Genesis Energy Limited (GNE) Earnings Call Transcript

Good morning, everyone. I'm Barbara Chapman, Chair of the Board of Genesis Energy. On behalf of my fellow directors, our Chief Executive and the executive team and all Genesis employees around New Zealand, welcome to our 2026 Annual Shareholder Meeting. We continue to hold this meeting in a hybrid form and very much appreciate those shareholders who are able to attend. As always, our online streaming facility is available for those who couldn't be here in the room. Before we start, just some quick housekeeping for those in the room. The bathrooms and the fire exits are behind you. If we hear a fire alarm and a request to evacuate, security will help us exit down the stairs and assemble across the road on Reimers Avenue, which is out this way. For those joining online, today's meeting is held via the Computershare online meetings platform. This enables you to read the company documents associated with the meeting and ask questions through the platform. Online attendees can submit questions during the meeting by selecting the Q&A tab on the right half of your screen at any time. Type your question into the field and press send. Your question will be immediately submitted. Should you require assistance, you can type your query and one of the Computershare team will assist through the chat function. Alternatively, you can call Computershare on 0800-650-034. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, they may be amalgamated. Due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course via e-mail. For those present in person, during question time, simply raise your hand and one of our attendants will bring a microphone to you. Turning now to today's agenda. We will move through Board highlights from the year, the Chief Executive's review, a Q&A session, the resolution and then general business. If there are any additional discussion points that you feel haven't been covered in today's meeting, please reach out to our Investor Relations team at the e-mail address investor.relations@genesisenergy.co.nz. There's just one resolution to vote on this year. We are putting forward Simon Mackenzie for election as a director following his appointment by the Board effective from 12 August. You will be able to vote on today's resolution either in person or for those online using the Computershare platform. I will refer to instructions on how to vote when we reach that point in today's meeting. With us today are members of our executive team, including our Chief Corporate Affairs Officer, Matthew Osborne, who will fulfill the role of Secretary for this year's meeting. Silvio Bruinsma is here representing our external auditor, Deloitte. Notice of the meeting has been duly given to shareholders, and we have the required quorum. I now declare the 2026 Annual Shareholder Meeting of Genesis Energy Limited officially open. Thank you all for joining us today. To begin, let me introduce your Board of Directors. Hinerangi Raumati-Tu'ua, Hinerangi joined the Board in March 2022. She is Chair of the Audit and Risk Committee and a member of the Human Resources and Remuneration Committee. Hinerangi is Chair of Tainui Group Holdings and serves on the Boards of a number of entities, including the Guardians of New Zealand Superannuation. She brings extensive governance experience, having chaired and served on iwi boards and those in varied sectors, including water, fisheries, local government, public trust and the Reserve Bank of New Zealand. In addition to her strong commercial investment and corporate governance background, Hinerangi focused on the development of post-settlement commercial entities and commercial frameworks with a Te Ao Maori view. Thanks, Hinerangi. Warwick Hunt. Warwick joined the Board in October 2022. He is a member of the Audit and Risk Committee and the Capital and Markets Committee. Warwick brings over 30 years leadership and governance experience. As a partner and then managing partner of PwC New Zealand, Europe, Middle East, Africa and U.K., Warwick has worked across a range of sectors, including energy, professional services, financial services, agribusiness and aviation. Warwick is Chair of the Bank of New Zealand, a Non-Executive Director of the National Australia Bank and a fellow chartered accountant in Australia and New Zealand. Thank you, Warwick. Tim Miles. Tim joined our Board in 2016, coming to us from his previous role as Chief Executive of Spark Digital. He is Chair of the Human Resources and Remuneration Committee and a member of the Health, Safety and Well-being Committee. Tim has had a long executive career in customer and technology-focused roles both in New Zealand and internationally. He is Chairman of FortySouth Limited, a Director of NZX listed company oOh!media Limited. Tim has served as a director of companies in the fields of technology, finance and property. Thank you, Tim. James Moulder. James joined the Board in 2018. He is Chair of the Capital and Markets Committee and a member of the Audit and Risk Committee. James has strong governance experience, having held a number of nonexecutive Board and advisory board positions in the electricity and carbon industries. James previously held executive management positions at Mighty River Power, now known as Mercury Energy. Prior to joining the Genesis Board, James advised the Singaporean government on the development of electricity hedge trading markets. More recently, he's been involved in the development of carbon and environmental markets in Asia. James' background advising the New Zealand electricity sector's regulatory bodies also strengthens the depth of our sector experience. Thank you, James. David Baldwin. David joined the Board in August last year. David is Chair of the Health, Safety and Wellbeing Committee and a member of the Capital and Markets Committee. David brings more than 35 years of international leadership and governance experience across Asia Pacific, Europe and North America. David has held senior executive and director roles spanning renewables, gas and LNG, utilities, chemicals and infrastructure asset management. His career includes leadership positions with Contact Energy, Origin Energy, Shell and Berkshire Hathaway Energy. Most recently, David was a Senior Managing Director with Macquarie Asset Management, where he advised and served on the boards of energy and infrastructure private