Slide 1: Origin Energy ASX transmittal: Results Announcement Presentation
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 29 August 2005 From Bill Hundy Pages 55 Subject Results Announcement - Presentation This Transmittal is confidential. If you have received this document in error, please contact Origin
Slide 2: Final Results Announcement, Full-year ended 30 June 2005
Final. Results Announcement Full-year ended 30 June 2005 29 August 2005
Slide 3: Outline
Outline Page 2 ¢ Performance Highlights Financial Review Operating Review Impact of A-IFRS Outlook All comparative data are in relation to the prior corresponding period, 1 July 2003 to 30 June 2004, unless otherwise stated All references to $ are references to Australian dollars unless otherwise sp
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Slide 5: Financial Highlights
Financial Highlights s s * * Page 4 Revenue™ EBITDA”) NPAT Free cash flow (FCF) OCAT Ratio ©) Debt / (debt + equity) EPS -~ Basic ~ Normalised®) FCF per share Final dividend Full year dividend $ 4.9 billion $ 928 million $ 266 million $ 447 million 14.4% 41% 37.2 cps 34.9 cps 62.5 cps 8 cps fully fr
Slide 6: Operating Highlights
Operating Highlights Page 5 Acquisition of 51.4% interest in Contact effective 1 October 2004 Higher retail margins realised despite increased levels of churn, mild weather and higher LPG purchasing costs Increased oil production from the Perth Basin Reserves upgrades at Yolla, Kupe and Spring Gully
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Slide 8: Consolidation of 100% of Contact changes presentation of results
The consolidation of 100% of Contact produces a number of significant changes in the presentation of Origin’s results Consolidation of Contact - Origin has consolidated 100% of Contact Energy as required by Australian accounting standards - Outside equity interests are recognised in reporting of net
Slide 9: Profit & Loss
Page 3 Profit & Loss Jun 05 Jun04 % change ($m) ($m) Revenue 4,914.3 3,556.0 38% EBITDA 927.8 532.2 74% EBIT 615.2 329.2 87% Net interest expense (135.1) (45.4) 197% Tax expense (147.4) (76.9) 92% Outside Equity Interests (66.7) (2.0) NPAT 266.0 204.9 30% ROE* 9.7% 10.6% EPS - Basic 37.2¢ 30.0¢ 24%
Slide 10: EBITDA of $928m up 74% led by consolidation of Contact
EBITDA of $928m up 74% led by consolidation of Contact and higher contributions from E&P and Retail Page 9 Divisions Jun 05 Jun04 % change ($m) ($m) Exploration & Production 245.5 197.2 25% Retail 254.1 237.6 7% Generation 52.7 68.0 (23%) Networks 29.8 29.4 1% Contact 345.6 - Total 927.8 532.2 74% «
Slide 11: Depreciation & Amortisation
Depreciation & Amortisation ($ million) Juno5 Jun 04 Generation property, plant and equipment 96.7 22.5 Other buildings, plant & equipment 97.0 78.7 Amortisation in producing areas* 70.8 51.7 Electricity hedging contracts 6.7 11.3 Licences 16.1 18.6 Goodwill 23.8 18.6 Other 1.5 1.5 Total 312.6 203.0
Slide 12: Funding & Interest
Funding & Interest Financial year ended Jun 05 Jun 04 ($m) ($m) Net debt ($m) 2,743 861 Total equity ($m) 3,990 1,939 Debt to (debt + equity) (%) 41% 31% Capitalised Interest 20.0 7.7 Net interest expense ($m) 135.1 45.4 Net interest cover (x EBIT)* 4.0 6.2 Weighted average interest rate 7.0% 6.6% «
Slide 13: Funding of Contact acquisition
Funding of Contact acquisition * Consideration for the acquisition was $1.0 billion plus NZ$535 million debt assumed from Edison Mission « Initial Funding - Convertible Undated Preference Shares (CUPS) ($595 million net of costs) - External Debt facilities ($426 million) - Origin immediately repaid
Slide 14: Tax Reconciliation
Tax Reconciliation ($ million) Jun 05 Jun 04 Profit before tax 480.1 283.8 Prima facie tax 149.7 85.4 add non deductible amortisation 24.4 20.2 less non-assessable income (7.2) (10.0) less other permanent differences (19.5) (18.7) equals Tax expense 147.4 76.9 Effective tax rate 30.7% 27.1% Tax (pai
Slide 15: Operating cash flow after tax has increased
Operating cash flow after tax has increased...... ($ million) Jun 05 Jun 04 Incl Contact Excl Contact EBITDA 928 582 532 Change in working capital (31) (30) (48) Stay-in-business capex (net) (111) (66) (83) Other (incl. non-cash items) (7) (4) 2 Tax / subvention payments (181) (46) (2) OCAT 598 436
Slide 16: Capital expenditure: SIB increase largely Contact
