Slide 1: ASX transmittal: Results for year ended 30 June 2011
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company ASX Limited Date 23 August 2011 From Helen Hardy Pages 72 Subject RESULTS FOR THE YEAR ENDED 30 JUNE 2011 This Transmittal is confidential. If you have received this document in error, please contact Origin Energy i
Slide 2: 2011 Full Year Results Announcement
For personal use only 2011 Full Year Results Announcement Financial Year Ended 30 June 2011 23 August 2011
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 2. Financial Review 3. Operational Review 4. Outlook 5. Appendix 3|
Slide 5: 1. Performance Highlights
For personal use only 1. Performance Highlights
Slide 6: Underlying Profit increased by 15% driven by new investments
Origin‟s Underlying Profit increased by 15% driven by significant contributions from new investments For personal use only Statutory Profit $186 million down 70% Statutory Earnings per Share(1) 19.6 cps down 71% Underlying EBITDA $1,782 million up 32% Underlying Profit $673 million up 15% Underlying
Slide 7: Origin secured two major opportunities
During the year, Origin successfully secured two major opportunities … For personal use only Acquisition of the Integral Energy and Country Energy retail businesses and entry into the Eraring GenTrader arrangements • Last major opportunity to participate in consolidation of the Australian retail ene
Slide 8: Invested $5 billion and committed $6 billion to APLNG
During the year Origin invested $5 billion in development and acquisitions and committed $6 billion to fund its share of APLNG FY2011 funding and capital management For personal use only Underlying NPAT & Free Cash Flow initiatives 700 1,400 • Raised $2.3 billion of equity via a pro rata Underlying
Slide 9: Progress in continued development of existing business
In addition to the NSW acquisition and the APLNG project, Origin has made significant progress in the continued development of its existing business … For personal use only Exploration and Production – Full year contributions from Kupe and an increased share in Otway – APLNG now supplying Darling Do
Slide 10: 2. Financial Review
For personal use only 2. Financial Review
Slide 11: 2011 Financial Highlights
2011 Financial Highlights Statutory Profit $186 million down 70% For personal use only EPS – Statutory 19.6 cps down 71% Revenue $10,344 million up 21% Underlying EBITDA $1,782 million up 32% Underlying EBIT $1,194 million up 33% Underlying Profit $673 million up 15% EPS – Underlying 71.0 cps up 10%
Slide 12: Reconciliation of Statutory and Underlying Profit
Income Statement – Reconciliation of Statutory and Underlying Profit ($ million) Jun 11 Jun 10 Change For personal use only Statutory NPAT 186 612 (426) Items Excluded from Underlying Profit(1)(2) Impairment of assets (160) (23) (137) Gain on dilution of Origin‟s interest in subsidiaries - 27 (27) I
Slide 13: Underlying Financial Performance
Underlying Financial Performance Underlying financial measures ($ million) Jun 11 Jun 10 Change For personal use only Revenue 10,344 8,534 21% EBITDA 1,782 1,346 32% EBIT 1,194 896 33% Net financing costs (143) (13) 1,000% Tax expense (316) (232) 36% Non-controlling interests(1) share of Underlying
Slide 14: Underlying EBITDA up 32% to $1,782 million
Underlying EBITDA up 32% to $1,782 million Segment ($ million) Jun 11 Jun 10 Change For personal use only Exploration & Production 325 250 30% Generation 327 182 80% Retail 785 568 38% Contact 345 346 0% Total 1,782 1,346 32% • Exploration & Production: Higher average commodity prices, a full year c
Slide 15: Underlying Depreciation and Amortisation increased 32%
Underlying Depreciation and Amortisation increased 32% due to investments in Exploration & Production and Generation … For personal use only Depreciation and Amortisation ($ million) Jun 11 Jun 10 Change Exploration & Production 221 170 30% Generation 115 44 161% Retail 75 65 15% Contact Energy 128
Slide 16: Underlying net financing costs increased
Underlying net financing costs increased, reflecting increased funding requirements associated with the NSW acquisition For personal use only ($ million) Jun 11 Jun 10 Interest revenue 36 113 Interest expense (179) (126) Underlying net financing costs (143) (13) Financing costs capitalised 153 156 W
Slide 17: Tax Reconciliation
