Genesis Energy Limited · NZX:GNE
Genesis Energy — H1 FY2021 Earnings Presentation
40 slides from Genesis Energy's earnings presentation, Feb 25, 2021
Slide 1: Half Year 2021 Results Presentation
Half Year 2021 Results Presentation 25 February 2021 Marc England – Chief Executive Officer Chris Jewell – Chief Financial Officer GENESIS ENERGY LIMITED
Slide 2: Agenda
Agenda 1 Key Highlights and Stakeholder Day 2 Financial Performance 3 Operational Update 4 Strategic Update 5 Outlook
Slide 3: Key Highlights
Key Highlights GENESIS ENERGY LIMITED
Slide 4: Results at a glance
Results at a glance EBITDAF 1 Group $ m • • • Commitment to a Science Based Target initiative (SBTi) target of limiting global warming to 1.5 degrees. Significant improvement in net debt to EBITDAF. Total interest costs declined by $5.9m. Investment in our people, assets and systems. Capital investm
Slide 5: We've refreshed our purpose, strategies and vision as we head into the 2020s
We've refreshed our purpose, strategies and vision as we head into the 2020s Continue to leverage the stability from our diverse Deliver more revenue streams, and grow in markets where we from our core identify compelling opportunities Empowering Manage an economic transition to a lower carbon Navig
Slide 6: Financial Performance
Financial Performance Genesis moved into Kenehi @ Wynyard in October 2020 which is rated as a 6 GENESIS ENERGY LIMITED Green Star Building, making the most of natural light, rain water collection, and energy efficiency systems.
Slide 7: HY21 Financial Summary
HY21 Financial Summary KEY FINANCIAL COMPARISONS 400 $ MILLIONS HY20 HY21 350 1,247 1,182 300 246 250 217 200 167 162 157 150 123 132 94 100 53 60 36 42 50 9 16 8.525cps 8.6cps 0 1 2 3 4 EBITDAF NPAT Underlying Controllable Operating Free Cash Flow Capital Interim Dividend Net Debt Earnings Operatin
Slide 8: Dividends
Dividends — Interim dividend of 8.6 cps declared (up 0.9%), with 80% imputation, representing a 6.5% gross yield1 DIVIDEND (CPS) & PAYOUT HISTORY 2 • An interim dividend of 8.6 cps, 80% imputed, will 9.00 Dividends (cps) % of Free Cash Flow 145% have a record date of 18 March 2021. Payable 8.525 8.6
Slide 9: HY21 EBITDAF
HY21 EBITDAF — Genesis delivered the strongest first half EBITDAF since listing in 2014. This was led by improved Retail netbacks, a decline in thermal fuel costs for Wholesale and the absence of scheduled outages at Kupe. EBITDAF HY21 vs HY20 EBITDAF Favourable Unfavourable $ MILLIONS $ MILLIONS $3
Slide 10: Segment EBITDAF
Segment EBITDAF RETAIL EBITDAF HY20 TO HY21 • Retail: continued netback growth in electricity and continued Favourable Unfavourable market share growth in LPG. • Wholesale: Declining fuel prices supported improved trading margins. Waipipi Wind Farm PPA produced additional value in the high priced wh
Slide 11: NPAT and Underlying Earnings
NPAT and Underlying Earnings — Kupe reserves upgrade, lower finance costs and increased profitability NPAT Favourable Unfavourable $ MILLIONS • Kupe reserves upgrade in August meant lower depreciation relative to pcp. This was partially offset by higher depletion due to the absence of any planned ou
Slide 12: Controllable operating expenses
Controllable operating expenses — Planned investment in people, systems and projects across Genesis CONTROLLABLE OPERATING EXPENSES1 HY21 VS HY20 OPERATING EXPENSES Favourable Unfavourable $ MILLIONS LPG distribution acquisition & increased $ MILLIONS share in Kupe JV 132 129 123 123 132 114 123 HY1
Slide 13: Capital expenditure
Capital expenditure — Significant Tekapo investment in efficiency and safety 4 Genesis invested $28m in stay in business capital (SIB), CAPITAL EXPENDITURE1 significant projects included: $ MILLIONS • Successful on time completion of the Tekapo A intake gate to provide additional resilience to seism
Slide 14: Capital structure
