20 February 2006

Origin Energy announces a 14% increase in half year profit. 

Directors’ Report (17 pages)
Appendix 4D (43 pages)
Presentation to media (33 slides)

A full six month contribution from Contact Energy and increased earnings from the Generation business have contributed to a 14% improvement in Origin Energy’s profit after tax to $193.7 million for the half year to 31 December 2005. 

Financial highlights

  • Revenue up 31% to $3,008 million 
  • EBITDA up 34% to $589.3 million 
  • Net profit after tax up 14% to $193.7 million 
  • Normalised earnings per share increased 11% to 25.5 cents per share 
  • Basic earnings per share up 4% 
  • Dividend of 9 cents per share fully franked to be paid on 20 March, up 29% on last year.

Commenting on the result Origin’s Chairman Mr Kevin McCann said, “We are pleased to announce a fully franked dividend of nine cents per share. This is a 29% increase over last year and will be paid on 20 March 2006 to shareholders of record on 1 March 2006.”1

Managing Director Mr Grant King said, “The contribution of Contact Energy which included the proceeds on the sale of the interest in the Valley Power generator increased net profit after tax by $47 million. Generation contribution increased with higher plant availabilities and increased capacity payments from Mt Stuart Power Station.

“Contribution from the Upstream business was down significantly from the prior year however non-recurring items totalling $19.9 million boosted the prior year’s result. The benefit of higher oil prices and further receipts of insurance payments relating to lost production from the Moomba incident were offset by lower production in the half particularly from the Perth Basin. 

The Company has also announced that it has adopted “successful efforts” accounting for its exploration activities. This has resulted in reducing capitalised exploration by $124 million. It is estimated that adoption of this policy will reduce reported earnings in the current year by approximately $10 million after tax.

“The retail contribution was also down on the prior period. Higher levels of customer acquisition in the current half has seen a pleasing increase of 39,000 customers over the prior year, the acquisition costs of which are expensed thereby reducing profit in the current half’s results.”

Commenting on the outlook for the full year, Mr King said, “Origin Energy’s earnings are typically higher in the first half and this is expected to be the case again this year, particularly given the one-off contribution from the sale of Valley Power.

“The BassGas Project is in the final stages of commissioning and will progressively contribute to earnings as the plant reaches full production in the fourth quarter of this financial year.

“Oil production in the Perth Basin has returned to target levels and will make an increased contribution to the second half of the year.

“We announced at the Annual General Meeting in October last year that we expected our earnings for the full year to be 10 to 15% higher than the recurring A-IFRS earnings in the prior year. Based on results for the first half and given current market conditions we expect results to be consistent with that announcement.” 


Grant King
Managing Director
Telephone: 02 8345 5435
Angus Gunthrie
Manager, Investor Relations
Telephone: 02 8345 5558

Origin Energy Key Financials

  2005 ($m) 2004 ($m) Change %
Sales revenue and other income   3,008  2,291  31
EBITDA   589  441  34
EBIT   442  327  35
Profit before tax   355  267  33
Profit after tax   263  194  36
Profit after tax and outside equity interests   194  170  14
Free cash flow(2)   328  247  33
OCAT ratio (calendar year)   13.6%  13.6%(3) N/A
Capital expenditure (including acquisitions)   426  1,192  (64)
Total assets   8,905  8,049  11
Net debt   2,633  2,742  (4)
Total equity   3,782  3,389  12
Key Ratios      
Earnings per share   25.5¢  24.6¢  4
Normalised earnings per share   25.5¢  23.0¢  11
Free cash flow(2) per share   43.2¢  36.8¢  17
Interim dividend per share   9.0¢  7.0¢  28
Net asset backing per share   $4.78  $5.03  (5)
Net debt to capitalisation   41%  45%  (9)
Net debt to equity   70%  81%  14
EBIT Interest cover (times)   4.5  4.9  (7)
Return on equity   7.1%  7.0%(4)  (24)
Segment Analysis (EBITDA)       
Exploration & Production   98.7  117.7  (16)
Retail   142.2  158.9  (10)
Generation   43.1  29.7  45
Networks   15.8  18.8  (16)
Contact   289.5  115.5  151
Total  589.3  440.6  34

  1. Origin Energy acquired a 51.4% interest in Contact Energy and has consolidated 100% of the results of Contact within its accounts. Outside equity interests are recognised in reporting of net profit after tax and total equity. 
  2. Cash flow available for funding growth and distributions to shareholders 
  3. Excludes Contact 
  4. Return on equity calculation treats Convertible Undated Preference Shares (CUPS) used to fund the acquisition of Contact as equity