Slide 1: Investor Presentation for Half Year Results
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 16 February 2023 From Helen Hardy Pages 57 Subject Investor Presentation for Half Year Results Please find attached the investor presentation relating to Origin Energy’s Results for the half year ended 31 December 2022.
Slide 2: 2023 Half Year Results
Origin Energy 2023 Half Year Results Half year ended 31 December 2022 Frank Calabria, CEO & Lawrie Tremaine, CFO 16 February 2023
Slide 3: Outline
Outline 1. Introduction - Frank Calabria 2. Financial Review - Lawrie Tremaine 3. Operational Review - Frank Calabria 4. Outlook - Frank Calabria 2 16 February 2023 2023 Half Year Results Announcement
Slide 4: Introduction
Introduction Frank Calabria, CEO 3 16 February 2023 2023 Half Year Results Announcement
Slide 5: Takeover due diligence substantially complete
• Takeover due diligence substantially complete, active engagement towards a binding proposal continues • Well placed to capture value from the energy transition • Advantaged portfolio • Positioned for growth • Platform for transition investment • Executing strategy at pace • Improved FY2023 Energy
Slide 6: Well placed to capture value from the energy transition
Well placed to capture value from the energy transition ✓ Leading Retail business Advantaged ✓ Competitive gas supply, largest thermal peaking fleet portfolio ✓ High quality, low cost APLNG gas resource ✓ Octopus – opportunities to expand margin and grow its global utility software business Position
Slide 7: Half year highlights
Financial highlights… action)] Statutory Profit Underlying Profit Underlying EBITDA $399 $44 $1,059 million million million (2.5 cps) Up $530 million, with favourable derivative Down $224 million due to Energy Markets Down from $1,099 million in HY2022 valuation and impairment in prior period earnin
Slide 8: Our ambition and strategy
Our ambition and strategy Our ambition To lead the energy transition through cleaner energy and customer solutions Unrivalled customer Accelerate renewable Deliver reliable energy solutions and cleaner energy through the transition Our • Leading brand providing lowest cost • Accelerate growth in ren
Slide 9: Executing on our strategy
Executing on our strategy Achieved to date Ambition • 96% of Mass Market customer accounts on Kraken • Strategic NPS +20 (FY2026) • Positive strategic NPS1 of +1 • $200 - $250 million cash costs saving (FY2024 vs FY2018) Unrivalled • Octopus now #2 UK energy retailer • 600k Broadband customer accoun
Slide 10: Energy Markets targeted earnings trajectory
Energy Markets targeted earnings trajectory based on strategy execution Targeted earnings trajectory1 Growth and value drivers ✓ Now a leading UK retailer, customer licence growth in energy Octopus growth software business and scaling up energy transition services Retail growth ✓ Customer scale prov
Slide 11: Purpose led organisation Getting energy right
Purpose led organisation Getting energy right Our Customers Our Communities Our Planet Our People ✓ Positive strategic NPS1 of +1 ✓ Regional procurement 18% of our ✓ Climate Transition Action Plan ✓ TRIFR down to 3.61 from 4.0 at total procurement spend received 94.5% shareholder June 2022 ✓ APLNG r
Slide 12: Policies must support investment and a sustainable transition
Policies must support investment and a sustainable transition • Substantial investment is required to underpin the new energy system – Investors require stable policy and adequate returns reflecting the risk profile • Investment in new gas supply is urgently needed – Government and regulatory interv
Slide 13: Financial Review
Financial Review Lawrie Tremaine, CFO 12 16 February 2023 2023 Half Year Results Announcement
Slide 14: Underlying Profit down $224 million to $44 million
Underlying Profit down $224 million to $44 million driven by lower Energy Markets’ earnings and increased tax expense Movements in Underlying Profit ($m) (70) 177 (120) (4) (27) 268 (180) 44 HY22 IG - Share of IG - Other EM Corporate D&A and Octopus Tax/other HY23 APLNG profit EBITDA EBITDA EBITDA I
Slide 15: Volatile markets materially impacting financial results
Volatile markets materially impacting financial results Item Impact Energy Markets’ • Under recovery of high wholesale prices in customer tariffs. Cost recovery via Reduced HY2023 Electricity Gross tariffs accelerating through to FY2024 Electricity gross profit Profit • High June 2022 net creditors
