Financial Statements 2012

Origin Energy Limited and Controlled Entities Financial Statements 30 June 2012
Origin Energy Limited ABN 30 000 051 696
Origin Energy Limited and Controlled Entities Financial Statements Contents

Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Statement of significant accounting policies Segments Profit Income tax expense Dividends Trade and other receivables Inventories Other assets Other financial assets, including derivatives Assets and liabilities classified as held for sale Investments accounted for using the equity method Property, plant and equipment Exploration, evaluation and development assets Intangible assets Tax assets Trade and other payables Interest-bearing liabilities Other financial liabilities, including derivatives Tax liabilities Provisions Employee benefits Share capital Reserves Other comprehensive income Notes to the statement of cash flows Auditors' remuneration Contingent liabilities and assets Commitments Financial instruments Acquisition and disposal of controlled entities Controlled entities Interest in joint venture operations Share-based payments Related party disclosures Key management personnel disclosures Deed of cross guarantee Earnings per share Parent entity disclosures Subsequent events
Directors' Declaration Independent auditor's report
Origin Energy Limited and Controlled Entities Income statement for the year ended 30 June
Note Revenue Other income Expenses Share of results of equity accounted investees Interest income Interest expense Profit before income tax Income tax expense Profit for the period Profit for the period attributable to: Non-controlling interests Members of the parent entity Profit for the period Earnings per share Basic earnings per share Diluted earnings per share 2012 $million 12,935 504 (11,829) 39 37 (326) 1,360 (302) 1,058 2011 $million 10,344 9 (9,857) 54 36 (191) 395 (147) 248
3(a) 3(b) 11(a) 3(c) 3(c) 4
78 980 1,058
62 186 248
37 37
90.6 cents 90.4 cents
The income statement should be read in conjunction with the accompanying notes set out on pages 8 to 112.
Origin Energy Limited and Controlled Entities Statement of comprehensive income for the year ended 30 June
2012 $million Profit for the period Other comprehensive income Available for sale financial assets (Gains)/losses transferred to income statement Cash flow hedges Losses transferred to income statement Transferred to carrying amount of assets Foreign currency translation gain Valuation loss taken to equity Net (loss)/gain on hedge of net investment in foreign operations Foreign currency translation differences for foreign operations Actuarial (loss)/gain on defined benefit superannuation plan Other comprehensive income/(loss) for the period Income tax (expense)/benefit on other comprehensive income Other comprehensive income/(loss) for the period, net of income tax Total comprehensive income for the period Total comprehensive income attributable to: Non-controlling interests Members of the parent entity Total comprehensive income for the period 1,058 2011 $million 248
(8)
109 4 6 (65) (37) 129 (13) 125 (8) 117 1,175
141 2 2 (168) 73 (245) 4 (182) 3 (179) 69
112 1,063 1,175
4 65 69
The statement of comprehensive income should be read in conjunction with the accompanying notes set out on pages 8 to 112.
Origin Energy Limited and Controlled Entities Statement of financial position as at 30 June
Note Current assets Cash and cash equivalents Trade and other receivables Inventories Other financial assets, including derivatives Tax assets Assets classified as held for sale Other assets Total current assets Non-current assets Trade and other receivables Other financial assets, including derivatives Investments accounted for using the equity method Property, plant and equipment Exploration and evaluation assets Intangible assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing liabilities Other financial liabilities, including derivatives Tax liabilities Provisions Liabilities classified as held for sale Total current liabilities Non-current liabilities Trade and other payables Interest-bearing liabilities Other financial liabilities, including derivatives Tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total parent entity interest Non-controlling interests Total equity 2012 $million 357 2,306 259 824 38 155 3,939 2011 $million 728 2,159 263 544 2 153 3,849
6 7 9 15 10 8
6 9 11 12 13 14 8
17 337 5,962 10,895 838 5,966 27 24,042 27,981
24 562 5,470 10,313 965 5,693 24 23,051 26,900
16 17 18 19 20 10
2,063 145 1,684 71 315 16 4,294
2,020 595 2,217 2 275 5,109
16 17 18 19 20
365 5,734 1,482 1,074 574 9,229 13,523 14,458
412 4,193 2,282 855 533 8,275 13,384 13,516
22 23
4,345 (186) 8,935 13,094 1,364 14,458
4,029 (301) 8,504 12,232 1,284 13,516
The statement of financial position should be read in conjunction with the accompanying notes set out on pages 8 to 112.
Origin Energy Limited and Controlled Entities Statement of changes in equity

