Genesis delivers strong result while investing for growth
GENESIS ENERGY LIMITED
Interim Report 2021
GENESIS ENERGY LIMITED
Interim Report 2022
2
GENESIS INTERIM REPORT 2022
Barbara Chapman CNZM
CHAIR
Marc England
CHIEF EXECUTIVE
Tēnā koutou,
Genesis continued to move at pace in
the first half of the 2021-22 financial
year with ongoing investment in the
transformation of the business and
new renewable generation, while
at the same time delivering another
solid financial performance.
The flexibility of our generation
assets, the Waipipi wind farm being
fully operational and growth in retail
netbacks were among important
contributors to the result. EBITDAF
was $210.3m, NPAT was up 63%
to $84.7m and gross margin was up
1% to $354.6m. The board approved
an interim dividend of 8.7 cents per
share and the reintroduction of the
Dividend Reinvestment Plan at 2.5%
discount.
Investing for the future
Our digital transformation continues
and will create consistent and
distinctive end-to-end customer
experiences, allow us to scale new
products and services at a greater
pace, integrate with partners more
efficiently, and reduce cost and risk
through automated processes.
We also continue to invest in our
assets to maximise their efficiency
and output.
During the half, along with our Kupe
joint venture partners Beach Energy
and NZ Oil and Gas, a $72m project
at the gas production station near
New Plymouth was completed.
It restored the plant's potential
capacity of 77TJs per day, equivalent
to approximately 15% of New
Zealand’s daily natural gas demand.
The joint venture partners are now
investigating the potential for drilling
another development well to further
increase recovery from the field.
Kupe remains a high-quality gas asset
and will continue to play a key role in
New Zealand’s transition to a lower
carbon future.
After five years of planning, design
and manufacture, work started on
stage two of a challenging upgrade
of our Tekapo B power station that
will future-proof it for decades. The
$15m+ project will see the station
deliver its 800 GWh of annual
generation by using up to 12,000
less litres of water per second.
The project will deliver operational
flexibility along with reduced
running limitations and annual
maintenance costs. The work follows
the completion of a two-year $26.5m
project to install a new intake gate at
Tekapo A in FY21.
Chairman and Chief Executive’s
joint letter
FROM THE CHAIRMAN AND CEO
Pukapuka Mai I te Heamana me te Manahautū
EBITDAF¹
m
HY21 $216.0m
$
NPAT
2
m
HY21 $52.0m
$
1. EBITDAF: Earnings before net finance expense, income
tax, depreciation, depletion, amortisation, impairment,
fair value changes, and other gains and losses. Refer
to the consolidated comprehensive income statement
on page 6 for reconciliation from EBITDAF to net profit
after tax.
2. Net Profit After Tax.
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GENESIS INTERIM REPORT 2022
sources of energy. Locations for the
solar developments will be mainly
in the North Island with a focus on
existing transmission connection
points.
Helping customers reduce their
emissions
Empowering New Zealand’s
sustainable future includes providing
tools and insights to help customers
understand and take action on their
own carbon footprint. Reducing
transport emissions is a focus for the
country, and we’ve developed some
unique offerings for electric vehicle
owners. More than 1,000 customers
have taken up our EV Plan over recent
months, and we’ve developed a portal
on our Energy IQ platform where
they can access data on their usage
and find the most cost-effective and
emissions-friendly times to charge.
Among those on the plan so far, we’ve
seen 7% moving their household
usage from day to night.
FROM THE CHAIRMAN AND CEO
EV Sync can
automate the
best times for
charging
added benefit that the power used
can be measured separately from the
rest of the house and sent directly
to the company for reporting and
reimbursement.
We have also seen strong growth
among commercial and industrial
customers wanting to understand their
energy use as the first step toward
decarbonising their business. Now,
more than 25% of these customers
– with 5% growth in the half - are
purchasing decarbonisation services
from us. A key driver in the uptake
of these differentiating products has
come from restructuring the supply
of our Energy Insights monitoring
product. We moved from a third-party
leasing arrangement to developing
our own sensors at the start of this
financial year, and now operate more
than 1,000 at clients’ premises.
Launching Frank*Energy
We also rebranded Energy Online
to Frank*Energy to reflect a new
direction, offering and attitude that it
will bring to the market. Challenger
retail brands have grown 40% over
the last four years and Frank*Energy
offers a simplified customer
proposition and business model to
keep prices low with digital sign up,
service and automation to drive lower
cost to acquire and serve. There are
no contracts, no preferential deals
with the same plans available for new
and existing customers. Frank*Energy
starts with a base of 90,000
customers and offers electricity, gas
and LPG. Customers can sign up,
manage their usage, pay bills and
place orders for LPG through the
Frank app and online. While owned by
Genesis, Frank*Energy, will operate
autonomously.
On the North Island’s East Coast, a
$7.7m project is underway to overhaul
two turbines at the Piripaua power
station. It's expected to improve
efficiency by 3.3%. Work on the
first generator started in November
and will run through till March. The
second unit will be upgraded in FY23.
Empowering New Zealand’s
sustainable future
Playing our role in the country’s
transition to a low carbon future
remains top of mind across the
organisation. This includes building
a sustainability framework to help us
deliver our targets.
In November we launched a
comprehensive Sustainable Finance
Programme, recognising the
company’s commitment, leadership
and investment in mitigating climate
change and sustainability more
broadly. The programme includes a
new Sustainable Finance Framework,
designating an existing NZX listed
bond (GNE030) as a Green Bond
and a $100m loan linked to achieving
our sustainability targets. The
targets acknowledge the broad
reach of sustainability, and include
reductions across all scopes of
emissions, ramp up renewable energy
generation goals, and a future of
work programme. As per the terms of
sustainable linked loans, Genesis will
pay a lower interest rate on the loan
for achieving its goals but will have to
pay higher interest if it falls short of
its commitments. During December
2021, Genesis converted a further
$150m of its funding facilities to a
sustainability linked loan structure.
Continuing to execute our Future-gen
strategy at pace, we also confirmed
FRV Australia as our joint venture
partner for the development of
grid-scale solar. FRV Australia is a
leading developer of utility-scale solar
farms and will bring its expertise in
developing these around the world
to work with Genesis in delivering
up to 500MW of solar capacity over
the next five years. This will generate
about 750GWh pa – enough to power
100,000 households or 185,000 EVs
per year. Genesis will hold a 60%
stake in the joint venture, which will
add to our generation portfolio of
hydro, wind, geothermal and thermal
We also partnered with Christchurch
based company Evnex to develop
and trial new EV smart charging
technology. Evnex has been at the
forefront of developing chargers since
2014 and now has a market-leading
smart charger that can safely reduce
overnight charging to a few hours.
The smart charger can also ‘talk’ to
electricity lines companies to balance
load and help smooth demand on
the grid. Genesis, through in-house
software development, has added
EV Sync, an intelligent feature that
connects the smart chargers to the
Energy IQ app so customers can
schedule and automate the best times
to charge.
Genesis is using the Evnex smart
chargers in a pilot with EV car sharing
company Zilch for one of their large
corporate clients. It includes the
installation of chargers in employee
homes as a cost-effective alternative
to workplace charging, with the
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GENESIS INTERIM REPORT 2022
Officer in January while Rebecca
Larking and Pauline Martin will
transition to their respective new
roles, Chief Operations Officer and
Chief Trading Officer, by mid-April.
We’re also pleased to welcome James
Spence as Chief Financial Officer.
We should all be mindful of NIWA’s
warning about La Nina weather
patterns for the next few months,
but the sector is in better shape
heading toward autumn and winter
than a year ago. The lakes are fuller,
we have reliable supplies of gas, and
the Waipipi wind farm is now fully
operational. There is also sufficient
coal to back-up the system, if the
country needs it.
Above all, after more than 100 days
of lockdown, our thanks go to all
our people who adjusted superbly
to the challenges and continued to
deliver strongly for our customers
and shareholders, helping Genesis to
continue to empower New Zealand’s
sustainable future.
Ngā mihi,
Barbara Chapman
Chairman
Marc England
Chief Executive Officer
FROM THE CHAIRMAN AND CEO
The role of Huntly
Huntly’s role in supporting the
market through the dry year of 2021
underlined its strategic importance to
New Zealand. This was also borne out
in independent analysis of the market
that we commissioned looking at four
different market scenarios through to
2030. In all scenarios, New Zealand
is on track to achieve 96% - 98%
renewable electricity by 2030 with
some thermal generation expected
to be needed to maintain a reliable
electricity system when renewable
energy is low.
Emissions from Huntly will decrease
sharply throughout this decade. We
believe we have reached peak coal
use and are looking at alternative
fuel options for the Rankines, such
as biomass. Broadly speaking, there
are three aspects to the work –
sourcing the right type of biomass,
ensuring there is a reliable supply, and
understanding the changes that will
need to be made to the Rankine units.
There is a lot to learn in each of these
areas. We are hopeful a biomass trial
will be possible in the coming months,
and, if successful, we’ll assess the
fuel’s commercial viability.
We believe that Huntly is a viable
alternative to the Lake Onslow
pumped hydro project. It’s ideally
located for major electricity
generation, close to demand, with
high voltage connection, and has
access to a good local workforce.
Transitioning the Rankines to biomass
strengthens the case for Huntly to
continue as the country’s electricity
back-up.
Coping with Covid
Covid-19 has proven to be a marathon
rather than a sprint for the country.
We’re very proud of how our staff
have adapted to fluctuating alert
levels and varied restrictions to
continue supporting our customers
and keeping our sites operational.
At all times, our priority has been
the safety of our people and we have
proactively looked at trends and
developments around the world. In
August we introduced saliva testing at
Huntly to provide assurance our staff
and the plant could operate safely.
We also joined other businesses in
November calling on the Government
to allow us to import rapid antigen
tests as another layer of protection
for staff and help ensure workplace
continuity. The Government agreed
and we secured more than 50,000
tests that are being deployed across
our business. Each staff member has
been provided with rapid antigen
testing kits and training. To enter
any of our premises, staff need to
complete a negative test twice a
week and upload the result to an
internal app. The feedback from staff
was overwhelmingly positive and our
people have completed more than
15,500 rapid antigen tests to date.
Looking ahead
Dealing with Covid-19 remains a key
priority but will not slow the pace of
our transformation.
The sector is waiting for the
Government to deliver a national
energy strategy later this year that
we hope will provide a detailed
framework for how the country will
achieve a lower carbon future. We
would like to see a clearly defined
long-term national energy strategy
with a strong commitment to a
more renewable energy system
supported by clear policies developed
in collaboration with business. We
believe a focus on carbon intensive
areas such as process heat and
transport should be a priority,
recognising the opportunity for
electricity to support a lower carbon
Aotearoa.
We enter the next phase of our
growth with four new executives
and a gender balanced executive
team. Three of the appointments
are internal promotions highlighting
the strong professional development
programme within the business to
foster growth and succession. Peter
Kennedy was appointed Chief Digital
Saliva testing
at Huntly
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GENESIS INTERIM REPORT 2022
Condensed Consolidated
Interim Financial Statements
For the six months ended
31 December 2021
Condensed
consolidated interim
financial statements
Consolidated comprehensive
income statement
6
Consolidated statement of
changes in equity
7
Consolidated balance sheet8
Consolidated cash flow statement9
Notes to
the condensed consolidated
interim financial statements
General information and significant matters10
A. Financial performance
A1. Underlying EBITDAF and underlying earnings12
A2. Segment reporting12
A3. Depreciation, depletion and amortisation15
B. Operating assets
B1. Property, plant and equipment15
B2. Oil and gas assets16
C. Working Capital
C1. Receivables and prepayments17
C2. Inventories17
D. Funding
D1. Borrowings18
D2. Finance expense19
D3. Dividends19
E. Risk management
E1. Derivatives19
E2. Change in fair value of financial instruments20
E3. Fair value measurement20
F. Other
F1. Related party transactions21
F2. Commitments22
F3. Contingent assets and liabilities22
F4. Arbitration decision in respect of a carbon liability dispute22
F5. Subsequent events22
Ngā Tauākī Pūtea Tōpū Whakarāpopoto Weherua
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
6
GENESIS INTERIM REPORT 2022
Consolidated comprehensive income statement
For the six months ended 31 December 2021
Note
31 Dec 2021
unaudited
$ million
Restated*
31 Dec 2020
unaudited
$ million
RevenueA2 1,382.4 1,419.4
ExpensesA2(1 ,1 7 2 .1 )(1,203.4)
Earnings before net finance expense, income tax, depreciation, depletion,
amortisation, impairment, fair value changes and other gains and losses
(EBITDAF)
A2210.3 216.0
Depreciation, depletion and amortisationA3(106.0)(102.1)
Impairment of non-current assets(2.5) -
Revaluation of generation assetsB1 - 0.5
Change in fair value of financial instrumentsE2 3 7. 0 (1 0.1)
Share of associates and joint ventures(3.4)(0.4)
Other gains (losses) 13.3 (1.0)
Profit before net finance expense and income tax 148.7 102.9
Finance revenue 0.2 0.3
Finance expenseD2(30.6)(30.3)
Profit before income tax 118.3 72.9
Income tax expense(33.6)(20.9)
Net profit for the period 84.7 52.0
Other comprehensive income
Change in cash flow hedge reserve 59.1 22.4
Income tax expense relating to items above(16.5)(6.3)
Total items that may be reclassified to profit or loss 42.6 1 6.1
Change in asset revaluation reserveB1 - (257.6)
Income tax credit relating to items above - 72.1
Total items that will not be reclassified to profit or loss - (185.5)
Total other comprehensive income (expense) for the period 42.6 (169.4)
Total comprehensive income (expense) for the period 127.3(117.4)
Earnings per share (EPS) from operations attributable to shareholders Cents Cents
Basic and diluted EPS 8 .1 2 5.02
* The comparative information has been restated to reflect the revision of the accounting policy for Intangible assets. 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.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
7
GENESIS INTERIM REPORT 2022
Consolidated statement of changes in equity
For the six months ended 31 December 2021
Note
Share
capital
unaudited
$ million
Share-
based
payments
reserve
unaudited
$ million
Asset
revaluation
reserve
unaudited
$ million
Cash flow
hedge
reserve
unaudited
$ million
Retained
earnings
unaudited
$ million
Total
unaudited
$ million
Balance as at 1 July 2021 652.2 2.2 1,508.5 (50.3)(60.9) 2,051.7
Restatement for adoption of revised
accounting policy*
- - - - (5.2)(5.2)
Restated balance as at 1 July 2021 652.2 2.2 1,508.5 (50.3)(6 6 .1 ) 2,046.5
Net profit for the period - - - - 84.7 84.7
Other comprehensive income
Change in cash flow hedge reserve - - - 59.1 - 59.1
Income tax expense relating to other
comprehensive income
- - - (16.5) - (16.5)
Total comprehensive income for the period - - - 42.6 84.7 127.3
Changes associated with share-based
payments
(0.2)(0.6) - - 0.2 (0.6)
Net change in treasury shares 0.1 - - - - 0.1
DividendsD3 - - - - (91.8)(91.8)
Balance as at 31 December 2021 652.1 1.6 1,508.5 ( 7. 7 )(73.0)2,081.5
Note
Share
capital
unaudited
$ million
Share-
based
payments
reserve
unaudited
$ million
Asset
revaluation
reserve
unaudited
$ million
Cash flow
hedge
reserve
unaudited
$ million
Retained
earnings
unaudited
$ million
Total
unaudited
$ million
Balance as at 1 July 2020 635.0 1.8 1,398.0 (42.7) 7 7. 7 2,069.8
Restatement for adoption of revised
accounting policy*
- - - - (3.4)(3.4)
Restated balance as at 1 July 2020635.0 1.8 1,398.0 (42.7)74.3 2,066.4
Restated net profit for the period - - - - 52.0 52.0
Other comprehensive income
Change in cash flow hedge reserve - - - 22.4 - 22.4
Change in asset revaluation reserveB1 - - (257.6) - - (257.6)
Income tax (expense) credit relating to other
comprehensive income
- - 72.1 (6.3) - 65.8
Restated total comprehensive income
(expense) for the period
- - (185.5) 1 6.1 52.0 (117.4)
Revaluation reserve reclassified to retained
earnings on disposal of assets
- - (4.4) - 4.4 -
Hedging gains and losses transferred to the
cost of assets
- - - 0.2 - 0.2
Income tax on hedging gains and losses
transferred to the cost of assets
- - - (0.1) - (0.1)
Changes associated with share-based
payments
(0.2)(0.2) - - 0.2 (0.2)
Shares issued under dividend reinvestment planD3 17.3 - - - - 17.3
Net change in treasury shares 0.1 - - - - 0.1
DividendsD3 - - - - (89.9)(89.9)
Restated balance as at 31 December 2020 652.2 1.6 1,208.1 (26.5) 41.0 1,876.4
* The accounting policy for Intangible assets has been revised during the period. 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.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
8
GENESIS INTERIM REPORT 2022
Consolidated balance sheet
As at 31 December 2021
Note
31 Dec 2021
unaudited
$ million
30 Jun 2021
restated*
$ million
Cash and cash equivalents71.6 104.3
Receivables and prepaymentsC1231.6 341.3
InventoriesC2184.0 93.2
Intangible assets82.1 55.4
Tax receivable - 15.1
DerivativesE17 7. 0 320.1
Total current assets646.3 929.4
Receivables and prepaymentsC13.4 4.1
Property, plant and equipmentB13,435.8 3,485.4
Oil and gas assetsB2280.9 293.9
Intangible assets335.2 340.4
Investments in associates and joint ventures27.4 21.0
DerivativesE168.9 160.5
Total non-current assets4,151.6 4,305.3
Total assets4,797.9 5,234.7
Payables and accruals290.9 390.5
Tax payable6.7 -
BorrowingsD13 6 7. 0 379.7
Provisions11.6 7.1
DerivativesE175.9 404.3
Total current liabilities752.1 1,181.6
Payables and accruals5.2 4.3
BorrowingsD11,078.9 1,048.1
Provisions156.2 159.1
Deferred tax643.2 619.5
DerivativesE180.8 175.6
Total non-current liabilities1,964.3 2,006.6
Total liabilities2,716.4 3,188.2
Share capital652.1 652.2
Reserves1,429.4 1,394.3
Total equity2,081.52,046.5
Total equity and liabilities4,797.95,234.7
* The comparative information has been restated to reflect the revision of the accounting policy for Intangible assets. 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.
