Origin Energy Limited

Good morning everyone and welcome to the Origin Energy results presentation for the 2025 financial year. It's Frank Calabria here and I'm joined by my executive leadership team and we have a brief presentation followed by questions and answers. And you'll also note that we have provided additional information in the appendices for your review. Slide two provides a summary of the financial performance and business highlights for the year and I think underscores the strength of our portfolio. Energy markets, EBITDA of $1.404 billion is ahead of guidance. APLNG production of 682 petajoules at a cost of $4.20 a gigajoule is in line with guidance. LNG trading is at the top end of guidance with trading gains of $441 million. And Octopus EBITDA is at a loss of $88 million. It's within guidance and reflects the investment in its rapid global growth. but also some unseasonably warm weather and one-off adjustments. There are several business highlights for the year. Our customer accounts grew by 104,000, cost to serve reduced by 50 million. We have strong generation performance, and I'll talk to that later. Battery developments are on track, and Yanko Delta Wind Farm has secured access rights. We received $797 million of dividends from APLNG during the year and then a further $335 million on the 3rd of July 2025 and those are all fully franked. Our 2p reserves are up by 298 petajoules before production. The Sinopreg price review is concluded with the final review in 2030 at APLNG's discretion. and Octopus continued its rapid growth. The UK energy customers grew by 13% to 7.6 million. Customers in the non-UK energy markets have doubled to 2.7 million and Kraken Technologies contracted customers have grown by 45% to 74 million. Very pleased to say that we've determined a final fully frank dividend of $0.30 per share, supported by a strong balance sheet and cash flow outlook. Turning to financial highlights, the statutory profit and underlying profit are both up. Our underlying profit at $1.49 billion. is up from $1.18 billion last year. Our underlying EBITDA of $3.41 billion is lower. Our net debt to EBITDA is at 1.9 times, I think highlighting that balance sheet strength. Our rolling 24-month return on capital ploy is 14.6%. And with that final dividend, we have total dividends for the financial year of $0.60 fully franked. Our purpose remains very important to us on slide four, getting energy right for our customers, communities and planet. Some of the highlights are for our customers, a customer happiness index of 69.4%. We spent $38 million supporting customers in hardship in the last year. We increased the breadth of our products. Those include now increasingly connected solutions and we have been rapidly adopting AI with our customer interactions. For communities, it includes spending over $400 million with regional suppliers and $20 million with First Nations suppliers. We've contributed over $4 million through our foundation, and we also contribute to many local communities, and one example here is the Murrumbidgee Council for the Yanko Delta Wind Project. And for the planet, this year we have released our updated Climate Transition Action Plan and have reaffirmed its targets and ambitions. We've increased our ash reuse at Ararang to 61%, which is pleasing to see, and we've also advanced our wind and battery storage developments, and there's more in the operational section. Turning to slide five, Origin is leading through differentiated assets and capabilities that we continue to strengthen. For customer, this includes a trusted brand, world-class platforms and a continuous innovation through tech and data. For energy supply, it includes the largest thermal peaking fleet, a diverse supply portfolio and advanced pipeline of developments in renewables and storage. For energy resource, we have APLNG, which is a world-class LNG asset. And equally importantly, it's backed by very strong reserves and an operating capability to deliver the results that are inherent in that asset and resource. With Octopus, we have a leading customer experience brand and low cost retailer. And for Kraken, we have a best in class enterprise software platform. On slide six, we have our investment proposition for Origin. It constitutes a leading Australian businesses with strong cash flows, fully franked dividends and also investing in the transition. Plus, we have significant growth potential through two globally significant businesses. Those leading Australian businesses are energy markets, integrated gas. With energy markets, we have a leading brand, advanced tech platforms in place, opportunities for growth that extend across customers, products, renewables and storage. And with integrated gas and APL&G, we have a low cost to supply and reserves that 50% of which at least are beyond the current export contracts. And currently, based on our share price on the 11th of August, we're paying a dividend yield of 5.1%, and that's before the franking benefit. The global growth I talked about, those significant businesses are Octopus and Kraken. In Octopus, we have the largest UK energy retailer that continues to grow, and it also grows in the non-UK markets in energy services. And Kraken, as I said before, rapidly growing technology platform business, a significant addressable market. and line of sight to an annual recurring revenue of £500 million by 2027. On that note, I'll hand over to Tony for the financial results and we'll come back and cover off the business performance in a moment.