Slide 16: Cash flow expected to improve in second half
Cash flow expected to improve in second half ($m) HY23 HY22 Change • Lower earnings from Energy Markets ($120 million) Underlying EBITDA, adjusted for • Oil hedge and LNG trading losses on higher commodities 35 154 (119) non-cash items prices ($84 million) Change in working capital, excluding future
Slide 17: Energy Markets cash conversion
Energy Markets cash conversion - FY22 H2 benefits largely unwound Energy Markets segment results ($m) 1,000 • H2 FY2022 Energy Markets operating cashflow benefited from high wholesale prices leading to a 800 significant increase in net creditors (lower net working capital) 600 • In H1 FY2023, this p
Slide 18: Strong APLNG half year cash distribution
Strong APLNG half year cash distribution APLNG estimated distribution to Origin and Origin oil hedging $1.4 – 1.6 billion • Strong operating cash flow of $3.9 billion after (Net of hedging2) $0.4 billion Queensland royalties 2,000 200 • APLNG distributed $783 million cash to Origin by way of unfrank
Slide 19: Dividend and capital management
Dividend and capital management Interim FY2023 dividend of 16.5 cps, fully franked • Consistent with prior period, and considers the improved second half FY2023 outlook for the business • Further capital management initiatives will be considered by the Board during FY2023 and beyond, taking into acc
Slide 20: Energy Markets Underlying EBITDA impacted by under recovery
Energy Markets Underlying EBITDA impacted by under recovery of wholesale costs in customer tariffs Movements in Underlying EBITDA ($m) Electricity gross profit down $183 million to $39 million (15) 4 • Margin impacts (-$184 million): − Higher wholesale prices flowing into customer tariffs (+$350 mil
Slide 21: Integrated Gas Underlying EBITDA up 10%
Integrated Gas Underlying EBITDA up 10% on higher export LNG prices Movements Underlying EBITDA ($m) 62 (157) 508 (243) 14 Share of APLNG EBITDA up $397 million, excluding the impact of the sell down: (84) (16) • Higher realised oil prices of US$109/bbl (A$163/bbl) vs US$68/bbl 1,362 1,267 (A$93/bbl
Slide 22: Operational Review
Operational Review Frank Calabria, CEO 21 16 February 2023 2023 Half Year Results Announcement
Slide 23: Energy Markets
Energy Markets 22 16 February 2023 2023 Half Year Results Announcement
Slide 24: Electricity margin suppressed over last 18 months
Electricity margin supressed over last 18 months but outlook improving FY2022 • Low customer tariffs reflecting record low wholesale prices during FY2021 due to COVID • Coal supply disruption, coupled with unprecedented market conditions in Q4 FY2022, resulted in exposure to high prices • Responded
Slide 25: Electricity margin impacted by higher cost of energy
Electricity margin impacted by higher cost of energy under recovered in tariffs Higher coal costs at Eraring Customer tariffs increasing Improved coal deliveries $/MWh NSW electricity forward price ($/MWh) 120 250 1.5 5 100 4 200 # of trains per day 80 1.0 150 3 mt 60 100 2 40 0.5 50 1 20 - - - - FY
Slide 26: Stronger gas outlook with cost of supply largely locked in
Stronger gas outlook with cost of supply largely locked in and tariffs repricing Energy Markets Increased sales volume FY2023 contracted sales volumes contracted gas supply PJ PJ PJ 250 250 200 200 82 150 150 70 100 100 50 50 26 27 - - HY22 HY23 As at 30 June 2022 As at 31 December 2022 FY23 FY24 FY
Slide 27: Retail market environment and value management
Retail market environment and value management Mass Market customer churn Lower discounts Large and growing customer base Monthly churn rate (%) Origin’s NSW (Ausgrid) variable market Customers accounts (‘000) 30% 25% offer (discount % off DMO) 4,458 4,489 4,236 4,266 20% 25% 15% 20% 10% 15% 5% 10%
Slide 28: Scale up growth opportunities
Scale up growth opportunities Community Energy Services Broadband Origin Loop (VPP) Gross Profit ($m) Customer accounts (‘000) Assets connected (MW) 70 74 449 54 61 42 44 40 258 33 159 20 85 H1 H2 H1 H2 H1 FY20 FY21 FY22 HY23 FY20 FY21 FY22 HY23 FY21 FY22 FY23 • Community Energy Services achieved •
Slide 29: Retail X migration near completion
Retail X migration near completion Retail X Low cost operator Customer accounts migrated to Kraken (‘000) Cash cost savings ($m) 3,385 67% $200 - 250 million Customer happiness index reduction 8 out of 10 2,200 Employee happiness 942 250 51 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 FY18 FY21 FY22 FY24 Targ
