Orca Gold Inc.
Annual Report 2022

Plain-text annual report

2022 Annual ReportWhere all good change startsLPGContents 1 Contents A message from Scott and Frank About Origin Where We Operate Board of Directors Executive Leadership Team Operating and Financial Review Directors’ Report Remuneration Report Lead Auditor’s Independence Declaration Financial Statements Share and Shareholder Information Exploration and Production Permits and Data Annual Reserves Report Five-year Financial History Glossary and Interpretation 2 4 5 6 8 11 54 58 81 83 150 154 156 160 162 2 Annual Report 2022 A message from Scott and Frank “At a time of incredible change for our sector, we have taken steps to put Origin in a stronger position to navigate the energy transition and create value for shareholders.” Welcome to the 2022 Annual Report It has been another extraordinary year in energy. The energy transition continued to accelerate and collided with macroeconomic and geopolitical events, resulting in major volatility in energy prices. A number of domestic factors added to the challenging conditions, with significant coal power plant outages in the market and wet weather affecting both renewables output and coal supply. This, in turn, caused an acute tightening of electricity and gas supply, leading to escalated wholesale prices. Despite the challenges faced by the industry, the excellent operating performance of Origin’s generation fleet played a vital role in keeping the lights on for customers. We are very aware that some customers have been concerned about rising energy prices at a time of broader cost of living pressures, and we have continued to prioritise support for those in a vulnerable financial position. Overall, we are pleased with how the business has performed this year, navigating myriad challenges and delivering higher underlying profit and strong cash flow. We have taken important steps to put Origin in a stronger position for the future, including announcing a refreshed strategy and ambition to lead the energy transition through cleaner energy and customer solutions. We will shortly release new, more ambitious targets to accelerate emissions reduction across our business as part of Origin’s first Climate Transition Action Plan. This plan will be subject to a non- binding, advisory vote at our 2022 Annual General Meeting on 19 October. Financial performance Origin’s FY2022 financial performance reflected the strength of our integrated business, with strong commodity prices driving higher earnings from our Integrated Gas business, helping offset lower earnings from Energy Markets. Underlying profit rose 30 per cent to $407 million, and Underlying EBITDA rose to $2,114 million, compared to $2,036 million in the prior year. On a statutory basis, Origin announced a loss of $1,429 million, reflecting a $2,196 million non-cash impairment. A $4,354 million uplift of in-the-money Energy Markets derivative assets associated with the hedging of very high wholesale electricity and gas prices resulted in the requirement to recognise the non-cash impairment of goodwill. This does not reflect the performance of the business, future cash flows, or any impact to future value. Origin benefitted from a record cash distribution from Australia Pacific LNG of $1,595 million, due to higher realised oil and spot LNG prices. This distribution contributed to a strong free cash flow position of $1,062 million. Adjusted net debt reduced by $1,801 million to $2,838 million, as strong cash flow and proceeds from the sale of a 10 per cent interest in Australia Pacific LNG enabled Origin to pay down debt, invest in growth and deliver returns to shareholders, including a $250 million share buyback. The board has determined a partly franked final dividend of 16.5 cents per share. Shareholders received total dividends of 29 cents per share in FY2022. A message from Scott and Frank 3 Operational performance Board and people In Integrated Gas, Australia Pacific LNG’s performance was strong. Reserves increased significantly due to higher estimated recoveries from producing fields, and revenue rose sharply on the strength of higher global commodity prices. Australia Pacific LNG continued to be a major provider of gas to the domestic market. Integrated Gas Underlying EBITDA was $1,837 million, up 62 per cent on the previous year. In Energy Markets, earnings were impacted by high commodity prices and domestic supply interruptions, combined with volatile wholesale electricity prices, higher fuel costs and wet weather. Underlying EBITDA for Energy Markets of $365 million was 63 per cent lower than the prior year. Despite the challenging conditions, there were several highlights in Energy Markets. Our customer base grew to 4.5 million, as 193,000 new accounts were added through the acquisition of WINconnect and a doubling in Broadband customers. Our domestic gas business also performed strongly. Our new retail operating model and migration of customers to Kraken is progressing well, with more than half of Origin’s electricity and gas customer accounts now on the platform. We are on target for completion by December 2022 and have achieved $170 million of a targeted total of $200 - $250 million in cash cost savings by FY2024, from an FY2018 baseline. Origin’s investment in Octopus Energy continues to exceed expectations, as it successfully navigated very challenging market conditions, emerging as the UK’s fifth largest retailer and better positioned to deliver on its ambitious growth strategy. Outlook There remains uncertainty around the range of potential earnings outcomes for FY2023. Underlying earnings are expected to be higher, driven by growth in earnings from the gas business, while electricity gross profit is expected to remain supressed. Risk of coal under-delivery remains, including due to rail and mine performance. We will continue to assess the outlook for the business with a view to providing an update when there is less uncertainty. In FY2024, we anticipate further growth in underlying earnings. The magnitude of this growth is dependent on fuel and energy prices and the extent to which these are reflected in customer tariffs, the outcome of a price review on ~50 petajoules of gas supply, and delivery of targeted retail savings. Australia Pacific LNG production for FY2023 is expected to be 680 – 710 petajoules, reflecting ongoing strong field performance and allowing for the impact of recent wet weather events. While there were fewer serious injuries recorded in FY2022, disappointingly, safety performance declined, with our total recordable injury frequency rate increasing to 4.0, from 2.7 in FY2021. We have further intensified our focus on safety programs to help address this decline and continue to target a zero- harm workplace. We continued to engage widely with our stakeholders and contribute meaningfully to the communities in which we operate, increasing regional procurement, indigenous employment, workforce diversity and announcing our support for the Uluru Statement from the Heart. We were pleased to welcome Dr Nora Scheinkestel to the Board as an Independent Non-executive Director. Dr Scheinkestel has deep financial expertise and extensive experience as a director of leading ASX listed companies. In conclusion, at a time of incredible change for our sector, we have taken steps to put Origin in a stronger position to navigate the energy transition and create value for shareholders. We recognise the energy transition is not without its challenges for society, and we must continue to work to get the balance right between emissions reduction, and energy security, reliability and affordability. Our fundamental belief is that the transition will be good for our business, customers and the planet. We hope you share our optimism for the future and look forward to welcoming you to this year’s Annual General Meeting. Thank you for your continued support. Scott Perkins Chairman Frank Calabria Chief Executive Officer 4 Annual Report 2022 About Origin Leading integrated energy company 4.5 million customer accounts 5,000 employees Listed on the Australian Securities Exchange in 2000 Electricity, gas, LPG and Broadband customers across Australia and the Pacific Inclusivity in the workplace; leading parental support Climate transition embedded in our strategy Powering Australia 27.5% interest in Australia Pacific LNG Australia's first approved science-based emissions targets 7,300 MW generation portfolio, including 1,245 MW owned and contracted renewables and storage Continue to be a significant contributor to the east coast gas market Supporting Australian communities Driving future energy innovation Exploration and appraisal The Origin Energy Foundation has contributed more than $35 million over 12 years 20% interest1 in Octopus Energy, investing in new technology, start-ups and future fuels Positions in three large prospective onshore basins: the Beetaloo, Canning and Cooper-Eromanga 1 Following CPPIB' investment in Octopus Energy during December 2021, Origin accounted for its interest in Octopus Energy at 18.7 per cent from 1 December 2021 (previously 20 per cent). An additional $163 million (£94 million) was invested to restore its 20 per cent interest in August 2022. Where We Operate 5 Where We Operate Canning BasinSouth East QueenslandPacific countries LPGBowen/ Surat basinsBrisbaneGladstoneRabaulLaeSantoHoniaraPort VilaSuvaLautokaLabasaApiaPago PagoRarotongaPort MoresbyGasPumped hydroSolar (contracted)Wind (contracted)CoalWind (contracted, not complete)LPG seaboard terminalElectricity customer accountsNatural gas customer accountsOrigin/JV upstream acreageAPLNG upstream acreageProduction facilityAPLNG pipelineExploration & production acreageGenerationBeetaloo BasinAdelaideMelbourneHobartBrisbaneBowen/ Surat Cooper Eromanga BasinbasinsGladstoneLNG ExportBrowse BasinSydney608k495k1,193k379k674k178k257k211k15kCanning BasinSouth East QueenslandPacific countries LPGBowen/ Surat basinsBrisbaneGladstoneRabaulLaeSantoHoniaraPort VilaSuvaLautokaLabasaApiaPago PagoRarotongaPort MoresbyGasPumped hydroSolar (contracted)Wind (contracted)CoalWind (contracted, not complete)LPG seaboard terminalElectricity customer accountsNatural gas customer accountsOrigin/JV upstream acreageAPLNG upstream acreageProduction facilityAPLNG pipelineExploration & production acreageGenerationBeetaloo BasinAdelaideMelbourneHobartBrisbaneBowen/ Surat Cooper Eromanga BasinbasinsGladstoneLNG ExportBrowse BasinSydney608k495k1,193k379k674k178k257k211k15kCanning BasinSouth East QueenslandPacific countries LPGBowen/ Surat basinsBrisbaneGladstoneRabaulLaeSantoHoniaraPort VilaSuvaLautokaLabasaApiaPago PagoRarotongaPort MoresbyGasPumped hydroSolar (contracted)Wind (contracted)CoalWind (contracted, not complete)LPG seaboard terminalElectricity customer accountsNatural gas customer accountsOrigin/JV upstream acreageAPLNG upstream acreageProduction facilityAPLNG pipelineExploration & production acreageGenerationBeetaloo BasinAdelaideMelbourneHobartBrisbaneBowen/ Surat Cooper Eromanga BasinbasinsGladstoneLNG ExportBrowse BasinSydney608k495k1,193k379k674k178k257k211k15kCanning BasinSouth East QueenslandPacific countries LPGBowen/ Surat basinsBrisbaneGladstoneRabaulLaeSantoHoniaraPort VilaSuvaLautokaLabasaApiaPago PagoRarotongaPort MoresbyGasPumped hydroSolar (contracted)Wind (contracted)CoalWind (contracted, not complete)LPG seaboard terminalElectricity customer accountsNatural gas customer accountsOrigin/JV upstream acreageAPLNG upstream acreageProduction facilityAPLNG pipelineExploration & production acreageGenerationBeetaloo BasinAdelaideMelbourneHobartBrisbaneBowen/ Surat Cooper Eromanga BasinbasinsGladstoneLNG ExportBrowse BasinSydney608k495k1,193k379k674k178k257k211k15k6 Board of Directors Annual Report 2022 Scott Perkins Ilana Atlas Maxine Brenner Frank Calabria Greg Lalicker Independent Non-executive Chairman Independent Non-executive Director Independent Non-executive Director Managing Director & Chief Executive Officer Independent Non-executive Director Tenure 1 year 6 months Tenure 8 years 9 months Tenure 5 years 10 months Tenure 3 years 5 months Greg Lalicker joined the Board in March 2019. He is a member of the Safety and Sustainability Committee. Greg is the Chief Executive Officer of Hilcorp Energy Company, based in Houston, USA. Hilcorp is the largest privately held independent oil and gas exploration and production company in the United States. Greg joined Hilcorp’s leadership team in 2006 as Executive Vice President where he was responsible for all exploration and production activities. He was appointed President in 2011 and Chief Executive Officer in 2018. Prior to working for Hilcorp, Greg was with BHP Petroleum based in Midland, Houston, London and Melbourne as well as McKinsey & Company where he worked in its Houston, Abu Dhabi and London offices. Greg graduated as a petroleum engineer from the University of Tulsa. He has a Master of Business Administration and a law degree. Ilana Atlas joined the Board in February 2021. She is a member of the Remuneration, People and Culture and Risk committees. Ilana is a Non-executive Director of ANZ Banking Group Limited (since 2014) and Scentre Group Limited (since May 2021). She is the Chair of Jawun, on the Board of the Paul Ramsay Foundation and a member of the Council of the National Gallery of Australia. Ilana was previously Chairman of Coca-Cola Amatil Limited (2017 – 2021). Her last executive role was Group Executive, People, at Westpac, where she was responsible for human resources, corporate affairs and sustainability. Prior to that role, she was Group Secretary and General Counsel. Before her 10-year career at Westpac, Ilana was a partner in law firm Mallesons Stephen Jaques (now known as King & Wood Mallesons). In addition to her practice in corporate law, she held a number of management roles in the firm including Executive Partner, People and Information, and Managing Partner. Ilana holds a Bachelor of Jurisprudence (Honours) and Bachelor of Laws (Honours) from the University of Western Australia and Masters of Laws from the University of Sydney. Maxine Brenner joined the Board in November 2013. She is Chair of the Safety and Sustainability Committee and a member of the Audit, Nomination and Risk committees. Maxine was previously a Managing Director of Investment Banking at Investec Bank (Australia) Ltd. Prior to Investec, Maxine was a Lecturer in Law at the University of NSW and a lawyer at Freehills, specialising in corporate law. Maxine is a Non-executive Director and Chairman of the Remuneration Committee of Orica Ltd (since April 2013), Non- executive Director of Qantas Airways Ltd (since August 2013) and Non-executive Director and Chair of the Risk Committee of Woolworths Group Limited (since 1 December 2020). She is also a member of the University of NSW Council. Maxine’s former directorships include Growthpoint Properties Australia, Treasury Corporation of NSW, Bulmer Australia Ltd, Neverfail Springwater Ltd and Federal Airports Corporation, where she was Deputy Chair. In addition, Maxine has served as a Council Member of the State Library of NSW and as a member of the Takeovers Panel. Maxine holds a Bachelor of Arts and a Bachelor of Laws. Frank Calabria was appointed Managing Director & Chief Executive Officer in October 2016. Frank is a member of the Safety and Sustainability Committee and a Director of the Origin Energy Foundation. Frank first joined Origin as Chief Financial Officer in November 2001 and was appointed Chief Executive Officer, Energy Markets in March 2009. In that latter role, Frank was responsible for the integrated business within Australia including retailing and trading of natural gas, electricity and LPG, power generation and solar and energy services. Frank is a Director of the Australian Energy Council and the Australian Petroleum Production & Exploration Association. He is a former Chairman of the Australian Energy Council and former Director of the Australian Energy Market Operator. Frank has a Bachelor of Economics from Macquarie University and a Master of Business Administration (Executive) from the Australian Graduate School of Management. Frank is a Fellow of the Chartered Accountants Australia and New Zealand and a Fellow of the Financial Services Institute of Australasia. Tenure 6 years 11 months including 1 year 10 months as Chairman Scott Perkins joined the Board in September 2015 and was appointed Chairman in October 2020. He is Chairman of the Nomination Committee and a member of the Audit, Remuneration, People and Culture, Risk and Safety and Sustainability committees. Scott has extensive Australian and international experience as a leading corporate adviser. He was formerly Head of Corporate Finance for Deutsche Bank Australia and New Zealand and a member of the Executive Committee with overall responsibility for the Bank’s activities in this region. Prior to that he was Chief Executive Officer of Deutsche Bank New Zealand and Deputy CEO of Bankers Trust New Zealand. Scott is a Non-executive Director of Woolworths Group Limited (since September 2014) and Brambles Limited (since May 2015). He is Chairman of Sweet Louise (since 2005) and the New Zealand Initiative (since 2012). Scott was previously a Director of the Museum of Contemporary Art in Sydney (2011 - 2020) and a Non-executive Director of Meridian Energy (1999 - 2002). Scott has a longstanding commitment to breast cancer causes, the visual arts and public policy development. Scott holds a Bachelor of Commerce and a Bachelor of Laws (Hons) from Auckland University. Board of Directors 7 Mick McCormack Bruce Morgan Steven Sargent Nora Scheinkestel Joan Withers Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director Tenure 1 year 8 months Tenure 9 years 9 months Tenure 7 years 3 months Tenure 5 months Tenure 1 year 10 months Steven Sargent joined the Board in May 2015. He is Chairman of the Origin Energy Foundation, Chairman of the Remuneration, People and Culture Committee and a member of the Nomination, Risk, and Safety and Sustainability committees. Steven’s executive career included 22 years at General Electric, where he gained extensive multi-industry, international experience leading businesses in industries including energy, healthcare and financial services across the USA, Europe and Asia Pacific. Steven is currently a Non-executive Director of Ramsay Healthcare Limited and Chairman of infection prevention company Nanosonics Limited. Steve’s unlisted board activities include Non-Executive Director of The Great Barrier Reef Foundation. Steven was previously Chairman of OFX Group Limited (2016 - 2022), and Non-executive Director of Veda Group Limited. Steven holds a Bachelor of Business from Charles Sturt University and is a Fellow with the Australian Institute of Company Directors. Nora Scheinkestel joined the Board in March 2022. She is a member of the Audit, Nomination and Risk committees. Nora is an experienced company director with almost 30 years experience as a non-executive chairman and director of companies in a wide range of industries including public, government and private sectors. She has a long track record in highly regulated sectors such as infrastructure and financial services and has served as chairman and director of numerous regulated utilities in the electricity, gas and water sectors. Nora is currently a Non- executive Director of Telstra Corporation Limited (since 2010), Brambles Limited (since 2020) and Westpac Banking Corporation (since 2021). Previous directorships of publicly listed companies include the Atlas Arteria group, which she chaired, Ausnet Services Ltd and Orica Limited. Nora holds a Bachelor of Laws (Honours) First Class and a Doctor of Philosophy from the University of Melbourne. Joan Withers joined the Board in October 2020. She is Chair of the Risk Committee and a member of the Audit and Nomination committees. Joan has spent over 25 years working in the media industry holding CEO positions at both Fairfax NZ Ltd and The Radio Network and she also has significant corporate governance experience. She is currently Chair of The Warehouse Group Ltd (since 2016), director of ANZ Bank NZ Ltd (since July 2013) and Sky Network TV Ltd (since 2019). She has previously held Chair positions at Auckland International Airport (1997 – 2013), Mercury NZ Ltd (2009 – 2019) and TVNZ (2015 – 2017). She has also held directorships on the boards of some of New Zealand’s largest companies including Meridian Energy Ltd and Tourism Holdings Ltd. Prior to her appointment as CEO of Fairfax NZ Ltd, Joan was a director on the Australian board of John Fairfax Holdings Ltd. Joan holds a Masters Degree in Business Administration from The University of Auckland. Mick McCormack joined the Board in December 2020. He is a member of the Audit, Remuneration, People and Culture and Safety and Sustainability committees. Bruce Morgan joined the Board in November 2012. He is Chairman of the Audit Committee and a member of the Nomination and Risk committees. Mick is Chairman of Central Petroleum Limited and Non-executive Director of Austal Limited. He is also Chairman of the Australian Brandenburg Orchestra Foundation and a director of the Clontarf Foundation. Bruce is Chairman of Transport Asset Holding Entity of New South Wales (since July 2020), a Director of the University of NSW Foundation and Deputy Chair of the European Australian Business Council. Mick was previously Managing Director and CEO of APA Group (2004 - 2019) and has more than 37 years of experience in the energy and infrastructure sectors, including gas-fired and renewable energy power generation, gas processing, LNG and underground storage. Prior to joining APA in 2000, Mick held various senior management roles with AGL Energy. Mick holds a Masters of Business Administration from the University of Queensland, a Graduate Diploma of Engineering from Monash University, and a Bachelor of Applied Science from the University of Queensland. Bruce was Chairman of Sydney Water Corporation (2013 - 2021), a Director of Caltex Australia Ltd (2013 - 2020), Chairman (2015 - 2018) and Director (2013 - 2022) of Redkite, and served as Chairman of the Board of PricewaterhouseCoopers (PwC) Australia (2005 - 2012). In 2009, he was elected as a member of the PwC International Board, serving a four-year term. He was previously Managing Partner of PwC’s Sydney and Brisbane offices. An audit partner of the firm for over 25 years, he was focused on the financial services and energy and mining sectors leading some of the firm’s most significant clients in Australia and internationally. Bruce has a Bachelor of Commerce (Accounting and Finance) from the University of NSW and is an Adjunct Professor of the University. Bruce is a Fellow of Chartered Accountants Australia and New Zealand and of the Australian Institute of Company Directors. 8 Annual Report 2022 Executive Leadership Team Jon Briskin Greg Jarvis Kate Jordan Tony Lucas James Magill Executive General Manager, Energy Supply and Operations Greg Jarvis joined Origin in 2002 as Electricity Trading Manager and was appointed General Manager, Wholesale, Trading and Business Sales in February 2011. Greg is responsible for Wholesale, Trading, Generation, HSE and LPG. Greg has over 20 years’ experience in the financial and energy markets. Executive General Manager, Retail Jon Briskin joined Origin in 2010 and was appointed Executive General Manager, Retail in December 2016. Jon leads the teams responsible for energy sales, marketing, product development and service experience for Origin’s residential and SME customers. Jon has held various roles at Origin, leading customer operations, service transformation and customer experience and prior to Origin worked as a management consultant. General Counsel and Executive General Manager, Company Secretariat, Risk and Governance Kate Jordan joined Origin in March 2020 as General Counsel and Executive General Manager, Company Secretariat, Risk and Governance. Kate leads the legal, company secretariat, risk, internal audit and energy markets compliance teams. Prior to joining Origin, Kate was Deputy Chief Executive Partner at Clayton Utz, with responsibility for people and development. Kate has over 20 years’ legal experience across a range of corporate transactions. Executive General Manager, Future Energy and Technology Tony Lucas joined Origin as Risk Analysis Manager in 2002 and was appointed as General Manager, Energy Risk Management in February 2011. Tony leads the team responsible for Future Energy, Strategy and Technology, ensuring that Origin is well positioned to lead the transition into a low-carbon, technology- enabled world. Tony began his career in the banking industry before moving into the energy sector. Executive General Manager, Origin Zero James Magill joined Origin in March 2022 and is responsible for the newly formed business unit, Origin Zero. Origin Zero partners with large businesses to achieve their sustainable energy goals through a range of energy and energy management services. Prior to joining Origin, James held leadership roles at Centrica, AGL and Genesis Energy in retail, technology, M&A and strategy. Executive Leadership Team 9 Sharon Ridgway Samantha Stevens Andrew Thornton Lawrie Tremaine Executive General Manager, People and Culture Sharon Ridgway joined Origin in 2009 and has been responsible for People and Culture since December 2016. Sharon’s team provide strategic support to the business in key areas such as engagement, diversity, talent management and culture change. Prior to Origin, Sharon developed a wide range of experience across operational and human resources roles whilst working in Dixons, a large European electrical retailer. Chief Financial Officer Lawrie Tremaine joined Origin in June 2017 and holds the position of Chief Financial Officer. Lawrie leads the teams responsible for all finance activities, corporate strategy and development, procurement, investor relations and insurance. Lawrie has over 30 years’ experience in financial and commercial leadership, predominantly in the resource, oil and gas and minerals processing industries having previously worked at Woodside Petroleum. Executive General Manager, Corporate Affairs Samantha Stevens joined Origin in March 2018 as Executive General Manager, Corporate Affairs. Samantha is responsible for Origin’s external affairs, government and public policy and employee communication functions and the Origin Energy Foundation. Samantha has more than 25 years’ experience in corporate affairs, mainly in the resources, industrials and financial services sectors. Prior to joining Origin, Samantha headed up Corporate Affairs for the global mining services company, Orica, and previously led the global media function and all Corporate Affairs M&A activity at global mining house, BHP, along with senior external affairs positions at two of Australia’s largest banks. Executive General Manager, Integrated Gas Andrew joined Origin in 2012 and was appointed as Executive General Manager – Integrated Gas in November 2021. Andrew is responsible for Australia Pacific LNG’s upstream operations and gas marketing, Origin’s upstream assets in the Beetaloo, Cooper and Canning Basins, and business development and investment activity in renewable fuels and carbon. Prior to joining Origin, Andrew held private equity and investment banking roles including as an Executive Director in the Principal Investment Area of Goldman Sachs, JB Were and a member of the Mergers, Acquisitions, Restructuring and Divestitures group of Morgan Stanley. Operating and Financial Review 11 Operating and Financial Review For the full year ended 30 June 2022 This report forms part of the Directors’ Report. 1 Market Context and Outlook FY2022 was a year of unprecedented volatility and challenging operating conditions in global and domestic energy markets. As the global economy emerged from the pandemic, demand for oil, coal and natural gas rebounded and this caused the price of these commodities to rise. This was exacerbated by Russia’s invasion of Ukraine, which impacted the global supply of these commodities, and saw prices rapidly escalate to extremely high levels. These high prices have persisted. In addition to global factors, Australia’s gas and electricity markets were impacted by a number of domestic/local factors. There was a shortage of power in the National Electricity Market, due to very high levels of planned and unplanned coal power plant outages, coal supply interruptions, and the La Niña weather pattern dampening renewables output, which also coincided with an early cold snap to start winter. This saw the NEM wholesale price of electricity average $276/MWh in the June 2022 quarter, approximately three times the price over the same period in the prior year. Gas prices also soared more than three fold over the same period, as substantially more gas was needed for gas fired power generation, to cover the supply constraints in the electricity market. The unprecedented supply challenges and price volatility had a significant impact on the energy market. Five smaller retailers were unable to continue supplying electricity to their customers at higher prices and failed, with Origin acting as a Retailer of Last Resort in certain geographic areas for some of these retailers, alongside other large retailers. Oil price - Brent (US$/bbl) NSW electricity price ($/MWh) 0 2 - l u J 0 2 - p e S 0 2 - v o N 1 2 - n a J 1 2 - r a M 1 2 - y a M 1 2 - l u J 1 2 - p e S 1 2 - v o N 2 2 - n a J 2 2 - r a M 2 2 - y a M 2 2 - l u J 0 2 - l u J 0 2 - p e S 0 2 - v o N 1 2 - n a J 1 2 - r a M 1 2 - y a M 1 2 - l u J 1 2 - p e S 1 2 - v o N 2 2 - n a J 2 2 - r a M 2 2 - y a M 2 2 - l u J Coal price (A$/t) Gas price ($/GJ) 0 2 - l u J 1 2 - n a J 1 2 - r a M 1 2 - r p A 1 2 - y a M 1 2 - n u J 1 2 - l u J 1 2 - g u A 1 2 - g u A 1 2 - p e S 1 2 - t c O 1 2 - v o N 1 2 - c e D 2 2 - n a J 2 2 - b e F 2 2 - r a M 2 2 - r a M 2 2 - r p A 2 2 - y a M 2 2 - n u J 2 2 - l u J 2 2 - g u A 0 2 - g u A 0 2 - t c O 0 2 - c e D 1 2 - b e F 1 2 - r p A 1 2 - n u J 1 2 - g u A 1 2 - t c O 1 2 - c e D 2 2 - b e F 2 2 - r p A 2 2 - n u J 2 2 - g u A Newcastle 5500 kcal Newcastle 6000 kcal JKM netback price - Wallumbilla (ACCC) Wallumbilla spot price 12 Annual Report 2022 Market Outlook The global and domestic energy market is experiencing a fundamental transition resulting from changes in technology, increasing electrification and increasing commitments to decarbonise. Recent events have highlighted that this transition will not always be smooth, with volatility expected due to the magnitude and complexity of the changes occurring in the energy system, as well as shifts in the geopolitical and macroeconomic environment. In the medium term, we expect some of the recent high pricing and volatility to ease as fuel prices and supply chain disruptions normalise. Increased electricity supply from large and small-scale renewable energy is expected to put downward pressure on average electricity prices over time. The growth in renewables will be supported by underwriting arrangements from governments and corporates with decarbonisation objectives. For example, the Australian Government is supporting the transition to cleaner energy, aiming to achieve 82 per cent renewables in the electricity market by 2030. The increase in renewables will in turn increase the need for reliable, dispatchable capacity such as flexible gas-fired generation and battery storage at times of peak demand and lower renewable generation. Electricity markets are expected to remain competitive. Customers are increasingly looking for lower carbon solutions as homes and businesses become more connected. Customers are becoming more empowered, managing their energy requirements in partnership with retailers such as Origin. Electricity prices for customers are expected to increase in FY2024 before reducing in mid 2020s as new sources of renewable electricity supply put downward pressure on prices. There is also potential for further government intervention in the market should volatility and higher prices threaten energy security and affordability. We expect international and domestic gas prices to remain high given the current global supply constraints. Pressures on the domestic gas market will ease as more coal baseload generation comes back online reducing the domestic demand for gas. We further expect the LNG industry on the east coast, including our own APLNG project, to continue to meet domestic gas demand. Energy Policy Reform The existing energy system has a critical role to play over the coming years as Australia transitions to renewable energy. Policy reform is urgently required to ensure the existing energy system performs reliably as it is needed to support this transition. New investment is also required in renewable energy, firming generation and transmission to underpin the new energy system. Gas is needed to play a critical role in firming renewables but requires a clear market signal to do so. The right market settings can accelerate the transition away from coal and towards renewables and maintain reliability for customers. Policy reform must address the lack of price incentives for reliable generation capacity. Origin supports the development of a well-designed capacity mechanism that would allow for the application of a consistent national framework that would provide the incentive to get the investment needed to help safeguard reliability at least cost as the market transitions. A capacity mechanism could have an overall positive impact by helping to stimulate investment in new supply. Importantly, the capacity mechanism should not be viewed as a means of staving off coal closures, but to work alongside a credible framework to help facilitate and manage orderly exits. It is crucial the capacity mechanism is designed to complement the existing energy-only framework. This would reduce any disruption, complexity, and ultimately costs in adopting the scheme, by building on the strengths of the National Energy Market’s current design. Operating and Financial Review 13 2 Highlights Our purpose underpins everything we do: Getting energy right for our customers, communities and planet Getting energy right for our customers Our customers are at the heart of everything we do. We are committed to providing ‘good energy’ that is reliable, affordable and sustainable. In FY2022, we: • supported residential and small business customers in financial distress due to COVID-19, and the floods in New South Wales and Queensland; • continued to support customers in our Power On hardship program; • increased the number of customer accounts across our GreenPower, Green Gas, Green LPG and Origin Go Zero products to 340,000, up from 260,000 in FY2021; • continued to migrate customers accounts to the Kraken platform, with 2.2 million successfully migrated as at 30 June 2022; • • supported the domestic east coast gas market through our APLNG business; and launched Origin Zero, our business unit dedicated to supporting our large business customers on their decarbonisation journey. Customers Strategic Net Promoter Score1 55 44 FY21 FY22 1 12-month average as at June 258 MW under orchestration in Origin Loop, our virtual power plant, up from 159 MW in FY2021 Communities We respect the rights and interests of the communities in which we operate, and consult with them to understand and manage our impact. Getting energy right for our communities Regional procurement spend as % of total spend 1818 2020 FY21 FY22 >$2.6M Contributed to the community by the Origin Energy Foundation We spent $318 million directly and indirectly with regional suppliers, or 20 per cent of our total spend, up from 18 per cent in FY2021. Our Stretch Reconciliation Action Plan (Stretch RAP) includes a commitment to increase the participation of Aboriginal and Torres Strait Islander businesses in Origin’s supply chain. In FY2022, our spend with Indigenous suppliers was up $7 million to $17 million, bringing our cumulative spend under our three-year Stretch RAP to $32.6 million. We continue to work closely with the Northern Land Council to engage with our Native Title holders in the Beetaloo Basin. During the year, we appointed a Native Title holder as a Community Liaison Officer to provide ongoing engagement with the local community about our activities. We also undertook meetings on Country to explain our upcoming work program and sacred site clearance and avoidance surveys of our potential future work areas. Through grants, 7,000 hours of employee volunteering, and our workplace giving program, the Origin Energy Foundation contributed over $2.6 million to the community in FY2022. We also committed to a $5 million community fund as part of our support for the community as we transition out of coal-fired generation at the Eraring Power Station. 14 Annual Report 2022 Getting energy right for the planet This year we continued updating our emissions reduction targets to be consistent with a 1.5°C pathway. We expect to announce our new targets before the 2022 Annual General Meeting. We also announced our intention to put our climate reporting and the new 1.5°C pathway targets to a non-binding, advisory vote of shareholders at our 2022 Annual General Meeting. During FY2022, we: • reduced our Scope 1 and 2 equity emissions by 2 million tonnes, or 12 per cent; • announced the potential early closure of the Eraring Power Station, from as early as August 2025; • • • received development approval for a 700 MW battery at the Eraring site; secured 1,300 MW of solar farm development projects, bringing total to 1,600 MW; increased Eraring's ash re-use rate to 73 per cent, up from 36 per cent in FY2021; • collaborated with others to begin developing the green hydrogen Hunter Valley Hydrogen Hub; • attained Climate Active carbon neutral certification for our Origin Go Zero (electricity), Carbon Neutral Solar, and Carbon Neutral Demand Response products ; and • launched Origin 360 EV Car Share. Our people Our people are one of our greatest strengths, and having a diverse and inclusive workplace is key to the success of our business. We continued to change the way we work in response to COVID-19, strengthening Origin’s culture during this time. During FY2022, we: • reduced Tier 1 and Tier 2 Process Safety Events to two, from 11 in FY2021; • completed the roll out of our Life Saving Controls program at operational sites; • announced support for the Uluru Statement from the Heart; • ranked in the top 10 in Australia in Equileap’s 2022 Gender Equality Global Report & Ranking; • awarded "Gold employer status" at the Australian LGBTQ Inclusion Awards; • received an engagement score down 6 per cent to 68 per cent, remains 7 per cent above the Australia and New Zealand energy industry average; and • grew our Indigenous talent base, from 35 Aboriginal and Torres Strait Islander employees at the beginning of our Stretch RAP in FY2018 to 73 at the end of FY2022. Regrettably our TRIFR deteriorated during the year due to the additional constraints wet weather and COVID-19 placed on our field based employees and contractors. We undertook a safety stand down to assess these field based injuries and continue to focus on providing a safe work environment for all of our people. Our COVID-19 response included extensive workplace health controls, including testing in specific situations, a temporary COVID-19 Vaccination Policy and detailed social distancing and hygiene controls. In July 2021, Origin became a signatory to 40:40 Vision, an investor-led initiative targeting gender balance in executive leadership by 2030. Under the initiative, we have committed to achieving gender balance (40:40:20) in executive leadership by 2030. Planet Greenhouse gas emissions (equity basis, mt CO2-e) 16.516.5 14.514.5 FY21 FY22 Scope 1 Scope 2 1,600 MW of solar farm development projects secured to date People Total Recordable Injury Frequency Rate (TRIFR) 44 2.72.7 FY21 FY22 40.8% Female Senior Leaders, up from 34.6% in FY2021  We continue to focus on supporting the mental health and well being of our people and to develop a range of resources and programs through our online Mental Health and Wellbeing Hub. Operating and Financial Review 15 Financial performance Statutory Profit ($m) Underlying Profit ($m) Underlying EBITDA 407407 2,036 2,036 2,1142,114 (1,429) (1,429) 314314 (2,281) (2,281) FY21 FY22 FY21 FY22 FY21 FY22 Free Cash Flow (before major growth) ($m) Adjusted Net Debt ($m) Final Dividend 1,030 1,030 1,062 1,062 4,639 4,639 2,838 2,838 16.5cps 75% franked FY21 FY22 Jun-21 Jun-22 Lease liabilities 29cps total FY2022 dividend (47% of FY2022 Free Cash Flow) Statutory Profit was impacted by a non-cash impairment associated with accounting for electricity and gas derivative assets. High electricity and gas prices meant the hedge transactions that we use to manage price risk significantly increased in value. This increase in hedge value resulted in a requirement to recognise an impairment in the underlying business assets which in no way reflects the performance or future value of the business. FY2022 was characterised by unprecedented volatility and elevated prices in global and domestic energy markets. Underlying Profit was higher at $407 million with higher earnings from Integrated Gas and lower earnings from Energy Markets. Earnings from Integrated Gas increased despite the sale of 10 per cent of APLNG during the period. Energy Markets earnings were adversely impacted during the period by a material contracted coal supply disruption to the Eraring Power Station at a time of high spot electricity prices. Low retail tariffs were set at a time of low customer demand during COVID-19, adding to the challenges faced by the electricity business. Our natural gas business performed well with increased earnings primarily driven by rising market prices reflected in higher trading sales. APLNG delivered stable production despite a significant increase in wet weather and well flooding events. APLNG delivered 132 cargoes, up from 130 cargoes in the prior period, including 15 spot cargoes, as well as delivering additional gas to the domestic market during a period of downstream maintenance and in response to high customer demand in Q4 FY2022. APLNG's realised oil price of US$74/bbl, up from US$43/bbl in FY2021 meant that a record cash distribution was paid to Origin. Free Cash Flow was up $32 million at $1,062 million, driven by record cash distributions from APLNG of $1,595 million partially offset by lower earnings from Energy Markets. This as well as $1,957 million from the sale of 10 per cent of Australia Pacific LNG enabled debt reduction of $1,801 million while allowing for investment in growth, dividends to shareholders and a $250 million on market share buy-back. Our partnership with Octopus to transform our retail operations is progressing well, with more than 2.2 million customer accounts migrated to the Kraken platform. An additional $80 million in FY2022 and $163 million in August 2022 were invested to restore our 20 per cent interest. The Board has determined to pay 16.5 cent per share dividend franked to 75% bringing total distributions for the year to 29 cents per share. 16 Annual Report 2022 Energy Markets performance Underlying EBITDA Operating cash flow $365M $824M Down $614m or 63% vs FY2021 Down $194m vs FY2021 (1.5%) Underlying ROCE1 Down 6.1% vs FY2021 Cost to serve Customer accounts Retail X $487M 4,458k 2,200k Stable vs FY2021 Up 193k vs June 2021 Customer accounts migrated to the Kraken platform During the period, we experienced unprecedented energy market conditions with extremely high and volatile electricity prices, driven by coal plant outages, high coal and gas fuel costs and wet weather impacted renewable energy generation. These conditions culminated with periods of administered wholesale electricity pricing and a temporary electricity spot market suspension in June. The Electricity business began the year in a strong position to manage these conditions; however, a material coal supply disruption to our only coal-fired generation plant, Eraring, at a time of high spot electricity prices resulted in significantly higher energy procurement costs. Low retail tariffs added to the unfavourable market conditions, with tariffs set during FY2021 when wholesale prices were at low levels due to COVID-19. This resulted in a $692 million reduction in the Electricity Gross Profit. During June, strong support was received from coal suppliers, rail network providers and the NSW Government to increase rail deliveries which uplifted Eraring's output. Coal contracting for FY2023 is progressing and is now more than halfway towards our purchase target of 5 to 6 million tonnes. Natural Gas Gross Profit increased by $117 million, driven by higher short-term trading gas sales and repricing of customer tariffs, partly offset by higher procurement costs. Our portfolio is underpinned by fixed-price2 supply contracts and is well placed heading into a tightening market. The JKM supply position is fully hedged at favourable rates to current market prices and there are no further price reviews on supply contracts until FY2024. We are committed to relieving the pricing impacts on customers where possible. Our principle is to hold FY2023 prices flat for our most vulnerable hardship customers who are on the Power On program, and we absorbed some higher energy costs to make sure that most of our customers are at or below the DMO and VDO, post product benefits such as market discounts and Solar FiT. Customer accounts increased by 193,0003, including the acquisition of WINconnect, which added 99,000 customer accounts. Our Broadband business grew by 28,000 to 61,000 customer accounts and was named Australia’s best-rated NBN provider of 2022 by Canstar Blue. Our investment in Octopus continues to exceed expectations. Octopus emerged from the recent UK energy crisis with 43 per cent more customer accounts, and is now the fifth largest UK retailer with around 15 per cent market share. This has demonstrated the significant advantage of Octopus’ low-cost operating model and market-leading Kraken platform in a rapidly changing energy landscape. We have migrated more than 2.2 million customer accounts to the Kraken platform and remain on track to achieve the targeted cash cost benefits. Our ambition is to lead the energy transition to net zero emissions through cleaner energy and customer solutions. We have established the Origin Zero business to provide innovative low and zero carbon energy solutions to our customers. We also acquired the large-scale Yarrabee Solar Farm development project and received NSW Government development approval for the Eraring large-scale battery. 1 12-month average. Return on Capital Employed (ROCE) is calculated as Adjusted EBIT / Average Capital Employed. 2 Subject to CPI adjustments. 3 Includes 39,000 previously excluded electricity unmetered sites due to an industry change, and around 7,000 customer accounts (post churn) due to recent Retailer of Last Resort (ROLR) events that occurred from May 2022 until the end of FY2022.   Operating and Financial Review 17 Integrated Gas performance Underlying EBITDA Cash distributions from APLNG $1,837M $1,595M Up $702m or 62% vs FY2021 Up $886m or 125% vs FY2021 Underlying EBIT up $539m 15.2% Underlying ROCE Up from 4.8% in FY2021 APLNG production (100%) 693PJ Average realised LNG price Capex and opex4/GJ US$12.5/ MMBtu $3.2/GJ Down 1% vs FY2021 Up 103% vs FY2021 11% increase vs FY2021 Up 110% in A$ terms at $16.4/GJ APLNG delivered record EBITDA and cash distributions to Origin driven by stable production, continued low operating and capital costs and high commodity prices. Integrated Gas EBITDA was up $702 million to $1,837 million and APLNG’s cash distributions to Origin were up $886 million to $1,595 million. Record earnings were primarily driven by realised oil prices at APLNG increasing from US$43/bbl (A$58/bbl) in FY2021 to US$74/bbl (A$103/bbl) in FY2022. Reflecting the high oil price environment, hedge losses at Origin increased from a gain of $55 million in FY2021 to a loss of $189 million in FY2022. Strong field performance and operational efficiencies enabled APLNG to maintain stable production despite a significant increase in wet weather and associated well flooding events. Well availability was stable at around 90 per cent in FY2022, with the wet weather impacts offset by implementation of new technology that reduced well defects and failures. High upstream gas processing facility reliability and improved performance from network infrastructure, driven by investment in prior periods enabled high utilisation of upstream gas processing capacity. During the period, APLNG delivered 132 LNG cargoes (up from 130 cargoes in FY2021) including 15 spot cargoes. APLNG also continued to supply significant volumes into the domestic market, directing additional gas during June 2022 when the market was experiencing particularly high demand. Operating expenses in APLNG increased, primarily due to higher power costs and higher royalties on the higher revenue base. Origin announced the sale of a 10 per cent interest in APLNG to ConocoPhillips on 8 December 2021, delivering net proceeds of $2 billion after adjustments. Origin retains a 27.5 per cent shareholding in the joint venture and continues the role of upstream operator. A scheduled price review with an LNG customer was successfully completed in early FY2023, with no material impact on Origin’s earnings. APLNG 2P (proved plus probable) reserves increased 901 PJ before production, representing reserves replacement of 116 per cent, driven by higher estimated recoveries from producing fields. After production and field divestment, 2P reserves increased by 109 PJ.5 Other highlights across Integrated Gas during the period included: • Beetaloo Basin – Production test results from the Amungee NW 1H well suggest a normalised gas flow rate equivalent of between 5.2 and 5.8 million cubic feet per day (MMscf/d) per 1,000 metres of lateral. Preparations are underway to continue appraisal of the Velkerri dry gas play at Amungee. • Origin was awarded $45 million from the Australian government to progress several renewable hydrogen projects including the proposed Hunter Valley Hydrogen Hub in Newcastle, the Tasmanian Green Hydrogen Hub Project at Bell Bay, and the potential development of a green hydrogen supply chain between Japan and Australia out of Gladstone, Queensland. 4 Opex excludes purchases and reflects royalties at the breakeven oil price. 5 Refer to Section 8 for disclosure relating to Tri-Star litigation associated with these CSG interests. 18 Annual Report 2022 3 Our strategy Our strategy During the year we made significant progress towards executing our strategy: • Submitted notice to AEMO giving Origin the ability to close Eraring as early as August 2025 and grew our coal contracting position to 3 million tonnes for FY2023, of a target of 5 - 6 million tonnes • Secured 1,300 MW of additional solar farm development projects, bringing total to 1,600 MW • Progressed plans for a Hunter Valley Hydrogen Hub green hydrogen project • Obtained approval for the Eraring battery development, now in tendering phase • Grew our virtual power plant (Loop) to 258 MW across 121,000 connected assets • Completed sale of 10 per cent interest in Australia Pacific LNG • Grew total customer accounts by 193,000 to 4.5 million, including through the WINconnect acquisition • Progressed the transformation of our retail business with 2.2 million customer accounts (over half) migrated to the Kraken platform • Launched Origin Zero to support large customers on their decarbonisation journey • Set new short- and medium-term targets aligned with 1.5°C pathway, which will shortly be released as part of Origin’s Climate Transition Action Plan Our business drivers As a leading integrated energy company, Origin’s earnings drivers are spread across the energy value chain. Our electricity margin is driven by outperforming the market cost of energy through our supply portfolio (including our power stations and supply contracts). Our portfolio of coal and gas generation plants, renewable energy power purchase agreements and market supply and hedge contracts provides us with the flexibility to manage energy procurement costs. As we sell more energy than we generate, we have the ability to build or contract renewable energy and storage as the price of renewable energy becomes more competitive. In natural gas, Origin’s wholesale margin is driven by a strong gas supply portfolio, with pipeline and storage flexibility enabling us to direct gas to where it is most needed. A large portion of supply is under long-term contracts that are either fixed-price6 or linked to oil and LNG spot prices. Some of our contracts reprice to market over time. Profitability in energy retailing is driven by managing retail margins through matching retail tariffs with energy procurement costs combined with an efficient, low cost operation and the ability to attract and retain customers through providing a superior customer experience. We are implementing the Kraken retail system which we believe will further lower our cost base and improve customer service. We own 20 per cent of Octopus Energy7, a UK-based fast-growing energy technology company. Octopus owns the Kraken technology platform which is licensing around the world. Octopus is the fifth-largest energy retailer in the UK. Origin is the upstream operator and has a 27.5 per cent interest in APLNG, reduced from 37.5 per cent following the sale of a 10 per cent stake during the year, which is Australia’s largest CSG to LNG project. It is a significant supplier to both domestic gas and international LNG markets, with the majority of volume contracted until approximately 2035. Profitability is underpinned by maintaining a low capital and operating cost base relative to revenues, much of which are linked to oil prices. In FY2022, around 76 per cent of APLNG gas volume was sold as LNG (of which 89 per cent was under long-term oil-linked contracts). 6 Subject to CPI adjustments. 7 Following CPPIB' investment in Octopus Energy during December 2021, Origin accounted for its interest in Octopus Energy at 18.7 per cent from 1 December 2021 (previously 20 per cent). An additional $163 million (£94 million) was invested to restore its 20 per cent interest in August 2022. 19 March 20222022 Strategy PresentationOur strategic pillarsOur ambitionENABLEcustomers to decarboniseGROWour portfolio of renewables and cleaner energy REDUCE emissions of our existing operationsUnrivalled customer solutionsAccelerate renewable and cleaner energyDeliver reliable energy through the transitionOur decarbonisation prioritiesTo lead the energy transition through cleaner energy and customer solutionsOur purposeGetting energy right for our customers communities and planetOperating and Financial Review 19 Our strategic pillars Our strategy involves three strategic pillars: Unrivalled customer solutions We have a leading retail business with 4.5 million customer accounts, delivering a superior customer experience at low cost and with churn lower than our Tier 1 competitors. Our strategy to increase the value of our retail business and enhance customer experience involves: • adopting a new operating model and migrating customers to the world class Kraken platform, delivering a superior customer experience, lower costs, a leaner operation and lower churn. We are targeting a $200 - 250 million cash cost reduction from FY2018 baseline by FY2024 • increasing the breadth of products purchased from us including broadband, solar, batteries, connected solutions and E-mobility • using strong data analytics capability to enable personalised and segmented offers and experiences for customers For our larger business customers, we are working to simplify the energy transition, providing tailored energy and decarbonisation solutions through Origin Zero. These solutions can include elements such as renewable energy, demand response, solar, batteries, renewables, energy management and electric vehicle fleet management. Through our Octopus Energy investment, we have access to an industry-leading retail platform to deliver the lowest costs and market-leading customer happiness, as well as exposure to Octopus’s global growth. Accelerate renewables and cleaner energy We will invest in clean energy positions to support our customers’ demand for energy and decarbonisation solutions. We will increase our renewable energy supply through new investments, partnerships, and projects, targeting multi-GW renewable growth opportunities through a staged and disciplined investment or contracting approach. In addition to our significant gas peaking generation portfolio, we will invest in growing our "firming capacity" to support the growth of renewables during periods of peak demand and lower renewable generation. We have developed a proprietary Virtual Power Plant (VPP) platform to connect and use artificial intelligence to orchestrate distributed assets. We are also growing our battery storage portfolio options with our first opportunity being the potential development of a 460MW stage 1 battery at Eraring. We are investigating opportunities to invest in cleaner fuels for harder-to-abate sectors, including domestic and export green hydrogen projects, targeting domestic green hydrogen supply from the mid 2020s and export supply from the late 2020s. Deliver reliable energy through the transition We have a valuable portfolio of assets that play a critical role in providing customers with reliable and affordable energy as we transition to a low-carbon future. We believe gas will remain a key part of the energy mix during the transition. Through our 27.5 per cent interest in APLNG, we continue to be low cost supplier of gas, for domestic and export customers. Any development associated with APLNG or our other upstream growth assets would only be done in a manner consistent with our decarbonisation commitments. Our Eraring coal fired power station continues to support the reliability and security of the electricity market. We have announced the potential early retirement of Eraring from 2025 as our portfolio and the market transitions to cleaner sources of energy and new sources of supply enter the market. We continue to investigate opportunities at the Eraring site for further clean energy developments, including batteries. Our existing thermal peaking generation will continue to play a critical role in providing capacity and firming as coal generators such as Eraring retire and are replaced by intermittent renewables. We have a leading domestic wholesale gas position with the ability to transport gas across the east coast to support our gas fired generation fleet as well as residential, business and wholesale customers. 