Origin Energy Limited · ASX:ORG
Origin Energy — Morgan Stanley Asia Pacific Summit 2005
32 slides from Origin Energy's conference presentation, Nov 16, 2005
Slide 1: ASX announcement cover: presentation to Morgan Stanley Asia Pacific Summit
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 16 November 2005 From Bill Hundy Pages 32 Subject PRESENTATION Please find attached a copy of a presentation entitled “Strategy, Performance and Growth - Delivering Value for Sharehold
Slide 2: Strategy, Performance, and Growth: Delivering Value for Shareholders
Strategy, Performance, and Growth Delivering Value for Shareholders fresentation to the Morgan Stanley Asia Pacific |
Slide 3: Outline
Outline ¢ Industry background and Origin’s strategy ¢ Strategy Implementation - In review - Looking forward ¢ Financials All references to $ are references to Australian dollars unless otherwise specifically marked A reference to Contact is a reference to Contact Energy Limited of New Zealand, a 51.
Slide 4: Industry background and Origin's strategy
yrigin energy industry background and Origin’s strategy
Slide 5: End use sales of electricity, gas and related products are around A$40 billion
End use sales of electricity, gas, and related products and services in Australia and NZ are around A$40 billion per annum and are growing steadily with energy usage..... A GROWING MARKET ¢ Growth in domestic demand for natural gas, LPG and electricity and has averaged around 4% per annum in Austral
Slide 6: Origin's financial objectives and business strategies
Origin’s financial objectives and business strategies were established to respond to these changes in the energy industry in the mid 90’s.... « Financial Objective - Steady and predictable cashflows - EPS growth of 10-15% pa on average « Business Strategy - Positioned in the competitive (rather than
Slide 7: Within this strategic positioning Origin has sought to develop options for growth
Within this strategic positioning Origin has sought to continually develop options for growth........ arate ys detec scm Sus9 tl pa 6 86 -S¥SEEEVES - Retail sales provide revenue certainty ~ Assets provide cost certainty v-assessing the risks and value of projects and Origin acquisitions against the
Slide 8: Origin reports its business across four segments
Origin reports its business across four segments covering its operations in Australia, New Zealand and the Pacific...... Exploration and Production Over 2,200 PJe 2P reserves and annual production of 84 PJe +Diverse acreage position across Australia and New Zealand +A leading Australian CSG producer
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Slide 10: Origin's strategies and knowledge of the industry provide a framework for decision making
Origin’s strategies and knowledge of the industry provides an important framework for decision making........ Industry Issues Origin Positioning Cost of Capital Competitive advantage in regulated infrastructure was low cost of capital. Envestra spun off with high gearing / secure cash flows. Proceed
Slide 11: This strategy has been patiently implemented over the last ten years
This strategy has been patiently implemented over the last ten years........ 997 1998 1999 2000 2001 2002 2003 2004 2005 2006 _ Building Retail ca pabiliti os I Spin off of regulated assets => Envestra Energy 21 acquisition (retail gas) Powercor acquisition {retail electricity) CitiPower acquisition
Slide 12: In E&P Origin focussed on finding gas close to markets
in E&P Origin focussed on finding gas close to markets..... 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 <= Legacy position in Cooper, onshore Otway, Bass, Perth, Surat and Bowen Basins Peat CSG acquisition..... Australia’s first long term CSG contract signed with BP Bulwer Island Yolla 2 appra
Slide 13: In generation Origin has built capabilities in cogeneration and peaking plants
weeees while in generation Origin has steadily built capabilities in development of cogeneration and peaking plants.... 997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Building generation capabilities _ Investment in small cogeneration facilities Commissioning of Osborne Cogeneration facility - Aus
Slide 14: Growth in generation capacity from the 51.4% interest in Contact Energy
A significant part of the growth in generation capacity comes from the acquisition of a 51.4% interest in Contact Energy... Retai? aid peneration coverage acioss NZ 28% of generation capacity # 50% thermal Otahuhu B @ 15% geothermal Combined cycle Otahuhy A @ 39% hydro gas turbne 3EOMW # Gay Lurbine
Slide 15: Implementation of strategy has grown the company's operations and profits
Implementation of Origin’s financial objectives and business strategy has grown the company’s operations and profits 2,500 2P Reserves (PJe) 2,660 4 41,560 4 1,600 + 580 + o4 Jun Jun Jun Jun- Jun- Jun- 64 05 60 01 62 63 3500 3000 (Mw)* Jun Jun Jun Jun oo «64 92 93 Page 14 Generation Capacity Jun Jun
