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Strategy Performance Growth | Sustainability Report 2012

ENERGYFOR TODAY and TOMORROW

Origin Energy LimitedABN 30 000 051 696

Top leftCommunity relations officers consult with the diverse communities Origin comes into contact with.

Bottom leftEnergía Austral’s proposed hydroelectric projects stand to provide significant benefits to the residents of Chile’s Aysén region.

Top rightOrigin’s Darling Downs Power Station in Queensland runs on natural gas.

Bottom rightOrigin Smart is one of the solutions provided to customers to manage their energy use.© Alex Bushby 2012

CONTENTS

COVER IMAGES

1Our Compass

2 Managing Director’sMessage

4 Business Strategy

5 Map of Assets,Operations and Developments

6SustainableOperations

8 Our Customers

12Our Communities

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Scope of the Report Origin has been reporting on our sustainability performance since 2001 and for the past three years we have outlined our performance against a set of 5-Year Objectives we first established in 2007. This year marks the close of the five year period and is therefore the final year we will report against these strategies.

Origin’s online Sustainability Report expands on our performance, measured both in termsof our own targets and on international frameworks such as the Global Reporting Initiative’s G3 Guidelines. It can be viewed at www.reports.originenergy.com.au.

Unless otherwise stated, this document reports on the sustainability performance of the activities and assets operated by Origin for the 12 months to 30 June 2012 and all monetary amounts are in Australian dollars.

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8

OUR COMPASS

18Our Employees

22Our Investors

24Sustainable Development

26Origin Foundation

28Further Information

29Glossary

Our Principles

Origin’s Principles provide guidance for making the right decisions:• We conduct ourselves and our business with

due care and in accordance with relevant laws and regulations. We have an overriding duty to ensure the health and safety of our employees, and to minimise the health, safety and environmental impacts on our customers and the communities in which we operate.

• We will add value to the resources that come under our control.

• The value we create will be distributed to stakeholders recognising the need to ensure the sustainability of our business, and its impact on the environment and the communities in which we operate.

• We encourage diversity and expression of ideas and opinions but require alignment with the company’s Principles, Values and Commitments and the policies establishedto implement them.

• When faced with choices, we make decisions knowing they will be subjectto scrutiny.

Our Values

We should be able to demonstrate the soundness of our decisions to all stakeholders.

Origin’s Values describe good behaviour:• Caring: We care about our impact on

customers, colleagues, the community, environment and shareholders.

• Listening: We listen to the needs of others, knowing that an unfulfilled need creates the best opportunities.

• Learning: We constantly learn and implement new and better ways, sharing information and ideas effectively.

• Delivering: We deliver on the commitments made in all areas of performance.

Our Commitments

Origin’s Commitments define the outcomes that we strive to achieve for key stakeholders.

We commit to:• Deliver market leading performance

for shareholders by identifying, developing operating and growing value-creating businesses.

• Create value for our customers, by understanding their needs and delivering relevant and competitive energy solutions to meet those needs both today and into the future.

• Create a rewarding workplace for our people by valuing everyone’s contribution, encouraging personal development, recognising good performance and fostering equality of opportunity.

• Respect the rights and interests of the communities in which we operate, by listening to them, understanding and managing the environmental, economic and social impacts of our activities.

• Respect the rights and interests of our business partners, by working collaboratively to create valued and rewarding partnerships.

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Origin Energy sustainability report 2012 1

This year’s Sustainability Report marks the end of Origin’s first 5-Year Sustainability Objectives. Since 2007, the objectives and accompanying strategies have helped Origin remain focused on the sustainable delivery of the commitments we made to each of our key stakeholders.

In this year’s Report, we take time to reflect on the achievements of the past five years. This reflection also helps us look forward. We have spent time thinking about what sustainability means for Origin today and in the context of our future direction. Our approach to the wide range of energy challenges faced by society continues to evolve and mature, and our sustainability path reflects this growth.

Throughout 2011 and the first half of 2012, we held discussions along the east coast of Australia with our customers, communities, employees and investors to increase our understanding of their perception of key sustainability issues in the energy sector. We have been considering this information in the light of our operations and development activities. In next year’s Sustainability Report we will communicate a new set of goals and use them as the basis from which we report Origin’s performance.

We encourage you to read this Report in conjunction with our Shareholder Review, which focuses on the financial performance of the Company and can be viewed at www.reports.originenergy.com.au.

Sustainability at Origin

We believe in the importance of the sustainable distribution of the value we create.

In the 2012 financial year, we delivered a significant increase in the value we created for our stakeholders, $2,244 million up from $1,124 million in the prior year. Of this value, $941 million was distributed to capital providers, through interest and dividend payments, compared with $750 million in the prior year.

Consistent with a growing workforce, labour related payments to our employees increased from $540 million in the prior year to $708 million in the 2012 financial year. In addition, we distributed $75 million to governments and communities through income taxes, royalties and community investments, again a significant increase on the $28 million distributed in the prior year.

A significant proportion of Origin’s community investment is awarded through the Origin Foundation, which continued its activities in the community throughout the year to support education-related initiatives that provide a pathway to employment and financial stability. Funded by Origin through an initial investment of $50 million in 2010, since its inception the Foundation has provided grants totaling $7.3 million to 24 not-for-profit community organisations.