20 Annual Report 2022 4 Guidance The following guidance is based on current market conditions and the regulatory environment. Ongoing volatility in market conditions is likely and may adversely impact operations. Integrated Gas - APLNG 100% Production Capex and opex, excluding purchases1 Unit capex + opex, excluding purchases1 1 Opex excludes purchases and reflects royalties at the breakeven oil price. Integrated Gas PJ A$b A$/GJ FY22 FY23 guidance 693 2.2 3.2 680 - 710 2.5 - 2.7 3.5 - 4.0 We estimate production in FY2023 of 680 - 710 PJ (APLNG 100 per cent), reflecting ongoing strong field performance and allowing for the impact of recent wet weather events. We estimate total APLNG capex and opex of $2.5 - $2.7 billion, higher than FY2022, reflecting: • Exposure to elevated current power costs both through operated upstream operations and non-operated joint ventures; • Commencement of cyclical upstream major maintenance program on gas processing plants along with continuation of downstream cyclical LNG Train maintenance; • • Increased workover activity as we target increased well availability, offsetting natural field decline to fill gas processing capacity; and Increased well drilling activity to maintain current production levels. At 2 August 2022, Origin estimates that approximately 43 per cent of APLNG’s FY2023 JCC oil price exposure has been priced at US$108/bbl before hedging, based on the long-term LNG contract lags. Based on forward market prices as at 2 August 2022, we estimate losses in FY2023 on oil hedging of $290 million and LNG trading of $47 million. The LNG trading result remains subject to the spread between European and Asian gas prices, shipping costs and the allocation of cargos in the annual schedule. See Section 6.2.2 for details of Integrated Gas oil hedging and LNG trading. Energy Markets There remains a wide range of potential earnings outcomes in FY2023. We will continue to assess the outlook with a view to providing an update when there is less uncertainty. We expect higher earnings in FY2023. Earnings from the gas business are expected to be higher on a largely fixed price8 supply portfolio with no further price reviews on gas supply contracts until 1 July 2023. We expect electricity gross profit to remain supressed due to rising energy costs being only partially priced into regulated tariffs. Coal contracting is partially complete with 4.4 million tonnes now contracted of a target of 5 to 6 million tonnes. The contracted coal supplies are from both legacy priced contracts and contracts priced at market forward prices at the time of contracting. We remain exposed to risk of under-delivery including due to rail and mine performance. Cost to serve is expected to be relatively flat on FY2022, with Kraken benefits being offset by non-repeat of surplus COVID-19 provision release and investment in future portfolio growth. In FY2024 we anticipate further growth in earnings. The magnitude of this growth is dependent on current forward prices being maintained and priced into regulated tariffs, and is subject to coal contracting risk and approximately 50 PJ gas price review outcomes. Octopus Energy is expected to deliver growth as global licensing revenue ramps up and the UK market stabilises. We expect Retail transformation to deliver on our commitment of $200 - $250 million cash cost reduction by FY2024, from an FY2018 baseline. 8 Subject to CPI adjustments. Operating and Financial Review 21 5 Financial update 5.1 Reconciliation from Statutory to Underlying Profit Statutory Profit/(Loss) - total operations Items Excluded from Underlying Profit (post-tax) Increase/(decrease) in fair value and foreign exchange movements Oil and gas Electricity FX and interest rate Other financial asset/liabilities FX gain/(loss) on foreign-denominated financing Impairment, disposals, business restructuring and other Total Items Excluded from Underlying Profit (post-tax) Underlying Profit FY22 ($m) (1,429) 791 92 713 3 59 (76) (2,627) (1,836) 407 FY21 Restated ($m) (2,281) (569) (231) (348) 13 (114) 111 (2,026) (2,595) 314 Change ($m) 852 Change (%) (37) 1,360 323 1,061 (10) 173 (187) (601) 759 93 (239) (140) (305) (77) (152) (168) 30 (29) 30 Fair value and foreign exchange movements reflect non-cash or non-recurring fair value gains/(losses) associated with commodity hedging, interest rate swaps and other financial instruments. These amounts are excluded from Underlying Profit to remove the volatility caused by timing mismatches in valuing financial instruments and the underlying transactions they relate to. • Oil and gas derivatives manage exposure to fluctuations in the underlying commodity price to which Origin is exposed through its gas portfolio and indirectly through Origin’s investment in APLNG. See Section 6.2.2 for details of Origin’s APLNG-related oil hedging. • Electricity derivatives, including swaps, options and forward purchase contracts, are used to manage fluctuations in wholesale electricity and environmental certificate prices in respect of electricity purchased to meet customer demand. • Foreign exchange and interest rate derivatives manage exposures associated with the debt portfolio. A portion of debt is euro- denominated and cross-currency interest rate swaps hedge that debt to AUD. • Other financial assets/liabilities reflects investments held by Origin. • Foreign exchange on foreign-denominated financing reflects currency fluctuations on unhedged USD debt. Debt is maintained in USD to offset the USD-denominated investment in APLNG, which delivers USD cash distributions. Impairment, disposals, business restructuring and other are either non-cash or non-recurring items and are excluded from Underlying Profit to better reflect the underlying performance of the business. They include: Impairments Impairment - Energy Markets Business restructuring Disposals Loss on divestment - APLNG equity accounted investment Loss on divestment - other assets Other Net capital gains tax on divestment - APLNG LGC net shortfall charge Deferred tax liability recognition net of reversal pertaining to divestment - APLNG Provision for legal matters Onerous contracts - LNG WINconnect other income Gain on dilution of investment - Octopus Energy Impairment, disposals, business restructuring and other FY22 ($m) (2,196) (2,196) (58) (114) (113) (1) (259) (172) (151) (39) (22) 34 47 44 (2,627) $2,196 million impairment of Energy Markets: Recent extraordinary market conditions have resulted in an uplift in the value of in-the money derivative assets of $4,354 million associated with the hedging of high wholesale electricity and gas prices results. The carrying value of the Energy Markets business is assessed independently of the derivatives, and accordingly, a non-cash impairment of Energy Markets has been recorded. This impairment will impact goodwill only, accordingly there is no tax impact. This impairment does not reflect the performance of the business and its cash flows, nor impact future value. 22 Annual Report 2022 • $113 million loss on the divestment of 10 per cent interest in APLNG. At completion, the impairment reported within the Interim Report 2022 of $193 million was partially offset by a net gain of $80 million. The net gain comprises the release of $105 million benefit from the foreign currency translation reserve, partially offset by FX hedging costs and other completion adjustments amounting to $25 million. Refer to Note B2.1 of the Financial Statements for further information; • $172 million capital gains tax expense on divestment of 10 per cent share of APLNG, net of $222 million benefit from capital losses. The cash tax payment will be lower than the net capital gains tax of $172 million as a result of offsetting tax deductions; • $151 million net cost relating to a decision to defer the surrender of a portion of Origin’s calendar year 2021 large-scale generation certificates and the expected deferral in relation to calendar year 2022. The costs associated with this deferral are expected to be recovered in future periods. Refer to Appendix for further details; • $39 million non-cash deferred tax expense, recognised net of the reversal of the booked amount to the divested share of APLNG, reflecting the expectation of higher future distributions from APLNG. Refer to Appendix for further details; • $34 million non-cash benefit relating to revaluation of the LNG onerous contract provisions, due to stronger near-term assumptions for LNG prices relative to Henry Hub prices and an increase in long-term assumptions for US Treasury bond rates. The realised loss for the period associated with these contracts is recognised in Underlying Profit; • $47 million in relation to Master Service Agreement (MSA) income earned as part of the acquisition of WINconnect; and • $44 million non-cash gain on dilution of Origin's stake in Octopus associated with CPPIB's acquisition of a six per cent stake in Octopus; The nature of Items Excluded from Underlying Profit set out in the above table have been reviewed by our auditor for consistency with the description in Note A1 of the Financial Statements. Prior period restatements The prior period has been restated for the following items. Refer to Note G11 of the Financial Statements for details of these restatements. • • IFRIC agenda decision - Configuration or Customisation Costs in a Cloud Computing Arrangement - SaaS restatement; IFRIC agenda decision - Economic Benefits from Use of a Windfarm (IFRS 16 Leases) - PPAs restatement; and • Certain amounts have been restated to reflect adjustments to the results of our equity accounted investment in Octopus Energy. 5.2 Underlying Profit Energy Markets Integrated Gas - Share of APLNG Integrated Gas - Other Corporate Underlying EBITDA Underlying depreciation and amortisation (D&A) Underlying share of ITDA of equity accounted investees Underlying EBIT Underlying interest income - MRCPS Underlying interest income - Other Underlying interest expense Underlying profit before income tax and non-controlling interests Underlying income tax expense Non-controlling interests’ share of Underlying Profit Underlying Profit Underlying EPS Underlying ROCE - rolling 12 month FY22 ($m) 365 2,134 (297) (88) 2,114 (449) (1,138) 527 48 13 (187) 401 10 (4) 407 23.2cps 7.6% FY21 Restated ($m) 979 1,145 (10) (78) 2,036 (541) (956) 539 106 3 (242) 406 (90) (2) 314 17.8cps 4.4% Change ($m) (614) 989 (287) (10) 78 92 (182) (12) (58) 10 55 (5) 100 (2) 93 5.4cps Change (%) (63) 86 2,870 13 4 (17) 19 (2) (55) 333 (23) (1) (111) 100 30 30 3.2% Refer to Sections 6.1 and 6.2 respectively for Energy Markets and Integrated Gas analysis. Corporate costs increased by $10 million, primarily reflecting unfavourable movements in foreign exchange and higher corporate insurance costs, partially offset by lower ERP costs. Underlying D&A decreased by $92 million, driven primarily by the lower asset base following the FY2021 generation asset impairment, partially offset by the impact of increased depreciation ($25 million) following the reassessment of Eraring's useful life. Underlying share of ITDA increased $182 million, driven by higher ITDA from APLNG ($169 million), comprising higher tax expense ($350 million), lower net interest expense ($88 million), and lower depreciation and amortisation ($93 million). These were partly offset by the increase in ITDA from the full year impact of Origin’s equity share of Octopus Energy ($12 million). Underlying MRCPS interest income decreased $58 million with the principal balance fully repaid during the year following buy-backs by APLNG, and a higher AUD/USD exchange rate. Operating and Financial Review 23 Underlying net interest expense decreased $65 million, reflecting a lower net debt balance and refinancing activities. 5.3 Cash flows Operating cash flow Underlying EBITDA Underlying equity accounted share of EBITDA (non-cash) Other non-cash items in Underlying EBITDA Underlying EBITDA adjusted for non cash items Change in working capital Energy Markets - excluding futures exchange collateral Energy Markets - futures exchange collateral Integrated Gas - excluding APLNG Corporate Other Tax (paid)/refunded Cash flow from operating activities FY22 ($m) 2,114 (2,097) 118 135 590 68 471 48 3 (167) (27) 531 FY21 ($m) 2,036 (1,141) 114 1,009 68 (29) 110 (2) (11) (144) 31 964 Change ($m) Change (%) 78 (956) 4 (874) 522 97 361 50 14 (23) (58) (433) 4 84 4 (87) 768 (334) 328 n/a (127) 16 (187) (45) Operating cash flow decreased $433 million, driven by lower Underlying EBITDA adjusted for non-cash items ($874 million) partially offset by an improved working capital position ($522 million). Underlying equity accounted share of EBITDA (non-cash) reflects share of APLNG ($2,134 million) less share of Octopus Energy ($36 million loss). Other non-cash expenses include provisions for bad and doubtful debts (+$65 million), share-based remuneration (+$29 million) and exploration expense (+$24 million). Working capital moved favourably by $590 million in the period driven primarily by a favourable movement in futures exchange collateral. Futures exchange collateral relates to cash received from the futures exchange associated with in-the-money forward electricity hedge positions. FY2022 included $471 million of cash collateral received from the favourable movement in the value of open energy futures hedging contracts. The cash flows from favourable futures contracts and security deposits arose during a period of higher prices in domestic energy markets at the end of the financial year. Subsequent value movements will depend on forward energy prices. Other reflects the cash impact of items excluded from Underlying Profit, primarily the 2021 LGC shortfall charge. Refer to Appendix 2 for further details. Investing cash flow Capital expenditure Distribution from APLNG Interest received from other parties Investments/acquisitions Disposals Cash flow from investing activities FY22 ($m) (336) 1,595 2 (392) 1,963 2,832 FY21 ($m) (339) 709 3 (161) 7 219 Change ($m) 3 886 (1) (231) 1,956 2,613 Change (%) (1) 125 (33) 143 27,943 1,193 We continue to tightly manage our capital spend, with FY2022 capital expenditure of $336 million remaining flat, and comprising: • generation maintenance and sustaining capital ($92 million), primarily at Eraring ($73 million) and Shoalhaven ($6 million); • other sustaining capital ($87 million) including spend in preparation for the move to five-minute settlement of pool prices ($15 million), LPG ($31 million), and Origin ERP system replacement ($13 million); • productivity/growth ($92 million) including deferred and contingent licensing payment to Octopus Energy ($30 million), other Kraken implementation costs ($20 million), and Community Energy Services ($8 million); and • exploration and appraisal spend ($65 million) primarily related to the appraisal programs in the Beetaloo and Canning Basins. Cash distributions from APLNG amounted to $1,595 million comprising $50 million of MRCPS interest (down from $110 million in FY2021), $1,112 million of MRCPS buy-backs (up from $599 million in FY2021), and unfranked dividends of $433 million, which commenced once MRCPS were fully redeemed during the year. Investments include deferred and contingent consideration for the equity interest in Octopus Energy ($268 million), WINconnect ($92 million9), Yarrabee Solar Farm ($14 million) and Carisbrook Solar Farm ($5 million), as well as investments in Future Energy and LPG. Disposals relate primarily to the sale of the 10 per cent interest in APLNG. 9 Reflects purchase price of $94 million and completion adjustments of $11 million, net of $13 million cash and cash equivalents received. 24 Annual Report 2022 Financing cash flow Net proceeds/(repayment) of debt Operator cash call movements AEMO cash deposits On-market purchase of shares Close out of foreign currency contracts APLNG loan (repayment)/proceeds1 Interest paid Payment of lease liabilities Dividends paid Total cash flow from financing activities Effect of exchange rate changes on cash FY22 ($m) (1,856) (70) (290) (325) (46) (51) (191) (73) (314) (3,216) 1 FY21 ($m) (1,042) (90) - (96) (65) (3) (234) (76) (343) (1,949) (2) Change ($m) Change (%) (814) 20 (290) (229) 19 (48) 43 3 29 (1,267) 3 78 (22) n/a 239 (29) n/a (18) (4) (8) 65 (150) 1 APLNG - loan (repayment)/proceeds represents cash generated by APLNG as part of its normal business operations deposited to a project finance debt service reserve accounts. Upon issuance of a bank guarantee to APLNG by Origin the cash was distributed to Origin by way of a loan. Repayment of debt reflects capital market debt repaid from the proceeds of the sale of 10 per cent interest in APLNG, Free Cash Flow and cash held. Operator cash call movements represent the movement in funds held and other balances relating to Origin's role as the upstream operator of APLNG. Australian Energy Market Operator (AEMO) cash deposits relates to cash security deposits placed with AEMO to support the Company’s energy purchases from national electricity and gas markets. This obligation is typically satisfied by bank guarantees; however, the obligation was partially met with cash in FY2022. On-market purchase of shares represents the purchase of shares connected with the on-market share buyback of $250 million, the employee share remuneration schemes and the Dividend Reinvestment Plan (DRP). Settlement of foreign currency contracts represents the partial closure of contracts executed in prior periods to monetise the value in certain cross-currency interest rate swap contracts. The value of outstanding contracts as at 30 June 2022 was $48 million. Operating and Financial Review 25 Free Cash Flow Free Cash Flow represents cash flow available to pay dividends, repay debt, invest in major growth projects or return surplus cash to shareholders. This is prepared on the basis of equity accounting of APLNG. Specific items may be excluded from Free Cash Flow, to better represent cashflows from the underlying business. In FY2022 there was a significant cash inflow for futures exchange collateral which is expected to unwind. Proceeds from the sale of 10 per cent of APLNG were also excluded. In FY2022, consistent with previous years, cash payments associated with the Octopus Energy equity investment and Kraken licence implementation costs ($318 million) were considered to be Major Growth and were excluded from FY2022 Free Cash Flow. Energy Markets Integrated Gas - Share of APLNG Integrated Gas - Other Corporate Total ($m) Underlying EBITDA Non-cash items Change in working capital Other Tax (paid) /refunded Operating cash flow Capital expenditure Cash distribution from APLNG (Acquisitions)/disposals Interest received Investing cash flow Interest paid Free Cash Flow including major growth Major growth spend APLNG proceeds Futures exchange collateral Free Cash Flow 5.4 Shareholder returns FY22 FY21 FY22 FY21 979 2,134 1,145 FY21 FY22 FY21 FY22 FY21 (10) (88) (78) 2,114 2,036 365 112 539 101 81 (192) (143) - - 824 1,018 (261) (263) - - (386) (155) - - (647) (418) - 177 318 - (471) 24 - 600 191 - (110) 681 (2,134) (1,145) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FY22 (297) 31 48 25 - (193) (69) 1,595 1,957 - 6 (2) (4) - (10) (60) 709 - - 12 3 - (27) (100) (6) - - 2 11 (1,979) (1,027) (11) 3 31 (44) (16) - 1 3 590 (167) (27) 531 68 (144) 31 964 (336) (339) 1,595 1,571 2 3,483 649 (4) (12) 2,832 - - (191) (234) (191) (234) 3,290 638 (295) (289) 3,172 - (1,957) - - - - - - - - - - 318 (1,957) (471) (110) 1,333 638 (295) (289) 1,062 1,030 709 (154) 3 219 949 191 - The Board has determined a partially franked final dividend of 16.5 cents per share. The dividend will be franked to 75 per cent. This brings Origin’s total distributions to shareholders for FY2022 to 29 cents per share, representing 47 per cent of Free Cash Flow. The final dividend will be paid on 30 September to shareholders registered as at 7 September 2022. During the period, $318 million was incurred in respect of the investment in Octopus Energy and the costs associated with the Kraken system implementation. This has been treated as major growth expenditure and excluded from Free Cash Flow when measuring the dividend pay-out percentage. As the company has returned to a tax paying position, we expect future dividends to be either fully or partially franked. Origin will seek to deliver sustainable shareholder returns through the business cycle and will target a payout range of 30 per cent to 50 per cent of Free Cash Flow per annum in the form of ordinary dividends. Free Cash Flow is defined as cash from operating activities and investing activities (excluding major growth projects), less interest paid. Remaining cash flow will be applied to further debt reduction, value accretive organic growth and acquisition opportunities, and/or additional capital management initiatives. The dividend payout ratio of 47 per cent is within the 30 per cent to 50 per cent target range as Free Cash Flow during the period, with Free Cash Flow adjusted for both the proceeds from the sale of the 10 per cent stake in APLNG and a large in-the-money collateral position on electricity futures hedge contracts. This collateral position is expected to reverse in future periods as the hedge contracts settle. The Board maintains discretion to adjust shareholder distributions for economic and business conditions. Given the Company’s continued focus on capital management, the Board has taken the decision to suspend the dividend reinvestment plan until further notice. 26 Annual Report 2022 5.5 Capital management During FY2022, the following capital management initiatives were completed: • Repaid and extended the tenor of our debt facilities: – repaid €800 million (A$1,164 million) 2.8 per cent effective interest rate debt; – repaid US$500 million (A$680 million) 5.5 per cent fixed interest rate debt; and – extended the tenor of A$2,357 million bank loan from FY2024/FY2025 to FY2026/FY2027. • Extended the tenor of A$500 million of bank guarantee facilities from FY2023/FY2025 to FY2025/FY2026. • Cancelled $65 million in undrawn bank loan facilities that were surplus to requirements. • Completed a $250 million on-market buy back of ordinary shares. Adjusted Net Debt Movements in Adjusted Net Debt ($m) (531) (531) (1,595) (1,595) 336336 4,639 4,639 (1,571) (1,571) 325325 314314 161161 189189 2,838 2,838 281281 290290 30 June 2021 Operating cash flow Net cash from APLNG Capex Net acquisitions / disposals Net interest payments Dividend Recognition/ revaluation of lease liability Purchase of shares on market AEMO cash deposits FX/Other 30 June 2022 Adjusted Net Debt decreased $1,801 million, driven by operating cash flow, cash distributions from APLNG and the proceeds from the sale of 10 per cent of APLNG. Operating cash flow of $531 million included $471 million of cash collateral received from the favourable movement in the value of open energy futures hedging contracts. The amount of the futures exchange collateral received was partially offset by a financing cash outflow of $290 million for cash security deposits placed with AEMO to support Origin's energy purchases from national electricity and gas markets. Purchase of shares on market includes the $250 million on-market share buyback, and shares purchased to meet employee share remuneration programs and the DRP. Foreign exchange/other primarily reflects the non-cash translation of unhedged USD debt and fees ($104 million), operator cash call movements ($88 million), repayment of APLNG loan ($51 million and settlement of foreign currency contracts ($46 million). Origin aims to maintain an Adjusted Net Debt/Adjusted Underlying EBITDA ratio of 2.0 - 3.0x and a gearing10 target of 20 per cent to 30 per cent. At 30 June 2022, these ratios were 1.9x and 22 per cent respectively, reflecting the sale of a 10 per cent interest in APLNG during the year with the proceeds applied to debt reduction, distributions from APLNG of $1,595 million and favourable working capital movement associated with futures exchange collateral. Our long-term credit profile is Baa2 (stable) from Moody’s. 10 Gearing is Adjusted Net Debt divided by Adjusted Net Debt plus Equity. Operating and Financial Review 27 Debt maturity profile - excluding lease liabilities (A$bn) Debt portfolio management Average term to maturity increased from 3.4 years at 30 June 2021 to 4.4 years at 30 June 2022. The average interest rate on drawn debt remained unchanged at 4.3 per cent for both FY2021 and FY2022. As at 30 June 2022, Origin held $0.6 billion11 of cash and $2.7 billion in committed undrawn debt facilities. This liquidity position of $3.3 billion is held to meet near-term debt and lease liability payment obligations of $0.3 billion and to maintain a sufficient liquidity buffer. 2.5 2.0 1.5 1.0 0.5 0 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32+ Capital Markets Debt & Term Loan Loans and Bank Guarantees - Drawn Loans and Bank Guarantees - Undrawn APLNG funding During construction of APLNG, shareholders contributed capital via ordinary equity and the investment in preference shares (termed MRCPS) issued by APLNG. APLNG distributed funds to shareholders firstly via fixed dividends of 6.37 per cent per annum on the MRCPS balance, recognised as interest income by Origin, and secondly via buy-backs of MRCPS (refer to Section 5.3 above). The MRCPS were entirely bought back in the year ended 30 June 2022 and subsequent distributions from APLNG during the year were received via unfranked dividends ($433 million). APLNG also funded construction via US$8.5 billion (APLNG 100 per cent) in project finance facilities. These facilities were partially refinanced in FY2019. The outstanding balance at 30 June 2022 was US$5,410 million (A$7,851 million), net of unamortised debt fees of US$51 million (A$74 million). APLNG’s average interest rate associated with its project finance debt portfolio for FY2022 was 3.1 per cent. Gearing12 in APLNG was 21 per cent as at 30 June 2022, down from 26 per cent at 30 June 2021. APLNG project finance debt amortisation profile Closing balance as at 30 June (US$m) Bank loan (variable) US Exim USPP Total 2022 2023 2024 2025 2026 2027 2028 2029 2030 1,689 1,407 1,772 1,519 1,153 1,247 871 965 587 679 265 382 - 162 2,000 2,000 1,940 1,887 1,787 1,690 1,437 5,461 4,927 4,340 3,722 3,052 2,337 1,599 - - 930 930 - - 297 297 11 Excludes $48 million cash held on behalf of APLNG as upstream operator. 12 Gearing is defined as project finance debt less cash, divided by project finance debt less cash plus equity. 28 Annual Report 2022 6 Review of segment operations 6.1 Energy Markets Origin’s Energy Markets business comprises one of Australia’s largest energy retail businesses by customer accounts, Australia’s largest fleet of gas-fired peaking power stations supported by a substantial contracted fuel position, a growing supply of contracted renewable energy and Australia’s largest power station, the black coal-fired Eraring Power Station. The business reports on an integrated portfolio basis. Electricity and Natural Gas Gross Profit and cost to serve are reported separately, as are the EBITDA of the Solar and Energy Services, Future Energy and LPG divisions, and our 20 per cent13 share of earnings from Octopus Energy. 6.1.1 Financial summary Electricity Gross Profit Natural Gas Gross Profit Electricity and Natural Gas cost to serve LPG EBITDA Solar and Energy Services EBITDA Future Energy EBITDA Share of EBITDA from Octopus Energy Underlying EBITDA Underlying EBIT FY22 ($m) 207 564 (487) 92 52 (28) (36) 365 (111) FY21 ($m) 899 447 (489) 89 55 (19) (3) 979 432 Change ($m) (692) 117 2 3 (3) (9) (33) (614) (543) Change (%) (77) 26 (0) 4 (6) 51 1,059 (63) (126) 13 Following CPPIB' investment in Octopus Energy during December 2021, Origin accounted for its interest in Octopus Energy at 18.7 per cent from 1 December 2021 (previously 20 per cent). An additional $163 million (£94 million) was invested to restore its 20 per cent interest in August 2022. Fuel Supply•••GasCoalLPGTransportation •Flexible contracted gas transport arrangements Generation •••1 black coal generatorAustralia’s largestgas-fired fleetGrowing contracted renewables•••Retail (consumer and SME)Business (commercial and industrial)Wholesale Networks •RegulatedCustomers Energy Markets operationsElectricity –$692 millionGas +$117 millionFY2021Cost of energyWholesale pricesNetwork costs / otherVolumesShort-term trading salesRepricing of customer tariffsContract roll off & price reviewsVolumesCost to serveOctopus, S&ES, LPG, Future EnergyFY2022979(325)(439)71111684(71)(13)2(41)365Movements in Underlying EBITDA ($m)Operating and Financial Review 29 6.1.2 Electricity Volume summary Volumes sold (TWh) NSW1 Queensland Victoria South Australia Total volumes sold FY22 Retail Business 7.6 4.1 2.9 1.3 15.9 8.1 4.2 5.0 2.3 19.6 Total 15.7 8.3 7.9 3.7 35.5 FY21 Retail Business 7.9 4.3 2.8 1.3 16.3 8.6 3.7 3.2 1.8 17.3 Total 16.4 8.0 6.1 3.1 33.5 Change (TWh) (0.8) 0.3 1.8 0.6 1.9 Change (%) (4.6) 3.7 29.9 19.3 5.8 1 Australian Capital Territory customers are included in New South Wales. Gross Profit summary Revenue Retail (residential/SME) Business Cost of goods sold Network costs Energy procurement costs Gross Profit Gross margin % FY22 $m 7,125 4,148 2,977 (6,918) (3,271) (3,647) 207 2.9% $/MWh 200.8 260.6 152.1 (194.9) (92.2) (102.8) 5.8 FY21 $m 7,136 4,382 2,754 (6,237) (3,156) (3,081) 899 12.6% $/MWh 212.7 269.6 159.3 (185.9) (94.1) (91.9) 26.8 Change (%) Change ($/MWh) (0.1) (5.3) 8.1 (10.9) (3.7) (18.4) (76.9) (76.9) (12.0) (8.9) (7.2) (9.0) 1.9 (10.9) (21.0) Electricity Gross Profit decreased by $692 million driven by: Sources and uses of electricity (TWh) • $21/MWh decrease in unit margins (-$693 million): – -$315 million due to higher generation fuel costs. Unit fuel costs increased from $47.9/MWh to $68.2/MWh, driven by higher coal costs as the material under-delivery of contracted coal from our primary supplier resulted in coal purchases at significantly higher prices. High electricity spot prices and colder weather towards the end of FY2022 also resulted in increased gas generation, with gas purchased at high market prices; – -$124 million due to higher electricity procurement costs, largely reflecting higher unit net pool costs which increased from $45.5/MWh to $99.2/MWh, and higher volumes of market contracts. Lower output from Eraring due to coal supply disruption required replacement electricity purchased in the spot and contract markets; – These higher costs were partially offset by lower cost of capacity hedge contracts as more expensive legacy contracts rolled off, lower unit cost of market contracts due to the timing of the sale and purchase of swaps, and lower bundled renewable PPA costs with Stockyard Hill volumes replacing more expensive legacy contracts; – -$325 million related to lower wholesale prices flowing into customer tariffs, which were set during FY2021 with a period of low wholesale prices due to the impacts of COVID-19; and – +$71 million from improved value management (+$48 million), recovery of FY2021 network costs (+$37 million), partially offset by metering costs under recovered (-$14 million). 40 30 20 10 0 FY21 Sources FY22 Sources FY21 Uses FY22 Uses Solar FiT Renewables Coal (Eraring) Gas Other Swap contracts Short position Business Retail Losses • Volumes increased 1.9 TWh, reflecting a 2.3 TWh increase in business volumes, partially offset by a 0.3 TWh decrease in retail volumes, with a +$1 million impact to Gross Profit. Higher business volumes are driven by net customer wins, and lower residential demand largely reflecting continued uptake in solar and energy efficiency. Owned and contracted generation output of 18.7 TWh was lower by 1.7 TWh, primarily driven by lower Eraring output (-2.3 TWh) due to coal supply constraints. Gas generation was higher (+0.3 TWh) primarily to offset lower coal generation. Generation from renewable PPAs increased (+0.3 TWh) largely due to Stockyard Hill volumes received while ramping up production. Refer to the Electricity Supply table on the following page. 30 Annual Report 2022 Wholesale energy costs Fuel cost1 Generation operating costs Owned generation1 Net pool costs2 Bundled renewable PPA costs3 Market contracts3 Solar feed-in tariff Capacity hedge contracts Green schemes (excl. PPAs) Other $m 1,057 235 1,293 363 271 727 207 226 535 24 FY22 FY21 TWh $/MWh 15.5 15.5 15.5 3.7 3.2 11.9 2.3 68.2 15.2 83.4 99.2 84.8 60.9 90.9 $m 837 240 1,078 230 282 485 203 308 484 12 TWh $/MWh 17.5 17.5 17.5 5.1 3.0 7.7 1.9 47.9 13.8 61.7 45.5 95.3 62.9 106.1 Energy procurement costs 3,647 36.64 99.7 3,081 35.14 87.9 1 Includes volume from internal generation and contracted from Pelican Point. 2 Net pool costs includes gross pool purchase costs net of pool revenue from generation, gross and net settled PPAs, and other contracts. 3 Bundled PPAs includes cost of electricity and renewable certificates. Market contracts include swap and energy hedge contracts. 4 Volume differs from sales volume due to energy losses of 1.1 TWh (FY2021: 1.6 TWh). FY22 FY21 Change Type1 Output Pool revenue Output Pool revenue Output Pool revenue (GWh) ($m) ($/MWh) (GWh) ($m) ($/MWh) (GWh) ($m) ($/MWh) Nameplate capacity (MW) 2,922 2,880 Black Coal 10,966 1,668 152 13,276 1,008 76 (2,310) 660 Electricity supply Eraring Units 1 - 4 Gas Turbine Darling Downs Osborne2 Uranquinty Mortlake Mount Stuart Quarantine Ladbroke Grove Roma Shoalhaven 42 OCGT 644 CCGT 180 CCGT 664 OCGT 584 OCGT 423 OCGT 235 OCGT 80 OCGT 80 OCGT - 1,871 606 301 458 70 95 42 55 240 Pump/hydro 153 - 475 105 94 90 49 27 9 19 35 - - 254 1,696 173 312 196 708 280 219 357 230 379 142 512 35 129 82 47 122 - 147 22 36 43 22 16 9 10 10 Internal generation 6,052 14,617 2,571 176 16,420 1,323 Pelican Point 240 CCGT 885 Renewable PPAs 1,0053 Solar / Wind 3,196 Owned and contracted generation 7,297 18,697 1,050 2,959 20,429 1 OCGT stands for open cycle gas turbine; CCGT stands for combined cycle gas turbine. 2 Origin has a 50 per cent interest in the 180 MW plant and contracts 100 per cent of the output. 3 Nameplate capacity does not include Stockyard Hill as it is not yet generating at full capacity. 76 - 167 116 56 111 89 155 112 138 151 95 - 87 58 255 85 619 125 106 219 79 81 - 176 226 159 (54) 34 (34) (39) 8 32 - 328 83 58 46 27 10 1 9 26 (1,803) 1,248 (165) 261 (1,707) Operating and Financial Review 31 6.1.3 Natural Gas Volume summary Volume sold (PJ) Retail Business FY22 NSW1 Queensland Victoria South Australia2 External volumes sold Internal sales (generation) Total volumes sold 12.2 3.1 23.6 5.4 44.2 19.5 71.9 40.3 12.1 143.9 Total 31.7 75.0 63.8 17.5 188.1 41.4 229.4 1 Australian Capital Territory customers are included in New South Wales. 2 Northern Territory and Western Australia customers are included in South Australia. FY21 Retail Business 12.1 3.3 24.8 5.7 45.9 24.1 66.8 46.3 9.8 147.0 Total 36.2 70.1 71.1 15.5 192.9 38.4 231.3 Change (PJ) Change (%) (4.5) 4.9 (7.3) 2.0 (4.9) 3.0 (1.8) (12) 7 (10) 13 (3) 8 (1) Gross Profit summary Revenue Retail (residential/SME) Business Cost of goods sold Network costs Energy procurement costs Gross Profit Gross margin % FY22 $m 2,769 1,185 1,584 (2,205) (749) (1,456) 564 20.4% $/GJ 14.7 26.8 11.0 (11.7) (4.0) (7.7) 3.0 FY21 $m 2,455 1,148 1,307 (2,008) (789) (1,218) 447 18.2% $/GJ 12.7 25.0 8.9 (10.4) (4.1) (6.3) 2.3 Change (%) Change ($/GJ) 13 3 21 (10) 5 (20) 26 12 2.0 1.8 2.1 (1.3) 0.1 (1.4) 0.7 Natural Gas Gross Profit increased $117 million driven by: Sources and uses of gas (PJ)1 • +$116 million due to increased volumes and prices on short-term trading sales, particularly in the second half of the year, net of higher procurement costs; • +$84 million due to retail and business customer tariff repricing, reflecting the recovery of higher costs; • -$71 million reflecting supply contract price reviews and the expiry of long-term supply contracts; and • 4.9 PJ decrease in external sales volume (-$13 million) due to expiration of business contracts, reduced residential usage driven by warmer than average weather, and COVID-19 impacts, partly offset by new sales for business customers. 250 200 150 100 50 0 FY21 Sources FY22 Sources FY21 Uses FY22 Uses APLNG - fixed price Other fixed price Oil/JKM linked Retail Business - C&I Business - Wholesale Generation 1 Fixed price contracts are subject to CPI adjustments. 32 Annual Report 2022 6.1.4 Electricity and Natural Gas cost to serve Cost to maintain ($ per average customer)1 Cost to acquire/retain ($ per average customer)1 Electricity and Natural Gas cost to serve ($ per average customer)1 Maintenance costs ($m) Acquisition and retention costs ($m)2 Electricity and Natural Gas cost to serve ($m) FY22 (97) (39) (135) (348) (139) (487) 1 Represents cost to serve per average customer account, excluding CES accounts. 2 Customer wins (FY2022: 480,000; FY2021: 484,000) and retains (FY2022: 1,244,000; FY2021: 1,441,000). Labour Bad and doubtful debts Other variable costs Retail and Business Wholesale Corporate services and IT Electricity and Natural Gas cost to serve FY22 ($m) (150) (58) (128) (337) (52) (99) (487) FY21 (100) (36) (136) (359) (130) (489) FY21 ($m) (136) (83) (102) (321) (56) (112) (489) Change ($) Change (%) 4 (2) 1 11 (9) 2 (4) 6 (1) (3) 7 (0) Change ($) Change (%) (14) 25 (26) (15) 4 13 2 11 (30) 25 5 (8) (12) (0) Electricity and Natural Gas cost to serve has reduced by $2 million, primarily driven by a $10 million release of surplus COVID-19 Business Energy bad and doubtful debt provision, lower wholesale, corporate services and IT costs, partially offset by higher labour costs while running dual Retail businesses during the migration of customers to the Kraken platform. Bad debt expense as a percentage of total Electricity and Natural Gas revenue decreased to 0.59 from 0.87 in FY2021. This included a $10 million release of surplus provision recognised in FY2020 relating to COVID-19. Normalising for this, the Bad debt expense ratio would be 0.69. We continue to target a $200 – $250 million reduction in operating and capital cost savings from FY2018 baseline by FY2024. $170 million cash cost savings have been achieved to date, with further savings on operating costs related to the adoption of Kraken platform and operating model expected over FY2023 - 24. Customer accounts Customer accounts ('000) as at 30 June 2022 30 June 2021 Electricity NSW2 Queensland Victoria South Australia3 Natural Gas NSW2 Queensland Victoria South Australia3 Total electricity and natural gas Rolling average customer accounts Broadband LPG Other5 2,7331 1,193 674 608 257 1,277 379 178 495 226 4,0104 3,922 61 368 20 2,625 1,175 637 566 246 1,249 350 178 492 228 3,874 3,855 33 359 - Total customer accounts 4,4581 4,266 1 Includes an additional 39,000 previously excluded electricity unmetered sites due to an industry change. 2 Australian Capital Territory customer accounts are included in New South Wales. 3 Northern Territory and Western Australia customer accounts are included in South Australia. 4 Includes 403,000 CES customer accounts (FY2021: 280,000). 5 Largely relates to Origin Home Assist customers. Change 108 17 37 42 11 29 29 (0) 3 (3) 137 67 28 8 20 193 Operating and Financial Review 33 Origin churn increased to 13.4 per cent, up from 12.5 per cent in the prior period, compared to market churn of 19.0 per cent which is up from 17.3 per cent in the prior period. Churn rates increased driven by volatile and high wholesale electricity prices, causing some smaller energy retailers to either exit the market or offer uncompetitive prices to their customers. Period end customer accounts increased by 193,000 overall, including recording 39,000 previously excluded electricity unmetered sites due to an industry change. Excluding the addition of the electricity unmetered sites, electricity customer accounts increased by 69,000 reflecting gains across all states. Natural Gas customer accounts increased by 29,000, driven primarily by gains in New South Wales. The addition of around 7,000 customer accounts was due to the Retailer of Last Resort (ROLR) events14 that occurred from May 2022 until the end of FY2022. WINconnect acquisition added 99,000 customer accounts to the CES business. Broadband customer accounts increased by 28,000 to a total of 61,000 and LPG customer accounts increased by 8,000 to 368,000. 6.1.5 LPG Volumes (kT) Revenue and Other Income ($m) Cost of goods sold ($m) Gross Profit ($m) Operating costs ($m) Underlying EBITDA ($m) Electricity and Gas: Customer account movement ('000)1 40 30 20 10 0 (10) NSW QLD VIC SA Electricity Gas 1 Excludes 39,000 unmetered sites which are now included in total customer accounts due to an industry change. FY22 357 710 (513) 196 (104) 92 FY21 389 589 (388) 201 (112) 89 Change Change (%) (32) 121 (125) (4) 8 3 (8) 21 32 (2) (7) 4 Origin is one of Australia’s largest LPG and propane suppliers, procuring and distributing LPG to residential and business locations across Australia and the Pacific. Gross Profit was broadly in line with FY2021 with higher cost of gas offset by retail price increases. Volumes were down 8 per cent due to continued decline in autogas sales and lower wholesale demand. Operating costs decreased $8 million, largely driven by cost efficiencies achieved as part of an ongoing cost optimisation program. 6.1.6 Solar and Energy Services Revenue and Other Income CES Gross Profit Solar Gross Profit Other Gross Profit Gross Profit Operating costs Underlying EBITDA FY22 ($m) 405 98 33 2 133 (81) 52 FY21 ($m) 346 82 39 5 126 (70) 55 Change ($m) Change (%) 59 16 (6) (2) 7 (11) (3) 17 20 (15) (60) 6 16 (5) Origin provides installation of solar photovoltaic (PV) systems and batteries to residential and business customers, and ongoing support and maintenance services. The Community Energy Services (CES) business provides serviced hot water, natural gas and electricity via embedded networks and other related services such as communal solar and battery systems to apartment blocks. Underlying EBITDA decreased $3 million. CES Gross Profit increased $16 million driven by continued growth in customer account, with the WINconnect acquisition in April 2022 adding around 99,000 customer accounts. This is offset by a $6 million reduction in Solar Gross Profit largely due to higher panel costs associated with manufacturing and supply constraints, and an $11 million increase in operating costs including the continued investment in Broadband. 14 Weston Energy, Pooled Energy and Enova Energy. 34 Annual Report 2022 6.1.7 Future Energy Operating costs Other income EBITDA Net (investments) / disposals1 FY22 ($m) (29) 2 (28) 1 FY21 ($m) (25) 6 (19) (5) Change ($m) (5) (3) (9) 5 Change (%) 16 (67) 47 (120) 1 Relates to investments in future energy technology focused private equity funds. Future Energy activities and associated expenditure reflects the transition from the incubation phase to scaling of various initiatives. The main focus areas continue to be the expansion of Origin Loop (our in-house Virtual Power Plant) and the deployment of digital products and services to our customers that reflect the continued shift towards a distributed and data-driven energy landscape. Assets connected to Loop have grown from 159 MW to 258 MW during FY2022, including an increasing variety of distributed assets, which are aggregated, controlled and dispatched in response to market and portfolio positions, improving customer engagement while reducing energy costs for both customers and Origin. Of the 121,000 connected services, more than 75,000 are from our Spike program, an increase of around 30 per cent in the past 12 months. Spike is a behavioural demand response program that rewards customers for reducing energy usage during periods of peak market demand called SpikeHour. It has proven to be very engaging with customers, with more than 2.6 million SpikeHour invitations since the launch in August 2020, with a participation rate of 69 per cent and total energy reduction of 342 MWh during the SpikeHour. We have also deployed in-app solar and battery features that provide customers with powerful insights on how they use and manage energy in their homes. Operating costs increased during the period, largely due to scaling of Loop, batteries and demand response offerings. Other income in the period related to distributions received from equity investments. Operating and Financial Review 6.1.8 Octopus Energy - Origin share15 Revenue - energy Revenue - licensing Cost of sales Gross Profit Operating costs EBITDA ITDA NPAT 1 Certain amounts have been restated to reflect an adjustment to the result of the equity accounted investment in Octopus Energy. Octopus customer accounts - Octopus 100% Energy customer accounts (closing) Energy customer accounts (12-month average) Licensed Kraken platform customer accounts migrated to date (closing) Licensed Kraken platform customer accounts migrated to date (12-month average) 35 FY21 ($m)1 750 31 (752) 29 (32) (3) (39) (42) FY21 ('000) 4,214 3,486 4,726 2,134 FY22 ($m) 1,603 35 (1,607) 32 (68) (36) (51) (87) FY22 ('000) 6,013 5,531 11,240 8,036 Octopus secured two new investors during the year. Origin invested an additional approximately $80 million (£43 million) in FY2022 and $163 million (£94 million) in August 2022 to restore its 20 per cent interest. Origin’s share of Octopus Energy EBITDA for the period was a loss of $36 million, a reduction of $33 million from FY2021. This was largely driven by unprecedented UK market conditions in FY2022 which saw about 28 UK energy retailers exit the market since the start of September 2021, displacing close to 6 million customers. Octopus' wholesale risk management approach largely shielded the company from the market volatility, though they incurred a higher cost of energy during extreme wholesale prices with an inability to pass this cost on to customers due to the lag in the reset of regulated tariffs. Octopus' operating costs increased driven by the scale up of labour to support the growth in licensing, energy services and international retail businesses. Octopus added around 1 million Avro Energy customer accounts under the regulator's Retailer of Last Resort (ROLR) scheme and launched in the Italian and French markets. Customer accounts in the underlying UK retail business have grown to 6 million at the end of June 2022, a 43 per cent increase in the past 12 months and Octopus is now the fifth largest UK retailer. This has demonstrated the significant advantage of Octopus’ low-cost operating model, prudent risk management approach and market-leading Kraken platform in a rapidly changing energy landscape. In November 2021, Octopus announced a licensing deal with EDF, the fourth largest UK energy supplier, to move its 5 million customers to Kraken from 2023. Following this deal, four of the UK’s leading energy suppliers will be on the Kraken platform. Licensing deals with E.ON and Origin are progressing well, with all of E.ON's 8.7 million customer accounts migrated and 2.2 million customer accounts from Origin now on the Kraken platform. 15 Following CPPIB' investment in Octopus Energy during December 2021, Origin accounted for its interest in Octopus Energy at 18.7 per cent from 1 December 2021 (previously 20 per cent). An additional $163 million (£94 million) was invested to restore its 20 per cent interest in August 2022. 36 Annual Report 2022 6.2 Integrated Gas Share of APLNG EBITDA (see Section 6.2.1)16 Integrated Gas - Other (see Section 6.2.2) Underlying EBITDA Underlying depreciation and amortisation Underlying share of ITDA from APLNG Underlying EBIT 6.2.1 Share of APLNG FY22 ($m) 2,134 (297) 1,837 (24) (1,086) 727 FY21 ($m) 1,145 (10) 1,135 (30) (917) 188 Change ($m) 989 (287) 702 6 (169) 539 Change (%) 86 2,870 62 (20) 18 287 Origin held a 37.5 per cent shareholding in APLNG, an equity accounted incorporated joint venture, at the beginning of FY2022. On 8 December 2021 Origin sold a 10 per cent interest to ConocoPhillips for net proceeds of $1,957 million taking Origin's holding in APLNG to 27.5 per cent.16 The sale completed in February 2022. APLNG operates Australia’s largest CSG to LNG export project (by nameplate capacity) with the country’s largest 2P CSG reserves17. Origin is the operator of the upstream CSG exploration and appraisal, development and production activities. ConocoPhillips is the operator of the 9 mtpa two-train LNG liquefaction facility at Gladstone in Queensland. As APLNG is an equity accounted incorporated joint venture, Integrated Gas reports its share of APLNG EBITDA. The share of APLNG ITDA is recorded as a line item between EBITDA and EBIT. APLNG acquired various CSG interests from Tri-Star in 2002 that are subject to reversionary rights and an ongoing royalty interest in favour of Tri-Star. These interests represent approximately 20 per cent of APLNG’s 2P CSG reserves and approximately 20 per cent of 3P (proved plus probable plus possible) CSG reserves (as at 30 June 2022). Refer to Section 8 for disclosure relating to Tri-Star litigation associated with these CSG interests. Financial summary – APLNG ($m) Commodity revenue and other income1 Operating expenses Underlying EBITDA Depreciation and amortisation MRCPS interest expense Project finance interest expense Other financing expense Interest income Income tax expense Underlying ITDA2 Underlying Profit FY22 FY21 APLNG 100% 9,362 (2,486) 6,876 (1,563) (141) (261) (67) 9 (1,456) (3,479) 3,397 Origin share16 2,903 (768) 2,134 (495) (48) (82) (23) 3 (445) (1,090) 1,044 APLNG 100% 4,595 (1,544) 3,051 (1,568) (282) (270) (87) 6 (255) (2,456) 595 Origin share 1,723 (578) 1,145 (588) (106) (101) (33) 2 (95) (921) 224 1 Includes commodity revenue plus other income of $29 million (Origin share) primarily related to Woleebee asset sale (FY2021: $16 million Origin share). 2 See Note B2.2 of the Financial Statements for details relating to a $4 million difference between APLNG ITDA and Origin's reported share. 16 On 8 December 2021, Origin sold a 10 per cent interest to ConocoPhillips for net proceeds of $1,957 million taking Origin's holding in APLNG to 27.5 per cent. 17 As per EnergyQuest EnergyQuarterly, June 2022. Exploration and appraisal Drilling and gatheringProcessing andtransportation Domestic customersLiquefaction and export customersOperating and Financial Review 37 Origin’s share of APLNG Underlying EBITDA increased by $989 million, primarily due to higher commodity prices, partially offset by the reduction in ownership from December 2021. • Commodity revenue and other income increased by $1,787 million18, primarily reflecting a realised oil price of US$74/bbl (A$103/bbl) compared to US$43/bbl (A$58/bbl) in FY2021 and higher realised spot LNG prices with 15 JKM-linked cargoes delivered in FY2022. The North Asian LNG prices delivered in FY2022 averaged approximately US$26/MMbtu compared with US$7/MMbtu in FY2021. • Operating expenses increased by $35318 million, driven by higher royalties as a result of higher revenue, along with higher electricity costs. See below for further details. • The change in ownership from December 2021 reduced Origin's share of APLNG's EBITDA by $444 million compared to maintaining a 37.5 per cent stake for the full year. The change in ownership is also the primary driver of the reduction in Origin’s share of depreciation and amortisation of $93 million and project finance interest expense of $19 million. MRCPS were fully repaid during the period, leading to a reduction in MRCPS interest expense of $58 million. 18 Origin's share is calculated at 37.5 per cent before 10 per cent divestment. Commodity revenue and other income ($1,787 million)Movements in Underlying EBITDA ($m)23FY2021LNG volumeLNG priceDomestic revenueOther incomeOpexDivestmentFY20221,1451,62211923(353)(444)2,13438 Annual Report 2022 APLNG volume summary Volumes (PJ) Operated Non-operated Total production Purchases Changes in upstream gas inventory/other Liquefaction/downstream inventory/other Total sales Commodity revenue ($m) Domestic gas LNG Sales mix (PJ) Domestic gas LNG contract LNG spot Realised price Domestic gas (A$/GJ) LNG (A$/GJ) LNG (US$/MMbtu) Origin share1 170 50 220 5 (1) (13) 211 327 2,546 52 143 16 FY22 APLNG 100% 535 157 693 15 (4) (40) 664 990 8,267 159 450 55 6.23 16.36 12.50 Origin share 202 61 263 2 (4) (15) 246 252 1,455 59 169 18 FY21 APLNG 100% 537 163 701 6 (12) (39) 656 672 3,880 158 450 48 4.24 7.79 6.17 1 During FY22 Origin completed the sale of a 10 per cent interest in APLNG. As a result of the sale, from 8 December 2021 Origin holds 27.5 per cent ownership in APLNG which continues to be equity accounted Strong operated field performance and operational efficiencies offset lower production from Spring Gully legacy wells, natural field decline in certain non-operated fields and wet weather impacts, resulting in stable production compared to the prior period. APLNG sales volumes increased 1 per cent, reflecting more volumes lifted from non-operated fields and portfolio management via time swaps, which allows for effective management of upstream gas production during periods of LNG plant outages. The average realised LNG price increased 110 per cent to A$16.36/GJ driven by higher realised oil prices, and higher spot LNG volumes and prices. The average realised domestic gas price increased 47 per cent to $6.23/GJ, primarily driven by market-linked short-term contract prices. Operating and Financial Review Cash flow – APLNG 100% Underlying EBITDA Non-cash items in underlying EBITDA Change in working capital Other Operating cash flow1 Capital expenditure1 Interest income1 Acquisitions/disposals1 Loans (advanced to)/paid by shareholders Investing cash flow Project finance interest and transaction costs1 Repayment of project finance1 Other financing activities1 Repayment of lease liabilities1 Interest on lease liabilities1 MRCPS interest MRCPS buy-back Ordinary dividends paid Financing cash flow Net increase/(decrease) in cash and cash equivalents Effect of exchange rate changes on cash1 Net increase/(decrease) in cash and cash equivalents including FX movement Distributable cash flow1 39 Change (%) 125 (1,213) 7 (100) 113 (10) (13) n/a 1,600 (35) (11) 3 (54) 22 (21) (51) 122 n/a 114 (794) (246) (483) 240 FY22 ($m) 6,876 (89) 283 - 7,070 (415) 7 68 51 (289) (233) (694) (22) (55) (15) (145) (3,544) (1,573) (6,281) 500 139 639 5,850 FY21 ($m) 3,051 8 265 (10) 3,314 (459) 8 - 3 (448) (263) (672) (48) (45) (19) (293) (1,598) - (2,938) (72) (95) (167) 1,721 Change ($m) 3,825 (97) 18 10 3,756 44 (1) 68 48 159 30 (22) 26 (10) 4 148 (1,946) (1,573) (3,343) 572 234 806 4,129 1 Included in distributable cash flow. Distributable cash flow represents the net increase in cash, including foreign exchange movements before MRCPS interest and buy-backs, and transactions with shareholders. APLNG generated distributable cash flow of $5,850 million in FY2022 at an effective oil price of US$74/bbl, up from $1,721 million at an effective oil price of US$43/bbl in the prior year. Cash distributions to Origin were $1,595 million in FY2022 up from $709 million in the prior year. The distribution Origin received comprised redemption of MRCPS and associated interest of $1,162 million, and unfranked ordinary dividends of $433 million. The project finance facility requires APLNG to hold an amount of cash to service near-term operational and project finance obligations. As at 30 June 2022, APLNG held $1,544 million of cash, up from $905 million at 30 June 2021 reflecting higher commodity prices in the last quarter of FY2022 compared with the last quarter of FY2021. 