Origin Energy 2018 Full Year Results Full year ended 30 June 2018 - PowerPoint PPT Presentation

Origin Energy 2018 Full Year Results Full year ended 30 June 2018 Frank Calabria , CEO and Lawrie Tremaine , CFO 16 August 2018

Important Notice Forward looking statements This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no certainty of outcome in relation to the matters to which the statements relate. These forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements. Those risks, uncertainties, assumptions and other important factors are not all within the control of Origin and cannot be predicted by Origin and include changes in circumstances or events that may cause objectives to change as well as risks, circumstances and events specific to the industry, countries and markets in which Origin and its related bodies corporate, joint ventures and associated undertakings operate. They also include general economic conditions, exchange rates, interest rates, regulatory environments, competitive pressures, selling price, market demand and conditions in the financial markets which may cause objectives to change or may cause outcomes not to be realised. None of Origin Energy Limited or any of its respective subsidiaries, affiliates and associated companies (or any of their respective officers, employees or agents) (the Relevant Persons) makes any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward looking statement or any outcomes expressed or implied in any forward looking statements. The forward looking statements in this presentation reflect views held only at the date of this presentation. Statements about past performance are not necessarily indicative of future performance. Except as required by applicable law or the ASX Listing Rules, the Relevant Persons disclaim any obligation or undertaking to publicly update any forward looking statements, whether as a result of new information or future events. No offer of securities This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction. 2 16 August 2018 2018 Full Year Results Announcement

Outline 1. Performance Highlights - Frank Calabria 2. Financial Review - Lawrie Tremaine 3. Operational Review - Frank Calabria 4. Outlook - Frank Calabria 3 16 August 2018 2018 Full Year Results Announcement

Performance Highlights Frank Calabria, CEO 4 16 August 2018 2018 Full Year Results Announcement

Financial highlights Statutory Profit Underlying Profit Underlying EBITDA (continuing operations) (continuing operations) $218 million $838 million $2,947 million 12.4 cps 47.7 cps Up $774 million or 36% on FY2017 Including H1 FY2018 impairments Up $438 million or 110% on FY2017 of $533 million after tax Underlying ROCE NCOIA Adjusted Net Debt (continuing operations) 8.4% $2,645 million $6.5 billion Up $1,267 million or 92% on FY2017 Down $1.6 billion from June 2017 Up from 5.5% in FY2017 and in line with H1 FY2018 5 16 August 2018 2018 Full Year Results Announcement

Sustainability highlights Customer People Total Recordable Incident Frequency Addressing affordability and transparency ▪ ▪ Rate (TRIFR) down from 3.2 to 2.2 Improved Net Promoter Scores, #1 Tier 1 ▪ Refreshed purpose and values retailer for Strategic NPS ▪ Employee engagement up 3% New products and digital experiences ▪ ▪ Communities Climate $236 million spent with regional suppliers Committed to halving emissions by 2032 ▪ ▪ $23 million awarded by Origin TCFD recommendations adopted ▪ ▪ Foundation to organisations since 2010 Owned and contracted generation ▪ ‘Best Company Indigenous Procurement’ consistently below NEM average CO2 ▪ Award emissions intensity 6 16 August 2018 2018 Full Year Results Announcement

First full year of production at APLNG Commodity prices LNG cargoes delivered Sales revenue (APLNG 100%) 80 13 140 6 70 11 120 5 100 US$/mmbtu 60 9 4 US$/bbl 80 A$bn 50 7 3 60 40 5 2 40 1 30 3 20 Oct-16 Apr-17 Oct-17 Apr-18 Jul-16 Jan-17 Jul-17 Jan-18 0 0 JCC (LHS) FY17 FY18 FY17 FY18 APLNG effective oil price (LHS) JKM (RHS) LNG Domestic Gas Contract Spot Source: Origin analysis 7 16 August 2018 2018 Full Year Results Announcement