Tax Reconciliation ($ million) Jun 11 Jun 10 For personal use only Underlying Profit before Tax 1,051 883 Prima facie tax on Underlying Profit at standard rates 323 268 Recognition of net tax benefits not previously brought to account (3) (23) Share of net profit of equity accounted investees (8) (6
Slide 18: OCAT Ratio increased to 13%
Origin‟s OCAT Ratio increased to 13% on a significantly expanded productive capital base For personal use only Operating Cash Flow • NSW-related non-cash liabilities ($ million) Jun 11 Jun 10 Change ($128m) represents the unwinding of non-cash provisions relating to Underlying EBITDA 1,782 1,346 436
Slide 19: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR (%) ($m) % Change ($m) % Change Jun 11 Jun 10 For personal use only Exploration & Production 457 102% 2,450 30% 18.6% 12.0% Generation 340 98% 2,555 111% 13.3% 14.2% Retail 508 33% 3,690 41% 13.8% 14.6% Contact Energy 277 -4% 3,41
Slide 20: Acquisition of NSW assets led to 64% capex increase
Acquisition of the NSW energy assets led to an increase in total capital expenditure of 64% Growth Capex For personal use only • $1,626 million, 2% lower than the prior year reflecting the completion of a number of projects including Origin Capital Expenditure (1) Darling Downs and Kupe, offset by i
Slide 21: Capital expenditure remains significant across segments
Capital expenditure remains significant across all business segments in the next financial year … For personal use only Acquisition and Growth Capital Expenditure by Segment The forward capital program includes: Growth Capital Expenditure by Segment • Origin share of APLNG Train 1 expenditure(1) 5,0
Slide 22: Fully franked final dividend declared
A fully franked final dividend of 25 cps has been declared, representing a payout ratio of 70% of Underlying Profit For personal use only Origin Dividend History • Ex-dividend date 29 August 2011 60 120% • Record Date 2 September 2011 50 100% • Payment Date 29 September 2011 • Dividend payout ratio
Slide 23: Funding and capital management initiatives
Origin has undertaken a number of funding and capital management initiatives to fund acquisitions and the ongoing capital expenditure of the business For personal use only Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin Debt and Bank Guarantee Maturity Profile as at 30 June
Slide 24: 3. Operational Review
For personal use only 3. Operational Review
Slide 25: Exploration & Production
For personal use only Exploration & Production
Slide 26: Exploration & Production Underlying EBITDA increased 30%
Exploration & Production Underlying EBITDA increased 30%, driven by increased contributions from Kupe, Otway, BassGas and APLNG … For personal use only Exploration and Production Segment • Underlying EBITDA up 30% to $325 million reflecting 800 400 increased production from Kupe, BassGas and Jun-11
Slide 27: Gas and liquids production both increased around 30%
Gas and liquids production both increased by around 30% over the prior year … For personal use only PJe Origin Annual Gas Production mmboe PJe Origin Annual Liquids Production mmboe 120 21 25 4.3 100 17 20 3.4 80 14 15 2.6 60 10 10 1.7 40 7 20 3 5 0.9 0 0 0 0.0 FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY0
Slide 28: Otway and BassGas share of production increased
Otway and BassGas share of production increased 53% and 38% respectively over the prior period Otway For personal use only • Share of production increased by 53% due to Origin‟s increased equity interest from 31% to 67% in March 2010, partially offset by production constraints • Origin assumed opera
Slide 29: Kupe delivered first full year of production
Kupe successfully delivered its first full year of production … Kupe For personal use only • Production increased 84% due to its first full year of production since its commencement in December 2009 • A successful plant integrity inspection was completed in the December Quarter 2010; a further statu
Slide 30: APLNG continued to increase production and reserves
APLNG continued to increase production and reserves(1) … PJ APLNG Gas Production 100 For personal use only 80 APLNG Dilution • APLNG production increased by 36% to 97 PJ as supply Origin Share commenced to Rio Tinto‟s Yarwun refinery and 60 Darling Downs Power Station 40 • Daily production capacity
