Slide 1: Presentation to Analysts and Financial Markets
To Company Announcements Office Facsimile 1300 135 638 For personal use only Company ASX Limited Date 22 August 2019 From Helen Hardy Pages 56 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: 2019 Full Year Results
For personal use only Origin Energy 2019 Full Year Results Year ended 30 June 2019 Frank Calabria, CEO and Lawrie Tremaine, CFO 22 August 2019
Slide 3: Outline
Outline For personal use only 1. Performance Highlights - Frank Calabria 2. Financial Review - Lawrie Tremaine 3. Operational Review - Frank Calabria 4. Outlook - Frank Calabria 2 22 August 2019 2019 Full Year Results Announcement
Slide 4: Performance Highlights
For personal use only Performance Highlights Frank Calabria, CEO
Slide 5: FY2019 financial highlights
FY2019 financial highlights For personal use only Statutory Profit Underlying Profit Operating Cash Flow $1,211 $1,028 $1,325 million million million (68.8cps) (58.4cps) 333% increase on FY20181 42% increase on FY20181 35% increase on FY20181 Underlying ROCE Adjusted Net Debt Final dividend 9.1% $5.
Slide 6: We are committed to our stakeholders
We are committed to our stakeholders For personal use only Getting energy right Caring about Keeping our people for customers our impact safe & engaged Regional procurement spend as TRIFR Strategic NPS % of total spend 5 FY18 FY19 - 15% 4 3 10% (5) 2 5% The right 1 (10) customer solutions 0% - (15)
Slide 7: Supporting our customers and communities
Supporting our customers and communities Customers Communities For personal use only • Putting customers first by going • Best Workplace to Give Back in 2019 beyond regulatory requirements and (GoodCompany) providing continued hardship support • Origin Foundation supporting education programs to emp
Slide 8: Strategy to deliver value in a future energy world
Strategy to deliver value in a future energy world Connecting customers to the energy and technologies of the future For personal use only • Accelerate towards clean energy The right • Low cost operator developing & energy growing gas resources The right • Embracing a decentralised and technologies
Slide 9: Our strategies in action
Our strategies in action For personal use only e Accelerate Low cost operator Embracing Leading customer towards developing & growing gas a decentralised and experience and solutions clean energy resources digital future • Target > 25% renewables • APLNG • Advanced analytics and • Transform the cust
Slide 10: Continued focus on shareholder value
Continued focus on shareholder value Delivering on commitments Balancing growth and returns For personal use only • Transforming culture • Disciplined capital allocation • Simplified portfolio • Executing growth options • Step change in cash generation ‒ Growing resource position ‒ Progressing gener
Slide 11: Dividend policy
Dividend policy • Sustainable shareholder distributions For personal use only through the business cycle • Target an ordinary dividend payout range of 30% to 50% of free cash flow per annum • Free cash flow - cash from operating activities and investing activities (excluding FY2019 final dividend ma
Slide 12: Financial Review
For personal use only Financial Review Lawrie Tremaine, CFO
Slide 13: FY2019 financial highlights
FY2019 financial highlights For personal use only Statutory Profit1 Underlying Profit1,2 Underlying EBITDA1 $3,232M $1,211M $1,028M $2,787M 68.8 cps $726M 58.4 cps 41.3 cps $280M 15.9 cps FY18 FY19 FY18 FY19 FY18 FY19 Corporate Energy Markets Integrated Gas Underlying ROCE1 Free Cash Flow3 Adjusted
Slide 14: Underlying profit increased 42%
Underlying profit increased 42% For personal use only Movements in Underlying Profit ($m) (77) 52 (119) 116 408 (77) 1,028 726 Higher APLNG- Legacy site Debt reduction, commodity related provision reduced interest prices hedging increase margin FY18 EM EBITDA Share of IG - Other Corporate Net financ
Slide 15: Energy Markets Underlying EBITDA down 5%