APLNG unit cost reductions on-track Key Outcomes Initial Targets Metric FY2018 FY2018 June 2019 Guidance Actual target run rate Cost reduction Well cost 1 A$m/well 2.4 1.9 1.2 and productivity improvement Operating cost 2 A$/GJ 1.3 1.3 1.0 Flatter, smaller, asset-led structure built around core processes – 500 role reduction in • FY2018 Driving down well costs by • – Continuous drilling improvements – Lower overheads – Re-priced rig and construction contracts – Optimised gathering construction – Simplified surface facilities design Further operating cost savings from power & streamlined maintenance through FY2019 • 1) Standard unfracked vertical Surat well; 2) Upstream operated 8 16 August 2018 2018 Full Year Results Announcement

Supply response in wholesale markets Electricity Natural Gas Forward price Actual 16 250 14 200 12 10 150 A$/MWh A$/GJ 8 100 6 4 50 2 0 0 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Brisbane Sydney Victoria QLD NSW VIC SA Adelaide Wallumbilla Source: AEMO Source: AEMO 9 16 August 2018 2018 Full Year Results Announcement

Increased competition in retail markets Customer movement Customer activity Market churn (‘000 customers) (‘000 customers) Rolling 12 month average 25% FY18 40 3,000 30 23% 2,500 20 10 21% 2,000 0 19% (10) 1,500 (20) 17% 1,000 (30) 15% (40) 500 (50) 13% (60) 0 NSW VIC QLD SA FY17 FY18 Market Origin Electricity Gas Wins Retains Net retail and business 23% increase in wins and retains Origin churn lower than • • • customer loss of 17,000 market 23% increase in call volumes • 10 16 August 2018 2018 Full Year Results Announcement

Transforming customer experience • Increasing supply – Eraring, Pelican Point and renewables • Flat/falling tariffs in FY2019 – Absorbed 3% electricity price More increase in NSW affordable • No increases for hardship customers since 2016 • Low rate concession products in SA, VIC • Transparency - Savernator comparator & dollar value estimates Smarter and • Digital first approach – seamless customer journey easier • Improved visibility & control – Usage Buster, HomeHQ • #1 provider for Business solar More sustainable • Targeting renewables to be >25% of generation mix by 2020 • Investing in future energy solutions 11 16 August 2018 2018 Full Year Results Announcement

Active role in policy development • Investment signal in low emissions and reliable generation Support NEG • Support more ambitious targets for the electricity sector over objectives time • We support sensible reform provided no unintended consequences − Conditional discounts to be cost reflective − Improve hardship framework and customer transfers ACCC report: Industry-wide − Abolish SRES and other state based green schemes; and response to − Write-down network asset bases drive best • Industry can go further: customer − Prevent confusing sales activity - e.g. door-to-door sales to outcomes vulnerable customers; and − Ban unanchored discounts & convert to dollar value discounts • We do not believe price regulation is in the best long-term interests of customers or the industry 12 16 August 2018 2018 Full Year Results Announcement

Making progress on key commitments ➢ Balance sheet repair – approaching target capital structure ➢ Disciplined capital management initiatives implemented ➢ Improving returns ➢ Becoming a low cost operator − Step change reduction in costs at APLNG on track − Cost to serve reduction underway in Energy Markets: Update to be provided later in the year 13 16 August 2018 2018 Full Year Results Announcement

Positioned for the future Growth opportunities Today’s portfolio APLNG strong foundations Integrated Gas On track to international Entering stage 2 in the Beetaloo • • competitiveness − Targeting liquids rich plays Delivering into strong Asian demand • Entered FEED for Ironbark Stage 1 • Significant cash generation • − Targeting first gas in FY2021/22 − Assessing alternative strategic options Flexibility a strength in Energy Markets Energy Markets Strong gas position with length Growing renewables >1,000 MW by FY2020 • • beyond 2022 and flexible transport Brownfield generation • Short energy and balanced capacity • − Increased flexibility and capacity Fuel and geographic diversity • − Pumped hydro and batteries Moderate near term capex required • Retail adjacencies and new products • Growing rooftop solar • 14 16 August 2018 2018 Full Year Results Announcement