ShareForeign based currency payments translation reserve reserve 61 21 21 82 (239) 68 68 (171) Availablefor-sale reserve (5) (5) (5) NonRetained controlling earnings interests 8,504 (11) 980 969 (538) (538) 8,935 1,284 34 78 112 (65) 32 1 (32) 1,364
$million Balance as at 1 July 2011 Total other comprehensive income (refer note 24) Profit Total comprehensive income/(expense) for the period Dividends paid (refer note 5) Movement in share capital (refer note 22) Movement in share-based payments reserve Total transactions with owners recorded directly in equity Balance as at 30 June 2012
Share capital 4,029 316 316 4,345
Hedging reserve (123) 31 31 (92)
Total equity 13,516 117 1,058 1,175 (603) 348 22 (233) 14,458
Balance as at 1 July 2010 Total other comprehensive income (refer note 24) Profit Total comprehensive income/(expense) for the period Dividends paid (refer note 5) Movement in share capital (refer note 22) Movement in share-based payments reserve Total transactions with owners recorded directly in equity Balance as at 30 June 2011
1,683 2,346 2,346 4,029
47 14 14 61
(132) (107) (107) (239)
(107) (16) (16) (123)
(7) 7 7 -
8,765 (5) 186 181 (442) (442) 8,504
1,189 (58) 62 4 (62) 153 91 1,284
11,438 (179) 248 69 (504) 2,499 14 2,009 13,516
The statement of changes in equity should be read in conjunction with the accompanying notes set out on pages 8 to 112.
Origin Energy Limited and Controlled Entities Statement of cash flows for the year ended 30 June
Note Cash flows from operating activities Cash receipts from customers Cash paid to suppliers Cash generated from operations Dividends/distributions received from equity accounted investees Income taxes (paid)/received Acquisition transaction costs Net cash from operating activities Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of exploration and development assets Acquisition of other assets Acquisition of businesses, net of cash acquired Investment in joint ventures/associates Interest received Net proceeds from sale of non-current assets Repayment of loans to equity accounted investees Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Interest paid Proceeds from issue of share capital - senior executive options Proceeds from issue of share capital - underwritten dividend reinvestment plan Dividends paid by the parent entity Dividends paid to non-controlling interests Proceeds from share rights issues Proceeds from shares issued by Contact Energy, a controlled entity of the consolidated entity Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate changes on cash Cash and cash equivalents at the end of the period 2012 $million 2011 $million
25(c)
13,991 (12,115) 1,876 4 (39) (19) 1,822
10,362 (8,768) 1,594 9 3 (205) 1,401
25(d)
(1,203) (127) (173) 75 (109) 37 41 (1,167) (2,626)
(1,055) (150) (422) (3,125) (49) 39 4 (4,758)
22
7,423 (6,330) (403) 10 145 (377) (34) 434 (370) 724 3 357
9,788 (8,191) (308) 18 (381) (27) 2,252 115 3,266 (91) 819 (4) 724
25(a)
The statement of cash flows should be read in conjunction with the accompanying notes set out on pages 8 to 112.
Origin Energy Limited and Controlled Entities Notes to the financial statements
1. Statement of significant accounting policies
Origin Energy Limited (the company) is a company domiciled in Australia. The address of the Companys registered office is Level 45, Australia Square, 264 -278 George Street, Sydney NSW 2000. The financial statements of the company for the year ended 30 June 2012 comprise the company, its controlled entities and the consolidated entity's interest in associates and joint ventures (together referred to as the consolidated entity). The consolidated financial statements were approved by the Board of Directors on 23 August 2012. The consolidated entity is a for-profit entity and primarily is involved in the operation of energy businesses including the exploration and production of oil and gas; electricity generation; wholesale and retail sale of electricity and gas; and renewable energy development opportunities in Australia and overseas. (A) Statement of compliance The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial statements of the consolidated entity comply with International Financial Reporting Standards adopted by the International Accounting Standards Board. (B) Basis of preparation The consolidated financial statements are presented in Australian dollars, which is the functional currency of the company and the majority of the controlled entities in the consolidated entity. Unless otherwise stated all reference to '$' refers to Australian dollars. The accounting policies set out below have been applied consistently to all periods presented in the financial statements. The accounting policies have been applied consistently by all entities in the consolidated entity. The entity has not elected to early adopt any accounting standards and amendments. The financial statements are prepared on the historical cost basis except for the following material items in the statement of financial position: derivative financial instruments and financial assets classified as available -for-sale that are measured at their fair value; and environmental scheme certificates which can be traded in an active market are measured at their fair value. The company is of a kind referred to in Australian Securities and Investments Commission (ASIC) Class Order (CO) 98/100 dated 10 July 1998 (updated by CO 05/641 effective 28 July 2005 and CO 06/51 effective 31 January 2006) and in accordance with that Class Order, amounts in the financial statements and Directors Report have been rounded off to the nearest million d ollars, unless otherwise stated. Certain comparative amounts have been reclassified to conform to the current year's presentation.
1. Statement of significant accounting policies (continued)
(C) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Refer to note 1(AM) for accounting estimates and judgements. (D) Principles of consolidation Accounting for acquisitions of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised. The adjustments to noncontrolling interests are based on a proportionate amount of the net assets of the controlled entity. Controlled entities The financial statements of the consolidated entity include the financial statements of Origin Energy Limited and all entities in which it had a controlling interest during the year. Where control of entities commenced or ceased during the year, the profits or losses are included only from the date control commenced or up to the date control ceased. Non-controlling interests in equity and the profit or loss of entities that are under the control of Origin Energy Limited are shown as a separate item in the financial statements. Associates and joint ventures (equity accounted investees) Associates are those entities over which the consolidated entity exercises significant influence, but not control, over the financial and operating policies and which are not intended for sale in the near future. Significant influence is presumed to exist when the consolidated entity holds between 20 and 50 per cent of the voting power of another entity. Joint ventures are those entities over whose activities the consolidated entity has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. In the financial statements, investments in associates and investments in incorporated joint ventures, including partnerships, are accounted for using equity accounting principles. The financial statements include the consolidated entity's share of the income and expenses and equity movements of the equity accounted investees, after adjusting to align the accounting policies with those of the consolidated entity, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the consolidated entity's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the consolidated entity has an obligation or has made payments on behalf of the investee.
(D) Principles of consolidation (continued) The equity accounted results are disclosed in the income statement as "share of results of equity accounted investees". Jointly controlled operations and assets The consolidated entity's interests in unincorporated joint ventures are brought to account by including the assets that it controls and the liabilities that it incurs in the course of pursuing the joint operation, and the expenses that it incurs and its share of the income that it earns from the joint operation on a line-by-line basis, from the date joint control commences to the date joint control ceases. Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the consolidated entity. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the consolidated entity takes into consideration potential voting rights that are currently exercisable. Any contingent consideration arising from a business combination is recognised at fair value at the acquisition date. Changes to the fair value that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained subsequent to the acquisition date about facts and circumstances that existed at the acquisition date. The measurement period ends as soon as all information is received but is no longer than twelve months. Any changes to the fair value of the contingent consideration after the measurement period are recognised in the income statement. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the consolidated entity reports provisional amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised to reflect the new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the consolidated entity incurs in connection with a business combination, are expensed as incurred. Business combinations from entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the consolidated entity are accounted for by recognising the assets and liabilities acquired at the carrying amounts recognised previously in the consolidated entity's controlling shareholder's consolidated financial statements. The components of equity of the acquired entities are added to the same components within the consolidated entitys equity. Any cash paid for the acquisition is recognised directly in equity.
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(D) Principles of consolidation (continued) Transactions eliminated on consolidation The effects of transactions between entities consolidated in the financial statements, and any unrealised income and expenses arising from these transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the consolidated entitys interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (E) Segment reporting The consolidated entity determines and presents operating segments based on the information that is internally provided to the Managing Director who is the chief operating decision maker. The Managing Director regularly receives financial information on the segment result and underlying consolidated profit of each operating segment and the statutory profit. A reconciliation is also received to show the financial impact of the individual items that are excluded from statutory profit in the measurement of segment result and underlying consolidated profit. The segment result and underlying consolidated profit information is provided to the Managing Director to assess the performance of the consolidated entitys business. The nature of items adjusted for in the measurement of segment result and underlying consolidated profit include gains and losses on the movement in fair value of financial instruments not qualifying for hedge accounting; impairment of non-current assets; Australia Pacific LNG related items such as gains on dilution of the consolidated entitys interests in Australia Pacific LNG; and other items such as transition and transaction costs that would distort the comparability of the results of the performance of the consolidated entity. A reconciliation between statutory profit attributable to members of the parent entity and underlying consolidated profit, including further details of the items excluded from segment results and underlying consolidated profit, is included in note 2(b). A segment is a distinguishable component of the consolidated entity that is engaged in providing business activities that are regularly reviewed by the Managing Director. (F) Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and term deposits. Bank overdrafts that are repayable on demand and form an integral part of the consolidated entity's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Bank overdrafts are disclosed in note 17. (G) Trade and other receivables Trade and other receivables are initially recognised at fair value. Subsequent to initial recognition they are measured at amortised cost less accumulated impairment losses. Unbilled revenue represents estimated gas and electricity services supplied to customers but unbilled at the end of the reporting period.
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(H) Inventories Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Cost is determined predominantly on the first-in-first-out basis of valuation. The cost of coal and gas storage inventory is determined on a weighted average basis. Inventories are presented as a current asset as the consolidated entity expects to utilise the inventories within its normal operating cycle. (I) Deferred expenses Expenditure is deferred to the extent that it is probable that future economic benefits embodied in the expenditure will eventuate and can be reliably measured. Deferred expenses are amortised on a straight-line basis over the period in which the related benefits are expected to be realised. (J) Impairment The carrying amounts of assets, other than inventories, derivatives, environmental scheme certificates and deferred tax assets, are reviewed at each reporting date to determine if there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated, as discussed below for all assets except exploration and evaluation assets which is discussed in note 1(M). An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the cash-generating unit on a pro-rata basis. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the income statement is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement. An impairment loss with respect to an available-for-sale financial asset is not reversed. With the exception of available-for-sale financial assets any impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. An impairment loss in respect of assets other than goodwill is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.
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(K) Calculation of recoverable amount (continued) The recoverable amount of receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Significant receivables are individually assessed for impairment. Non-significant receivables are not individually assessed. Instead, impairment testing is performed by placing nonsignificant receivables into portfolios of similar risk profiles, based on objective evidence from historical experience adjusted for any effects of conditions existing at each reporting date. The recoverable amount of other assets is the greater of their fair value less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. (L) Intangible assets Goodwill All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets, liabilities and contingent liabilities acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested bi-annually for impairment. In respect of equity accounted entities, the carrying amount of goodwill is included in the carrying amount of the investment in the equity accounted entity. Negative goodwill arising on an acquisition is recognised directly in the income statement. Other intangible assets Other intangible assets are stated at cost less accumulated amortisation and impairment losses. Amortisation is recognised as an expense on a straight-line basis over the estimated useful lives of the assets. Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the consolidated entity has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Amortisation is recognised as an expense on a straight-line basis once the assets are ready for use, over the estimated useful lives of the assets.
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(M) Exploration and evaluation assets Exploration and evaluation assets are accounted for in accordance with the area of interest method. The application of this method is based on a partial capitalisation model closely aligned to the successful efforts approach. All exploration and evaluation costs, including directly attributable overheads, general permit activity, geological and geophysical costs are expensed as incurred except the cost of drilling exploration wells and the cost of acquiring new interests. The costs of drilling exploration wells are initially capitalised pending the determination of the success of the well. Costs are expensed where the well does not result in a successful discovery. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are expensed as incurred. Exploration and evaluation assets are partially or fully capitalised where the rights of the area of interest are current and either (i) the expenditure is expected to be recouped through successful development and exploitation of the area of interest (or alternatively, by its sale) or (ii) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing, or where both conditions are met. Upon approval for the commercial development of a project, the accumulated expenditure is transferred to development assets. Exploration and evaluation assets are reviewed at each reporting date to determine if there is any indication of impairment. Impairment indicators include (i) expiration of the right to explore in the specific area during the period or in the near future that is not expected to be renewed or (ii) substantive expenditure on further exploration for and evaluation of resources is not planned or budgeted for or (iii) a decision to discontinue activity in a specific area due to exploration for and evaluation of resources not leading to the discovery of commercially viable quantities or (iv) data indicating that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. (N) Development assets The costs of oil and gas assets in the development phase are separately accounted for and include costs transferred from exploration and evaluation assets once technical feasibility and commercial viability of an area of interest are demonstrable, and all development drilling and other subsurface expenditure. When production commences, the accumulated costs are transferred to producing areas of interest except for land and buildings and surface plant and equipment associated with development assets which are recorded in the other land and buildings and other plant and equipment categories respectively. (O) Investments in debt and equity securities Financial instruments held for trading are classified as current assets and are stated at fair value at the reporting date, with any resulting gain or loss recognised in the income statement. Other financial assets held by the consolidated entity are classified as being available-for-sale and are stated at fair value at the reporting date, with any resulting gain or loss recognised in other comprehensive income and presented directly in equity, except for impairment losses and in the case of monetary items such as foreign exchange gains and losses. When these investments are
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(O) Investments in debt and equity securities (continued) derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in profit or loss. The fair value of financial assets classified as available-for-sale is their quoted bid price at the reporting date. Financial assets classified as available-for-sale investments are recognised/derecognised by the consolidated entity on the date it commits to purchase/sell the investments. (P) Property, plant and equipment Items of property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Producing areas of interest The costs of oil and gas assets in production are separately accounted for and include costs transferred from exploration and evaluation assets, transferred development assets and the ongoing costs of continuing to develop reserves for production including an estimate of the costs to restore the site. Land and buildings and surface plant and equipment associated with producing areas of interest are recorded in the other land and buildings and other plant and equipment categories respectively. Leased plant and equipment Leases of plant and equipment which are classified as finance leases are capitalised and amortised over the period during which benefits are anticipated. Other leases are classified as operating leases and the lease costs are expensed on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Self-constructed assets These assets are carried at cost less accumulated depreciation and tested for impairment. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, an appropriate proportion of production overheads and capitalised interest. Depreciation and amortisation With the exception of producing areas of interest sub-surface assets and land, depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The carrying values of producing areas of interest sub-surface assets are amortised on a units of production basis using the proved and probable reserves to which they relate, together with the estimated future development expenditure required to develop those reserves. Land is not depreciated.
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(P) Property, plant and equipment (continued) The range of depreciation rates for the current and comparative period for each class of asset are: Generation property, plant and equipment Other land and buildings Other plant and equipment Producing areas of interest (Q) Finance leases Leases where substantially all the risks and rewards of ownership are assumed by the consolidated entity are classified as finance leases. Upon initial recognition a lease asset and a lease liability are recognised at the lower of the fair value and the present value of the minimum lease payments. Subsequent to initial recognition, lease liabilities are reduced by the repayments of principal with the interest components of the lease payments expensed in profit or loss. The asset is accounted for in accordance with the accounting policy applicable to assets in note 1(P). (R) Operating leases Payments made under operating leases are expensed on a straight-line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Lease incentives are recognised in the income statement as part of total lease expense spread over the lease term. (S) Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services received and are recorded at amortised cost. (T) Interest-bearing liabilities Interest-bearing liabilities are initially recognised at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of borrowings on an effective interest basis. Interest expense is recognised in the income statement as a component of net financing costs. (U) Defined benefit superannuation plan The consolidated entity's net obligation in respect of the defined benefit superannuation plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The benefit is discounted to determine its present value, and the fair value of the plan assets is deducted. The discount rate is the yield at the reporting date on Commonwealth Government bonds that have maturity dates approximating the terms of the consolidated entity's obligations. The calculation is performed by a qualified actuary using the projected unit credit method. The calculation for the financial year ended 30 June 2012 was performed on 13 July 2012. 1% - 33% 1% - 18% 1% - 50% 2% - 25%
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(U) Defined benefit superannuation plan (continued) When the benefits of the plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement. When the calculation results in plan assets exceeding liabilities to the consolidated entity, the recognised asset is limited to the total of any unrecognised past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Past service cost is the increase in the present value of the defined benefit obligation for employee services in prior periods, resulting in the current period from the introduction of, or changes to, post-employment benefits or other long-term employee benefits. Past service costs may either be positive (where benefits are introduced or improved) or negative (where existing benefits are reduced). Actuarial gains and losses are recognised directly in retained earnings in the period in which they occur and are presented in the statement of comprehensive income. (V) Defined contribution superannuation funds The consolidated entity makes contributions to defined contribution superannuation funds. All contributions made by the consolidated entity are recognised as a labour related expense within expenses in the income statement as incurred. (W) Long-term service benefits The consolidated entity's net obligation in respect of long-term service benefits, other than superannuation plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted using the rates attached to the Commonwealth Government bonds at the reporting date which have maturity dates approximating the terms of the consolidated entity's obligations. (X) Wages, salaries, annual leave and other employee benefits Liabilities for employee benefits for wages, salaries, annual leave and other employee benefits that are expected and due to be settled within 12 months of the reporting date represent present obligations resulting from employees services provided up to the reporting date calculated at undiscounted amounts based on remuneration wage and salary rates that the company expects to pay as at the reporting date including related on-costs, such as workers compensation insurance and payroll tax. (Y) Equity-based compensation Equity-based compensation benefits are provided to employees via the Long Term Incentive (LTI) Plan and the Employee Share Plan. The LTI Plan covers options and share rights (collectively securities). Share rights are in the form of Performance Share Rights (PSRs) and Deferred Share Rights (DSRs). The accounting policies regarding each of these plans are as follows:
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(Y) Equity-based compensation (continued) Senior Executive Options, Performance Share Rights and Deferred Share Rights The fair value of the securities granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date using a Black-Scholes methodology with a Monte Carlo simulation model, taking into account market performance conditions (except for DSRs which have a service and personal performance hurdle rather than market hurdle) and is recognised over the vesting period during which the employees become unconditionally entitled to the securities. The amount recognised as an expense is adjusted to reflect the actual number of securities that vest except where forfeiture of options and PSRs is due to market related conditions. Employee Share Plan Where shares allocated to the benefit of employees are purchased by the company on market, the fair value of the shares is recognised as a liability in the statement of financial position until paid and included in the income statement. (Z) Provisions A provision is recognised in the statement of financial position when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain. Provisions are determined by discounting the expected future cash flows required to settle the obligation at a pre-tax rate that reflects current market assessments of the time value of money and the risk free rate, being the rates on Commonwealth Government bonds most closely matching the expected future payments, except where noted below. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the recovery receivable is recognised as an asset when it is virtually certain that the recovery will be received and is measured on a basis consistent with the measurement of the related provision. In the income statement, the expense recognised in respect of a provision is presented net of the recovery. The unwinding of the discount on the provision is recognised in the income statement within net financing costs. In the statement of financial position, the provision is recognised net of the recovery receivable only when the entity has a legally recognised right to set off the recovery receivable and the provision, and intends to settle on a net basis, or to realise the asset and settle the provision simultaneously. Dividends A provision for dividends payable is recognised in the reporting period in which the dividend is declared, for the entire undistributed amount, regardless of the extent to which it will be paid in cash.
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(Z) Provisions (continued) Restoration, rehabilitation and dismantling Provisions for the estimated costs relating to current environmental restoration, rehabilitation and dismantling are recognised as liabilities when a legal or constructive obligation arises as a result of exploration, development and production activities having been undertaken, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the obligation arises as a result of the construction or installation of an asset or assets, an amount equal to the initial liability is capitalised as a component of the asset. At each reporting date, the restoration liability is remeasured in line with changes in discount rates, and timing or amount of the costs to be incurred. Any changes in the liability in future periods are added or deducted from the related asset, other than the unwinding of the discount which is recognised as interest expense in the income statement as it occurs. The costs, which include field site rehabilitation and restoration, remediation of soil, groundwater and untreated waste and dismantling and removal of infrastructure, are determined on the basis of current legal requirements and current technology. Changes in estimates are factored in on a prospective basis. Uncertainties exist as to the amount of the restoration obligations that will be incurred due to uncertainty as to the remaining life of existing operating sites and the impact of changes in environmental legislation. Onerous contracts An onerous contract provision is recognised when the unavoidable cost of meeting the obligation under the contract exceeds the economic benefits expected to be received under the contract. A provision is recognised at the present value of the obligation and is the lower of the cost of terminating the contract and the net cost of continuing with the contract. (AA) Share capital Ordinary shares Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit. Dividends Dividends are recognised as a liability in the period in which they are declared.
19
(AB) Revenue recognition Revenue Revenue comprises revenue earned (net of returns, discounts and allowances) from the provision of products or services to parties outside the consolidated entity, including estimated amounts for customers unread meters and is measured at the fair value of consideration received or receivable. Sales revenue is recognised in accordance with the contractual arrangements where applicable and only once the significant risks and rewards of ownership of the goods passes from the consolidated entity to the customer or when services have been rendered to the customer, collectability is reasonably assured and revenue can be measured reliably. In practice, the above revenue recognition approach is applied to the consolidated entity's operating segments as follows: Revenue from the sale of oil and gas in the Exploration & Production and Australia Pacific LNG operating segments is recognised when the commodities have been loaded for shipment and title passes to the customer. Revenue from electricity and gas supplied by the Energy Markets and Contact Energy operating segments is recognised once the electricity and gas have been delivered and is measured through a regular review of usage meters. Revenue from the sale of solar panels is recognised once installation is complete. Government grants Government grants are recognised in the statement of financial position initially as deferred income when there is reasonable assurance that they will be received and that the consolidated entity will comply with the conditions attaching to them. Grants that compensate the consolidated entity for expenses incurred are recognised as revenue in the income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the consolidated entity for the cost of an asset are deferred as unearned income until the asset is ready for use at which time they are recognised in the income statement as other income on a systematic basis over the useful life of the asset. Dividends All dividends received from controlled entites, jointly controlled entities and associates are recognised as income in the entitys stand alone accounts when the right to receive the dividend is established. Revenue from dividends from other investments is recognised when dividends are declared. Interest income Interest income is recognised in the income statement as it accrues. (AC) Net financing costs Net financing costs comprise interest payable on borrowings, dividends on redeemable preference shares recorded as debt, unwinding of discounts and interest receivable on funds invested. Borrowing costs are expensed as incurred and included in net financing costs in the income statement.
20
(AC) Net financing costs (continued) Financing costs incurred for the construction of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. (AD) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authorities. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as an expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the tax authorities is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authorities are classified as operating cash flows. (AE) Income tax Income tax on the profit and loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax receivable/payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill, the initial recognition of assets or liabilities that affect neither accounting, nor taxable profit, and differences relating to investments in controlled entities and equity accounted investees to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. The consolidated entitys Exploration & Production operations in New Zealand have an accounting functional currency other than the New Zealand dollar (NZD). New Zealand tax legislation dictates that these operations have a NZD currency for the purposes of submitting their tax returns. Origin is required to translate the NZD tax bases using the spot rate at the reporting date when performing the tax effect accounting calculation, with the foreign exchange movement recorded in the income statement through income tax expense. Petroleum Resource Rent Tax (PRRT) Petroleum Resource Rent Tax (PRRT) is considered, for accounting purposes, to be a tax based on income under AASB 112 Income Taxes. Accordingly, any current and deferred PRRT expense is measured and disclosed on the same basis as income tax.
21
(AF) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the relevant entitys functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement except for differences arising on a financial liability designated as a hedge of a net investment in foreign operations that is effective or are qualifying cash flow hedges, which are recognised in other comprehensive income and presented in equity. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined. (AG) Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation are translated to Australian dollars at foreign exchange rates in effect at the reporting date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised in other comprehensive income, and presented in the foreign currency translation reserve within equity. (AH) Net investment and hedge of net investment in foreign operations Exchange differences arising from the translation of the net investment in foreign operations, and of related hedges that are deemed effective, are recognised in other comprehensive income and presented in the foreign currency translation reserve within equity. They are released to the income statement upon disposal. The consolidated entity applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and the parent entitys functional currency, regardless of whether the net investment is held directly or through an immediate parent entity. (AI) Environmental scheme certificates The consolidated entity holds environmental scheme certificates in order to meet the consolidated entity's regulatory surrender obligations under various schemes in Australia and overseas. Both the environmental certificate assets and the surrender obligations are initially recorded at cost. Subsequent to initial recognition, they are recorded at fair value (being the market price for certificates at the reporting date) where there is an active market in which the consolidated entity participates in buying and selling activities. If there is no active market, the certificates continue to be recorded at cost.
22
(AJ) Derivative financial instruments The consolidated entity uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate, electricity price and commodity price risks arising from operating, financing and investing activities. In accordance with its treasury and energy risk management policies, the consolidated entity does not hold or issue derivative financial instruments for speculative or trading purposes. However, derivatives that do not qualify for hedge accounting are required to be accounted for as trading instruments. Derivative financial instruments are recognised initially at fair value on the date the instrument is entered into. Where a valuation technique results in a gain or loss at the execution date of an instrument, the day one gain or loss is not recognised at the date of execution and the impact of the day one gain or loss is excluded from the changes in fair value of the instrument recognised each period over the life of the instrument. Subsequent to initial recognition, derivative financial instruments are re-measured to fair value. The gain or loss on re-measurement to fair value is recognised immediately in the income statement unless the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition of the gain or loss in the income statement depends on the nature of the hedging relationship. The consolidated entity designates certain derivatives as either hedges of the exposure to fair value changes in recognised assets or liabilities or firm commitments (fair value hedges); hedges of the exposure to variability in cash flows attributable to a recognised asset or liability or highly probable forecast transactions (cash flow hedges); or hedges of net investments in foreign operations. Refer to note 29 for further details. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. (AK) Hedging Cash flow hedges Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in other comprehensive income and presented in the hedging reserve directly in equity. When the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, the associated cumulative gain or loss is removed from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss. For cash flow hedges, other than described above, the associated cumulative gain or loss is removed from equity and recognised in the income statement in the same period or periods during which the hedged forecast transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the income statement.
23
(AK) Hedging (continued) When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship, but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to occur, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the income statement. Economic hedges The consolidated entity holds a number of derivative instruments for economic hedging purposes under the board approved risk management policies, which are prohibited from being designated as hedges under AASB 139 Financial Instruments: Recognition and Measurement . These derivatives are therefore required to be categorised as held for trading with changes in the fair value being recognised in the income statement. Fair value hedges Where a derivative financial instrument is designated as a hedge of exposure to changes in fair value of a recognised asset or liability, the changes in fair value of the derivative are recognised in the income statement, together with the changes in fair value of the hedged asset or liability attributable to the hedged risk. Hedge of net investment in foreign operations The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an effective hedge is recognised in other comprehensive income and presented directly in equity in the foreign currency translation reserve. The ineffective portion is recognised immediately in the income statement. (AL) Assets and liabilities classified as held for sale Assets and liabilities that are expected to be recovered or settled primarily through sale rather than through continuing use, are classified as held for sale and recognised as current assets or current liabilities. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the consolidated entitys accounting policy for that asset or liability. Thereafter the assets or liabilities are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement at the end of each reporting period are recognised in the income statement. Once classified as held for sale, property, plant and equipment and intangible assets are no longer depreciated or amortised.
24
(AM) Accounting estimates and judgements Estimates of reserve quantities Reserves are estimates of the amount of product that can be economically and legally extracted from the consolidated entitys properties. In order to estimate economically recoverable reserves, assumptions are required about a range of geological, technical, legal and economic factors, including quantities, grades, production techniques, reversion rights, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size, shape and depth of reserve fields to be determined by analysing geological data such as drilling samples. This process may require complex and difficult geological judgements to interpret the data. Because the economic assumptions used to estimate economically recoverable reserves change from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period. Changes in reported reserves may affect the consolidated entitys financial results and financial position in a number of ways, including the following: asset carrying values (notes 11, 12 and 13) may be affected due to changes in estimated future cash flows depreciation, depletion and amortisation charged in the i ncome statement (note 3(b)) may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change restoration, rehabilitation and dismantling provisions (note 20) may change where changes in estimated reserves affect expectations about the timing or the cost of the activities the carrying value of deferred tax assets and tax liabilities (notes 15 and 19) may change due to changes in the estimates of the likely recovery of the tax benefits Restoration, rehabilitation and dismantling The consolidated entity estimates the future removal costs of off-shore oil and gas platforms, production facilities, wells, pipelines, LPG tankers and tanks and generation plants at the time of installation or construction of the assets. In most instances, removal of the assets occurs many years into the future. This requires judgemental assumptions regarding removal date, future environmental legislation, the extent of restoration and rehabilitation activities required, the methodology for estimating cost, future removal technologies in determining the removal cost, and the risk free rate to determine the present value of these cash flows. Refer to note 20 for the carrying value of these provisions.
25
(AM) Accounting estimates and judgements (continued) Impairment of assets In accordance with AASB 136 Impairment of assets, the recoverable amount of assets is the greater of its value in use and its fair value less costs to sell. An assets value in use is determined, in the absence of quoted market prices, through estimating the present value of future cash flows using asset specific discount rates. The value in use calculations are based on financial forecasts covering periods which reflect the long term nature of the assets. The forecasts include assumptions related to the growth in revenue, operating expenditure and capital expenditure. The growth assumptions are largely determined by contractual parameters and the projected Australian Consumer Price Index or equivalent. Expenditure growth for all assets is largely indexed to the projected Australian Consumer Price Index. Assumptions used for oil and gas properties also include reserves levels, future production profiles and commodity prices. The estimated future cash flows are discounted to their present value using a pre tax discount rate based on the weighted average cost of capital (WACC). The WACC takes into account the average rates of return required by providers of debt and equity (weighted to the market) to compensate them for the time value of money and the inherent risk or uncertainty in achieving the cash flow returns for that outlay of capital. The discount rates applied in determining the recoverable amounts of the cash generating units (CGU) with significant carrying amounts of goodwill are shown in note 14. The impairment assessment, performed at a CGU level is inclusive of the allocation of corporate assets. CGUs have been identified for the purpose of assessing impairment, on the grounds that these are the smallest identifiable groups of assets that generate cash inflows largely independent of the cash inflows from other assets or groups of assets. For further detail around key assumptions refer to note 14. The consolidated entity owns assets in Australia that are impacted by the Australian Governments Clean Energy Legislative package which included the Clean Energy Act, passed in the Federal Parliament on 8 November 2011. A key component of the legislative package is the Carbon Pricing Mechanism which is effective 1 July 2012. The introduction of a carbon framework will impact the value in use calculations applied for impairment reviews of the consolidated entitys Australian assets. The impact of the emissions legislation program has been included in the consolidated entitys asset recoverability testing at the reporting date. Exploration and evaluation assets The consolidated entity's accounting policy for exploration and evaluation assets is set out in note 1(M). The application of this policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under this policy, it is concluded that the consolidated entity is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the income statement. Refer to note 13 for the carrying value of exploration and evaluation assets.
26
(AM) Accounting estimates and judgements (continued) Amortisation of producing areas of interest The carrying values of producing areas of interest sub-surface assets are amortised on a units of production basis using the proved and probable reserves to which they relate, together with the estimated future development expenditure required to develop those reserves. Certain estimates and assumptions are used in determining these reserves and development cost estimates such as the assessment as to technical feasibility and commercial viability of an area and quantities of reserves. Refer above for further reserves assumptions and to note 12 for the carrying values of producing areas of interest. Commitments Commitments are estimated based on information and expectations as at the reporting date. Assumptions are made for expected performance and charges to be incurred in respect of committed arrangements including: delivery volumes, service levels, exchange rates and delivery timeframes. Refer to note 28 for further details. Fair value of financial instruments The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments that are not traded in an active market are determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Refer to note 29 for further details. Defined benefit superannuation plan obligations Various actuarial assumptions are utilised in the determination of the consolidated entitys defined benefit superannuation plan obligations. These assumptions are discussed in note 21. Unbilled revenue Unbilled revenue for unread gas and electricity meters is estimated at the end of the reporting period. This involves an estimate of consumption for each unread m eter based on the customers past consumption history or an estimate of unbilled days at an average billed rate over the billing cycle. Refer to note 6 for the carrying value of unbilled revenue. Taxation The consolidated entity is subject to income taxes in Australia and jurisdictions where it has foreign operations. Judgement is required in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable profits are available to utilise those temporary differences and losses, and the tax losses continue to be available, having regard to the nature and timing of their origination and compliance with the relevant tax legislation associated with their recoupment.
27
(AM) Accounting estimates and judgements (continued) Assumptions are made about the application of income tax legislation. These assumptions are subject to risk and uncertainty and there is a possibility that changes in circumstances will alter expectations which may impact the amount of deferred tax assets and deferred tax liabilities recorded in the statement of financial position and the amount of tax losses and timing differences not yet recognised. In these circumstances, the carrying amount of deferred tax assets and liabilities may change, impacting the profit or loss of the consolidated entity. Refer to notes 15 and 19 for the carrying value of tax assets and liabilities. Petroleum Resource Rent Tax (PRRT) From 1 July 2012, the Petroleum Resource Rent Tax (PRRT) applies to all Australian onshore oil and gas projects, including coal seam gas projects. In addition to the taxation estimates and judgements above, implementation of PRRT legislation involves judgement around the application of the PRRT legislation including, definition and grouping of PRRT projects, the taxing point of projects, the transfer price used for determining PRRT income, and the measurement of the Starting Base for transition of existing permits, production licences and retention leases into the PRRT regime. In assessing the recoverability of deferred tax assets, estimates are required in respect of future augmentation (escalation) of expenditure, the sequence in which current and future deductible amounts are expected to be utilised, and the probable cash flows used in determining the recoverability of deferred tax assets.
28
(AN) New standards and interpretations not yet adopted The following standards, amendments to standards and interpretations have been identified as those which may impact the consolidated entity in the period of initial application. They are available for early adoption at 30 June 2012, but have not been applied in preparing the financial statements: AASB 9 Financial Instruments AASB 10 Consolidated Financial Statements AASB 11 Joint Arrangements AASB 12 Disclosures of Interests in Other Entities AASB 13 Fair Value Measurement AASB 119 Employee Benefits AASB 127 Separate Financial Statements AASB 128 Investments in Associates and Joint Ventures AASB 1053 Application of Tiers of Australian Accounting Standards AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) AASB 2010-8 Amendments to Australian Accounting Standards Deferred Tax Recovery of Underlying Assets AASB 2011-4 Amendments to Australia Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangement Standards AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Other Comprehensive Income AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) AASB 2012-2 Amendments to Australian Accounting Standards Disclosures Offsetting Financial Assets and Financial Liabilities AASB 2012-3 Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle The consolidated entity is currently in the process of assessing the impact of the adoption of these standards.
29
Origin Energy Limited and Controlled Entities Notes to the financial statements for the year ended 30 June
2. Segments (a) Operating segments The operating segments have been presented on a basis consistent with the information that is internally provided to the Managing Director who is the chief operating decision maker for the consolidated entity. The consolidated entity's operating segments have been updated from those presented at 30 June 2011 to reflect the Final Investment Decision (FID) on the first phase of the Australia Pacific LNG export project, the deepening integration within the Energy Markets business between retail and generation activities, and increased development opportunities outside of existing operations. The comparative balances have been restated to conform to the current period presentation. The segments are: Energy Markets - Australian energy retailing, associated products and services; power generation in Australia; and LPG operations in Australia, the Pacific, Papua New Guinea and Vietnam. Exploration & Production - Gas and oil exploration and production in Australia, New Zealand and International areas of interest. Australia Pacific LNG - The consolidated entity's 42.5 per cent investment in Australia Pacific LNG (50 per cent at 30 June 2011) including current domestic operations and the Australia Pacific LNG coal seam gas to LNG export project. Contact Energy - The consolidated entity's investment in its 53.0 per cent owned New Zealand controlled entity (52.6 per cent at 30 June 2011) Contact Energy Limited, is involved in energy retailing, associated products and services, and power generation in New Zealand. Corporate - Corporate activities that are not allocated to other operating segments and business development activities outside of the consolidated entitys existing operations. The Managing Director receives financial information on the segment result of each operating segment so as to assess the performance of each segment. Segment result represents underlying earnings before interest and tax (EBIT) for the Energy Markets and Exploration and Production segments. Net financing costs and tax expense/(benefit) are allocated to Australia Pacific LNG, Contact Energy and the Corporate segments in measuring segment result. The Managing Director also receives a listing of the items excluded from segment result and underlying consolidated profit by segment, and a reconciliation of the consolidated statutory profit to the underlying consolidated profit.
30
2. Segments (continued) (a) Operating segments (continued) for the year ended 30 June Segment results: $million Revenue Total segment revenue Intersegment sales elimination (2) Total revenues from external customers Underlying Earnings before interest, tax, depreciation and amortisation (EBITDA) (3) Depreciation and amortisation expense Share of interest, tax, depreciation and amortisation of equity accounted investees Underlying Earnings before interest and tax (EBIT) Net financing costs Income tax expense Non-controlling interests Segment result and Underlying consolidated profit Items excluded from segment result and Underlying consolidated profit for the period (refer note 2(b)): Increase/(decrease) in fair value of financial instruments Impairment of assets Australia Pacific LNG related items Other Tax and non-controlling interests on items excluded from segment result Impact of items excluded from segment result and Underlying consolidated profit net of tax Statutory profit attributable to members of the parent entity 1,562 (237) (8) 1,317 1,174 (189) (7) 978 329 (224) 105 268 (221) 47 47 (33) 14 14 63 (42) 21 21 400 (151) (1) 248 (67) (51) (70) 60 345 (128) (3) 214 (60) (47) (61) 46 (81) (2) (3) (86) (150) (364) (3) (603) (68) (1) 3 (66) (83) (269) (1) (419) 2,257 (614) (45) 1,598 (217) (415) (73) 893 1,782 (539) (49) 1,194 (143) (316) (62) 673 Energy Markets 2012 2011 10,250 10,250 8,109 8,109 Exploration & Production 2012 2011 735 (152) 583 701 (174) 527 Australia Pacific LNG 2012 (1)
2011 -
Contact Energy 2012 2011 2,102 2,102 1,708 1,708
Corporate 2012 2011 -
Consolidated 2012 2011 13,087 (152) 12,935 10,518 (174) 10,344
1,317
978
105
47
175 (87) (108)
(214) (251)
2 (225) -
1 -
421 9
12 4 16
(9) (3) 20 (2) 6
(5) 4 (1)
(2) (197) (8) 101 (106)
17 (214) (2) 161 (38)
166 (512) 421 (96) 108 87 980
(201) (214) 12 (253) 169 (487) 186
(20)
(465)
(223)
430
(1) (2) (3)
The consolidated entity owns a 42.5 per cent share of Australia Pacific LNG at 30 June 2012 (30 June 2011: 50 per cent). Refer to note 11(b) for further details. Intersegment pricing is determined on an arm's length basis. Intersegment sales are eliminated on consolidation. The Exploration & Production segment sells gas and LPG to the Energy Markets segment. Underlying EBITDA includes the consolidated entity's share of underlying EBITDA of equity accounted investees of $73 million (2011: $79 million). Refer to note 11(a) for further details. 31
2. Segments (continued) (a) Operating segments (continued) as at 30 June Other segment information: $million Assets Segment assets Investments accounted for using the equity method (refer note 11(a)) Cash and interest rate derivatives and current and deferred tax assets Total assets Energy Markets 2012 2011 12,833 71 12,504 64 Exploration & Production 2012 2011 3,617 5 3,460 Australia Pacific LNG 2012 5,769 5,769
(1)
2011 5,258 5,258
Contact Energy 2012 2011 5,072 5 5,077 4,591 9 37 4,637
Corporate 2012 2011 140 117 352 609 140 139 698 977
Consolidated 2012 2011 21,662 5,962 357 27,981 20,695 5,470 735 26,900
12,904
12,568
3,622
3,460
Liabilities Segment liabilities Other financial liabilities, interestbearing liabilities and related derivatives and tax liabilities Total liabilities Acquisitions of non-current assets (includes capital expenditure)
(2,384)
(2,839)
(693)
(467)
(380)
(353)
(275)
(186)
(3,732)
(3,845)
(2,384)
(2,839)
(693)
(467)
(3,576) (3,576)
(3,576) (3,576)
(2,064) (2,444)
(1,835) (2,188)
(4,151) (4,426)
(4,128) (4,314)
(9,791) (13,523)
(9,539) (13,384)
567
3,991
450
301
451
443
112
36
1,580
4,771
(1)
Origin owns a 42.5 per cent share of Australia Pacific LNG at 30 June 2012 (30 June 2011: 50 per cent). Refer to note 11(b) for further details.
32
2. Segments (continued) (b) Reconciliation of underlying consolidated profit to statutory profit for the year ended 30 June $million 2012 Noncontrolling Tax interests 2011 Noncontrolling Tax interests
Gross Profit attributable to members of the parent entity Items excluded from segment result and underlying consolidated profit attributable to members of the parent entity: Increase/(decrease) in fair value of financial instruments Impairment of assets Australia Pacific LNG related items Other Total items excluded from segment result and underlying consolidated profit Underlying consolidated profit 166 (512) 421 (96) (21)
