Slide 1: Results for the year ended 30 June 2008 (ASX cover note)
For personal use only To Company Announcements Office Company Australian Stock Exchange Limited Date 28 August 2008 From Bill Hundy Pages 53 Subject RESULTS FOR THE YEAR ENDED 30 JUNE 2008 Please find attached a presentation relating to Origin Energy’s Results for the full-year ended 30 June 2008. R
Slide 2: Final Results Announcement
For personal use only Final Results Announcement Full-year ended 30 June 2008 28 August 2008
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 • Performance Highlights • Financial Review • Operating Review • Outlook 3
Slide 5: Performance Highlights
For personal use only Performance Highlights
Slide 6: A year of significant development for Origin
This has been a year of significant development for Origin with progress on a number of major projects and initiatives… For personal use only • Significant upgrade in Origin’s gas reserves position • Commenced the CSG monetisation process to seek proposals to accelerate the development of Origin’s C
Slide 7: Deepened integration of business through gas reserves and generation
Origin has deepened the integration of its business through a substantial increase in gas reserves and generation under development For personal use only Fuel Retailer Generator Largest holder of proved and Largest owner and developer A leading wholesaler and probable gas reserves in of gas fired el
Slide 8: Very strong second half performance in a challenging year
This has resulted in a very strong second half performance in a challenging year in wholesale gas and electricity markets… Revenue $8,275 million up 29% For personal use only EBITDAF (1) (2) $1,309 million up 12% Statutory Profit $517 million up 13% Underlying Profit $443 million up 20% EPS – Statut
Slide 9: Track record of underlying earnings growth
Origin’s results continue an impressive track record of underlying earnings growth Revenue EBITDAF For personal use only 9,000 1,500 Compound annual growth rate: 26% Compound annual growth rate: 23% 7,500 1,200 6,000 900 $millions $millions 4,500 600 3,000 300 1,500 0 0 2001 2002 2003 2004 2005 2006
Slide 10: Financial Review
For personal use only Financial Review
Slide 11: Profit & Loss - Statutory
Profit & Loss - Statutory ($ million) Jun 08 Jun 07 % change For personal use only Revenue 8,275 6,436 29 EBITDAF 1,309 1,165 12 EBIT 1,090 943 16 Net financing costs (1) 220 215 2 Tax expense 235 157 50 Minority Interests 105 135 (22) NPAT – Statutory 517 457 13 ROE 13.4% 12.7% EPS – Statutory 59.0
Slide 12: Profit & Loss - Underlying
Profit & Loss - Underlying ($ million) Jun 08 Jun 07 % change For personal use only NPAT – Statutory 517 457 13 Significant items 74 87 (15) NPAT – Underlying 443 370 20 Adjusted shareholders equity 4,972 4,683 6 Underlying ROE 11.5% 10.3% EPS – Underlying 50.6 cps 44.3 cps 14 • Significant items in
Slide 13: Movements in fair value of financial instruments
Movements in fair value of financial instruments Reconciliation of Balance Sheet and Profit and Loss items associated with For personal use only financial instruments movements ($ million) Change in net assets (2,985) Recognised in the Balance Sheet 2,895 Recognised in the Equity Hedge Reserve (post
Slide 14: EBITDAF of $1,309m up 12% on strong Retail performance
EBITDAF of $1,309m up 12% on strong Retail performance Segments ($ million) Jun 08 Jun 07 % change For personal use only Exploration & Production 264 254 4 Generation 56 79 (29) Retail 499 355 41 Contact 490 477 3 Networks - 30 - Adjustment for discontinued business+ - (30) - Total 1,309 1,165 12 No
Slide 15: Depreciation & Amortisation
Depreciation & Amortisation For personal use only ($ million) Jun 08 Jun 07 Generation property, plant and equipment 123 124 Other buildings, plant and equipment 140 130 Amortisation in producing areas (1) 78 70 Other 4 6 Total 345 330 14 (1) Amortisation of exploration and evaluation costs in produ
Slide 16: Interest