SIB increase largely Contact expenditure on generation assets. Higher growth capex is driven by E&P projects... Jun 05 ($m) Jun 04 ($m) Stay-in-business 132 86 Growth Exploration & Production 315 207 Retail 39 30 Generation 3 - Networks - - Contact 18 - Total capital expenditure 507 323 Acquisitions
Slide 17: Cash flow return from the business segments
Cash flow return from the business segments is measured pre-tax and targets 14.3% over a full year Funds Operating OCFR OCFR* Employed Cashflow Jun05 Jun 04 ($m) ($m) (%) (%) Exploration & 1,303 178 13.7% 13.6% Production Retail 1,237 217 = 17.5% 14.9% Generation 333 48 14.6% 15.0% Networks 223 38 1
Slide 18: Final dividend of 8cps declared, full year 15cps fully franked
A final dividend of 8cps has been declared, bringing the full year dividend to 15cps fully franked Dividends - cents per share Franking Payment and DRP 100% 100% 40% 100% 100% 20 « Ex-dividend date 1 September 2005 « Date of record 7 September 2005 « Payable 26 September 2005 « DRP to apply at no di
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Slide 20: Exploration & Production: EBITDA of $245.5m up 25%
Exploration & Production: EBITDA of $245.5m up 25% on higher liquids sales and sale of Carpentaria gas pipeline « Revenue from the sale of ail, liquids and 450 400 ethane increased over 40% to $184 million E 400 | i Jun-05 | | 350 Liquids production up on Perth Basin 2 “ Jun-04 | production and Moom
Slide 21: E&P sales volumes increased overall
Sales from the E&P segment increased overall led by higher Perth Basin oil sales and higher CSG sales........ 100 90 E&P Sales Volumes 80 70 4 60 5 50 4 PJe 40 4 30 5 2005 2604 Wi Cooper Basin Denison/Surat CSG Onshore Otway Perth Basin © Tubridgi Further details on production and sates are avaitabl
Slide 22: Oil sales from the Perth Basin continued to rise
Oil sales from the Perth Basin continued to rise and Moomba liquids production was restored 12.6 16.6 Liquids Sales by Product by Half Year (PJe} 5] =| SSSSs Petajoule Equivalent (PJe} 2.0 4) SSS SSS Ss SANNA SSS op SESS SSE SSS SSSSSESS 6.0 T = ~ s = ws A © & As & > Se > er eo ~ eo a eo > ~ ” s » ~
Slide 23: 2P reserves remained constant year on year
Origin’s 2P reserves remained constant year on year with discoveries and upgrades offsetting production and revisions Proved and Probable Reserves (PJe)‘) 2P reserves at 30 June 2004 2,220 add reserves upgrades (Yolla, Kupe, Spring Gully) 123 add discoveries (Perth Basin) & misc adjustments 9 less p
Slide 24: The BassGas project has experienced significant delays
The BassGas project has experienced significant delays. Construction at the onshore plant is now essentially complete BassGas Project (42.5%) fassGas | Pipetine 5 * ‘Wstscas Promontory: Gippdtand? Tasmania / Pipeline. f ° . Basin - Development drilling completed in September 2004. Field Reserves upg
Slide 25: Spring Gully Project completed on time and on budget
The Spring Gully Project was completed on time and on budget, commencing gas delivery in June 05 = “7 praphaed — production tacllit Total project costs to date $199 million to establish 13 PJ/annum of deliverability. 42 wells drilled, 40 wells stimulated, and 35 wells completed with excellent produc
Slide 26: Otway Gas Project progressed steadily
Development of the Otway Gas Project (Thylacine / Geographe) progressed steadily during the year..... Otway Gas Project (29.75%) « Project 42% complete at 30 June 2005 « Project currently on schedule for commissioning in mid 2006 Otway). ftagae. * Origin has come to an agreement with cost CalEnergy
Slide 27: Kupe development planning and approvals in New Zealand
In New Zealand Origin continues to progress planning and approvals for the Kupe development......... . es ; Kupe Gas Project (50%) Soe E + FEED work completed and tenders sought. a Responses received and being evaluated « Confirmed {April 2005) that new purpose a built onshore processing facilities
Slide 28: Retail: EBITDA of $254.1 million up 7%
Retail: EBITDA of $254.1 million up 7% despite generally challenging conditions...... « Segment revenues increased 3% on higher 3,500 350 LPG revenue 3.000 - mJun-05 | 300° Customer churn and milder weather ~ & Jun-04 reduced mass market gas volumes and & m electricity volumes, while wholesale gas o