Energy Markets Underlying EBITDA down 5% Movements in Underlying EBITDA ($m) For personal use only 15 (4) (154) 66 1,651 1,574 Electricity gross profit down 10% to $1,390 million: • Price relief measures (-$100 million) and competition/discounting (-$80 million) • Lower volume - customer numbers and
Slide 16: Integrated Gas Underlying EBITDA up 51%
Integrated Gas Underlying EBITDA up 51% Movements in Underlying EBITDA ($m) For personal use only 22 (16) (77) 688 24 1,892 Integrated Gas Share of APLNG 1,251 Other (+$718 million) (-$77 million) Share of APLNG EBITDA up 51% to $2,123 million: FY181 LNG Volume LNG Price Domestic Revenue Opex and ot
Slide 17: Strong cash flow and improved returns
Strong cash flow and improved returns ($m) FY2019 FY20181 Change Underlying ROCE2 For personal use only Cash from operating activities 1,325 983 342 13.6% Distributions from APLNG 974 287 687 12.2% 10.9% 9.1% 7.7% Capital expenditure (341) (318) (23) 8.2% 4.9% 4.1% (Acquisitions)/disposals (46) 1,47
Slide 18: Proportionate free cash flow of $2 billion in FY2019
Proportionate free cash flow of $2 billion in FY2019 Proportionate Free Cash Flow1 Proportionate Free Cash Flow Yield2 For personal use only 3,000 - excluding disposals 20% 2,500 CAGR 162% 2,000 15% 15% A$M 1,500 10% 1,000 8% 5% 500 2% - - 0% FY17 FY18 FY19 FY17 FY18 FY19 Origin – excl. share of APL
Slide 19: Target capital structure achieved
Target capital structure achieved For personal use only Adjusted Net Debt / Adjusted 6x Underlying EBITDA 5x • Debt reduced by $2.7 billion over two 4x years from cash flow and asset sales 3x • Target credit rating achieved: BBB Target (2.5 - 3.0x) 2.6x (stable) / Baa2 (stable) 2x FY17 FY18 FY19 • $
Slide 20: APLNG is deleveraging
APLNG is deleveraging For personal use only Project Finance Net Debt1 Balance and Gearing • US$1.6 billion debt repaid since January 2016 - adding to equity value 10 45% • 30% gearing2 at June 2019 8 40% • Deleveraging at US$500 ~US$600 million p.a. over next 5 years 6 35% Refinanced US$4.5 billion
Slide 21: Disciplined capital allocation framework
Disciplined capital allocation framework For personal use only 1 Debt service Capital expenditure 2 (excluding major growth) Dividend 3 (30-50% free cash flow1) Surplus cash Debt Major growth 4 returns to reduction projects shareholders 1) Free cash flow is defined as cash from operating activities
Slide 22: Operational Review
For personal use only Operational Review Frank Calabria, CEO
Slide 23: Energy Markets
For personal use only Energy Markets
Slide 24: Strong generation and gas performance
Strong generation and gas performance Eraring output Natural Gas external sales Customer activity For personal use only (‘000s) 18 250 3,000 16 2,500 14 200 12 2,000 150 10 TWh PJ 1,500 8 100 6 1,000 4 50 500 2 - - - FY17 FY18 FY19 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Wins Retains • Record output at E
Slide 25: Flexible portfolio a competitive strength
Flexible portfolio a competitive strength Electricity sources and uses (TWh) Natural Gas sales (PJ) For personal use only 45 40 Short Losses 35 Position Generation Swap 30 Contracts Business Other 25 Business - Gas Wholesale 20 15 Owned and contracted Coal generation Business - 10 (Eraring) C&I Reta
Slide 26: Accelerating to clean energy
Accelerating to clean energy Responding to a changing market, progressing opportunities in a disciplined way For personal use only Stockyard Hill (contracted PPA) 530 MW planned to be online by 2020 Darling Downs Power Quarantine Power Station Station Unit 1 fast-start repower now Option for site ex
Slide 27: Gas portfolio underpinned by strong supply
Gas portfolio underpinned by strong supply For personal use only Energy Markets East Coast Gas supply PJ 300 Short term volumes purchased to match duration of C&I sales contracts 250 200 150 Longer term 100 supply volumes 50 0 FY19 FY20 FY21 FY22 FY23 APLNG legacy contract Fixed Price Oil linked Pri
Slide 28: Balancing market share and value in Retail
Balancing market share and value in Retail Customer accounts Cost to serve Customer movement For personal use only (‘000) ($m) (‘000 customers) 4,000 60 FY2019 50 40 170 155 3,000 30 20 10 2,000 - (10) 455 455 (20) 1,000 (30) (40) - (50) Jun-16 Jun-17 Jun-18 Jun-19 FY18 FY19 NSW QLD VIC SA Electrici
