For personal use only use personal For With you. For you.

GENESIS ENERGY LIMITED annual report 2019 / te pūrongo ā-tau 2019 Chairman's 2 letter

Chief Executive's 3 letter

Results 4 at a glance

Reimagining energy 6 with and for our customers

10 generation - resilience shines in tough conditions

Enabling innovation 14 through our people

17 Sustainability

Introducing the 19 Genesis School-gen Trust

Your 20 Board of Directors

Your 22 Executive team

Consolidated 24 financial statements

Independent 59 auditor’s report

Corporate 62 governance

For personal use only use personal For Director and Executive 64 employee remuneration

Statutory 68 disclosures Your Board spent considerable time this Powering toward a Overall EBITDAF¹ for the year From the year ensuring best practice governance From the sustainable future increased to $363 million. The was applied to meet all stakeholder Genesis is committed to supporting prior year NPAT² of $20 million expectations. Significant governance , Chairman Chief New Zealand's transition to a more has increased to $59 million, with activities undertaken during the year customers are now Ngā Tirohanga a te renewable energy future. We are underlying earnings increasing 16 per include: logging into their Executive partnering with Tilt Renewables on a Heamana cent to $67 million. Genesis Energy IQ >> a refresh of Board and standing Mai i te Manahautū new wind farm in South Taranaki, which apps every week. committee charters and policies will enable 250,000 tonnes of carbon to Your Company has delivered a free cash comprising the Company's Corporate be removed from the system each year. flow³ of $176 million, down on FY18 Governance Policy Framework, We are working hard to operate more Almost 150,000 customers took part due to higher, but necessary, capital including ensuring the framework is sustainably. This includes offsetting in our fifthPower Shout in May 2019, expenditure. Operating costs⁴ were consistent with the recently updated our emissions through local forestry choosing the hours of free power that down $1.2 million on FY18, reflecting NZX listing rules; and improving efficiencies across our suited them. As a result customers are the Company's strong financial >> a review of the outcomes of the power generation business. We are also choosing us and staying with us, with disciplines. A dividend of 17.05 cents conduct-related Australian Prudential actively exploring energy technologies net churn dropping from 19 to 16 per per share will be paid for the full year, Regulation Authority (APRA) review that could play a role in New Zealand’s cent. up 1 per cent on FY18, representing a into the Commonwealth Bank low-carbon future, such as hydrogen. Enabling innovation through our gross yield of 6.4 per cent⁵. of Australia and the Hayne Royal people Commission review of Australian Our School-gen programme and the Dear Shareholders, Genesis’ focus on yield plus growth is banks; and Genesis School-gen Trust are preparing At Genesis, we recognise that delivering value to shareholders, with Dear Shareholders, It was a privilege to take over from >> close oversight of important students for the future of work by innovation and delivering for customers a 12-month total shareholder return for Dame Jenny Shipley as the Chairman regulatory review and consultation This year has been a year of building helping them engage with science and is everyone’s job. We are actively FY19 of 51 per cent, which is above the of Genesis in October 2018. Along with processes, including the Electricity momentum, from Genesis' flexible technology. School-gen is an important building our culture to encourage and market (NZX) average of 17 per cent. my fellow Directors and our Genesis Price Review and the Interim Climate generation fleet, to our new products part of the Genesis partnership with empower every employee to try new team, I would like to thank you for your Strong corporate governance Change Commission report. and services. Genesis people have Emirates Team New Zealand. Together, things and enhance our processes, support of Genesis over the past year. created value for shareholders and we will deliver valuable educational Your Board is committed to our vision: products and services. Good governance matters. Our for New Zealand through innovation, resources into schools nationwide Genesis has a simple purpose: governance practices support and creativity and hard work. in the lead up to, and during, the The approach is working. Our employee enable our operations, encourage and To be customers' first choice To reimagine energy to put control America’s Cup in 2021. engagement score is now: monitor good conduct and a great for energy management Ground-breaking digital energy in our customers' hands. per cent, up a substantial culture, and support effective risk services, such as For Dairy and Leading in retail markets We have ambitions for Genesis and are our hugely popular Power Shouts, 12 points on 2018. This purpose guides the strategic management and compliance. We have enabled strong earnings proud to serve our shareholders as we demonstrate successful delivery of choices that we make and, in particular, growth in retail markets by focusing on During the year we welcomed work with management to reimagine the vision we set out for Genesis three We are seeing higher internal over the year we have focused our engaging customers through innovative Catherine Drayton and James Moulder energy. years ago to reimagine energy and alignment with our customers, greater attention on providing increased products that reward loyal customers. to the Board and farewelled Dame be customers' first choice for energy empowerment within teams, faster transparency to our customers, to Thank you again for your support of Genesis customers want efficient, Jenny Shipley and Mark Cross. management. execution, stronger customer offerings enable them to make more informed Genesis and our great team of people. easy-to-use energy services they can Catherine and James both bring and a rich flow of ideas feeding the choices about their own electricity use – resilience access via an app, online or over the extensive industry and governance pipeline of products and services to and energy related carbon footprint. phone. They also want to see that experience to your Company and Ngā mihi, in tough conditions come. We believe this transparency is key we understand and reward them for add to the skills we need as a Board The Company’s resilience has shone to supporting our ambition for a choosing and staying with Genesis. On behalf of the Executive team, I to effectively fulfill our roles and through across a year of major fuel sustainable low-carbon future. would like to thank you for your support responsibilities and govern in our constraints. Retailers across the market In a New Zealand first, we launched and interest in the Company over the dynamic environment. Both James Barbara Chapman CNZM turned to Genesis' supply from our For Dairy, a plan specifically designed Financial results last 12 months. As our business and the and Catherine have been appointed Chairman diversified fuels portfolio. Combined with and for New Zealand dairy farmers Over the year, Genesis has defended market evolve, it is also important to as members of the Audit and Risk with a well-balanced spread of fuel to give them greater control over and value with our flexible generation assets keep evolving as an Executive team, Committee. contracts, we have been able to offset value from their energy use. helping to ensure reliable, affordable so you will note I have refined and higher fuel costs to support stable and low-carbon electricity prevails. refreshed the team’s responsibilities for growing earnings. FY20, which will broaden the team’s This flexibility also enabled Genesis experience and ensure we are fit for to ensure energy security for all 1. EBITDAF: Earnings before Interest, Tax, Depreciation, Amortisation and Fair Value the road ahead. We look forward to New Zealanders during a period of Adjustments. continuing to perform strongly as we unplanned and significant natural 2. NPAT: Net Profit After Tax.

For personal use only use personal For transform Genesis to deliver for you, gas supply constraints and low hydro 3. Free cash flow: EBITDAF less cash tax paid, net interest costs and stay in business capital our shareholders and our customers. catchment inflows in the first half of expenditure. FY19. 4. Operating costs: employee benefits plus other operating expenses. Ngā mihi, Our focus on optimising our generation 5. Gross yield based on closing share price as at assets, as well as enhancing the 30 June 2019, $3.47. customer experience, enabled Genesis to continue to perform well during FY19 with year-end EBITDAF¹ in line with Marc England market guidance at $363 million. Chief Executive

2 GENESIS ANNUAL REPORT 2019 FROM THE CHAIRMAN FROM THE CHIEF EXECUTIVE GENESIS ANNUAL REPORT 2019 3 Results at a glance Ngā tīpakotanga

net profit after tax underlying (NPAT) earnings FY18 $20m FY18 $57m

CHIEF FINANCIAL OFFICER

Chris Jewell Chief Financial Officer in FY19 EBITDAF $

Over FY19 our customer- led strategy delivered FY18 $360m free cash flow meaningful growth, while FY18 $190m our flexible wholesale fuel portfolio successfully defended value in the face of unprecedented fuel shortages. EBITDAF performed well in the circumstances, total dividend with NPAT well ahead relating to FY19 result of last year due to better underlying performance and higher futures prices in the wholesale market driving cps ¹ net debt² some asset revaluations. FY18 $1,183m It is great to see our FY18 16.9cps integrated portfolio continuing to deliver on our investment proposition of a strong yield plus growth, delivered through stable growing earnings and steadily growing dividends. controllable operating expenses

$ For personal use only use personal For revenue Chief Financial Officer & Executive General Manager Strategy FY18 $2.3b in FY20 FY18 303m

1. Cents per share 2. USPP translated using CCIRS fixed rate

4 GENESIS ANNUAL REPORT 2019 RESULTS AT A GLANCE GENESIS ANNUAL REPORT 2019 5 Reimagining energy with and for our customers E hangahangaia ana te pūngao mōu, mō tātou

valuable insights for customers today, Total Customer Delivering targeted growth across We’re delivering products while generating the data that's helping Lifetime Value up retail and business us build the products of tomorrow. In a New Zealand first, and aligned to and services that give our our With You. For You. mantra, Genesis customers the knowledge LPG customer numbers have grown % by 10 per cent across the year and now launched For Dairy in May. The plan has and advice they need to get stand at over 64,000. In tandem, the been specifically designed with, and the most from their energy. volume of LPG sold has also increased for, New Zealand dairy farmers to give them greater control over, and value Over the past 12 months by nearly 10 per cent to 38,500 tonnes. from, their energy use. we have powered ahead in Today, Genesis has 27 major LPG depots nationwide. For Dairy takes account of the fact helping New Zealand homes In addition, service quality has Digital Customer that, for most dairy farms, the greatest and businesses engage with Nigel Clark improved 8 percentage points over the Interactions up volume of electricity is generally used James Magill Executive General Manager energy management. past 12 months, with 90 per cent of at off-peak and shoulder periods of Executive General Manager Customer Service & Operations in FY19 customers now receiving their gas on % the day. For Dairy graphs and forecasts Customer & Innovation in FY19 time. This has resulted in a substantial farmers’ electricity use and savings, Approximately 100,000 residential improvement in customer experience, taking into consideration seasonal and business customers are now using which is reflected in strong Net variations and usage patterns during a typical milking day on the farm. The increased adoption of Genesis’ Energy IQ app every month Promoter Scores. Considerable focus The Retail group has seen new digital technologies for updates on their energy use. The has gone into achieving this positive For Dairy is a tangible example of your the positive results from has generated large-scale app provides weather-based daily and change, which concurrently improved Residential Company delivering on its strategy the platform for growth efficiency improvements, weekly electricity forecasts, gives usage our cost to deliver by 9 per cent. Dual Fuel of targeted growth through product established over the last break-downs and shares more routine couple of years. By investing improved service and We are actively implementing digital Customers up differentiation. Farmers withFor Dairy billing updates. Additionally, 100,000 in great service experience, bolstered our ability to meet processes to improve business can make straightforward changes to customers with smart meters have as well as innovative customer needs. efficiency. Over the next 12 - 24 energy use and achieve significant cost now completed home profiles, letting % products that reward loyal months we will be using new digital savings. Increasing the number of them compare their home’s energy customers, we have given technologies to further enhance the channels and hours of the consumption with other households of Simple behaviour changes, such as customers more reasons to customer experience. Digitalised and day customers can contact a similar age and size. using a timer to ensure water heating stay with Genesis. Therefore, streamlined processes will significantly us has also improved takes place in off-peak and shoulder investors are benefitting We have now installed nearly 2,000 reduce manual paperwork and improve customer experience. periods or chillers are off in peak from reduced churn, stable energy management connections delivery efficiency. Importantly, our Cost to periods, result in more efficient on-farm customer accounts and We’ve surpassed the targets into customer sites nationwide. Each drivers' time has been freed up so they Serve energy use. improving netback margins. we set ourselves a year ago time we deploy a product that has can focus on better serving our LPG down The product also gives dairy farmers by delivering more LPG to an internet of things sensor, we are customers. Agile ways of working, more customers on time. growing our customer understanding. greater transparency by splitting out coupled with increased Our drive for innovation continues in % This is testament to ongoing This boosts our ability to deliver useful, the network charges from the energy empowerment and deeper the Wairarapa. Douglas Park School, improvements and structural personalised and timely information charges. We are very proud to have employee engagement in Ata Rangi Winery and local residents change being driven in our to support their needs. Genesis has developed an energy management our success, continue to from our Local Energy Project are LPG teams. also reviewed its metering services. product that is the first to let farming drive Genesis' innovation generating, storing, sharing and selling Following and extensive RFP process customers track, monitor and optimise engine. It’s rewarding to I’m looking forward to energy through our virtual power plant and entering into new arrangements their energy usage as an input cost to see our customer-centric applying this experience to trial. The virtual power plant aggregates with service providers, Genesis their business. strategy delivering strongly the Wholesale Operations & and coordinates the energy produced continues to improve its customer for employees, customers Kupe role going forward. or stored in homes and businesses. At understanding and is set to deliver a Doing this can generate savings of up and shareholders alike.

For personal use only use personal For times of high wholesale prices or grid New Zealand first with the roll out of to 25 per cent on annual dairy shed constraints, it can provide an alternative gas smart meters to its customers late electricity costs. For Dairy is available source of power and reward customers next year. through Fonterra’s Farm Source group, in the process. The trial will help us which exclusively services Fonterra Executive General Manager Our Bottled Gas Monitoring, Electricity understand what customers value and Executive General Manager Retail co-operative members. It has achieved Wholesale Operations & Kupe JV Monitoring and Electricity Insights how it might be scaled up for the future. Markets in FY20 outstanding uptake since launch, with in FY20 products are adding to our energy over 400 plans sold already. management connections. They deliver

6 GENESIS ANNUAL REPORT 2019 REIMAGINING ENERGY WITH AND FOR OUR CUSTOMERS REIMAGINING ENERGY WITH AND FOR OUR CUSTOMERS GENESIS ANNUAL REPORT 2019 7 Growing customer loyalty talking to an agent in person. This We are looking to the future and have Schools to benefit from our Our new Everything is Energy brand year there were over 45,000 LiveChat trialled agents working from home this energy powering Emirates Team campaign is now in market, showcasing interactions, showing the value of this year. We see clear benefits in enabling New Zealand how we partner with customers and channel, which can deliver customer customer service representatives to We are incredibly proud to be the reimagine energy together. support outside our regular call centre have greater flexibility in when and how energy behind Emirates Team contact hours. they work, and the approach allows us Genesis has seen churn for our New Zealand's 36th America’s Cup to service customers at times that best residential customers drop to 16 per Customers are also making the most of defence. As Official Energy Partner, suit them. cent, down from 19 per cent in 2018. the new service functionality available Genesis is the sole provider of Customers are choosing us and through our new integrated service electrical, gas and solar power for staying with us. Fostering loyalty and platform. Close to 120,000 customers Emirates Team New Zealand’s engagement has been a deliberate, requested call backs and over 2,700 base. Our partnership with Emirates considered strategy for Genesis. We customers chose to use our new ‘book Team New Zealand will benefit schools have focused on delivering simple, a call’ option. This lets customers be nationwide through our Genesis useful loyalty rewards that customers called back by Genesis at a pre-agreed School-gen programme. value. time that suits them. Genesis and Emirates Team In May, we held our fifthPower Shout, Additionally, 74 per cent of Genesis New Zealand will work together offering customers two hours of free customers and 82 per cent of Energy through School-gen to introduce power. Based on their regular electricity Online customers are now opting to Genesis invests in electric new STEM (science, technology, use, we were able to recommend the receive their Genesis invoices online. mobility business engineering and maths) resources and time and day when they would get Overall, savings of 27 per cent have In August 2019 Genesis invested activities for schools in the lead up to the greatest value from their Power been made on communications costs $2 million for a 40 per cent stake the defence. Members of Emirates Shout. The response to this advice-led by your Company this year. in Yoogo Share, an EV car sharing Team New Zealand and the Genesis approach was incredible, with close company aimed at supporting School-gen team will also visit schools Investment in service boosts to 150,000 customers taking up a businesses and individuals to reduce with the America’s Cup. We can’t wait profitability and loyalty Power Shout. We are also rewarding their carbon emissions. to inspire the next generation of STEM Over the past 12 months Genesis’ cost- leaders and innovators! loyalty with Fly Buys. Nearly 160,000 Yoogo Share’s experience in EV to-serve for customers has reduced by customers have opted into earning fleet management and charging “Both Emirates Team New Zealand and 7 per cent on FY18. Concurrently, bad points on their monthly Genesis bills. infrastructure, combined with Genesis’ Genesis are focused on pushing the debt has decreased. Investment in retail service customer and brand reach, will go a boundaries when it comes to technical Genesis customers have increased long way to achieving momentum in this innovations,” said Grant Dalton, Chief delivering strong returns the number of fuels they buy from us, essential and growing sector. Executive Officer of Emirates Team Real energy has gone into making it helping boost the lifetime profitability New Zealand. “Behind the scenes we easy for customers to connect with us. There is a groundswell of activity from of our customers. Our customers both rely on engineers, scientists and Digital self-service interactions have individuals, business and government recognised our ability to provide designers, who are the unsung heroes increased 41 per cent on FY18. We to support New Zealand’s emissions market-leading energy products, tools powering New Zealand homes and our have invested in both our people and reduction targets and we hope to and advice when we won the CanStar America’s Cup boats.” platforms to drive these outcomes. support that. Partnering with Yoogo Blue Dual Fuel Award in November Share enables a solution to help our Digital self-service achieves the dual 2018. customers further reduce their energy benefits of putting customers in control Pleasing performance metrics are costs and carbon emissions. of straightforward administration of not limited to the overall profitability their accounts, while allowing our team of your Company. Customer loyalty members to concentrate on higher- metrics have increased over the value service activities. year too. Genesis’ 2019 Brand We launched LiveChat this year. Promoter Score is now at 36%, up Energy Online keeps power are highly satisfied and happy to Energy Online and Genesis. This has This service allows customers to one percentage point on FY18. The brilliantly simple recommend the brand to friends and enabled cost savings, employee skills chat with us via our website and is score shows customers today are Energy Online is our challenger family following an interaction with the enhancement and strengthened the particularly helpful for those who have more willing to actively recommend brand, offering ‘brilliantly simple’, Energy Online customer care centre. service experience we offer our Energy straightforward queries around our us to friends and family. Positive shifts Online customers. competitively priced electricity and Key back-end changes have products, their accounts or joining in these scores indicate our focus natural gas. contributed to this. During 2019 Energy Genesis. LiveChat users are connected on loyalty, and innovative energy Online’s billing platform was integrated For personal use only use personal For with an online Genesis agent, bypassing management services are boosting The brand continues to perform into Gentrack, the billing system used queue wait times when calling and overall customer satisfaction with strongly and its 2019 customer numbers by Genesis. Having common systems Genesis. are up two per cent on the previous financial year. has enabled one core billing platform across both brands, dual branded Energy Online’s 52-point Interaction Net back-office processes, together with Promoter Score indicates its customers a single back-office team supporting

8 GENESIS ANNUAL REPORT 2019 REIMAGINING ENERGY WITH AND FOR OUR CUSTOMERS REIMAGINING ENERGY WITH AND FOR OUR CUSTOMERS GENESIS ANNUAL REPORT 2019 9 Electricity generation – Resilience shines in tough conditions Whakahiko - mā te kōtonga e whakawhitia te manawaroa

The Generation team also delivered a Record performance from Kupe Gas constraints and Carbon Intensity Profile significant asset lifecycle investment Kupe delivered another record year of Genesis Energy's Generation Portfolio programme to tight timeframes, of gas production in FY19, increasing variable hydrology led to enabling availability of the assets when total production by one per cent on 1,000 challenging times for many required and delivering significant last year’s record production. Kupe's in New Zealand’s energy 800 efficiency improvements. operator, Beach Energy, has focused /GWh on lowering operating costs. This has sector over the past 600 Agile planning of this programme and delivered efficiencies and cost savings 400 flexibility of resources allowed the year. Genesis has again benefitting Genesis as its joint venture 2 CO Tonnes temporary return of Huntly Rankine demonstrated resilience, as 200 partner over the past 12 months. FY00 FY05 FY10 FY15 FY19 Unit 2 to the market from planned its generation and wholesale Total Thermal storage, providing important This outcome is particularly portfolios delivered soundly. generation during periods of market noteworthy as gas production was Tracey Hickman constraints. reduced for a month and a half, as Shaun Goldsbury Executive General Manager scheduled Huntly Unit 5 outage and Executive General Manager Carbon Dioxide Emissions (kt CO2) Future-gen: powering a Generation & Wholesale in FY19 Genesis’ Rankine units again enabled statutory required maintenance at the Wholesale Markets from FY20 and Gas/ Use (PJs) at Huntly low-carbon future New Zealand to operate its 85 per Kupe production plant were carried cent renewable electricity system by Genesis is actively moving toward a 7,000 60 out, leading to a shortfall of around ensuring security of supply during lower-carbon position through new, The Wholesale Markets 6,000 50 1,000 terajoules in gas production. significant natural gas shortages from 5,000 40 innovative generation partnerships, were extremely volatile 4,000 30 such as our 20-year electricity offtake The reduced production capacity As the newest member of suppliers in the first half of this financial PJs in FY19, driven by 2 ktCO year. 3,000 20 agreement with Tilt Renewables. coincided with significant market the Executive team and numerous unplanned 2,000 10 volatility, exacerbated by production the first with Iwi ancestry Meeting demand in an environment of 1,000 0 The agreement will see Genesis and unprecedented gas FY00 FY05 FY10 FY15 FY19 constraints experienced in the largest I am proud of the role we gas shortages and variable hydrology purchasing around 450 Gigawatt hours outages or constraints and (ktCO₂) Gas Burn Coal Burn gas-producing field in New Zealand. play in ensuring a reliable, of renewable energy produced at Tilt’s low inflows into the hydro has required high levels of reliability sustainable and low-cost Waipipi Wind Farm. The wind farm is Despite scheduled maintenance Kupe catchments at different from the generation fleet. electricity market. points across the year. expected to be operational from 2021. plant availability continued to be high Engineering innovation also enabled a at 95 per cent, demonstrating the We couldn’t do what we Generation trend (Gwh) by fuel type Genesis has also joined forces with The Genesis team showed new and more flexible operating mode quality of the asset. Kupe’s contribution do without the support , and resilience and passion for for the Huntly Unit 5 Gas Turbine. Unit to Genesis’ earnings continues to be of the communities we 4,000 Z Energy to form Drylandcarbon, a the integrity of the New starts have increased this year as we significant, delivering $109 million, or operate in. The projects 3,000 limited liability partnership that will Zealand electricity market shifted from an always-on model of 30 per cent, of total EBITDAF in FY19. we deliver through our operating to moving production across see the four companies invest in the as we worked hard to ensure 2,000 LPG yield improved 10 per cent in FY19, generation sites are focused establishment of a geographically supply could be maintained different sites and locations to match while oil yields continued to decrease on working actively with our 1,000 diversified forest portfolio to sequester to our customers and other demand and resource availability. Start in line with expectations, reflecting the communities on the issues market participants. We reliability across the fleet has been very 0 carbon. FY00 FY05 FY10 FY15 FY19 natural decline in oil production. Oil that matter. achieved high asset reliability high at 99.3 per cent, a particularly Renewable Gas Coal The primary objective is to produce a prices in United States dollars increased At Genesis we take very and operational flexibility pleasing result. stable supply of forestry-generated eight per cent on average. seriously the impact we have in a year where we also New Zealand Unit (NZU) carbon Managing climate risk around us and are always successfully carried out credits, and the initiative will also Genesis is cognisant of the ongoing and balancing that with the significant life extension expand New Zealand’s national developing effects of climate change, need to ensure homes and investment in many of our forest estate. While Genesis is not along with the potential environmental businesses in New Zealand generation assets. involved in the day-to-day running of impacts and associated operational, receive the energy they need Drylandcarbon and its forests, credits I’m looking forward to taking regulatory and financial risks to the to power their lives. For personal use only use personal For gained through the partnership will some of that passion for the business. industry with me into the support Genesis in meeting its annual Retail Operations role. requirements under the New Zealand Emissions Trading Scheme.

