Origin Energy 2020 Half Year Results Half year ended 31 December 2019 Frank Calabria , CEO & Lawrie Tremaine , CFO 20 February 2020
Outline 1. Performance Highlights - Frank Calabria 2. Financial Review - Lawrie Tremaine 3. Operational Review - Frank Calabria 4. Outlook - Frank Calabria 2 20 February 2020 2020 Half Year Results Announcement
Performance Highlights Frank Calabria, CEO 3 20 February 2020 2020 Half Year Results Announcement
HY2020 financial highlights Statutory Profit Underlying Profit Underlying ROCE 12 month rolling $599 $528 8.3% million million (34.0 cps) (30.0 cps) 11% decrease: introduction of regulated 25% decrease including lower net gain 0.3% decrease on December 2018 retail electricity prices and generation outages on fair value and FX movements Free Cash Flow Adjusted Net Debt Interim dividend $680 $5.1 .1 15 cps 15 million billion Fully franked $342 million decrease from June-19 22% increase including higher distribution (excluding $540 million lease liability under Up from 10 cps from APLNG 39% of Free Cash Flow AASB 16 first recognition) All comparisons relate to HY2019 unless stated otherwise. 4 20 February 2020 2020 Half Year Results Announcement
Strong operational performance in HY2020 Integrated Gas Energy Markets Record half year production - improved upstream Unplanned generation outages detracted from an • • field and facility performance otherwise strong operational performance ERIC pipeline brought online, improving utilisation Mortlake generation unit returned to service in • • of processing capacity December 2019 and portfolio performing reliably during summer peaks Gas processing facility reliability of 99.6% 1 • Disciplined approach to managing for customer • APLNG unit production costs 2 reduced to $3.5/GJ, lifetime value • down 13% from HY2019 Gas portfolio benefiting from lower wholesale gas • prices APLNG production (PJ) Further $28 million reduction in cost to serve • 358 340 339 338 338 Retail digital transformation on track with online • sales, e-billing and digital interactions continuing to increase FY18 FY19 FY20 H1 H2 1) Average monthly electric gas processing facility reliability (excludes legacy gas fired processing facilities) measured as operating time divided by the sum of operating time + unplanned down time. 2) Includes capex + operating cash costs, excluding Ironbark acquisition costs and purchases, and reflecting royalties payable at the breakeven oil price. Royalties payable increases as oil price increases 5 20 February 2020 2020 Half Year Results Announcement
We are committed to delivering for our stakeholders Committed to safety and Transforming customer Caring about our impact diversity experience TRIFR – rolling 12 months Regional procurement spend as a Strategic NPS % of total spend 5 4.5 Jun-19 Dec-19 14% 3.5 4 - 15% 12% 3 (2) (1) 10% 2 (4) 5% 1 (6) - 0% (6) Jun-19 Dec-19 FY19 HY20 (8) Renewable + storage as % of total owned Customer interaction NPS 1 Women in senior roles and contracted generation capacity 40% 25% ~6% 30.0 31% 26.6 30% SYH 20% 30% 25.0 21.3 15% 20.0 20% 10% 19% 19% 15.0 5% 10% 10.0 0% 5.0 0% Jun-19 Dec-19 - Jun-19 Dec-19 SYH: Stockyard Hill 530 MW windfarm Jun-19 Dec-19 completion expected by end of CY2020 NPS: Net Promoter Score TRIFR: Total recordable Injury Frequency Rate 1) Interaction NPS includes both LiveChat and voice interactions 6 20 February 2020 2020 Half Year Results Announcement
We are driven by our Purpose of “Getting energy right” … for our Customers … for our Communities … for the Planet >$200 million direct and indirect 1.5 ⁰ C scenario analysis published • • Moving to a simpler, digitised • regional spend in HY2020 for wholesale electricity portfolio customer experience >$870,000 donated to drought Support national goal of net zero • • VDO extended beyond regulatory • and bushfire relief and recovery emissions in the electricity sector requirements from 1 January 2020 by 2050 or earlier Origin Foundation celebrating 10 • Assisting customers facing • years, donated >$25 million to On track for >25% of owned and • hardship, including $4 million set good causes in education and contracted generation capacity aside for bushfire relief package addressing disadvantage over from renewables + storage by the APLNG supporting domestic • that time end of calendar year 2020 manufacturers with an additional Pursuing opportunities in new low • 16 PJ sales agreed carbon fuels and products Delivering on our Purpose creates value for all our stakeholders 7 20 February 2020 2020 Half Year Results Announcement
