Origin Energy Profit Down, Australia

Origin Energy Limited today announced a Statutory Profit of $378 million for the financial year ended 30 June 2013, down from $980 million reported in the prior year.

The primary factors contributing to a decrease in Statutory Profit include a loss on the movement in the fair value of financial instruments, increased expenditure on Retail Transformation and transition costs relating to the acquired NSW energy assets and a lower contribution from the Energy Markets business.

Underlying Profit of $760 million decreased from $893 million in the prior year, a reduction of 15 per cent year on year which is at the lower end of the guidance range provided in February 2013. Underlying Profit reflects a lower contribution from Energy Markets, higher Underlying depreciation and amortisation charges and an increase in Underlying net financing costs.

Origin Chairman, Mr Kevin McCann said, “During the past decade, Origin has established the leading Australian integrated energy company. While a number of external factors and challenges impacted performance of the Energy Markets business during the period, its fundamentals remain strong.

“Delivery of the Australia Pacific LNG project remains a key focus for Origin and I am pleased to report that, due to substantial progress on the Upstream and Downstream components during the year, the project is approximately 45 per cent complete. Origin’s investment in Australia Pacific LNG stands to deliver a step change in earnings and cash flow to support the Company’s future growth.

“Origin continues to significantly reduce its capital expenditure on other projects and manage the funding position to support its commitments to Australia Pacific LNG.

“Origin has $5.3 billion1 in committed undrawn debt facilities and cash as at 30 June 2013, with maturities extending beyond the 2015 financial year, which provides sufficient liquidity for Origin’s remaining $4.1 billion funding requirement for Australia Pacific LNG.

“The Board has declared a final unfranked dividend of 25 cents per share, taking total dividends for the year to 50 cents per share. As the interim dividend of 25 cents per share was franked, this brings the franking level for the year to 50 per cent, compared with 100 per cent in the prior year,” Mr McCann said.

As a result of utilisation of available tax losses and the impact from development projects, including Australia Pacific LNG, the Company does not expect to have sufficient franking credits to frank the final dividend.

The final dividend will be paid on 27 September 2013 to shareholders of record on 2 September 2013. Origin’s Dividend Reinvestment Plan (DRP) will apply to this dividend. No discount will be applied in the calculation of the DRP price.

Origin Managing Director, Mr Grant King said, “Origin reported Underlying EBITDA of $2.18 billion, a reduction of 3 per cent on the prior year. Notwithstanding a 15 per cent reduction in Underlying EBITDA from the Energy Markets business, Origin reported stronger contributions from all other parts of the business which largely offset this impact.”

Australia Pacific LNG

Australia Pacific LNG made significant progress during the year, and the project is now approximately 45 per cent complete and on track to deliver first LNG by mid 2015.

In the Upstream project, drilling is progressing ahead of schedule as is construction of the main pipeline. In the Downstream project the roof on both LNG tanks was raised ahead of schedule, and the first LNG modules, refrigeration compressors and gas turbine generators have been installed.

The estimated cost of Australia Pacific LNG is $24.7 billion3. Australia Pacific LNG’s total capital expenditure for the year was $7.8 billion, with Origin’s cash contribution totalling $561 million due to Australia Pacific LNG’s access to the proceeds of the second Sinopec equity issue and the drawdown of project finance.

“We are pleased with the ongoing progress of Australia Pacific LNG, with the project on track for first LNG exports within two years,” Mr King said.

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LNG World News Staff, August 22, 2013