Slide 1: ASX fax cover: Presentation to Analysts and Financial Markets
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 21 August 2014 From Helen Hardy Pages 68 Subject Presentation to Analysts and Financial Markets Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 500
Slide 2: 2014 Full Year Results Announcement
For personal use only 2014 FULL YEAR RESULTS ANNOUNCEMENT Financial Year Ended 30 June 2014 Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy 21 August 2014
Slide 3: Forward looking statements
For personal use only 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 i
Slide 4: Outline
Outline For personal use only 1. Performance Highlights Grant King 2. Financial Review Karen Moses 3. Operational Review Grant King 4. Prospects Grant King 5. Appendix 3|
Slide 5: 1. Performance Highlights
For personal use only 1. PERFORMANCE HIGHLIGHTS Grant King, Managing Director 4|
Slide 6: Highlights
Highlights Statutory Profit* $530 m up 40% Statutory EPS* 48.1 cps up 39% For personal use only Underlying Profit1* $713m down 6% Underlying EPS* 64.8 cps down 7% Group OCAT $2,041m up 79% Total Recordable Injury Frequency Rate 5.0 down from 6.52 Total Recordable Injury Total Shareholder Return Freq
Slide 7: Lower Underlying Profit with reduced contribution from Energy Markets
Lower Underlying Profit with reduced contribution from Energy Markets partly offset by increased contributions from E&P and Contact, underpinned by a 79% increase in OCAT For personal use only Lower contribution from Energy Markets primarily due to lower volumes Underlying Profit down Higher contrib
Slide 8: Origin intends to raise hybrid securities to refinance Browse acquisition debt
Origin intends to raise hybrid securities to refinance drawdown of debt used to fund the Browse acquisition For personal use only • Origin is preparing for a European hybrid securities issuance as an alternative to ordinary equity, provided appropriate market conditions prevail • Any hybrid securiti
Slide 9: Strong progress on four key priorities
Origin has made strong progress on its four key priorities … Improving the Performance of the Existing Businesses For personal use only Retail Transformation complete, Expansion of gas margins Increased availability and delivering operational and cash production from upstream assets flow impro
Slide 10: Priorities to deliver Origin's strategy are changing
As APLNG delivers first LNG in mid-2015, and the energy markets businesses mature, priorities to deliver Origin’s strategy are changing … For personal use only Improving returns in energy markets businesses Deregulation of retail Improving customer Regional leader markets experience in energy Ca
Slide 11: 2. Financial Review
For personal use only 2. FINANCIAL REVIEW Karen Moses, Executive Director, Finance and Strategy 10 |
Slide 12: 2014 Full Year Financial Highlights
2014 Full Year Financial Highlights ($ million) FY2014 FY2013 Change Statutory Profit 530 378 152 For personal use only Statutory EPS 48.1 cps 34.6 cps 13.5 Revenue 14,518 14,747 (229) Underlying EBITDA* 2,139 2,181 (42) Underlying EBIT* 1,353 1,438 (85) Underlying net financing cost (192) (255) 63
Slide 13: Underlying EBITDA and EBIT
Underlying EBITDA down 2% to $2,139 million Underlying EBIT down 6% to $1,353 million For personal use only Underlying EBITDA Underlying EBIT ($ million) FY2014 FY2013 Change FY2014 FY2013 Change Energy Markets 1,053 1,333 (21%) 787 1,038 (24%) Exploration & Production 487 395 23% 210 162 30% LNG 83
Slide 14: Reconciliation of Statutory Profit to Underlying Profit
Reconciliation of Statutory Profit to Underlying Profit ($ million) FY2014 FY2013 Change For personal use only Statutory Profit 530 378 152 Items Excluded from Underlying Profit Decrease in fair value of financial instruments (196) (243) 47 Asset disposals, dilution and impairments 157 352 (195) LNG
Slide 15: Group OCAT increased to $2 billion
Group OCAT increased to $2 billion Free cash flow increased to $1.6 billion ($ million) FY2014 FY2013 Change For personal use only Underlying EBITDA 2,139 2,181 (42) Reduced Energy Markets debtors due to significantly improved billing Change in working capital 163 (298) 461 and collections performan