Executive General Manager Retail Operations in FY20

10 GENESIS ANNUAL REPORT 2019 GENERATION — RESILIENCE SHINES IN TOUGH CONDITIONS GENERATION — RESILIENCE SHINES IN TOUGH CONDITIONS GENESIS ANNUAL REPORT 2019 11 We will continue to track and forecast Whanganui Iwi: Leveraging our expertise in Energy the impacts of the changing climate Genesis is a member of Te Kōpuka, Management, Generation teams are on our generation assets and make which was formed following now implementing advanced analytics generation decisions as needed based Te Awa Tupua 2014 Settlement. using production data to predict on these impacts. Te Kōpuka’s membership is comprised performance and provide early warning of Iwi, industry and recreational and of deterioration. This improves financial Genesis operates three hydro environment groups. Together, performance by reducing operational Whio: boosting a national taonga catchments across the North and Te Kōpuka members are responsible for losses, unplanned outages and Whio are a critical indicator of the South Islands. This diversity, together producing a strategy to identify issues improved maintenance efficiency. health of high-country waterways. with our operations at Huntly Power relevant to the health and wellbeing of They’re also one of New Zealand’s Station and wind generation at Hau Girls with Hi-Vis® the Whanganui River. The first rarest species, with less than 3,000 Nui, gives Genesis flexibility in where Girls with Hi-Vis is a unique initiative for Te Kōpuka hui took place in May, with birds left. Working in partnership with and how it produces electricity. Having female students in Years 10-13 aimed at Executive General Manager Tracey the Department of Conservation and these options provides some mitigation showing them a new world of career Hickman representing Genesis. We are others, Genesis is helping to ensure the around climate risk. options in infrastructure industries excited to be involved in this significant restoration of whio populations through like ours. The initiative, established by Iwi relationships workstream, which we believe is of targeted predator control activities. Connexis, our industry learning partner, As kaitiaki of the natural resources we international interest. We’re rightfully proud of what we’re all enables female students to spend a use when producing electricity, Iwi achieving: Embracing digital day on-site, hearing from Genesis We have had another relationships are valued and highly Remotely operated aerial and employees working in infrastructure phenomenally successful year, significant to Genesis. Genesis partners submersible drones are increasingly roles and trialling practical work with 714 whio breeding pairs with Iwi and hapū as we collectively being used to inspect tunnels, confined experience tasks. now protected, this is more than seek to mitigate the impacts of our spaces and underwater or elevated in Whio breeding double the number of ducks activities and enhance ecological This year Genesis hosted 34 girls from areas that formerly were inspected by pairs since 2011 breeding since our partnership integrity generally. six schools at , staff. In addition to improving safety with Genesis began in 2011. We Tokaanu Power Station and Tuai Power Supporting Tongariro Tuna: outcomes, the use of drones is proving should all be very proud of these Station in Waikaremoana. It is the third more efficient and cost-effective than achievements and recognise the consecutive year we've participated in traditional physical inspection methods. significance of this success, for the Girls with Hi-Vis programme. whio and for conservation in New Zealand.

Lou Sanson Director-General Department of Conservation Tuna, or eels, are an important food source for Iwi and an endemic aquatic species. We have expanded our Engaging the next generation energy and climate change. At Huntly The meetings were extremely valuable, existing partnership with Ngāti Hikairo A big part of delivering New Zealand’s we hosted 56 secondary students as showing that the next generation care and Ngāti Tuwharetoa to support tuna energy future is making sure we’re part of the ‘Blake Inspire’ programme, deeply about the environment and are populations and migration within the developing the energy innovators a week-long leadership development well informed about the challenges Ngāti Hikairo rohe. We recognise that of tomorrow through the Genesis adventure for environmentally focused ahead. the hydro scheme creates a physical School-gen programme. This year students. Students discussed and barrier for tuna as they migrate from we ran events with secondary school debated the issues with management rivers to the sea. We are actively students looking at how New Zealand and toured our Huntly site. collaborating with local Iwi to help might meet its target of generating 100 manually transport elvers (young eel) per cent renewable electricity. Led by upstream and help mature adult eels One student told us: For personal use only use personal For our CEO Marc England, these events downstream to enable their journey to “I really liked that we heard it from the were intended to open a dialogue with sea to spawn. A special tuna pass for CEO because it made it feel like we high school students passionate about the Whanganui intake is currently being were actually taken seriously. It also climate change and the role the energy designed. This will be in place for the shows that the changes are moving sector can play. Twenty students from 2019/2020 elver season. from the top down and that they are six schools attended our Auckland important!” event where they heard Marc and other Genesis staff discuss renewable

12 GENESIS ANNUAL REPORT 2019 GENERATION — RESILIENCE SHINES IN TOUGH CONDITIONS GENERATION — RESILIENCE SHINES IN TOUGH CONDITIONS GENESIS ANNUAL REPORT 2019 13 A new understanding of safety with the TupuToa programme this Enabling innovation and wellness year, and we have launched Te Reo Over the past year we have challenged classes for Genesis team members ourselves to look beyond physical at our Greenlane office who want to through our people safety and explore the wellbeing needs grow their Te Reo language skills and E whakamanahia ana te hiringa e mātou of our people, and today ‘keeping knowledge of te ao Māori. our people safe and well’ is one of Genesis was named as the 'On the Genesis’ five key all-Company strategic Journey' award winner at the YWCA performance priorities. How we recognise and celebrate on developing a suite of options Equal Pay Awards held in November. great performance has also pivoted to help Genesis people meet their Our mental wellbeing programme has The award recognises the focus Working for Genesis means to reflect our new ways of working. commitments and aspirations on the been hugely engaging for Genesis Genesis has brought to closing the being focused on continuous We have launched the Genesis Genies job and in life outside of work. team members, with 65 per cent gender pay gap for its employees. programme, a peer-nominated of our employee base engaging in improvement to help drive We’ve done this because enabling Nicola Richardson recognition programme that lets mental wellbeing initiatives, such as: Executive General Manager our people to succeed, perform and our business forward. People individual contributors at Genesis registering for resilience and wellbeing People & Culture grow at work means better business nominate the people and teams they talks, workshops and courses this in our teams are committed performance for Genesis. Genesis’ see actively living our behaviours of: year. Mental health advocate Mike to actively learning, growing new flexibility options take a holistic succeeding together, growing with King presented to Generation teams, with energy and delivering a approach, reflecting that every age energy and delivering a difference. enabling some of the most stoic group in the workforce has different We are actively addressing difference for our customers, Recognition is now as collaborative as members of our workforce to openly circumstances that might necessitate what skills, attributes and our ways of working. discuss and share their experiences the community and non-standard working hours or time culture Genesis people around maintaining mental wellness. environment. away from the workplace. Today, Genesis has led the way for other need to work and perform Genesis is offering buyable leave, Managing our critical risks remains large corporates in this space, with at their best as we support career breaks and phased retirement. of the highest importance to us. New ’s New Zealand business the delivery of our strategy. technology, such as drones and robots, recently adopting our practice of not We continue to evolve our Our culture unites us We have also enhanced parental are today being used by our Generation asking new hires for their previous working environments, We are seeing higher internal leave entitlements. Our parental leave teams to de-risk activities, such as salary details to remove bias and the processes and practices to alignment with our customers, package has been designed to support working at heights, in confined spaces possibility of ‘importing’ pay gaps from enable that. We’re seeing greater empowerment within teams, new mums and dads across two key other organisations. strong results, as this year’s faster execution and real growth in or in remote places. periods – the arrival of their child and in significant gains around the ability of our people to share the transitioning back to work at Genesis. This year we have introduced our Safe With you, for your community customer retention and Genesis story. To enable advocacy, In late 2018 we launched a revitalised Flex for all The new options are available to any Supplier Framework. Relationship employee engagement show. all employees can now download volunteering programme at Genesis, The energy Genesis people bring permanent employee. managers have been trained and G-Crew, our staff app, allowing Genesis dashboards created to monitor and with the tagline With you. For your to work every day helps drive Our generation sites are also Our customers and team members to log sales leads and support the ongoing, high performance community. giving every Genesis staff your Company’s sustained high implementing flexible working options. shareholders rightly expect customer feedback when they are out member one volunteer day a year. performance. We have focused of our suppliers. big things from us. This and about with family and friends or means our people need to even when they interact with strangers. The total recordable injury frequency By streamlining the process, organising rate (TRIFR) for employees and volunteer days, creating staff ‘DIY’ be highly engaged, included Staff engagement has increased 12 contractors has increased slightly volunteer days with charities they are and empowered to make the points over the past year, with our from FY18 to FY19, from 1.34 to 1.43 passionate about and encouraging right decisions as they deliver overall engagement score now sitting at injuries per 200,000 hours worked, ‘snack-size volunteering’ to allow on our energy management 71 per cent. with delivery of services to customers' part- time staff and busy staff to do vision. We have actively focused on removing premises continuing to be where the a few hours of volunteering where pain points for our people by aligning majority of incidents are occurring. they can, participation has risen business processes that embed and We have implemented action plans to dramatically. A total of 172 volunteers support our aspirational culture. reduce re-occurrence. have contributed 1,272 hours, with Genesis organising 26 volunteer days. This has involved increasing the Inclusion enables strength agility of all teams within Genesis, We are incredibly proud of our own This year has been an exceptional year enabling executive role modelling and inclusive, open workplace. Genesis for our incredible Emergency Response development of an inclusion index people self-identify with more than 50 Team. The team, supported by many

For personal use only use personal For within our engagement survey to better different nationalities. of their Genesis colleagues, raised track people’s sense of belonging. $61,000 for Leukaemia & Blood Cancer We were delighted to host five How we work has changed significantly New Zealand. The team won this year's high-performing Māori and Pasifika Tower Stair Challenge event from a in the last 12 months. Work is now interns through our involvement transparent and visual, with information field of over 90 crews. readily available for all to see. Goals are clearly defined, communicated and understood and progress is measured and shared.

14 GENESIS ANNUAL REPORT 2019 ENABLING INNOVATION THROUGH OUR PEOPLE ENABLING INNOVATION THROUGH OUR PEOPLE GENESIS ANNUAL REPORT 2019 15 It’s an outstanding result and reflects Gender diversity the team’s commitment, drive for Sustainability success and willingness to challenge 100% 4 2 19 themselves to go further and faster 75% every year. The team has placed first Kia toitū a Kenehi two years running, in the face of 50% 4 5 26 staunch national and international 25% competition. Genesis’ Martina Perez See Genesis’ full sustainability update at Casajuana was the fastest woman up 0% Board Executive Senior the tower, with many of the Genesis Officers Management www.genesisenergy.co.nz/sustainability crew placing in the top five for their age Female Male categories. Boosting velocity to enable Matthew Osborne delivery Executive General Manager Corporate Affairs, General Counsel This year has seen Genesis gain real Gender diversity - Age, gender profiles of workforce and Company Secretary momentum in what it delivers for Number of employees customers. This upward trend in 200 velocity has been achieved by aligning 150 Sustainability at Genesis internal business processes to embed is holistic and covers the and support our aspirational culture. 100 environmental, social and economic health We have implemented market-leading 50 processes in how we fund our agile of our organisation and tribe, increased agile ways of working 0 our country. Whether it’s across our non-tribe teams and MF MFMFMFMFMFMF MF sustainably powering New Under 18 18-24 25-34 35-44 45-54 55-64 65+ unknown refreshed Genesis’ Code of Conduct so Zealand, building strong communities or caring for our everyone working for us understands Grand Total: 1,187 Female 525 Male 662 our commitment to doing the right environment, the mindset is thing, in the right way with the right embedded across Genesis people. and you don’t have to look far to find people passionate Ethnicities represented - Across Genesis about the positive impact we Number of employees can have. 450 Caring for our environment We are cognisant of the As New Zealand’s largest thermal that commitment and, through our challenges that New Zealand 300 electricity generator, we are very Future-gen programme, we are actively faces as we move to a lower- aware of the role we play – and the working towards it. carbon economy. At Genesis, responsibility we have – in transitioning Asian we are proud to be able to

150 ori Other (European) Our care for the environment goes ā to a low-carbon future. That’s why M beyond emissions from generation, speak to those challenges, Other 75 Peoples Pasifika we have committed to not using any African to articulate the key role of Latin American which is why we’re calculating and then 0 NZ European Undisclosed coal to generate electricity in normal Growing the capability of Genesis reducing our overall carbon footprint. the electricity sector as an market conditions by 2025, with enabler in that context and leaders has been continuously enabled Grand Total: 1,187 This footprint takes in our own the intention to phase out coal use across 2019. All senior leaders were electricity consumption and vehicle to work with regulators and completely by 2030. Given the variable immersed in agile practices and fleet, while our focus on doing what's policy makers as we play our weather dependent nature of our tools through our bi-annual Business right sees us working actively on issues part in that transition. Graphs as at 30 June 2019 electricity sector, it won’t necessarily Leaders’ Forum. New leaders are being around water and wildlife. be a linear transition but we stand by onboarded into the Genesis way of working through our New Leaders Fast Start programme and we have implemented coaching guilds and Scope 1 and 2 emissions (tCO2) coaching support for Tribe members Genesis gender pay Scope 1 Category FY19 tCO2e For personal use only use personal For and team leaders in our Customer ACC gap now just Stationary combustion Fuel used for generation 2,491,223 Excellence and Residential Sales teams. accreditation Mobile combustion Fuel used in vehicles 860 We are developing leaders who are Retained our Fugitive emissions 196 able to drive cooperation, collaboration ACC accreditation at Total 2,492,279 and empathy for customers as we focus tertiary level (FY18 2.9%) Scope 2 on delivering the energy management Measuring the pay gap Electricity consumption* Purchased electricity 251 solutions New Zealanders need. between women and Total scope 1 and 2 2,492,530 men doing the same or *Our 100KW solar array on our Kenehi on Bryce building in Hamilton produced approximately 30% of the electricity used by that site in this financial year, saving 11,164 tCo2e. comparable work

16 GENESIS ANNUAL REPORT 2019 ENABLING INNOVATION THROUGH OUR PEOPLE SUSTAINABILITY GENESIS ANNUAL REPORT 2019 17 Building strong communities Introducing the Genesis School-gen families most at risk of energy hardship. Keeping the warmth in for For more than a decade the Genesis EnergyMate is being delivered by low-income families Genesis School-gen Trust School-gen programme has provided community-based financial mentors, Genesis has supported the Wellington E whakamōhiotia ana te Kura Whakatipu o Kenehi educational resources to support initially to 150 families in Wellington, Curtain Bank and the Christchurch teachers and schools nationwide and Rotorua and South Auckland. It Curtain Bank for almost ten years. we are well on our way to our target of supports vulnerable families by engaging with 50 per cent of schools helping cut power bills and provides In FY19 by 2020. advice around home heating, energy Wellington Curtain Bank efficiency and insulation. This initiative has provided We have enhanced our engagement builds on Genesis’ existing Vulnerable with secondary schools this year Care Package, which already delivers through the launch of new NCEA a wide range of services to support resources and have cemented our role those who are medically dependent curtains to 4,056 in primary and intermediate schools or are needing support controlling and households since 2010 schools applied for equipment in through the launch of our Crunch Time managing their energy use. the Trust's first funding round 2.0 online quiz game. Duffy Books in Homes Christchurch Curtain Bank Access to energy for all Genesis has been supporting Duffy helped over In April we joined forces with the Books in Homes for 20 years, making Electricity Retailers Association of New it our longest running community Zealand (ERANZ), the Government investment. Our funding provides , and the wider electricity sector to help $ books for students at Huntly Primary worth of STEM fund and launch EnergyMate, a free households in the ten years School and Huntly West Primary equipment gifted in-home energy literacy service to help from 2008-2018 School. in FY19

Powering New Zealand students benefitting Helping customers make Virtual power plant through the seven recipient schools to date sustainable choices The latest step in our Local Energy Genesis customers are now able to Project saw the establishment of make energy decisions based on a virtual power plant in June with an informed view of their carbon our partner Karit, a Christchurch www.genesisschoolgentrust.org.nz footprints, thanks to new functionality technology start-up. in Energy IQ. This functionality lets This initiative involves residential customers see overall carbon emissions participants in the project, along with In February 2019 Genesis established In FY19 six schools received STEM Maungatapu School principal Tane from electricity in real time, together Ata Rangi Winery and Douglas Park the independent charitable School-gen equipment packages (valued at $5,000 Bennett said the equipment would with electricity demand across the School (a Genesis School-gen solar Trust to complement the School-gen each) and a seventh school received a allow the students to extend their country. Customers can then use these school) generating, storing, sharing and programme, by providing equipment $20,000 solar package. learning about the Rangataua Harbour, insights to inform their own home selling energy through a virtual power to New Zealand schools and inspiring including water quality and sea life. energy use. Tamatea High School principal Robin plant in the South Wairarapa. students’ interest in STEM (science, Fabish says students' learning is technology, engineering and improved by ‘doing’. “We’ve received science microscopes, Customers say: Karit's Bruce Emson says: mathematics) and renewable energy. a TV monitor and a drone – all of “We’re delighted that Genesis is willing Genesis has donated $100,000 for the "It lets me see and understand what “We want to apply the technology which will make the children’s learning to trial our technology. Not only can first two rounds of funding and, from

For personal use only use personal For my individual carbon footprint is, which to real-world problems so that our tangible,” said Bennett. it reduce New Zealand’s reliance on September, Genesis customers can also really makes me think about my usage students can work together to be traditional forms of energy but it has donate via their bills. and why I should reduce it." creative, innovative collaborators who the potential to transform the electricity Together with our customers, we will can see that their skills and talents can "Well done for making this information sector by allowing consumers to be supporting New Zealand’s future make a difference to someone’s life,” available to your customers, it shows directly participate in the market.” innovators and preparing them for the said Fabish. Genesis cares about our environment future of work. and our carbon footprint."

18 GENESIS ANNUAL REPORT 2019 SUSTAINABILITY GENESIS SCHOOL-GEN TRUST GENESIS ANNUAL REPORT 2019 19 Your - Board of Directors Ko tō tātou poari

CHAIRMAN Catherine Drayton Doug McKay Tim Miles James Moulder Maury Leyland Penno Joanna Perry Paul Zealand

BCom, LLB, FCA ONZM, BA, AMP (Harvard) BA BA, BCA BE (Hons), FEng, CMInstD MNZM, MA Econ (Cantab), FCA, BSc Mech. Eng (Hons), MBA Barbara Chapman CFInstD CNZM, BCom, CMInstD Doug McKay joined the Genesis Tim Miles joined the Genesis Maury Leyland Penno joined Paul Zealand joined the Genesis Barbara joined the Genesis Board Catherine joined the Genesis James joined the Genesis Joanna Perry joined the Genesis in May 2018 and assumed the role Board in March 2019. She is a Board in 2014 and is Chairman Board in November 2016 and Board in October 2018. He is a the Genesis Board in July Board in October 2016 and is Board in 2007 and is Chair of of Chairman in October 2018. member of the Audit and Risk of the Company’s Human is a member of the Company’s member of the Audit and Risk 2016. She is a member of the a member of the Company’s Committee. Resources and Remuneration Human Resources and Committee. Company's Audit and Risk the Company’s Audit and Risk Human Resources and Barbara is a Director of NZME, Committee and is also a member Remuneration Committee and Committee and the Human Committee. Remuneration Committee and , IAG New Catherine brings extensive of the Company’s Nominations the Nominations Committee. James has strong governance Resources and Remuneration the Nominations Committee. Zealand and is the Deputy Chair governance experience to Committee. experience having held a number Committee. Joanna is a professional of The New Zealand Initiative. Genesis. She is currently Tim began his career with IBM of non-executive Board and Director, whose other Board Paul is a professional Director, Barbara also serves on the Prime the Chair of Christchurch Doug is Chairman of the Bank and later joined Data General Advisory Board positions. Maury is the Chair of The appointments currently include currently sitting on the Boards Minister’s Business Advisory International Airport Limited, as of New Zealand and Eden Park Corporation, rising to Director Education Hub and on the Oyster Property (Chair), Partners of New Zealand Refining Council and is the Chair of the well as being a Director of Beca Trust Board and has directorships of Marketing – Asia Pacific. He He was until recently Chairman steering committee of Te Hono Life Limited, Regional Facilities Company Limited and Lochard APEC CEO Summit Committee Group Limited, Southern Cross with National Australia Bank then joined Unisys Corporation of the Electricity Authority’s Movement. She has been a Auckland (Deputy Chair) and Energy. and co-Chair of the APEC Medical Care Society, Southern (NAB), IAG New Zealand Limited in various senior executive Market Development Director of Nyriad Limited. Joanna is Business Leadership Group. Cross Hospitals Limited and and Fletcher Building Limited. roles before taking up roles Wholesale Advisory Group and . Chairman of the International Paul has over 40 years’ Southern Cross Benefits Doug began his career with as the Chief Executive Officer and previously chaired the She is a Fellow of Engineering Financial Reporting Standards international experience in Barbara served as Chief Executive Limited and is a Board member Procter & Gamble, working of Vodafone New Zealand, Electricity Commission: Market New Zealand and a Chartered (IFRS) Advisory Council. the oil and gas sector. His and Managing Director of ASB in a number of roles both in the Chief Executive Officer of Member of the Institute of executive roles included Bank for seven years and has of Guardians of New Zealand Development Advisory Group. New Zealand and overseas Vodafone UK and the Vodafone Directors. Her previous Board Country Chairman of Shell New worked in a variety of financial Superannuation. Her former and subsequently worked in Group Chief Technology appointments include Zealand and Chief Executive services executive roles in New directorships include Ngai Tahu James’ previous directorships Managing Director and Chief Officer. Maury worked at Fonterra Group, and Officer of the upstream oil Zealand and Australia. She is Holdings Corporation Limited, include CO2 New Zealand Rowing New Zealand. Prior to a former Chair of Oxfam New Powerbyproxi Limited and Executive roles with Lion Nathan, Limited, Rodney Properties from 2005 until 2016, most and gas business of Origin embarking on her governance Zealand, has served on the Limited. Carter Holt Harvey, Goodman Upon returning to Limited and Bosco Connect. He recently as a member of the Energy in Australia. Through Board of Supervisors for Oxfam Fielder, Sealord and Independent New Zealand, Tim was has held executive leadership Executive team in the role of career Joanna was a partner these roles Paul developed International and was a previous Catherine’s executive Liquor where he was also Managing Director of listed positions with Mighty River Managing Director for People, at KPMG. She has also been skills in strategic business Chair of the New Zealand Equal career as a senior partner in Chairman. agricultural group PGG Power, including leading its Culture and Strategy. She has Chairman of the New Zealand management, health and Opportunities Trust. PricewaterhouseCoopers, Wrightson before taking up a business. also held leadership roles in Financial Reporting Standards safety, and environmental specialising in mergers and Doug was the inaugural Chief role as Chief Executive Officer risk and crisis management, Board and a member of the management, operational Barbara was named New Zealand acquisitions, culminated Executive of the amalgamated of Spark Digital, playing a key More recently James has been supply chain management and Securities Commission. risk and the commercial Herald’s Business Leader of the in leading that company’s Auckland Council until the end role in the transition of Spark to involved in the commercialisation for the listing of the Fonterra management of complex Year in 2017 and was named the Assurance and Advisory of 2013. become New Zealand’s leading of large datasets in New Zealand, Shareholders’ Fund. Earlier in assets. inaugural INFINZ Diversity and practices for Central and digital services provider. Europe and the United States, her career Maury worked as Inclusion Leader in 2018. Eastern Europe (excluding coupled with the development a consultant with the Boston Russia). Catherine is a Fellow Tim is a Director of UDC of a carbon asset management Consulting Group, and was Barbara was awarded a of Chartered Accountants New Finance, Nyriad Limited, business in Australia. with Team New Zealand as a Companion of the New Zealand Zealand and Australia. Chairman of Gut Cancer member of the design team Order of Merit (CNZM) for Foundation and ASX listed during the successful 1995 services to business in the 2019 company oOh! Media Limited. America’s Cup campaign. For personal use only use personal For New Year Honours List. Tim has also served as a Director of Goodman Property and Chair on the Advisory Boards of Revera Limited and CONTACT THE BOARD the CCL Group. If you have a comment or question, please email the Board on: [email protected]

20 GENESIS ANNUAL REPORT 2019 YOUR BOARD OF DIRECTORS YOUR BOARD OF DIRECTORS GENESIS ANNUAL REPORT 2019 21 Your - Executive team Ko tō tātou tira ārahi

Genesis is beginning FY20 with refreshed portfolios for James Magill is Executive General Manager Retail Markets and several senior leadership team members designed to meet Chris Jewell is Chief Financial Officer and Executive General evolving business priorities. Manager Strategy. From 1 July 2019, Tracey Hickman is the Executive General Three years into our journey to become first choice for energy Manager Retail Operations, previously known as Customer management, refreshing and energising the Executive team is and Service Operations. Nigel Clark is responsible for the new strategically important for the Company, and is an opportunity role of Executive General Manager Wholesale Operations. for each Executive to continue to develop their breadth of Shaun Goldsbury has been promoted to the new role of knowledge, while ensuring a cross-section of experience can Executive General Manager Wholesale Markets. contribute to the choices we make at the Executive table.