The Directors of Genesis Energy Limited authorise these condensed consolidated interim financial statements for issue on behalf of
the Board.
Barbara Chapman
Chairman of the Board
Date: 25 February 2022
Catherine Drayton
Chairman of the Audit and Risk Committee
Date: 25 February 2022
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
9
GENESIS INTERIM REPORT 2022
Consolidated cash flow statement
For the six months ended 31 December 2021
Note
31 Dec 2021
unaudited
$ million
Restated*
31 Dec 2020
unaudited
$ million
Receipts from customers1,544.5 1,449.4
Interest received0.3 0.1
Payments to suppliers and related parties(1,349.5)(1,145.9)
Payments to employees(67.4)(57.3)
Tax paid(4.4)(1.7)
Operating cash flows123.5 244.6
Proceeds from disposal of property, plant and equipment0.2 -
Proceeds from assets under finance lease0.4 -
Payments to associates and joint ventures(10.3)(3.9)
Purchase of assets under finance lease(5.5) -
Purchase of property, plant and equipment(24.0)(27.0)
Purchase of oil and gas assets(8.7)(10.2)
Purchase of intangibles
(excluding emission units and deferred customer acquisition costs)(9.4)(9.1)
Investing cash flows(57.3)(50.2)
Proceeds from lease incentives - 11.1
Proceeds from borrowings100.0 200.0
Repayment of borrowings(78.3)(255.3)
Interest paid and other finance charges(28.3)(28.4)
DividendsD3(91.8)(72.6)
Acquisition of treasury shares(0.5)(0.4)
Financing cash flows(98.9)(145.6)
Net increase (decrease) in cash and cash equivalents(32.7)48.8
Cash and cash equivalents at 1 July104.3 32.5
Cash and cash equivalents at 31 December71.6 81.3
Reconciliation of net profit to operating cash flowsNote
31 Dec 2021
unaudited
$ million
Restated*
31 Dec 2020
unaudited
$ million
Net profit for the period84.7 52.0
Net (gain) loss on disposal of property, plant and equipment - 1.1
Finance expense excluding time value of money adjustments on provisions28.4 28.3
Change in advances to associates and joint ventures receivable and change in lease receivable
4.5 -
Change in rehabilitation and contractual arrangement provisions1.8 2.9
Items classified as investing/financing activities34.7 32.3
Depreciation, depletion and amortisation expenseA3106.0 102.1
Revaluation of generation assetsB1 - (0.5)
Impairment of non-current assets2.5 -
Change in fair value of financial instrumentsE2(37.0)1 0.1
Deferred tax expense7.2 (16.5)
Change in capital expenditure accruals2.1 3.5
Share of associates and joint ventures3.4 0.4
Other non-cash items1.4 5.7
Total non-cash items85.6 104.8
Change in receivables and prepayments110.4 27.0
Change in inventories(90.8)(8.5)
Change in emission units on hand(26.7)(9.8)
Change in deferred customer acquisition costs0.9 0.3
Change in payables and accruals(98.7)11.5
Change in tax receivable/payable21.8 35.3
Change in provisions1.6 (0.3)
Movements in working capital(81.5)55.5
Net cash inflow from operating activities123.5 244.6
* The comparative information has been restated to reflect the revision of the accounting policy for Intangible assets. 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.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
10
GENESIS INTERIM REPORT 2022
Notes to the condensed consolidated interim financial statements
For the six months ended 31 December 2021
General information
The unaudited condensed consolidated interim financial statements comprise Genesis Energy Limited ('Genesis'), its subsidiaries,
controlled entities and the Group's interests in associates and joint arrangements (together, the 'Group') for the six month period
ended 31 December 2021.
Genesis is registered under the Companies Act 1993. It is a mixed ownership model company, majority owned by the 'Crown', bound
by the requirements of the Public Finance Act 1989. Genesis is listed on the New Zealand Stock Exchange ('NZX') and the Australian
Securities Exchange ('ASX') and has bonds listed on the NZX debt market. Genesis is an FMC reporting entity under the Financial
Markets Conduct Act 2013.
The core business of the Group and activities carried out by each segment is disclosed in note A2.
Basis of preparation
The condensed consolidated interim financial statements:
• Comply with New Zealand Equivalent to International Accounting Standard 34 Interim Financial Reporting and International
Accounting Standard 34 Interim Financial Reporting;
• Do not include all the information and disclosures required in the annual financial statements. Consequently, they should be read
in conjunction with the annual financial statements and related notes included in Genesis Energy's Annual Report for the year
ended 30 June 2021 ('2021 Annual Report');
• Are presented in New Zealand dollars rounded to the nearest 100,000.
Critical accounting estimates and judgements
The basis of critical accounting estimates and judgements are the same as those disclosed in the 2021 Annual Report.
COVID-19
To date the economic disruption caused from the COVID-19 pandemic has not had a material impact on reported results. This is
mainly due to the fact that Genesis provides an essential service.
Seasonality of operations
Fluctuations in seasonal weather patterns can have a significant impact on supply and demand and therefore the generation of
electricity, which in turn can have a positive or negative impact on reported results.
Accounting policies
During the period the Group implemented the IFRS Interpretations Committee ('IFRIC') agenda decision on Configuration and
Customisation costs incurred in implementing Software-as-a-Service ('SaaS'). The accounting policies set out in the 2021 Annual
Report have been applied consistently to all periods presented, with the exception of those impacted by the IFRIC agenda decision.
There have been no other changes in accounting policies or methods of computation since 30 June 2021.
Implementation of IFRIC agenda decision on Configuration and Customisation costs incurred in implementing
Software-as-a-Service
As noted in the 2021 Annual Report the IFRIC released an agenda decision in April 2021 in relation to accounting for configuration
and customisation costs incurred in implementing SaaS arrangements. SaaS arrangements are service contracts providing the Group
with the right to access the cloud provider’s application software over the contract period. The agenda decision clarifies how current
accounting standards should be applied to these types of arrangements.
The Group's accounting policy has historically been to capitalise costs directly attributable to the configuration and customisation of
SaaS arrangements as intangible assets in the Balance Sheet, aligned to the underlying subscription contract. Following the adoption
of the above IFRIC agenda decision, current SaaS arrangements were identified and assessed to determine if the Group has control
of the software. For those arrangements where the Group does not have control of the developed software, the configuration and
customisation costs previously capitalised have been derecognised and prospectively these costs are now recognised as operating
expenses when the services are received; the ongoing fees to obtain access to the cloud provider's application software continue
to be an operating expense. Amounts paid to the supplier in advance of the commencement of the service period, including for
configuration or customisation that are not distinct from the underlying SaaS, are treated as a prepayment.
Costs may be incurred for the integration of the SaaS or the development of software code that enhances or modifies existing on-
premise systems. This spend continues to meet the definition of, and recognition criteria for, an intangible asset. These costs are
recognised as software assets and amortised over the useful life of the software on a straight line basis.
The change in accounting policy has been applied retrospectively and as a result the comparative information has been restated. The
impact of the accounting policy change is disclosed on the following page.
General information and significant matters
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
11
GENESIS INTERIM REPORT 2022
Implementation of IFRIC agenda decision on Configuration and Customisation costs incurred in implementing
Software-as-a-Service (continued)
Consolidated comprehensive income statement
For the six months ended 31 December 2020
As originally
presented
$ million
SaaS agenda
decision
$ million
Restated
$ million
EBITDAF217.3 (1.3)216.0
Depreciation, depletion and amortisation(102.5)0.4 (102.1)
Profit before income tax73.8 (0.9)72.9
Income tax expense( 2 1.1)0.2 (20.9)
Net profit after tax52.7 (0.7)52.0
The restatement primarily impacts the Retail segment with only $0.1 million of the amortisation adjustment being allocated to the
Corporate segment.
Earnings per share decreased from 5.09 cents per share to 5.02 cents per share as a result of applying the IFRIC agenda decision.
Consolidated cash flow statement
For the six months ended 31 December 2020
As originally
presented
$ million
SaaS agenda
decision
$ million
Restated
$ million
Operating cash flows245.9 (1.3)244.6
Investing cash flows(51.5)1.3 (50.2)
Consolidated balance sheet
As at 30 June 2021
As originally
presented
$ million
SaaS agenda
decision
$ million
Restated
$ million
Receivables and prepayments343.5 1.9 345.4
Intangible assets404.9 (9.1)395.8
Deferred tax(621.5)2.0 (619.5)
Retained earnings60.9 5.2 66.1
Consolidated balance sheet
As at 1 July 2020
As originally
presented
$ million
SaaS agenda
decision
$ million
Restated
$ million
Receivables and prepayments238.1 0.9 239.0
Intangible assets358.3 (5.7)352.6
Deferred tax(631.6)1.4 (630.2)
Retained earnings( 7 7. 7 )3.4 (74.3)
Amendment to NZ IFRS 9, NZ IAS 39 and NZ IFRS 7 - Interest rate benchmark reform
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank
offered rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’). These alternative risk-free rates are gradually
being adopted; however there are uncertainties around the timing and method of transition.
As noted in the 2021 Annual Report, the IBOR reform only impacts the Group’s Cross Currency Interest Rate Swaps ('CCIRS') that are
linked to USD LIBOR. The Group manages interest rate risk on the fixed rate United States Private Placement (‘USPP’) notes (notional
value US$150.0 million) by swapping back to floating rates, maturing in 2026 and 2027. As such, LIBOR is documented in hedge
relationships for CCIRS.
The Group adopted the Phase 1 amendments of the Interest Rate Benchmark Reform in the prior year. Despite the cessation date for
certain LIBOR tenors announced as 30 June 2023, there is still uncertainty around transition to alternative rates, for example when
existing rates will no longer be representative and the need for a liquid market. The Group has applied the relief provisions in the
accounting standards to transition the hedge relationships to the alternative benchmark without de-designation.
Phase 2 amendments to Interest Rate Benchmark Reform apply to the Group from 1 July 2021 and address issues that may affect
Genesis at the point of transition from LIBOR to the alternative benchmark rate. The amendments are relevant for the following types
of hedging relationships:
• Fair value hedges where LIBOR is designated as the fair value hedge of fixed rate debt in respect of the USD LIBOR risk component
of the CCIRS (notional value of US$150.0 million);
• Cash flow hedge where LIBOR is designated as a cash flow hedge component of the CCIRS (notional value of NZ$193.2 million).
The Group does not expect the transition to alternative benchmark rates to lead to discontinuation of hedge accounting relationships.
The Group continues to work through the transition plan including actions required to update processes, systems and documentation.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
12
GENESIS INTERIM REPORT 2022
A1. Underlying EBITDAF and underlying earnings
Underlying EBITDAF and underlying earnings are performance measures used internally to provide insight into the operating
performance of the Group by adjusting for items that are outside Management's control or items that relate to strategic rather than
operational decisions. Items are excluded from underlying EBITDAF and underlying earnings when they meet the criteria outlined in
the Group's non-GAAP financial information policy (refer to www.genesisenergy.co.nz/investors/governance/documents for a copy
of the policy). These measures are considered to be non-GAAP performance measures. They should not be viewed in isolation nor
considered a substitute for measures reported in accordance with New Zealand Equivalents to International Financial Reporting
Standards ('NZ IFRS'). Underlying EBITDAF and underlying earnings are used by many companies, however, because these measures
are not defined by NZ IFRS they may not be uniformly defined or calculated by all companies. Accordingly, these measures may not
be comparable.