Slide 31: APLNG achieved major milestones, culminating in FID
APLNG has achieved major milestones during the year … State and Federal approvals of Environmental Impact Statement For personal use only Binding agreement with Sinopec for 20-year 1-train LNG off-take agreement and Sinopec was issued 15% equity in APLNG Completion of front-end engineering and
Slide 32: Staged investment towards first gas in 2015
A staged investment enables continued progress towards first gas in 2015 … For personal use only Compelling Project Benefits • Leverages strong growth in Asian energy markets • Revenues linked to international oil prices • Significant contribution to Origin‟s earnings once operational • Prudent cont
Slide 33: APLNG commitment to communities and environment
APLNG continues its commitment to local communities and the environment to operate sustainably … For personal use only Supporting the Community • Social Impact Management Plan to identify community needs and direct investment • Boosting local skills via apprenticeships, scholarships and training • R
Slide 34: Origin's share of APLNG Underlying EBITDA up 40%
Origin‟s share of APLNG Underlying EBITDA increased by 40% to $63 million Origin’s 50% Total For personal use only ($ million) Jun 11 Jun 11 Jun 10 Operating Revenue 336 Operating Expenses (210) Underlying EBITDA 126 63 45 Depreciation & Amortisation Expense (77) Net financing costs (4) Income Tax E
Slide 35: 2P reserves added across Origin's interests
Origin added 968 PJe of 2P reserves across its interests, or 834 PJe including production, taking 2P reserves to 7,041 PJe … Origin 2P reserves(1)(2) movements: For personal use only Origin and APLNG 2P Reserves (1)(2) 2P Reserves Additions Production Net PJe mmboe (PJe) (revisions) Movement 14,000
Slide 36: Generation
For personal use only Generation
Slide 37: Generation delivered 80% increase in Underlying EBITDA
Generation delivered an 80% increase in Underlying EBITDA due to a full year contribution from Darling Downs Power Station … For personal use only Generation Segment 500 1,000 • Underlying EBITDA increased 80% or $145 million 450 900 to $327 million reflecting increased capacity Jun-11 Total Revenue
Slide 38: Generation portfolio capacity more than doubled
Over the year, Origin has more than doubled the capacity of its generation portfolio … For personal use only Peak Demand vs Generation Capacity(1)(2) NEM NEMMarket MarketShare Shareof of Generation Capacity(3),(4) Generation Capacity (3)(4) 10,000 Origin 9,000 TRUenergy 8,000 Peak Demand 2011 Mac. G
Slide 39: Darling Downs, Eraring and Shoalhaven operational flexibility
Darling Downs, Eraring and Shoalhaven power stations provide significant operational flexibility … For personal use only Darling Downs Power Station • Provides intermediate to baseload operation (540 MW) as well as peaking generation (90 MW) through its duct-firing capabilities • Generated over 2,80
Slide 40: Mortlake Power Station expected to commence operations
Mortlake Power Station is expected to commence operations in the first half of financial year 2012 Origin's Generation Portfolio & Development Options For personal use only 14,000 12,000 1,314 587 1,502 10,000 8,000 MW 3,670 6,000 550 4,000 5,310 2,000 0 Operating Under Thermal Wind - Wind - Wind -
Slide 41: Expanding diversified energy resource opportunities
Origin is expanding its portfolio of diversified energy resource opportunities both domestically and in growing markets offshore … Innamincka geothermal tenements - Australia For personal use only • Deeps JV (Origin 30% interest): the Joint Venture is working toward the drilling of the Habanero 4 we
Slide 42: Hydro opportunities such as Purari Hydro Power Project
… hydro power opportunities such as the significant resource potential of the Purari Hydro Power Project in PNG … Purari Hydro Power Project - PNG For personal use only • PNG Energy Developments Limited (50:50 JV between Origin and PNG Sustainable Development Program) is evaluating the hydro- electr
Slide 43: Retail
For personal use only Retail
Slide 44: NSW retail acquisition drove 38% Retail EBITDA increase
The acquisition of the Integral Energy and Country Energy retail businesses drove a 38% increase in Retail Underlying EBITDA For personal use only Retail Segment • Underlying EBITDA up 38% to $785 million driven by four 10,000 1000 months‟ contribution from the acquired NSW retail businesses 9,000 9