CHIEF EXECUTIVE, Chris Jewell James Magill Matthew Osborne Nicola Richardson Nigel Clark Shaun Goldsbury Tracey Hickman

Chief Financial Officer & Executive General Manager Executive General Manager Executive General Manager Executive General Manager Executive General Manager Executive General Manager Marc England MBA, MENG Executive General Manager Retail Markets Corporate Affairs, General Counsel People & Culture Wholesale Operations & Kupe JV Wholesale Markets Retail Operations Strategy BSc (Hons), Dip Corp Finance, MBA and Company Secretary BA (Hons) BBus (Acc), Dip Treasury BSc MA (Hons) BE (Hons), MEM, CIMA BCom, LLB Management, FCPA, FAICD, CFTP Marc joined Genesis in May (Snr) 2016. He is responsible for the James joined Genesis in Nicola joined Genesis in 2014 Shaun was appointed to the Tracey Hickman joined the leadership, strategic direction Chris joined the Genesis October 2016 as Executive Matthew joined Genesis in May as Group Manager Talent Genesis Executive team on Genesis Executive team in 2012 and management of all its Executive in 2013 as General General Manager, Customer 2018 as General Counsel and and Development. She was Nigel joined Genesis in October 1 July 2019. He joined Genesis in as General Manager Generation. business interests. Manager Portfolio Management and Innovation. From 1 July 2019 Company Secretary and was appointed to the Executive team 2016 as Executive General 2013 as an analyst and has held a From 1 July 2019 she has taken and was appointed Chief his role expanded to Executive appointed Executive General to lead the Company’s People Manager Customer and Service number of senior roles, including on a new portfolio as Executive Prior to joining Genesis, Marc Financial Officer in 2016. From General Manager, Retail Markets. Manager of Corporate Affairs in and Culture function in 2016. Operations. From 1 July 2019 that of General Manager General Manager Retail was Executive General Manager 1 July 2019 his role was expanded October that year. he has taken on a new portfolio Wholesale. Operations. New Energy at AGL Energy in to include executive general James is responsible for Nicola is responsible for the as Executive General Manager Australia and also previously management of Strategy. driving growth across the retail Matthew is responsible for our people and culture focus of the Wholesale Operations with As Executive General Manager As Executive General Manager held the role of Group Head portfolio. This includes product legal, regulatory, government Company, including human responsibility for Genesis’ Kupe Wholesale Markets Shaun is Retail Operations Tracey is of Strategy there. Marc has 12 Chris is responsible for leading development, sales, brand and relations, sustainability, resources, property and facilities Joint Venture. responsible for managing the responsible for Genesis’ customer years’ experience in the sector the Company’s strategy marketing, the development community investment, management, organisational Wholesale Market trading functions, including billing, across three markets having formulation and overseeing all of customer applications communications and company development and remuneration. In this role Nigel is responsible activities for Genesis. He is payments, inbound and outbound also worked at British Gas, a finance functions, treasury, tax, and architecture and data secretarial functions. She has a particular interest in for driving value creation from accountable for management of customer service, switching, subsidiary of Centrica Plc, in the risk, corporate finance, mergers governance. business transformation and has our electricity generation assets, our electricity, gas, coal, LPG and metering and field services. UK from 2007. and acquisitions, investor Having worked in a number led Genesis’ successful transition environmental management, our carbon portfolios. Additionally, she is accountable relations and procurement. James brings broad experience of international markets, he to agile work practices. Kupe Joint Venture Investment for Genesis’ digital solutions, Earlier in his career Marc held a in strategy, corporate finance, brings significant experience and leading safety and wellness Prior to joining Genesis Shaun information security and LPG number of Corporate Finance Chris brings significant product development and in executing business strategy Prior to joining Genesis Nicola across Genesis. Nigel brings held roles at and service and delivery operations roles at Ford Motor Company senior leadership experience originating new business and in providing specialist risk held senior leadership roles in deep executive-level energy Sport Bay of Plenty. His iwi across New Zealand. and prior to that was a Petroleum in the energy sector across opportunities to his role at management, commercial, legal the financial services, real estate sector experience to Genesis. affiliations are Ngati Porou and Engineer for Halliburton Energy the disciplines of markets, Genesis. He has international and regulatory advice. and human resource consulting He has held Managing Director Te Aitanga-a-Hauiti. Additionally, Prior to her current role Tracey led Services in the Middle East infrastructure investment and energy sector experience, having sectors in the United Kingdom, and Chief Financial Officer Shaun is a current Board member Genesis’ Generation, Wholesale and United States. Marc has asset operations. Chris sat worked in the United Kingdom, Prior to joining Genesis, Matthew Asia and New Zealand. roles within Australia’s energy of Volleyball New Zealand. and Fuels portfolio businesses. an Master of Engineering in on the Electricity Authority North America and Australia sector and is motivated by the She brings over 25 years of energy For personal use only use personal For held senior legal and governance Mechanical Engineering and governance boards and has prior to joining Genesis. roles with the Vodafone Group in challenge of transformational sector experience to the Executive European Studies and an MBA. previously worked in the the Middle East and Ireland. change to achieve growth team, having begun her career telecommunications and and sustained increases in with the Electricity Corporation of infrastructure sectors in the profitability.He served on the New Zealand, managing United Kingdom. Snowy Hydro Board as a Director large-scale environmental from 2015 to 2019. projects.

22 GENESIS ANNUAL REPORT 2019 YOUR EXECUTIVE TEAM YOUR EXECUTIVE TEAM GENESIS ANNUAL REPORT 2019 23 Consolidated comprehensive income statement Consolidated Financial Statements For the year ended 30 June 2019 Ngā Tauākī Pūtea Tōpū

For the year ended 30 June 2019 Restated* 2019 2018 Note $ million $ million Consolidated Notes to the consolidated financial Operating revenue A2, A3 2,700.7 2,302.5 Financial Statements statements Operating expenses A2 (2,337.3) (1,942.1) General information and significant matters 29 Earnings before net finance expense, income tax, depreciation, depletion, Consolidated comprehensive 25 amortisation, impairment, fair value changes and other gains and losses 363.4 360.4 income statement A. Financial performance (EBITDAF) A1. Underlying EBITDAF and underlying earnings 32 Consolidated statement of 26 A2. Segment reporting 32 Depreciation, depletion and amortisation A5 (196.5) (205.7) changes in equity A3. External revenue 35 Impairment of non-current assets B1, B3 (7.0) (0.4) A4. Other gains (losses) 36 Revaluation of generation assets B1 4.6 (48.8) Consolidated balance sheet 27 A5. Depreciation, depletion and amortisation 36 Change in fair value of financial instruments F5 (15.2) (3.1) A6. Income tax 36 Share of associate D3 (0.2) -

Consolidated cash flow statement 28 B. Operating assets Other gains (losses) A4 7.3 (0.7) B1. Property, plant and equipment 37 Profit before net finance expense and income tax 156.4 101.7 B2. Oil and gas assets 39 Finance revenue 1.0 B3. Intangible assets 40 0.6 Finance expense E6 (75.3) C. Working capital and provisions (73.9) Profit before income tax 83.1 27.4 C1. Receivables and prepayments 43 C2. Inventories 43 Income tax expense A6 (23.9) ( 7.7) C3. Payables and accruals 43 Net profit for the year 59.2 19.7 C4. Provisions 44

D. Group Structure Other comprehensive income D1. Subsidiaries and controlled entities 45 Change in cash flow hedge reserve F5 (22.9) (28.8) D2. Joint operations 45 Income tax credit relating to items above A6 6.4 8.1 D3. Share in associates 45 Total items that may be reclassified to profit or loss (16.5) (20.7) E. Funding E1. Capital management 46 Change in asset revaluation reserve B1 394.6 178.7 E2. Share capital 46 Income expense relating to items above A6 (110.5) (50.0) E3. Earnings per share 46 Total items that will not be reclassified to profit or loss 284.1 128.7 E4. Dividends 46 E5. Borrowings 47 Total other comprehensive income for the year 267.6 108.0 E6. Finance expense 48 Total comprehensive income for the year 326.8 127.7 F. Risk management

F1. Derivatives 51 Earnings per share (EPS) from operations attributable to shareholders Cents Cents F2. Price risk 52 Basic and diluted EPS E3 5.84 1.97 F3. Interest rate risk 52

F4. Foreign exchange risk 53 * The comparative information has been restated to reflect the adoption of two new accounting standards. Refer to the ‘General F5. Impact of derivatives on the income statement and equity 53 information and significant matters’ section in the notes for a reconciliation to the previously reported information. F6. Sensitivity analysis for each type of market risk 54 The above statement should be read in conjunction with the accompanying notes. F7. Liquidity risk 54

F8. Fair value measurement 55 For personal use only use personal For G. Other G1. Share-based payments 57 G2. Related party transactions 57 G3. Auditor's remuneration 58 G4. Commitments 58 G5. Contingent assets and liabilities 58 G6. Subsequent events 58

24 GENESIS ANNUAL REPORT 2019 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 20182019 25 Consolidated statement of changes in equity Consolidated balance sheet For the year ended 30 June 2019 As at 30 June 2019 Restated 2019 2018 Note $ million $ million Share- Cash and cash equivalents 61.9 49.3 based Asset Cash flow Share payments revaluation hedge Retained Receivables and prepayments C1 226.7 225.2 capital reserve reserve reserve earnings Total Inventories C2 126.0 70.3 Note $ million $ million $ million $ million $ million $ million Intangible assets B3 7.6 14.7 Balance as at 1 July 2017 539.7 1.0 987.2 (22.6) 476.6 1,981.9 Tax receivable 16.2 4.4 Restatement for adoption of new accounting - - - - (5.0) (5.0) Derivatives F1 39.9 24.8 policies* Total current assets 478.3 388.7 Restated equity as at 1 July 2017 539.7 1.0 987.2 (22.6) 471.6 1,976.9 Receivables and prepayments C1 0.9 1.7 Restated net profit for the year - - - - 19.7 19.7 Inventories C2 4.2 5.3 Property, plant and equipment B1 3,392.8 3,051.6 Other comprehensive income Oil and gas assets B2 324.1 378.4 Change in cash flow hedge reserve F5 - - - (28.8) - (28.8) Intangible assets B3 364.0 364.3 Change in asset revaluation reserve B1 - - 178.7 - - 178.7 Investments in associates D3 0.2 - Income tax (expense) credit relating to other Derivatives F1 68.0 37.5 A6 - - (50.0) 8.1 - (41.9) comprehensive income Total non-current assets 4,154.2 3,838.8 Restated total comprehensive income Total assets 4,632.5 4,227.5 - - 128.7 (20.7) 19.7 127.7 (expense) for the year Payables and accruals C3 241.5 205.7 Revaluation reserve reclassified to retained Borrowings E5 172.8 210.0 - - (0.6) - 0.6 - earnings on disposal of assets Provisions C4 11.4 10.1 Share-based payments - 0.6 - - - 0.6 Derivatives F1 70.7 36.8 Shares issued under dividend Total current liabilities 496.4 462.6 E2 19.1 - - - - 19.1 reinvestment plan Net change in treasury shares E2 (1.1) - - - - (1.1) Payables and accruals C3 0.7 0.8 Dividends E4 - - - - (166.8) (166.8) Borrowings E5 1,117.0 1,045.4 Restated balance as at 30 June 2018 557.7 1.6 1,115.3 (43.3) 325.1 1,956.4 Provisions C4 154.2 156.0 Deferred tax A6 656.0 569.4 Net profit for the year - - - - 59.2 59.2 Derivatives F1 5 7.4 36.9 Total non-current liabilities 1,985.3 1,808.5 Other comprehensive income Total liabilities 2,481.7 2,271.1 Change in cash flow hedge reserve F5 - - - (22.9) - (22.9) Change in asset revaluation reserve B1 - - 394.6 - - 394.6 Share capital E2 597.6 557.7 Income tax (expense) credit relating to other Reserves 1,553.2 1,398.7 A6 - - (110.5) 6.4 - (104.1) comprehensive income Total equity 2,150.8 1,956.4 Total comprehensive income (expense) for Total equity and liabilities 4,632.5 4,227.5 - - 284.1 (16.5) 59.2 326.8 the year

The above statement should be read in conjunction with the accompanying notes. Revaluation reserve reclassified to retained - - (1.2) - 1.2 - earnings on disposal of assets The Directors of Genesis Energy Limited authorise these financial statements for issue on behalf of the Board.

Hedging gains and losses transferred to the cost F5 - - - 0.1 - 0.1 of assets Share-based payments - 0.1 - - - 0.1 Shares issued under dividend E2 40.9 - - - - 40.9

reinvestment plan For personal use only use personal For Net change in treasury shares E2 (1.0) - - - - (1.0) Barbara Chapman Joanna Perry Dividends E4 - - - - (172.5) (172.5) Chairman of the Board Chairman of the Audit and Risk Committee Balance as at 30 June 2019 597.6 1.7 1,398.2 (59.7) 213.0 2,150.8 Date 27 August 2019 Date 27 August 2019 * Two new accounting standards have been adopted during the year. Refer to the ‘General information and significant matters’ section in the notes for a reconciliation to the previously reported information.

The above statement should be read in conjunction with the accompanying notes.

26 GENESIS ANNUAL REPORT 2019 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 20182019 27 Consolidated cash flow statement Notes to the consolidated financial statements

For the year ended 30 June 2019 Restated For the year ended 30 June 2019 2019 2018 $ million Note $ million General information and significant matters Receipts from customers 2,683.9 2,297.3 Interest received 0.6 1.0 General information Impairment of assets Payments to suppliers and related parties (2,232.9) (1,827.3) These consolidated financial statements comprise Genesis Assets that have indefinite useful lives are tested annually for Payments to employees (97.1) (88.7) Energy Limited (‘Genesis’), its subsidiaries, controlled entities impairment. Assets that are subject to depletion, depreciation or and the Group’s interests in associates and joint operations amortisation are reviewed for impairment annually or whenever Tax paid (53.1) (51.7) (together, the ‘Group’). Refer to section D for more information events or changes in circumstances indicate that the carrying Operating cash flows 301.4 330.6 on the Group structure. amount may not be recoverable. If an asset’s carrying value exceeds its recoverable amount, the difference is recognised Genesis is registered under the Companies Act 1993. It is a mixed Proceeds from disposal of property, plant and equipment 0.2 0.3 as an impairment loss in the income statement, except where ownership model company, majority owned by the ‘Crown’, Payments to associates (0.4) - the asset is carried at a revalued amount then it is treated as a bound by the requirements of the Public Finance Act 1989. revaluation decrease up to the amount previously recognised in Purchase of property, plant and equipment (65.9) (43.7) Genesis is listed on the New Zealand Stock Exchange (NZX) and the revaluation reserve. Purchase of oil and gas assets (6.9) (6.4) the Australian Securities Exchange (ASX) and has bonds listed on Purchase of intangibles (excluding emission units and deferred customer the NZX debt market. Genesis is an FMC reporting entity under Adoption of new and revised accounting standards, (19.7) (32.4) acquisition costs) the Financial Markets Conduct Act 2013. interpretations and amendments During the year the Group adopted NZ IFRS 9 Financial Investing cash flows (92.7) (82.2) The core business of the Group and activities carried out by each Instruments (‘NZ IFRS 9’) and NZ IFRS 15 Revenue from Contracts segment is disclosed in note A2. with Customers (‘NZ IFRS 15’). The impact of adopting these Proceeds from borrowings E5 240.0 - standards, using the full retrospective method, is disclosed Repayment of borrowings E5 (232.6) (9.0) Basis of preparation below. Interest paid and other finance charges (70.6) (69.1) These financial statements have been prepared: NZ IFRS 9 Financial Instruments Dividends E4 (131.6) (147.7) • In accordance with New Zealand generally accepted Key changes introduced by NZ IFRS 9 include: Acquisition of treasury shares E2 (1.3) (1.1) accounting practice ('GAAP') and comply with International 1. Changes to the classification and measurement of financial Financing cash flows (196.1) (226.9) Financial Reporting Standards (‘IFRS’) and New Zealand equivalents (‘NZ IFRS’), as appropriate for profit-oriented instruments; entities; Net increase in cash and cash equivalents 12.6 21.5 2. A new expected credit loss methodology for calculating impairment of financial assets; and Cash and cash equivalents at 1 July 49.3 27.8 • In accordance with the Financial Markets Conduct Act 2013, Cash and cash equivalents at 30 June 61.9 49.3 the Financial Reporting Act 2013 and the Companies Act 3. A new hedge accounting framework that better aligns with risk 1993; management practices. Restated 2019 2018 • Using the historical-cost convention, modified by the The only financial instruments affected by the change in Reconciliation of net profit to operating cash flows Note $ million $ million revaluation of derivatives, emission units held for trading and classification were cash and cash equivalents and receivables. Net profit for the year 59.2 19.7 generation assets; These were previously classified as 'loans and receivables' but • In New Zealand dollars rounded to the nearest 100,000; are now classified as 'measured at amortised cost'. The change did not impact the measurement of the assets. Net loss on disposal of property, plant and equipment 0.1 1.0 • On a Goods and Services Tax (‘GST’) exclusive basis with the Interest and other finance charges paid 6 7.8 69.4 exception of receivables and payables, which include GST Adoption of NZ IFRS 9 has resulted in a change in the method Items classified as investing/financing activities 6 7.9 70.4 where GST has been invoiced; used to calculate impairment of receivables. Under NZ IFRS 9 the provision is based on the lifetime credit loss expected to be • Using the accounting policies set out in the notes to incurred, whereas the previous model was based on incurred Depreciation, depletion and amortisation expense A5 196.5 205.7 the financial statements. The impact of adopting new losses. This change results in earlier recognition of credit losses. Revaluation of generation assets B1 (4.6) 48.8 and revised accounting standards, interpretations and The impact of the change is disclosed in the table on page 30. Impairment of non-current assets B1, B3 7.0 0.4 amendments is disclosed below. No adjustment was made to opening equity on transition. Change in fair value of financial instruments F5 15.2 3.1 Estimates and judgements The Group elected to adopt the hedge accounting requirements Deferred tax expense A6 (1 7.5) (45.7) In the process of preparing the financial statements of NZ IFRS 9. As a result the foreign currency basis spread Change in capital expenditure accruals (1.1) (1.7) Management makes a number of estimates and judgements components of Cross-Currency Interest Rate Swaps ('CCIRS') Change in rehabilitation and contractual arrangement provisions 3.3 10.3 based on historical experience and various other factors that are are now excluded from a number of hedge relationships with Share of associate 0.2 - reasonable under the circumstances. The table below lists the amounts recognised in a separate Cost of Hedging Reserve key estimates and judgements: Other non-cash items 0.3 1.0 ('CoHR'). The balance of the CoHR is disclosed in note F5. Total non-cash items 199.3 221.9 There were no other changes in measurement as a result of Key estimates and judgements Note Page applying NZ IFRS 9. Change in receivables and prepayments (0.7) (4.9) For personal use only use personal For Fair value of generation assets B1 38 Change in inventories (54.6) 4.2 Change in emission units on hand 7.1 (1.2) Depletion of oil and gas producing assets B2 40 Change in deferred customer acquisition costs (0.2) (0.4) Change in payables and accruals 35.7 25.5 Valuation of rehabilitation and restoration C4 44 Change in tax receivable/payable (11.8) 1.9 provisions Change in provisions (0.5) (6.5) Valuation of electricity derivatives F8 56 Movements in working capital (25.0) 18.6 Net cash inflow from operating activities 301.4 330.6 The above statement should be read in conjunction with the accompanying notes.

28 GENESIS ANNUAL REPORT 2019 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 29 Adoption of new and revised accounting standards, Accounting standards, interpretations and amendments in interpretations and amendments (continued) issue not yet effective

NZ IFRS 15 Revenue from Contracts with Customers NZ IFRS 16 Leases The adoption of NZ IFRS 15 has resulted in two changes: NZ IFRS 16 specifies how to recognise, measure and disclose 1. Reduction in the period over which account credits given to 2. FlyBuy points issued through the Group’s loyalty programme are leases. The standard provides a single lessee accounting model, customers is allocated. The previous policy was to spread considered to represent a separate performance obligation under requiring lessees to recognise right-of-use assets and lease account credits over the length of the average customer tenure the contract and, as a result, a portion of the revenue received liabilities for almost all leases. Lessor accounting remains similar where there was evidence that the return from the customer over from the contract is allocated to this obligation. The Group is to the current standard. This standard will be adopted by the the amortisation period was positive. Taking into consideration considered to act as an agent for the programme and as a result Group for the financial year ending 30 June 2020 using the recent guidance, the amortisation period has been reduced the Group recognises the net amount of the consideration retrospective method. The retrospective method will result in the to the length of the contract and as a result will not take into retained in relation to the points in operating revenue (being the 30 June 2019 information being restated when it is reported in consideration future contracts that may be entered into when difference between the consideration allocated to the points the 30 June 2020 financial statements. The estimated impact of the contract expires. The change has resulted in a decrease in and the amount paid to Loyalty NZ for the points). Previously, adopting the standard is as follows: receivables and prepayments of $5.2 million as at 30 June 2018, the programme was recognised as a cost in other operating $6.9 million ($5.0 million net of tax) was recognised in opening expenses. The change has resulted in a decrease in operating Increase/ Comprehensive income statement (decrease) retained earnings on 1 July 2017. This was offset by $1.7 million revenue and operating expenses of $3.7 million for the year For the year ended 30 June 2019 $ million ($1.2 million net of tax) being recognised in the income statement ended 30 June 2018. for the year ended 30 June 2018. Operating expenses (6.9) Depreciation, depletion and amortisation 4.5 Finance expense 4.1 Profit before income tax (1.7) As originally Comprehensive income statement presented NZ IFRS 9 NZ IFRS 15 Restated Income tax expense (0.5) For the year ended 30 June 2018 $ million $ million $ million $ million Net profit after tax (1.2) Operating revenue 2,304.5 - (2.0) 2,302.5 The change is estimated to increase EBITDAF by $6.9 million. Operating expenses (1,944.0) (1.8) 3.7 (1,942.1) The change does not change the underlying cash flows EBITDAF 360.5 (1.8) 1.7 360.4 payable under the contracts. Income tax expense ( 7.7) 0.5 (0.5) ( 7.7) Net profit after tax 19.8 (1.3) 1.2 19.7 Increase/ Total comprehensive income for the year 127.8 (1.3) 1.2 127.7 Consolidated balance sheet (decrease) As at 30 June 2019 $ million Earnings per share reduced from 1.98 cents per share to 1.97 cents per share as a result of adopting NZ IFRS 9 and NZ IFRS 15. Property, plant and equipment 60.1

As originally Borrowings 70.5 Consolidated balance sheet presented NZ IFRS 9 NZ IFRS 15 Restated Provisions (0.4) As at 30 June 2018 $ million $ million $ million $ million Deferred tax (2.8) Receivables and prepayments 233.9 (1.8) (5.2) 226.9 Retained earnings (7.2) Tax receivable 4.9 - (0.5) 4.4 Deferred tax (571.8) 0.5 1.9 (569.4) Increase/ Retained earnings (330.2) 1.3 3.8 (325.1) Consolidated cash flow statement (decrease) For the year ended 30 June 2019 $ million Operating cash flows 7.0 As originally Consolidated cash flow statement presented NZ IFRS 9 NZ IFRS 15 Restated Financing cash flows (7.0) For the year ended 30 June 2018 $ million $ million $ million $ million

Receipts from customers 2,301.0 - (3.7) 2,297.3 Determining the number of renewal periods to include in the Payments to suppliers and related parties (1,831.0) - 3.7 (1,827.3) lease term can have a material impact on the value of the right- of-use asset and lease liability. For sites with perpetual leases the number of renewal periods included in the calculation was aligned with the period used to value the assets.

All other standards, interpretations and amendments approved but not yet effective in the current year are unlikely to have a material impact on the Group and, therefore, have not been

discussed. For personal use only use personal For

30 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 31 A2. Segment reporting (continued) A. Financial performance A1. Underlying EBITDAF and underlying earnings Underlying EBITDAF and underlying earnings are performance defined in NZ IFRS and therefore are considered to be non- Inter- measures used internally to provide insight into the operating GAAP performance measures. They should not be viewed in segment Year ended 30 June 2019 Retail Wholesale Kupe Corporate items Total performance of the Group by adjusting for items that are outside isolation nor considered a substitute for measures reported in $ million $ million $ million $ million $ million $ million Management’s control or items that relate to strategic rather accordance with NZ IFRS. Underlying EBITDAF and underlying than operational decisions. Items are excluded from underlying earnings are used by many companies, however, because these Electricity 1,258.6 1,506.2 - - (530.8) 2,234.0 EBITDAF and underlying earnings when they meet the criteria measures are not defined by NZ IFRS they may not be uniformly Gas 155.4 164.2 88.0 - (143.6) 264.0 outlined in the Group’s non-GAAP financial information policy defined or calculated by all companies. Accordingly, these Petroleum (oil and LPG) 68.2 22.4 66.5 - (34.9) 122.2 (refer to www.genesisenergy.co.nz/investors/governance/ measures may not be comparable with similarly titled measures Emission unit revenue from trading - 62.4 - - - 62.4 documents for a copy of the policy). These measures are not used by other companies. Other 13.3 3.5 0.7 0.6 - 18.1 Restated Operating revenue 1,495.5 1,758.7 155.2 0.6 (709.3) 2,700.7 Reconciliation of reported net profit to underlying earnings 2019 2018 Note $ million $ million Electricity purchase, transmission and distribution (1,052.6) (917.8) - - 530.8 (1,439.6) Net profit for the year 59.2 19.7 Gas purchase, transmission and distribution (121.9) (208.4) - - 55.6 (274.7) Petroleum production, marketing and distribution (32.6) (22.8) (42.0) - 34.9 (62.5) Change in fair value of financial instruments F5 15.2 3.1 Fuel consumed - (289.6) - - 88.0 (201.6) Revaluation of generation assets B1 (4.6) 48.8 Employee benefits (44.4) (28.9) (0.1) (25.5) - (98.9) Impairment of non-current assets B1, B3 7.0 0.4 Emission unit expenses from trading - (57.3) - - - (57.3) Unrealised gain on revaluation of carbon units held for trading A4 ( 7.4) (0.2) Other operating expenses (121.5) (56.3) (4.3) (20.6) - (202.7) Adjustments before tax expense 10.2 52.1 Operating expenses (1,373.0) (1,581.1) (46.4) (46.1) 709.3 (2,337.3) Tax expense on adjustments (2.9) (14.6) Earnings before net finance expense, income tax, Adjustments after tax expense 7.3 37.5 depreciation, depletion, amortisation, impairment, 122.5 1 7 7.6 108.8 (45.5) - 363.4 Underlying earnings 66.5 57.2 fair value changes and other gains and losses (EBITDAF) Cents Cents Underlying EPS 6.56 5.71 Depreciation, depletion and amortisation (18.6) (104.6) (63.2) (10.1) - (196.5) Impairment of non-current assets (0.9) (0.3) (5.6) (0.2) - (7.0) There were no differences between reported EBITDAF and underlying EBITDAF. Revaluation of generation assets - 4.6 - - - 4.6 A2. Segment reporting Change in fair value of financial instruments - (16.7) 0.5 1.0 - (15.2) The Group reports activities under four operating segments as follows: Share of associate - (0.2) - - - (0.2) Other gains (losses) 0.1 7.4 - (0.2) - 7.3 Segment Activity Profit (loss) before net finance expense 103.1 6 7.8 40.5 (55.0) - 156.4 and income tax Retail (previously 'Customer') Supply of energy (electricity, gas and LPG) and related services to end-users. Finance revenue - - 0.1 0.5 - 0.6 Supply of electricity to the wholesale electricity market, supply of gas and LPG to wholesale Finance expense (0.2) (2.1) (3.6) (68.0) - (73.9) Wholesale customers and the Retail segment and the sale and purchase of derivatives to fix the price of Profit (loss) before income tax 102.9 65.7 3 7.0 (122.5) - 83.1 electricity.