Capital structure — Net debt reduced by $65 million, Debt/EBITDAF ratio well within target band • S&P reaffirmed BBB+ credit rating in February 2021. • Average interest rate of 4.6% in HY21, down from 5.4% for FY20, due to lower fixed rate debt and lower floating rates. Total • Average debt tenure i
Slide 15: 3. Operational Update
3. Operational Update GENESIS ENERGY LIMITED
Slide 16: Our flexible generation portfolio is supporting the market
Our flexible generation portfolio is supporting the market • Hydro generation was consistent with the prior comparable period but GENERATION MIX lower inflows, particularly in December, meant greater use of stored water Thermal Renewable Generation by all market participants. 4,500 • NIWA’s declarat
Slide 17: Fuel and carbon portfolios navigate the transition to a sustainable future
Fuel and carbon portfolios navigate the transition to a sustainable future STOCKPILE COSTS • Decline in global fuel prices: stockpiled fuel prices down from $7.10/GJ in H1 $7.2 FY20 to $6.10/GJ in H1 FY21. Current stockpile will continue to provide $7.0 support through the remainder of FY21. $6.8 $6
Slide 18: Positive financial impacts through proactive customer care
Positive financial impacts through proactive customer care Genesis chose to stop all disconnections DECLINE IN DISCONNECTIONS during COVID lockdown periods • Our Manaaki Kenehi (Customer Care) programme is proving successful in helping our customers through both good and bad times, including COVID-
Slide 19: Better customer service at a lower cost
Better customer service at a lower cost COST TO SERVE SELF SERVE VS ASSISTED INTERACTIONS Cost to Serve per ICP $165 HY21 15% 3% 6% 76% $160 $160 FY20 23% 3% 9% 65% $155 FY19 30% 12% 56% $150 $151 $145 FY18 40% 14% 47% $140 FY17 44% 13% 43% $140 $135 $138 FY16 52% 14% 34% $134 $130 FY17 FY18 FY19 FY
Slide 20: A refreshed Retail strategy builds value in our core business
A refreshed Retail strategy builds value in our core business GENESIS 1 CUSTOMER CHURN • Our refreshed Retail strategy is focused on providing consistent, yet distinctive end- to-end customer experiences, focused on improving retention and rewarding loyalty. Gross Churn Net Churn • We are focused on
Slide 21: Continued value growth across all retail markets
Continued value growth across all retail markets COMMERCIAL AND INDUSTRIAL ELECTRICITY SALES VOLUMES (GWh) & NETBACK ($/MWh) • Continued momentum in residential netback whilst maintaining stable volume sales. Sales Volume Netback 1,300 1,200 1,168 • Commercial and industrial netbacks grew strongly a
Slide 22: 4. Strategic Outlook
4. Strategic Outlook GENESIS ENERGY LIMITED Waipipi Wind Farm Taranaki
Slide 23: Genesis is focused on five of 17 UN Sustainable Development Goals
Genesis is focused on five of 17 of The United Nations Sustainable Development Goals • Local employment • Future-gen • Gender Pay Gap • Iwi Partnerships • Science-Based pathways Strategy • Genesis School- • Tilt Renewables Target initiative • POU Limited • Zilch gen Trust • Department of (SBTi) • Sc
Slide 24: Committed to a Science Based Target aligned to 1.5°C
Empowering New Zealand’s Sustainable Future: Committed to a Science Based Target aligned to 1.5⁰C Reduce direct emissions Reduce indirect emissions Scope 1 & 2 Target Year 1: Scope 3 % % New Auckland Home – Genesis will be moving to new 6-Green Star building in Wynyard Quarter October 2019 Reduce em
Slide 25: New Zealand needs a national energy strategy and systems thinking
New Zealand needs a national energy strategy and systems thinking to navigate the fastest route to net zero emissions We agree with: CLIMATE CHANGE COMMISSION FORECAST OF ELECTRICITY DEMAND • Climate Change Commission's ambition for a low-carbon future. • Electricity is a key enabler of New Zealand’