Slide 16: Significant appreciation in Origin's share price and market capitalisation
This has led to a significant appreciation in Origin’s share price and market capitalisation............ Grigin Energy Share Price and S&P ASX 106 Index {1 March 2060 to 9 November 2005) « Market Capitalisation: increased from $0.6 billion in March 2000 to around $5.4 billion in November 2005 « Rank
Slide 17: Origin continues to concentrate on project development as the main driver for growth
Looking forward origin continues to concentrate on project development as the main driver for growth Major Projects not yet contributing significantly to Origin’s results: @ Projects approved/under: construction ® Yet to receive investment approval Spring Gutly coal seam gas | SLIVER @ demonstration
Slide 18: Production from Spring Gully has commenced and will ramp up
Production from Spring Gully has commenced and the project will ramp up over the next two years... Spring Gully Coal Seam Gas (Origin 97% - Operator) + Project delivered on time and on budget + First gas delivered June 05: will ramp up over 2 years to help service AGL contract {150 PJ over 15 years}
Slide 19: Power generation development options in Australia and New Zealand
Origin is progressing a number of power generation development options in Australia and New Zealand...... Proposed Spring Gully Power Station « Environmental Impact Statement released for public comment on 9 November 2005 « Proposal to construct a high efficiency gas fired power station of around 10
Slide 20: Financial Results
Financial Results
Slide 21: Origin's Executive Management Team has been reorganised
Origin’s Executive Management Team has been reorganised... — — .....to ensure clear accountabilities for continued improvement of performance in existing businesses and identifying and implementing new opportunities fo r growth Origin Page 26
Slide 22: Profit & Loss
Profit & Loss Jun01 JunO2 Jun03 Jun04 Jun 05 ($m) (Sm) Sm) (Sm) ($m) Revenue 1,679 2,429 3,352 3,556 4,914 EBITDA 305 405 941 532 928 EBIT 173 231 295 329 615 Net interest expense (32) (43) {49) (45) (135) Tax expense (38) (54) (80) (77) (147) OE! (6) (5) (5) (2) (67) NPAT 98 129 162 205 266 Basic E
Slide 23: Increased returns per share with a conservative dividend payout ratio
Despite increased returns per share over the last six years, Origin has maintained a conservative dividend payout ratio 76 63 a CFPS J EEPS * i a) 60 mw DPS a an EPS has increased 22% per annum on a compound basis over the past 5 years « Cash flow per share has increased 3.3 times since listing in 2
Slide 24: Growth has required significant capital expenditure
Origin’s growth has required significant capital expenditure. Acquisitions in the Retail and Generation areas have provided immediate contributions... Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 ($m) ($m) ($m) ($m) ($m) Growth & Acquisitions E&P 56 129 179 313 315 Retail 344 78 154 46 39 Generation 46 116 93
Slide 25: Cash flow measures as the primary measure of performance
Origin uses cash flow measures as the primary measure of performance within the business....... Jun0Ot Jun02 Jun03 Jun04 Jun 05# ($m) ($m) ($m) ($m) ($m) EBITDA 305 405 491 532 582 Non-cash items (8) (17) 13 2 (30) Change in Working Capital 11 16 39 (48) (66) Stay in business CAPEX (83) (65) (94) (8
Slide 26: Funding of the acquisition of Contact Energy
..while the funding of the acquisition of Contact Energy required only Origin’s second equity raising * Consideration for the acquisition was $1.0 billion plus NZ$535 million debt assumed from Edison Mission Initial Funding - Convertible Undated Preference Shares (CUPS) ($595 million net of costs) -
Slide 27: Conservatively geared balance sheet funding the Contact acquisition
This has allowed Origin to maintain a conservatively geared balance sheet and take on the extra debt to fund the Contact acquisition Juno2 Jun03 Jun04 Jun 05 Jun 01 Net debt ($m) 727 Total equity ($m) 1,328 Debt / (debt + equity) (%) 35% Net interest expense ($m) (32) Net interest cover (x EBIT) 5.5
Slide 28: A-IFRS for Origin
A-IFRS for Origin « Australian equivalents of International Financial Reporting Standards (A-IFRS) will be implemented by Origin for the first time for the half year ending 31 December 2005, and year ending 30 June 2006. * In order to comply with A-IFRS, Origin must restate its comparative balances
Slide 29: Impact of A-IFRS on Origin's balance sheet and profit
The impact of A-IFRS on Origin’s balance sheet at 30 Jun 05 and profit for the year ended 30 Jun 05 is summarised below A-IFRS adjustments (net of tax where appropriate): 39.9 39.9 | Goodwill and licence amortisation 39.9 39.9 - (6.5) (5.3) | Dismantiing, removal & restoration provisions (38.9) 68.6
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Slide 31: For more information
For more information. Page 36 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 failow the prompts to th
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