Exploration, development and production of gas and petroleum products. Supply of gas and LPG Other segment information Kupe to the Wholesale segment and supply of light oil. Capital expenditure 22.5 48.1 9.0 11.1 - 90.7

Head-office functions, including new generation investigation and development, fuel management, information systems, human resources, finance, corporate relations, property Corporate management, legal and corporate governance. Corporate revenue is made up of property rental and miscellaneous income.

The segments are based on the different products and services offered by the Group. All segments operate in New Zealand. No operating segments have been aggregated. The Group has no individual customers that account for 10.0 per cent or more of

For personal use only use personal For the Group’s external revenue (2018: none).

32 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 33 A2. Segment reporting (continued) A3. External revenue

Inter- Year ended 30 June 2019 Retail Wholesale Kupe Corporate Total Restated segment Restated $ million $ million $ million $ million $ million Year ended 30 June 2018 retail Wholesale Kupe Corporate items total Electricity 1,258.6 967.7 - - 2,226.3 $ million $ million $ million $ million $ million $ million Gas 155.4 98.4 - - 253.8 Electricity 1,230.8 1,147.9 - - (497.6) 1,881.1 LPG 68.2 3.4 10.2 - 81.8 Gas 145.5 124.0 88.9 - (136.2) 222.2 Oil - - 38.8 - 38.8 Petroleum (oil and LPG) 63.1 26.3 69.1 - (33.4) 125.1 Emissions on fuel sales and electricity contracts* - 18.6 1.1 - 19.7 Emission unit revenue from trading - 43.7 - - - 43.7 Emission unit revenue from trading - 62.4 - - 62.4 Other 12.2 16.8 0.6 0.8 - 30.4 Other revenue 13.3 3.3 0.7 0.6 17.9 Operating revenue 1,451.6 1,358.7 158.6 0.8 (667.2) 2,302.5 Operating revenue 1,495.5 1,153.8 50.8 0.6 2,700.7

Electricity purchase, transmission and distribution (1,022.1) (603.1) - - 497.6 (1,127.6) Year ended 30 June 2018 Retail Wholesale Kupe Corporate Total Gas purchase, transmission and distribution (114.8) (158.3) - - 47.2 (225.9) $ million $ million $ million $ million $ million Petroleum production, marketing and distribution (33.6) (26.3) (38.7) - 33.4 (65.2) Electricity 1,230.8 647.1 - - 1,877.9 Fuel consumed - (267.6) - - 89.0 (178.6) Gas 145.5 72.6 - - 218.1 Employee benefits (40.8) (27.8) (0.1) (23.1) - (91.8) LPG 63.1 9.0 9.2 - 81.3 Emission unit expenses from trading - (42.0) - - - (42.0) Oil - - 42.7 - 42.7 Other operating expenses (130.6) (55.6) (4.5) (20.3) - (211.0) Emissions on fuel sales and electricity contracts* - 7.9 1.0 - 8.9 Operating expenses (1,341.9) (1,180.7) (43.3) (43.4) 667.2 (1,942.1) Emission unit revenue from trading - 43.7 - - 43.7 Earnings before net finance expense, income tax, Other revenue 12.2 16.3 0.6 0.8 29.9 depreciation, depletion, amortisation, impairment, 109.7 178.0 115.3 (42.6) - 360.4 Operating revenue 1,451.6 796.6 53.5 0.8 2,302.5 fair value changes and other gains and losses (EBITDAF) * Emissions on fuel sales and electricity contracts is not a separate performance obligation under the revenue standard. It has been reported separately as it provides useful information to finance statement users. Depreciation, depletion and amortisation (14.9) (111.9) (66.6) (12.3) - (205.7) Impairment of non-current assets (0.1) (0.3) - - - (0.4) Other revenue Revenue recognition Revaluation of generation assets - (48.8) - - - (48.8) Other revenue for the Wholesale segment in the prior year The table below provides a summary of the accounting policies includes an amount in relation to the insurance claim for Tekapo applied to material revenue streams. Change in fair value of financial instruments - (2.2) (1.5) 0.6 - (3.1) B power station outage. Other gains (losses) (0.1) (0.6) 0.3 (0.3) - (0.7) Profit (loss) before net finance expense 94.6 14.2 47.5 (54.6) - 101.7 and income tax Contract Revenue stream Nature of goods or services and revenue recognition Payment terms Finance revenue 0.1 - 0.1 0.8 - 1.0 term Finance expense (0.3) (2.3) (3.5) (69.2) - (75.3) Profit (loss) before income tax 94.4 11.9 44.1 (123.0) - 27.4 Daily supply of electricity, gas or metered LPG over the contract period. Revenue is recognised over time at the end of each day when the consumption is known. The Customers are invoiced Other segment information Electricity (retail), 0-36 amount of revenue recognised is based on the amount the monthly and payment is due gas and LPG Capital expenditure 35.8 22.0 6.8 15.8 - 80.4 months Group has the right to invoice. between two weeks to one (including emissions) month after invoice. Inter-segment revenue Individual supply of bottled LPG. Revenue is recognised Sales between segments is based on transfer prices developed when the bottle is delivered to the customer. in the context of long-term contracts. The electricity transfer price per MWh charged between Wholesale and Retail was The clearing manager $83.01 (2018: $78.97). Inter-segment gas and petroleum revenue Half hourly supply of electricity. Revenue is recognised calculates and invoices the includes the Group’s share of Kupe gas and LPG sales to Electricity (wholesale) No term over time when each trading period is concluded and the revenue. Payment is received Wholesale and gas and LPG on-sold from Wholesale to Retail. electricity generation is known. on the 20th of the following month.

Sale of emission units. Revenue is recognised at the Payment is due within five Emission unit revenue No term point in time that the emission unit is confirmed as being business days of the units from trading

transferred into the acquirer's emission unit account. being transferred. For personal use only use personal For

Payment is due no later Individual oil shipments. Revenue is recognised on the bill Oil 12 months than 30 days from the bill of of lading date. lading date.

34 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 35 A3. External revenue (continued) B. Operating assets Judgement used in determining revenue Other Where customer meters are unbilled at balance date the Group Where a discount is offered for prompt payment, revenue is property, uses judgement to determine the volume of the unbilled revenue. initially recognised net of the estimated discount. The estimated Generation Buildings and plant and Capital work The Group estimates the unbilled volume using historical discount is based on historical trends in customer payments. B1. Property, plant and equipment assets improvements equipment in progress Total consumption information. Unbilled revenue is disclosed in Note $ million $ million $ million $ million $ million note C1. Carrying value at 1 July 2017 2,903.9 1.4 61.0 37.7 3,004.0 Additions - - - 56.4 56.4 A4. Other gains (losses) Revaluation of generation assets Other gains (losses) includes a $7.4 million unrealised gain in relation to the change in fair value of carbon units held for trading as a Increase taken to revaluation reserve 178.7 - - - 178.7 result of units being acquired at below current market prices. The unrealised gain in the prior year was $0.2 million. Decrease taken to the income statement (48.8) - - - (48.8) Change in rehabilitation and contractual - - - (4.5) (4.5) A5. Depreciation, depletion and amortisation 2019 2018 arrangement assets Note $ million $ million Transfer between asset categories 2.9 - 15.3 (18.2) - Property, plant and equipment B1 111.5 118.3 Transfer to intangible assets B3 - - - (14.2) (14.2) Oil and gas assets B2 58.5 61.5 Disposals (0.8) (0.2) (0.3) - (1.3) Intangibles (excluding amortisation of deferred customer acquisition costs) B3 26.5 25.9 Impairment - - - (0.4) (0.4) 196.5 205.7 Depreciation expense A5 (109.0) - (9.3) - (118.3) Carrying value at 30 June 2018 2,926.9 1.2 66.7 56.8 3,051.6 Restated Income tax Additions - - - 63.8 63.8 A6. Income tax 2019 2018 Income tax is recognised in the income statement unless it Revaluation of generation assets $ million $ million relates to other comprehensive income. Increase taken to revaluation reserve 394.6 - - - 394.6 Current tax 41.4 53.4 Current tax Increase taken to the income statement 4.6 - - - 4.6 Deferred tax (17.5) (45.7) Current tax is the expected tax payable on taxable income for Change in rehabilitation and contractual Income tax expense 23.9 7.7 - 1.8 - 0.9 2.7 the year, using tax rates enacted or substantively enacted at arrangement assets the end of the reporting period, together with any unpaid tax or Transfer between asset categories 35.3 - 20.2 (55.5) - adjustment to tax payable in respect of previous years. Reconciliation of pre-tax Restated Transfer to intangible assets B3 - - - (11.3) (11.3) accounting profit to income tax 2019 2018 Deferred tax Disposals (0.2) - (0.1) - (0.3) expense $ million $ million Deferred tax reflects the differences between the carrying Impairment - - - (1.4) (1.4) Profit before income tax 83.1 27.4 amounts of assets and liabilities for financial reporting purposes Depreciation expense A5 (102.2) (0.7) (8.6) - (111.5) Income tax at 28% 23.3 7.7 and the amounts used for taxation purposes. The amount of Carrying value at 30 June 2019 3,259.0 2.3 78.2 53.3 3,392.8 Tax effect of adjustments: deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and Under (over) provided 1.6 (0.6) liabilities, using tax rates enacted or substantively enacted at the in prior periods Summary of cost and accumulated depreciation and impairment end of the reporting period. Non-deductible expenditure (1.0) 0.6 Fair value or cost 2,926.9 1.9 160.5 59.5 3,148.8 and other adjustments Accumulated depreciation and impairment - (0.7) (93.8) (2.7) (97.2) Income tax expense 23.9 7.7 Carrying value at 30 June 2018 2,926.9 1.2 66.7 56.8 3,051.6

Fair value or cost 3,259.0 3.7 180.0 54.7 3,497.4 Property, plant and Oil and gas Restated Restated Accumulated depreciation and impairment - (1.4) (101.8) (1.4) (104.6) Deferred tax equipment assets Provisions Intangibles other total Carrying value at 30 June 2019 3,259.0 2.3 78.2 53.3 3,392.8 $ million $ million $ million $ million $ million $ million Balance as at 1 July 2017 494.9 109.6 (46.1) 27.0 (12.2) 573.2 Recognised in the income statement (26.7) (16.6) 1.2 (2.9) (0.7) (45.7) Generation assets Recognised in other comprehensive income 50.0 - - - (8.1) 41.9 Generation assets include land, buildings and plant and A decrease in carrying amount arising on revaluation is Balance as at 30 June 2018 518.2 93.0 (44.9) 24.1 (21.0) 569.4 equipment associated with generation assets. Generation assets recognised in the income statement to the extent that it exceeds Recognised in the income statement (0.6) (14.2) (0.4) (3.7) 1.4 (17.5) are recognised in the balance sheet at fair value at the date of the balance, if any, held in the asset revaluation reserve for that valuation, less any subsequent accumulated depreciation and asset. Accumulated depreciation at the date of the revaluation Recognised in other comprehensive income 110.5 - - - (6.4) 104.1 impairment losses. The underlying assumptions used in the is eliminated against the gross carrying value so that the

Balance as at 30 June 2019 628.1 78.8 (45.3) 20.4 (26.0) 656.0 valuation are reviewed at each reporting date. Revaluations gross carrying amount after revaluation equals the revalued For personal use only use personal For are performed with sufficient regularity to ensure the carrying amount. amount does not materially differ from the estimated fair value at Subsequent additions to generation assets are recognised at balance date. cost. Cost includes the consideration given to acquire the asset Any increase in the valuation is recognised in other plus any other costs incurred in bringing the asset to the location comprehensive income, unless it reverses a revaluation and condition necessary for its intended use, including major decrease for the same asset previously recognised in the income inspection costs, resource consent, relationship agreement costs statement, in which case it is recognised in the income statement and financing costs where appropriate. to the extent it reverses a decrease previously recognised.

36 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 37 B1. Property, plant and equipment (continued) Exploration Oil and gas Other oil Capital and evaluation producing and gas work Generation assets were revalued at 30 June 2019 to the Huntly site where it is calculated by type of unit (units 1 to 4, B2. Oil and gas assets expenditure assets assets in progress Total $3,259.0 million (2018: $2,926.9 million) resulting in a net gain unit 5 and unit 6). As the key inputs into the valuation are based Note $ million $ million $ million $ million $ million on revaluation of $399.2 million (2018: $129.9 million gain). on unobservable market data, the valuation is classified as level Carrying value at 1 July 2017 12.2 400.8 19.0 2.8 434.8 The revaluation gain was principally driven by an increase in 3 in the fair value hierarchy. It requires significant judgement and Additions 0.2 2.1 - 4.5 6.8 wholesale electricity prices and a decrease in the discount rate therefore there is a range of reasonably possible assumptions as a result of the decrease in long term interest rates, partially that could be used in estimating the fair value. Transfer between asset categories - 1.2 - (1.2) - offset by higher fuel costs. The revaluation increase taken to Change in rehabilitation asset - (1.7) - - (1.7) If generation assets were carried at historical cost less the income statement partially reverses previous revaluation Depreciation and depletion expense A5 - (60.4) (1.1) - (61.5) accumulatd depreciation and accumulated impairment, the decreases for Huntly units 1 to 4. carrying amount would be approximately $1,558.4 million (2018: Carrying value at 30 June 2018 12.4 342.0 1 7.9 6.1 378.4 The valuation is based on a discounted cash flow model prepared $1,585.5 million). Additions 2.0 1.2 - 5.8 9.0 by Management, calculated by generating scheme except for Transfer between asset categories - 6.3 - (6.3) - Change in rehabilitation asset - (4.8) - - (4.8) Depreciation and depletion expense A5 - (57.4) (1.1) - (58.5) Key estimates and judgements Carrying value at 30 June 2019 14.4 287.3 16.8 5.6 324.1 The wholesale electricity price path is the key driver of The internally generated price path assumes national demand changes in the valuation. The price path is an average of the growth based on the latest available industry analysis and Genesis’ internally generated price path and price paths published by view of economic growth. Forecast hydrology is based on 83 years Summary of cost and accumulated depreciation, depletion and impairment independent third parties. A slight adjustment has been made to of historical hydrological inflow data, and new generation build Cost 30.9 756.7 25.1 6.1 818.8 the way short term prices are calculated to better reflect likely assumptions are based on public information and an assessment settlement prices. Changes in electricity demand, hydrology and on the wholesale electricity prices required to support new Accumulated depreciation, depletion and impairment (18.5) (414.7) (7.2) - (440.4) new generation build affect the price path. These factors are generation build. The internally generated price path assumes the Carrying value at 30 June 2018 12.4 342.0 1 7.9 6.1 378.4 reviewed for reasonableness by senior management personnel ongoing operation of New Zealand Aluminium Smelters Limited who are responsible for the price path used by the business. at Tiwai Point. The significant unobservable inputs in the valuation Cost 32.9 759.4 25.1 5.6 823.0 model were: Accumulated depreciation, depletion and impairment (18.5) (472.1) (8.3) - (498.9) Increase/ Carrying value at 30 June 2019 14.4 287.3 16.8 5.6 324.1 (decrease) in Inter-relationships Significant Sensitivity fair value of between unobservable unobservable inputs Method used to determine input range generation assets inputs Exploration and evaluation expenditure Other oil and gas assets Wholesale electricity Average of the internally generated price path +10% $579 million Hydrological inflows All exploration and evaluation costs, including directly Other oil and gas assets include land, buildings, storage price path and price paths published by independent third - 10% ($579) million affect generation attributable overheads and general permit activity are facilities, sales pipeline, motor vehicles and the ongoing parties. The average annual wholesale electricity volumes, as well as expensed as incurred except for the costs of drilling exploration costs of continuing to develop reserves for production. The price paths used to value generation assets range wholesale electricity wells and the costs of acquiring new interests. The costs of cost of other oil and gas assets, less any estimated residual from $91 per MWh to $127 per MWh referenced prices. drilling exploration wells are initially capitalised pending the value, is depreciated on a straight-line basis. to the Otahuhu 220KV locational node from July determination of the success of the wells. Costs are expensed 2019 to June 2039. immediately where a well does not result in a successful discovery. Costs incurred before the Group has obtained the Generation volumes In-house modelling of the wholesale electricity +10% $415 million Wholesale electricity legal rights to explore an area are expensed as incurred. market. The generation volumes used in the - 10% ($415) million prices affect the Asset category Estimated useful lives valuation range between 2,820 GWh and 6,732 amount of generation. Exploration and evaluation expenditure assets are not amortised; Buildings 50 years GWh per annum. The low end of the range relates instead, they are assessed annually for indicators of impairment. Storage facilities 25 years to periods where there is no thermal generation. Any impairment is recognised in the income statement. Once Sales pipeline 25 years commercial approval has been obtained for the development of a Discount rate Pre-tax equivalent discount rate of 9.9%. +1% ($334) million Discount rate is Motor vehicles 5 years project, the accumulated expenditure in relation to the project is - 1% $387 million independent of transferred to oil and gas producing assets. wholesale electricity prices and generation Oil and gas producing assets volumes. Oil and gas producing assets include costs associated with the production station, platform and pipeline transferred from exploration and evaluation expenditure, mining licences and major inspection costs. Depletion of oil and gas producing All other categories of property, plant and equipment Depreciation assets, excluding major inspection costs, is calculated on a All other categories of property, plant and equipment, with the Depreciation is calculated on a straight-line basis. The estimated unit-of-production basis using proved remaining reserves (‘1P’) exception of land and capital work in progress, are recognised useful lives are reviewed annually. An asset’s carrying amount estimated to be obtained from, or processed by, the specific at cost less accumulated depreciation and any accumulated is written down immediately to its recoverable amount if the asset. Major inspection costs are depreciated on a straight-line For personal use only use personal For impairment losses. Land and capital work in progress are not carrying amount is greater than its estimated recoverable basis over the period up to the next major inspection. Major depreciated. amount. inspections occur every two to 10 years depending on the nature of the work undertaken. Impairment Asset category Estimated useful lives Impairment of capital work in progress relates to expenditure Generation assets up to 85 years on new technology, Huntly unit 6 and a variety of small projects. Buildings and improvements 10 to 50 years Huntly unit 6 capital work in progress is impaired as incurred as the fair value of this unit is nil. Refer to note A2 for disclosure of Other plant and equipment 3 to 50 years impairment by segment.

38 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 39 B2. Oil and gas assets (continued) B3. Intangible assets (continued)

Goodwill Retail – LPG Key estimates and judgements Goodwill represents the excess of the cost of a business The goodwill associated with LPG relates to the acquisition Proved reserves (‘1P’) are the estimated quantities of oil and known as volumetrics, has been used to estimate the size and acquisition over the fair value of the Group’s share of the net of the LPG business from Nova Energy on 1 June 2017. The gas that geological and engineering data demonstrates with recoverability of the reserve. There are high levels of uncertainty identifiable assets, liabilities and contingent liabilities at the date impairment test is based on an estimated discounted cash flow reasonable certainty to be recoverable in future years from in terms of accessibility of reserves through sealing faults and of acquisition. Goodwill is assessed as having an indefinite useful analysis (fair value less disposal costs) using ten years of forecast known reservoirs, under existing economic and operating pressure support. A reduction of 10 per cent in these reserves life and is not amortised but is subject to impairment testing information. Cash flows beyond the forecast period are based conditions. Proved reserves (‘1P’) are defined as those that have would impact depletion charges going forward by approximately at each reporting date or whenever there are indications of on an EBITDAF multiple of 7.5x (2018: 7.5x). The estimated future a 90 per cent likelihood of being delivered. Proved reserves $5.6 million per annum at current production rates. The table impairment. For the purpose of impairment testing, goodwill has cash flow projections are discounted using a pre-tax equivalent used to deplete oil and gas producing assets are reviewed below presents the remaining Kupe oil and gas field reserves in been allocated to the following cash-generating units (‘CGU’): discount rate of 9.9 per cent (2018: 10.4 per cent). The forecast annually. Because the geology of the Kupe oil and gas field Peta joule equivalents (‘PJe’) of which the Group has a 46.0 per takes into consideration both the acquired and existing LPG subsurface cannot be examined directly, an indirect technique, cent interest (2018: 46.0 per cent). Goodwill by CGU 2019 2018 business, as the assets of the acquired business are used to $ million $ million service the pre-acquisition LPG customers. Any reasonably Proved reserves (‘1P’) Proved and probable reserves (‘2P’) Retail – electricity and gas 102.6 102.6 possible change in key assumptions on which the recoverable 2019 2018 2019 2018 amount is based is not expected to cause the carrying value of Retail – LPG 112.6 112.6 PJe PJe PJe PJe the goodwill to exceed its recoverable amount. As the valuation Kupe 13.2 13.2 Opening remaining field reserves at 1 July 209.8 250.5 351.1 373.1 is based on inputs that are not based on observable market data Change in reserve estimate 15.0 (4.5) 4.6 14.2 Total goodwill 228.4 228.4 the valuation is classified as level three in the fair value hierarchy. Production (36.7) (36.2) (36.7) (36.2) Closing remaining field reserves at 30 June 188.1 209.8 319.0 351.1 Retail – electricity and gas Kupe The goodwill associated with the electricity and gas business The goodwill associated with Kupe relates to the acquisition of Developed 93.3 126.9 126.5 163.8 mainly relates to the acquisition of NGC electricity and gas the Kupe subsidiaries from New Zealand Oil and Gas Limited business in 2002 and 2003. The impairment test is based on (‘NZOG’) on 1 January 2017. The impairment test is based on Undeveloped 94.8 82.9 192.5 187.3 an estimated discounted cash flow analysis (value in use). an estimated discounted cash flow analysis (value in use). The Closing remaining field reserves at 30 June 188.1 209.8 319.0 351.1 Estimated future cash flow projections are based on the Group’s estimated future cash flow projections are based on proved Further investment will be required to access the undeveloped field reserves disclosed above. five-year business plan for the CGU. Cash flows beyond the five- and probable reserves (‘2P’), as disclosed in note B2. The pre- year business plan are extrapolated using a 1.0 per cent year- tax equivalent discount rate was 9.9 per cent (2018: 10.4 per on-year growth rate (2018: 1.0 per cent). The estimated future cent). Any reasonably possible change in key assumptions on Deferred cash flow projections are discounted using a pre-tax equivalent which the recoverable amount is based is not expected to cause Emission customer discount rate of 9.9 percent (2018: 10.4 per cent). Any reasonably the carrying value of the goodwill to exceed its recoverable units held Contractual acquisition possible change in key assumptions on which the recoverable amount. B3. Intangible assets Goodwill Software for own use arrangements costs Total amount is based is not expected to cause the carrying value of Note $ million $ million $ million $ million $ million $ million the goodwill to exceed its recoverable amount. Carrying value at 1 July 2017 228.4 28.3 13.5 96.1 5.2 371.5 Additions - 17.2 14.8 0.4 5.5 37.9 Transfer from property, plant and equipment B1 - 14.2 - - - 14.2 Key assumptions in the impairment tests for electricity and gas and LPG were: Disposal or surrender - - (13.6) - (0.5) (14.1) Assumptions Method of determination Amortisation expense A5 - (15.3) - (10.6) - (25.9) Review of actual customer numbers and historical data regarding movements in customer Amortisation expense included in other Customer numbers and - - - - (4.6) (4.6) numbers (the historical analysis is considered against expected market trends and competition for operating expenditure customer churn customers). Carrying value at 30 June 2018 228.4 44.4 14.7 85.9 5.6 379.0 Gross margin Additions - 17.9 27.9 2.4 4.8 53.0 Review of actual gross margins and consideration of expected market movements and impacts. (electricity and gas) Transfer from property, plant and equipment B1 - 11.3 - - - 11.3 Disposal or surrender* - - (35.0) - - (35.0) EBITDAF (LPG) Review of actual EBITDAF and consideration of expected market movements and impacts. Impairment - - - (5.6) - (5.6) Amortisation expense A5 - (16.4) - (10.1) - (26.5) Cost to serve Review of actual costs to serve and consideration of expected future costs. Amortisation expense included in other - - - - (4.6) (4.6) operating expenditure Carrying value at 30 June 2019 228.4 57.2 7.6 72.6 5.8 371.6

* The disposal or surrender of emission units held for own use includes a $12.8m transfer to the 'held for trading' account.

