ASX CEO Connect March 2018 - Chris Jewell - CHIEF FINANCIAL OFFICER
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ASX CEO Connect March 2018 Chris Jewell – CHIEF FINANCIAL OFFICER GENESIS ENERGY LIMITED
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)
NOV17 INVESTOR ROADSHOW 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.
NOV17 INVESTOR ROADSHOW 3
Market fundamentals outlook
— continue to be supportive
• Electricity demand growth of 1% in 2017 with EV penetration accelerating
Customer • 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
• Forward electricity prices more reflective of tightening supply/demand dynamics.
Wholesale 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
Kupe $62/bbl
• LPG supply/demand balance tightening with a possible move to net import early 2020’s
HY18 RESULT PRESENTATION 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 Targeted growth in
Initiatives Grow LPG Build energy
excellence and share of residential business category
value optimisation category category services
Insights and Analysis
Foundation investments in technology & digital
Enabling
Embed data-driven decisions
Initiatives
Ways of working
NOV17 INVESTOR ROADSHOW 6
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
Delivered $200m $200m $192 million
EBITDAF H1 FY18
- Up 28% Supported NZ Launched loyalty
security of supply program with
during two dry >120,000 customers
periods linked
NOV17 INVESTOR ROADSHOW 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
My New
Technologies
Account
Technology
“Making Energy management real for our “Partnering with customers to test and develop
customers by initiating trials for our new the latest energy innovations and deliver
services which include energy forecasting products and services that give them control
which went live this month.” about their energy use.”
NOV17 INVESTOR ROADSHOW 8
Financial strategy: FY21 target
— target to deliver $400 - $430 million by FY21
$15m -$20m
$12m -$17m
$13m -$17m
$6m -$10m $2m -$3m
$5m -$8m $400m -
$9m -$14m
$5m -$8m $430m
$385m -
$410m
$333m
FY17 EBITDAFOperational Residential Business Grow LPG Energy services Kupe Core growth 4 Original Nova Energy Revised FY21
excellence value sharecategory growth category FY21 EBITDAF retail LPG EBITDAF
3
target business target
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. $4-6 million of synergies from the acquisition will be
reflected in the “grow LPG category”
4. Core growth represents partial benefit from the rolling off of the take or pay gas contracts and natural growth in wholesale prices over time
NOV17 INVESTOR ROADSHOW 9
Investor Strategy
— continued growth in dividends with a 8.6% gross yield1 and outperformance of TSR relative to peers
• FY17 16.6c of dividends declared up 1.2% representing a cash yield of 6.7%. Dividend policy to grow in
real terms over time with 3.8% growth delivered in past three years against inflation of 2.5%
• TSR target of top quartile, translating to ~14%, with a focus on dividend yield plus growth
• TSR has exceeded market by 7.2% and peer index by 4.1% in past 12 months
DIVIDEND & PAYOUT HISTORY 2017 TOTAL SHAREHOLDER RETURN
200 100%
Total Dividends Paid ($millions)
80% 81% 81% 84% 2017 closing share price: $2.52
73% 29.2%
80%
% of Free Cash Flow
150 25.1%
22.0%
60%
100
160 164 166 40%
130
50 114
20%
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.
HY18 RESULT PRESENTATION 10Financial 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 EBITDAF BY SEGMENT
$ MILLIONS $ MILLIONS
400 400 55
350 350 50
94 80 84
300 300 107 45
172 159 40
250 177 250
157 35
200 200 194 176 56
201 30
150 169
150
25
100 106
173 176 200 100 20
151 156
50 50 87 103 110 15
83 58
0 0 10
FY14 FY15 FY16 FY17 HY18 FY14 FY15 FY16 FY17 HY18
Customer Generation & Wholesale Kupe Corporate
NOV17 INVESTOR ROADSHOW 12Capital 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 Total Debt $ 1,229.1
Cash and Cash Equivalents $ 40.6
with Net Debt/EBITDAF expected to return to upper end of target
Headline Net Debt $ 1,188.5
range by end of FY18
USPP FX and FV Adjustments $ 25.2
• Dividend reinvestment plan announced at HY18, 2.5% discount Adjusted Net Debt1 $ 1,163.3
Headline Gearing 39.1%
GENESIS ENERGY DEBT PROFILE
Adjusted Gearing 38.6%
$m
$300 Net Debt/EBITDAF2 3.0x
$250 Interest Cover 6.9x
$200
1. Net debt has been adjusted for foreign currency translation and fair value
$150 movements related to USD denominated borrowings which have been fully
hedged with cross currency swaps
$100 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
NOV17 INVESTOR ROADSHOW 13Summary
15
FY17 15
15Genesis 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%)
NOV17 INVESTOR ROADSHOW 16You can also read