Thank you, Frank. Tony Lucas here, CFO of Origin. Good morning, everyone, and thanks for joining. It's a pleasure to share such a strong result that demonstrates both operational discipline, portfolio strength and long-term value for shareholders. So just turning to energy markets, EBITDA energy markets first. It was a strong second-half performance from energy markets, particularly within the electricity portfolio, benefiting from higher than normal trading gains and increased volatility, delivering an EBITDA result above the top end of guidance. The retail business grew by 100,000 customer accounts across electricity, gas and the internet, reduced bad and doubtful debts and a $50 million overall reduction in cost to serve, well on our way to meet our target of $100 to $150 by Fin Year 26 compared to Fin Year 24. As expected, EBITDA contribution was lowered this year with lower customer tariffs, following the lag cost recovery of higher energy prices in last year's tariff and also in fin year 24 we benefited from the coal price cap which did not repeat in 25. so a strong underlying performance from energy markets highlighting the portfolio is well placed into the energy transition octopus EBITDA was lower in fin year 25 relative to 24 However, UK retail saw strong organic growth of 13% customer growth, adding a further 1.6 million customer accounts. Octopus experienced unseasonably warm weather in the second half, impacting retail margin by $60 million Aussie dollars origin share, as well as some one-off accounting treatment changes and a settlement of the government energy price guarantee from prior periods, That guarantee was set up to help customers through the energy crisis. Non-UK retail continued to grow, doubling customer accounts to 2.7 million as it continues to invest and scale, looking to replicate the success in the UK. Energy services increased investment to establish a major foothold in consumer demand for behind-the-meter technology and into the drive for electrification in the UK. including the heat pump market, which continues to be subsidised by the UK government. Kraken continues to expand globally, with contracted accounts reaching 74 million, with 45 million of these live. Integrated gas, APLNG's EBITDA was down 3%, reflecting lower production, lower realised LNG prices, also including the impact of the Sinopec price review, which concluded in the period. LNG trading delivered at the top end of guidance at $441 million from trading gains relating to opportunistic hedging undertaken in 2022 during the energy crisis. APLNG continues to be a significant contributor to the East Coast gas market, and as Frank highlighted, has strong reserves, well in excess of its export contracts. Moving through to cash, Finyear 25 saw a major investment in growth capex. Energy markets cash conversion exceeded 100% once we adjust for the Queensland bill relief. APL&G cash flow was strong with $797 million in the year and a further $335 million on the 3rd of July, and that was all 100% franked. Cash tax was slightly higher than last year, but it was lower than what I indicated to you in February as we're able to vary tax instalments throughout the year. CapEx was slightly below expectations, but this is mainly due to timing of payments around year end with material investments in battery storage as part of the energy transition. So moving on to the balance sheet, net debt moved up to $4.6 billion as anticipated on the back of those investments into the battery projects. Earnings from these will start to come on in the second half of Fin Year 26 and further earning contributions expected from Fin Year 27. We expect adjusted net debt to EBITDA to be in our target range over the Fin Year 26-27 period. Our balance sheet is well placed to deliver strong dividends and invest into growth. Capital allocation. The board has determined a dividend of 30 cents per share fully franked. That results in a dividend yield over 5%. The Fin Year 25 declared dividend result is an 86% payout ratio. Dividends paid were up 21% relative to the prior period. This combined with our investment into the energy transition reflects our disciplined approach to capital management. I hope you can see that we remain focused on both driving efficiency, capturing opportunities and evolving landscape, but ultimately delivering sustainable returns. And I'll hand back to Frank to dive into the underlying business drivers.

