Slide 1: Results for the half year ended 31 December 2011 transmittal
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company ASX Limited Date 23 February 2012 From Helen Hardy Pages 61 Subject RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011 This Transmittal is confidential. If you have received this document in error, please contact Orig
Slide 2: 2012 Half Year Results Announcement
For personal use only 2012 Half Year Results Announcement Half Year Ended 31 December 2011 Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy 23 February 2012
Slide 3: Important Notice
Important Notice This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction (including the USA). This presentation is for information purposes only, is in a summary form, and does not purport to b
Slide 4: Outline
Outline For personal use only 1. Performance Highlights Grant King 2. Financial Review Karen Moses 3. Operational Review Grant King 4. Outlook Grant King 3|
Slide 5: 1. Performance Highlights
For personal use only 1. Performance Highlights Grant King, Managing Director • Origin’s Statutory Profit contains a number of items that do not portray the operational performance of the business. Underlying Profit excludes the impact of these items to better illustrate the business performance of
Slide 6: Substantial progress on two major investments
During the half Origin has made substantial progress on its two major investments … For personal use only Effective integration of the NSW FID 1 taken, with binding sales acquisition with successful Retail agreements clearing the way for Transformation setting up for retail FID 2 systems integration
Slide 7: A strong increase in earnings in the half year
A strong increase in earnings in the half year reflecting the NSW acquisition … For personal use only Statutory Profit / (Loss) $794 m up from ($136) m Statutory Earnings per Share 73.8 cps up from (15.0) cps1 Underlying Profit $489 m up 61% from $304 m Underlying Earnings per Share 45.5 cps up 36%
Slide 8: Funding activities during the half year
Origin has undertaken a number of funding activities during the half year … For personal use only 2,500 • Underwritten DRP - $266m Loans & Bank Guarantees - Undrawn • Unsecured Notes issuance in US 2,000 Loans & Bank Guarantees - Drawn 144A market – US$500m ($492m) USPP, Retail Notes & Euro Hybrid •
Slide 9: 2. Financial Review
For personal use only 2. Financial Review Karen Moses, Executive Director, Finance and Strategy
Slide 10: 2012 Half Year Financial Highlights
2012 Half Year Financial Highlights ($ million) Dec 11 Dec 10 Change For personal use only Statutory Profit / (Loss) 794 (136) na EPS – Statutory 73.8 cps (15.0) cps na Revenue 6,499 4,590 42% Underlying EBITDA 1,157 818 41% Underlying EBIT 832 536 55% Underlying Profit 489 304 61% EPS – Underlying
Slide 11: Reconciliation of Statutory Profit to Underlying Profit
Reconciliation of Statutory Profit to Underlying Profit For personal use only ($ million) Dec 11 Dec 10 Change Statutory Profit / (Loss) 794 (136) 930 Items Excluded from Underlying Profit1 APLNG related items 454 11 443 Increase (decrease) in fair value of financial 34 (156) 190 instruments Impairm
Slide 12: Statutory Profit of $794 million
Statutory Profit of $794 million, up $930 million from a loss of $136 million For personal use only 1,000 na na 800 41% 15% 91% 47% 305 $ million 600 6% 61% 339 (43) (40) 400 (73) 2 794 200 489 304 440 - (136) -200 Dec 10 Items Dec 10 Underlying D&A Net Tax Non- Dec 11 Items Dec 11 Statutory exclude
Slide 13: OCAT decreased despite higher Underlying EBITDA
OCAT decreased, with the increase in Underlying EBITDA offset primarily by changes in working capital, acquisition liabilities and capex For personal use only Higher working capital ($ million) Dec 11 Dec 10 Change requirements primarily Underlying EBITDA 1,157 818 339 due to additional SRES require
Slide 14: Origin has revised its operating segments