We also reinvested to continue growing our business, with capital expenditure for the year of $1,561 million.

We seek to operate our business in a way that strikes a balance between the differing needs of each of our stakeholder groups in both the short and long term.

This year, two issues challenged our ability to strike that balance. First, the impact of the rising cost of energy on the Australian community and second, the sustainable development of lower carbon fuels, in particular coal seam gas (CSG) and renewable energy.

ENERGYFOR the FUTURE

MANAGING DIRECTOR’sMESSAGE

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1Managing Director, Grant King.

2 MANAGING DIRECTOR’s MESSAGE

Energy for our customers

As the debate around the rising cost of energy intensified, we sought to improve communication with our own customers on the issue of energy pricing and to offer improved solutions to help them manage their energy consumption and bills.

During the 2012 financial year, our Energy Markets business successfully completed the implementation of a major new SAP billing and customer relationship management system – the Retail Transformation program – to increase the efficiency of our operations, improve competitiveness and allow us to respond more effectively to customer needs. While this is a significant achievement, as is normal following such a significant system implementation, a dedicated team has been formed to identify and address any residual issues that may impact on timeliness or accuracy of billing.

We are cognisant of customer and community concerns about cost of living pressures and continue to invest in helping customers understand more about their energy usage as well as develop tools to provide them with greater control over their energy use. In Victoria, we recently launched Australia’s first large-scale roll out of a smart energy management solution – Origin Smart – which provides visibility of daily energy use via an online portal. Origin Smart enables customers to predict future bills, providing more control over energy use and costs than ever before.

We continue to focus on providing consumers with choices, so that they can choose the products that best suit their individual needs. We have one of Australia’s leading rooftop solar photovoltaic (PV) businesses, remain the leading green energy retailer with more than 594,000 GreenPower and green gas customers, and we now provide charging equipment to support the expected growth in electric vehicles.

There are also customers who are in financial hardship and find it difficult to pay their energy bills and require our support. We support these customers through our Power On program, which this year provided more than $3.1 million to customers in payment support, through a combination of tailored payment plans, energy audits and energy efficiency programs.

Co-existing with communities

In Australia and internationally, the nature of our operations and development opportunities brings us into direct contact with many local communities and landholders. We seek to listen to and learn from our engagement with communities surrounding our operations, which include power stations and gas plants as well as the gas and renewable energy projects we are seeking to develop. We take a long term approach to developing and nurturing these relationships.

Responding to some concerns in the community about CSG, we have strengthened our education program, to explain the process we undertake to produce CSG as Upstream operator for Australia Pacific LNG. In Australia, CSG’s social and environmental impacts are managed in one of the most highly regulated settings in the world, allowing the economic and

environmental benefits of developing this source of energy to be safely realised. As Upstream operator of Australia Pacific LNG’s project, the leading CSG producer in Australia, we are uniquely positioned to take on the role of demonstrating the responsible production of CSG to liquefied natural gas (LNG).

One of our most innovative CSG programs is Working Together which will provide farmers with the opportunity to gain formal recognition for their knowledge and skills in environment and land management, enabling them to earn additional income by carrying out related activities supporting the gas infrastructure located on their properties. We discuss this program in detail in a case study on page 16 and hope it will be another way to demonstrate how communities and the CSG industry can, and already do, successfully co-exist.

Delivering energy today, and investing in solutions for tomorrow

Origin has Australia’s largest and one of the most flexible power generation portfolios (1), with approximately 5,900 MW of power generation capacity, which is diverse across geographies and fuels including gas, coal and wind.

We also continue to progress a number of our development opportunities which will ensure we can provide the energy solutions for tomorrow. Through Australia Pacific LNG, the Queensland CSG to LNG company in which we have a 37.5 per cent interest, we continued to support cleaner energy in the form of natural gas in Australia, and signed long-term LNG supply deals with China and Japan, which will see cleaner energy being delivered to these economies from 2015.

While natural gas is not, by itself, a solution to our global carbon challenges, it plays an important role. Natural gas is ideal for addressing the intermittency of many renewable energy technologies through peaking power generation plants, and also provides a cleaner form of baseload power generation. Through being exported in the form of LNG, natural gas also has the potential to supersede other, potentially less environmentally attractive fuel choices in other countries, while bringing economic benefits to Australia.

These benefits come with social and environmental challenges, and we continue our commitment to better understand and address these challenges. Recognising the significant environmental, social and economic advantages that gas might hold for our collective energy future, we continued during the year to identify other conventional and unconventional gas resources in Australia, New Zealand, Kenya, Botswana, North East Thailand and Vietnam.

We are evaluating a number of renewable energy opportunities in overseas markets. In Chile, a new OECD economy with rapidly increasing energy demand (2), we are pursuing geothermal interests and a potential large-scale hydroelectric opportunity. We are also pursuing a potential hydroelectric project in Papua New Guinea which, should it proceed, has the potential to contribute Australia’s first genuine baseload renewable energy, thereby playing a significant role in delivering cleaner

energy supply. In addition, we are pursuing geothermal exploration in Indonesia.

