HY18 Result Presentation
14 February 2018
Marc England – CHIEF EXECUTIVE Chris Jewell – CHIEF FINANCIAL OFFICER
GENESIS ENERGY LIMITED AGENDA
Key Financial Highlights Performance
Operational and Outlook Strategic Update
HY18 RESULT PRESENTATION 2 1. Key Highlights HY18 key highlights — positive start to FY18 as our diverse portfolio, acquisitions and strategy deliver results
Strong financial performance Delivering business outcomes
• EBITDAF up 28% to $200m, 15% excluding acquisitions • Strong wholesale performance with generation volumes up 25%, • NPAT down 24% to $28 million, due to fair value movements GWAP up 80% • Underlying earnings up 14% to $43 million • Steady performance for customer segment (EBITDAF impacted • Free cash flow up 37% to $129 million by higher costs) • Operating cash flow up 57% to $199 million • Kupe gas production at 94% of maximum capacity supporting • Operating costs1 up 16%, down 1% on an underlying basis generation requirements excluding growth expenditure and carbon costs • TRIFR of 1.37 remains at sector leading levels
Continuing progress on strategy Converting to shareholder returns
• New brand launched with promoter score up 2 ppts • > 100,000 EOL customers, up 5% • Dividend declared of 8.3cps, up 1% • Organic LPG growth up 27%. LPG integration on track including • Dividend Reinvestment Plan introduced to support growth with bringing forward third party distributor exit NZ government commitment to retain 51% ownership • B2B sales teams drive volumes up 17% • 12 month total shareholder return 7% ahead of NZX50 • Thermal assets providing an important role in ensuring New Zealand security of supply
1. Operating costs refers to “other operating expenses and employee benefits”, including carbon costs for trading purposes. Refer to Operating costs on slide 9 for further information. HY18 RESULT PRESENTATION 4 2. Financial Performance HY18 financial highlights — strong financial performance in variable market conditions
FINANCIAL HIGHLIGHTS $ MILLIONS HY17 HY18 200
173 156 149 129
95 82 83
37 37 43 28 23 27
EBITDAF NPAT Underlying Earnings Operating Costs Free Cash Flow Capital Expenditure Interim Dividend
+ 28% -24% + 14% + 16% + 37% + 17% + 1%
HY18 RESULT PRESENTATION 6 HY18 EBITDAF waterfall — 28% EBITDAF growth driven by strong underlying performance and FY17 acquisitions
HY18 vs HY17 EBITDAF $ MILLIONS Favourable Unfavourable
4 5 4 7 2 7 2
19
25 200
156
HY17 EBITDAF Generation Kupe Kupe LPG Pricing Lines costs Reduced Investment Other HY18 EBITDAF margin acquisition volumes and acquisition improvements retail in growth fuel prices demand opex
HY18 RESULT PRESENTATION 7 Segment performance — Strong H1 for Wholesale and Kupe with Customer prioritising growth investment
Customer Wholesale - LPG distribution business acquisition benefit offset by investment - Strong performance as Genesis’ diverse portfolio responds to market in growth conditions
EBITDAF down $6 million (9%) to $57 million EBITDAF up $24 million (29%) to $106 million Electricity sales 3,008 GWh up 3% Generation 3,870 GWh up 25% Gas sales 4.0PJ down 7% GWAP $96/MWh up 80% LPG sales 18.3 kilo tonnes up 610% Average fuel cost $36/MWh up 17% Transfer price impact $(2.5) million Transfer price impact $2.5 million
Kupe - Impact of 15% additional stake and strong production levels to support thermal plant EBITDAF up $24 million (75%) to $56 million Gas sales 6.1PJ up 61% Oil sales 241kbbl up 64% LPG sales 22.7kt up 96%
HY18 RESULT PRESENTATION 8 Operating expenses — underlying expenses down 1%, before acquisitions, investment in growth and carbon
OPERATING EXPENSES1 OPERATING EXPENSE BRIDGE $ MILLIONS $ MILLIONS Favourable Unfavourable 176 173 3 142 144 149 14 7 6 173 138 137 149
3 2 HY14 HY15 HY16 HY17 HY18 HY17 LPG Investment in Carbon Other HY18 operating acquisition growth opex costs movements operating Underlying operating expenses Carbon costs2 expenses expenses Investment in growth LPG acquisition $7 million of additional investment to support growth Operating cost efficiencies in core business, in line with market guidance, carbon for trading underlying expenses down 1% purposes up in line with increase in carbon costs 1. Operating costs refers to “other operating expenses and employee benefits”. 2. Carbon costs represent the cost of carbon used for trading purposes, offset by revenue recognised in other revenue. 3. Investment in business sales teams and rebranding. HY18 RESULT PRESENTATION 9 Cash flow — operating cash flow up 57% and free cash flow up 37% in line with EBITDAF growth
OPERATING CASH FLOW FREE CASH FLOW1 $ MILLIONS $ MILLIONS
199 129 165 163 114 95 136 127 83 92
HY14 HY15 HY16 HY17 HY18 HY14 HY15 HY16 HY17 HY18
Significantly up reflecting higher EBITDAF, reduction in coal inventory and carbon Improved free cash flow reflects operating trading units, reduced tax pre-payments performance improvement and use of pre-paid gas 1. Free cash flow represents EBITDAF less tax, interest and stay in business capital expenditure.