Summary of cost and accumulated amortisation and impairment

For personal use only use personal For Cost 228.4 193.9 14.7 101.2 13.7 551.9 Accumulated amortisation and impairment - (149.5) - (15.3) (8.1) (172.9) Carrying value at 30 June 2018 228.4 44.4 14.7 85.9 5.6 379.0

Cost 228.4 225.8 7.6 102.5 18.5 582.8 Accumulated amortisation and impairment - (168.6) - (29.9) (12.7) (211.2) Carrying value at 30 June 2019 228.4 57.2 7.6 72.6 5.8 371.6

The current portion of intangible assets disclosed in the balance sheet relates to emission units held for own use. All other intangible assets are non-current.

40 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 41 B3. Intangible assets (continued) C. Working capital and provisions Software Fuel, petroleum, consumables and spare parts Software are assets with finite lives. These assets are recognised Amortisation of customer contracts and relationships related to Restated C1. Receivables and prepayments Fuel, petroleum, consumables and spare parts are recognised at cost less accumulated amortisation and impairment losses. the LPG business are recognised in the income statement on a 2019 2018 $ million $ million at the lower of cost and net realisable value. Cost is determined Amortisation is recognised in the income statement on a diminishing-value basis over the estimated life of the contract or using the weighted average cost basis, which includes straight-line basis over the estimated useful life of the asset relationship to reflect the likely churn of customers. The majority Trade receivables 99.6 104.8 expenditure incurred in bringing the inventories to their present from the date it is available for use. The estimated useful life is of the assets have 50 year lives with one contract having a five Accrued revenue 97.8 94.3 location and condition, including shipping and handling. Net between one and ten years. year life. Expected credit loss provision ( 7.4) ( 7.8) realisable value is the estimated selling price in the ordinary Emission units held for own use Impairment of customer contracts and relationships relates to a Deferred customer account credits 5.5 6.2 course of business less the estimated costs necessary to make Emission units held for own use are used to settle the Group’s change in the term of a contract. Total 195.5 197.5 the sale. emission obligation. The units are initially recognised at fair value Emission units receivable 9.9 2.7 Sponsorship contracts Fuel inventories mainly consist of coal used in electricity and are not revalued. As the units do not have an expiry date Sponsorship contracts are assets with finite lives. These assets Other receivables 8.0 13.6 production. Fuel inventories (excluding natural gas) expensed they have an indefinite useful life. The units are not amortised are recognised at cost less accumulated amortisation and Prepayments 14.2 13.1 during the year amounted to $101.0 million (2018: $43.6 million). but are subject to impairment testing. impairment losses. Amortisation is recognised in the income Total 227.6 226.9 Petroleum products consist of LPG and light crude oil held for Contractual arrangements statement on a straight-line basis over the estimated useful life resale produced from the Kupe production facility. Petroleum Contractual arrangements include customer contracts and of the asset from the date it is available for use. The useful life is Current 226.7 225.2 products expensed during the year amounted to $26.9 million relationships acquired through business acquisitions and based on the contract period, which ranges between one and Non-current 0.9 1.7 (2018: $26.0 million). sponsorship contracts. 15 years. Total 227.6 226.9 Consumables and spare parts are held to service or repair Customer contracts and relationships Deferred customer acquisition costs generating assets. Consumables and spare parts relating to Customer contracts and relationships are assets with finite Customer acquisition costs that are directly attributable to Trade receivables and accruals Huntly unit 6 are impaired when incurred, as the fair value of this lives. These assets are recognised at cost less accumulated securing a particular customer contract are capitalised and Trade receivables and accruals are initially recognised at fair unit is nil. amortisation and impairment losses. amortised over the length of the average customer tenure (30 value and are subsequently measured at amortised cost. Trade months). Amortisation of these costs is included within operating receivables and accrued revenue, which are known to be Emission units held for trading Amortisation of customer contracts and relationships related expenditure. uncollectable, are written off. Emission units held for trading are measured at fair value. to Kupe are recognised in the income statement on a units-of- Changes in the fair value are recognised in the income statement use basis, using proved remaining reserves (‘1P’) expected to be Total bad debts written off during the year was $6.4 million within other gains (losses). The fair value is determined using the obtained over the contract period. Remaining reserves used in (2018: $8.0 million). OM Financial forward curve. As the fair value is calculated using the calculations range from 164.7 to 188.1 PJe (2018: 183.3 to 213.8 inputs that are not quoted prices, the units are classified as level PJe). Refer to note B2 for further information on the reserves Expected credit loss provision two in the fair value hierarchy. Refer to note F8 for an overview of estimate. The expected credit loss provision is calculated using the the fair value hierarchy. simplified approach, which takes into account the lifetime expected credit loss on trade receivables and accrued revenue. C3. Payables and accruals 2019 2018 The provision is based on the following matrix: $ million $ million Trade payables and accruals 200.1 189.2 Class of receivable Expected loss rate Employee benefits 8.9 7.5 Trade receivables 0.76% of revenue Emission obligations 33.2 9.8 Trade receivables referred to 85% of the receivable balance Total 242.2 206.5 a collection agency

Unoccupier trade receivables 100% of the receivable balance Current 241.5 205.7 Deferred customer account credits Non-current 0.7 0.8 Account credits given to customers are included in the Total 242.2 206.5 measurement of revenue. The account credit is spread over the term of the customer contract. Trade payables and accruals Trade payables and accruals are recognised when the Group becomes obligated to make future payments, resulting from the C2. Inventories 2019 2018 purchase of goods or services, and are subsequently carried at $ million $ million amortised cost. Fuel 76.7 39.7 Employee benefits Petroleum products 1.6 1.1 A liability for employee benefits (wages and salaries, annual and Consumables and spare parts 27.5 27.5 long-service leave and employee incentives) is recognised when Emission units held for trading 24.4 7.3 it is probable that settlement will be required and the amount is Total 130.2 75.6 capable of being measured reliably. Provisions made in respect of employee benefits are measured using the remuneration rate

For personal use only use personal For expected to apply at the time of settlement. Current 126.0 70.3 Non-current 4.2 5.3 Emission obligations Emission obligations are recognised as a liability when the Total 130.2 75.6 Groups incurs the emission obligation. Emission units payable to third parties are recognised at the average cost of emission units on hand, up to the amount of units on hand at the recognition date. Where the emission obligation exceeds the level of units on hand, the excess obligation is measured at the contract price where forward contracts exist or the market price for any obligation not covered by units on hand or forward contracts.

42 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 43 D. Group Structure Contractual Rehabilitation Other C4. Provisions arrangements and restoration provisions Total D1. Subsidiaries and controlled entities Note $ million $ million $ million $ million The consolidated financial statements include Genesis, its Balance at 1 July 2017 56.4 110.3 5.9 172.6 subsidiaries and controlled entities listed below. The two Trusts Created 0.3 0.2 0.1 0.6 have been consolidated into the Group on the basis that Genesis determined how the Trusts were designed and how they operate, Released (3.3) (2.3) (0.1) (5.7) Genesis controls the financing and investing activities of the Used (5.1) (0.4) (1.8) (7.3) Trusts and the Trusts are dependent on funding from Genesis. Time value of money adjustment E6 1.8 4.0 0.1 5.9 Balance at 30 June 2018 50.1 111.8 4.2 166.1 Interest held Created 4.0 1.8 - 5.8 Place of 2019 2018 Released - (5.8) (1.3) (7.1) Name of entity Principal activity incorporation % % Used (3.9) (0.1) (1.3) (5.3) Kupe Venture Limited Joint venture holding company New Zealand 100 100 Time value of money adjustment E6 1.6 4.5 - 6.1 Genesis Energy Insurance Pte Limited Captive insurance company Singapore 100 100 Balance at 30 June 2019 51.8 112.2 1.6 165.6 Genesis Energy Talent Retention Plan Trust Trust New Zealand - - Genesis Energy Limited Executive Long-term Incentive Plan Trust Trust New Zealand - - Current 6.6 1.3 2.2 10.1 All entities have 30 June balance dates. Non-current 43.5 110.5 2.0 156.0 As at 30 June 2018 50.1 111.8 4.2 166.1

D2. Joint operations D3. Share in associates Current 8.2 2.5 0.7 11.4 The Group has a 46.0 per cent interest in the Kupe production During the year Genesis entered into a limited liability Non-current 43.6 109.7 0.9 154.2 facility and Petroleum Mining Permit 38146 held by the Kupe partnership with three other investors to establish a As at 30 June 2019 51.8 112.2 1.6 165.6 Joint Venture (2018: 46.0 per cent). The principal activity of geographically diverse forest portfolio. The objective of entering the Kupe Joint Venture is petroleum production and sales. The into the arrangement is to provide the Group with a stable Joint Venture is unincorporated and operates in New Zealand. supply of forestry-generated emission units. The investment The Group is considered to share joint control based on the in DrylandCarbon One Limited Partnership is accounted for Contractual arrangements Key estimates and judgements contractual arrangements between the Group and other joint using the equity method. The Group’s share in DrylandCarbon Contractual arrangements provisions relate to relationship and The key assumption that could have a material impact on the operators that state unanimous decision-making is required for One Limited Partnership profit/loss is disclosed in the income sponsorship agreements with various parties. The provisions Huntly ash ponds rehabilitation estimate relates to the extent of relevant activities that most significantly impact the returns of statement. represents the present value of the best estimate of cash flows rehabilitation work required. The current assumption is that all the joint operation. required to settle the Group’s obligations under the agreements. the ash would be removed from the ponds but if some of the ash The timing of the outflows is expected to occur over the next was capped in situ, the provision could decrease by $6.7 million. The Joint Venture is classified as a joint operation under NZ 20 years. The rehabilitation work on the ash ponds is estimated to be IFRS 11 Joint Arrangements. The Group’s share of revenue, completed within the next 14 years. expenditure, assets and liabilities is included in the Group financial statements on a proportionate line-by-line basis. The Rehabilitation and restoration The key assumptions that could have a material impact on operating results of the Kupe Joint Venture are included in The majority of this provision relates to the remediation of the the Kupe production facility rehabilitation estimate relate to the Kupe segment in note A2 and the Group’s share of capital Huntly ash ponds and the Kupe production facility. The provision foreign exchange rates, mobilisation and demobilisation costs expenditure commitments relating to joint operations is represents the present value of the Group’s best estimate of for rig and offshore supply vessel and regulatory requirements disclosed in note G4. future expenditure to be incurred to remediate the sites at in relation to the removal of the subsea pipeline. The majority balance date. Key assumptions include: an estimate of when the of costs are based in United States dollars and, therefore, are rehabilitation and restoration is likely to take place, the possible sensitive to fluctuations in foreign exchange rates. If the foreign remediation alternatives available, the expected expenditures exchange rate were to decrease by 10 per cent the provision attached to each alternative and the foreign currency exchange would increase by $10.6 million. Given the equipment required rate. to complete the rehabilitation comes from overseas, the mobilisation and demobilisation costs can fluctuate significantly There is no provision for the remediation of the Huntly depending on the volume of work the contractor has nearby at generation site because the Group has the right to lease the site the time the rehabilitation is required to be completed. The full in perpetuity, there is no fixed or planned termination date for cost of mobilisation and demobilisation has been provided for the Huntly lease and the site remains a key electricity generation given the uncertainty around the ability to share these costs site for the Group. The lease of the site is independent of with other entities. If the costs could be shared with other decisions around the retirement of Huntly units 1 to 4, which are entities the provision would decrease by between $9.9 million planned to be available to the electricity market until such time and $19.9 million. The provision is based on the removal of the they are uneconomic to run. There may be costs and recoveries shore section of the subsea pipeline. The remaining pipeline associated with retiring Huntly units 1 to 4 but these cannot be

For personal use only use personal For will be flushed and left in situ. If all of the pipeline needed to be reliably estimated at this time. removed, the cost would increase the provision by $16.4 million. The rehabilitation is estimated to be completed in approximately 12 years.

44 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 45 E. Funding Weighted average E1. Capital management E5. Borrowings effective 2019 2018 Analysis of borrowings 2019 2018 The Group manages its capital to ensure that each entity in Under the Group’s debt funding facilities, the Group has given interest rate % $ million $ million $ million $ million the Group will be able to continue as a going concern while undertakings that the ratio of debt to equity will not exceed Revolving credit and Money market 44.4 - Floating 154.5 187.5 maximising the return to shareholders through the appropriate a prescribed level and the interest cover will not be below a money market Revolving credit drawn down 110.0 187.0 balance of debt and equity. This is achieved by ensuring that prescribed level. For the purpose of these undertakings the Term loan facility 4.6% 30.0 30.0 Accrued interest 0.1 0.5 the level and timing of its capital investment programmes, capital bonds and related interest costs are treated as 50 per Wholesale term notes 6.0% 292.8 292.8 187.5 equity raisings and dividend distributions are consistent with cent equity. The covenants are monitored on a regular basis Total revolving credit and money market 154.5 Retail term notes 4.3% 100.7 100.5 the Group’s capital structure strategy. This strategy remains to ensure they are complied with. There were no breaches in Capital bonds 5.5% 474.5 426.0 unchanged from previous years. The capital structure of the covenants during the year (2018: nil). Expiring FY20 - 220.0 United States Private Group consists of debt, which includes the borrowings disclosed 3.6% 237.3 218.6 Expiring FY21 80.0 110.0 in note E5, cash and cash equivalents and equity attributable to Placement ('USPP') Expiring FY22 70.0 50.0 the shareholders of Genesis, comprising issued capital, reserves Total 1,289.8 1,255.4 and retained earnings, as disclosed in the balance sheet. Expiring FY23 150.0 75.0 Current 172.8 210.0 Expiring FY24 50.0 - 2019 2018 Total available revolving credit facilities 350.0 455.0 No. of No. of Non-current 1,11 7.0 1,045.4 E2. Share capital Revolving credit drawn down shares 2019 shares 2018 Total 1,289.8 1,255.4 110.0 187.0 Note million $ million million $ million (excluding accrued interest) Issued capital Total undrawn revolving credit facilities 240.0 268.0 Balance as at 1 July 1,008.5 559.7 1,000.0 540.6 Borrowings Borrowings are initially recognised at fair value, net of Shares issued under dividend reinvestment plan E4 15.1 40.9 8.5 19.1 Expiring FY24 30.0 30.0 transaction costs incurred and are subsequently measured Balance as at 30 June 1,023.6 600.6 1,008.5 559.7 at amortised cost using the effective interest rate method. Total term loan facility 30.0 30.0 Borrowings designated in a fair value hedge relationship are Treasury shares carried at amortised cost adjusted for the change in the fair Expiring FY20 120.0 120.0 Balance as at 1 July (0.9) (2.0) (0.5) (0.9) value of the hedged risk. Shares acquired for long-term incentive and talent retention plans (0.5) (1.3) (0.4) (1.1) Expiring FY23 70.0 70.0 Borrowings are classified as current liabilities unless the Group Expiring FY25 100.0 100.0 Sharesissued to LTIP paticipants 0.2 0.3 - - has an unconditional right to defer settlement of the liability for Balance as at 30 June (1.2) (3.0) (0.9) (2.0) at least 12 months after the balance date. Accrued interest 3.1 3.3 Capitalised issue costs (0.3) (0.5) Total share capital 1,022.4 597.6 1,007.6 557.7 Reconciliation of change in liabilities 2019 2018 Total wholesale term notes 292.8 292.8 arising from financing activities $ million $ million All shares are ordinary authorised, issued and fully paid shares. Treasury shares relate to shares held in trust for the Long-Term Opening balance 1,255.4 1,259.8 They all have equal voting rights and share equally in dividends Incentive Plan (‘LTI’) and the employee Talent Retention Plan Expiring FY22 100.0 100.0 and any surplus on winding up. (‘TRP’) (refer to note G1 and G2). Proceeds from borrowings 240.0 - Accrued interest 1.2 1.2 Repayment of borrowings (232.6) (9.0) Capitalised issue costs (0.5) (0.7) E3. Earnings per share Restated Non-cash changes 100.5 2019 2018 Change in foreign exchange on USPP 1.6 16.8 Total retail term notes 100.7 19.7 Change in fair value interest rate risk Net profit for the year attributable to shareholders ($ million) 59.2 27.7 (13.3) adjustment Expiring FY19 - 200.0 Amortisation of capitalised issue costs (1.4) 1.0 Weighted average number of ordinary shares (million units) 1,015.3 1,001.7 Expiring FY47 225.0 225.0 Less weighted average number of Treasury shares (million units) (0.8) Change in accrued interest (0.9) 0.1 (1.1) Expiring FY49 240.0 - Weighted average number of shares used in EPS calculation (million units) 1,014.2 1,000.9 Closing balance 1,289.8 1,255.4 Fair value interest rate risk 11.5 0.8 Cents Cents adjustment Basic and diluted EPS 5.84 1.97 Bond issued during the year Accrued interest 3.1 3.4 On 16 July 2018 the Group exercised its right to redeem $200.0 Capitalised issue costs (5.1) (3.2) million of fixed rate subordinated capital bonds with an original 2019 2018 maturity date of 15 July 2041. The redeemed capital bonds were Total capital bonds 474.5 426.0 E4. Dividends 2019 Cents 2019 2018 Cents 2018 replaced by $240.0 million of capital bonds with a maturity date Note Imputation per share $ million Imputation per share $ million of 16 July 2048. This issue pays a quarterly coupon of 4.65 per Expiring FY26 74.4 73.9 Dividends declared and paid during the year cent per annum. On the first reset date and every five years Prior year final dividend 80% 8.60 86.7 80% 8.40 84.0 thereafter, the interest rate will reset to be the sum of the five- Expiring FY27 148.9 147.8

For personal use only use personal For Fair value interest rate risk Current year interim dividend 80% 8.45 85.8 80% 8.30 82.8 year swap rate on the relevant reset date plus the margin of 2.01 11.6 (5.4) adjustment 1 7.05 172.5 16.70 166.8 per cent per annum plus the step-up margin of 0.25 per cent per annum. Issue costs are amortised over five years to the first Accrued interest 3.0 3.0 Less: dividend reinvestment plan E2 (40.9) (19.1) reset date. An interest rate swap has been used to manage the Capitalised issue costs (0.6) (0.7) Cash dividend paid 131.6 147.7 fair value risk of the bonds. Total USPP 2 3 7.3 218.6

Dividends declared subsequent to balance date Final dividend 80% 8.60 88.0 80% 8.60 86.7

Imputation credits There were no imputation credits as at 30 June 2019 (2018: nil). Future tax payments will cover the imputation of the final dividend.

46 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 47 E5. Borrowings (continued) E6. Finance expense 2019 2018 F. Risk management Note $ million $ million Capital bonds The Group’s activities expose it to a variety of financial risks, The Group uses the following derivatives to hedge its financial Interest on borrowings The interest rate on the capital bonds resets every five years. The 42.8 43.5 including market risk (price risk, interest rate risk and foreign risk exposures: (excluding capital bonds) next interest rate reset is June 2022 for the FY47 bonds and July exchange risk), credit risk and liquidity risk. The Board has • Electricity swaps and options; 2023 for the FY49 bonds. Interest on capital bonds 25.3 25.8 established policies that provide an overall risk management Total interest on borrowings 68.1 69.3 framework, as well as policies covering specific areas, such as • Oil swaps; USPP Other interest and finance electricity and oil price risk, interest rate risk, foreign exchange • Forward purchase agreements for emission units; During the 2015 financial year the Group issued $150.0 million 0.4 0.6 charges risk, credit risk, liquidity risk and the use of derivatives. United States dollar-denominated unsecured notes to United • Foreign exchange contracts; Time value of money Compliance with policies is monitored by the risk assurance States-based institutional investors. CCIRS have been used to C4 6.1 5.9 • CCIRS; and function. manage foreign exchange and interest rate risks on the notes adjustments on provisions • Interest rate swaps. (refer to note F4 for further information on CCIRS). 74.6 75.8 Capitalised finance expenses (0.7) (0.5) A summary of the financial risks that impact the Group, how they While the New Zealand dollar amount required to repay the arise and how they are managed is presented below: 73.9 75.3 USPP is fixed as a result of the CCIRS, the USPP is required Weighted average to be translated to New Zealand dollars at the spot rate at the 5.9% 5.7% Market risk reporting date. Any revaluation of the USPP as a result of this capitalisation rate Nature and exposure to the Group Note How the risk is managed translation is offset by the change in the fair value of the CCIRS. Interest on borrowings, bank and facility fees and transaction The Group aims to hedge price risk on electricity sales and purchases, Revolving credit facility costs are recognised in the income statement over the period of oil sales and emission costs by entering into electricity swaps and Subsequent to year end the Group entered into an additional the borrowings, using the effective interest rate method, unless options, oil swaps and forward purchase agreements for emission units, $75.0 million revolving credit facility which expires in August such costs relate to funding capital work in progress. Time value Price risk in line with policy limits. 2022. of money adjustments on provisions are recognised in the income The Group is exposed to movements in the spot F2 statement up to the point the provision is used or released. price of electricity arising through the sale and The Electricity hedging policy focuses on the Group’s net exposure to purchase of electricity to and from the market, electricity prices over a three-year period, with greater focus on the Finance expense on capital work in progress (qualifying assets) near term period. The Treasury policy requires that 50-90 per cent of oil Fair value of borrowings held at amortised cost movements in the spot price of light crude oil is capitalised during the construction period. The capitalisation sales are fixed for a period of up to one year. The range decreases to a rate used to determine the amount of finance expense to be arising from oil sales and movements in the spot 2019 2019 2018 2018 maximum of 50 per cent for sales forecasted in two to three years' time. capitalised is based on the weighted average finance expenses price of emission units. Carrying Fair Carrying Fair The Carbon hedging policy focuses on managing price risk using units incurred by the Group. value value value value on hand and forward purchase agreements to cover price risk in the $ million $ million $ million $ million short to medium term. Level one Interest rate risk Retail term The Group is exposed to interest rate risk because 100.7 105.7 100.5 103.4 notes Genesis borrows funds at both fixed and floating interest rates. Changes in market interest rates The Group uses interest rate swaps to manage interest rate risk in line Capital bonds 426.0 439.3 474.5 498.6 expose the Group to changes in: with the Group’s Treasury policy. The Treasury policy requires that F3 50-100 per cent of projected debt is fixed for a period of up to one year. Level two • Future interest payments on borrowings The range decreases as the age profile increases to a maximum of Fixed term loan subject to floating interest rates (cash flow 30.0 32.1 30.0 30.8 20 per cent for debt due in 10-15 years. facility risk); and Wholesale term 292.8 316.0 292.8 311.3 • The fair value of borrowings subject to fixed notes interest rates (fair value risk). USPP 237.3 241.6 218.6 220.8 Capital and operating transactions The valuation of the fixed term loan facility and the wholesale The Group uses foreign exchange contracts to manage foreign exchange term notes is based on estimated discounted cash flow analyses, risk on capital and operational transactions (including maintenance of using applicable market yield curves adjusted for the Group’s capital equipment and oil sales) in accordance with the Group’s Treasury credit rating. The credit-adjusted market yield curves at balance policy. The Treasury policy requires that 50-90 per cent of projected oil date used in the valuation ranged from 1.9 per cent to 3.0 per sales are fixed for a period of up to one year. The range decreases as the cent (2018: 2.9 per cent to 4.3 per cent). age profile increases to a maximum of 50 per cent for projected oil sales Foreign exchange risk in two to three years' time. All foreign currency exposures on capital The valuation of USPP is based on estimated discounted cash The Group is exposed to foreign currency risk as a commitments are hedged, as well as operating commitments over flow analyses, using applicable United States market yield result of capital and operational transactions and F4 $0.5 million. curves adjusted for the Group’s credit rating. The credit-adjusted borrowings denominated in a currency other than market yield at balance date used in the valuation was 2.6 per the Group’s functional currency. Overseas borrowings cent (2018: 3.9 per cent). The Group uses CCIRS to manage foreign exchange risk on overseas borrowings. All interest and principal repayments are hedged. The The carrying value of all other borrowings approximate their fair combination of the foreign-denominated debt and CCIRS results in a net For personal use only use personal For values. exposure to New Zealand dollar floating interest rates and a fixed New Security Zealand dollar-denominated principal repayment. The New Zealand All of the Group’s borrowings are unsecured. The Group borrows dollar floating interest rate risk is managed using the process described under a negative pledge arrangement, which does not permit the in the interest rate risk section above. Group to grant any security interest over its assets, unless it is an exception permitted within the negative pledge.

