Investor Roadshow May/June 2017 Marc England, Chief Executive - - PowerPoint PPT Presentation

GENESIS ENERGY

Investor Roadshow

May/June 2017 Marc England, Chief Executive Chris Jewell, Chief Financial Officer

Market Overview

Overview of the NZ Energy Sector

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New Zealand Energy Sector

May 2017 Update Presentation

NZ Electricity Market

85% renewable, mainly hydro, but with limited storage

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May 2017 Update Presentation

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Generation Volume Mix (%)

Hydro Thermal Geothermal Wind

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Total Generation Hydro Generation Hydro Storage

Annual Generation vs Hydro Storage (GWh)

NZ Gas Market

Natural gas produced in one region with stable supply

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May 2017 Update Presentation

• Currently 15 producing fields in Taranaki
• The decline in oil price has led to a decline in wells

drilled since the 2011 peak

• There is currently an oversupply of gas, but this may

become more balanced by 2020 if current levels of exploration continue

• Gas reserves are stable as smaller fields replace

Maui’s dwindling production

NET NATURAL GAS PRODUCTION

NZ LPG Market

New Zealand is historically an exporter of LPG but is becoming more balanced1

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May 2017 Update Presentation

1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition

Energy Retailing

Competitive retail landscape however traditional retailers still dominate

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May 2017 Update Presentation

29 5 10 15 20 25 30 35 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

ACTIVE RETAILERS (>100 ICPS)

• 1 in 5 customers switch each year as the number
• f energy participants continues to increase

− Price led competition but loyalty becoming increasingly important

• Demand growth has been low, with the exception
• f LPG which has seen over 6% growth in the past

5 years in the key 45kg and bulk segments

• Distributed energy costs remain high relative to
• ther fuel types but they are declining and in time

will become an economic option

10% 15% 20% 25% 30% Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 % annualised INDUSTRY CUSTOMER CONNECTION SWITCHING Electricity Market Switching Rate Electricity Industry Rolling 12m Gas Market Switching Rate Gas Industry Rolling 12m

Genesis Energy Overview

About Genesis Energy

Largest electricity and gas retailer with a flexible generation portfolio and integrated fuel position

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May 2017 Update Presentation

1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition

About Genesis Energy

Only fully integrated energy management company in New Zealand

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May 2017 Update Presentation

Production Generation Retail

25% 39% 19% Electricity Gas LPG

Market Share1

1. Pro forma for the Genesis Energy Nova Retail LPG Acquisition

Financial Overview

A growing dividend stream over time with a BBB+ credit rating

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May 2017 Update Presentation

50 100 150 200 250 FY13 FY14 FY15 FY16 $ MILLION DIVIDENDS DECLARED AND FREE CASH FLOW Dividends Free Cash Flow 50 100 150 200 250 300 350 FY13 FY14 FY15 FY16 FY17 $ MILLION EBITDAF1

• $156 million of EBITDAF delivered in first half of

FY17 in line with expectations and guidance

• EPS up 4% over the first half
• 8.2cps dividend declared and paid representing

a 7.2% cash yield annualised

• Dividend policy to grow over time in real terms
• Committed to BBB+ credit rating

− Genesis Energy continues to target a net debt to EBITDAF ratio of 2.5x to 2.8x over time − Recently completed successful $225 million hybrid bond raising resulting in pro forma gearing of 33%

1. FY17 based on mid point of guidance

Strategy and Performance Update

Genesis Energy Highlights

A reinvigorated strategy in place

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Reset Vision and Strategy Transformation Journey Underway Announced Acquisition of an Additional 15% Interest in Kupe Announced Acquisition of Nova Energy Retail LPG Business Strong Health & Safety Performance with lowest TRIFR in market FY17 EBITDAF Guidance Range $320 to $330 million

May 2017 Update Presentation

Strategy

Our plan on a page REIMAGINING ENERGY to be customers’ first choice for energy management

Vision

OPTIMISE

To improve short term return

INNOVATE

In long-term value creation

INVEST

For medium term growth

Strategic Themes

Lean start up product development

Critical Future capabilities

Data driven decision making Field force management Scaled agile ways of working

Strategic Priorities Create enduring customer relationships Leverage data, analysis and insight Maximise return from core activities Deploy technology to build trust Enhance experience with new business models

Commercial relationship management Distributed asset management Software development Sales capabilities

Organise for best in class strategic execution

May 2017 Update Presentation

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Strategic Themes

To Energy Management

May 2017 Update Presentation

1. Optimise generation 2. Optimise “Traditional Retail “ − Deliver best in class cost to serve − Drive loyalty into the customer base − Win and keep valuable customers 3. Seeking corporate efficiency gains