equity portfolio companies. David is also a Non-Executive Director of energy companies in the Philippines and the United States, both in the Macquarie Asset Management portfolio. Thank you, David. Simon Mackenzie. Our new Director, Simon Mackenzie, joined us on August 12. He can't be with us today, but has recorded a message, which we will play later in the meeting. Simon has broad experience across the energy sector. Simon served as Vector's Group Chief Executive from 2008 to 2025, currently serves as a Director of Bluecurrent and has previously held director roles for New Zealand wind farms and the gas industry company. Prior to joining Vector, Simon gained experience in both energy retailing and generation through roles with Mercury and ECNZ. During his tenure as Vector Group Chief Executive, Simon transformed the company from a traditional energy infrastructure operator into a more diversified technology-driven business. Simon has championed innovation across the energy sector, forging partnerships with Amazon Web Services and Google X, supporting early trials of solar and battery technologies and overseeing major investment in Auckland's electricity and gas networks to accommodate growth, electrification and climate-related resilience. You'll have the opportunity to hear from Simon later and vote for his election. I'd like to take this opportunity to acknowledge our former Director, Catherine Drayton, who stepped down from the Board this year after seven years of service. Catherine was Chair of the company's Audit Committee and a member of the Markets and Risk Committee. Catherine's input to the direction of Genesis, her skills and careful stewardship were invaluable. We thank her for her expertise, dedication to the company and wish her all the best. On the screen now is our Board's skills matrix, a summary of the skills we consider necessary for the company's success and an assessment of the skills held by directors. The matrix shows a very strong breadth and depth of expertise and secondary skills held by your Board. The skills matrix is not set and forget. The Board is conscious of the need to keep an eye on the skills we need to create value in the future. Technology and AI are developing rapidly. The Board and management are purposely developing our understanding across a broad range of initiatives to ensure we are well placed to use technology and AI to drive shareholder value into our strategic delivery. We are, of course, not alone on this journey. Engaging with similar businesses outside of New Zealand and those at the frontier of data and AI is an essential part of this program. During the financial year ended 30 June 2026, the Board was assisted by the following four committees in the performance of its functions. the Audit Committee, the Markets and Risk Committee, the Human Resources and Remuneration Committee and the Nominations Committee. In June 2026, the Board resolved to amend its committee structure. This means that with effect from 1 July 2026, the Board is now assisted by a modified group of four committees in the performance of its functions, an Audit and Risk Committee, Capital and Markets Committee, a Human Resources and Remuneration Committee and the Health, Safety and Well-being Committee. The role previously performed by the Nominations Committee will now be undertaken by the Board as a whole. As part of that decision, the Board also resolved to amend the remuneration scale for committee responsibilities but within the directors' fee envelope. Directors' remuneration was last reviewed in the FY '25 year as part of the previously communicated biennial review cycle. No increase in the directors' fees pool was sought. Directors' remuneration will be reviewed again in FY '27. Through our reporting, we seek to present a balanced view of how Genesis creates value over the short, medium and long term. Our annual reporting suite includes a fully integrated report where our commercial performance is supported by relevant environmental, social and governance metrics, a climate statement, a modern slavery statement and a sustainable finance report. They can be found in the Investor Center on our website. I'm proud to lead a strong and capable Board of Directors who provide their extensive experience and specialist skills for the benefit of our company, our shareholders, the wider community and our other stakeholders. The energy market has continued to evolve over the past year. The independent review of electricity market performance led by Frontier Economics concluded with the government announcing a package of measures in response. Affordability and security of supply remain firmly in focus, and we're seeing that reflected in the regulatory and policy programs. Striking the right balance between those two outcomes is critical, and Genesis understands this challenge, particularly well given our role the portfolio plays in supporting New Zealand's energy security. Diversity of reserve fuel and generation remain critical components of this as does ensuring the commercial cost of delivering this is carried proportionally across the entire sector. Policymakers and regulators are considering additional reliability obligations to strengthen security of supply through dry and low wind periods, and you will all be aware of the government's work on a potential LNG import facility. While we are encouraged to see the broad consensus emerging across parliament on the need to accelerate electrification of New Zealand's overall energy makeup, we do expect the election ahead to shape how electrification may play out over the near term. Importantly, Gen35 has been designed to balance serving our customers well and delivering strong outcomes for our shareholders across the near and longer term. Our strategy is focused on the underlying needs of our customers and New Zealand's energy system and is designed to remain resilient through changes in the policy and regulatory environment. FY '26 marked an important milestone in Genesis' transformation. Alongside a strong financial performance, we strengthened our balance sheet through a capital raise and launched our FY '32 growth plan, positioning Genesis to accelerate growth while supporting New Zealand's energy security. This year's strong financial result was achieved through improved margin quality, cost discipline and strong capital management. Favorable hydro conditions enabled