40 Annual Report 2022 Operating expenditure – APLNG 100% Purchases Royalties and tariffs1 Upstream operated opex Upstream non-operated opex Downstream opex APLNG Corporate/other Total operating expenses per Profit and Loss Other cash items Total operating cash costs FY22 ($m) (144) (784) (935) (295) (309) (19) (2,486) (32) (2,518) FY21 ($m) (41) (180) (767) (249) (221) (86) (1,544) (89) (1,634) Change ($m) Change (%) (103) (604) (168) (46) (88) 67 (942) 57 (884) 251 336 22 18 40 (78) 61 (64) 54 1 Reflects actual royalties paid. At breakeven price, royalties and tariffs would have amounted to $175 million (FY2021: $147 million). Operating expenses increased $942 million, primarily driven by higher royalties and tariffs ($604 million), reflecting stronger commodity prices. Higher purchases was associated with portfolio management via time swaps supporting sales during upstream maintenance periods ($103 million). Upstream operated opex increased $168 million mainly due to increased electricity costs with 24 per cent of APLNG's FY2022 electricity costs on a floating price, and a higher number of major workovers completed. Upstream non-operated opex increased $46 million, also driven by higher electricity costs. Downstream opex increased $88 million primarily reflecting the 31-day planned Train 1 major maintenance activity conducted early in the year. APLNG Corporate/other reduced by $67 million, primarily due to favourable FX revaluation of USD cash balances. Capital expenditure – APLNG 100% Operated upstream - Sustain Operated upstream - Infrastructure Exploration and appraisal Downstream Non-operated Total capital expenditure FY22 ($m) (202) (29) (35) (23) (131) (421) FY21 ($m) (285) (11) (23) (14) (95) (429) Change ($m) 83 (18) (12) (9) (36) 8 Change (%) (29) 166 50 68 37 (2) Capital expenditure decreased $8 million, with an $83 million decrease in operated sustain costs, partially offset by increases across other areas. The reduction in operated sustain costs reflects reduced development activity in the period enabled by improved field performance as well as the impact of more wet weather in FY2022. Non-operated expenditure increased $36 million due to the commencement of Arcadia Phase 2 and Fairview development programs. Operated infrastructure costs increased $18 million primarily due to construction costs associated with the Talinga Condabri North Pipeline (TCNP), which was commissioned in July 2022, connecting gas fields to gas processing infrastructure with surplus capacity. Operated upstream - Sustain includes expenditure for drilling, completions, fracture stimulation, the gathering network, surface connection, capital improvements and land access which occurs over multiple years. In FY2022, 63 operated wells were drilled (versus 86 in FY2021), 23 wells were fracture stimulated (versus 18 in FY2021) and 65 operated wells were commissioned (versus 141 in FY2021). Operating and Financial Review 41 6.2.2 Integrated Gas – Other This segment comprises Origin Integrated Gas activities that are separate from APLNG, and includes exploration interests in the Beetaloo, Cooper-Eromanga and Canning Basins and a potential conventional development resource in the offshore Browse Basin. It also includes overhead costs (net of recoveries) incurred as upstream operator and corporate service provider to APLNG, costs associated with growth initiatives such as hydrogen, and costs incurred in managing Origin’s exposure to LNG pricing risk and impacts of its LNG trading positions. Beetaloo Basin (Northern Territory) Origin has a 77.5 per cent interest in three exploration permits over 18,500 km2 in the Beetaloo Basin. Stage 2 appraisal under the farm-in arrangement to evaluate three independent shale gas plays was completed in HY2022. Stage 3 is now underway, targeting the Velkerri dry gas play. Work continues with regulators and Native Title holders to ensure operations are conducted safely with transparency and consistent with necessary approvals and consents. • Velkerri dry gas play – A further production test of the Amungee NW 1H well was conducted in August 2021 to assess if stages that were stimulated during the previous test in 2016 are contributing to flow rates. Average gas flow rates of 1.02 million standard cubic feet per day (MMscf/d) were observed over a 45-day period, with between 85 per cent and 95 per cent of the flows measured coming from the first 200-metre section of the well. The test results suggest a normalised gas flow rate equivalent of between 5.2 and 5.8 MMscf/d per 1,000 metres of lateral. Future production wells will target effective lengths of approximately 3,000 metres. This result indicates the Velkerri dry gas play may be comparable with commercial shale plays around the world. The Stage 3 work programme includes drilling, hydraulic fracture stimulation and extended production test of two horizontal wells. • Velkerri liquids-rich gas play –The Velkerri 76 S2-1 well was drilled to a total measured depth of 2,129 metres in October 2021 with encouraging preliminary results, indicating that the Velkerri shales at this location are within the wet gas maturity window. The CY2022 work programme includes core sample analysis to further characterise the reservoir. • Kyalla liquids-rich gas play – A production test was conducted at the Kyalla 117 well during the period. The well was able to intermittently flow without assistance at rates up to 1.5 MMscf/d; however, production was not sustained and the well has been shut in. Kyalla 117 is the first horizontal well drilled targeting the Beetaloo Basin's Kyalla shale formation and successfully met its primary technical objective of demonstrating potential liquids-rich gas flows. The Stage 3 work programme includes further evaluation of the results of the Kyalla 117 well to better understand the issues encountered during testing in CY2021. Cooper-Eromanga Basin (Queensland) Origin has a 75 per cent interest and operatorship of five permits, 100 per cent interest and operatorship of one permit, and has 99 per cent interest and operatorship of additional 11 permits. In December 2020, the first vertical exploration well, Obelix-2, was drilled to test the maturity of the Toolebuc Formation. The well was written off in HY2022 with no plans for further development at the well location. Additional permits were acquired to continue the evaluation of the prospectivity of the Toolebuc formation within the basin, targeting both unconventional liquids and gas. Canning Basin (Western Australia) Origin entered into agreements in December 2020 with Buru Energy to farm in to a 50 per cent equity share in five permits, and a 40 per cent equity share in two permits. The Currajong 1 well was drilled to a total measured depth of 2,340 metres in August 2021 however no oil was recovered from the test zones, and the well was written off in HY2022. The Rafael 1 well was drilled to a total depth of 4,141 metres in November 2021, and a production test was conducted in March 2022 with gas successfully flowed to the surface. Initial analysis of the data collected during the test indicates encouraging gas composition with high condensate and low CO2 content. Further appraisal of Rafael will be required to understand materiality and commerciality. Financial summary Origin only commodity hedging and trading Other Origin only costs Underlying EBITDA Underlying depreciation and amortisation/ITDA Interest income - MRCPS Underlying Profit/(Loss) FY22 ($m) (189) (109) (297) (20) 48 (268) FY21 ($m) 55 (65) (10) (26) 106 71 Change ($m) (244) (44) (287) 6 (58) (339) Change (%) (441) 67 2,870 (22) (55) (477) Refer to the following table for a breakdown of Origin only commodity hedging and trading costs. Other Origin only costs increased $44 million, primarily reflecting write-off of wells in the Cooper and Canning Basins. 42 Annual Report 2022 Commodity hedging and trading summary FY2022 positions realised a $189 million net loss, compared to a $55 million gain in FY2021. Based on current forward market prices19, we estimate a net loss on oil hedging and LNG trading in FY2023 of $358 million. ($m) Oil hedging premium expense Gain/(loss) on oil hedging Gain/(loss) on LNG trading Total 1 Based on forward prices as at 2 August 2022. Oil hedging FY22 actual (28) (137) (23) (189) FY21 actual (9) 101 (37) 55 FY23 estimate1 (21) (290) (47) (358) Origin has entered into oil hedging instruments to manage its share of APLNG oil price risk based on the primary principle of protecting the Company’s investment grade credit rating and cash flows during volatile market periods. For FY2023, Origin’s share of APLNG related Japan Customs-cleared Crude (JCC) oil price exposure is estimated to be approximately 17 MMboe. As at 2 August 2022, we estimate that 43 per cent has been priced (based on LNG contract lags) at approximately US$108/bbl before any hedging. Origin has separately hedged to provide downside protection (using 5.4 MMbbl of swaps and 1.6 MMbbl of producer collars) and subsequently executed 4.4 MMbbl of collars to re-participate in upside in a higher oil environment. As at 2 August 2022, the effective price on the realised hedging (3 MMbbl equivalent) was US$67/bbl (see table below). Based on forward oil price of US$94/bbl, the effective prices on the unrealised hedges would be US$64/bbl (2.4 MMbbl equivalent), which would result in an effective oil price for FY2023 of ~US$87/bbl including hedges. Premium spend for this hedge position is A$21 million, to be incurred in FY2023. Realised as at 2 August 2022 Remaining unrealised FY2023 hedge instruments Volume (MMbbl) Brent USD swaps Brent producer collars Brent USD upside participation collar Net realised price The FY2024 hedge position consists of: • 2 MMbbl hedged at a fixed price of A$137/bbl, 3.0 0.4 2.6 Effective realised price on 3 MMbbl US$57/bbl -US$3/bbl +US$13/bbl US$67/bbl Volume (MMbbl) Average price 2.4 1.2 1.8 US$55/bbl US$35-90/bbl US$61-76/bbl • 0.8 MMbbl hedged at a floor price of US$35/bbl, with all of this hedged amount participating in market prices up to US$90/bbl. The total premium spend for this hedge position is A$2 million to be incurred in FY2024. LNG hedging and trading In 2013, Origin established a Henry Hub linked contract to purchase 0.25 mtpa from Cameron LNG for a period of 20 years, with the first cargo delivered to Origin in June 2020. In FY2020, a non-cash onerous provision of $641 million was recognised, which has been revalued to nil ($0m) as at 30 June 2022 ($397 million as at 30 June 2021), reflecting stronger near-term assumptions for LNG prices relative to Henry Hub prices, higher US Treasury bond rates and the realised gain for the period. In 2016, Origin established a contract with ENN LNG Trading Company Limited to sell 0.28 mtpa on a Brent oil-linked basis commencing in FY2019 and ending in December 2023 to act as a partial hedge to the Cameron LNG contract. In FY2021, a non-cash onerous provision of $13 million was recognised, which has been revalued at $397 million as at 30 June 2022, reflecting stronger near-term assumptions for LNG prices relative to Brent oil prices. These contracts and derivative hedge contracts that manage the price risk associated with the physical LNG contracts form part of an LNG trading portfolio. Based on market forward prices as at 2 August 2022, the FY2023 LNG trading loss is expected to be $47 million and remains subject to the spread between European and Asian gas prices, shipping costs and the allocation of cargos in the annual schedule. The increase in expected loss compared to FY2022 is primarily due to less favourable hedging rates achieved and higher shipping costs on physical deliveries. 19 As at 2 August 2022. Operating and Financial Review 43 7 Risks related to Origin’s future financial prospects The scope of operations and activities means that Origin is exposed to risks that can have a material impact on our future financial prospects. Material risks, and the Company’s approach to managing them, are summarised below. Risk management framework Overseen by the Board and the Board Risk Committee, Origin’s risk management framework supports the identification, management and reporting of material risks. Risks are identified that have the potential to impact the delivery of business plans and objectives. Risks are assessed using a risk toolkit that considers the level of consequence and likelihood of occurrence using consistent risk assessment criteria. The risk framework incorporates a "three lines of defence" model for managing risks and controls in areas such as health and safety, environment (including climate change), financial, reputation and brand, legal and compliance and social impacts. All employees are responsible for making risk-based decisions and managing risk within approved risk appetite and specific limits. The Board reviews Origin’s material risks each quarter and assesses the effectiveness of the Company’s risk management framework annually in accordance with the ASX Corporate Governance Principles and Recommendations. Three lines of defence Line of defence First line Lines of business Second line Oversight functions Third line Internal audit Responsibility Primary accountability Identifies, assesses, records, prioritises, manages and monitors risks. Management Provides the risk management framework, tools and systems to support effective risk management. Management Provides assurance on the effectiveness of governance, risk management and internal controls. Board, Board Committees and Management Our risk framework supports the identification and management of emerging risks and escalating threats. During FY2022, the accelerating energy transition, continued COVID-19 challenges, as well as emerging geopolitical risks, inflationary pressures, and supply chain disruptions were key threats to our operational and financial performance. These threats have required ongoing response and management across many of our existing material risks to minimise impacts. Our priorities remain focused on ensuring the continuity of our operations and supporting activities to provide essential services to our customers, and to maintain our financial resilience to respond to changes in global markets. Material risks The risks identified in this section have the potential to materially affect Origin’s ability to meet our business objectives and impact its future financial prospects. These risks are not exhaustive and are not arranged in order of significance. Strategic risks Strategic risks arise from uncertainties that may emerge in the medium to longer term and, while they may not necessarily impact on short- term profits, can have an immediate impact on the value of the Company. These strategic risks are managed through continuous monitoring and reviewing of emerging and escalating risks, ongoing planning and the allocation of resources, and evaluation from management and the Board. Risk Consequences Management Competition Origin operates in a highly competitive retail environment which can result in pressure on margins and customer losses. Competition also impacts Origin’s wholesale business, with generators competing for capacity and fuel and the potential for gas markets to be impacted by new domestic gas resources, LNG imports and the volume of gas exports. Origin is well placed to respond to prevailing headwinds due to the diversified nature of our business; however, Origin is exposed to coal supply challenges relative to vertically integrated organisations with coal businesses or those with long term legacy coal contracts. • Our strategy to mitigate the impact of this risk on our retail business is to provide customers with value for money products with exceptional service whilst continuously focussing on maintaining our cost leadership and innovation. The migration of our business to Octopus’ Kraken platform should see Origin maintain our churn advantage to competitors through extending leadership in cost, products and service. • We endeavour to mitigate the impact of this risk on our wholesale business by sourcing competitively priced fuel to operate our generation fleet and through efficient operations to optimise flexibility in our fuel, transportation and generation portfolio. 44 Annual Report 2022 Risk Consequences Management Technological developments / disruption Changes in demand for energy Regulatory and government Origin is exposed to risks and opportunities relating to new digital, and low-carbon technologies. Distributed generation is empowering consumers to own, generate and store electricity, consuming less energy from the grid. Technology is allowing consumers to understand and manage their power usage through smart appliances, having the potential to disrupt the existing utility relationship with consumers. Technology also allows customers to have increased awareness of the impact of when they consume energy and the source of that energy. Advances in technology and the abundance of low-cost data acquisition, communication and control has the potential to create new business models and introduce new competitors. The volume or source of energy demanded by customers could change due to price, consumer behaviour, community expectations, mandatory energy efficiency schemes, Government policy, weather and other factors. Demand for the energy is also expected to grow due to increased electrification, e.g., hydrogen, E-mobility and distributed infrastructure as a service, providing new market opportunities. The current global energy market environment may impact the supply and cost of energy to our customers, and this could have an adverse impact on our reputation with customers and the community. Any change in demand for energy could impact Origin’s revenues and future financial performance. Origin has broad exposure to regulatory policy change and other government interventions. Changes to policy and other government interventions can impact financial outcomes and, in some cases, change the commercial viability of existing or proposed projects or operations. Specific areas subject to review and development include government subsidies for building new generation or transmission capacity, government direct investment in generation, constraints upon plant closure, energy market design, domestic and international climate change policies, domestic gas market interventions, wholesale and retail price, consumer protection regulation, and royalties and taxation policy. • Origin actively participates and invests in technological developments through local and global start-up accelerator programs, trialling new energy technology and new products and business models. • In parallel, Origin is growing its distributed generation and home energy services businesses and endeavouring to mitigate the impact of this risk on its core energy businesses by offering superior service and innovative products and reducing cost to serve. • Origin is pursuing opportunities in low-carbon technologies such as hydrogen, e-mobility, and carbon management. • Our strategy of increasing our supply of renewables and investing in new technology and products, such as storage, the virtual power plant and low carbon customer solutions, supports Origin’s ability to meet future increases in energy demand. • Origin uses the flexibility in its gas supply and peaking generation capacity, as well as the flexibility of Eraring Power Station, to manage the intermittency of renewables. • Origin is partially mitigating the impact of this risk by developing data-based customer propositions and better predicting customer demand through our AI orchestration platform, which connects and controls distributed assets and IoT devices, and by applying advanced data analytics capability. • Origin contributes to the policy process with federal, state and territory governments by actively participating in public policy debate, proactively engaging with policy makers and participating in public forums, industry associations, think tanks and research. • Origin advocates directly with key members of governments, opposition parties and bureaucrats to achieve sound policy outcomes aligned with our Purpose and commercial objectives. Origin also makes formal submissions to relevant government policy inquiries. • Origin actively and publicly promotes the customer and economic benefits that flow from our activities in deregulated energy markets. Operating and Financial Review 45 Climate risks Climate change risk is considered a strategic risk for Origin. Under the Task Force on Climate-related Financial Disclosures (TCFD) framework, Origin’s climate-related risks can be classified as transitional or physical. Many of Origin’s climate-related risks are managed within our existing risks and the table below provides a summary of our climate-related risks under the TCFD's categories. TCFD Risk Type Consequences Management Transition Risks Policy and Legal Risk time horizon: Short – Medium Changes to government policy and regulation in relation to, and resulting from, climate change may present risks and opportunities for Origin, including: • regulatory intervention in the national electricity and gas markets; • carbon pricing (including carbon markets, border adjustment and taxes); the emergence of new climate-related legislation or reporting requirements; • government investment in energy infrastructure and generation including partnerships; • government grants and subsidies to innovate and incentivise market development; and • development approvals and planning and zoning laws. These changes may impact Origin's asset values, operating costs, or investment decisions. There is an increased risk of climate change-related litigation globally and in Australia. Any litigation would incur legal costs and potential fines, compensation payments or settlement costs and may directly or indirectly influence future operational strategy. • Origin has committed to updating its emissions reduction targets to be consistent with a 1.5°C pathway. • Origin continues to advocate for coordinated and long- term energy policy at the national level to give industry the confidence to invest in new electricity generation and gas supply. • Origin engages proactively with all levels of government and regulatory bodies on energy and climate policy, including through policy submissions, participating in think tanks, research and various industry associations. This consultation helps to support government responses in a rapidly evolving landscape. • Climate-related commitments and disclosures are regularly reviewed and updated to take into consideration up to date science, regulatory requirements and stakeholder expectations. • Scenario based planning and portfolio assessment is carried out. Technology Risk time horizon: Short – Long The development of new technologies may be required to assist Origin to meet its medium to long-term decarbonisation targets, however there is uncertainty regarding the efficacy, timing, and cost of available technologies. The growth of low emissions technologies, distributed generation, and demand management enabled by technologies could result in lower demand (and revenue) for existing products however these also present new market opportunities and revenue streams. Market Risk time horizon: Short - Medium The energy transition represents a period of significant change and volatility which presents both risks and opportunities for Origin. The ongoing decarbonisation of energy markets and lower demand for fossil fuels in some markets could result in: • • the reduced lifespan of existing carbon-intensive assets and potential for stranded assets; the continued electrification of some sectors that currently depend on fossil fuels, with potential to increase overall demand for electricity; • a change in the competitive landscape and the development of new markets and business models that Origin can participate in, as cleaner fuels, renewables, storage, and distributed generation markets evolve; and • energy market price volatility, as both the volume and source of energy supply and demand shift. Origin's response to these market changes may have a positive or negative influence on our future financial prospects including our earnings, asset values, and investments. Origin's financial performance during the energy transition will also be influenced by the timely and affordable access to: • capital to support our strategy and growth aspirations; • • land and infrastructure, including the necessary network transmission capacity to enable investment in renewables and other third-party infrastructure; and the necessary inputs (including skills, commodities, and other supplies) in an ethical manner to develop renewable and cleaner energy assets. • Origin participates in local and global start-up accelerator programs, trialling new energy technology and exploring investments in new products or business models. • Origin is growing its offerings in emerging technologies and markets. • More details are in the ‘Technological developments / disruption’ strategic risk above. • Our aim is to transition through cleaner energy and customer solutions. • Origin is focused on growing our offering of low carbon solutions, including solar and batteries, electric vehicles and demand management, that help our customers decarbonise. We are also accelerating growth in renewables and cleaner energy, by aiming to grow our portfolio of renewables and storage and exploring both domestic and export market opportunities for renewable hydrogen and ammonia. • All major Origin capital expenditure and investment decisions are tested against a range of climate-related scenarios and incorporate a price on carbon. Climate change scenario analysis plays a role in our assessment of the assets we should hold, invest in, dispose of and acquire. • Origin aims to deploy capital in areas that deliver value to shareholders and are consistent with our strategy, targets and ambition. • Origin is investing in new technology to support our ability to manage the supply / demand balance in the electricity market. This includes scaling an artificial intelligence orchestration platform, or VPP, which connects, and controls distributed assets and IoT devices, and applying advanced data analytics capability to smart meter data to better predict customer demand and develop data-based customer propositions. The VPP provides Origin with an important tool to manage the supply/demand balance in the electricity market. 46 Annual Report 2022 TCFD Risk Type Consequences Management Transition Risks Reputation Risk time horizon: Short Our decarbonisation targets and climate change strategy may fail to meet stakeholder expectations. This includes the timing and alignment of our portfolio decisions, particularly in relation to the role of gas as a transition fuel, and how we set, measure and report on climate change targets. This could result in: • increased cost of, or restricted access to, debt and equity capital and insurance; • adverse impacts to our social licence to operate, and our reputation among communities and with our customers; and • challenges attracting and retaining talent. Physical Risks Chronic Risk time horizon: Short – Long Changing weather patterns may influence the demand for energy, which could impact Origin’s revenues and future financial performance. Acute Risk time horizon: Short – Long Changing and more frequent and severe weather conditions, including floods, droughts, bushfires, and extreme temperature events could disrupt our operations or impact the efficacy of our assets, leading to increased operating costs, increased maintenance and capital expenditure, and higher insurance costs or restrictions on the ability access insurance. • Origin has committed to updating its medium-term emissions reductions target consistent with a 1.5°C pathway. We also have a short-term emissions reduction pathway linked to executive remuneration, and aim to be net zero by 2050. This will contribute to Origin’s reputation as being responsive to climate change risks. • Origin has been using the TCFD as the framework for our external climate disclosures since 2018, and in 2022 will publish a Climate Transition Action Plan (CTAP) that will be put to a non-binding, advisory shareholder vote at the 2022 Annual General Meeting. The CTAP will include Origin's updated emissions reduction targets and ambitions. • Origin proactively engages with our capital providers and other financial stakeholders to ensure they are well informed of our climate change strategy, commitments and targets. • Origin engages with communities to understand, mitigate, and report on environmental risks associated with its projects and operations, including relating to climate change. • Origin is applying advanced data analytics capability to better predict customer demand and increasing our supply of renewables and flexible capacity to meet changes in demand. • More details are in the ‘Changes in demand for energy’ strategic risk above. • Origin has extreme weather event preparation processes including comprehensive seasonal readiness activities and emergency response plans. • Our operational planning and design processes incorporate extreme weather events, while investment decisions for major growth projects. incorporate potential financial losses from natural disasters. Time horizons: Short-term: up to three years; Medium-term: three to 10 years; Long-term: beyond 10 years Operating and Financial Review 47 Financial risks Financial risks are the risks that directly impact the financial performance and resilience of Origin. Consequences Management Risk Commodity Foreign exchange and interest rates Origin has a long-term exposure to international oil, LNG and gas prices through the sale and purchase of domestic gas, LNG and LPG, and its investment in APLNG. Pricing can be volatile and downward price movements can impact cash flow, financial performance, reserves and asset carrying values. Some of Origin’s long-term domestic gas purchase agreements and APLNG’s LNG sale agreements contain periodic price reviews. Following each review, pricing may be adjusted upwards or downwards, or it may remain unchanged. Prices and volumes for electricity that Origin sources to on-sell to customers are volatile and are influenced by many factors that are difficult to predict. Fluctuations in coal and gas prices also impact the margins of Origin's generation portfolio. Energy Markets also has exposures to contracted volumes of coal not being delivered which could result in lower output or higher costs to meet customer demand. Different commodity prices that have historically moved in a correlated fashion may see that correlation break down. It would disadvantage Origin if the domestic wholesale energy costs incurred by Energy Markets were high, but the international oil and LNG prices obtained by APLNG were low. Origin has exposures through principal debt and interest payments associated with foreign currency and Australian dollar borrowings, through the sale and purchase of gas, LNG and LPG, and through its investments in APLNG and Octopus. Interest rate and foreign exchange movements could lead to a decrease in revenues or increased payments in Australian dollar terms. Liquidity and access to capital markets Origin’s business, prospects and financial flexibility could be adversely affected by a failure to appropriately manage its liquidity position, or if markets are not available at the time of any financing or refinancing requirement. Credit and counterparty Some counterparties may fail to fulfil their obligations (in whole or part) under major contracts. • Commodity exposure limits are set by the Board to manage the overall financial exposure that Origin is prepared to take. • Origin's commodity risk management process monitors and reports performance against defined limits. • Commodity price risk is managed through a combination of physical positions and derivatives contracts. • For each periodic price and supply review, a negotiation strategy is developed, which takes into account external market advice and utilises both external and in- house expertise. • Risk limits are set by the Board to manage the overall exposure. • Origin's treasury risk management process monitors and reports performance against defined limits. • Foreign exchange and interest rate risks are managed through a combination of physical positions and derivatives. • Origin actively manages its liquidity position through cash flow forecasting and maintenance of minimum levels of liquidity as determined under Board approved limits. • Counterparty risk assessments are regularly undertaken and where appropriate, credit support is obtained to manage counterparty risk. • Australian Energy Market Operator (AEMO) credit is managed daily to ensure compliance with the market rules, ensuring management forecast the collateral required to continue to meet spot market obligations for all AEMO markets. 48 Annual Report 2022 Operational risks Operational risks arise from inadequate or failed internal processes, people or systems or from external events. Risk Consequences Management Safe and reliable operations Environmental and Social Origin has exposure to reliability or major accident events that may impact our licence to operate or financial prospects. This includes loss of containment, cyber-attack and security incidents, unsafe operations, and natural hazards and events that may result in harm to our people, environmental damage, additional costs, production loss, third-party impacts, and impact to our reputation. A production outage or constraint, network or IT systems outage, would affect Origin's ability to deliver electricity and gas to its customers. A serious incident or a prolonged outage may also damage Origin’s financial prospects and reputation. An environmental incident or Origin’s failure to consider and adequately mitigate the environmental, social and socio- economic impacts on communities and the environment has the potential to cause environmental impact, community action, regulatory intervention, legal action, reduced access to resources and markets, impacts to Origin’s licence to operate and reputation and increased operating costs. Community concerns regarding environmental and social impacts associated with our activities may also give rise to unrest amongst community stakeholder groups and activism which may impact the company's reputation. A third party’s actions may also result in delay in Origin carrying out its approved development and operational activities. NGOs, landholders, community members and other affected parties can seek to prevent or delay Origin’s activities through court litigation, preventing access to land and extending approval pathway time frames. Cyber security A cyber security incident could lead to a breach of privacy, loss of and/or corruption of commercially sensitive data, and/or a disruption of critical business processes. This may adversely impact customers and the Company’s business activities. • Core operations are subject to a comprehensive framework of controls and operational performance monitoring to manage the design, operational and technical integrity of our assets and associated operational activities. Origin’s standards and controls are designed to ensure it meets regulatory and industry standards in all operations. • Origin personnel are appropriately trained and licensed to perform their operational activities. • Origin maintains an extensive insurance program to mitigate consequences by partially transferring financial risk exposure to third parties where commercially appropriate. • Origin engages with communities to understand, mitigate and report on environmental and social risks associated with its projects and operations. • At a minimum, the management of environmental and social risks meets regulatory requirements. Where practical, our management extends to the improvement of environmental values and the creation of socio- economic benefits. • Origin has a cultural awareness learning framework to build awareness of Aboriginal and Torres Strait Islander cultures, histories and achievements. Origin maintains and implements Native Title Agreements and Cultural Heritage Management Plans with Traditional Owners where appropriate. Engagement with impacted groups and consideration of cultural heritage protection is undertaken as part of ongoing operations and at project stage gates. • A dedicated Board Committee oversees safety and sustainability. The Committee receives regular reporting of the highest rated environmental risks and mitigants, and reviews significant incidents and near misses. The Committee also receives periodic updates on our engagement with Traditional Owners. • Origin engages with its stakeholders prior to seeking relevant approvals for its development and operational activities, and this engagement continues through the life of the project and during operations. • A cyber security strategy is in place and is regularly updated to cater for emerging threats, security regulation and stakeholder expectations. • A robust security monitoring and incident response process exists and is exercised on a regular basis. In the event of an incident, Origin is supported by an external incident response and forensics firm. • Origin undertakes regular independent security assurance to assess the resilience of our digital channels and internal security controls. • Employees undertake compulsory cyber awareness training, including how to identify phishing emails and keep data safe; and are subject to a regular program of random testing. Operating and Financial Review 49 Risk Consequences Management APLNG gas reserves, resources and deliverability There is uncertainty about the productivity, and therefore economic viability, of resources and developed and undeveloped reserves. As a result, there is a risk that actual production may vary from that estimated, and in the longer term, that there will be insufficient reserves to supply the full duration and volumes to meet contractual commitments. As at 30 June 2022 APLNG’s identified reserves and resources are estimated to be greater than its contractual supply commitments on a volume basis. However, given the inherent uncertainty in forecasting future production rates, there is a risk that the rate of gas delivery required to meet APLNG’s committed gas supply agreements may not be able to be met for the later years in the life of existing contracts. • APLNG integrates all available subsurface data to develop insights into regional prospectivity allowing identification and prioritisation of plays and prospects for exploration to mature contingent and prospective resources. • APLNG monitors reservoir performance and adjusts development plans accordingly. APLNG continually takes steps to further strengthen the supply base such as lowering costs and identifying new plays. • APLNG is progressing an exploration campaign that if successful, could increase long term supply. • APLNG continues to review business development opportunities for long term gas supply, and has the ability to substitute gas or LNG to meet contractual requirements if required. Conduct Unlawful, unethical or inappropriate conduct that falls short of community expectations could result in penalties, reputational/ brand damage, loss of customers and adverse financial impacts. • Origin’s people are trained on the laws and regulations that apply to their activities and operations or on the processes that underpin compliance with laws and regulations. Origin’s financial prospects and operations are underpinned by our licence to operate which requires compliance with stakeholder commitments, regulations, and laws for example requirements for dealing with vulnerable customers, privacy, and insider trading. Joint venture Third party joint venture operators may have economic or other business interests that are inconsistent with Origin’s own and may take actions contrary to the Company’s objectives, interests or standards. This may lead to potential financial, reputational and environmental damage in the event of a serious incident. • Origin’s Purpose, Values, Behaviours and Code of Conduct guide conduct and decision making across Origin. • All Origin’s people are trained in our Code of Conduct, and we conduct training for insider trading, privacy and competition and consumer law every year. • Conduct risk and Compliance are identified as material risks within Origin’s risk management framework and are regularly reported to the Board Risk Committee. Controls specific to the different parts of Origin’s business are the accountability of Business Units and are subject to assurance activities, including Internal Audit. • Origin applies a number of governance and management standards across its various joint venture interests to provide a consistent approach to managing them. • Origin actively monitors and participates in its joint ventures through participation in their respective boards and governance committees. 50 Annual Report 2022 8 APLNG reversion In 2002, APLNG acquired various CSG interests from Tri-Star that are subject to reversionary rights and an ongoing royalty in favour of Tri-Star. If triggered, the reversionary rights require APLNG to transfer back to Tri-Star a 45 per cent interest in those CSG interests for no additional consideration. The reversion trigger will occur when the revenue from the sale of petroleum from those CSG interests, plus any other revenue derived from or in connection with those CSG interests, exceeds the aggregate of all expenditure relating to those CSG interests plus interest on that expenditure, royalty payments and the original acquisition price. The affected CSG interests represent approximately 20 per cent of APLNG’s 3P CSG reserves (as at 30 June 2022), and approximately 20 per cent of APLNG’s 2P CSG reserves (as at 30 June 2022). Tri-Star served proceedings on APLNG in 2015 (‘reversion proceeding’) claiming that reversion occurred as early as 1 November 2008 following ConocoPhillips’ investment in APLNG, on the assertion that the equity subscription monies paid by ConocoPhillips, or a portion of them, were revenue for purposes of the reversion trigger. Tri-Star has also claimed in the alternative that reversion occurred in 2011 or 2012 following Sinopec’s investment in APLNG. These claims are referred to in this document as Tri-Star’s "past reversion" claims. Tri-Star has made other claims in the reversion proceeding against APLNG relating to other aspects of the reversion trigger (including as to the calculation of interest, calculation of revenue and the nature and quantum of APLNG’s expenditures that can be included), the calculation of the royalty payable by APLNG to Tri-Star, rights in respect of infrastructure, and claims relating to gas sold by APLNG following the alleged reversion dates. APLNG denies these claims and is defending the proceedings. If Tri-Star’s past reversion claims are successful, then Tri-Star may be entitled to an order that reversion occurred as early as 1 November 2008. If the court determines that reversion has occurred, then APLNG may no longer have access to the reserves and resources that are subject to Tri-Star’s reversionary interests and may need to source alternative supplies of gas (including from third parties) to meet its contracted commitments. There are also likely to be a number of further complex issues that would need to be resolved as a consequence of any such finding in favour of Tri-Star. These matters will need to be determined by the court (either in the current or in separate proceedings) or by agreement between the parties, and they include: • • • the terms under which some of the affected CSG interests will be operated where currently there are no joint operating agreements in place; the amount of Tri-Star’s contribution to the costs incurred by APLNG in exploring and developing the affected CSG interests between the date of reversion and the date of judgment, which APLNG has stated in its defence and counter-claim are in the order of $4.56 billion (as at 31 December 2019) if reversion occurred on 1 November 2008; and the consequences of APLNG having dealt with Tri-Star’s reversionary interests between the date of reversion and the date of judgment, including the gas produced from them. Tri-Star has: – estimated the value of such gas which it has been unable to take since the alleged reversion, calculated by reference to the sale of gas as LNG and gas to domestic customers, to be approximately $3.37 billion (as at 31 March 2019) and approximately $1.3 billion per annum thereafter. In the alternative, Tri-Star claims that the value of such gas should be assessed by reference to the revenue derived by APLNG or its affiliates from LNG sales since the alleged reversion, being approximately $2.5 billion (as at March 2019), or $2.4 billion (as at March 2019) if the proceeds from the sale of LNG is determined to be calculated net of liquefaction costs; and – alleged that it should be paid the value of such gas or is otherwise entitled to set-off the value of such gas from any amount owing to APLNG arising from APLNG’s counter-claim for contribution to the costs incurred by APLNG in exploring and developing the affected CSG interests between the date of reversion and the date of judgement; and • • • if reversion occurred: the extent of the reversionary interests principally with respect to Tri-Star’s ownership and/or rights to use or access certain project infrastructure; and the repayment by Tri-Star of the ongoing royalty which has been paid by APLNG since reversion, resulting from its mistake as to the occurrence of the reversion trigger. If APLNG is successful in defending Tri-Star’s past reversion claims in the reversion proceeding, the potential for reversion to otherwise occur in the future in accordance with the reversion trigger will remain. In 2017, Tri-Star commenced separate proceedings against APLNG (‘markets proceeding’) which allege that APLNG breached three CSG joint operating agreements by failing to offer Tri-Star (and the other minority participants in those agreements) an opportunity to participate in the “markets” alleged to be constituted by certain of its LNG and domestic gas sales agreements, including the Sinopec and Kansai LNG sale agreements entered into by APLNG in 2011 and 2012. Tri-Star has alleged that it should have been offered participation in those sales agreements for its share of production from those three CSG joint ventures referable to both its small participating interests and its reversionary interests in those joint ventures. In September 2019, Tri-Star made further claims in the markets proceeding relating to: • the nature and scope of the obligations of APLNG as operator pursuant to the CSG joint operating agreements; • Tri-Star’s ownership and/or rights to use or access certain project infrastructure; and • APLNG’s entitlement as operator to charge (both historically and in the future) certain categories of costs under the relevant CSG joint operating agreements. Tri-Star is seeking, amongst other things, damages and/or an order that APLNG offer Tri-Star (and the other minority participants in those CSG joint operating agreements) the opportunity to participate in those sales agreements for their proportionate share of production from those three CSG joint ventures. APLNG denies these claims and is defending these proceedings. APLNG filed defences and counterclaims in both proceedings in April and May 2020. In December 2020, Tri-Star filed replies and answers in both proceedings. APLNG filed its rejoinders in the reversion proceeding and the markets proceeding in February and April 2021 respectively. APLNG filed a further amended defence and counterclaim in the reversion proceeding in December 2021. In September 2021, Tri-Star filed and served an application in both proceedings for questions to be determined separately (or further or alternatively referred to a referee to conduct an inquiry into and prepare a report to the court on those questions). The questions proposed for separate determination in those applications include the issue of whether the 2008 ConocoPhillips subscription monies are revenue for the purposes of the calculation of the reversion trigger. APLNG opposed those applications. The applications were heard in April 2022 and judgement has been reserved. Origin expects that the court will wait for the applications to be finally Operating and Financial Review 51 determined before making further orders for the conduct of the two proceedings (which Origin expects will continue to be managed in parallel). The necessary steps to prepare for a trial (whether as to all disputed issues or discrete questions) usually include document disclosure, evidence preparation and exchange and pre-trial mediation. The process that will ultimately be followed (and the procedural timetable) is difficult to predict at this stage. If APLNG is not successful in defending all or some of the claims being made in the proceedings by Tri-Star, APLNG’s financial performance may be materially adversely impacted and the amount and timing of cash flows from APLNG to its shareholders, including Origin, may be significantly affected. Each underlying measure disclosed has been adjusted to remove the impact of these items on a consistent basis. A reconciliation and description of the items that contribute to the difference between Statutory Profit and Underlying Profit is provided in Section 5.1 of this OFR. Certain other non-IFRS financial measures are also included in this OFR. These non-IFRS financial measures are used internally by management to assess the performance of Origin’s business and make decisions on allocation of resources. Further information regarding the non-IFRS financial measures is included in the Glossary of this OFR. Non-IFRS financial measures have not been subject to audit or review. Certain comparative amounts from the prior corresponding period have been re-presented to conform to the current period's presentation. Emissions data Origin reports its Scope 1 and Scope 2 emissions under the National Greenhouse and Energy Reporting Act, 2007 (NGER)20. Origin calculates Scope 3 emissions based on the Greenhouse Gas Protocol’s Corporate Value Chain (Scope 3) Accounting and Reporting Standard21 and Scope 3 guidance documents22. Due to the inherent uncertainty and limitations in measuring emissions under the calculation methodologies used in the preparation of such data, all emissions data or references to emissions volumes (including ratios or percentages) in this presentation are estimates. Where data is not available due to timing, Origin applies a reasonable estimation methodology. Where applicable, Origin revises prior year data to update prior estimates and align with external reporting requirements such as NGER. 9 Important information Forward looking statements This Operating and Financial Review (OFR) contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events and future financial prospects. Such statements are not statements of fact and there can be no certainty of outcome in relation to the matters to which the statements relate. Forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements, and the outcomes are not all within the control of Origin. Statements about past performance are not necessarily indicative of future performance. Neither the Company nor any of its subsidiaries, affiliates and associated companies (or any of their respective officers, employees or agents) (the ‘Relevant Persons’) makes any representation, assurance or guarantee as to the accuracy, completeness or likelihood of fulfilment of any forward looking statement any assumption on which a forward looking statement is based. The forward looking statements in this OFR reflect views held only at the date of this report and except as required by applicable law, the Relevant Persons disclaim any obligation or undertaking to publicly update any forward looking statements whether as a result of new information or future events. Information on likely developments in the Company’s business strategies, prospects and operations for future financial years and the expected results that could result in unreasonable prejudice to the Company (for example, information that is commercially sensitive, confidential or could give a third party a commercial advantage) has not been included in this OFR. The categories of information omitted include forward-looking estimates and projections prepared for internal management purposes, information regarding the Company’s operations and projects, which are developing and susceptible to change, and information relating to commercial contracts. Non-IFRS financial measures This OFR and Directors’ Report refers to Origin’s financial results, including Origin’s Statutory Profit and Underlying Profit. Origin’s Statutory Profit contains a number of items that when excluded provide a different perspective on the financial and operational performance of the business. Income Statement amounts, presented on an underlying basis such as Underlying Profit, are non-IFRS financial measures, and exclude the impact of these items consistent with the manner in which senior management reviews the financial and operating performance of the business. 20 National Greenhouse and Energy Reporting NGER (cleanenergyregulator.gov.au) 21 Corporate Value Chain (Scope 3) Standard | Greenhouse Gas Protocol (ghgprotocol.org) 22 Scope 3 Calculation Guidance | Greenhouse Gas Protocol (ghgprotocol.org) 52 Annual Report 2022 Appendix 1 Deferred Tax Liability - investment in APLNG During the year the MRCPS were fully redeemed, with $433 million being received by way of unfranked dividends. The ordinary dividends will be unfranked until APLNG starts paying income tax, which is expected to occur in the next few years. An income tax expense of $130 million was recognised during the year in respect of these unfranked dividends distributed out of APLNG’s current year earnings. There an unrecognised deferred tax liability in respect of our investment in APLNG because the accounting cost base of the investment is higher than the tax cost base. The accounting carrying value has been augmented, primarily as a result of our equity accounted share of retained profits to date, while the tax cost base reflects only the cash outlaid. Consistent with accounting standards, the deferred tax liability has not been recognised historically because 1. Origin is able to control the timing of distributions from APLNG which would reverse the temporary difference; and 2. it has not been probable that the temporary difference will reverse in the foreseeable future via dividends paid from current retained earnings, capital returns or a disposal. As it had become probable in FY2021 that APLNG would begin to distribute cash to shareholders via dividends in the coming years, Origin recognised a deferred tax liability of $669 million. During the period, the recognised deferred tax liability was reduced by $178 million, reflecting the deferred tax liability associated with the 10 per cent share of APLNG divested, and an additional amount of $217 million was recognised, reflecting improved outlook for distributable cash flows from APLNG. This has resulted in a net tax expense and a net increase in the recognised deferred tax liability of $39 million. As at 30 June 2022 we have a deferred tax liability on the balance sheet of $708 million, representing 30 per cent of the dividends expected to be paid by APLNG in the foreseeable future from the carried forward equity accounted earnings based on current market assumptions, including future oil prices, at our residual interest of 27.5 per cent. Recognition of the deferred tax liability only impacts the timing of accounting for the tax expense and has no impact on the underlying economics or cash flows. There is a remaining unrecognised deferred tax liability at 30 June 2022 of $685 million which may be partly or fully recognised in the future. Going forward, when Origin receives unfranked dividends from APLNG, the proportion paid from earnings in that year will give rise to a tax expense, and the balance attributable to carried forward equity accounted earnings will result in partial utilisation of the deferred tax liability. 2 Accounting for large-scale generation certificate trading strategy Supply and demand for large-scale generation certificates (LGCs) is driven by the rate of new renewable projects coming online, voluntary demand for carbon offsets as well as the compliance obligations under the Large-scale Renewable Energy Target (LRET). Renewable project delays and generation curtailments have led to a near-term tightening of the LGC market. However, it is expected that the 33 TWh legislated target will be exceeded and longer term the market will be oversupplied. The Clean Energy Regulator has acknowledged this and provides the option for parties to shift demand from periods of tight supply by deferring the surrender of certificates to later years. Under the scheme, parties can defer up to 10 per cent of their obligation at no additional cost and can defer more than 10 per cent by incurring a shortfall charge of $65 per certificate that is refundable provided the LGCs are surrendered within three years. Refunds are now non-assessable for tax following legislative change and aligns with the non-deductible treatment of the shortfall charge. This presents an economic opportunity with the LGC forward curve in backwardation and Origin has elected to defer surrender of 2.5 million CY2020 certificates in February 2021 and 3.6 million CY2021 certificates in February 2022. Origin also expects to defer approximately 2.8 million CY2022 certificates due for surrender in February 2023. FY2022 impact During FY2022, a shortfall charge of $236 million was paid in relation to CY2021 certificates of which $102 million was accrued in FY2021, and a further $92 million was accrued in relation to the first half of CY2022. Included in the FY2022 Underlying Profit is a cost of $74 million, reflecting the estimated future surrender cost, based on a weighted average of the current forward price and purchases to date, comprising: • 1.6 million CY2021 certificates recorded in FY2021 repriced from $12 to $20; • 2 million CY2021 certificates at $20/certificate; and • ~ 1.4 million CY2022 certificates at $14/certificate (estimate for the first half of CY2022). The balance of $151 million is excluded from Underlying Profit. FY2023 impact Subject to changes in volume and forward price estimates, we expect to incur a further $92 million for the shortfall charge for the second half of CY2021. A cost of $20 million will be recognised in FY2023 Underlying Profit and the balance of $72 million will be excluded from Underlying Profit. Future surrender cost will continue to be reassessed each reporting period. Operating and Financial Review 53 Statutory Profit ($m) Adjustment ($m) Underlying Profit ($m) CY2020 and CY2021 certificates shortfall Shortfall charge (~4.1 million certificates x $65; $160 million paid and $102 million accrued) (262) Expected surrender cost (~2.5 million CY2020 certificates x $19) Expected surrender cost (~1.6 million CY2021 certificates x $12) FY2021 impact Reassessment of FY2021 impact, remaining CY2021 certificates shortfall and CY2022 certificates shortfall Shortfall charge accrued (~3.5 million certificates x $65; $236 million paid and $92 million accrued) Reassessment of CY2021 shortfall recorded in FY2021 (~1.6 million certificates x $8) Expected surrender cost (~2 million CY2021 certificates x $20) Expected surrender cost (~1.4 million CY2022 certificates x $14) FY2022 impact Remaining CY2022 certificates shortfall Shortfall charge accrued (~1.4 million certificates x $65) Expected surrender cost (~1.4 million certificates x $14) FY2023 impact CY2020 certificates surrender Surrender (~2.5 million certificates x $19) Shortfall refund (~2.5 million certificates x $65) FY2024 impact CY2021 certificates surrender Surrender (~3.6 million certificates x $20) Shortfall refund (~3.6 million certificates x $65) FY2025 impact CY2022 certificates surrender Surrender (~2.8 million certificates x $14) Shortfall refund (~2.8 million certificates x $65) FY2026 impact Total cost of ~8.9 million certificates - - (262) (225) - (225) (92) (92) (46) 160 114 (72) 235 163 (40) 184 144 (158) 262 (46) (18) 198 225 (13) (41) (20) 151 92 (20) 72 46 (160) (114) 72 (235) (163) 40 (184) (144) - (46) (18) (64) - (13) (41) (20) (74) - (20) (20) - - - - - - - - - - (158) 54 Annual Report 2022 Directors’ Report For the year ended 30 June 2022 The Dividend Reinvestment Plan (DRP) will not operate for the FY2022 final dividend. 4 Directors and Company Secretary The Directors of the Company at any time during or since the end of the financial year, their qualifications, experience and special responsibilities are set out on pages 6 and 7. The qualifications and experience of the Company Secretary is also set out below: Scott Perkins Independent Non-executive Chairman Frank Calabria Managing Director and Chief Executive Officer John Akehurst (retired 20 October 2021) Independent Non-executive Director Ilana Atlas Independent Non-executive Director Maxine Brenner Independent Non-executive Director Greg Lalicker Independent Non-executive Director Mick McCormack Independent Non-executive Director Bruce Morgan Independent Non-executive Director Steven Sargent Independent Non-executive Director Nora Scheinkestel  (appointed 4 March 2022) Independent Non-executive Director Joan Withers Independent Non-executive Director Helen Hardy Company Secretary Helen Hardy joined Origin in March 2010. She was previously General Manager, Company Secretariat of a large ASX-listed company, and has advised on governance, financial reporting and corporate law at PwC and Freehills. Helen is a Chartered Accountant, Chartered Secretary and a Graduate Member of the Australian Institute of Company Directors. Helen is a director of the Governance Institute of Australia and a member of its Legislative Review Committee. She holds a Bachelor of Laws and a Bachelor of Commerce from the University of Melbourne, a Graduate Diploma in Applied Corporate Governance and is admitted to legal practice in New South Wales and Victoria. In accordance with the Corporations Act 2001 (Cth), the Directors of Origin Energy Limited (Company) report on the Company and the consolidated entity Origin Energy Group (Origin), being the Company and its controlled entities for the year ended 30 June 2022. The Operating and Financial Review and Remuneration Report form part of this Directors’ Report. 