Slide 16: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow* Productive Capital OCFR* (%) For personal use only FY2014 FY2013 % FY2014 FY2013 % FY2014 FY2013 ($m) ($m) Change ($m) ($m) Change Energy Markets 1,035 812 27% 9,565 9,849 (3%) 10.8% 8.2% Exploration & 529 233 127% 2,249 2,063 9% 23.5% 11.3% Production
Slide 17: Browse acquisition financed by drawdown of committed facilities
The Browse acquisition was initially financed by drawdown of committed undrawn bank facilities in place to fund Origin’s commitments to APLNG For personal use only Origin Debt & Bank Guarantee Maturity Profile as at 30 June 20141 • The acquisition of a 40% interest 4,500 in the Poseidon exploration
Slide 18: Unfranked final dividend determined
An unfranked final dividend of 25 cps1 has been determined, representing a payout ratio of 77% of annual Underlying EPS For personal use only Dividends and Underlying EPS Dividends and Free Cash Flow g y per share 160 160 Dividend per share Free Cash Flow per share • First full year of 140 Underlyin
Slide 19: 3. Operational Review
For personal use only 3. OPERATIONAL REVIEW Grant King, Managing Director 18 |
Slide 20: Energy Markets
Energy Markets ($m) Underlying UnderlyingEBITDA EBITDA ($m) OperatingCashflow Operating Cash Flow ($m) Growth GrowthCapex Capex For personal use only 1,400 1,400 1,400 1,333 1,200 1,200 1,200 1,000 1,053 1,000 1,000 1,035 800 800 800 812 600 600 600 400 400 400 200 200 200 155 96 0 0 0 FY2013 FY2014
Slide 21: Energy Markets EBITDA down $280 million
Energy Markets EBITDA down $280 million to $1,053 million primarily due to lower contribution from Electricity and higher operating costs For personal use only • Electricity Gross Profit down due to: Energy Markets Underlying EBITDA Bridge – Volumes - warm winter weather 1,400 (-$27m); energy effici
Slide 22: Electricity Unit Gross Profit and margin management
Improved margin management in second half results in year on year Electricity Unit Gross Profit down 3% ($1/MWh) compared to 9% down ($3.20/MWh) at the first half For personal use only Volumes Sold (TWh) FY2014 FY2013 Change Mass Market 18.0 20.1 (2.1) C&I 20.3 22.2 (1.9) Total 38.3 42.3 (4.0) Elect
Slide 23: Electricity Mass Market volumes impacted by weather, efficiency, solar PV
Electricity Mass Market volumes impacted by weather, energy efficiency, solar PV and prior year customer losses … For personal use only NEM Mass Market Electricity Consumption Origin’s Average Signed Discount Offers for per Capita1 Electricity and Natural Gas (%)2 7.50 Usage trend includes effects o
Slide 24: Increased hedging and internal generation raised procurement cost
Increased hedging and use of internal generation increased Origin’s energy procurement cost1 by $1.70/MWh, broadly in line with the forward contract market For personal use only Origin’s Internal Generation Average Annual Prices TWh $/MWh 80 20,000 Spot prices down Contract prices 70 $6.40/MWh up $2
Slide 25: Natural Gas Unit Gross Profit expanded by 19%
Natural Gas Unit Gross Profit expanded by 19% ($0.40/GJ) reflecting the benefit of Origin’s diverse gas supply portfolio … For personal use only Volumes Sold (PJ) FY2014 FY2013 Change Mass Market 37.1 39.4 (2.3) C&I 71.1 87.8 (16.7) Total 108.2 127.2 (19.0) Natural Gas Performance ($/GJ) FY2014 FY20
Slide 26: Natural Gas penetration up and net customer accounts stabilised
Origin has continued to increase its Natural Gas penetration and stabilised net customer accounts … For personal use only FY2014 Electricity and Natural Gas Electricity and Natural Gas Customer Accounts Customer Account Movements by State 4,500 4,500 By Commodity By State 25 • 38,000 Natural Gas 4,0
Slide 27: Reduced churn from withdrawal from door-to-door sales
The market has seen reduced churn driven by the withdrawal from door-to-door by Tier 1 retailers … For personal use only Electricity and Natural Gas Churn Rates Customer Wins and Retains Sales Channels 40% 2,000 2,000 Customer wins and retains ('000) Customer wins and retains ('000) Origin, FY2013 O
Slide 28: Cash cost to serve per customer 6% lower
Cash cost to serve per customer $11 or 6% lower, reflecting operational improvements … For personal use only Cost to serve FY2014 FY2013 Change Cost to serve ($ per average customer account) (169) (180) 11 Cost to maintain ($ per average customer account) (144) (150) 6 Cost to acquire/retain ($ per
Slide 29: Retail Transformation complete and delivering improvements
