Origin Energy Limited · ASX:ORG
Origin Energy — FY2001 Earnings Presentation
40 slides from Origin Energy's earnings presentation, August 2001
Slide 1: Results Announcement Financial Year 2001
Results Announcement Financial Year 2001
Slide 2: Outline
Outline • Performance Highlights • Financial Review • Operational Review • Outlook Page 2
Slide 3: Introduction
Introduction • All figures relate to the continuing Origin Energy businesses compared to proforma results for the previous year • Discontinued activities of Boral’s building and construction materials businesses are not part of the current result • Activities relating to Boral building and construct
Slide 4: Performance Highlights
Performance Highlights 27 August 2001
Slide 5: Performance Highlights
Performance Highlights • PAT up 30% to $98 million • Powercor acquisition • EBITDA up 12% to $305.2 • Continued growth of million generation projects • Operating cash flow return • Peat coal seam gas project of 13.0% brought online • Growth capital including • Significant additions to acquisitions o
Slide 6: Financial Review
Financial Review
Slide 7: Profit & Loss (Origin continuing businesses)
Profit & Loss (Origin continuing businesses) 2000/01 1999/00 % change ($m) ($m) Revenue 1,687.4 1,529.8 + 10% EBITDA 305.2 271.4 + 12% EBIT 173.3 131.1 + 32% Interest 31.7 29.9 + 6% Tax 38.0 22.6 + 68% PAT before abnormals 98.0 75.3 + 30% Earnings per share (cents) 17.1 13.3 + 29% Return on equity (
Slide 8: Cashflow
Cashflow 2000/01 1999/00 ($m) ($m) EBITDA 305 271 Change in Working Capital 39 (26) Stay in business CAPEX (83) (69) Tax/Subvention Payments (24) (36) OCAT 237 140 Interest (Net) (31) (33) Free Cashflow 206 107 OCAT Ratio 13.0% 7.4% Page 8
Slide 9: Capital Expenditure
Capital Expenditure 2000/01 ($m) Stay in business 83 Exploration & Production 60 Generation 39 Retail Systems 13 Powercor Retail business 315 Bulwer Island 21 Other 5 Total capital expenditure 536 Disposals 14 Capital expenditure net of disposals 522 Page 9
Slide 10: Tax reconciliation
Tax reconciliation 2000/01 1999/00 ($m) ($m) Profit before tax 141.6 101.1 Prima facie tax (@34%, 36%) 48.1 36.4 less Stratus benefit (11.3) (16.2) add non-deductible amortisation 8.4 10.9 less other permanent differences (7.2) (8.5) equals Tax expense 38.0 22.6 Tax paid 5.3 1.3 Envestra subvention
Slide 11: Funding
Funding 2000/01 1999/00 Net debt as at 30 June $727 m $431 m Net debt to equity 55%* 35% Net interest expense $31.7 m $29.9 m Net interest cover 5.5 times 4.4 times Average interest rate 6.7% 7.1% * July share placement raised $125 million and reduced net debt to equity ratio to 40% at 31 July 2001.
