend Policy Update
Dividend Policy Update Genesis has revised its Dividend Policy: Genesis’ Dividend Policy has been revised to a range of 70% to 90% of Free Cash Flow from one based on maintaining dividends in real terms. The change in policy ensures our dividends are more able to reflect underlying business pe
Slide 37: 6. Appendices
6. Appendices genesis
Slide 38: Financial statements
Financial statements FY21 FY20 FY21 FY20 Income Statement Variance Balance Sheet Variance ($m) ($m) ($m) ($m) Revenue 3,221.2 2,591.5 24.3% Cash and Cash Equivalents 104.3 32.5 Total Operating Expenses (2,863.3) (2,235.9) 28.1% EBITDAF 357.9 355.6 0.6% Other Current Assets 823.2 407.0 Depreciation,
Slide 39: Debt information
Debt information GENESIS DEBT PROFILE AT 13 AUGUST 2021 Debt Information FY21 FY20 Variance ($m) ($m) Total Debt $ 1,428 1,367 $m Cash and Cash Equivalents $ 104 32 $400 $350 Headline Net Debt $ 1,324 1,335 -0.9% $300 $250 USPP FX and FV Adjustments $ 48 88 $200 Adjusted Net Debt1 $ 1,276 1,247 +2.3
Slide 40: Operational metrics
Operational metrics Retail Key Information FY21 FY20 Variance Retail Key Information FY21 FY20 Variance EBITDAF ($ millions) 172.3 134.0 28.6% Retail Electricity Sales (GWh) 6,241 6,244 0.0% Customers with > 1 Fuel 128,214 121,110 5.9% Retail Gas Sales (PJ) 8.0 7.8 2.6% Electricity Only Customers 29
Slide 41: Operational metrics
Operational metrics Wholesale Key Information FY21 FY20 Variance Kupe Key Information FY21 FY20 Variance EBITDAF ($ millions) 144.1 164.9 -12.6% EBITDAF ($m) 87.5 93.8 -6.8% Renewable Generation (GWh) 2,526 2,344 7.8% Thermal Generation (GWh) 5,501 4,461 23.3% Field Production - Gas (PJ) 23.0 23.2 -
Slide 42: Glossary
Glossary RETAIL Brand Net Promoter Score Based on survey question "How likely would you be to recommend Genesis Energy/Energy Online to your friends or family?" Interaction Net Promoter Score Based on survey question "Based on your recent Interaction With GE/EOL, how likely would you be to recommend
Slide 43: Disclaimer
Disclaimer 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 investor to evaluate an i
Slide 44: Investor relations enquiries
Investor relations enquiries Tim McSweeney GM Investor Relations & Market Risk +64 27 200 5548