1 Principal activities, review of operations and significant change in state of affairs During the year, the principal activity of Origin was the operation of energy businesses including exploration and production of natural gas, electricity generation, wholesale and retail sale of electricity and gas, and sale of liquefied natural gas. There have been no significant changes in the nature of those activities during the year and no significant changes in the state of affairs of the Company during the year. The Operating and Financial Review, which forms part of this Directors’ Report, contains a review of operations during the year and the results of those operations, the financial position of Origin, its business strategies, and prospects for future financial years, including likely developments in Origin’s operations in future financial years and the expected results of those operations. 2 Events subsequent to balance date Other than the matters described below, no matters or circumstances have arisen since 30 June 2022, which have significantly affected, or may significantly affect, the Company’s operations, the results of those operations or the Company’s state of affairs in future financial years. On 26 July 2022 Origin announced an additional investment of £94 million (approximately A$163 million) in Octopus Energy Group Limited to maintain its 20 per cent equity interest. On 18 August 2022, the Directors determined a final dividend of 16.5 cents per share, partially franked to 75 per cent, on ordinary shares. The dividend will be paid on 30 September 2022. 3 Dividends a. Dividends paid during the year by the Company were as follows: $ million 132 220 7.5 cents per ordinary share, unfranked, for the full year ended 30 June 2021, paid 1 October 2021 12.5 cents per ordinary share, unfranked, for the half year ended 31 December 2021, paid 25 March 2022 b. In respect of the current financial year, the Directors have determined a final dividend as follows: 16.5 cents per ordinary share, partially franked to 75 per cent, for the full year ended 30 June 2022 payable 30 September 2022 $ million 284 Directors’ Report 55 5 Directors' meetings The number of Directors’ meetings, including Board committee meetings, and the number of meetings attended by each Director during the financial year, are shown in the table below: Directors J Akehurst3 I Atlas M Brenner F Calabria G Lalicker B Morgan M McCormack S Perkins S Sargent N Scheinkestel4 J Withers Scheduled Additional Audit Sustainability Nomination Safety & Remuneration, People & Culture Risk H1 A2 H1 A2 H1 A2 H1 A2 H1 A2 H1 A2 H1 A2 3 8 8 8 8 8 8 8 8 3 8 3 8 8 8 8 8 8 8 8 2 8 1 5 5 5 5 5 5 5 5 2 5 1 5 5 5 5 5 5 5 5 2 4 - - 4 - - 4 4 4 - 1 4 - - 4 - - 4 4 4 - 1 4 1 - 3 4 3 1 4 4 4 - - 1 - 3 4 3 1 4 4 4 - - 1 - 3 - - 3 - 3 3 1 2 1 - 3 - - 3 - 3 3 1 2 - 3 2 - 2 - 5 5 5 - - - 3 2 - 2 - 5 5 5 - - 2 2 5 - - 5 - 5 5 2 5 2 2 5 - - 5 - 5 5 2 5 1 Number of meetings held during the time that the Director held office or was a member of the Committee during the year. 2 Number of meetings attended. 3 Prior to the date of retirement on 20 October 2021. 4 From the date of appointment on 4 March 2022. The Board held eight scheduled meetings, including an annual strategic review and five additional meetings to deal with urgent matters. There were also two scheduled workshops. In addition, the Board conducted in-person and virtual visits of Company operations at various sites and met with operational management during the year. 6 Directors’ interests in shares, Options and Rights The relevant interests of each Director as at 30 June 2022 in the shares and Options or Rights over such instruments issued by the companies within the consolidated entity and other related bodies corporate at the date of this report are as follows: Director I Atlas M Brenner F Calabria G Lalicker B Morgan M McCormack S Perkins S Sargent N Scheinkestel J Withers Ordinary shares held directly and indirectly 50,000 28,367 595,361 100,000 47,143 100,000 80,000 41,429 33,365 26,000 Restricted shares Options over ordinary shares - - - - Performance Share Rights (PSR) over ordinary shares Restricted Share Rights (RSR) over ordinary shares - - - - 444,281 401,2881 872,1471 419,4031 - - - - - - - - - - - - - - - - - - - - - - - - - 1 The Exercise price for Options is $7.37 and the Exercise price for Rights is Nil. No Director other than the Managing Director and Chief Executive Officer participates in the Company’s Equity Incentive Plan. 56 Annual Report 2022 Securities granted by Origin Non-executive Directors do not receive Options or Rights as part of their remuneration. Non-executive Directors are eligible to participate in the Non-executive Director Share Plan (NEDSP). During the year, one Non-executive Director elected to participate in the NEDSP, however the first allocation of Rights is not expected until FY23. The following securities were granted to the five most highly remunerated officers (other than Directors) of the Company during the year ended 30 June 2022: J Briskin G Jarvis A Lucas A Thornton L Tremaine Restricted Shares Performance Share Rights Restricted Share Rights Matching Share Plan Rights1 93,252 73,170 46,858 22,713 104,872 77,331 79,049 63,067 24,794 87,385 77,331 79,050 63,069 24,792 87,384 443 443 - 443 443 1 Matching Share Plan Rights were granted in accordance with the Origin Employee Share Plan rules and disclosed to the ASX at the time of grant. The Employee Share Plan is available to all eligible Origin employees. Refer to Section 3.8 of the Remuneration Report for further details. The awards of Restricted Shares, Performance Share Rights, and Restricted Share Rights were made in accordance with the Company’s Equity Incentive Plan as part of the relevant Executive’s remuneration. Further details on Rights granted during the financial year, and unissued shares under Options and Rights, are included in Section 7 of the Remuneration Report. No Options or Rights were granted since the end of the financial year. Origin shares issued on the exercise of Options and Rights Options No Options granted under the Equity Incentive Plan were exercised during or since the year ended 30 June 2022, so no ordinary shares in Origin were issued as a result. Rights 662,907 ordinary shares of Origin were allocated from the Origin Energy Limited Employee Share Trust during the year ended 30 June 2022 on the vesting and exercise of RSRs and PSRs under the Equity Incentive Plan and Matching Share Plan Rights granted under the Employee Share Plan. No amounts were payable on the vesting of these RSRs, PSRs and Matching Share Plan Rights and, accordingly, no amounts remain unpaid in respect of any of those shares. Since 30 June 2022, 1,145 ordinary shares were allocated from the Origin Energy Limited Employee Share Trust on the vesting of Matching Share Plan Rights granted under the Employee Share Plan. All shares in the Origin Energy Limited Employee Share Trust were purchased on market. 7 Environmental regulation and performance The Company’s operations are subject to environmental regulation under Commonwealth, State, and Territory legislation. For the year ended 30 June 2022, the Company notified 17 environmental reportable incidents to the relevant regulators (Integrated Gas: 10 and Energy Supply and Operations: 7). All of these incidents resulted in minor environmental consequences with the appropriate level of investigation undertaken. All incidents are investigated, and lessons learned captured and shared across the Company. During the year ended 30 June 2022, Integrated Gas received one Environmental Protection Order, one penalty infringement notice, two breach notices, and nine formal warning letters from the Department of Environmental Science in Queensland. Directors’ Report 57 8 Indemnities and insurance for 10 Non-audit services Directors and Officers Under its Constitution, the Company may indemnify current and past Directors and Officers for losses or liabilities incurred by them as a Director or Officer of the Company or its related bodies corporate to the extent allowed under law. The Constitution also permits the Company to purchase and maintain a Directors’ and Officers’ insurance policy. No indemnity has been granted to an auditor of the Company in their capacity as auditor of the Company. The Company has entered into agreements with current Directors and certain former Directors whereby it will indemnify those Directors from all losses or liabilities in accordance with the terms of, and subject to the limits set by, the Constitution. The agreements stipulate that the Company will meet the full amount of any such liability, including costs and expenses to the extent allowed under law. The Company is not aware of any liability having arisen, and no claim has been made against the Company during or since the year ended 30 June 2022 under these agreements. During the year, the Company has paid insurance premiums in respect of Directors’ and Officers’ liability, and legal expense insurance contracts for the year ended 30 June 2022. The insurance contracts insure against certain liability (subject to exclusions) of persons who are or have been Directors or Officers of the Company and its controlled entities. A condition of the contracts is that the nature of the liability indemnified and the premium payable not be disclosed. 9 Auditor independence There is no former partner or director of EY, the Company’s auditors, who is or was at any time during the year ended 30 June 2022 an officer of the Origin Energy Group. The auditor’s independence declaration for the financial year (made under section 307C of the Corporations Act 2001 (Cth) is attached to and forms part of this Report. The amounts paid or payable to EY for non-audit services provided during the year was $879,000 (shown to the nearest thousand dollars). Amounts paid to EY are included in note G7 to the full financial statements. Based on written advice received from the Audit Committee Chairman pursuant to a resolution passed by the Audit Committee, the Board has formed the view that the provision of those non-audit services by EY is compatible with, and did not compromise, the general standards of independence for auditors imposed by the Corporations Act 2001 (Cth). The Board’s reasons for concluding that the non-audit services provided by EY did not compromise its independence are: • all non-audit services provided were subjected to the Company’s corporate governance procedures and were either below the pre- approved limits imposed by the Audit Committee or separately approved by the Audit Committee; • all non-audit services provided did not, and do not, undermine the general principles relating to auditor independence as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards; and • there were no known conflict of interest situations nor any other circumstance arising out of a relationship between Origin (including its Directors and Officers) and EY which may impact on auditor independence. 11 Proceedings on behalf of the Company The Company is not aware of any proceedings being brought on behalf of the Company, nor any applications having been made in respect of the Company under section 237 of the Corporations Act 2001 (Cth). 12 Rounding of amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and, in accordance with that class order, amounts in the financial report and Directors’ Report have been rounded off to the nearest million dollars unless otherwise stated. 13 Remuneration The Remuneration Report forms part of this Directors’ Report. 58 Annual Report 2022 Remuneration Report For the year ended 30 June 2022 The Remuneration Report for the year ended 30 June 2022 (FY2022) forms part of the Directors’ Report. It has been prepared in accordance with the Corporations Act 2001 (Cth) (the Act) and Accounting Standards, audited as required by section 308(3C) of the Act. Letter from the Chairman of the Remuneration, People and Culture Committee Dear Shareholder On behalf of the Remuneration, People and Culture Committee (RPCC) and the Board, I am pleased to present the Remuneration Report for FY2022. The Company has delivered solid results in another challenging year characterised by the extraordinary volatility of commodity prices and an uncertain regulatory environment. The higher earnings from Integrated Gas as Australia Pacific LNG (APLNG) benefited from strong commodity prices were offset by a decline in Energy Market earnings. These were associated, in part, with a decline in retail prices (Default Market Offers) set when wholesale prices were low during COVID-19 and the recent rise in fuel prices. The remuneration framework and governance processes have again shown that remuneration outcomes align with business outcomes and the shareholder experience. The remuneration framework has effectively dealt with the combination of market volatility, uncertainty and operational challenges during the period. FY2022 remuneration outcomes Although the operating environment presented significant and varying challenges during the year, Origin’s share price rose 27.1 per cent and recorded a Total Shareholder Return (TSR) of 32.4 per cent over the year, reflecting the resilience of our portfolio. Key factors driving remuneration outcomes for FY2022 included: • • record-high revenue off the back of a strong rebound in commodity prices; superior field performance and disciplined cost management that has enabled the Integrated Gas business to leverage the buoyant commodity market; • continuing progress on the transformation of the retail business, including the rollout of the Kraken technology platform and new operating model, to provide a superior customer experience at a lower cost (customer migration is on track for completion in mid FY2023); • strong market support following our announcement of the proposed closure of Eraring and the proposed installation of a large-scale battery, reflecting our commitment to playing a leading role in Australia’s energy transition. Constructive response has also been received from our employees and the local community in relation to our comprehensive plans for a just and effective transition; • penalties of $17 million in relation to regulatory compliance failures with the implementation of certain customer payment plans. Significant action has been taken since to remedy the problem. Our Power On program currently supports and protects around 47,000 customer accounts in financial hardship, and we are focused on supporting them effectively through rising costs of living and the impact of recent price increases; • continuing strong performance of our strategic investment in Octopus Energy, now valued at more than £3 billion (GBP), and disciplined capital management including crystallisation of some of the value in APLNG on the sale of 10 per cent of our interest; additionally our acquisition of WINconnect, which adds further scale to the Community Energy Services business. Management’s efforts in achieving these strong financial and operating outcomes, while managing a diverse and complex business, have resulted in the following incentive outcomes for FY2022: • the outcome for the CEO’s Short Term Incentive (STI) scorecard was 74.6 per cent of maximum (124.6 per cent of target); • other Executive Key Management Personnel (KMP) outcomes range between 69.3 and 80.4 per cent of maximum (115.8 to134.3 per cent of target); and • the aggregate outcome was 73.6 per cent of maximum (122.9 per cent of target). Long Term Incentive (LTI) awards tested during the year partially vested (25.0 per cent). One half of the August–October 2018 LTI grants was subject to a relative TSR hurdle and failed to vest. The other half was subject to two separate Return on Capital Employed (ROCE) hurdles for the Integrated Gas and Energy Markets businesses respectively, both of which partially vested at threshold levels. The overall vesting level was 25.0 per cent. LTI vesting outcomes for FY2023 will be determined at the end of August 2022. Indicatively the vesting outcome is expected to be around 16 per cent. Details of LTI outcomes are explained in more detail in Section 4.2.2. Remuneration Report 59 FY2022 remuneration framework and levels Fixed Remuneration and Non-executive Director fees There were no changes to the level or structure of Non-executive Director (NED) fees in FY2022. Following comprehensive benchmarking in line with our policy, the Fixed Remuneration (FR) of the CEO was increased by 2.7 per cent and the FR of other Executive KMP increased by an average of 2.3 per cent, in line with adjustments to the workforce more generally. Short Term Incentive Plan The architecture for the STI Plan (STIP) was refined for FY2022 to better reflect the Company’s key performance criteria, resulting in 60 per cent being based on financial outcomes and the balance of 40 per cent based on the strategic priorities that build capability for Origin’s future. A key feature of the revised STIP design is that, while the scorecard outcomes are numerically determined on output measures and strategic priorities, the scorecard performance is also subject to review of how the results were achieved. Long Term Incentive Plan There is no change to the LTI Plan (LTIP) in FY2022. The architecture remains the same as that adopted in FY2020 and is fully described in Section 3.5. FY2023 remuneration Each year the RPCC considers the remuneration framework’s continuing appropriateness in terms of the organisation’s strategies and priorities. It also considers the framework’s effectiveness and capacity to provide realisable remuneration that attracts and keeps the right people, drives their focus and rewards execution. The RPCC concluded that the current framework and policy settings remain balanced and appropriate, and accordingly, no changes are planned for FY2023. In terms of changes to the level of FR for FY2023, adjustments across the wider organisation are expected to average in the 3.5–4.0 per cent, reflecting prevailing market conditions, and movements for Executive KMP will be consistent with this. Finally, there will be no changes to the structure or level of NED fees for FY2023. Steven Sargent Chairman, Remuneration, People and Culture Committee 60 Annual Report 2022 Report structure The Remuneration Report is divided into the following sections: 1. Key Management Personnel 2. Remuneration link with Company performance and strategy 3. Remuneration framework details 4. Company performance and remuneration outcomes 5. Governance 6. Non-executive Director fees 7. Statutory tables and disclosures 1 Key Management Personnel The Remuneration Report discloses the remuneration arrangements and outcomes for people listed below: individuals who have been determined as KMP as defined by AASB 124 Related Party Disclosures. Members of the RPCC are identified in the last column. Name Role Appointed Retired Term as KMP in FY2022 RPCC e v i t u c e x e - n o N e v i t u c e x E S Perkins I Atlas M Brenner G Lalicker Chairman, Independent Independent Independent Independent d r a o B M McCormack Independent B Morgan S Sargent Independent Independent N Scheinkestel Independent J Withers J Akehurst F Calabria L Tremaine J Briskin G Jarvis A Thornton Independent Independent Chief Executive Officer (CEO) Chief Financial Officer (CFO) Executive General Manager, Retail Executive General Manager, Energy Supply and Operations Executive General Manager, Integrated Gas 20-Oct-20 19-Feb-21 15-Nov-13 1-Mar-19 18-Dec-20 16-Nov-12 29-May-15 4-Mar-22 21-Oct-20 29-Apr-09 19-Oct-16 10-Jul-17 5-Dec-16 5-Dec-16 1-Nov-21 20-Oct-21 ✓ ✓ ✓ Chair Full Full Full Full Full Full Full Part Full Part Full Full Full Full Part The term ‘Other Executive KMP’ (abbreviated as ‘Other’ in tables and charts) refers to Executive KMP excluding the CEO. ‘Executive team’ is a broader reference to the Executive Leadership Team (ELT). Remuneration Report 61 2 Remuneration link with Company performance and strategy 2.1 Overview of remuneration framework Our remuneration framework is designed to support the Company’s strategy and to reward our people for its successful execution. It is designed around three principles, summarised in the diagram below. Strategy Connecting customers to the energy and technologies of the future Leading customer experience and solutions; accelerating towards clean energy; embracing a decentralised and digital future; striving to be a low-cost operator; developing resources to meet growing gas demand; maintaining disciplined capital management. Remuneration principles Attract and retain the right people Pay fairly Drive focus and discretionary effort The framework secures high-calibre individuals from diverse backgrounds and industries with the talent to execute the strategy. The framework is market competitive. Outcomes are a function of Company performance, reflect our behavioural expectations and our values, and align with shareholder expectations. The framework encourages Executives to think and act like owners and to deliver against long-term strategies and the short-term business priorities that are expected to drive long-term outcomes. Remuneration framework Fixed Remuneration Short Term Incentive Long Term Incentive Variable Remuneration (at risk) Outcomes subject to Board discretion and adjustment, see Section 5.3 Purpose To attract and retain the right people and pay fairly and competitively Variable pay determined by performance against an annual scorecard. Allows pay to be reduced below intended levels where achievements are below target levels and to reward outperformance when above target levels. Drives focus and discretionary effort Variable pay designed to encourage focus on long-term performance and sustainability and to build executive share ownership in the business Delivery Cash salary, superannuation and benefits delivered through the year Annual award based on performance scorecard outcomes Half paid in cash after year end and half awarded after year end as shares restricted for two years Annual grant (allocated at face value) of conditional share rights vesting over three to five years, all deferred for five years. Half conditional on Board review of underpinning metrics and half subject to a relative total shareholder return performance hurdle Details Section 3.1 Sections 3.3 and 3.4 Sections 3.5 and 3.6 2.2 Board oversight Remuneration outcomes are subject to Board oversight and strong governance controls as set out in Section 5.3. Origin believes that observance of our values and leadership behaviours and the quality of our relationships with our customers and the community are inextricably linked to the creation of shareholder value. Prior to making remuneration determinations, the full Board conducts formal reviews of management that incorporate individual performance, risk management and leadership behaviours. The Board may adjust variable outcomes up or down. 62 Annual Report 2022 2.3 Minimum Shareholding Requirement for Executive KMP A key objective of the remuneration framework is to promote employee share ownership and to encourage employees to think and act as owners. Equity is therefore a key element of remuneration, representing at least half of STI awards and the whole of LTI awards. This is supplemented by other share plan arrangements, including salary sacrifice, share purchase and matching plans (see Section 3.8). Executive KMP are required to build and maintain a substantial shareholding in the Company (that is, the Minimum Shareholding Requirement (MSR)). Executives are not expected to purchase shares to meet the requirement. The MSR operates as an additional trading restriction which prevents the disposal of shares (other than to cover arising tax liabilities) that have been generated from executive share plans until the MSR has been achieved and maintained. The requirement will normally be achieved within four years of the first equity grant following appointment. The MSR is referenced to one of two nominal multiples of FR, one for the CEO and one applicable to all Other Executive KMP. Following changes to the LTIP in August 2020, the reference multiples are scheduled to increase from 200 per cent of the FR to 250 per cent of the FR for the CEO and from 100 per cent to 150 per cent of the FR for Other Executive KMP, effective after August 2023, which is the earliest date from which the new plan can begin to impact vesting patterns. For transparency, simplicity and practicability1, the MSR is expressed as a number of shares rather than a dollar value. From time to time, the Board changes this number, which is determined by taking into account changes in FR, changes to STI deferral or LTI opportunity levels, and the medium-term share price trend. The current determinations of 620,000 shares (CEO) and 130,000 shares (Other Executive KMP) are scheduled to increase to 720,000 and 160,000, respectively, in FY2024. Share rights awarded under incentive plans do not count towards the MSR obligation. Table 7.4 (a) shows that the CEO and Executive KMP exceed both the current and FY2024 MSR requirements, with the exception of new appointee Andrew Thornton, whose accumulation is on track to meeting his MSR. 3 Remuneration framework details 3.1 Fixed Remuneration FR comprises cash salary, employer contributions to superannuation and salary sacrifice benefits. It takes into account the size and complexity of the role, and the skills and experience required for success in the role. FR is reviewed annually, but increases are not guaranteed. Roles are benchmarked to the median of corresponding roles in organisations with comparable activity and scale and with which Origin competes for talent.2 In the absence of special factors, new or newly promoted incumbents generally commence below this reference point and move to the median over time. FR may be positioned above this reference point where it is appropriate to reward sustained high performance, for key talent retention purposes or where it is necessary to attract and secure key skills to fill a business-critical role. Accordingly, the median positioning may vary between approximately the 40th and 60th percentile of the reference market. 3.2 Variable Remuneration Variable Remuneration (VR) enables pay to be adjusted upwards or downwards, depending on whether performance outcomes exceed or fall short of expectations. Unlike bonus systems that pay for performance above expectations but do not reduce pay where performance falls short of them, VR does both. It is important to note that the total of FR plus VR is set and benchmarked such that the at target outcome represents the satisfaction of expected performance. VR comprises the total of STI and LTI: • The minimum VR is zero, where no STI or LTI is awarded, or where the STI scorecard outcome is zero and LTI is not awarded or all of it fails to vest, or where discretion is exercised to reduce such awards or vesting outcomes to zero. • The target VR represents the total of STI awarded at the target level, plus the target value of LTI (calculated as 50 per cent of the face value3 of Performance Share Rights (PSRs) and 100 per cent of the face value of Restricted Share Rights (RSRs)). The LTI components are described in Section 3.5. The LTI target value represents a risked or expected (probabilistic) vesting outcome. • The maximum VR is the total of STI awarded at the maximum level, plus the full face value of all LTI assuming 100 per cent vesting. VR outcomes are subject to Board oversight and discretionary adjustment as summarised in Sections 4.2 and 5.3. 1 A practical consideration is that Executives periodically need to sell shares to meet Employee Share Scheme tax obligations. Any process of tagging shares for MSR according to the share price of specific shares at grant or allocation (for example) would become exceedingly complex to track when parcels are disposed of according to other tags (such as cost bases for capital gains tax purposes). 2 The prime references are to (a) ASX-listed organisations ranked between seven and 70 by average two-year market capitalisation (excluding foreign domiciles, listed investment companies or similar) and to (b) organisations with revenues between 40 per cent and 250 per cent of Origin’s revenue, always including AGL, APA Group, Santos and Woodside. 3 The face value at the date of grant is represented by the share price on the date of grant. The face value of deferred equity elements (Deferred STI and LTI) is represented by the current share price (present-day value) because it is not possible to predict future share prices. Remuneration Report 63 3.3 Total Remuneration Total Remuneration (TR) is the sum of FR and VR. TR at target (TRT) TR maximum (TRM) = = FR FR + + target VR maximum VR TRT is benchmarked to the median of equivalent TRT in the reference market, with the intention that when Origin’s outcomes are at their maximum possible (that is, TRM), they will be comparable to the top quartile of the reference TRT. 3.4 FY2022 Short Term Incentive Plan details The following is a detailed description of how the STIP operates. Parameter Award basis Details The annual performance cycle is 1 July to 30 June. Individual balanced scorecards are agreed, with shared Group objectives and targeted divisional objectives. Objectives are set across financial categories (generally 60 per cent of the weightings) and non-financial categories (generally 40 per cent). The CEO’s FY2022 scorecard details and outcomes are shown in Section 4.2. Scorecard operation Individual objectives on the scorecard are referenced to three performance levels: threshold, target and stretch (with pro-rating between each). Threshold performance represents the lower limit of rewardable outcome for an individual objective – one that represents a satisfactory outcome, often achieving year-on-year improvement and contribution towards delivery of annual plans but falling short of the target level. Threshold performance yields 20 per cent of maximum (33 per cent of target). Target represents the expectation for achieving robust annual plans, yielding 60 per cent of maximum. Stretch performance represents the delivery of exceptional outcomes well above expectations, yielding the maximum payout (corresponding to 167 per cent of target). Opportunity level Award calculation and assessment Delivery and timing The opportunity level for FY2022 for all Executive KMP was unchanged at 100 per cent FR at target, with a capped maximum of 167 per cent of FR. Achievement and performance against each Executive’s balanced scorecard is assessed annually as part of the Company’s broader performance review process and is subject to Board oversight and adjustment as detailed in Sections 2.2 and 5.3. The STI award is delivered in two parts, a cash element and a deferred element, each representing half of the award. Both elements are delivered in August to September following the end of the financial year to which they relate. The deferred element is delivered in the form of Restricted Shares (RSs) that are restricted for two years. The award is subject to forfeiture if the service conditions are not met (as set out below). RS allocation Number of RSs = Deferred STI amount divided by the 30-day volume weighted average price (VWAP) to 30 June of the performance year just completed, rounded to the nearest whole number. 64 Annual Report 2022 Parameter Details Service conditions and cessation of employment Release Dividends Sourcing of RSs Unless the Board determines otherwise: • For resignation or dismissal with cause, the whole of an STI award is forfeited and RSs within their restriction period are forfeited. • In cases of death, disability, redundancy or genuine retirement (good leaver circumstances), to the extent that an STI award is payable, it is delivered wholly in cash. RSs in respect of FY2022 STI awards will be released on the second trading day following the release of full-year financial results for FY2024, subject to the service conditions being met and the service period completed (or else as described under ‘Service conditions and cessation of employment’ above). As the STI has been earned and awarded, RSs carry dividend entitlements and voting rights. The Board’s practice is to purchase shares on market, but it may issue shares or make the award in alternative forms, including deferred cash. Governance and MSR After restrictions on RSs are lifted, trading is subject to the MSR (see Section 2.3), to the Company’s Dealing in Securities Policy, and to the malus and clawback provisions in Section 5.3. 3.5 FY2022 Long Term Incentive Plan details The operation of the LTIP is described below. Parameter Award basis Opportunity and value range Details LTIP awards are conditional grants of equity that may vest in the future, subject to the meeting of performance conditions and/or underpinning criteria, and subject also to the Executive meeting service and personal conduct and performance requirements. Awards are considered annually for approximately 60 senior roles representing those having significant influence on long-term company performance. The LTIP opportunity level reflects the capacity of the role to influence long-term sustainable growth and performance, and is set with reference to market benchmarks (see Section 3.2). Opportunity levels are expressed as a percentage of FR (at the commencement of the financial year in which the grant is to be made) and in terms of the total face value of the awards (that is, not discounted for risk). LTIP opportunity (percentage of FR) Executive KMP Minimum Maximum CEO Other 0 0 120 80 Awards are granted at face value, between the minimum and maximum opportunity level. Prior to the determination of LTIP grants, the Board considers whether there are any reasons to reduce or not make an award. But in the normal course of events, awards are granted at the maximum opportunity level (given that they are subject to future performance and underpinning conditions, additional to malus and clawback processes). The value of an award is as follows. • The minimum value is zero (which will be the case if the award fails to vest, is forfeited or is not awarded). • The target value represents the risked or expected value of the maximum grant, taking into account the likelihood of vesting. • The maximum value represents the present-day face value of the maximum grant, assuming that 100 per cent of the grant vests, ignoring the risks of achieving performance conditions and of the service requirements. The actual or realised value of an LTIP award depends on the level of vesting and the share price at the time of vesting, neither of which can be determined in advance. LTIP awards are delivered in the form of share rights. The share rights do not carry any dividend or voting entitlements. Each vested share right represents a right to a fully paid ordinary share (as an RS) in the Company and such additional shares equal to the value of dividends (as determined by the Board) in the period from grant to exercise on the underlying share on a reinvested basis. The terms and conditions applying to the share rights or RSs apply also to the dividend-equivalent amounts and shares. The Board retains a discretion to make a cash equivalent payment to settle the dividend-equivalent amount in lieu of an allocation of shares. The share rights are granted at no cost because they are awarded as remuneration. No dividend or dividend-equivalents are received by participants on share rights during a vesting period, and none on share rights that do not vest. Shares allocated upon vesting of rights (including rights to a dividend-equivalent amount) carry the same dividend and voting rights as other shares (including while they are subject to a holding lock). Vehicle, dividends and voting rights Number and type of share rights The total number of share rights to be granted is calculated by taking the face value of the award being made and dividing it by the 30-day VWAP of Origin shares to 30 June preceding the grant, rounded to the nearest whole number. The award is divided into two halves, each with its own vesting conditions. One half of the share rights is awarded as PSRs, that are subject to a Relative TSR (RTSR) performance condition with a conventional vesting scale. The other half of the share rights is awarded as RSRs where vesting is subject to Board discretion with reference to a suite of underpinning conditions as described below. The number of RSRs will be divisible by three because this tranche is further divided into three equal parts, which vest progressively as described below. Vesting and release All of the share rights are deferred for five years. Remuneration Report 65 Parameter Details PSR tranche RSR tranche The PSR tranche vests (subject to achievement against the RTSR vesting scale) into RSs at the end of the three-year performance period, remaining under a holding lock for a further two years. The RSR tranche vests (subject to Board discretion) progressively after three, four and five years. The part which vests after three years is into RSs that remain under a two-year holding lock; the part vesting after four years is locked for a further year; and the final part vests after five years vests into unrestricted shares. The vesting dates corresponding to the three-year, four-year and five-year periods are determined as the second trading day after the release of the respective full year results. For FY2022 awards granted in September and October 2021 (following completion of the FY2021 year), these are expected to be 26 August 2024, 25 August 2025 and 24 August 2026 (Release Date). At all times before and after vesting, and after release from a holding lock, the share rights and shares remain subject to malus and clawback provisions (Section 5.3), and may also be subject to trading restrictions arising from the MSR (Section 2.3) and from the Company’s Dealing in Securities Policy. RTSR measures the Company’s TSR performance relative to a reference group of companies, assuming reinvestment of dividends, measured over three financial years with vesting deferred for a further two years. It has been chosen because it aligns Executive reward with shareholder returns. It rewards only when Origin outperforms the reference group; it does not reward overall market uplifts. The market reference group is the S&P/ASX 501, representing a transparent and widely understood group of companies with which Origin competes for investors, skills and talent. Narrower comparator groups have not been chosen due to the small number of companies with investment profiles and operations similar to those of Origin. In calculating RTSR, share prices are determined using three-month VWAPs to the start and end of the performance period. Vesting occurs only if Origin’s TSR over the performance period ranks it higher than the 50th percentile of the group. Half of the PSRs vest on satisfying that condition, and all of the PSRs vest if Origin ranks at or above the 75th percentile. Straight-line pro-rata vesting applies between these two points. In contrast to the PSR tranche, which is conditional on performance against a single external financial metric, the RSR tranche is designed to vest in full unless there is a material deviation from Board expectations of performance across approximately 30 key metrics. These metrics reflect the underlying health, performance and sustainability of the Company and, since FY2021, are reported annually as the Key Sustainability Performance Measures in the Company’s annual Sustainability Report. They cover the four dimensions of Customer, Community, Planet (climate change and environment) and People. If, at the review date for vesting, the Board considers management’s performance against the totality of these underpinning indicators has not met its expectations, then it may reduce or cancel vesting accordingly. Together, the PSR and RSR tranches provide a balance that incorporates a hard single financial test with a holistic assessment across the full range of performance areas that will position the Company for ongoing success. This approach aligns management interests with those of shareholders and stakeholders through the building of Executive share ownership and driving focus across the full range of key measures that align operations with long-term strategy. The RSR vesting review process incorporates outcomes from the Executive Performance Review (described in Section 5.3) and overall performance with reference to the underpinning indicators in addition to risk and reputation matters. Vesting decisions will be disclosed in the relevant Remuneration Report accompanied by a rationale for the Board’s determinations. Service conditions and cessation of employment Unless the Board determines otherwise: • For resignation or dismissal with cause, all share rights are forfeited. • In cases of death, disability, redundancy or genuine retirement (good leaver circumstances), share rights remain on foot subject to their original terms and conditions (other than the continuing service condition). Sourcing The Board’s preferred approach is to satisfy the vesting of share rights through the purchase of shares on market, but it may issue shares or make the award in alternative forms, including cash or deferred cash. 1 The TSR reference group is set at the commencement of the performance period. For FY2022, it comprised: The a2 Milk Company Ltd, Medibank Private Ltd, Ampol Ltd, Macquarie Group Ltd, Aristocrat Leisure Ltd, National Australia Bank Ltd, Amcor PLC, Newcrest Mining Ltd, Australia and New Zealand Banking Group Ltd, Northern Star Resources Ltd, APA Group, Afterpay Ltd, Qantas Airways Ltd, ASX Ltd, QBE Insurance Group Ltd, Aurizon Holdings Ltd, Ramsay Health Care Ltd, BHP Group Ltd, Rio Tinto Ltd, Brambles Ltd, South32 Ltd, Commonwealth Bank of Australia, Scentre Group, Cochlear Ltd, Stockland Corporation Ltd, Coles Group Ltd, Sonic Healthcare Ltd, Computershare Ltd, Santos Ltd, CSL Ltd, Suncorp Group Ltd, Dexus, Sydney Airport Holdings Pty Ltd, Endeavour Group Ltd, Transurban Group, Fortescue Metals Group Ltd, Telstra Corporation Ltd, Goodman Group, Treasury Wine Estates Ltd, GPT Group, Westpac Banking Corp, Insurance Australia Group Ltd, Wesfarmers Ltd, James Hardie Industries PLC, Woolworths Group Ltd, LendLease Group, Woodside Energy Group Ltd, Mirvac Group and Xero Ltd. Companies are not replaced (for example, as a consequence of merger, acquisition or delisting) unless the Board determines otherwise. 66 Annual Report 2022 3.6 Variable Remuneration components and timelines The following chart summarises the components of Variable Remuneration and the timelines for delivery. 3.7 Remuneration range and mix The potential range for the CEO’s total remuneration in FY2022 was between a minimum of $1.88 million (his FR) to a target of $5.452 million and a maximum of $7.276 million (FY2021: $7.086 million). The remuneration mix at target and at maximum is shown in the chart below, which shows the significant proportion of variable or performance-based pay and delivery in equity. Variable or performance-based pay represents 65.5 per cent of the CEO’s package at target outcomes, and 74.2 per cent at maximum outcomes. Forfeitable equity represents 48.3 per cent at target outcomes and 52.6 per cent at maximum outcomes. Corresponding figures for the average remuneration mix for other Executive KMP are also shown in the table below. Remuneration component CEO Other Executive KMP (average)1 $’000, %TR FR cash STI cash STI deferred equity LTI conditional deferred equity Total Remuneration Variable (performance- related) component Equity component Target 1,880 34.5% 940 17.2% 940 17.2% 1,692 31.1% 5,452 100% 65.5% 48.3% Maximum 1,880 25.8% 1,570 21.6% 1,570 21.6% 2,256 31.0% 7,276 100% 74.2% 52.6% Target 947 38.5% 474 19.2% 474 19.2% 568 23.1% Maximum 947 28.8% 791 24.1% 791 24.1% 758 23.0% 2,463 100% 3,287 100% 61.5% 42.3% 71.2% 47.1% 1 A Thornton's remuneration is not pro-rated for the KMP term for the purpose of these calculations Remuneration Report 67 3.8 Other equity/share plans The Company operates a universal Employee Share Plan in which all full-time and part-time employees can choose to be eligible for awards of up to $1,000 worth of Company shares annually, or else participate in a salary sacrifice scheme to purchase up to $4,800 in shares annually. Under the $1,000 scheme (the General Employee Share Plan (GESP)), shares are restricted for three years or until cessation of employment, whichever occurs first. Under the Matching Share Plan (MSP), shares purchased under the sacrifice scheme are restricted for two years or until cessation of employment, whichever occurs first. For every two shares purchased under the salary sacrifice scheme within a 12-month cycle, participants are granted one Matching Right (MR) at no cost. The MRs vest two years after the cycle began, provided that the participant remains employed by the Company at this time. Each MR entitles the participant to one fully paid ordinary share in the Company, or in certain limited circumstances a cash equivalent payment. The MRs do not have any performance hurdles as they have been granted to encourage broad participation in the scheme across the Company, and to encourage employee share ownership. All shares are currently purchased on market. Directors are not eligible to participate in the above schemes, but may participate in the NED Share Plan (NEDSP) by sacrificing Board fees. This plan is intended to facilitate share acquisition, enabling new Directors to meet their MSR obligations. All NEDs currently meet their MSR or are recently appointed. In FY2022, there was one participant sacrificing during the year. However no rights or shares have yet been allocated under the Plan. Rights and shares will be allocated in FY2023. Directors regularly assess the risk of the Company losing high-performing key people who manage core activities or have skills that are being actively solicited in the market. Where appropriate, the Board may consider the selected use of deferred payment arrangements to reduce the risk of such critical loss. From time to time, it may be necessary to offer sign-on equity to offset or mirror unvested equity, which a prospective executive must forfeit to take up employment with Origin. No such arrangements were implemented for Executive KMP in FY2022. 68 Annual Report 2022 4 Company performance and remuneration outcomes This section summarises remuneration outcomes for FY2022 and provides commentary on their alignment with Company outcomes. 4.1 Five-year Company performance and remuneration outcomes The table below summarises key financial and non-financial performance for the Company from FY2018 to FY2022, grouped and compared with short-term and long-term remuneration outcomes. Five-year key performance metrics FY2018–221 FY18 FY19 FY20 FY21 FY22 Operational measures Underlying earnings per share (EPS) (cents)2,12 Net cash from/(used in) operating and investing activities (NCOIA) ($m) Energy Markets underlying EBITDA ($m)12 Integrated Gas underlying EBITDA (total operations) ($m) Adjusted net debt ($m)3 Strategic Net Promoter Score (sNPS)4 Total Recordable Injury Frequency Rate (TRIFR5) Female representation in senior roles (%)6 CEO-1 CEO-2 Senior leadership roles Origin Engagement Score7 STI award outcomes Percentage of maximum (%)8 Return measures Closing share price at end of June ($)9 Dividends (cents per share)10 Annual TSR (%) Three-year rolling TSR (CAGR % p.a.)11 Group Statutory EBIT ($m)12 Underlying ROCE12,13 (%) LTI outcomes LTI vesting percentage (%) 58.2 2,645 1,811 1,521 6,496 (19) 2.2 20.0 33.8 34.2 61 58.4 1,914 1,574 1,892 5,417 (9) 4.5 25.0 40.6 34.4 61 57.6 1,813 1,450 1,741 5,158 (3) 2.6 33.3 43.9 33.9 75 17.8 1,183 979 1,135 4,639 4 2.7 33.3 42.9 34.6 74 23.2 3,363 365 1,837 2,838 5 4.0 30.0 43.6 40.8 68 88.7 73.7 84.1 50.7 73.6 10.03 0 46.2 (2.6) 473 7.7 7.31 25 (26.1) 12 1,432 9.1 5.84 25 (17.7) (8) 360 8.7 4.51 20 (19.7) (20.6) (1,833) 4.4 5.73 29 32.4 (0.4) (745) 7.6 0 0 0 35.3 25.0 1 Except as noted in (2) below, FY2018 is as previously reported. It has not been restated for the presentation of certain electricity hedge premiums, which are included in underlying from FY2019, or for the reclassification of futures collateral balances to operating cash flows (previously in financing cash flows in prior periods). A restatement for these factors for FY2018 only was provided in the FY2019 Consolidated Financial Statements at Note A1 Segments and in the Statement of cash flows, for indicative comparison purposes only. 2 EPS is calculated on a continuing activities basis (excludes Lattice Energy for FY2018). 3 Adjusted Net Debt for FY2020 includes first recognition of lease liability ($514 million) under AASB16. 4 sNPS is an industry-recognised measure of customer advocacy. The measures were previously presented on a final-quarter average for each year and have been restated as the average over the whole of the relevant financial year. 5 TRIFR is the total number of injuries resulting in lost time, restricted work duties or medical treatment per million hours worked. 6 CEO-1 represents Executives reporting directly to the CEO. In line with market practice, it includes the CEO. CEO-2 includes roles directly reporting to CEO-1. Senior leadership roles captures the three reporting levels below CEO and includes roles with base salaries exceeding approximately $200,000 per annum. 7 Employee engagement is measured as a score through an annual Company-wide survey conducted independently. 8 This is the total dollar value of STI awarded for Executive KMP as a percentage of their total maximum STI. The percentage of STI forfeited is this amount subtracted from 100 per cent. 9 The opening share price for FY2018 was $6.86. 10 Dividends represent the interim plus final dividends determined for each financial year. For FY2022, this includes the final dividend determined on 18 August 2022 to be paid on 30 September 2022. The amounts paid within each financial year are 0c, 10c, 30c, 22.5c and 20.0c, respectively. 11 TSR calculations use the three-month VWAP share price to 30 June, reflecting the testing methodology for relative TSR ranking. 12 Following clarifying guidance from the International Financial Reporting Interpretations Committee, the Group has applied changes in accounting policies that require restatement of previously reported amounts. Refer to note G11 Prior year restatements, in the Consolidated Financial Statements. 13 Underlying ROCE is defined in the Glossary and Interpretation. Remuneration Report 69 4.2 Variable remuneration outcomes 4.2.1 Assessment process The Board has adopted governing principles to apply when considering adjustments to measures that are used for remuneration purposes. The starting points for setting STI scorecard targets are the relevant underlying measures from the financial accounts. Targets set at the beginning of the year may be subject to events materially outside the course of business and outside the control of the current management, in which case discretion may be required to vary targets or outcomes to reflect the intended purpose and/or actual results and achievements. The principles provide a structured process for the consideration of adjustments and the exercise of discretion, and a decision framework that seeks fairness (to both Executives and shareholders) and balance between favourable and unfavourable events. 4.2.2 Short-term performance and STI outcomes STI awards are calculated on the basis of a balanced scorecard, with requirements set at threshold, target and stretch achievement levels. The CEO’s FY2022 scorecard showing measures, outcomes and results is summarised below.4 Measure, rationale and performance Underlying EPS (cents) Measure of earnings and profitability. Increased 28.2 per cent on prior year, reflecting improved performance in the Integrated Gas business, which outweighed a decline in the Energy Markets business Origin NCOIA ($m) Measure of effective cashflow generation. Performance was 27 per cent above target after the removal of the impact of the sale of a 10 per cent interest in APLNG Energy Markets EBITDA ($m) Measure of operating performance of the Energy Markets business. Performance did not reach threshold requirements and this measure did not contribute to STI outcomes Integrated Gas cost ($m) Measure of capital and operating costs in the Integrated Gas business. Superior field performance and disciplined cost management has enabled the business to leverage the buoyant commodity market Financial measures Origin Scope 1 emissions reduction (CO2-e)(%) Measure of progress against our decarbonisation strategy. Scope 1 emissions were reduced 22 per cent in the year, far exceeding the stretch target of 10 per cent Strategy development for Integrated Gas Measures the reliable delivery of energy through the transition and progress on cleaner energy initiatives. Significant progress was made on key exploration and production prospects, portfolio re-positioning, hydrogen hub development and securing of strategic locations, and decarbonisation Strategy development for Energy Markets Measures progress in unrivalled customer solutions and accelerating renewables. Customer migration to the Kraken platform well advanced and will be completed in mid FY2023. Origin Zero established. Excellent progress on the Eraring closure pathway and Eraring battery storage, acquisition of WINconnect and acquisitions of renewable development projects, material value add through Octopus relationship Strategic priorities  Non-financial measures Total Targets and outcomes Result Weight Threshold Target Stretch (% max) 15% 15% 15% 15% 60% 10% 12% 18% 40% 100% 365 4.4 10.4 18.3 23.2 2,496 2,646 2,896 3,363 450 525 615 2,520 2,400 2,250 2,299 20 60 100 71.7 4 6 10 22 20 60 100 63.9 20 60 100 77.3 20 60 100 78.9 20 60 100 74.6 100.0 100.0 0.0 86.9 71.7 100.0 63.9 77.3 78.9 74.6 4 The value for each of the three levels are shown along the top of the achievement bar and correspond to results of 20 per cent, 60 per cent or 100 per cent of maximum, respectively. The actual achievement is represented by the darker shading along the bar while the achievement value is recorded below the bar 70 Annual Report 2022 The scorecard reflects financial and operating outcomes achieving 71.7 per cent of maximum accounting for 60 per cent of the STI award. In addition, it reflects very strong performance against the three non-financial strategic priorities defined for the year (78.9 per cent of maximum) accounting for the remaining 40 per cent of the STI award. The overall scorecard outcome was 74.6 per cent of maximum (124.6 per cent of target). Application of the principles described in Section 4.2.1 included the following adjustments: • The significant impact of the sale of our 10 per cent interest in APLNG was excluded from the NCOIA result and Integrated Gas Capital Employed. • The impact of the WINconnect acquisition was removed from the NCOIA result and from the Energy Markets ROCE EBIT. • The NCOIA result was adjusted for the cost of the additional investment in Octopus Energy. • Penalties and legal costs associated with Australian Energy Regulator action, excluded from underlying financial measures, were included for the purposes of the relevant metrics in STI awards. 4.2.3 Executive KMP STI outcomes Origin’s EPS and NCOIA targets, and therefore results, represent half of the financial metrics for all Executive KMP. The remaining financial metrics for divisional Executive General Managers are based on divisional targets. While Energy Markets EBITDA and Retail EBITDA contributed zero and small contributions, respectively, there has been a relative outperformance in Integrated Gas. Accordingly, scorecard outcomes ranged between 69.3 to 80.4 per cent of maximum. Executive KMP % of target % of maximum % forfeited STI award F Calabria L Tremaine J Briskin G Jarvis A Thornton1 124.6 124.6 115.8 117.6 134.3 74.6 74.6 69.3 70.4 80.4 25.4 25.5 30.7 29.6 19.6 $’000 2,343 1,299 1,071 1,100 793 1 The STI award for A Thornton relates to the period as KMP. 4.2.4 Long-term performance and LTI outcomes In FY2022, the Company’s share price increased 27.1 per cent, TSR by 32.4 per cent and underlying ROCE by 71.1 per cent. Longer term measures in the performance summary in Section 4.1 over the last five years show that dividends have been restored and stabilised; female representation has significantly increased across all levels of leadership; and engagement, though dipping in the challenging FY2022 year, is above the average and close to the top quartile of organisations in Australia and New Zealand. Improving performance has been reflected in partial vesting of LTIP awards in the last two years, following eight years of zero vesting outcomes. A partial vesting (25.0 per cent) of LTI awards granted in FY2019 occurred on 23 August 2021. One half of that grant was subject to relative TSR conditions and failed to vest. The other half was subject to ROCE hurdles in two equal tranches, one determined by results in the Integrated Gas business and the other by results across Energy Markets, over three years. Each of these two latter elements met its threshold vesting requirement (9.0 per cent for Energy Markets and 6.1 per cent for Integrated Gas, measured on an LTI basis), delivering 50 per cent in each case, a total of 25 per cent of all rights tested. Vesting outcomes for FY2023 will be determined at the end of August 2022. Testing will include the last tranche of Options that the Company has granted (in August to October 2017). These Options were subject to a five-year TSR hurdle relative to a ten-up/ten-down market capitalisation peer group. Origin’s performance will not meet the median peer TSR performance and all of the Options will lapse. Testing will also include PSRs granted in August and October 2019, half of which were subject to a three-year TSR hurdle (relative to ASX 50) and the balance to three-year ROCE hurdles. Origin’s performance will not meet the median peer TSR performance and all of these PSRs will lapse. The ROCE tranche is divided equally into Energy Markets and Integrated Gas hurdles. The Energy Markets tranche will not meet threshold vesting requirements, while the Integrated Gas tranche is likely to approach its full vesting level (9.1 per cent). The overall vesting outcome for FY2023 is expected to be around 16 per cent. Remuneration Report 71 4.3 Total pay received in FY2022 In line with general market practice, a non-AASB presentation of actual pay received in FY2022 is provided below as a summary of real or ‘take home’ pay. AASB statutory remuneration is presented in Table 7-2. ($’000) Executive KMP F Calabria L Tremaine J Briskin G Jarvis A Thornton6 FR1 1,880 1,043 925 935 570 STI cash2 Short-term equity3 Long-term equity4 Actual total pay received 1,171 649 535 550 397 806 406 202 386 134 333 131 66 71 22 4,190 2,229 1,728 1,942 1,123 Share price appreciation included in total5 (986) (443) (221) (200) (119) 1 FR is cash and superannuation received during FY2022. 