Slide 29: Churn and price dispersion reduced
Churn and price dispersion reduced Customer churn Market offers dispersion For personal use only (Rolling 12 month) 25% Victoria (CitiPower) NSW (Endeavour) $1,800 $2,800 $1,600 23% $2,300 $1,400 $1,800 $1,200 $1,300 21% $1,000 $800 $800 Nov-18 Jul-19 Nov-18 Jul-19 19% Queensland (Energex) SA (SAPN)
Slide 30: Targeting a step change in our Retail business
Targeting a step change in our Retail business Simplified organisation driven by a customer and digital first mindset For personal use only Transform Target market Grow new customer leading cost revenue experience position streams • Simpler offers • Targeting >$100 million • Centralised Energy cost
Slide 31: Retail transformation on track
Retail transformation on track For personal use only Transform Target market Growwnew Grow revenue customer leading cost revenue streams experience position streams Energy Markets – Cost to serve CES Gross Profit ($m) 21.7 21.5 22.0 ($/customer) Interaction NPS 18.0 171 169 57 16.1 <$145 44 38 Jun-1
Slide 32: Integrated Gas
For personal use only Integrated Gas
Slide 33: APLNG continues to improve performance
APLNG continues to improve performance For personal use only APLNG Production APLNG Commodity Net cash (to)/from APLNG 400 (100%) (PJ) Revenue (100%) (A$m) (A$m) (37.5%) 4,000 350 3,500 300 3,000 250 2,500 200 2,000 943 150 1,500 100 1,000 363 50 500 - - H1 H2 H1 H2 H1 H2 H1 H2 FY17 FY18 FY19 FY18 F
Slide 34: Delivering on commitments
Delivering on commitments Distribution breakeven (US$/boe) For personal use only June 2019 Metric Baseline Run Rate AUD/USD 0.72 Target 39 - 42 Cost per Well1 A$m/well 2.4 1.2 ✓ 36 16 Operated opex2 15 A$/GJ 1.3 1.0 ✓ Operating Breakeven US$/boe3 30 <24 ✓ 23-26 21 Distribution Breakeven US$/boe3 48
Slide 35: Unit cost targets achieved in June 2019
Unit cost targets achieved in June 2019 For personal use only Cost per well (A$m/well)1 Operating cost (A$/GJ)2 2.4 1.3 1.9 1.2 1.0 1.0 1.4 1.2 FY2018 FY2018 FY2019 Run Rate FY2018 FY2018 FY2019 Run Rate Baseline (Actual) (Actual) (June 2019) Baseline (Actual) (Actual) (June 2019) Target Target • Ju
Slide 36: Significant value uplift achieved in FY2019
Significant value uplift achieved in FY2019 For personal use only Origin 2P reserves • Increase in estimated recovery from operated producing areas up 55 PJ, before • Queensland gazettal block awarded underpinning >50 PJ of gas sales production (147 PJ to domestic customers APLNG 100%) • Progressing
Slide 37: APLNG underpinned by a solid reserves base
APLNG underpinned by a solid reserves base APLNG reserves position (PJ) For personal use only 18000 15000 12000 9000 6000 ~66% 3000 0 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Production 1P P2 P3 • Stable reserves with a steady trend converging towards 3P since FID • Before production,
Slide 38: APLNG production and cost outlook
APLNG production and cost outlook APLNG Production (100%) For personal use only 680-700 FY2020 700 APLNG (100%) FY17 FY18 FY19 Guidance 676 679 650 Production (PJ) 610 676 679 680-700 PJ 600 610 Capex + opex, excl. 2.7 2.6 2.7 2.8 – 3.0 purchases1 (A$b) 550 FY17 FY18 FY19 FY20 • FY2019 distribution
Slide 39: Beetaloo
Beetaloo Stage 2 appraisal commenced For personal use only • Targeting Kyalla and Velkerri shale liquids-rich gas plays Northern Territory • Two horizontal wells to be drilled, fracture stimulated and put on extended production testing (EPT): − Kyalla: all environmental approvals in place − Velkerri
Slide 40: Outlook
For personal use only Outlook Frank Calabria, CEO
Slide 41: FY2020 Guidance
FY2020 Guidance Provided that market conditions do not materially change and the regulatory and political For personal use only environment does not result in further adverse impacts on operations Energy Markets • Electricity down $180-$220 million: impact FY2019 FY2020 DMO/VDO (~$100 million), lowe
Slide 42: Appendix
For personal use only Appendix