Slide 45: Retail business experienced significant growth
The Retail business experienced significant growth over the period … For personal use only Year ended Retail 30 June 2011 Electricity Natural Gas LPG Solutions Revenue ($m) 5,349 (+27%) 1,180 (+11%) 670 (+6%) 445 (+128%) Gross Profit ($m) 929 (+43%) 205 (+10%) 166 (+8%) 64 (+21%) Underlying EBITDA (
Slide 46: Effective management of the wholesale portfolio
Effective management of the wholesale portfolio enabled Origin to benefit from both low electricity prices and summer volatility For personal use only Low volatility outside of January Lower wholesale and February electricity prices • Wholesale electricity market characterised by low pool prices thr
Slide 47: Underlying EBIT growth of 41%
Underlying EBIT growth of 41% was driven by the NSW acquisition, increased tariffs, favourable wholesale market conditions, increased gas consumption and growth in solar installations … For personal use only Retail EBIT Movement - FY2010 to FY2011 750 700 82 650 ($ million) 600 93 550 24 1 8 711 500
Slide 48: NSW acquisition performed to expectations
The NSW acquisition performed to expectations in its first four months … For personal use only • Including four months‟ contribution from the NSW acquisition, the Underlying EBIT/Sales margin 2011 2011 Gas and Electricity NSW (incl. NSW 2010 moved from 8.8% to 8.7% acquisition* acquisition)* • Under
Slide 49: NSW acquisition increased retail customer base over 50%
The NSW acquisition led to an increase in Origin‟s retail customer base of over 50% … Electricity and Gas Customer Numbers Movement - FY2010 to FY2011 For personal use only 5,000 customer accounts ('000) 567 (604) 4,000 1,636 (51) 4,137 3,000 Net change in Origin controlled customer accounts 2,589 (
Slide 50: Average churn rate remained stable at 18.5%
Origin‟s average churn rate remained stable at 18.5% … Combined Gas and Electricity Churn Rates For personal use only Combined Combined 35% Electricity and Gas andNatural GasChurn Electricity Churn Rates Rates 35% Annualised 35% 30% NSW acquisition led to a decrease in % Churn: Monthly Data Annualis
Slide 51: Competitive activity in NSW likely to drive churn higher
Increased competitive market activity in NSW post the privatisation process is likely to continue, driving churn rates higher … For personal use only Queensland Electricity Churn 50% Market Churn • NSW market churn has increased from an 40% Origin Churn average of 12% in the eight months prior to 1
Slide 52: Retail Transformation progressing, customers migrated to SAP
Origin‟s Retail Transformation is progressing well, with 300,000 SA customers successfully migrated onto the new SAP billing platform … For personal use only • Origin‟s new SAP integrated billing and customer management system is now in production • 300,000 South Australian customers were migrated i
Slide 53: Developing new products and business lines
Origin continues to develop its new products and business lines to deliver solutions for customers … For personal use only Solar and Home Products E-Mobility/Electric Vehicle (EV) • Solar rooftop installations up from Charging 6,449 in FY2010 to 36,840 in FY2011 • First ChargePointTM installed in Au
Slide 54: Underlying EBIT for LPG business up 5%
Underlying EBIT for the LPG business up 5% to $26 million … For personal use only • Sales revenue increased 6% or $36 million, to $670 million, due to an increase in volumes, strategic price management and higher international benchmark LPG prices • Retail volumes increased 12 ktonnes, predominantly
Slide 55: Contact
For personal use only Contact
Slide 56: Contact Underlying EBITDA up 3% in NZD terms
Underlying EBITDA up 3% in NZD terms as enhanced portfolio flexibility and increased retail sales were mostly offset by low wholesale market prices and higher network, gas and carbon costs … For personal use only • Underlying EBITDA up 3%, or NZ$14 million, however Contact Segment declined by $1 mil
Slide 57: Contact better positioned with improved portfolio flexibility
Contact is now better positioned to manage hydrology outcomes with improved portfolio flexibility … Increased Portfolio Flexibility Generation Market Share Growth For personal use only • Ahuroa Gas Storage - Enables Contact to inject and extract gas as required • Stratford Peakers - New 200 MW gas-f