Net 980
Gross
Net 186
(50) 104 9 50 113
3 1 (9) (5)
119 (407) 430 (55) 87 893
(201) (214) 12 (253) (656)
60 54 4 51 169
2 (2) -
(139) (160) 16 (204) (487) 673
Refer to note 2(c) for explanatory notes. 33
2. Segments (continued) (c) Explanatory notes to the reconciliation of underlying consolidated profit to statutory profit Increase/(decrease) in fair value of financial instruments Change in fair value of financial instruments primarily relates to instruments that are effective economic hedges but do not qualify for hedge accounting. Impairment of assets During the year ended 30 June 2012 the consolidated entity reviewed the carrying amount of its noncurrent assets. The review led to the recognition of an impairment loss of $512 million which has been recorded in the line item 'expenses' (refer note 3(b)) in relation to property, plant and equipment, exploration assets, intangibles assets and investments in equity accounted investees; and comprises the following: 2012 Gross 153 44 65 5 17 198 27 3 512
$million Transform Solar Geothermal development opportunities Wind development opportunities Gas fired development site in central NSW Worsley Generation Plant Ironbark Surat assets Clutha Hydro site (Contact Energy Limited)
Tax (18) (11) (5) (2) (59) (8) (1) (104)
- $153 million: in respect of the consolidated entity's 50 per cent equity accounted investment in the Transform Solar Joint Venture arising from a scale back of operations and challenging economic conditions impacting the commercialisation benefits of the Sliver technology; - $44 million: in respect of the Australian Geothermal development opportunities which have not met expectations for a timely and commercial development of the geothermal resources; - $65 million: in respect of the consolidated entitys portfolio of wind development opportunities following the de-prioritisation of certain sites; - $5 million: following the de-prioritisation of a prospective gas fired generation development site in central NSW; - $17 million: in respect of the consolidated entitys 50 per cent interest in the Worsley Generation plant, reflecting a revised view of the plant's future contracted capacity; - $198 million: relates to the Ironbark CSG permit area in respect of the realisation of an upfront tax deduction for the permit acquisition; - $27 million: from the unlikelihood of realising value from the Surat assets with neglible reserves at 30 June 2012; and - $3 million: recorded by Contact Energy Limited (a 53.0 per cent owned controlled entity of the consolidated entity) as a result of the decision not to proceed with any of the options being investigated for hydro generation development on the Clutha Hydro site for the foreseeable future.
34
2. Segments (continued) (c) Explanatory notes to the reconciliation of underlying consolidated profit to statutory profit (continued) Australia Pacific LNG related items $million Dilution gain on Australia Pacific LNG investment Financing costs not able to be capitalised Share of unwinding of discounted receivables within Australia Pacific LNG Share of tax expense on translation of foreign denominated long term tax balances Foreign currency gain 2012 Gross 437 (72) 21 (5) 40 421 Tax 22 (13) 9
- $437 million: net gain on dilution of the consolidated entity's investment in Australia Pacific LNG arising on Australia Pacific LNG issuing new shares to China Petroleum and Chemical Corporation (Sinopec), resulting in Sinopec holding a 15 per cent interest in Australia Pacific LNG and the consolidated entity's interest in Australia Pacific LNG diluting from 50 per cent to 42.5 per cent; - $72 million: net financing costs incurred by the consolidated entity in funding the Australia Pacific LNG project. The interest would otherwise be capitalised except for the investment being held via an equity accounted investment. If the development project was completed by the consolidated entity, the interest would be capitalised; - $21 million: the consolidated entity's share of the unwinding of discounted receivables within Australia Pacific LNG, refer note 11(b); - $5 million: share of tax expense on translation of foreign denominated long term tax balances recorded in the equity accounted investment in Australia Pacific LNG; and - $40 million: foreign currency gain incurred by the consolidated entity and Australia Pacific LNG in relation to the funding and development of Australia Pacific LNG. Other $million Retail business transformation and transition costs and NSW Energy assets transition costs Transaction costs for acquisition activity Gain on Contact Energy's exiting of investment in Oakey Power Holdings Pty Ltd Tax expense on translation of foreign denominated long term tax balances Recognition of tax benefits not previously brought to account relating to Powercor Trading Contracts Recognition of deferred tax benefit in respect of the Petroleum Resource Rent Tax (PRRT) legislation 2012 Gross 111 8 (23) 96 Tax (36) 1 7 (6) (16) (50)
35
2. Segments (continued) (d) Geographical information for the year ended 30 June 2012 $million Revenue Australia New Zealand Other (1) Total revenue from external customers 2011 $million
10,533 2,291 111 12,935
8,377 1,876 91 10,344
Non-current assets Australia New Zealand Other (1) Total segment non-current assets
18,280 5,266 159 23,705
17,526 4,904 59 22,489
(1)
The other geographic segment includes operations in the Pacific, South East Asia, Papua New Guinea, Chile, Indonesia, Kenya and Botswana.
In presenting geographical information revenue is based on the geographical location of customers. Non-current assets, which exclude financial instruments and deferred tax assets, are based on the geographical location of the assets.
36
3. Profit Note (a) Other income Net gain on dilution of Origin's interest in equity accounted investees Net gain on sale of other assets Net foreign exchange gain Government grants/subsidies Other Total other income (b) Expenses Raw materials and consumables used, and changes in finished goods and work in progress Labour related expenses Exploration expense Depreciation and amortisation expense Impairment of assets Increase/(decrease) in fair value of financial instruments Transition and transaction costs Other expenses Expenses (c) Net financing costs Interest income Other parties Interest expense Other parties Impact of discounting on long term provisions Unwinding of discounted liability payable to Australia Pacific LNG Interest expense related to Australia Pacific LNG funding 2012 $million 2011 $million
2(b)
437 27 34 1 5 504
5 2 2 9
21
2(b) 2(b) 2(b)
(9,255) (708) (49) (614) (512) 166 (119) (738) (11,829)
(7,379) (540) (118) (539) (214) (201) (253) (613) (9,857)
37 37 (217) (37) (72) (326) (289)
36 36 (157) (22) (12) (191) (155)
Net financing costs Net financing costs excluding unwinding of discounted liability payable to Australia Pacific LNG and interest expense related to Australia Pacific LNG funding Financing costs capitalised
(2) (1)
(217) 142
(143) 153
(1)
Disclosure is provided to enable reconciliation to net financing costs included in the segment analysis in note 2(a). Capitalised interest is calculated at an average rate based on the general borrowings of the consolidated entity (2012: 7.53 per cent; 2011: 7.18 per cent). 37
(2)
4. Income tax expense 2012 $million Income tax Current tax expense Deferred tax expense Over provided in prior years Petroleum resource rent tax deferred tax benefit Total income tax expense in the income statement 2011 $million
103 217 (2) (16) 302
40 115 (8) 147
Reconciliation between tax expense and pre-tax net profit Profit before income tax Income tax using the domestic corporation tax rate of 30 per cent (2011: 30 per cent) Prima facie income tax expense on pre-tax accounting profit: - at Australian tax rate of 30 per cent - adjustment for difference between Australian and overseas tax rates Income tax expense on pre-tax accounting profit at standard rates Increase/(decrease) in income tax expense due to: Tax benefit not recognised for acquisition transaction costs Impairment expense not recoverable Share of results of equity accounted investees Gain on dilution of equity accounted investees Recognition of change in net tax loss position Recognition of tax benefits relating to Powercor Trading Contracts not previously brought to account Tax expense on translation of foreign denominated tax balances Other Over provided in prior years - current and deferred Income tax expense on pre-tax net profit Petroleum resources rent tax Total income tax expense
1,360
395
408 (3) 405
119 7 126
50 (11) (131) 2 (6) 7 4 (85) (2) 318 (16) 302
58 11 (15) (2) (31) 8 29 (8) 147 147
Deferred tax movements recognised directly in equity (including foreign currency translation) Fair value of available-for-sale financial assets 2 Financial instruments at fair value 12 (6) Property, plant and equipment 13 (43) Provisions (1) 5 Other items (5) (2) 19 (44)
38
4. Income tax expense (continued) $million Income tax expense recognised in other comprehensive income Available for sale assets: (Gains)/losses transferred to income statement Cash flow hedges: Losses transferred to income statement Transferred to carrying amount of assets Foreign currency translation gain Valuation loss taken to equity Net (loss)/gain on hedge of net investment in foreign operations Foreign currency translation differences for foreign operations Actuarial (loss)/gain on defined benefit superannuation plan Other comprehensive income/(loss) for the period 2012 Gross 2012 Tax 2012 Net 2011 Gross 2011 Tax 2011 Net
(8)
(5)
(2)
109 4 6 (65) (37) 129 (13) 125
(31) (2) 18 4 (8)
78 2 6 (47) (37) 129 (9) 117
141 2 2 (168) 73 (245) 4 (182)
(42) (1) 49 (1) 3
99 1 2 (119) 73 (245) 3 (179)
39
5. Dividends 2012 $million (a) Dividend reconciliation Final dividend of 25 cents per share, fully franked at 30 per cent, paid 29 September 2011 (2011: Final dividend of 25 cents per share, fully franked at 30 per cent, paid 28 September 2010) Interim dividend of 25 cents per share, fully franked at 30 per cent, paid 30 March 2012 (2011: Interim dividend of 25 cents per share, fully franked at 30 per cent, paid 1 April 2011) 2011 $million
266
221
272 538
221 442
(b) Subsequent event Since the end of the financial year, the directors have declared a final dividend of 25 cents per share, fully franked at 30 per cent, payable 27 September 2012.
272
The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2012 and will be recognised in subsequent financial statements. (c) Dividends per share Dividends paid or provided for during the reporting period Current year interim franked dividend per share Previous year final franked dividend per share Dividends proposed and not recognised as a liability Franked dividend per share
25 cents 25 cents
25 cents 25 cents
25 cents
(d) Dividend franking account Franking credits available to shareholders of Origin Energy Limited for subsequent financial years are: Australian franking credits available at 30 per cent 58 213 New Zealand franking credits available at 28 per cent (in NZD) 140 140 The ability to utilise the franking credits is dependent upon the ability to declare dividends.
40
6. Trade and other receivables 2012 $million Current Trade receivables net of allowance for doubtful debts Unbilled revenue Other debtors 2011 $million
890 1,317 99 2,306
867 1,201 91 2,159
Non-current Trade receivables
17 17
24 24
Trade receivables of the consolidated entity's operations denominated in currencies other than the functional currency of the operations comprise $8 million denominated in US dollars (2011: $6 million) and $2 million denominated in New Zealand dollars (2011: $13 million). The consolidated entity's policy requires trade debtors to pay in accordance with agreed payment terms. Depending on the customer segment, the settlement terms are generally 14 to 30 days from the date of the invoice. All credit and recovery risk associated with trade debtors has been provided for in the statement of financial position. The average age of trade receivables is 22 days (2011: 22 days). The movement in the allowance for doubtful debts in respect of trade receivables during the year is as follows: Balance as at 1 July Acquired impairment losses recognised for the NSW acquisition Impairment losses recognised Amounts written off Balance as at 30 June 62 70 (66) 66 27 31 60 (56) 62
The aging of the consolidated entity's trade receivables at the reporting date is detailed below: 2012 2012 2011 2011 $million $million $million $million Total Allowance Total Allowance Current 599 (1) 665 (1) 30 - 60 days 126 (2) 95 (2) 60 - 90 days 45 (1) 38 (1) More than 90 days 186 (62) 131 (58) 956 (66) 929 (62)
41
7. Inventories Note Raw materials and stores Finished goods Inventory gas 2012 $million 79 42 138 259 2011 $million 92 43 128 263
8. Other assets Current Prepayments Deposits
77 78 155
84 69 153
Non-current Prepayments
27 27
24 24
9. Other financial assets, including derivatives Current Derivative financial instruments Available-for-sale financial assets Environmental scheme certificates
29 29 29
545 11 268 824
310 15 219 544
Non-current Derivative financial instruments Environmental scheme certificates Available-for-sale financial assets: Listed shares Investments held in other corporations Other available-for-sale financial assets
29 29
44 280
132 410
29 29 29
2 2 9 13 337
4 4 12 20 562
42
10. Assets and liabilities classified as held for sale At 30 June 2012 the following assets and liabilities were classified as held for sale: 2012 $million Assets classified as held for sale Producing areas of interest (1) Exploration asset
(2) (3)
2011 $million
13 5 6 10 4 38
Generation property, plant and equipment Other plant and equipment (1) Inventories (1)
Liabilities classified as held for sale Restoration, rehabilitation and dismantling provision
(1)
16 16
Cumulative income or expenses recognised in other comprehensive income There are no cumulative income or expenses recognised in other comprehensive income relating to the assets and liabilities held for sale.
(1)
The Tariki, Ahuroa, Waihapa and Ngaere (TAWN) fields along with the Waihapa Production Station and associated infrastructure assets have been classified as held for sale following the consolidated entity entering into an agreement on 31 May 2012 to sell the TAWN assets. The sale is expected to complete in the year ending 30 June 2013. The exploration asset relates to the consolidated entity's interest in a drilling rig held by the Innamincka Deeps joint venture with Geodynamics; the drilling rig is subject to a sale agreement, with the sale expected to complete in the year ending 30 June 2013. Certain land assets have been classified as held for sale as they are being actively marketed by Contact Energy, a 53.0 per cent owned controlled entity of the consolidated entity, following Board approval to dispose of the land. These land assets are expected to be sold within the year ending 30 June 2013.
(2)
(3)
43
11. Investments accounted for using the equity method (a) Investments summary Principal Note activity Place of Reporting incorporation date Ownership interest per cent 50.0 50.0 50.0 40.0 50.0 50.0 Share of interest, tax, depreciation Share of and EBITDA amortisation $million $million 15 3 18 40 4 (2) (1) 7 48 66 (8) (1) (9) (15) 1 (4) (18) (27) Equity accounted investment carrying amount $million 38 23 61 5,769 33 43 5 15 36 5,901 5,962
2012 Associates BIEP Pty Ltd BIEP Security Pty Ltd CUBE Pty Ltd (1) Energia Andina S.A.(2) Gas Industry Superannuation Pty Ltd Oakey Power Holdings Pty Ltd Rockgas Timaru Ltd (4) Joint venture entities Australia Pacific LNG Pty Ltd Bulwer Island Energy Partnership Energia Austral S.A.(5) KUBU Energy Resources (Pty) Limited OTP Geothermal Pte Ltd (7) PNG Energy Developments Limited (8) Transform Solar Pty Ltd (9)
(6) (3)
Share of net profit $million 7 2 9 25 4 (1) (1) 3 30 39
Cogeneration Cogeneration Cogeneration Geothermal activities Superannuation trustee
Vic Vic SA Chile
30 30 30 31
June June June Dec
SA Electricity generation NSW LPG distributor NZ
30 June 30 June 31 Mar
11(b) Coal seam gas (CSG)
NSW Qld Chile Botswana Singapore PNG NSW
30 June 30 31 30 31 31 30 June Dec June Dec Dec June
42.5 50.0 20.7 (5) 50.0 50.0 50.0 50.0
Cogeneration Hydro development CSG exploration Geothermal activities Hydro development Solar technology
Total Consolidated entity's share of items recorded in Australia Pacific LNG treated as items excluded from underlying consolidated profit (11) Total excluding the consolidated entity's share of items recorded in Australia Pacific LNG treated as items excluded from underlying consolidated profit
Refer to page 46 for footnotes.
(12)
7 73
(18) (45)
(11) 28
44
11. Investments accounted for using the equity method (continued) (a) Investments summary (continued) Principal Note activity Place of Reporting incorporation date Ownership interest per cent 50.0 50.0 50.0 40.0 50.0 25.0 50.0 50.0 Share of interest, tax, depreciation Share of and EBITDA amortisation $million $million 12 6 18 63 5 (2) (5) 61 79 (7) (3) (10) (18) 1 2 (15) (25) Equity accounted investment carrying amount $million 33 13 9 55 5,258 31 6 8 112 5,415 5,470
2011 Associates BIEP Pty Ltd BIEP Security Pty Ltd CUBE Pty Ltd (1) Energia Andina S.A.(2) Gas Industry Superannuation Pty Ltd Oakey Power Holdings Pty Ltd Rockgas Timaru Ltd (4) Vitalgas Pty Ltd (10) Joint venture entities Australia Pacific LNG Pty Ltd Bulwer Island Energy Partnership OTP Geothermal Pte Ltd PNG Energy Developments Limited Transform Solar Pty Ltd (9)
(7) (8) (3)
Share of net profit $million 5 3 8 45 5 (1) (3) 46 54
Cogeneration Cogeneration Cogeneration Geothermal activities Superannuation trustee
Vic Vic SA Chile
30 30 30 31 30 30 31 31
June June June Dec June June Mar Dec
SA Electricity generation NSW LPG distributor NZ Autogas distributor NSW
11(b) Coal seam gas (CSG)
NSW
30 June 30 31 31 30 June Dec Dec June
50.0 50.0 50.0 50.0 50.0
Cogeneration Qld Geothermal activities Singapore Hydro development PNG Solar technology NSW
Total Consolidated entity's share of items recorded in Australia Pacific LNG treated as items excluded from underlying consolidated profit Total excluding the consolidated entity's share of items recorded in Australia Pacific LNG treated as items excluded from underlying consolidated profit
(12)
79
(24) (49)
(24) 30
45
11. Investments accounted for using the equity method (continued) (a) Investments summary (continued)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
Osborne Cogeneration Pty Ltd, a company incorporated in SA, is a wholly-owned controlled entity of CUBE Pty Ltd. Origin Energy Geothermal Chile Limitada acquired 40 per cent of the shares in Energia Andina S.A. in May 2011, forming a joint venture with Antofagasta Minerals S.A. Oakey Power Holdings Pty Ltd was an associate of Contact Energy Limited, a 53.0 per cent owned controlled entity of the consolidated entity. Contact Energy Limited held a 25 per cent interest in Oakey Power Holdings Pty Ltd. Contact exited its investment in Oakey Power Holdings Pty Ltd on 18 January 2012 for proceeds of $31 million. A gain of $22 million post tax has been recognised in the income statement for the year ended 30 June 2012 and has been excluded from underlying consolidated profit (refer note 2(b)). Rockgas Timaru Ltd is an associate of Contact Energy Limited, a 53.0 per cent owned controlled entity of the consolidated entity. Contact Energy Limited has a 50 per cent interest in Rockgas Timaru Ltd. On 3 April 2012, the consolidated entity acquired a 51 per cent voting interest in Energia Austral SpA through being issued 150,000,000 partly paid ordinary shares in Energia Austral SpA. As at 30 June 2012, the consolidated entity has fully paid US$37,510,000 of these ordinary shares, giving it an economic interest of 20.7 per cent in Energia Austral SpA. The consolidated entity expects to pay the remaining unpaid shares in accordance with specific development milestones up to a total amount of US$150 million. The consolidated entity does not control Energia Austral as the Shareholders Agreement provides for joint control between the consolidated entity and Xstrata over the key strategic financial and operating decisions of the entity. Kubu Energy Resources (Pty) Limited is a joint venture established in November 2011 and owned 50 per cent by the consolidated entity and 50 per cent by Sasol Petroleum International (Pty) Limited. OTP Geothermal Pte Ltd is a joint venture established during the year ended 30 June 2011 and owned 50 per cent by the consolidated entity and 50 per cent by Trust Energy Resources Pte Ltd. OTP Geothermal Pte Ltd owns 95 per cent of the Sorik Marapi geothermal concession. The consolidated entity has a 50 per cent interest in PNG Energy Developments Limited, a joint venture focussed on hydro generation development opportunities in Papua New Guinea. Transform Solar Pty Ltd is owned 50 per cent by the consolidated entity. Refer to note 2(b) for details on the impairment loss of $153 million recognised against the consolidated entity's investment in the Transform Solar joint venture recorded at 30 June 2012. Vitalgas Pty Limited, a 50:50 joint venture between the consolidated entity and Caltex was divested on 1 November 2011. The consolidated entity's share of items recorded in Australia Pacific LNG treated as items excluded from underlying consolidated profit include the consolidated entity's share of the unwinding of discounted receivables (EBITDA $Nil, ITDA $21 million gain); share of tax expense on foreign denominated long term tax balances (EBITDA $Nil, ITDA $5 million expense) and share of foreign currency loss incurred by Australia Pacific LNG in relation to the funding and development of Australia Pacific LNG (EBITDA $7 million loss, ITDA $2 million benefit). Disclosure is provided to enable the reconciliation to share of interest, tax, depreciation and amortisation of equity accounted investees included in the segment analysis in note 2(a).
46
11. Investments accounted for using the equity method (continued) (b) Investment in Australia Pacific LNG Pty Ltd The consolidated entity entered into a joint venture with ConocoPhillips to develop a CSG to LNG project using the consolidated entity's CSG reserves and resources in Queensland through Australia Pacific LNG. From the period of inception of the joint venture in October 2008 up to 9 August 2011, the consolidated entity's interest in the joint venture was 50 per cent. On 9 August 2011, Australia Pacific LNG issued new shares to China Petroleum and Chemical Corporation (Sinopec) resulting in Sinopec holding a 15 per cent interest in the issued capital of Australia Pacific LNG. As a result of the new share issue, the consolidated entity's interest in Australia Pacific LNG was diluted from 50 per cent to 42.5 per cent, and from 9 August 2011, the consolidated entity holds a 42.5 per cent interest. This transaction gave rise to a gain on dilution of the consolidated entity's investment in Australia Pacific LNG of $437 million (refer note 2(b)). Origin's interest in the results of Australia Pacific LNG are presented in the operating segment "Australia Pacific LNG" (refer note 2). A summary of Australia Pacific LNG's financial performance for the periods ended 30 June 2012 and 30 June 2011 including a reconciliation to the segment result disclosed in note 2(a), and its financial position as at 30 June 2012 and 30 June 2011 follows: 2012 $million 2012 $million Origin 42.5 per cent Total APLNG interest (1) 362 (251) 111 (93) 6 10 34 2011 $million Total APLNG 336 (210) 126 (77) (4) (3) 42 2011 $million Origin 50 per cent interest
Operating revenue Operating expenses EBITDA Depreciation and amortisation expense Net financing income/(costs) Income tax benefit/(expense) Segment result for the period Items excluded from segment result: Net unwinding of discounted receivables from shareholders Net foreign exchange loss Tax (expense)/benefit on translation of foreign denominated tax balances Total items excluded from segment result Net profit for the period
47
63
14
21
50 (12) (13) 25 59
21 (5) (5) 11 25
40 9 49 91
20 4 24 45
(1)
The consolidated entity's interest in Australia Pacific LNG for the period was 50 per cent from 1 July 2011 until 8 August 2011, and 42.5 per cent from 9 August 2011 to 30 June 2012. 47
11. Investments accounted for using the equity method (continued) (b) Investment in Australia Pacific LNG Pty Ltd (continued) 2012 $million Summary statement of financial position of Australia Pacific LNG Receivables from shareholders Other current assets Current assets Receivables from shareholders Property, plant and equipment and exploration and evaluation and development assets Other non-current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Consolidated entity's interest of 42.5 per cent at 30 June 2012 (2011: 50 per cent) Consolidated entity's own costs 2011 $million
2,969 767 3,736 2,682 8,656 52 11,390 15,126 1,260 320 1,580 13,546
3,746 346 4,092 3,690 3,273 50 7,013 11,105 479 126 605 10,500
5,757 12 5,769
5,250 8 5,258
Australia Pacific LNG has an unrecognised deferred tax asset of $2,426 million (100 per cent Australia Pacific LNG) relating to the expanded Petroleum Resource Rent Tax. This has not been recognised by Australia Pacific LNG as it is not currently probable that future taxable profits will be available against which the assets can be utilised. (c) Investments in associates Results of associates 100 per cent of associates' revenues 100 per cent of associates' net profit
103 18
119 22
Summary of statement of financial position of associates Assets and liabilities of associates, not adjusted for percentage ownership held by the consolidated entity are as follows: Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets 24 127 151 22 15 37 114 26 220 246 31 96 127 119
48
11. Investments accounted for using the equity method (continued) (d) Investments in joint venture entities 2012 $million Results of joint venture entities 100 per cent of joint venture entities' revenues 100 per cent of joint venture entities' net (loss)/profit
(1)
2011 $million
395 (145)
(1)
371 93
Included in the $145 million loss is $207 million relating to an impairment recognised by Transform Solar following a decision to scale back operations of the joint venture. Concurrently the consolidated entity reviewed the carrying value of its investment resulting in an impairment being recognised of $153 million (refer note 2(b)). As the consolidated entity has fully impaired its investment, it ceases to equity account the results of Transform Solar. Therefore the loss recorded by Transform Solar is not reflected in the equity accounted results shown in note 11(a).
Summary of statement of financial position of joint venture entities Assets and liabilities of joint venture entities, not adjusted for percentage ownership held by the consolidated entity are as follows: Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets 3,840 11,727 15,567 1,314 339 1,653 13,914 4,113 7,272 11,385 504 145 649 10,736
(e) Transactions between Origin and equity accounted investees Osborne Cogeneration Pty Ltd The consolidated entity is party to a Gas Supply Agreement and a Power Purchase Agreement with its associated entity Osborne Cogeneration Pty Ltd (Osborne). Under these agreements the consolidated entity supplies gas to Osborne and purchases electricity from Osborne. Australia Pacific LNG Pty Ltd Joint Venture The consolidated entity provides services to Australia Pacific LNG. The services are provided in accordance with contractual arrangements. The services provided under these arrangements include the provision of corporate related services, Upstream operating services including activities related to the development and operation of Australia Pacific LNG's natural gas assets and coal seam gas (CSG) marketing related services. The consolidated entity incurs costs in providing these services and charges Australia Pacific LNG in accordance with the terms of the contractual arrangements. The consolidated entity has entered agreements with Australia Pacific LNG where the consolidated entity purchases gas from Australia Pacific LNG (2012: $255 million; 2011: $140 million) and the consolidated entity sells gas to Australia Pacific LNG (2012: $59 million; 2011: $19 million). At 30 June 2012, the consolidated entity's outstanding payable balance for purchases from Australia Pacific LNG is $40 million (2011: $6 million) and outstanding receivable balance for sales to Australia Pacific LNG is $Nil (2011: $1 million).
49
12. Property, plant and equipment 2012 $million Generation property, plant and equipment At cost Less: Accumulated depreciation 2011 $million
8,985 1,168 7,817
8,190 928 7,262
Other land and buildings At cost Less: Accumulated depreciation and amortisation
130 30 100
122 30 92
Other plant and equipment At cost Less: Accumulated depreciation
3,522 1,330 2,192
3,357 1,171 2,186
Producing areas of interest At cost Less: Accumulated amortisation
1,656 870 786 10,895
1,542 769 773 10,313
Included in property, plant and equipment is an amount of $1,926 million (2011: $1,309 million) relating to capital work in progress.
50
12. Property, plant and equipment (continued) Generation property, Other land Other plant plant and and and equipment buildings equipment
$million 2012 Balance as at 1 July 2011 Additions Depreciation/amortisation expense Impairment loss (1) Transfers within PP&E and to intangibles Transfers to held for sale Effect of movements in foreign exchange rates Balance as at 30 June 2012
Producing areas of interest
Total
7,262 775 (269) (3) (6) 58 7,817
92 23 (4) (13) 2 100
2,186 438 (160) (23) (258) (10) 19 2,192
773 124 (103) (11) (13) 16 786
10,313 1,360 (536) (50) (258) (29) 95 10,895
2011 Balance as at 1 July 2010 Additions Additions through acquisition of entities/operations (2) Disposals Depreciation/amortisation expense Transfers (to)/from development assets and intangibles Effect of movements in foreign exchange rates Balance as at 30 June 2011
6,064 719 867 (1) (218) (169) 7,262
96 4 (2) (6) 92
2,151 296 (3) (158) 28 (128) 2,186
857 56 (110) (30) 773
9,168 1,075 867 (4) (488) 28 (333) 10,313
(1)
Impairment losses of $15 million in respect of the consolidated entity's portfolio of wind development opportunities; $5 million following the de-prioritisation of a prospective gas fired generation development site; $3 million in respect of Contact Energy Limited's impairment of the Clutha Hydro site; and $27 million in respect of the Surat Basin recorded against other land and buildings and producing areas of interest have been recognised at 30 June 2012. Refer to note 2(b) for details. Generation property, plant and equipment in relation to the GenTrader arrangements entered as part of the NSW energy asset transaction over the Eraring and Shoalhaven power stations. The GenTrader arrangements expire in 2032 for Eraring and 2038 for Shoalhaven. 51
(2)
13. Exploration, evaluation and development assets 2012 $million Exploration and evaluation assets Net costs carried forward in respect of areas of interest in the exploration and evaluation phase Development assets Net costs carried forward in respect of areas of interest in the development phase Reconciliations Reconciliations of the carrying amounts of exploration and evaluation assets and development assets are set out below: Exploration and evaluation Development assets 2011 $million
838
965
$million 2012 Balance as at 1 July 2011 Additions Impairment loss (1) Exploration expense Transfers to assets held for sale Balance as at 30 June 2012
965 169 (242) (49) (5) 838
2011 Balance as at 1 July 2010 Additions Impairment loss (2) Exploration expense Transfers including to property, plant and equipment and intangibles Effect of movements in foreign exchange rates Balance as at 30 June 2011
1,039 254 (202) (118) (8) 965
76 3 (75) (4) -
(1)
Impairment losses of $198 million in respect of the Ironbark CSG permit area and $44 million in respect to the consolidated entity's Geothermal development opportunities in Australia have been recognised at 30 June 2012. Refer to note 2(b) for details. An impairment loss of $202 million was recognised at 30 June 2011 in relation to the consolidated entity's 30 per cent interest in the Innamincka Joint Venture with Geodynamics focussed on deep geothermal generation technology in northern South Australia. 52
(2)
14. Intangible assets 2012 $million Goodwill at cost Customer related and other intangible assets at cost Less: Accumulated amortisation 5,341 913 288 625 5,966 2011 $million 5,398 505 210 295 5,693
Class of asset Customer related and other intangible assets at cost
Average amortisation rate 13% 13%
Reconciliations Reconciliations of the carrying amounts of each class of intangible asset are set out below: Customer related and other $million Goodwill intangibles 2012 Balance as at 1 July 2011 NSW acquisition settlement adjustment Other additions Transfers from development assets and property, plant and equipment Impairment loss (1) Amortisation expense Effect of movements in foreign exchange rates Balance as at 30 June 2012 2011 Balance as at 1 July 2010 Additions through business combinations (2) Other additions Transfers from development assets and property, plant and equipment Amortisation expense Effect of movements in foreign exchange rates Balance as at 30 June 2011
Total
5,398 (49) 1 (17) 8 5,341
295 198 258 (50) (78) 2 625
5,693 (49) 199 258 (67) (78) 10 5,966
2,599 2,822 (23) 5,398
197 52 52 47 (51) (2) 295
2,796 2,874 52 47 (51) (25) 5,693
(1)
Impairment losses of $50 million in respect of the consolidated entity's portfolio of wind development opportunities and $17 million in respect of the consolidated entity's 50 per cent interest in the Worsley Generation plant have been recognised at 30 June 2012. Refer to note 2(b) for details. Restated on finalisation of acquisition accounting relating to NSW Government energy assets (refer note 25(d)). 53
(2)
14. Intangible assets (continued) 2012 $million Impairment tests for cash-generating units containing goodwill The following cash-generating units have carrying amounts of goodwill: Retail Contact Energy Generation Other 2011 $million
4,735 427 176 3 5,341
4,783 419 193 3 5,398
Retail cash-generating unit The impairment test for the Retail cash-generating unit's goodwill is based on a value in use methodology. The value in use calculations apply a discounted cash flow methodology. Cash flow projections are based on the consolidated entity's five-year business plan for the Retail cashgenerating unit and cash flows for a further 35-year period are determined based on expected market trends and the expected impact of the key assumptions (discussed below) of the change in customer numbers and customer churn, gross margin per customer and other operating costs per customer. The consolidated entity's electricity and gas business is considered a long-term business and the cash flow projections allow for the risk of increased competition for customers and shortterm and long-term customer churn. The cash flow projections are discounted using a pre-tax discount rate of 12.2 per cent (2011: 12.2 per cent). Key assumptions in the value in use calculation for the Retail cash-generating unit and the approach to determining the value in the current and previous period are: Assumptions Method of determination Customer numbers and customer Review of actual customer numbers and historical data regarding movements in customer numbers and levels of customer churn. The churn historical analysis is considered against current and expected market trends and competition for customers. Gross margin per customer Review of actual gross margins per customer and consideration of current and expected market movements and impacts. Review of actual operating costs per customer and consideration of current and expected market movements and impacts.
Other operating costs per customer
Generation cash-generating unit The impairment test for the Generation unit's goodwill is based on a value in use methodology. The value in use calculations apply a discounted cash flow methodology. Cash flow projections are based on the consolidated entity's five-year business plan for the Generation cash-generation unit and cash flows out to the expected life of each asset. The cash flow projections are discounted using a pre-tax discount rate of 12.2 per cent (2011: 12.2 per cent). Contact Energy cash-generating unit The Contact Energy goodwill relates to Origin Energy's acquired 53.0 per cent ownership interest in Contact Energy Limited. The impairment test for the Contact Energy goodwill is based on the value in use of the Contact Energy business, applying a discounted cash flow methodology. The cash flow projections are discounted using a pre-tax discount rate of 12.5 per cent (2011: 12.5 per cent). The valuation considers the longer-term value in use for the Contact Energy cash-generating unit.
54
15. Tax assets Note Current Income tax receivable Non-current Recognised deferred tax assets Deferred tax assets are attributable to the following: Accrued expenses not incurred for tax Employee benefits Acquired environmental scheme certificate purchase obligations Acquired energy purchase obligations Provisions Financial instruments at fair value Available-for-sale financial assets Inventories Tax value of carry-forward tax losses recognised Petroleum resource rent tax Other items Tax assets Set-off of tax Net tax assets Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items: Revenue losses Capital losses Petroleum resource rent tax (net of income tax) GenTrader finance lease asset Acquisition transaction costs Investment in joint venture Intangible assets 2012 $million 2011 $million
19
12 51 26 101 226 4 5 191 16 37 669 (669) -
17 49 32 118 194 121 4 5 143 48 731 (731) -
17 43 1,027 61 57 28 19 1,252
15 43 5 58 121
Australia Pacific LNG Australia Pacific LNG (Origins 42.5 per cent joint venture) is also subject to the Petroleum Resource Rent Tax legislation and has an unrecognised deferred tax asset balance of $2,426 million (100 per cent Australia Pacific LNG) at 30 June 2012. Any future recognition of this balance by Australia Pacific LNG will result in an increase in the consolidated entitys equity accounted investment in Australia Pacific LNG shown in note 11, rather than a deferred tax asset, as the consolidated entity equity accounts its 42.5 per cent interest.
55
15. Tax assets (continued) Movement in temporary differences during the year Recognised in income Recognised in equity Acquisition of controlled entities
$million 2012 Accrued expenses not incurred for tax Employee benefits Acquired environmental scheme certificate purchase obligations Acquired energy purchase obligations Provisions Financial instruments at fair value Available-for-sale financial assets Inventories Tax value of carry-forward tax losses recognised Petroleum resource rent tax Other items Tax assets Set-off of tax Net tax assets 2011 Accrued expenses not incurred for tax Employee benefits Acquired environmental scheme certificate purchase obligations Acquired energy purchase obligations Provisions Financial instruments at fair value Available-for-sale financial assets Inventories Tax value of carry-forward tax losses recognised Other items Tax assets Set-off of tax Net tax assets
Opening
Closing
17 49 32 118 194 121 4 5 143 48 731 (731) -
(5) 2 (7) (17) 31 (121) 45 16 (16) (72)
1 3 5 9
1 1
12 51 26 101 226 4 5 191 16 37 669 (669) -
4 39 23 119 3 1 193 32 414 (326) 88
3 10 (5) (6) (3) 60 3 4 (35) 2 33
(5) 6 (2) (15) 14 (2)
10 14 124 83 55 286
17 49 32 118 194 121 4 5 143 48 731 (731) 56
16. Trade and other payables 2012 $million Current Trade payables and accrued expenses Acquired energy purchase obligations Acquired environmental certificate purchase obligations 2011 $million
2,006 34 23 2,063
1,931 56 33 2,020
Non-current Acquired energy purchase obligations Acquired environmental certificate purchase obligations Other payables
301 62 2 365
337 73 2 412
Trade payables of the consolidated entity's operations denominated in currencies other than the functional currency of the operations comprise $9 million of trade payables denominated in Australian dollars (2011: $2 million), $3 million of trade payables denominated in Euros (2011: $3 million) and $24 million of trade payables denominated in US dollars (2011: $19 million). 17. Interest-bearing liabilities Interest-bearing liabilities Current Bank overdrafts - unsecured Bank loans - secured Bank loans - unsecured Capital market borrowings - unsecured Lease liabilities - secured
17 49 77 2 145
4 15 328 246 2 595
Non-current Bank loans - secured Bank loans - unsecured Capital market borrowings - unsecured Lease liabilities - secured
277 2,022 3,430 5 5,734
295 1,857 2,036 5 4,193
Refer to note 29 for further information regarding interest-bearing liabilities. Interest rates The consolidated entity has entered into interest rate swap contracts to manage the exposure to interest rates at 1.20 per cent to 7.67 per cent per annum at a weighted average of 5.81 per cent per annum (2011: 1.20 per cent to 7.67 per cent per annum at a weighted average of 5.80 per cent per annum). Refer to note 29(c)(iv) Financial risk factors - interest rate risk (cash flow and fair value), for a summary of interest rate risks.
57
18. Other financial liabilities, including derivatives Note Current Derivative financial instruments Loan from Australia Pacific LNG joint venture associated entity Environmental scheme surrender obligations Other financial liabilities 2012 $million 2011 $million
29 29
257 1,262 160 5 1,684
356 1,731 128 2 2,217
Non-current Derivative financial instruments Loan from Australia Pacific LNG joint venture associated entity
29
335 1,147 1,482
437 1,845 2,282
19. Tax liabilities Current Provision for income tax Non-current Recognised deferred tax liabilities Deferred tax liabilities are attributable to the following: Property, plant and equipment (1) Exploration, evaluation and development assets Financial instruments at fair value Investments in associates Unbilled receivables Other items Tax liabilities Set-off of tax Net tax liabilities 1,089 344 44 6 248 12 1,743 (669) 1,074 961 353 19 237 16 1,586 (731) 855
71
15
At 30 June 2012 a deferred tax liability balance of $1,723 million (2011: $1,569 million) for temporary differences of $5,741 million (2011: $5,230 million) in respect of Origin's investment in the Australia Pacific LNG joint venture has not been recognised as Origin is able to control the timing of the reversal of the temporary difference through voting rights prescribed in the shareholders' agreement and it is not expected that the temporary difference will reverse in the foreseeable future.
(1)
Restated on finalisation of acquisition accounting relating to NSW Government energy assets (refer note 25(d)). 58
19. Tax liabilities (continued) Movement in temporary differences during the year Recognised in income statement Recognised in equity Acquisition of controlled entities
$million 2012 Property, plant and equipment Exploration, evaluation and development assets Financial instruments at fair value Investments in associates Unbilled receivables Other items Deferred tax liabilities Set-off of tax Net deferred tax liabilities 2011 Property, plant and equipment Exploration, evaluation and development assets Financial instruments at fair value Investments in associates Unbilled receivables Discounted receivables Other items Deferred tax liabilities Set-off of tax Net deferred tax liabilities
Opening
Closing
961 353 19 237 16 1,586 (731) 855
115 (9) 32 (16) 11 (6) 127
13 12 3 28
2 2
1,089 344 44 6 248 12 1,743 (669) 1,074
615 401 9 23 132 4 43 1,227 (326) 901
129 (48) (9) (1) 105 (4) (32) 140
(43) (3) (46)
260 5 265
961 353 19 237 16 1,586 (731) 855
59
20. Provisions Note Current Employee benefits Restoration, rehabilitation and dismantling Onerous contracts Other Non-current Employee benefits Restoration, rehabilitation and dismantling Onerous contracts Defined benefit superannuation plan deficit Other 2012 $million 2011 $million
180 14 99 22 315 20 451 76 14 13 574
154 14 90 17 275 17 342 156 2 16 533
21
Reconciliations Reconciliations of the carrying amounts of each class of provision, except employee benefits and defined benefit superannuation plan deficit are set out below: Restoration rehabilitation Onerous and Other $million contracts dismantling Balance as at 1 July 2011 Provisions recognised Provisions released Payments/utilisation Impact of discounting expense Transfer to held for sale Effect of movements in foreign exchange rates Balance as at 30 June 2012 246 9 (98) 18 175 356 119 (14) (1) 17 (16) 4 465 33 16 (8) (6) 35
10
Nature and purpose of provisions Employee benefits The provision for employee benefits predominantly represents accrued annual leave, vested long service leave, other employee benefits and related on-costs. Restoration, rehabilitation and dismantling The restoration, rehabilitation and dismantling provision represents estimates of future expenditure for site rehabilitation and restoration of oil and gas fields and infrastructure sites, including the future costs of dismantling and removing infrastructure. Onerous contracts Onerous provisions represent the onerous portion of the Transitional Services Agreement (TSA) covering customer related services in respect of the acquired NSW retail businesses; onerous property leases for premises held by the consolidated entity; and other onerous contract arrangements.
60
21. Employee benefits Note Labour related expenses Wages and salaries Annual leave expense Long service leave expense Employee share plan (refer note 33) Executive share-based payments expense (refer note 33) Net gain on defined benefit superannuation fund assets Contributions to defined contribution superannuation funds 2012 $million 2011 $million
21(f)
(575) (46) (11) (3) (22) 1 (52) (708)
(440) (37) (9) (4) (14) 1 (37) (540)
(a) Employee superannuation funds At 30 June 2012, there were in existence a number of superannuation plans in which the consolidated entity participates for the benefit of its employees in Australia and overseas. The major plans are managed through Equipsuper. The principal types of benefit provided for under the plans are lump sums payable on retirement, termination, death or total disability. Contributions to the plans by both employees and entities in the consolidated entity are predominantly based on percentages of the salaries or wages of employees. Entities in the consolidated entity contribute to the plans in accordance with the governing Trust Deeds subject to certain rights to vary. Defined benefit members receive lump sum benefits on retirement, death, disablement and withdrawal. Some defined benefit members are also eligible for pension benefits in certain circumstances. The defined benefit section of the plan is closed to new members. All new members receive accumulation only benefits. Defined benefits superannuation plan The following sets out details in respect of the Equipsuper defined benefit section only: (b) Statement of financial position amounts The amounts recognised in the statement of financial position are determined as follows: Present value of the defined benefit obligation 59 Fair value of the plan assets 45 Deficit (14) Net liability in the statement of financial position 20 (14) (c) Reconciliations Reconciliation of the present value of the defined benefit obligation Balance at 1 July 2011 Current service cost Interest cost Actuarial losses/(gains) Benefits paid Balance at 30 June 2012
51 49 (2) (2)
51 2 2 10 (6) 59
53 2 2 (2) (4) 51
61
21. Employee benefits (continued) 2012 $million (c) Reconciliations (continued) Reconciliation of the fair value of plan assets Balance at 1 July 2011 Expected return on plan assets Actuarial (losses)/gains Contributions by Origin Energy companies Benefits paid Balance at 30 June 2012 (d) Categories of plan assets The percentage invested in each class of asset at reporting date is as follows: 2012 per cent 35 27 11 10 8 2 7 100 2011 per cent 35 27 12 10 8 2 6 100 2011 $million
49 3 (2) 1 (6) 45
47 3 2 1 (4) 49
Australian equities International equities Fixed income Property Growth alternatives Defensive alternatives Cash
(e) Recognising actuarial gains and losses There is immediate recognition of actuarial gains and losses through retained earnings. (f) Amounts recognised in income statement The amounts recognised in the income statement are as follows: 2012 $million 2 (3) (1) 2 1 2011 $million 2 (3) (1) 2 1
Current service cost Expected return on plan assets - gain Total gain recognised in employee benefits expense Interest expense Total loss recognised in income statement (g) Actuarial gains and losses recognised directly in equity Cumulative loss at the beginning of the period Losses/(gains) recognised during the period Cumulative loss at the end of the period
15 13 28
19 (4) 15
(h) Expected rate of return on plan assets The expected return on assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each class and allowing for the correlations of the investment returns between asset classes. The returns used for each asset class are net of investment tax and investment fees. The expected return on assets assumption for pension assets has not been reduced for investment tax, as earnings on the assets supporting the pension liability are tax free.
62
21. Employee benefits (continued) 2012 $million (i) Actual return on plan assets (j) Principal actuarial assumptions 2012 per cent p.a. 2.6 2.9 4.0 3.0 7.0 7.5 2011 per cent p.a. 4.7 5.1 4.5 3.0 7.0 7.5 2011 $million 5
Discount rate (active members) Discount rate (pensioners) Expected salary increase rate Expected pension increase rate Expected rate of return on assets: supporting lump sum liabilities supporting pension liabilities (k) Historical information 2012 $million 59 45 (14) 1 3 2011 $million 51 49 (2) (2) 2010 $million 53 47 (6) 2 (1)
Present value of defined benefit obligation Fair value of plan assets (Deficit)/surplus in plan Experience adjustments loss/(gain) - plan liabilities Experience adjustments loss/(gain) - plan assets
2009 $million 57 54 (3) (8) 15
2008 $million 61 68 7 (6) 11
The consolidated entity expects $1 million in contributions to be paid to the defined benefit plan during the year ended 30 June 2013.
63
22. Share capital Note Issued and paid-up capital 1,089,564,638 (2011: 1,064,507,259) ordinary shares, fully paid 2012 $million 2011 $million
4,345
4,029
Ordinary share capital at the beginning of the period Shares issued: 23,664,131 (2011: 3,929,332) shares in accordance with the Dividend Reinvestment Plan 1,393,248 (2011: 2,809,000) shares in accordance with the Long Term Incentive Plan Nil (2011: 86,875,125) shares under an institutional rights issue (1) Nil (2011: 90,224,930) shares under a retail rights issue Total movements in ordinary share capital Ordinary share capital at the end of the period
(1)
4,029
1,683
306
33
61 18 1,112 1,155 2,346 4,029
10 316 4,345
(1)
The terms of the prior year rights issue was 1 new Origin Energy Limited share offered for every 5 existing shares at $13 per share. The rights issues were fully underwritten and were completed on 29 March 2011 (Institutional rights offer) and 28 April 2011 (Retail rights offer). The net proceeds from the rights issues of $2.27 billion were used to pay down Group borrowings. The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on which the shares were issued were adjusted for the bonus element of the rights issues being 1.0289.
Terms and conditions Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings. In the event of the winding up of the company, ordinary shareholders rank after creditors, and are fully entitled to any proceeds of liquidation. The company does not have authorised capital or par value in respect of its issued shares.
64
23. Reserves 2012 $million Share-based payments Foreign currency translation Hedging Available-for-sale 82 (171) (92) (5) (186) 2011 $million 61 (239) (123) (301)
Nature and purpose of reserves: Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options and performance share rights over their vesting period (refer note 33). Foreign currency translation reserve The foreign currency translation reserve records the foreign currency differences arising from the translation of foreign operations, and the translation of transactions that hedge the companys net investments in foreign operations. Hedging reserve The hedging reserve is used to record the effective portion of the gains or losses on hedging instruments in cash flow hedges that have not yet settled. Amounts are recognised in profit or loss when the associated hedged transactions affect profit or loss or as part of the cost of an asset if nonmonetary. Available-for-sale reserve Changes in fair value and exchange differences arising on translation of investments and settlement residue agreements are taken to the available-for-sale reserve. Amounts are recognised in profit or loss when the associated investments/settlement residue agreements are sold/settled or impaired.
65
24. Other comprehensive income 2012 $million Gain on translation of assets and liabilities of overseas controlled entities Net loss on hedge of net investment in foreign operations taken to equity Cash flow hedges - effective component recognised in equity, net of tax Cash flow hedges - amount removed from equity and transferred to profit, net of tax Cash flow hedges - amount transferred to the initial carrying value of non-financial assets, net of tax Cash flow hedges - foreign currency translation (loss)/gain, net of tax Fair value adjustment on available-for-sale financial assets Actuarial loss on defined benefit superannuation plan, net of tax (Loss)/gain on transfer of interest in entities under common control Other comprehensive income Foreign currency translation reserve Hedging reserve Available-forsale reserve Retained earnings Non-controlling interests Total other comprehensive income
111 (37)
(52)
(5) (5)
24 5 1 2 -
135 (37) (47) 78 2 (5) (9) 117
(6) 68
77 2 4 31
(9) (2) (11)
2 34
66
24. Other comprehensive income (continued) 2011 $million Loss on translation of assets and liabilities of overseas controlled entities Net gain on hedge of net investment in foreign subsidiaries taken to equity Cash flow hedges - effective component recognised in equity, net of tax Cash flow hedges - amount removed from equity and transferred to profit, net of tax Cash flow hedges - amount transferred to the initial carrying value of non-financial assets, net of tax Cash flow hedges - foreign currency translation (loss)/gain, net of tax Fair value adjustment on available-for-sale financial assets Actuarial gain on defined benefit superannuation plan, net of tax (Loss)/gain on transfer of interest in entities under common control Other comprehensive income Foreign currency translation reserve Hedging reserve Available-forsale reserve Retained earnings Non-controlling interests Total other comprehensive income
(178) 73 (2) (107)
(116) 98 1 1 (16)
7 7
3 (8) (5)
(65) (3) 1 1 8 (58)
(243) 73 (119) 99 1 7 3 (179)
67
25. Notes to the statement of cash flows Note (a) Reconciliation of cash and cash equivalents Cash includes cash on hand, at bank and short-term deposits, net of outstanding bank overdrafts. Cash as at the end of the period as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash and cash equivalents Bank overdrafts 357 357 728 (4) 724 2012 $million 2011 $million
17
(b) The following non-cash financing and investing activities have not been included in the statement of cash flows: Issue of shares in respect of the Dividend Reinvestment Plan
22
306
61
(c) Reconciliation of profit to net cash provided by operating activities Profit for the period Adjustments to reconcile profit to net cash provided by operating activities: Depreciation and amortisation Executive share-based payment expense Bad debts expense Exploration expense Impairment of assets (Increase)/decrease in fair value of financial instruments Net financing costs Increase in tax balances Gain on dilution of the consolidated entity's interest in equity accounted investees and sale of assets Non-cash share of net profits of equity accounted investees Unrealised foreign exchange gain Changes in assets and liabilities, net of effects from acquisitions/disposals: Receivables Inventories Payables Provisions Other Total adjustments Net cash provided by operating activities 1,058 248
614 22 70 49 512 (166) 289 263 (464) (39) (23) (222) 7 47 (54) (141) 764 1,822
539 14 60 118 214 201 155 150 (45) (283) 20 213 2 (205) 1,153 1,401
68
25. Notes to the statement of cash flows (continued) (d) Business combinations 2012 There were no business combinations during the year ending 30 June 2012. During the year the consolidated entity received a working capital settlement amount of $75 million in respect of the acquisition of the retail businesses of Integral Energy and Country Energy. The acquisition accounting for the acquisition of the NSW Government energy assets is now completed and has resulted in an adjustment to the 2011 statement of financial position and corresponding notes. The changes were to goodwill (note 14) and deferred tax liability (note 19) for $260 million. 2011 Acquisition of NSW Government energy assets On 1 March 2011 Origin completed Sale and Purchase Agreements with the NSW Government to acquire the retail businesses of Integral Energy and Country Energy, and entered into GenTrader arrangements with Eraring Energy for a combined consideration of $3,259 million. Included in the purchase consideration was estimated NSW stamp duty payable of $134 million. In addition to the $3,259 million consideration paid, an amount of up to $198 million may become payable if certain payments under the GenTrader arrangements are ruled to be tax deductible. Transaction costs incurred on the acquisition of $213 million (including estimated stamp duty payable in NSW and other states) were recognised within expenses in the income statement and were recorded as an item excluded from segment result and underlying consolidated profit (refer note 2(b)).
69
26. Auditors' remuneration 2012 $'000 Audit and review services by: Auditors of the company (KPMG) Audit and review of the financial reports 2011 $'000
3,212 3,212
3,338 3,338
Other auditors (1) Audit and review of the financial reports
66 3,278
74 3,412
Other services by: Auditors of the company (KPMG) In relation to other assurance, taxation and due diligence services Other auditors (2) In relation to other assurance services
929
1,131
3,857 4,786 8,064
5,303 6,434 9,846
(1)
Other auditors audit financial reports of certain controlled entities located in various Pacific Island countries. Includes amounts for internal audit, taxation, advice on acquisition transactions, information technology, risk and quality assurance advice and accounting advice.
(2)
27. Contingent liabilities and assets Details of contingent liabilities where the probability of future payments is not considered remote are set out below. Provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement. Details of contingent liabilities and contingent assets, which the directors consider should be disclosed, have also been included. 2012 $million Bank guarantees - unsecured Letters of credit - unsecured 352 19 371 2011 $million 430 23 453
