Genesis Energy Limited · NZX:GNE
Genesis Energy — FY2022 Earnings Presentation
49 slides from Genesis Energy's earnings presentation, Aug 19, 2022
Slide 1: Market release: higher EBITDAF with 44% lower emissions
MARKET RELEASE Date: 19 AUGUST 2022 NZX: GNE / ASX: GNE For personal use only Genesis delivers higher EBITDAF of $440m with 44% lower emissions Year-ended Year-ended Variance June 2022 June 20211 EBITDAF 2 $440.3m $354.6m $85.7m Net Profit $221.9m $31.7m $190.2m Earnings Per Share 21.24 cps 3.04 cps
Slide 2: Market release continued: customers, future-gen, executive team
“Our forecasts show New Zealand’s electricity generation will be 96-98% renewable by 2030, but there will still be times when it doesn’t rain, the wind doesn’t blow, and the sun doesn’t shine. Huntly can continue to provide security to the renewable electricity system day to day for the country’s en
Slide 3: FY23 capex guidance and About Genesis Energy
FY23 capex guidance is around $80 million. Long-run outlook for stay in business capital expenditure is $50 million to $70 million. Key capital expenditure projects include Huntly Unit 4 cold survey, Tuai generator refurbishment and Huntly Unit 6 refurbishment, capital to support LPG growth and enha
Slide 4: FY22 Results Presentation
For personal use only FY22 Results Presentation FY22 Results Presentation Presenters: Marc England Chief Executive Officer James Spence Chief Financial Officer Attending Roadshow: Tracey Hickman Chief Customer Officer (Incoming Interim Chief Executive Officer) 19 August 2022
Slide 5: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Genesis Energy Limited (‘Genesis While all reasonable care has been taken in compiling this presentation, to Energy’) for information purposes only. This disclaimer applies to this the maximum extent permitted by law, Genesis En
Slide 6: Agenda
For personal use only 1. Performance Highlights 2. Financial Performance 3. Operational Performance 4. Strategic Outlook 5. FY23 Guidance 6. Appendix
Slide 7: Performance Highlights
Performance Highlights For personal use only Financial Operational Social EBITDAF 1 Declining Customer Churn Hours of Free Power Donated $440m 12.8% 130,000 24% increase on FY21. 6% increase on By our customers and the company Net Churn, down from 15.9% in FY21 adjusted FY21 EBITDAF 2 to people in n
Slide 8: Financial Performance
For personal use only Financial Performance
Slide 9: FY22 Financial Summary
FY22 Financial Summary For personal use only FY22 FY211 Variance % Movements $ MILLIONS Revenue 2,834.1 3,221.2 -387.1 -12% q EBITDAF 440.3 354.6 85.7 24% p NPAT 221.9 31.7 190.2 600% p p 2 Operating Expenses 298.7 274.3 24.4 9% Operating Cash Flow 261.7 319.5 -57.8 -18% q p 3 Free Cash Flow 263.9 1
Slide 10: FY22 EBITDAF
FY22 EBITDAF EBITDAF1 For personal use only $ MILLIONS 550 500 9 10 45 450 (24) 56 (10) 440 400 415 2 350 355 300 250 200 150 100 50 0 FY21 EBITDAF Electricity Gas LPG Other Operating Kupe FY22 EBITDAF Gross Margin Gross Margin Gross Margin Gross Margin Expenses Gross Margin 1 Due to the implementat
Slide 11: Gross Margin Movements
Gross Margin Movements Electricity: For personal use only • Higher hydro inflows, reduced thermal running ELECTRICITY GROSS MARGIN GAS GROSS MARGIN requirements. • Reduced swaption volumes and a full year’s 600 40 generation at Waipipi significantly improved derivative 500 38 settlement. 529 30 473
Slide 12: Operating Expenditure
Operating Expenditure For personal use only OPERATING EXPENDITURE $ MILLIONS 7 299 8 9 274 FY21 Staff Costs Digital Other FY22 Operating Transformation Operating Costs Costs • Staff Costs - Employee costs increased, as Genesis worked to retain staff in a competitive market. Investment in Covid testi
Slide 13: Net Profit After Tax
Net Profit After Tax NPAT1 For personal use only $ MILLIONS 222 222 (18) 86 (20) (4) 32 (75) FY21 NPAT Change in Depreciation Net Finance costs Income Tax Fair Value and Revaluation of FY22 NPAT EBITDAF (DDA) Expense Other Gains / Loss Generation Assets • Higher depreciation due to upwards revaluati
