Org Capital Structure and Cash Managment Performance

8 May 2013

To: Origin Energy Limited – Board of Directors

From: AFF5250-Group 27

There is the report that you requested to evaluate Origin Energy’s capital structure and cash management performance over past five years, and also forecast future cash flow. The main purpose of this report is to explore company current financial performance and make recommendations regarding to improvements for company for the next strategic planning horizon. We hope that this report will merit your approval.

Sincerely!

Group 27

Executive Summary

The purpose of this report is to evaluate Origin Energy’s capital structure and cash management over past five years. Specifically, it is to explore the significant changes to ORG’s capital structure. And post-tax WACC has been calculated. Afterwards, this report discusses the company’s cash management performance by performing cash flow analysis and ratio analysis. Finally, recommendations regarding to improve capital structure and cash management situation have been provided.

In this report, it has been found that Origin Energy relies more on equity instrument rather than debt instrument to finance overall operations and growth. In addition, the report also finds that Origin Energy is currently using aggressive strategy for funding and has a relative superior cash management performance, but it is still far away from optimal position.

It is therefore recommended that to put more attention on cash management in order to arrive at an optimal position and through an efficient capital structure to keep the stable development for the company.

Table of Contents

Executive Summary ii

Part 1 Background of Origin Energy 1

1.1 Business Analysis 1

1.2 Du-pont analysis 1

Part 2 Capital Structure 4

2.1 Debt and Equity Current Used 4

2.2 Capital Structure 4

2.3 Significant Change in Capital Structure 6

2.4 Post-Tax WACC 8

Part 3 Cash Management 9

3.1 Cash Flow Analysis 9

3.2 Free Cash Flow Forecast 11

3.3...