FY18 Result Presentation 29 August 2018 Marc England – CHIEF EXECUTIVE 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
AGENDA Year in Financial Review Performance Strategic Update Supplementary and Outlook Information FY18 RESULT PRESENTATION 2
1. Year in Review
Our VISION is to be customers’ first choice for energy management Results at a glance EBITDAF Total generation Record Up Up Up $ 11% 5% 8% , GWh PJ FY17 $333m m supports volatile market Kupe gas production FY18 total dividend NPAT Brand revitalised Up $ Down 2% Energy IQ “With You, 83% cps launched with For you” m over 100,000 unique users FY17 16.6c due to generation engaged New Zealand’s 2018 # 1 Imputation 80% revaluations energy utility (Colmar FY17 $119m Brunton & Reptrak) $ Up 33% Excellence in execution on foundational investment m integrated LPG integrated operations billing platform servicing centre delivering distribution platform. EOL & Genesis brands. Operating cashflow operational Genesis now servicing 100,000+ EOL customers FY17 $249m efficiencies, digital around 60,000 LPG successfully migrated. interactions up 46%. customers.
Earnings growth — EBITDAF growth of 8%, and continued growth in FY18 dividends at a 6.9% net yield 1 DIVIDEND CENTS PER SHARE & PAYOUT HISTORY EBITDAF 2 Dividends (CPS) % of Free Cash Flow $ MILLIONS 16.9 130% 16.6 16.4 16.0 110% 92% 87% 13.0 91% 90% 74% 70% 70% 361 345 335 333 50% 308 30% 10% 0 -10% FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Full year dividend of 16.9 cps declared (up 1.8%), with Average of 4% growth per annum since 80% imputation, representing a 6.9% net yield. DRP FY2014 offer remains in place with 2.5% discount. 1. Net yield based on closing share price as at 29 June 2018, $2.44. 2. Free cash flow represents EBITDAF less tax paid, net interest and stay in business capital expenditure FY18 RESULT PRESENTATION 5
Brand performance — a focus on brand and loyalty initiatives is shifting perceptions and reducing churn versus market BRAND METRIC RESIDENTIAL ELECTRICITY CHURN (EXCL EOL, ROLLING 3 MONTH) Genesis Genesis Genesis vs Genesis Market (excl Genesis) 27% May 17 May 18 Competitors 25% First to market with new technology 14% 29% +14 ppt 23% 2.6 ppt 2.1 ppt Puts people in control of their energy use 15% 23% +11 ppt 21% 19% +15 ppt Market leader 21% 33% 17% Knows you and understands what you 60% 67% +8 ppt 15% need Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 SOURCE: Campaign Tracking, The Purpose Business CORPORATE REPUTATION RANKINGS GENESIS NPS AND PROMOTER SCORE New Zealand’s 2018 # 1 ranked energy utility NPS - Genesis 3 Month Rolling Promoter - Genesis 3 Month Rolling 40% +5 ppt 35% Genesis vs 30% 2017 2018 Competitors 25% 20% +10 ppt 15% 20 th 13 th 1 st 10% 5% 0% -5% 13 th 5 th 1 st Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 FY18 RESULT PRESENTATION 6
Product innovation — providing knowledge and insight to customers to help them manage their bills > 280,000 > 100,000 DAILY ENERGY IQ USERS / NEW USERS SINCE LAUNCH (MAY 2018) Daily Unique IQ Users (LHS) New Energy IQ Users (RHS) 25,000 40,000 Power Shouts Total unique users for 35,000 System migration/outage redeemed 1 20,000 My Account/Energy IQ 30,000 25,000 15,000 20,000 ↑30 % on pcp “Hi. Your app is the best - it helps 10,000 15,000 me to keep my power bill down as I 10,000 Customers linked to Fly 5,000 now know exactly which appliances 5,000 use the most electricity. “ Buys, >150,000 0 0 FLYBUY CHURN IMPACT (EXCL EOL) DUAL FUEL CUSTOMER GROWTH (UP 5%) AND CHURN (ROLLING 3 MONTH) Fly Buys Customer Churn Non Fly Buys Customer Churn Dual Fuel Customers (LHS) Single Fuel Churn Multi-fuel Churn 30% 112,000 30% 25% 25% 110,000 20% 20% 108,000 15% 15% 106,000 10% 10% 5% 104,000 5% 0% 102,000 0% Churn at July17 12 Mth Avg Customer Churn Churn at June 18 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 1. Power Shouts redeemed from March to August 2018 FY18 RESULT PRESENTATION 7
