Origin Energy announced a statutory profit of $530 million for the financial year ended 30 June 2014, a 40 per cent increase from $378 million in the prior year.
A decrease in underlying profit of 6 per cent to $713 million was driven by a lower contribution from energy markets which was partially offset by higher contributions from all other segments.
Group operating cash flow after tax was up 79 per cent from $1.14 billion to $2.04 billion primarily due to a positive change in working capital from improved billing and collections performance, and a reduction in taxes paid.
Origin Chairman, Gordon Cairns said, “As foreshadowed at the beginning of the year, our Energy Markets business has faced challenging market conditions placing pressure on electricity margins. In the second half of the year, we have seen some improvements in those margins suggesting that our focus on improving the performance of our existing businesses is delivering results.
“During fiscal 2014, improved operational performance was also evident in a record contribution from our upstream business and a 79 per cent increase in Operating Cash Flow After Tax to $2.04 billion.
“The 2015/16 financial years will be a transitional period for Origin with the commencement of LNG production by Australia Pacific LNG in mid-2015 after a seven- year development phase.
“The LNG project will deliver a step change in Origin’s earnings and cash flow from the 2016 financial year when the project begins to deliver LNG under its existing long-term contracts.
“The first full year of earnings and cash flow from two LNG trains at Australia Pacific LNG is expected in the 2017 financial year, with distributable cash flow4 of around US$1 billion (Origin’s 37.5 per cent share) on average per year. The step change in cash flow will allow Origin to increase shareholder distributions, maintain an investment grade credit rating and reinvest the cash in growing businesses.
“Origin is well placed to fund its commitment through to completion of the Australia Pacific LNG project, with $5.1 billion of existing liquidity comprising undrawn debt facilities and cash.
“During the period, Origin announced the acquisition of a 40 per cent interest in the Poseidon exploration permits in WA’s highly prospective Browse Basin. We believe that acquiring these resources, when compared with greenfield exploration, substantially reduces the risk of securing opportunities to drive Origin’s long-term growth.
“Given the company’s strong cash flow over the past financial year and good progress on Australia Pacific LNG, Origin intends to refinance the debt facilities used for this acquisition via the issue of a new Euro hybrid security as an alternative to ordinary equity,” Cairns said.