Origin Energy Limited · ASX:ORG
Origin Energy — FY2011 Earnings Presentation
71 slides from Origin Energy's earnings presentation, Aug 23, 2011
Slide 1: 2011 Full Year Results Announcement
2011 Full Year Results Announcement Financial Year Ended 30 June 2011 23 August 2011
Slide 2: 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 3: Outline
Outline 1. Performance Highlights 2. Financial Review 3. Operational Review 4. Outlook 5. Appendix 3|
Slide 4: 1. Performance Highlights
O origin 1. Performance Highlights
Slide 5: Underlying Profit increased 15% driven by new investments
Origin‟s Underlying Profit increased by 15% driven by significant contributions from new investments 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 Earnings per Share(2)
Slide 6: Origin secured two major opportunities during the year
During the year, Origin successfully secured two major opportunities … 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 energy market • Secured O
Slide 7: Origin 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 Underlying NPAT & Free Cash Flow initiatives 700 1,400 • Raised $2.3 billion of equity via a pro rata Underlying NPAT ($ million) 600 1
Slide 8: Progress in the 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 … Exploration and Production – Full year contributions from Kupe and an increased share in Otway – APLNG now supplying Darling Downs Power Station and
Slide 9: 2. Financial Review
O origin 2. Financial Review
Slide 10: 2011 Financial Highlights
2011 Financial Highlights Statutory Profit $186 million down 70% 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% Group OCAT $1,585 mil
Slide 11: Reconciliation of Statutory and Underlying Profit
Income Statement – Reconciliation of Statutory and Underlying Profit ($ million) Jun 11 Jun 10 Change 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) Increase (decrease) in
Slide 12: Underlying Financial Performance
Underlying Financial Performance Underlying financial measures ($ million) Jun 11 Jun 10 Change 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 Profit (62) (66) -6% U
Slide 13: Underlying EBITDA up 32% to $1,782 million
Underlying EBITDA up 32% to $1,782 million Segment ($ million) Jun 11 Jun 10 Change 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 contribution from Kupe
Slide 14: Underlying Depreciation and Amortisation increased 32%
Underlying Depreciation and Amortisation increased 32% due to investments in Exploration & Production and Generation … Depreciation and Amortisation ($ million) Jun 11 Jun 10 Change Exploration & Production 221 170 30% Generation 115 44 161% Retail 75 65 15% Contact Energy 128 129 -1% Total 539 408
Slide 15: Underlying net financing costs increased
Underlying net financing costs increased, reflecting increased funding requirements associated with the NSW acquisition ($ million) Jun 11 Jun 10 Interest revenue 36 113 Interest expense (179) (126) Underlying net financing costs (143) (13) Financing costs capitalised 153 156 Weighted average intere
Slide 16: Tax Reconciliation
Tax Reconciliation ($ million) Jun 11 Jun 10 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) Tax losses unrecogni
Slide 17: OCAT Ratio increased to 13%
Origin‟s OCAT Ratio increased to 13% on a significantly expanded productive capital base Operating Cash Flow • NSW-related non-cash liabilities ($ million) Jun 11 Jun 10 Change ($128m) represents the unwinding of non-cash provisions relating to Underlying EBITDA 1,782 1,346 436 the NSW acquisition,
Slide 18: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR (%) ($m) % Change ($m) % Change Jun 11 Jun 10 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% 3,412 0% 8.1% 8.4% • Explo
Slide 19: Acquisition led to 64% increase in total capital expenditure
Acquisition of the NSW energy assets led to an increase in total capital expenditure of 64% Growth Capex • $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 increased capex due 6,0
Slide 20: Capital expenditure remains significant across segments
Capital expenditure remains significant across all business segments in the next financial year … 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) 5,000 Origin's contributi
Slide 21: Dividend Payout Ratio
A fully franked final dividend of 25 cps has been declared, representing a payout ratio of 70% of Underlying Profit 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 of 70% of Dividend Pay
Slide 22: 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 Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 • $2.3 billion w
Slide 23: 3. Operational Review
O origin 3. Operational Review
Slide 24: Exploration & Production
O origin Exploration & Production
Slide 25: Exploration & Production Underlying EBITDA increased 30%
Exploration & Production Underlying EBITDA increased 30%, driven by increased contributions from Kupe, Otway, BassGas and APLNG … Exploration and Production Segment • Underlying EBITDA up 30% to $325 million reflecting 800 400 increased production from Kupe, BassGas and Jun-11 Jun-10 APLNG, and Orig