Slide 14: Capital Expenditure
Capital Expenditure For personal use only Stay in business capital2 of $58m includes: CAPITAL EXPENDITURE1 $ MILLIONS • Completion of a Tuai generator refurbishment, the first of three being replaced over a three-year period increasing generation capacity by 2MW. 106 • Completed first outage of the
Slide 15: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet FIXED INTEREST RATE PROFILE • Adjusted net debt increased by $76m in the year to $1.35b. Key For personal use only 8.0% 87% 90% drivers for this were the increase in inventory and the payment of 79% 72% 80% costs relating to the Beach arbitration. 68% 68% 7.0% 64% 70% • I
Slide 16: Dividends
Dividends DIVIDEND PER SHARE & PAY-OUT HISTORY For personal use only 17.2 17.4 17.6 130% • Genesis will pay a final dividend of 8.9 cps bringing total 16.6 16.9 17.05 FY22 dividends to 17.6 cps. 106% 110% 97% 97% 89% 89% • The stronger free cash flow enabled Genesis to retain more 90% earnings for f
Slide 17: Operational Performance
Operational Performance For personal use only
Slide 18: Empowering Customers Through Energy IQ
Empowering Customers Through Energy IQ • Genesis launched Energy IQ version 2.0 in FY22, transforming the For personal use only user experience with a modern look and feel, bringing energy to life and incorporating interactive and customisable features. • The updated version includes new features su
Slide 19: Record Levels of Residential Customer Satisfaction and Loyalty
Record Levels of Residential Customer Satisfaction and Loyalty • Residential customer satisfaction and loyalty continued to grow RESIDENTIAL NETBACK GROWTH For personal use only with net customer churn falling to 12.8%. $150 $20 • Customer satisfaction was strong, with interaction Net Promoter $140
Slide 20: Supporting Business in the Transition to a Renewable Future
Supporting Business in the Transition to a Renewable Future • Value growth continued in SME with electricity netback up and 30% of SME NETBACK For personal use only customers re-contracting in the year. Gas netbacks grew as customers re-contracted at current market prices. $130 $20 • Genesis continu
Slide 21: Frank Energy digital sales and churn
Digital Sales Mix ICP Movement For personal use only 51.4% +2.7k 46.1% +2.0k +1.5k 29.6% 30.5% • In November 2021 Energy Online was rebranded as Frank*Energy; an affordable, -1.5k no-contract offering for customers who want an energy provider that “sells it to FY21 H1 FY21 H2 FY22 H1 FY22 H2 FY21 H1
Slide 22: Managing the Transition to Decarbonisation
Managing the Transition to Decarbonisation • Genesis’ priority remains decarbonising our portfolio through CARBON HEDGE POSITION For personal use only displacing thermal generation and supporting our customers in making sustainable choices. 100% • Additional carbon hedges were secured in FY22 and Ge
Slide 23: Keeping our People Safe, Motivated and Valued
Keeping our People Safe, Motivated and Valued • Our employees remained safe and engaged through a productive year For personal use only at Genesis. Our employee NPS score remained strong at over 65 Leadership Progression Gap throughout the year. FY21 Male 55% Female 45% • Diversity and inclusion rem
Slide 24: Delivering Sustainable Outcomes for our People, Communities and New Zealand
Delivering Sustainable Outcomes for our People, Communities and New Zealand For personal use only • 44% reduction in Scope 1 and 2 emissions since FY21. A low carbon • 29% of C&I customers purchasing energy services, including decarbonisation roadmaps. future for all • Trialling of Energy as a Servi
Slide 25: Sustainability Reporting
Sustainability Reporting CLIMATE-RELATED RISK ASSESSMENT This year the following disclosures have been made and are available for review: For personal use only • Climate Risk Report. Outlines climate-related financial risks and opportunities under different climate scenarios. The report aligns with
Slide 26: Strategic Outlook
Strategic Outlook For personal use only Empowering New Zealand’s sustainable future 23.