Slide 43: Electricity forward prices by state
Electricity forward prices by state For personal use only VIC NSW $120 $120 $110 $110 $100 $100 A$/MWh $90 A$/MWh $90 $80 $80 $70 $70 $60 $60 $50 $50 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 QLD SA $120 $120 $110 $1
Slide 44: Large scale renewable certificates
Large scale renewable certificates For personal use only LREC forward prices Origin’s LREC position $80 8 Millions $70 7 $60 6 $50 5 $40 4 $30 3 $20 2 $10 1 $0 - Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 2019 2020 2021 2022 2023 Legacy & Contracts Recent solar deals Cal 19 Cal 20 FY20 Average Stockyard Hil
Slide 45: Oil price risk management
Oil price risk management For personal use only 85 FY2020 Oil hedging FY2020 oil hedging 80 FY20 effective price • $28 million1 hedge premium FY20 effective price after hedging Effective oil price (US$/bbl) 75 • Gain of $21 million based on 70 forward market prices as at 20 August 2019 65 • 11.6 mmb
Slide 46: Provision for legacy sites
Provision for legacy sites For personal use only • We hold provisions for the remediation of a number of legacy sites that historically operated as gasworks • The largest provision for site remediation relates to the Osborne site in South Australia which operated as a gasworks from 1928 to 1979 • Th
Slide 47: Statutory to Underlying Profit
Statutory to Underlying Profit Reconciliation from Statutory to Underlying Profit For personal use only Year ended 30 June 2019 2018 Change Change ($m) ($m) ($m) (%) Statutory Profit/(Loss) - continuing operations 1,211 280 931 333 Statutory Profit/(Loss) - discontinued operations - (62) 62 (100) St
Slide 48: Segment summary
Segment summary For personal use only Energy Markets Share of APLNG Integrated Corporate Total Year Ended 30 June ($m) Gas - Other 2019 2018 1,2 1,2 2019 2018 2019 2018 2019 2018 2019 20181,2 1,2 Underlying EBITDA 1,574 1,651 2,123 1,405 (231) (154) (234) (115) 3,232 2,787 Underlying EBIT 1,173 1,29
Slide 49: Underlying ROCE
Underlying ROCE As at 30 Jun 2019 30 Jun 2018 Change Change For personal use only ($m) ($m) ($m) (%) Capital Employed Net Assets - continuing operations 13,149 11,828 1,321 11 including: Investment in APLNG 6,960 5,988 972 16 MRCPS issued by APLNG 3,045 3,620 (575) (16) Non-cash fair value uplift (2
Slide 50: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt For personal use only Issue Issue Hedged Hedged AUD $m AUD $m AUD $m Currency Notional Currency Notional 30-Jun-19 30-Jun-19 30-Jun-19 Debt and Interest- CCIRS fair Adjusted net bearing value debt liabilities adjustments AUD debt AUD 526 AUD 526 501 - 501 USD Debt
Slide 51: Capital expenditure program
Capital expenditure program For personal use only 600 FY2020 Capex • Generation sustain includes $25 million 500 in creditor payments from the prior year, cost associated with Mortlake 400 repairs and Eraring ash dam as well as other scheduled maintenance. $M 300 • Other sustain includes LPG capex,
Slide 52: FY2019 breakeven
FY2019 breakeven For personal use only FY2019 FY2019 100% APLNG (A$m) Change Actual1 Guidance1 Capital expenditure – Sustain 1,175 1,320 (145) Capital expenditure – E&A 102 140 (38) Operating expenses – pre 1,649 1,690 (41) capitalisation2 Less: Spot LNG & domestic revenue (1,133) (1,050) (83) Opera
Slide 53: Important Notices
Important Notices Forward looking statements For personal use only 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 cert
Slide 54: Important Notices
Important Notices All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin For personal use only Energy Limited and its controlled entities, for the reporting period ended 30 June 2019 (the period) compared with the reporting period ende
Slide 55: For more information
For more information For personal use only Peter Rice General Manager, Capital Markets Email: peter.rice@originenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Liam Barry Group Manager, Investor Relations Email: liam.barry@originenergy.com.au Office: +61 2 9375 5991 Mobile: + 61 401 71
Slide 56: Thank You
For personal use only Thank You