Genesis to leverage its market-leading flexibility to support customers, strengthen New Zealand's energy security and deliver value for our shareholders. The investments we have made over the past few years to strengthen our trading capability enabled us to capture this value. Our normalized EBITDAF of $522 million was up $52 million on FY '25. This keeps Genesis on track to achieve EBITDAF in the upper $500 million range by FY '28. The successful $400 million equity raise completed in March 2026 not only strengthened our balance sheet, but increased our strategic flexibility, enabling us to accelerate priority investments as part of the FY '32 growth plan while preserving optionality as our development pipeline continues to mature. Our Gen35 strategy delivery is well underway with proof points now emerging. Malcolm will expand on these in his presentation. We've maintained disciplined investment in existing assets alongside new renewable generation and storage in line with our FY '32 growth plan. We balance this investment with competitive shareholder returns. The Board moved to a fixed dividend policy for the period FY '24 to FY '28 to provide shareholders with certainty while we positioned the business for growth. As outlined at our annual results presentation, the Board is reviewing our dividend policy beyond FY '28, and we'll have more to say in the FY '27 interim results in February. Regarding guidance for FY '27, we are guiding to normalized EBITDAF of $480 million to $520 million, assuming P50 hydrology, wind and solar conditions. As always, guidance remains subject to hydrology, fuel and plant reliability and no material changes in regulatory or policy settings. The health, safety and well-being of our people is a priority for this Board. This year, the Board established a health, safety and well-being committee to reflect the importance we place on this area and to focus our efforts on continuous improvement. Among those improvements this year was the introduction of the GenSafe platform, enhancing our ability to capture insights, support timely decision-making and strengthen learning from incidents and near-misses. Effective risk management reduces exposure to high-consequence events across our operations. It was pleasing that recordable injuries reduced from 48 to 37 last year. To maintain this continuous momentum, we started a comprehensive review of our critical health and safety risks to ensure our controls remained effective and aligned with industry good practice. In FY '27, we will upgrade and implement a new critical risk management framework aimed at strengthening how critical risks are identified, monitored and controlled across the business. A reduction in our emissions this year reflected good hydrology, strong trading and emissions reduction efforts across the business. Our total greenhouse gas emissions, Scopes 1, 2 and 3 decreased to 2,014 kilotonnes, down 47% from FY '25 and the lowest level recorded since our FY '20 baseline. While our emissions are trending downward over time and will continue to do so as we invest in new renewable generation, renewables will continue to influence emissions outcomes. While holders of Huntly Firming Options, or HFOs, own and hold their own thermal fuel reserves, Genesis as the generator is required under international carbon accounting rules to account for these emissions as our Scope 1. We expect holders will account for the same emissions as their Scope 3. This means that while HFO holders determine when and how much the thermal generation is called under their HFOs, that generation will affect Genesis' reported Scope 1 emissions. We will clearly identify the emissions associated with HFO generation in our future reporting. Our emissions profile is therefore influenced by that HFO dispatch decision, hydrology conditions and renewable generation. As a result, annual emissions are expected to fluctuate while the long-term trend will continue downwards. Achievement of our FY '30 interim emissions target towards our FY '40 net zero commitment assumed deployment of biomass at Huntly. We have recently concluded that current commercial decisions do not support progressing biomass to the next stage of investment. And as a result, we no longer expect to meet the FY '30 interim target based on normal hydrology and expected market conditions. During FY '27, we will assess the implications of this on our FY '40 net zero target. We expect to provide an update in our FY '27 climate statement. Huntly Power Station continues to play a critical role in maintaining security of supply when renewable generation is constrained. As we continue to invest in renewable generation and flexible firming capacity, we remain focused on reducing emissions over the long term while maintaining a secure and reliable electricity system. In conclusion, along with my fellow directors and our Genesis Energy team, I'd like to thank you for your continuing support of our company. Our renewable transmission must also deliver energy security and reliability, and we will continue to engage constructively with regulators to help ensure a workable pathway for new renewables generation while maintaining our focus on security of electricity supply and affordability for our customers. I have every confidence that your Board, overseeing our strong executive team will maintain the company's position as an essential and profitable part of New Zealand's energy future, while at the same time, living up to the company's purpose and vision. Finally, I want to acknowledge the awards that Genesis has been recognized for in the past year across our wholesale and retail segments. These include our Women in Wholesale program winning the Wellbeing Award at the Energy Excellence Awards, our Power Shout gifting program, winning Best Social or Sustainability Initiative at the 2026 Asia Pacific Loyalty Awards, our wholesale outages and projects team winning two awards at the New Zealand Project Management Awards and our people and culture team winning the Business Impact Award at the Human Resources New Zealand Awards for their contribution to delivering on our Gen35 strategy. Awards like these are a reflection of the talented, dedicated and innovative group of people you have striving to make your company better in every area. It's now my pleasure to invite your Chief Executive, Malcolm Johns, to address our shareholders. Welcome, Malcolm.

