Slide 1: FY19 Full Year Results Presentation
FY19 Full Year Results Presentation 28 August 2019 Marc England – CHIEF EXECUTIVE OFFICER Chris Jewell – CHIEF FINANCIAL OFFICER GENESIS ENERGY LIMITED
Slide 2: 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 3: Agenda
AGENDA 1 Year in Review 2 Financial Performance and Guidance 3 Strategy Update and Outlook 4 Supplementary Information Genesis Energy Limited FY19 Full Year Result Presentation 3.
Slide 4: 1. Year in Review
1. Year in Review Genesis Energy Limited FY19 Full Year Result Presentation 4.
Slide 5: Results at a glance
Results at a glance 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 respective fuel purchase cos
Slide 6: Earnings growth
Earnings growth — EBITDAF growth of $3m, and continued growth in FY19 dividends translating to a 6.6% gross yield1 EBITDAF GROSS DIVIDEND YIELD COMPARISON WITH PEERS AND LONG-TERM BOND YIELDS Genesis Meridian Mercury $ MILLIONS Contact US 10 Yr Govt Bonds NZ 10 Yr Govt Bonds 14% 12% Leading 6.6% 10%
Slide 7: A customer focused strategy coming to life
A customer focused strategy coming to life — Investment in loyalty, brand, products and innovation is driving value, CLV up 3% 50K UNIQUE ENERGY IQ USERS PER WEEK, 100K USERS PER MONTH (ROLLING 3 MONTH AVG) 70,000 Weekly Unique EIQ Users 60,000 50,000 40,000 30,000 20,000 Knowledge 10,000 - Jul-18 N
Slide 8: Residential customers are increasingly engaged and loyal
Residential customers are increasingly engaged and loyal — Increased value from our residential customer base through loyalty, gross churn down 3.8 ppt RESIDENTIAL ELECTRICITY SALES VOLUMES (GWh) & NETBACK 1 ($/MWh) Sales Volume Netback RESIDENTIAL CUSTOMER GROSS2 CHURN DOWN 3.8 ppt, NET CHURN DOWN
Slide 9: Growing business customer volume with targeted propositions
Growing business customer volume with targeted propositions — Focus remains on volume, but not at the expense of value, business sales volume up 7.8% BUSINESS ELECTRICITY SALES VOLUMES (GWh) & NETBACK ($/MWh) Sales Volume Netback BUSINESS DUAL FUEL CUSTOMERS UP 25%, CHURN DOWN TO 7.9% (ROLLING 12 MO
Slide 10: Digital initiatives driving down cost to serve
Digital initiatives driving down cost to serve — Cost to serve is down 7% to $141 per connection (ICP1) DIGITAL INTERACTIONS UP 24 ppt SINCE FY16 30 ppt INCREASE IN CUSTOMER E-BILL ADOPTION SINCE FY16 Phone WebChat Email Digital 80% 75% 75% E-bill adoption FY19 30% 12% 58% 70% up 30 ppt 65% FY18 40%
Slide 11: Wholesale portfolio defended value in a volatile wholesale market
Wholesale portfolio defended value in a volatile wholesale market — A resilient result, enabled by managing through gas supply constraints and water shortages ABNORMAL HYDRO STORAGE EXISTED ACROSS BOTH ISLANDS FOR OVER 80% OF THE YEAR SHORTAGE OF BOTH GAS AND WATER DRIVES WHOLESALE PRICE VOLATILITY,
Slide 12: Elevated fuel and wholesale electricity prices
Elevated fuel and wholesale electricity prices — Tighter gas fuel supply is putting upward pressure on prices RECORD ANNUAL GWAP, FY19 UP $51/MWh to $143/MWh RECORD KUPE GAS PRODUCTION (25.7 PJ), LPG YIELD UP AND OIL PRODUCTION IN DECLINE $160 Gas Oil LPG 30 $140 $143 25.5 25.7 Genesis GWAP ($/MWh)
Slide 13: Strong asset management underpins stable earnings
Strong asset management underpins stable earnings — Key outages, on time and on budget, with Forced Outage Factor down to 0.3% HIGH PLANT RELIABILITY, WITH UNIT 5 MAINTENANCE & RANKINE RECERTIFICATION DELIVERED HUNTLY’S U5 OPERATING FLEXIBILITY IS PROVEN WITH THE FY19 PLANNED OUTAGE USED TO UPGRADE