The bank guarantees and letters of credit disclosed have primarily been provided by the consolidated entity in favour of the Australian Electricity Market Operator Limited to support its obligations to purchase electricity from the National Electricity Market.
70
27. Contingent liabilities and assets (continued) At 30 June 2012, the consolidated entity holds a 42.5 per cent interest in Australia Pacific LNG, which has bank guarantees of $178 million (the consolidated entity's 42.5 per cent share $76 million). The Australia Pacific LNG bank guarantees have primarily been provided in favour of the State of Queensland to support its environmental obligations relating to CSG exploration and production. A process has commenced amongst ConocoPhillips, Sinopec, Australia Pacific LNG and the consolidated entity to amend each Sponsors share in the guarantees to reflect Sinopecs 25 per cent holding in Australia Pacific LNG. These are outlined in note 39. The consolidated entity has given to its bankers letters of responsibility in respect of accommodation provided from time to time by the banks to Origin Energy Limited's wholly or partly-owned controlled entities. Warranties and indemnities have been given by entities in the consolidated entity in relation to environmental liabilities for certain properties as part of the terms and conditions of divestments. A number of sites within the consolidated entity have been identified as contaminated, all of which are subject to ongoing environmental management programs to ensure appropriate controls are in place and clean-up requirements are implemented. The contaminating activities ceased in the 1970s when manufactured gas was replaced with natural gas from oil and gas fields. For sites where the requirements can be assessed and costs estimated, the estimated cost of remediation has been expensed or provided for. Certain entities within the consolidated entity are subject to various lawsuits and claims as well as audits and reviews by government or regulatory bodies. Any liabilities arising from such lawsuits and claims, or potential claims arising from audits or reviews, are not expected to have a material adverse effect on the consolidated financial statements. The consolidated entity, as a participant in certain joint ventures, is liable for a share of all liabilities incurred by these joint ventures in proportion to its equity interest in them. In some circumstances, the consolidated entity may incur more than its proportionate share of such liabilities, but will have the right to recover the excess liability from the other joint venture participants. The consolidated entity has provided guarantees for certain contractual commitments of its joint ventures associated with capital projects. The consolidated entity has disclosed its share of these contractual commitments in note 28. The consolidated entity is party to deferred contingent consideration payments relating to past business combinations contingent on future events and performance related triggers. Current assessment of these triggers and future events indicates that any payment is considered remote.
71
27. Contingent liabilities and assets (continued) The company has outstanding claims in respect of availability liquidated damages including those arising from the fires at the Eraring Power Station in October 2011 and March 2012. The company has not recorded an asset in respect of these matters as the claims are currently in progress. Deed of cross guarantee Under the terms of ASIC Class Order (CO) 98/1418 (as amended by CO 98/2017) certain wholly-owned controlled entities have been granted relief from the requirement to prepare audited financial reports. Origin Energy Limited has entered into an approved deed of indemnity for the crossguarantee of liabilities with those controlled entities (refer note 31). A consolidated income statement and a consolidated statement of financial position, comprising the company and controlled entities which are a party to the Deed of Cross Guarantee, after eliminating all transactions between parties to the Deed, at 30 June 2012, are set out in note 36.
72
28. Commitments 2012 $million Capital expenditure commitments (1) Contracted but not provided for and payable: Not later than one year Later than one year but not later than five years Later than five years Joint venture commitments
(2)
2011 $million
229 281 589 1,099
579 350 612 1,541
Share of exploration, development and capital expenditure commitments not provided for and payable: Not later than one year 2,841 1,019 Later than one year but not later than five years 2,868 1,167 Later than five years 6 8 5,715 2,194 Other commitments
(1)
Other commitments include contracts for ongoing maintenance and services provided in respect of the consolidated entity's assets and operations, but not provided for and payable: Not later than one year 236 196 Later than one year but not later than five years 713 623 Later than five years 1,859 1,912 2,808 2,731 Operating leases Lease commitments in respect of operating leases are payable as follows: Not later than one year Later than one year but not later than five years Later than five years
78 228 104 410 65
60 228 136 424 47
Operating lease rental expense
The consolidated entity leases property, plant and equipment under operating leases with terms of one to ten years.
(1)
Included in the capital expenditure and other commitments above are fixed charges to be paid in respect of the GenTrader arrangements over the Eraring and Shoalhaven power stations entered as part of the NSW energy asset transaction in 2011. Included in the joint venture commitments above is an amount of $5,251 million (2011: $1,844 million) relating to the consolidated entity's 42.5 per cent (2011: 50 per cent) share of Australia Pacific LNGs commitments. The consolidated entity has recorded a $2,409 million (2011: $3,576 million) loan payable to Australia Pacific LNG (refer to note 18) which may be called upon by Australia Pacific LNG to fund its commitments. 73
(2)
29. Financial instruments (a) Financial assets and liabilities The consolidated entity classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired or executed. The consolidated entity classifies its financial liabilities into the following categories: at fair value through profit or loss and other financial liabilities. Management determines the classification of its financial assets and liabilities at initial recognition and re-evaluates this designation at every reporting date. Financial assets and liabilities at fair value through profit or loss This category has two sub-categories: financial assets or liabilities held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivative instruments (assets and liabilities) are also categorised as held for trading unless they are designated as hedges for accounting purposes. The consolidated entity holds a number of derivative instruments for economic hedging purposes under the Board approved risk management policies, which are prohibited from being designated as hedges under Australian Accounting Standards. These derivative assets and liabilities are therefore required to be categorised as held for trading. Assets and liabilities in this category are classified as current assets or current liabilities if they are held for trading and include derivative instruments which are not designated as hedges for accounting purposes with the exception of environmental scheme certificates, which are not required to be surrendered within 12 months from balance date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the reporting date, which are classified as non-current assets. Loans and receivables are classified as trade and other receivables in the statement of financial position (note 6). Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of, or otherwise realise, the asset within 12 months of the reporting date. Other financial liabilities Other financial liabilities are non-derivatives that are either designated into this category or not designated as fair value through profit or loss. They are included in current liabilities, except where the obligation matures greater than 12 months after the reporting date.
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29. Financial instruments (continued) (a) Financial assets and liabilities (continued) Recognition Regular purchases and sales of investments are recognised on trade-date, the date on which the consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the consolidated entity has transferred substantially all risks and rewards of ownership. Available-forsale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Financial liabilities carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Other financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss and 'financial liabilities at fair value through profit or loss' categories are presented in the income statement within 'expenses' in the period in which they arise. The consolidated entity does not recognise day one gains or losses arising from valuation techniques used to estimate the fair value of structured commodity derivatives for which no observable market prices exist. The effect of any day one gains and losses is excluded from recognition both initially and in all subsequent periods during the life of the instrument. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement within 'expenses'. Dividends on available-for-sale equity instruments are recognised in the income statement when the consolidated entitys right to receive payments is established. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arms length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. The consolidated entity assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. If available-for-sale financial assets are deemed to be impaired, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in note 1.
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29. Financial instruments (continued) (b) Derivative financial instruments and hedging activities The consolidated entity uses a range of derivative financial instruments to hedge the risk exposures arising from its operational, financing and investment activities. Derivatives are initially recognised at fair value on the date they are entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The consolidated entity designates certain derivatives as either: (1) hedges of the fair value of recognised assets, liabilities or firm commitments (fair value hedge); (2) hedges of a particular cash flow risk associated with a recognised asset, liability or highly probable forecast transaction (cash flow hedge); or (3) hedges of a net investment in a foreign operation (net investment hedge). The consolidated entity documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The fair values of various derivative instruments used for hedging purposes are disclosed in note 9 and note 18. Movements of the hedging reserve in shareholders equity are shown in the statement of changes in equity and note 24. The fair value of hedging derivatives is classified as either current or non-current based on the timing of the underlying cash flows of the instrument. Cash flows due within 12 months of the reporting date are classified as current and cash flows due after 12 months of the reporting date are classified as non-current. Derivatives which are valid economic hedges, but which do not qualify for hedge accounting, are classified as a current asset or liability. Fair value hedges Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the cross currency interest rate swaps hedging fixed rate foreign currency borrowings is recognised in the income statement within expenses. Changes in the fair value of the hedged fixed rate borrowings attributable to interest rate and foreign exchange rate risk are recognised in the income statement within 'expenses'. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity. Cash flow hedges The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating to the ineffective portion is recognised immeditately in the income statement within 'expenses'.
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29. Financial instruments (continued) (b) Derivative financial instruments and hedging activities (continued) Cash flow hedges (continued) Amounts accumulated in equity are transferred to the income statement in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement within net financing costs'. The gain or loss relating to the effective portion of commodity derivatives hedging floating price forecast purchases is recognised in note 3(b) within 'raw materials and consumables used, and changes in finished goods and work in progress'. The gain or loss relating to the effective portion of commodity derivatives hedging floating price forecast sales is recognised in the income statement within 'revenue'. The gain or loss relating to the effective portion of forward foreign exchange contracts hedging export sales is recognised in the income statement within revenue. The gain or loss relating to the effective portion of forward foreign exchange contracts hedging purchases of non-financial assets (such as capital equipment) is recognised in the initial carrying value of the non-financial asset. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. Net investment hedges Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity; the gain or loss relating to the ineffective portion is recognised immediately in the income statement. Gains and losses accumulated in equity are transferred to the income statement when the foreign operation is disposed. Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting, despite being valid economic hedges of the relevant risk(s). Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement within expenses and disclosed in the 'increase/(decrease) in fair value of financial instruments' (note 3(b)). (c) Financial risk management Financial risk factors The consolidated entitys activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and commodity price risk), credit risk and liquidity risk. The consolidated entitys overall risk management program focuses on the unpredictability of financial and commodity markets and seeks to minimise potential adverse effects on the consolidated entitys financial performance. The consolidated entity uses a range of derivative financial instruments to hedge these risk exposures. Risk management is carried out under policies approved by the Board of Directors. Financial risks are identified, evaluated and hedged in close co-operation with the consolidated entitys operating units. The consolidated entity has written policies covering specific areas, such as foreign exchange risk, interest rate risk, electricity price risk, oil price risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and the investment of excess liquidity.
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29. Financial instruments (continued) (c) Financial risk management (continued) (i) Market risk Foreign exchange risk The consolidated entity operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the New Zealand dollar, US dollar and Euro. Foreign exchange risk arises from future commercial transactions (including interest payments on long-term borrowings, the sale of oil, the sale and purchase of LPG and the purchase of capital equipment), recognised assets and liabilities (including foreign receivables and borrowings) and net investments in foreign operations. To manage the foreign exchange risk arising from future commercial transactions, the consolidated entity uses forward foreign exchange contracts. To manage the foreign exchange risk arising from the future principal and interest payments required on foreign currency denominated long-term borrowings, the consolidated entity uses cross currency interest rate swaps (both fixed to fixed and fixed to floating) which convert the foreign currency denominated future principal and interest payments into the functional currency for the relevant entity for the full term of the underlying borrowings. In certain circumstances borrowings are left in the foreign currencies, or hedged from one foreign currency to another to match payments of interest and principal against expected future business cash flows in that foreign currency. Each controlled entity designates internal derivatives as fair value hedges or cash flow hedges, as appropriate with the relevant underlying transaction. External derivative contracts are designated at the consolidated entity level as hedges of foreign exchange risk on specific assets, liabilities or future transactions on a gross basis. The consolidated entity has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the consolidated entitys foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies. The following table summarises the impact of a 10 per cent strengthening/weakening of the Australian dollar against the relevant foreign currencies on the consolidated entitys post-tax profit for the year and on other components of equity. All variables other than the relevant primary risk variable identified are held constant in the analysis. Foreign exchange rate change + / - 10 per cent Impact on post-tax profit Impact on equity 2012 2011 2012 2011 + / - ($million) + / - ($million) USD NZD EUR 21 60 22 1 21 87 21 60 50 21 22
Post-tax profit for the year would increase/decrease as a result of certain financial instruments which do not qualify for hedge accounting under AASB 139 Financial Instruments: Recognition and Measurement requirements and trade receivables and payables denominated in foreign currencies. In addition to the impact on retained earnings arising from the impact on post-tax profit, equity would increase/decrease as a result of the hedging instruments which do qualify for cash flow hedge accounting under AASB 139.
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29. Financial instruments (continued) (c) Financial risk management (continued) Price risk The consolidated entity is exposed to carbon, equity securities and price risk from a number of commodities, including electricity, oil, gas and related commodities associated with the purchase and/or sale of these commodities. To manage its price risks in respect to electricity and oil, the consolidated entity utilises a range of derivative instruments including fixed priced swaps, options and futures. The consolidated entitys equity investments subject to price risk are all publicly traded. The consolidated entity's risk management policy for commodity price risk is to hedge forecast future transactions for up to 18 years into the future. The consolidated entity has a risk management policy framework that manages the exposure arising from its commodity-based activities. The policy permits the active hedging of price and volume exposure arising from the retailing, generation and portfolio management activities, within prescribed risk capacity limits. The policy prescribes the maximum risk exposures permissible over prescribed periods for each commodity within the portfolio, under defined worse case scenarios. The full portfolio is subject to ongoing testing against these limits at prescribed intervals, and reported monthly to management. The consolidated entity is also exposed to equity securities price risk because of investments held by the consolidated entity and classified on the statement of financial position as available-for-sale and fair value through profit or loss. The following table summarises the impact of a 10 per cent increase/decrease of the relevant forward prices (for commodities and carbon) and equity prices (for equity investments) on the consolidated entitys post-tax profit for the year and on other components of equity. All variables other than the relevant primary risk variable identified are held constant in the analysis. Impact on post-tax profit 2012 2011 + / - ($million) Electricity forward price Oil forward prices Equity securities quoted price Carbon and renewable energy price 5 33 10 40
Impact on equity 2012 2011 + / - ($million) 2 5 33 88 27 1 40
Post-tax profit for the year would increase/decrease as a result of the inherent ineffectiveness in some commodity hedging relationships and some financial instruments which are valid economic hedges of these commodity price risks which do not qualify for cash flow hedge accounting under AASB 139 requirements. In addition to the impact from retained earnings arising from the impact on post-tax profit, equity would increase/decrease as a result of the hedging instruments which do qualify for cash flow hedge accounting under AASB 139 and gains on equity securities classified as available-for-sale.
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29. Financial instruments (continued) (c) Financial risk management (continued) (ii) Credit risk The consolidated entity manages its exposure to credit risk via credit risk management policies which allocate credit limits based on the overall financial and competitive strength of the counterparty. Publicly available credit information from recognised providers is utilised for this purpose where available. Credit policies cover exposures generated from the sale of products and the use of derivative instruments. Derivative counterparties are limited to high-credit-quality financial institutions and other organisations in the relevant industry. The consolidated entity has Board approved policies that limit the amount of credit exposure to each financial institution and derivative counterparty. The consolidated entity also utilises International Swaps and Derivative Association (ISDA) agreements with all derivative counterparties in order to limit exposure to credit risk through the netting of amounts receivable from and amounts payable to individual counterparties. The carrying amounts of financial assets recognised in the statement of financial position, and disclosed in more detail in notes 6 and 9 best represents the consolidated entity's maximum exposure to credit risk at the reporting date. In respect of those financial assets and the credit risk embodied within them, the consolidated entity holds no significant collateral as security and there are no other significant credit enhancements in respect of these assets. The credit quality of all financial assets that are neither past due nor impaired is appropriate and is constantly monitored in order to identify any potential adverse changes in the credit quality. There are no significant financial assets that have had renegotiated terms that would otherwise, without that renegotiation, have been past due or impaired. (iii) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the consolidated entity aims to maintain flexibility in funding by keeping committed credit lines available. Certain of the consolidated entity's interest-bearing liability obligations are subject to change in control provisions under the agreements with third-party lenders. As at 30 June 2012 these provisions were not triggered. The following summarises the contractual timing of cash flows of the borrowings including interest and related derivative instruments at 30 June 2012 and 30 June 2011: 2012 $million Less than one month One to three months Three to 12 months One to five years Over five years 151 71 1,619 5,704 3,073 2011 $million 322 52 2,285 5,818 1,583
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29. Financial instruments (continued) (c) Financial risk management (continued) (iii) Liquidity risk (continued) Included in the balances from the previous table is the $2,409 million (2011: $3,576 million) loan from Australia Pacific LNG ($1,262 million current within three to twelve months and $1,147 million non-current within one to five years; 2011: $1,731 million current within three to twelve months and $1,845 million non-current within one to five years). The consolidated entity has $4,189 million (2011: $3,562 million) of undrawn facilities (refer note 29(e)) which is immediately available. (iv) Interest rate risk (cash flow and fair value) The consolidated entitys income and operating cash flows are substantially independent of changes in market interest rates. The consolidated entitys interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the consolidated entity to cash flow interest rate risk. Borrowings issued at fixed rates expose the consolidated entity to fair value interest rate risk. The consolidated entitys risk management policy is to manage interest rate exposures using Profit at Risk and Value at Risk methodologies using 95% statistical confidence levels. Exposure limits are set to ensure that the consolidated entity is not exposed to excess risk from interest rate volatility. The consolidated entity manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the consolidated entity agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. The following table summarises the impact of a 100 basis point increase/decrease of the relevant interest rates at the reporting date on the consolidated entitys post-tax profit for the year and on other components of equity. All variables other than the relevant primary risk variable identified are held constant in the analysis. Impact on post-tax profit 2012 2011 + / - ($million) Interest rates (16) (12)
Impact on equity 2012 2011 + / - ($million) 12 25
At 30 June 2012, if interest rates at that date had been higher/lower by 100 basis points with all other variables held constant, post-tax profit and other components of equity of the consolidated entity would have been higher/lower by the amounts as set out in the previous table. Profit would have been affected mainly as a result of the ineffective portion of cash flow and fair value hedge transactions and the fair value change in derivatives which are valid economic hedges but which do not qualify for hedge accounting. In addition to the impact on retained earnings arising from the impact on post-tax profit, equity would have been affected mainly as a result of an increase/decrease in the fair value of interest rate swaps which qualify for cash flow hedge accounting.
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29. Financial instruments (continued) (d) Capital risk management The consolidated entitys objectives when managing capital are to safeguard the consolidated entitys ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the consolidated entity monitors its current and future funding requirements for at least the next five years and regularly assesses a range of funding alternatives to meet these funding requirements in advance of when the funds are required. The consolidated entity anticipates meeting future financing requirements through operating cash flows, periodically raising long-term and short-term bank and capital markets debt, and utilising the dividend reinvestment plan and other capital management tools, including equity offerings as may be required from time to time. The consolidated entity aims to maintain a diversified debt portfolio that enables access to a range of debt markets and specific instruments to meet on-going business requirements and investment opportunities. To date, the consolidated entity has financed operations and developments primarily through cash flows from operations, borrowings from banks and proceeds from issuances of equity and debt securities. The consolidated entity intends to continue to fund business operations, future acquisitions and developments from existing financial resources and may also raise additional funds through debt or equity offerings or sales or other dispositions of assets in the future to finance all or a portion of future developments or for other purposes. The consolidated entity assesses the capital structure and gearing policies on an on-going basis in light of overall business objectives and prevailing local and global economic conditions. The consolidated entity's objective is to maintain an appropriate capital structure with sufficient financial headroom to allow the business to absorb any short term shocks to business performance. The consolidated entity seeks to retain the flexibility to access a range of debt and equity markets to ensure sufficient liquid funds are available to meet financial commitments as required. Key factors considered in determining our capital structure and funding strategy at any point in time include expected operating cash flows, capital expenditure plans, maturity profile of existing debt facilities, dividend policy and the ability to access funding from banks, capital markets, and other sources. Consistent with others in the industry, the consolidated entity monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total interest-bearing borrowings less cash and cash equivalents and fair value adjustments to borrowings in hedge relationships. Total capital is calculated as equity as shown in the statement of financial position plus net debt less reserves attributable to fair value adjustments on financial instruments. In addition, Origin monitors various other credit metrics, principally funds from operations (FFO) to gross debt.
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29. Financial instruments (continued) (d) Capital risk management (continued) The consolidated entity maintains a gearing ratio designed to optimise the cost of capital whilst providing flexibility to fund growth opportunities. The gearing ratios were as follows: 2012 2011 $million $million Total interest-bearing borrowings 5,879 4,788 Fair value adjustments on borrowings in hedge relationships 216 223 Less: Cash and cash equivalents (357) (728) Adjusted net debt 5,738 4,283 Total equity 14,458 13,516 Less: Reserves (1) 97 123 Total capital (excluding reserves (1)) 20,293 17,922 Total capital (including reserves (1)) 20,196 17,799 (1) Gearing ratio (excluding reserves ) 28% 24% (1) Gearing ratio (including reserves ) 28% 24%
(1)
Represents reserves attributable to fair value adjustments on financial instruments.
(e) Interest-bearing liabilities Bank loans - unsecured Bank loans - secured Capital markets borrowings - unsecured Bank overdrafts - unsecured Total borrowings Lease liabilities Total interest-bearing borrowings 2,071 294 3,507 5,872 7 5,879 2,185 310 2,282 4 4,781 7 4,788
The exposure of the consolidated entitys borrowings to interest rate changes and the contractual repricing dates at the reporting date are as follows: Six months or less 1,749 2,644 Six to twelve months 77 47 One to five years 2,505 1,171 Over five years 1,541 919 5,872 4,781 The remaining contractual maturity of non-current borrowings is as follows: One to two years Two to five years Over five years Total non-current borrowings Lease liabilities Total interest-bearing borrowings
764 2,443 2,522 5,729 5 5,734
208 2,659 1,321 4,188 5 4,193
The carrying amounts and fair values of the non-current borrowings are as follows: Carrying value Fair value 2012 2011 2012 2011 $million $million $million $million Bank loans - unsecured 2,022 1,857 2,022 1,857 Bank loans - secured 277 295 277 295 Capital markets borrowings - unsecured 3,430 2,036 3,484 2,092 5,729 4,188 5,783 4,244
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29. Financial instruments (continued) (e) Interest-bearing liabilities (continued) The carrying amounts of the consolidated entitys borrowings are exposed to the following currencies: 2012 2011 $million $million Australian dollar 2,861 2,509 New Zealand dollar 1,353 1,162 US dollar 1,045 435 Euro 613 675 5,872 4,781 The consolidated entity has the following committed undrawn floating rate borrowing facilities: Expiring within one year 739 44 Expiring beyond one year 3,450 3,518 4,189 3,562 On 24 May 2012, the consolidated entity announced that Australia Pacific LNG (an equity accounted joint venture of the consolidated entity) had secured US$8.5 billion through a project finance facility. At 30 June 2012 the project finance facility was undrawn and subject to the completion of certain conditions precedent. Once the conditions precedent are satisfied and the project finance facility is in place, the consolidated entity will guarantee its proportionate share of amounts drawn down under the facility during the construction phase of the project and it will also reduce funding required from the consolidated entity for the project. At 30 June 2012 the facility was undrawn and no amounts had been guaranteed by the consolidated entity in respect of the project finance facility. (f) Hedge accounting Fair value hedges The changes in the fair values of the hedged items and hedging instruments recognised in the income statement for the year are disclosed in the following table: Gain/(loss) on the hedging instruments (Loss)/gain on the hedged item attributable to the hedge risk Cash flow hedges The effective portion of the losses on cash flow hedges recognised in the cash flow hedge reserve (pre tax) The losses transferred from the cash flow The losses transferred from the cash flow The losses transferred from the cash flow The losses transferred from the cash flow carrying value of non-financial assets hedge hedge hedge hedge reserve reserve reserve reserve to to to to sales cost of sales finance cost the initial 30 (28) 2 (110) 109 (1)
(65) 1 88 20 4 113 (3)
(168) 3 133 5 2 143 (1)
The ineffectiveness losses recognised in the income statement from cash flow hedges
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29. Financial instruments (continued) (f) Hedge accounting (continued) Net investment hedges The effective portion of the gains/(losses) on net investment hedges recognised in the foreign currency translation reserve for the year to 30 June 2012 totalled $37 million loss (2011: $73 million gain). The ineffectiveness recognised in the income statement from net investment hedges for the year to 30 June 2012 totalled $Nil (2011: $Nil). Derivatives that do not qualify for hedge accounting The net change in fair value of derivatives which do not qualify for hedge accounting (and are therefore required to be classified as held for trading), which has been recognised in the income statement for the year to 30 June 2012 totalled $123 million gain (2011: $134 million loss). Fair value of financial instruments designated as hedging instruments Assets 2012 2011 $million $million 1 Fair value hedges (1) (2) 118 164 Cash flow hedges (3) Net investment hedges
(1)
Liabilities 2012 2011 $million $million (170) (200) (311) (403) (1,363) (736)
The consolidated entity designates certain cross currency interest rate swaps in fair value hedge relationships. The consolidated entity designates certain foreign exchange contracts, electricity derivatives, interest rate swaps, cross currency interest rate swaps and oil derivatives in cash flow hedge relationships. The consolidated entity designates certain foreign denominated borrowings in net investment hedge relationships.
(2)
(3)
(g) Derivative financial instruments Assets 2012 2011 $million $million 1 538 6 545 1 41 2 44 589 1 10 296 3 310 6 3 123 132 442 Liabilities 2012 2011 $million $million 64 34 3 156 257 117 139 61 18 335 592 46 11 14 277 8 356 65 194 6 164 8 437 793
Notes Current Interest rate swaps Cross currency interest rate swaps Forward foreign exchange contracts Electricity derivatives Oil derivatives
9, 18
Non-current Interest rate swaps Cross currency interest rate swaps Forward foreign exchange contracts Electricity derivatives Oil derivatives Other commodity derivatives
9, 18
Total
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29. Financial instruments (continued) (g) Derivative financial instruments (continued) Interest rate swaps The aggregate notional principal amounts of the outstanding interest rate swap contracts at 30 June 2012 were $1,968 million (2011: $1,768 million). At 30 June 2012, the fixed interest rates vary from 1.20 per cent to 8.00 per cent (2011: 1.20 per cent to 7.67 per cent) and the main floating rates are BBSW, US LIBOR and BKBM. Interest rate swaps are either designated in cash flow hedge relationships or remain non-designated and are fair valued through the income statement. The hedged anticipated interest payment transactions are expected to occur at various dates between one month and 12 years from the reporting date as a result of the maturities of the underlying borrowings. Gains and losses recognised in the cash flow hedge reserve in equity (statement of comprehensive income) on interest rate swap contracts as of 30 June 2012 will be continuously released to the income statement in each period in which interest payments are recognised in the income statement until the maturities of the swaps and underlying borrowings. During the year to 30 June 2012 and the year to 30 June 2011 no interest rate swaps were dedesignated. Cross currency interest rate swaps The aggregate notional principal amounts of the outstanding cross currency interest rate swap contracts at 30 June 2012 were $1,470 million (2011: $1,497 million). At 30 June 2012, the fixed interest rates vary from 6.25 per cent to 7.49 per cent (2011: 6.25 per cent to 7.49 per cent) and the main floating rates are BBSW and BKBM. Cross currency interest rate swaps are designated in either cash flow hedge relationships or fair value hedge relationships, or remain non-designated and are fair valued through the income statement. The hedged anticipated interest payment transactions are expected to occur at various dates between one month and 6 years from the reporting date as a result of the maturities of the underlying borrowings. Gains and losses recognised in the cash flow hedge reserve in equity (statement of comprehensive income) on interest rate swap contracts as of 30 June 2012 will be continuously released to the income statement in each period in which interest payments are recognised in the income statement until the maturities of the swaps and underlying borrowings. Forward foreign exchange contracts The aggregate notional principal amounts of the outstanding forward foreign exchange contracts at 30 June 2012 were $78 million (2011: $258 million). Forward foreign exchange contracts are designated in cash flow hedge relationships. The hedged anticipated transactions denominated in foreign currency are expected to occur at various dates between one month and 3 years from the reporting date. Gains and losses recognised in the cash flow hedge reserve in equity (statement of comprehensive income) on forward foreign exchange contracts as of 30 June 2012 will be released to the income statement when the underlying anticipated transactions affect the income statement or included in the carrying value of assets or liabilities acquired. During the year to 30 June 2012 and the year to 30 June 2011, no forward foreign exchange contracts were de-designated and all underlying forecast transactions remain highly probable to occur as originally forecast.
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29. Financial instruments (continued) (g) Derivative financial instruments (continued) Electricity derivatives The aggregate notional volumes of the outstanding electricity derivatives at 30 June 2012 were 232 million MWhs (2011: 224 million MWhs). Electricity derivatives are either designated in cash flow hedge relationships or remain non-designated and are fair valued through the income statement within 'increase/(decrease) in fair value of financial instruments' (note 3(b)). The hedged anticipated electricity purchase and sale transactions are expected to occur continuously for each half hour period throughout the next 17 years from the reporting date consistent with the forecast demand from customers over this period. Gains and losses recognised in the cash flow hedge reserve in equity (statement of comprehensive income) on electricity derivatives as of 30 June 2012 will be continuously released to the income statement in each period in which the underlying purchase or sale transactions are recognised in the income statement. During the year to 30 June 2012 and the year to 30 June 2011, no hedges were de-designated and all underlying forecast transactions remain highly probable to occur as originally forecast. The inherent variability in the volume of electricity purchased by customers and dispatched from generators in any half hour period means that the actual purchase requirements and sales volume can vary from the forecasts. The forecasts are updated for significant changes in underlying conditions and where this leads to a reduction in the forecast below the aggregate notional volume of hedging instruments in the relevant half hour periods impacted, the affected hedging instruments are de-designated and the accumulated gain or loss which had been recognised in the cash flow hedge reserve is recognised directly in the income statement as the underlying forecast purchase or sale transactions for those half hours are no longer expected to occur. Oil derivatives The aggregate notional volumes of the outstanding oil and related derivatives at 30 June 2012 were 0.77 Mbbl (2011: 1.16 Mbbl). Oil derivatives are designated in cash flow hedge relationships. The hedged anticipated oil sale and purchase transactions are expected to occur continuously throughout the next two years from the reporting date consistent with the forecast production and demand from customers over this period. Gains and losses recognised in the cash flow hedge reserve in equity (statement of comprehensive income) on oil derivatives as of 30 June 2012 will be continuously released to the income statement in each period in which the underlying sale or purchase transactions are recognised in the income statement. During the year to 30 June 2012 and the year to 30 June 2011, no hedges were de-designated and all underlying forecast transactions remain highly probable to occur as originally forecast.
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29. Financial instruments (continued) (h) Fair value estimation The fair values of financial instruments traded in active markets (such as available-for-sale securities) are based on quoted market prices at the reporting date. The quoted market prices used for financial assets held by the consolidated entity are the current bid prices for the assets. The fair values of financial instruments that are not traded in an active market (for example, overthe-counter derivatives) are determined by using valuation techniques. The consolidated entity uses valuation techniques consistent with the established valuation methodology and general market practice applicable to each instrument/market. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. The fair values of interest rate swaps and cross currency interest rate swaps are calculated using the present value of the estimated future cash flows of these instruments. The fair values of forward foreign exchange contracts are determined using quoted forward exchange rates at the reporting date. The fair values of commodity swaps and futures are calculated using the present value of the estimated future cash flows using available market forward prices. The fair values of commodity option contracts which are regularly traded are determined based on the most recent available transaction prices for the same instruments. Certain commodity derivative instruments utilised by the consolidated entity are not regularly traded and there is no observable market prices or transactions for equivalent or substantially similar instruments. Valuation techniques are required in order to estimate the fair value of such instruments. The valuation technique estimates the fair value of the avoided cost of physical assets at the valuation date required to achieve an equivalent risk management outcome for the consolidated entity, taking into account all relevant variables including capital costs, fixed and variable operating costs, efficiency factors and asset lives. Valuation techniques require the use of a range of variables and assumptions. Maximum use is made of all relevant independent and observable market data when selecting variables and developing assumptions for valuation techniques. Each instrument is discounted at the market interest rate appropriate to the instrument. Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument, there are two key variables used: appropriate market pricing data (for the relevant underlying interest rates, foreign exchange rates or commodity prices); and discount rates. For these derivative instruments, both of these variables are taken from observed market pricing data at the valuation date and therefore these variables represent those which would be used by market participants to execute and value the instruments. The nominal value of trade receivables (less impairment allowance) and payables approximate their fair values.
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29. Financial instruments (continued) (h) Fair value estimation (continued) Fair value hierarchy The table below summarises the financial instruments carried at fair value by valuation method. The different levels in the hierarchy are defined as follows: - Level 1: quoted prices (unadjusted) in active markets for identical instruments. - Level 2: inputs other than quoted prices included within Level 1 that are observable for the instrument, either directly (as prices) or indirectly (derived from prices). - Level 3: one or more key inputs for the instrument are not based on observable market data (unobservable inputs). Level 1 $million 24 548 (160) 412 Level 2 $million 119 (588) (469) Level 3 $million 470 (4) 466 Total $million 24 589 548 (592) (160) 409
2012 Available-for-sale financial assets Derivative financial assets Environmental scheme certificates Derivative financial liabilities Environmental scheme certificates surrender obligations
Note
9 9 9 18 18
2011 Available-for-sale financial assets Derivative financial assets Environmental scheme certificates Derivative financial liabilities Environmental scheme certificates surrender obligations
9 9 9 18 18
35 629 (128) 536
290 (776) (486)
152 (17) 135
35 442 629 (793) (128) 185
The following table shows a reconciliation from the beginning balances to the ending balances for the fair value measurements in Level 3 of the fair value hierarchy: Financial liabilities held for trading (17) 13 (4)
Balance as at 1 July 2011 Net gain from financial instruments at fair value through profit or loss Balance as at 30 June 2012
Financial assets held for trading 152 318 470
The consolidated entity does not hold any financial assets or financial liabilities for trading purposes. The consolidated entity has a number of valid economic hedging instruments which are unable to be designated as hedges for accounting purposes and are therefore deemed by accounting standards to be held for trading.
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29. Financial instruments (continued) (h) Fair value estimation (continued) Although the consolidated entity believes that the estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects: 2012 Effect on profit or loss Favourable (Un-favourable) 254 (254) 3 (3) 2011 Effect on profit or loss Favourable (Un-favourable) 142 (142) 2 (2)
Derivative assets Derivative liabilities
The favourable and unfavourable effects of using reasonably possible alternative assumptions have been calculated by recalibrating the model values using expected cash flows and risk-adjusted discount rates based on the probability weighted average of the consolidated entity's ranges of possible outcomes. Key inputs and assumptions used in the models at 30 June 2012 include: Discount rate The discount rates applied to the cash flows of the consolidated entity are based on the observable market rates for risk-free interest rate instruments for the appropriate term. Forward electricity prices The consolidated entity uses both observable external market data and internally derived forecast data for forward electricity prices in the valuations of certain Level 3 instruments. Physical generation plant variables The consolidated entity uses relevant variables from the valuation of physical generation assets with equivalent risk management outcomes as inputs to the valuation of certain Level 3 instruments. The key variables are new build capital costs, operating costs and plant efficiency factors.
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30. Acquisition and disposal of controlled entities Net Carrying consideration amount paid Beneficial $million $million ownership 100% 100%
2012 South American Energy (Bermuda) Limited Energy Hydro Chile SpA
Date of Interest acquisition acquired 3 Apr 2012 3 Apr 2012 100% 100%
The following entities were incorporated/registered during the period: No entities were registered during the year ended 30 June 2012. The following entities were deregistered during the period: No entities were deregistered during the year ended 30 June 2012. 2011 No entities were acquired or ceased to be controlled during the year ended 30 June 2011. The following entities were incorporated/registered during the period: Origin Energy Finance Limited 19 May 2011 Origin Energy Geothermal Chile Limitada 28 Feb 2011 Origin Energy Chile Holdings Pty Limited 21 Feb 2011 Origin Energy Power Development Pty Ltd 10 Nov 2010 The following entities were deregistered during the period: No entities were deregistered during the year ended 30 June 2011. 31. Controlled entities Name changes during the financial year: OCA Holdings Pty Ltd to Origin Energy Southern Africa Holdings Pty Ltd South American Energy (Bermuda) Limited to Origin Energy Hydro Bermuda Limited Energy Hydro Chile SpA to Origin Energy Hydro Chile SpA Name changes during the previous financial year: Collaby Hill Wind Farm Pty Ltd to Crystal Brook Wind Farm Pty Ltd Origin Energy Power Development Pty Ltd to Eraring Gentrader Depositor Pty Ltd
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31. Controlled entities (continued) 2012 2011 Ownership Ownership Incorporated interest per interest per in cent cent Origin Energy Limited Origin Energy Finance Ltd Huddart Parker Pty Ltd < Origin Energy NZ Share Plan Ltd FRL Pty Ltd < BTS Pty Ltd < Origin Energy Power Ltd < Origin Energy SWC Ltd < BESP Pty Ltd Origin Energy Pinjar Security Pty Ltd Origin Energy Pinjar Holdings No. 1 Pty Ltd Origin Energy Pinjar No. 1 Pty Ltd Origin Energy Pinjar Holdings No. 2 Pty Ltd Origin Energy Pinjar No. 2 Pty Ltd Origin Energy Walloons Transmissions Pty Ltd Origin Energy Holdings Pty Ltd < Origin Energy Retail Ltd < Origin Energy (Vic) Pty Ltd < Gasmart (Vic) Pty Ltd < Origin Energy (TM) Pty Ltd Cogent Energy Pty Ltd Origin Energy Electricity Ltd < Eraring Gentrader Depositor Pty Ltd Sun Retail Pty Ltd < OE Power Pty Ltd < Origin Energy Uranquinty Power Pty Ltd Origin Energy Mortlake Terminal Station No. 1 Pty Ltd Origin Energy Mortlake Terminal Station No. 2 Pty Ltd Origin Energy PNG Ltd Origin Energy PNG Holdings Ltd Origin Energy Tasmania Pty Ltd < The Fiji Gas Co Ltd Tonga Gas Ltd Origin Energy Contracting Ltd < Origin Energy LPG Ltd < Origin (LGC) (Aust) Pty Ltd < Origin Energy SA Pty Ltd < Hylemit Pty Ltd Speed-E-Gas (NSW) Pty Ltd Origin Energy WA Pty Ltd < Origin Energy Services Ltd < OEL US Inc. NSW Vic Vic NZ WA WA SA WA Vic Vic Vic Vic Vic Vic Vic Vic SA Vic Vic Vic Vic Vic Vic Qld Vic Vic Vic Vic PNG PNG Tas Fiji Tonga Qld NSW NSW SA Vic NSW WA SA USA
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 66.7 100 100 51 51 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 66.7 100 100 51 51 100 100 100 100 100 100 100 100 100
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31. Controlled entities (continued) 2012 2011 Ownership Ownership Incorporated interest per interest per in cent cent Origin Energy NSW Pty Ltd < Origin Energy Asset Management Ltd < Origin Energy Pipelines Pty Ltd < Origin Energy Pipelines (SESA) Pty Ltd Origin Energy Pipelines (Vic) Holdings Pty Ltd < Origin Energy Pipelines (Vic) Pty Ltd < Origin LPG (Vietnam) LLC Origin Energy Solomons Ltd Origin Energy Cook Islands Ltd Origin Energy Vanuatu Ltd Origin Energy Leasing Ltd Origin Energy Samoa Ltd Origin Energy American Samoa Inc Origin Energy Resources Ltd < Origin Energy CSG 2 Pty Ltd Origin Energy ATP 788P Pty Ltd Angari Pty Ltd < Oil Investments Pty Ltd < Origin Energy Southern Africa Holdings Pty Ltd Origin Energy Wallumbilla Transmissions Pty Ltd Oil Company of Australia (Moura) Transmissions Pty Ltd < Origin Energy Kenya Pty Ltd Origin Energy Bonaparte Pty Ltd < Origin Energy Developments Pty Ltd < Origin Energy Zoca 91-08 Pty Ltd < Origin Energy Petroleum Pty Ltd < Origin Energy Northwest Ltd Sagasco Southeast Inc Origin Energy Resources NZ Ltd Kupe Development Ltd Kupe Mining (No.1) Ltd Origin Energy Resources (Kupe) Ltd Origin Energy Resources NZ (Rimu) Ltd Origin Energy Resources NZ (TAWN) Ltd Sagasco NT Pty Ltd < Sagasco Amadeus Pty Ltd < Origin Energy Amadeus Pty Ltd < Amadeus United States Pty Ltd < OE Resources Ltd Partnership Origin Energy Vietnam Pty Ltd NSW SA NT Vic Vic Vic Republic of Vietnam Solomon Islands Cook Islands Vanuatu Vanuatu Western Samoa American Samoa SA Vic Qld SA SA Qld Vic WA Vic SA ACT SA Qld UK Panama NZ NZ NZ NZ NZ NZ SA SA Qld Qld NSW Vic 100 100 100 100 100 100 51 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 51 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
93
31. Controlled entities (continued) 2012 2011 Ownership Ownership Incorporated interest per interest per in cent cent Origin Energy Singapore Holdings Pte Ltd Origin Energy (Song Hong) Pte Ltd Origin Energy (Block 31) Pte Limited Origin Energy (Block 01) Pte Limited Origin Energy (L15/50) Pte Limited Origin Energy (L26/50) Pte Limited Origin Energy (Savannahket) Pte Limited Origin Energy Fairview Transmissions Pty Ltd Origin Energy VIC Holdings Pty Ltd< Origin Energy New Zealand Ltd Origin Energy Universal Holdings Ltd Origin Energy Five Star Holdings Ltd Origin Energy Contact Finance Ltd Origin Energy Contact Finance No.2 Ltd Origin Energy Pacific Holdings Ltd Contact Energy Ltd Contact Australia Pty Ltd Contact Aria Ltd Contact Operations Australia Pty Ltd Contact Wind Ltd Empower Ltd Rockgas Ltd Origin Energy Capital Ltd< Origin Energy Finance Company Pty Ltd < OE JV Co Pty Ltd < OE JV Holdings Pty Ltd Origin Energy Australia Holding BV Origin Energy Mt Stuart BV Parbond Pty Ltd Origin Foundation Pty Ltd Origin Renewable Energy Investments No 1 Pty Ltd Origin Renewable Energy Investments No 2 Pty Ltd Origin Renewable Energy Pty Ltd Origin Energy Geothermal Holdings Pty Ltd Origin Energy Geothermal Pty Ltd Origin Energy Chile Holdings Pty Ltd Origin Energy Chile S.A. Origin Energy Geothermal Chile Limitada Origin Energy Geothermal Singapore Pte Ltd Singapore Singapore Singapore Singapore Singapore Singapore Singapore Vic Vic NZ NZ NZ NZ NZ NZ NZ Vic NZ Vic NZ NZ NZ Vic Vic Vic Vic Netherlands Netherlands NSW Vic Vic Vic Vic Vic Vic NSW Chile Chile Singapore 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 53.0 53.0 53.0 53.0 53.0 53.0 53.0 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 52.6 52.6 52.6 52.6 52.6 52.6 52.6 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
94
31. Controlled entities (continued) 2012 2011 Ownership Ownership Incorporated interest per interest per in cent cent Origin Renewable Energy Pty Ltd (continued) Origin Energy Wind Holdings Pty Ltd Cullerin Range Wind Farm Pty Ltd Yass Valley Wind Farm Pty Ltd Conroy's Gap Wind Farm Pty Ltd Crystal Brook Wind Farm Pty Ltd Wind Power Pty Ltd Wind Power Management Pty Ltd Lexton Wind Farm Pty Ltd Stockyard Hill Wind Farm Pty Ltd Tuki Wind Farm Pty Ltd Dundas Tablelands Wind Farm Pty Ltd Origin Energy Hydro Bermuda Limited Origin Energy Hydro Chile SpA Vic Vic NSW Vic NSW NSW Vic Vic Vic Vic Vic Vic Bermuda Chile 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 -
< Entered into a Class Order 98/1418 and related deed of cross guarantee with Origin Energy Limited removing the requirement for the preparation of separate financial statements (refer note 27 and 36).
32. Interest in joint venture operations The consolidated entity holds interests in a number of unincorporated joint ventures covering the following major assets: Cooper Basin Bass Basin Kupe Otway Basin Surat Basin Perth Basin Worsley Power Plant Geodynamics South East Asia joint ventures
The principal activities of these joint ventures are oil and/or gas exploration, development and production, power generation, and geothermal power technology.
95
33. Share-based payments Origin Energy Limited Long Term Incentive Plan The company's Long Term Incentive (LTI) Plan was approved by the Board on 23 May 2011. Staff eligible to participate in the Plan are those senior executives invited by the Board, with the invitation based on performance and the role the individual plays in guiding the future success of the company. The Plan covers Options and Share Rights (collectively 'securities'). Share Rights are currently in the form of Performance Share Rights (PSRs) and Deferred Share Rights (DSRs). The fair value of the securities granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date using a Black-Scholes methodology with a Monte Carlo simulation model, taking into account market performance conditions (except for DSRs which have a service and personal performance hurdle rather than market hurdle) and is recognised over the vesting period during which the employees become unconditionally entitled to the securities. The amount recognised as an expense is adjusted to reflect the actual number of securities that vest except where forfeiture of options and PSRs is due to market related conditions. (a) Senior Executive Options Options granted under the plan entitle the holder to subscribe for one fully paid ordinary share per option. The exercise price of the options is based on the weighted average price of the company's shares over a period of at least five but no more than fifteen trading days determined by the Board to be representative of the company's position at the time. Except in certain circumstances applicable to specific option tranches, the options are exercisable at any time after the third anniversary of the grant, provided that relevant performance hurdles are met. The performance hurdles that must be met prior to an option becoming exercisable vary by option tranche and are discussed in the footnotes to the Senior Executive Options table in note 33(f). Options granted under the plan do not carry any dividend or voting rights. During the year, the company issued 4,969,944 options (2011: 2,230,143 options). The exercise prices of the options issued during the year are included in the Senior Executives Option table in this note. The fair value of the options granted is recognised as an employee expense with a corresponding increase in equity. The company has recognised $8,354,365 (2011: $6,334,538) as an expense during the year. The amount recognised in issued capital in the financial statements of the company for the financial year representing the proceeds received from exercise of options, is as follows: 2012 $million 10 2011 $million 18
Note Issued ordinary share capital

