Origin Energy Limited · ASX:ORG
Origin Energy — FY2000 Earnings Presentation
38 slides from Origin Energy's earnings presentation, Aug 23, 2000
Slide 1: Results Announcement Financial Year 2000
Results Announcement Financial Year 2000 23 August 2000
Slide 2: Outline
Outline • Performance Highlights • Financial Review • Operational Review • Outlook Page 2
Slide 3: Basis of presentation: continuing Origin Energy businesses
• All figures relate to the continuing Origin Energy businesses • Activities relating to Boral building and construction businesses reported in Origin’s statutory accounts for the six months ending December 1999, have been excluded for the purposes of this briefing • Note Boral building and construc
Slide 4: Performance Highlights
Performance Highlights 23 August 2000
Slide 5: Financial Highlights
Financial Highlights • Revenue increased by 34% to $1.4 billion • EBITDA of $271 million, up 49% • EBIT increased by 62% to $131 million • NPAT before abnormal items increased by 24% to $75.4 million • Net debt:equity of 34.8% • Unfranked dividend of 6 cents per share declared Page 5
Slide 6: Operating Highlights
Operating Highlights • Energy 21 and Stratus networks successfully integrated into Origin’s business achieving significant synergies • Ladbroke Grove power station commissioned • Significant increase in natural gas production • Net reserves increased by 25 PJe (gross additions & revisions of 110 PJe
Slide 7: Financial Review
Financial Review
Slide 8: Profit & Loss (Origin continuing businesses)
Profit & Loss (Origin continuing businesses) 1999/00 1998/99 % change ($m) ($m) Revenue 1,379.6 1,029.0 34.1 EBITDA 271.4 181.7 49.4 EBIT 131.1 81.0 61.9 Interest 29.9 0.8 Tax 22.6 17.2 31.4 PAT before abnormals 75.4 61.0 23.6 Earnings per share (cents) 13.3 10.7 24.3 Page 8
Slide 9: Comparison with projections contained in the Scheme of Arrangement documents
Comparison with projections contained in the Scheme of Arrangement documents 1999/00 Scheme Proforma projections* ($m) ($m) Revenue 1,380 1,270 EBITDA 271 215 - 230 EBIT 131 85 - 100 Interest 30 33 Tax 23 1 PAT before abnormals 75 47 - 62 * Directors’ forecasts and Grant Samuel analysis Page 9
Slide 10: EBITDA up 49% with all segments contributing
EBITDA up 49% with all segments contributing to the improvement 200 1998/99 150 1999/00 EBITDA ($m) 100 50 0 Exploration & Retail & Trading Generation Networks Production Page 10
Slide 11: EBIT of $131.1 million was up 62% on the prior year
EBIT of $131.1 million was up 62% on the prior year 1999/00 1998/99 % change ($m) ($m) Exploration & Production 96.9 49.9 94.1 Retail & Trading 16.5 20.4 (19.2) Generation 9.6 4.4 121.5 Networks 20.9 8.7 141.5 Corporate (12.9) (2.4) Total 131.1 81.0 61.9 Page 11
Slide 12: Abnormal loss of $72.6 million after tax reported for the year
Abnormal loss of $72.6 million after tax reported for the year Before Tax After tax effect tax Change in accounting (81.7) 6.6 (75.1) policy Other write-downs (16.0) 1.2 (14.8) Environmental provision (5.0) 1.8 (3.2) GST implementation (4.5) 1.6 (2.9) Change in tax rate 13.2 13.2 Exploration tax ben
Slide 13: Funding
Funding 1999/00 1998/99 % change Net debt as at 30 June $431 m $400 m 7.8 Net debt to equity 34.8% 31.1% 11.9 Net interest expense $29.9 m $0.8 m Average interest rate 7.1% - Net interest cover 4.4 times - Envestra float left Boral’s energy businesses with a cash surplus until Energy 21 purchased in
Slide 14: Tax reconciliation
Tax reconciliation 1999/00 ($m) Profit before tax 101.2 Prima facie tax (@36%) 36.4 less Stratus benefit 16.2 add other permanent differences 2.4 equals Tax expense 22.6 Tax payable 1.6 Envestra subvention payments 35.0 Page 14
Slide 15: Cash flow (Origin continuing businesses)
Cash flow (Origin continuing businesses) 1999/00 1998/99 ($m) ($m) EBITDA 271 182 less Increase in working capital 52 79 Capex (net of disposals) 128 197 Major acquisitions 15 527 Major disposals - (36) Net interest paid 33 1 Tax paid 3 7 Subvention payments 35 6 Dividends paid 36 1 Cash surplus/(de
Slide 16: Key ratios
Key ratios • EPS before abnormal items increased by 2.6 cents to 13.3 cents per share • Return on equity increased to 6.3% • Operating cash flow after tax on funds employed of 7.4% Page 16
Slide 17: Operating cash flow after tax return
Operating cash flow after tax return Operating cash flow after tax (OCAT) Funds employed OCAT = EBITDA less Movement in working capital SIB capex (net of disposals) Tax paid Subvention payment Page 17
Slide 18: Operating Review
Operating Review
Slide 19: Exploration & Production: EBITDA up 59% to $187 million
Exploration & Production: strong performance with EBITDA up 59% to $187 million 300 200 • Increased sales volumes of 1998/99 180 15% to 88 PJe accounted 250 1999/00 for half of the increase in 160 earnings 140 EBITDA/EBIT ($m) 200 – Port Campbell sales of 6.4 Revenue ($m) 120 PJ accounted for nearly
Slide 20: An additional 6 PJ was sold as a result of pull through projects
An additional 6 PJ was sold as a result of pull through projects Wild dog Energy 21 Port Campbell Surat & CSG Roma SA Otway Ladbroke Grove Page 20
