MADE by ORIGIN SHAREHOLDER REVIEW 2014 Strategy Performance Growth
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MADE BY ORIGIN SHAREHOLDER REVIEW 2014 Strategy Performance Growth ENERGY BY ORIGIN In 2014 Origin generated 17,195 gigawatt hours of electricity... WASHED BY ALEX ...enough energy to power around 16 billion (1) loads of washing. PERFORMANCE Statutory Profi t ($m) Statutory Earnings Per Share (¢) Dividends Per Share (¢) (2) HIGHLIGHTS $530m 48.1¢ 50¢ 2014 530 2014 48.1 2014 50 2013 378 2013 34.6 2013 50 A reconciliation between Statutory and 2012 980 2012 90.6 2012 50 Underlying profi t measures can be found 2011 186 2011 19.6 2011 50 in note 2 of the Origin Consolidated Financial Statements. 2010 612 2010 67.7 2010 50 Underlying EBITDA ($m) Underlying Profi t ($m) Underlying Earnings Per Share (¢) Free Cash Flow ($m) $2,139m $713m 64.8¢ $1,599m 2014 2,139 2014 713 2014 64.8 2014 1,599 2013 2,181 2013 760 2013 69.5 2013 1,188 2012 2,257 2012 893 2012 82.6 2012 1,415 2011 1,782 2011 673 2011 71.0 2011 1,316 2010 1,346 2010 585 2010 64.8 2010 800 01 ...............PERFORMANCE HIGHLIGHTS 02 ...............MESSAGE FROM THE CHAIRMAN AND MANAGING DIRECTOR 03 ...............FINANCIAL CALENDAR 2014/2015 03 ...............KEY MILESTONES IN 2014 03 ...............OUR COMPASS 04...............ENERGY MARKETS 04............... CONTACT ENERGY 05 ...............EXPLORATION & PRODUCTION 05 ...............LNG 06 .............. BOARD OF DIRECTORS 06 ..............EXECUTIVE MANAGEMENT TEAM 07 ...............FIVE YEAR FINANCIAL HISTORY 07 ...............GLOSSARY 08 ..............BUSINESS STRATEGY 08 ..............MAP OF ASSETS & OPERATIONS MESSAGE FROM THE CHAIRMAN AND MANAGING DIRECTOR During the period, we announced the acquisition starting to deliver results, as refl ected in the Fellow shareholder, of a 40 per cent interest in the Poseidon improvement in margins in the second half. During the 2014 fi nancial year Origin took exploration permits in Western Australia’s Exploration & Production Underlying EBITDA prospective Browse Basin. We believe that increased by 23 per cent to $487 million. acquiring these resources, when compared signifi cant steps to improve the performance with greenfi eld exploration, substantially reduces The strong performance of our Exploration the risk of securing opportunities to drive Origin’s & Production business refl ects the high level of its operational business while at the same long term growth. of availability from our main operating assets at Otway, Bass and Kupe basins. Investments time securing opportunities to drive the Given the Company’s strong cash fl ow during the made in prior periods to position the business have past fi nancial year and good progress on Australia successfully delivered higher production volumes. Company’s future growth. Pacifi c LNG, we intend to refi nance the debt facilities used for this acquisition through the LNG Underlying EBITDA increased by 38 per cent issue of a new Euro hybrid security as an to $83 million, primarily refl ecting higher domestic alternative to ordinary equity. gas sales and production. FINANCIAL HIGHLIGHTS THE YEAR IN REVIEW Origin’s contribution to Australia Pacifi c LNG increased from $561 million to $2.8 billion during In the fi nancial year, our Statutory Profi t increased As foreshadowed at the beginning of the year, UNDERLYING BUSINESS PERFORMANCE by 40 per cent to $530 million, while Underlying our Energy Markets business has faced challenging the year. The Australia Pacifi c LNG project remains Profi t (1) decreased by 6 per cent to $713 million, market conditions. We saw a reduction in volumes Underlying EBITDA decreased 2 per cent to on track to deliver fi rst LNG in mid-2015. $2.14 billion, refl ecting a reduced contribution refl ecting a lower contribution from the Energy which stemmed primarily from a decrease in Contact Energy Underlying EBITDA increased Markets business, which was partially off set by electricity sales to our domestic Mass Market from Energy Markets of $280 million, partially by 9 per cent to NZ$587 million, primarily due higher contributions from all other business units. customers, refl ecting a reduction in average off set by higher contributions from Exploration to an increased proportion of energy produced & Production, LNG and Contact Energy. Group Operating Cash Flow After Tax was up consumption and an historically mild year. Despite from hydro generation displacing more expensive 79 per cent from $1.14 billion to $2.04 billion, this, we saw some improvement in margins in the Energy Markets Underlying EBITDA decreased thermal generation, and the receipt of NZ$43 million primarily due to a positive change in working second half of the year. 21 per cent to $1.05 billion, refl ecting reduced of compensation relating to delays in the start-up capital from an improved billing and collections Energy Markets also strengthened its gas portfolio volumes and higher operating