Slide 27: A Refreshed Leadership Team to Navigate the Transition
A Refreshed Leadership Team to Navigate the Transition For personal use only Marc England Tracey Hickman James Spence Chief Executive Chief Customer Officer Chief Financial Officer MBA, MENG MA (Hons), AMP (Harvard) BSc, CA Joined Genesis in May 2016, Over 28 years energy sector Experience as CFO at
Slide 28: Together, Inspiring Millions of Sustainable Choices
Together, Inspiring Millions of Sustainable Choices For personal use only Sustainable choices Genesis offers COMPARE Sustainable choices Genesis could to customers now: offer to customers in the future: CHOOSE EVerywhere Decarbonising Gas & LPG Encouraging EV usage through Through fuel switching or
Slide 29: An Active Enabler of New Zealand's Energy Transition
An Active Enabler of New Zealand’s Energy Transition FUTURE-GEN PORTFOLIO PIPELINE Power Purchase Agreements (PPA) For personal use only 3,000 2,500 • Inflationary pressures have increased costs of renewable development. 2,000 MWh 1,500 • Due to delays and increasing costs, Mercury have advised 1,00
Slide 30: New Zealand, Insulated from Global Energy Crisis so far
New Zealand, Insulated from Global Energy Crisis so far • The New Zealand electricity market has, to date, been protected from the GLOBAL WHOLESALE ELECTRICITY FUTURES1 For personal use only unprecedented rise in global energy prices. The domestic market’s only 800 global link is through imported co
Slide 31: Genesis to Launch Market Security Options to Reduce Price Volatility
Genesis to Launch Market Security Options to Reduce Price Volatility For personal use only How Market Security Options will work • The existing Swaption contracts with Meridian and Contact expire in December 2022. Commercial terms • On August 30th, market participants will be offered the have not be
Slide 32: Appropriate Regulatory Settings are Required for a Stable Transition
Appropriate Regulatory Settings are Required to Ensure a Stable Transition to a Low Carbon Future For personal use only Market Challenges Genesis Position • To date, Genesis' coal stockpile has provided dry period support to • Genesis is proposing Market Security Options to provide market Dry Year S
Slide 33: Guidance
For personal use only Guidance
Slide 34: Guidance
Guidance For personal use only FY23 EBITDAF is expected to be around $455 million, subject to hydrological conditions, gas availability, and any material adverse events or unforeseeable circumstances; • The current Swaption contracts will end in December 2022. Depending on the outcome of negotiation
Slide 35: Appendix
For personal use only Appendix
Slide 36: Electricity and Gas Gross Margin Breakdown
Electricity and Gas Gross Margin Breakdown FY22 FY21 Variance For personal use only Volume Rate per unit ($m) Volume Rate per unit ($m) Volume Rate per unit ($m) Electricity Retail Sales C&I 1.9 TWh $142/MWh 273.6 2.3 TWh $141/MWh 320.6 -0.4 TWh $1/MWh (47.0) Retail Sales Mass Market 3.9 TWh $262/MW
Slide 37: LPG and Other Gross Margin Breakdown
LPG and Other Gross Margin Breakdown FY22 FY21 Variance For personal use only Volume Rate per unit ($m) Volume Rate per unit ($m) Volume Rate per unit ($m) LPG Retail Sales 44.3 kt $1,946/t 86.3 43.5 kt $1,905/t 82.9 0.8 kt $41/t 3.4 Wholesale Sales 17.1 kt $1,174/t 20.1 15.5 kt $765/t 11.8 1.6 kt $
Slide 38: Kupe Gross Margin and Reconciliation to EBITDAF