Slide 12: Hedging
Hedging 2001/02 2000/01 Oil price % hedged 46% 55% Average hedge price > US$27 > US$ 25 USD % hedged 68% 57% Average hedge price <56.5 US cents < 60 US cents Page 12
Slide 13: Capital Management and Distributions
Capital Management and Distributions • Share buy-back in lieu of interim dividend • BBB+ Credit Rating • $125 m institutional placement • Share Purchase Plan • 4 cent fully franked dividend Page 13
Slide 14: EBITDA up 12.5% with strong contributions from Production, Retail and Generation
EBITDA up 12.5% with strong contributions from Production, Retail and Generation 2000/01 1999/00 % change ($m) ($m) Exploration & Production 201.3 185.5 7.9% Retail & Trading 66.5 58.4 13.9% Generation 25.0 16.1 54.8% Networks 21.9 22.6 (2.8%) Corporate (9.5) (12.2) 22.5% Total 305.2 271.4 12.5% Pag
Slide 15: EBIT of $173.3 million is up 32.2% on the prior year
EBIT of $173.3 million is up 32.2% on the prior year 2000/01 1999/00 % change ($m) ($m) Exploration & Production 122.1 96.9 26.0% Retail & Trading 23.7 16.5 43.4% Generation 17.2 9.6 78.4% Networks 19.9 20.9 (4.9%) Corporate (9.6) (12.9) 25.7% Total 173.3 131.1 32.2% Relative increase in EBIT larger
Slide 16: One-off Items
One-off Items 2000/01 ($m) Reassessment of Magellan Share value 3.5 Reduction in Newstead Rehabilitation 6.5 Insurance claim provision (6.2) Write down of cogeneration project (2.2) carrying values LPG debtors review (1.4) Net of above items 0.2 Page 16
Slide 17: Operating Review
Operating Review
Slide 18: Upstream continues to provide solid cashflow
Upstream continues to provide solid cashflow…. Assets EBITDA OCFR ($m) ($m) (%) Exploration & Production 793 201 31% Retail & Trading 1,482 66 3% Generation 175 25 30% Networks 66 22 19% Corporate 170 (9) n/a Assets EBITDA OCAT ($m) ($m) Ratio Total 2,686 305 13.0% ….while Generation is growing stro
Slide 19: Exploration & Production: EBITDA up 7.9% to $201 million
Exploration & Production: EBITDA up 7.9% to $201 million 300 140 • Higher revenue on steady 2000/01 total volumes, but mix of 250 1999/00 120 contributing assets changed. Revenue & EBITDA ($m) 100 200 • Oil price achieved increased 33% taking account of hedges Capex ($m) 80 150 • D&A charges reduced
Slide 20: Average oil price received up significantly to A$44
The average oil price received was up significantly to A$44 (inclusive of oil price and currency hedges) 300 50 Revenue 45 Average oil price received (A$) 250 40 Av Oil Price 35 200 Revenue ($m) 30 150 25 20 100 15 10 50 5 0 0 1998/99 1999/00 2000/01 Page 20
Slide 21: Annual Sales Volumes (PJe)
Sale of the Port Campbell fields masked production growth in other areas • Sales volumes increase by 90 nearly 10PJe in aggregate from Annual Sales Volumes (PJe) • Beharra Springs 85 • Katnook/Ladbroke Grove • Tubridgi 87.1 86.8 • Surat Basin 80 • Coal seam gas fields • Sale of Port Campbell reservo
Slide 22: A new category (Scope for Recovery) captures potentially commercial discoveries
A new category (Scope for Recovery) captures potentially commercial discoveries requiring appraisal (PJe) Origin Energy Reserves 1/7/00 1024 + Exploration / Appraisal 35 + Acquisitions / Divestments 11 + Revisions / adjustments (14) - Production 81 Origin Energy 2P Reserves 30/6/01 975 + Scope for R
Slide 23: Retail & Trading: EBITDA increase by 14% to $66.5 million
Retail & Trading: EBITDA increase by 14% to $66.5 million 1400 400 2000/01 • Natural gas volumes rose 11% 1200 350 on the back of increased sales 1999/00 300 to industrial markets and Revenue & EBITDA ($m) 1000 colder weather (but still mild 250 by historical standards) Capex ($m) 800 200 • LPG volu
Slide 24: Retail business: Revenues in excess of $1 billion
Retail business: Revenues in excess of $1 billion, diversified fuel base, and critical scale economies Natural Electricity LPG Total Gas * ** Revenue (A$M) 755 117 469 1,340 Sales – (PJ) 110 110 Sales – (TWh) 2.1 2.1 Sales – (k tonnes) 549 549 Total Sales (PJe) 110 7.6 27.0 144.6 Customer Numbers 96
Slide 25: Powercor's electricity retail franchise covers western Victoria
Powercor’s electricity retail franchise covers western Victoria with 582,000 customers… …and combined with the gas franchise provides access to 50% of Victoria’s energy market Page 25
Slide 26: Degree Day Variation
Warmer than average weather conditions in primary markets again depressed energy sales Cumulative Degree Day Variation (from 10 year average) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 0 -20 -40 Degree Day Variation -60 -80 -100 -120 -140 Melbourne -160 Adelaide -180 Actual 10 yr average Melbou