Slide 21: Average oil price received was up significantly to A$36
The average oil price received was up significantly to A$36 350 40 300 Revenue Average oil price received) 35 Average oil price received (A$) 30 250 Revenue ($m) 25 200 20 150 15 100 10 50 5 0 0 1995/96 1996/97 1997/98 1998/99 1999/00 Page 21
Slide 22: Reserves
Reserves Sales Gas LPG Condensate Crude Oil Total (PJ) (‘000 tonne) (‘000 barrels) (‘000 barrels) (PJe) Estimated reserves as at 864 762 8940 7538 994 30 June 1999 Additions & Revisions 71 341 4130 48 110 Production 70 78 668 1270 85 Estimated reserves as at 865 1025 12403 6315 1019 30 June 2000 • 7
Slide 23: Retail & Trading: EBITDA increase by 17% to $58 million
Retail & Trading: EBITDA increase by 17% to $58 million • Sales volumes of 139 PJe* up 900 70 significantly from 93 PJe – Natural gas up by 41 PJe* due to full 880 1998/99 12 months of Energy 21 1999/00 60 860 • First half impacted by warm winter 840 50 • LPG margins severely depressed with EBITDA/E
Slide 24: Warmer than average weather conditions in primary markets
Warmer than average weather conditions were experienced in primary markets Cumulative Degree Day Variation (from 10 year average) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 0 -50 Degree Day Variation -100 -150 -200 -250 Melbourne Adelaide -300 Brisbane -350 Actual 10 yr average Melbourne (EDD)
Slide 25: LPG margins severely depressed as international price increased
LPG margins severely depressed as the average international price of LPG increased by A$199 per tonne 700 Average international price of 600 LPG in FY 00 was A$425 500 Average international price of Propane Price ($A) LPG in FY 99 was A$226 400 300 200 100 0 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99
Slide 26: Generation: EBITDA increased by 152% to $16.1m
Generation: EBITDA increased by 152% to $16.1m 35 35 • Full 12 month contribution 1998/99 from Osborne and Roma 30 1999/00 30 • Osborne equity accounted 25 25 income was $4.6 m compared EBITDA/EBIT ($m) to $1.5 m in prior year Revenue ($m) 20 20 • Ladbroke Grove commissioned 15 15 – Unit 1: January
Slide 27: Power Generation
Power Generation Queensland Load Duration South Australia Load Duration 1000 1000 800 800 $ per MWh $ per MWh 600 600 400 400 200 200 0 0 0% 25% 50% 75% 100% 0% 25% 50% 75% 100% % Exceedance % Exceedance Roma Ladbroke Grove Net Generation 82,904 MWh 151,748 MWh Capacity factor 13.5% 84.0% Average sp
Slide 28: Networks: EBITDA of $22.6 million
Networks: EBITDA of $22.6 million, up significantly from $10 million in prior year • Management and incentive fees 30 increased over the prior year 1998/99 – Stratus Networks managed on 25 1999/00 behalf of Envestra for the full 12 months – Envestra performance targets exceeded EBITDA/EBIT ($m) 20 •
Slide 29: Capital expenditure: SIB capex unchanged, growth capex down 44%
Capital expenditure: SIB capex of $69 million was unchanged with growth capex down 44% to $77 million 140 120 1998/99 100 1999/00 Capex ($m) 80 60 40 20 0 Exploration & Retail & Generation Networks Corporate Production Trading Page 29
Slide 30: Outlook
Outlook
Slide 31: 2000/01: Profit currently expected to be higher than 1999/00
2000/01: Profit in 2000/01 currently expected to be higher than 1999/00 • Sensitivities to EBIT: – Oil price US$1 inc/dec = US$2.9m inc/dec – US$0.01 inc/dec = $1.1m dec/inc – Weather 1 degree day colder/warmer = $0.05m inc/dec • Focus on reducing controllable costs and working capital • Full year c
Slide 32: Hedging
Hedging 2000/01 Oil price % hedged 55% Average hedge price > US$25.00 USD % hedged 57% Average hedge price < US$0.60 Page 32
Slide 33: Beyond 2000/01: Natural gas contestability timetable
Beyond 2000/01: Natural gas contestability timetable NSW Vic SA Qld 1 Jul 00 ≥1 TJ ≥100 TJ All non- domestic 1 Sep 00 ≥10 TJ 1 Dec 00 >100 TJ 1 Jul 01 All All domestic 30 Sep 01 All All 1 Jan 02 1 Jul 02 Page 33
Slide 34: Oil & condensate production expected to decline absent discoveries
In the absence of further discoveries, oil & condensate production is expected to decline Oil & condensate production ('000 barrels) 2500 2000 1500 1000 500 0 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Page 34
Slide 35: Potential for natural gas discoveries in Otway and Bass Basin
Potential for natural gas discoveries in the Otway and Bass Basin Otway Basin Bass Basin Drilling program for 2000/01 consists of 149 wells at a total cost of $93 million Page 35
Slide 36: Identifying and delivering growth
Identifying and delivering growth • Greenfields exploration • Electricity retailing capability • Marketing of Yolla gas to Tasmania • Pursuing a number of other natural gas fired cogeneration and power projects • Green power projects in Green Triangle area (bordering SA & Victoria) • Solar technolog
Slide 37: Summary: Origin is creating value through…
Summary: Origin is creating value through… Good • Positioning – Established management team Positions – Sound strategic focus – Risks being well managed across the business Strong • Improving performance of existing business Cashflow – 1999/00 increase in EBITDA of 49% – Prospects for coming year lo
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