Interest ($ million) Jun 08 Jun 07 For personal use only Net financing costs 220 215 Unwinding of discount on provisions (18) (15) Net interest expense 202 200 Capitalised interest 55 30 Net interest expense + capitalised interest 257 230 Net interest cover (EBIT) (1) 4.2 4.1 Weighted average intere
Slide 17: Tax Reconciliation
Tax Reconciliation ($ million) Jun 08 Jun 07 For personal use only Profit before tax 856 748 Prima facie tax 265 233 less recognition of change in net loss position (3) (13) less over provision in prior period (20) (9) less reduction in tax rates New Zealand (33% to 30%) - (57) less Net Gain on disp
Slide 18: Growth capex rose as CSG and Kupe spending increased
Growth capex rose as spending on CSG developments and the Kupe project increased, and new Generation projects were initiated… For personal use only ($ million) Jun 08 Jun 07 Stay-in-business 178 179 Growth Exploration & Production 714 401 Retail 72 39 Generation 484 82 Networks - - Contact 128 58 To
Slide 19: Cash flow return from the business segments
Cash flow return from the business segments is measured pre-tax and targets 14.2% over a full year For personal use only Av. Funds Operating OCFR (%)+ Employed Cash flow ($m) ($m) Jun 08 Jun 07 Exploration & Production 1,104 241 21.8 25.7 Generation 258 58 22.3 35.8 Retail 2,408 336 14.0 11.4 Contac
Slide 20: Operating cash flow after tax increased by 7%
Operating cash flow after tax increased by 7% while funds employed increased by 19%. OCAT Ratio remains above target of 9.4% ($ million) Jun 08 Jun 07 For personal use only EBITDAF 1,309 1,165 Discontinued Networks business - 30 Change in working capital (125) (36) Stay-in-business capex(1) (152) (1
Slide 21: Balance Sheet and Gearing
Balance Sheet and Gearing ($ million) Jun 08 Jun 07 For personal use only Net debt 3,283 2,958 Add back fair value adjustment (m-t-m) 325 431 Adjusted net debt 3,608 3,389 Total equity 5,176 6,969 Equity adjustment to remove fair value reserves 204 2,286 Adjusted total equity 4,972 4,683 Net debt to
Slide 22: Final fully franked dividend declared, full year 25 cps
A final fully franked dividend of 13 cps has been declared, bringing the full year dividend to 25 cps fully franked For personal use only Dividends - cents per share Franking 100% 100% 40% 100% 100% 100% 100% 100% Payment and DRP 25 • Ex-dividend date 3 September 2008 20 • Date of record 9 September
Slide 23: Operating Review
For personal use only Operating Review
Slide 24: Exploration & Production: Record Production, Sales and Revenue
Exploration & Production: Record Production, Sales and Revenue underpin growth in earnings… For personal use only 600 800 Jun-08 • EBITDAF of $264m, up 4% as new projects Total Revenue & EBITDAF ($m) 500 Jun-07 more than offset mature basin decline 600 • Total 2P reserves up 66% to 5,770 PJ 400 CAPE
Slide 25: Origin's CSG reserves have grown significantly in 2008
Origin’s CSG reserves have grown significantly in 2008… Origin's CSG Origin’s CSG Reserves Reserves and and Resources Resources as as at at 30 30June June 2008 20,000 For personal use only 17,947 PJ 16,000 15,869 PJ 12,000 PJ 10,138 PJ 8,000 4,000 4,751 PJ 1,375 PJ 0 Reserves Contingent Prospective
Slide 26: Increasing CSG production to meet contracted requirements
Origin has been increasing CSG production to meet contracted requirements… For personal use only 45 • Origin’s equity share of CSG production 40 reached 131 TJ/d by the year ending 30 June 2008, reinforcing the Company’s position as the 35 largest CSG producer in Australia Annual Production (PJ) 30
Slide 27: BassGas and Otway Gas Project
After addressing a number of capacity constraints at BassGas, 10.5 PJe was produced over the financial year including 320 kbbls of condensate and 19 Ktonnes of LPG For personal use only BassGas Project (42.5%) Otway Gas Project (30.75%) • The Yolla 3 well was shut during the first • Production facil
Slide 28: Investments in new production areas offset mature basin decline
