21 March 2013
Half Year Report to Shareholders 2013
Message from the Chairman and Managing Director
For the half year ended 31 December 2012, Origin reported Statutory Profit of $524 million, a decrease of $270 million compared to the prior corresponding period. Underlying EBITDA1 was $1.06 billion, down 9 per cent on the prior first half.
The period was characterised by more challenging operating conditions in Energy Markets, which is reflected in the lower Underlying Profit1 and operating cash flow. The fundamentals of this business remain strong, and we are taking proactive steps to deal with the impact of regulatory and market dynamics which are expected to benefit the 2014 financial year.
Delivery of Australia Pacific LNG’s project is the subject of continuing focus for Origin. A review of the project’s schedule and costs has now been completed, which confirms the strength of Origin’s investment.
Origin has recently undertaken initiatives to strengthen its balance sheet, with current cash, undrawn facilities and operating cash flow providing sufficient liquidity to cover the Australia Pacific LNG funding commitment and requirements of the existing business, without the need for refinancing until the 2015 financial year.
The Board has determined to pay an interim fully franked dividend of 25 cents per share, to be paid to shareholders on 4 April 2013.
In November 2012, based on market conditions at the time, Origin issued revised guidance for a reduction in full year Underlying Profit of 5 to 10 per cent compared to the prior year. The first half result, together with a review of expected performance in the second half, were consistent with that guidance, with the exception of an event in January 2013 which led to an extended period of very high prices in the Queensland wholesale electricity market.
This event cannot be absorbed in the previous guidance range, and therefore based on prevailing market conditions, guidance for Underlying Profit for the 2013 financial year is now 10 to 15 per cent below the prior year.
A number of initiatives will contribute to improved performance in 2014, and looking forward, we are confident that our investment in Australia Pacific LNG stands to deliver a step change in earnings and cash flow to support the Company’s next phase of growth.