Thank you, Barbara. [Foreign Language] from wherever you are listening, a warm welcome. It is a pleasure to speak to you today and set out how our team is delivering. Our strategy, Gen35 remains, and we are delivering Horizon 2, the period from FY '27 to FY '32. We refer to this as the FY '32 growth plan. Let me first start by introducing our executive leadership team, and I'd ask each to stand as I do so. Emma Oettli is a long-time member of our leadership team, who seamlessly transitioned into Chief Financial Officer in April this year. Emma is an excellent example of the investment we have made in developing our senior leadership talent to ensure we have a strong internal bench ready to step up to executive leadership when appropriate. Claire Walker is our very experienced Chief People Officer and has worked hard to strengthen our leadership bench through a combination of building and recruiting talent while setting up strong internal succession lines. Stephen England-Hall is our dynamic Chief Revenue Officer. Currently unique to Genesis, Stephen leads both our retail and wholesale functions. delivering our strongest gross margin outcome during FY '26. Matthew Osborne is our experienced Corporate Affairs Officer, navigating a busy year with a number of regulatory and policy matters following the release of the Frontier report. Ed Hyde is a very experienced senior executive leading our technology and transformation programs as Chief Technology and Transformation Officer. Tracey Hickman has an extensive and broad career across the energy sector and is our Chief Operating Officer. I'm extremely proud to work with a strong executive team and alongside a great mix of established and emerging leaders who are delivering for our customers and our shareholders. We are no longer in an energy transition. We believe we have entered the age of electricity. We are seeing growing electrification in transport, heating and data, not only here in New Zealand but across the world. Homes and businesses everywhere are experiencing the AI revolution. And this is accelerating change to levels we have not seen before. Electricity is both critical to this revolution and generally scarce relative to future demand. As we look ahead over the next few years, we are going to experience a rapid AI revolution that will need four core components: increasing amounts of electricity, data, processing capacity and human judgment. Regardless of how AI changes everything else, these four things will remain constant through the AI revolution. This means demand and supply of electricity are going to have to grow and likely grow for some time to come. At Genesis, we believe electricity is New Zealand's energy solution. It's efficient. It's increasingly renewable. It's made in New Zealand. And because neither rain, wind nor sunshine need to travel through the Strait of Hormuz, it provides energy security and independence. However, today, electricity only makes up around 30% of New Zealand's total annual energy use. 70% comes from nonelectrical sources and 50% of our overall energy is imported. As we have all been experiencing since conflict in the Middle East began, this energy profile with its heavy imported components can have a material impact on the total energy costs for Kiwi homes and businesses. If electricity made up 60% of New Zealand's total annual energy today, the average household would be saving up to $3,000 a year on total energy costs. New Zealand's total annual energy bill would be around $10 billion a year less than it is today. This is why our vision is a country that lives life at full power, homes and businesses, leveraging New Zealand's natural electricity advantage to thrive at full power for this generation and the generations that come after us. Achieving this is about the electrification of transport, heat and data. And to do this at scale and at pace, we need predictable long-term policy and regulatory settings that enable us to compete for both customers and capital in equal measure. This will not only lower the total cost of energy for our customers, it will empower the New Zealand economy for generations to come. As a sector, we must deliver what we call the 60-95-100 formula, 60% electrification of New Zealand's total energy, at least 95% renewable generation and electricity that is available 100% of the time regardless of the weather or customer demand. For Genesis, Gen35 is about growing customer demand for electricity through electrification, reducing average generation costs from increased renewable generation and energy security and flexibility from Huntly Power Station and our three well-placed hydro schemes. Gen35, life at full power, delivers for our customers, our investors and for future generations. For our investors, we are focused on embedding three commercial foundations into our culture: margin quality, cost discipline and strong capital management. On margin quality, this year, group gross margin increased to $949 million, up 10% on the prior year. This reflects how our teams are delivering across our customer, trading and generation business units. It is the strongest gross margin result for Genesis to date. On cost discipline, cost to serve reduced and investment in our major technology program remains within the self-imposed overall envelope of $145 million. As the major technology and single brand programs conclude in FY '27, the focus increasingly shifts into ongoing margin quality and cost discipline outcomes. On strong capital management, we are investing to structurally lower the average core cost of generation by FY '32 in support of increased margin quality. Each investment is assessed within our strong capital management framework, and we will deliver new generation through three structures: direct investment from our balance sheet, leveraging third-party capital into joint venture developments and contracting power purchase agreements or PPAs. I'll now take you through what we have delivered in FY '26 in each of our three COGS of customer, renewables and Huntly as well as touching on our major technology replatforming program. In customer, our team is delivering our strategy to lower the total cost of energy for our customers while also lowering our cost to acquire customers and our cost to serve customers and improving netback outcomes. FY '26 saw overall customer numbers move lower as planned as we rebalanced our customer portfolio to improve our margin quality and cost discipline. Netback increased to $176 per megawatt hour. And as I have said, we delivered the strongest gross margin outcome for Genesis to date. This rebalancing of committed demand also enhanced our flexibility at Huntly Power Station. That allowed our trading teams to use that increased flexibility to great fit. as reflected in the strongest gross margin I have mentioned. We have now delivered this repositioning, delivered a simpler retail operating model and launched our single brand. And if you turn to the right, you can see our single brand outside. Pleasingly, customer numbers returned to growth around May this year with quality customer acquisitions continuing over quarter 1 of FY '27. Electric vehicle plan connections are growing strongly. Rooftop solar connections remain in growth with Genesis now the largest rooftop solar retailer in New Zealand. And flexible customer demand reached 58 megawatts, a record. We are delivering margin quality and cost discipline in our customer business, and we can see the direct link of this in our improved commercial outcomes in FY '26 and early in FY '27. In renewables, we will deliver more than 2 terawatt hours of new renewable generation by FY '32, and this will structurally lower the average generation cost. In FY '26, we delivered the first full year of operation from our joint venture, Lauriston Solar Farm in Canterbury. Tihori solar farm near Edgecumbe moved into construction, and we reached final investment decisions, greenlighting Leeston solar farm in Canterbury. New power purchase agreements were secured for supply from Mt Cass wind farm being built by Yinson Renewables in Canterbury, along with a new geothermal PPA in Northland, which will come into effect in FY '29. Our PPA for generation from the Kaiwaikawe wind farm in Northland became effective with the site expected to reach full generation in January '27. As our renewable generation portfolio grows, we are monetizing the flexibility and dispatchability of Huntly Power Station in ways we have not done so before. We have delivered capacity contracts to support maintaining three ranking units known as Huntly Firming Options or HFOs. These are a return on and a return of capital contract. HFOs have underpinned and derisked the more than $100 million in life extension investment we are making to extend the three ranking units