HY18 RESULT PRESENTATION 10 Capital expenditure — disciplined approach as capital reallocated to support growth segments
CAPITAL EXPENDITURE1 CAPITAL EXPENDITURE1
$ MILLIONS $ MILLIONS 82
24
47 44 40 8 27 58 5 44 40 39 22
FY14 FY15 FY16 FY17 FY18 YTD FY14 FY15 FY16 FY17 FY18 YTD
Wholesale Customer Kupe Technology & Digital Stay in Business Tekapo Canal Growth2 Reallocation of capital to growth areas with Continued discipline on spend a higher ROCE
1. Capital expenditure excludes M&A activities. 2. Key projects include LPG distribution investment, the Energy Project and Technology and Digital development. HY18 RESULT PRESENTATION 11 Capital structure — net debt has reduced by $52m with improving debt metrics
NET DEBT AND NET DEBT/EBITDAF SOURCES OF FUNDING 1,210 5.0 31 DECEMBER 2016 31 DECEMBER 2017 1,158 1200 4.5 100 100 966 4.0 190 1000 905 310 831 3.1 3.5 193 800 anticipated3.0 193 3.3 30 Jun18 range 2.9 2.9 2.5 600 2.6 2.5 290 2.0 400 1.5 200 1.0 425 200 240 0.5 0 0.0 Bank debt Wholesale domestic bonds FY14 FY15 FY16 FY17 HY18 FY18 Fct Capital bonds USPP Retail bonds Net debt Net debt/EBITDAF Average tenor at HY18 up 3.1 years, interest costs down 20 basis points to 5.8%, improving net debt Reduced reliance on bank debt, S&P rating to EBITDAF reaffirmed at BBB+, 15 January 2018
HY18 RESULT PRESENTATION 12 Dividends — continued growth in dividends with a 8.6% gross yield1 and outperformance of TSR relative to peers
DIVIDEND & PAYOUT HISTORY 2017 TOTAL SHAREHOLDER RETURN 83 120% 80 82 82 100% 2017 closing share price: $2.52 64 87% 87% 72% 80% 29.2% 77% 64% 50 25.1% 60% 22.0%
40%
20%
0 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec HY14 HY15 HY16 HY17 HY18 Dividends % of Free Cash Flow Genesis Peer Index NZX50
Interim dividend of 8.3cpu declared (up 1.2%), with TSR has exceeded market by 7.2% and peer index 80% imputation, representing a 8.6% gross yield1 by 4.1% in past 12 months