22
Details of options outstanding at the beginning and the end of the financial year and movements during the year are provided in the Senior Executives Options table in note 33(f).
96
33. Share-based payments (continued) (b) Senior Executive Performance Share Rights PSRs granted under the plan entitle the holder to subscribe for one fully paid ordinary share per PSR, or such other number as adjusted in accordance with the terms of the LTI Plan. The PSRs are unlisted. The exercise price of the PSRs is nil unless otherwise determined by the Board. Except in certain circumstances applicable to specific PSR tranches, the PSRs are exercisable at any time after the third anniversary of the grant, provided that relevant performance hurdles are met. The performance hurdles that must be met prior to a PSR becoming exercisable may vary by PSR tranche and are discussed in the footnotes to the PSR table in note 33(g). PSRs granted under the plan do not carry any dividend or voting rights. During the year, the company issued 2,118,256 PSRs (2011: 838,116). The company has recognised $10,171,657 (2011: $6,218,317) as an expense during the year. Details of PSRs outstanding at the beginning and the end of the financial year and movements during the year are provided in the Senior Executive Performance Share Rights table in note 33(g). (c) Senior Executive Deferred Share Rights DSRs granted under the plan entitle the holder to subscribe for one fully paid ordinary share per DSR, or such other number as adjusted in accordance with the terms of the LTI Plan. The DSRs are unlisted. The exercise price of the DSRs is nil unless otherwise determined by the Board. DSRs vest in independent equal thirds on satisfaction of the vesting conditions at each vesting date. Any DSRs that have not vested on their specific vesting date will lapse. The vesting conditions that must be met prior to a DSR becoming exercisable may vary by DSR tranche and are discussed in the footnotes to the Deferred Share Rights table in note 33(h). DSRs granted under the plan do not carry any dividend or voting rights. During the year, the company issued 161,448 DSRs (2011: nil). The fair value of the DSRs is recognised as an employee expense with a corresponding increase in equity. The company has recognised $574,995 (2011: $nil) as an expense during the year.
97
33. Share-based payments (continued) (d) Employee Share Plan The Board approved the Origin Energy Employee Share Plan (Origin ESP) on 20 March 2001. All fulltime and permanent part-time employees of the consolidated entity based in Australia with at least one year of service qualify for participation in the Origin ESP. Under the Origin ESP, up to $1,000 worth of fully paid shares are offered to all qualifying employees, in each year in which the Origin ESP is in effect, for no consideration. Shares are awarded under the terms of the Origin ESP in recognition of the contribution employees make to the overall success of the consolidated entity, based on performance hurdles established each year. The Origin ESP is a Taxed Up Front Employee Share Scheme (eligible for $1,000 concession) under amendments to the Income Tax Assessment Act 1997 (Cth). Origin Energy Limited shares awarded under the Origin ESP to Australian-based employees are registered as restricted shares which cannot be sold for three years from the date of award unless the employee ceases employment. The shares awarded in the name of the qualifying employee, are not subject to forfeiture and vest at the date of award to the employee. Shares awarded under the Origin ESP rank equally with other fully paid ordinary shares on issue and carry full voting and dividend rights. To enable employees of the consolidated entity based in New Zealand to receive benefits similar to those of Australian-based employees, the Board has approved the Origin Energy New Zealand Employee Share Plan (New Zealand ESP). The terms and benefits awarded under the New Zealand ESP are similar to those of the Origin ESP and all full-time and permanent part-time employees with at least one year of service qualify for participation in the plan. Under the New Zealand ESP, up to $1,000 worth of fully paid shares are offered to all qualifying employees, in each year in which the New Zealand ESP is in effect, for no consideration. Shares awarded under the New Zealand ESP are restricted shares which cannot be sold for three years from the date of award and employees may elect to either receive the shares in their name at the time of award or have the shares placed into trust. Shares received by employees in their name at the date of award are not subject to forfeiture and vest at the date of award. Shares held in trust are subject to a three year vesting period before being allocated to employees and may be forfeited if employees do not remain employees of the consolidated entity for the full three year vesting period. Separate plans and procedures, adapting for local laws, have also been implemented to enable employees not based in Australia or New Zealand to receive benefits similar to those awarded under the Origin ESP and the New Zealand ESP.
98
33. Share-based payments (continued) (d) Employee Share Plan (continued) No shares were awarded under the employee share plan during the year ended 30 June 2012. The following table details the shares awarded under the employee share plans for the year ended 30 June 2011: Number of shares granted 175,412 7,272 182,684
Cost per share (2) $15.60 $0.00
2011
Date shares granted 10 September 2010 10 September 2010 (1)
Total cost $'000 2,736 2,736
(1)
Shares awarded to New Zealand-based employees at no cost as the shares were granted from forfeited shares acquired at market prices in prior periods.
(2)
The cost per share represents the weighted average market price of the company's shares.
The number of shares held in trust at 30 June 2012 is 14,784 (2011: 14,844) of which 3,252 (2011: 3,312) is allocated to employees and 11,532 (2011: 11,532) is held in trust under the New Zealand ESP. During the year ended 30 June 2012, 60 shares vested to employees (2011: 60 shares) and nil shares (2011: nil shares) vested to the trust. (e) Contact Energy Share Based payments The company's 53.0 per cent controlled entity, Contact Energy Limited, has an Employee Long Term Incentive Scheme for participating employees whereby the value of the long-term incentive award is allocated as a mix of share options and PSRs (options with an exercise price of zero), under the Share Option Scheme. Contact also previously issued restricted shares under a Restricted Share Plan. Under the Share Option Scheme the share options and PSRs will only be exercisable to the extent that the relevant performance hurdles are met (the hurdle is a comparison of Contact's total shareholder return (TSR) relative to the TSR of a reference group comprising companies in the NZX50 index over the relevant period, commencing on the effective grant date). The consolidated entity has recognised $2,668,415 (2011: $2,236,913) as an expense during the year.
99
33. Share-based payments (continued) (f) Summary of senior executive options 2012 Exercise price per Expiry date option 11 Sep 26 Jun 28 Dec 28 Sep 30 Dec 28 Dec 6 Feb 10 Aug 31 Dec 31 Dec 30 Jun 15 Jan 11 Jul 2011 2012 2012 2012 2013 2014 2015 2015 2015 2015 2016 2017 2017 $6.04 $8.51 $9.86 $9.86 $15.84 $14.58 $15.47 $14.89 $14.91 $14.91 $13.01 $13.01 $12.91
(3) (3) (3) (3) (3) (3) (3) (3) (3)
Grant date 11 Sep 2006 26 Jun 2007 28 Sep 2007 28 Sep 2007 30 Sep 2008 28 Sep 2009 6 Nov 2009 10 May 2010 28 Oct 2010 22 Jun 2011 15 Oct 2011 15 Oct 2011 11 Apr 2012
First exercise date 11 Sep 2009 26 Jun 2010 28 Sep 2010 28 Sep 2010 30 Sep 2011 28 Sep 2012 6 Nov 2012 10 May 2013 1 Oct 2013 1 Oct 2013 1 Apr 2014 15 Oct 2014 11 Apr 2015
Fair value of options at measurement date $1.43 $2.25 $2.51 $2.57 $4.49 $4.48 $4.30 $4.38 $4.23 $4.23 $2.97 $3.04 $2.00
Hurdle price per Balance as at share 1 July 2011