well out into the 2030s. Our new $130 million 200-megawatt hour battery energy storage system, or BESS, has been delivered and is operational. We are proud that this is the most capital-efficient grid-scale battery delivered in New Zealand to date. We have committed to Stage 2 of Huntly BESS, a further 200-megawatt hours for which construction will begin later this year. We expect BESS Stage 2 to take over from BESS Stage 1 as the most capital-efficient grid-scale BESS delivered in New Zealand to date. We see the Huntly site centered around 400-megawatt hours of batteries. Three life extended 240-megawatt rankine units and our 50-megawatt fast-start diesel gas peaker. We retain the option for a second fast-start peaker, although there is no commercial case for that investment today. Those assets will be supported by diversified fuels of coal, gas and diesel, with biomass remaining an option as economics improve into the 2030s. Should imported gas become an option, fuel pricing will continue to determine which fuels are dispatched at what times. We have also begun building new renewable generation around the Huntly site with Rangiriri solar farm moving toward final investment decision. Gas storage remains of interest. However, it is no longer essential to delivering our FY '32 growth plan objectives. In September, we contracted additional third-party gas supply for the period of March '27 to December '29 to support our industrial customers and electricity generation. We are now clear on what we need to support Genesis' electricity supply and security across dry and low wind periods, and we are now well covered for these risks. For national energy security needs, over and above this, Genesis is committed to making a contribution proportional to its position in the overall sector. Flexible generation is a key strength in our portfolio, and our long-run generation share will be around 15%. However, we can flex down as low as 7% to 8% generation share and up to as high as 18% to 20% generation share, allowing us to maximize market conditions as we have demonstrated across FY '25 and '26, and we will demonstrate again in FY '27. We see our fair contribution to national energy security through this lens. And we have been clear since we launched Gen35 in FY '24 that we can only maintain generation and fuel reserves where there is a clear commercial case for us to do so, which brings us to our decision to review the future of Unit 5. Our 400-megawatt combined cycle gas turbine at Huntly Power Station. Unit 5 has not operated for half of each of the past two years. As we and others build new renewable generation and with the recent addition of extra water storage now in play and in an energy-only market context, it is challenging to currently see an attractive commercial case for Unit 5 beyond the very near term. To remain commercially viable in New Zealand, Unit 5 needs contracted long-term revenues, long-term cost competitive and reliable fuel supply and fuel flexibility. None of these things are currently available in New Zealand. As we indicated in our full year results, we have established a review team and commenced a review process of Unit 5. The team will be exploring options to secure Unit 5's commercial future in New Zealand, alongside options to sell it in the international market and any other options that the team may choose to investigate. We expect this process will take us around 12 months or so, and we will keep the market updated as appropriate. Finally, a quick update on our technology program. As we detailed at our 2023 Investor Day, we're delivering three major technology replatforms, a new billing and CRM system in our customer business, a new financial management system and a new electricity trading and risk management platform. This is the technology equivalent of a heart and lung transplant to Genesis. These are complex programs, and our teams are doing a great job. We currently remain on track to complete them within time and budget envelope that we gave ourselves. FY '26 saw the completion of the consolidation of our three 3 retail brands, Genesis, Frank and Ecotricity into a single unified Genesis brand. Our updated brand positioning is energy that never stops. And our new tagline is life at full power. chosen because they translate our strategy into clear customer and investor benefits. The new sunburst logo represents a raw continuous source of energy in a bold and distinctive way. It also draws on the story of Maui, capturing the sun, symbolizing the harnessing of energy, reinforcing our role in helping customers control and get more value from their overall energy purchases. We have a market-leading strong brand position with high customer loyalty and the changes being delivered under our single brand strategy over the coming months will strengthen our market position further. FY '26 has been a solid year of delivery. FY '27 will be the same. FY '28 remains our target year for being clear of the major technology, brand and transformational investment, setting the platform for Genesis to thrive over the years to come. We remain committed to upper $500 million EBITDAF in FY '28 based on P50 hydro, wind and solar and assuming no major unplanned outages or major regulatory changes. Looking now out to FY '32. The period from now until 2032 is Horizon 2 of Gen35. We call it the FY '32 growth plan. The FY '32 growth plan has five delivery pillars. customer, where we will partner with our customers to electrify their homes and businesses to lower their total cost of energy, while also delivering lower cost to acquire customers and to serve our customers to deliver margin quality and cost discipline. And in renewables, where our focus is to structurally lower our long-term average cost of generation through delivering more than 2 terawatt hours of new renewable generation. And at Huntly, where we are putting in place a group of flexible, dispatchable generation assets and fuels to maximize the flexibility and security of our portfolio and lift our asset-backed trading outcomes. And in operating costs, where we will deliver cost discipline to reduce our current core operating costs while also recognizing and managing our commercial headwinds, which broadly fall into two areas: increased operating costs associated with building and maintaining a strong future generation development pipeline appropriate to our portfolio and the known and planned decline of Kupe production out to around FY '24. Both of these headwinds have been included in the FY '22 numbers shared during our capital raise earlier this year. So to recap, we are building a culture focused on margin quality, cost discipline and strong capital management to deliver growing quality demand, lower average generation cost, increased margin from flexible dispatchable generation, a competitive operating cost base while leaning into and managing our known headwinds. Critical to this is how we develop and strengthen our people. During FY '26, employee engagement remains strong with overall engagement of 78% remaining above the New Zealand benchmark of 75%. These results during a period of profound change within Genesis demonstrate how we are delivering our strategic objectives in leadership and culture development. A core part of our strategy delivery will remain investing in our people and our leaders to ensure we have a strong internal leadership bench, and we are evolving our leadership and leadership structure to reflect both the dynamically changing internal and external operating environment without compromising strategic delivery. We have developed an awesome group of people, and they are doing some very cool stuff right now. I am extremely proud of them and extremely proud to be part of this team. So in wrapping up, we can expect the regulatory context for electricity to remain politically contested in New Zealand for the foreseeable future. We can expect wholesale electricity prices to continue to fluctuate as we navigate what will be a dynamic context for supply and demand balance over the coming years. It is, however, largely rational market that has served New Zealand well for decades. We will remain constant or what will remain constant is that we are in the age of electricity and the transport, heat and data sectors of our economy are going to electrify. That means we will all have to continue to compete strongly for customers and capital to ensure the age of electricity is a golden age for our generation and the generations that come after us. We are well into building a company that can deliver a strategy designed to navigate that political context and energy policy and the ups and downs over time in supply and demand dynamics. We will deliver Life at Full Power for our customers and for our investors. I'll now hand back to Barbara.