Slide 29: Increased contribution in electricity and LPG at gross margin
increased contribution in electricity and LPG at the gross margin level...... Product information and % Natural Gas Electricity LPG change from Jun 04 Product Revenue (A$m) 848 (-1%) 1,670 0% 485 (22%) Gross margin (A$m) 134 (-6%) 276 (414%) 147 (412%) Sales (PJ) 117 (2%) - - Sales (TWh) - 15.7 (-1%
Slide 30: Retail EBIT/Sales margin increase from 5.2% to 5.7%
The strength of the retail business is demonstrated by the increase in overall EBIT/Sales margin from 5.2% to 5.7%.... Retail Grass Margin ¢$) and EBIT Margin (%} . Natural gas sales volumes 600 6.0% marginally higher with mix of . lower domestic volumes (weather, 2 500 | 5.0% churn) and higher whol
Slide 31: Net gain of 39,000 customers in the second half
After significant customer losses in the 1st half Origin has recorded a net gain of 39,000 customers in the 2nd half Mass Market Churn: Completed & Pending # hse Mat 00) e000) ty 35% wom Vic Elec Jun '04 979° 894" Vic NG 7 30%] oe NeW Elec Jun ‘05 900 913 aauweSW NG Net Churn (79} 19 25% 44 SA Elec
Slide 32: Tariff structure adjusted to be less weather-susceptible
Origin has moved to adjust its tariff structure to be less susceptible to the influence of weather....... 350 5 . . / Victorian Effective Degree Days 300 5 Effective Degree Days FY ended June 204 1,508 s 250 + FY ended June 2005 1315 5 Yr on Yr Reduction: 13%) e 200 4 04-05 % 03-04 ° 150 + | @ 10 ye
Slide 33: Contract market has continued to soften
Despite some periods of higher prices the contract market has continued to soften 870 ses + $60 Forward |——--------— Curve Jun Forward [~~ [: Curve Jun $20 {22S Se [Sy fas] ------ 06 3 3 5 S 8 3 3 8 3 3 8 ory FY FY ey 5 FA Fy Fa § 4 $ g $ g § 0606 ser o7/08 o8709 3 a 48 oa 3 a 4 a a a 3 ....with the
Slide 34: Escalating global LPG prices and transport fuel costs
Escalating global LPG prices (CP) and transport fuel costs placed pressure on LPG margins....... Jul-Jun-04 600.00 4 ASSIE Propane price (SA) Jui-03 Jan-04 JuEd Sarr 05 ° Cost of LPG (CP) averaged AS$519/tonne over period (increase of 25% on prior year) New Zealand volumes added 60kt on full year co
Slide 35: Generation: EBITDA of $52.7m, $15m lower
Generation: EBITDA of $52.7m, $15m lower than last year 40 | 20 5 - Planned major outage at Osborne, offset by improved availability at other plants due mostly to non-recurrence of Dec 03 tax benefits....... 140 14. Lower result for Jun 05 reflects E Bi Jun-05 | # 120 + & Jun-04 | +12 - Non-recurren
Slide 36: Availability for externally contracted plants was high
Availability for externally contracted plants was high with the exception of Osborne (major planned outage Oct & Nov) Major Origin | Origin | Capacity | Type | Operation | Availability | Contracting Power int. % MW Party Plants Worsley 50 120 Cogen | Base 97% Western Power & Worsley Bulwer Is. 50 32
Slide 37: Planning and permitting for gas fired power stations
Planning and permitting approvals for the option to develop high-efficiency gas fired power stations are progressing........ « Two projects being progressed, each up to 1000 MW, following power site optimisation studies : Potential Power < Station - Mortlake in Victoria (shown) ~ Spring Gully in Que
Slide 38: Support and development of renewable energy technologies
Origin continues to support, invest in and develop renewable energy technologies..... Solar « Origin’s investment in the solar photovoltaic SLIVER ® project continues to meet significant milestones « Modules have been progressively scaled up « Key advantage is dramatically lower silicon usage while
Slide 39: Networks: EBITDA of $29.8 million up 1%
Networks: EBITDA of $29.8 million up 1% on full year contribution from SEA Gaas......... . + Lower revenues due to reduced capital 180 1.8 program and associated lower capital 160 - wi Jun-05 | | 46 cost recoveries 140 4 = Jun-04 laa + Full year SEA Gas contribution of $6.7 million, compared with $4
Slide 40: Contact: EBITDA of $345.6 million
Contact: EBITDA of $345.6 million in line with Origin’s expectations at the time of acquisition..... 1,400 @ Jun-05 1,200 - 'Jun-04 4 Total Sales Revenue ($m) 1,000 + 800 5 600 5 400 - 200 + 0-4 + w Cc So + N wi oS a x So oS (ug) xede> B VGLIGg + = oe oS + wy Qo Revenue EBITDA Capex* « Acquisition o