(1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (4) (5) (6) (1) (1) (1)
Issued 174,316 4,433,058 362,570 4,969,944 1,471,159 3,498,785 4,969,944
Exercised
(2)
Balance as at Vested as at Forfeited 30 June 2012 30 June 2012 72,000 120,500 151,128 145,595 489,223 489,223 489,223 815,600 300,000 1,161,500 1,056,500 412,000 11,600 1,933,899 106,000 174,316 4,287,463 362,570 10,621,448 3,968,697 6,652,751 10,621,448 815,600 300,000 958,934 2,074,534 977,894 1,096,640 2,074,534
922,000 50,000 1,085,000 300,000 1,233,500 1,177,000 412,000 11,600 2,085,027 106,000 7,382,127
922,000 50,000 269,400 1,241,400 211,000 1,030,400 1,241,400
Key management personnel (7) Non-key management personnel
2,708,538 4,673,589 7,382,127
Refer to page 102 for footnotes. 100
33. Share-based payments (continued) (f) Summary of senior executive options (continued) 2011 Exercise price per Expiry date option 7 Sep 11 Sep 26 Jun 28 Dec 28 Sep 30 Dec 28 Dec 6 Feb 10 Aug 31 Dec 31 Dec 2010 2011 2012 2012 2012 2013 2014 2015 2015 2015 2015 $7.21 $6.04 $8.51 $9.86 $9.86 $15.84 $14.58 $15.47 $14.89 $14.91 $14.91 Fair value of options at measurement date $1.69 $1.43 $2.25 $2.51 $2.57 $4.49 $4.48 $4.30 $4.38 $4.23 $4.23 Hurdle price per Balance as at share 1 July 2010
(1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1)
Grant date 7 Sep 2005 11 Sep 2006 26 Jun 2007 28 Sep 2007 28 Sep 2007 30 Sep 2008 28 Sep 2009 6 Nov 2009 10 May 2010 28 Oct 2010 22 Jun 2011
First exercise date 7 Sep 2008 11 Sep 2009 26 Jun 2010 28 Sep 2010 28 Sep 2010 30 Sep 2011 28 Sep 2012 6 Nov 2012 10 May 2013 1 Oct 2013 1 Oct 2013
Issued 2,124,143 106,000 2,230,143 887,653 1,342,490 2,230,143
Exercised
(2)
Balance as at Vested as at Forfeited 30 June 2011 30 June 2011 47,000 46,000 41,000 36,000 39,116 209,116 209,116 209,116 922,000 50,000 1,085,000 300,000 1,233,500 1,177,000 412,000 11,600 2,085,027 106,000 7,382,127 3,081,653 4,300,474 7,382,127 922,000 50,000 1,085,000 300,000 2,357,000 913,000 1,444,000 2,357,000
(3) (3) (3) (3) (3) (3) (3) (3) (3)
1,433,000 1,370,000 50,000 1,649,000 300,000 1,274,500 1,213,000 412,000 11,600 7,713,100 3,313,000 4,400,100 7,713,100
1,386,000 448,000 518,000 2,352,000 1,119,000 1,233,000 2,352,000
Key management personnel Non-key management personnel
101
33. Share-based payments (continued) (f) Summary of senior executive options (continued)
(1)
The performance hurdle for these options is based on the Total Shareholder Return (TSR) index, i.e. the index measuring total shareholder returns maintained by the Australian Securities Exchange that calculates the share price movement of ordinary shares after notional reinvestment of dividends. Whether the exercise hurdle is satisfied within the exercise period is determined by comparing the TSR index of the company with the TSR index of a predetermined reference group of Australian listed companies. The percentage of options that may be exercised is calculated on a sliding scale dependent upon the company's performance against the reference group of companies. If the Origin Energy TSR exceeds the 50th percentile, 50 per cent of the options may be exercised and if it reaches the 75th percentile, 100 per cent of the options may be exercised. The reference group of companies is available to shareholders and may be accessed via the company's website. In certain circumstances the options may be exercised prior to the first exercise date. More details of the performance hurdles are included in the Remuneration Report in section 4.3.5. The weighted average share price during the year ended 30 June 2012 was $13.67 (2011: $15.97). Exercise prices have been adjusted to reflect the impact of the rights issue in March and April 2011. The inputs used to measure the fair value of options granted during the year ended 30 June 2012 were a weighted average share price of $14.28, an exercise price of $13.01, expected volatility of 26.4 per cent, dividend yield of 3.50 per cent and a risk free rate of 3.96 per cent derived from the yield on Australian Government Bonds of appropriate term. The inputs used to measure the fair value of options granted during the year ended 30 June 2012 were a weighted average share price of $14.28, an exercise price of $13.01, expected volatility of 26.4 per cent, dividend yield of 3.50 per cent and a risk free rate of 4.03 per cent derived from the yield on Australian Government Bonds of appropriate term. The inputs used to measure the fair value of options granted during the year ended 30 June 2012 were a weighted average share price of $13.09, an exercise price of $12.91, expected volatility of 24.0 per cent, dividend yield of 3.82 per cent and a risk free rate of 3.40 per cent derived from the yield on Australian Government Bonds of appropriate term. Opening balances restated to reflect changes to key management personnel for the year ended 30 June 2012.
(2)
(3)
(4)
(5)
(6)
(7)
102
33. Share-based payments (continued) (g) Summary of Senior Executive Performance Share Rights (PSR) 2012 Exercise price per Expiry date PSR 28 Dec 30 Dec 28 Dec 6 Feb 10 Aug 31 Dec 31 Dec 1 Apr 15 Oct 11 Apr 2012 2013 2014 2015 2015 2015 2015 2016 2016 2017 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Fair value of PSRs at measurement date $6.78 $11.38 $11.62 $11.62 $11.75 $11.51 $11.51 $10.39 $10.31 $8.35 Hurdle price per Balance as at share 1 July 2011
(1) (1) (1) (1) (1) (1) (1) (3) (4) (5) (1) (1) (1)
Grant date 28 Sep 2007 30 Sep 2008 28 Sep 2009 6 Nov 2009 10 May 2010 28 Oct 2010 22 Jun 2011 15 Oct 2011 15 Oct 2011 11 Apr 2012
First exercise date 28 Sep 2010 30 Sep 2011 28 Sep 2012 6 Nov 2012 10 May 2013 1 Oct 2013 1 Oct 2013 1 Apr 2014 15 Oct 2014 11 Apr 2015
Issued 42,886 1,976,961 98,409 2,118,256 368,208 1,750,048 2,118,256
Exercised 38,000 113,848 151,848 151,848 151,848
Balance as at Vested as at Forfeited 30 June 2012 30 June 2012 1,705 25,215 34,274 54,706 115,900 115,900 115,900 131,000 388,107 427,295 154,370 4,322 719,379 38,078 42,886 1,922,255 98,409 3,926,101 1,170,159 2,755,942 3,926,101 131,000 320,421 451,421 238,349 213,072 451,421
169,000 503,660 452,510 154,370 4,322 753,653 38,078 2,075,593 801,951 1,273,642 2,075,593
Key management personnel (6) Non-key management personnel
103
33. Share-based payments (continued) (g) Summary of Senior Executive Performance Share Rights (PSR) (continued) 2011 Exercise price per Expiry date PSR 28 Dec 2012 14 Feb 2013 30 Dec 2013 28 Dec 2014 6 Feb 2015 10 Aug 2015 31 Dec 2015 31 Dec 2015 Nil Nil Nil Nil Nil Nil Nil Nil Fair value of PSRs at measurement date $6.78 $5.98 $11.38 $11.62 $11.62 $11.75 $11.51 $11.51 Hurdle price per Balance as at share 1 July 2010
(1) (1) (1) (1) (1) (1) (1) (1)
First exercise Grant date date 28 Sep 2007 14 Nov 2007 30 Sep 2008 28 Sep 2009 6 Nov 2009 10 May 2010 28 Oct 2010 22 Jun 2011 28 Sep 2010 14 Nov 2010 30 Sep 2011 28 Sep 2012 6 Nov 2012 10 May 2013 1 Oct 2013 1 Oct 2013
Issued 14,608 13,145 4,370 122 767,793 38,078 838,116 335,549 502,567 838,116
(2) (2) (2) (2) (2)
Exercised 357,000 100,000 457,000 188,500 268,500 457,000
Balance as at Vested as at Forfeited 30 June 2011 30 June 2011 18,000 16,848 13,835 14,140 62,823 62,823 62,823 169,000 503,660 452,510 154,370 4,322 753,653 38,078 2,075,593 871,549 1,204,044 2,075,593 169,000 169,000 169,000 169,000
544,000 100,000 505,900 453,200 150,000 4,200 1,757,300 724,500 1,032,800 1,757,300
Refer to page 105 for footnotes. 104
33. Share-based payments (continued) (g) Summary of Senior Executive Performance Share Rights (PSR) (continued)
(1)
The performance hurdle which must be met for the PSRs to be exercised is based on the Total Shareholder Return (TSR) index, i.e. the index measuring total shareholder returns maintained by the Australian Securities Exchange that calculates the share price movement of ordinary shares after notional reinvestment of dividends. Whether the exercise hurdle is satisfied within the exercise period is determined by comparing the TSR index of the company with the TSR index of a predetermined reference group of top 100 Australian listed companies. The percentage of PSRs that may be exercised is calculated on a sliding scale dependent upon the company's performance against the reference group of companies. If the Origin Energy TSR exceeds the 50th percentile, 50 per cent of the PSRs may be exercised and if it reaches the 75th percentile, 100 per cent of the PSRs may be exercised. The reference group of companies is available to shareholders and may be accessed via the company's website. In certain circumstances the PSRs may be exercised prior to the first exercise date. More details of the performance hurdles are included in the Remuneration Report in section 4.3.5. PSR issuances have been adjusted to reflect the impact of the rights issue in March and April 2011. The inputs used to measure the fair value of performance share rights granted during the year ended 30 June 2012 were a weighted average share price of $14.28, expected volatility of 26.4 per cent, dividend yield of 3.50 per cent and a risk free rate of 3.96 per cent derived from the yield on Australian Government Bonds of appropriate term. The inputs used to measure the fair value of performance share rights granted during the year ended 30 June 2012 were a weighted average share price of $14.28, expected volatility of 26.4 per cent, dividend yield of 3.50 per cent and a risk free rate of 4.03 per cent derived from the yield on Australian Government Bonds of appropriate term. The inputs used to measure the fair value of performance share rights granted during the year ended 30 June 2012 were a weighted average share price of $13.09, expected volatility of 24.0 per cent, dividend yield of 3.82 per cent and a risk free rate of 3.37 per cent derived from the yield on Australian Government Bonds of appropriate term. Opening balances restated to reflect changes to key management personnel for the year ended 30 June 2012.
(2)
(3)
(4)
(5)
(6)
105
33. Share-based payments (continued) (h) Summary of Senior Executive Deferred Share Rights (DSR) 2012 Exercise price per Expiry date DSR 1 Apr 1 Apr 1 Apr 15 Oct 15 Oct 15 Oct 1 Feb 1 Feb 1 Feb 2013 2014 2015 2013 2014 2015 2014 2015 2016 Nil Nil Nil Nil Nil Nil Nil Nil Nil Fair value of DSRs at measurement date $13.56 $13.10 $12.60 $13.33 $12.85 $12.33 $12.36 $11.90 $11.42
(2) (2) (2) (2) (2) (2) (3) (3) (3)
Grant date 15 15 15 15 15 15 11 11 11 Oct 2011 Oct 2011 Oct 2011 Oct 2011 Oct 2011 Oct 2011 Apr 2012 Apr 2012 Apr 2012
First exercise date 1 Apr 1 Apr 1 Apr 15 Oct 15 Oct 15 Oct 1 Feb 1 Feb 1 Feb 2013 2014 2015 2013 2014 2015 2014 2015 2016
Hurdle price per Balance as at share 1 July 2011