2 STI cash represents the cash element of the FY2022 STI award. 3 Short-term equity represents the value of previously awarded equity from short-term arrangements (including STIP and grants under the Employee Share Plan) that are vested or released (as relevant) during FY2022. The value is determined as the number of shares vested or released multiplied by the five-day VWAP immediately prior to the date of vest/release. This value is usually the same as the equity’s taxable value to the executive. The amounts shown above relate to Deferred Share Rights (DSR) vests and Restricted Share releases, all on 26 August 2021, arising from Deferred STI arrangements, plus GESP shares released on 5 September 2021 and Matching Share Plan allocations released on 22 October 2021. 4 Long-term equity represents the value of previously awarded equity from long-term arrangements (LTIP and other arrangements with deferral periods of three or more years) that are vested or released (as relevant) during FY2022. The value is determined in the same way as described in note 3 above. The amounts shown all relate to vesting and releases on 26 August 2021 (being three-year ROCE LTI awards). 5 Share price appreciation represents the increase (decrease) in share value at the time of realisation or release, relative to the value at the time the relevant equity was awarded and allocated. 6 Remuneration for A Thornton relates to the period as KMP. 72 Annual Report 2022 5 Governance 5.1 The role of the Remuneration, People and Culture Committee The RPCC supports the Board by overseeing Origin’s remuneration policies and practices. It operates under a Charter (published on the Company’s website at originenergy.com.au). The RPCC met formally five times during the reporting period. Including its Chairman, the RPCC has four members, all of whom are independent NEDs (see Section 1 for details). The RPCC’s Charter requires a minimum of three NEDs. In addition, there is a standing invitation to all Board members to attend the RPCC’s meetings. Management may attend RPCC meetings by invitation but a member of management will not be present when their own remuneration is under discussion. The following diagram sets out the role of the RPCC and its operational relationships with the Board, management, stakeholders and external advisors. 5.2 Remuneration advisors The RPCC engages external advisors from time to time to conduct benchmarking, advise on regulatory and market developments, and review proposals and reports. Protocols have been established for engaging and dealing with external advisors, including those defined as remuneration consultants for the purposes of the Corporations Act 2001. These protocols are to ensure independence and avoid conflicts of interest. The protocols require that remuneration advisors are directly engaged by the RPCC and act on instruction from its Chairman. Reports must be delivered directly to the RPCC Chairman. The advisor is prohibited from communicating with Company management except as authorised by the Chairman, and even then, this is limited to the provision or validation of factual and policy data. The advisor must furnish a statement confirming the absence of any undue influence from management. The RPCC generally seeks information rather than specific remuneration recommendations within the definition of the Act, and this was the case during FY2022. Guerdon Associates was appointed for this period; no remuneration recommendations as defined under the Act were provided. In addition, the RPCC makes use of general market trend information from a variety of commercial and industry sources and has access to in-house remuneration professionals who provide it with guidance and analysis on request. The recommendations that the RPCC makes to the Board are based on its own independent assessment of the advice and information received from these multiple sources, using its experience and having careful regard to the principles and objectives of the remuneration framework, Company performance, shareholder and community expectations, and good governance. Remuneration Report 73 5.3 Remuneration governance and oversight The Board’s oversight of executive performance and remuneration outcomes is rigorous and multi-phased. The oversight can be divided into the stages set out below, and it is designed to ensure that outcomes are fair to executives and to stakeholders, consistent in approach, and governed by documented principles. 5.3.1 Through the performance period Throughout the STI performance year and LTI vesting periods, the Board monitors and reviews management performance against financial and non-financial targets, including factors affecting the original assumptions underlying the setting of targets at the beginning of the relevant performance periods. Potential adjustments that may be required are considered under a set of protocols that cover materiality, symmetry of treatment for favourable and unfavourable events, the degree to which events are foreseeable and controllable by management, and the impact of Board decisions (for example, mergers and acquisitions). Any adjustments are subject to Board approval at the end of the performance period. The outcome from this stage comprises preliminary STI outcomes and preliminary LTI vesting outcomes. 5.3.2 At the end of the financial year At the end of each financial year the full Board conducts a formal Executive Performance Review of the CEO and each member of the ELT, including the preliminary remuneration outcomes. The review is a formal and holistic process which considers: • risk, audit, compliance and reputation matters (including whistle-blowing, discrimination, bullying or harassment complaints; and safety and employee relations matters); • enterprise and business strategy contribution; and • leadership habits and behaviours.5 The process includes taking feedback from: • Chair of the Health, Safety and Environment Committee; • Chair of the Audit Committee; • Internal Auditor; • General Counsel and EGM Company Secretariat, Risk and Governance; and • Executive General Manager, People & Culture.6 As a performance review process, the output includes performance feedback and identifies specifically whether there are any matters that warrant the exercise of downward discretion to modify individual executives’ preliminary remuneration outcomes. In exceptional circumstances the Board may exercise upward discretion, within the capped opportunity level. During this stage, the Board will also consider whether any exercises of discretion are appropriate on a collective basis, and in the overall context of ensuring that the outcomes represent a reasonable and fair reflection of the company’s performance from the perspective of all stakeholders. The output from this stage comprises final STI outcomes and final LTI vesting decisions. 5.3.3 Beyond the performance period Issues may emerge after final results have been notified where the Board deems that those results are no longer appropriate, or that the results would give rise to the receipt of an inappropriate benefit. Where such issues emerge before payment has been made or before rights have vested or shares have been released from trading locks, the Board may reduce or cancel the award or the vesting level, and/or extend the period of a trading lock under the Company’s malus provisions. The deferral period for equity (two years for STI and five years for all tranches of LTI) means that the exercise of malus is available for significant periods of time. Where benefits have been paid, vested or released, the Company’s clawback provisions give the Board further powers to recover cash proceeds from the sale of shares and to recover cash awards. These powers may be limited by statute or regulation. Of course, fraud, dishonesty, gross misconduct, negligence, breach of duties and other serious matters would have consequences additional to the remuneration impacts described above. Downward discretions have been exercised by the Board from time to time, both to STI outcomes and to LTI allocations or vesting outcomes, to provide better alignment of variable pay outcomes with the broader context and overall circumstances of the Company. There have been no circumstances to date in which the Board has sought to apply the clawback provisions. 5.4 Change of control and capital reorganisation On a change of control event the Board may determine that all or a specified number of unvested securities will vest or cease to be subject to restrictions. On a capital reorganisation, the Board may determine the manner of adjustment of the number of unvested share rights and Options held by participants to minimise or eliminate any material advantage or disadvantage to the participant. If new awards are granted, they will, unless the Board determines otherwise, be subject to the same terms and conditions as the original awards. 5 Behaviours across the company are informed by a behaviourally anchored rating scale (BARS) methodology. 6 For the Executive General Manager, People & Culture, the feedback is from the CEO and/or the Chair of the RPCC. 74 Annual Report 2022 6 Non-executive Director fees 6.1 Remuneration policy and structure for Non-executive Directors NED remuneration comprises fixed fees with no incentive-based payments. This ensures that NEDs can independently and objectively assess both Executive and Company performance. Board and committee fees take into account market rates for similar positions at relevant Australian organisations (those of comparable size and complexity) and fairly reflect the time commitments and responsibilities involved. The aggregate cap for overall NED remuneration remains at $3.2 million p.a., as approved by shareholders in 2017. The Origin Chairman receives a single fee that includes committee activities, while other NEDs receive a NED Base Fee and separate fees for their role on specific committees (other than the Nomination Committee, which is considered within the NED Base Fee). All fees include superannuation contributions. The table below summarises the structure and level of NED fees. No change to the fee structure or quantum is proposed for FY2023. Office Board Audit Committee RPCC, Safety and Sustainability Committee, and Risk Committee Nomination Committee 1 The Chairman fee is inclusive of committee fees. Chairman 6771 57 47 nil FY2022 and FY2023 ($’000) Member 196 29 23.5 nil 6.2 Minimum Shareholding Requirement for Non-executive Directors To align the interests of the Board with those of shareholders, NEDs are required to build and maintain a substantive shareholding in the Company (the MSR). NEDs may purchase shares directly or through the NEDSP that was approved by shareholders in 2018. The NEDSP is a fee sacrifice plan that allows NEDs to acquire share rights (rights to acquire fully paid ordinary shares in the Company) subject to the terms of the grant. The NEDSP is intended to facilitate the acquisition of shares for new Directors to meet their MSR obligation while recognising that opportunities for direct purchases by Directors may be limited. NEDs are expected to reach their MSR within three years of their appointment. During FY2022, one NED commenced salary sacrificing fees under the NEDSP. However, no rights or shares are scheduled to be allocated until FY2023. There were no rights or shares allocated during the reporting period under the NEDSP, as there had been no prior participants under the NEDSP. The NED MSR is determined from time to time as a number of shares referenced to a nominal multiple of fees. The determination takes into account changes in fees and share prices over time. The nominal reference multiple is 100 per cent of the annual base NED fee for all NEDs except for the Chairman of the Board, where it is 200 per cent of the annual base NED fee. The current share determinations of 28,000 shares for NEDs and 56,000 shares for the Chairman are to be increased to 36,000 and 72,000, respectively, from August 2023. Share rights held by NEDs under the NEDSP (FY2022: nil) will count towards the satisfaction of NED MSR obligations because they are funded through sacrifice of fees by the participating Director. The shares allocated on vesting of the share rights are bought on market on behalf of the Director and are not subject to forfeiture. Table 7-4 (b) shows that all NEDs meet the current MSR obligation apart from recent appointee Joan Withers, who is on track to meeting her MSR. Remuneration Report 75 7 Statutory tables and disclosures Table 7-1 Executive service agreements The main terms of service agreements for Executive KMP as at 30 June 2022 are set out in the table below. Basis of contract Notice period Ongoing • Twelve months by either party for CEO; six months for Other Executive KMP • Shorter notice may apply by agreement • No notice in defined circumstances1 Termination benefits for cause Statutory entitlements only Termination benefits for resignation Notice as above or payment in lieu of notice that is not worked; current-year STI forfeited; unvested equity lapses; statutory entitlements Termination benefits for other than resignation or cause Notice worked (or payment in lieu of any portion not worked); pro-rata STI for the period worked (no deferral applicable); all unvested equity lapses unless held on foot in accordance with Equity Incentive Plan Rules2; statutory entitlements. For redundancy (Other Executive KMP only) payment in accordance with the Company’s general redundancy policy of three weeks FR per year of service, with a minimum of 18 weeks and a maximum of 78 weeks. Remuneration Remuneration is reviewed annually or as required to maintain alignment with policy and benchmarks. 1 These circumstances include but are not limited to serious or persistent or wilful misconduct, breach of contract, or conduct likely to seriously injure the reputation of the Company. 2 For cases of death, disability, genuine retirement or other extraordinary circumstances as approved by the Board. Table 7-2 (a) Executive KMP statutory remuneration ($’000) Short term Post- employment benefit Base salary Long term Share based4 Totals Other1 Cash STI2 Leave accrual3 Deferred STI LTI Other Accounting remuneration At risk (%) Executive Director F Calabria 2022 2021 1,855 1,786 Other Executive KMP 905 873 916 877 535 — 1,023 990 — 898 J Briskin G Jarvis A Thornton5 L Tremaine 2022 2021 2022 2021 2022 2021 2022 2021 Former Executive KMP M Schubert6 Executive total 2022 2021 2022 2021 24 22 24 22 24 22 16 — 24 22 — 22 51 46 14 19 25 37 60 — 44 34 — 84 1,171 712 535 434 550 341 396 — 649 488 — 0 44 122 150 15 63 65 113 — 16 (16) — 40 658 1,694 1,091 1,385 368 484 320 453 189 436 296 464 332 365 — — 393 625 517 440 — — (471) (369) 0 0 1 2 148 261 1 — 1 7 — 0 5,497 5,164 2,433 2,145 2,510 2,388 1,675 — 2,667 2,590 — 204 5,234 5,424 112 110 194 220 3,301 1,975 386 226 1,928 3,476 2,182 2,084 151 270 14,782 12,491 1 Represents non-monetary benefits including insurance premiums and fringe benefits (such as car parking and expenses associated with travel). 2 STI cash represents one half of the STI award. STI cash is paid after the end of the financial year to which it relates but is allocated to the earning year. The balance of the STI award is Deferred STI. 3 Movement in leave provision over the reporting period. Negative movement indicates that leave taken during the year exceeded leave accrued during the current year. 4 Share based remuneration is that portion of the accounting value of equity granted or to be granted for the current and prior periods attributable to the reporting period. Where vesting of the equity is conditional on a non-market hurdle (for example ROCE, or the underpinning metrics in the LTI RSR tranche) in following reporting periods the accumulated expense is adjusted for the number of instruments then expected to be released or vested. In good leaver circumstances, a bring-forward of future-period accounting expense may occur where a cessation of employment occurs before the normal vesting date. See Note G3 for details on share-based remuneration accounting. 5 For FY2022, pro-rata period for KMP office is from 1 November 2021 to 30 June 2022. 6 For FY2021, ‘Other’ includes accommodation benefits associated with travel from home base to the Brisbane office. Share based (%) 43 48 33 36 37 44 33 — 34 41 — 0 38 36 64 62 55 57 59 58 57 — 58 60 — 0 60 52 76 Annual Report 2022 Table 7-2 (b) NEDs statutory remuneration ($’000) Short term Board and committee fees Other1 Post-employment Superannuation contributions Total remuneration NEDs — current I Atlas2 M Brenner G Lalicker M McCormack2 B Morgan S Perkins N Scheinkestel3 S Sargent J Withers2 NEDs — former J Akehurst3 G Cairns2 T Engelhard2 NED total 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 207 59 273 267 200 191 239 112 262 278 653 529 66 — 267 268 241 151 83 244 — 217 — 84 2,491 2,400 0 0 0 0 0 0 0 0 0 1 0 2 0 — 0 1 0 0 0 1 — 0 — 1 0 6 21 6 24 20 20 20 23 11 24 22 24 22 7 — 24 22 24 16 8 22 — 10 — 7 199 178 228 65 297 287 220 211 262 123 286 301 677 553 73 — 291 291 265 167 91 267 — 227 — 92 2,690 2,584 1 Represents non-monetary benefits including insurance premiums and fringe benefits (such as car parking and expenses associated with travel). 2 For FY2021: G Cairns and T Engelhard retired on 20 October 2020; J Withers, M McCormack, and I Atlas were appointed on 21 October 2020, 18 December 2020 and 21 February 2021, respectively. 3 For FY2022: J Akehurst retired on 20 October 2021; N Scheinkestel was appointed on 4 March 2022. Remuneration Report 77 Table 7-3 Details of equity grants made during the reporting period Equity grants made to KMP during the reporting period are listed below. The grants are at nil cost to the recipient and none of the instruments granted have an exercise price. For Rights, exercise is automatic at vest and the expiry date is the same as the vest date. Rights that fail to meet the relevant performance conditions lapse effective on the test date, which may be prior to the scheduled vest date. Number granted Grant date fair value ($)1 Exercise price ($) Grant date Vest date2 Expiry date Executive Director Type F Calabria3 Performance Share Rights Restricted Share Rights Restricted Shares (Deferred STI) Other Executive KMP J Briskin Performance Share Rights Restricted Share Rights Matching Rights Restricted Shares (Deferred STI) G Jarvis Performance Share Rights Restricted Share Rights Matching Rights Restricted Shares (Deferred STI) A Thornton Performance Share Rights Restricted Share Rights Matching Rights Restricted Shares (Deferred STI) L Tremaine Performance Share Rights Restricted Share Rights Matching Rights 235,989 235,989 153,000 77,331 77,331 443 93,252 79,049 79,050 443 73,170 24,794 24,792 443 22,713 87,385 87,384 443 3.58 5.14 4.44 2.46 4.44 0.47 4.44 2.46 4.44 0.47 4.44 2.46 4.44 0.47 4.44 2.46 4.44 0.47 4.44 — — — — — — — — — — — — — — — — — — — 20-Oct-21 26-Aug-24 26-Aug-24 20-Oct-21 2024-2026 2024-2026 6-Sep-21 21-Aug-23 — 6-Sep-21 6-Sep-21 24-Sep-21 6-Sep-21 6-Sep-21 6-Sep-21 24-Sep-21 6-Sep-21 6-Sep-21 6-Sep-21 24-Sep-21 6-Sep-21 6-Sep-21 6-Sep-21 24-Sep-21 6-Sep-21 26-Aug-24 26-Aug-24 2024-2026 2024-2026 20-Oct-23 21-Aug-23 — — 26-Aug-24 26-Aug-24 2024-2026 2024-2026 20-Oct-23 21-Aug-23 — — 26-Aug-24 26-Aug-24 2024-2026 2024-2026 20-Oct-23 21-Aug-23 — — 26-Aug-24 26-Aug-24 2024-2026 2024-2026 20-Oct-23 21-Aug-23 — — Restricted Shares (Deferred STI) 104,872 1 For MRs, the fair value is per $1 contributed by the Executive. 2 For Restricted Shares, the vest date is the date that trading restrictions are lifted (other than restrictions arising from MSR or the Dealing in Securities Policy). 3 F Calabria was granted 235,989 PSRs and 235,989 RSRs as approved at the 2021 Annual General Meeting under ASX Listing Rule 10.14. 78 Annual Report 2022 Table 7-4 (a) Details of, and movements in, equity rights and ordinary shares of the Company Executive KMP The following table summarises holdings and movements of rights and ordinary shares held (directly, indirectly or beneficially, including by related parties) over the reporting period (or KMP portion of the period), including grants, transactions and forfeits, by value and by number. See Table 7-5 for further details of the terms and conditions of those rights. Type Executive Director F Calabria Options Granted/acquired2,3 Exercised4 Held at start1 Number, Value ($) No. vested Number Value ($)8 Forfeited/ disposed5 Held at end1,6,7 632,995 — — 0 0 0 231,707 401,288 Performance Share Rights 1,075,269 235,989 844,841 78,061 78,061 333,320 361,050 872,147 Restricted Share Rights Deferred Share Rights9 Shares3 Other Executive KMP J Briskin Options 183,414 235,989 1,212,983 0 0 0 45,556 — — 45,556 45,556 194,524 763,025 276,617 679,320 86,910 — — — 0 — 0 — 0 0 0 419,403 0 0 1,039,642 — 86,910 Performance Share Rights 275,333 77,331 190,234 15,498 15,498 66,176 73,969 263,197 Restricted Share Rights Matching Rights Shares3 G Jarvis Options 60,102 77,331 343,350 708 443 2,256 279,001 109,633 414,039 164,927 — — 0 431 — 0 0 431 — 0 — 2,233 — 0 0 0 0 137,433 720 388,634 71,708 93,219 Performance Share Rights 291,545 79,049 194,461 16,623 16,623 70,980 79,338 274,633 Restricted Share Rights Matching Rights Shares3 A Thornton Options Performance Share Rights Restricted Share Rights Matching Rights Shares3 L Tremaine Options 61,440 79,050 350,982 708 443 2,256 277,371 92,429 324,875 34,925 87,091 43,491 528 141,567 — 0 0 192 382 81,441 — — — — 1,128 — — 0 431 0 431 0 2,233 0 0 140,490 720 — 0 0 0 0 — 0 — 0 0 0 0 — 0 — 101,000 268,800 0 0 0 0 — 0 0 0 0 0 34,925 87,091 43,491 720 15,000 126,949 81,441 0 Performance Share Rights 358,047 87,385 214,967 30,612 30,612 130,713 91,837 322,983 Restricted Share Rights Matching Rights Shares3 67,917 87,384 387,985 708 443 2,256 591,847 136,367 465,632 0 431 — 0 431 — — 2,233 — 0 0 0 155,301 720 728,214 1 The number of instruments that were held at the start/end of the reporting period. For A Thornton the start is at appointment as KMP. 2 Rights to equity and shares in the Company granted to Executive KMP during the reporting period under the Equity Incentive Plan, as listed in Table 7-2. These were provided at no cost to the recipients. 3 Shares include purchases and transfers in, and shares received upon the vesting and exercise of share rights. It includes allotments of fully paid ordinary shares purchased by the Executive under the MSP (number of shares acquired: G Jarvis 1,035; J Briskin 1,035; L Tremaine: 1,035). The value of shares shown relates to the value of restricted shares granted (as set out in Table 7-3). No value is attributed to the balance of shares acquired, as they represent shares arising from the exercise of share rights (the value of which is shown in the relevant share rights line of this table) or shares purchased by the Executive under the MSP. 4 All of the rights currently listed in this table are automatically exercised upon vesting. 5 Forfeited Options and PSRs were granted on 30 August 2016, 19 October 2016, 30 August 2017, 18 October 2017, 10 September 2018 and 17 October 2018. 6 Options granted in 2017 and PSRs granted in 2019 failed to meet their test on 30 June 2022 and were subsequently lapsed, following which the remaining number of instruments held is as follows: Options (all Executives: 0), PSRs (F Calabria: 419,405; J Briskin: 137,435; G Jarvis: 140,487; A Thornton: 43,493; L Tremaine: 155,301). 7 There were no vested Options as at the end of the period. Other than rights and shares disclosed elsewhere in this Report, no other equity instruments, including shares in the Company, were granted to KMP during the period. 8 After vesting and after payment of any exercise price. The value of rights exercised is calculated as the closing market price of the Company’s shares on the ASX on the date of exercise, after deducting any exercise price. The exercise price for all of the rights referenced in this table is nil. DSRs vesting in the period were granted on 18 October 2017 (vested 23 August 2021). 9 Prior to FY2018, the deferred element of STI was delivered in the form of Deferred Share Rights. Remuneration Report 79 Table 7-4 (b) Details of, and movements in, ordinary shares of the Company — NEDs NEDs — current5 I Atlas M Brenner G Lalicker M McCormack B Morgan S Perkins S Sargent N Scheinkestel J Withers NEDs — former J Akehurst Type Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Held at start1 Acquired2 Disposed3 Held at end1,4 50,000 28,367 100,000 100,000 47,143 56,000 41,429 0 0 0 0 0 0 0 24,000 0 33,365 26,000 71,200 0 0 0 0 0 0 0 0 0 0 0 50,000 28,367 100,000 100,000 47,143 80,000 41,429 33,365 26,000 71,200 1 The number of instruments held at the start/end of the reporting period. 2 Purchases and transfers in. 3 Sales and transfers out. 4 Other than shares disclosed elsewhere in this Report, no other equity instruments, including shares in the Company, were granted to KMP during the period. 5 NEDs are not issued shares under any incentive or equity plans. Acquisitions include purchases of shares on market, or pursuant to the Company’s dividend reinvestment plan or the August 2015 Entitlement Offer. 80 Annual Report 2022 Table 7-5 Summary of share rights outstanding The table below lists all the share rights outstanding at 30 June 2022 that have been granted to current or former employees (including Executive Directors and Executive KMP) under equity-based incentive plans. Equity-based incentives are not granted to NEDs. No terms of equity-settled share-based transactions have been altered or modified subsequent to grant. Share rights that failed to meet their performance hurdles on test dates on or before 30 June 2022 lapsed effective on that test date. Details of awards granted in prior years, including applicable service and performance conditions, are summarised in prior Remuneration Reports corresponding to the reporting period in which the awards were granted. Granted Legacy Options 30-Aug-17 18-Oct-17 Performance Share Rights 30-Aug-19 16-Oct-19 3-Nov-20 6-Sep-21 20-Oct-21 Restricted Share Rights 3-Nov-20 3-Nov-20 3-Nov-20 6-Sep-21 6-Sep-21 6-Sep-21 20-Oct-21 20-Oct-21 20-Oct-21 Matching Rights 25-Sep-20 24-Sep-21 Number outstanding1 Number held by KMP Exercise price ($) Earliest vest date2 Last possible expiry date3,4 22-Aug-22 22-Aug-22 821,594 401,288 1,648,867 452,742 955,692 1,039,173 235,989 322,570 322,570 322,570 351,533 351,533 351,533 78,663 78,663 78,663 285,053 113,847 215,054 401,288 471,188 452,742 391,573 268,559 235,989 130,524 130,524 130,524 89,519 89,519 89,519 78,663 78,663 78,663 2,112 768 7.37 7.37 — — — — — — — — — — — — — — — — 22-Aug-22 22-Aug-22 22-Aug-22 22-Aug-22 21-Aug-23 26-Aug-24 26-Aug-24 21-Aug-23 26-Aug-24 25-Aug-25 26-Aug-24 25-Aug-25 24-Aug-26 26-Aug-24 25-Aug-25 24-Aug-26 21-Oct-22 20-Oct-23 1 Options and PSRs with the earliest vest date of 22 August 2022 were tested on 30 June 2022. These Options and PSRs (TSR hurdle only) did not satisfy the vesting conditions and will lapse on 22 August 2022, in accordance with the Plan Rules. This applies to Options granted in 2017 and PSRs granted in 2019 (TSR hurdle only, the remaining total balance of 2019 PSRs: 1,050,807; held by KMP: 461,965). 2 The vest date for PSRs and RSRs granted since 2018 does not include the trading restriction of approximately one to two years that applies to the shares allocated on vesting. 3 Where no expiry is given, automatic exercise applies at vesting. To the extent that rights fail to meet the relevant performance conditions, they will lapse effective on the test date, which may be on or before the vest date. 4 Options with the expiry date of 22 August 2022 failed their test on 30 June 2022 and as such will lapse on 22 August 2022, in accordance with the Plan Rules. Loans to KMP No loans have been made, guaranteed or secured, directly or indirectly, by the Company or any of its subsidiaries, at any time throughout the year, in relation to any KMP including to a KMP-related party. Signed in accordance with a resolution of Directors Scott Perkins Chairman Sydney, 18 August 2022 Lead Auditor’s Independence Declaration 81 Lead Auditor’s Independence Declaration A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Auditor’s Independence Declaration to the Directors of Origin Energy Limited As lead auditor for the audit of the financial report of Origin Energy Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit b) No contraventions of any applicable code of professional conduct in relation to the audit; and c) No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Origin Energy Limited and the entities it controlled during the financial year. Ernst & Young Andrew Price Partner Sydney 18 August 2022 Financial Statements Financial Statements 30 June 2022 83 G Other information G1 Contingent liabilities G2 Commitments G3 Share-based payments G4 Related party disclosures G5 Key management personnel G6 Notes to the statement of cash flows G7 Auditors' remuneration G8 Master netting or similar agreements G9 Deed of Cross Guarantee G10 Parent entity disclosures G11 Prior year restatements G12 Subsequent events Directors’ Declaration Independent Auditor’s Report Primary statements Income statement C Operating assets and liabilities Statement of comprehensive income C1 Trade and other receivables Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Overview A Results for the year A1 Segments A2 Revenue A3 Other income A4 Expenses A5 Results of equity accounted investees A6 Earnings per share A7 Dividends C2 Exploration and evaluation assets C3 Property, plant and equipment C4 Intangible assets C5 Trade and other payables C6 Provisions C7 Other financial assets and liabilities C8 Impairment of non-current assets D Capital, funding and risk management D1 Capital management D2 Interest-bearing liabilities D3 Contributed equity D4 Financial risk management D5 Fair value of financial assets and liabilities B Investment in E Taxation equity accounted joint ventures and associates B1 Interests in equity accounted joint ventures and associates B2 Investment in APLNG B3 Investment in Octopus Energy Holdings Limited B4 Transactions between the Group and equity accounted investees E1 Income tax expense E2 Deferred tax F Group structure F1 Controlled entities F2 Business combinations F3 Joint arrangements and investments in associates 84 Income statement for the year ended 30 June Revenue Other income Expenses Results of equity accounted investees Interest income Interest expense Loss before income tax Income tax expense Loss for the year Loss for the period attributable to: Members of the parent entity Non-controlling interests Loss for the year Earnings per share Basic earnings per share Diluted earnings per share Annual Report 2022 Note A2 A3 A4 A5 A3 A4 E1 2022 $m 14,461 150 (16,315) 959 61 (190) (874) (551) (1,425) (1,429) 4 (1,425) 20211 $m 12,097 43 (14,158) 185 109 (242) (1,966) (313) (2,279) (2,281) 2 (2,279) A6 A6 (81.5) cents (129.6) cents (81.5) cents (129.6) cents 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. The income statement should be read in conjunction with the notes to the financial statements. Financial Statements 85 Statement of comprehensive income for the year ended 30 June Loss for the period Other comprehensive income Items that will not be reclassified to profit or loss, net of tax Actuarial gain on defined benefit superannuation plan Investment valuation changes Items that can be reclassified to profit or loss, net of tax Foreign currency translation reserve: Reclassified to income statement2 Translation of foreign operations Cash flow hedges: Reclassified to income statement Effective portion of change in fair value Total other comprehensive income, net of tax Total comprehensive income for the year Total comprehensive income attributable to: Members of the parent entity Non-controlling interests Total comprehensive income for the year Note 2022 $m 20211 $m (1,425) (2,279) E1 E1 E1 E1 E1 E1 1 3 (103) 598 (310) 2,385 2,574 1,149 1,144 5 1,149 3 (6) - (639) 91 356 (195) (2,474) (2,475) 1 (2,474) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Refer to note B2 for details of a foreign currency translation reserve gain recycled to the income statement as a result of the sale of a 10 per cent interest in APLNG. The statement of comprehensive income should be read in conjunction with the notes to the financial statements. 86 Statement of financial position as at Annual Report 2022 Current assets Cash and cash equivalents Trade and other receivables Inventories Derivatives Other financial assets Income tax receivable Other assets Total current assets Non-current assets Trade and other receivables Derivatives Other financial assets Investments accounted for using the equity method Property, plant and equipment (PP&E) Exploration and evaluation assets Intangible assets Deferred tax assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Payables to joint ventures Interest-bearing liabilities Derivatives Other financial liabilities Provision for income tax Employee benefits Provisions Total current liabilities Non-current liabilities Trade and other payables Interest-bearing liabilities Derivatives Other financial liabilities Deferred tax liabilities Employee benefits Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total parent entity interest Non-controlling interests Total equity C1 D4 C7 C1 D4 C7 A5 C3 C2 C4 E2 C5 D2 D4 C7 C6 D2 D4 C7 E2 C6 D3 30 June 2022 30 June 20211 Note $m $m 1 July 20201 $m 1,240 1,959 164 630 479 89 105 472 2,298 113 769 503 7 121 4,283 4,666 14 366 1,465 6,939 3,291 245 4,658 - 47 17,025 21,308 2,407 169 2,004 741 344 - 231 43 18 675 2,225 7,360 4,331 190 5,373 462 40 20,674 25,340 1,934 202 1,401 466 237 - 234 163 620 3,416 182 3,174 860 - 90 8,342 - 3,075 243 6,245 3,255 286 2,523 - 51 15,678 24,020 3,485 131 316 1,590 727 59 242 378 6,928 5,939 4,637 - 3,074 1,744 - 1,359 37 856 7,070 13,998 10,022 6,877 3,109 11 9,997 25 10,022 - 3,224 1,395 15 5 36 1,219 5,894 11,833 9,475 7,138 525 1,792 9,455 20 9,475 193 5,451 1,343 16 - 33 1,313 8,349 12,986 12,354 7,145 716 4,472 12,333 21 12,354 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. The statement of financial position should be read in conjunction with the notes to the financial statements. Financial Statements Statement of changes in equity for the year ended 30 June Contributed equity Share-based payments reserve Foreign currency translation reserve Hedge reserve Fair value reserve Retained earnings Non- controlling interests $m Balance as at 30 June 2021 restated Prior year restatements1 Balance as at 1 July 2021 restated Profit/(loss) Other comprehensive income Total comprehensive income for the year Dividends provided for or paid On-market share buy-back (refer to note D3) Movement in contributed equity (refer to note D3) Share-based payments Total transactions with owners recorded directly in equity Balance as at 30 June 2022 Balance as at 30 June 2020 Prior year restatements1 Balance as at 1 July 2020 restated Profit/(loss) Other comprehensive income Total comprehensive income for the year Dividends provided for or paid Movement in contributed equity (refer to note D3) Share-based payments Total transactions with owners recorded directly in equity Balance as at 30 June 2021 restated 7,138 - 7,138 - - - - (250) (11) - (261) 6,877 7,145 - 7,145 - - - - (7) - (7) 226 - 226 - - - - - - 11 11 237 223 - 223 - - - - - 3 3 222 - 222 - 494 72 - 72 - 2,075 494 2,075 - - - - - - - - - - 716 2,147 860 - 860 - (638) (638) - - - - (375) - (375) - 447 447 - - - - 7,138 226 222 72 5 - 5 - 4 4 - - - - - 9 8 - 8 - (3) (3) - - - - 5 1,795 (3) 1,792 (1,429) - (1,429) (352) - - - (352) 11 4,819 (347) 4,472 (2,281) - (2,281) (396) - - (396) 1,795 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. The statement of changes in equity should be read in conjunction with the notes to the financial statements. 87 Total equity 9,478 (3) 9,475 (1,425) 2,574 1,149 (352) (250) (11) 11 (602) 20 - 20 4 1 5 - - - - - 25 10,022 21 - 21 2 (1) 1 (2) - - (2) 20 12,701 (347) 12,354 (2,279) (195) (2,474) (398) (7) 3 (402) 9,478 88 Statement of cash flows for the year ended 30 June Annual Report 2022 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Cash generated from operations Income taxes (paid)/received, net of refunds received Net cash from operating activities Cash flows from investing activities Acquisition of PP&E Acquisition of exploration and evaluation assets Acquisition of other assets Acquisition of Octopus Energy Acquisition of other investments Interest received from other parties Net proceeds from sale of non-current assets Australia Pacific LNG (APLNG) investing cash flows Divestment of ten per cent share in APLNG1 Receipt of Mandatorily Redeemable Cumulative Preference Shares (MRCPS) interest Receipt of unfranked dividends Proceeds from APLNG buy-back of MRCPS Net cash from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Joint venture operator cash call movements Settlement of foreign currency contracts Australian Energy Market Operator (AEMO) cash deposits Interest paid2 Repayment of lease principal Dividends paid to shareholders of Origin Energy Ltd, net of Dividend Reinvestment Plan (DRP) Dividends paid to non-controlling interests Repayment of Debt Service Reserve Account (DSRA) loan to equity accounted investees Buy back of shares on-market Purchase of shares on-market (treasury shares) Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash Cash and cash equivalents at the end of the year Note G6 D3 D3 2022 $m 14,663 (14,105) 558 (27) 531 (162) (65) (109) (268) (124) 2 6 1,957 50 433 1,112 2,832 2,896 (4,752) (70) (46) (290) (191) (73) (313) (1) (51) (250) (75) (3,216) 147 472 1 620 2021 $m 12,954 (12,021) 933 31 964 (124) (47) (168) - (161) 3 7 - 110 - 599 219 - (1,042) (90) (65) - (234) (76) (341) (2) (3) - (96) (1,949) (766) 1,240 (2) 472 1 Sales proceeds of $1,998 million offset by ($41) million relating to hedging and other transaction related costs. 2 Includes $17 million (2021: $17 million) of interest payments on leases. The statement of cash flows should be read in conjunction with the notes to the financial statements. Financial Statements 89 Overview Origin Energy Limited (the Company) is a for-profit company domiciled in Australia. The address of the Company’s registered office is Level 32, Tower 1, 100 Barangaroo Avenue, Barangaroo NSW 2000. The nature of the operations and principal activities of the Company and its controlled entities (the Group or Origin) are described in the segment information in note A1. On 18 August 2022, the Directors resolved to authorise the issue of these consolidated general purpose financial statements for the year ended 30 June 2022. Basis of preparation The financial statements have been prepared: • in accordance with the requirements of the Corporations Act 2001 (Cth), Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board; • on a historical cost basis, except for derivatives and other financial assets and liabilities that are measured at fair value; and • on a going concern basis. The financial statements: • are presented in Australian dollars; • are rounded to the nearest million dollars, unless otherwise stated, in accordance with Australian Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191; and • do not early adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective. Changes in accounting policies Following clarifying guidance from the International Financial Reporting Interpretations Committee (IFRIC), the Group has applied changes in accounting policies that require restatement of previously reported amounts. The nature and effect of each new amendment on the Group’s consolidated financial report are described below. IFRIC agenda decision - Configuration or Customisation Costs in a Cloud Computing Arrangement -SaaS restatement In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and customisation costs incurred related to a Software as a Service (SaaS) arrangement. Consequently, the Group has changed its accounting policy in relation to configuration and customisation costs incurred in implementing SaaS arrangements. The nature and effect of the changes as a result of changing this policy is described below. SaaS arrangements are arrangements in which the Group does not currently control the underlying software used in the arrangement. Where costs incurred to configure or customise SaaS arrangements result in the creation of a resource which is identifiable, and where the company has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others to those benefits, such costs are recognised as a separate intangible software asset and amortised over the useful life of the software on a straight-line basis. The amortisation is reviewed at least at the end of each reporting period and any changes are treated as changes in accounting estimates. Where costs incurred to configure or customise do not result in the recognition of an intangible software asset, then those costs that provide the Group with a distinct service (in addition to the SaaS access) are now recognised as expenses when the supplier provides the services. When such costs incurred do not provide a distinct service, the costs are now recognised as expenses over the duration of the SaaS contract. Previously, some costs had been capitalised and amortised over its useful life. IFRIC agenda decision - Economic Benefits from Use of a Windfarm (IFRS 16 Leases) -PPAs restatement In December 2021, IFRIC published a final agenda decision addressing whether an agreement for the use of a windfarm provides the right to obtain substantially all the economic benefits to qualify as a lease. It was determined that such an agreement conveyed neither the right nor the obligation for the retailer to obtain any of the electricity produced by the windfarm, and as such does not contain a lease. Following the IFRIC clarification, the Group has changed its accounting policy in relation to the treatment of some renewable power purchase agreements (PPAs) previously recognised as leases. As a result of applying the above guidance to the Group’s renewable PPAs, certain agreements have been retrospectively recognised as electricity derivatives. Impact on financial statements In accordance with Australian Accounting Standards, the changes in accounting policies have been adopted retrospectively and prior periods comparatives have been restated. Restated amounts are detailed in note G11. Use of judgements and estimates Preparing the financial statements in conformity with Australian Accounting Standards requires management to make judgements and apply estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions, which are based on historical experience and various other factors believed to be reasonable under the circumstances, form the basis of judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Throughout the notes to the financial statements, further information is provided about key management judgements and estimates that we consider material to the financial statements. The Group's operating environment and COVID-19 In addition to the COVID-19 pandemic; the Group's operating environment has experienced very challenging energy market conditions, with high prices and periods of supply constraints. This is most evident with the Ukraine war and the move by many countries away from importing energy from Russia. This is driving higher global energy prices and causing countries to place greater national importance on energy security. These factors have had wider impacts on consumers, businesses and the overall economy. The Group entered the 2022 financial year in a financially resilient position with significantly reduced upstream costs at APLNG, and materially reduced debt. This has enabled the Group to respond to the above factors with a focus on safely maintaining energy supply and supporting customers who have been financially affected. AEMO market suspension During the year, Origin has experienced unprecedented energy market conditions with extremely high and volatile electricity prices, driven by generation supply constraints in the National Electricity Market (NEM), high coal and gas fuel costs and wet weather impacted renewable energy generation. These conditions culminated with periods of administered wholesale electricity pricing 90 Annual Report 2022 and a temporary electricity spot market suspension in June 2022. The economic impacts of the changes in the Group's operating environment due to market conditions and COVID-19 impacts have implications for various line items in the financial statements. Strategy and climate change risks Managing the transition to a low-carbon economy is a strategic priority. With an aim to achieve net-zero emissions by 2050, the Group is committed to helping lead the transition to a low-carbon future by progressively decarbonising its business. The Group has identified certain key physical and transition risks relating to climate change. These include changes in market supply and demand for energy and fossil fuels, government policy and regulation in relation to climate change and other technological advancements that might occur as the decarbonisation transition unfolds. The Group continues to monitor climate- related legislation and policies that impact the financial report and will incorporate any required changes as they arise. We recognise that there is significant uncertainty around the pace of decarbonisation across the global economy and future changes to the Group’s climate change strategy or realisation of global decarbonisation ambitions quicker or more slowly than currently anticipated may impact some of the Group’s significant judgements and key estimates. In preparing the financial report, the key judgements and estimates consider the range of economic conditions that are forecast to exist over the remaining useful lives of assets, including expectations about future operations, the current outlook for commodity prices, discount rates, capital expenditure requirements and market supply and demand profiles. Climate change will impact those areas of the financial statements that are subject to estimation uncertainties in the medium to long term and can also introduce more volatility in assets and liabilities carried at fair value. The Group’s current strategy to manage the risks associated with climate change is contemplated in the significant judgements and estimates in the following notes to the financial statements: • B2 - Investment in APLNG • C2 - Exploration assets • C3 - Property, plant and equipment • C4 - Intangible assets • C6 - Provisions - restoration • C8 - Impairment of non-current assets In February 2022, the Group announced plans to accelerate the exit from coal-fired power generation, bringing forward the closure of the Eraring Power Station by up to seven years to as early as 2025, with timing to be determined closer to 2025. This announcement will reduce the exposure of the financial statements to climate change risks in future years. The recoverable amount estimates used in the impairment assessment for the Energy Markets Generation CGU considers climate change risk through the adjustment of cashflows associated with the early closure of Eraring in 2025. In line with this, the useful life of the Eraring Power Station has been adjusted to accelerate the depreciation expense in future years reflecting the earlier closure date. Refer to note C3. Similarly, the timing of restoration activities and associated cashflows for the Eraring site remediation work have been brought forward and are reflected in the provision balance at 30 June 2022. Refer to note C6. Paris Agreement and net zero emissions by 2050 The Group acknowledges that there are a range of possible energy transition scenarios that are aligned with the goals of the Paris Agreement. One such scenario is the International Energy Agency (IEA) Net Zero Emissions (NZE) scenario which reflects a world where there is significantly strengthened government and climate policy in order to limit warming to 1.5°C. At a domestic level, the Australian Energy Market Operator (AEMO) produces various climate scenarios for the gas and electricity sector such as the “strong electrification” scenario which is derived from the IEA NZE scenario and has also been designed to reflect a world where warming is limited to 1.5°C. The Group considers these scenarios when testing the resilience of the portfolio for the impact of climate change. At this time, the Group does not utilise the key assumptions in these scenarios to derive the critical accounting estimates in the financial statements, as these are not viewed as the most likely outcome given the uncertainty around the pace of decarbonisation across the global economy. The key estimates in the financial statements are determined using the Group’s base case assumptions which are informed by an assessment of the current market outlook. Although all potential financial reporting consequences under the scenarios above are impracticable to fully assess, the long-term commodity price outlook under the above 1.5°C scenarios would result in the following impact to the financial statements: Energy Markets For Energy Markets, commodity prices under a 1.5°C scenario are net favourable compared to the price outlook in the current base case assumptions, benefiting existing assets such as the peaking generation fleet and PPAs. Increased electrification of the NEM and other growth areas such as electric vehicle penetration and an increase in connected services as customers decarbonise their homes will provide further opportunities for the retail business. The recent announcement of the early closure of Eraring and the impairments recognised in FY2022 limit the exposure of the carrying value of the assets in the Energy Markets segment to long-term commodity price movements. There is no expected impact to the useful lives of the remaining assets or restoration and rehabilitation provisions under this 1.5°C scenario. Investment in APLNG For the Group’s investment in APLNG, the commodity price outlook and carbon price assumptions under this 1.5°C scenario are unfavourable compared to the price outlooks in the current base case. A key input into the recoverable amount assessment is the long-term oil price assumption, with the Group’s base case assumption of US$60/bbl (real, 2022) favourable compared to the IEA NZE oil price assumptions of US$36 by 2030 (real, 2022), US$30 by 2040 (real, 2022) and US$24 by 2050 (real, 2022). The Group’s preliminary assessment of the recoverable amount using the IEA NZE commodity and carbon price assumptions indicates that there is still significant value in the investment in APLNG despite the sharp price reductions. It is noted that the impact of applying these prices alone would result in an impairment of the investment at 30 June 2022, however it is currently impracticable to fully assess the potential impact under such a pricing environment as the Group would take steps to mitigate any adverse cashflow impact by adjusting its future operational and investment decisions. There are inherent limitations with scenario analysis, and it is difficult to predict which, if any, of the scenarios might eventuate. Scenarios do not constitute definitive outcomes or probabilities, and scenario analysis relies on assumptions that may or may not be, or prove to be, correct and may or may not eventuate. Scenarios may also be impacted by additional factors to the assumptions disclosed. Financial Statements 91 Items excluded from the calculation of underlying profit are reported to the Managing Director as not representing the underlying performance of the business and thus are excluded from underlying profit or underlying EBITDA. These items are determined after consideration of the nature of the item, the significance of the amount and the consistency in treatment from period to period. The nature of items excluded from underlying profit and underlying EBITDA are: • Changes in the fair value of financial instruments not in accounting hedge relationships, to remove the significant volatility caused by timing mismatches in valuing financial instruments and the related underlying transactions. The valuation changes are subsequently recognised in underlying earnings when the underlying transactions are settled; • Realised and unrealised foreign exchange gains/losses on debt held to hedge USD-denominated investment in APLNG; • Significant redundancies and other costs in relation to business restructuring, transformation or integration activities; • Gains/losses on the sale or acquisition of an asset/entity; • Transaction costs incurred in relation to the sale or acquisition of an entity; • Impairments of assets; • Significant onerous contracts; • Deferred tax liability recognition relating to the APLNG investment; • Large-scale Generation Certificates (LGCs) net shortfall charge; and • Other significant non-recurring items. A Results for the year This section highlights the performance of the Group for the year, including results by operating segment, income and expenses, results of equity accounted investees, earnings per share and dividends. A1 Segments The Group's operating segments are presented on a basis that is consistent with the information provided internally to the Managing Director, who is the chief operating decision maker. This reflects the way the Group's businesses are managed, rather than the legal structure of the Group. The reporting segments are organised according to the nature of the activities undertaken and are detailed below. • Energy Markets: Energy retailing and • wholesaling, power generation and LPG operations predominantly in Australia. Also includes Origin's investment in Octopus Energy Holdings Limited (Octopus Energy). Integrated Gas: Origin's investment in APLNG, exploration interests in the Beetaloo, Cooper-Eromanga and Canning basins and costs associated with growth initiatives such as hydrogen. It also includes overhead costs (net of recoveries from APLNG) and costs incurred in managing Origin’s exposure to LNG pricing risk and impacts of its LNG trading positions. For greater transparency, the investment in APLNG is presented separately from the residual component of the segment. • Corporate: Various business development and support activities that are not allocated to operating segments, including corporate treasury and tax items. Underlying profit and underlying EBITDA are non-statutory (non-IFRS) measures. The objective of measuring and reporting underlying profit and underlying EBITDA is to provide a more meaningful and consistent representation of financial performance by removing items that distort performance or are non-recurring in nature. 92 Annual Report 2022 A1 Segments (continued) Segment result for the year ended 30 June $m Ref. 2022 20211 2022 2021 2022 2021 2022 20211 2022 20211 Energy Markets Share of APLNG Other Corporate Consolidated Integrated Gas External revenue 13,636 11,931 - - 825 166 - - - - 14,461 12,097 - EBITDA (403) (1,205) 2,134 1,145 (689) (389) (200) 113 842 (336) Depreciation and amortisation (424) (513) - - (24) (30) (52) (39) (1,090) (879) (1,757) 1,044 (921) 224 4 4 (1) - 2 - (449) (541) (1,138) (956) (709) (415) (201) 115 (745) (1,833) 48 106 13 (190) (551) (4) 3 (242) (313) (2) 61 (190) (551) (4) 109 (242) (313) (2) (879) (1,757) 1,044 224 (661) (309) (933) (439) (1,429) (2,281) Share of ITDA of equity accounted investees EBIT Interest income2 Interest expense3 Income tax expense4 Non-controlling interests (NCI) Statutory profit/(loss) attributable to members of the parent entity Reconciliation of statutory profit/(loss) to segment result and underlying profit/(loss) Fair value and foreign exchange movements Disposals, impairments, business restructuring and other Tax and NCI items excluded from underlying profit (a) 1,574 (444) (b) (2,342) (1,740) - - - - - - (331) (556) (112) 187 1,131 (813) (62) 176 (3) 4 (2,407) (1,560) (393) (380) (560) (675) (222) (560) (222) (31) (1,836) (2,595) Total significant items (768) (2,184) Segment underlying profit/(loss)5 Underlying EBITDA5,6 (111) 365 427 979 1,044 224 2,134 1,145 (268) (297) 71 (258) (408) 407 314 (10) (88) (78) 2,114 2,036 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Interest income earned on MRCPS has been allocated to the Integrated Gas - Other segment. 3 Interest expense related to general financing is allocated to the Corporate segment. 4 Income tax expense for entities in the Origin tax consolidated group is allocated to the Corporate segment. 5 Underlying profit and underlying EBITDA are non-statutory (non-IFRS) measures. 6 Underlying EBITDA equals segment result and underlying profit/(loss) adjusted for: depreciation and amortisation; share of ITDA of equity accounted investees; interest income/(expense); income tax expense; and NCI. Financial Statements 93 A1 Segments (continued) Segment result for the year ended 30 June $m (a) Fair value and foreign exchange movements Increase/(decrease) in fair value of derivatives Net gain/(loss) from financial instruments measured at fair value Exchange (loss)/gain on foreign-denominated debt Fair value and foreign exchange movements (b) Disposals, impairments, business restructuring and other Loss on sale - Horan & Bird Energy Pty Ltd Loss on divestment - APLNG equity accounted investment Loss on sale - other assets Disposals Impairment - Energy Markets Impairments Restructuring costs2 Transaction costs Transformation costs Business restructuring Deferred tax liability recognition - APLNG Net capital gains tax on divestment - APLNG3 Gain on dilution of investment - Octopus Energy Provision for legal matters LGC net shortfall charge Onerous contracts provision4 WINconnect other income5 Other provisions Other 2022 20211 Gross Tax and NCI Gross Tax and NCI 1,155 85 (109) 1,131 - (113) (1) (114) (2,196) (2,196) (51) (5) (27) (83) - - 44 (22) (151) 48 67 - (14) (347) (26) 33 (340) - - - - - - 15 2 8 25 (39) (172) - - - (14) (20) - (245) (220) (809) (163) 159 (813) (13) - - (13) (1,504) (1,504) (3) (2) (20) (25) - - - - (198) 176 - 4 (18) (1,560) 242 49 (47) 244 - - - - 250 250 1 - 6 7 (669) - - - - (53) - (1) (723) (466) (222) Total disposals, impairments, business restructuring and other (2,407) Total significant items (1,276) (560) (2,373) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 The amount in the current year relates to the early closure of the Eraring Power Station. Refer to note C6. 3 Includes $394 million of capital gains tax, offset by a $222 million tax benefit pertaining to carry-forward capital losses. 4 This amount represents the non-cash movement during the year relating to the Group's onerous contracts. Future realised gains or losses will be recognised within underlying profit. Refer to note C6. 5 Refer to note F2 for details of the WINconnect acquisition transaction. 