Genesis Energy Limited · NZX:GNE
Genesis Energy — Non-Deal Roadshow (September 2018)
31 slides from Genesis Energy's roadshow presentation, Sep 19, 2018
Slide 1: London & Edinburgh Investor Meetings September 2018
For personal use only London & Edinburgh Investor Meetings September 2018 Marc England – CHIEF EXECUTIVE Cameron Parker – INVESTOR RELATIONS GENESIS ENERGY LIMITED
Slide 2: Genesis' value proposition
Genesis’ value proposition — integrated energy company delivering sustained earnings growth, with five year average dividend yield of ~7.5% For personal use only • Investor strategy: TSR target of top quartile, translating to ~14% return, focus on dividend yield plus growth • Business strategy: FY21
Slide 3: Genesis' yield comparison
Genesis’ yield comparison — contextualising Genesis’ average net dividend yield of ~7.5% For personal use only FTSE 100 YIELD COMPARISON Mean 90th Percentile 75th Percentile 25th Percentile GNE 10% 8% 6% 4% 2% 0% Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 20
Slide 4: New Zealand Market Overview
For personal use only New Zealand Market Overview
Slide 5: About New Zealand
About New Zealand — good growth in a stable political and regulatory environment GDP For personal use only st billion, Ease of doing 3% growth business st th Investor Providing Protection Sustainable, Secure Energy rd nd Economic Global Prosperity Freedom Index Source: Economy Rankings 2018 (The Wor
Slide 6: Overview of the New Zealand energy market
Overview of the New Zealand energy market — deregulated unsubsidised market with an established operating system For personal use only 2m electricity customers 270,000 gas customers, 220,000 LPG customers 29 electricity lines companies 5 gas distributors 48% residential 4 LPG distributors customers
Slide 7: New Zealand electricity market
New Zealand electricity market — >80% renewable, with positive signs of future demand growth and electrification For personal use only SUPPLY DEMAND 9,963MW 44% ~ 1-2% pa1 63% 12% installed capacity South Island Forecast demand North Island Tiwai but risks based growth based reduced GENERATION MIX %
Slide 8: New Zealand gas market
New Zealand gas market — over-supply in short term, declining reserves with no new exploration permits to be issued For personal use only SUPPLY DEMAND 15 1,917 PJ >270,000 -2.0% 30% producing 2P reserves gas consumers, 10 year demand Methanex fields restricted to NI growth1 GAS PRODUCTION BY FIELD
Slide 9: New Zealand LPG market
New Zealand LPG market — likely to move to net import in early 2020’s, currently demand growing at 6% pa For personal use only SUPPLY DEMAND 6 1,416 kt >6% reserves, dominated >220,000 producing 5 year growth in key 45kg by Kupe LPG consumers fields and bulk markets LPG DEMAND kt LPG GROSS REMAINING
Slide 10: New Zealand distributed energy market
New Zealand distributed energy market — solar installations are slow, but EV take-up is accelerating For personal use only SOLAR – INSTALLED CAPACITY (MW) 70 • Whilst grid parity has been achieved, solar 60 penetration remains low as economics remain 50 poor relative to buying off grid from an alrea
Slide 11: Regulatory environment
Regulatory environment — fully deregulated market has promoted efficiency and competition For personal use only • Energy policy set by Government INTERNATIONAL COMPARISON OF RESIDENTIAL ELECTRICITY COSTS ‒ New government focused on climate change with a Zero 400 Carbon Act to be introduced and an in
Slide 12: Genesis Energy Overview
For personal use only Genesis Energy Overview
Slide 13: About Genesis Energy
About Genesis Energy — our vision is to be customers’ first choice for energy management For personal use only KEY INFORMATION Revenue (FY18): NZ$2.3 billion EBITDAF (FY18): NZ$361 million , Dividend Yield (FY18): 6.9% Share Price: NZ$2.50 Market Capitalisation: NZ$2.5 billion Enterprise Value (FY18
Slide 14: FY18 UK Investor Meetings
For personal use only 14 SEPTEMBER FY17 18 UK INVESTOR MEETINGS 14 14
Slide 15: FY18 Results at a glance
Our VISION is to be customers’ first choice for energy management FY18 Results at a glance For personal use only EBITDAF Total generation Record Up Up Up $ 8% 11% 5% m , GWh supports volatile market PJ Kupe gas production FY17 $333m NPAT FY18 total dividend Brand revitalised Up $ Down 83% 2% “With Y
Slide 16: Genesis Sustainability Framework launched