A. Financial performance
Reconciliation of reported net profit to underlying earningsNote
31 Dec 2021
unaudited
$ million
Restated
31 Dec 2020
unaudited
$ million
Net profit for the period84.7 52.0
Change in fair value of financial instrumentsE2 (37.0)1 0.1
Revaluation of generation assetsB1 - (0.5)
Impairment of non-current assets 2.5 -
Unrealised loss on revaluation of carbon units held for trading0.6 1.1
Adjustments before tax expense(33.9)10.7
Tax expense on adjustments9.5 (3.0)
Adjustments after tax expense(24.4)7. 7
Underlying earnings 60.3 59.7
CentsCents
Underlying EPS5.78 5.76
There were no differences between reported EBITDAF and underlying EBITDAF.
6 months ended
SegmentActivity
RetailSupply of energy (electricity, gas and LPG) and related services to end users.
Wholesale
Supply of electricity to the wholesale electricity market, supply of gas and LPG to wholesale customers and
the Retail segment and the sale and purchase of derivatives to fix the price of electricity.
Kupe
Exploration, development and production of gas, oil and LPG. Supply of gas and LPG to the Wholesale
segment and supply of light oil.
Corporate
Head office functions, including human resources, finance, corporate relations, property management, legal,
corporate governance and strategy.
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 the
Group's external revenue (31 December 2020: none).
Reconciliation of expenses in the consolidated comprehensive income statement to the segment note
Expenses in the consolidated comprehensive income statement includes the following line items in the segment note: external costs,
employee benefits and other operating expenses.
Intersegment revenue
Sales between segments is based on transfer prices developed in the context of long-term contracts. The electricity transfer price per
MWh charged between Wholesale and Retail was $105.53 (31 December 2020: $89.51).
A2. Segment reporting
The Group reports activities under four segments as follows:
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
13
GENESIS INTERIM REPORT 2022
Six months ended 31 December 2021
Retail
unaudited
$ million
Wholesale
unaudited
$ million
Kupe
unaudited
$ million
Corporate
unaudited
$ million
To t a l
unaudited
$ million
Electricity685.0 409.8 - - 1,094.8
Gas95.5 68.6 - - 164.1
LPG45.7 9.9 - - 55.6
Oil - - 13.7 - 13.7
Emissions on fuel sales and electricity contracts0.3 18.2 - - 18.5
Emission unit revenue from trading - 33.7 - - 33.7
Other revenue0.8 0.1 0.5 0.6 2.0
Total external revenue827.3 540.3 14.2 0.6 1,382.4
Electricity – intersegment - 347.1 - - 3 4 7.1
Gas – intersegment - 49.2 38.1 - 87.3
LPG – intersegment - 15.1 10.7 - 25.8
Emissions on fuel sales – intersegment - - 6.1 - 6 .1
Total segment revenue827.3951.769.1 0.6 1,848.7
Electricity purchases - (405.5) - - (405.5)
Electricity network, transmission, levies and meters(266.6)( 7. 6 ) - - (274.2)
Fuel consumed in electricity generation - (106.6) - - (106.6)
Gas purchases - (107.1) - - ( 1 0 7.1 )
Gas network, transmission, levies and meters(35.9)(8.8) - - (44.7)
LPG purchases, inventory changes and transportation costs(7.5)( 7. 6 )(0.1) - (15.2)
Oil inventory changes, storage and transportation costs - - (0.5) - (0.5)
Emissions associated with electricity generation - (17.5) - - ( 1 7. 5 )
Emissions associated with fuel sales - (16.2)(11.9) - ( 2 8 .1 )
Emission unit expenses from trading - (22.9) - - (22.9)
Other costs(0.2) - (5.3) - (5.5)
Total external costs(310.2)(699.8)( 1 7. 8 ) - ( 1 , 0 2 7. 8 )
Electricity purchases – intersegment(347.1) - - - ( 3 4 7.1 )
Fuel consumed in electricity generation – intersegment - (38.1) - - ( 3 8 .1 )
Gas purchases – intersegment(49.2) - - - (49.2)
LPG purchases, inventory changes and transportation costs – intersegment(15.1)(10.7) - - (25.8)
Emission costs – intersegment - (6.1) - - (6 .1 )
Total segment costs(721.6)(754.7)( 1 7. 8 ) - (1,494.1)
Gross margin105.71 9 7. 051.3 0.6 354.6
Employee benefits(32.0)(16.5) - (15.5)(64.0)
Other operating expenses(39.6)(20.3)(11.0)(9.4)(80.3)
Earnings before net finance expense, income tax, depreciation,
depletion, amortisation, impairment, fair value changes and other
gains and losses (EBITDAF)
34.1160.2 40.3 (24.3)210.3
Depreciation, depletion and amortisation(11.9)(69.9) (20.6) (3.6)(106.0)
Impairment of non-current assets(2.0)(0.5) - - (2.5)
Change in fair value of financial instruments - 3 7.1 - (0.1)3 7. 0
Share of associates and joint ventures(3.0)(0.4) - - (3.4)
Other gains (losses)0.1 12.9 - 0.3 13.3
Profit (loss) before net finance expense and income tax 17.3 139.4 19.7 ( 2 7. 7 )148.7
Finance revenue0.1 - - 0.1 0.2
Finance expense(0.2)(1.8)(1.4)(27.2)(30.6)
Profit (loss) before income tax17.2 1 3 7. 618.3 (54.8)118.3
Other segment information
Capital expenditure excluding leased assets11.0 20.0 6.5 0.6 38.1
A2. Segment reporting (continued)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
14
GENESIS INTERIM REPORT 2022
A2. Segment reporting (continued)
Six months ended 31 December 2020
Restated
retail
unaudited
$ million
Wholesale
unaudited
$ million
Kupe
unaudited
$ million
Restated
corporate
unaudited
$ million
Restated
total
unaudited
$ million
Electricity695.8 485.2 - - 1,181.0
Gas88.0 58.8 - - 146.8
LPG44.1 5.4 - - 49.5
Oil - - 10.8 - 10.8
Emissions on fuel sales and electricity contracts0.2 11.9 - - 12.1
Emission unit revenue from trading - 17.3 - - 17.3
Other revenue1.2 0.2 0.1 0.4 1.9
Total external revenue829.3 578.8 10.9 0.4 1,419.4
Electricity – intersegment - 310.0 - - 310.0
Gas – intersegment - 44.2 47.9 - 92.1
LPG – intersegment - 11.9 14.6 - 26.5
Emissions on fuel sales – intersegment - - 4.9 - 4.9
Total segment revenue829.3 944.9 78.3 0.4 1,852.9
Electricity purchases - (453.5) - - (453.5)
Electricity network, transmission, levies and meters(266.4)(8.0) - - (274.4)
Fuel consumed in electricity generation - (112.8) - - (112.8)
Gas purchases(0.4)(105.7) - - (106.1)
Gas network, transmission, levies and meters(35.3)(10.5) - - (45.8)
LPG purchases, inventory changes and transportation costs(8.1)(2.8) - - (10.9)
Emissions associated with electricity generation - (19.2) - - (19.2)
Emissions associated with fuel sales - (13.7)(10.0) - (23.7)
Emission unit expenses from trading - (15.3) - - (15.3)
Other costs - - (8.1) - (8.1)
Total external costs(310.2)(741.5)(18.1) - (1,069.8)
Electricity purchases – intersegment(310.0) - - - (310.0)
Fuel consumed in electricity generation – intersegment - (47.9) - - (47.9)
Gas purchases – intersegment(44.2) - - - (44.2)
LPG purchases, inventory changes and transportation costs – intersegment(11.9)(14.6) - - (26.5)
Emission costs – intersegment - (4.9) - - (4.9)
Total segment costs(676.3)(808.9)(18.1) - (1,503.3)
Gross margin153.0 136.0 60.2 0.4 349.6
Employee benefits(26.8)(15.9) - (14.0)(56.7)
Other operating expenses(39.1)(18.4)(10.8) (8.6)(76.9)
Earnings before net finance expense, income tax, depreciation,
depletion, amortisation, impairment, fair value changes and other
gains and losses (EBITDAF)
87.1 101.7 49.4 (22.2)216.0
Depreciation, depletion and amortisation(13.3)(64.7)(20.2)(3.9)(102.1)
Revaluation of generation assets - 0.5 - - 0.5
Change in fair value of financial instruments - (10.8)0.1 0.6 (1 0.1)
Share of associates and joint ventures(0.2)(0.2) - - (0.4)
Other gains (losses) - (1.2) - 0.2 (1.0)
Profit (loss) before net finance expense and income tax 73.6 25.3 29.3 (25.3)102.9
Finance revenue - - - 0.3 0.3
Finance expense(0.3)(1.6)(1.3)(27.1)(30.3)
Profit (loss) before income tax73.3 23.7 28.0 (52.1)72.9
Other segment information
Capital expenditure excluding leased assets9.2 15.0 11.9 4.9 41.0
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
15
GENESIS INTERIM REPORT 2022
A3. Depreciation, depletion and amortisation
31 Dec 2021
unaudited
$ million
Restated
31 Dec 2020
unaudited
$ million
Property, plant and equipment75.3 70.6
Oil and gas assets19.5 19.0
Intangibles (excluding amortisation of deferred customer acquisition costs)11.2 12.5
106.0 102.1
6 months ended
B1. Property, plant and equipment
6 months ended
31 Dec 2021
unaudited
$ million
Year ended
30 Jun 2021
audited
$ million
Opening balance3,485.4 3,367.7
Additions25.7 68.0
Revaluation of generation assets
Increase taken to revaluation reserve - 163.6
Increase taken to the income statement - 27.9
Change in rehabilitation and contractual arrangement assets - 1.7
Transfer from/(to) intangible assets0.7 (1.6)
Disposals(0.1 )(6.0)
Depreciation expense recognised in inventories(0.6)(1.3)
Depreciation expense(75.3)(134.6)
Closing balance3,435.8 3,485.4
Property, plant and equipment includes $68.9 million of leased assets (30 June 2021: $69.1 million).
Generation assets
A valuation of generation assets has been undertaken as at 31 December 2021; the results indicate the carrying value approximates
the fair value and, as a result, the Group has not undertaken a full revaluation of generation assets at 31 December 2021. The last
revaluation of generation assets occurred on 30 June 2021.
The valuation is based on a discounted cash flow model prepared by Management, calculated by generating scheme except for
the Huntly site where it is calculated by type of unit (units 1 to 4, unit 5 and unit 6). As the key inputs into the valuation are based
on unobservable market data, the valuation is classified as level 3 in the fair value hierarchy. It requires significant judgement and
therefore there is a range of reasonably possible assumptions that could be used in estimating the fair value. Refer to the 2021 Annual
Report for an overview of the fair value hierarchy.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
B. Operating assets
16
GENESIS INTERIM REPORT 2022
B2. Oil and gas assets
6 months ended
31 Dec 2021
unaudited
$ million
Year ended
30 Jun 2021
audited
$ million
Opening balance293.9 307.4
Additions6.5 22.0
Depreciation and depletion expense(19.5)(35.5)
Closing balance280.9 293.9
Since 30 June 2021 the only change to the estimated remaining reserves disclosed in the 2021 Annual Report was in relation to actual
production for the six months ended 31 December 2021 of 16.0 PJe. The estimated remaining reserves balance as at 31 December 2021
was 202.3 PJe for proved reserves (1P) and 292.8 PJe for proved and probable reserves (2P) (30 June 2021: 218.3 PJe and 308.8 PJe
respectively).
B1. Property, plant and equipment (continued)
Significant
unobservable inputs Method used to determine input
Sensitivity
range
Increase/(decrease)
in fair value of
generation assets
Interrelationships between
unobservable inputs
Wholesale electricity
price path
The average annual wholesale electricity price ranged
between $78 per MWh and $139 per MWh referenced
to the Otahuhu 220KV locational node from January
2022 to June 2041.
+10%
- 10%
$532 million
($532) million
Hydrological inflows affect
generation volumes, as well as
wholesale electricity prices.
Generation volumes
In-house modelling of the wholesale electricity market.
The generation volumes used in the valuation range
between 2,679 GWh and 7,025 GWh per annum. The
low end of the range relates to periods where there is
no thermal generation.
+10%
- 10%
$410 million
($410) million
Wholesale electricity
prices affect the amount of
generation.
Discount ratePre-tax equivalent discount rate of 9.3%.
+1%
- 1%
($346) million
$455 million
Discount rate is independent
of wholesale electricity prices
and generation volumes.
Key estimates and judgements
Wholesale electricity price path
The wholesale electricity price path is the key driver of changes
in the valuation. The price path is an average of the internally
generated price path and price paths published by two
independent third parties, and as a result reflects the uncertainty
surrounding Tiwai Point smelter operating beyond 2024 and the
impact this could have on future prices
Internally generated price path
The internally generated price path assumes wholesale
electricity demand will continue to grow based on the latest
available industry analysis and Genesis' view of future economic
growth. Forecast hydrology is based on 83 years of historical
hydrological inflow data. New and retiring generation plant
assumptions are based on publicly available information and
Genesis' view on wholesale electricity prices required to support
the plant. The internally generated price path assumes that Tiwai
Point smelter will continue to operate beyond 2024.
Price paths published by independent third parties
Independent third party price path assumptions on the future
of Tiwai Point smelter range from Tiwai Point smelter exiting in
2025 through to operating beyond 2025 or the generation load
consumed by Tiwai Point smelter being replaced by other major
industrial loads beyond 2025.
Other key assumptions
The valuation also includes assumptions around market fuel and electricity supply and demand. Our longer term demand assumption
increases from industrial electrification and electric vehicle fleet growth in response to climate change. The impact of COVID-19
has also been considered in the valuation, primarily through the wholesale electricity price path. Our current view is that Genesis’
generation will be less affected by COVID-19 as it is an essential service and the vaccine rollout is well advanced. Changes in
these interrelated factors will impact the wholesale electricity price path and generation volumes. These factors are reviewed for
reasonableness by senior management personnel who are responsible for the price path used by the business.
Significant unobservable inputs in the valuation model were:
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
17
GENESIS INTERIM REPORT 2022
C. Working capital
C1. Receivables and prepayments
31 Dec 2021
unaudited
$ million
30 Jun 2021
restated
$ million
Total trade receivables and accrued revenue176.8291.5
Advances to associates and joint ventures2.6 2.2
Lease receivable7. 9 3.7
Emission units receivable23.0 31.8
Other receivables9.9 10.7
Prepayments14.8 5.5
To t a l235.0 345.4
Current231.6 341.3
Non-current3.4 4.1
To t a l235.0 345.4
Lease receivable
The group enters into lease agreements as a lessor in respect of some of its property leases and vehicles.