48 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 49 F. Risk management (continued) F1. Derivatives 2019 2018 $ million $ million Electricity swaps and options (26.3) 11.3 Once hedge accounting is discontinued the fair value Other risks Oil swaps (1.7) (15.8) adjustments to the carrying amount of the hedged item arising from the hedged risk is amortised to the income statement from Nature and exposure to the Group Note How the risk is managed Interest rate swaps (29.4) (26.9) that date through to maturity of the hedged item. CCIRS 3 7.9 20.4 The Group has a policy that requires the debt facilities to be maintained Foreign exchange contracts (0.3) (0.4) Hedge accounting is discontinued when the hedge instrument with a minimum headroom amount above the projected peak debt levels Forward purchase and forward expires or is sold, terminated, exercised or no longer qualifies for Liquidity risk (0.4) - over the next 12 months. Liquidity risk is monitored by continuously sale agreements for emission units hedge accounting. Liquidity risk is the risk that the Group will not be forecasting cash flows and matching the maturity profiles of financial F7 Total (20.2) (11.4) The Group’s policy is to designate derivatives in hedge able to meet its financial obligations as they fall assets and liabilities. relationships on inception when their fair value is zero applying due. The Group’s approach to managing liquidity a hedge ratio of 1:1. The Group determines the existence of an risk is to ensure that it will always have sufficient The Group’s ability to attract cost-effective funding is largely driven Current assets 39.9 24.8 economic relationship between the hedging instrument and the funds to meet its liabilities when due, under both by its credit standing (Standard & Poor’s = BBB+). Prudent liquidity Non-current assets 68.0 37.5 hedged item based on the amount and timing of their respective normal and stressed conditions. risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of Current liabilities (70.7) (36.8) cash flows, reference rates, pricing dates, maturities and committed credit facilities and the spreading of debt maturities. Non-current liabilities (5 7.4) (36.9) notional amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be, and Total (20.2) (11.4) has been effective in, offsetting the changes in cash flows of the Wholesale electricity sales hedged item. The Group purchases wholesale electricity for its retail customer base, Derivatives therefore the credit risk is limited to the net amount receivable after Derivatives are initially recognised at fair value on the date the Derivatives that do not qualify for hedge accounting deducting purchases. Market participants are required to provide letters contract is entered into and subsequently re-measured to fair This category includes derivatives that economically hedge of credit to the market-clearing agent (NZX Limited), which would be value. The gain or loss on re-measurement is recognised in the financial risks but have not been designated in hedge called upon should any market participant default. income statement, unless the derivative is designated into an relationships for accounting purposes. In these cases changes Credit risk C1 effective hedge relationship as a hedging instrument, in which in the fair value are recognised immediately in the income case the timing of recognition in the income statement depends Credit risk is the risk that a counterparty will Retail electricity sales, gas, LPG and oil sales statement within the change in fair value of financial instruments on the nature of the designated hedge relationship. The Group default on its contractual obligations, resulting The Group minimises its exposure to credit risk by applying credit limits, line (refer to note F5). in financial loss to the Group. The Group has no may designate derivatives as either: obtaining collateral where appropriate and applying credit-management Certain electricity derivatives and electricity future contracts significant concentrations of credit risk and the practices, such as monitoring the size and nature of exposures and Cash flow hedges where the derivative is used to manage the cannot be hedge accounted under NZ IFRS 9. These are carrying amounts of cash and cash equivalents, mitigating the risk deemed to be above acceptable levels. The credit risk variability in cash flows relating to recognised liabilities or highly principally swap and option contracts that provide dry year cover receivables and derivative assets in the balance is mitigated by the Group’s large customer base and the diverse range of probable forecast transactions. for counterparties and electricity futures offered to the market to sheet represent the Group’s maximum exposure to industries customers operate in. enable other counterparties to hedge their electricity risks. credit risk at balance date. The effective portion of changes in the fair value of cash flow hedges are recognised in other comprehensive income and Forward purchase and forward sale agreements for emission Cash and cash equivalents and derivative contracts accumulate in the cash flow hedge reserve. The ineffective units are entered into for both ‘own use’ and ‘held for trading’. Credit risk is managed by using high-credit quality financial institutions portion of changes in the fair value of cash flow hedges is BS, Agreements to purchase emission units for the Group’s own use and other organisations. The Group’s exposure and the credit ratings recognised immediately in the income statement in the change F1 are not recognised in the financial statements until the units of its counterparties are continuously monitored to ensure the risk is in fair value of financial instruments line. are delivered. Forward purchase and forward sale agreements spread among approved counterparties. held for trading do not meet the ‘own use’ exemption and are Amounts accumulated in other comprehensive income are accounted for as derivatives. These contracts are measured at reclassified to the income statement in the period when the fair value and any gain or loss on re-measurement is recognised hedged item is recognised in the income statement. However, immediately in the income statement. when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or The effects of the Group’s application of hedge accounting in liability, the gains and losses previously deferred in the cash flow respect of derivatives used to manage financial risks are shown hedge reserve are reclassified from the cash flow hedge reserve in notes F2 to F5. and included in the initial measurement of the cost of the asset or liability.

Once hedge accounting is discontinued the cumulative gain or loss at that time remains in the cash flow hedge reserve and is reclassified to the income statement either when the transaction occurs or if the forecast transaction is no longer expected to occur, it is reclassified immediately.

Fair value hedges where the derivative is used to manage the

variability in the fair value of recognised assets and liabilities. For personal use only use personal For Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

50 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 51 CCIRS (cash flow Foreign exchange contracts Electricity swaps Oil swaps and fair value hedge) (cash flow hedge) F2. Price risk 2019 2018 2019 2018 F4. Foreign exchange risk 2019 2018 2019 2018 $ million $ million $ million $ million $ million $ million $ million $ million Nominal amount at balance date 1,575.4 914.9 USD 24.5 USD 41.3 Nominal amount at balance date 193.2 193.2 (36.6) (33.7) Carrying value of asset at balance date 22.0 9.6 1.0 - Carrying value of asset at balance date 3 7.9 20.4 0.4 0.9 Carrying value of liability at balance date (62.4) (25.5) (2.7) (16.6) Carrying value of liability at balance date - - (0.7) (1.3) Recognised in other comprehensive income during the year (60.4) 29.8 19.1 (14.0) Recognised in other comprehensive income during the year (0.4) 20.1 0.2 (2.7) Reclassified to the income statement during the year 39.2 (36.2) (5.7) (5.9) Reclassified to the cost of assets - - 0.1 - Hedge ineffectiveness (gain (loss)) during the year (3.2) (0.2) 1.4 (2.1) Reclassified to the income statement during the year (0.4) (15.7) (0.1) (0.5) Hedge ineffectiveness (gain (loss)) during the year - (1.1) - (0.2) Electricity swaps are entered into to manage the variability of due to price premiums and discounts on oil sales (the hedged cash flows from electricity purchases and sales. Oil swaps are item) that are not present in the hedging instrument. entered into to manage the variability of cash flows from oil The Group enters into foreign exchange contracts to hedge The principal, basis and margin components of the CCIRS At balance date the carrying value of non-hedge accounted sales. Cash flow hedge accounting is applied. highly probable forecast transactions denominated in foreign are designated as a cash flow hedge and the benchmark electricity swaps was a $19.1 million asset, electricity future currencies. Cash flow hedge accounting is applied. The amount component of the CCIRS is designated as a fair value hedge of Gains and losses on electricity swaps are recognised in options was a $5.0 million liability, and oil swaps was nil (2018: and maturity of the derivative and forecast transactions are the USPP notes. The change in fair value relating to the foreign electricity revenue and gains and losses on oil swaps are $26.6 million asset, $0.6 million asset and $0.8 million asset aligned to ensure the hedge relationship remains effective. currency basis spread component of the CCIRS is excluded recognised in petroleum revenue. Electricity revenue includes respectively). The nominal value at balance date of non-hedge from the hedge relationship. The change is recognised in other The Group uses CCIRS to manage foreign exchange risk on $22.6 million (2018: $20.0 million) of option fees on electricity accounted electricity swaps was $202.3 million and oil swaps comprehensive income in a separate Cost of Hedging Reserve the USPP. All interest and principal repayments are hedged. swaps and options. was nil (2018: $158.9 million and USD 3.5 million respectively). (CoHR). The combination of the foreign-denominated debt and CCIRS The main source of ineffectiveness for electricity swaps relates results in a net exposure to New Zealand dollar floating interest Gains and losses on foreign exchange contracts reclassified to to the difference between the market price and the strike price rates and a fixed New Zealand dollar-denominated principal the income statement are recognised in operating expenses at inception of the contracts. For oil swaps ineffectiveness arises repayment. and oil revenue. Gains and losses reclassified to the income statement on CCIRS are recognised in finance expenses.

Cash flow hedge Fair value hedge F5. Impact of derivatives on the income statement and equity (receive float, pay fixed) (receive fixed, pay float)

F3. Interest rate risk 2019 2018 2019 2018 The tables below provide a break down of the change in fair value of financial instruments recognised in the income statement and a $ million $ million $ million $ million reconciliation of movements in the cash flow hedge reserve. Nominal amount at balance date 420.0 380.0 240.0 240.0 Carrying value of asset at balance date - - 11.4 0.8 Change in fair value of financial instruments 2019 2018 Carrying value of liability at balance date (40.2) (25.6) - - Note $ million $ million Recognised in other comprehensive income during the year (6.6) 2.9 N/A N/A CCIRS 16.8 (13.3) Reclassified to the income statement during the year ( 7.8) (6.6) N/A N/A Interest rate swaps 10.6 0.8 Maturity 0-9 years 1-9 years 4 years 4-5 years Fair value interest rate risk adjustment on borrowings (27.7) 13.3 Weighted average rate 4.4% 4.8% 2.6% 2.6% Fair value hedges – gain (loss) (0.3) 0.8

Cash flow hedges – hedge ineffectiveness – gain (loss) F2, F4 (1.8) (3.6) Interest rate swaps are entered into to manage interest rate At balance date the carrying value of non-hedge accounted risk on borrowings. Gains and losses on interest rate swaps interest rate swaps was $0.6 million liability and the nominal Electricity swaps and options (13.1) (2.0) designated as cash flow hedges reclassified to the income value was $65.0 million (2018: $2.1 million liability and $65.0 statement are recognised in finance expenses. million nominal value). Other derivatives - 1.7

The fair value hedge adjustment is recognised in finance Derivatives not designated as hedges – gain (loss) (13.1) (0.3) expenses in the income statement. Total change in fair value of financial instruments (15.2) (3.1)

Reconciliation of movements in the cash flow hedge reserve 2019 2018 $ million $ million Opening balance (43.3) (22.6) Total reclassified from the cash flow hedge reserve to the income statement 25.2 (64.9) Effective gain (loss) on cash flow hedges recognised directly in the cash flow hedge reserve (48.1) 36.1 Total recognised in other comprehensive income (22.9) (28.8)

For personal use only use personal For Total reclassified from the cash flow hedge reserve to the cost of assets 0.1 - Income tax on change in cash flow hedge reserve 6.4 8.1 Closing balance (59.7) (43.3)

The amount accumulated in the cost of hedging reserve at 30 June 2019 was $1.4 million (2018: $0.3 million).

52 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 53 F6. Sensitivity analysis for each type of market risk F8. Fair value measurement The table below represents the effect on the income statement and the cash flow hedge reserve at balance date if various market rates had been higher or lower with all other variables held constant. A positive number in the table represents an increase in profit or the cash flow hedge reserve. Fair value hierarchy Post-tax impact on the Post-tax impact on cash flow income statement hedge reserve (equity) The Group’s assets and liabilities measured at fair value are Level three – the fair value is derived from inputs that are not categorised into one of three levels as follows: 2019 2018 2019 2018 based on observable market data. Financial instruments included in this level are electricity derivatives valued using the wholesale $ million $ million $ million $ million Level one – the fair value is determined using unadjusted electricity price path. Electricity prices quoted prices from an active market for identical assets and +10% 7.3 (6.1) 20.5 (2.9) liabilities. A market is regarded as active if quoted prices are The Group’s policy is to recognise transfers into and out of fair -10% (5.6) 4.2 (19.7) 2.9 readily and regularly available from an exchange, a dealer, a value hierarchy levels at the date the change in circumstances broker, an industry group, a pricing service or a regulatory occurred. Refer to the reconciliation of level three electricity Oil prices agency and those prices represent actual and regularly occurring swaps and options table for transfers between levels. +10% - (0.1) (2.7) (5.0) market transactions on an arm’s-length basis. -10% - 0.1 2.7 5.0 All derivatives disclosed in F1 other than electricity swaps and Level two – the fair value is derived from inputs other than Foreign exchange rates options are considered level two. The $26.3 million electricity quoted prices included within level one that are observable for swap and option net liability, comprises a $1.3 million liability +10% (NZD appreciation) - - 2.4 2.2 the asset or liability, either directly (ie, as prices) or indirectly (ie, classified as level two and a $25.0 million liability classified -10% (NZD depreciation) - - (2.9) (2.6) derived from prices). Financial instruments in this level include as level three (2018: $0.6 million asset and $10.7 million asset Interest rates interest rate swaps, foreign exchange contracts, oil swaps, respectively). +100 bps (0.5) (0.6) 11.7 9.6 CCIRS and electricity derivatives, valued using the ASX forward -100 bps 0.5 0.7 (12.6) (10.3) price curve.

F7. Liquidity risk The following table details the Group’s liquidity analysis for its price curves existing at balance date. As the amounts included Valuation of level two derivatives financial liabilities and derivatives. Where the amount payable in the table are contractual undiscounted cash flows, these The fair values of level two derivatives are determined using discounted cash flow models. The key inputs in the valuation models or receivable is not fixed, the amount disclosed has been amounts will not reconcile to the amounts disclosed in the were: determined by reference to the internally generated forward balance sheet. Item Valuation input Total Interest rate swaps Forward interest rate price curve Less than More than contractual Foreign exchange contracts Forward foreign exchange rate curves As at 30 June 2019 1 year 1 to 2 years 2 to 5 years 5 years cash flows Oil swaps Forward oil price and foreign exchange rate curves $ million $ million $ million $ million $ million Electricity swaps and options ASX forward price curve Trade and other payables (224.7) - - - (224.7) CCIRS Forward interest rate price curve and foreign exchange rate curves Borrowings (221.5) (80.0) (409.4) (1,380.0) (2,090.9) Forward purchase and forward sale agreements for emission Total non-derivative financial liabilities (446.2) (80.0) (409.4) (1,380.0) (2,315.6) OM Financial forward curve units held for trading

Inflows 8.6 8.2 24.6 244.4 285.8 Outflows (6.8) (6.1) (18.4) (209.9) (241.2) Valuation of level three derivatives

Gross-settled derivatives 1.8 2.1 6.2 34.5 44.6 Valuation process The team that carries out the valuations reports directly to Net-settled derivatives (16.3) 10.3 36.9 69.3 100.2 the Chief Financial Officer. The results and key drivers of the changes in the valuations are reviewed at least six monthly Total non-derivative financial liabilities and derivatives (460.7) (6 7.6 ) (366.3) (1,276.2) (2,170.8) for generation assets and monthly for derivatives. The Chief Financial Officer reports key changes in fair value to the Board. Total Any changes to the valuation methodology are reported to the Less than More than contractual Audit and Risk Committee. As at 30 June 2018 1 year 1 to 2 years 2 to 5 years 5 years cash flows $ million $ million $ million $ million $ million Trade and other payables (196.7) - - - (196.7) Borrowings (258.0) (267.1) (374.9) (925.2) (1,825.2) Total non-derivative financial liabilities (454.7) (267.1) (374.9) (925.2) (2,021.9)

For personal use only use personal For Inflows 8.9 8.1 24.5 250.7 292.2 Outflows (8.2) (8.0) (25.9) (226.7) (268.8) Gross-settled derivatives 0.7 0.1 (1.4) 24.0 23.4

Net-settled derivatives* (0.5) 5.3 35.6 (3.4) 37.0

Total non-derivative financial liabilities and derivatives (454.5) (261.7) (340.7) (904.6) (1,961.5) *Net settled derivatives have been restated to remove the amortisation of the 'day one' gain.

54 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 55 F8. Fair value measurement (continued) G. Other G1. Share-based payments 2019 2018 Valuation of electricity swaps and options The Group operates three share-based payment plans (Long– Note $ million $ million The valuation is based on a discounted cash flow model. The terms of each contract. No calling is required for the swaps Term Incentive Plan (‘LTI’), Talent Retention Plan (‘TRP’) and Short-term benefits 6.9 6.7 key inputs and assumptions are: the callable volumes, strike and there are no option fees. The price path is the significant Employee Share Scheme (‘ESS’)) to enable staff to share in the Post-employment benefits 0.2 0.2 price and option fees outlined in the agreement, the wholesale unobservable input in the valuation model. Refer to note B1 for ownership of Genesis. Termination benefits 0.2 - electricity price path (‘price path’), ‘day one’ gains and losses, information in relation to the method used to determine the emission credits and the discount rate. The options are deemed price path. Changes in electricity demand, hydrology and new The cost of the plans are recognised over the period in which Share-based payments — LTI G1 0.6 0.6 to be called when the price path is higher than the strike prices generation build affect the price path. the performance and/or service conditions are fulfilled. The total Total key management 7.9 7.5 after taking into account obligations relating to the specific amount to be expensed is based on the Group’s best estimate of personnel compensation the number of equity instruments that will ultimately vest, taking Included in short-term benefits are Directors' fees of $0.9 million 2019 2018 into consideration the likelihood that service conditions will be (2018: $0.9 million). Price path $92 per MWh to $114 per MWh over the $74 per MWh to $100 per MWh over the met, multiplied by the initial fair value of each share. period from 1 July 2019 to 31 December 2025. period from 1 July 2018 to 31 December 2025. LTI Under the LTI plan senior executives purchase shares at market Impact of increase/decrease in price A 10% increase would decrease the liability A 10% increase would decrease the asset by 2019 2018 value, funded by interest-free loans from Genesis. The shares are path on fair value by $34.9 million. A 10% decrease would $13.4 million. A 10% decrease would increase Note $ million $ million held on trust by the Trustee until the end of the vesting period. increase the liability by $31.4 million. the asset by $11.0 million. LTI G2 0.6 0.6 Dividends on the shares during the vesting period are deducted TRP 0.2 0.1 from the loan balance. If the shares vest, each executive is Other unobservable inputs 2019 2018 ESS 0.6 0.3 entitled to a cash amount which, after deduction for tax, is Emission credits Total expense for the year 1.4 1.0 equal to the outstanding loan balance on day one for the shares $27 - $48 $21 - $25 (price per unit) that have vested. That cash amount must be applied towards Discount rate 1.3% - 3.6% 2.0% - 5.4% repayment of the loan balance and the corresponding shares and G2. Related party transactions dividends on the shares during the vesting period are released to the executive. Majority shareholder and entities controlled by, and related to, Vesting of shares is dependent on continued employment the majority shareholder throughout the vesting period and achievement of certain performance targets relating to total shareholder return (‘TSR’) in Reconciliation of level three electricity swaps and options Deferred ‘day one’ gains (losses) The majority shareholder of Genesis is the Crown. The comparison to the NZX50. 2019 2018 There is a presumption that when derivative contracts are Group transacts with Crown-controlled and related entities $ million $ million entered into on an arm’s-length basis, and no payment is independently and on an arm’s-length basis for the following In the prior year an updated plan commenced, with an additional Balance as at 1 July 10.7 21.2 received or paid on day one, the fair value at inception would goods and services: royalties, emission obligations, scientific performance hurdle introduced to further enhance alignment be nil. The contract price of non-exchange traded electricity consultancy services, electricity transmission, postal services, Total gain (loss) with shareholder interests. In the updated plan the performance derivative contracts are agreed on a bilateral basis, the pricing rail services and energy-related products (including electricity hurdles are a relative TSR hurdle compared against industry Electricity revenue 12.8 20.1 for which may differ from the prevailing derived market price derivatives). All transactions with Crown-controlled and related peers and an absolute TSR hurdle where the absolute total Change in fair value of financial (14.1) (6.1) for a variety of reasons. In these circumstances an adjustment entities are based on commercial terms and conditions and shareholder return compares against the NZX and ASX. instruments is made to bring the initial fair value of the contract to zero at relevant market drivers. Total gain (loss) in the income statement (1.3) 14.0 inception. The adjustment is called a ‘day one’ gain (loss) and is In the event the performance targets are not met or if the During the year the Crown received $88.4 million dividends Total gain (loss) recognised in other deferred and amortised, based on expected call volumes over the participant ceases to be employed by the Group other than for (60.4) 20.4 (2018: $85.6 million) of which $67.5 million was paid in cash comprehensive income term of the contract. The following table details the movements qualifying reasons, no shares will vest and the shares will be (2018: $75.8 million) and $20.9 million was paid in shares (2018: forfeited to the Trustee without compensation and the relevant Settlements (gain) loss 49.1 (24.9) and amounts of deferred ‘day one’ gains (losses) included in the $9.8 million). There were no other individually significant executive will receive no benefits under the plan (unless the Sales (23.1) (20.0) fair value of level three electricity swaps and options: transactions with the Crown (2018: nil). Board exercises its discretion to allow some or all of the shares Balance as at 30 June (25.0) 10.7 to vest). The Group has five significant electricity swap and option Number of 2019 2018 contracts with Meridian Energy, a Crown-controlled entity. The $ options $ million $ million electricity swap and option contracts period and profile vary Balance at 1 July 2017 933,668 493,206 The change in fair value of financial instruments includes an Balance as at 1 July 69.4 71.6 between the range of 12.5MW and 150MW, from the period 1 unrealised loss of $6.6 million (2018: $6.1 million loss). Granted 874,340 363,010 New derivatives 78.6 3.5 January 2011 to 31 December 2025. In addition to these contracts Forfeited (113,980) (55,153) Amortisation of existing derivatives (13.5) (5.7) there are a small number of insignificant contracts with Crown- Dividends (134,348) - Balance as at 30 June 134.5 69.4 controlled and related entities. Balance as at 30 June 2018 1,559,680 801,063 Approximately 36.4 per cent of the value of electricity derivative Granted 835,871 336,700 assets and approximately 54.1 per cent of the value of electricity derivative liabilities at year end are held with Crown-controlled Vested (331,542) (181,088) and related entities (2018: 51.9 per cent and 40.9 per cent Forfeited (122,382) (57,323) respectively). The contracts expire at various times; the latest Dividends (70,436) -

For personal use only use personal For expiry date is December 2025. Balance at 30 June 2019 1,871,191 899,352

Key management personnel compensation ^ No shares vested in FY18 as the TSR targets for the FY15 grant The key management personnel of the Group consists of the were not met. Directors and the Executive Management team. Key management Grant date Performance period personnel compensation is as follows: FY17 * 1 June 2016 - 30 June 2019 FY18 1 June 2017 - 30 June 2020 FY19 1 June 2018 - 30 June 2021

* The FY17 grant is 100 per cent vesting.