Slide 26: Gas and liquids production both increased by around 30%
Gas and liquids production both increased by around 30% over the prior year … 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 FY07 FY08 FY09 FY10 FY11
Slide 27: Otway and BassGas share of production increased
Otway and BassGas share of production increased 53% and 38% respectively over the prior period Otway • 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 operatorship from Woodside
Slide 28: Kupe first full year of production
Kupe successfully delivered its first full year of production … Kupe • 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 statutory inspection is sch
Slide 29: APLNG continued to increase production and reserves
APLNG continued to increase production and reserves(1) … PJ APLNG Gas Production 100 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 reached 320 TJ/day pri
Slide 30: APLNG achieved major milestones, culminating in FID
APLNG has achieved major milestones during the year … State and Federal approvals of Environmental Impact Statement 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 design studies Sign
Slide 31: Staged investment enables progress towards first gas in 2015
A staged investment enables continued progress towards first gas in 2015 … 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 contracting strategy with
Slide 32: APLNG commitment to local communities and environment
APLNG continues its commitment to local communities and the environment to operate sustainably … Supporting the Community • Social Impact Management Plan to identify community needs and direct investment • Boosting local skills via apprenticeships, scholarships and training • Regional Community Cons
Slide 33: Origin's share of APLNG Underlying EBITDA up 40%
Origin‟s share of APLNG Underlying EBITDA increased by 40% to $63 million Origin’s 50% Total ($ 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 Expense (3) Underlying
Slide 34: Origin added 968 PJe of 2P reserves
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: Origin and APLNG 2P Reserves (1)(2) 2P Reserves Additions Production Net PJe mmboe (PJe) (revisions) Movement 14,000 2,410 APLNG 864 (48) 8
Slide 35: Generation
O origin Generation
Slide 36: 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 … Generation Segment 500 1,000 • Underlying EBITDA increased 80% or $145 million 450 900 to $327 million reflecting increased capacity Jun-11 Total Revenue & Underlying EBITDA (
Slide 37: Origin more than doubled generation portfolio capacity
Over the year, Origin has more than doubled the capacity of its generation portfolio … 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. Generation (customer as
Slide 38: Darling Downs, Eraring and Shoalhaven operational flexibility
Darling Downs, Eraring and Shoalhaven power stations provide significant operational flexibility … 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 2,800 GWh over the year at
Slide 39: Mortlake Power Station expected to commence in first half FY2012
Mortlake Power Station is expected to commence operations in the first half of financial year 2012 Origin's Generation Portfolio & Development Options 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 - Aerial shot of Mortlak
Slide 40: 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 • Deeps JV (Origin 30% interest): the Joint Venture is working toward the drilling of the Habanero 4 well during FY2012 to co
Slide 41: Purari Hydro Power Project and Transform Solar
… hydro power opportunities such as the significant resource potential of the Purari Hydro Power Project in PNG … Purari Hydro Power Project - PNG • PNG Energy Developments Limited (50:50 JV between Origin and PNG Sustainable Development Program) is evaluating the hydro- electric potential of the Pu
Slide 42: Retail
O origin Retail
Slide 43: Retail Underlying EBITDA up 38%
The acquisition of the Integral Energy and Country Energy retail businesses drove a 38% increase in Retail Underlying EBITDA Retail Segment • Underlying EBITDA up 38% to $785 million driven by four 10,000 1000 months‟ contribution from the acquired NSW retail businesses 9,000 900 Jun-11 • The Retail
Slide 44: Retail business experienced significant growth
The Retail business experienced significant growth over the period … Year ended Retail 30 June 2011 Electricity Natural Gas LPG Solutions Revenue ($m) 5,349 (+27%) 1,180 (+11%) 670 (+6%) 445 (+128%) Gross Profit ($m) 929 (+43%) 205 (+10%) 166 (+8%) 64 (+21%) Underlying EBITDA ($m) 710 (+42%) 50 (+0%
Slide 45: Effective management of wholesale portfolio
Effective management of the wholesale portfolio enabled Origin to benefit from both low electricity prices and summer volatility Low volatility outside of January Lower wholesale and February electricity prices • Wholesale electricity market characterised by low pool prices throughout the year, comb