Slide 27: LPG margins maintained despite 37% increase in supply cost
LPG margins have been maintained despite a 37% increase in LPG cost of supply compared with last year 800 Average international price of Average international price of LPG in FY 01 was A$574 LPG in FY 00 was A$418 600 Propane Price ($A) 400 200 0 9 0 00 01 0 1 99 00 0 1 99 00 l-9 l-0 -0 -0 -0 -0 n-
Slide 28: Generation: EBITDA increased by 55% to $25.0m
Generation: EBITDA increased by 55% to $25.0m 40 80 • BP Bulwer Island cogeneration 2000/01 commenced commercial 35 70 1999/00 operations in January 2001 30 60 • Ladbroke Grove operated Revenue & EBITDA ($m) 25 50 profitably through the year and Capex ($m) switch to base load operation due 20 40 to
Slide 29: The Generation business has developed a balanced portfolio of assets
The Generation business has developed a balanced portfolio of assets that continue to perform strongly Generation Asset Generation Type Capacity Av. Price (net, Mwh) ** Utilisation ($/MWh) BHP Whyalla 66,815 C Baseload 28.47 Bridgestone Salisbury 10,852 C Baseload 92.48 Ladbroke Grove 649,400* M 82%
Slide 30: Recent investments in Generation will reach earnings potential through 2001 & 2002
Recent investments in Generation will progressively reach earnings potential through 2001 & 2002 500 450 BP: 16MW 400 Quarantine Power Station: 95 MW merchant* Equity Interest (MW) 350 Worsley Cogen: 60 MW contracted** 300 Bulwer Island Cogen: 16 MW contracted 250 Ladbroke Grove 2: 41 MW merchant 20
Slide 31: Networks: EBITDA decreased slightly to $21.9 million
Networks: EBITDA decreased slightly to $21.9 million. Business remains stable and is seeking new growth opportunities. 30 0.6 2000/01 • 23,000 new natural gas 1999/00 consumers connected to 25 0.5 networks under management Revenue & EBITDA ($m) 20 0.4 • 220 km of new mains laid, 230 km of existing m
Slide 32: Outlook
Outlook
Slide 33: Business Development
Business Development Projects contributing for part of 2000/01 Projects initiated but not yet contributing BP Bulwer Island cogeneration: 32 MW Peat coal seam gas project Worsley cogen: 120MW Quarantine power station: 95 MW Integration of Powercor acquisition SEA Gas pipeline Commercialisation of Ba
Slide 34: BassGas project and Otway discoveries will add to net production
The BassGas project and the offshore Otway discoveries will add significantly to Origin’s net production 120 • Base case production likely to decline as fields and 100 provinces mature • BassGas project delivers moderate gas production Annual Production (PJe) 80 and high liquids yields (LPG & conden
Slide 35: Timetable for full retail contestability is constantly changing
The timetable for full retail contestability is constantly changing and will impact our operations. State Natural Gas Electricity Victoria Originally Sept 01 – all Jan 02 – all customers customers. Now likely to be delayed past July 2002 (Oct 2002?) South Delayed to Jul 02 at Although contestable Au
Slide 36: Forward projections of electricity prices across the states
Forward projections of electricity prices demonstrate different conditions across the states Forecast av. Electricity prices 50 • Relatively higher prices are predicted in Victoria and South Australia. (SA prices determined by internal ($/Mwh) 40 modelling – not published by AFMA) • Origin has compe
Slide 37: Investments and projects will progressively contribute to profit
These investments and projects will progressively contribute to profit over the coming years 160 BP: 16MW Otway BassGas Projects SEA Gas Pipeline Natural gas retailing Agency Fee Quarantine power station Worsley Cogeneration Powercor Acquisition 0 0 2 0 2 0 3 0 3 0 4 0 4 0 5 0 5 0 1/ 0 1/ 0 2/ 0 2/
Slide 38: Profit in 2001/02 is currently expected to be higher than 00/01
Profit in 2001/02 is currently expected to be higher than 2000/01 • Full year contribution from Powercor acquisition • Part year contribution from Quarantine power station • Part year contribution from Worsley acquisition • Access to Victorian agency fee likely to be delayed • Sensitivities to EBIT
Slide 39: Delivering Value to Shareholders
Delivering Value to Shareholders • Origin Energy has delivered a strong profit performance and has strong cashflows from its ongoing operations • Sound strategic positioning and effective operational management have delivered a valuable pipeline of new opportunities • The share placement with instit
Slide 40: Slide 40