Slide 1: Results for the year ended 30 June 2012 transmittal
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company ASX Limited Date 23 August 2012 From Helen Hardy Pages 70 Subject RESULTS FOR THE YEAR ENDED 30 JUNE 2012 This Transmittal is confidential. If you have received this document in error, please contact Origin Energy i
Slide 2: 2012 Full Year Results Announcement
For personal use only 2012 Full Year Results Announcement Financial Year Ended 30 June 2012 Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy 23 August 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 For personal use only securities in Origin, in any jurisdiction (including the USA). This presentation is for information purposes only, is in a summary form, and
Slide 4: Important Notice
Important Notice Origin’s Full Year Financial Statements for the year ended 30 June 2012 are presented in accordance with Australian Accounting For personal use only Standards. Segment results, which are used to measure segment performance are disclosed in Note 2 of the 2012 Full Year Financial Stat
Slide 5: 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 5. Glossary 4|
Slide 6: 1. Performance Highlights
For personal use only 1. Performance Highlights Grant King, Managing Director
Slide 7: A strong increase in earnings reflecting a full year contribution from the NSW acquisition
A strong increase in earnings reflecting a full year contribution from the NSW acquisition … For personal use only Statutory Profit* $980 m up from $186 m Statutory EPS* 90.6 cps up from 19.6 cps Net items excluded from Underlying Profit1 $87 m up from ($487) m Underlying Profit* $893 m up 33% from
Slide 8: Origin made significant progress in its Energy Markets business
Origin made significant progress in its Energy Markets business which will deliver ongoing cash flows … For personal use only • A full year contribution from the NSW acquisition has delivered benefits of scale and incumbency • The migration of 2.6 million customers to the new SAP system will increas
Slide 9: Origin has reviewed current activities and reduced future capital expenditure
Origin has reviewed current activities and reduced future capital expenditure … For personal use only $m 3,000 Lower future capital expenditure 2,500 due to: • Review of investment activities, 2,000 with some determined as not warranted in the near term given 1,500 the requirement to fund APLNG, res
Slide 10: $4.2 billion in undrawn committed debt facilities and cash
Origin has $4.2 billion1 in existing undrawn committed debt facilities and cash, providing sufficient liquidity to fund its $3.6 billion share of APLNG cash contributions For personal use only $m 2,500 1,600 Loans & Bank Guarantees - Undrawn 1,400 2,000 Loans & Bank Guarantees - Drawn USPP, Retail N
Slide 11: Substantial increase in free cash flows expected following APLNG completion
Origin expects to have a substantial increase in free cash flows following the completion of APLNG … For personal use only Exploration and Appraisal Activity • Ironbark – evaluation activities continued, with surface facilities and gathering networks being installed to support the pilot well project
Slide 12: 2. Financial Review
For personal use only 2. Financial Review Karen Moses, Executive Director, Finance and Strategy
Slide 13: 2012 Financial Highlights
2012 Financial Highlights For personal use only ($ million) Jun 12 Jun 11 Change Statutory Profit 980 186 427% Statutory EPS 90.6 cps 19.6 cps 362% Revenue 12,935 10,344 25% Underlying EBITDA* 2,257 1,782 27% Underlying EBIT* 1,598 1,194 34% Underlying Profit 893 673 33% Underlying EPS 82.6 cps 71.0
Slide 14: Reconciliation of Statutory Profit to Underlying Profit
Reconciliation of Statutory Profit to Underlying Profit ($ million) Jun 12 Jun 11 Change For personal use only Statutory Profit 980 186 794 Items Excluded from Underlying Profit APLNG related items 430 16 414 Increase (decrease) in fair value of financial 119 (139) 258 instruments Impairment of asse
Slide 15: Statutory Profit up 427%, from $186 million to $980 million
Statutory Profit up 427%, from $186 million to $980 million 1,400 27% For personal use only 1,200 12% 52% 193 31% 427% 1,000 18% 33% 87 980 ($ million) 800 893 600 186 487 673 400 200 186 - FY2011 Net Items FY2011 Underlying Underlying Underlying Underlying Non- FY2012 Net items FY2012 Statutory exc
Slide 16: Underlying EBITDA up 27% to $2,257 million
