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TRANSCRIPT
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
GENESIS ENERGY Annual Shareholders’ Meeting
28 October 2014
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
YOUR BOARD A wide range of professional and commercial experience
― Dame Jenny Shipley, Chairman, DNZM
― Joanna Perry, Deputy Chairman, MNZM
― John Dell
― John Leuchars
― Graeme Milne, ONZM
― Rukumoana Schaafhausen
― Mark Cross
― Doug McKay
― Andrew Clements
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
THE AGENDA
― Introduction
― Chairman’s Overview of Results for FY2014
― Chief Executive’s Report
― Questions
― Resolutions and Voting
― Afternoon Tea
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
YOUR COMPANY
NEW ZEALAND’S LARGEST RETAILER
1 OF ELECTRICITY AND GAS
DIVERSE AND FLEXIBLE
2 ELECTRICITY GENERATION
OIL AND GAS
3 DIVERSIFICATION
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
5
HIGHLIGHTS
Listed on the NZX and ASX on 17 April 2014
• Welcomed 68,000 new investors on first day of trading
• Delivered great service to our customers, both large and small
• Completed major remediation work on Tekapo Canal
• Placed a second coal/gas unit at Huntly into storage
• Sold 27PJ of gas over six years to Contact Energy and agreed a hedge with Meridian Energy
Delivered
– Operating earnings of $307m ahead of IPO forecast
– NPAT of $49m ahead of IPO forecast
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
MEETING THE
CHALLENGES
The Company demonstrated its resilience to
market challenges
― Abundance of water in hydro schemes
― Warmer weather
― Addition of new renewables
― Reduced thermal generation
― Increasing retail competition
― Lower customer demand
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
2014 HIGHLIGHTS
7
Albert Brantley Chief Executive
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
YOUR EXECUTIVE TEAM
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
9
0
1000
2000
3000
4000
5000
6000
7000
0
200
400
600
800
1000
1200
1400
1600
1800
GW
h
GW
h
Electricity Sales Volumes (GWh)
Quarterly TOU Sales Volumes Quarterly Mass Market Sales Volumes
Rolling 12 months sales volumes (RHS)
• Genesis Energy maintains its position as New Zealand’s largest electricity retailer
• Total electricity customers of 523,278 at 30 June 2014
• Market share reduced to 26.1% of ICPs reflecting:
– Increased switching rates
– Heightened competition from smaller niche retailers
• Despite lower customer numbers, total retail electricity sales volumes 1% higher in FY2014
• Focused on retaining and gaining valuable customers while leveraging the momentum in the Time of Use market
ELECTRICITY
CUSTOMERS
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
10
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
0.0
0.5
1.0
1.5
2.0
2.5
PJ
PJ
Retail Gas Sales Volumes (PJ)
Quarterly Mass Market Sales Volumes Quarterly TOU Sales Volumes
Rolling 12m total sales volumes (RHS)
35.0%
36.0%
37.0%
38.0%
39.0%
40.0%
41.0%
42.0%
43.0%
44.0%
45.0%
90,000
95,000
100,000
105,000
110,000
115,000
120,000
Mar
ket
Shar
e
Cu
sto
me
rs b
y IC
P
Natural Gas Customers and Market ShareCustomer Numbers Share of Total Market (RHS)
Source: Company data, Gas Industry Co
• 42% share of the market by ICPs, but 3,037 fewer customers than a year ago reflecting:
• Competitive retail gas market
• New entrants
• Total retail gas sales volumes up 23% in FY2014
• Increased Time of Use volumes including “All of Government” contract
• 11,803 LPG customers, up 22% on FY2013
– Continues to be demand for bottled LPG
– Able to take advantage of LPG off take volumes from Kupe
GAS CUSTOMERS
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
11
Total Generation down 11% versus FY2013 to 6,427 GWh, 4% lower than PFI as a result of:
• A wetter end to the year resulting in reduced opportunity to run thermal fleet
• Reduction in GWh from Huntly Rankine Units due to long term storage of second Unit plus lower peaking requirement
• Hydro generation up 13% versus FY2013 due to shorter outage of Tekapo A and B for canal remediation
• Customer demand continues to be broadly met by generation from Huntly Unit 5 plus hydro stations
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY2010 FY2011 FY2012 FY2013 FY2014
GW
h
Annual Generation Profile
Hau Nui Wind
Tekapo A & B
Waikaremoana
Tongariro
Huntly Unit 6
Huntly Unit 5
Huntly Rankine Units
GENERATION
PERFORMANCE
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
12
Work on the remediation of Tekapo Canal concluded in FY2014
• No lost time injuries over 224,000 man hours of work, over two seasons
• Estimated $11.5m impact on FY2014 EBITDAF
• Total capital expenditure of $136m
• Below $145m to $155m budget Focus of
second
season of work
TEKAPO CANAL
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
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0
100
200
300
400
500
600
700
0
20
40
60
80
100
120
140
160
180
200
Q1
10
/11
Q2
Q3
Q4
Q1
11
/12
Q2