Innovate

For medium term growth

Invest

In long-term value creation 1. Investment into systems and data capabilities, including accelerated foundation investment in retail 2. Develop eco-system platforms that deliver comfort, convenience and control for customers and advantage for Genesis Energy 3. Obtain greater influence of our Kupe business 4. Targeted business growth 1. Enable products and services based on new customer data flows 2. Become market maker of customer comfort, convenience and control 3. Maximise the value of our Bottled Gas resources 4. Grow market share in Business to Business segment 5. Create an empowered and accountable agile culture and way of working

Optimise

To improve short term return

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Optimise

To improve short term returns

May 2017 Update Presentation

Cost to acquire down 15% from lower and less frequent discounts Online acquisitions channels growing Became a member of Flybuys in May 2017, NZ’s largest loyalty program $6 million in cost savings delivered in HY17 TRIFR down 42% year and lowest in peer group

2012 2013 2014 2015 2016 SALES BY ACQUISITION CHANNEL Door-to-door Outbound 60 110 160 210 260 HY16 HY17 COST TO ACQUIRE PER CUSTOMER

Call volumes down and self service interactions up

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Self Service Transactions Digitial Usage CUSTOMER INTERACTIONS 0.65 0.37 TOTAL RECORDABLE INJURY FREQUENCY RATE

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Innovate

For medium term growth

May 2017 Update Presentation

SME field force in place Q3 FY17 LPG customers up 25% year on year Held an inaugural hackathon in March 2017 Agile way of working embedded in business Launched NZ’s first real world research and development energy community

12,000 14,000 16,000 18,000 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17

LPG CUSTOMERS

Implemented C&I bottle management solution

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Invest

In long term value creation

Kupe – building on our integrated fuels strategy and creating a flexible fuels strategy with 15% share acquisition from NZOG LPG – investing to grow retail and bulk market share with acquisition of Nova Energy Retail LPG business Distributed generation and Energy Management products – launched ‘The Local Energy Project’ Foundation technology systems – New integrated digital and voice platform in place with further investment planned to support optimisation of the customer experience

May 2017 Update Presentation

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Acquisition of 15% stake in Kupe

May 2017 Update Presentation

Greater fuel flexibility and JV influence

1. Enhances ‘Integrated Fuels Strategy’ to create value from production through to generation and retail: ‒ Ownership of more uncontracted gas volumes ‒ Additional LPG volumes, 21% of national production, to boost position in wholesale LPG market ‒ Improved support for retail LPG growth initiative ‒ Attractively priced LPG contract for all of NZOG’s share of LPG 2. Improves level of influence and control within the JV 3. Underpins progressive dividend policy with a more diverse earnings stream 4. Strengthens medium term Balance Sheet metrics 5. Kupe field well understood by Genesis Energy and a strong performing quality asset

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Nova Energy Retail LPG Acquisition

 Significant LPG distribution network covering key demand centres in New Zealand and complementary to Genesis Energy’s existing footprint  Well established customer base across residential, commercial and industrial customers  Distribution chain ideally positioned to capture ongoing growth in New Zealand’s LPG market  Experienced operating team adding to Genesis Energy’s existing capabilities  ~$17 million in additional EBITDAF before integration costs and synergies  Option to acquire Nova’s interest in Liquigas

Pivotal moment in customer centric-growth strategy with $192 million acquisition

May 2017 Update Presentation

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Creating value in our LPG business in an attractive market whilst supporting the strategy of delivering a superior offering of integrated energy management solutions

Nova LPG Benefits for Genesis Energy

Becoming a LPG retailer of scale in a growth market with higher margins Unlocking new customer segments Scale capability in distribution with associated margin benefits Improved customer loyalty through integrating the customer experience Capturing additional margin from upstream position

Total LPG market share increases from 3% to 19% in a market with attractive dynamics Scale allows an improved holistic customer offering and acceleration of innovation activities Superior distribution network will allow Genesis Energy to unlock further growth Rebalancing upstream and downstream LPG positions Leveraging distribution network capabilities to reduce costs

May 2017 Update Presentation

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Customer Performance Update

• Whilst electricity demand remains subdued, prices have been increasing up 1.7% this year for mass market

customers and 4.4% for time of use (TOU) customers

• Gas prices have also been increasing up 1.7% with sales up in both the mass and TOU markets
• LPG growth has been strong, with customer connections increasing 24.6% over the past year

