ASX CEO Connect March 2018 Chris Jewell – CHIEF FINANCIAL OFFICER G E N E S I S E N E R G Y L I M I T E D
About New Zealand — good growth in a stable regulatory environment Source: Economy Rankings 2017 (The World Bank), The Heritage Foundation 2017, Forbes Lists 2016, Legatum Prosperity Index 2016, Energy Architecture Performance Index 2017 (World Economic Forum) MAR18 ASX CEO CONNECT 2
About Genesis Energy — only integrated energy management company in New Zealand KEY INFORMATION Revenue: NZ$2.0 billion , EBITDAF Guidance (FY18): NZ$350-360 million Dividend Yield: 6.7% Share Price: NZ$2.40 Market Capitalisation: NZ$2.4 billion Average Daily Turnover: 750,000 shares Credit Rating: BBB+ (Standard & Poors) Genesis Energy is a large, fully integrated energy management company. It is New Zealand’s largest energy retailer, generates electricity from a diverse portfolio of thermal and renewable assets located throughout the country, and has an interest in the Kupe oil and gas field offshore of Taranaki. ASX CEO CONNECT MAR18 3
Market fundamentals outlook — continue to be supportive • Electricity demand growth of 1% in 2017 with EV penetration accelerating • Total NZ gas demand down due to industrial however retail growth continues with Customer connections up over 15,500 in past five years • LPG demand growth remains strong, with 6% growth in market over last 12 months • Forward electricity prices more reflective of tightening supply/demand dynamics. Year 2 price is up $4MWh (5%) on prior comparable period Wholesale • Tiwai Point Aluminum Smelter economics stable with a more positive outlook • Forward carbon prices up to $24 per tonne in 2020 • Brent crude up 20% in 2017 with consensus outlook for 2018 in the range of US$59 to $62/bbl Kupe • LPG supply/demand balance tightening with a possible move to net import early 2020’s MAR18 ASX CEO CONNECT 4
Strategy Company Financial Investor
Company strategy — five key strategic initiatives underpin our transformation REIMAGINING ENERGY to put control in our customers’ hands Optimise Innovate Invest To improve short term return For medium term growth For long-term value creation Core Strategic Deliver operational Increase value share Targeted growth in Initiatives Grow LPG category Build energy excellence and value of residential business category services optimisation category Insights and Analysis Foundation investments in technology & digital Enabling Embed data-driven decisions Initiatives Ways of working 6 MAR18 ASX CEO CONNECT
Company strategy: Recent strategy highlights — transformation journey underway Launched NZ’s first real world research and Reset development energy Strategy and vision community Acquired additional 15% of Kupe for $168 million Acquired retail LPG distribution business of Nova Energy for $200m $192 million Delivered $200m EBITDAF H1 FY18 - Up 28% Supported NZ security Launched loyalty of supply during two program with dry periods >120,000 customers linked MAR18 ASX CEO CONNECT 7
Company strategy: Innovating to lead — working with customers collaboratively to build our energy management capabilities Energy Innovation Management R&D Local Energy Energy Project Management New My Technologies Account Technology “Making Energy management real for our “Partnering with customers to test and develop the customers by initiating trials for our new services latest energy innovations and deliver products and which include energy forecasting which went live services that give them control about their energy this month.” use.” MAR18 ASX CEO CONNECT 8