Where the Group is a head lessor, the leases have been classified as finance leases as the lease transfers substantially all of the risks
and rewards incidental to ownership of the underlying asset. Where the Group is an intermediate lessor, the head lease and the
sublease are accounted for as two separate contracts. Subleases that transfer substantially all of the risks and rewards of ownership to
the lessee are classified as finance leases, all other subleases are classified as operating leases. The assessment is based on the right-
of-use asset arising from the head lease.
Amounts due from lessees under finance leases are recognised as lease receivables. Finance lease income is allocated to individual
periods based on a constant periodic rate of return. Rental income from operating leases is recognised on a straight line basis over the
term of the lease.
C2. Inventories
31 Dec 2021
unaudited
$ million
30 Jun 2021
audited
$ million
Fuel 142.3 4 7. 0
Petroleum products2.6 2.3
Consumables and spare parts30.0 29.5
Emission units held for trading9.1 14.4
To t a l184.0 93.2
Fuel, petroleum, consumables and spare parts
Fuel inventories mainly consist of coal used in electricity production. Fuel inventories (excluding natural gas) expensed during the
period amounted to $28.8 million (31 December 2020: $63.0 million).
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
18
GENESIS INTERIM REPORT 2022
Fair value of borrowings held at amortised cost
31 Dec 2021
Carrying value
unaudited
$ million
31 Dec 2021
Fair value
unaudited
$ million
30 Jun 2021
Carrying value
audited
$ million
30 Jun 2021
Fair value
audited
$ million
Level one
Green bonds101.2 101.8 - -
Retail term notes - - 101.0 103.4
Capital bonds469.0 477.2 474.7 487.6
Level two
Term loan facility30.0 31.2 30.0 31.3
Wholesale term notes322.6 330.9 222.7 239.2
USPP234.9 240.7 235.2 241.1
The carrying value of all other borrowings approximates their fair values.
D. Funding
D1. Borrowings
31 Dec 2021
unaudited
$ million
30 Jun 2021
audited
$ million
Sustainable Financing
Green bonds101.2 -
Other Financing
Revolving credit facility - 10.0
Term loan facility30.0 30.0
Money market and commercial paper194.8 259.8
Wholesale term notes322.6 222.7
Retail term notes - 101.0
Capital bonds469.0 474.7
United States Private Placement ('USPP')234.9 235.2
Lease liability93.4 94.4
To t a l1,445.9 1,427.8
Current3 6 7. 0 379.7
Non-current1,078.9 1,048.1
To t a l1,445.9 1,427.8
Green Bonds
The Group's retail term notes were designated as a Green Bond on 3 November 2021. The terms and conditions remain unchanged,
the expiry remains in March 2022.
Wholesale term notes
A $100.0 million wholesale term note was issued in December 2021. The note expires in December 2028.
Revolving credit facilities
Available revolving credit facilities
31 Dec 2021
unaudited
$ million
30 Jun 2021
audited
$ million
Sustainable Financing250.0 -
Other Financing295.0 445.0
Total available revolving credit facilities545.0 445.0
Revolving credit drawn down (excluding accrued interest) - 10.0
Total undrawn revolving credit facilities545.0 435.0
During the period, the Group launched its Sustainable Finance Programme, as part of this programme $200.0 million of existing
facilities were converted to be sustainably linked; additionally $50.0 million sustainbly linked revolving credit facilities were added.
The Sustainable Finance facilities have variable payments that are linked to performance against the Group's sustainability targets.
There was also $50.0 million of other financing secured.
In addition, there is a $100.0 million undrawn bridge facility in place to cover refinancing of the Green Bond in March 2022.
The undrawn facilities ensure the Group will have sufficient funds to meet its liabilities when due, under both normal and stressed
conditions.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
19
GENESIS INTERIM REPORT 2022
E. Risk management
E1. Derivatives
31 Dec 2021
unaudited
$ million
30 Jun 2021
audited
$ million
Electricity swaps and options and electricity power purchase agreements ('PPA')(57.3)(136.5)
Oil price swaps(4.9)(3.2)
Interest rate swaps10.2 (9.6)
Cross-currency interest rate swaps (‘CCIRS’)36.6 35.9
Foreign exchange contracts1.4 5.2
Coal price swaps0.9 8.0
Other derivatives2.3 0.9
To t a l(10.8)(99.3)
Current assets7 7. 0 320.1
Non-current assets68.9 160.5
Current liabilities(75.9)(404.3)
Non-current liabilities(80.8)(175.6)
To t a l(10.8)(99.3)
The process and method of valuing derivatives is outlined in note E3.
D2. Finance expense
31 Dec 2021
unaudited
$ million
31 Dec 2020
unaudited
$ million
Interest on borrowings (excluding capital bonds and lease liability)13.6 13.9
Interest on capital bonds12.8 12.8
Interest on lease liability1.8 1.8
Total interest on borrowings28.2 28.5
Other interest and finance charges0.7 0.5
Time value of money adjustments on provisions2.2 2.0
Capitalised finance expenses(0.5)(0.7)
To t a l30.6 30.3
6 months ended
D3. Dividends
Imputation
unaudited
Cents per
share
unaudited
$ million
unaudited
Imputation
unaudited
Cents per
share
unaudited
$ million
unaudited
Dividends declared and paid during the period
Prior period final dividend80%8.80 91.8 80%8.675 89.9
Less shares issued under the dividend
reinvestment plan
- (17.3)
Cash dividend paid91.8 72.6
Dividends declared subsequent to reporting date
Current period interim dividend80% 8.70 90.880%8.60 89.8
6 months ended
31 Dec 2021
6 months ended
31 Dec 2020
Level two - Fair value calculation
The valuation of the term loan facility and the wholesale term notes is based on estimated discounted cash flow analyses, using
applicable market yield curves adjusted for the Group's credit rating. The credit-adjusted market yield curves used in the valuation at
the reporting date ranged from 1.5 per cent to 3.7 per cent (30 June 2021: 0.8 per cent to 2.1 per cent).
The valuation of USPP is based on estimated discounted cash flow analyses, using applicable United States market yield curves
adjusted for the Group's credit rating. The credit-adjusted market yield used in the valuation at the reporting date was 1.8 per cent (30
June 2021: 1.4 per cent).
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
20
GENESIS INTERIM REPORT 2022
E3. Fair value measurement
Fair value hierarchy
The Group's assets and liabilities measured at fair value are categorised into one of three levels. The levels are outlined in the 2021
Annual Report.
The Group's policy is to recognise transfers into and out of fair value hierarchy levels at the date the change in circumstances
occurred. There were no transfers between levels one, two and three during the period (31 December 2020: nil).
Level two and three items carried at fair value
All derivatives disclosed in E1 other than electricity swaps and options and PPAs are considered level two. The $57.3 million electricity
swaps and options and PPAs net liability comprises a $1.2 million asset classified as level two and a $58.5 million liability classified
as level three (30 June 2021: $7.4 million liability and $129.1 million liability respectively). Emission units held for trading, recorded
in inventory, are level two instruments. The carrying value of the units as at 31 December 2021 was $9.1 million (30 June 2021: $14.4
million). Generation assets, recorded in property, plant and equipment, are considered to be level three. The carrying value of
generation assets as at 31 December 2021 was $3,219.4 million (30 June 2021: $3,273.2 million).
Valuation of level two items carried at fair value
The fair values of level two derivatives and emission units held for trading are determined using discounted cash flow models. The key
inputs in the valuation models are the same as those disclosed in the 2021 Annual Report.
Valuation of level three items carried at fair value
Valuation method and process
The method and process used to value level three generation assets and derivatives is consistent with that disclosed in the 2021
Annual Report.
E2. Change in fair value of financial instruments
31 Dec 2021
unaudited
$ million
31 Dec 2020
unaudited
$ million
CCIRS(5.2)(6.5)
Interest rate swaps(6.4)(3.4)
Fair value interest rate risk adjustment on borrowings11.9 10.2
Fair value hedges – gain (loss)0.3 0.3
Cash flow hedges – hedge ineffectiveness – gain (loss) - 0.1
Electricity swaps and options and PPAs41.5 (12.9)
Other derivatives(4.8)2.4
Derivatives not designated as hedges – gain (loss)36.7 (10.5)
Total change in fair value of financial instruments3 7. 0 (1 0.1)
6 months ended
31 Dec 2021
unaudited
30 Jun 2021
audited
Price path
$78 per MWh to $139 per MWh over the period
from 1 January 2022 to 28 February 2045.
$81 per MWh to $190 per MWh over the period
from 1 July 2021 to 4 March 2041.
Impact of increase/decrease in
price path on fair value
A 10% increase would decrease the liability by
$64.9 million. A 10% decrease would increase
the liability by $55.4 million.
A 10% increase would increase the liability by
$5.9 million. A 10% decrease would decrease
the liability by $6.2 million.
Discount rate0.8% - 5.8%0.2% - 4.85%
Valuation of electricity swaps and options and PPAs
The valuation is based on a discounted cash flow model. The key
inputs and assumptions in the model are: the callable volumes,
strike price and option fees outlined in the agreement, the
wholesale electricity price path ('price path'), 'day one' gains
and losses, and the discount rate. The options are deemed to be
called when the price path is higher than the strike prices after
taking into account obligations relating to the specific terms of
each contract. No calling is required for the swaps and there are
no option fees. The price path is the significant unobservable
input in the valuation model. Refer to B1 for information in
relation to the method and judgements used to determine the
price path.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
21
GENESIS INTERIM REPORT 2022
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Reconciliation of level three electricity swaps and options and PPAs
6 months ended
31 Dec 2021
unaudited
$ million
Year ended
30 Jun 2021
audited
$ million
Opening balance(1 2 9.1 )4.0
Electricity revenue20.9 4 7.4
Change in fair value of financial instruments33.0 (90.0)
Total gain (loss) in the income statement53.9 (42.6)
Total gain (loss) recognised in other comprehensive income36.8 (220.2)
Settlements(7.0)155.4
Sales(1 3.1 )(25.7)
Closing balance(58.5)(129.1)
The change in fair value of financial instruments includes an unrealised gain of $34.8 million (30 June 2021: $87.4 million loss).
Deferred ‘day one’ gains (losses)
There is a presumption that when derivative contracts are entered into on an arm's length basis, and no payment is received or paid on
day one, the fair value at inception would be nil. The contract price of non-exchange traded electricity derivative contracts and PPAs
are agreed on a bilateral basis, the pricing for which may differ from the prevailing derived market price for a variety of reasons. In these
circumstances, an adjustment is made to bring the initial fair value of the contract to zero at inception. The adjustment is called a 'day
one' gain (loss) and is deferred and amortised, based on expected call volumes over the term of the contract. The following table details
the movements and amounts of deferred 'day one' gains (losses) included in the fair value of level three electricity swaps and options:
6 months ended
31 Dec 2021
unaudited
$ million
Year ended
30 Jun 2021
audited
$ million
Opening balance100.7 118.4
New derivatives24.4 -
Amortisation of existing derivatives(11.6)( 1 7. 7 )
Closing balance113.5 100.7
F. Other
F1. Related party transactions
The majority shareholder of Genesis is the Crown. The Group transacts with Crown-controlled and related entities independently and
on an arm's length basis for the following goods and services: royalties, emissions obligations, scientific consultancy services, electricity
transmission, postal services, rail services and energy-related products (including electricity derivatives). All transactions with Crown-
controlled and related entities are based on commercial terms and conditions and relevant market drivers.
During the period the Crown received $47.0 million dividends (31 December 2020: $46.1 million) of which $47.0 million was paid in
cash (31 December 2020: $37.2 million) and none was paid in shares (31 December 2020: $8.9 million). The Group is also subject to the
Emission Trading Scheme (ETS) which requires the Group to acquire and surrender emission units either directly to the Crown or to third
parties who ultimately remit the units to the Crown. Refer to note A2 for information on the amount expensed in relation to the ETS. The
amount payable in relation to ETS at 31 December 2021 was $126.0 million (30 June 2021: $80.5 million). There were no other individually
significant transactions with the Crown during the period (31 December 2020: nil).
The Group has five significant electricity swap and option contracts with Meridian Energy, a Crown-controlled entity. The electricity
swap and option contracts period and profile vary between the range of 12.5MW and 150MW, from the period 1 January 2011 to 31
December 2025. Additionally, the Group has two significant power purchase agreements with Mercury NZ, a Crown-controlled entity. The
agreements are for variable volumes based on the production of the related site, with the latest expiry date being February 2045.
Other transactions with Crown-controlled and related entities, which are collectively but not individually significant, relate to the sale
of electricity derivatives. Approximately 14.1 per cent of the value of electricity derivative assets and approximately 34.0 per cent of the
value of electricity derivative liabilities held at the reporting date were held with Crown-controlled and related entities (30 June 2021:
10.3 per cent and 29.2 per cent respectively). The contracts expire at various times; the latest expiry date is February 2045.
E3. Fair value measurement (continued)
22
GENESIS INTERIM REPORT 2022
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
F2. Commitments
As at 31 December 2021 the Group had $22.8 million of capital commitments (30 June 2021: $21.1 million).
F3. Contingent assets and liabilities
No new contingent assets or liabilities have arisen since 30 June 2021 and there has been no change in the contingent liabilities
disclosed in the 2021 Annual Report.
F4. Arbitration decision in respect of a carbon liability dispute
In July 2021, following an arbitration process, Genesis settled a contractual dispute relating to the carbon terms of one of its long
term gas supply agreements. As disclosed in the Group’s 2021 Annual Report, the arbitrator's decision determined that Genesis
was required to meet the carbon liability for gas supplied since 1 January 2018 up to the date the contract expires. The arbitrator's
decision was final and binding. As a result an accrual for $52.9 million was recognised at 30 June 2021, comprised of $45.9 million in
Trade payables and accruals and $7.0 million in Emission obligations. The Trade payable was settled during the six months ended 31
December 2021, reflected in operating cash flows, whilst the Emission obligations forms part of normal settlements.
F5. Subsequent events
The following events occurred subsequent to the reporting date:
• $90.8 million of dividends were declared on 25 February 2022 (refer to note D3);
• On 22 February 2022 Genesis finalised joint venture arrangements with FRV in relation to a new long-term agreement to develop
utility-scale solar developments in New Zealand, delivering up to 500MW of solar capacity;
• On 23 January 2022 the country moved into the Red setting of the Government's Covid-19 traffic light system in response to the
Omicron variant circulating in the community. The move to Red and the further spread of Omicron and other variants through the
community is not expected to have a material financial impact on the business given Genesis provides an essential service and is
implementing an effective response plan that is underpinned by a robust testing programme to keep Genesis staff members safe
and ensure business continuity;
• On 28 January 2022 the Group's FY47 capital bond was designated as a Green Bond. The terms and conditions remain unchanged,
with the next interest rate reset in June 2022.
23
GENESIS INTERIM REPORT 2022
Independent Auditor’s Review Report
To the shareholders of Genesis Energy Limited
The Auditor-General is the auditor of Genesis Energy Limited (‘the Company’) and its subsidiaries (the Group). The Auditor-General
has appointed me, Bryce Henderson, using the staff and resources of Deloitte Limited, to carry out the review of the condensed
consolidated interim financial statements (‘interim financial statements’) of the Group on his behalf.