Thanks very much Tony. We now turn to business performance and I'm now on slide 13. Energy markets is tracking in line with medium term targets that many of you will be aware of. Electricity earned just above that medium term target in financial year 25. That target is $25 to $40 a megawatt hour. You'll see that gas is in line with the $3 to $4 a gigajoule target for the year. and we have achieved cost-to-serve savings of $50 million in the year and are on track to meet our target of $100 million to $150 million savings in FY26 compared to FY24. Turning to customer on the next slide, we're growing share and value with a relentless focus on customer. As I said earlier, we grew our customer base by 104,000, continuing the growth trend over the last four years. We've been very pleased with the investments we have made in channels that's enabling us to acquire customers at a low cost. We've repositioned the brand to all kinds of useful and have the highest brand consideration and preference in the industry. And we're building scale in our internet offering. Our customer experience has improved. Our churn of 13.4% is over 6% lower than market. And importantly, we are attracting and retaining our key customer segments. Our digital interactions with customers continue to rise. Our customer happiness index improved, and you can see that through the trend of the last six months of this financial year. And product bundling is delivering benefits. Our investment in leading tech and product continues to advance and you can see there the utilization of AI for emails and messages. And we also have a pilot for AI voice agent that's live with 25,000 customers. The investment in tech and product is all about improving the user experience and faster speed to market across many dimensions, all leading to better outcomes for customers. Our virtual power plant grew to 1.5 gigawatts and importantly is delivering value. So as you can see from this slide, we are starting to reap the benefits of Kraken investment and our investments more broadly across a range of capabilities and technologies. Turning to slide 15, I did talk about the strong generation performance and on the left-hand side what we really mean by that is being there when it counts and that enabled high coverage through volatility events and you'll see most notably what happened in June 2025 where many of you will be watching what happened and very pleasingly were available at all of those important times and have done that throughout the year. Our gas peaking and hydro start reliability is very high and we've achieved good availability for our RRing through the year. Our investments in renewables and storage, the batteries are on track and we're confirming our target post-tax returns of 8% to 11% post-tax and continue to see it at the upper end of that range at the front end of the asset life. Bianca Delta Wind Farm, it is progressing. We've been granted full access rights and we've resubmitted environmental approvals as part of that development. Turning to AP LNG, the revenue is steady. The composition has moved underneath in terms of a higher proportion of LNG, which has been offset by lower LNG prices. And you will see there that we have received the full year benefit of QCLNG purchase volumes for a contract we entered into in 2018. Our costs are steady, although the nature of the activity changed throughout the year with higher workovers and optimisation offsetting less cyclical upstream maintenance activity. And you will see on the cash distributions on the right that they are similar to the prior year when you take into account the franking benefit. That's despite the realised oil price being lower at US$83 a barrel before hedging. and we highlight here that 41% of our 26 financial year-old exposure is hedged at a net $73 US a barrel. And APLNG is now paying fully frank dividends and that's expected to continue. The next slide, 17, highlights APLNG's reserves and production and you can see on the left-hand side that the 2p reserves have uplifted by 3% before production. That's really come out of the spring gully and the updated reserves. And we have greater than 50% of reserves and resources beyond the export contracts, as highlighted by that yellow portion of the bar on the left-hand chart. We continued our strong trend of reserves replacement. That's 57% in 2025 and an average of 72% since 2017. and we have the opportunity to increase future reserves with exploration activity underway. On the right-hand side, this really, I think, reaffirms the material that you would have received in the quarterly, but for completeness, you can see in terms of both production and wells drilled in the east, for Talinga, Orana, it's all focused on optimisation activity to manage natural field decline, and for Kondabrai, it's focused on live workovers and solids mitigation. remembering that in the east we're no longer facilities constrained in Tilinga and Orana particularly. In the west it's very strong field performance where we are constrained by processing facilities and in non-operated fields they have been impacted by decline in some fields, unplanned outages and development delays. Turning to the next slide though, just