56 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENESIS ANNUAL REPORT 2019 57 G2. Related party transactions (continued) G5. Contingent assets and liabilities

The Group had contingent assets and liabilities at 30 June 2019 Other transactions with key management personnel or entities in respect of: related to them Key management personnel and their families may purchase gas, Land claims, law suits and other claims electricity and LPG from the Group on an arm’s-length basis and Genesis acquired interests in land and leases from Electricity may purchase shares in Genesis. Key management personnel Corporation of New Zealand Limited ('ECNZ') on 1 April 1999. Independent also participate in the LTI plan discussed on the previous page. These interests in land and leases may be subject to claims The total number of shares held by key management personnel to the Waitangi Tribunal and may be resumed by the Crown. (excluding LTI shares) as at 30 June 2019 was 314,713 (2018: Genesis would expect to negotiate with the new Māori owners auditor’s report 289,019). During the year dividends paid to key management for occupancy and usage rights of any sites resumed by the personnel and their families was $69,150 (2018: $48,967). Crown. Certain claims have been brought to, or are pending No other transactions took place between key management against ECNZ and the Crown under the Treaty of Waitangi Act TO THE SHAREHOLDERS OF GENESIS ENERGY LIMITED personnel and the Group (2018: nil). As at 30 June 2019 the 1975. Some of these claims may affect land and leases purchased balance payable to key management personnel was nil (2018: nil). from ECNZ. In the event that land is resumed by the Crown, the Auditor General In addition to the audit we have carried out assignments in resumption would be effected by the Crown under the Public The Auditor-General is the auditor of Genesis Energy Limited the areas of trustee reporting, scrutineer’s notice, secretarial Works Act 1981 and compensation would be payable. The Board and its subsidiaries (‘the Group’). The Auditor-General has services for the corporate tax payer group, whistleblower hotline G3. Auditor’s remuneration cannot reasonably estimate the adverse effect (if any) of the appointed me, Bryce Henderson, using the staff and resources service, leadership development initiatives for senior employees Audit fees comprise $0.1 million for the review of the interim claims and cannot provide any assurance that should a claim be of Deloitte Limited, to carry out the audit of the consolidated and review of the interim report which are compatible with financial statements and $0.5 million for the audit of the raised it would not have a material adverse effect on the Group's financial statements of the Group on his behalf. those independence requirements. Customer management annual financial statements (2018: $0.1 million and $0.5 million business, financial condition or results of operations. respectively). In addition to the audit Deloitte completed the support services have also been provided by a business Opinion Gas supply agreement acquired by Deloitte Limited during the year ended 30 June following work during the year: provision of secretarial services We have audited the consolidated financial statements of the Genesis is currently engaged in a contractual dispute relating to 2019. Appropriate safeguards were put in place to mitigate any for the Corporate Taxpayer Group (of which Genesis is a Group on pages 25 to 58, that comprise the consolidated balance the carbon terms of one of its long-term gas supply agreements. threats to audit independence following the acquisition and we member), trustee reporting, leadership development initiatives sheet as at 30 June 2019, the consolidated comprehensive Following an escalation process, the matter has been referred discontinued providing the service to Genesis Energy shortly for senior employees, customer management software support income statement, consolidated statement of changes in equity to arbitration in accordance with the terms of the agreement. after the acquisition. These services have not impaired our and whistleblower hotline service (2018: provision of secretarial and consolidated cash flow statement for the year ended on that The arbitration process is expected to take up to a further 12 independence as auditor of the Group. services for the Corporate Taxpayer Group (of which Genesis is date, and the notes to the consolidated financial statements that months. Details of the dispute remain confidential and have not a member), trustee reporting and whistleblower hotline service). include accounting policies and other explanatory information. In addition to these assignments, principals and employees been disclosed to avoid any prejudice to the ongoing arbitration Total fees relating to other services was $0.139 million (2018: of our firm deal with the Group on normal terms within the process. At this stage in the process Genesis is confident of $0.031 million). In our opinion, the consolidated financial statements present ordinary course of trading activities of the Group. Other than the a favourable outcome, however, should there be an adverse fairly, in all material respects, the consolidated financial position audit and these assignments and trading activities, we have no outcome from the proceedings potentially up to 724,000 carbon of the Group as at 30 June 2019, and its consolidated financial relationship with, or interests in the Group. G4. Commitments units may need to be transferred. As the cost of any unit transfer performance and its consolidated cash flows for the year Capital Operating will depend on when the units are required to be transferred then ended in accordance with New Zealand Equivalents to Audit materiality commitments leases and the make up of units held at that time, it is not possible to International Financial Reporting Standards and International We consider materiality primarily in terms of the magnitude of 2019 2018 2019 2018 provide a reliable estimate of the financial effect of any transfer. Financial Reporting Standards. misstatement in the consolidated financial statements of the $ million $ million $ million $ million Group that in our judgement would make it probable that the There are no other known material contingent assets or liabilities Basis for opinion Less than one year 28.8 25.4 9.3 8.3 economic decisions of a reasonably knowledgeable person (2018: nil). We conducted our audit in accordance with the Auditor- One to five years 13.2 7.9 26.7 28.7 would be changed or influenced (the ‘quantitative’ materiality). General’s Auditing Standards, which incorporate the Professional More than five years - 2.0 21.8 27.5 In addition, we also assess whether other matters that come to G6. Subsequent events and Ethical Standards and the International Standards on our attention during the audit would in our judgement change Total 42.0 35.3 5 7.8 64.5 The following events occurred subsequent to balance date: Auditing (New Zealand) issued by the New Zealand Auditing and or influence the decisions of such a person (the ‘qualitative’ Kupe Joint Venture has capital commitments of $1.2 million • $88.0 million of dividends declared on 27 August 2019 Assurance Standards Board. Our responsibilities under those materiality). We use materiality both in planning the scope of our as at 30 June 2019 (2018: nil) and DrylandCarbon One Limited (refer to note E4); standards are further described in the Auditor’s responsibilities audit work and in evaluating the results of our work. Partnership has capital commitments of $1.2 million as at 30 June • $75.0 million revolving credit facility was entered into for the audit of the consolidated financial statements section of We determined the quantitative materiality for the Group 2019 (2018: nil). (refer to note E5); and our report. We are independent of the Group in accordance with financial statements as a whole to be $9 million. • Genesis acquired a 40 per cent interest in Yoogo Share the Auditor-General’s Auditing Standards, which incorporate Leases Professional and Ethical Standard 1 (Revised) Code of Ethics for Limited. The investment in Yoogo Share Limited will be Key audit matters Leases are classified as finance leases whenever the terms of the Assurance Practitioners issued by the New Zealand Auditing equity accounted. Key audit matters are those matters that, in our professional lease transfer substantially all the risks and rewards of ownership and Assurance Standards Board, and we have fulfilled our other judgement, were of most significance in our audit of the to the lessee. All other leases are classified as operating leases. ethical responsibilities in accordance with these requirements. Payments made under operating leases (net of any incentives consolidated financial statements of the current period. These received from the lessor) are recognised in the income statement We believe that the audit evidence we have obtained is sufficient matters were addressed in the context of our audit of the on a straight-line basis over the lease term. and appropriate to provide a basis for our opinion. consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on Operating lease commitments these matters. The Group leases office buildings, land for its generation sites, For personal use only use personal For LPG depots and vehicles. The leases have varying lease periods of up to 23 years with some going out to perpetuity. In some cases renewal rights exist with market review clauses. The Group does not have any options to purchase the leased assets at the expiry of the lease periods.

Lease commitments are disclosed exclusive of GST.

58 GENESIS ANNUAL REPORT 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT GENESIS ANNUAL REPORT 2019 59 Other information collusion, forgery, intentional omissions, misrepresentations, Key audit matters How our audit addressed the key audit matters and results The Directors are responsible on behalf of the Group for or the override of internal control. the other information. The other information comprises the • Obtain an understanding of internal control relevant to Valuation of generation assets information included in the Annual Report, but does not include the audit in order to design audit procedures that are Generation assets were revalued at 30 June 2019 as set out in note Our audit procedures included assessing the key inputs to the consolidated financial statements and our auditor’s report appropriate in the circumstances, but not for the purpose B1 of the consolidated financial statements to $3,259 million. the model used to estimate the fair value of the generation thereon. of expressing an opinion on the effectiveness of the Group’s assets. Our procedures, which included the use of our internal internal control. The fair value of generation assets is estimated using an internally Our opinion on the consolidated financial statements does not valuation experts, were primarily focused on evaluating the • Evaluate the appropriateness of accounting policies used generated discounted cash flow model. The significant inputs cover the other information and we do not express any form of process undertaken by Genesis Energy in forecasting the and the reasonableness of accounting estimates and related used to calculate the fair value of the generation assets are the audit opinion or assurance conclusion thereon. wholesale electricity price path and assessing whether the wholesale electricity price path, generation volumes, and the disclosures made by management. forecast was consistent with internal and external data. discount rate. The wholesale electricity price path is estimated In connection with our audit of the consolidated financial • Conclude on the appropriateness of the use of the going by Genesis Energy as described in note B1 of the consolidated We assessed the professional competence of the Genesis statements, our responsibility is to read the other information concern basis of accounting by the directors and, based financial statements. Energy valuers involved in the forecasting of the electricity and, in doing so, consider whether the other information on the audit evidence obtained, whether a material price path and valuation of the generation assets. is materially inconsistent with the consolidated financial uncertainty exists related to events or conditions that may The estimate of the wholesale electricity price path is the most statements or our knowledge obtained in the audit or otherwise cast significant doubt on the Group’s ability to continue as significant input in estimating the fair values determined for the We also compared budgeted performance information from appears to be materially misstated. If, based on the work a going concern. If we conclude that a material uncertainty generation assets and affects the estimated generation volumes prior periods to actual data to assess the accuracy of the we have performed, we conclude that there is a material exists, we are required to draw attention in our auditor’s which are also used in the fair value calculation. Changes to the forecasting process. misstatement of this other information, we are required to report report to the related disclosures in the consolidated financial forecast of the wholesale electricity price path could significantly We assessed the forecast wholesale electricity price path that fact. We have nothing to report in this regard. statements or, if such disclosures are inadequate, to modify change the estimated fair value of the generation assets. which included externally derived data. We also evaluated the our opinion. Our conclusions are based on the audit evidence Directors’ responsibilities for the consolidated financial The treatment of the gain on revaluation estimated by Genesis assumptions used in forecasting the electricity price path to obtained up to the date of our auditor’s report. However, statements Energy is described in note B1 of the consolidated financial determine whether they were consistent with assumptions future events or conditions may cause the Group to cease to statements. used across the business, including management budgets The Directors are responsible on behalf of the Group for the continue as a going concern. and valuations of other assets including certain electricity preparation and fair presentation of the consolidated financial • Evaluate the overall presentation, structure and content We included the valuation of generation assets as a key audit derivatives. statements in accordance with New Zealand equivalents to of the consolidated financial statements, including the matter due to the level of judgement required in forecasting the International Financial Reporting Standards and International disclosures, and whether the consolidated financial wholesale electricity price path. We performed sensitivity analysis on the key assumptions Financial Reporting Standards, and for such internal control as statements represent the underlying transactions and events applied in determining the fair value of the generation assets the Directors determine is necessary to enable the preparation in a manner that achieves fair presentation. and considered the adequacy of the Group’s disclosures. of consolidated financial statements that are free from material • Obtain sufficient appropriate audit evidence regarding the We have found the assumptions and resulting valuation to be misstatement, whether due to fraud or error. financial information of the entities or business activities reasonable. In preparing the consolidated financial statements, the Directors within the Group to express an opinion on the consolidated are responsible on behalf of the Group for assessing the Group’s financial statements. We are responsible for the direction, ability to continue as a going concern, disclosing, as applicable, supervision and performance of the group audit. We remain matters related to going concern and using the going concern solely responsible for our audit opinion. basis of accounting unless the Directors either intend to liquidate We communicate with the Directors regarding, among other the Group or to cease operations, or have no realistic alternative matters, the planned scope and timing of the audit and but to do so. significant audit findings, including any significant deficiencies in Valuation of electricity derivatives and cross currency interest internal control that we identify during our audit. rate swaps The Directors’ responsibilities arise from the Financial Markets Conduct Act 2013. The Group’s activities expose it to electricity and gas market price, We tested the design and operating effectiveness of key We also provide the Directors with a statement that we oil price, currency and interest rate risk which are managed using controls related to the recording and valuation of electricity Auditor’s responsibilities for the audit of the consolidated have complied with relevant ethical requirements regarding derivative financial instruments. At 30 June 2019 derivative assets derivative transactions. financial statements independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our totalled $107.9 million and derivative liabilities were $128.1 million We challenged key assumptions applied by management and Our objectives are to obtain reasonable assurance about independence, and where applicable, related safeguards. as set out in note F1 of the consolidated financial statements. agreed underlying data to the contract terms on a sample whether the consolidated financial statements as a whole are The valuations of the oil swaps, interest rate swaps, foreign basis. We have independently recalculated the fair value of a free from material misstatement, whether due to fraud or error, From the matters communicated with the Directors, we exchange swaps and some electricity derivatives which are sample of electricity derivatives. and to issue an auditor’s report that includes our opinion. determine those matters that were of most significance in the audit of the consolidated financial statements of the current prepared by Genesis Energy valuers are based primarily on Our internal valuation experts have evaluated the Reasonable assurance is a high level of assurance, but is not period and are therefore the key audit matters. We describe observable inputs and are measured using standard valuation appropriateness of the methodology applied in valuation a guarantee that an audit conducted in accordance with the these matters in our auditor’s report unless law or regulation techniques. models for the electricity derivatives. Auditor-General’s Auditing Standards will always detect a precludes public disclosure about the matter or when, in Cross-currency interest rate swaps and certain electricity swaps material misstatement when it exists. Misstatements can arise We also performed audit work on the wholesale electricity extremely rare circumstances, we determine that a matter and options are also valued using primarily observable inputs from fraud or error and are considered material if, individually or price path as explained above under the section entitled should not be communicated in our report because the adverse but require more complex valuation models. Additionally, some in the aggregate, they could reasonably be expected to influence ‘Valuation of Generation Assets’. consequences of doing so would reasonably be expected to electricity swaps and options are valued using the wholesale the economic decisions of shareholders taken on the basis of outweigh the public interest benefits of such communication. electricity price path forecast prepared by Genesis Energy valuers. Our internal valuation experts have independently recalculated these consolidated financial statements. the value of a sample of cross-currency interest rate swaps As explained in the ‘Valuation of Generation Assets’ section above, As part of an audit in accordance with the Auditor-General’s Our responsibilities arise from the Public Audit Act 2001.

For personal use only use personal For using specialist treasury management software. the wholesale electricity price path forecast requires significant Auditing Standards, we exercise professional judgement and judgement. We have found the assumptions and resulting valuations to be maintain professional scepticism throughout the audit. We also: We have included the valuation of electricity derivatives and reasonable. • Identify and assess the risks of material misstatement of the cross currency interest rate swaps as a key audit matter due to consolidated financial statements, whether due to fraud or the complexity associated with their valuation and the judgement error, design and perform audit procedures responsive to involved in evaluating the inputs to the electricity derivative Bryce Henderson those risks, and obtain audit evidence that is sufficient and valuation models. Deloitte Limited appropriate to provide a basis for our opinion. The risk of On behalf of the Auditor-General not detecting a material misstatement resulting from fraud is Auckland, New Zealand higher than for one resulting from error, as fraud may involve 27 August 2019

60 GENESIS ANNUAL REPORT 2019 INDEPENDENT AUDITOR'S REPORT INDEPENDENT AUDITOR'S REPORT GENESIS ANNUAL REPORT 2019 61 Corporate governance Te Mana Arataki Rangatōpū BARBARA CATHERINE DOUG TIM JAMES MAURY JOANNA PAUL Corporate governance information Director independence CHAPMAN DRAYTON MCKAY MILES MOULDER LEYLAND PERRY ZEALAND This section of the Annual Report >> Genesis’ Constitution The names of the current Directors, SKILL / CAPABILITY PENNO provides information on Directors' Business strategy and leadership experience (a proven >> Board Charter together with a short biography of record of developing and executing business strategy) independence, committees, fees and each, are set out on pages 20 and >> Audit and Risk Committee Listed company governance experience (experience in diversity and inclusion policies and Charter 21. All of the Directors are currently listed company governance and driving and assessing the activities. considered to be independent Directors effectiveness of the executive) >> Human Resources and as none of them are executives of Regulated industry knowledge and experience Genesis' governance framework Remuneration Committee the Company or have any direct or (electricity sector experience or experience in a similarly is guided by the principles and Charter regulated industry) indirect interests or relationships that recommendations described in the Government and stakeholder relationship experience >> Nominations Committee could reasonably influence, or could NZX Corporate Governance Code. (a proven record of successfully engaging and managing Charter reasonably be perceived to influence, key external stakeholder relationships) Genesis considers it has followed >> Corporate Governance in a material way, their decisions on Finance / Accounting / Audit Committee experience these recommendations in all material Statement relation to the company. (senior executive or Director level experience in financial respects during FY19, and as at 30 accounting, reporting and internal financial controls) >> Code of Conduct and Ethics June 2019¹. Genesis has reported in Diversity and Inclusion Policy and Corporate finance / capital markets / transactional >> Diversity and Inclusion Policy experience (executive or Director level experience in detail against the NZX Corporate gender composition corporate finance related transactions – such as capital Governance Code in its separately raising and/or mergers and acquisitions) >> Trading in Company Securities Genesis’ Diversity and Inclusion Policy published Corporate Governance Policy and Minding the Gap Programme Large industry operational (capital) project Statement, which, together with management experience (executive level experience >> Market Disclosure Policy record the Company’s commitment to within the electricity sector or similar large scale industrial other detailed information on Genesis’ an inclusive workplace that embraces business) Board of Directors, Executive team >> Audit Independence Policy and promotes diversity through a Health and safety, risk experience (deep understanding and corporate governance policies, >> Investor Communication Policy of excellence in Health & Safety in strategic and number of initiatives, including a practices and processes can be operational context and applicable legislative framework) >> Information about Genesis focus on equal opportunity. Genesis viewed on the Genesis Governance shares Customer insight, data, marketing and brand has sought to establish measurable experience (executive level experience in consumer section on the Genesis website >> Information about bonds issued objectives for achieving diversity, retail and execution of marketing and brand strategies to (www.genesisenergy.co.nz/investors/ deliver growth). by Genesis including gender diversity, and its annual governance). This contains the Technology / innovation and digitalisation experience assessment of its diversity objectives following documents: (detailed understanding of the role of technology and for FY19 and the Company’s progress innovation in delivering a superior customer experience) towards achieving these objectives are People / culture / reputation management (deep 1 During the year the Company has not complied 2 The term ‘Officer’ is defined in the NZX Listing set out in the table below. understanding of the strategic importance of people, with Recommendation 3.6 (takeover protocols) of Rules as a person, however designated, who is values, behaviours and management style as drivers of the Code due to the Crown's share ownership in concerned or takes part in the management of As at 30 June 2019: organisational culture and reputation) the Company making it practically impossible for the public issuer’s business and reports to the a takeover offer to be made. See the Corporate Board or to a person who reports to the Board. At >> Four out of eight Genesis Energy Governance Statement for more detail. Genesis our Officers are the Chief Executive and the Chief Executive’s direct reports. Directors were women (FY18=three out of eight). Board and committee meetings and attendances >> Two out of eight Officers² were HUMAN RESOURCES women (FY18=three out of eight). BOARD AUDIT AND AND REM NOMINATIONS DIRECTOR¹ APPOINTED MEETINGS² RISK COMMITTEE COMMITTEE COMMITTEE FY19 Measurable objectives for diversity Total Meetings held 12 5 5 7 OBJECTIVE PROGRESS AS AT 30 JUNE 2019 Barbara Chapman (Chairman) 1 May 2018 12 5 3 7 Lead flexible working -- Continued to explore flexibility options across all sites, including four day weeks and nine day fortnights on practices in the our generation sites; rolled out ‘agents at home’ in our Retail Operations area, and fostered flexible locations to Catherine Drayton 14 Mar 2019 4 1 0 0 Energy Sector support team members and minimise productivity impact during crisis events and office refurbishment. Doug McKay 24 June 2014 12 3 5 6 -- Supported people to take career breaks, retaining 100% of those who have taken up these opportunities. -- Prepared for a second-round of buyable leave, offering our people greater flexible to achieve what’s important to Tim Miles 21 Nov 2016 11 0 5 6 them both in and outside of work. -- Continued to support individuals seeking flexibility around location, schedule and role. James Moulder 10 Oct 2018 8 3 0 2

Build a workforce -- Completed an in-depth analysis of our ethnic diversity, enabling us to see a comparison against the greater Maury Leyland Penno 1 August 2016 10 5 3 5 that reflects New New Zealand population, and unearthed opportunities for development of ethnic minorities. Joanna Perry 1 May 2007 11 5 0 6 Zealand’s multi- - Supported two people to attend the Pasifika Leadership Development Programme, and committed to another

For personal use only use personal For - cultural society and three years with the TupuToa Internship Programme (an internship scheme aimed at creating pathways for Māori Paul Zealand 19 Oct 2016 11 0 5 5 customer base and Pasifika students into careers). -- Continued Genesis’ commitment to Māori Language Week. Dame Jenny Shipley* 1 Nov 2009 4 1 2 4

Strive for gender -- Reduced the gender pay gap between women and men doing the same or comparable work to 1.6 per cent. Mark Cross* 24 Jun 2014 3 0 0 1 balance -- Continued to support the Genesis parental leave offering, including 12 weeks’ salary top up (in addition to Internal 1. All Directors listed are independent Directors. Revenue Department Paid Parental Leave), two weeks paid partner leave, annual leave accrual at normal salaried 2. In addition, Directors participated in a number of stakeholder and investor meetings throughout FY19. rate and support for a gradual return to work (80 per cent worked for 100 per cent pay). We have seen 100% 3. The above numbers include attendances at Committee meetings by non-member Directors. retention of those who have completed their parental leave. * Dame Jenny Shipley ceased to be a Director on 10 October 2018. -- Continued development of women through Global Women membership and leadership programmes, the Genesis * Mark Cross ceased to be a Director on 27 August 2018. Women in Operations Network and a step-up in support of the Girls in Hi-Vis® initiative. -- Focused attention to gender balance through a dashboard that reports gender metrics in areas of interest.

62 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES CORPORATE GOVERNANCE AND DISCLOSURES GENESIS ANNUAL REPORT 2019 63 Breakdown of Chief Executive's pay for performance FY19 Director and Executive MAXIMUM PERCENTAGE DESCRIPTION PERFORMANCE MEASURES PERCENTAGE POSSIBLE ACHIEVED % Target set at 50% of fixed 60% based on Company KPIs, employee remuneration remuneration (Base Salary + of EBITDAF, Customer and Health and Safety STI Benefits) based on Company and 150% 127% Ngā utu ā-tau o ngā Kaihautū individual performance measures This report outlines our refreshed and remuneration appraisals of the The Long Term incentives (LTI) are 40% based on Individual KPIs Remuneration Report for the year Executive Team, with the Board also ‘a pay for performance’ component Conditional awards of shares under ending 30 June 2019. It sets out approving the Chief Executive’s designed to align rewards for the LTI a Long Term Incentive Plan set at Relative TSR performance against NZX50 100% 100% remuneration information for the remuneration. Executive with shareholder value over 50% of fixed remuneration Chief Executive, the Executive Team a three year period. Only the Executive Total remuneration for the Executive and Directors. Director and employee are eligible to participant in the LTI. The following new interests granted in FY19 for vesting in FY21 Team is made up of three elements: remuneration is also discussed in the In FY19 LTI grants were made to the fixed remuneration, short-term GRANT YEAR LTI LOAN VALUE PERFORMANCE PERIOD PERFORMANCE MEASURE Company’s Corporate Governance Executive Team and the value of the incentives and long-term incentives. FY19 $379,463 used to acquire July 2018 - June 2021 50% relative TSR measured against the Peer Statement which can be viewed at grants were set at a percentage of fixed 152,853 ordinary shares, Gen-Tailor Group 50% absolute TSR measured www.genesisenergy.co.nz/investors/ remuneration between a range of Fixed remuneration consists of base restricted for the performance period against ASX and NZX performance governance/documents. salary and benefits and is targeted to 25 per cent to 50 per cent. This value be in the third quartile of the market. less tax was then used to determine the Genesis Energy now follows the number of shares held in trust for each New Zealand Shareholder Association’s In FY19 Marc England was provided with a LTI loan of $379,463 that was used to acquire Genesis shares at a market value of $2.48. Subject to achievement of TSR Short Term incentives (STIs) are ‘a pay grant for the Executive Team member. guide to assist all investors to performance hurdles over the three-year performance period ending 20 June 2021, Marc England will receive a gross LTI bonus of $566,371 to be applied to repay for performance’ component designed Over the performance period of three his LTI loan balance. See page 57 for LTI detail. understand how remuneration is to motivate and reward performance in years the Company must satisfy certain aligned with value creation for its a single financial year. The target value performance measures in order for the shareholders. Genesis’ remuneration of an STI is set annually as a percentage incentive to be paid. LTI payments, if Five year summary - Chief Executive remuneration policy for the Executive Team including of the Executive’s fixed remuneration. achieved, are made in Genesis shares PERCENTAGE STI PERCENTAGE LTI the Chief Executive is designed to have TOTAL For FY19 the target for the Chief rather than cash, and the Board retains CHIEF EXECUTIVE ACHIEVED AGAINST VESTED LTI AGAINST PERFORMANCE them remunerated with competitive REMUNERATION Executive was 50 per cent and for other discretion over the final outcome. More MAXIMUM % MAXIMUM PERIOD salaries, a wide range of benefits Executives was between 25 per cent details on the LTI scheme can be found Marc England FY19 $2,351,631 85% 100% July 2016 – June 2019 and use of performance incentives and 40 per cent. The performance on page 57. FY18 $2,061,265 79% 100% July 2015 – June 2018 to achieve outstanding performance measures to achieve the STI are then FY17 $1,429,928 68% N/A N/A and alignment with our shareholders' set across Company KPIs for EBITDAF, Genesis Energy’s LTI scheme has FY16 $308,070 43% N/A N/A interests. The Human Resources Customer, Health and Safety and been reviewed and a new scheme Albert Brantley FY16 $2,114,862 43% N/A N/A and Remuneration Committee (HR individual KPIs. Within each measure, established to ensure it continues FY15 $1,733,193 58% N/A N/A & Rem Committee) regularly reviews there are three performance levels, to attract, retain and motivate the remuneration policy. For the high calibre executive members to ‘threshold’, ‘on target’ and ‘stretch’. Total remuneration including Salary, Benefits, and STI and LTI earned in the year but paid in the following year. Executive Team the policy provides On appraisal at the end of each year drive outstanding outcomes for our the opportunity to achieve, where an Executive will be awarded an STI customers and our shareholders. performance has been outstanding, payment based on their performance Details of the new scheme effective a total remuneration package in the from FY20 will be included in next between a range of 0 per cent for Five year summary - TSR Performance upper quartile for equivalent market below threshold performance, to year’s Annual Report. matched roles. Each year the HR & Rem 150 per cent for outstanding Committee reviews the performance performance. Gen-Tailor Peer Avg NZX50 GNE

60%

The Chief Executive remuneration is presented below as the value of all remuneration and benefits earned in FY19 and FY18. 50%

The total remuneration earned by Chief Executive Marc England for FY19 and FY18 is as follows: 40% TOTAL FIXED REMUNERATION PAY FOR PERFORMANCE REMUNERATION 30% Period BASE SALARY BENEFITS SUBTOTAL STI LTI SUBTOTAL

For personal use only use personal For FY19 1,164,730 90,447 1,255,177 719,291 37 7,163 1,096,454 2,351,631 20% FY18 1,086,338 179,279 1,265,617 514,848 280,800 795,648 2,061,265 10% The Base Salary is inclusive of holiday pay paid as per New Zealand legislation. Benefits include employer contributions towards KiwiSaver on the base salary, STI and LTI. FY18 benefits includes a one off payment of $100,000 as reported in FY18. The FY17 LTI grant met the performance measures for Genesis Energy TSR to be 0% above the 75 percentile of the NZX50 in the three-year performance period ending 30 June 2019 and achieved a 100 per cent vesting outcome. FY15 FY16 FY17 FY18 FY19 The FY19 LTI value above represents the gross LTI bonus earned on vesting of the FY17 grant. The net LTI bonus was applied to repay Marc England’s LTI loan balance. The accumulated cash dividends net of withholding tax of $54,389 was paid to Marc England in July 2019. The dividends are earned subsquent to the initial grant and are excluded from the LTI amount above. Following repayment of his LTI loan balance, 123,460 ordinary shares with a market value of $3.47 were transferred to Marc England on 22 July 2019.