Conclusion
We have reviewed the interim financial statements of the Group on pages 6 to 22, which comprise the consolidated balance sheet
as at 31 December 2021, and the consolidated comprehensive income statement, consolidated statement of changes in equity and
consolidated cash flow statement for the six months ended on that date, and the notes including a summary of significant accounting
policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements of the Group
do not present fairly, in all material respects, the financial position of the Group as at 31 December 2021, and its financial performance
and cash flows for the six months ended on that date, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting.
Basis for Conclusion
We conducted our review in accordance with NZ SRE 2410 (Revised) Review of Financial Statements Performed by the Independent
Auditor of the Entity (‘NZ SRE 2410 (Revised)’). Our responsibilities are further described in the Auditor’s Responsibilities for the
Review of the Interim Financial Statements section of our report.
We are independent of the Group in accordance with the Auditor General’s ethical requirements relating to the audit of the annual
financial statements, which incorporate the relevant independence requirements issued by the New Zealand Auditing and Assurance
Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other assignments for the Group in the areas of trustee reporting and non-assurance services to the Corporate
Taxpayer Group. These services have not impaired our independence as auditor of the Group.
In addition to these assignments, partners and employees of our firm deal with the Group on normal terms within the ordinary
course of trading activities of the Group. Other than these assignments and trading activities, we have no relationship with, or interests
in the Group.
Directors’ responsibilities for the interim financial statements
The directors are responsible, on behalf of the Group, for the preparation and fair presentation of these interim financial statements
in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and for such internal control as the
directors determine is necessary to enable the preparation and fair presentation of the interim financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the interim financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. NZ SRE 2410 (Revised) requires
us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements, taken
as a whole, are not prepared, in all material respects, in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim
Financial Reporting.
A review of the interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited assurance engagement. We perform
procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. The procedures performed in a review are substantially less than those performed
in an audit conducted in accordance with International Standards on Auditing (New Zealand) and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion on these interim financial statements.
Bryce Henderson
for Deloitte Limited
On behalf of the Auditor-General
Auckland, New Zealand
25 February 2022
Pūrongo Arotake Motuhake
INDEPENDENT REVIEW REPORT
Head/Registered Office
Genesis Energy
Level 6, 155 Fanshawe Street,
Wynyard Quarter,
Auckland 1010
P: 64 9 580 2094
E: info@genesisenergy.co.nz
investor.relations@genesisenergy.co.nz
board@genesisenergy.co.nz
media@genesisenergy.co.nz
W: genesisenergy.co.nz
frankenergy.co.nz
---
MARKET RELEASE
Date: 28 FEBRUARY 2022
NZX: GNE / ASX: GNE
Genesis delivers strong HY22 result while investing for future growth
Half Year-ended
December 2021
Half Year-ended
December 2020
Change Year on Year
EBITDAF
1
$210.3 million
$216.0 million
$5.7 million (down 3%)
Net Profit $84.7m $52.0m $32.7 m (up 63%)
Underlying Earnings
2
$60.3m $59.7m $0.6 m (up 1%)
Earnings Per Share 8.1 cps 5.0 cps 3.1cps (up 62%)
Underlying EPS 5.8 cps 5.8 cps ----
Interim dividend 8.7 cps 8.6 cps 0.1cps (up 1%)
Free Cash Flow
3
$152.4m $157.7m $5.3 m (down 4%)
Genesis Energy (ASX: GNE, NZX: GNE) delivered another strong performance in the first half of FY22 with
EBITDAF of $210.3 million, and net profit of $84.7m which is 63% up on the same period last year. The result
underlines the company’s momentum as it invests for future growth in new renewable generation and enhanced
customer experiences.
The Retail segment performed well through a combination of strong margins, improved efficiencies and
customers feeling supported through lockdown. Net customer churn fell for a sixth consecutive quarter and was
13.2% in the half. Our brand net promoter score lifted to its highest level of +26. Netbacks continued to grow
with gas, in particular, performing strongly.
In the Wholesale segment, the flexibility of our assets continues to support the market during periods of high
spot prices. During periods of lower prices, when more renewable generation was available, our portfolio flexed
to benefit from lower spot prices.
Operating expenses rose 8% to $144.3m, which included ongoing investment in our digital transformation, the
Future-gen strategy, and building a pipeline of new solar development options. Additional cost was also incurred
to protect our people and operations from Covid-19, with the introduction of saliva PCR testing at generation
sites and the purchase and deployment of rapid antigen tests across the whole business. Our people have
completed more than 15,500 Rapid Antigen tests to date.
An interim dividend of 8.7 cps and the reintroduction of the Dividend Reinvestment Plan has been approved by
the Board.
Chief Executive Marc England said Genesis has delivered another strong result while building capability for the
future.
1
Earnings before net finance expenses, income tax, depreciation, depletion, amortisation, impairment, Fair Value changes and other
gains and losses. Refer to consolidated comprehensive income statement in the 2022 interim report for a reconciliation from EBITDAF to
Net Profit after tax.
2
Net Profit adjusted for non-cash fair value adjustments and business acquisition costs.
3
Free Cash Flow is EBITDAF, less cash tax paid, net interest costs and stay in business capital expenditure.
“We’re investing in enhanced digital capabilities, new sources of renewable generation, and in maximising the
efficiency and output of our assets, all important for future growth as we manage the transition to a sustainable
future,” England said.
“This will be a pivotal year for the electricity sector and New Zealand’s climate agenda. There is significant
investment in renewables being made, the Emissions Reduction Plan is due from Government and Budget 2022
will allocate capital to our climate response. Genesis has a key role to play with agreements for wind and
geothermal generation, expanding our portfolio into grid-scale solar, and continuing our work to ensure back-
up generation at Huntly supports the transition.”
Future proofing our assets
Genesis undertook three significant investment projects during the period, at Kupe, Tekapo B and the
Waikaremoana Power Scheme. Along with our Kupe joint venture partners, a $72m project was completed that
restored production capability back to 77 TJs per day, equivalent to approximately 15% of New Zealand’s daily
natural gas demand. The joint venture partners are now investigating the potential for drilling another
development well to further increase recovery from the field.
Work started on stage two of a challenging upgrade of our Tekapo B power station that will future-proof it for
decades. The $15m+ project will deliver operational flexibility, reduce running limitations and annual
maintenance costs. It follows the completion of a two-year $26.5m project to install a new intake gate at Tekapo
A in FY21. At Piripaua, on the east coast of the North Island, a $7.7m project is underway to overhaul two
turbines, one this summer and one next summer.
Empowering New Zealand’s sustainable future
Genesis continues to progress its Future-gen strategy, signing new power purchase agreements for wind and
geothermal generation and a joint venture agreement with internationally recognised solar developer, FRV
Australia. Focus is now on building the pipeline of development opportunities.
Huntly Power Station remains a viable alternative to the proposed Lake Onslow pumped hydro scheme due to
its location close to demand, infrastructure already in place, and its accessible workforce. Scenario analysis we
have undertaken through to 2030 shows the electricity sector will be 96% - 98% renewable by the end of the
decade. However, dry year risk and increased renewable intermittency will mean back-up in the form of both
peaking capacity and dry-year energy storage will still be required. Biomass through Huntly’s Rankine units could
provide a relatively low-cost renewable back-up option out to 2040.
FY22 guidance
The FY22 EBITDAF guidance range has been updated to $430 to $440 million subject to hydrological
conditions, gas availability, any material events, one-off expense or other unforeseeable circumstances. FY22
capital expenditure guidance is up to $84 million.
4
Further information on the company’s operations and financing can be found in the HY22 investor presentation
and in the 2022 Interim Report. Both can be found at www.genesisenergy.co.nz/investors
.
ENDS
4
As a result of implementing the IFRS Interpretations Committee ('IFRIC') agenda decision regarding accounting for SaaS configuration and
customisation costs, a total of $11 million has been reclassified from capex to opex. This change has been reflected in guidance.
For investor relations enquiries, please contact:
Tim McSweeney
GM Investor Relations & Market Risk
M: 027 200 5548
For media enquiries, please contact:
Chris Mirams
GM Communications & Media
M: 027 246 1221
About Genesis Energy
Genesis Energy (NZX: GNE, ASX: GNE) is a diversified New Zealand energy company. Genesis sells electricity,
reticulated natural gas and LPG through its retail brands of Genesis and Frank Energy and is New Zealand’s
largest energy retailer with approximately 500,000 customers. The Company generates electricity from a diverse
portfolio of thermal and renewable generation assets located in different parts of the country. Genesis also has
a 46% interest in the Kupe Joint Venture, which owns the Kupe Oil and Gas Field offshore of Taranaki, New
Zealand. Genesis had revenue of $NZ3.2 billion during the 12 months ended 30 June 2021. More information
can be found at www.genesisenergy.co.nz
---
Growth through the transition
28February 2022
Marc England Chief Executive Officer
Emma Oettli Acting Chief Financial Officer
HY22 Results Presentation
2.
Disclaimer
This presentation has been prepared by Genesis Energy Limited (‘Genesis
Energy’) for information purposes only.This disclaimer applies to this
document and the verbal or written comments of any person presenting it.
The information in this presentation is of a general nature and does not
purport to be complete nor does it contain all the information required for an
investor to evaluate an investment.This presentation should be read in
conjunction with Genesis Energy’s Interim Report for FY22 and
accompanying market releases.
This presentation may contain projections or forward-looking statements.
Forward-looking statements may include statements regarding Genesis
Energy’s intent, belief or current expectations in connection with Genesis
Energy’s future operating or financial performance, or market
conditions.Such forward-looking statements are based on current
expectations and involve risks, uncertainties, assumptions, contingencies
and other factors, many of which are outside Genesis Energy’s
control.Although management may indicate and believe that the
assumptions underlying any projections and forward-looking statements are
reasonable, any of the assumptions could prove inaccurate or incorrect and
there can be no assurance that the results contemplated in those
projections and forward-looking statements will be realised.Actual results
may differ materially from those projected.Genesis Energy gives no
warranty or representation as to its future financial performance or any
future matter.
EBITDAF, underlying earnings and free cash flow are non-GAAP measures.
These non-GAAP measures should not be considered in isolation from, or
construed as a substitute for, other financial measures determined in
accordance with GAAP or NZ IFRS.
While all reasonable care has been taken in compiling this presentation, to
the maximum extent permitted by law, Genesis Energy accepts no
responsibility for any errors or omissions, and no representation is made as
to the accuracy, completeness or reliability of the information, in this
presentation.The information in this presentation does not constitute
financial product, legal, financial, investment, tax or any other advice or a
recommendation and nothing in this presentation should be construed as
an invitation for any subscription for, or purchase of, securities in Genesis
Energy.
All references to $ are to New Zealand dollars, unless otherwise stated.
Except as required by law, or the rules of any relevant securities exchange
or listing authority, Genesis Energy is not under any obligation to update
this presentation at any time after its release, whether as a result of new
information, future events or otherwise.
Agenda
1. Highlights
2. Financial performance
3. Operational performance
4. Strategic outlook
5. FY22 guidance
Highlights
5.
Performance Highlights
Financial
$210m
EBITDAF
1
OperationalSocial
Ngā Ara Creating
Pathways
N PAT$85 million
8.7 cps
Interim Dividend
Gross yield of 8.3% and return of DRP
2
$350m
Release of Sustainable
Finance Framework
Committed to sustainable outcomes
+26
Strong Customer Loyalty
Brand NPS
13.2%
Net Churn
500MW
Partnership with FRV Australia
Grid-scale solar
242 GWh
Waipipi
Renewable Generation
Plan to develop up to
Facilitating transformational education,
training and employment opportunities to
prepare rangatahi for the future of work.
Power Shout
Gifting
Genesis customers can now give away
their free power to those in need. Over
15,000 customers chose to do so.
Manaaki Kenehi
Engaged with over 9,000 customers in
need.
1
Earnings before net finance expenses, income tax, depreciation, depletion, amortisation, impairment, Fair Value changes and other gains and losses.
Refer to consolidated comprehensive income statement in the 2022 interim report for a reconciliation from EBITDAF to Net Profit after tax.
2
Dividend Reinvestment Plan
Financial
Performance
7.
HY22 Financial Summary
KEY FINANCIAL COMPARISONS
1
1
Due to the Implementation of IFRIC agenda decision on Configuration and Customisation costs incurred in implementing Software-as-a-Service, HY21 and FY21 comparable financials have been restated in this presentation. As a result, prior comparable
period (pcp) metrics may also have changed.
2
Underlying earnings is net profit after tax (NPAT) adjusted to exclude transactions which do not relate to the current operatingperformance of the business, refer to note A1 of condensed consolidated interim financial statements for reconciliation to NPAT.
3
Inventory prior comparison period is against the period ending 30 June 2021.
4
Controllable operating expenses refer to Employee Benefits plus Other Operating Expenses.
5
Free Cash Flow represents EBITDAF less cash tax paid, net interest costs and stay in business capital expenditure. Net interest costs is interest and other finance charges paid, less interest received.
6
Capital Expenditure amounts differ from amounts stated in the financial statements due to exclusion of capital expenditure relating to Huntly Unit 5’s Long Term Maintenance Agreement (LTMA).
7
Net Debt and interim dividends are shown on a separate scale to other financial comparisons. Net Debt prior comparison periodis against the period ending 30 June 2021. Interim Dividend stated in cps.
- 2.6%+ 62.9%+ 1.0%+ 8.0%- 15.4%- 3.4%+ 1.2%+ 4.5%- 49.5%+ 97.4%
$ millions
8.
Dividend reinvestment plan reactivated to support growth
• Interim Dividend of 8.7 cps, 80% imputed with a record date
of 18 March 2022 will be paid on 1 April 2022. A
supplementary dividend of 1.2283 cps will be paid to non-
resident shareholders.
• Sector leading dividend yield representing a gross yield of
8.3% as at 25 February 2022.
• Dividend Pay-out ratio of 60% reflects a solid first half
performance.
• Dividend Reinvestment Plan (DRP) has been reactivated to
support Genesis investment growth strategy.
• Shareholders will be offered the opportunity to reinvest
theirdividend at a 2.5% discount.
DIVIDEND PER SHARE & PAY-OUT HISTORY
1
Free cash flow repres ents EBITDAF less cash tax paid, net interest costs and stay in business capital expenditure.
9.
Building value through Retail momentum
EBITDAF
1
EBITDAF
1
$ MILLIONS
• Genesis delivered a consistent EBITDAF performance for the first half, once the impact of arbitration emissions in HY21 are applied
to the period the units were incurred.
• Continued growth in netback across all fuels delivered $17m of value relative to pcp.
• Consistent Wholesale performance in changing market conditions reflects the flexibility of generation available to Genesis.