Origin has revised its operating segments • Final Investment Decision on the first phase of APLNG’s CSG to LNG project For personal use only • Deepening integration within Origin’s Energy Markets business • Increased development opportunities outside of existing operations Segment Business Descripti
Slide 15: Underlying EBITDA and Assets by Segment
Underlying EBITDA and Assets1 by Segment For personal use only ($ million) Dec 11 Dec 10 110% $1,157m $23.9b Energy Markets 820 538 100% Exploration & Production 179 98 90% Australia Pacific LNG 16 32 80% Contact Energy 182 180 70% % split by Segment Corporate (40) (30) 60% 1,157 818 50% 40% 30% ($
Slide 16: Underlying EBITDA up 41% to $1,157 million
Underlying EBITDA up 41% to $1,157 million For personal use only 1,400 83% 50% 1% 33% 41% 1,200 52% (16) 217 2 (10) 1,157 1,000 81 $ million 282 800 145 818 600 75 400 200 - Dec 10 Energy Expl. & Prod. Australia Contact Corporate Dec 11 Underlying Markets Pacific LNG Underlying EBITDA EBITDA Underly
Slide 17: Segment Cash Flow Returns
Segment Cash Flow Returns For personal use only Operating Cash Flow Productive Capital OCFR (%) $m % Change $m % Change Dec 11 Dec 10 Energy Markets 900 12% 8,009 73% 11.2% 17.3% Exploration & Production 388 41% 1,868 -3% 20.8% 14.3% APLNG 68 -9% 802 26% 8.4% 11.7% Contact Energy 251 -15% 3,668 7% 6
Slide 18: Growth capital and APLNG contribution
During the half year Origin spent $764 million on growth capital, and contributed $173 million to APLNG For personal use only 1,000 937 • Growth capital expenditure1, excluding APLNG 900 846 contribution, down 10% on prior half year 800 • Key areas of capital expenditure include: 700 - Mortlake Powe
Slide 19: Additional capital raised to strengthen balance sheet
Origin has raised additional capital to further strengthen its balance sheet, improve liquidity and diversify its funding sources For personal use only Jun 20101 ($5.6b) Dec 20112 ($9.5b) • Given facilities Origin has in place, there is no intention to raise additional equity 7% for APLNG Train 1 an
Slide 20: Future expenditure majority APLNG related
Without additional future commitments, the majority of expenditure over the next three years will be APLNG related For personal use only 5,000 4,500 NSW 4,000 Acquisition • With $5.5 billion of 3,500 committed undrawn facilities 3,000 and cash, Origin is well $ million placed to fund future 2,500 co
Slide 21: Fully franked interim dividend declared
A fully franked interim dividend of 25 cps has been declared, which represents a 55% payout ratio For personal use only Origin Dividend History 60 • Ex-dividend date: 28 February 2012 Dec Half 50 • Record Date: 5 March 2012 Jun Half Additional • Payment Date: 30 March 2012 40 • Dividend Reinvestment
Slide 22: 3. Operational Review
For personal use only 3. Operational Review Grant King, Managing Director
Slide 23: Energy Markets
Energy Markets For personal use only Underlying EBITDA up 52% to $820 million Strong earnings growth from NSW acquisition Lower average wholesale energy costs due to deepening integration, supporting margins NSW market churn increased, as expected Successful migration of pre-NSW acquisitio
Slide 24: Energy Markets integrated provider of energy products
Origin’s Energy Markets business is an integrated provider of energy products For personal use only • Diverse and flexible legacy • 3,075,000 electricity • Solar PV installations fuel portfolio customer accounts • Solar hot water • 5,310 MW generation portfolio • 950,000 gas customer • Heating and C
Slide 25: Large, diverse fuel portfolio and flexible gas transport
Origin’s large, diverse fuel portfolio, and flexible gas transport arrangements, are central to its integrated business model … For personal use only 400 Fuel/Generation - Gas 10,000 Fuel/Generation - Coal Retail - Gas 9,000 Retail - Electricity 300 8,000 Contract or Capacity (MW) 7,000 Spot Market
Slide 26: Energy Markets earnings growth from NSW acquisition