Underlying EBITDA up 27% to $2,257 million Underlying EBIT up 34% to $1,598 million Underlying EBITDA Underlying EBIT For personal use only ($ million) Jun 12 Jun 11 % change Jun 12 Jun 11 % change Energy Markets 1,562 1,174 33% 1,317 978 35% Exploration & Production 329 268 23% 105 47 123% Australi
Slide 17: Full year NSW contribution led to increase in Group OCAT and free cash flow
A full year contribution from the NSW acquisition led to an increase in Group OCAT and free cash flow For personal use only ($ million) Jun 12 Jun 11 Change Reversal of the temporary increase in network creditors in Underlying EBITDA 2,257 1,782 475 the prior year, higher wholesale Change in working
Slide 18: Cash outflow from NSW onerous hedge contracts reduces
The cash outflow associated with NSW onerous hedge contracts reduces by around $90 million in FY2013 … For personal use only 160 160 140 140 120 120 100 100 $ million $ million 80 80 60 First year 60 unwind was for 40 40 4 months 20 20 0 1 - The profile reflects market prices at the The profile refl
Slide 19: Segment Cash Flow Returns
Segment Cash Flow Returns For personal use only Operating Cash Flow* Productive Capital OCFR* (%) Jun 12 Jun 11 % Jun 12 Jun 11 % Jun 12 Jun 11 ($m) ($m) Change ($m) ($m) Change ($m) ($m) Energy Markets 1,141 892 28% 8,651 6,342 36% 13.2% 14.1% Exploration & 371 386 (4%) 1,796 1,929 (7%) 20.6% 20.0%
Slide 20: Growth and acquisition capital expenditure significantly lower
Growth and acquisition capital expenditure, including cash contributions to APLNG, was significantly lower than last year For personal use only $m 5,000 $4,751m • Key areas of capital expenditure included: - Eraring Power Station ($176m) 4,000 - Mortlake Power Station ($165m) - Retail Transformation
Slide 21: Significantly reduced future capital expenditure on other projects
Origin has significantly reduced its future capital expenditure on other projects … $m For personal use only 3,000 2,500 • APLNG capital expenditure is 2,000 supported by the US$8.5b Project Finance facility, combined with the US$2.1b 1,500 cash injection from Sinopec 1,000 • Origin’s funding requir
Slide 22: Funding activities undertaken during the year
Origin has undertaken a number of funding activities during the year … For personal use only 2,500 • Unsecured Notes issuance in US Loans & Bank Guarantees - Undrawn 144A market – US$500m ($492m) 2,000 Loans & Bank Guarantees - Drawn USPP, Retail Notes & Euro Hybrid • Subordinated Notes in Australia
Slide 23: Fully franked final dividend declared
A fully franked final dividend of 25 cps has been declared, representing a payout ratio of 61% of Underlying EPS For personal use only 60 Dec Half 50 Jun Half Additional 40 • Ex-dividend date: 27 August 2012 25 25 25 25 25 cents per share • Record Date: 31 August 2012 30 • Payment Date: 27 September
Slide 24: 3. Operational Review
For personal use only 3. Operational Review Grant King, Managing Director
Slide 25: Energy Markets
Energy Markets Underlying EBITDA up 33% to $1,562 million For personal use only Electricity volumes up 26% to 42.7 TWh following the NSW acquisition Underlying EBIT margin* expansion from 12.7% to 13.6% Migrated 2.6 million customers to the new billing and customer relationship management sy
Slide 26: Integrated business well positioned for changing market conditions
Origin’s integrated business is well positioned to benefit from changing market conditions … For personal use only Fuel Generator Retailer Large and diverse fuel Australia’s largest Australia’s leading portfolio generation portfolio energy retailer • Strong domestic gas supply • 5,900 MW • 3,014,000
Slide 27: Large, diverse portfolio enables effective management of purchase costs
Origin’s large, diverse and integrated portfolio enables effective management of gas and electricity purchase costs … 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 6,000 200
Slide 28: NSW acquisition led to a substantial increase in earnings
The NSW acquisition led to a substantial increase in earnings For personal use only Performance metrics, $m Non- Natural Gas Electricity LPG (% change from June 11) commodity Revenue ($m)1 1,203 (+2%) 7,566 (+40%) 213 (-50%) 706 (+5%) Gross Profit* ($m) 233 (+14%) 1,797 (+41%) 35 (-45%) 178 (+3%) Fu
Slide 29: Strong growth in gas customers offset by mild weather
Strong growth in gas customers was offset by mild weather in Victoria and South Australia … PJ For personal use only Days 1,600 160 142 1,400 130 1,200 120 1,000 C&I volumes declined 7 PJ due 800 80 to a reduction in wholesale trading 600 volumes of 13 PJ, with core C&I 400 40 customer volumes incre
Slide 30: Natural Gas Gross Profit up 14% to $233 million