(1) (1) (1) (1) (1) (1) (1) (1) (1)
Issued 11,292 11,292 11,292 35,329 35,329 35,329 7,195 7,195 7,195 161,448 161,448 161,448
Exercised -
Balance as at Vested as at Forfeited 30 June 2012 30 June 2012 11,292 11,292 11,292 35,329 35,329 35,329 7,195 7,195 7,195 161,448 161,448 161,448 -
(1)
Deferred share rights (DSRs) vest in equal thirds (tranches) on satisfaction of the vesting conditions as detailed below: - Tranche 1 - continued employment until end of year 2 - Tranche 2 - continued employment until end of year 3 - Tranche 3 - continued employment until end of year 4 Vesting of DSRs is also subject to satisfactory performance during the period in which the DSRs are held. Satisfactory performance is defined in the company's performance management system as reviewed by line management and the Managing Director from time to time. The inputs used to measure the fair value of performance share rights granted during the year ended 30 June 2012 were a weighted average share price of $14.28, expected volatility of 26.4 per cent and dividend yield of 3.50 per cent. The inputs used to measure the fair value of performance share rights granted during the year ended 30 June 2012 were a weighted average share price of $13.09, expected volatility of 24.0 per cent and dividend yield of 3.82 per cent. 106
(2)
(3)
34. Related party disclosures Associated entities Interests held in equity accounted entities are set out in note 11. The business activities of a number of these entities are conducted under joint venture arrangements. The equity accounted entities conduct business transactions with various controlled entities. Such transactions include purchases and sales of certain products, provision of services and dividends. Refer to note 11 for further information regarding these transactions. Refer to note 35 for key management personnel disclosures. 35. Key management personnel disclosures (a) Key management personnel compensation tables Refer to the Remuneration Report in the Directors' Report. (b) Equity instruments Refer to the Remuneration Report in the Directors' Report for details of the following: (i) Options over equity instruments granted as compensation; (ii) Exercise of options granted as compensation; and (iii) Equity holdings and transactions. (c) Loans and other transactions with key management personnel (i) Loans There were no loans with key management personnel during the year. (ii) Other transactions with the company or its controlled entities Transactions entered into during the year with key management personnel which are within normal employee, customer or supplier relationships on terms and conditions no more favourable than dealings in the same circumstances on an arms length basis include: the receipt of dividends from Origin Energy Limited; participation in the Employee Share Plan and the Long Term Incentive Plan; terms and conditions of employment; reimbursement of expenses; and purchases of goods and services.
Certain directors of Origin Energy Limited are also directors of other companies which supply Origin Energy Limited with goods and services or acquire goods or services from Origin Energy Limited. Those transactions are approved by management within delegated limits of authority and the directors do not participate in the decisions to enter into such transactions. If the decision to enter into those transactions should require approval of the Board, the director concerned will not vote upon that decision nor take part in the consideration of it.
107
36. Deed of cross guarantee The following summarised consolidated income statement comprises the company and its controlled entities which are party to the Deed of Cross Guarantee (refer notes 27 and 31), after eliminating all transactions between parties to the Deed. 2012 $million 2011 $million
for the year ended 30 June
Summarised consolidated statement of comprehensive income and retained profits Profit before income tax expense Income tax expense Profit for the period Other comprehensive income Total comprehensive income for the period Retained earnings at the beginning of the period Dividends paid Retained earnings at the end of the period 1,432 297 1,135 (9) 1,126 8,342 (538) 8,930 503 187 316 (5) 311 8,473 (442) 8,342
108
36. Deed of cross guarantee (continued) as at 30 June Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Inventories Other financial assets, including derivatives Other assets Total current assets Non-current assets Trade and other receivables Other financial assets, including derivatives Investments accounted for using the equity method Property, plant and equipment Exploration and evaluation assets Intangible assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing liabilities Other financial liabilities, including derivatives Tax liabilities Provisions Total current liabilities Non-current liabilities Trade and other payables Interest-bearing liabilities Other financial liabilities, including derivatives Tax liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity 2012 $million 2011 $million
152 4,152 130 820 93 5,347
600 3,876 152 547 99 5,274
11 3,952 5,816 5,176 175 5,186 21 20,337 25,684
24 4,091 5,402 4,934 178 4,895 23 19,547 24,821
2,621 120 1,596 46 276 4,659
2,598 549 2,161 7 238 5,553
2,321 3,307 1,339 333 424 7,724 12,383 13,301
1,954 2,371 2,127 103 411 6,966 12,519 12,302
4,345 26 8,930 13,301
4,029 (69) 8,342 12,302
109
37. Earnings per share 2012 Earnings per share based on statutory profit Basic earnings per share Diluted earnings per share Earnings per share based on underlying consolidated profit Underlying basic earnings per share Underlying diluted earnings per share Weighted average number of shares used as the denominator 2012 Number Number of ordinary shares for basic earnings per share calculation pre adjusting for bonus element of the rights issue 1,081,691,687 Bonus element of rights issue Number of ordinary shares for basic earnings per share calculation 1,081,691,687 Effect of executive share options, performance share rights and deferred share rights on issue 2,408,440 Number of ordinary shares for diluted earnings per share calculation 1,084,100,127 2011 Number 922,201,286 25,540,613 947,741,899 2,880,456 950,622,355 2011
Reconciliation of earnings used in calculating basic and diluted earnings per share based on statutory profit 2012 2011 $million $million Profit for the period 1,058 248 Less: Profit attributable to non-controlling interests (78) (62) Earnings used in calculating earnings per share 980 186 Refer to note 2(b) for a reconciliation of underlying consolidated profit used in calculating earnings per share based on underlying consolidated profit. Information concerning the classification of securities (a) Fully paid ordinary shares Fully paid ordinary shares are classified as ordinary shares for the purposes of calculating basic and diluted earnings per share. (b) Share options, performance share rights and deferred share rights Share options, performance share rights and deferred share rights issued under the Long Term Incentive Plan have been classified as potential ordinary shares and have been included in the determination of diluted earnings per share. The options and rights have not been included in the determination of basic earnings per share. Information about basic and diluted Earnings per share During the year 1,998,371 (2011: 3,080,939) options and performance share rights were exercised, forfeited or lapsed. Full details of these share options and performance share rights are set out in note 33. There were 68,515 (2011: 292,000) shares issued as a result of the exercise of options and performance share rights between the reporting date and the completion of the financial report.
110
38. Parent entity disclosures As at, and throughout the financial year ended 30 June 2012, the parent entity company of the consolidated entity was Origin Energy Limited. Origin Energy Limited 2012 2011 $million $million Results of the parent entity Profit for the period Other comprehensive income, net of income tax Total comprehensive income for the period Financial position of the parent entity at period end Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities 29,202 1,436 30,638 20,565 4,671 25,236 28,371 1,541 29,912 20,122 4,347 24,469 158 4 162 144 (23) 121
Total equity of the parent entity comprising: Share capital Share-based payments reserve Hedging reserve Retained earnings Total equity
4,345 77 (31) 1,011 5,402
4,029 58 (44) 1,400 5,443
Parent entity contingencies The directors are of the opinion that provisions are not required in respect of contingencies, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement. Contingent liabilities Bank guarantees - unsecured
44
14
The parent entity has provided guarantees for certain contractual commitments of its joint ventures associated with capital projects. The parent entity has entered into a Deed of Cross Guarantee with the effect that the company guarantees debts in respect of certain of its controlled entities. Further details of the Deed of Cross Guarantee and the controlled entities subject to the deed, are disclosed in note 31 and note 36.
111
39. Subsequent events Final Investment Decision on the second train of the two train Australia Pacific LNG Pty Limited Incorporated Joint Venture CSG to LNG project and issue of shares to China Petroleum and Chemical Corporation On 4 July 2012 Australia Pacific LNG Pty Limited a 42.5 per cent owned and equity accounted incorporated joint venture of the consolidated entity, announced that a Final Investment Decision ('FID') on the second train of the two train CSG to LNG project had been approved. LNG from the previously announced first train is expected to be delivered in mid-2015, with LNG from the second train expected in early 2016. The total capital expenditure for the FID approved two train project (100 per cent Australia Pacific LNG) is estimated to be A$23 billion, including contingencies. This excludes expected expenditure on non-project costs associated with the domestic operations, pre-LNG operating and maintenance costs and costs associated with the supply of gas to third party LNG projects. On 12 July 2012 Australia Pacific LNG issued new shares to China Petroleum and Chemical Corporation (Sinopec) resulting in Sinopecs equity holding increasing from 15 percent to 25 per cent. As a result of this new share issue, Origin's interest in Australia Pacific LNG has been diluted from 42.5 per cent to 37.5 per cent. Under the terms of the subscription agreement Sinopec paid net consideration to Australia Pacific LNG of US$1.4 billion. The completion of the share issue from Australia Pacific LNG to Sinopec will result in a dilution gain recorded in statutory profit for the consolidated entity of approximately A$0.4 billion for the year ended 30 June 2013. Commitments at 30 June 2012 will reduce by $618 million as Origin's share of the commitments and guarantees of the Australia Pacific LNG joint venture (refer notes 27 and 28) will be diluted from 42.5 per cent to 37.5 per cent following the issue of shares to Sinopec to increase Sinopecs interest in Australia Pacific LNG to 25 per cent.
112
Directors' Declaration
1 In the opinion of the directors of Origin Energy Limited (the Company): (a) the financial statements and notes, and the Remuneration Report in the Directors Report, are in accordance with the Corporations Act 2001 (Cth), including: (i) giving a true and fair view of the financial position of the consolidated entity as at 30 June 2012 and of its performance, for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 (Cth). (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1 in the consolidated financial statements. (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2 There are reasonable grounds to believe that the Company and the controlled entities identified in note 31 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those controlled entities pursuant to ASIC Class Order 98/1418. 3 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 (Cth) from the Managing Director and the Executive Director, Finance and Strategy for the financial year ended 30 June 2012.
Signed in accordance with a resolution of the directors:
Kevin McCann, Chairman Director Sydney, 23 August 2012
113

