Origin Energy Limited · ASX:ORG
Origin Energy — Merger or Acquisition (November 2006)
38 slides from Origin Energy's merger presentation, Nov 27, 2006
Slide 1: Origin Energy ASX announcement: Presentation - Acquisition of Sun Retail
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 27 November 2006 From Bill Hundy Pages 38 Subject PRESENTATION - ACQUISITION OF SUN RETAIL Please find attached a presentation to be given to the media and financial markets today rega
Slide 2: Acquisition of Sun Retail, 27 November 2006
Acquisition of Sun Retail 27 November 2006
Slide 3: Important Notice
Important Notice ‘The information in this presentation is an overview and does not contain ail information necessary {o an investment decision. The information contained in this presentation has been prepared in good faith by the Company. No representation or warranty, express or implieds is made as
Slide 4: Outline
Outline « Overview « The three businesses ¢ Funding Origin Page 3
Slide 5: Overview
drig Overview
Slide 6: The acquisition of Sun Retail provides a unique opportunity
The acquisition of Sun Retail provides a unique opportunity for Origin to: Y Secure a leading position in the continuing consolidation and integration of the Australian and New Zealand energy markets ¥ Have a very competitive cost position in retail, wholesale and production segments through increas
Slide 7: Sun Retail comprises three businesses acquired for $1,202 million
Sun Retail comprises three businesses which have been acquired for $1,202 million. The Mass Market Retail business is valued at $1,100 per customer Value Key Valuation Metric Mass Market Retail $916m_ | $1,100/customer ~ 833,000 customers Wholesale $220 m $0.61/MWh* -16 TWh LPG $66 m $2,130/tonne ~
Slide 8: Key contributors to the valuation of Sun Retail
Key contributors to the valuation of Sun Retail include: Y Origin’s estimate that scale benefit on cost-to-serve is approximately $20 per customer per year of which less than $10 is ascribed to the acquisition. This benefit contributes approximately $250 to the retail valuation of $1,100 per custome
Slide 9: Origin will fund the acquisition through a number of financing options
Origin will fund the acquisition through a number of financing options... ¥ A $400 million fully underwritten institutional bookbuild placement of ordinary shares which commences today (details follow) Y Bridging finance and term debt facilities ¥ Share Purchase Plan proposed for the March quarter 2
Slide 10: Origin expects the acquisition to be EPS accretive from the first full year
Origin expects the acquisition of Sun Retail to be EPS accretive from the first full year of ownership... v In the period to June 2007, the acquisition will reduce EPS ~ Some acquisition and transition costs will be expensed ~ Equity will be raised two months prior to settlement vY From 2007/08 the
Slide 11: Origin has a strong track record of integrating acquired energy businesses
Origin has a strong track record of integrating acquired energy businesses with existing operations... Y Origin has a successful track record of integrating systems and migrating data for the Energy 21, Powercor and CitiPower acquisitions Y The SPA includes provision for Energex to provide transitio
Slide 12: The three businesses: Mass Market Retail
The three businesses Mass Market Retail Wholesale
Slide 13: Sun Retail provides exposure to population and economic growth
Sun Retail provides exposure to Population and Economic Growth fast growing south east Queensland + Queenstand’s GDP growth is forecast to be higher than the rest of Australia over the next decade. & +« Qld energy consumption is forecast 6 300 to grow at 3.5% pa vs Vic/SA at 0.8% a and NSW at 1.7% +
Slide 14: The acquisition adds significantly to Origin's retail position
It’s acquisition adds significantly to Origin’s retail position with over 1 million customers in Queensland, approximately 2.7 million gas and electricity accounts across Australia... Customer Sun Retaii Origin |Combined| Total Contact Origin accounts/sites Energy Qld Origin Energy Energy ('000)* Qi
Slide 15: The acquisition increases Origin's customer market share to 23%
The acquisition increases Origin’s electricity and gas customer number market share to 23%... Gas and Electricity Market Position Eastern Australia Pre-acquisition Origin, 16% Energex, 11% Ergon, 6% ¢ AGL, 26% Country, 7% integral, 7% EnergyAustratia, 16% Red, VEPL, Jack, 2% Post-acquisition Grigin,
Slide 16: Churn once the Queensland market opens to competition
While it is anticipated that there will be churn once the Queensland market opens to competition in July 2007... Mass Market Churn; Completed & Pending 60% emme VIC Elec 50% || NSW Etec A Initial churn rates are 3 SA Etec likely to be high and 2 sox i settle between the s i higher margin Victorian >
Slide 17: Revenue certainty enhanced through Queensland price setting mechanisms
Revenue certainty has been enhanced through Queensland Government defining price setting mechanisms reducing risks to recovery of cost increases v v v x Revenue to FRC date is set on a 71% / 29% split Prior to FRC all customers are on a default tariff A “building-block” approach in the movement in t
Slide 18: Scale benefits bring Origin well down the cost curve
Once fully integrated the scale benefits of the acquisition bring Origin well down the cost curve... « Until March 2008 billing and call centre services will be provided by Energex at a fixed cost which is higher than Origin’s cost to serve Cost to maintain $/Custamer « Over this period Origin will
Slide 19: Origin confirmed as leading provider of green energy products
The acquisition also confirms Origin as the leading provider of green energy products by combining the largest two portfolios of green energy customers in Australia Green Power - Share of Customer Numbers Green Power - Share of Load (MWhs} Origin 22% AGL 9% Sun Retail 17% Sun Retaii TRU 11% 2% 7 ( O