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Slide 42: A-IFRS for Origin
A-IFRS for Origin « Australian equivalents of International Financial Reporting Standards (A-IFRS} will be implemented by Origin for the first time for the half year ending 31 December 2005, and year ending 30 June 2006. « In order to comply with A-IFRS, Origin must restate its comparative balances
Slide 43: Impact of A-IFRS on balance sheet and profit
The impact of A-IFRS on Origin’s balance sheet at 30 Jun 05 and profit for the year ended 30 Jun 05 is summarised below AAFRS adjustments (net of tax where appropriate): 39.9 39.9 | Goodwill and licence amortisation 39.9 39.9 - (0.5) {5.3} | Dismantling, removai & restoration provisions (38.9) 68.6
Slide 44: Consequences for Origin
Consequences for Origin Goodwill and licence amortisation « For the financial year ended 30 June 2005, goodwill and licence amortisation expense will decrease by $39.9 million. « The Goodwill and licences being arnortised arose largely from the acquisition of gas and electricity retail businesses in
Slide 45: Consequences for Origin (continued)
Consequences for Origin (continued) Dismantling, removal and restoration provisions « Under A-IFRS, the present value of restoration obligations is recognised and adjusted at each reporting date in line with changes in discount rates and timing or amount of the costs to be incurred (AGAAP uses undis
Slide 46: Consequences for Origin (continued)
Consequences for Origin (continued) Deferred tax + As a result of the acquisition of Contact Energy Origin has had a significant increase in deferred tax liabilities- created by the difference between accounting and tax values which arises from the revaluation of Contact’s generation assets. + Due t
Slide 47: Consequences for Origin (continued)
Consequences for Origin (continued) Contingent Asset - Moomba Claim * The criteria for recognising contingent assets on the balance sheet has increased from a “more probable than not” test under Australian GAAP to a “virtual certainty” test under A-IFRS. * At 30 June 2004, under Australian GAAP, Ori
Slide 48: Other A-IFRS Impacts
Other A-IFRS Impacts « Financial Instruments - AASB 132 & 139 - Effective from 1 July 2005 - Origin will elect not to restate comparatives - Listed investments are expected to be classified as “available for sale” with changes in fair value recognised in equity. - The application of AASB 139 is expe
Slide 49: Impact of A-IFRS on balance sheet and profit
The impact of A-IFRS on Origin’s balance sheet at 30 Jun 05 and profit for the year ended 30 Jun 05 is summarised below A-IFRS adjustments (net of tax where appropriate): 39.9 39.9 | Goodwill and licence amortisation 39.9 39.9 - (0.5) (5.3) | Dismantling, removal & restoration provisions (38.9) 68.6
Slide 50: On an ongoing basis the application of A-IFRS
On an ongoing basis the application of A-IFRS: Page 49 « does not impact Origin’s strategy or underlying business operations « does not impact future cash flows « does not impact capacity to pay dividends * increases after tax earnings by approximately $30 million * reduces equity resulting in: ~ In
Slide 51: Other Accounting Policy Considerations
Other Accounting Policy Considerations « Successful Efforts Accounting for Exploration and Evaluation - Origin is in the process of evaluating its current “full cost area of interest” accounting policy in relation to exploration and evaluation activities in the Exploration and Production business. -
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Slide 53: Major drivers of earnings in the coming year
In the coming year, major drivers of earnings will be: « Contact Energy will provide a full year of earnings « Spring Gully will provide a 12 month contribution through the ramp-up phase of supplying the AGL contract « The BassGas project will commence contributions through the commissioning phase i
Slide 54: A-IFRS to uplift reported earnings but complicate forecasting
The implementation of A-IFRS will see an uplift in reported earnings, but make forecasting earnings more difficult « While hedge accounting policies will be adopted there are expected to be some instruments which are regarded as ineffective and will introduce mark to market volatility to earnings No
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