1. Gross yield based on closing share price as at 29 December 2017.
HY18 RESULT PRESENTATION 13 3. Operational and strategic update Customer segment highlights — growth in LPG, B2B and EOL, with NPS improving
NPS AND PROMOTER SCORE LPG SALES VOLUMES 40% PJ GE-Rolling 12M (KT) EOL-Rolling 12M (KT) ICP count 8 70,000 30% 7 60,000 6 50,000 5 20% 40,000 4 30,000 10% 3 2 20,000 0% 1 10,000 0 0
-10% NPS - Genesis 3 Month Rolling
Jul-17
Jan-17
Jun-17
Oct-17
Apr-17
Feb-17 Sep-17
Dec-17
Aug-17
Nov-17 Mar-17
Promoter - Genesis 3 Month Rolling May-17 Refreshed brand showing early signs of improved NPS Significant organic growth, new distribution platform in place
EOL CONNECTIONS TOTAL B2B VOLUME BILLED 110 Electricity Gas LPG 3,000 2,619 100 2,500 2,353 90 2,000
‘000’s 80 1,500 GWh 70 1,000 60 500
0
Jul-17
Jan-17
Jun-17
Oct-17
Apr-17
Sep-17 Feb-17
Dec-17
Aug-17
Nov-17 Mar-17 May-17 Dec-16 Dec-17 EOL, 2nd largest tier 2 retailer, > 100,000 customers, up 4% B2B segment momentum growing with 11% volume from June 2017 increase
HY18 RESULT PRESENTATION 15 Brand refresh — new Genesis brand launched focused on leading the way to a new energy future
78% 68% of New Zealanders believe of New Zealander’s the brand relaunch makes believe that the brand Genesis seem more relaunch says something innovative than other new about Genesis1 energy providers1 2 5% Customer websites launched 2% Improvement in brand Improvement in promoter ‘Top 2 Consideration’, a score whilst NPS trending lead indicator for sales positive conversions
1. Based on a representative sample of 524 energy decision makers. HY18 RESULT PRESENTATION 16 Residential — Continued progress on optimising residential segment for value
GE SEGMENT VALUE MIX1 GE RESIDENTIAL VALUE MIX1
30% 100% 90% 25% 80% 20% 70% 15% 60% 50% 10% 40% 5% 30% 20% 0% 10% segment 1 segment 2 segment 3 segment 4 segment 5 0%
Low High
Jul-17
Jan-17
Jun-17
Oct-17
Apr-17
Feb-17 Sep-17
Dec-17
Aug-17 Nov-17 Low Mar-17 Spend per month High May-17 Negative Low Medium Low Medium High High Segment share of total market Genesis share of segment
7% improvement in customer mix in past 12 months Genesis continues to target high value customers towards higher value customers
1. Source: Commissioned research & Genesis analysis.
HY18 RESULT PRESENTATION 17 Energy IQ — a significant step forward in achieving our Energy Management vision
• Agile environment delivering energy management solutions at pace • Three new features delivered, including Electricity Forecast, an exclusive Genesis Energy innovation • Services developed with customers, first in the Local Energy Project, followed by a dedicated Beta release section in My Account • Customer feedback positive, with service ratings at 3.9 out of 5, service enhancements underway
Electricity Forecast Home Comparison Energy Mix
Successful launch of Energy IQ developed with customers and now available to 75% of residential customers
HY18 RESULT PRESENTATION 18 Energy Online — 2nd largest tier 2 retailer with >100,000 connections
TIER 2 RETAILERS1 EOL GROWTH
106,506 100,492 105,000
100,000 72,577 63,411 95,000 90,000 44,289 85,000 27,229 23,372 20,156 18,882 80,000
75,000
Flick
Pulse
Jul-17
Kiwi
Bosco
Nova
Jan-17
Jun-17
Oct-17
Apr-17
Feb-17 Sep-17
Online
Dec-17
Others
Energy Energy
Aug-17
Nov-17
Mar-17
Electric
May-17
Glo-Bug Powershop Electricity Connections Gas Connections LPG Customers Electricity Gas LPG 1. Source: Electricity Authority, as at January 2018.
Significant growth in past 12 months, total customers up 5%, gas up 28%, LPG up 176%
HY18 RESULT PRESENTATION 19 LPG — significant organic growth with integration of new distribution business complete
ORGANIC GROWTH COMPOSITION LPG DISTRIBUTION EXPANSION • Expanding new distribution capability Duel LPG only to match existing customer base by investing in new depots and delivery contractors • Targeted regions contain approx.