• The energy shortage events in August 2021, where Genesis experienced multiple unplanned plant constraints, resulted in a one off
cost of $6m.
$ MILLIONS
1
Due to the Implementation of IFRIC agenda decision on Configuration and Customisation costs incurred in implementing Software-as-a-Service, HY21
and FY21 comparable financials have been restated in this presentation. As a result, prior comparable period (pcp) metrics may also have changed.
206
10.
Resilient performance of our integrated portfolio
RetailWholesaleKupe
EBITDAF
$34m
$53m vs pcp
$160m
$59m vs pcp
$40m
$9mvs pcp
Transfer
Prices
Changes
$(66m) impact
vs pcp
•Higher gas, electricity and LPG transfer
prices.
•The sustained growth in wholesale markets
flowed through to the Retail segment.
$75m impact vs pcp
•Combined benefits from internal transfer
prices from Kupe and to the Retail
segment.
$(9m)impact vs pcp
•Lower internal transfer price for the sale
of gas and LPG between Genesis’ 46%
share in Kupe and the Wholesale
segment.
Other
Drivers
•Continued netback momentum across
business and retail customers drove
additional value.
•Net customer churn continued a downward
trajectory and is 13.2% for FY22 YTD.
•Continued efficient operation with CTS level
at $124 per ICP
1
.
•Portfolio flexibility drove value, offset by
higher fuel and emissions costs.
•August wholesale energy event incurred a
one off $6m loss.
•Successful completion of the inlet
compression project during the period
restored field capability up to 77TJ/day.
•Strengthening global energy markets
provided momentum for oil sales.
1
Retail costs associated with serving customers across all fuels divided by the total number of Installation Control Points (ICP). Costs are 12 month historical.
11.
Valuation gains drive higher NPAT
• Lower wholesale electricity forward
prices favourably impacted fair value
movements through electricity swaps,
partially offset by PPAs
2
.
• $13m in realised cash gains relating to
coal derivatives.
• Uplift in tax expenses due to
increased profitability.
• Higher depreciation due to upwards
revaluation of generation assets in
June 2021.
NPAT
1
$ MILLIONS
$
MILLIONS
UNDERLYING EARNINGS
1
1
Due to the Implementation of IFRIC agenda decision on Configuration and Customisation costs incurred in implementing Software-as-a-Service, HY21
and FY21 comparable financials have been restated in this presentation. As a result, prior comparable period (pcp) metrics may also have changed.
2
Power Purchase Agreements
12.
Investing for growth and a low carbon future
• Genesis continued to plan for a low carbon future, through
investment in Future-gen and positioning Huntly for the long
term. This strategy includes progressing the biofuels trial,
expected to be completed by the end of FY22.
• Commenced the implementation of our retail digital
transformation programme.
• Higher ongoing business costs included increased
insurance and software costs, salary inflation and higher
overheads. Genesis has also invested nearly $1m in
keeping our employees safe and productive through the
pandemic.
• Reclassified some capital expenditure related to
implementing SaaS as operating expenditure following an
accounting policy change which increased operating
expenditure by $3m. This includes $2m of investment in our
Digital Transformation programme.
$ MILLIONS
OPERATING EXPENDITURE
13.
Capital invested for efficiency and long term resilience
Stay in business capital
2
of $25.5m includes:
Long term investment to improve the reliability and efficiency of
generation assets. This included:
• $1.5m invested in the ongoing Tekapo B runner upgrade
project. The overhaul of both turbine runners will result in 2.5%
improved efficiency for the 800 GWh station.
• $4.2m invested in the Huntly Rankine units to ensure long-
term continued reliability of New Zealand’s thermal back-up.
• Commenced the overhaul of the Piripaua power station
turbines. Investment is expected to increase efficiency by 3.3%
for the 42MW station.
Growth capital includes:
• Successful completion of the inlet compression at Kupe,
ensuring continued gas resilience and a return to full
production capability of 77TJ/day.
• Investing to grow customer loyalty and reduce churn through
our successful Power Shout programme.
• $1.7m invested in supporting new LPG customers and other
growth initiatives.
CAPITAL EXPENDITURE
1
CAPITAL EXPENDITURE
1
1
Capital expenditure excludes M&A activities.
2
Stay in Business capital expenditure includes an additional $1.9m which reflects payments made during the
period regarding LTMA contract.
3
HY21 and FY21 Capital have been restated for the impact of IFRIC agenda decision on Software as a Servic e
configuration and customisation costs (HY21: $1.3m, FY21: $4.2m).
4
Capital expenditure amounts differ from amounts stated in the financial statements due to exclusion of capital
expenditure relating to Huntly U5’s Long Term Maintenance contract (LTMA) HY22: $3.4m
$ MILLIONS
$ MILLIONS
14.
A well managed capital structure
• S&P reaffirmed BBB+ credit rating in February 2022.
• Net debt has increased due to increased inventory and FY21
arbitration costs paid in HY22. Debt/EBITDAF is lower due to
higher expected earnings in FY22.
• $545 million of undrawn facilities provides ample
headroom,including cover for $195 million of short-term
commercial paper on issue at 31 December 2021.
• A 7-year $100 million wholesale bond was issued in
December 2021 at a rate of 3.65%, demonstrating ongoing
debt investor appetite.
•Average interest rate of 4.2% in HY22, down from 4.4% for
FY21, due to lower fixed rate debt. Total finance expense is
flat due to increased debt offset by the lower interest rates.
1
S&P Global Ratings make a number of adjustments to Net Debt and EBITDAF for the purpose of
calculating credit metrics. The most significant of these is the 50% equity treatment attributed to the Capital
Bonds. In FY21 S&P added back the EBITDAF related to prior year arbitration impact.
2
HY22 Net Debt/EBITDAF is based on Net Debt at 31 December 2021 and the mid-point of FY22 EBITDAF
guidance of $435 million.
NET DEBT/EBITDAF RATIO FALLING TO TARGET BAND
FIXED INTEREST RATE PROFILE
15.
35% of facilities linked to sustainable assets and outcomes
First NZ company to have a Framework, loan and bond aligned to the Climate Transition Finance Handbook
• Genesis partnered with Westpac to develop its Sustainable Finance Framework. This was released in November 2021.
• Genesis has enteredinto three Sustainability-Linked Loans, where Genesis commits to meeting sustainability targets in order to
receive a discount on interest costs. This includes Genesis’ 1.5°C degree Science-Based emissions reduction target; and an
emissions reductions goal that we believe is the largest of any Sustainability-Linked Loan in New Zealand.
• As at 28 February 2022 Genesis has $575m of bonds and bank debt facilities under its Sustainable Finance Framework and
expects to extend this in the second half of FY22.
DECEMBER2020NOVEMBER/
DECEMBER2021
JANUARY 2022MARCH2022
Genesiscommitsto anambitious
1.5°C Science Basedcarbon
reductiontarget(SBTi)
SustainableFinance
FrameworkReleased
$250mSustainability
LinkedLoans
Green designation of $100m
Senior Bonds
$225m of Capital
Bondsdesignatedas
GreenCapitalBonds
Considering a Green
Bond issuance of
$100m to $125m
Operational
performance
17.
Growing customer engagement and loyalty
•Energy IQ continues to inform and engage customers, with 8.8m
interactions in HY22, equal to 71% of all interactions in FY21. 141,000
visits to the tipscentre, 40% up on FY21 total.
•Energy IQ and Power Shoutcontinue todrive customer loyalty.
Customer NPS rose to the highestlevel of +26.Net customer churn
declined to 13.2%.
•15,000 Genesis customers gifted over 60,000 hours of free power to
those struggling financially. Matchedby Genesis, more than130,000
hours will be given away this winter.
•Leveraging residential capability to launch a new online sales channel
and transparent energy plans that better target small business
customers.Already delivering 6% - 7% monthly business sales.
BRAND NPS
WHEN CUSTOMERS CHOOSE POWER SHOUTENERGY IQ NPS
“It makes us feel like a really valued customer. In a
world where nothing is free it’s great that Genesis is
trying to give back to the customers through the
Power Shout Loyalty programme.
”
18.
Continued growth in LPG
•The total New Zealand LPG market has grown4% on the pcp. Genesis’
total market share is now29%, up 2% on the pcp.
•Netbacks continued to grow with residential up 5.5% and business up 4.5%
on pcp.
•Genesis continues tofocus on regions with growing consumption and
utilise our distribution network to optimise delivery efficiency.
•Residential customersnumbers were up 9% on pcp, with Genesis now
having 43% share of45kg category. Warmer winter conditions and COVID
meant that per customer 45kg consumption declined by -5% YTD.
•Additional import volumes to New Zealand has meant wholesale prices
continued to converge with global energy prices.
SECTOR LPG GROWTH
IMPORT SHARE OF RETAILLPG SUPPLY AND DEMAND
LPG (T)
19.
More and more customers are engaging with Energy IQ
ENERGY IQ 1.0 HAS BEEN DELIVERING
EXCELLENT EXPERIENCES AND RECORD
ENGAGEMENT
•With a great range of energy management features and loyalty
offers to customers, paired with a robust experience design,
Energy IQ is achieving record engagement scores.
•Increased uptake of Energy Insights and Power Shout continue to
drive high usage of Energy IQ, with unique users up 31% on pcp.
ENERGY IQ 2.0 IS CENTRED AROUND THE
CUSTOMER’S HOME
•Genesis will be launching an entirely new version of Energy IQ in
FY22.
•This has been designed alongside customers and is an entirely
new way to interact with energy. Shifting the focus from the bill to a
customer's energy usage and insights from around their home.
•The home will contextually reflect the customer's energy situation
and highlight the most relevant information.
Solar
LPG
EV
ENERGYIQUNIQUEMONTHLYUSERS
H1FY21113,000
H2FY21140,000
H1FY22148,000
6 Month Rolling Average
20.
Energy Management is changing the way our customers engage
NEWEVENERGYMANAGEMENTFEATURES
•Energy EV customers can now monitor theirhousehold
day/night usage through the new feature in Energy IQ,
EV IQ.
•Over40%of ourEVcustomers have engaged with the
feature. Across allEVcustomerstherehasbeenan
average7%shift of total household usage from day to night
since joiningthe EV plan.
PILOTINGNEWEVTECHNOLOGY
•Wearecurrentlypilotingnewtechnologythatconnects a
customer’shomesmartchargers directly to EnergyIQ.
•EV Sync manages a customer’s EV charging profilewith the
low rate and low carbon generation periods,while ensuring
that their EV is charged by a preferred time.
•This intelligent new feature provides customers with
charge scheduling options, automated optimisation and
separateenergytrackingfor theirE V.
RESIDENTIALCUSTOMERSWITHENERGY MANAGEMENT
PRODUCTS& EIQFEATURES
LARGEBUSINESSCUSTOMERSWITHENERGY
MANAGEMENTSERVICES
14%
CurrentH1
average
18%
Targetforend
ofFY22
21.
•Previously, Energy Online.90,000 Customers.Full relaunch from Feb 2022.
•No contracts, nogimmicks. Same great prices offered for both new and
existing customers.
•Simplifycustomer propositions and business model to keep prices low and
deliver targeted profitability outcomes. Digital sign up, service
andautomation to drive lower cost to acquire andserve.
•Autonomous Frank digital and marketing capability established.Leveraging
core Genesis investments in Digital Transformation programme.
DIGITALSALESMIX
FY21H129.6%
FY21H230.5%
FY22H146.1%
Total ICP MovementChurn v rest of the Tier 2 market
Electricity ICP churn (annualised)per Electricity Authority
-
50
100
150
200
250
20182019202020212022
ResidentialCommercial
Ecotricity Sales
•Ecotricity are New Zealand’s leaders in providing 100%
carboNZero certified renewable electricity.
•The company has delivered strong growth with supply
contracts to New Zealand’s two largest EV charging networks.
Ecotricity will supply three data centres starting in 2022. This
pipeline supports growth of ~50% in FY22.
•Genesis increased its ownership share in Ecotricity to 70%, on
28 February 2022.
•Successful migration completed in 2021 to technologically
advanced billing platform which allows for rapid deployment of
new zero carbon products.
•Ecotricity is involved in a number of large scale renewable
generation projects to support commercial and industrial
clients move to carboNZero certified electricity.
Annual Volumes GWh
Note that Ecotricity customer numbers and sales volumes are not included in Genesisretail operational statistics.
Goal of 50%
growth in 2022
23.
Optimisingourgenerationportfoliotomeetmarketconditions
•Genesis’ flexible generation portfolio continued to provide back-up
energy to the market during periods of high prices and pulling back and
running short into lower priced periods.
•Wholesale gas trading activity enabled flexibility and the ability to focus
generation into higher-price periods. Additional gas has been secured
for winter periods in 2022 and 2023.
•By focusing generation on higher-priced periods and purchasing
additional volume through the spot market, the portfolio LWAP/GWAP
declined to 92%.
•Genesis was able to run 270 GWh short into the market through the
half at an average cost of $78/MWh, a significant discount to average
thermal running cost of $99/MWh.
HUNTLY FLEXIBILITY
GAS SUPPLY FLEXIBILTYWHOLESALE MARKET PRICES
24.
A securesupplyoffuelsandcarboncredits
•Genesis continued to provide energy security to New Zealand
through HY22 and is well prepared to provide essential back-up
through 2022. At the conclusion of the half, Genesis had 2.1 TWh
of stored energy across hydro and thermal.
•Despite rising carbon costs, Genesis remains hedged through to
FY28 with a supply of units well below current market prices.
•Beyond our current hedge position, our investment
in Drylandcarbon will provide Genesis a long-term unit supply over
the next three decades. This is currently forecast to provide
approximately 150,000 units per annum and Genesis is considering
extending this position.
SECTOR ENERGY STORAGE
CARBON HEDGE POSITION
CARBON HEDGE PRICES
Carbon hedge position as at 31 December 2021, inclusive of units from investment in Drylandcarbon.
Thermal and Hydro storage as at 31 December 2021.
Position as at 31 January 2022.
Mercury
25.
GrowingValueandsupportingNewZealandEnergySecurity
•Kupe continues to prove its value to the New Zealand energy system. In
a period of rising wholesale oil, gas and LPG prices, Kupe provided
Genesis with reliable supply.
•After successful inlet compression investment, Kupe returned to full
production capability of 77TJ/day.
•Work is continuing to progress on well development, in the lead up to
final investment decision. Engineering design work and rig procurement
is currently underway with a decision expected this calendar year.
•The annual full plant critical function test was successfully completed in
November 2021. Planning is underway for the next major plant shutdown
in November 2022.
LONG TERM GAS PRODUCTION VOLUME FORECASTCRUDE OIL PRICE
HY22 KUPE PRODUCTION
Successful Inlet
Compression
Long term gas forecast from FY20 2P reserves. W ell development is subject to relevant approvals and Kupe JV
investment decisions. Reserves associated with the Development W ell are classified as Undeveloped Reserves
26.