Slide 26: Our Future-gen strategy focuses on managing the energy transition
Our Future-gen strategy focuses on the opportunity to deliver value uplift by actively managing the energy transition New renewables displacing baseload 1 thermal Empowering Secure gas flexibility through 2 contracts and storage New Zealand’s sustainable future 3 Emissions abatement from forestry 4
Slide 27: Genesis is progressing Future-gen, diverse renewable generation portfolio
Genesis is progressing Future-gen, our flexible assets give us choices to develop a diverse portfolio of renewable generation RFP Launched Up to 15 projects with 11 partners Key Wind 3000 GWh Confirmed Solar 1300 GWh Generation Commences Commitments Geothermal 1700 GWh 1,350 GWh active by Dec-24 Tar
Slide 28: Our refreshed retail strategy emphasises six key priorities
Our refreshed retail strategy emphasises six key priorities, delivering more from our core whilst building for the future 1 Create residential experiences that build customer loyalty Grow our market share of 2 small business customers Empowering New Zealand’s 3 LPG #1 or #2 in every region sustainab
Slide 29: Ecotricity partnership serves a new customer segment
Ecotricity partnership serves a new customer segment and is another step towards our energy management vision NZ’s cleanest, greenest Brand promise With you. For you. Brilliantly simple energy electricity Energy IQ Simple transparent tariffs 100% CarboNZero2 certified Example products Power Shouts N
Slide 30: Outlook and guidance
Outlook and guidance GENESIS ENERGY LIMITED
Slide 31: Outlook and guidance — Updated guidance for FY21 EBITDAF
Outlook and guidance — Updated guidance for FY21 EBITDAF is $415 million to $425 million • EBITDAF guidance for the full year ended 30 June 2021 has been revised upward from $395 million - $415 million to $415 million - $425 million. Guidance is subject to hydrological conditions, gas availability,
Slide 32: Genesis is well positioned for market uncertainties
Genesis is well positioned for market uncertainties Market Industrial Gas Pace of Carbon uncertainties closures availability electrification pricing Largest residential supplier We have Transition Future-gen long-term rights to expected to benefit will lower Largely gas electricity emissions Genesis
Slide 33: Our commitments Why invest in Genesis?
Our commitments Why invest in Genesis? Distinctive customer Attractive growing experiences dividend Improve customer Net Promoter Score Earnings growth and improved balance sheet Limit climate change Science based target Reducing carbon for 1.5°C – 1.2 million tonnes exposure of carbon displaced by
Slide 34: Appendices
Appendices GENESIS ENERGY LIMITED
Slide 35: Financial statements
Financial statements HY21 HY20 HY21 FY20 Income Statement Variance Balance Sheet Variance ($m) ($m) ($m) ($m) Revenue 1,419.4 1,334.2 +6.4% Cash and Cash Equivalents 81.3 32.5 Total Operating Expenses -1,202.1 -1,167.0 +3.0% Other Current Assets 433.7 407.0 EBITDAF 217.3 167.2 +30.0% Non-Current Ass
Slide 36: Debt information
Debt information Debt Information HY21 FY20 Variance GENESIS ENERGY DEBT PROFILE ($m) ($m) Total Debt $ 1,317 1,367 $m Cash and Cash Equivalents $ 81 32 $450 Headline Net Debt $ 1,236 1,335 (7.4%) $400 $350 $300 USPP FX and FV Adjustments $ 54 88 $250 Adjusted Net Debt1 $ 1,182 1,247 (5.2%) $200 $15
Slide 37: Operational highlights
Operational highlights Retail Key Information HY21 HY20 Variance Wholesale Key Information HY21 HY20 Variance EBITDAF ($ millions) 88 64 +37.5% EBITDAF ($ millions) 102 79 +29.1% Electricity Netback ($/MWh) $121.95 $108.20 +12.7% Gas Netback ($/GJ) $10.52 $9.56 +10.0% Renewable Generation (GWh) 1,46
Slide 38: 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 r
Slide 39: 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 40: genesis With you. For you.
genesis With you. For you.