Origin Energy has announced an Underlying Profit1 of $443 million for the year ended June 30, 2008, an increase of 20% compared with the prior year.
Origin's Statutory Profit of $517 million, an increase of 13% compared with the prior year, contains a number of one-off items providing a benefit of $74 million.
Origin Chairman, Kevin McCann said, "A very good second half performance led to a full year result up substantially on the prior year. This result highlights the strength of our integrated business which provides a strong platform for growth.
"We expect this growth to continue in the current financial year, with a number of projects expected to make initial or significantly increased contributions to Origin’s financial performance. Based on current market conditions we are targeting growth in underlying EPS of at least 10% for the 2008/09 financial year."
McCann concluded, "The Directors are pleased to announce a final dividend of 13 cents per share, fully franked, to be paid on October 3, 2008 to shareholders of record on September 9, 2008. This will bring total dividends for the financial year ended June 30, 2008 to 25 cents per share, an increase of 19% compared with last year. This represents a dividend payout ratio of nearly 50% of underlying EPS."
In commenting on the result, Origin's Managing Director, Grant King said, "Origin's financial performance and business development activities this year have continued to strengthen and develop the Company's fuel integrated generation and retail business. A substantial increase in our CSG reserves has also created an opportunity for the Company to grow significantly by increasing gas production for domestic markets or potentially participating in a CSG to LNG project to access export markets.
"The result highlights the strength of our existing businesses. Record production, sales and revenues have resulted in higher earnings from the Exploration and Production segment. This reflected our growing coal seam gas operations, a full year contribution from the BassGas Project and an initial contribution from the Otway Gas Project.
"The Retail segment significantly increased earnings, predominantly due to a full year contribution from Sun Retail, despite continuing high churn in gas and electricity markets and tighter margins in the LPG business. Customer numbers were maintained across the year and dual fuel accounts increased. We continue to be the market leader in green energy customers.
"Earnings in the Generation business were in line with the prior year after adjusting for the Mt Stuart Power Station transition to an internal contract. Contact Energy increased its contribution to our profits.
"We have significantly increased our capital expenditure, with major projects such as the Kupe Gas Project, CSG assets in Queensland and the Darling Downs Power Station representing a substantial investment in Origin's continuing growth," said King.
In commenting on the outlook for Origin, King stated, "A number of projects are expected to make initial or significantly increased contributions to Origin's financial performance in the current financial year. These include continuing increases in CSG production, a full year contribution from the Otway Gas Project and from the assets purchased from Swift Energy in New Zealand, an initial contribution expected from the Uranquinty Power Station by December 2008 and an increased contribution from the expanded Quarantine Power Station which will start commissioning in late 2008. These projects will more than offset the decline in contribution from mature upstream assets such as the Cooper and Perth Basins.
"During the year it is expected that a number of developments that could create substantial opportunities for Origin will either be resolved or progressed. The completion of the CSG monetisation process will allow Origin to determine whether direct participation in a CSG to LNG project may deliver additional value for shareholders when compared with other alternatives available to Origin to monetize its CSG reserves and resources. The Federal Government will continue to formulate its Carbon Pollution Reduction Scheme. Origin believes its business strategy and investments over the last decade position the Company favorably for the transition to a lower carbon economy. These opportunities could add substantially to the longer term growth of Origin.
"In addition, the Company will continue to progress the development of several major projects which are expected to make contributions following the current financial year. These include the Kupe Gas Project in New Zealand targeted to commence gas production in mid 2009, ongoing growth in CSG production, and continuing investments in generation such as the Darling Downs and Mortlake power stations, the Cullerin Range wind farm and expansion of the Mt Stuart Power Station."
King said, "With this range of opportunities before it, the Company continues to target ongoing growth in underlying EPS averaging 10-15% per annum."
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