Keepingourpeoplesafeandensuringcontinuedproductivity
•Genesis is proud to be keeping our people safe and productive through
the pandemic. Genesis has distributed and trained over 1,300 staff and
contractors in their use of RA test kits so that our people can self-test
prior to coming to work.
•At phase two Omicron, Genesis requires twice weekly RA testing to
attend offices and daily testing at key operational sites.
•Genesis has undertaken in excess of 14,500 PCR tests and 15,500 RA
tests.$1m investedin testing in addition to development and
implementation of our response plan.
•Genesis employees continue to remain engaged, motivated and
supportive of our purpose to empower New Zealand’s sustainable future.
Employee Net Promoter score remains a strong +65.
TESTS CONDUCTED
EMPLOYEE NET PROMOTER SCOREINJURIES TREND
Strategic outlook
28.
AnactiveenablerofNew Zealand’senergytransition
Future-gen– transitioningourwholesalepositiontoleadNZ’senergytransition
Growrenewables
Valuefromflexibility
andreliability
TransitionHuntly
Contract for
newrenewable
generation
Contract for
fuel flexibility
Trial biofuels
asa fueloption
forHuntly
Partnerto builda
pipeline of solar
options
Drylandcarbon
partnership
Planforemerging
technologies
(Batteries)
Sell contracts that
support market
reliability (swaptions)
29.
Varied scenarios trend towards 96% to 98% renewable by 2030
1. MixofPower Purchase Agreements (PPA)andsolardevelopment
Outputs
Balanced
Demand growth from EV
and industrials are evenly
metbycommerciallyviable
renewablesalongwithsteady
thermaldisplacement.
RegulatedRenewables
An incentivisedrenewable
uptake with a goal of 100%
renewableleadingto increased
periods of over and under
supply.
Pressurecooker
Faster than anticipated
demand growth with
development constraints,
leads to slower renewable
growth and displacing less
thermal.
Oversupply
Tiwaiclosurecauses
oversupply of low cost energy
and incentivises large scale
demandresponse.
NZrenewablesmix,%
88%95%97%88%95%98%87%92%96%88%96%98%
Totalmarket
generation,TWh
Geothermal
Hydro
SolarThermal
Wind
Renewables added to
GenesisPortfolio
1
, TWh
Huntlyemissions,ktCO
2
202220252030
202220252030
202220252030
202220252030
30.
A highly renewable market will require peaking capacity and
seasonal storage -market settings may need to adapt
•More than 750MW of peaking capacity is required in less than 1% of
hours in typical hydrology (50th percentile) to maintain security of
supply.
•1650GWh of energy storage is drawn on 40% of the time in dry years
(5th percentile) compared with 700GWh in normal years (50th
percentile).
A highly renewable
1
grid draws on backup generation to cover
infrequent peak capacity needs and dry-year firming
Near 100% renewable, spill makes further renewable build a
costly way to displace remaining thermal
0
1000
2000
3000
4000
5000
92%94%96%98%100%
Volumes (GWh)
Modelled system renewable generation contribution
Renewables addedThermalSpill
•New renewables start to contribute more to spill than future
displacement of thermal generation.
•The system can reach 98% renewable where approximately
700GWh of backup generation is used on average.
0
200
400
600
800
1000
1200
1400
1600
1800
051015202530354045
Dispatched generation MW
% of the year
5th Percentile Dry Hydro50th Percentile Hydro95th Percentile Wet Hydro
Dry year Energy Requirement
Winter Capacity
requirement on low
renewable days
1. Simulated 2030 market conditions under ‘Balanced’ scenario.
31.
Biofuel at Huntly could provide a seasonal storage solution
but not short notice peaking capacity
WORKCOMPLETEDTOD AT EPAIN T SA POSITIVEPICTUREFOR
BIOMASSATHUNTLY
Biofuelsresourceassessment
•Emerging domestic industry with significant sustainable resource
potential,but innascent stageof development.
•International markets scaling up with advanced biofuels emerging
whichare a near drop-in replacementfor coal.
RankineUnitlifecycleassessment(Dec2021)
•Opportunityto extendoperationallifeto at least2040and
potentiallybeyondat a relatively low cost vs alternatives.
•IncrementalCAPEXdependentonrunningintensitiesand
desiredlifetime.
Technicalviabilityassessment
•Progressing with advanced biofuel which is practically a drop-in
replacementforcoal (<$200kunitmods fortrial).
•Improved weather resistance and reduced dust from advanced
biofuels,negate theneed forcovered storage.
Physicaltrial
•Testplancomplete
•Trial supplyof advancedbiofuelsourced– arrivalMarch2022
•TrialburnscheduledforApril/May2022
ADVANCED BIOFUELS NEAR DROP-IN REPLACEMENT FOR COAL
Our analysis indicates that biofuels are a viable solution to New Zealand’s 100%
renewables commitment and expected to be lowercost thanother renewableoptions
ADVANCED BIOFUELS EXPECTED TO BE COMPETITIVE WITH COAL
ATCURRENTCARBON PRICES(PRIOR TOFREIGHT)
$-
$100
$200
$300
$60 $90 $120 $150
Generation Cost $/MWh
Carbon $/tCO
2
Biofuel Indicative
Range
Coal Range
Gas Range (U5
without storage)
32.
Regulatoryenvironment creates an opportunity for business,
Government and regulators to collectively shapea low carbon
energy system
Potential
Opportunities
Regulatory
Reviews
EA:reviewofwholesalemarketcompetition
• Found offer prices generally reflected underlying
conditions.
• Focus on the Tiwaicontracts between Meridian, Contact
andNZAluminumSmelters.
EA:DryYearReview
• Found the system worked largely as intended, but
highlightedroom for improvement in policies and
communication toprovidegreatercertainty during
fuel scarcity.
MBIE: NZ Battery Project assessment
1
•Work programme identifying renewable optionsto
provide dry year back-up to New Zealand.
•Genesis is engaging with the Government, including
regarding the future of Huntly and opportunities in
conversion of Rankines to run on biomass
EA:ReviewsfollowingAugust2021outage
• Highlighted the importance of security of supply and
resilienceof ourenergy system.
• EAstatedthatactionstakenbyGenesiswerereasonably
open to Genesis and did not threaten confidence in, or
theintegrity of themarket.
GIC:Gasmarketsettingsinvestigation
•Highlighted need for further upstream investment to
ensuresecuresupplylater inthedecade.
MfE Emissions Reductions Plan
•Delivered in 2022 determining the policy plans to meet
carbon budgets.
•An energy strategy is to be developed (MBIE) setting
out how the sector will navigate the transition.
1. The NZ Battery Project is the New Zealand Government’s investigation into possible solutions to New Zealand’s dry year back-u p challenge.
33.
Future-gen programme on track to deliver lower
cost renewables
• Future-gen has already displacedan estimated 330,000
tonnes of carbon emissions through the Waipipi windfarm.
• Waipipi is now generating 455 GWh per annum.
• Kaiwaikawe is expected to be completed by 1 March
2024 and will provide 230 GWh per annum.
• Tauhara is expected to be completed by 1 January 2025
and will provide 520 GWh per annum, from the start
date.
• Genesis has signed a JV agreement with FRV Australia to
develop up to 500MW of grid scale solar. The JV has been
investigating potential sites and working arrangements.
• This brings together an internationally renowned global solar
developer and Genesis’ experience operating in New
Zealand.
• Genesis will own 60% of the partnership as well as
purchasing energy generated by the projects.The
partnership intends to develop multiple sites.
GENESIS GENERATION DIVERSITY
FUTURE-GEN PORTFOLIO PIPELINE TARGET
OwnershipJoint VenturePPA
HydroNI/SI
WindNINI
Solar
GeoNI
ThermalNI
Current
Future-gen
34.
Genesis is considering what further long-term carbon
reduction commitments we can make
• Genesis has committed to a 1.5 degree
Science-Based Target
1
by 2025, which will
reduce emissions by at least 1.2 million
tonnes by FY25
2
.
• Our Future-gen strategy aims to reduce
emissions through to 2030, consistent with a
net-zero pathway.
• Genesis is considering making a further
longer term carbon commitment. This could
include a goal of net-zero emissions by
2040.
• We will only make a commitment if we have
strategies in place to achieve this goal.
• Any commitment would be externally verified
and adhere to global standards, such as the
SBTi.
SCOPE 1 EMISSIONS - GENERATION INTENSITY (MEAN YEAR)
SCOPE 3 EMISSIONS (MtCO
2
)
1
Validated by the SBTi, a global partnership that provides a clearly defined path to
reduce emissions in line with the Paris Agreement goals.
2
To reduce absolute scope 1 and 2 GHG emissions 36% by FY25 from a FY20
base year and to reduce absolute scope 3 emissions from use of sold products
21% by FY25 from a FY20 base year.
35.
Customers’firstchoiceforenergymanagement
Createconsistent,distinctiveend-to-endcustomerexperiences
Digital transformation: Invest in technology and data to create
consistent and distinctive end to end customer experiences
Create residential
experiencesthatbuild
customerloyalty
Grow our market
share of small
businesscustomers
BecomeanLPG
marketleader
UnleashFrank*in
thetier2 market
Design products for
emerging energy
managementneeds
36.
Transforminghow weprovideourcustomersenergy
MAHITAHIRUBIKSBOWIE
What?
A newcloud Genesis
Data Platform (GDP)
consolidating and
governing data while
reducing integration
points.
New Information
System (CIS) and
Customer Relationship
Management(CRM).
Design of a Target
Operating Model for
Genesis retail to bridge
strategyandexecution.
Why?
Trusted and readily
available data assets,
leadingtoreduced costs
and increased abilityto
generatevalue from
insights.
Enhanced customer
experiences through
modern sales, service
andbillingtechnologies,
as current systems
reachendof life.
FutureRetailoperating
model to fully leverage
new technology and
datacapabilities.
BenefitsChurn-4%CTA -3%CTS-5%
Status
New platform live
withDataMartbuilds
underway;tworetail
usecaseslivebyFY23.
Discovery progressing
with preferred vendor,
withfinaldecisionin Q3
FY22.
Futureoperatingmodel
in detailed design and
planning phase with
trials planned later in
2022.
Head office Staff perspective
The core differentiator of our plans is the
price. Making changes to the price takes
many months and consumes a lot of effort
I’d rather spend creating differentiated
propositions.
Current situation
The core system has limited product
configuration capabilities, e.g. cannot
support time of day billing.
Customer perspective
All energy companies are the same, it’s a
basic rate and doesn’t feel the energy
companies have even tried to make a plan
that suits me.
Post implementation
The core system comes with a rich set of
pre-configured product structures e.g.
multiple discount types, rule based pricing,
time of day billing .
USE CASE EXAMPLE:
NEW ENERGY PLANS
Front & Back office Staff perspective
It feels like I spend all my time talking
about customers bills and the price, as the
price is the only thing that varies across our
plans.
Head office Staff perspective
Price changes are simple, I have
confidence the automated processes will
implement accurately. The differentiation in
our plans shifts focus from just the price.
Customer perspective
I am able to choose a plan that feels like it
fits my needs, it rewards me for the actions
I can take to shift my load and set up
automatic payments.
Front & Back office Staff perspective
I can engage the customer in a more
meaningful conversation about their energy
needs, and help find a plan that meets their
needs and isn’t just about $/kwh.
Pricing
configuration
Product
configuration
Quoting time
Key capability uplifts
37.
A refreshedLeadershipTeamtonavigatethetransition
MarcEngland
CEO
Responsible for the leadership,
strategic direction and
management of all its business
interests.
JamesSpence
CFO
(Incoming)
Responsibleforoverseeing
allfinancefunctions,treasury,
tax,risk,corporatefinanceand
investorrelations. Starting 1
March 2022.
Nigel Clark
COO
(Outgoing)
Responsible for our generation
assets, Kupe and leading
safetyandwellness.Role
ending April 2022.
NicolaRichardson
CPO
Responsible for the people,
culture, property and
procurement.
TraceyHickman
CCO
Accountable for the Genesis
Retail brand, LPG operations
and a range of retail support
functions for the whole
business.
Rebecca Larking
COO
(Incoming)
Responsible for our generation
assets, Kupe and leading
safetyandwellness. Role
commencing April 2022.
Pauline Martin
CTO
(Incoming)
Responsible for Genesis’
electricity,gas,coal and carbon
portfoliomanagement,
derivativesandspottrading.
Role commencing March 2022.
PeterKennedy
CDO
Accountablefortechnologyand
data transformation across the
business.
MatthewOsborne
CCAO
Responsible for legal,
regulatory, external
communications
government relations,
sustainability.
FY22 guidance
39.
FY22 EBITDAF is $430 to $440 million
•The FY22 EBITDAF guidance range has been updated to $430 to $440 million subject to hydrological conditions,
gas availability, any material events, one-off expense or other unforeseeable circumstances. FY22 capital
expenditure guidance is up to $84 million.
•As a result of implementing theIFRS Interpretations Committee ('IFRIC') agenda decision regarding accounting for
SaaS configuration and customisation costs, a total of$11 million has been reclassified fromcapex to opex. This
change has been reflected in guidance.
•Genesis is well positioned for 2022, heading into the peak demand period. Lake levels and contracted gas supplies
are higher than a year ago. There is also sufficient coal to back-up the system, if the country needs it.
Appendices
41.
Financial statements
1
Capital items received as part of the LTMA are recognis ed upfront and paid off over the life of the
agreement (8 years), the cash outflow ($1.9m) relating to this has been recorded as Stay in Business
capex for the purposes of the Free Cash Flow Calculation.
Income Statement
HY22
($m)
HY21
($m)
Variance
Revenue1,382.41,419.4
(2.6)%
Expenses(1,172.1)(1,203.4)
(2.6)%
EBITDAF210.3216.0
(2.6)%
Depreciation, Depletion & Amortisation(106.0)(102.1)
Impairment of Non-Current Assets(2.5)-
Fair Value Change37.0(10.1)
Revaluation of generation assets-0.5
Other Gains (Losses)13.3(1.0)
Share in associates and joint ventures(3.4)(0.4)
Earnings Before Interest & Tax148.7102.944.5%
Interest(30.4)(30.0)
Tax(33.6)(20.9)
Net Profit After Tax84.752.062.9%
Earnings Per Share (cps)8.125.0261.8%
Stay in Business Capital Expenditure25.528.3(9.9)%
Free Cash Flow
1
152.4157.7(3.4)%
Dividends Per Share (cps)8.78.61.2%
Dividends Declared as a % of FCF60%57%
Balance Sheet
HY22
($m)
FY21
($m)
Variance
Cash and Cash Equivalents71.6104.3
Other Current Assets574.7825.1
Non-Current Assets4,151.64,305.3
Total Assets4,797.95,234.7(8.3)%
Total Borrowings1,445.91,427.8
Other Liabilities1,270.51,760.4
Total Equity2,081.52,046.51.7%
Adjusted Net Debt1,3331,276
Gearing34.3%34.2%
EBITDAF Interest Cover8.6x8.3x
Net Debt/EBITDAF2.7x2.9x
Cash Flow Summary
HY22
($m)
FY21
($m)
Variance
Net Operating Cash Flow123.5244.6
Net Investing Cash Flow(57.3)(50.2)
Net Financing Cash Flow(98.9)(145.6)
Net Increase (Decrease) in Cash(32.7)48.8(81.5)
42.
