Connect March 2018 Chris Jewell CHIEF FINANCIAL OFFICER G E N E S - - PowerPoint PPT Presentation

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Connect March 2018 Chris Jewell CHIEF FINANCIAL OFFICER G E N E S - - PowerPoint PPT Presentation

Dec 04, 2022 449 likes •640 views

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

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G E N E S I S E N E R G Y L I M I T E D

ASX CEO Connect

March 2018

Chris Jewell – CHIEF FINANCIAL OFFICER

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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

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About Genesis Energy

— only integrated energy management company in New Zealand

3 MAR18

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

  • f Taranaki.

,

ASX CEO CONNECT

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MAR18 4

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

connections up over 15,500 in past five years

  • LPG demand growth remains strong, with 6% growth in market over last 12 months

Customer Wholesale Kupe

  • Forward electricity prices more reflective of tightening supply/demand dynamics. Year 2

price is up $4MWh (5%) on prior comparable period

  • 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
  • LPG supply/demand balance tightening with a possible move to net import early 2020’s

ASX CEO CONNECT

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Strategy

Company Investor Financial

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Optimise

To improve short term return

Invest

For long-term value creation

Innovate

For medium term growth

REIMAGINING ENERGY to put control in our customers’ hands

Deliver operational excellence and value

  • ptimisation

Increase value share

  • f residential

category Targeted growth in business category Grow LPG category Build energy services Insights and Analysis Foundation investments in technology & digital Embed data-driven decisions Ways of working Core Strategic Initiatives Enabling Initiatives

Company strategy

— five key strategic initiatives underpin our transformation

ASX CEO CONNECT MAR18

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Company strategy: Recent strategy highlights

— transformation journey underway

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Reset Strategy and vision Acquired additional 15%

  • f Kupe for $168 million

Launched NZ’s first real world research and development energy community Acquired retail LPG distribution business

  • f Nova Energy for

$192 million Delivered $200m EBITDAF H1 FY18

  • Up 28%

Launched loyalty program with >120,000 customers linked Supported NZ security

  • f supply during two

dry periods

$200m

ASX CEO CONNECT MAR18

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Company strategy: Innovating to lead

— working with customers collaboratively to build our energy management capabilities

“Making Energy management real for our customers by initiating trials for our new services which include energy forecasting which went live this month.”

My Account Energy Management

“Partnering with customers to test and develop the latest energy innovations and deliver products and services that give them control about their energy use.”

R&D New Technologies

Innovation Technology

Local Energy Project Energy Management

8 ASX CEO CONNECT MAR18

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FY17 EBITDAF Operational excellence Residential value share Business category growth Grow LPG category Energy services Kupe Core growth Original FY21 EBITDAF target Nova Energy retail LPG business Revised FY21 EBITDAF target

$333m $5m -$8m $9m -$14m $5m -$8m $6m -$10m $2m -$3m $13m -$17m $12m -$17m $15m -$20m $385m - $410m $400m - $430m

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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

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Financial strategy: FY21 target

— target to deliver $400 - $430 million by FY21

ASX CEO CONNECT MAR18

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DIVIDEND & PAYOUT HISTORY 10

Investor Strategy

— continued growth in dividends with a 8.6% gross yield1 and outperformance of TSR relative to peers

2017 TOTAL SHAREHOLDER RETURN Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Genesis Peer Index NZX50

29.2% 25.1% 22.0%

2017 closing share price: $2.52

  • 1. Gross yield based on closing share price as at 29 December 2017.
  • FY17 16.6c of dividends declared up 1.2% representing a cash yield of 6.7%. Dividend policy to grow in real terms
  • ver 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

114 130 160 164 166 73% 80% 81% 81% 84% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 20 40 60 80 100 120 140 160 180 200 FY2013 FY2014 FY2015 FY2016 FY2017 % of Free Cash Flow Total Dividends Paid ($millions) Total dividends paid Total Dividend Paid as % of FCF

ASX CEO CONNECT MAR18

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Financial Performance

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151 173 176 156 200 157 172 159 177 50 100 150 200 250 300 350 400 FY14 FY15 FY16 FY17 HY18 $ MILLIONS

EBITDAF EBITDAF BY SEGMENT

  • 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

Financial overview

— a diverse portfolio delivering consistent earnings over time

83 87 103 110 58 169 201 194 176 106 107 94 80 84 56 10 15 20 25 30 35 40 45 50 55 50 100 150 200 250 300 350 400 FY14 FY15 FY16 FY17 HY18 $ MILLIONS Customer Generation & Wholesale Kupe Corporate

ASX CEO CONNECT MAR18

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  • Average cost of debt 5.8%, down 20 basis points
  • Average tenure 11 years, up 3.1 years
  • S&P reaffirmed BBB+ rating post acquisitions in January 2018 with Net

Debt/EBITDAF expected to return to upper end of target range by end of FY18

  • Dividend reinvestment plan announced at HY18, 2.5% discount

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Key Debt Metrics 31 Dec 2017 Total Debt $ 1,229.1 Cash and Cash Equivalents $ 40.6 Headline Net Debt $ 1,188.5 USPP FX and FV Adjustments $ 25.2 Adjusted Net Debt1 $ 1,163.3 Headline Gearing 39.1% Adjusted Gearing 38.6% Net Debt/EBITDAF2 3.0x Interest Cover 6.9x

1. Net debt has been adjusted for foreign currency translation and fair value movements related to USD denominated borrowings which have been fully hedged with cross currency swaps 2. EBITDAF is based on the midpoint of the guidance range provided for FY18

GENESIS ENERGY DEBT PROFILE

Capital structure overview

— long tenure debt in place at lower cost, with BBB+ rating from S&P, DRP in place

$0 $50 $100 $150 $200 $250 $300 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2042 FY 2047 $m Retailable Bonds Wholesale Domestic Drawn Bank Undrawn Bank Capital Bonds USPP

ASX CEO CONNECT MAR18

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Summary

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FY17 15

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  • 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%)

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Genesis Energy

— our mission is to reimagine energy, to put control in our customers’ hands

ASX CEO CONNECT MAR18

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