We operate in a rapidly changing energy market Renewables impacting intra-day volatility NEM forward prices declining Gas prices declining (Average NEM demand July- Sep (GWh) (NSW $/MWh) (A$/GJ) 30 14 130 28 12 120 110 26 10 100 24 8 90 22 6 80 20 4 70 18 2 60 Opportunity for flexible capacity 16 0 50 0:00 6:00 12:00 18:00 Jul-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 2010 2014 2018 JKM Netback - Wallumbilla (ACCC) Current 2022 JKM Forward Netback - Wallumbilla (ACCC) Wallumbilla spot price Source: AEMO/Bloomberg Source: AEMO Source: ACCC, AEMO 8 20 February 2020 2020 Half Year Results Announcement
Executing our strategy to deliver value in a changing energy market Executing a clear strategy Building a track record Positioned for growth Energy Markets >$100m retail cost out on-track, • planning next wave of transformation ✓ Transforming culture Building a digital IoT capability, • customer demand products launched Accelerate towards clean energy New revenue streams – CES, • broadband, solar and storage ✓ Simplified portfolio Brownfield generation opportunities - • increasing flexibility and capacity Low cost operator developing & Pursuing opportunities in E-mobility • growing gas resources ✓ Operational capability Integrated Gas ✓ Rebasing cost structure APLNG exploring multiple plays and • focusing on further cost efficiencies Embracing a decentralised & Replicating low cost upstream model to • digital future develop Beetaloo resource ✓ Capital discipline Interest in Cooper-Eromanga Basin • Pursuing opportunities in hydrogen and • LNG for transport Customer-centric retailer Connecting customers to the energy and technologies of the future 9 20 February 2020 2020 Half Year Results Announcement
Operational performance driving returns for shareholders in FY2020 APLNG targeting in FY2020: ✓ Improved production at upper end of 690-710 PJ range ‒ Lower distribution breakeven at US$29-US$32 1 /boe, including ~US$8/boe project finance ‒ principal repayment Operational performance driving Higher cash distributions to Origin of $1.1-1.3 billion ‒ strong free cash flow Expect improved generation performance in H2 FY2020 ✓ Continue to target $150 million company-wide cost out by FY2021 ✓ >$100 million from Energy Markets cost to serve ($43 million realised to HY2020) ‒ 15 cps fully franked dividend determined up from 10 cps HY2019 ✓ Capital management Disciplined approach to capital management ✓ 1) FX rate: 0.70 AUD/USD, excludes Ironbark acquisition costs 10 20 February 2020 2020 Half Year Results Announcement
Financial Review Lawrie Tremaine, CFO 11 20 February 2020 2020 Half Year Results Announcement
HY2020 financial highlights Statutory Profit Underlying EBITDA Underlying Profit $1,727M $796M $592M $1,590M $528M $599M 45.3 cps 33.7 cps 30.0 cps 34.0 cps HY19 HY20 HY19 HY20 HY19 HY20 Energy Markets Integrated Gas Corporate Underlying ROCE Free Cash Flow 1 Adjusted Net Debt (rolling 12 months) $680M 8.6% 8.3% $540M $556M $5,417M $5,075M Dec-18 Dec-19 HY19 HY20 Jun-19 Dec-19 Lease liability under AASB 16 (first recognition) 1) Free Cash Flow is defined as cash from operating activities and investing activities (excluding major growth projects), less interest paid. 12 20 February 2020 2020 Half Year Results Announcement
Accounting changes adopted from 1 July 2019 AASB 16 Leases APLNG dewatering and workover costs: Adopted from 1 July 2019, prospectively Change in treatment from 1 July 2019, prospectively • • Lease liability and corresponding right-of-use asset Previously capitalised • • recognised Now expensed as incurred as, following a period of embedding • Lease expense in EBITDA replaced by depreciation and steady state operations, these costs are considered ongoing • interest expense and operational in nature going forward Lease payments and interest recognised as financing cash Recognised within operating cash flow, no change to net cash • • flow, no change to net cash Impact to Underlying Profit $m Impact to Underlying Profit $m Energy Markets 30 Integrated Gas - EBITDA (56) Integrated Gas – Share of APLNG 2 Depreciation and amortisation 1 66 Integrated Gas – Other 5 Income tax expense 1 (3) Corporate 5 Net impact 7 EBITDA 42 1) Included within Origin Share of ITDA. Depreciation and amortisation (41) Share of ITDA from APLNG (3) Net financing costs (9) Income tax expense 3 Net impact (8) 13 20 February 2020 2020 Half Year Results Announcement
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