Kupe Gross Margin and Reconciliation to EBITDAF FY22 FY21 Variance For personal use only Volume Rate per unit ($ m) Volume Rate per unit ($ m) Volume Rate per unit ($ m) Oil Sales 292 Kbbl $85.9/bbl 25.1 306 Kbbl $75.5/bbl 23.1 -14 Kbbl $10.5/bbl 2.0 Gas Sales 11.1 PJ $7.1/GJ 78.8 10.6 PJ $8.5/GJ 89
Slide 39: Financial Summary
Financial Summary FY22 FY211 Variance FY22 FY211 Variance For personal use only Income Statement Balance Sheet ($m) ($m) ($m) ($m) Revenue 2,834.1 3,221.2 (12.0)% Cash and Cash Equivalents 105.6 104.3 1.2% Expenses (2,393.8) (2,866.6) (16.5)% Other Current Assets 626.0 825.1 EBITDAF 440.3 354.6 24.2
Slide 40: Debt Information
Debt Information GENESIS DEBT PROFILE AT 30 JUNE 2022 Debt Information FY22 FY21 Variance For personal use only $m ($m) ($m) $300 Total Debt $ 1,493 1,428 $250 Cash and Cash Equivalents $ 106 104 Headline Net Debt $ 1,387 1,324 +4.8% $200 $150 USPP FX and FV Adjustments $ 35 48 $100 Adjusted Net Deb
Slide 41: Operational Metrics
Operational Metrics Retail Key Information FY22 FY21 Variance Retail Key Information FY22 FY21 Variance For personal use only EBITDAF ($ millions) 55.7 169.2 (67.1)% Retail Electricity Sales (GWh) 5,806 6,241 (7.0)% Customers with > 1 Fuel 133,550 128,214 4.2% Retail Gas Sales (PJ) 7.4 8.0 (7.5)% El
Slide 42: Operational Metrics
Operational Metrics Wholesale Key Information FY22 FY21 Variance Kupe Key Information FY22 FY21 Variance For personal use only EBITDAF ($ millions) 353.5 144.1 145.3% EBITDAF ($ millions) 77.4 87.4 (11.4)% Renewable Generation (GWh) 2,743 2,526 8.6% Gas Production (PJ) 11.1 10.6 4.7% Thermal Generat
Slide 43: Glossary – Gross Margin Breakdown
Glossary – Gross Margin Breakdown ELECTRICITY For personal use only Retail Sales C&I Sale of electricity to commercial and industrial customers. Retail Sales Mass Market Sale of electricity to residential and small business customers. Wholesale Sales Sale of generated electricity onto spot market, e
Slide 44: Glossary – Operational Metrics
Glossary – Operational Metrics RETAIL For personal use only 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
Slide 45: Glossary – Operational Metrics
Glossary – Operational Metrics POWER PURCHASE AGREEMENTS For personal use only Wind (GWh) Energy purchased through long term agreements with generator Average Price Received for Generation - GWAP Price received at production node. (E.g. Waipipi at WVY1101 node) ($/MWh) WHOLESALE Average Retail Elect
Slide 46: Investor Relations Enquiries
For personal use only Investor Relations Enquiries Tim McSweeney GM Investor Relations & Market Risk +64 27 200 5548
Slide 47: Results announcement
Results announcement Results for announcement to the market Name of issuer Genesis Energy Limited (GNE) Reporting Period 12 months to 30 June 2022 For personal use only Previous Reporting Period 12 months to 30 June 2021 Currency NZD Amount (000s) Percentage change 1 Revenue from continuing $2,834,1
Slide 48: Distribution Notice
Distribution Notice Please note: all cash amounts in this form should be provided to 8 decimal places Section 1: Issuer information For personal use only Name of issuer Genesis Energy Limited (GNE) Financial product name/description Ordinary Shares NZX ticker code GNE ISIN (If unknown, check on NZX
Slide 49: Distribution Notice (continued)
If fully or partially imputed, please 80% state imputation rate as % applied 6 Imputation tax credits per financial $0.02768889 product Resident Withholding Tax per $0.01081844 financial product For personal use only Section 4: Distribution re-investment plan (if applicable) DRP % discount (if any)