20,000+ customers
Customer Numbers Customer
Jul-17
Jan-17
Jun-17
Oct-17
Apr-17
Feb-17 Sep-17
Dec-17
Aug-17
Nov-17
Mar-17 May-17 INTEGRATION UPDATE Activity Status
Staff • 100% migrated
Systems • Billing and distribution migrated Customers • 29,000 migrated, remaining receiving Genesis branded bills • Churn in line with forecast • Self-service ordering of bottles up from 60% to 80% Existing depots Call Centre • Fully established, 160,000 calls handled p.a. down to 120,000 New delivery locations
Brand • 23 depots, 68 vehicles, customer collateral completed • c.100,000 cylinders well advanced
HY18 RESULT PRESENTATION 20 Bad debt — 10% improvement in bad debt expected in FY18
BAD DEBT % TO REVENUE (ROLLING 12 MONTHS) 1 6% reduction in December 2016 December 2017 DSO2 for Genesis 0.44% Brand 17 16 0.42% Days Days
0.40%
0.38% Genesis Energy Online 0.36%
0.34% 69% 91% 0.32%
0.30% Drastic drop in medically dependent debt compared to
JUL-17 December 2016 due to improved
SEP-17
FEB-17
JAN-17
JUN-17
DEC-17
APR-17
OCT-17
AUG-17
NOV-17 MAY-17 MAR-17 internal processes across both brands 1. Bad debt expense refers to the net amount of uncollectible debt written off. 2. Day sales outstanding refers to how many days of sales are owing on average.
HY18 RESULT PRESENTATION 21 Generation & Wholesale segment highlights — diverse portfolio creating value in volatile market conditions
GENERATION & GWAP1 GWAP/TWAP HY17 HY18 2173 Historic 2017 1.55 1.50 1625 1697 1.42 1485 96.2 1.17 1.03 1.04 1.07 1.10 1.01 1.01 0.99 1.06 1.02 1.03 0.98 1.01 53.4 + 46.3% + 4.5% + 80.2%
Thermal Renewable GWAP $MWh Rankines Unit 5 Unit 6 Tokaanu Rangipo Waikare- Tekapo Portfolio Generation Generation moana GWh GWh Portfolio responding well in volatile market conditions Continuing to find ways to optimise portfolio
OUTAGE MANAGEMENT EMISSIONS SUMMARY Genesis Emissions Swaption Emisssions Demand HY FOF HY EAF 4.0% 95% 350 300 38 3.0% 90% 250 200 141 2.0% 85% 150 29
265 (FOF) (FOF) % 1.0% 80% 100 172
Factor (EAF) % 145
50 138 120 109
Forced Forced OutageFactor Equipment Availability 0.0% 75% Emissions Total (kt CO2) 0 HY14 HY15 HY16 HY17 HY18 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Improved outage planning increasing generation days Partly driven by swaption demand
1. GWAP is the Generation Weighted Average Price (or the price received for generation). HY18 RESULT PRESENTATION 22 Wholesale market performance — consistent results in a volatile market
GENERATION & WHOLESALE PERFORMANCE HY18
Deferred hydro generation realised, Gross margin maintained in low Unit 5 and Tekapo outages limit gross margin, Swaption demand limits long low swaption demand and profitable demand period by buying hedges high Kupe production, Rankines on, and 200 volume at high price period hedges sold in July rather than running Rankines. hydro generation sustained 10
180 9 Rankines Rankine Swaptions Spot Price GNE Gross Margin* 160 8
140 7
120 6
100 5
80 4
60 3
40 2 Weekly GWh & Average Spot Price Price Spot($/MWh Average & GWh Weekly 20 1
- - July August September October November December
* Gross margin is represented by shape only HY18 RESULT PRESENTATION 23 Rankine units supporting market during dry months — 90% of Rankine output in 2017 was bought by other retailers & spot customers
RANKINE OUTPUT GWh
250
200
150
100
50
- Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Genesis customers Other retailers/spot customers Swaptions