Over the last decade Origin has made a series of investments in new production areas to offset the anticipated decline of the Cooper Basin and other mature producing areas… For personal use only PJe 50 Origin Gas Production by Half Year Gas 45 • The Cooper Basin is in decline as contract 40 volumes
Slide 29: Liquids production by half year
The rate of decline of oil production from the Perth Basin was partially offset with increased production of condensate and LPG as the BassGas and Otway projects commenced production For personal use only PJe 10 Origin Liquids Production by Half Year Liquids 9 • Perth Basin oil production continued
Slide 30: New Zealand: Swift acquisition and Kupe Gas Project
In New Zealand, completion of the Swift acquisition will add to earnings… Swift Acquisition For personal use only • Completed acquisition of a number of producing assets and exploration permits in the Taranaki Basin • Joint arrangement with Contact to develop an underground gas storage facility Kupe
Slide 31: Generation: focused on high plant availability
Generation: focused on high plant availability to deliver maximum value capture opportunity to the Retail business… For personal use only 120 600 Jun-08 Jun-07 • EBITDAF of $56m, down 29% from $79m* 100 500 primarily reflecting the transition of Mt Total Revenue, EBITDAF ($m) Stuart to an internally
Slide 32: Mt Stuart transitioned to an internally contracted plant
Mt Stuart transitioned from an externally to an internally contracted plant For personal use only • Mt Stuart PPA with Enertrade terminated in Dec 06 for a fee of $19.6 million (recognised as a Significant Item) • Under PPA, Enertrade was required to take a minimum output. Failure to take resulted i
Slide 33: Existing and near term developments will add value
Origin’s existing and near term developments will continue to add value… Capacity Origin’s Generation Plants State Operation Status For personal use only (MW) Externally Contracted* Worsley WA 60 Cogen Operational Bulwer Island QLD 16 Cogen Operational Osborne SA 90 Cogen Operational Internally Cont
Slide 34: Committed to build additional 2,096 MW of generation
Origin has committed to build an additional 2,096 MW of power generation, quadrupling generation capacity by 2010… MW Origin's Generation Capacity For personal use only 6,000 Darling Downs Power Station 560 • 704 MW of Operating capacity 5,000 • 1,850 MW of Committed capacity under 1,450 constructio
Slide 35: Developing renewable energy options
In addition to the expansion of Origin’s portfolio of gas-fired power projects, the Company is also developing a number of renewable energy options For personal use only Geothermal • Origin acquired a 30% joint-venture interest in Geodynamics main project in the Cooper Basin • Geodynamics have drill
Slide 36: Retail: Successful integration of Sun Retail
Retail: Successful integration of Sun Retail and effective management of wholesale position… For personal use only 8,000 550 • EBITDAF of $499m, up 41%, mainly due to Sun Retail acquisition 500 Jun-08 7,000 • Prudent gas and electricity purchasing Jun-07 450 strategies coupled with tariff increases,
Slide 37: Sun Retail has boosted scale of the Retail business
Sun Retail has boosted the scale of the Retail business with product revenue up $1.4 billion… For personal use only Performance Metrics and % Natural Gas Electricity LPG change from June 07 (1) Product Revenue ($m) 928 +5% 3,781 +53% 613 +6% Gross Profit ($m) 132 -2% 644 +50% 121 -14% EBITDAF ($m) 4
Slide 38: Forward electricity prices have stabilised
Forward electricity prices have stabilised and returned to a rising forward price compared with the steep backwardation of June and December 2007 For personal use only $160 $150 Victorian Spot and Forward Contract Electricity Prices $140 $130 Forward Curve Forward Curve $120 Jun-07 Dec 07 $110 $100
Slide 39: Volatility increased during second half
Volatility increased during the second half of the year and average prices decreased… For personal use only NEM Average daily price maximum (Vic, SA, NSW, Qld) 1,000 NEM Pool Prices ($ per Megawatt - logarithmic scale) Legend Time period Average price (capped at $300) Days average excedes $300 * 300