Thanks very much, Malcolm. We now have an opportunity to take questions on the presentations that you've just heard. Questions from the floor are now open. If you do have a question, indicate please by raising your hand. And please remember that this meeting is being webcast. You'll need to be heard by a remote audience. So please wait for the microphone to be passed to you before speaking. Those shareholders attending online today may also submit questions, and I will address those questions after we have addressed the questions from the floor. Before asking your question, please state your name and if you are a shareholder, proxy holder or shareholder representative. Thank you. So are there any questions from the floor?

Alex Ball, New Zealand Shareholders' Association proxy holder. Thanks for the presentation, very detailed and comprehensive. A quick question, and it's a minor disclosure question. You've put up the corporate governance skills matrix for the Board as a collective skills matrix. Thank you for that. Leading companies and an increasing number of companies on the NZX have been moving to an individual director skills matrix which allows shareholders to understand the individual skills that directors bring to the collective Board. And I know that a number of your peers in the energy sector and the listed energy sector are already doing that. Have you got any plans to have a look at that?

Alex, it's nice to see you here. Look, that is definitely something we can look at. As I said, skills amongst the Board are not a set and forget thing. And so I think going forward, yes, let me take that away with the team, and we can see if we can make that better and more aligned to what best practice might be nowadays. So thank you. Graham, there's one over here as well when you're ready.

Vincent Rego, I'm a shareholder. Two quick questions. One is about the guidance for '27 as against a profit of $522 million, there's a guidance of a range from $480 million to $520 million. From the presentation that we have heard, I would have thought the guidance would be at least 10% above what is indicated. The second question is, pardon me if I'm wrong, but the customer base has fallen. Is that was mentioned, customer base has fallen. What would be the primary reasons for that? And what are we doing to reverse that and increase the customer base?

Well, thank you for your questions. I'll start with the question on the customer base. You will have heard that we have merged three entities inside Genesis, one being Genesis, one being Frank and one being Ecotricity. And as part of that, our focus has been on customers who are of the most value to the company. So in our view, yes, it's great to have a lot of customers, but we want those customers to be high-value customers. So we will focus on the contribution that they make and really hone in hard on those customers who make the most contribution. So while customer numbers might be going down, the value of the contribution from the retail book from customers won't be. So you'll see that just slight change in dynamic. On the forecast, the guidance that we have given, as always, it assumes things like P50 hydrology, wind, solar. And so outcomes will fluctuate from year-to-year based on those particular dynamics. So the year we've just been in, it's been a favorable year for Genesis because of those hydrology dynamics and the other initiatives that the team has put in place to get to the result that we've got to, which was a very good result, a very strong result. Looking forward, I think it would be remiss of us to give guidance based on hydrology that might not happen. And so we always guide towards that P50 hydrology. And you'll see us during the year, should the need arise as we have done in the past, we might change that guidance just depending on how things are tracking in and around that hydrology component. Do you want to add anything more, Malcolm?

I'd just add that we still have one-off or the technology spend is $40 million this year. So the major technology programs that I talked about in my presentation, we still have $40 million worth of operating costs in this year. They come to an end in the end of FY '27, so they move out. And I think that's probably the 10% difference that you're thinking of because our policy is to expense those programs as we build them rather than capitalize them. We capitalize a small portion, but the majority of it we're expensing as we go through.

Okay. So you've indicated that last year, hydro was very favorable. I just want to talk about importation, imported cost of coal when there's local available across the road Huntly. Kupe winding down with the potential of the future development of gas. These are politically overtime statements because I realize they're all very relevant to the election at the moment. So importing LNG is very contentious at the moment. And the question is, what's Genesis policy regarding the climate concerns accessing local coal and hunt and reopening gas fields in New Plymouth, which some political parties are indicating they're very keen on doing.

