nzx spotlight event - microsoft€¦ · about genesis energy —only integrated energy management...

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

NZX Spotlight Event

March 2018

Chris Jewell – CHIEF FINANCIAL OFFICER

About Genesis Energy— only integrated energy management company in New Zealand

2MAR18 NZX SPOTLIGHT EVENT

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.

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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

MAR18 NZX SPOTLIGHT EVENT

Strategy Company

InvestorFinancial

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OptimiseTo improve short term return

InvestFor long-term value creation

InnovateFor medium term growth

REIMAGINING ENERGYto put control in our customers’ hands

Deliver operational excellence and value

optimisation

Increase value share of residential

category

Targeted growth in business category

Grow LPG category Build energy services

Insights and AnalysisFoundation 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


Company strategy: Recent strategy highlights— transformation journey underway

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ResetStrategy and vision

Acquired additional 15%of Kupe for $168 million

Launched NZ’s first real world research and

development energy community

Acquired retail LPG distribution business

of Nova Energy for $192 million

Delivered $200m EBITDAF H1 FY18

- Up 28% Launched loyalty program with

>120,000 customers linked

Supported NZ security of supply during two

dry periods

$200m


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.”

MyAccount

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

7MAR18 NZX SPOTLIGHT EVENT

FY17 EBITDAF Operationalexcellence

Residentialvalue share

Businesscategorygrowth

Grow LPGcategory

Energyservices

Kupe Core growth OriginalFY21 EBITDAF

target

Nova Energyretail LPGbusiness

Revised FY21EBITDAF

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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NOTES1. Several initiatives are interdependent. As an example, energy services capability will contribute towards residential value share2. All ranges are net of operational investment required to achieve target outcomes3. 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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3

Financial strategy: FY21 target— target to deliver $400 - $430 million by FY21


DIVIDEND & PAYOUT HISTORY

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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 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

114130

160 164 166

73%80% 81% 81% 84%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

160

180

200

FY2013 FY2014 FY2015 FY2016 FY2017%

of

Free

Cas

h F

low

Tota

l Div

iden

ds

Paid

($

mill

ion

s)

Total dividends paid Total Dividend Paid as % of FCF


• To provide capital support for Genesis’ growth strategy, and provide a cost effective way for shareholders to reinvest in Genesis’ growth strategy

• A discount of 2.5% will apply to the price, this may be amended for future dividends

• Shareholders have the option of full, partial or no participation. If a shareholder elects to participate they will remain in the plan at the same participation level until they elect to terminate or amend their participation rate

• The New Zealand government has committed to participate to the extent required to retain its 51% holding

• Genesis has the right to terminate or suspend the plan at any time

• Details of the plan will be sent to shareholders in early March

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Dividend reinvestment plan— introduced for the HY18 dividend to support growth

DRP Details

Discount 2.5%

Dividend amount 8.3 cpu

Price The volume weighted average sale price over a period of five Business Days starting on the “Ex Date”, less

the discount

Key Dates

Ex dividend date 5 April 2018

Final date to elect to participate 6 April 2018

Record date 6 April 2018

Payment and share issue date 20 April 2018


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151 173 176 156200

157172 159 177

0

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

HY18 financial overview— a diverse portfolio delivering consistent earnings over time

83 87 103 11058

169201 194 176

106

10794 80 84

56

10

15

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45

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0

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FY14 FY15 FY16 FY17 HY18

$ MILLIONS

Customer Generation & Wholesale Kupe Corporate


A coal free electricity future— Genesis believes in a coal free future

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At Genesis we are taking steps to ensure New Zealand can move to an even more renewable future – we believe in a coal-free future for electricity generation in New Zealand.


Summary

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