Financial strategy: FY21 target — target to deliver $400 - $430 million by FY21 $15m -$20m $12m -$17m $13m -$17m $6m -$10m $2m -$3m $9m -$14m $5m -$8m $400m - $430m $5m -$8m $385m - $410m $333m FY17 EBITDAF Operational Residential Business Grow LPG Energy Kupe Core growth 4 Original Nova Energy Revised FY21 excellence value share category category services FY21 EBITDAF retail LPG EBITDAF growth target business target 3 NOTES 1. Several initiatives are interdependent. As an example, energy services capability will contribute towards residential value share 2. All ranges are net of operational investment required to achieve target outcomes 3. Represents acquired EBITDAF in the acquisition of the Nova Energy retail LPG business not in original FY21 target. $4-6 million of synergies from the acquisition will be reflected in the “grow LPG category” 4. Core growth represents partial benefit from the rolling off of the take or pay gas contracts and natural growth in wholesale prices over time 9 MAR18 ASX CEO CONNECT
Investor Strategy — continued growth in dividends with a 8.6% gross yield 1 and outperformance of TSR relative to peers • FY17 16.6c of dividends declared up 1.2% representing a cash yield of 6.7%. Dividend policy to grow in real terms over time with 3.8% growth delivered in past three years against inflation of 2.5% • TSR target of top quartile, translating to ~14%, with a focus on dividend yield plus growth • TSR has exceeded market by 7.2% and peer index by 4.1% in past 12 months DIVIDEND & PAYOUT HISTORY 2017 TOTAL SHAREHOLDER RETURN 200 100% 84% Total Dividends Paid ($millions) 180 90% 81% 2017 closing share price: $2.52 81% 80% 29.2% 73% 160 80% % of Free Cash Flow 25.1% 140 70% 22.0% 120 60% 100 50% 166 164 80 40% 160 130 60 30% 114 40 20% 20 10% 0 0% FY2013 FY2014 FY2015 FY2016 FY2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total dividends paid Total Dividend Paid as % of FCF Genesis Peer Index NZX50 1. Gross yield based on closing share price as at 29 December 2017. MAR18 ASX CEO CONNECT 10
Financial Performance
Financial overview — a diverse portfolio delivering consistent earnings over time • HY18 EBITDAF $200 million, up 28%, FY18 guidance of $350 - $360 million • NPAT down 24% to $28 million, due to fair value movements, underlying earnings up 14% to $43 million • Operating cash flow up 57% to $199 million, and free cash flow up 37% to $129 million EBITDAF BY SEGMENT EBITDAF $ MILLIONS $ MILLIONS 400 55 400 50 350 350 80 94 84 45 107 300 300 40 172 159 250 250 177 157 35 200 200 194 176 56 201 30 169 150 150 25 106 100 200 100 20 176 173 156 151 110 50 50 103 15 87 83 58 0 0 10 FY14 FY15 FY16 FY17 HY18 FY14 FY15 FY16 FY17 HY18 Customer Generation & Wholesale Kupe Corporate MAR18 ASX CEO CONNECT 12
Capital structure overview — long tenure debt in place at lower cost, with BBB+ rating from S&P, DRP in place • Average cost of debt 5.8%, down 20 basis points Key Debt Metrics 31 Dec • Average tenure 11 years, up 3.1 years 2017 • S&P reaffirmed BBB+ rating post acquisitions in January 2018 with Net Total Debt $ 1,229.1 Cash and Cash Equivalents $ 40.6 Debt/EBITDAF expected to return to upper end of target range by end of Headline Net Debt $ 1,188.5 FY18 USPP FX and FV Adjustments $ 25.2 • Dividend reinvestment plan announced at HY18, 2.5% discount Adjusted Net Debt 1 $ 1,163.3 Headline Gearing 39.1% GENESIS ENERGY DEBT PROFILE Adjusted Gearing 38.6% $m Net Debt/EBITDAF 2 $300 3.0x $250 Interest Cover 6.9x $200 1. Net debt has been adjusted for foreign currency translation and fair value movements $150 related to USD denominated borrowings which have been fully hedged with cross $100 currency swaps 2. EBITDAF is based on the midpoint of the guidance range provided for FY18 $50 $0 FY FY FY FY FY FY FY FY FY FY FY FY 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2042 2047 Retailable Bonds Wholesale Domestic Drawn Bank Undrawn Bank Capital Bonds USPP MAR18 ASX CEO CONNECT 13
Summary
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Genesis Energy — our mission is to reimagine energy, to put control in our customers’ hands • Company strategy • Deliver operational excellence and value optimization • Increase value share of residential category • Grow business 2 business & LPG categories • Build energy services • Financial strategy • Deliver EBITDAF of $400 - $430 million by FY21 • Investor strategy • Deliver yield plus growth, target top quartile TSR (~14%) MAR18 ASX CEO CONNECT 16
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