Retail prices are up whilst LPG growth remains strong

May 2017 Update Presentation

0.0 2.0 4.0 6.0 8.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Q1 FY12 Q2 Q3 Q4 Q1 FY13 Q2 Q3 Q4 Q1 FY14 Q2 Q3 Q4 Q1 FY15 Q2 Q3 Q4 Q1 FY16 Q2 Q3 Q4 Q1 FY17 Q2 Q3 PJ PJ RETAIL GAS SALES VOLUMES (PJ) Quartlery TOU Sales Volumes Quarterly MM Sales Volumes Rolling 12month sales volume (RHS) 1000 2000 3000 4000 5000 6000 500 1000 1500 2000 Q1 FY12 Q2 Q3 Q4 Q1 FY13 Q2 Q3 Q4 Q1 FY14 Q2 Q3 Q4 Q1 FY15 Q2 Q3 Q4 Q1 FY16 Q2 Q3 Q4 Q1 FY17 Q2 Q3 GWh GWh ELECTRICITY SALES VOLUMES (GWh) Quartlery TOU Sales Volumes Quarterly MM Sales Volumes

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Wholesale Performance Update

• Wet in the North but dry in the South means North Island hydro is running hard and thermal generation is

ramping up

• Genesis Energy has the most diverse generation portfolio in the market to capture the benefits of different

types of market conditions

Current wholesale conditions favourable to Genesis

May 2017 Update Presentation

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 1-Jan 6-Jan 11-Jan 16-Jan 21-Jan 26-Jan 31-Jan 5-Feb 10-Feb 15-Feb 20-Feb 25-Feb 2-Mar 7-Mar 12-Mar 17-Mar 22-Mar 27-Mar 1-Apr 6-Apr 11-Apr 16-Apr 21-Apr 26-Apr 1-May 6-May 11-May 16-May 21-May Lake Storage (GWh) Wholesale Price ($/MWh) Benmore (BEN2201) Otahuhu (OTA2201) Storage Long Run Average (RHS) FY2017 Storage Source: COMIT/Genesis Energy

DAILY AVERAGE WHOLESALE PRICES & NATIONAL HYDRO STORAGE

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Kupe Performance Update

• Gas production up 17% for the year due to increased ownership percentage
• Oil sales down as the joint venture has moved towards larger and less frequent oil shipments to seek cost

benefits from economies of scale

• Oil prices remain consistently higher than the comparable period last year

Moved to 46% ownership from 1 January 2017

May 2017 Update Presentation

$20 $30 $40 $50 $60 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun USD/bbl BRENT CRUDE OIL PRICE FY2017 FY2016 5 10 15 20 25 30 2 4 6 8 Q1 FY12 Q2 Q3 Q4 Q1 FY13 Q2 Q3 Q4 Q1 FY14 Q2 Q3 Q4 Q1 FY15 Q2 Q3 Q4 Q1 FY16 Q2 Q3 Q4 Q1 FY17 Q2 Q3 PJ PJ TOTAL JV KUPE GAS PRODUCTION (PJ) Quarterly Production Volumes Rolling 12 months production volumes (RHS)

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Outlook

Outlook

• FY17 EBITDAF guidance range of $320 to $330 million including increased share of Kupe and transaction

costs associated with acquisition of Nova Energy Retail LPG business1

• Target earnings profile remains to deliver $400+ million of EBITDAF in FY21

Targeting an upper quartile TSR of >14%

1. Subject to any material events, significant one-off expenses or other unforeseen circumstances

May 2017 Update Presentation

Acquisitions $360m Dividend $164m+ pa $35-50m pa Stay in Business capex $10-15m pa growth capex EPS growth of c.5-10% Progressive growth c.8% yield Weighted average

• rganic earnings growth
• f c.2-3%

Targeted TSR of >14% Debt funded Cash funded

HOW WE THINK ABOUT CREATING SHAREHOLDER VALUE

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Why Genesis Energy?

Yield plus growth strategy in motion as Genesis Energy transforms

Customer Centric Generation Flexibility Integrated Fuel Position Leading Market Disruption

• Brand strength and largest customer base provides strong platform for growth
• Obsession with customer experience will drive increased loyalty and lower costs
• Leveraging technology to improve the energy experience for customers
• Unique position to flex thermal, renewable and on market activities underpins earnings profile
• Closer integration of maintenance, operations and wholesale activities will optimise asset base
• Large retail market share and long retail South Island position reduces price risks of Tiwai closure
• Flexibility over fuel supply to support generation and retail needs
• Upside opportunity from accelerated production and priority access to uncontracted gas
• Access to increased LPG production provides strong alignment with growth aspirations
• Defining new approaches to energy management
• Accelerating change through agile ways of working
• Embracing unpredictability to develop resilience in rapidly evolving market

May 2017 Update Presentation

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Thank You