Genesis Sustainability Framework launched FY19 https://www.genesisenergy.co.nz/sustainability For personal use only Caring for our Building strong Powering environment communities New Zealand Putting control in our Emissions Our Communities customers’ hands Water and Wildlife Our People Delivering N
Slide 17: Company Strategy
For personal use only Company Strategy
Slide 18: Strategy: We are Performing while Transforming
Strategy: We are Performing while Transforming — an update to be provided at Genesis’ Investor Day 7th November 2018 For personal use only Our VISION is to reimagine energy to be customers’ first choice for energy management Our PURPOSE is to put control in our customers’ hands Our STRATEGY is to us
Slide 19: Outlook and guidance
Outlook and guidance — guidance for FY19 EBITDAF is $350 to $370 million For personal use only • FY19 EBITDAF guidance range is $350 to $370 million subject to hydrological conditions, any material events, one-off expenses or other unforeseeable circumstances. Key assumptions include: • $10 million
Slide 20: FY21 target EBITDAF
FY21 target EBITDAF — target to deliver $400 - $430 million by FY21 and top quartile TSR, as set out in FY17 and will be updated for For personal use only our November Investor Day, rebased from FY18 actuals $15m -$20m $12m -$17m $13m -$17m $6m -$10m $2m -$3m $5m -$8m $9m -$14m $5m -$8m $400m - $430
Slide 21: Generation flexibility
Generation flexibility — flexible assets and fuels portfolio delivers value in volatile hydro conditions For personal use only 7,105 GWh $92 MWh ↑ 51% NEW ZEALAND HYDRO CONDITIONS 1.5 Normal Storage Band National Storage as % of Average Generation up 11% to Average price received for National Storag
Slide 22: Value through integration
Value through integration — integrated Kupe position driving value through Wholesale flexibility and LPG Customer growth potential For personal use only KUPE PRODUCTION (GENESIS SHARE, PJe) NEW ZEALAND LPG SUPPLY/DEMAND (BY CALENDAR YEAR) Gas Oil LPG Demand Export 18 Supply Import Linear (Supply Dec
Slide 23: Brand performance
Brand performance — a focus on brand and loyalty initiatives is shifting perceptions and reducing churn versus market For personal use only BRAND METRIC RESIDENTIAL ELECTRICITY CHURN (EXCL EOL, ROLLING 3 MONTH) Genesis Genesis Genesis vs Genesis Market (excl Genesis) 27% May 17 May 18 Competitors 25
Slide 24: Product innovation
Product innovation — providing knowledge and insight to customers to help them manage their bills For personal use only > 100,000 > 280,000 DAILY ENERGY IQ USERS / NEW USERS SINCE LAUNCH (MAY 2018) 25,000 Daily Unique IQ Users (LHS) New Energy IQ Users (RHS) 40,000 Total unique users for Power Shout
Slide 25: FY18 Financial Performance
FY18 Financial For personal use only Performance
Slide 26: FY18 financial highlights
FY18 financial highlights — EBITDAF up 8%, investment in operating and capital expenditure up, free cash flow up 1%, net debt down $29m For personal use only FINANCIAL HIGHLIGHTS $ MILLIONS FY17 FY18 1,212 1,183 361 333 331 305 284 249 182 184 170 166 119 74 80 58 47 20 1 EBITDAF NPAT 2 Underlying E
Slide 27: FY18 EBITDAF waterfall
FY18 EBITDAF waterfall — EBITDAF growth of 8% driven by record Kupe gas production, strong thermal generation and acquisitions For personal use only FY18 vs FY17 EBITDAF Favourable Unfavourable $ MILLIONS 5 2 12 13 32 364 361 333 FY17 EBITDAF Acquisitions FY18 Baseline Customer Wholesale Kupe Corpor
Slide 28: Cash flow
Cash flow — operating cash flow up 33% and free cash flow up $2m For personal use only OPERATING CASH FLOW FREE CASH FLOW1 $ MILLIONS $ MILLIONS 304 319 325 331 198 186 182 184 172 249 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Higher operating cash flow reflects growth Free cash flow has inc
Slide 29: Capital expenditure
Capital expenditure — increase reflects a year of investment in integration of LPG operations and platform investment in Customer For personal use only CAPITAL EXPENDITURE1 • Stay in business capex (SIB) includes ($51m, FY18 $ MILLIONS guidance issued was $50-60m): 82 80 ₋ Tekapo G3 refurbishment, E
Slide 30: Capital structure
Capital structure — net debt has reduced by $29m, debt/EBITDAF down 0.3 to 3.0 For personal use only NET DEBT AND NET DEBT/EBITDAF RATIO1 • S&P reaffirmed BBB+ credit rating post acquisitions 1,212 5.0 1,183 in January 2018 1200 4.5 966 4.0 • Dividend reinvestment plan (DRP) announced at 1000 905 83
Slide 31: For personal use only
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