94 Annual Report 2022 A1 Segments (continued) Segment assets and liabilities as at 30 June $m Assets Integrated Gas Energy Markets Share of APLNG Other Corporate Consolidated 2022 20211 2022 2021 2022 2021 2022 20211 2022 20211 Segment assets 15,982 11,493 - - 972 743 155 194 17,109 12,430 Investments accounted for using the equity method (refer to note A5) Cash, funding-related derivatives and tax assets 424 407 6,392 7,315 (571) (783) - 1,296 Total assets 16,406 11,900 6,392 7,315 401 1,256 - 666 821 - 6,245 6,939 643 666 1,939 837 24,020 21,308 Liabilities Segment liabilities Financial liabilities, interest-bearing liabilities, funding-related derivatives and tax liabilities Total liabilities Net assets (6,713) (4,534) (6,713) (4,534) - - - (1,763) (1,210) (604) (673) (9,080) (6,417) - (1,763) (1,210) (5,522) (6,089) (13,998) (11,833) (4,918) (5,416) (4,918) (5,416) 9,693 7,366 6,392 7,315 (1,362) 46 61 (4,701) (5,252) 10,022 9,475 4 15 766 491 Additions of non-current assets 697 415 - - 65 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Financial Statements A2 Revenue 2022 $m Sale of electricity Sale of gas Pool revenue Solar and batteries Other revenue Total revenue 2021 $m Sale of electricity Sale of gas Pool revenue Solar and batteries1 Other revenue1 Total revenue Retail 4,196 1,185 - - - 5,381 4,381 1,148 - - 35 5,564 Business and Wholesale 2,891 1,627 2,608 - 28 7,154 2,754 1,307 1,337 - 34 5,432 LPG - 705 - - - 705 - 585 - - 4 589 Solar and Energy Services Integrated Gas 126 114 - 107 49 396 94 108 - 111 33 346 - 825 - - - 825 - 166 - - - 95 Total 7,213 4,456 2,608 107 77 14,461 7,229 3,314 1,337 111 106 166 12,097 1 Prior period amounts for Solar and Energy Services were restated to reflect a new category for solar and batteries. The Group's primary revenue streams relate to the sale of electricity and natural gas to retail (Residential and Small to Medium Enterprises), business and wholesale customers, and the sale of generated electricity into the NEM. Key judgements and estimates The Group recognises revenue from electricity and gas sales once the energy has been consumed by the customer. When determining revenue for the financial period, management estimates the volume of energy supplied since a customer's last bill. The estimation of unbilled consumption requires judgement and is based on various assumptions including: • volume and timing of energy consumed by customers; • allocation of estimated electricity and gas volumes to various pricing plans; • discounts linked to customer payment patterns; and • loss factors. Management also uses unbilled consumption volumes to accrue network expenses incurred by the Group for unread customer electricity and gas meters. The calculation of unbilled revenue requires significant judgement in estimating the level of energy consumption by customers during the unbilled period to 30 June 2022. The Group uses a backcasting model and volume-matching process to provide a reliable estimate of unbilled revenue as at 30 June 2022. Refer to note C1 for the Group's consideration of the COVID-19 impact on its cash collection of trade receivables and unbilled revenue. Retail contracts Retail electricity service is generally marketed through standard service offers that provide customers with discounts on published tariff rates. Contracts have no fixed duration, generally require no minimum consumption, and can be terminated by the customer at any time without significant penalty. The supply of energy is considered a single performance obligation for which revenue is recognised upon delivery to customers at the offered rate. Where customers are eligible to receive additional behavioural discounts, Origin considers this to be variable consideration, which is estimated as part of the unbilled process. Business and wholesale contracts Contracts with business and wholesale customers are generally medium to long-term, higher-volume arrangements with fixed or index-linked energy rates that have been commercially negotiated. The nature and accounting treatment of this revenue stream is largely consistent with retail sales. Some business and wholesale sales arrangements also include the transfer of renewable energy certificates (RECs), which represent an additional performance obligation. Revenue is recognised for these contracts when Origin has the 'right to invoice' the customer for consideration that corresponds directly with the value of units of energy delivered to the customer. Pool revenue relates to sales by Origin generation assets into the NEM, as well as revenue associated with gross settled PPAs. Origin has assessed it is acting as the principal in relation to transactions with the NEM and therefore recognises pool sales on a gross basis. Revenue from these sales is recognised at the spot price achieved when control of the electricity passes to the grid. 96 Annual Report 2022 A2 Revenue (continued) Solar and energy services Solar and batteries revenue includes the sale, installation, repairs and maintenance services of solar photovoltaic systems, and battery solutions, to residential and business customers. Revenue is recognised at the point in time that the system is installed, or the service provided is complete. Community Energy Services supplies electricity and gas within embedded network sites. Similar to Retail contracts, the supply of energy is considered a single performance obligation for which revenue is recognised upon delivery to the customers at the offered rate. LPG and Integrated Gas Revenue from the sale of LPG (from Origin's Energy Markets segment) and LNG (from Origin's Integrated Gas segment) is recognised at the point in time that the customer takes physical possession of the commodity. Revenue is recognised at an amount that reflects the consideration expected to be received. A3 Other income Net gain on dilution of investments (refer to note B4) Fees and services, and other income Other income Interest earned from other parties1 Interest earned on APLNG MRCPS (refer to note B4) Interest income 1 Interest income is measured using an effective interest rate method and recognised as it accrues. A4 Expenses Cost of sales2 Employee expenses3 Depreciation and amortisation Impairment of non-current assets4 Net loss on divestment5 Impairment of trade receivables (net of bad debts recovered) (Increase)/decrease in fair value of derivatives Net (gain)/loss from financial instruments measured at fair value Net loss on sale of assets Net foreign exchange loss/(gain) Onerous contracts provision6 Other7 Expenses Interest on borrowings Interest on lease liabilities Unwind of discounting on long-term provisions Interest expense 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Includes variable lease payments of $24 million (2021: $21 million). 3 Includes contributions to defined contribution superannuation funds of $60 million (2021: $62 million). 4 Refer to note C8. 5 Relates to the divestment of 10 per cent of Origin’s investment in APLNG. Refer to note B2.1 for further details. 6 Refer to note C6. 7 Includes low-value assets and short-term leases payments of $3 million (2021: $5 million). 2022 $m 44 106 150 13 48 61 2022 $m 13,388 690 449 2,196 113 65 (1,155) (85) 2 128 (51) 575 2021 $m - 43 43 3 106 109 20211 $m 10,261 643 541 1,504 - 88 809 163 11 (163) (176) 477 16,315 14,158 169 17 4 190 218 17 7 242 Financial Statements 97 A5 Results of equity accounted investees for the year ended 30 June 2022 $m APLNG1,2 Total joint ventures Octopus Energy3 Gasbot Pty Limited Gaschem Sydney Total associates Total 2021 $m APLNG1,2 Total joint ventures Octopus Energy3,4 Gasbot Pty Limited Gaschem Sydney Total associates Total Share of EBITDA Share of ITDA Share of net profit/(loss) 2,134 2,134 (36) (1) - (37) (1,086) (1,086) (51) - (1) (52) 2,097 (1,138) 1,145 1,145 (3) (1) - (4) 1,141 (917) (917) (39) - - (39) (956) 1,048 1,048 (87) (1) (1) (89) 959 228 228 (42) (1) - (43) 185 1 APLNG's summary financial information is separately disclosed in notes B2.2, B2.3 and B2.4. 2 Included in the Group’s share of net profit is $4 million (2021: $4 million) of MRCPS interest income, in line with the depreciation of the capitalised interest in APLNG’s result. Refer to note B2.2. 3 The Group holds an 18.7 per cent interest in Octopus Energy and has significant influence over the entity. The prior year interest was 20 per cent. Refer to note B4 for details regarding the dilution of the Group's interest during the year. Included in the Group's share of net profit is $18 million (2021: $18 million) of depreciation, relating to the fair value attributed to assets at the acquisition date. Refer to note B3. 4 The prior year amounts have been restated to reflect adjustments disclosed in note G11. as at 30 June $m APLNG1,2 Octopus Energy3,4 Gasbot Pty Limited Gaschem Sydney Total 1 APLNG's summary financial information is separately disclosed in notes B2.2, B2.3 and B2.4. 2 During the year the Group divested ten per cent of its share of APLNG. Refer to note B2.1. 3 Octopus Energy's summary financial information is separately disclosed in note B3. 4 The prior year amount has been restated to reflect adjustments disclosed in note G11. Equity accounted investment carrying amount 2022 5,821 413 1 10 2021 6,532 395 1 11 6,245 6,939 98 Annual Report 2022 A6 Earnings per share Weighted average number of shares on issue-basic2 Weighted average number of shares on issue-diluted3 Statutory profit Earnings per share based on statutory consolidated profit Statutory loss $m Basic earnings per share Diluted earnings per share Underlying profit Earnings per share based on underlying consolidated profit Underlying profit $m4 Underlying basic earnings per share Underlying diluted earnings per share 2022 20211 1,753,612,216 1,759,555,663 1,762,126,506 1,764,549,534 (1,429) (2,281) (81.5) cents (129.6) cents (81.5) cents (129.6) cents 407 23.2 cents 23.1 cents 314 17.8 cents 17.8 cents 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 The basic earnings per share calculation uses the weighted average number of shares on issue during the period reduced by shares bought-back and excluding treasury shares held. 3 The diluted earnings per share calculation uses the weighted average number of shares on issue during the period reduced by shares bought-back and excluding treasury shares held. It is also adjusted to reflect the number of shares that would be issued if outstanding Options, Performance Share Rights, Deferred Share Rights, Restricted Shares and Matching Share Rights were to be exercised (2022: 8,514,290; 2021: 4,993,871). 4 Refer to note A1 for a reconciliation of statutory profit to underlying consolidated profit. A7 Dividends The Directors have determined to pay a final dividend of 16.5 cents per share, partially franked to 75 per cent, on ordinary shares. The dividend will be paid on 30 September 2022. Dividends paid during the year ended 30 June are detailed below. Final unfranked dividend of 7.5 cents per share, in respect of FY2021, paid 1 October 2021 (2021: 10 cents per share, in respect of FY2020, unfranked, paid 2 October 2020) Interim unfranked dividend of 12.5 cents per share, in respect of FY2022, paid 25 March 2022 (2021: 12.5 cents per share, in respect of FY2021, unfranked, paid 26 March 2021) Total dividends provided for or paid Dividend franking account 2022 $m 132 220 352 2021 $m 176 220 396 Franking credits available to shareholders of Origin Energy Limited for subsequent financial years are shown below. Australian franking credits available at 30 per cent New Zealand franking credits available at 28 per cent (in NZD) 86 304 (7) 304 Financial Statements 99 B Investment in equity accounted joint ventures and associates This section provides information on the Group’s equity accounted investments including financial information relating to APLNG and Octopus Energy. B1 Interests in equity accounted joint ventures and associates Joint ventures and associates APLNG1 Octopus Energy2,3 PNG Energy Developments Limited Gasbot Pty Limited Gaschem Sydney KUBU Energy Resources (Pty) Limited Reporting date 30 June 30 April Country of incorporation Australia United Kingdom 31 December PNG 30 June Australia 31 December Germany 30 June Botswana Ownership interest (per cent) 2022 27.5 18.7 50.0 35.0 25.0 - 2021 37.5 20.0 50.0 35.0 25.0 50.0 1 APLNG is a separate legal entity. Operating, management and funding decisions require the unanimous support of the Foundation Shareholders, which includes the Group and ConocoPhillips. Accordingly, joint control exists and the Group has classified the investment in APLNG as a joint venture. 2 Octopus Energy is a separate legal entity. The Group’s investment is equity accounted as a result of the Group’s active participation on the Board and the Group’s ability to impact decision making, leading to the assessment that significant influence exists. 3 Refer to note B4 for details of additional equity transactions after 30 June 2022. Of all the above joint ventures and associates, only the interests in APLNG and Octopus Energy have a material impact on the Group at 30 June 2022. B2 Investment in APLNG This section provides information on financial information related to the Group's investment in the equity accounted joint venture APLNG. B2.1 Sale of share of APLNG Subsequent to 31 December 2021, the Foreign Investment Review Board approved ConocoPhillips application to acquire an additional 10 per cent in APLNG from Origin, reducing Origin's interest from 37.5% to 27.5%. All conditions precedent under the share sale agreement between Origin and ConocoPhillips were satisfied and completion occurred on 18 February 2022. On 8 December 2021, Origin classified the portion of the asset to be divested as held for sale and recognised an impairment of $193 million to reduce the carrying value of the portion sold to its estimated fair value of $1,998 million. At completion, this impairment was partially offset by a net gain of $80 million, outlined in the table below, resulting in the final net loss on divestment amounting to $113 million. Foreign currency translation reserve1 FX hedging costs2 Other completion adjustments Total completion adjustments 2022 $m 105 (18) (7) 80 1 An amount of $105 million was recycled to the income statement from the foreign currency translation reserve at completion. 2 On execution of the previously announced transaction, US$285 million was hedged at a forward rate of AUD/USD 0.749. The net loss on the hedge contract on closing out the position amounted to $18 million. The following amounts in notes B2.2, B2.3 and B2.4 reflect this change in ownership which was effective from 8 December 2021. 100 Annual Report 2022 B2.2 Summary APLNG income statement for the year ended 30 June 2022 2021 $m Operating revenue Operating expenses EBITDA Depreciation and amortisation expense Interest income Interest expense – MRCPS Other interest expense Income tax expense ITDA Statutory result for the year Other comprehensive income Statutory total comprehensive income2 Underlying profit for the year3 Underlying EBITDA for the year3 Total APLNG 9,362 (2,486) 6,876 (1,563) 9 (141) (328) (1,456) (3,479) 3,397 - 3,397 3,397 6,876 Origin interest1 2,134 (495) 3 (48) (105) (445) (1,090) 1,044 - 1,044 1,044 2,134 Total APLNG 4,595 (1,544) 3,051 (1,568) 6 (282) (357) (255) (2,456) 595 - 595 595 3,051 Origin interest1 1,145 (588) 2 (106) (134) (95) (921) 224 - 224 224 1,145 1 Origin's interest is 27.5 per cent. Prior to 8 December 2021 it was 37.5 per cent. 2 Excluded from the above is $4 million (2021: $4 million) (Origin share) of MRCPS interest income that has been recognised by Origin, in line with the depreciation of the capitalised interest in APLNG’s result above. Refer to note B2.3. This adjustment is disclosed under the Integrated Gas - Other segment on the 'share of ITDA of equity accounted investees' line in note A1. 3 Underlying profit and underlying EBITDA are non-statutory (non-IFRS) measures. Income and expense amounts are converted from USD to AUD using the average exchange rate prevailing for the relevant period. Financial Statements B2.3 Summary APLNG statement of financial position 100 per cent APLNG as at 30 June $m Cash and cash equivalents Assets classified as held for sale Other assets Current assets Receivables from shareholders PP&E Exploration, evaluation and development assets Other assets Non-current assets Total assets Bank loans – secured Liabilities classified as held for sale Other liabilities Current liabilities Bank loans – secured Payable to shareholders (MRCPS) Other liabilities Non-current liabilities Total liabilities Net assets Group's interest of 27.5 (prior to 8 Dec 2021: 37.5) per cent of APLNG net assets Group's impairment expense Group's own costs MRCPS elimination1 Investment in APLNG Pty Ltd2 101 2021 905 24 647 1,576 335 31,352 486 730 32,903 34,479 681 1 588 1,270 7,179 3,417 3,107 13,703 14,973 19,506 7,315 (650) 25 (158) 6,532 2022 1,544 - 788 2,332 312 32,083 558 142 33,095 35,427 776 - 766 1,542 7,075 - 3,569 10,644 12,186 23,241 6,392 (477) 18 (112) 5,821 1 During project construction, when the Group received interest on the MRCPS from APLNG, it recorded the interest as income after eliminating a proportion of this interest that related to its ownership interest in APLNG. At the same time, when APLNG paid interest to the Group on MRCPS, the amount was capitalised by APLNG. Therefore, these capitalised interest amounts form part of the cost of APLNG's assets and these assets have been depreciated since commencement of operations. The proportion attributable to the Group’s own interest (37.5 per cent prior to 8 December 2021 and 27.5 per cent thereafter) is eliminated through the equity accounted investment balance. 2 Includes a movement of $631 million in foreign exchange that has been recognised in the foreign currency translation reserve. This represents the net amount after $105 million was recycled to the income statement on divestment. Also included is a movement of A$433 million (US$303 million) relating to unfranked dividends received from APLNG. Reporting date balances are converted from USD to AUD using an end-of-period exchange rate of 0.6891 (2021: 0.7516). Key judgements and estimates The carrying amount of the Group's equity accounted investment in APLNG is reviewed at each reporting date to determine whether there is any indication of impairment or reversal of impairment. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made. The Group’s assessment of the recoverable amount uses a discounted cash flow methodology and considers a range of macroeconomic and project assumptions, including oil and LNG price, AUD/USD exchange rates, discount rates and costs over the asset's life. No impairment loss or reversal of impairment was recognised during the year. Climate change is a material risk that can affect the Group’s operations through current and future climate-related legislation and policies and climate related scenarios. Future climate related conditions, legislation and policies may have an impact on future commodity prices, foreign exchange rates, discount rates, inflation, global market supply and demand conditions and whether reserve quantities are capable of economic extraction. 102 Annual Report 2022 B2.4 Summary APLNG statement of cash flows 100 per cent APLNG for the year ended 30 June $m Cash flow from operating activities Receipts from customers Payments to suppliers and employees Net cash from operating activities Cash flows from investing activities Loan repaid by Origin Acquisition of PP&E Acquisition of exploration and development assets Proceeds from sale of assets Other investing activities Net cash used in investing activities Cash flows from financing activities Payments relating to other financing activities Repayment of lease principal Payment of interest on lease liabilities Repayment of borrowings Payments of transaction and interest costs relating to borrowings Payments for buy-back of MRCPS Payments of interest on MRCPS Payments of ordinary dividends Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash Cash and cash equivalents at the end of the year 2022 2021 9,529 (2,459) 7,070 51 (393) (22) 68 7 (289) (22) (55) (15) (694) (233) (3,544) (145) (1,573) (6,281) 500 905 139 1,544 4,808 (1,494) 3,314 3 (431) (28) - 8 (448) (48) (45) (19) (672) (263) (1,598) (293) - (2,938) (72) 1,072 (95) 905 Cash flow amounts are converted from USD to AUD using the exchange rate that approximates the actual rate on the date of the cash flows. Financial Statements 103 B3 Investment in Octopus Energy Holdings Limited Octopus Energy is an energy retailer and technology company incorporated in the United Kingdom and is not publicly listed. During the year the Group's ownership was reduced from 20 per cent to 18.7 per cent following additional equity transactions undertaken by Octopus Energy. Refer to note B4 for further details. The following table summarises the financial information of Octopus Energy, as included in its financial statements, adjusted for differences in accounting policies. The table also reconciles the summarised financial information to the carrying amount of the Group's interest in Octopus Energy. Summary Octopus Energy income statement for the year ended 30 June $m Operating revenue Statutory and underlying result for the year Other comprehensive income Statutory total comprehensive income3 2022 Total Octopus Energy 8,562 (345) - (345) Origin interest2 (69) - (69) 20211 Total Octopus Energy 3,907 (121) - (121) Origin interest2 (24) - (24) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Origin's interest is 18.7 per cent. Prior to 1 December 2021 it was 20 per cent. Refer to note B4. 3 $18 million (2021: $18 million) (Origin share) of amortisation relating to the fair value attributed to assets at the acquisition date is not included above as it is recognised by Origin. Income statement amounts are converted from GBP to AUD using the average rate prevailing for the relevant period. Summary Octopus Energy statement of financial position as at 30 June $m Current assets2 Non-current assets Current liabilities3 Non-current liabilities3 Net assets Group's interest of 18.7 per cent (prior to 1 Dec 2021: 20 per cent) of Octopus Energy net assets Goodwill and fair value adjustments Group's own costs Group's carrying amount of the investment in Octopus Energy 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Current assets include cash and cash equivalents of $800 million (2021: $233 million). 2022 2,961 570 (2,867) (11) 653 122 285 6 413 20211 1,317 331 (1,372) - 276 55 334 6 395 3 Includes current financial liabilities and non-current financial liabilities of $1,732 million (2021: $703 million) and $11 million (2021: $nil) respectively. Reporting date balances are converted from GBP to AUD using an end-of-period exchange rate of 0.5665 (2021: 0.5428). The associate has no contingent liabilities or capital commitments as at 30 June 2022. 104 Annual Report 2022 B4 Transactions between the Group and equity accounted investees APLNG Service transactions The Group provides services to APLNG including corporate services, upstream operating services related to the development and operation of APLNG's natural gas assets, and marketing services relating to coal seam gas (CSG). The Group incurs costs in providing these services and charges APLNG for them in accordance with the terms of the contracts governing those services. Commodity transactions Separately, the Group has entered agreements to purchase gas from APLNG (2022: $401 million; 2021: $354 million) and sell gas to APLNG (2022: $17 million; 2021: $7 million). At 30 June 2022, the Group's outstanding payable balance for purchases from APLNG was $25 million (2021: $55 million) and outstanding receivable balance for sales to APLNG was $7 million (2021: $7 million). Funding transactions The Group recorded cash received of A$1,162 million (2021: $709 million) and reflected a reduction in the MRCPS non-current financial asset during the financial year. The related MRCPS dividend of A$50 million was recognised as interest income. As at 30 June 2022, the APLNG MRCPS were fully bought back and APLNG have commenced distributions via unfranked dividends of which $433 million were received during the year. During the year, Origin repaid $51 million (2021: $3 million) of the loan from APLNG under the APLNG project finance DSRA requirements. Octopus Energy Initial investment - deferred consideration and BOT milestone payments On 1 May 2020, the Group announced the acquisition of a 20 per cent equity stake in Octopus Energy for a total cash consideration of £215 million (A$412 million), of which £65 million was paid prior to 30 June 2020 and £150 million was deferred over two financial years. The Group has also entered into a licensing agreement for a total cash consideration of £25 million, of which £5 million was paid prior to 30 June 2020 and £20 million was deferred over two financial years. During the year, the Group paid £100 million (A$189 million) to Octopus Energy in respect of the remaining deferred consideration payable under the equity purchase agreement. A further £15 million (A$28 million) was also paid to Octopus Energy during the year, representing £10 million of the remaining deferred consideration payable under the licensing agreement and an additional £5 million which became payable on achievement of certain milestones. Additional equity transactions On 27 September 2021, the Group committed an additional investment of £38 million (~A$72 million) to maintain its 20 per cent equity interest, following the announcement of an investment into Octopus Energy by a fund managed by Generation Investment Management (GIM) for approximately a seven per cent interest in Octopus Energy. This amount was paid in October 2021 and was recognised as an increase in the carrying amount of the Group's equity investment in Octopus Energy. In December 2021, GIM obtained a further three per cent interest in Octopus Energy and Octopus Energy announced that the CPP Investment Board (CPPIB) agreed to acquire a six per cent stake in Octopus Energy for £211 million with completion of the CPPIB transaction occurring in two tranches. The first CPPIB tranche was completed in December 2021. The GIM and CPPIB transactions in December 2021 resulted in a dilution of the Group’s ownership in Octopus Energy to 18.7 per cent at 31 December 2021 and the Group has recognised a gain on dilution of $44 million in the current year. In April 2022, £4.5 million ($8 million) was paid to Octopus Energy in respect of our equity investment. The amount represents a tranche 2 milestone payment under the previous announced transaction between Tokyo Gas and Octopus and was required to maintain the Group’s 18.7 per cent interest. On 26 July 2022 Origin announced an additional investment of £94 million (approximately A$163 million) to restore its 20 per cent equity interest. Financial guarantee The Group has provided a financial guarantee to Octopus Energy’s financiers and during the year, $9 million (2021: $8 million) has been recognised within other income in respect of the financial guarantee income. The current financial guarantee expires in March 2023. Financial Statements 105 C Operating assets and liabilities This section provides information on the assets used to generate the Group's trading performance and the liabilities incurred as a result. C1 Trade and other receivables The following balances are amounts due from the Group's customers and other parties. Current Trade receivables net of allowance for impairment Unbilled revenue net of allowance for impairment Other receivables Total current Non-current Trade receivables Other receivables Total non-current 2022 $m 769 2,107 540 3,416 - - - 2021 $m 602 1,444 252 2,298 9 5 14 Trade and other receivables are initially recorded at the amount billed to customers or other counterparties. Unbilled receivables represent estimated gas and electricity supplied to customers since their previous bill was issued. The carrying value of all receivables, including unbilled revenue, reflects the amount anticipated to be collected. Key judgements and estimates Recoverability of trade receivables: Judgement is required in determining the level of provisioning for customer debts. Impairment allowances take into account the age of the debt, historic collection trends and expectations about future economic conditions. Unbilled revenue: Unbilled gas and electricity revenue is not collectable until customers' meters are read and invoices issued. Refer to note A2 for judgement applied in determining the amount of unbilled energy revenue to recognise. Credit risk and collectability The Group minimises the concentration of credit risk by undertaking transactions with a large number of customers from across a broad range of industries. Credit approval processes are in place for large customers and all customers are required to pay in accordance with agreed payment terms. Depending on the customer segment, settlement terms are generally 14 to 30 days from the date of the invoice. For some debtors, the Group may also obtain security in the form of deposits, guarantees, deeds of undertaking or letters of credit, which can be called upon if the counterparty defaults. Debtor collectability is assessed on an ongoing basis and any resulting impairment losses are recognised in the income statement. The Group applies the simplified approach to providing for trade receivable and unbilled revenue impairment, which requires the expected lifetime credit losses to be recognised when the receivable is initially recognised. To measure expected lifetime credit losses, trade receivables and unbilled revenue balances have been grouped based on shared credit risk characteristics and ageing profiles. A debtor balance is written off when recovery is no longer assessed to be possible. With the emergence of COVID-19, the government introduced lockdowns and other restrictions to combat the spread of the virus, which has had a wide-ranging impact on businesses and individuals, with job losses and business shutdowns in certain industries. This has placed increased pressure on businesses' ability to absorb these impacts, and on consumer budgets. Collectively, this impacts the Group's debt collection performance and any expected credit losses. At the date of this report, the Group has not experienced a significant impact on its debt collection as a result of COVID-19. Despite this, there remains future credit risk associated with trade receivable amounts due to the unprecedented nature of this event, such that historical performance cannot be used in isolation as an indicator of the future. The impacts seen in other countries are not comparable due to different consumer patterns, demographics and responses to COVID-19, including the nature and quantum of government stimulus. 106 Annual Report 2022 C1 Trade and other receivables (continued) The Group has assessed its provision for bad and doubtful debts in accordance with AASB 9 Financial Instruments considering: • Current collection performance, including the COVID-19 period when lockdown restrictions and government stimulus measures were in place, and expected credit default frequencies; • Regulatory and economic outlook, including forecast unemployment rates and the timing and quantum of government stimulus packages and other relief measures provided by banks and landlords; and • Risk profile of customers and industry-specific risk assessments based on actual and forecasted volumes as a measure for credit risk. These considerations require significant judgement. The Group models the expected credit loss by customer type and industry group. Where possible, publicly available information, such as expected default rates, has been applied. For residential customers, a higher allowance for impairment is included for those with significantly aged receivables. As at 30 June 2022, the allowance for impairment in respect of trade receivables and unbilled revenue is $186 million (2021: $186 million). The average age of trade receivables is 18 days (2021: 19 days). Other receivables are neither past due nor impaired, and relate principally to generation and hedge contract receivables. The ageing of trade receivables and unbilled revenue at the reporting date is detailed below. $m Unbilled revenue Not yet due Less than 30 days 31-60 days past due 61-90 days past due Greater than 91 days Total 2022 2021 Gross 2,120 539 86 49 30 238 3,062 Impairment allowance (13) (8) (5) (9) (8) (143) (186) Gross 1,465 380 105 45 30 207 2,232 The movement in the allowance for impairment in respect of trade receivables and unbilled revenue during the year is shown below. Balance as at 1 July Impairment losses recognised Amounts written off Balance as at 30 June 186 65 (65) 186 Impairment allowance (21) (8) (7) (9) (9) (132) (186) 162 88 (64) 186 Financial Statements C2 Exploration and evaluation assets Balance as at 1 July Additions Exploration write-off Balance as at 30 June1 107 2021 $m 190 55 - 245 2022 $m 245 65 (24) 286 1 The closing balance primarily relates to the Group’s 77.5 per cent share in the Beetaloo Basin joint venture with Falcon Oil & Gas (Beetaloo asset) and the Group's interests in several permits in the Canning Basin with Buru Energy and Rey Resources. The Group holds a number of exploration permits that are grouped into areas of interest according to geographical and geological attributes. Expenditure incurred in each area of interest is accounted for using the successful efforts method. Under this method, all general exploration and evaluation costs are expensed as incurred except the direct costs of acquiring the rights to explore, drilling exploratory wells and evaluating the results of drilling. These direct costs are capitalised as exploration and evaluation assets pending the determination of the success of the well. If a well does not result in a successful discovery, the previously capitalised costs are immediately expensed. The carrying amounts of exploration and evaluation assets are reviewed at each reporting date to determine whether any of the following indicators of impairment are present: • • • • the right to explore has expired, or will expire in the near future, and is not expected to be renewed; further exploration for and evaluation of resources in the specific area is not budgeted or planned for; the Group has decided to discontinue activities in the area; or there is sufficient data to indicate the carrying value is unlikely to be recovered in full from successful development or by sale. Where an indicator of impairment exists, the asset's recoverable amount is estimated. If it is concluded that the carrying value of an exploration and evaluation asset is unlikely to be recovered by future exploitation or sale, an impairment is recognised in the income statement for the difference. Key judgement Recoverability of exploration and evaluation assets Assessment of the recoverability of capitalised exploration and evaluation expenditure requires certain estimates and assumptions to be made as to future events and circumstances, particularly in relation to whether economic quantities of reserves have been discovered. Such estimates and assumptions may change as new information becomes available. Additionally, future climate-related conditions, legislation and policies may impact whether reserve quantities are capable of economic extraction. The recoverability of these assets continues to be monitored by the Group. Such estimates and assumptions may change as new information becomes available. Upon approval of the commercial development of a project, the exploration and evaluation asset is classified as a development asset. Once production commences, development assets are transferred to PP&E. 108 Annual Report 2022 C3 Property, plant and equipment Owned Right-of-use Total Plant and equipment Land and buildings Capital work in progress Plant and equipment Land and buildings $m 2022 Cost Less: Accumulated depreciation and impairment losses Total Balance as at 1 July 2021 Additions Net restoration movement Disposals Modifications to lease terms Depreciation/amortisation Transfers within PP&E Transfers to intangibles Effect of movements in foreign exchange rates Balance as at 30 June 2022 2021 Cost Less: Accumulated depreciation and impairment losses Total Balance as at 1 July 2020 Additions Disposals Modifications to lease terms Depreciation/amortisation Impairment Transfers within PP&E Transfers from intangibles Effect of movements in foreign exchange rates 5,952 194 (3,649) 2,303 2,458 41 (31) (9) - (216) 60 (3) 3 2,303 5,863 (3,405) 2,458 3,443 36 - - (294) (801) 71 5 (2) (79) 115 112 6 - - - (3) - - - 115 194 (82) 112 143 1 - - (4) (28) - - - 371 - 371 317 114 - - - - (60) - - 371 317 - 317 278 110 - - - - (71) - - 317 266 397 7,180 (97) 169 84 127 - - 12 (54) - - - 169 162 (78) 84 108 29 (13) 12 (48) (4) - - - 84 (100) 297 320 1 - (78) 85 (31) - - - (3,925) 3,255 3,291 289 (31) (87) 97 (304) - (3) 3 297 3,255 408 6,944 (88) 320 359 1 (1) 1 (40) - - - - 320 (3,653) 3,291 4,331 177 (14) 13 (386) (833) - 5 (2) 3,291 Balance as at 30 June 2021 2,458 112 Owned PP&E PP&E is recorded at cost less accumulated depreciation, amortisation and impairment charges. Cost includes the estimated future cost of required closure and rehabilitation. The carrying amounts of assets are reviewed to determine if there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated and if required, an impairment is recognised in the income statement. Depreciation is calculated on a straight-line basis so as to write off the cost of each asset over its expected useful life. Leasehold improvements are amortised over the period of the relevant lease or estimated useful life, whichever is shorter. Land and capital work in progress are not depreciated. The estimated useful lives used in the calculation of depreciation are shown below. • Buildings, including leasehold improvements 10 to 50 years • Plant and equipment 3 to 30 years Financial Statements 109 C3 Property, plant and equipment (continued) Leased PP&E The Group's leased assets include commercial offices, power stations, LPG terminals and shipping vessels, motor vehicles and other items of equipment. ROU assets are recognised at the commencement of a lease. ROU assets are initially valued at the corresponding lease liability amount adjusted for any payments already made, lease incentives received or initial direct costs incurred when entering into the lease. Where the Group is required to restore the ROU asset at the end of the lease, the cost of restoration is also included in the value of the ROU asset. ROU assets are depreciated on a straight-line basis over the shorter of the lease term or the useful life of the ROU asset. The carrying amounts of ROU assets are reviewed to determine if there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated, and if required, an impairment is recognised in the income statement. Refer to note D2 for discussion of the recognition and measurement of associated lease liability balances. Key judgements and estimates Recoverability of carrying values: Estimates of recoverable amounts are based on an asset’s value-in-use or fair value less costs to sell, whichever is higher. The recoverable amount of these assets is sensitive to changes in key assumptions. Refer to note C8 for further details. Estimation of useful economic lives: A technical assessment of the operating life of an asset requires significant judgement. Useful lives are amended prospectively when a change in the operating life is determined. The estimated useful lives of our assets align with our climate change strategy commitments. Restoration provisions: An asset's carrying value includes the estimated future cost of required closure and rehabilitation activities. Refer to note C6 for a judgement related to restoration provisions. Climate change risks: Future climate-related conditions, legislation and policies may have an impact on these estimates and continues to be monitored. Lease term: Where lease arrangements contain options to extend the term or terminate the contract, the Group assesses whether it is 'reasonably certain' that the option to extend or terminate will be exercised. Consideration is given to all facts and circumstances that create an economic incentive to extend or terminate the contract. Lease liabilities and ROU assets are measured using the reasonably certain contract term. 110 Annual Report 2022 C4 Intangible assets Goodwill net of impairment losses Software and other intangible assets Accumulated amortisation Total 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Reconciliations of the carrying amounts of each class of intangible asset are set out below. $m Balance as at 30 June 2021 restated Additions2 Transfers from PP&E Impairment3 Amortisation expense Balance as at 30 June 2022 Balance as at 1 July 2020 restated Additions4 Transfers to PP&E Impairment3 Amortisation expense Balance as at 30 June 2021 restated 2022 $m 1,965 1,684 (1,126) 2,523 Goodwill1 Software and other intangibles1 4,136 25 - (2,196) - 1,965 4,818 - - (682) - 4,136 522 183 3 - (150) 558 555 135 (5) - (163) 522 20211 $m 4,136 1,528 (1,006) 4,658 Total1 4,658 208 3 (2,196) (150) 2,523 5,373 135 (5) (682) (163) 4,658 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Includes $77 million of software and other intangibles related to the acquisition of WINconnect Pty Ltd and $25 million of goodwill (refer to note F2). Additions also include $15 million related to the acquisition of Yarrabee Solar Farm and $12 million related to the acquisition of the Carisbrook Solar Farm. 3 Includes $2,196 million (2021: $671) million related to the impairment of Energy Markets segment goodwill. The remaining prior year amount of $11 million related to goodwill written off when Horan & Bird Energy Pty Ltd was sold. 4 Additions include amounts relating to the build of the Kraken technology platform, along with amounts relating to the implementation of a new Enterprise Resource Planning system for the Group. Goodwill is stated at cost less any accumulated impairment losses and is not amortised. Software and other intangible assets are stated at cost less any accumulated impairment losses and accumulated amortisation. Amortisation is recognised as an expense on a straight-line basis over the estimated useful lives of the intangible assets. The average amortisation rate for software and other intangibles (excluding capital work in progress) was 11 per cent (2021: 13 per cent). Key judgements and estimates Recoverability of carrying values: Refer to note C8 for further details. C5 Trade and other payables Current Trade payables and accrued expenses Deferred consideration1 Total 1 The prior year deferred consideration balance was settled during the year. Refer to note B4. 2022 $m 3,485 - 3,485 2021 $m 2,205 202 2,407 Financial Statements C6 Provisions $m Balance as at 1 July 2021 Provisions recognised Provisions released Payments/utilisation Unwinding of discounting Effect of movements in foreign exchange rates Balance as at 30 June 2022 Current Non-current Total provisions 111 Total 1,262 448 (496) (20) 4 36 1,234 378 856 1,234 Restoration1 Onerous contracts2 Other3 675 9 (48) (8) 1 - 629 411 393 (446) - 3 36 397 176 46 (2) (12) - - 208 1 The closing balance includes amounts relating to the restoration of the Eraring Power Station site and other generation gas power station locations. Also included within this balance are rehabilitation provisions for contamination at existing and legacy operating sites. 2 All contracts in which the unavoidable costs of meeting the obligations exceed the economic benefits are deemed onerous and require a provision to be recognised up front. The opening balance included an onerous contract provision of $398 million (US$299 million) for the Cameron LNG purchase contract which has been released during the year. The closing balance relates to an onerous contract provision of $397 million (US$273 million) (30 June 2021: $13 million) for the LNG sales contract with ENN. 3 The closing balance of other provisions primarily relates to costs for compliance with safety standard requirements relating to the Eraring ash dam wall, costs associated with the new Myuna Bay Recreation Centre facility, costs associated with the Eraring Power Station closure and a make good provision relating to existing property leases. Restoration provisions are initially recognised at the best estimate of the costs to be incurred in settling the obligation. Where restoration activities are expected to occur more than 12 months from the reporting period, the provision is discounted using a risk-free rate that reflects current market assessments of the time value of money. The unwinding of the discount is recognised in each period as interest expense. At each reporting date, the restoration provision is remeasured in line with changes in discount rates, and changes to the timing or amount of costs to be incurred, based on current legal requirements and technology. Any changes in the estimated future costs associated with: • Restoration and dismantling are added to or deducted from the related asset; and • Environmental rehabilitation are expensed in the current period. Key estimate Restoration, rehabilitation and dismantling costs The Group estimates the cost of future site restoration activities at the time of installation or construction of an asset, or when an obligation arises. Restoration often does not occur for many years and thus significant judgement is required as to the extent of work, cost and timing of future activities. Future climate-related conditions, legislation and policies may have an impact on these estimates and will continue to be monitored. 112 Annual Report 2022 C7 Other financial assets and liabilities $m Other financial assets Measured at fair value through profit or loss MRCPS issued by APLNG Settlement Residue Distribution Agreement units Environmental scheme certificates Investment fund units Debt and other securities Equity securities Measured at fair value through other comprehensive income Equity securities Measured at amortised cost Futures collateral AEMO cash deposits Debt instruments Total other financial assets Other financial liabilities Measured at fair value through profit or loss Environmental scheme surrender obligations Measured at amortised cost Futures collateral Financial guarantees1 Total other financial liabilities 2022 2021 Current Non-current Current Non-current - 109 444 - 14 - - 3 290 - 860 417 304 6 727 - 70 - 59 22 1 51 - - 40 243 - - - - - 42 255 - 12 - - 194 - - 503 321 23 - 344 1,296 31 - 64 22 6 46 - - - 1,465 - - 15 15 1 Financial guarantee contracts are initially recognised at fair value. Subsequently, they are measured at either the amount of any determined loss allowance or at the amount initially recognised less any cumulative income recognised, whichever is larger. This financial guarantee relates to the working capital facility entered into by Octopus Energy with its financiers, as referred to in note B4, for which the Group has provided a guarantee. C8 Impairment of non-current assets Cash-generating units Assets are grouped together into the smallest group of individual assets that generate largely independent cash inflows (cash generating unit or (CGU)). The Energy Markets segment consists of the following materially distinct CGUs: • Retail CGU: incorporates Mass Market customers, Commercial & Industrial customers and the Wholesale & Trading businesses for electricity and natural gas commodities. The Wholesale & Trading business includes various electricity PPAs and major wholesale gas supply contracts. • Generation CGU: incorporates cash flows from Origin's power stations. • LPG CGU: supplies and distributes LPG to residential and business locations across Australia and the Pacific. The carrying amounts of the CGUs are reviewed at each reporting date to determine whether there is any indication of impairment. Where an indicator of impairment exists, or where goodwill is present, a formal estimate of the recoverable amount is made. Only the Retail CGU contains a material goodwill balance and an impairment assessment of the recoverable amount was performed at June 2022. Impairment testing for the year ended 30 June 2022 Origin’s assessment of the carrying value of its non-current assets in the Retail CGU considers a range of macroeconomic factors, including market prices for wholesale electricity and gas, large-scale generation certificates (LGCs), retail market dynamics, discount rates and costs. In order to manage risk around the volatility of its energy supply costs, the Group enters into long-term and short-term derivative contracts. The recent extraordinary market conditions have resulted in a significant increase in wholesale electricity and gas prices and associated in-the-money derivative assets at 30 June 2022 (refer note D4). The recoverable amount of the Retail CGU is assessed independently of the derivative cashflows which results in a cost of energy that is based on market prices and not the contracted hedged price. Accordingly, the higher assumed market prices have resulted in a non-cash impairment of $2,196 million recognised as at 30 June 2022. Financial Statements 113 C8 Impairment of non-current assets (continued) Although the in-the-money derivative assets will unwind in future periods as the underlying contracts are settled, the impairment is allocated to goodwill in the Retail CGU and cannot be reversed in future periods. The impairment expense recognised by class of asset is outlined in the following table. Impairment expense Non-current assets PP&E Intangible assets Total impairment expense on non-current assets Note C3 C4 A4 2022 $m - 2,196 2,196 2021 $m 833 671 1,504 The carrying amount of the remaining goodwill allocated to the Retail CGU is $1,943 million after the recognition of the impairment. Recoverable amount The recoverable amount of the Retail CGU has been determined using value-in-use models that include an appropriate terminal value. The value-in-use calculations are sensitive to a number of key assumptions requiring management judgement, including future commodity prices, regulatory policies, and the outlook for the market supply-and-demand conditions. The key assumptions used by the Group in its impairment assessment are shown in the table below. Key assumptions Energy Markets Commodity prices Future commodity price assumptions impact the recoverability of carrying values and are reviewed at least twice annually. The Group's estimate of future commodity prices is made with reference to internally derived forecast data, current spot prices, external market analysts' forecasts and forward curves. Where volumes are contracted, future prices reflect the contracted price. Long-term growth rates Cash flows are projected for the term of electricity PPAs and major wholesale supply contracts in the Retail CGU. Other Retail CGU cash flows are projected for five years. The growth rate used to extrapolate Retail cash flows beyond the initial period projected averages 2.3 per cent, analogous to long term Consumer Price Index. Customer numbers This is based on a review of actual customer numbers and historical data regarding levels of customer churn. The historical analysis is considered against current and expected market trends and competition for customers. Gross margin and operating cost This is based on a review of actual gross margins and cost per customer, and consideration of current and expected market movements and impacts. Discount rate Discount rates used are the pre-tax equivalent of a post-tax discount rate of 7.2 per cent (2021: 6.8 per cent). Climate risk The Group continues to develop its assessment of the potential impacts of climate change and the transition to a low-carbon economy and this has been considered in the assumptions used as part of the recoverable amount assessment. Sensitivity analysis To the extent the Retail CGU, that includes a significant portion of goodwill, has been written down to the recoverable amount in the current year, any change in key assumptions on which the valuation is based would further impact asset carrying values. When modelled in isolation, it is estimated that changes in the key assumptions would result in the following additional impairments in FY2022. Sensitivity Retail Discount rates increase by 1% Long-term growth rates decrease by 1% (728) (540) Changes in any of the aforementioned assumptions may be accompanied by changes in other assumptions, which may have an offsetting impact. 114 Annual Report 2022 D Capital, funding and risk management This section focuses on the Group's capital structure and related financing costs. Information is also presented about how the Group manages capital, and the various financial risks to which the Group is exposed through its operating and financing activities. D1 Capital management The Group’s objective when managing capital is to make disciplined capital allocation decisions between investment in growth, distributions to shareholders and to maintain an optimal capital structure while maintaining access to capital. Management believes that a strong investment-grade credit rating (Baa2) and an appropriate level of net debt are required to meet these objectives. The Group's current credit rating is Baa2 (stable outlook) from Moody's. Key factors considered in determining the Group's capital structure and funding strategy at any point in time include expected operating cash flows, capital expenditure plans, the maturity profile of existing debt facilities, the dividend policy, and the ability to access funding from banks, capital markets and other sources. The Group monitors its capital requirements through a number of metrics including the gearing ratio (target range of approximately 20 to 30 per cent) and an adjusted net debt to adjusted underlying EBITDA ratio (target range of 2.0x to 3.0x). These targets are consistent with attaining a strong investment-grade rating. Underlying EBITDA is a non-statutory (non-IFRS) measure. The gearing ratio is calculated as adjusted net debt divided by adjusted net debt plus total equity. Net debt, which excludes cash held by Origin to fund APLNG-related operations, is adjusted to take into account the effect of FX hedging transactions on the Group’s foreign currency debt obligations. The adjusted net debt to adjusted underlying EBITDA ratio is calculated as adjusted net debt divided by adjusted underlying EBITDA (Origin's underlying EBITDA less Origin's share of APLNG underlying EBITDA plus net cash flow from APLNG) over the relevant rolling 12-month period. The Group 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 requirements in advance of when the funds are required. Borrowings Lease liabilities Total interest-bearing liabilities Less: Cash and cash equivalents excluding APLNG-related cash2 Net debt Fair value adjustments on FX hedging transactions Adjusted net debt Total equity Total capital Gearing ratio Ratio of adjusted net debt to adjusted underlying EBITDA 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 This balance excludes $48 million (2021: $30 million) of cash held by Origin, as upstream operator, to fund APLNG-related operations. 2022 $m 2,855 535 3,390 (572) 2,818 20 2,838 10,022 12,860 22% 1.9x 20211 $m 4,765 463 5,228 (442) 4,786 (147) 4,639 9,475 14,114 33% 2.9x The Group has undertaken a bank debt extension during the year ended 30 June 2022. This activity has been aimed at strengthening the capital profile by extending the weighted average tenor of the Group’s debt portfolio. A summary of key transactions is shown below. Bank debt facility extension 13 December 2021 - extended the maturity dates of $2.4 billion of bank debt facilities from FY2024/FY2025 to FY2026/FY2027. Refinance of bank guarantee facilities 13 April 2022 - extended the maturity dates of A$500 million of bank guarantee facilities from FY2023/FY2025 to FY2025/FY2026. Debt maturity 30 September 2021 - repaid the €800 million eight-year note issued under the Euro Medium Term Note program. The notes had been swapped to A$1,164 million. 13 October 2021 - repaid US$500 million ten-year 144a note. Share buy-back 1 April 2022 to 22 June 2022 - Origin incurred A$250 million on a share buy-back with 38.5 million shares bought back at an average price of A$6.50 per share. Financial Statements 115 D2 Interest-bearing liabilities Current Bank loans - unsecured Capital market borrowings – unsecured Total current borrowings Lease liabilities – secured Total current interest-bearing liabilities Non-current Bank loans – unsecured Capital market borrowings – unsecured Total non-current borrowings Lease liabilities – secured Total non-current interest-bearing liabilities 2022 $m 2021 $m 29 228 257 59 316 508 2,090 2,598 476 3,074 - 1,938 1,938 66 2,004 537 2,290 2,827 397 3,224 Interest-bearing liabilities are initially recorded at the amount of proceeds received (fair value) less transaction costs. After that date, the liability is amortised to face value at maturity using an effective interest rate method. Lease liabilities are initially measured at the present value of future lease payments discounted at the Group's incremental borrowing rate. Where a lease includes termination and/or extension options, the impact of these options on the amount of future payments is included where exercise of such options is considered reasonably certain to occur. Interest expense is charged on outstanding lease liabilities that reduce over time as periodic payments are made. The lease liability is remeasured when certain events occur, including changes in the lease term or changes in future lease payments such as those resulting from inflation-linked indexation or market rate rent reviews. On remeasurement of lease liabilities, a corresponding adjustment is made to the ROU asset. The contractual maturity of lease liabilities is disclosed within the liquidity table in note D4. The contractual maturities of non-current borrowings are as set out below. One to two years Two to five years Over five years Total non-current borrowings 2022 $m 123 508 1,967 2,598 2021 $m 237 534 2,056 2,827 Some of the Group's borrowings are subject to terms that allow the lender to call on the debt in the event of a breach of covenants. As at 30 June 2022, these terms had not been triggered. 