HY18 RESULT PRESENTATION 24 Strategic priorities help lift GWAP/TWAP ratios — active trading decisions have driven $5-7 million of extra value in 2017
1 PRICE RESPONSIVENESS VS BASE-LOAD PLANT • GWAP/TWAP ratio lift is driven by plant Rankine MW Rangipo MW NI Price
availability, water values, flexible fuel, 250 $120
spot trading and hedging tactics 200 $100 $80 • 7% improvement in ratio in past year - 150 MW $60 $/MWh c4% due to favourable market conditions, 100 $40 but c3% due to decisions driven by 50 $20
strategic priorities 0 $0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 • Portfolio with no wind or geothermal Trading Period gives us price responsive plant with SECTOR GWAP/TWAP RATIO control over dispatch of generation 1.10 1.06 • Each portfolio GWAP/TWAP per cent 1.03 1.03 improvement is worth c$2 million in gross 0.98 margin improvement per year
1. GWAP is the Generation Weighted Average Price (or the price received for generation), and TWAP is the Time Weighted Average Price of a particular Genesis Genesis Mercury Contact Meridian period. Historical 2017 2017 2017 2017 HY18 RESULT PRESENTATION 25 Kupe segment highlights — record production volumes due to acquired 15% and generation demand
GAS PRODUCTION (PJ) & PLANT UTILISATION (%) GAS SALES VOLUME (PJ)
30.00 100% 24.3 24.0 24.3 25.00 23.0 95% 6.1 20.00 90% 13.2 3.8 15.00 3.5 3.5 3.4 85% 10.00 5.00 80% - 75% FY14 FY15 FY16 FY17 YTD FY18 HY14 HY15 HY16 HY17 HY18 Gas production for Kupe plant up 8.2% on H1 FY17 Genesis gas sales up 61% on H1 FY17
OIL & LPG YIELDS BRENT CRUDE OIL PRICE USD/BBl Oil Yield LPG Yield 12 mths to Dec16 12 mths to Dec17 $70 90.0 4.5 80.0 4.0 $60
70.0 3.5 $50 60.0 3.0 $40
50.0 2.5
LPG (kt/TJ) LPG Oil (bbl/TJ) Oil 40.0 2.0 $30 30.0 1.5 $20 FY14 FY15 FY16 FY17 YTD FY18 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Genesis oil sales up 64% to 241 kbbls on H1 FY17, LPG Oil spot price up 20% in 12 months to December 2017, sales up 96% to 22.7 kt average hedge price up 3% to USD59/bbl HY18 RESULT PRESENTATION 26 Environmental and social responsibility — making a tangible difference for our people, our community and our shared natural resources
Commitment to being an inclusive and More than hectares diverse employer NZ families of forest Gender mix assisted in HY18 , supported in Whanganui, the Coromandel through Genesis’ partnership peninsula, Marlborough and Canterbury % % with curtain banks in Auckland, through an agreement with Green Growth female Wellington and Christchurch Forests Ltd that serves to diversify Genesis’ male carbon offset investments, whilst children at supporting the regeneration of native % of senior management including 92 School-gen forest in New Zealand Directors schools are female , provided with real time updates Minding the Gap of their school’s solar electricity - gender pay gap has dropped from generation Whio Bootcamp game was played % % students at 12 schools , times . to . participated in Graeme Dingle , Foundation Kiwi-can programmes in the calendar year ending December meaning more people are Genesis people ethnicities learning about whio and Identify with why they are an indicator of more than Iwi relationships in place healthy water alongside several hapu/runanga relationships within the rohe of the Company’s generation assets and offices, all of which are highly valued by Genesis. HY18 RESULT PRESENTATION 27 A coal free electricity future — Genesis believes in a coal free future 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.
