Financial & Economic Interpretation and Communication Report

This report offers a comprehensive financial analysis of Origin Energy Limited, an Australian energy company operating in the electricity supply sector. The analysis examines the company's financial and non-financial performance, focusing on key metrics like profit, revenue, debt, EBITDA, free cash flow, and ROCE, comparing 2019 figures with those of the previous year. The report interprets the changes in financial position, highlighting profit increases, revenue growth, and the impact of debt reduction. It also considers the company's strategic focus on renewable energy, customer base, and growth opportunities within the energy market. The report explores the company's strategies, management approach, and non-financial indicators, concluding with an overall positive assessment and recommendations for future growth and investment based on the provided financial data. The analysis incorporates relevant references to support the findings and interpretations.

Financial & Economic Interpretation and
Communication

Executive summary
Origin energy limited is an Australian company that is involved in the energy sector. The
main income-generating a source of the company is the electricity supply which is
undertaken by the business. Major sections in which the investments are made by the
company include energy markets, exploration and production, and Australia Pacific LNG.
There is renewable energy that is provided and in this, there is the use of solar, storage and
wind technologies (Origin Energy Limited, 2019). The electricity is developed with the help
of various sources which are available. The analysis for the financial and non-financial
aspects will be carried in relation to the company in which all the areas will be covered.
Analysis
The company is operating and in order to make it attain all the targets, it will be required that
proper analysis shall be performed. The company provides various financial results and they
will be taken into account for the making of decisions and analyzing the position in the
current period.
Particulars 2019 2018 Variance
Profit/(loss) 1211 280 333%
Revenue 14727 14604 0.84%
Debt 5417 6529 -17%
EBITIDA 3232 2787 16%
Free cash flow 1539 1955 -21%
ROCE 9.1% 7.7% 1.4%
The major financial results which are required for the performance of the analysis have been
collected and are presented above. It can be seen that the profits of the company are
increasing at a high level and there is a rise of 333% in comparison to the previous year
(Origin Energy Limited, 2019). The revenues have increased but not at that level and there is
a slight rise in the same. The free cash flows have declined by 21% and also the increase is
attained in ROCE with 1.4%.
Interpretation
The changes which are taking place in the financial position of the business have been
identified above. There is a high change which is made in the profits of the company and the
same is due to the decrease in the expense and increase in the number of revenues. The cash

flow from the investing activities has declined and due to that the overall decrease in the free
cash flows has been faced. The financing cost has been reduced and that is also beneficial for
the business (Karadag, 2015). This is due to the decrease in the amount of debt on which the
cost is incurred.
In the company, there are various operations which are performed and for that various
segments are involved in the same. All the changes which are taking place in the same and
will be affecting the position and performance of the business shall be taken into account. It
has been identified that the company is a leading energy retailer and is having 4.2 million gas,
LPG and electricity accounts which are held by the customers (Hofer, Eroglu and Hofer,
2012). The largest CSG reserve base in Australia is of the company with 2P reserves of
11920PJ. There are various growth opportunities which are involved in the company and they
include the increase which can be made in the capacity and flexibility of generation.
There are various new streams from which the revenue can be generated and they include
solar and storage service, adjacencies and centralized energy services. With the help of them,
further growth will be attained and there will be a higher level of the development that will be
made (Teeratansirikool et al., 2013). The operations are carried in Southeast Queensland and
pacific islands where the exploration and generation of various resources are carried out. The
main strategy of the company is developed in such a manner that all the energies are provided
to the communities, planet, and customers in a direct manner. Strategies are designed in
relation to the decentralization and decarbonization of the digitization and supply.
The main strategy of the company is to connect the customers with the technologies and
energies in relation to the coming period. The management team of the company is efficient
and is performing all of the tasks in the manner by which the aim of the company will be
fulfilled (Ameer and Othman, 2012). The strategy is taken into consideration and all of the
actions are designed in accordance with the same. The remuneration is paid by the company s
per the policy which is made and for that proper evaluation is also made. The highest amount
is paid to the F Calabria who is the executive director of the company.
There is the consideration of all the non-financial indicators also by which the performance of
the company is analyzed (Sheikhi, Ranjbar and Oraee, 2012). It can be noted that the overall
performance of the company is good and there are also various opportunities which are

available. The steps will be taken for further improvement which will be making the
company grow and sustain for a longer duration of time.
Conclusion
The appropriate evaluation is made for the origin energy limited and in that, all of the
elements have been included. The financial results of the company have been collected and
all the changes which are taking place in them are identified. The analysis is performed in an
effective manner and by that, it can be said that there are effective results which are obtained
and the operations are also carried in an appropriate manner. This will be helping all of the
users to consider the information and then take the decision in relation to the investment
which is to be made in the company. The earnings of the company have increased greatly and
that will be attracting all the investors as they will be getting the appropriate amount of the
returns and security will be maintained. There is a reduction in the free cash flows which will
be affecting the liquidity position of the company. All the other non-financial aspects have
been covered and it is identified that operations are performed in various locations and in
such manner that advantage will be provided to the customers who will be using the products
and services.

References
Ameer, R. and Othman, R. (2012) Sustainability practices and corporate financial
performance: A study based on the top global corporations. Journal of business
ethics, 108(1), pp.61-79.
Hofer, C., Eroglu, C. and Hofer, A.R. (2012) The effect of lean production on financial
performance: The mediating role of inventory leanness. International Journal of Production
Economics, 138(2), pp.242-253.
Karadag, H. (2015) Financial management challenges in small and medium-sized enterprises:
A strategic management approach. EMAJ: Emerging Markets Journal, 5(1), pp.26-40.
Origin Energy Limited. (2019) Annual report. [Online] Available at:
https://www.originenergy.com.au/content/dam/origin/about/investors-media/documents/fy19-
origin-annual-report-online-oct.pdf[Accessed 7 October 2019]
Origin Energy Limited. (2019) What we do. [Online] Available at:
https://www.originenergy.com.au/about/who-we-are/what-we-do.html [Accessed 7 October
2019]
Sheikhi, A., Ranjbar, A.M. and Oraee, H. (2012) Financial analysis and optimal size and
operation for a multicarrier energy system. Energy and buildings, 48, pp.71-78.
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C. (2013) Competitive
strategies and firm performance: the mediating role of performance
measurement. International Journal of Productivity and Performance Management, 62(2),
pp.168-184.