Slide 14: 2. Financial Performance
2. Financial Performance Genesis Energy Limited FY19 Full Year Result Presentation 14.
Slide 15: FY19 financial highlights
FY19 financial highlights — EBITDAF up $3m to $363m, underlying earnings up 16% to $67m, with operating costs down $1m 1 $ MILLIONS FY18 FY19 1,183 1,186 360 363 331 303 302 301 17.05 cps 190 176 16.9 cps 80 89 59 57 67 20 2 3 4 5 5 EBITDAF NPAT Underlying Controllable Operating Cashflow Free Cash F
Slide 16: Dividends
Dividends — A final dividend of 8.6 cps declared, resulting in a full year dividend of 17.05 cps, representing a 6.6% gross yield 1 FY15 TO FY19 DIVIDEND CENTS PER SHARE & PAY-OUT HISTORY & NORMALISED VIEW • Normalised for ‘one-off3’ levels of SIB capex, pay-out ratio Dividends (CPS) % of Free Cash
Slide 17: FY19 EBITDAF
FY19 EBITDAF — EBITDAF growth of $3m to $363m, due to a standout Retail performance, resilient Wholesale result, and a stable Kupe outcome FY18 to FY19 EBITDAF $ MILLIONS Higher Lower 0 7 3 13 360 363 FY18 EBITDAF Retail Wholesale Kupe Corporate FY19 EBITDAF Genesis Energy Limited FY19 Full Year Res
Slide 18: Segment EBITDAF
Segment EBITDAF — A standout Retail performance, resilient Wholesale result and a stable Kupe outcome FY18 TO FY19 RETAIL EBITDAF • Retail: Growth in LPG and Business segments and reduced cost to serve Higher Lower across residential customers, offset by lower residential consumption due to warmer w
Slide 19: NPAT & Underlying Earnings
NPAT & Underlying Earnings — $39m increase in NPAT and 16% increase in underlying earnings FY18 TO FY19 NPAT $ MILLIONS Higher Lower 1 8 16 • Depreciation and amortisation costs down driven by changes in asset valuations in FY18, offset by recent 35 investment in Retail. 9 59 • Positive fair value a
Slide 20: Controllable operating expenses
Controllable operating expenses — Controllable operating expenses down $1m on the prior year FY15 TO FY19 CONTROLLABLE OPERATING EXPENSES1 $ MILLIONS • Operating expenses down to $301.6m, 285 278 284 303 302 following a period of investment (FY18, $302.8m). FY15 FY16 FY17 FY18 FY19 • Bad debts down
Slide 21: Capital expenditure
Capital expenditure — Increased capex levels reflect a period of significant plant investment in Wholesale, reduced expenditure in Retail FY15 TO FY19 CAPITAL EXPENDITURE1 • $23m Tekapo safety upgrade to install intake gate $ MILLIONS 2 project commenced in FY19. 89 3 80 3 • Stay in business capex (
Slide 22: Capital structure
Capital structure — Net Debt/EBITDAF flat at 3.0 and net debt flat at $1,186m • S&P reaffirmed BBB+ credit rating in January 2019. FY15 TO FY19 NET DEBT AND NET DEBT/EBITDAF RATIO1 • $240m of Capital Bonds maturing in FY 2049 were issued 1,212 1,183 1,186 5.0 on 16 July 2018 at a coupon rate of 4.65
Slide 23: FY20 Guidance
FY20 Guidance — Guidance for FY20 EBITDAF is $360 million to $380 million • FY20 EBITDAF guidance is $360 million to $380 million subject to normal hydrological conditions, any material events, one-off expenses or other unforeseen circumstances. Key assumptions include: • IFRS 16 adoption - positive
Slide 24: 3. Strategy Update and Outlook
3. Strategy Update and Outlook Genesis Energy Limited FY19 Full Year Result Presentation 24.
Slide 25: We're performing while transforming
We’re performing while transforming 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 Retail Market Maximising value from our Generation
Slide 26: Our pathway to FY21
Our pathway to FY21 — Driven by targeted retail growth, optimisation and roll-off of legacy contracts, offset by the decline in Kupe production $MILLIONS Residential Value Growth 420 B2B Growth 10 - 20 LPG Growth 400 10 - 15 15 - 30 7 10 - 12 363 1 2 FY19 EBITDAF IFRS16 Impact Kupe Production Retail
Slide 27: Kupe production
Kupe production — Early onset of decline due to record production driven by gas market shortages and field outages KUPE PRODUCTION DECLINE1 HAS COMMENCED EARLIER THEN EXPECTED DUE TO HIGHER RECENT EXTRACTION FY20 Production Forecast (24 PJ) Daily Max Decline @ 1.2% Daily Max Decline @ 1.5% LEVELS TJ
Slide 28: Genesis invests in EV car share business
Genesis invests in EV car share business — 40% stake in Yoogo Share, New Zealand’s only fully electric car sharing business, to support businesses to decarbonise • The NZ transport sector represents around 20% of the country’s greenhouse gas emissions. • There is a groundswell of activity from busin
Slide 29: Enabling a more sustainable future
Enabling a more sustainable future 143% 714 1,000 School-gen 450 GWh 250,000 increase Whio pairs schools Trust per annum carbon since 2011 protected engaged established from 2021 offset 50% As kaitiaki of the natural The primary objective is to 100% of heavy resources we use when producing produce a
Slide 30: 4. Supplementary Information
‘For Dairy’, developed with farmers for farmers…….With You. For You. 4. Supplementary Information Genesis Energy Limited FY19 Full Year Result Presentation 30.
Slide 31: Financial statements
Financial statements Income Statement FY19 FY18 Variance Balance Sheet FY19 FY18 Variance ($m) ($m) ($m) ($m) Revenue 2,700.7 2,302.5 +17.3% Cash and Cash Equivalents 61.9 49.3 Total Operating Expenses (2,337.3) (1,942.1) +20.3% Other Current Assets 416.4 339.4 EBITDAF 363.4 360.4 +0.8% Non-Current
Slide 32: Diversified funding profile
Diversified funding profile GENESIS DEBT PROFILE Debt Information FY19 FY18 Variance ($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 Debt1 $ 1,186.2 1,182.9 +0
Slide 33: Operational metrics
Operational metrics Retail Key Information FY19 FY18 Variance Retail Key Information FY19 FY18 Variance 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% Customer LPG Sales (t
Slide 34: Operational metrics
Operational metrics Wholesale Key Information FY19 FY18 Variance Kupe Key Information FY19 FY18 Variance 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 Generation (GWh) 3,987 4,049 (1
Slide 35: Slide 35