Energy Markets delivered strong earnings growth from the NSW acquisition For personal use only Performance Metrics, $m Non- Natural Gas Electricity LPG (% change from Dec 10) commodity Revenue1 624 (+2%) 3,827 (+78%) 136 (-36%) 350 (+5%) Gross Profit 126 (+20%) 930 (+68%) 18 (-42%) 94 (+5%) Underlyi
Slide 27: Energy Markets Underlying EBIT/Sales margins
Energy Markets Underlying EBIT/Sales margins are higher than previously reported in the Retail segment For personal use only • Historically, guidance for Underlying Retail EBIT margins 18 (0.6%) was 8-9% 16 1.0% (0.8%) 3.1% 13.8% 14.1% • Under new Energy Markets 14 11.1% reporting segment, margins h
Slide 28: Mild weather reduced gas sales volumes
Mild weather in Victoria and South Australia led to an 8% decline in Origin’s Natural Gas sales volumes For personal use only EDDs PJ 1,200 100 90 83 1,000 Mild weather 80 in half year 800 60 600 40 400 20 200 0 0 Dec 10 Dec 11 2007 2008 2009 2010 2011 Half Year ended Calendar Year SA Qld Vic NSW C&
Slide 29: Softening demand in the NEM
Softening demand in the NEM was intensified by mild weather this half … For personal use only TWh TWh TWh 140 280 25 Jul-Dec (LHS) Fin. Year (RHS) 3.8% decline in Jul-Dec 21.8 120 240 since 2009 NEM demand 20 100 200 1.8% fall in half year 80 160 NEM demand 15 13.9 compared 60 120 with the prior hal
Slide 30: Natural Gas Gross Profit up 20%
In Natural Gas, Gross Profit up 20% to $126 million Gas Performance ($/GJ) Dec 11 Dec 10 Change For personal use only Revenue Combined Revenue 9.2 8.4 0.8 Recovery of higher C&I 5.4 4.8 0.6 network costs led to Mass Market 17.4 15.4 2.0 increased unit revenue Cost of Goods Sold Network costs (2.8) (
Slide 31: Electricity Gross Profit up 68%
In Electricity, Gross Profit up 68% to $930 million Electricity Performance ($/MWh) Dec 11 Dec 10 Change For personal use only Revenue Combined Revenue 175 154 21 C&I 114 108 6 Recovery of higher Mass Market 228 201 27 network costs led to increased unit revenue Cost of Goods Sold1 Network costs (81
Slide 32: Reduction in wholesale energy procurement costs
Electricity achieved a 10%, or $6/MWh1 reduction in wholesale energy procurement costs … For personal use only 60 Spot prices Contract prices2 Green costs3 Origin’s average up 29% down 9% up 84% wholesale energy cost 50 down 10% 40 Lower energy cost attributed to: $/MWh 30 • Effective management of
Slide 33: Diverse generation portfolio and high reliability
A diverse generation portfolio and high reliability levels delivered a competitive cost of energy For personal use only Eraring Eraring Power Station ERF was 86% Interm. • Load/ Base due to fire in transformer of Unit 2 Darling Downs • First of two Mortlake units available Ladbroke Grove for dispatc
Slide 34: Churn rate declined
Origin’s churn rate declined from 19.6% to 18.8% despite market churn remaining steady at 21.0% For personal use only 40% 5,000 % Churn: Monthly Data Annualised Origin, HY2011 Origin, HY2012 Customer Accounts ('000) 35% 263 (375) Market, HY2011 Market, HY2012 4,000 366 362 30% 963 net loss of 112 92
Slide 35: Migration of 2.6 million customers to new billing system
Energy Markets has successfully migrated 2.6 million customers to a new industry-leading billing and customer relationship management system For personal use only • Four large-scale migrations of Origin’s 2.6 million pre-NSW customers onto new integrated SAP billing platform successfully completed •
Slide 36: New retail products and business lines
Origin continues to develop its new retail products and business lines to deliver innovative solutions to customers For personal use only Origin’s portfolio of non-commodity products include solar electricity, solar hot water, heating, cooling, electric vehicle charging, trigeneration systems and sm
Slide 37: Exploration & Production
Exploration & Production For personal use only Underlying EBITDA up 83% to $179 million Steady operational performance Completed major planned maintenance shutdowns at Kupe and Otway Commenced BassGas Mid Life Enhancement Project Lower exploration activity Total Assets Underlying ($m) less