Investment in Retail Transformation complete and beginning to deliver operational improvements and enhanced customer experience … For personal use only Operating Cash Flow Operating metrics FY2014 FY2013 1,200 Up 27% Billing performance 99.8% 99.2% 1,000 1,035 Doubtful Debt expense as a 800 1.0% 1.8
Slide 30: Contact Energy
Contact Energy ($m) Underlying EBITDA Underlying EBITDA ($m) Operating Cashflow Cash Flow ($m) Growth Growth Capex Capex 600 600 600 For personal use only 500 533 500 500 400 435 400 400 416 373 300 300 300 200 200 200 255 183 100 100 100 0 0 0 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 Contact’s U
Slide 31: Contact's Electricity Unit Gross Profit margin up 6%
Contact’s Electricity Unit Gross Profit margin up 6% driven by lower energy costs following investments in generation and fuel flexibility For personal use only Volumes Sold (GWh) FY2014 FY2013 Change Mass Market 3,852 4,067 (215) C&I 4,526 4,210 316 Total 8,378 8,277 101 Electricity Performance ($/
Slide 32: Contact benefitted from higher renewable generation
Contact has benefitted from lower costs of generation with higher levels of renewable generation … For personal use only Contact’s Renewable and Thermal Generation (based on TWh of generation) 100% Flexibility of Contact’s portfolio allows management of variable 80% operating conditions Increased
Slide 33: Exploration & Production
Exploration & Production ($m) Underlying EBITDA Underlying EBITDA ($m) Operating Cash Operating Cashflow Flow ($m) Growth Capex Growth Capex For personal use only 600 600 600 500 500 529 500 487 400 400 400 426 395 365 300 300 300 200 200 233 200 100 100 100 0 0 0 FY2013 FY2014 FY2013 FY2014 FY2013
Slide 34: Upstream investments delivered increased availability and production
Investments in upstream assets have delivered increased availability and production, appraisal at Ironbark has seen reserves replace production … For personal use only Origin Gas and Liquids Origin 2P Reserves1,2 Opportunities PJe PJe Production1 mmboe 120 20.6 1,200 Origin has recently secured Prod
Slide 35: LNG
LNG Origin’s Cash Contributions ($m) Underlying EBITDA Underlying EBITDA ($m) For personal use only to APLNG1 100 3,000 2,821 2,500 80 83 2,000 60 60 1,500 40 1,000 20 500 561 0 0 FY2013 FY2014 FY2013 FY2014 Substantial progress made on the project • Upstream 76% complete • Downstream 75% complete
Slide 36: APLNG capital expenditure for the year
APLNG capital expenditure for the year was $9.9 billion, with Origin’s cash contribution $2.8 billion For personal use only Cumulative Estimate from FID1 to Year to 30 from FID1 to (A$m) 1st sales from Train 2 June 2014 30 June (A$b) 2014 Project Capex 8,5071 21,004 24.73 Non-Project Capex: Capitali
Slide 37: Upstream Project Progress - 76% complete
Upstream Project Progress - 76% complete and on track For personal use only FY2014 Upstream Operated Goals Actual Progress to 30 June 2014 Plan First gas and water production from Reedy Creek (western area) Q3 Accomplished Main pipelines complete Q3 Accomplished Condabri Central Train 1 commissioned
Slide 38: APLNG continues to mature reserves
APLNG continues to mature reserves to support domestic contracts and a minimum 20 years of production from 2 trains For personal use only PJ 100% APLNG Reserves and Resources1 • APLNG’s 3P reserves have increased to 20,000 17,459 PJe3 and 2P reserves to 14,091 PJe (net of production) • Reserves are
Slide 39: Downstream Project Progress - 75% complete
Downstream Project Progress - 75% complete and on track FY2014 Downstream Operated Goals Actual Progress to 30 June 2014 For personal use only Plan First cryo modules set Q3 Accomplished Last Train 2 refrigeration compressor set Q3 Accomplished Expected Q1-FY15 Complete loading platform for LNG jett
Slide 40: Key near term project goals and milestones
Construction, commissioning and operations of upstream assets will continue through calendar year 2014 … For personal use only Key near term project goals and milestones HY2015 HY2015 Upstream Operated Downstream Plan Plan Inlet Air Chiller Package received on Curtis Orana Train 2 mechanical complet
Slide 41: 4. Prospects
For personal use only 4. PROSPECTS Grant King, Managing Director 40 |
Slide 42: Priorities to deliver Origin's strategy are changing