Despite reduced volumes, Natural Gas Gross Profit was up 14%, to $233 million, delivering a $0.40/GJ increase in unit gross profit … For personal use only Gas Performance ($/GJ) Jun 12 Jun 11 Change Revenue Combined Revenue 9.3 8.3 1.0 C&I 5.5 5.0 0.5 Tariff increases in line with market prices, inc
Slide 31: Energy demand in the NEM is softening
Energy demand in the NEM is softening, impacting energy usage per customer … For personal use only TWh 50 40 42.7 30 34.0 SA Qld Vic 20 NSW C&I 10 0 FY2011 FY2012 4 months’ 12 months’ contribution contribution Source: AEMO 2012 Electricity Statement of Opportunities from NSW from NSW acquisition acq
Slide 32: Electricity Gross Profit up 41% to $1,797 million
Electricity Gross Profit up 41% to $1,797 million, delivering a $5/MWh increase in unit gross profit … For personal use only Electricity Performance ($/MWh) Jun 12 Jun 11 Change Revenue Combined Revenue 177 159 18 C&I 116 110 6 Tariff increases include Mass Market 231 204 27 network cost increases a
Slide 33: Slight reduction in wholesale electricity portfolio costs
Origin achieved a slight reduction in wholesale electricity portfolio costs compared with the prior year … For personal use only 60 60 Average Price Greater than $300/MWh Average Price Greater than $300/MWh Average Price Less than $300/MWh Average Price Less than $300/MWh Average NEM Pool Price ($/M
Slide 34: Systems implemented to comply with Clean Energy Future Package
Systems and processes required to comply with the Clean Energy Future Package have been successfully implemented … For personal use only Carbon $/MWh • Systems and processes successfully implemented to comply with obligations 80 under the Clean Energy Future package 70 Average Energy Price (rolling
Slide 35: Origin's churn reduced from 18.5% to 17.1%
Origin’s churn reduced from 18.5% to 17.1%, with market churn stable at 20.4% For personal use only 40% 5,000 Origin, FY2011 Origin, FY2012 - - 35% 263 (375) % Churn: Monthly Data Annualised 282 (330) Customer Accounts ('000) Market, FY2011 Market, FY2012 4,000 366 362 354 30% Net loss of 112 Net lo
Slide 36: Retail transformation continued with 2.6 million customers migrated
Retail transformation continued with 2.6 million customers migrated to a new billing and customer relationship management system … For personal use only • Four large scale migrations of 2.6 million customers to the new SAP billing platform • Integral Energy customers expected to be migrated in early
Slide 37: Underlying cost to serve customers was stable
Origin’s underlying cost to serve customers was stable … For personal use only Cost-to-serve Jun 12 Jun 11 Change Total Natural Gas, Electricity & non- (551) (419) (132) commodity operating costs ($m) Maintenance costs ($m) (465) (351) (114) Acquisition & retention costs ($m) (86) (68) (18) Average
Slide 38: Generation portfolio achieved high levels of reliability
Origin’s generation portfolio achieved high levels of reliability … For personal use only Base Load/ Eraring Interm. Darling Downs Mortlake 1 Ladbroke Grove Quarantine Peaking Roma Uranquinty • Commercial operations for both units reached on 21 August 2012 Shoalhaven • Two units, 550 MW Mt Stuart •
Slide 39: Opportunities to improve business performance
Origin is pursuing a number of opportunities to improve business performance in the short and long term For personal use only Retail Transformation Customers Legacy Fuel Position • To deliver an improved • Build on improving trend in • Legacy fuel contracts set at customer experience and net custome
Slide 40: Exploration & Production
Exploration & Production For personal use only Underlying EBITDA up 23% to $329 million Higher revenues driven by a 12% increase in commodity prices Completion of the Otway gas inlet compression project Increased 2P reserves for the Cooper Basin, Ironbark and Kupe Lower exploration activit
Slide 41: Production down due to BassGas shutdown; 2P reserves up 7%
Production was down, primarily due to the extended shutdown at BassGas … For personal use only PJe PJe mmboe 100 17.2 1,400 +7% 1,200 1,235 80 13.7 1,154 1,000 60 10.3 800 40 6.9 600 400 20 3.4 200 0 0.0 FY08 FY09 FY10 FY11 FY12 - Total Liquids SA Cooper & SWQ FY2011 FY2012 Perth Surat Bass Taranaki
Slide 42: Major planned shutdowns at BassGas and Otway
Major planned shutdowns have been undertaken at Origin’s key offshore producing assets – BassGas and Otway For personal use only BassGas Otway Kupe Cooper, Surat and Perth • Lower production (-54%) • Production in line • Production increased • Production up on prior due to the planned with prior yea