Financial Statements 2012

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Financial Statements 2012

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Origin Energy Limited and Controlled Entities Financial Statements 30 June 2012

Origin Energy Limited ABN 30 000 051 696

Origin Energy Limited and Controlled Entities Financial Statements Contents

Directors' Declaration Independent auditor's report

3(a) 3(b) 11(a) 3(c) 3(c) 4

90.6 cents 90.4 cents

19.6 cents 19.6 cents

109 4 6 (65) (37) 129 (13) 125 (8) 117 1,175

141 2 2 (168) 73 (245) 4 (182) 3 (179) 69

112 1,063 1,175

17 337 5,962 10,895 838 5,966 27 24,042 27,981

24 562 5,470 10,313 965 5,693 24 23,051 26,900

2,063 145 1,684 71 315 16 4,294

2,020 595 2,217 2 275 5,109

365 5,734 1,482 1,074 574 9,229 13,523 14,458

412 4,193 2,282 855 533 8,275 13,384 13,516

4,345 (186) 8,935 13,094 1,364 14,458

4,029 (301) 8,504 12,232 1,284 13,516

Origin Energy Limited and Controlled Entities Statement of changes in equity

Share capital 4,029 316 316 4,345

Hedging reserve (123) 31 31 (92)

1,683 2,346 2,346 4,029

(132) (107) (107) (239)

(107) (16) (16) (123)

8,765 (5) 186 181 (442) (442) 8,504

1,189 (58) 62 4 (62) 153 91 1,284

11,438 (179) 248 69 (504) 2,499 14 2,009 13,516

13,991 (12,115) 1,876 4 (39) (19) 1,822

10,362 (8,768) 1,594 9 3 (205) 1,401

(1,203) (127) (173) 75 (109) 37 41 (1,167) (2,626)

(1,055) (150) (422) (3,125) (49) 39 4 (4,758)

Contact Energy 2012 2011 2,102 2,102 1,708 1,708

Corporate 2012 2011 -

Consolidated 2012 2011 13,087 (152) 12,935 10,518 (174) 10,344

175 (87) (108)

(9) (3) 20 (2) 6

(2) (197) (8) 101 (106)

17 (214) (2) 161 (38)

166 (512) 421 (96) 108 87 980

(201) (214) 12 (253) 169 (487) 186

(1) (2) (3)

2011 5,258 5,258

Contact Energy 2012 2011 5,072 5 5,077 4,591 9 37 4,637

(50) 104 9 50 113

119 (407) 430 (55) 87 893

(201) (214) 12 (253) (656)

(139) (160) 16 (204) (487) 673

Refer to note 2(c) for explanatory notes. 33

Tax (18) (11) (5) (2) (59) (8) (1) (104)

10,533 2,291 111 12,935

8,377 1,876 91 10,344

18,280 5,266 159 23,705

17,526 4,904 59 22,489

2(b) 2(b) 2(b)

(9,255) (708) (49) (614) (512) 166 (119) (738) (11,829)

(7,379) (540) (118) (539) (214) (201) (253) (613) (9,857)

37 37 (217) (37) (72) (326) (289)

36 36 (157) (22) (12) (191) (155)

103 217 (2) (16) 302

40 115 (8) 147

408 (3) 405

50 (11) (131) 2 (6) 7 4 (85) (2) 318 (16) 302

58 11 (15) (2) (31) 8 29 (8) 147 147