really continuing the strategy that we've been executing on in APONG. The near-term focus is very much about ramping up field optimisation activity, focusing on de-bottlenecking infrastructure, projects that reduce downhole pressure and can accelerate production, and also resuming exploration and appraisal. And in the mid-term, it's an opportunity, there are opportunities for us to invest in infrastructure and drilling, particularly in the west, to accelerate low-cost gas. We did highlight in the quarterly that that is subject to APLNG board approval, but there are opportunities to bring low-cost gas into the portfolio subject to that decision. We are focused on drilling new fields in the east and also growing reserves through exploration and appraisal. Turning now to Octopus and Kraken. The Octopus group, the energy group there, and Kraken continue to build two growing platforms aligned to Origin. And Origin is supportive of the legal separation of these businesses with an appropriate capital structure for growth and regulatory requirements. Octopus Energy has demonstrated to be a leading energy retailer with significant growth potential. It has tremendous capabilities across brand, customer experience, low cost and innovation. And Origin gets the benefit of that customer growth, the increasing customer lifetime value, and really the ability for us and them to share and learn from each other across retail and wholesale energy management. Kraken Technologies is the leading platform, the best in class enterprise platform in energy and utilities. It's got a proven track record transforming and modernising companies across the world. There's an enormous addressable market and its growth is significant in both new geographies and products, and it's achieving well in excess of the global SaaS rule of 40. Obviously, Origin gets the benefit of being a foundation customer of Kraken, but also the insight into the ongoing technology innovation, including AI. A little further detail on the next slide in relation to Octopus Energy, number one energy retailer in the UK, more than 24% market share. The average EBITDA over the last four years is £40 per customer, whilst doubling customers. Its cost to acquire is low these days at £60 a customer, and it's attracting greater than 35% or greater than 40% of switchers and low churn. In the non-UK market, you can just see how rapidly it has grown over the last 12 months, doubling those meters on supply. And they really are focused on replicating that UK success with the same capabilities. Energy services is all about increasing customer lifetime value through integrating those low carbon technologies with its existing large customer base. and the long-term value through the combination of services, supply and flexibility. They very much are focused on business improvement towards profitability, which goes to margins, efficiency and labour utilisation. Kraken Technologies on slide 21 is uniquely placed for growth, clear competitive advantage. You can see their success rate. It's a global enterprise software platform, AI enabled, and it's now got 45 migrations in 17 countries. It's serving the full utility value chain and the product has expanded into water and broadband. That large addressable market I've spoken to you can see is enormous at 2.1 billion households globally and they've signed their major first customer in the U.S., And you can see there's significant contracted customer growth and revenue on the right-hand side of that chart, with revenues growing by 77% in the year, and the EBITDA margin of 43%, which is an average over the last three years. I will now turn to guidance, and we provide a summary here, and there is further information supporting this guidance in the slides, in the appendix. And this guidance is provided on the basis that market conditions and the regulatory environment do not materially change. For energy markets, EBITDA, the FY26 guidance is $1.4 to $1.7 billion. The LNG trading EBITDA is between $100 and $150 million. The share of Octopus Energy EBITDA is between $0 and $150 million. And total CapEx, excluding any acquisitions, is between $800 and $1.1 billion. For APL&G, this is consistent with what you would have received at the time of issuing our quarterly production of between 635 and 680 petajoules production, capex, opex, all-in costs between 2.9 and 3.2 billion, and therefore that converts to a unit range of capex and opex between $4.30 and $5 a gigajoule for the FY26 year. So just finishing up, really just want to summarise the fact that we highlighted, I think, the advantaged assets and capabilities that are well positioned for the transition, the strong cash flows and returns from two diversified businesses and energy markets and integrated gas through APLNG, and also that we've got global growth exposure and value upside via Kraken and Octopus Energy. Importantly, having a balance sheet that's strong enables us to not only increase funding, increase dividends this year, but also is enabling us to continue to invest in the energy transition. So on that note, we will open up for questions and the team will look forward to answering anything that you may have regarding this result.