HY18 RESULT PRESENTATION 28 4. Outlook Dividend reinvestment plan — to be introduced for the HY18 dividend to support growth
• To provide capital support for Genesis’ growth strategy, and provide DRP Details a cost effective way for shareholders to reinvest in Genesis’ growth Discount 2.5% strategy Dividend amount 8.3 cpu Price The volume weighted average sale • A discount of 2.5% will apply to the price, this may be amended for price over a period of five Business future dividends Days starting on the “Ex Date”, less the discount • Shareholders have the option of full, partial or no participation. If a shareholder elects to participate they will remain in the plan at the Key Dates same participation level until they elect to terminate or amend their participation rate Ex dividend date 5 April 2018 Final date to elect to participate 6 April 2018 • The New Zealand government has committed to participate to the Record date 6 April 2018 extent required to retain its 51% holding Payment and share issue date 20 April 2016 • 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
HY18 RESULT PRESENTATION 30 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. Year 2 Wholesale 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 Kupe • LPG supply/demand balance tightening with a possible move to net import early 2020’s
HY18 RESULT PRESENTATION 31 FY18 outlook — guidance refined to $350 to $360 million
• A positive start to FY18, more challenging conditions in the second half – $12 million FY18 impact of Tekapo B outage (largely weighted to second half), some benefit to be realised in FY19 – First half had significant North Island inflows – Kupe production contracts favour first half result – Increase in emissions costs in line with change in ETS obligations
• FY18 EBITDAF updated guidance range of $350 to $360 million subject to hydrological conditions, any material events, one-off expenses or other unforeseeable circumstances
• FY18 capital expenditure guidance is up to $75 million including an early Tekapo B G3 upgrade, bringing forward third party LPG distributor exit with associated depot builds and Phase 2 expenditure at Kupe
HY18 RESULT PRESENTATION 32 Appendices Financial statements
Income Statement HY18 HY17 Variance Balance Sheet HY18 FY17 Variance ($m) ($m) ($m) ($m) Revenue 1,214.5 965.3 +25.8% Cash and Cash Equivalents 40.6 27.8 Total Operating Expenses (1,015.0) (809.6) +25.4% Other Current Assets 309.5 344.5 EBITDAF 199.5 155.7 +28.1% Non-Current Assets 3,770.3 3,847.0 Depreciation, Depletion & Amortisation (103.5) (73.6) Total Assets 4,120.4 4,219.3 -2.3% Impairment of Non-Current Assets - (0.8) Total Borrowings 1,229.1 1,259.8 Fair Value Change (19.7) 1.9 Other Liabilities 978.4 977.6 Other Gains (Losses) 0.9 (1.6) Total Equity 1,912.9 1,981.9 -3.5% Earnings Before Interest & Tax 77.2 81.6 -5.4% Interest (37.4) (28.7) Adjusted Net Debt 1,163.3 1,211.5 -4.0% Tax (11.4) (15.5) Gearing 39.1% 38.9% Net Profit After Tax 28.4 37.4 -24.0% EBITDAF Interest Cover 6.9x 6.6x Earnings Per Share (cps) 2.84 3.74 -24.1% Net Debt/EBITDAF 3.0x 3.3x Stay in Business Capital Expenditure 21.6 16.8 +28.6% Cash Flow Summary HY18 HY17 Variance Free Cash Flow 129.1 94.6 +36.5% ($m) ($m) ($m) Dividends Per Share (cps) 8.3 8.2 +1.2% Net Operating Cash Flow 198.4 126.5 Dividends Declared as a % of FCF 64.3% 86.7% Net Investing Cash Flow (30.7) (29.8) Net Financing Cash Flow (155.4) 78.1 Net Increase (Decrease) in Cash 12.8 174.8 -92.7%
HY18 RESULT PRESENTATION 34 Reconciliation of EBITDAF to NPAT