Slide 58: 4. Outlook
For personal use only 4. Outlook
Slide 59: Transformational year, $5 billion invested
A transformational year has seen Origin invest $5 billion in growing and developing its business • Origin‟s investments in development projects and acquisitions are expected to make initial or For personal use only increased contributions to Origin‟s earnings in FY2012: - A full year contribution fr
Slide 60: Actively managing and adding to debt facilities
Origin is actively managing and will appropriately add to its debt facilities … Origin Debt and Bank Guarantee Maturity Profile as at For personal use only 30 June 2011 Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin will fund contributions to its 2,500 ongoing business and
Slide 61: Opportunities to drive medium to longer term growth
Origin has established a set of opportunities that will drive growth in the medium to longer term … For personal use only • The first phase of the APLNG project, following a commitment of US$6 billion (Origin‟s 42.5% share) in July 2011 • A Final Investment Decision on APLNG Train 2 • Te Mihi geothe
Slide 62: Consistent growth through development and acquisition
Origin has delivered consistent growth through development and acquisition … For personal use only Fuel Generator Retailer Extensive thermal and Australasia’s largest Australasia’s largest renewable fuel position generation portfolio energy retailer • Strong domestic gas supply • Diversified across
Slide 63: 5. Appendix
62 | For personal use only 5. Appendix
Slide 64: Asset Impairments
Asset Impairments For personal use only ($ million) Pre-tax Post-tax Innamincka “Deeps” Geothermal JV 202 152 Geodynamics listed shares 12 8 Impairment of Assets 214 160 • Details regarding the Innamincka “Deeps” Geothermal JV and Geodynamics listed shares impairments were provided at HY2011 63 |
Slide 65: Changes in fair value of financial instruments
Changes in fair value of financial instruments Reconciliation of Statement of Financial Position and Income Statement items associated with financial instruments movements For personal use only ($ million) Jun 11 Change in net assets (222) Recognised in the Statement of Financial Position (21) Recog
Slide 66: Capital Expenditure by Segment
Capital Expenditure by Segment For personal use only ($ million) Jun 11 Jun 10 Stay-in-business 203 179 Growth Exploration & Production 324 294 Generation 464 764 Retail 497 241 Contact Energy 341 365 Total Capital Expenditure 1,829 1,843 Acquisitions (net of transaction costs) 3,125 1,184 Capex inc
Slide 67: Balance Sheet Capacity
Balance Sheet Capacity For personal use only Balance Sheet Capacity as at 30 June 2011(1) $ billion Cash 0.7 Adjusted Gross Debt (4.1) Adjusted Net Debt(2)(3) (3.4) Undrawn Committed Facilities(4) 3.2 Available Funding Capacity 3.9 66 | (1), (2), (3) and (4) See slide 70 for End Notes to this Slide
Slide 68: End Notes
End Notes Slide 5 (1) FY2010 Statutory EPS of 69.7 cps restated to 67.7 cps for the bonus element of the rights issue completed in April 2011 (2) FY2010 Underlying EPS of 66.6 cps restated to 64.8 cps for the bonus element of the rights issue completed in April 2011 For personal use only (3) Group O
Slide 69: End Notes
End Notes Slide 17 (1) Productive Capital is funds employed including 50% of APLNG and excluding capital work in progress (2) Group OCAT Ratio = (OCAT – interest tax shield)/Productive Capital For personal use only (3) Transitional Services Agreements (4) Power Purchase Agreements Slide 19 (1) Capit
Slide 70: End Notes
End Notes Slide 34 (1) The statements in this Presentation relating to reserves and resources for other assets have been compiled by Andrew Mayers, a full-time employee of Origin. Andrew Mayers is qualified in accordance with ASX listing rule 5.11 and has For personal use only consented to the form
Slide 71: End Notes
End Notes Slide 59 (1) Includes $300 million of NSW acquisition bridge finance which was repaid in July 2011; excludes Contact Energy (2) As at 30 June 2011 For personal use only Slide 60 (1) Guidance excludes the interest expense associated with the funding of APLNG, which is a development project
Slide 72: Thank you / Further Information
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 71 |