Thank you. Look, I'll start, and I'm sure Malcolm will have a much better answer than I do ultimately. But I covered a lot about emissions in my presentation. And so hopefully, you heard we are on a downward trajectory, but it does go up and down depending on all the conditions we have. On coal, the coal can't just be any source of coal. There's a specific type of coal that's required for us burning, yes. Sorry, what particular point do you not agree with?

I don't agree with the fact that the local coal could not be changed economically to be available for power generation at Huntly.

We do use a lot of local coal at Huntly. So I'm sorry if you've not been clear on that.

No, I'm just worried about the import factor because on the cost thing, import is a strong variable in your decision to wind down Unit 5. And also just generally, it seems to be that I was at the 95%. It can change the balance sheet. I'm just saying that hydro was very favorable, and that's not always going to be the case. So I think there is a -- I want to hear about more about the other concerns when it's not wet yet when that makes aren't full.

So we can pick that up with you offline. I think the people in our fuels team would be the best group to answer some of those questions. I'm well aware that the cost of importing coal, of course, is high. There are costs associated with that with shipping it and transporting it into New Zealand. The coal that we bring in is the right specification for our machinery and the local coal that we buy is also the right specification. So we work hard to get that particular balance right because we are aware of the additional costs associated with importing. Look, on LNG, we don't need LNG for our portfolio. But obviously, were it to come in, that changes the dynamic again. And you had a question around Kupe. Sorry, what was that particular question?

It's not a done deal. There's some political parties that are keen on reopening the gas fields that are available in Taranaki. It was a political decision to shut them down and it's an issue on the selection. I happen to know being some local of Ngamotu.

Thank you. Were that to happen, we, of course, will respond to whatever changing fuel supply might happen in New Zealand. And that's one of the strengths of Genesis. We do have good options around how we manage the flexibility of fuel that is available to us as a gentailer. And so were that change to happen, then our response will be commensurate with that change. But who and the team is best to manage an ongoing question. So, Tracey, would you mind just standing up? And if you want to find Tracey at the end of the presentation, please talk to Tracey about the fuel flexibility issues and the political dynamics that you've been raising. So thank you. There was a question here.

Thank you. Keith Stewart, I'm a shareholder. Why doesn't Genesis build another coal-fired unit at Huntly? That is why Huntly was there. It's got the coal, it's got the water. It's got all the facilities. The Chinese build them all the time. Why doesn't Genesis build a coal-fired unit at Huntly? That would solve all of New Zealand's electricity problems, and it will be reliable. It would be 100% online. It's the obvious thing to do.

Thank you very much, Mr. Stewart. Malcolm, I'll pass that one to you.

I think as New Zealand builds more renewable generation, the amount of thermal reserve generation that you need will naturally adjust. We've invested over $100 million on extending the life of the existing coal-fired ranks out into the 2030s. It is a question for New Zealand, I think, more broadly in terms of what the long-term thermal backup will be. I do note that some political parties have made comment in the last 24, 48 hours around the potential for a new rankine, albeit on biomass produced from woody biomass. So it looks like that is a debate that is beginning to evolve and it's certainly one that we would participate in.

I think also, that would mean that Genesis could sell more electricity to the I can't understand why aren't you building -- you should be building 10 of them actually. There's coal there. plenty of coal nearby.

We do have three of them at the moment.

Thank you very much, Mr. Stewart. Any other questions from the floor before I -- okay, thank you. Matt, do we have questions online?

Yes.

Thank you.

[indiscernible], I'm a shareholder. Two topics I wanted to raise questions on. One is just purely relating to the financials. When I look at the factors in there, you've got the valuations of derivatives in there. The actual fluctuation in 12 months from a positive to a negative seems to add up to about $271 million. That's a hell of a lot of money. How come? Why has it changed so much in 12 months?

I'll pass to Malcolm or maybe to Emma.

And I'll pass to Emma for a more so that you can have a more technical explanation. But broadly, accounting policy requires us to act as if we sell all of our forward contracts for electricity on the 30th of June. And so we have to value them against the market on that date. And this year, because of the low wholesale prices, a number of them were theoretically out of the money. And so that's why the valuation swings around year-on-year. Now we don't sell those forward contracts because the part of the equation we're not able to value under accounting policies is all of our customers. And so we've already sold that electricity to all of our customers. So we have to value the forward supply contract, but not the forward demand contract, and that's why it affects the balance sheet the way that it does. But. I'll get Emma to stand up quickly. Don't try and explain it now, but maybe you can connect afterwards and have a chat on it.

Probably the one thing I would add, though, that is a noncash adjustment. So what we actually pay for those forward contracts when they become due is still the price that we've agreed. So while it has this big net profit swing that you do see, the value we can derive in terms of the cash out, but also our ability to sell the energy is still locked in. I'll talk to you later about it.

The second question I wanted to ask was relating to data centers that seem to be using a lot of electricity. There's a number of factors I see come into this that are very relevant. Genesis sort of the attitude it might be better to keep away from data centers and not supply them or actually go into supplying them because with the amount of electricity they are using, I understand it well, if I call it, you'll have the pretty high cost of transporting the electricity if you didn't generate it quite handy to the site. And if these sites are dotted around, well, even just the North Island, that becomes a very big factor.