Slide 43: The Yolla Mid Life Enhancement project is progressing
The Yolla Mid Life Enhancement project is progressing … Stage 1: Construction (FY2012/13) For personal use only • Accommodation module installed • Safety and utility systems upgraded • The compression module lift was unsuccessful • Free flow production to be restarted in the September Quarter, at wh
Slide 44: Investment in offshore assets will increase supply into growing gas market
Investment in existing offshore assets will increase supply into a growing east coast gas market … For personal use only PJ • Phase 1 of BassGas MLE underway with the accommodation 2,500 module installed • Phase 2 of BassGas MLE will involve the drilling of an 2,000 additional two wells in FY2014 LN
Slide 45: Exploration focussed on resources close to markets
Exploration activity is focussed on resources close to markets, with wells in Kenya and Vietnam expected to be drilled in FY2013 For personal use only Kenya Botswana • Drilling of the Mbawa-1 well in the • Established Kubu Energy Resources, a 50:50 Lamu Basin commenced in August 2012 JV with Sasol,
Slide 46: Australia Pacific LNG
Australia Pacific LNG For personal use only Underlying EBITDA down 25% to $47 million Agreements signed with Kansai and Sinopec for Train 2 LNG sales, all marketing now complete FID1 taken in July 2011 and FID2 taken in July 2012 Origin’s shareholding in APLNG diluted from 50% to 42.5% as at
Slide 47: APLNG sales increased on higher customer demand and gas prices
APLNG sales increased on higher customer demand and gas prices … June 12 June 11 For personal use only ($ million) Origin’s Origin’s Total Total share1 share2 Higher gas prices Operating Revenue 362 336 & customer sales Increased activity Operating Expenses (251) (210) supporting the expanding LNG e
Slide 48: APLNG's 2P reserves base continues to expand
APLNG’s industry leading 2P reserves base continues to expand … PJ 30,000 For personal use only 25,000 20,000 • 2P reserves increased over the 15,000 year by 1,336 PJ to 13,111 PJ • 3P reserves increased over the 10,000 year by 1,305 PJ to 16,047 PJ 5,000 - Estimated Requirements 1 3C1 2C 3P 2P Ramp
Slide 49: Australia Pacific LNG has world leading operators
Australia Pacific LNG has world leading operators For personal use only Talinga gas well Laying of pipe Curtis Island UPSTREAM – 14% Complete DOWNSTREAM – 17% Complete • Operated by Origin • Operated by ConocoPhillips • Over 15 years’ CSG production experience in • Over 40 years’ LNG production expe
Slide 50: Upstream on track and 14% complete
Upstream on track and work 14% complete For personal use only Coil-tubing drill rig Condabri Gathering Camp Water – brine treatment skid The Narrows Crossing (QCLNG site) Drilling Gathering Facilities Pipeline & Electrification • 68 Phase 1 operated • 595 of 1,100 operated • 7 new gas processing and
Slide 51: Drilling rate will increase as additional rigs are mobilised
The drilling rate will increase as additional rigs are mobilised … For personal use only • The 1,100 operated wells to be drilled for Phase 1 are expected to produce 1,200 TJ/d1, with an additional 200 TJ/d1 from non-operated assets • Current operated well production is over 1 TJ per well per day on
Slide 52: Downstream on track and 17% complete
Downstream on track and work 17% complete For personal use only Curtis Island site, August 2012 LNG Tank Foundations Mainland – aggregate loading onto barge Curtis Island Mainland / Dredging • Site preparation works well advanced • Roll-On Roll-Off facilities on Fisherman’s Landing and Curtis Island
Slide 53: APLNG is on schedule to meet milestones
APLNG is on schedule to meet the below milestones For personal use only Upstream Milestones Date (CY) Downstream Milestones Date (CY) Pipeline Manufacture 2011 & 2012 1st concrete LNG Tanks April 2012 Condabri construction camp occupied June 2012 1st concrete Train 1 foundations June 2012
Slide 54: APLNG making significant economic contribution to Queensland
Australia Pacific LNG is making a significant economic contribution to Queensland and creating thousands of new jobs … For personal use only • Currently creating employment for around 4,000 Queenslanders and will create 6,000 construction jobs and a further 1,000 jobs for ongoing operations • More t
Slide 55: APLNG capital expenditure of $5.3 billion for the year
100% of APLNG’s capital expenditure for the year was $5.3 billion, with Origin’s cash contribution $1.167 billion For personal use only APLNG Capital Expenditure for the year ended 30 Operated and non-operated costs associated with June 2012 (A$m)1 the LNG project plus O&M costs associated with the