Debt information
Debt InformationHY22
($m)
FY21
($m)
Variance
Total Debt
$
1,4461,428
Cash and Cash Equivalents
$
72104
Headline Net Debt
$
1,3741,324+3.8%
USPPFX and FV Adjustments
$
4148
AdjustedNet Debt
1
$
1,3331,276+4.5%
Headline Gearing41.0%41.1%-0.1 ppts
AdjustedGearing40.3%40.3%
Covenant Gearing34.3%34.2%+0.1 ppts
Net Debt/EBITDAF
2
2.7x2.9x-0.2x
Interest Cover8.4x8.3x+0.1x
Average InterestRate4.2%4.4%-0.2 ppts
Average Debt Tenure8.7 yrs10.3 yrs-1.6 yrs
1
Net debt has been adjusted for foreign currency translation and fair value movements related to USD
denominated borrowings which have been fully hedged with cross currency swaps and fair value interest
rate risk adjustments for fixed rate Capital Bonds.
2
Standard and Poor’s make a number of adjustments to Net Debt and EBITDAF for the purpos e of
calculating credit metrics. The most significant of these is the 50% equity treatment attributed to the
Capital Bonds.
GENESIS DEBT PROFILE AT 31 DECEMBER 2021
$545million of bank facilities (including $250 million of sustainability linked
loans) were undrawn and $195million of Commercial Paper was on issue
at 31 December 2021. The Commercial Paper matures within 90 days.
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
FY22
Q3
FY22FY23FY24FY25FY26FY27FY28FY29FY47FY49
$m
Commercial PaperWholesale DomesticDrawn Bank
Undrawn BankUndrawn SLLCapital Bonds
Green BondsUSPP
Q4
43.
Operational metrics
1
HY22 Retail and W holesale operational numbers have been corrected since the Q2 Performance Report.
2
Historical segment LPG netbacks have been restated in line with sales channels, “Bottled” and “SME &
Bulk”, to better align with business activities. There is no change to headline netback numbers.
Retail Key Information
1
HY22HY21Variance
EBITDAF ($ millions)34.187.1(60.8)%
Customers with > 1 Fuel129,920124,9963.9%
Electricity Only Customers290,288303,518(4.2)%
Gas Only Customers15,10115,649(3.5)%
LPG Only Customers34,25433,5842.0%
Total Customers469,563477,747(1.7)%
Total Electricity, Gas and LPG ICP’s668,206669,496(0.2)%
Volume Weighted Average Electricity
Selling Price – Resi ($/MWh)
$267.99$264.461.3%
Volume Weighted Average Electricity
Selling Price – SME ($/MWh)
$231.93$215.667.5%
Volume Weighted Average Electricity
Selling Price – C&I ($/MWh)
$139.95$138.950.7%
Volume Weighted Average Gas Selling
Price ($/GJ)
$22.70 $19.65 15.5%
Volume Weighted Average LPG Selling
Price ($/tonne)
$1,908.90 $1,906.87 0.1%
Retail Key InformationHY22HY21Variance
Retail Electricity Sales (GWh)3,1213,286 (5.0)%
Retail Gas Sales (PJ)4.24.5(6.7)%
Retail LPG Sales (tonnes)23,965 23,142 3.6%
Electricity Netback ($/MWh)$124.50$121.952.1%
Gas Netback ($/GJ)$12.86$10.5222.2%
LPG Netback ($/t)$1,081.12$1,044.993.5%
Retail Netback
2
by Segment & FuelHY22HY21HY20
Residential - Electricity ($/MWh)$140.79$143.07 $122.83
Residential - Gas ($/GJ)$15.76 $14.17 $12.30
Bottled - LPG ($/tonne)$1,365.58$1,294.73 $1,261.36
SME - Electricity ($/MWh)$121.23 $105.03 $100.49
SME - Gas ($/GJ)$11.91$10.33 $9.33
C&I - Electricity ($/MWh)$101.53$100.53 $89.14
C&I - Gas ($/GJ)$10.70 $7.41 $7.30
SME & Bulk - LPG ($/tonne)$862.07 $825.20 $793.29
44.
Operational metrics
Wholesale Key Information
1
HY22HY21Variance
EBITDAF ($ millions)160.2101.757.5%
Renewable Generation (GWh)1,4261,466(2.7)%
Thermal Generation (GWh)1,6802,307(27.2)%
Total Generation (GWh)3,1063,774(17.7)%
Power Purchase Agreements
Wind (GWh)24230706.7%
Average Price Received for PPA -GWAP ($/MWh)$101.15 $106.62 (5.1)%
GWAP ($/MWh)$130.00 $127.7 1.8%
Electricity Purchases - Retail (GWh)3,2893,464(5.1)%
LWAP ($/MWh)$119.24 $129.02 (7.6)%
LWAP/GWAP Ratio92%101%(9)ppts
Electricity Financial Contract Purchases (GWh)
1,1921,1048.0%
Electricity Financial Contract Purchase price ($/MWh)
$114.10 -
Electricity Financial Contract Sales (GWh)
1,4771,4611.1%
Electricity Financial Contract Sales Price ($/MWh)
$131.08 -
Coal/Gas Mix (Rankines only)83/1793/7
Gas Used in Internal Generation (PJ)10.510.7(1.9)%
Coal Used in Internal Generation (PJ)4.010.4(61.5)%
Weighted Average Gas Burn Cost ($/GJ)$11.21$8.9924.6%
Weighted Average Coal Burn Cost ($/GJ)$7.25$6.0819.2%
Weighted Average Thermal Fuel Cost ($/MWh)$99.27$79.9924.1%
Weighted Average Portfolio Fuel Cost ($/MWh)$53.71$48.919.8%
Kupe Key InformationHY22HY21Variance
EBITDAF ($ millions)40.349.4(18.4)%
Gas Production (PJ)5.45.7(5.3)%
Gas Sales (PJ)5.45.7(5.3)%
Oil Production (kbbl)152178(14.6)%
Oil Sales (kbbl)147157(6.4)%
LPG Production (kt)23.324.4(4.5)%
LPG Sales (kt)23.824.5(2.9)%
Remaining Kupe Reserves (2P, PJe)292.8323.4(30.6)PJe
Average Brent Crude Oil (USD/bbl)$75.52 $43.61 73.4%
Realised Oil Price (NZD/bbl)$97.37 $68.55 42.0%
1
HY22 Retail and W holesale operational numbers have been corrected since the Q2 Performanc e Report.
45.
Glossary
RETAIL
BrandNetPromoterScoreBasedonsurveyquestion “Howlikelywouldyou betorecommend Genes isEnergy/EnergyOnlineto yourfriendsorfamily?”
InteractionNetPromoterScore
Based on survey question “Based on your recent Interaction W ith GE/EOL, how likely would you be to recommend GE/EOL to your Friends/Family?”
CustomersElectricityand gas customersare defined bysingle customer view,regardless of number ofconnections (ICP’s)
SingleCustomerViewRepresentsuniquecustomerswhichmayhavemultipleICP’s
ICPInstallationConnectionPoint, aconnectionpoint thatis bothoccupiedand hasnotbeen disconnected(Active-Occupied)
LPGCustomerConnectionsDefinedasnumberof customers
GrossCustomerChurnDefinedascustomersinstigatinga traderswitchorhomemove
NetCustomerChurnDefinedasGrossChurnposthomemovesaves,retentionandacquisitionactivity
Resi,SME,C&IResidential,smallandmediumenterprisesandcommercial& industrialcustomers
B2BBusinesstoBusiness,includingbothSMEandC&I
Volume Weighted Average Electricity Selling Price-
$/MW h
Average sellingpriceforcustomersincluding lines/transmissionanddistributionandafter discounts
Volume Weighted Average Gas Selling Price
- $/GJ
Average sellingpriceforcustomersincludingtransmissionanddistributionandafter discounts
Volume Weighted Average LPG Selling Price
- $/tonne
Averagesellingpriceforcustomersincludingafterdiscounts
BottledLPGSales(tonnes)Represents45kgLPGbottlesales
SME& OtherBulkLPGsales(tonnes)RepresentsSMEandotherbulkand3rdpartydistributors
CosttoServe($perICP)Retailcosts associatedwith servingcustomers across allfuel typesdivided bythe total numbersof ICPsat timeof reporting
Netback($/MW h,$/GJ,$/tonne)
Customer EBITDAF by fuel type plus respective fuel purchase cost divided by total fuel sales volumes, stated in native fuel units (excluding corporatealloc ation
costs andTechnology& Digital cost centre)
GENERATION
AveragePriceReceivedforGeneration- GW AP
($/MW h)
Excludessettlementsfromelectricityderivatives.
Coal(GW h)Coalgenerationis calculatedbyapplyingcoalburntomonthlyaverage heatrates
CoalUsedInInternalGeneration(PJ)Resultshavebeenrevisedtoreflect changesin coalkilotonnesto PJconvers ionrateandvolume methodology
Rankine’sFuelledbyCoal(%)Theproportionof coalusedin theRankineunits
EquipmentAvailabilityFactor(EAF)Thepercentageoftimea powerstationis availabletogenerateelectricity
ForcedOutageFactor(FOF)Thepercentageof timea powerstation is unavailable togenerateelectricity dueto unplannedfailure ordefect
46.
Glossary
POWERPURCHASEAGREEMENTS
W ind(GW h)Energypurchasedthroughlongtermagreementswithgenerator
AveragePriceReceivedforGeneration- GW AP
($/MW h)
Pricereceivedatproductionnode.(E.g.W aipipi atW VY1101node)
WHOLESALE
AverageRetailElectricityPurchasePrice- LW AP
($/MW h)
Excludessettlementsfromelectricityderivatives
ElectricityFinancialContractPurchases-
W holesale(GW h)
Settlement volumes of generation hedge purchases, including exchange traded and OTC contracts. Excludes PPAs, active trading, Financial
TransmissionsRights (FTRs) and Cap/Collar/Floor contracts.
ElectricityFinancialContractSales-
W holesale(GW h)
Settlement volumes of generation hedge sales, including exchange traded, OTC contracts and Swaptions. Excludes PPAs, active trading, Financial
TransmissionsRights (FTRs) and Cap/Collar/Floor contracts.
ElectricityFinancialContractPurchases-
W holesalePrice($/MW h)
AveragepricepaidforElectricityFinancialContractPurchases- W holesale.
ElectricityFinancialContractSales-
W holesalePrice($/GW h)
AveragepricereceivedforElectricityFinancialContractSales- W holesale.
Swaptions(GW h)Electricityswapoptionssalesvolume.A subsetof theElectricityFinancialContractSales.
W holesaleLPGSales(tonnes)Representswholes ale,exportsalesandtransferstoHuntlypowerstation
Weighted Average Gas Burn Cost ($/GJ)Totalcost ofgas burntdivided bygeneration fromgas firedgeneration, excludingemissions
Weighted Average CoalBurn Cost ($/GJ)Totalcostof coalburntdivided bygenerationfrom coalfired generation,excludingemissions
Weighted Average Fuel Cost - Portfolio ($/ MW h)
Totalcost of fuelburnt plus emissions onfuel burnt dividedby total generation (thermal,hydro and wind)
Weighted Average Fuel Cost - Thermal ($/ MW h)
Totalcost offuel burntplus emissions onfuel burntdivided by totalgeneration fromthermal plant
CoalStockpile- StoredEnergy(PJ)Thecoalstockpile closingbalanc e intonnesdivided byan estimatednominal energycontent ofHuntly’s coal (22GJ/t)
CORPORATE
Total RecordableInjuries12-monthrollingTotalRecordableInjuries including LostTimeInjuries, RestrictiveW orkInjuries andMedicalTreatmentInjuries.
HeadcountBasedonfulltimeequivalents,includingcontractors
KUPE
OilPricerealis ed(NZD/bbl)Oilpricereceivedincludinghedgeoutcomeforoilandforeignexchange
OilPricerealis ed(USD/bbl)Theunderlyingbenchmarkcrude oilpricethat is usedto setthepricefor crudeoilsales
OilHedgeLevels(%)%hedgedforremainderof FYas%of forecastsales
Investor relations enquiries
Tim McSweeney
GM Investor Relations & Market Risk
+64 27 200 5548
---
Results announcement
Results for announcement to the market
Name of issuer Genesis Energy Limited (GNE)
Reporting Period 6 months to 31 December 2021
Previous Reporting Period 6 months to 31 December 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$1,382,400 -2.61%
Total Revenue $1,382,400 -2.61%
Net profit/(loss) from
continuing operations
$84,700 62.88%
Total net profit/(loss) $84,700 62.88%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.08700000
Imputed amount per Quoted
Equity Security
$0.02706667
Record Date 18/03/2022
Dividend Payment Date 1/04/2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.59 $1.45
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the HY2022 Interim Report attached to this
announcement for Genesis’ unaudited interim financial
statements.
Authority for this announcement
Name of person authorised
to make this announcement
Tim McSweeney
Contact person for this
announcement
Tim McSweeney
Contact phone number +64 27 200 5548
Contact email address Timothy.McSweeney@genesisenergy.co.nz
Date of release through MAP 28/02/2022
Unaudited financial statements accompany this announcement.
---
Distribution Notice
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer Genesis Energy Limited (GNE)
Financial product name/description Ordinary Shares
NZX ticker code GNE
ISIN (If unknown, check on NZX
website)
NZGNEE0001S7
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies X
Record date 18/03/2022
Ex-Date (one business day before the
Record Date)
17/03/2022
Payment date (and allotment date for
DRP)
1/04/2022
Total monies associated with the
distribution
1
$ 90,790,472.64
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.11406667
Gross taxable amount
3
$0.11406667
Total cash distribution
4
$0.08700000
Excluded amount (applicable to listed
PIEs)
$0.00000000
Supplementary distribution amount $0.01228235
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
Partial imputation
No imputation
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
If fully or partially imputed, please
state imputation rate as % applied
6
80%
Imputation tax credits per financial
product
$0.02706667
Resident Withholding Tax per
financial product
$0.01057533
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
2.5%
Start date and end date for
determining market price for DRP
17/03/2022 23/03/2022
Date strike price to be announced (if
not available at this time)
24/03/2022
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
New Issue
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
21/03/2022
Section 5: Authority for this announcement
Name of person authorised to make
this announcement
Tim McSweeney
Contact person for this
announcement
Tim McSweeney
Contact phone number +64 27 200 5548
Contact email address Timothy.McSweeney@genesisenergy.co.nz
Date of release through MAP 28/02/2022
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.