116 Annual Report 2022 D3 Contributed equity Ordinary share capital Opening balance On-market share buy-back1 Less treasury shares: Opening balance Shares purchased on market Utilisation of treasury shares on vesting of employee share schemes and DRP Total treasury shares Closing balance 2022 2021 2022 2021 Number of shares $m 1,761,211,071 1,761,211,071 (38,463,400) - (6,046,328) (3,212,930) (13,748,516) (20,903,960) 13,895,660 18,070,562 (5,899,184) (6,046,328) 7,163 (250) (25) (75) 64 (36) 7,163 - (18) (96) 89 (25) 1,716,848,487 1,755,164,743 6,877 7,138 1 During the period, a buy-back of 38.5 million shares was completed. As at 30 June 2022, the total consideration paid for shares bought back on-market was $250 million at an average price of $6.50 per share. Ordinary shares Holders of ordinary shares are entitled to receive dividends as determined from time to time and are entitled to one vote per share at shareholders' meetings. In the event of the winding up of the Group, ordinary shareholders rank after creditors, and are fully entitled to any proceeds of liquidation. The Group does not have authorised capital or par value in respect of its issued shares. Treasury shares Where the Group or other members of the Group purchase shares in the Company, the consideration paid is deducted from the total shareholders' equity and the shares are treated as treasury shares until they are subsequently sold, reissued or cancelled. Treasury shares are purchased primarily for use on vesting of employee share schemes and the DRP. Shares are accounted for at a weighted average cost. D4 Financial risk management Overview The Group's day-to-day operations, new investment opportunities and funding activities introduce financial risks, which are actively managed by the Board Risk Committee. These risks are grouped into the following categories: • Credit: The risk that a counterparty will not fulfil its financial obligations under a contract or other arrangement. • Market: The risk that fluctuations in commodity prices, foreign exchange rates and interest rates will adversely impact the Group's result. • Liquidity: The risk that the Group will not be able to meet its financial obligations as they fall due. Risk Credit Market Liquidity Sources Risk management framework Financial exposure Sale of goods and services and hedging activities The Board approves credit risk management policies that determine the level of exposures it is prepared to accept. It also allocates credit limits to counterparties based on publicly available credit information from recognised providers where available. Notes C1, C7 and D4 disclose the carrying amounts of financial assets, which represent the Group's maximum exposure to credit risk at the reporting date. The Group utilises International Swaps and Derivative Association (ISDA) agreements to limit exposure to credit risk by netting amounts receivable from and payable to individual counterparties (refer to note G8). Purchase and sale of commodities and funding risks Ongoing business obligations and new investment opportunities The Board approves policies that ensure the Group is not exposed to excess risk from market volatility. These policies include active hedging of price and volume exposures within prescribed cash flow at risk and value at risk limits. The Group centrally manages its liquidity position through cash flow forecasting and maintenance of minimum levels of liquidity determined by the Board. The debt portfolio is periodically reviewed to ensure there is funding flexibility and an appropriate maturity profile. See below for further discussion of market risk. Analysis of the Group's liquidity profile as at the reporting date is presented at the end of this section. Financial Statements 117 D4 Financial risk management (continued) Market risk The scope of the Group's operations and activities exposes it to multiple markets risks. The table below summarises these risks by nature of exposure and provides information about the risk mitigation strategies being applied. Nature Sources of financial exposure Risk management strategy Commodity price Future commercial transactions and recognised assets and liabilities exposed to changes in electricity, oil, gas, coal or environmental scheme certificate prices Foreign exchange Foreign-denominated borrowings and investments (e.g., APLNG MRCPS) and future foreign currency denominated commercial transactions Interest rate Variable-rate borrowings (cash flow risk) and fixed-rate borrowings (fair value risk) Due to vertical integration, a significant portion of the Group's spot electricity purchases from the NEM are naturally hedged by generation sales into the NEM at spot prices. The Group manages its remaining exposure to commodity price fluctuations beyond Board-approved limits using a mix of commercial contracts (such as fixed-price purchase contracts) and derivative instruments (described below). The Group limits its exposure to changes in foreign exchange rates through forward foreign exchange contracts and cross-currency interest rate swaps. In certain circumstances, borrowings are left in a foreign currency, or swapped from one foreign currency to another, to hedge expected future business cash flows in that currency. Significant foreign-denominated transactions undertaken in the normal course of operations are managed on a case-by-case basis. Interest rate exposures are kept within an acceptable range as determined by the Board. Risk limits are managed through a combination of fixed-rate and fixed-to-floating interest rate swaps. Derivatives to manage market risks Derivative instruments are contracts with values that are derived from an underlying price index (or other variable) that require little or no initial net investment, and that are settled at a future date. The Group uses the following types of derivative instruments to mitigate market risk. Forwards Futures Swaps Options A contract documenting the underlying reference rate (such as benchmark price or exchange rate) to be paid or received on a notional principal obligation at a future date. An exchange-traded contract to buy or sell an asset for an agreed price at a future date. Futures are net-settled in cash without physical delivery of the underlying asset. A contract in which two parties exchange a series of cash flows for another (such as fixed-for-floating interest rate). A contract in which the buyer has the right, but not the obligation, to buy (a call option) or sell (a put option) an instrument at a fixed price in the future. The seller has the corresponding obligation to fulfil the transaction if the buyer exercises the option. Structured electricity products A non-standardised contract, generally with an energy market participant, to acquire long-term capacity. These contracts typically contain features similar to swaps and call options. Derivatives are carried on the balance sheet at fair value. Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative. The method of recognising changes in fair value depends on whether the derivative is designated in an 'accounting' hedge relationship. Derivatives not designated as accounting hedges are referred to as 'economic' hedges. Fair value gains and losses attributable to economic hedges are recognised in the income statement and resulted in a $1,153 million gain (2021: $377 million loss) for the year. Fair value gains and losses attributable to accounting hedges are discussed in the Hedge Accounting section. 118 Annual Report 2022 D4 Financial risk management (continued) $m 2022 Economic hedges Commodity contracts Foreign exchange and interest rate contracts Total economic hedges Accounting hedges Commodity contracts Foreign exchange and interest rate contracts Total accounting hedges Total 20211 Economic hedges Commodity contracts Foreign exchange and interest rate contracts Total economic hedges Accounting hedges Commodity contracts Foreign exchange and interest rate contracts Total accounting hedges Total Assets Liabilities Current Non-current Current Non-current 1,112 5 1,117 2,016 41 2,057 3,174 434 10 444 218 107 325 769 1,766 - 1,766 1,309 - 1,309 3,075 201 - 201 121 44 165 366 (1,417) (48) (1,465) (125) - (125) (1,590) (537) (54) (591) (150) - (150) (741) (1,526) (3) (1,529) (161) (54) (215) (1,744) (1,231) (60) (1,291) (44) (60) (104) (1,395) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Hedge accounting The Group uses two types of hedge accounting relationships, as detailed below. Fair value hedge Cash flow hedge Objective of hedging arrangement To hedge our exposure to changes in the fair value of a recognised asset or liability or unrecognised firm commitment, caused by interest rate or foreign currency movements. To hedge our exposure to variability in the cash flows of a recognised asset or liability, or a highly probable forecast transaction caused by commodity price, interest rate and foreign currency movements. Effective hedge portion Hedge ineffectiveness All changes in the fair value of the underlying item relating to the hedged risk and the change in fair value of derivatives are recognised in profit and loss at the same time. The effective portion of changes in the fair value of derivatives designated as cash flow hedges are recognised in the hedge reserve. Certain determinants of fair value, such as credit charges included in derivatives, or mismatches between the timing of the instrument and the underlying item in the hedge relationship, can cause hedge ineffectiveness. Any ineffectiveness is recognised immediately in profit or loss as a change in the fair value of derivatives. Hedged item sold or repaid The unamortised fair value adjustment is recognised immediately in profit or loss. Amounts accumulated in the hedge reserve are transferred immediately to profit or loss. Hedging instrument expires, is sold, is terminated or no longer qualifies for hedge accounting The unamortised fair value adjustment is recognised in profit or loss when the hedged item is recognised in profit or loss. This may occur over time if the hedged item is amortised over the period to maturity. The amount previously deferred in the hedge reserve is only transferred to profit or loss when the hedged item is also recognised in profit or loss. At 30 June 2022 all derivatives designated in hedge accounting relationships are cash flow hedges. Financial Statements 119 D4 Financial risk management (continued) Cash flow hedges A number of derivative contracts have been designated as cash flow hedges of the Group's exposure to foreign exchange, interest rate and commodity price fluctuations. Designated derivatives include swaps, options, futures and forwards. The Group's structured electricity products, though important to the overall risk management strategy, do not qualify for hedge accounting. As such, they are not represented in the summary information below. 2022 Nominal hedge volumes Hedge rates FX and interest EUR 750m AUD/EUR 0.62-0.81; Fixed 3.2%-6.6% Electricity 25.4 TWh $29-$303 Crude oil 8,085k barrels US$53-US$115 (ICE Brent); US$6.5- US$30.6 (JKM) Propane 24k mt US$285-US$728 Timing of cash flows – up to Sep 2029 Dec 2025 Oct 2024 (ICE Brent); Dec 2025 (JKM) Dec 2023 Carrying amounts - $m FX and interest Electricity Crude oil Propane Hedging instrument – assets1 Hedging instrument – liabilities1 Hedge reserve2 Fair value increase/(decrease) - $m Hedging instrument Hedged item Hedge ineffectiveness3 Reconciliation of hedge reserve - $m Effective portion of hedge gains/(losses) Transfer of deferred losses/(gains) to: – Cost of sales – Finance costs Tax on above items Change in hedge reserve (post-tax) 41 (54) (4) 3 (4) (1) 24 - 27 (16) 35 2,386 (102) (2,284) 2,337 (2,337) - 930 (184) (770) 563 (562) 1 2,304 1,065 34 - (701) 1,637 (484) - (174) 407 9 - (9) (6) 6 - 14 (20) - 2 (4) 1 Hedging instruments are included in the derivatives balance on the statement of financial position. 2 No hedges have been discontinued or de-designated in the current period. 3 Hedge ineffectiveness is recognised within expenses in the income statement as a change in fair value of derivatives. Total 3,366 (340) (3,067) 2,897 (2,897) - 3,407 (470) 27 (889) 2,075 120 Annual Report 2022 D4 Financial risk management (continued) Residual market risk After hedging, the Group's financial instruments remain exposed to changes in market pricing. The following is a summary of the Group's residual market risk and the sensitivity of financial instrument fair values to reasonably possible changes in market pricing at the reporting date. Risk Residual exposure Relationship to financial instruments value USD exchange rate • USD debt • FX and commodity derivatives with USD pricing Euro exchange rate • Currency basis on the CCIRSs swapping euro debt to AUD Interest rates • Interest rate swaps • Long-term derivatives and other financial assets/ liabilities for which discounting is significant Electricity forward price • Electricity forward price Oil forward price • Commodity derivatives Renewable Energy Certificates (REC) forward price Liquidity risk • REC forwards • Environmental scheme certificates • Environmental scheme surrender obligations A 10 per cent increase/decrease in the USD exchange rate would increase/decrease fair value by $47/($48) million (2021: $21/($18 million). A 10 per cent increase/decrease in the euro exchange rate would increase/decrease fair value by $6 million (2021: $11 million). A 100 basis point increase/decrease in interest rates would impact fair value by ($27)/$26 million (2021: ($38)/ $39 million). A 10 per cent increase/decrease in electricity forward prices would increase/decrease fair value by $355 million (2021: $68/($69) million). A 10 per cent increase/decrease in oil forward prices would increase/decrease fair value by $139/(140) million (2021: $44/(40) million). A 10 per cent increase/decrease in renewable energy certificate forward prices would increase/decrease fair value by $32 million (2021: $23 million). The table below sets out the timing of the Group's payment obligations, as compared to the receipts expected from the Group's financial assets, and available undrawn facilities. Amounts are presented on an undiscounted basis and include cash flows not recorded on the statement of financial position, such as interest payments for borrowings. 2022 $m Bank loans and capital markets borrowings Lease liabilities Net other financial assets/liabilities Derivative liabilities Derivative assets Net liquidity exposure Less than one year One to two years Two to five years (343) (88) (69) (500) (2,104) 3,975 1,871 1,371 (211) (69) 76 (204) (959) 1,736 777 573 (749) (166) 52 (863) (314) 941 627 (236) Over five years (2,082) (364) 74 (2,372) (285) 347 62 (2,310) The amount of cash and committed undrawn floating rate borrowing facilities expiring beyond one year is $3,274 million. 2021 $m Bank loans and capital markets borrowings Lease liabilities Net other financial assets/liabilities Derivative liabilities Derivative assets Net liquidity exposure Less than one year (2,068) (91) 754 (1,405) (779) 902 123 (1,282) One to two years Two to five years Over five years (313) (74) 199 (188) (289) 211 (78) (266) (754) (147) 7 (894) (137) 39 (98) (992) (2,221) (276) - (2,497) (68) 28 (40) (2,537) The amount of cash and committed undrawn floating rate borrowing facilities expiring beyond one year is $3,279 million. Financial Statements 121 D5 Fair value of financial assets and liabilities Financial assets and liabilities measured at fair value are grouped into the following categories based on the level of observable market data used in determining that fair value: • Level 1: The fair value of financial instruments traded in active markets (such as exchange-traded derivatives and RECs) is the quoted market price at the end of the reporting period. These instruments are included in level 1. • Level 2: The fair value of financial instruments that are not traded in an active market (such as over-the-counter derivatives) is determined using valuation techniques that maximise the use of observable market data. If all significant inputs required to fair value an instrument are observable, either directly (as prices) or indirectly (derived from prices), the instrument is included in level 2. • Level 3: If one or more of the significant inputs required to fair value an instrument is not based on observable market data, the instrument is included in level 3. 2022 Derivative financial assets Other financial assets at fair value Financial assets carried at fair value Derivative financial liabilities Other financial liabilities at fair value Financial liabilities carried at fair value 2021 Derivative financial assets Other financial assets at fair value Financial assets carried at fair value Derivative financial liabilities Other financial liabilities at fair value Financial liabilities carried at fair value Note D4 C7 D4 C7 D4 C7 D4 C7 Level 1 $m 1,917 623 2,540 (471) (417) (888) Level 1 $m 44 328 372 (86) (321) (407) Level 2 $m 3,382 73 3,455 (2,294) - (2,294) Level 2 $m 1,066 77 1,143 (1,097) - (1,097) Level 3 $m 950 74 1,024 (569) - (569) Level 3 $m1 25 1,369 1,394 (953) - (953) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. The following table shows a reconciliation of movements in the fair value of level 3 instruments during the period. Balance as at 30 June 2021 Prior year restatements1 Balance as at 1 July 2021 restated New instruments recognised in the period Instruments transferred out of level 3 Net cash settlements paid/(received) Gains/(losses) recognised in other comprehensive income Gains/(losses) recognised in profit or loss Change in fair value Cost of sales Interest income Balance as at 30 June 2022 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Total $m 6,249 770 7,019 (3,334) (417) (3,751) Total $m1 1,135 1,774 2,909 (2,136) (321) (2,457) $m 1,330 (889) 441 72 (218) (1,353) 4 1,267 196 46 455 122 Annual Report 2022 D5 Fair value of financial assets and liabilities (continued) Valuation techniques used to determine fair values The various techniques used to value the Group's financial instruments are summarised in the following table. To the maximum extent possible, valuations are based on assumptions that are supported by independent and observable market data. For instruments that settle more than 12 months from the reporting date, cash flows are discounted at the applicable market yield, adjusted to reflect the credit risk of the specific counterparty. Instrument Fair value methodology Financial instruments traded in active markets Interest rate swaps and CCIRS Forward foreign exchange contracts Quoted market prices at reporting date. Present value of expected future cash flows based on observable yield curves and forward exchange rates at reporting date. Present value of future cash flows based on observable forward exchange rates at reporting date. Electricity, oil and other commodity derivatives (not traded in active markets) Present value of expected future cash flows based on observable forward commodity price curves (where available). The majority of the Group's level 3 instruments are commodity contracts for which further detail on the significant unobservable inputs is included below. Other financial instruments Discounted cash flow analysis. Long-term borrowings Present value of future contract cash flows. Fair value measurements using significant unobservable inputs (level 3) The following is a summary of the Group's level 3 financial instruments, the significant inputs for which market observable data is unavailable, and the sensitivity of the estimated fair values to the assumptions applied by management. Instrument1 Unobservable inputs Relationship to fair value Electricity derivatives Forward electricity spot market price curve Forward electricity cap price curve Forecast REC prices A 10 per cent increase/decrease in the unobservable inputs would increase/decrease fair value by $256 million (2021: $57 million). 1 Excludes $49 million (June 2021: $47 million) of unlisted equity securities, and associated share warrants, for which management has assessed the investment cost to be a reasonable reflection of fair value at reporting date. Day 1 fair value adjustments For certain complex financial instruments, such as the structured electricity products, the fair value that is determined at inception of the contract using unobservable inputs does not equal the transaction price. When this occurs, the difference is deferred to the statement of financial position and recognised in the income statement over the life of the contract in a manner consistent with the valuation methodology initially applied. Reconciliation of net deferred gain Balance as at 30 June 2021 Prior year restatements Balance as at 1 July 2021 restated Value recognised in the income statement New instruments Balance as at 30 June 2022 Classification of net deferred gain Derivative assets Derivative liabilities Balance as at 30 June 2022 $m 166 378 544 (75) 15 484 289 195 484 Financial Statements 123 D5 Fair value of financial assets and liabilities (continued) Financial instruments measured at amortised cost Except as noted below, the carrying amounts of non-current financial assets and liabilities measured at amortised cost are reasonable approximations of their fair values due to their short-term nature. Liabilities Bank loans – unsecured Capital markets borrowings – unsecured Total1 Fair value hierarchy level 2 2 Carrying value Fair value 2022 2021 2022 2021 $m $m $m $m 508 2,090 2,598 537 2,290 2,827 542 1,874 2,416 575 2,460 3,035 1 Non-current interest-bearing liabilities in the statement of financial position include $2,598 million (June 2021: $2,827 million) as disclosed above, and lease liabilities of $476 million (June 2021: $397 million). The fair value of these financial instruments reflects the present value of expected future cash flows based on market pricing data for the relevant underlying interest and foreign exchange rates. Cash flows are discounted at the applicable credit-adjusted market yield. 124 Annual Report 2022 E Taxation This section provides details of the Group's income tax expense, current tax provision, deferred tax balances and tax accounting policies. E1 Income tax expense Income tax Current tax expense Adjustments to current tax expense for previous years Deferred tax expense Total income tax expense Reconciliation between tax expense and pre-tax net profit Loss before income tax Income tax using the domestic corporation tax rate of 30 per cent (2021: 30 per cent) Prima facie income tax expense on pre-tax accounting profit: – at Australian tax rate of 30 per cent – adjustment for tax exempt charity (Origin Foundation Limited) Income tax expense/(benefit) on pre-tax accounting profit at standard rates Increase/(decrease) in income tax expense due to: Share of results of equity accounted investees Unfranked distributions received - APLNG Impairment of carrying value of Energy Market goodwill Loss on divestment - APLNG equity accounted investment Net capital gains tax on divestment - APLNG Deferred tax liability recognition - APLNG LGC shortfall charge Other Under provided in prior years Total income tax expense Deferred tax movements recognised directly in other comprehensive income (including foreign currency translation) Financial instruments at fair value Provisions Employee benefits Other items 2022 $m 100 (2) 453 551 20211 $m 59 (7) 261 313 (874) (1,966) (262) 2 (260) (300) 130 659 33 172 39 67 9 809 2 551 886 (10) - - 876 (590) (3) (593) (55) - 201 - - 669 79 8 902 4 313 190 17 1 (1) 207 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. The Company and its wholly owned Australian resident entities that met the membership requirement formed a tax-consolidated group with effect from 1 July 2003. The head entity within the tax-consolidated group is Origin Energy Limited. Tax funding arrangement amounts are recognised as inter-entity amounts. Income tax expense is made up of current tax expense and deferred tax expense. Current tax expense represents the expected tax payable on the taxable income for the year, using current tax rates and any adjustment to tax payable in respect of previous years. Deferred tax expense reflects the temporary differences between the accounting carrying amount of an asset or liability in the statement of financial position and its tax base. Financial Statements 125 E1 Income tax expense (continued) Key judgements and estimates Tax balances: Tax balances reflect a current understanding and interpretation of existing tax laws. Uncertainty arises due to the possibility that changes in tax law or other future circumstances can impact the tax balances recognised in the financial statements. Ultimate outcomes may vary. Deferred taxes: The recognition of deferred tax balances requires judgement as to whether it is probable such balances will be utilised and/or reversed in the foreseeable future and there will be sufficient future taxable profits against which the benefits can be utilised. A deferred tax liability is recognised for taxable temporary differences associated with investments in joint ventures unless the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. During the year, the Group recognised a deferred tax expense of $39 million (2021: $669 million) in respect of the investment in APLNG, representing carried forward equity accounted earnings that are expected to be distributed to Origin via dividends from APLNG in the foreseeable of future. In determining the forecast distributions from APLNG, the Group’s assessment of future cash flows considers a range of macroeconomic and project assumptions, including oil and LNG prices, AUD/USD exchange rates, discount rates and costs over the asset's life. At 30 June 2022, the Group has recognised a deferred tax liability of $708 million. The remaining unbooked balance is not expected to reverse in the foreseeable future through the payment of future dividends, through sale or through a capital return. The unrecognised portion is disclosed in note E2. Income tax expense recognised in other comprehensive income $m Gross Tax Net Gross Tax Net 2022 2021 Actuarial gain on defined benefit superannuation plan Investment valuation changes Foreign currency translation reserve: Reclassified to income statement Translation of foreign operations Cash flow hedges: Reclassified to income statement Effective portion of change in fair value Other comprehensive income for the year E2 Deferred tax 1 4 (103) 584 - (1) - 14 (443) 3,407 3,450 133 (1,022) (876) 1 3 (103) 598 (310) 2,385 2,574 4 (8) - (623) 130 509 12 (1) 2 - (16) (39) (153) (207) 3 (6) - (639) 91 356 (195) Deferred tax balances arise when there are temporary differences between accounting carrying amounts and the tax bases of assets and liabilities, other than where: • • • the difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither the accounting profit nor taxable profit or loss; temporary differences relate to investments in subsidiaries, associates and interests in joint arrangements, to the extent the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and temporary differences arise on initial recognition of goodwill. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet 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 if it is no longer probable that the related tax benefit will be realised. 126 Annual Report 2022 E2 Deferred tax (continued) Movement in temporary differences during the year Asset/(liability) $m 1 July 20201 Recognised in income1 Recognised in equity 30 June 20211 Recognised in income Recognised in equity Acquisition of subsidiary 30 June 2022 Employee benefits Provisions Tax value of carry-forward tax losses recognised PP&E Exploration and evaluation assets Financial instruments at fair value Investment in APLNG APLNG MRCPS elimination (refer to note B2.3) Business-related costs (deductible under s.40-880 ITAA97) ROU assets Lease liabilities Intangibles Other items 79 488 46 (489) (54) 301 - 49 27 (140) 154 - 2 2 (41) (45) 274 (13) 236 (669) (1) (1) 19 (15) 1 (8) (1) (17) - - - (190) - - - - - - 1 Net deferred tax liabilities 463 (261) (207) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Unrecognised deferred tax assets and liabilities 80 430 1 (215) (67) 347 (669) 4 (17) - 36 (13) (397) (39) 48 (15) 26 (121) 139 1 (5) (5) (20) (18) 22 1 3 - 10 - - - (886) - - - - - - - (453) (876) Deferred tax assets have not been recognised in respect of the following items: Revenue losses - non-Australian Capital losses Petroleum resource rent tax, net of income tax Acquisition transaction costs Investment in joint ventures1 Intangible assets Deferred tax liabilities have not been recognised in respect of the following items: Investment in APLNG2 - - - - - - - - - - - (25) - (25) 84 423 1 (179) (80) (936) (708) 33 6 (139) 161 (23) (2) (1,359) 2022 $m 2021 $m 5 - 119 57 - 8 189 4 223 118 57 67 8 477 (685) (685) (810) (810) 1 There is no longer an unrecognised deferred tax asset in the current year as the relevant joint ventures have been deregistered. 2 The deferred tax liability in respect of the investment in APLNG has not been recognised in full during the year as not all of the temporary difference is expected to reverse in the foreseeable future. Financial Statements 127 F Group structure The following section provides information on the Group's structure and how this impacts the results of the Group as a whole, including details of joint arrangements, associates, controlled entities, transactions with non-controlling interests, and changes made to the Group structure during the year. F1 Controlled entities The financial statements of the Group include the consolidation of Origin Energy Limited and controlled entities. Controlled entities are the following entities controlled by the parent entity (Origin Energy Limited). Incorporated in Ownership interest per cent 2022 2021 Origin Energy Limited Origin Energy Finance Limited Huddart Parker Pty Limited1 FRL Pty Ltd1 Origin Energy Power Limited1 Origin Energy SWC Limited1 Sun Spot 5 Pty Ltd Yarrabee Project Co Pty Ltd Yarrabee One Pty Ltd Origin Energy Eraring Pty Limited1 Origin Energy Eraring Services Pty Limited1 Origin Energy Upstream Holdings Pty Ltd Origin Energy B2 Pty Ltd Origin Energy Browse Pty Ltd Origin Energy West Pty Ltd Origin Energy C6 Pty Limited Origin Energy C5 Pty Limited Origin Energy Future Fuels Pty Ltd Origin Energy Upstream Operator Pty Ltd Origin Energy Holdings Pty Limited1 Origin Energy Retail Limited1 Origin Energy (Vic) Pty Limited1 Gasmart (Vic) Pty Ltd1 Origin Energy (TM) Pty Limited1 Cogent Energy Pty Ltd Origin Energy Retail No. 1 Pty Limited Origin Energy Retail No. 2 Pty Limited Origin Energy Electricity Limited1 Eraring Gentrader Depositor Pty Limited Sun Retail Pty Ltd1 OE Power Pty Limited1 Origin Energy Uranquinty Power Pty Ltd1 OC Energy Pty Ltd1 Origin Energy Eraring Battery Pty Ltd Ten Ants Connect Pty Ltd WINconnect Pty Ltd Nextgen Utilities Pty Ltd Carbon Energy Management Technologies Pty Ltd Carbon R&D Pty Ltd NSW Vic Vic WA SA WA NSW Vic Vic NSW NSW Vic Vic Vic NSW Vic Vic Vic Vic Vic SA Vic Vic Vic Vic Vic Vic Vic Vic Qld Vic Vic Vic NSW NSW Vic Vic WA WA 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - - - 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 - - - - - 1 Entered into ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and related Deed of Cross Guarantee with Origin Energy Limited. 128 Annual Report 2022 F1 Controlled entities (continued) Origin Energy International Holdings Pty Limited Origin Energy PNG Ltd1 Origin Energy PNG Holdings Limited1 Origin Energy Tasmania Pty Limited2 The Fiji Gas Co Ltd Origin Energy Contracting Limited2 Origin Energy LPG Limited2 Origin (LGC) (Aust) Pty Limited2 Origin Energy SA Pty Limited2 Hylemit Pty Limited Origin Energy LPG Retail (NSW) Pty Limited Origin Energy WA Pty Limited2 Origin Energy Services Limited2 OEL US Inc. Origin Energy Asset Management Limited2 Origin Energy Pipelines Pty Limited2 Origin Energy Solomons Ltd Origin Energy Cook Islands Ltd Origin Energy Vanuatu Ltd Origin Energy Samoa Ltd Origin Energy American Samoa Inc Origin Energy Insurance Singapore Pte Ltd Angari Pty Limited2 Oil Investments Pty Limited2 Origin Energy Southern Africa Holdings Pty Limited Origin Energy Vietnam Pty Limited Origin Energy Singapore Holdings Pte Limited Origin Energy (Song Hong) Pte Limited Origin Future Energy Pty Limited Origin Energy Metering Coordinator Pty Ltd Origin Energy Resources NZ (Rimu) Limited Origin Energy VIC Holdings Pty Limited2 OE JV Co Pty Limited2 Origin Energy LNG Holdings Pte Limited Origin Energy LNG Portfolio Pty Ltd2 Origin Energy Australia Holding BV1 Origin Energy Mt Stuart BV1 OE Mt Stuart General Partnership1 Parbond Pty Limited Origin Energy Foundation Ltd Incorporated in Ownership interest per cent Vic PNG PNG Tas Fiji Qld NSW NSW SA Vic NSW WA SA USA SA NT Solomon Islands Cook Islands Vanuatu Western Samoa American Samoa Singapore SA SA Qld Vic Singapore Singapore NSW NSW NZ Vic Vic Singapore Vic Netherlands Netherlands Netherlands NSW NSW 2022 100 66.7 2021 100 66.7 100 100 51 100 100 100 100 100 100 100 100 100 100 100 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 51 100 100 100 100 100 100 100 100 100 100 100 80 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 1 Controlled entity has a financial reporting period ending 31 December. 2 Entered into ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 and related Deed of Cross Guarantee with Origin Energy Limited. Financial Statements 129 F1 Controlled entities (continued) Origin Renewable Energy Investments No 1 Pty Ltd Origin Renewable Energy Pty Ltd Origin Energy Geothermal Holdings Pty Ltd Origin Energy Geothermal Pty Ltd Origin Energy Chile Holdings Pty Limited Origin Energy Chile S.A.1 Origin Energy Wind Holdings Pty Ltd Wind Power Pty Ltd Origin Energy Hydro Bermuda Limited 1 Controlled entity has a financial reporting period ending 31 December. Changes in controlled entities • Ten Ants Connect Pty Ltd was incorporated on 26 October 2021. • Sun Spot 5 Pty Ltd was acquired on 25 March 2022. Incorporated in Ownership interest per cent 2022 2021 Vic Vic Vic Vic Vic Chile Vic Vic Bermuda 100 100 100 100 100 - 100 100 100 100 100 100 100 100 100 100 100 100 • WINconnect Pty Ltd, Nextgen Utilities Pty Ltd, Carbon Energy Management Technologies Pty Ltd and Carbon R&D Pty Ltd were acquired on 1 April 2022. • Yarrabee One Pty Ltd and Yarrabee Project Co Pty Ltd were acquired on 28 April 2022. • Origin Energy Chile S.A. was deregistered on 10 June 2022. 130 Annual Report 2022 F2 Business combinations Acquisition of WINconnect Pty Ltd On 1 April 2022 the Group completed the acquisition of 100 per cent of the formerly privately held WINconnect Pty Limited under a Share Sale Agreement. The acquisition adds embedded electricity network and serviced hot water customers to Origin's community energy services business. Considering the timing of the transaction and the size of the operations, the overall impact of the acquisition to the Group's consolidated revenue and profit and loss since the acquisition date, is not significant. Purchase consideration of $105 million was paid to acquire the net assets on the completion date. Considering the acquired cash balance of $13 million the net cash impact from the acquisition was $92 million in the current year. The purchase consideration of $92 million has been recognised in investing cashflow. As part of the transaction, Origin has agreed to amendments to its Master Services Agreement (MSA) with Intellihub which has included an increase the current meter volume commitment. Origin received a one-off payment of $67 million excluding GST ($74 million inclusive of GST) which has been recognised upfront as Other Income. Purchase consideration Cash acquired Acquisition related cashflow Cash and cash equivalents Trade and other receivables PP&E Customer related intangible assets Trade and other payables Deferred tax liability Fair value of net assets acquired Purchase consideration Less fair value of net assets acquired Goodwill recognised on consolidation 2022 $m Fair value1 105 (13) 92 13 17 24 77 (26) (25) 80 105 (80) 25 1 In accordance with the Group's accounting policies, the fair value of assets and liabilities acquired are provisional and will be subject to further review for a period of up to 12 months from the date of acquisition. F3 Joint arrangements and investments in associates Joint arrangements are entities over whose activities the Group has joint control, established by contractual agreement and requiring the consent of two or more parties for strategic, financial and operating decisions. The Group classifies its interests in joint arrangements as either joint operations or joint ventures, depending on its rights to the assets and obligations for the liabilities of the arrangements. Associates are entities, other than partnerships, for which the Group exercises significant influence, but no control, over the financial and operating policies, and which are not intended for sale in the near future. Of the Group's interests in joint arrangements and associates, only APLNG and Octopus Energy have a material impact on the Group at 30 June 2022 (refer to Section B). Interests in unincorporated joint operations The Group's interests in unincorporated joint operations are brought to account on a line-by-line basis in the income statement and statement of financial position. These interests are held on the following assets whose principal activities are oil and/or gas exploration, development and production; power generation; and geothermal power technology: • Beetaloo Basin • Browse Basin • Canning Basin • Innamincka Deeps Geothermal • Cooper-Eromanga Basin Financial Statements 131 G Other information This section includes other information to assist in understanding the financial performance and position of the Group, and items required to be disclosed to comply with accounting standards and other pronouncements. G1 Contingent liabilities Discussed below are items where either it is not probable that the Group will have to make future payments or it is not possible to reliably measure the amount of future payments. Joint arrangements and associates As a participant in certain joint arrangements, the Group is liable for its share of liabilities incurred by these arrangements. In some circumstances, the Group may incur more than its proportionate share of such liabilities, but will have the right to recover the excess liability from the other joint arrangement participants. The Group continues to provide parent company guarantees in excess of its 27.5 per cent shareholding in APLNG, in respect of certain historical domestic contracts. In October 2018, Origin and the other APLNG shareholders agreed to indemnify one of APLNG’s long-term LNG customers (following that customer's election to defer delivery of 30 cargoes over six years (2019-24)) should APLNG fail to supply make-up cargoes to that customer prior to the expiry of the LNG supply contract. The customer will pay APLNG for the deferred cargoes and APLNG expects to resell the gas to other customers, and deliver the deferred cargoes to the long-term LNG customer between 2025 and the end of the LNG supply contract. The indemnity was provided severally in accordance with each shareholder’s proportionate shareholding in APLNG. At the inception of the agreement, any obligation or liability on the part of the shareholders will only be confirmed by the occurrence or non-occurrence of future events, and cannot be measured with sufficient reliability. The Group has entered into an agreement to provide a financial guarantee to Octopus Energy’s financiers in respect of a working capital facility entered into by Octopus Energy. Under this agreement, the Group is required to make a payment to Octopus Energy’s financiers should Octopus Energy not make payments under the working capital facility. In return, Octopus Energy is required to pay a monthly fee to the Group in respect of the guarantee facility. The guarantee has been accounted for as a Financial Guarantee Contract under AASB 9 Financial Instruments and is carried at fair value (refer to note C7) with reference to the guarantee amount in the facility agreement. Legal and regulatory Certain entities within the Group (and joint venture entities, such as APLNG) are subject to various lawsuits and claims as well as audits and reviews by government, regulatory bodies or other joint venture partners. In most instances, it is not possible to reasonably predict the outcome of these matters or their impact on the Group. Where outcomes can be reasonably predicted, provisions are recorded. A number of sites owned/operated (or previously owned/operated) by the Group have been identified as potentially contaminated. For sites where it is likely that a present obligation exists, and it is probable that an outflow of resource will be required to settle the obligation, such costs have been expensed or provided for. Warranties and indemnities have also been given and/or received by entities in the Group in relation to environmental liabilities for certain properties divested and/or acquired. Capital expenditure As part of the acquisition of Browse Basin exploration permits in 2015, the Group agreed to pay cash consideration of US$75 million contingent upon a project Final Investment Decision (FID), and US$75 million contingent upon first production. The Group will pay further contingent consideration of up to US$50 million upon first production if 2P reserves, at the time of the FID, reach certain thresholds. These obligations have not been provided for at the reporting date as they are dependent upon uncertain future events not wholly within the Group’s control. Bank guarantees There are no contingent liabilities arising from bank guarantees held by the Group that are required to be disclosed as at the reporting date, as these have either been provided for, or an outflow of economic benefits is considered remote. The Group's share of guarantees for certain contractual commitments of its joint ventures is shown at note G2. AEMO administered and suspended market During the period of administered pricing and market suspension, an administered price cap was imposed. Generators were entitled to claim compensation through the Australian Energy Market Commission for losses incurred as a result of the administered price cap. Origin has lodged a notice of its intent to claim direct costs and opportunity costs as a result of the price cap. During the period of administered pricing and market suspension, AEMO issued directions to generators to supply electricity as needed. Generators directed on by AEMO during this period were entitled to directions compensation. Compensation to be paid to generators is still in the process of being determined. AEMO will seek to recover these compensation costs from retailers. These compensation payments and costs have not been recognised for at the reporting date as they are still in the process of being determined and therefore not wholly within the Group’s control and cannot be measured with sufficient reliability. 132 Annual Report 2022 G2 Commitments Detailed below are the Group's contractual commitments that are not recognised as liabilities as there is no present obligation. Capital expenditure commitments Joint venture commitments1 2022 $m 108 237 2021 $m 107 208 1 Includes $121 million (2021: $135 million) in relation to the Group's share of APLNG’s capital and joint venture commitments. G3 Share-based payments This section sets out details of the Group's share-based remuneration arrangements, including details of the Company's Equity Incentive Plan and Employee Share Plan (ESP). The table below shows share-based remuneration expenses that were recognised during the year. Equity Incentive Plan Employee Share Plan Total 2022 $m 29 4 33 2021 $m 24 4 28 Equity Incentive Plan Eligible employees are granted share-based remuneration under the Origin Energy Limited Equity Incentive Plan. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate or to receive any guaranteed benefits. Equity incentives granted prior to FY2018 were offered in the form of Options and/or Share Rights. From FY2019 onwards, equity incentives are granted in the form of Share Rights and/or Restricted Shares (RSs). Only RSs carry dividend and voting entitlements. To the extent that Share Rights ultimately vest, a dividend equivalent mechanism operates. (i) Short Term Incentive Short Term Incentive (STI) includes the award of RSs, which are subject to trading restrictions for a set period of time (generally up to two years), after which they become unrestricted, provided that the employee remains employed with satisfactory performance. Once unrestricted, the shares are transferred into the employee's name at no cost. The face value of RSs measured at grant date is recognised as an employee expense over the related service period. RSs are forfeited if the service and performance conditions are not met.1 (ii) Long Term Incentive The Long Term Incentive (LTI) awards include the award of Share Rights, which vest subject to performance conditions. Generally half of each LTI award is made in the form of Performance Share Rights (PSRs) and is subject to a market hurdle, namely Origin’s Total Shareholder Return (TSR) relative to a Reference Group of ASX-listed companies, as identified in the 2022 Remuneration Report. The remaining half of each LTI award is made in the form of Restricted Share Rights (RSRs), where vesting is subject to Board assessment with reference to a suite of underpinning conditions , as set out in the 2022 Remuneration Report. The number of awards that may vest are considered separately for PSRs and RSRs. For the PSR awards, which are subject to the relative TSR hurdle, vesting only occurs if Origin’s TSR over the performance period ranks higher than the 50th percentile of the Reference Group. Half of the PSRs vest if that condition is satisfied. All the PSRs vest if Origin ranks at or above the 75th percentile of the Reference Group. Straight-line pro-rata vesting applies in between these two points. The PSR grants made in FY2022 have a performance period of three years. Vesting is into RSs with a trading restriction for a further two years (total deferral five years). For the RSR awards, the Board will determine the vesting outcome shortly before each of three progressive vesting dates at years three, four and five by reference to a broad range of performance indicators. Vesting is into RSs which all have trading restrictions until the end of the fifth year. Prior to FY2021, the LTI awards include the award of PSRs, such that half of the award is subject to the TSR hurdle, and the remaining half of each LTI award is subject to an internal hurdle, namely Return on Capital Employed (ROCE), as set out in the relevant remuneration report. For awards granted in FY2019 and FY2020 that are subject to the ROCE hurdle, half of the ROCE tranche is allocated to Energy Markets and the other half to Integrated Gas. Each tranche will be tested separately and vest separately. Vesting for each tranche only occurs if the average actual annual ROCE outcomes over the performance period for the relevant business meets or exceeds the average of the annual ROCE targets, which are reflective of delivering WACC for the relevant business. Half of the relevant PSRs will vest if the ROCE target is met. All the relevant PSRs will vest if the ROCE target is exceeded by two percentage points or more. Straight-line pro-rata vesting applies in between. Vested share rights are automatically exercised upon vesting, and there is no exercise price. Upon exercise, a vested award is converted into one fully paid ordinary share that is subject to a post-vesting holding lock for a set period (generally up to two years) and carries voting and dividend entitlements. 1 The Equity Incentive Plan Rules set out exceptional circumstances, such as death, disability, redundancy or genuine retirement, (‘good leaver’ circumstances) under which RSs are released at cessation unless the Board determines otherwise. Prior to FY2018, the equity component of STI was awarded in the form of Deferred Share Rights (DSRs). Financial Statements 133 G3 Share-based payments (continued) In relation to Share Rights awarded since FY2021, upon vest, a dividend equivalent amount will be delivered in the form of additional shares equal in value (as determined by the Board) to the amount of dividends that would have been paid and re-invested had the participant held the underlying shares during the period from the grant date through to the relevant vesting date. The fair value of the awards granted is recognised as an employee expense, with a corresponding increase in equity, over the vesting period. In exceptional circumstances2 , unvested Share Rights may be held ‘on foot’ subject to the specified performance hurdles and other plan conditions being met, or dealt with in an appropriate manner determined by the Board. For PSRs subject to the relative TSR condition, fair value is measured at grant date using a Monte Carlo simulation model that takes into account the exercise price, share price at grant date, price volatility, dividend yield, risk-free interest rate for the term of the security, and the likelihood of meeting the TSR market condition. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome. The amount recognised as an expense is adjusted to reflect the actual number of awards that vest except where due to non-achievement of the TSR market condition. Set out below are the inputs used to determine the fair value of the PSRs granted during the year. For RSRs subject to the underpinning conditions, the initial fair value at grant date is the market value of an Origin share, and the recognised expense is trued up at each reporting period to the expected outcome as assessed at that time. Set out below is a summary of RSRs and PSRs issued during the financial year. Grant date Grant date share price Exercise price Volatility Risk-free rate1 RSRs RSRs PSRs PSRs 06 Sep 2021 20 Oct 2021 06 Sep 2021 20 Oct 2021 $4.44 Nil - - $5.14 Nil - - $4.44 Nil 37% 0.15% $2.46 $5.14 Nil 37% 0.51% $3.58 Grant date fair value (per award) $4.44 $5.14 1 Where the risk-free rate is nil, these RSR tranches are subject to a number of underpinning conditions to be assessed by the Board; therefore, the risk-free rate is not relevant to their valuation. Equity Incentive Plan awards outstanding Set out below is a summary of awards outstanding at the beginning and end of the financial year. Outstanding at 1 July 2021 Granted Exercised/released Forfeited Outstanding at 30 June 2022 Options 3,105,221 - - 1,882,339 1,222,882 Weighted average exercise price PSRs RSRs $6.32 5,670,304 - - - 1,296,535 397,663 2,236,713 995,169 1,311,963 - 48,834 $7.37 4,332,463 2,258,298 DSRs 45,556 - 45,556 - - Exercisable at 30 June 2022 - - - - - Outstanding at 1 July 2020 3,259,381 $6.33 Granted Exercised/released Forfeited - - 154,160 - - - 6,243,467 1,044,581 563,432 1,054,312 Outstanding at 30 June 2021 3,105,221 $6.32 5,670,304 Exercisable at 30 June 2021 - - - - 213,038 1,056,609 - - 167,482 61,440 995,169 - - 45,556 6,695,155 - - The weighted average share price during 2022 was $5.45 (2021: $4.75). The options outstanding at 30 June 2022 have an exercise price of $7.37. The options outstanding at 30 June 2022 were tested on 30 June 2022; they did not satisfy the vesting conditions and will lapse on 22 August 2022 in accordance with the Equity Incentive Plan rules. For more information on these share plans and performance rights issued to key management personnel, refer to the Remuneration Report. 2 The Equity Incentive Plan Rules provide that Share Rights, and RSs arising from STI arrangements, are forfeited on cessation of employment, except in ‘good leaver’ circumstances or unless the Board determines otherwise. The offer terms provide guidance for the exercise of that discretion, specifically that the Share Rights and RSs will not normally be forfeited in cases of 'good leavers' (such as those ceasing employment due to death, disability, redundancy or genuine retirement). RSs 6,695,155 4,929,061 3,156,022 467,068 8,001,126 4,523,573 4,216,362 1,758,548 286,232 134 Annual Report 2022 G3 Share-based payments (continued) Employee Share Plan Under the ESP, all eligible employees have a choice of either participating in the $1,000 General Employee Share Plan (GESP) or the Matching Share Plan (MSP). Under the GESP, all employees of the Company who are based in Australia and have been continuously employed as at 1 March of the performance year, are granted up to $1,000 of fully paid Origin shares conditional on Board approval. The shares are granted for no consideration. Shares awarded under the GESP are purchased on market, registered in the name of the employee, and are restricted for three years, or until cessation of employment, whichever occurs first. Under the MSP, all eligible employees may elect to purchase shares via a salary sacrifice arrangement, which commences on 1 October of the performance year. The shares under this plan are allotted quarterly and are subject to a trading restriction for a set period (generally two years) or until cessation of employment. The Company matches the purchased shares on a one-for-two basis with allocation of additional Matching Rights (MRs) which vest at the same time as the restriction is lifted for the purchased shares. Vesting of MRs is conditional on the employee remaining in continuous employment at that time. MRs are forfeited if the service conditions are not met.3 Details of the shares awarded under the GESP during the year are set out below. The cost per share represents the weighted average market price of the Company's shares on the grant date. 2022 2021 Grant date 6 Sep 2021 28 Aug 2020 Shares granted 813,637 813,637 703,794 703,794 Cost per share $4.36 $5.49 Total Total Set out below is a summary of MRs outstanding at the beginning and end of the financial year. Outstanding at 1 July 2021 Granted Exercised/released Forfeited Outstanding at 30 June 2022 Exercisable at 30 June 2022 Total cost $'000 3,547 3,547 3,864 3,864 MRs 375,895 267,619 219,688 24,926 398,900 - 3 The Equity Incentive Plan Rules provide that Share Rights, and RSs arising from STI arrangements, are forfeited on cessation of employment, except in ‘good leaver’ circumstances or unless the Board determines otherwise. The offer terms provide guidance for the exercise of that discretion, specifically that the Share Rights and RSs will not normally be forfeited in cases of 'good leavers' (such as those ceasing employment due to death, disability, redundancy or genuine retirement). Financial Statements 135 G4 Related party disclosures The Group's interests in equity accounted entities and details of transactions with these entities are set out in notes B1 and B4. Certain Directors of Origin Energy Limited are also directors of other companies that 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. G5 Key management personnel Short-term employee benefits Post-employment benefits Other long-term benefits Share-based payments Total 2022 $ 2021 $ 11,222,909 10,344,127 306,469 385,726 5,554,712 289,963 225,909 4,133,424 17,469,816 14,993,423 Loans and other transactions with key management personnel There were no loans with key management personnel during the year. Transactions entered into during the year with key management personnel are normal employee, customer or supplier relationships and have terms and conditions that are no more favourable than dealings in the same circumstances on an arm’s length basis. These transactions include: • the receipt of dividends from Origin Energy Limited or participation in the DRP; • participation in the ESP and Equity Incentive Plan; • • terms and conditions of employment or directorship appointment; reimbursement of expenses incurred in the normal course of employment; and • purchases of goods and services. 136 Annual Report 2022 G6 Notes to the statement of cash flows Cash includes cash on hand, at bank and in short-term deposits, net of outstanding bank overdrafts. The following table reconciles profit to net cash provided by operating activities. Loss for the year Adjustments for non-cash ITDA Depreciation and amortisation Net financing costs Income tax expense Non-cash share of ITDA of equity accounted investees Adjustments for other non-cash items (Increase)/decrease in fair value of derivatives (Increase)/decrease in fair value of financial instruments Unrealised foreign exchange loss/(gain) Net loss on divestment Impairment of non-current assets Loss on sale of assets Gain on dilution of investment Impairment losses recognised - trade and other receivables Non-cash share of EBITDA of equity accounted investees Exploration expense Share-based payment expense Changes in assets and liabilities: – Receivables – Inventories – Payables – Provisions – Other – Futures collateral Tax (paid)/received Total adjustments Net cash from operating activities 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. Reconciliation of movements of liabilities to cash flows arising from financing activities $m Balance as at 1 July 2021 Proceeds from borrowings Repayment of borrowings/other liabilities Changes to leases Foreign exchange adjustments and other non- cash movements Reclassification Balance as at 30 June 2022 Liabilities from financing activities Current borrowings Non-current borrowings 1,938 - (1,968) - 23 264 257 2,827 2,883 (2,896) - 48 (264) 2,598 Lease liabilities 463 - - 72 - - 535 Other financial (assets)/ liabilities (81) 13 112 - (30) - 14 2022 $m 20211 $m (1,425) (2,279) 449 129 551 1,138 (1,220) (46) 109 113 2,196 2 (44) 65 541 133 313 956 809 163 (153) - 1,504 11 - 88 (2,097) (1,141) 24 29 (1,052) (68) 1,308 16 (90) 471 (27) 1,956 531 - 24 (398) 50 450 (178) (70) 110 31 3,243 964 Total 5,147 2,896 (4,752) 72 41 - 3,404 Financial Statements 137 G7 Auditors' remuneration During the year, the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms. Amounts received or due and receivable by the auditor of the Parent Company and any other entity in the Group for: Auditing the statutory financial report of the Parent Company covering the Group 2,225 1,998 2022 $'000 2021 $'000 Auditing the statutory financial reports of any controlled entities Fees for other assurance and agreed-upon-procedures services under other legislation or contractual arrangements Fees for other services Tax compliance1 Advisory services2 Sustainability compliance Total Amounts received or due and receivable by affiliates of the auditor of the Parent Company for: Auditing the statutory financial reports of any controlled entities Total fees to overseas member firms of the Parent Company auditor Total remuneration to Parent Company auditor Auditing of statutory financial reports of any controlled entities by other auditors Total auditors' remuneration 73 9 879 - 250 3,436 69 69 3,505 206 3,711 73 9 823 900 141 3,944 69 69 4,013 169 4,182 1 This amount relates to the Group's share of tax compliance work billed. An amount of $879,000 (2021: $800,000) was recharged to APLNG in respect of its share and is excluded from this amount. 2 The fees for non-audit services paid to the auditor of the Parent Company (EY) in the prior year predominantly related to a one-off occurrence due to transactional activities that took place in FY2020. As part of the acquisition of Octopus Energy and the associated retail transformation process, an external consulting firm was engaged by the Group to undertake advisory services in respect of this acquisition. In June 2020, midway through the project, the firm engaged by the Group was acquired by EY. As the Group decided it was in the best interest for the project to continue, the audit committee agreed to a one-off approval allowing for continuation of the work, provided the time period and fees were limited. This project completed in the prior year and therefore these costs will not reoccur going forward. 