Slide 56: Contact Energy
Contact Energy Underlying EBITDA up 16% to $400 million For personal use only Higher wholesale prices due to lower South Island hydro storage levels offset by 25% reduction in hydro generation Increased thermal generation offset by lower gas and carbon unit costs Competitive focus on retaini
Slide 57: Contact is one of New Zealand's leading energy companies
Contact is one of New Zealand’s leading energy companies, supplying gas, electricity and LPG products across the country For personal use only Generation Portfolio • 290 MW geothermal generation • 752 MW hydro generation • 1,176 MW thermal generation • Over 2,000 MW in generation development opportu
Slide 58: Increased portfolio flexibility delivered strong earnings growth
Increased portfolio flexibility delivered strong earnings growth Higher wholesale prices in response to below mean hydro storage, offset by 25% reduction in For personal use only • hydro generation replaced by thermal capacity • Improved unit generation cost with lower gas and carbon unit costs • St
Slide 59: Portfolio flexibility will increase in the next two years
Portfolio flexibility will increase in the next two years … Lower average cost of generation and For personal use only increased portfolio flexibility NZ$m • 166 MW Te Mihi geothermal power 700 station, completion in 2013 600 • Peaking power stations, gas storage, and diverse generation fuel mix 500
Slide 60: Corporate
Corporate For personal use only Underlying EBITDA down 19% to ($81) million Commenced geothermal exploration in Chile, and acquired additional concessions Acquired 51%1 interest in hydro development joint venture in Chile Feasibility studies of PNG hydroelectric development have begun ($m) U
Slide 61: Developing large-scale renewable energy opportunities internationally
Origin continues to develop large-scale renewable energy opportunities in international markets that offer high prospectivity and access to growing demand … For personal use only Chile Chile • 40% interest in Chile’s leading geothermal • Acquired 51%1 interest in one of Chile’s exploration company,
Slide 62: 4. Outlook
For personal use only 4. Outlook Grant King, Managing Director
Slide 63: Focus on delivering APLNG with funding managed
A key focus for Origin over the next few years is delivering the APLNG project on schedule and on budget, with funding of the investment managed through … For personal use only … reducing capital … maximising cash … managing maturities expenditure on other & flow from the & of existing debt projects
Slide 64: Outlook for the coming year is more challenging
The outlook for the coming year is more challenging than in prior years • Less growth from new capital investments For personal use only • Regulatory uncertainty particularly related to pricing decisions made by the Queensland Competition Authority for which Origin has initiated a judicial review •
Slide 65: Delivery of APLNG combined with growth opportunities
The delivery of the APLNG project in the near term … For personal use only • The APLNG project provides access to export markets and stands to deliver significant value to Origin shareholders … combined with a number of established opportunities to capture growth in the medium to longer term … • Ori
Slide 66: 5. Glossary
For personal use only 5. Glossary
Slide 67: Statutory Financial Measures
Statutory Financial Measures For personal use only Term Meaning Total current and non-current interest bearing liabilities only less cash and cash Net Debt equivalents. Economic interest in a controlled entity of the Consolidated Entity that is not Non-controlling interest held by the Parent entity
Slide 68: Non-IFRS Financial Measures
Non-IFRS Financial Measures Non-IFRS Financial measures are 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 to make decisions on al
Slide 69: Non-Financial Terms
Non-Financial Terms For personal use only Term Meaning The sum of Proved plus Probable Reserves. Probable Reserves are those reserves which analysis of geological and engineering data indicate are less likely to be 2P reserves recovered than Proved Reserves but more certain than Possible Reserves. I
Slide 70: Thank you
For personal use only Thank you For more information Kylie Springall Group Manager, Investor Relations Email: kylie.springall@originenergy.com.au Office: +61 2 8345 5288 Mobile: + 61 400 477 393 www.originenergy.com.au 69 |