Slide 30: Octopus earnings recovery expected in H2 FY2023
Octopus’ earnings recovery expected in H2 FY2023 UK wholesale electricity costs in the energy price cap £/MWh 600 Higher tariff and margin expected Jan-Mar 23 as tariff setting mechanism H1 earnings lower: 500 reflects high market prices in • Customer tariffs reset mechanism under-recovered Aug to N
Slide 31: Octopus – leading UK energy retailer with a global enterprise software business
Octopus – leading UK energy retailer with a global enterprise software business Exponential growth in retail Growing licensing business Developing integrated offering Customer accounts (‘000, LHS) and Customer accounts (‘000) Intelligent Octopus 10,000 revenue (£m, RHS) 5,000 30,000 150 capacity und
Slide 32: Integrated Gas
Integrated Gas 31 16 February 2023 2023 Half Year Results Announcement
Slide 33: Record high commodity prices sustain high revenue
Record high commodity prices sustain high revenue Record commodity prices Record high revenue 60 A$/GJ 8,000 $m 50 6,000 40 30 4,000 20 2,000 10 - - H1 H2 H1 H2 H1 H2 H1 H1 H2 H1 H2 H1 H2 H1 FY20 FY21 FY22 FY23 . FY20 FY21 FY22 FY23 Average LNG price Average domestic price LNG revenue Domestic reven
Slide 34: APLNG is a major supplier to the east coast domestic market
APLNG is a major supplier to the east coast domestic market Domestic sales PJ 180 • Of the three LNG projects, APLNG is the largest net 150 supplier to the domestic market and has supplied over 1,400 PJ of gas since the project was 120 sanctioned 90 • Gas is supplied at average prices well below tho
Slide 35: APLNG production resilient but impacted by prolonged wet weather period
APLNG production resilient but impacted by prolonged wet weather period Quality resource and assets Cyclical costs impacting cost base APLNG production (100%) (PJ) APLNG Capex + Opex (100%)1 $m (LHS) and $/GJ (RHS) 400 1,600 4.0 300 1,200 3.0 200 800 2.0 100 400 1.0 - - - H1 H2 H1 H2 H1 H1 H2 H1 H2
Slide 36: Production recovery underway
Production recovery underway H1 FY2023 production impacted by three-year La Niña cycle Wait on Weather (WOW)1 (%) Wet weather impacts 30% 26% • Delays to workovers and drilling, and lower rig utilisation 25% 24% • Restricted site access for brownfields project execution and well optimisation 20% • F
Slide 37: Continued focus on operational improvements
Continued focus on operational improvements Production Optimisation Improving Mean Time to Failure Network infrastructure investment Reedy Creek well package Talinga Orana non-frac wells PJ 40 Talinga Condabri North Pipeline Gas production per well Well bottomhole pressure 12 month rolling average M
Slide 38: Strategic review of Non-APLNG exploration assets
Strategic review of Non-APLNG exploration assets Conducted a strategic review of all remaining non-APLNG exploration permits with a view to exiting those permits over time. Enables greater flexibility to allocate capital towards growing cleaner energy and new customer solutions, and supporting deliv
Slide 39: Outlook
Outlook Frank Calabria, CEO 38 16 February 2023 2023 Half Year Results Announcement
Slide 40: Guidance – Energy Markets
Guidance – Energy Markets The following guidance is consistent with prior guidance, and is provided on the basis that market conditions and the regulatory environment do not materially change FY2023 • Since providing guidance in January 2023, operating and trading performance, including at Octopus E
Slide 41: FY2023 Guidance – Integrated Gas
FY2023 Guidance – Integrated Gas The following guidance is provided on the basis that market conditions and the regulatory environment do not materially change Integrated Gas - APLNG 100% FY22 FY23 guidance Production PJ 693 660 – 680 Capex and opex, excluding purchases1 A$b 2.2 2.5 - 2.7 Unit capex
Slide 42: Appendix
Appendix 41 16 February 2023 2023 Half Year Results Announcement
Slide 43: Items excluded from Underlying Profit
Items excluded from Underlying Profit • $75 million relating to loss on disposal of interests in the Reconciliation from Statutory to Underlying Profit Beetaloo Basin ($m) • $43 million non-cash utilisation of recognised deferred tax liability for dividends paid out of APLNG’s retained earnings • $7
Slide 44: Large-scale Generation Certificates strategy