As APLNG delivers first LNG in mid-2015, and the energy markets businesses mature, priorities to deliver Origin’s strategy are changing … For personal use only Improving returns in energy markets businesses Deregulation of retail Improving customer Regional leader markets experience in energy Ca
Slide 43: Australian wholesale electricity prices suppressed by oversupply
In Australia, wholesale electricity prices are currently suppressed by generation over supply, driving generators into retail markets and intensifying competition For personal use only NEM Supply and Demand (Capacity)1 • LNG production in Gladstone will help 50,000 20,000 to alleviate the generation
Slide 44: New Zealand excess supply and gas redirected to methanol
Similarly in New Zealand flat demand and prior investments in generation have resulted in excess supply, with this imbalance addressed through gas being redirected to recently restarted methanol production For personal use only Sources of New Zealand Gas Demand1 NZ Geothermal and Thermal Energy Supp
Slide 45: Review of policy and regulatory settings
Rate of decline in consumption expected to moderate however this trend will require review of policy and regulatory settings to ensure the market operates on an economically efficient basis For personal use only NEM Mass Market Electricity Review policy and regulatory settings 7.50 Consumption per C
Slide 46: Well positioned to manage costs and improve customer experience
With completion of Retail Transformation Origin is well positioned to manage costs and improve customer experience For personal use only Cost to Serve Electricity and Natural Gas 800 Cash Cost Cost incl. TSA Lower cash 40% Churn Rates 700 cost to Origin, FY2013 Origin, FY2014 serve offset 35% Market
Slide 47: Capturing benefits of rising gas prices
In Australia, Origin has captured the benefits of rising gas prices through oil-linked gas sale agreements and increasing penetration of Mass Market customers For personal use only Sources of Origin Energy Markets’ Retail market PJ/a East Coast Contracted Gas Portfolio 300 2 NSW regulated prices p
Slide 48: Te Mihi to improve Contact's generation mix and margins
In New Zealand, the completion of Te Mihi geothermal power station will increase Contact’s proportion of low cost fuel in its generation mix, resulting in improved margins For personal use only Contact’s Renewable and Thermal Generation Contact’s Generation as a % of (based on TWh of generation) Tot
Slide 49: Investment in energy markets focused on retail systems and generation
Investment in the energy markets businesses has been focused on retail systems to improve operational efficiency and customer experience and in flexible, low cost generation For personal use only Segment Operating Cash Flow less Segment Growth Capital Expenditure Growth Capital Expenditure 1,200 1,2
Slide 50: Australia forecast to be world's largest LNG exporter
Australia is forecast to emerge as the world’s largest LNG exporter with around 85 mtpa1 directed to offshore markets by 2017, four times domestic gas demand Darwin LNG For personal use only Ichthys Exporting to Asia Pacific ~12 mtpa markets where demand is set to almost double from 175 mtpa in 2013
Slide 51: APLNG on track for first LNG in mid-2015
APLNG is on track to deliver first LNG in mid-2015, with distributable cash flow to Origin expected to be around US$1 billion on average per year1 For personal use only Upstream 76% Complete Downstream APLNG tenure in the Surat and Bowen basins at 30 April 2014 75% Complete APLNG 3P reserves up 8% t
Slide 52: Offsetting natural field decline in Otway, Bass and Cooper basins
Origin’s short to medium term focus will be on offsetting natural field decline through in field and near field developments in Otway, Bass and Cooper basins For personal use only Otway Basin • Drilling of Halladale development well expected in Q1 FY2015 and planning for drilling Geographe 3 develop
Slide 53: Growth opportunities in Cooper, Beetaloo and Browse basins
Medium to longer term growth opportunities expanded through three recent transactions in Cooper, Beetaloo and Browse basins … For personal use only Cooper Basin – JV with Senex and Planet Gas • Targeting tight sands, shale and deep coal • Close to existing infrastructure • Up to 50% interest in perm
Slide 54: Increasing investment in renewable energy