Slide 38: Steady operational performance despite shutdowns
Notwithstanding planned shutdowns at Otway, BassGas and Kupe … For personal use only PJe mmboe PJe mmboe 50 8.6 10 1.7 40 6.9 8 1.4 30 5.1 6 1.0 20 3.4 4 0.7 10 1.7 2 0.3 0 0.0 0 0.0 Dec Jun Dec Jun Dec Jun Dec Jun Dec Dec Jun Dec Jun Dec Jun Dec Jun Dec FY 08 FY09 FY10 FY11 FY12 FY 08 FY09 FY10 FY1
Slide 39: Major planned maintenance shutdowns
Major planned maintenance shutdowns have been undertaken on Origin’s key offshore producing assets … Australian Offshore - Otway For personal use only • Lower production (-9%) resulting from planned maintenance shutdown in November 2011 • Inlet compression project being commissioned, planned to be o
Slide 40: Industry gas demand tripling over next 5 years
Asset reliability is currently being optimised in anticipation of industry gas demand tripling over the next 5 years PJ Origin currently supplies around 15% of For personal use only 2,500 • East coast gas production 2000-2017 (PJ) eastern Australia’s gas • Maintenance & enhancement of offshore asset
Slide 41: Exploring in high prospectivity regions
Origin is exploring for resources in regions that offer high prospectivity and access to growing markets… For personal use only New Zealand • Anadarko, as operator, continued preparations to drill Caravel-1 in the offshore Canterbury Basin in late 2012 targeting significant gas and liquids • Manutah
Slide 42: Australia Pacific LNG
Australia Pacific LNG For personal use only Underlying EBITDA down 50% to $16 million FID on LNG Train 1 and infrastructure to support Train 2 taken in July 2011 Origin equity share in APLNG JV reduced from 50% to 42.5% Binding agreements signed with Kansai and Sinopec for Train 2 LNG sales
Slide 43: APLNG one of Australia's largest CSG to LNG projects
Origin, as part of the APLNG joint venture, is developing one of Australia’s largest CSG to LNG projects For personal use only Compelling Project • Leverages strong growth in Asia • Oil-linked revenues • Strong and aligned joint venture • Large, quality reserves base • Successful history of working
Slide 44: APLNG production growth and large reserves base
APLNG’s CSG to LNG project is underpinned by a long history of production growth and a large, high quality reserves base For personal use only PJ 30,000 25,000 • APLNG production up 4% on the prior half year to 52 PJ 20,000 • Production capacity from both operated and non-operated 15,000 assets incr
Slide 45: APLNG sales and costs
APLNG sales reduced on lower customer demand, while costs increased with the growth in project activities, resulting in lower Underlying EBITDA For personal use only Dec 11 Dec 10 ($ million) Origin’s Origin’s Total Total share1 share2 Lower customer Operating Revenue 165 178 demand Increased activi
Slide 46: APLNG progress against project milestones
APLNG continues to make good progress against project milestones For personal use only • FID 1 in July 2011 • Marketing agreements in place to underpin two trains – Train 1 - Sinopec (4.3 mtpa)1 – Train 2 - Kansai (1.0 mtpa)2 – Train 2 – Sinopec (3.3 mtpa)2 • Sinopec to increase holding to 25%3 • Ma
Slide 47: Upstream activities ramping up
Upstream activities are ramping up with land access, drilling and gas processing facilities tracking within plan For personal use only • Participated in over 200 wells during the half • Two hybrid coil tubing drilling rigs now in operation; capability to drill wells in less than 4 days per rig; more
Slide 48: Pipeline construction and electrification on track
Preparations for the major pipeline construction activities and gas field electrification project are on track For personal use only • EPC pipeline contract awarded to McConnell Dowell, Consolidated Contracting Co. joint venture in July 2011 • Line pipe awarded to MetalOne in Japan; first delivery m
Slide 49: Curtis Island site preparations
