Origin Energy Limited (Origin) has announced a statutory loss of $2,291 million for the full-year ended 30 June 2021, primarily comprising $2,247 million of non-cash charges including impairments and a deferred tax liability.

Underlying profit of $318 million reflected lower commodity prices both in the Energy Markets and Integrated Gas divisions. This was partially offset by lower operating costs in Australia Pacific LNG, retail cost savings, lower interest expense and oil hedging gains.

Free Cash Flow remained robust at $1,140 million driven by a high cash conversion in Energy Markets due to lower working capital requirements, $709 million in cash distributions from Australia Pacific LNG, lower capital expenditure, and lower interest and tax payments. Strong cash flow enabled debt reduction of $519 million, while allowing for investment in growth and dividends to shareholders.

Origin CEO Frank Calabria said, 'Operating conditions were challenging this year due to low prices and the impacts of COVID-19 across our key commodities of electricity, natural gas and oil. Energy Markets headwinds are expected to persist into FY2022, though this should be largely offset by the strong performance of our Integrated Gas business.

'Our immediate focus is on capital discipline and cost management to continue to build balance sheet resilience, with a rebound in Energy Markets earnings expected in FY2023 assuming current forward commodity prices continue and flow through to tariffs.

'There were a number of operational highlights across Origin's two businesses, contributing to stable cash flows. Australia Pacific LNG was outstanding, safely curtailing output when the market was subdued, and rapidly ramping up production when demand recovered, matching previous daily production records and shipping a record 130 cargoes for the year. Improved field performance and successful appraisal led to a very high reserves replacement ratio.

'Strong field capability and improved productivity helped deliver record low costs, with a distribution breakeven almost half what it was just three years ago, which supported a strong cash distribution to Origin.

'The generation fleet continued to have very high reliability, and Origin was able to respond with increased supply to support reliability and cover unplanned outages at a number of other plants across the NEM. Origin also boosted gas supply and transport arrangements to help address the expected future supply shortage in southern markets forecast by AEMO.

'In retail, strategic NPS reached a record high and customer accounts increased through our Everyday Rewards plan and growth segments including solar, broadband and community energy services. Progress with our new, more efficient retail operating model continues, and more than 250,000 customer accounts are now on Kraken as we accelerate towards a target of greater than 850,000 customer accounts by end December.

'The growth trajectory of Octopus Energy continues to impress, with strong organic growth of more than 100,000 new customer accounts in the UK each month and expansion into new markets, including the US, Japan, Germany and Spain, all of which has helped to drive a material value uplift in the company since our initial investment in 2020.

'Strong, diversified cash flow from our two core businesses allows Origin to balance the priorities of paying down debt and delivering returns to shareholders, while continuing to invest in targeted growth opportunities.

'To address lower earnings in the near-term, we are focused on continued capital discipline and achieving the targeted $100-$150 million in retail cost savings by FY2024, over and above the previous cost out target of $100 million achieved this year.

'With many Australian households and businesses affected by the pandemic at various times over the past year, I am proud of everything we have done, and continue to do, to look after our customers, including payment extensions and other assistance,' Mr Calabria said.

Dividend

The board has determined to pay an unfranked final dividend of 7.5 cents per share, representing 31 per cent of free cash flow, taking total dividends for FY2021 to 20 cents per share. The final dividend will be paid on 1 October 2021 to shareholders registered as at 7 September 2021.

The board continues to target a payout ratio of 30 to 50 per cent of free cash flow per annum, and will consider a combination of ordinary dividends and on-market share buybacks in future.

The dividend reinvestment plan (DRP) will operate with nil discount. The requirements of the DRP shares will be satisfied through on-market purchase.

Contact:

Anneliis Allen

Tel: +61 2 8345 5119

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