Slide 40: Victorian gas market experienced higher wholesale gas costs
The gas market in Victoria experienced higher wholesale gas costs, accentuated by unexpected delays in the Otway Gas Project commissioning after construction was complete… For personal use only (for period 01 Jul 2005 to 30 Jun 2007) Daily weighted average spot market price (A$/GJ) 45 Victorian Gas
Slide 41: Churn rates remain high; customer numbers
Churn rates remain high. Origin acquired over 482,000 new gas and electricity accounts for a net decline of 22,000 accounts For personal use only Mass Market Churn: Completed & Pending June 2008 Origin Customer Numbers 45% VIC Elec Vic Gas Natural QLD Elec QLD Gas (000’s) Electricity Total 40% SA El
Slide 42: Gross margin and EBITDAF per customer improved
Gross margin and EBITDAF per customer both improved on prior year despite increased energy costs For personal use only Gas & Electricity Customers Jun 08 Jun 07 Year end customer numbers (’000) 2,653 2,675 EBITDAF / Sales 9.9 % 9.2 % EBITF / Sales 9.2 % 8.4 % $ Per Customer: Gross Margin / Customer
Slide 43: Leadership position in green energy sales
Origin has clearly established its leadership position in green energy sales… A leading market position* and leading market products For personal use only Origin 30% • At 30 June 2008, Origin had more than 423,000 • Origin launched its Carbon Pollution Reduction + green energy customers (up from 270
Slide 44: LPG purchasing costs increased by 25%
LPG purchasing costs increased by 25% or $225/tonne compared with last year… For personal use only Average Australian Dollar Propane Price 1200 2007/08 A$840 • Underlying sales volumes 1000 2006/07 decreased by 5% due to higher A$673 LPG costs and unfavourable 800 weather conditions • Customer accou
Slide 45: Contact Energy: Higher retail volumes, price and generation
Contact Energy: Higher retail volumes, price and increased generation… For personal use only 2,500 600 • EBITDAF of $490 million, 3% higher Jun-08 • Significant operating factors that Jun-07 contributed were: 500 2,000 total wholesale electricity revenue EBITDAF & Capex ($m) increased by 82% howev
Slide 46: Outlook
For personal use only Outlook
Slide 47: Projects expected to contribute in the coming year
In the coming year a number of the projects Origin has been developing are expected to make initial, or significantly For personal use only increased, contributions to financial performance • A full year contribution from the Otway Gas Project • A full year contribution from the oil and gas producti
Slide 48: Issues expected to be resolved or progressed
During the year it is also expected that a number of issues that could create substantial opportunities for Origin will either be resolved or progressed substantially For personal use only • Completion of the CSG monetisation process which will allow Origin to determine whether direct participation
Slide 49: Major projects contributing after current financial year
Origin will continue to progress the development of several major projects which are expected to make contributions following the end of the current financial year For personal use only • The Kupe Gas Project in New Zealand which is targeting to commence gas production in mid 2009 • Continued develo
Slide 50: For personal use only
For personal use only
Slide 51: For more information
For more information For personal use only 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 follow the p
Slide 52: Appendix
For personal use only Appendix
Slide 53: Underlying Profit $443 million, 20% higher than prior year
Underlying Profit $443 million, 20% higher than the prior year Jun 08 Jun 07 After For personal use only After Tax Tax and Change NPAT and OEI NPAT ($ million) OEI (%) Impact Impact Statutory Profit 517 457 13 Significant items Asset Sales - Networks 145 76 – Mokai geothermal assets 9 - Changes in F