Customer service efficiency — digital transformation gaining momentum, focus on customer service and efficiency CUSTOMER INTERACTIONS 100,000 + ↑46 % Phone Email Digital EOL customers migrated onto 1.3m total digital self FY16 51% 14% 35% Genesis’ single billing platform serve interactions FY17 42% 13% 45% 80 % ↑10 ppt ↓13 % FY18 38% 13% 49% $1.3m field services $1m reduction in bad costs recovered debt expense 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% DIGITAL INTERACTION BREAKDOWN CALL CENTRE SERVICE METRICS (GENESIS & EOL) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 80% FY17 FY18 17 ppt improvement FY16 51% 14% 35% 60% FY17 43% 19% 38% 40% 6 ppt improvement 20% FY18 41% 21% 36% 0% Web & App Self Serve Credit Extension Self Serve Bottle Order Self Serve Abandonment Grade of Service Credit Card Self Serve Chat Bot FY18 RESULT PRESENTATION 8
B2B growth — building momentum with stable netback while growing electricity volumes 19% and gas volumes 6% C&I ELECTRICITY SME ELECTRICITY Electricity Volume Electricity Netback Electricity Volume Electricity Netback 2,000 $90 1,811 2,000 $110 Electricity Volume (GWh) Electricity Volume (GWh) $104.55 1,500 $85 Netback ($/MWh) Netback ($/MWh) 1,330 1,500 $105 1,244 1,154 1,096 1,081 1,000 $80 1,000 $100 $80.18 $79.88 $99.46 $100.28 $77.60 500 $95 500 $75 - $90 - $70 FY16 FY17 FY18 FY16 FY17 FY18 SME GAS C&I GAS Gas Volume Gas Netback Gas Volume Gas Netback 3,400 $10 3,362 1,460 $12 $9 1,446 3,350 $7.21 $8 1,440 $7.21 $10 $9.02 3,300 Gas Volume (TJ) $8.51 $7 Netback ($/GJ) Gas Volume (TJ) 1,420 Netback ($/GJ) $9.12 3,250 $6.89 $8 $6 3,203 1,396 1,400 3,200 $5 $6 3,143 $4 1,380 3,150 1,365 $4 $3 1,360 3,100 $2 $2 1,340 3,050 $1 1,320 $0 3,000 $- FY16 FY17 FY18 FY16 FY17 FY18 FY18 RESULT PRESENTATION 9
Value through integration — integrated Kupe position driving value through Wholesale flexibility and LPG Customer growth potential NEW ZEALAND LPG SUPPLY/DEMAND (BY CALENDAR YEAR) KUPE PRODUCTION (GENESIS SHARE, PJe) Demand Export Gas Oil LPG Supply Import 18 Linear (Supply Decline) Linear (Demand Increase) 250 16 14 Supply / Demand (kt) 150 12 *-5% pa 10 PJe 50 8 6 2013 2014 2015 2016 2017 -50 *+6% pa 4 -150 2 0 -250 * Average annual supply/demand decline/increase since 2014 FY14 FY15 FY16 FY17 FY18 SOURCE: LPGA GENESIS CUSTOMER LPG DEMAND MASS MARKET LPG CUSTOMERS & CHURN LPG Dual Fuel LPG Only 50 Kupe Post-migration LPG Only Churn Post-migration LPG Dual Fuel Churn Supply 45 40,000 25% 40 35,000 Thousand tonnes (kt) 20% LPG Customer Numers 35 Monthly Churn 30,000 Bulk 30 25,000 15% 25 20,000 Commercial 10% 20 15,000 15 10,000 5% 10 5,000 Residential 5 - 0% Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 0 FY14 FY15 FY16 FY17 FY18 FY18 RESULT PRESENTATION 10
Generation flexibility — flexible assets and fuels portfolio delivers value in volatile hydro conditions $92 ↑ 51% 7,105 GWh NEW ZEALAND HYDRO CONDITIONS Normal Storage Band National Storage as % of Average 1.5 Average price received for Generation up 11% to National Storage as % of 1.3 generation (GWAP) support volatile market 1.1 Average ‘normal’ conditions 3 fuels 88 % only 1/3 rd of year 0.9 An integrated portfolio of Rankine demand 0.7 means flexibility and security coming from market 0.5 FY18 GENERATION BY FUEL TYPE (GWh) RANKINE UNIT DEMAND (MONTHLY GWh) Genesis Retail & Huntly Outage Support Other Retailers / Spot Customers Swaptions Coal Gas Renewable 5,000 400 350 4,000 300 3,000 250 GWh 200 2,000 150 100 1,000 50 0 0 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY18 RESULT PRESENTATION 11
2. Financial Performance
FY18 financial highlights — EBITDAF up 8%, investment in operating and capital expenditure up, free cash flow up 1%, net debt down $29m FINANCIAL HIGHLIGHTS $ MILLIONS FY17 FY18 1,212 1,183 361 333 331 305 284 249 184 182 170 166 119 80 74 58 47 20 1 2 EBITDAF NPAT Underlying Earnings Operating Costs Operating Cashflow Free Cash Flow Capital Expenditure Dividend Net Debt + 8% - 83% - 2% - 22% + 7% + 33% + 1% + 71% + 2% 1. Net Debt is shown on a separate scale to other financial comparisons 2. Impacted by $100.3m non-cash fair value asset adjustments on Huntly Rankine units, FY18 $48.8m decrease against a FY17 $51.5m gain. FY18 RESULT PRESENTATION 13
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