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ANNUAL 2017 ANNUAL REPORT HOW ARE YOU ADAPTING TO A RAPIDLY CHANGING ENERGY LANDSCAPE? Trish Kelliher Shareholder Everything you want to know about how we’re tackling the big questions. ORIGIN ENERGY CONTENTS 02 WELCOME TO THE 2017 ANNUAL REPORT 04 YEAR AT A GLANCE 08 DIRECTORS' REPORT 12 OPERATING AND FINANCIAL REVIEW 38 RENUMERATION REPORT 67 LEAD AUDITOR’S INDEPENDENCE DECLARATION 68 BOARD OF DIRECTORS 70 EXECUTIVE MANAGEMENT TEAM 73 CORPORATE GOVERNANCE STATEMENT 82 FINANCIAL STATEMENTS 145 DIRECTORS’ DECLARATION 146 INDEPENDENT AUDITOR’S REPORT 152 SHARE AND SHAREHOLDER INFORMATION 154 EXPLORATION AND PRODUCTION PERMITS AND DATA 156 ANNUAL RESERVES REPORT 164 FIVE YEAR FINANCIAL HISTORY 166 GLOSSARY AND INTERPRETATION On the cover of this Annual Report is Trish Kelliher, an Origin shareholder and also one of our employees. When we recently spoke to Trish, she asked what Origin is doing to ensure that energy remains affordable for families; and how are we making life easier for customers? This information is found in the Energy Markets section of the Operating and Financial Review, as well as in our Shareholder Review and Sustainability Report. ORIGIN ENERGY 1 Origin is focused on a cleaner, smarter and customer-centric energy future. 2 WELCOME TO THE 2017 ANNUAL REPORT In compiling this year’s report, we spent Given our primary focus was to reduce debt, WELCOME time reflecting on common questions the Board determined not to pay a dividend we've been hearing from our shareholders. for the second half of FY2017. We are acutely aware of the importance of dividends Did you meet your commitments for the year? TO THE to many of our shareholders and this Is the business in good shape? What are you decision was not taken lightly. The Board’s doing for your customers? How are you 2017 view is that suspension of the dividend is planning to grow? Are we getting a dividend? in the best interests of all shareholders at ANNUAL These are all important questions, and this time. we’ve taken time to answer them, among IMPROVED BUSINESS PERFORMANCE REPORT others, in our reporting suite. On that note, we’d like to thank Trish Kelliher, one of our Our solid operational performance delivered shareholders and also one of our employees, an increase in Underlying EBITDA of for appearing on the front cover of the $834 million, or 49 per cent, to $2.5 billion. report and sharing her questions. In Energy Markets, our electricity business is PROGRESS ON COMMITMENTS performing well and our natural gas portfolio remains a core differentiator. This year, we have made good progress towards our commitments, delivering a Australia Pacific LNG has made a strong $1 billion reduction in debt and improving start to operations, producing 10 per cent business performance. above nameplate capacity through the recent 90-day two train Lenders’ Test, Our operational performance for the year proving its resources and facilities are was solid, driving increases in Underlying world class. In response to the low oil EBITDA and Underlying Profit. However, price environment, Australia Pacific LNG the full year statutory result was significantly is focused on improving productivity and impacted by non-cash impairment charges. significantly reducing its cost base. WELCOME TO THE 2017 ANNUAL REPORT 3 49% increase in underlying EBITDA to $2.5 billion WHAT WE’RE DOING OUTLOOK FOR GROWTH Our employees are the heart and soul of FOR CUSTOMERS Through our two businesses Energy Markets Origin and central to any success we achieve. We are aware that rising energy prices and Integrated Gas, Origin is focused on We acknowledge their incredible efforts are hurting many Australian households a cleaner, smarter and customer-centric and the great pride they take in Origin. and businesses. Origin is helping those in energy future. In closing, we are operating in an hardship by making sure they will not pay We expect our two businesses to underpin environment where stakeholder the recent price increases and ensuring they growth in the year ahead, subject to market expectations are evolving rapidly. are on our best offer with no conditions conditions and the regulatory environment. We are committed to meeting those attached. We are also behind the push to Energy Markets Underlying EBITDA for expectations by being more responsive, simplify energy and help customers more FY2018 is expected to be in the range efficient and adaptable. easily compare offers. of $1.7 billion to $1.8 billion, up 14 to We’re confident if we do this, we can Bringing energy prices down will require 21 per cent on FY2017. continue to build on our core strengths, a whole of industry response, including Integrated Gas is expected to achieve grow new businesses and transform our networks, generators and retailers. Origin is production in the range of 245 to 265 PJ culture to position Origin for success. taking action to put downwards pressure on in FY2018, up 7 to 16 per cent on FY2017. prices by increasing our supply of low-cost We look forward to speaking with renewables to more than 