costs. of the Te Mihi Power Station. performance in Energy Markets, and a reduction by entering into a gas purchase agreement with While we saw a reduction in volumes within Underlying EBITDA in Australian dollars increased in taxes paid. Esso Australia and BHP Billiton during the year. the Energy Markets business, our operational by 23 per cent to $533 million, refl ecting the impact Basic earnings per share (EPS) based on Statutory This part of our business remains well positioned performance improved as demonstrated by of a strengthening NZ dollar. Profi t increased by 39 per cent to 48.1 cents per to capture the benefi ts of rising gas prices through the uplift in cash fl ows, stabilisation of customer oil price-linked gas sales agreements with numbers, enhanced customer experience and share (cps), and Underlying EPS decreased by CREATING GROWTH OPPORTUNITIES Queensland LNG projects, as well as the increasing reduced rates of churn. 7 per cent to 64.8 cps. FOR THE MEDIUM TO LONGER TERM penetration of Mass Market gas customers. Our customer accounts marginally declined by In line with our dividend policy, the Board has Consistent with our focus to be a regionally The Australia Pacifi c LNG project remains on 0.05 per cent or 3,000 accounts. The net position determined to pay an unfranked fi nal dividend signifi cant player in natural gas and LNG, and track to deliver fi rst LNG in mid-2015, achieving includes a reduction of 41,000 electricity customer of 25 cps, taking the total dividend for the 2014 create growth opportunities for the medium key milestones in the period. At the year end, accounts and an increase of 38,000 natural gas fi nancial year to 50 cps. term, Origin expanded its gas exploration the Upstream component of the project was accounts, building on our strong gas position. Origin acreage opportunities within Australia. As a result of utilisation of available tax losses and 76 per cent complete and the Downstream also maintained a churn rate that is 6 per cent the impact from development projects, including component was 75 per cent complete. We are lower than the market rate. We completed a farm-in agreement in the Cooper Australia Pacifi c LNG, Origin does not expect to well placed to fund our commitments through We saw an improvement in customer satisfaction basin during the year. In July 2014, we were awarded have suffi cient franking credits to frank the fi nal to completion of this project, with $5.1 billion new exploration acreage in the Bonaparte Basin. dividend. and an increased number of customers taking of existing liquidity comprising undrawn debt up new product off erings and payment options. In August 2014, we completed the acquisition of (2) The dividend will be paid on 26 September 2014 facilities and cash at 30 June 2014. The cash cost of serving our customers reduced, interests in the Poseidon gas fi eld and a farm-in agreement in the Beetaloo Basin. to shareholders of record on 28 August 2014. The performance of our Exploration & Production refl ecting the completion of the Retail The Dividend Reinvestment Plan (DRP) will apply business refl ected record production and higher Transformation Program. Our focus on improving Further afi eld, our strategic intent is to continue to this dividend. average commodity prices. the performance of our existing businesses is a modest level of investment in renewable energy opportunities in Chile and Indonesia. 02 ORIGIN ENERGY SHAREHOLDER REVIEW 2014 FUTURE PRIORITIES AND OUTLOOK — A reduced contribution from the Exploration Throughout the year our focus has remained on Origin’s position in the market as the leading & Production business in 2015 as some assets safety. Pleasingly, during the period we recorded FINANCIAL Australian integrated energy company refl ects will have extended shut-downs (BassGas and a much improved safety result, evidenced by the our strategy to develop our business and deliver Otway) to invest in sustaining production 23 per cent reduction in the total recordable injury CALENDAR (5) value to shareholders. Today, we employ more capacity for 2016 and beyond; frequency rate from 6.5 to 5.0. This measure than 6,700 (3) people, operate one of the largest — Prior period investments in Origin’s existing demonstrates progress towards our ultimate 2014/2015 generation portfolios and service the energy needs businesses will result in an increase in aspiration of conducting our operations in a way of more than 4.3 million customers. We continue depreciation and amortisation; and that causes no harm to people. 26 September 2014 — First LNG from Australia Pacifi c LNG’s Train 1 to focus on becoming a regional leader in energy During the 2014 fi nancial year, we appointed Final dividend payment markets and, in addition, we have made good to commence in mid calendar year 2015 and Maxine Brenner to our Board as an Independent progress on delivering the Australia Pacifi c LNG from Train 2 in late calendar year 2015.