Large-scale Generation Certificates strategy – refund of shortfall charge LGC strategy benefit $/certificate • Over FY2021 to FY2023, we deferred the surrender of ~9 million certificates, incurring a shortfall charge of $65/certificate 80 or $587 million in total 70 • This shortfall charge was inclu
Slide 45: Large-scale Generation Certificates (LGC) strategy
Large-scale Generation Certificates (LGC) strategy Adjustments to Statutory Profit Statutory Shortfall CY2020 CY2021 CY2022 Underlying Impact across various financial years ($m) Profit charge/(refund) surrender cost surrender cost surrender cost Profit FY2021 CY2020 and CY2021 certificates shortfall
Slide 46: Customer account movements
Customer account movements Electricity ('000) 20 Customer accounts as at 31 December 30 June Change ('000) 2022 2022 10 Electricity 2,736 2,733 3 - Business 30 31 (1) (10) Retail – Residential 2,242 2,243 (0) Retail – SME 287 291 (4) (20) Retail – Community Energy Services 176 168 8 (30) Gas 1,282 1
Slide 47: Origin Zero – Partnering with large business to achieve their sustainable energy goals
Origin Zero – Partnering with large business to achieve their sustainable energy goals Renewable PPAs & carbon Supporting large business customers through a VPP orchestration challenging commodity market • C&I gas volume up 3.2 PJ from HY2022 • C&I elec volume up 1.0 TWh from HY2022 • NPS up 17% yea
Slide 48: Electricity forward price by State
Electricity forward price by State (A$/MWh) NSW QLD 250 250 200 200 150 150 100 100 50 50 - - May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 Feb-23 May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22 Feb-23 VIC 250 SA 200 200 150 150 100 100 50 50 - - May-21 Aug-21 Nov-21 Feb-22 May-22 Aug-22 Nov-22
Slide 49: Energy Markets segment revenue reconciliation
Energy Markets segment revenue reconciliation The table below reconciles the difference between segment revenue and customer revenue disclosed in the Electricity, Natural Gas, LPG and Solar & Energy Services tables. HY23 HY22 Change Change ($m) ($m) ($m) (%) Energy Markets segment revenue 8,000 6,08
Slide 50: Capex
Capex Origin capex ($m) HY23 Capex 300 • Managing sustaining capex on key assets: one-off 250 costs associated with the Myuna Bay Recreation 200 Centre ($40 million), and Ash Dam at Eraring; along with other maintenance activities across the fleet 150 • Other sustaining capital: LPG, CES and other a
Slide 51: Segment summary
Segment summary Energy Markets Integrated Gas Integrated Corporate Total - Share of APLNG Gas - Other ($m) HY23 HY22 HY23 HY22 HY23 HY22 HY23 HY22 HY23 HY22 Underlying EBITDA 148 268 1,193 1,039 (239) (169) (43) (39) 1,059 1,099 Underlying EBIT (107) 38 642 465 (249) (181) (43) (34) 243 288 Underlyi
Slide 52: Underlying ROCE – 12 month rolling
Underlying ROCE – 12 month rolling As at 31 December 2022 30 June 2022 Change Change ($m) ($m) ($m) (%) Capital Employed Net Assets 8,679 10,022 (1,343) (13%) Adjusted Net Debt 3,280 2,838 442 16% Net derivative (assets) / liabilities (1,198) (2,935) 1,737 (59%) Origin's share of APLNG net debt (pro
Slide 53: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt Issue Issue Hedged Hedged AUD $m AUD $m AUD $m $m Currency Notional Currency Notional Dec-22 Dec-22 Dec-22 Interest bearing Debt & CCIRS FV Adjusted net debt liabilities2 adjustments AUD debt AUD 1,276 AUD 1,276 1,261 - 1,261 USD Debt left in USD USD 610 USD 610 8
Slide 54: Financial Instruments and fair value adjustments
Financial Instruments and fair value adjustments Balance Sheet Impact Income Statement Impact Financial asset/(liability) Pre-tax Post-tax Gain/(loss) Inc/(dec) in Inc/(dec) in Gain/(loss) Gain/(loss) Total inc/(dec) included in financial other net excluded from excluded from ($m) 31 Dec 2022 30 Jun
Slide 55: Important notices
Important notices Forward looking statements This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no certainty of outcome in re
Slide 56: Important notices
Important notices All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the reporting period ended 31 December 2022 (the period) compared with the reporting period ended 31 December 2021
Slide 57: For more information
For more information Peter Rice General Manager, Capital Markets Email: peter.rice@originenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Lindsay Donnelly Group Manager, Investor Relations Email: lindsay.donnelly@originenergy.com.au Office: +61 2 8345 5502 Mobile: + 61 414 697 070 orig