Data centers definitely do make a big swing in the demand side of the equation. And I think it's up to the electricity sector to understand how we will supply into that, and that's something that Genesis is thinking about. You see examples overseas where data centers come with their own energy. They have their own peakers and things beside them. Whether New Zealand would ever go down that route, I don't know. But we're certainly alive to the demand. And as Malcolm talks about, electrification is a big part of New Zealand's future and getting from that 30% electrification now to 60% will make a massive difference in the amount and affordability of energy in New Zealand. Data centers would take up a lot more energy again. And so the supply response to meet that energy would also have to be a fairly large response. But Malcolm, do you want to add something?

I think, as I mentioned, the supply and demand balance for electricity is going to be very dynamic, where you've got the potential for large blocks of demand to suddenly become available and also large blocks of supply to suddenly become available. I think if you look at New Zealand overall, we've got something like an annual demand of 42-odd terawatt hours of electricity a year, and we have a national pipeline of more than 40 terawatt hours of generation we can build. So we're far from running out of opportunity and options as those dynamics play out.

Thank you. Are there other questions before I take questions online? Okay, Matt.

Okay. We have first question here from a shareholder, [indiscernible]. She's querying Simon Mackenzie's absence from this meeting and asking how available will he be to attend future Genesis Board and committee meetings in person.

Thank you for the question. Prior to joining the Board, Simon flagged to us that he had a family commitment in Europe at this particular time. So it was a known thing when he joined. We all knew that he would not be able to make this meeting. It wasn't a family commitment that he could change. So I'm very satisfied that Simon's got the capacity and the ability to be a really effective member of this Board. And I'm really looking forward as all of us to working with Simon. So please rest assured that his capacity is not constrained. This is just a one-off thing that happened at this moment in time.

Next question here is from Stephen Mayne. Mr. Mayne is referring to the $400 million capital raise undertaken in March earlier this year. And he asks, why was there a $100 million placement component to the capital raise when pro rata raises are the fairest way to go. He goes on to ask whether we will be offering a share purchase plan to make up for the dilution impact of the placement. And also queries in terms of the rights issue, the $300 million rights issue, why the complication of making it pay 1 for $7.9 who came up with that number? Should it not just be 1.8?

Thank you very much, Mr. Mayne, for the question. Sort of addressing your question about share purchase buybacks, is that right, Matt?

Yes, another -- sorry, will there be another share purchase plan to make up for the dilution of the $100 million placement aspect of the capital raise?

If you look at it in the round, the whole equity raise was designed around fairness to our customers, getting the support from the government aligned to the amount of capital we were trying to raise and the placement was a particular component of that to make sure that we were able to secure the $400 million that we were looking for. I think that the discount that applied across the board was very fair to customers and shareholders, sorry, to shareholders. And actually, in this market, it was a very, very effective discount. And so I think the outcome in the round of the capital raise was very good for Genesis and very good for shareholders. There are, of course, lots of other alternative ways that we could have structured this deal. And the Board spent a good deal of time, and it was the Board's decision. The Board spent a good deal of time getting the structure right so that we could satisfy making sure that shareholders that were involved and those that weren't were fairly treated. And I think we got a very good outcome for the company and for the shareholders in the way that the equity raise was structured and executed.

Next question from Stephen for those -- sorry, he refers to Malcolm's recent opinion piece for BusinessDesk where New Zealand's EV uptake rate was described as measly at just 2%. He asks, what policies would you like to see implemented to get this number up? And are there any examples of Pro EV policies in countries that have worked? And what major Western countries are worse than New Zealand when it comes to EV uptake?

I'm just trying to remember the BusinessDesk article. New Zealand has -- if you include plug-in hybrids as well as full electric, we're somewhere around 3%, 4% of total vehicles. The most important thing is to look at the core economics of changing from combustion engines to electric vehicles. And to achieve that tipping point, you need to achieve two things. One is you need to achieve price parity between combustion engine and electric vehicles. And the second is you need to achieve range parity. In other words, for the same purchase of a vehicle, you can travel the same distance. And we expect those two parities to occur in New Zealand sometime around 2029 and '30. So the fundamental economics of purchasing electric vehicles versus combustion engine vehicles is likely to change around the 2030 mark. Now it's already changed in places like China. They've already tipped over that balance. And what we've seen is electric vehicle uptake accelerate when you reach that point. So I think from a market perspective, and New Zealand largely follows a market-based approach to these things, those two parities of price and range are the critical tipping points for when we think electric vehicles will start to supersede combustion engine vehicles in terms of sales here in New Zealand. Most people will be aware, our fleet stays around for a long time, 15, 20 years. And so it's going to take a while for personal vehicles to transition to electric vehicles at scale. What's of more interest is what's happening in light commercial vehicles, where the products that are coming into the market in terms of couriers and light commercial vehicles, et cetera, are much more exciting from our perspective. And with the conflict in Iran and the price of gas at the moment, we're seeing roughly 1/3 of vehicle sales being electric vehicles at the moment. So the market is working extremely effectively. Now as a country, we can make a decision to put in place policies that makes that go faster. But I think that the most important thing is that the base economics of price and range parity and the alternate fuel are the critical elements to determine how fast the vehicle fleet will electrify.