138 Annual Report 2022 G8 Master netting or similar agreements The Group enters into derivative transactions under ISDA master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of all transactions outstanding in the same currency are aggregated into a net amount payable by one party to the other. Financial assets and liabilities are offset, and the net amount reported in the statement of financial position, where the Group has a legally enforceable right to offset recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group has also entered into arrangements that do not meet the criteria for offsetting, but still allow for the related amounts to be offset in certain circumstances, such as a loan default or the termination of a contract. The following table presents the recognised financial instruments that are offset, or subject to master netting arrangements but not offset, as at the reporting date. The net amount column shows the impact on the Group's statement of financial position if all set-off rights were exercised. 2022 Derivative assets Derivative liabilities 2021 Derivative assets Derivative liabilities1 Amount offset in the statement of financial position $m Amount in the statement of financial position $m Related amount not offset $m Gross amount $m 9,855 (6,940) 1,488 (2,489) (3,606) 3,606 (353) 353 6,249 (3,334) 1,135 (2,136) (2,070) 2,070 (867) 867 Net amount $m 4,179 (1,264) 268 (1,269) 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. G9 Deed of Cross Guarantee The parent entity has entered into a Deed of Cross Guarantee through which the Group guarantees the debts of certain controlled entities in the event that one of those entities is wound up. The controlled entities that are party to the Deed are shown in note F1. The following consolidated statement of comprehensive income and retained profits, and statement of financial position, cover the Company and its controlled entities that are party to the Deed of Cross Guarantee after eliminating all transactions between parties to the Deed. for the year ended 30 June Consolidated statement of comprehensive income and retained profits Revenue Other income Expenses Share of results of equity accounted investees Impairment Net loss on divestment Interest income Interest expense Loss before income tax Income tax expense Loss for the year Other comprehensive income Total comprehensive income for the year Retained earnings at the beginning of the year Dividends paid Retained earnings at the end of the year 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2022 $m 14,299 19 (13,520) 1,046 (2,196) (113) 59 (198) (604) (615) (1,219) - (1,219) 2,007 (352) 436 20211 $m 11,966 15 (12,747) 227 (1,783) - 109 (261) (2,474) (380) (2,854) - (2,854) 5,257 (396) 2,007 Financial Statements G9 Deed of Cross Guarantee (continued) as at 30 June Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Inventories Derivatives Other financial assets Income tax receivable Other assets Total current assets Non-current assets Trade and other receivables Derivatives Other financial assets2 Investments accounted for using the equity method PP&E Intangible assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Payables to joint ventures Interest-bearing liabilities Derivatives Other financial liabilities Provision for income tax Employee benefits Provisions Total current liabilities Non-current liabilities Trade and other payables Interest-bearing liabilities Derivatives Deferred tax liabilities Employee benefits Provisions Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total equity 1 Certain amounts have been restated to reflect adjustments disclosed in note G11. 2 Includes investment in subsidiaries relating to entities outside the Deed of Cross Guarantee. 139 20211 $m 286 3,304 102 667 491 7 117 4,974 1,537 302 1,074 6,543 3,077 4,641 47 17,221 22,195 2,443 169 72 523 311 1 221 38 3,778 5,314 926 1,291 13 44 1,177 8,765 12,543 9,652 7,138 507 2,007 9,652 2022 $m 481 4,404 170 2,901 732 - 87 8,775 1,909 3,074 93 5,832 3,052 2,419 51 16,430 25,205 3,361 133 87 1,010 688 59 240 373 5,951 3,856 977 1,740 1,394 37 814 8,818 14,769 10,436 6,877 3,123 436 10,436 140 Annual Report 2022 G10 Parent entity disclosures The following table sets out the results and financial position of the parent entity, Origin Energy Limited. Origin Energy Limited Profit/(loss) Other comprehensive income, net of income tax Total comprehensive income for the year Financial position of the parent entity at year end Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Share-based payments reserve Foreign currency translation reserve Hedge reserve Fair value reserve Retained earnings1 Total equity 2022 2021 $m $m 505 512 1,017 743 17,418 18,161 4,274 3,421 7,695 6,877 236 664 3 4 2,682 10,466 (1,428) (657) (2,085) 271 16,771 17,042 3,364 3,626 6,990 7,138 226 189 (33) 3 2,529 10,052 1 Refer to note A7 for details of dividends provided for or paid of $352 million. The parent entity has entered into a deed of indemnity for the cross-guarantee of liabilities of a number of controlled entities. Refer to note F1. G11 Prior year restatements Changes in accounting policies Following clarifying guidance from the International Financial Reporting Interpretations Committee (IFRIC), the Group has applied changes in accounting policies that require restatement of previously reported amounts. SaaS The net intangibles assets of $40 million have been derecognised in the statement of financial position at 30 June 2021 and the associated retained earnings amount of $29 million (after tax) has been restated. The associated amortisation of $9 million (before tax) for the period has been reversed in the income statement as at 30 June 2021. PPAs In the year ended 30 June 2021, the Group recognised an impairment of goodwill allocated to the Energy Markets Retail cash generating unit (CGU) amounting to $830 million, and the cash flows associated with the renewable PPAs were included in the calculation of the recoverable amount for the Retail CGU. This change in the Group’s accounting policy to recognise PPAs as derivatives has resulted in an adjustment of $324 million to reverse a portion of the impairment of goodwill recorded at 30 June 2021, relating to the renewable PPAs that were included in the recoverable amount. The net electricity derivative liabilities of $889 million have been recognised as derivatives in the statement of financial position at 30 June 2021 and the associated retained earnings amount of $298 million (after tax) have been restated. Other restatements Certain amounts have been restated to reflect an adjustment to the result of the equity accounted investment in Octopus Energy. Financial Statements 141 G11 Prior year restatements (continued) The following tables show the adjustments recognised for each individual line item. Impact on statement of financial position Non-current assets Derivatives Investments accounted for using the equity method Intangible assets Deferred tax assets Non-current liabilities Derivatives Deferred tax liabilities Net assets Equity Retained earnings Total equity Impact on income statement Expenses Results of equity accounted investees (Loss)/profit before income tax Income tax expense (Loss)/profit for the period Profit for the period attributable to: Members of the parent entity (Loss)/profit for the period Restatements Restatements 30 June 2021 PPAs SaaS Other Restated 30 June 2021 30 June 2020 Restated 1 July 2020 PPAs SaaS $m $m $m $m $m $m $m $m $m 366 6,952 4,374 - 506 283 9,815 - - 324 - 889 (267) (298) 2,132 9,815 (298) (298) - - (40) - - (11) (29) (29) (29) - 366 528 147 (13) 6,939 7,360 4,658 5,420 - - - - 675 7,360 (47) 5,373 - 315 134 13 462 1,395 749 594 5 - - - - 1,343 - - - - (13) 9,475 12,701 (313) (34) 12,354 (13) 1,792 4,819 (13) 9,475 12,701 (313) (313) (34) 4,472 (34) 12,354 Restatements Restatements 30 June 2021 PPAs SaaS Other Restated 30 June 2021 30 June 2020 Restated 1 July 2020 PPAs SaaS $m $m $m $m $m $m $m $m $m (14,048) (119) 195 - (1,846) (119) (443) (2,289) (2,291) (2,289) 133 14 14 14 9 - 9 (3) 6 6 6 - (14,158) (13,418) (10) 185 (10) (1,966) (313) (10) (2,279) (10) (2,281) (10) (2,279) 512 179 (93) 86 83 86 66 - 66 (20) 46 46 46 (11) (13,363) - (11) 3 (8) (8) (8) 512 234 (110) 124 121 124 Impact on note A4 Expenses Expenses Depreciation and amortisation Impairment of non- current assets Decrease/(increase) in fair value of derivatives Other Expenses Restatements Restatements 30 June 2021 $m PPAs $m SaaS $m Restated 30 June 2021 $m 30 June 2020 $m PPAs $m SaaS $m 550 - (9) 541 1,828 (324) 366 477 14,048 443 - 119 509 668 (275) 486 - - - 1,504 809 477 (9) 14,158 13,418 - - (66) - (66) (8) - - 19 11 Restated 1 July 2020 $m 501 668 (341) 505 13,363 142 Annual Report 2022 G11 Prior year restatements (continued) Impact on note A6 basic and diluted earnings per share Statutory (loss)/profit Earnings per share based on statutory consolidated profit Statutory profit/(loss) $m Basic earnings per share (cents) Diluted earnings per share (cents) Underlying profit Earnings per share based on underlying consolidated profit Underlying profit $m Underlying basic earnings per share (cents) Underlying diluted earnings per share (cents) Restatements Restatements 30 June 2021 PPAs SaaS Other Restated 30 June 2021 30 June 2020 Restated 1 July 2020 PPAs SaaS (2,291) (130.2) (130.2) 318 18.0 18.0 14 0.8 0.8 - 0.0 0.0 6 0.3 0.3 6 0.3 0.3 (10) (2,281) (0.5) (129.6) (0.5) (129.6) 83 4.7 4.7 (10) (0.5) (0.5) 314 17.8 17.8 1,023 58.1 58.0 46 2.7 2.7 - 0.0 0.0 (8) (0.5) (0.5) 121 6.9 6.9 (8) 1,015 (0.5) (0.5) 57.6 57.5 Impact on note D5 Fair value of financial assets and liabilities Non-current assets Economic hedges Commodity contracts Total economic hedges Non-current liabilities Economic hedges Commodity contracts Total economic hedges Restatements Restatements 30 June 2021 $m PPAs $m SaaS $m Restated 30 June 2021 $m 30 June 2020 $m PPAs $m SaaS $m Restated 1 July 2020 $m 201 201 - - (342) (402) (889) (889) - - - - 201 201 258 258 147 147 (1,231) (1,291) (173) (297) (594) (594) - - - - 405 405 (767) (891) G12 Subsequent events Other than the matters described below, no item, transaction or event of a material nature has arisen since 30 June 2022 that would significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial periods. Additional investment On 26 July 2022 Origin announced an additional investment of £94 million (approximately A$163 million) in Octopus Energy Group Limited to restore its 20 per cent equity interest. Dividends On 18 August 2022, the Directors determined a final dividend of 16.5 cents per share, partially franked to 75 per cent, on ordinary shares. The dividend will be paid on 30 September 2022. The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 June 2022 and will be recognised in subsequent financial statements. Financial Statements 143 Directors’ Declaration 1. In the opinion of the Directors of Origin Energy Limited (the Company): a. the consolidated financial statements and notes are in accordance with the Corporations Act 2001 (Cth), including: i. giving a true and fair view of the financial position of the Group as at 30 June 2022 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 consolidated financial statements also comply with International Financial Reporting Standards as disclosed in the Overview of the consolidated financial statements; and 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 F1 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 Corporations (Wholly-owned Companies) Instrument 2016/785. 3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) from the Chief Executive Officer and the Chief Financial Officer for the financial year ended 30 June 2022. Signed in accordance with a resolution of the Directors: Scott Perkins Chairman Director Sydney, 18 August 2022 144 Annual Report 2022 Independent Auditor’s Report Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au Independent Auditor’s Report to the Members of Origin Energy Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Origin Energy Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated income statement, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial performance for the year ended on that date; and b. Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. Financial Statements 145 Carrying Value of the Energy Markets Group of Cash Generating Units (CGUs) Why significant How our audit addressed the key audit matter In accordance with the requirements of Australian Accounting Standards, the Group is required to test all CGUs annually for impairment where goodwill is present. The Group assesses the recoverable amount of each CGU using a discounted cash flow forecast to determine value in use. As disclosed in Note C8 to the financial statements, as a result of increased forecast wholesale electricity and gas prices, the Group has recognised a $2,196 million impairment charge on its Retail CGU, which form part of the Energy Markets group of CGUs. Assumptions used in the forecasting of cash flows are highly judgmental and inherently subjective. As disclosed in Note C8, small changes in key assumptions can lead to significant changes in the recoverable amount of these assets. As a result, we considered the impairment testing of the Energy Markets group of CGUs and the related disclosures in the financial report to be particularly significant to our audit. Our audit procedures included the following: • Assessed whether the impairment testing methodology for the Energy Markets group of CGUs used by the Group met the requirements of Australian Accounting Standards. • Assessed the basis for the determination of the Group’s CGUs based on our understanding of the nature of the Group’s business, the interdependence of cash flows, and the economic environment in which it operates. • Tested the mathematical accuracy of the discounted cash flow models. • Assessed the cash flow forecasts with reference to historical budgeting accuracy and current trading performance, historical growth rates, historical operating results, market data and forecasts, ratio analysis, and discussions with management and senior executives. • Where long term supply or sales contracts are in place, agreed the forecast revenue and costs to the contract terms and rates. • For the Generation CGU within the Energy Markets Group of CGUs, compared the useful lives of assets assumed in the impairment model to the Australian Energy Market Operator (“AEMO”) closure dates. • Involved our energy market modelling specialists to assess the conclusions reached by the Group’s internal specialists in respect of forecast energy prices, forecast generation volumes, forecast capacity prices and marginal loss factors. • Involved our valuation specialists to: o Assess the discount rates, growth rates and terminal growth rates with reference to publicly available information on comparable companies in the industry and markets in which the Group operates; and o Perform sensitivity analyses and evaluated whether any reasonably possible changes in assumptions could cause the carrying amount of the cash generating unit to exceed its recoverable amount. • Considered the potential impacts of climate risk on the recoverable amount by analysing the forecast energy price assumptions applied by management, asset useful lives and the possible changes to commodity prices resulting from the transition to a low carbon future. • Evaluated the adequacy of the related disclosure in the financial report. 146 Annual Report 2022 Carrying Value of APLNG Equity Accounted Investment Why significant How our audit addressed the key audit matter At 30 June 2022, the Group’s equity accounted investment in Australia Pacific LNG Pty Limited (APLNG) had a carrying value of $5,821 million. The Group has concluded that no impairment or impairment reversal was required. As disclosed in Note B2.3, the carrying amount of the Group's equity accounted investment in APLNG is reviewed at each reporting date to determine whether there is any indicators of impairment or impairment reversal. Where an indicator of impairment or impairment reversal exists, a formal estimate of the recoverable amount is made. Oil price is a significant assumption used in this assessment and is inherently subjective. In times of economic uncertainty, including the current political and energy supply uncertainty which results from the Ukraine war, the degree of subjectivity in determining forecast pricing is higher than it might otherwise be. Changes in this assumption can lead to significant changes in the recoverable amount. Due to the significance of this investment relative to total assets and the inherent complexity in forecasting commodity prices and future market outlooks, we considered the carrying value of this investment to be a key audit matter. In fulfilling our responsibilities as Group auditor, we considered the work performed by the EY Component Auditor responsible for auditing APLNG. This included: • Sending instructions to the EY Component Auditor detailing the scope to be covered for the purposes of our audit of the Group. This included the risk associated with impairment or impairment reversal. • The Component Auditor confirmed compliance with the instructions provided and reported the results of their procedures to us. • To ensure sufficient oversight, we, as the Group audit team: o Held frequent meetings with the Component Auditor to discuss the outcome and extent of their procedures. o Reviewed underlying working papers and documentation of the Component Auditor for selected areas of audit focus. In addition, we undertook the following additional procedures with the assistance of our valuation’s experts: • Considered whether information existed that was contrary to the EY Component auditor’s conclusion in respect of the existence of impairment or impairment reversal for APLNG at 30 June 2022 and may represent objective evidence of a significant or prolonged change in value of the investment, including: o Compared current period results from APLNG to prior period impairment modelling. o Considered changes to market conditions during the period including changes and volatility in key macro-economic assumptions such as oil price and gas price with reference to broker and analyst data and publicly available peer company information. o Evaluated possible changes to the APLNG discount rate with reference to external market data including government bond rates and comparable company data. o Considered the impact of climate risk on the asset life and key macro-economic assumptions. o Undertook sensitivity analysis for reasonably possible changes in key assumptions which included price sensitivity analysis using scenarios developed by the International Energy Agency. • Considered available market information including trading and reserve multiples as a cross check of the carrying value of the Group’s equity accounted investment. • Assessed the climate related disclosures in respect of APLNG for accuracy and consistency with other publicly disclosed information. Financial Statements 147 Unbilled Revenue Why significant How our audit addressed the key audit matter At 30 June 2022, the Group recognised unbilled revenue net of an allowance for impairment of $2,107 million as disclosed in Note C1. Unbilled revenue represents the value of energy supplied to customers between the date of the last meter read and the reporting date where no bill has been issued to the customer at the end of the reporting period. The estimation of unbilled revenue is considered a key audit matter due to the complex estimation process and significant audit effort required to address the estimation uncertainty. Key factors that require consideration impacting the complex estimation process include: • Estimation of customer demand which is impacted by weather and an individual customer’s circumstances. • Application of different customer rates across different regulated and unregulated markets. • Changes in energy consumption patterns compared to the same period in the prior year, particularly due to the ongoing impacts of COVID-19 and wholesale energy price volatility. The Group’s disclosures in respect of the unbilled revenue estimation process are included in Note C1 of the financial report. Our audit procedures included the following: • Assessed whether the methodology used to recognise unbilled revenue met the requirements of Australian Accounting Standards. • Assessed the effectiveness of the Group’s controls governing energy purchased, energy sold and the customer pricing process. • Evaluated the unbilled revenue calculation by: o With the assistance of specialists, assessing the calculation methodology and mathematical accuracy. o Comparing inputs used in the calculation to supporting data such as historical temperature data and volume data provided by the Australian Energy Market Operator (AEMO). o Compared the prices applied to customer consumption with historical and current data. o Reviewed the Group’s reconciliation of volumes acquired from AEMO against volumes sold and volumes purchased as used by the Group in their analysis. o Compared the accuracy of the unbilled revenue accrual by comparing the historical accrual to final billing data and performing a trend analysis of the accrual year on year. o Tested the accuracy of the unbilled revenue accrual for business customers by comparing the unbilled revenue accrual to subsequent invoices. • Evaluated the adequacy of the related disclosures in the financial report including those made with respect to judgements and estimates Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2022 annual report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 148 Annual Report 2022 Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. ► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ► Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Financial Statements 149 ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Origin Energy Limited for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Andrew Price Partner Sydney 18 August 2022 150 Annual Report 2022 Share and Shareholder Information The information set out below was applicable as at 29 July 2022. Corporate Governance Statement The Company’s Corporate Governance Statement can be found on its website at originenergy.com.au/governance Substantial shareholders As at 29 July 2022, the Company received notice of two substantial holders: Shareholder AustralianSuper Pty Ltd Vanguard Group Date notice received 1 July 2022 28 April 2022 Number of shares in notice 218,137,581 88,061,736 Percentage of capital in notice 12.66% 5.00007% Number of equity securities holders and voting rights As at 29 July 2022 there were: • • 138,184 holders of 1,722,747,671 ordinary shares in the Company; 15 holders of 1,222,882 Options, 61 holders of 4,332,463 Performance Share Rights, 60 holders of 2,258,298 Restricted Share Rights; and • 712 holders of 396,315 Matching Share Rights. Only ordinary shares of the Company are quoted. Only holders of ordinary shares are entitled to attend and vote at a meeting of members. Voting rights of members At a meeting of members, each member who is entitled to attend and vote may attend and vote in person or by proxy, attorney or representative. On a show of hands, every person present who is a member, proxy, attorney or representative, shall have one vote; and on a poll, every member who is present in person or by proxy, attorney or representative shall have one vote for each fully paid ordinary share held. No other equity securities hold voting rights. Analysis of holdings Fully paid ordinary shares Holdings ranges Holders Total shares 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 59,701 56,210 13,414 8,628 25,388,736 136,083,626 95,424,251 178,549,435 100,001-999,999,999 231 1,287,301,623 % 1.470 7.900 5.540 10.360 74.720 Totals 138,184 1,722,747,671 100.000 Options Holdings ranges Holders Total options 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-999,999,999 Totals 0 0 0 14 1 15 0 0 0 821,594 401,288 1,222,882 100.000 % 0.000 0.000 0.000 67.190 32.810 Share and Shareholder Information Performance share rights Restricted Share rights Matching Share Plan matched rights 151 % 0.000 0.000 0.350 45.310 54.340 100.000 % 0.000 0.000 0.940 50.930 48.130 100.000 Holdings ranges Holders Total rights 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-999,999,999 Totals 0 0 2 51 8 61 0 0 15,252 1,963,127 2,354,084 4,332,463 Holdings ranges Holders Total rights 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-999,999,999 Totals 0 0 3 51 6 60 0 0 21,180 1,150,242 1,086,876 2,258,298 Holdings ranges Holders Total rights % 1-1,000 712 396,315 100.000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-999,999,999 0 0 0 0 0 0 0 0 0.000 0.000 0.000 0.000 Totals 712 396,315 100.000 Unmarketable parcels 7,612 shareholders held less than a marketable parcel as at 29 July 2022. Top 20 holdings Shareholder HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED BNP PARIBAS NOMS PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED ARGO INVESTMENTS LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD CERTANE CT PTY LTD CITICORP NOMINEES PTY LIMITED NETWEALTH INVESTMENTS LIMITED CERTANE CT PTY LTD BNP PARIBAS NOMS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 MUTUAL TRUST PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> Number of shares % of Issued shares 440,271,158 437,906,585 141,870,327 68,203,964 41,301,426 27,318,193 11,351,603 9,707,307 9,119,774 8,766,570 6,965,196 6,140,797 5,923,371 4,189,056 2,939,491 2,855,269 2,255,426 2,218,988 1,881,258 1,828,570 25.56% 25.42% 8.24% 3.96% 2.40% 1.59% 0.66% 0.56% 0.53% 0.51% 0.40% 0.36% 0.34% 0.24% 0.17% 0.17% 0.13% 0.13% 0.11% 0.11% 152 Annual Report 2022 Securities exchange listing Origin shares are traded on the AustralianSecurities Exchange Limited (ASX). The symbol under which Origin shares are traded is ‘ORG’. Escrowed securities There are no securities subject to voluntary escrow as at the date of this Report. On-market buy-back There is no current on-market buy-back of Origin shares. During FY2022, the company undertook an on-market buy-back between 1 April 2022 and 23 June 2022. On-market purchases for employee equity plans During the reporting period, 5,900,000 Origin shares were purchased on-market for the purpose of Origin’s employee incentive plans. The average price per share purchased was $6.12. Shareholder enquiries For information about your shareholding, to notify a change of address, to make changes to your dividend payment instructions or for any other shareholder enquiries, you should contact Origin Energy’s share registry, Boardroom Pty Ltd on 1300 664 446. Please note that broker-sponsored holders are required to contact their broker to amend their address. When contacting the share registry, shareholders should quote their security holder reference number, which can be found on the holding or dividend statements. Shareholders with internet access can update and obtain information regarding their shareholding online at www.originenergy. com.au/ about/investors-media Tax File Number For resident shareholders who have not provided the share registry with their Tax File Number (TFN) or exemption category details, tax at the top marginal tax rate (plus Medicare levy) will be deducted from dividends to the extent they are not fully franked. For those shareholders who have not provided their TFN or exemption category details, forms are available from the share registry. Shareholders are not obliged to provide this information if they do not wish to do so. Information on Origin The main source of information for shareholders is the Annual Report. The Annual Report will be provided to shareholders on request and free of charge. Shareholders not wishing to receive the Annual Report should advise the share registry in writing so that their names can be removed from the mailing list. Origin’s website (www.originenergy.com.au) is another source of information for shareholders. 154 Annual Report 2022 Exploration and Production Permits and Data Origin permitAPLNG permitProduction facilityPipelinePipelineOrigin Energy InterestsOther (Non Origin)155 * * * Exploration and Production Permits and Data 1 Origin's Australian interests Origin held interests in the following permits at 30 June 2022. Basin/Project Area Interest Basin/Project Area Interest Basin/Project Area Interest Queensland (continued) Queensland (continued) Combabula/Reedy Creek/Peat and Taroom East Kenya/Kenya East/Bellevue and Anya Queensland Surat-Bowen basins Angry Jungle ATP 631; PLs 281 and 282 4.9765375% 1 Carinya and Ramyard ATP 972; PL 469, 470 and 471 25.50% * 1 ATP 973 27.5% * 1 ATP 2047 ATP 606; PLs 297, 403, 404, 405, 406, 407, 408, 412 and 413; PL(A) 444 PL 101 PPL 178 Condabri 13.75% 25.50% 27.5% 27.5% 1 * 1 * 1 * 1 PLs 265, 266, 267, 1011, 1018 and 1084 PPLs 177, 185, 186, 2000 and 2059 27.50% * 1 27.50% * 1 Denison Trough ATP 1191; PLs 1082 and 1083 (Mahalo block deeps) 13.75% 1 1 13.75% ATP 1191; PLs 450, 451, 457, 1012; PL(A) 1062 PLs 43, 44, 45, 183 and 218 (Deeps) Fairview and Arcadia ATPs 745; PLs 420, 421 and 440 PL 1059 ATPs 2012; 90, 91, 92, 99, 100, 232, 233, 234, 235, 236 and 1017 Gladstone LNG PFL 20 PPLs 162 and 163 Ironbark ATP 788; PL(A) 1106 (Deeps) ATP 788; PL(A) 1106 (Shallows) 27.50% 27.50% 1 * 1 6.88% * 1 27.50% * 1 8.078125% 1 8.59375% 1 8.59375% 1 8.59375% 1 PL 247 PFL 19 PL 1025 PLs 257, 273, 274, 275, 278, 279, 442, 466, 474 and 503 (Shallows) PLs 179, 180, 228, 229 and 263 PPLs 107, 176, 2014 and 2063 Membrance and Lonesome ATP 804 PLs 219 and 220 8.057017% 1 27.50% * 1 Spring Gully ATP 592; PLs 195, 268, 414, 415, 416, 417, 418 and 419 25.99% * 1 Cooper-Eromanga basins ATPs 736, 737, 738, 2025 and 2026 75.00% 99.00% 100% 100% * PLs 1094, 1095, 1096, 1097, 1098, 1099, 1100, 1101, 1102, 1103 and 1104 ATP 784 Boree North EPM 27973 Northern Territory Beetaloo Basin EP 76, 98 and 117 77.50% * Western Australia 11.171875% 1 Browse Basin 11.171875% 1 TR/7, TR/8, WA-90-R, WA-91-R, WA-92-R 40.00% Canning Basin EP 129, 391, 428, 431 and 436 50.00% EP 457 & EP 458 40.00% South Australia Geothermal GRL 3 30.00% Notes: * Operatorship 1 Interest held through 27.5 per cent ownership of Australian Pacific LNG Joint Venture 13.75% * 1 PL 200 PL 204 26.32% 27.42% PPL 143, 180 and 2026 27.50% * 1 * 1 * 1 6.558623% 6.55875% 1 6.580664% 1 Talinga and Orana PLs 215, 216, 225, 226 and 272 PFL 26 PPLs 171, 181 and 2032 27.50% * 1 27.50% 27.50% * 1 * 1 156 Annual Report 2022 Annual Reserves Report For the year ended 30 June 2022 1 Reserves and resources This Annual Reserves Report provides an update on the reserves and resources of Origin Energy Limited (Origin) and its share of Australia Pacific LNG Pty Limited (APLNG), as at 30 June 2022. 1.1 Highlights APLNG (Origin 27.5 per cent share) • Origin share reduced from 37.5 to 27.5 per cent during the financial year. • Updated reservoir modelling to reflect strong field performance and step-out data, primarily in Combabula, resulted in an overall 1161 per cent 2P (proved plus probable) reserves replacement in operated and non-operated areas during FY2022. A detailed breakdown of movements in Origin’s share of APLNG 2P reserves is as follows: – 240 PJ (7 per cent) upward revision of operated 2P reserves before production driven by updated reservoir models reflecting strong field performance and new data insights; – 37 PJ (6 per cent) increase in non-operated 2P reserves before production; and – (220) PJ of production. • Excluding divestment of Origin equity in APLNG, 2P reserves replacement of 99 per cent has been achieved in operated fields over the last five years, primarily driven by strong performance in producing fields, along with continued maturation of contingent areas shown to be feasible for development through appraisal activities. • Developed 2P reserves accounted for 60 per cent of total 2P reserves as at 30 June 2022. • Origin’s share of 1P (proved) reserves has continued to grow, with an increase of 7 per cent or 197 PJ before production due to strong performance in producing fields. 1P reserves represent 59 per cent of total 3P (proved plus probable plus possible) reserves as at 30 June 2022. 1.2 2P reserves (Origin share) 2P reserves decreased by 1,104 PJ after divestment, revisions and production to a total of 3,148 PJ, compared to 30 June 2021. Origin 2P reserves by area (PJ) Operated Assets – Asset East – Asset West Non-Operated Assets Total 2P 2P 30/06/2021 Acquisition/ divestment New booking/ discovery Revisions/ extensions Production 2P 30/06/2022 3,587 1,463 2,124 665 4,252 (984) (390) (594) (177) (1,161) - - - - - 240 110 130 37 277 (170) (86) (84) (50) (220) 2,673 1,097 1,576 475 3,148 • Summary of 2P reserves movement - key changes include: – 220 PJ decrease due to production; – 1,161 PJ decrease due to divestment, largely related to Origin’s equity decrease from 37.5% to 27.5% (-1,134 PJ) but also including APLNG’s divestment of the Woleebee and Mahalo fields (-27 PJ); – 240 PJ positive revision across all operated areas, reflecting; – Updated reservoir models reflecting strong field performance and new step-out data acquisition resulting in an increase in estimated recovery, notably from Combabula-Reedy Creek area this year. – 37 PJ increase in non-operated areas. • As at 30 June 2022, developed 2P reserves represented 60 per cent of total 2P reserves. • As at 30 June 2022, 100 per cent of Origin’s share of 2P reserves are unconventional gas located in the Surat and Bowen Basins. 1 At 100% APLNG project level including impact of Woleebee asset sale and Mahalo divestment Annual Reserves Report 157 Origin 2P reserves by development type (PJ) Operated Assets – Asset East – Asset West Non-Operated Assets Total 2P Developed Undeveloped 30-6-2021 Developed Undeveloped 30-6-2022 Total 2P Total 2P 2,173 1,031 1,142 393 2,566 1,414 432 982 273 1,686 3,587 1,463 2,124 665 4,252 1,637 793 844 267 1,903 1,036 304 732 208 1,245 2,673 1,097 1,576 475 3,148 1.3 1P reserves (Origin share) 1P reserves increased by 197 PJ or 7 per cent before production and decreased by 757 PJ after divestment and production to 1,998 PJ, compared to 30 June 2021. As at 30 June 2022, developed 1P reserves represented 91 per cent of total 1P reserves. The remaining 9 per cent of 1P reserves represents wells that have been spudded but not connected or planned wells that are immediately adjacent to drilled wells. 100 per cent of 1P reserves are unconventional gas located in the Surat and Bowen Basins. Origin 1P reserves by area (PJ) Operated Assets – Asset East – Asset West Non-Operated Assets Total 1P Origin 1P reserves by development type 1P 30/06/2021 Acquisition/ divestment New booking/ discovery Revisions/ extensions Production 1P 30/06/2022 2,203 1,124 1,079 553 2,755 (588) (300) (288) (147) (735) - - - - - 179 53 126 18 197 (170) (86) (84) (50) (220) 1,624 791 833 373 1,998 (PJ) Operated Assets – Asset East – Asset West Non-Operated Assets Total 1P Developed Undeveloped 30-6-2021 Developed Undeveloped 30-6-2022 Total 1P Total 1P 2,046 1,020 1,026 383 2,428 157 104 53 170 327 2,203 1,124 1,079 553 2,755 1,557 765 792 260 1,817 68 26 42 113 181 1,624 791 833 373 1,998 1.4 2C contingent resources for Origin Energy Beetaloo Basin A material contingent resource announcement of 6.6 Tscf (gross) or 2.3 Tscf (net) for the Beetaloo Basin was provided on 15 February 2017 to the ASX: https://www.asx.com.au/asxpdf/20170215/pdf/43g0qhh87j71bb.pdf Origin increased its interest in the Beetaloo Joint Venture to 70 per cent in May 2017 by acquiring Sasol’s 35 per cent share: https://www.asx.com.au/asxpdf/20170505/pdf/43j1ss71xqbxtc.pdf During FY2020 Origin further increased its interest in the Beetaloo Joint Venture to 77.5 per cent by acquiring 7.5 per cent of the interest owned by Falcon Oil and Gas: https://www.asx.com.au/asxpdf/20200407/pdf/44gs08yfdwfrjp.pdf Refer to the Operating and Financial Review, released on the same date as this report, for details of the current status of the Beetaloo Basin asset. 158 Annual Report 2022 Appendix A: APLNG reserves and resources Origin, as APLNG upstream operator, has prepared estimates of the reserves and resources held by APLNG for operated assets detailed in this report. Netherland, Sewell & Associates, Inc. (NSAI) has prepared a consolidated report of the reserves and resources held by APLNG for non-operated assets. The reserves and resources estimates for the non-operated properties in their report have been independently estimated by NSAI. The tables below provide 1P, 2P and 3P reserves and 2C resources for APLNG (100 per cent) and Origin’s 27.5 per cent interest in these APLNG (operated and non-operated) reserves and resources. Reserves and resources held by APLNG (100 per cent share) Reserves/resource classification 30/06/2021 Acquisition/ divestment New booking/ discovery Revisions/ extensions Production 30/06/2022 1P (proven) 2P (proven plus probable) 3P (proven plus probable plus possible) 2C (best estimate contingent resource) 7,348 11,339 12,204 3,602 - (100) (151) (115) - - - - 610 901 1,048 196 (693) (693) (693) - 7,265 11,448 12,408 3,683 Reserves and resources held by Origin (27.5 per cent in APLNG) Reserves/resource classification 30/06/2021 Acquisition/ divestment New booking/ discovery Revisions/ extensions Production 30/06/2022 1P (proven) 2P (proven plus probable) 3P (proven plus probable plus possible) 2C (best estimate contingent resource) 2,755 4,252 4,576 1,351 (735) (1,161) (1,262) (392) - - - - 197 277 317 54 (220) (220) (220) - 1,998 3,148 3,412 1,013 See details above for movements in 1P and 2P reserves. The 1,048 PJ increase in APLNG (100 per cent share) 3P reserves, excluding production and divestment is due to improved understanding of field behaviour, coupled with strong field performance which has resulted in an increase in estimated recovery from producing areas. Annual Reserves Report 159 Appendix B: Notes relating to this report for downstream transport and processing. This price is exposed to changes in the supply/demand balance in the market through oil price-linked LNG contracts. a. Methodology regarding reserves c. Reversionary rights and resources The Reserves Report has been prepared to be consistent with the Petroleum Resources Management System (PRMS) 2018 published by the Society of Petroleum Engineers (SPE). This document may be downloaded from the SPE website: https://www.spe.org/en/industry/ reserves/. Additionally, this Reserves Report has been prepared to be consistent with the ASX reporting guidelines. For all assets, Origin reports reserves and resources consistent with SPE guidelines as follows: proved reserves (1P); proved plus probable reserves (2P); proved plus probable plus possible reserves (3P) and best estimate contingent resource (2C). Reserves must be discovered, recoverable, commercial and remaining. The CSG reserves and resources held within APLNG’s properties have either been independently prepared by NSAI or prepared by Origin. The reserves and resources estimates contained in this report have been prepared in accordance with the standards, definitions and guidelines contained within the PRMS and generally accepted petroleum engineering and evaluation principles as set out in the SPE Reserves Auditing Standards. Origin does not intend to report prospective or undiscovered resources as defined by the SPE in any of its areas of interest on an ongoing basis. b. Economic test for reserves The assessment of reserves requires a commercial test to establish that reserves can be economically recovered. Within the commercial test, operating cost and capital cost estimates are combined with fiscal regimes and product pricing to confirm the economic viability of producing the reserves. Gas reserves are assessed against existing contractual arrangements and local market conditions, as appropriate. In the case of gas reserves where contracts are not in place, a forward price scenario based on monetisation of the reserves through domestic markets has been used, including power generation opportunities, direct sales to LNG and other end users, and utilisation of Origin’s wholesale and retail channels to market. For CSG reserves that are intended to supply the APLNG CSG to LNG project, the economic test is based on a weighted average price across domestic, spot and LNG contracts, less short run marginal costs e. Rounding Information on reserves is quoted in this report rounded to the nearest whole number. Some totals in tables in this report may not add due to rounding. Items that round to zero are represented by the number 0, while items that are actually zero are represented with a dash "-". f. Abbreviations bbl Tscf CSG kbbls barrel trillion standard cubic feet coal seam gas kilo barrels = 1,000 barrels ktonnes kilo tonnes = 1,000 tonnes mmboe million barrels of oil equivalent PJ PJe petajoule = 1 x 1015 joules petajoule equivalent g. Conversion factors for PJe CSG 1.038 PJ/Bscf The CSG interests that APLNG acquired from Tri-Star in 2002 are subject to reversionary rights. If triggered, these rights will require APLNG to transfer back to Tri-Star a 45 per cent interest in those CSG interests for no additional consideration. Origin has assessed the potential impact of these reversionary rights, based on economic tests consistent with the reserves and resources referable to the CSG interests, and based on that assessment does not consider that the existence of these reversionary rights impacts the reserves and resources quoted in this report. Tri-Star has commenced proceedings against APLNG claiming that reversion has occurred. APLNG denies that reversion has occurred and is defending the claim.2 d. Information regarding the preparation of this Reserves Report h. Reference point The CSG reserves and resources held within APLNG’s properties have either been independently prepared by NSAI or by Origin. All assessments are based on technical, commercial and operational data provided by Origin on behalf of APLNG. The statements in this Report relating to reserves and resources as at 30 June 2022 for APLNG’s interests in non-operated assets are based on information in the NSAI report dated 29 July 2022. The data has been compiled by Mr John Hattner, a full- time employee of NSAI. Mr Hattner has consented to the statements based on this information, and to the form and context in which these statements appear. The statements in this Report relating to reserves and resources for other assets are based on, and fairly represent, information and supporting documentation prepared by, or under the supervision of qualified petroleum reserves and resource evaluators who are employees of Origin. This Reserves Statement as a whole has been approved by Ms Petrina Weatherstone CPEng NER MIEAust who is a full-time employee of Origin. Ms Petrina Weatherstone is Chief Reservoir Engineer, a qualified petroleum reserves and resources evaluator and a member of the Society of Petroleum Engineers, has consented to the form and context in which these statements appear. Reference points for Origin’s petroleum reserves and contingent resources are defined points within Origin’s operations where normal exploration and production business ceases, and quantities of the produced product are measured under defined conditions prior to custody transfer. Fuel, flare and vent consumed to the reference points are excluded. i. Preparing and aggregating petroleum resources Petroleum reserves and contingent resources are typically prepared by deterministic methods with support from probabilistic methods. Petroleum reserves and contingent resources are aggregated by arithmetic summation by category and as a result, proved reserves may be a conservative estimate due to the portfolio effects of the arithmetic summation. Proved plus probable plus possible may be an optimistic estimate due to the same aforementioned reasons. j. Methodology and internal controls The reserves estimates undergo an assurance process to ensure that they are technically reasonable given the available data and have been prepared according to our reserves and resources process, which includes adherence to the PRMS Guidelines. The assurance process includes peer reviews of the technical and commercial assumptions. The annual reserves report is reviewed by management with the appropriate technical expertise, including the Resource Assessment Lead and Integrated Gas General Managers. 2 Refer to Section 7 of the Operating and Financial Review released to the ASX on 18 August 2022 for further information. 160 Annual Report 2022 Five-year Financial History A reconcilation between statutory and underlying profit measures can be found in note A1 of the Origin Consolidated Financial Statements. Income statement ($m) Total external revenue Underlying: EBITDA3 Depreciation and amortisation expense Share of interest, tax, depreciation and amortisation of equity accounted investees4 EBIT Net financing costs Income tax benefit/(expense) Non-controlling interests Segment result and underlying consolidated profit Impact of items excluded from segment result and underlying consolidated profit net of tax Statutory: Profit/(loss) attributable to members of the parent entity Statement of financial position ($m) Total assets Net debt/(cash) Shareholders' equity - members/parent entity interest Adjusted net debt/(cash)5 Shareholders' equity - total Cash flow Key ratios Statutory basic earnings per share (cents) Underlying basic earnings per share (cents) Total dividend per share (cents)6 Net debt to net debt plus equity (adjusted) (%)5 Underlying EBITDA by segment ($m) Energy Markets7 Integrated Gas Corporate General Information Number of employees 20221 20211,2 20201,2 20191 20181 14,461 12,097 13,157 14,727 14,883 2,114 (449) (1,138) 527 (126) 10 (4) 407 2,036 (541) (956) 539 (133) (90) (2) 314 (1,836) (2,595) 3,122 (501) (1,303) 1,318 (126) (174) (3) 1,015 (894) 3,232 (419) (1,504) 1,308 (154) (123) (3) 1,028 183 3,217 (381) (1,194) 1,642 (278) (339) (3) 1,022 (804) (1,429) (2,281) 121 1,211 218 24,020 2,818 9,997 2,838 10,022 21,308 4,786 9,455 4,639 9,475 (81.5) 23.2 29.0 22 365 1,837 (88) (129.6) 17.8 20.0 33 979 1,135 (78) 25,340 5,688 12,333 5,158 12,354 1,813 6.9 57.6 25.0 29 1,450 1,741 (69) 25,743 6,084 13,129 5,417 13,149 24,257 7,289 11,804 6,496 11,828 1,914 2,645 68.8 58.4 25.0 29 1,574 1,892 (234) 12.4 58.2 - 36 1,811 1,521 (115) Net cash from operating and investing activities - total operations ($m) 3,363 1,183 Weighted average number of shares 1,753,612,216 1,759,555,663 1,759,801,186 1,758,935,655 1,757,442,268 5,174 4,979 5,232 5,360 5,565 Five-year Financial History 161 Integrated Gas8 2P reserves (PJe) Product sales volumes (PJe) Liquified Natural Gas (Kt) Natural gas and ethane (PJ) Production volumes (PJe) Energy Markets Generation (MW) - owned Generation dispatched (TWh) Number of customers ('000) Electricity Natural gas LPG Broadband Other11 Electricity (TWh) Natural gas (PJ) LPG (Kt) 20221 20211,2 20201,2 20191 20181 3,148 211 2,868 52 220 6,052 15 4,458 2,733 1,277 368 61 20 35 188 357 4,252 246 3,370 59 263 6,047 16 4,266 2,625 1,249 359 33 34 193 389 4,268 251 3,258 70 265 6,029 18 4,236 2,631 1,220 36510 20 34 204 417 4,599 254 3,257 73 255 6,029 20 4,2009 2,639 1,191 362 8 36 222 426 4,799 255 3,213 77 254 5,981 21 4,181 2,666 1,145 370 - 38 214 450 1 Includes discontinued operations and assets held for sale unless stated otherwise. 2 Following clarifying guidance from the International Financial Reporting Interpretations Committee, the Group has applied changes in accounting policies that require restatement of previously reported amounts. Refer to note G11 Prior year restatements, in the Consolidated Financial Statements. 3 Since FY2019 this includes premiums relating to certain electricity hedges within Underlying profit. The equivalent amount in FY2018 has not been restated in the above table. Had the amount been adjusted, the impact to underyling EBITDA would have been $(160) million. 4 Origin discloses its equity accounted results in two lines: 'share of EBITDA of equity accounted investees,' included in EBITDA; and 'share of interest, tax, depreciation and amortisation of equity accounted investees,' included between EBITDA and EBIT. 5 Total current and non-current interest-bearing liabilities only, less cash and cash equivalents excluding APLNG related cash, less fair value adjustments on hedged borrowings. 6 Dividends represent the interim and final dividends determined for each FY. This includes the final dividend for FY22 determined on 18 August 2022 to be paid on 30 September 2022. The amounts paid within each FY are 20c, 22.5c, 30c ,10c and 0c respectively. 7 Since FY2019 this includes premiums relating to certain electricity hedges within Underlying profit. The equivalent amount in FY2018 has not been restated in the above table. Had the amount been adjusted, the impact to underlying EBITDA would have been $(160) million. 8 FY2018 excludes Lattice Energy (continuing operations basis shown). 9 Total number of customers restated to include Broadband customers 10 June 2020 LPG customer accounts restated to include ~2,500 Asia Pacific customer accounts 11 Largely relates to Origin Home Assist customers. 162 Annual Report 2022 Glossary and Interpretation Glossary Statutory financial measures Statutory financial measures are measures included in the Financial Statements for the Origin Consolidated Group, which are measured and disclosed in accordance with applicable Australian Accounting Standards. Statutory financial measures also include measures that have been directly calculated from, or disaggregated directly from financial information included in the Financial Statements for the Origin Consolidated Group. Term Meaning Cash flows from investing activities Statutory cash flows from investing activities as disclosed in the Statement of Cash Flows in the Origin Consolidated Financial Statements. Cash flows from operating activities Statutory cash flows from operating activities as disclosed in the Statement of Cash Flows in the Origin Consolidated Financial Statements. Cash flows used in financing activities Statutory cash flows used in financing activities as disclosed in the Statement of Cash Flows in the Origin Consolidated Financial Statements. Net Debt Non- controlling interest Statutory Profit/Loss Statutory earnings per share Total current and non-current interest-bearing liabilities only, less cash and cash equivalents excluding cash to fund APLNG day-to- day operations. Economic interest in a controlled entity of the consolidated entity that is not held by the Parent entity or a controlled entity of the consolidated entity. Net profit/loss after tax and non-controlling interests as disclosed in the Income Statement in the Origin Consolidated Financial Statements. Statutory Profit/Loss divided by weighted average number of shares as disclosed in the Income Statement in the Origin Consolidated Financial Statements. Non-IFRS financial measures Non-IFRS financial measures are defined as financial measures that are presented other than in accordance with all relevant Accounting Standards. Non-IFRS financial measures are used internally by management to assess the performance of Origin’s business, and to make decisions on allocation of resources. The Non-IFRS financial measures have been derived from Statutory financial measures included in the Origin Consolidated Financial Statements, and are provided in this report, along with the Statutory financial measures to enable further insight and a different perspective into the financial performance, including profit and loss and cash flow outcomes, of the Origin business. The principal Non-IFRS profit and loss measure of Underlying Profit has been reconciled to Statutory Profit in Section . The key Non-IFRS financial measures included in this report are defined below. Term AASB Adjusted Net Debt Adjusted Underlying EBITDA Average interest rate Meaning Australian Accounting Standards Board Net Debt adjusted to remove fair value adjustments on hedged borrowings Origin Underlying EBITDA – Share of APLNG Underlying EBITDA + net cash from APLNG over the relevant 12 month period. Interest expense divided by Origin’s average drawn debt during the period. cps Cents per share. Free Cash Flow Net cash from operating and investing activities (excluding major growth projects), less interest paid. FY22 (Current period) FY21 (Prior period) Gearing Twelve months ended 30 June 2022. Twelve months ended 30 June 2021. Adjusted Net Debt / (Adjusted Net Debt + Total equity) Gross Profit Revenue less cost of goods sold. Items excluded from Underlying Profit (IEUP) Items that do not align with the manner in which the Chief Executive Officer reviews the financial and operating performance of the business which are excluded from Underlying Profit. See Section 5.1 for details. MRCPS Mandatorily Redeemable Cumulative Preference Shares. Non-cash fair value uplift Reflects the impact of the accounting uplift in the asset base of APLNG which was recorded on creation of APLNG and subsequent share issues to Sinopec. This balance will be depreciated in APLNG’s Income Statement on an ongoing basis and, therefore, a dilution adjustment is made to remove this depreciation. Share of ITDA Origin’s share of equity accounted interest, tax, depreciation and amortisation. Total Segment Revenue Total revenue for the Energy Markets, Integrated Gas and Corporate segments, as disclosed in note A1 of the Origin Consolidated Financial Statements. Underlying EPS Underlying Profit/Loss divided by weighted average number of shares. Underlying EBITDA Underlying earnings before underlying interest, underlying tax, underlying depreciation and amortisation (EBITDA) as disclosed in note A1 of the Origin Consolidated Financial Statements. Glossary and Interpretation 163 Term SME TRIFR TW TWh VDO Watt Meaning Small Medium Enterprise Total Recordable Incident Frequency Rate Terawatt = 1012 watts Terawatt hour = 109 kilowatt hours Victorian Default Offer A measure of power when a one ampere of current flows under one volt of pressure. Interpretation All comparable results reflect a comparison between the current period and the prior period, unless otherwise stated. A reference to APLNG or Australia Pacific LNG is a reference to Australia Pacific LNG Pty Limited in which Origin holds a 27.5 per cent shareholding. A reference to Octopus Energy or Octopus is a reference to Octopus Energy Group Limited in which Origin holds an 18.7% shareholding as at 30 June 2022, with subsequent investment to restore its 20% shareholding in FY2023. Origin’s shareholding in APLNG and Octopus Energy is equity accounted. A reference to $ is a reference to Australian dollars unless specifically marked otherwise. All references to debt are a reference to interest bearing debt only. Individual items and totals are rounded to the nearest appropriate number or decimal. Some totals may not add due to rounding of individual components. When calculating a percentage change, a positive or negative percentage change denotes the mathematical movement in the underlying metric, rather than a positive or a detrimental impact. Percentage changes on measures for which the numbers change from negative to positive, or vice versa, are labelled as not applicable. Term Meaning Underlying share of ITDA Underlying Profit/Loss Underlying ROCE (Return on Capital Employed) Share of interest, tax, depreciation and amortisation of equity accounted investees adjusted for items excluded from Underlying Profit. Underlying net profit/loss after tax and non- controlling interests as disclosed in note A1 of the Origin Consolidated Financial Statements. Calculated as Adjusted EBIT / Average Capital Employed. Average Capital Employed = Shareholders Equity + Origin Debt + Origin’s Share of APLNG project finance - Non-cash fair value uplift + net derivative liabilities. The average is a simple average of opening and closing in any 12 month period. Adjusted EBIT = Origin Underlying EBIT and Origin’s share of APLNG Underlying EBIT + Dilution Adjustment = Statutory Origin EBIT adjusted to remove the following items: a) Items excluded from underlying earnings; b) Origin’s share of APLNG underlying interest and tax; and c) the depreciation of the Non-cash fair value uplift adjustment. In contrast, for remuneration purposes Origin’s statutory EBIT is adjusted to remove Origin’s share of APLNG statutory interest and tax (which is included in Origin’s reported EBIT) and certain items excluded from underlying earnings. Gains and losses on disposals and impairments will only be excluded subject to Board discretion. Non-financial terms Term Boe CES C&I DMO ERP GJ JCC Joule Kansai kT Mtpa MW MWh NEM NPS PJ PJe PPA Sinopec Meaning Barrel of oil equivalent Community Energy Services Commercial and Industrial Default Market Offer Enterprise resource planning Gigajoule = 109 joules Japan Customs-cleared Crude (JCC) is the average price of crude oil imported to Japan. APLNG’s long- term LNG sales contracts are priced based on the JCC index. Primary measure of energy in the metric system. When referring to the off-taker under the LNG Sale and Purchase Agreement (SPA) with APLNG, means Kansai Electric Power Co. Inc. kilo tonnes = 1,000 tonnes Million tonnes per annum Megawatt = 106 watts Megawatt hour = 103 kilowatt hours National Electricity Market Net Promoter Score (NPS) is a measure of customers’ propensity to recommend Origin to friends and family Petajoule = 1015 joules Petajoules equivalent = an energy measurement used to represent the equivalent energy in different products so the amount of energy contained in these products can be compared. Power Purchase Agreement When referring to the off-taker under the LNG Sale and Purchase Agreement (SPA) with APLNG, means China Petroleum & Chemical Corporation which has appointed its subsidiary Unipec Asia Co. Ltd. to act on its behalf under the LNG SPA. 164 Annual Report 2022 This page has been intentionally left blankDirectoryRegistered OfficeLevel 32, Tower 1100 Barangaroo AvenueBarangaroo, NSW 2000GPO Box 5376Sydney NSW 2001T (02) 8345 5000F (02) 9252 9244originenergy.com.auenquiry@originenergy.com.auSecretaryHelen HardyShare RegistryBoardroom Pty LimitedLevel 12, 225 George StreetSydney NSW 2000GPO Box 3993Sydney NSW 2001T Australia 1300 664 446T International (+61 2) 8016 2896F (02) 9279 0664boardroomlimited.com.au origin@boardroomlimited.com.auAuditorEYFurther information about Origin’s performance can be found on our website:originenergy.com.au

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