Origin is focused on leveraging its existing renewables base of 1,213 MW to increase investments in renewable energy … For personal use only Portfolio of Renewable Renewable Development Opportunities Operational Generation MW 1,500 1,000 Indonesia New Zealand 47.5% interest in Sorik 250 MW geotherma
Slide 55: Completion of APLNG creates a step change in earnings and cash flow
Completion of APLNG creates a step change in Origin’s earnings and cash flow For personal use only Priorities post APLNG: The first full year of contribution 1. Increase distributions to from APLNG is expected to be shareholders FY2017, with distributable cash 2. Maintain investment grade credit flo
Slide 56: FY2015 and FY2016 are transitional years
Looking forward, FY2015 and FY2016 are transitional years for Origin with first contribution from LNG from mid-2015, expanding gas margins and an improving supply/demand balance in For personal use only electricity markets During the next two years Origin expects: Increased contribution from the E
Slide 57: 5. Appendix
56 | For personal use only 5. APPENDIX
Slide 58: Important Information
Important Information For personal use only All figures in this report relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the full year ended 30 June 2014 (the period) compared with the full year ended 30 June 2013 (
Slide 59: Important Information
Important Information For personal use only All references to debt are a reference to interest bearing debt only (excludes Australia Pacific LNG shareholder loans). Individual items and totals are rounded to the nearest appropriate number or decimal. Some totals may not add down the page due to roun
Slide 60: Glossary - Statutory Financial Measures
Glossary - Statutory Financial Measures Statutory Financial Measures are measures included in the Financial Statements for the Origin Consolidated Group, which are measured and disclosed in accordance with applicable Australian Accounting Standards. Statutory Financial Measures also include measures
Slide 61: Glossary - Non-IFRS Financial Measures
Glossary - Non-IFRS Financial Measures Non-IFRS Financial measures are defined as financial measures that are presented other than in accordance with all relevant Accounting Standards. Non-IFRS Financial measures are used internally by management to assess the performance of Origin’s business, and t
Slide 62: Glossary - Non-Financial Terms
Glossary - Non-Financial Terms Term Meaning For personal use only Proved Reserves are those reserves which analysis of geological and engineering data can be estimated with reasonable certainty to be commercially 1P reserves recoverable. There should be at least a 90% probability that the quantities
Slide 63: Additional APLNG Slides
For personal use only Additional APLNG Slides 62 |
Slide 64: Gas and Water Processing Facilities completion is a key priority
Gas and Water Processing Facilities completion is a key priority … For personal use only Gas Processing Facilities Progress • Condabri Central Train 1 commissioned • Condabri Central Train 2, Condabri South Train 1, Orana Train 1 and Reedy Creek Train 1 mechanically complete Orana Gas Processing Fac
Slide 65: Drilling and gathering is progressing in line with plan
For personal use only Drilling and gathering is progressing in line with plan … • 821 Phase 1 development wells drilled to 30 June 2014 • Well commissioning and dewatering is on track to deliver ramp up for first LNG in mid-2015 • Well productivity is ramping up in line with expectations • Maximum W
Slide 66: Construction of the main gas pipeline is complete
Construction of the main gas pipeline is complete … For personal use only • 530 km main transportation line to Curtis Island completed • 73 km Condabri lateral and 88 km Woleebee lateral are both complete to collect production from the Gas Processing Facilities • Talinga pipeline compression commiss
Slide 67: Downstream Project progressing with all modules in place
The Downstream Project is progressing with all Train 1 and Outside Battery Limit modules in place … For personal use only • Workforce is nearing peak manning levels and will be sustained through to early 2015 • Camp has been successfully expanded to accommodate the additional workforce • Tank A has
Slide 68: Thank you
For personal use only Thank you For more information David Moon Group Manager, Investor Relations Email: david.moon@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 437 039 310 www.originenergy.com.au 67 |