Curtis Island site preparations are progressing well, and major downstream contracts have been awarded For personal use only • Bechtel responsible for all activity on Curtis Island under a fixed price contract • Costs confirmed for key Train 2 contracts, including Bechtel EPC contract; long lead ite
Slide 50: Community engagement and environmental impact
The APLNG Project is committed to community engagement, education and minimising environmental impacts … Example Programs include For personal use only • Independently chaired community consultative committees operating in regional centres • Skills Queensland program to enable farmers to support CSG
Slide 51: APLNG capital expenditure for the half year
APLNG 100% capital expenditure for the half year was $2.5 billion … For personal use only APLNG Capital Expenditure for the half year to Dec 11 A$m Upstream Downstream Total Development expenditure 852 1,550 2,402 Exploration & appraisal 91 - 91 Total 943 1,550 2,493 Origin cash contribution 173 • A
Slide 52: Contact Energy
Contact Energy For personal use only Underlying EBITDA up 1% to $182 million Flexibility delivering savings benefits Low hydro volumes and high retail competition Te Mihi and Enterprise Transformation projects on track Balance Sheet strengthened Total Assets Underlying less Segment ($b) ($
Slide 53: Contact is one of New Zealand's leading energy companies
Contact is one of New Zealand’s leading energy companies, supplying gas, electricity and LPG products across the country For personal use only Generation Portfolio • 290 MW geothermal generation • 752 MW hydro generation • 1,176 MW gas generation • Over 2,000 MW in generation development opportuniti
Slide 54: Portfolio flexibility offset by fuel mix and competition
Increased portfolio flexibility and improved wholesale prices were offset by an unfavourable fuel mix and retail competition For personal use only Solid operational progress under challenging market conditions • Wholesale market prices responded to below- average hydro storage levels • Ahuroa Gas St
Slide 55: Positive outlook and development opportunities
Increased portfolio diversity and flexibility, along with strategic development opportunities provide a positive outlook For personal use only Lower Average Cost of Generation and increased portfolio flexibility • 166 MW Te Mihi geothermal power station, under development • Peaking power stations •
Slide 56: Corporate
Corporate For personal use only Underlying EBITDA down 33% to ($40) million Commenced geothermal exploration in Chile, and acquired additional concessions Technical feasibility of PNG hydroelectric development confirmed Total Assets Underlying less Segment ($b) ($m) EBITDA Liabilities 50 1.2 0
Slide 57: Exploring for resources in growth markets
Building on its domestic success, Origin is exploring for resources in markets that offer high prospectivity and access to growing demand For personal use only • Low cost resources • Low cost market entry • Fuel source of the future • Growing demand for energy • Leverage existing experience • Low re
Slide 58: 4. Outlook
For personal use only 4. Outlook Grant King, Managing Director
Slide 59: Origin confirms FY2012 guidance
Based on prevailing market conditions, Origin confirms its FY2012 guidance provided in August 2011 For personal use only • Origin provided FY2012 guidance based on prevailing business conditions and following assumptions: - Full year contribution from NSW acquisition - Initial contribution from Mort
Slide 60: Deepening integration of the business
Origin continues to deepen the integration of its business … … which is delivering strong growth in earnings and a robust business For personal use only in challenging markets … • Extensive fuel position • Large, flexible and diverse generation portfolio • Australia’s leading energy retailer • Integ
Slide 61: Thank you
For personal use only Thank you Further Information Angus Guthrie Group Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61 2 8345 5558 Mobile: + 61 417 864 255 Website www.originenergy.com.au 60 |