Slide 46: 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 … Retail EBIT Movement - FY2010 to FY2011 750 700 82 650 ($ million) 600 93 550 24 1 8 711 500 450 503 400 FY2010 EB
Slide 47: NSW acquisition performed to expectations
The NSW acquisition performed to expectations in its first four months … • 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)* • Underlying EBIT/Sales margi
Slide 48: NSW acquisition increased 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 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 (37) 2,000 Net IE & CE
Slide 49: Average churn rate remained stable at 18.5%
Origin‟s average churn rate remained stable at 18.5% … Combined Gas and Electricity Churn Rates 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 Annualised Annualised 30% 30%
Slide 50: 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 … 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 30% March 2011, to 14%
Slide 51: Retail Transformation progressing, SA customers migrated to SAP
Origin‟s Retail Transformation is progressing well, with 300,000 SA customers successfully migrated onto the new SAP billing platform … • Origin‟s new SAP integrated billing and customer management system is now in production • 300,000 South Australian customers were migrated into SAP in June, and a
Slide 52: Developing new products and business lines
Origin continues to develop its new products and business lines to deliver solutions for customers … 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 Australia • Since 2009,
Slide 53: Underlying EBIT for LPG business up 5%
Underlying EBIT for the LPG business up 5% to $26 million … • 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 in the Australian res
Slide 54: Contact
origin Contact
Slide 55: 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 … • Underlying EBITDA up 3%, or NZ$14 million, however Contact Segment declined by $1 million in terms of AUD t
Slide 56: Contact better positioned to manage hydrology
Contact is now better positioned to manage hydrology outcomes with improved portfolio flexibility … Increased Portfolio Flexibility Generation Market Share Growth • Ahuroa Gas Storage - Enables Contact to inject and extract gas as required • Stratford Peakers - New 200 MW gas-fired peaking power sta
Slide 57: 4. Outlook
O origin 4. Outlook
Slide 58: A transformational year; FY2012 earnings expectations
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 increased contributions to Origin‟s earnings in FY2012: - A full year contribution from the Integral Energy
Slide 59: 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 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 APLNG from a range of
Slide 60: Opportunities driving medium to longer term growth
Origin has established a set of opportunities that will drive growth in the medium to longer term … • The first phase of the APLNG project, following a commitment of US$6 billion (Origin‟s 42.5% share) in July 2011 • A Final Investment Decision on APLNG Train 2 • Te Mihi geothermal project via its s
Slide 61: Consistent growth through development and acquisition
Origin has delivered consistent growth through development and acquisition … Fuel Generator Retailer Extensive thermal and Australasia’s largest Australasia’s largest renewable fuel position generation portfolio energy retailer • Strong domestic gas supply • Diversified across different • Large, inc
Slide 62: 5. Appendix
O origin 5. Appendix 62 |
Slide 63: Asset Impairments
Asset Impairments ($ 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 64: 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 ($ million) Jun 11 Change in net assets (222) Recognised in the Statement of Financial Position (21) Recognised in the Equity He
Slide 65: Capital Expenditure by Segment
Capital Expenditure by Segment ($ 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 including Acquisitions 4,
Slide 66: Balance Sheet Capacity
Balance Sheet Capacity 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 66
Slide 67: 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 (3) Group OCAT means operating ca
Slide 68: 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 (3) Transitional Services Agreements (4) Power Purchase Agreements Slide 19 (1) Capital expenditure is base
Slide 69: 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 consented to the form and context in which t
Slide 70: 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 Slide 60 (1) Guidance excludes the interest expense associated with the funding of APLNG, which is a development project Slide 66 (1) All amoun
Slide 71: Thank you
Thank you Further Information Angus Guthrie Group Manager, Investor Relations Email: [email protected] Office: +61 2 8345 5558 Mobile: + 61 417 864 255 Website www.originenergy.com.au 71 |