64 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES CORPORATE GOVERNANCE AND DISCLOSURES GENESIS ANNUAL REPORT 2019 65 Director and Executive employee remuneration (continued)

Directors’ fees Directors’ remuneration is in the form The cover extends to liabilities to prohibited from being insured against of Directors’ fees for non-executive persons (other than the Company by law or relates to fraudulent conduct. Chief Executive remuneration performance pay for FY19 Directors, approved by shareholders. and its subsidiaries or related Remuneration of Company employees, Pay For Performance Scenarios bodies corporate) that arise out including those acting as Directors of The Chairman receives a higher level of the performance of their duties subsidiary companies, is disclosed in of fees to reflect the additional time 3,000,000 as Directors, unless the liability is the relevant banding on page 66. and responsibilities that this position 2,500,000 involves but does not receive any 2,000,000 fees for committee membership or 1,500,000 attendances. Table 1 – Approved Directors’ fees 1,000,000 POSITION FEES PER ANNUM TOTAL 500,000 Shareholders have approved Board of Directors Chairman 180,000 180,000 0 remuneration for membership of the Fixed On Plan Maximum Member (x7) 90,000 630,000 various Board committees. Fixed STI LTI Maximum Potential STI 150% Audit and Risk Committee Chairman 24,000 24,000 Table 1 sets out the Shareholder- Member (x3) 12,000 36,000 approved Directors’ fees for the year Human Resources and Chairman 15,000 15,000 Remuneration Committee to 30 June 2019. These fees were Member (x3) 7,500 22,500 last approved by shareholders at the Nominations Committee Chairman² - - Company’s 2016 Annual Shareholder Member (x3) 5,000 15,000 Meeting. Pool for additional work or 17,500 17,500 No Director is entitled to any attendances1 remuneration from the Company other Total approved pool $940,000 Remuneration of employees earning over $100,000 in the year ending 30 June 2019 than by way of Directors’ fees and the 1. In 2016 shareholders approved a $25,000 pool of fees for additional work or attendances. In the year to 30 June, There were 353 Genesis and subsidiary employees (or former employees) who received remuneration and benefits in excess of $7,500 of the pool was reallocated to permit the appointment of a fourth member to the Human Resources and reimbursement of reasonable travelling, Remuneration Committee. $100,000 (not including Directors) in their capacity as employees during the year ended 30 June 2019, as set out below. accommodation and other expenses 2. The Chairman of the Board is the chairman of the Committee and does not receive any fees for Committee Remuneration of employees incurred in performing their duties as membership. REMUNERATION EMPLOYEES REMUNERATION EMPLOYEES REMUNERATION EMPLOYEES Directors. $2,030,000 - $2,040,000 1 $310,000 - $320,000 1 $200,000 - $210,000 7 Table 2 sets out the remuneration paid Table 2 – Directors’ fees paid during FY19 $930,000 - $940,000 1 $300,000 - $310,000 3 $190,000 - $200,000 2 to Directors during the year to 30 June 2019. $760,000 - $770,000 1 $290,000 - $300,000 2 $180,000 - $190,000 7 BOARD AUDIT & RISK HR & REM NOMINATIONS DIRECTOR FEES COMMITTEE COMMITTEE COMMITTEE TOTAL Details of Directors of subsidiary $700,000 - $710,000 1 $280,000 - $290,000 2 $170,000 - $180,000 18 entities forming part of the Genesis Barbara Chapman1 155,081 3,323 - - 158,404 $600,000 - $610,000 1 $260,000 - $270,000 7 $160,000 - $170,000 24 Energy Group are set out in the Catherine Drayton2 26,337 3,000 - - 29,337 $490,000 - $500,000 2 $250,000 - $260,000 2 $150,000 - $160,000 34 Statutory Disclosures on page 69. Doug McKay 90,000 - 15,000 5,000 110,000 Tim Miles 90,000 - 7,500 5,000 102,500 $430,000 - $440,000 1 $240,000 - $250,000 3 $140,000 - $150,000 29 Directors received no remuneration James Moulder3 65,081 8,000 - - 73,081 $350,000 - $360,000 3 $230,000 - $240,000 3 $130,000 - $140,000 37 or other benefits during the period in relation to their duties as Directors of a Maury Leyland 90,000 12,000 4,375 - 106,375 $340,000 - $350,000 1 $220,000 - $230,000 2 $120,000 - $130,000 61 subsidiary. Penno $320,000 - $330,000 1 $210,000 - $220,000 1 $110,000 - $120,000 45 Joanna Perry 90,000 24,000 - - 114,000 All Directors received the benefit of an Paul Zealand 90,000 - 7,500 5,000 102,500 $100,000 - $110,000 50 indemnity from Genesis and the benefit Dame Jenny 49,839 - - - 49,839 Total employees earning $100,000+ 353 of Directors and Officers liability Shipley4 insurance cover.

Employees who are included but who are no longer at Genesis Energy as at 30 June 2019 24 Mark Cross5 15,000 2,000 - - 17,000 For personal use only use personal For This includes base salary, employer KiwiSaver contributions, vested shares from employee share schemes, short-term performance payments, settlement payments and Pool for additional - - -- redundancy payments for all permanent employees received during FY19. Short-term performance payments and the LTI bonus are paid in arrears; therefore the table work or attendances above includes the STI and LTI earned in FY18. GRAND TOTAL $863,036

1. Barbara Chapman was appointed Chairman on 10 October 2018. 2. Catherine Drayton was appointed on 14 March 2019. 3. James Moulder was appointed on 10 October 2018. 4. Dame Jenny Shipley retired from the Board on 10 October 2018. 5. Mark Cross resigned from the Board on 27 August 2018. Directors’ fees exclude GST and reimbursed costs directly associated with carrying out their duties.

66 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES CORPORATE GOVERNANCE AND DISCLOSURES GENESIS ANNUAL REPORT 2019 67 Directors of subsidiary companies Directors’ interests in shares Credit rating Statutory disclosures Directors disclosed the following As at the date of this Annual Report As at 30 June 2019: relevant interests in Genesis Energy Standard & Poor’s long-term credit Ngā Whakapuakitanga Whakature >> The Chairman of Genesis, shares as at 30 June 2019: rating for Genesis was BBB+ Stable. Barbara Chapman, the Chief RELEVANT Exercise of NZX disciplinary powers Executive of Genesis, Marc INTEREST HELD Interests register entries The NZX did not exercise any of its England, and Chief Financial DIRECTOR IN SHARES In accordance with section 211(1)(e) of the Companies Act, particulars of the entries in the Interests Register of Genesis during Officer of Genesis, Chris powers under Listing Rule 5.4.2 (of Barbara Chapman Nil the financial year to 30 June 2019 are set out in the table below: Jewell, were Directors of all the NZX listing rules applicable to the the subsidiary companies listed Catherine Drayton Nil Company during the year) in relation to DIR. POSITION COMPANY DIR. POSITION COMPANY in Note D1 of the financial Genesis during FY19. Maury Leyland Penno 19,088 Director IAG New Zealand1 Director Cybele Capital Limited1 statements with the exception Auditor’s fees Director Fletcher Building Limited Director Motupipi Holdings Limited1 Doug McKay 15,814

of Genesis Energy’s captive Director The New Zealand Initiative Trustee Moulder Family Trust1 insurance company incorporated Deloitte, on behalf of the Auditor- and Deputy Chair Tim Miles 40,410 Director Motupipi Offshore Investments1 in Singapore, Genesis Energy General, has continued to act as Trustee Flinton Trust Director Lycaon Advisory Limited1 Insurance Pte Limited. James Moulder Nil auditor for the Company and the Director and Two Tin Pigs Limited Director Tasman Environmental Markets Pty

(Chairman) amounts paid and payable by Genesis Shareholder Limited1 >> Chris Jewell, the Chief Financial Joanna Perry 29,799

Barbara Chapman Director NZME Director Tasman Environmental Markets and its subsidiaries to Deloitte, for James Moulder James Officer, Warwick Williams, Limited Partnership1 Paul Zealand Nil audit fees (including half year review Patron New Zealand Rainbow Tick Excellence the Senior Regulatory Advisor Awards Director Ramp Carbon Limited1 fees) and non-audit fees in FY19, were and George McGhie (resident Director Guardians of New Zealand Director NDVER Carbon Reductions Pty Waivers from the NZX $557,000 and $139,510 respectively. Superannuation1 Limited1 Singapore-based Director Chair Christchurch International Airport Director Nyriad Limited and employed by the Genesis On 19 November 2018, an NZX Limited1 Stock exchange listings Chair IFRS Advisory Council Energy captive manager Willis Regulation Decision was published Director Southern Cross Medical Care Society1 Director Trade Me Group Limited Management (Singapore) Genesis' ordinary shares are listed Director Southern Cross Hospitals Limited1 which included a class ruling providing Director and Shareholder JMGP Limited and quoted on the NZX Main Board Director Southern Cross Benefits Limited1 Pte Limited) were Directors that waivers and rulings previously Director Partners Life Holding Limited (NZSX) and the Australian Securities Trustee Trustee of Southern Cross Health Trust1 of Genesis Energy’s captive granted to issuers transitioning to Director Partners Life Limited Exchange (ASX) under the company Councillor University of Canterbury Council1 Perry Joanna insurance company incorporated the new NZX Listing Rules will have Deputy Chair Regional Facilities Auckland in Singapore, Genesis Energy comparable effect under the new NZX code 'GNE'. Genesis has three issues Catherine Drayton Catherine Director Fronde Systems Group Limited1 Oyster Property Group (and Chairman of retail bonds listed and quoted on Director Beca Group Limited1 subsidiaries) Insurance Pte Limited. Listing Rules (the Class Ruling). The the NZX Debt Market (NZDX) under Director and Shareholder CMD Associates Limited1 Dale Vercoe Community Care Class Ruling is available until 30 June Trustee Director and Shareholder CMD Commercial Limited1 Charitable Trust1 2020. The Company has relied on company codes 'GNE030', 'GNE040' Director and Shareholder Harbour View Properties Limited1 Director Lochard Energy the Class Ruling in respect of waivers and 'GNE050'. Genesis' listing on the The New Zealand Refining Company ASX is as a Foreign Exempt Listing. For Paul Director Director Leaft Foods1 Limited from old NZX Listing Rule 9.2.1 (in Zealand Disclosures of Directors’ interests in the purposes of ASX lising rule 1.15.3, Director Signum Holdings Limited1 Director Zoenergy Limited respect of transmission agreements share transactions Genesis confirms that it continues to Director and Shareholder Pure Food Company Limited1 Trustee Zealand Family Trust with Transpower) and old NZX Listing comply with NZX Listing Rules. Director and Shareholder Stem and Stalk Limited1 Chair Oravida Limited and subsidiaries During FY19, in relation to the Rule 11.1.6 (in respect of the inclusion Director Okuora Holdings Limited Co-Chair Champion for Change Company’s Directors, the following of certain provisions in the Company’s Chair and Trustee The Education Hub Director Director of BOAO Forum for Asia disclosures were made in the Interests Constitution) and a ruling in relation to Trustee Arapito Trust Chair of China Construction Bank old NZX Listing Rule 10.8.1 (in respect Chairman Register as to dealing in Company Maury Penno Leyland Trustee Polperro No. 2 Trust (New Zealand) Limited shares under section 148 of the of the Company not being a “mining Director Wangapeka River Hops Limited Director and Shareholder Jenny Shipley New Zealand Ltd Companies Act 1993: issuer”). These waivers and ruling were Director Fletcher Building Limited Shipley Jenny Trustee Heart Health Research Trust issued at the time of the initial public Chair Eden Park Trust Board Trustee Shipley Family Trust Joanna Perry made ongoing disclosures

(retired 10 October 2018) offering of the Company. Bank of New Zealand Group (and in relation to beneficial interests in the Chair Executive Board Member New Zealand China Council subsidiaries) Director acquisition of 1,604 ordinary shares IAG New Zealand Limited and Donations Director Milford Asset Management Limited in the Company pursuant to the subsidiaries Chairman and Shareholder (and subsidiaries) Company’s Dividend Reinvestment In accordance with section 211(1)(h)

Doug McKay Director Wymac Consulting Limited Chairman and Shareholder MFL Mutual Fund Limited Plan. of the Companies Act 1993, Genesis Director National Australia Bank Chairman and Shareholder Superannuation Investments Limited records that it made donations of Director and Shareholder Emcee Squared Limited Director and Shareholder Tourism Transport Limited Use of Company information $19,771 during the year ended 30 June Director and Shareholder Alpha Investment Partners Limited Director oOh!media Limited1 2019. Genesis subsidiaries did not make Director and Shareholder Virsae Group Limited No notices have been received by the Mark Cross For personal use only use personal For Director UDC Finance1 any donations. Director Z Energy Limited (and subsidiaries) Board of Genesis under section 145 of Director Nyriad Limited1 Director Argosy Property Limited the Companies Act 1993 with regard

Chairman Gut Cancer Foundation1 2018) 27 August (resigned Triathlon Youth Foundation New Trustee to the use of Company information Director and Shareholder Jeffries Miles Consultancy Limited Zealand received by Directors in their capacities Director and Shareholder Jeffries Miles Property Limited Trustee Cross Family Trust Tim Miles Tim Director Khandallah Trust Limited as Directors of the Company or its 1 Entries added by notices given by Directors during the year ended 30 June 2019. Trustee Marshall Miles Family Trust subsidiary companies. Trustee Barbara Nel Miles Trust Advisory Trustee Leadership New Zealand

68 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES CORPORATE GOVERNANCE AND DISCLOSURES GENESIS ANNUAL REPORT 2019 69 Twenty largest registered shareholders as at 30 June 2019* Genesis Energy Limited (GNE040) 5.70% Bonds 09/06/2047 (Total) NAME UNITS AT 30 JUNE 2019 % OF UNITS Top Holders As Of 30/06/2019 Composition: G004 Her Majesty The Queen In Right Of New Zealand Acting By And Through 524,433,655 51.23 RANK NAME UNIT % UNITS Her Minister Of Finance And Minister For State Owned Enterprises (SOE) 1 Forsyth Barr Custodians Limited 41,108,000 18.27 HSBC Custody Nominees (Australia) Limited 31,924,843 3.11 2 Jbwere (NZ) Nominees Limited 23,412,000 10.41 Citibank Nominees (New Zealand) Limited 27,236,402 2.66 3 FNZ Custodians Limited 15,013,000 6.67 HSBC Nominees (New Zealand) Limited 22,582,332 2.20 4 Custodial Services Limited 11,855,000 5.27 HSBC Nominees (New Zealand) Limited 22,010,268 2.15 5 Custodial Services Limited 10,141,000 4.51 Accident Compensation Corporation 19,991,719 1.95 6 National Nominees New Zealand Limited 9,086,000 4.04 JP Morgan Chase Bank Na NZ Branch 15,389,057 1.50 7 Custodial Services Limited 7,207,000 3.20 Forsyth Barr Custodians Limited 14,690,508 1.43 8 Investment Custodial Services Limited 5,359,000 2.38 FNZ Custodians Limited 10,272,493 1.00 9 Public Trust Class 10 Nominees Limited 4,485,000 1.99 Citicorp Nominees Pty Limited 9,116,896 0.89 10 Custodial Services Limited 4,337,000 1.93 Custodial Services Limited 9,115,777 0.89 11 Custodial Services Limited 3,989,000 1.77 JBWere (NZ) Nominees Limited 8,925,648 0.87 12 Ponz Capital Limited 3,146,000 1.40 ANZ Wholesale Australasian Share Fund 8,575,570 0.83 13 Custodial Services Limited 2,231,000 0.99 Custodial Services Limited 7,221,900 0.70 14 Citibank Nominees (New Zealand) Limited 1,870,000 0.83 BNP Paribas Nominees (NZ) Limited 6,601,363 0.64 15 Fletcher Building Educational Fund Limited 1,600,000 0.71 New Zealand Depository Nominee Limited 5,757,999 0.56 16 Forsyth Barr Custodians Limited 1,585,000 0.70 JP Morgan Nominees Australia Limited 5,465,178 0.53 17 Arden Capital Limited 1,450,000 0.64 Clyde Parker Holland & Rena Holland 5,250,000 0.51 18 Vincent Ka Soon Chia & Vui Yung Chia 1,300,000 0.58 Investment Custodial Services Limited 4,942,611 0.48 19 ANZ Custodial Services New Zealand Limited 1,180,000 0.52 BNP Paribas Nominees (NZ) Limited 4,937,332 0.48 20 Anne Margaret Tindall 1,150,000 0.51 Totals: Top 20 holders of Ordinary Shares 764,441,551 74.61 Totals: Top 20 holders of 5.70% BONDS 09/06/2047 (Total) 151,504,000 6 7.32 * In the above table the shareholding of New Zealand Central Securities Depository Limited (NZSCD) has been allocated to the applicable members of NZSCD. Total Remaining Holders Balance 73,496,000 32.68

Substantial security holders The following information is given pursuant to section 293 of the Financial Markets Conduct Act 2013 (FMCA). According to notice given to the Company pursuant to section 280 (1) (b) of the FMCA, the substantial security holder in the Company and its Genesis Energy Limited (GNE050) 4.65% Bonds 16/07/2048 (Total) relevant interests as at the date of the notice are noted below. The total number of voting shares on issue as at 30 June 2019 was Top Holders As Of 30/06/2019 Composition: G005 1,023,646,556. RANK NAME UNIT % UNITS DATE OF RELEVANT INTEREST IN % OF SHARES HELD AT 1 Forsyth Barr Custodians Limited 61,393,000 25.58 SUBSTANTIAL SECURITY NOTICE THE NUMBER OF SHARES DATE OF NOTICE 2 Jbwere (NZ) Nominees Limited 32,691,000 13.62 Her Majesty The Queen 6 July 2015 519,723,781 51.97 3 Custodial Services Limited 15,134,000 6.31 In Right Of New Zealand 4 Custodial Services Limited 12,208,000 5.09 5 Custodial Services Limited 10,243,000 4.27 Genesis Energy Limited (GNE030) 4.14% Bonds 18/03/2022 (Total) 6 Investment Custodial Services Limited 9,095,000 3.79 Top Holders As Of 30/06/2019 Composition: G001 7 FNZ Custodians Limited 8,290,000 3.45 RANK NAME UNIT % UNITS 8 Custodial Services Limited 5,181,000 2.16 1 JP Morgan Chase Bank Na Nz Branch-Segregated Clients Acct 10,525,000 10.53 9 Custodial Services Limited 4,781,000 1.99 2 FNZ Custodians Limited 9,625,000 9.63 10 Forsyth Barr Custodians Limited 4,450,000 1.85 3 Custodial Services Limited 6,762,000 6.76 11 Custodial Services Limited 2,380,000 0.99 4 Forsyth Barr Custodians Limited 5,403,000 5.40 12 John Culyer Wigglesworth & Dennis James Munn & Sondra Wigglesworth 1,500,000 0.63 5 Investment Custodial Services Limited 5,390,000 5.39 13 Kps Society Limited 835,000 0.35 6 BNP Paribas Nominees (NZ) Limited 5,200,000 5.20 14 Forsyth Barr Custodians Limited 804,000 0.34 7 Citibank Nominees (New Zealand) Limited 5,131,000 5.13 15 Jbwere (NZ) Nominees Limited 750,000 0.31 8 Custodial Services Limited 4,537,000 4.54 16 Investment Custodial Services Limited 653,000 0.27 9 Custodial Services Limited 4,136,000 4.14 17 Best Farm Limited 600,000 0.25 10 Custodial Services Limited 4,004,000 4.00 18 Investment Custodial Services Limited 530,000 0.22 11 Custodial Services Limited 2,527,000 2.53 19 BNP Paribas Nominees (NZ) Limited 505,000 0.21 12 FNZ Custodians Limited 2,458,000 2.46 20 Chilcotin Investments Limited 500,000 0.21

For personal use only use personal For 13 Southland Building Society 1,600,000 1.60 20 Jml Capital Limited 500,000 0.21 14 ANZ Custodial Services New Zealand Limited 1,340,000 1.34 20 Renzhong Gong 500,000 0.21 15 TEA Custodians Limited Client Property Trust Account 1,100,000 1.10 20 Somsmith Nominees Limited 500,000 0.21 16 BNP Paribas Nominees (NZ) Limited 1,025,000 1.03 Totals: Top 20 holders of 5.70% BONDS 09/06/2047 (Total) 174,023,000 72.52 17 Custodial Services Limited 1,013,000 1.01 Total Remaining Holders Balance 65,977,000 27.48 18 Tappenden Holdings Limited 700,000 0.70 19 Custodial Services Limited 660,000 0.66 20 FNZ Custodians Limited 601,000 0.60 Totals: Top 20 holders of 4.14% BONDS 18/03/2022 (Total) 73,737,000 73.75 Total Remaining Holders Balance 26,263,000 26.25

70 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES CORPORATE GOVERNANCE AND DISCLOSURES GENESIS ANNUAL REPORT 2019 71 Distribution of ordinary shares and shareholdings as at 30 June 2019

NUMBER OF % OF NUMBER OF % OF SIZE OF HOLDING SHAREHOLDERS SHAREHOLDERS ORDINARY SHARES ORDINARY SHARES

1 to 999 4,472 10.09 2,842,259 0.28

1,000 – 4,999 32,440 73.17 73,914,205 7.22

5,000 – 9,999 3,401 7.67 23,173,633 2.26

10,000 – 49,999 3,569 8.05 66,582,756 6.50

50,000 – 99,999 276 0.62 18,165,828 1.78

100,000 and over 175 0.40 838,967,875 81.96

Totals 44,333 100.00 1,023,646,556 100.00

Debt listings Genesis Energy’s subordinated, unsecured capital bonds are listed on the New Zealand Debt Market Exchange. Distribution of holders of quoted securities

INVESTOR RANGES: 30 JUNE 2019 SECURITY CODE: GNE030 RANGE HOLDER % OF HOLDERS NUMBER OF BONDS % OF BONDS

5,000 to 9,999 156 22.38 917,000 0.92

10,000 – 49,999 394 56.53 7,863,000 7.86

50,000 – 99,999 79 11.33 4,794,000 4.79

100,000 – 499,999 50 7.17 8,900,000 8.90

500,000 – 999,999 7 1.01 3,996,000 4.00

1,000,000 and over 11 1.58 73,530,000 73.53

Totals 697 100.00 100,000,000 100.00

INVESTOR RANGES: 30 JUNE 2019 SECURITY CODE: GNE040 RANGE HOLDER % OF HOLDERS NUMBER OF BONDS % OF BONDS OFFICE LOCATIONS AUDITOR

5,000 to 9,999 148 9.52 862,000 0.38 Head/Registered Office Bryce Henderson 10,000 – 49,999 1,010 64.95 22,213,000 9.87 Genesis Energy Building of Deloitte Limited 50,000 – 99,999 222 14.28 13,015,000 5.78 660 Great South Road, has been appointed to 100,000 – 499,999 142 9.13 24,514,000 10.90 Greenlane, Auckland 1051 perform the audit on behalf P: 64 9 580 2094 of the Auditor-General. 500,000 – 999,999 13 0.84 8,192,000 3.64 F: 64 9 580 4894 1,000,000 and over 20 1.28 156,204,000 69.43 E: [email protected] B A N K E R S [email protected] Westpac Totals 1,555 100.00 225,000,000 100.00 [email protected] INVESTOR RANGES: 30 JUNE 2019 W: genesisenergy.co.nz BOARD/EXECUTIVE PHOTOS SECURITY CODE: GNE050 energyonline.co.nz Scott McAulay Photography % OF ISSUED CAPITAL RANGE HOLDER % OF HOLDERS NUMBER OF BONDS % OF BONDS Hamilton PRINTED REPORT PAPER STOCK 94 Bryce Street, Hamilton Our Annual Report is printed on Tauro Offset 5,000 to 9,999 124 6.77 718,000 0.30 Huntly Power Station paper stock, which is made from material from 10,000 – 49,999 1,290 70.41 27,417,000 11.42 Cnr Te Ohaki and well-managed, FSC® -certified forests and 50,000 – 99,999 248 13.54 14,390,000 6.00 Hetherington Roads, Huntly othercontrolled sources. The fibre used to produce Tauro Offset is elemental chlorine free (ECF). 100,000 – 499,999 147 8.02 22,982,000 9.57 Tokaanu Power Station State Highway 47, Tokaanu

For personal use only use personal For 500,000 – 999,999 11 0.60 7,147,000 2.98 Waikaremoana Power Station 1,000,000 and over 12 0.66 167,346,000 69.73 Main Road, Tuai RD5, Totals 1,832 100.00 240,000,000 100.00 Wairoa 4195 Tekapo Power Station 167 Tekapo Power House Road, Tekapo 7999

72 GENESIS ANNUAL REPORT 2019 CORPORATE GOVERNANCE AND DISCLOSURES For personal use only