Q3
Q4
Q1
12
/13
Q2
Q3
Q4
Q1
13
/14
Q2
Q3
Q4
tho
usa
nd
of
bar
rels
tho
usa
nd
of
bar
rels
Kupe Oil Production Volumes (kbbl)
Quarterly Production Volumes
Rolling 12 months production volumes (RHS)
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.0
0.5
1.0
1.5
2.0
2.5
PJ
PJ
Kupe Gas Sales Volumes (PJ)
Quarterly Sales Volumes Rolling 12 months sales volumes (RHS)
KUPE
Kupe continues to be a consistent source of earnings
• Natural gas, oil and LPG volumes all up on FY2013 and compared to PFI, reflecting:
• Higher export oil prices
• Opportunities to accelerate gas off take
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
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The safety of our employees and workplace remains a priority
• Genesis Energy is committed to a zero harm work environment
• Only 2 lost time incidents in FY2014 and no serious incidents
• Genesis Energy recent winner of Excellence in Health and Safety award at Deloitte Energy Excellence Awards
0
6
12
18
24
30
0
1
2
3
4
5
6
7
8
9
10
Jul-
11
Au
g-1
1
Sep
-11
Oct
-11
No
v-1
1
De
c-1
1
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
De
c-1
2
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Nu
mb
er
of
Inci
de
nts
pe
r M
illio
n H
ou
rs W
ork
ed
Nu
mb
er
of
Inci
de
nts
Genesis Energy Safety Statistics
Total Recordable Injuries 12 Month Rolling Total Recordable Incident Frequency Rate (RHS)
TRIFR is measured by number of incidents per million man hours worked
HEALTH AND
SAFETY
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
OUR PEOPLE AND OUR COMMUNITIES
Community investment is aligned to our business activity
― Strong relationship with iwi in each generation community
― Premier programme – Schoolgen – grows to 66 schools
― Whio Forever partnership with Department of Conservation
― Foundation for Youth Development getting good results
Our people
― Close to 40% of our people participate in the Employee Share Programme
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
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RESULTS
SUMMARY EBITDAF, NPAT, free cash flow (FCF), dividends and net debt were all better than the PFI
― EBITDAF of $307.8m down 9% on FY2013
― But 1% ahead of PFI
― NPAT of $49.2m was down 53% on FY2013
― But 18% higher than PFI
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
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-$100m
$0m
$100m
$200m
$300m
$400m
$500m
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
EBIT
DA
F $
m
Genesis Energy Contribution to EBITDAF
Oil & Gas
Customer Experience
Energy Management
Corporate
Source: Genesis Energy
$336m
$308m
$42m $54m
$2m $14m
$150m
$200m
$250m
$300m
$350m
$400m
FY2013EBITDAF
CustomerExperience
EnergyManagement
Oil & Gas Corporate FY2014EBITDAF
EBITDAF bridge from FY2013 to FY2014
EBITDAF
SEGMENTAL DETAIL
FY2014 EBITDAF composition changed materially from FY2013
• Significant increase in Customer Experience EBITDAF
• Energy Management EBITDAF reduced 24%
• Corporate overheads increased due to costs associated with IPO and employee restructuring
• Kupe’s FY2014 EBITDAF of $107m represents 35% of Group EBITDAF
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
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BALANCE SHEET
-5%
5%
15%
25%
35%
45%
0
1,000
2,000
3,000
4,000
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Tota
l Ass
ets
$m
Total Assets and Gearing
Total Assets Gearing*
*Gearing = Debt/(Debt + Equity) in line with the Company's banking covenants and credit
• Net debt remains within the range of $950m to $1,000m
• Despite increased dividend and capital expenditure associated with Tekapo Canal remediation
• Gearing is flat at 34.5%, but ahead of PFI
• Improvement in key debt metrics included Net Debt/EBITDAF and interest cover
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
19
DIVIDENDS • Final dividend of 6.6 cps takes total dividends declared in FY2014 to 13cps
• 14% ahead of FY2013
• 2% ahead of PFI
• Dividend policy remains unchanged
Intention is to pay a dividend that provides shareholders with a consistent, reliable and attractive dividend even in periods of business-cycle downturn
Expected that year-on-year dividends will be at least maintained in real terms
GENESIS ENERGY ANNUAL SHAREHOLDERS’ MEETING
20
OUTLOOK • In the face of challenging retail and wholesale electricity markets, Genesis Energy has
delivered FY2014 results better than the April 2014 PFI
• Continuation of heightened retail competition in the electricity and natural gas markets, warmer temperatures and elevated hydro storage levels in the near terms
• Opportunities to improve the Company’s results, especially in Customer Experience, have been identified
• However, given the Company’s portfolio of assets and its ability to manage volatility in the electricity market, Genesis Energy retains its FY2015 PFI forecasts:
– EBITDAF of $363.4m
– NPAT of $95.4m.
– Dividend of 16cps
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