Income Statement HY18 HY17 • EBITDAF is a non-GAAP item but is used as a key ($m) ($m) metric by management to monitor performance at a EBITDAF 199.5 155.7 business segment and group level Depreciation, Depletion & Amortisation (103.5) (73.6) Impairment of Non-Current Assets - (0.8) • Genesis Energy believes that reporting EBITDAF Change in Fair Value of Financial (19.7) 1.9 assists stakeholders and investors in understanding Instruments the Company’s operational performance Other Gains (Losses) 0.9 (1.6) Profit Before Net Finance Expense and 77.2 81.6 • In HY18 EBITDAF was up 28% on HY17 Income Tax Finance Revenue 0.4 0.9 • HY17 Net Profit After Tax is down 24%, materially Finance Expense (37.8) (29.6) affected by change in fair value of financial Profit Before Income Tax 39.8 52.9 instruments Income Tax Expense (11.4) (15.5) Net Profit After Tax 28.4 37.4
HY18 RESULT PRESENTATION 35 Underlying earnings
Underlying Earnings HY18 HY17 • Underlying Earnings is a non-GAAP item but is used ($m) ($m) as a key metric by management to assess underlying Net Profit After Tax 28.4 37.4 performance by adjusting for items outside Business acquisition costs - 0.8 managements control or items that relate to Change in fair value of financial 19.7 (1.9) strategic rather than operational actions instruments Impairment of non-current assets - 0.8 • Genesis Energy believes that reporting underlying Underlying Net Profit Before Tax 48.1 37.1 earnings assists stakeholders and investors in Tax expense on adjustments (5.5) 0.3 understanding the Company’s operational Underlying Earnings 42.6 37.4 performance
• In HY18 underlying earnings were up 14% on HY17
HY18 RESULT PRESENTATION 36 Debt information
GENESIS ENERGY DEBT PROFILE Debt Information HY18 FY17 Variance ($m) ($m) ($m) $m Total Debt $ 1,229.1 1,259.8 $300 Cash and Cash Equivalents $ 40.6 27.8 $250 Headline Net Debt $ 1,188.5 1,232.0 -3.5%
$200 USPP FX and FV Adjustments $ 25.2 20.5 1 $150 Adjusted Net Debt $ 1,163.3 1,211.5 -4.0%
$100 Headline Gearing 39.1% 38.9% +0.2ppts Adjusted Gearing 38.6% 38.5% +0.1ppts $50 Covenant Gearing 32.3% 32.3% Flat $0 2 FY FY FY FY FY FY FY FY FY FY FY FY Net Debt/EBITDAF 3.0x 3.3x 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2042 2047 Interest Cover 6.9x 6.6x Average Interest Rate 5.8% 6.0% Retailable Bonds Wholesale Domestic Drawn Bank Average Debt Tenure 11.0 yrs 11.4 yrs Undrawn Bank Capital Bonds USPP 1. Net debt has been adjusted for foreign currency translation and fair value movements related to USD denominated borrowings which have been fully hedged with cross currency swaps 2. EBITDAF is based on the midpoint of the guidance range provided for FY18
HY18 RESULT PRESENTATION 37 Operational highlights
Customer Key Information HY18 HY17 Variance Wholesale Key Information HY18 HY17 Variance
EBITDAF ($ millions) 57.2 62.7 (8.8%) EBITDAF ($ millions) 106.4 82.8 +28.5% Netback $80.80 $82.14 (1.6%) Renewable Generation (GWh) 1,697 1,625 +4.5% Electricity Only Customers 342,500 NA Thermal Generation (GWh) 2,173 1,485 +46.3% Gas Only Customers 18,111 NA Total Generation (GWh) 3,870 3,110 +24.5% LPG Only Customers 32,991 NA GWAP ($/MWh) 96.16 53.36 +80.2% Customers with > 1 Fuel 109,734 NA LWAP/GWAP Ratio 103% 100% +3 ppts Total Customers 503,336 NA Weighted Average Fuel Cost ($/MWh) 35.72 30.04 +16.8% Total Electricity and Gas ICP’s 607,279 621,917 (2.4%) Coal/Gas Mix (Rankines only) 63/27 30/70
Volume Weighted Average Electricity 248.52 247.66 +0.3% Kupe Key Information HY18 HY17 Variance Selling Price – Resi ($/MWh) Volume Weighted Average Electricity 216.03 213.55 +1.2% EBITDAF ($m) 55.7 31.9 +74.6% Selling Price – SME ($/MWh) Gas Sales (PJ) 6.1 3.8 +60.5% Volume Weighted Average Electricity 120.45 117.12 +2.8% Selling Price – C&I ($/MWh) Oil Production (kbbl) 277.8 195.8 +41.9% Volume Weighted Average Gas Selling 25.59 25.43 +0.6% Oil Sales (kbbl) 241.0 146.8 +64.2% Price ($/GJ) LPG Sales (PJ) 22.7 11.5 +96.3%
Customer Electricity Sales (GWh) 3,008 2,916 +3.3% Average Brent Crude Oil (USD/bbl) 57 48 +19.1% Customer Gas Sales (PJ) 4.0 4.3 (7.1%) Average Hedged Price (USD/bbl) 59 57 +3.3% Customer LPG Sales (tonnes) 18,251 2,570 +610.2%
HY18 RESULT PRESENTATION 38