Slide 20: The three businesses: Wholesale
The three businesses Mass Market Retail Wholesale
Slide 21: The Wholesale business comprises
The Wholesale business comprises; Y Sales to Large Customers - currently 7 TWh/a ¥ Purchase arrangements comprising 16 TWh/a for sale to large customers and the mass market retail business ¥Y Purchase arrangements to cover GEC and REC obligations* ¥ Permitted site at Braemar for a 450 MW Peaker Comb
Slide 22: The wholesale position creates contracting optimisation and investment opportunities
The wholesale position creates contracting optimisation and investment opportunities... ¥ Reduction in the overall risk profile of the total Origin retail customer base due to geographic diversity ¥ Revenue to support existing peak generation assets and contracts in Queensland ¥ Revenue certainty to
Slide 23: Geographic diversity of combined volumes reduces load volatility
The geographic diversity of the combined Origin and Sun Retail volumes reduces volatility of the load and therefore the cost of managing that volatility Combined Portfolios FE Reduced Cap Requirements Origin estimates this benefit as a reduction in cap cover of up to 250 MW z 2 g VIC/SA/NSW QD Combi
Slide 24: Sun Retail customer base provides revenue certainty for generation portfolio
The Sun Retail customer base provides revenue certainty for Origin’s current generation portfolio The Braemar contract, Mt Stuart and Roma Power Stations provide an internal hedge against extreme price events Sun Retail Electricity Sales Cap Contracts are used to cover load shape and weather Braemar
Slide 25: Queensland requires new capacity from 2010
Queensland requires new capacity from 2010 with an additional ~500 MW per annum every year thereafter 14,000 4 Pal Origin & Sun 13,0004 ra a Retail have a around 1,500 : MW already permitted to access this growth and has the gas reserves to support the development 9,000 9 I 2 s Capacity (MW) 3 Ss =
Slide 26: Option to develop gas fired power generation at Spring Gully
The option to develop cost effective base load gas fired power generation at Spring Gully creates the ability to cover base energy needs... « The Queensland Government has mandated that 13% of electricity sold must have a Gas Electricity Certificate (GEC) attached. These are created through Gas Fire
Slide 27: The three businesses: LPG
drig The three businesses Mass Market Retail Wholesale Sc nae ee cc LPG
Slide 28: The LPG business complements Origin's existing distribution network
The LPG business complements Origin’s existing extensive distribution network across the State es + Sun Retail adds approximately 55,000 LPG customers and 31,000 tonnes of sales per annum « Origin’s LPG business encompasses the Sun Retail geographic and segment spread « Operational efficiencies and
Slide 29: Funding
Slide 30: Origin will fund the acquisition through a number of financing options
Origin will fund the acquisition through a number of financing options... ¥ A $400 million fully underwritten institutional bookbuild placement of ordinary shares which commences today (details follow) Y Bridging finance and term debt facilities ¥ Share Purchase Plan proposed for the March quarter 2
Slide 31: Placement Summary
Placement Summary issuer Origin Energy Limited Offering size A$400 million Indicative bookbuild 466 99 to A$7.15 (58 to 56 million shares) range Lower end of range (A$6.90) representing a: + 5.3% discount to the closing price of A$7.29 on Friday, 24 November 2006 + 5.2% discount to the 5 day VWAP of
Slide 32: Placement Summary: timetable
Placement Summary anneunced halt Monday, 27 November 2006 - before trading commences Offer opens Monday, 27 November 2006 ~ 3.00pm Offer close* Tuesday, 28 November 2006 - 5.00pm Trade date Wednesday, 29 November 2006 DvP Settlement Monday, 4 December 2006 Allotment Monday, 4 December 2006 nasal sta
Slide 33: Share Purchase Plan
Share Purchase Plan ¥ All shareholders will be given the opportunity to purchase up to $5,000 of shares at the lower of: - The institutional placement price; or - The same discount as the institutional placement to the 5 day VWAP following the Share Purchase Plan record date. Y If subscriptions rece
Slide 34: A review of Origin's ownership of its Networks business has been initiated
A review of Origin’s ownership of its Networks business has been initiated... Y Origin’s strategy has been to focus on the competitive rather than the regulated segments of the energy supply chain Y Consistent with this focus Origin has initiated a review of its ownership of the Networks business wh
Slide 35: Proposed timetable for completion of the transaction
The proposed timetable for completion of the transaction and associated issues is as follows Key dates Action / event 27 November Transaction announced Institutional placement commences 28 November Institutional placement concludes 29 November Origin recommences trading 1 February 2007 Settlement an
Slide 36: In summary, the acquisition of Sun Retail provides a unique opportunity
in summary, the acquisition of Sun Retail provides a unique opportunity for Origin to: Y Secure a leading position in the continuing consolidation and integration of the Australian and New Zealand energy markets ¥ Have a very competitive cost position in retail, wholesale and production segments thr
Slide 37: Questions
drig Questions
Slide 38: For more information
For more information For more information on Origin Energy please contact Angus Guthrie Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61-2-8345 5558 Mobile: + 61-4-1786 4255 Alternatively visit our website www. originenergy.com.au and follow the prompts to the Investo
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