25 per cent of Debt reduction remains a key priority and many of you at our forthcoming AGM our generation mix within three years, and Origin is targeting adjusted net debt of on 18 October. boosting generation from Eraring. below $7 billion by the end of FY2018, Thank you for your continued support. pending the divestment of Lattice Energy, We will continue to advocate for policy our conventional gas assets. We remain on certainty, particularly the adoption of a track to execute this by the end of 2017. Clean Energy Target as the critical action needed to stimulate further investment in NEW LEADERS new supply and deliver a genuine reduction This year we were pleased to welcome to Gordon Cairns in prices for Australians. our leadership team, Lawrie Tremaine as Chairman Chief Financial Officer and Mark Schubert as head of Integrated Gas. Teresa Engelhard joined the Board as an independent non-executive director, bringing valuable expertise in technology Frank Calabria Managing Director and innovation as we transition to a cleaner and smarter energy future. We farewelled Helen Nugent and thank her for her enormous contribution. 4 YEAR AT A GLANCE YEAR AT A GLANCE 5 YEAR AT A GLANCE SHAREHOLDERS This year, Origin was focused on reducing debt and improving returns to shareholders. UNDERLYING EBITDA UP UNDERLYING PROFIT UP STATUTORY LOSS INCLUDING $834 MILLION OR 49% TO $185 MILLION OR 51% TO IMPAIRMENTS OF $3.1 BILLION $2.5B↑ $550M↑ $2.2B ADJUSTED NET DEBT DOWN BY NIL DIVIDEND $1B OUTLOOK FOR GROWTH ENERGY INTEGRATED ADJUSTED NET MARKETS GAS DEBT TARGET Underlying EBITDA Australia Pacific Below $7 billion by up 14–21% to LNG production June 2018, pending $1.7–$1.8 billion. up 7–16% to the divestment of 245–265 PJ. Lattice Energy. Lattice Energy production ↑ ↑ 76–86 PJe. ↓ Origin will cease recognising earnings from Lattice Energy upon completion of the expected divestment. 6 YEAR AT A GLANCE YEAR AT A GLANCE 7 In 2017, Origin was also focused on delivering better outcomes for customers, our people and the community. CUSTOMERS PEOPLE COMMUNITIES INVESTING IN FUTURE IMPROVED SAFETY IMPROVED CUSTOMER ENERGY SOLUTIONS PERFORMANCE WITH TRIFR OF SATISFACTION - NPS ↑ 4 points to 16.1 3.2 - business customer OUR PEOPLE VOLUNTEERED satisfaction ↑ 11 points to 76 Connected home our best ever result THEIR TIME TO SUPPORT - ombudsman complaints ↓ solution focusing on GOOD CAUSES home monitoring IMPROVING OUR CULTURE DIGITAL MAKING LIFE EASIER FOR CUSTOMERS 5,912 HRS Technology to itemise SINCE 2010 THE ORIGIN energy use in the home – New leaders FOUNDATION HAS CONTRIBUTED – Online sales ↑ 23% – Creating a more – My Accounts visits ↑ 30% responsive, efficient and to 2.5 million customers adaptable company +$20M – 1.8 million customers on 760 GAS DEALS e-billing, ↑ 15% to support good causes with domestic commercial EMPLOYEE ENGAGEMENT in education and help and industrial customers HELPING CUSTOMERS Australians reach IN HARDSHIP their potential ↑ 5 percentage Customers in financial points to 58% hardship program will not pay recent price rises 8 DIRECTORS’ REPORT DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2017 In accordance with the Corporations Act 2001 (Cth), the 4 EVENTS SUBSEQUENT TO BALANCE DATE Directors of Origin Energy Limited (Company) report on the Company and the consolidated entity Origin Energy Group No matters or circumstances have arisen since 30 June 2017, (Origin), being the Company and its controlled entities for the which have significantly affected, or may significantly affect the year ended 30 June 2017. Company’s operations, the results of those operations or the Company’s state of affairs in future financial years. The Operating and Financial Review and Remuneration Report form part of this Directors’ Report. 5 DIVIDENDS 1 PRINCIPAL ACTIVITIES No Dividends were paid during the year by the Company and the Directors have determined that no final dividend will be payable During the year, the principal activity of Origin was the for the year ended 30 June 2017. operation of energy businesses including: – exploration and production of oil and gas; 6 DIRECTORS – electricity generation; The Directors of the Company at any time during or since the end of the financial year are: – wholesale and retail sale of electricity and gas; and Gordon Cairns (Chairman) – sale of liquefied natural gas. Frank Calabria (Chief Executive Officer & Managing Director) There were no other significant changes in the nature of these (appointed 19 October 2016) activities during the year. Grant King (Managing Director) (retired 19 October 2016) John Akehurst 2 REVIEW OF OPERATIONS Maxine Brenner Teresa Engelhard (appointed 1 May 2017) & FUTURE DEVELOPMENTS Bruce Morgan A review of the operations and results of operations of Origin Helen Nugent (retired 3 March 2017) during the year, the financial position of Origin and the business Scott Perkins strategies and prospects for future financial years, is set out in Steve Sargent the Operating and Financial Review, which forms part of this Directors’ Report.

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