This year we also took decisions to scale back a number of development opportunities, including the Transform Solar joint venture, and certain wind farms and geothermal activities in Australia, because at this time we are unable to strike the right balance between delivering an appropriate return on investment for our shareholders and ensuring a sustainable supply of energy for the community at an affordable cost.

Safety underpins sustainability

At Origin, the foundation of sustainability is working safely. To that end, we have continued to focus on improving safety, and implemented a new program of observations to encourage our people to highlight unsafe behaviours, reinforce safe behaviours and prevent unsafe actions before incidents happen.

Regrettably, we continue to be reminded of the risks faced by our people and those who do work on our behalf. In February 2012, an employee was killed in a road accident while on a work-related trip in the Papua New Guinea highlands. In August 2012, two employees of Stena Drilling, a contractor operating the Stena Clyde drilling rig, which was drilling a well for Origin in the Bass Strait, died as a result of an incident on the rig. We continue to target a zero harm workplace for our employees and contractors, and we recognise that we have more work to do to drive meaningful improvements in our safety performance.

In closing, I would like to reflect on the importance of energy in society today. Energy is central to the quality and standard of living we enjoy in Australia. Our challenge at Origin is to ensure we find the right balance between the differing needs of our stakeholders, as we seek to ensure the sustainable delivery of energy today, and for the long term. Our Compass remains the constant that guides our decisions and helps us make good choices that we know will stand up to scrutiny today, and well into the future.

Grant KingManaging Director

(1) Through owned and contracted rights.(2) The Chilean Energy Ministry’s National Energy

Strategy (2012-2030) forecasts six to seven per cent growth in electricity consumption through to 2020.


BUSINESS STRATEGY

BUSINESS STRATEGY:consistent performance and growth through integration

• Large and diverse portfolio of physical and contracted fuel supply, strong domestic gas supply business and flexible gas transport arrangements.

• One of Australia’s largest power generation portfolios, with approximately 5,900 MW of owned and contracted generation, diversified across operations, fuels and geographies.

• Australia’s leading energy retailer with 4.4 million electricity, natural gas and LPG customer accounts, along with a diverse portfolio of energy solutions including trigeneration, solar rooftop panels, smart energy management and electric vehicles.

• Origin has a 53.0 per cent interest in Contact Energy, one of New Zealand’s largest integrated energy companies with 567,200 electricity, natural gas and LPG customers and producing approximately 25 per cent of the country’s electricity generation.

• Fully sanctioned two-train $23 billion CSG to LNG project.

• Origin has a 37.5 per cent (1) interest in the strong and well aligned incorporated joint venture with unrivalled CSG and LNG development expertise.

• Australia Pacific LNG has Australia’s largest 2P CSG reserves position, with 13,111 PJe at 30 June 2012.

• Australia’s leading producer of CSG, producing over 44 per cent of all CSG in Australia over the 12 months to March 2012 (2).

• Binding long term sales agreements to supply 8.6 million tonnes per annum (mtpa) of LNG to China and Japan.

• Exploring for resources in markets that offer high prospectivity and access to growing demand.

• Domestic and international gas exploration opportunities, including New Zealand, Botswana, Kenya, North East Thailand and Vietnam.

• Large-scale renewable energy development opportunities, including geothermal in Chile and Indonesia and hydroelectric in Papua New Guinea and Chile.

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Origin continues to focus on the competitive segments of the Australian and New Zealand energy markets, developing LNG to export to growing Asian economies, and pursuing a portfolio of resource development opportunities in attractive international energy markets.

There are three key components to Origin’s strategy:1. Integrated supplier to energy markets in Australia and New Zealand;2. Supplier of energy to growing export markets through Australia Pacific LNG; and3. An expanding portfolio of energy resource opportunities.

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1Origin’s gas-fired Uranquinty Power Station, NSW.

2Landowner and Origin Community Relations Officer at a CSG well in Queensland.

3Geothermal exploration project in Chile.

(1) As at 1 September 2012.

(2) EnergyQuest, May 2012.

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Map of assets,operations and Developments


Sustainable operations

SUSTAINABLE OPERATIONS

Origin is one of Australia’slargest power generators,with approximately 5,900 MW of owned and contracted capacity.

Managing our operations sustainably

Origin has diverse operations spanning gas and oil exploration and production, power generation and energy retailing. Our operations are located in Australia, New Zealand and the South Pacific.

The 5-Year Sustainability Objectives we have had in place since 2007 largely focus on these operational aspects of our business. Our operations are expanding, becoming more complex and we operate in a variety of different, and continuously evolving state and federal regulatory frameworks and standards.

Over the following pages is an extensive assessment of Origin’s performance against our 5-Year Sustainability Objectives. As Origin’s operations and activities have evolved considerably since these were established in 2007 we have taken the opportunity in this year’s Report to share the key issues and opportunities that will underpin the sustainability of our operations now and into the future.

Meeting our customers’ expectationsEnergy is an essential commodity that we provide to our 4.4 million customers and which they rely on every day, meaning we share an important relationship. For many years, this relationship has been based primarily on the exchange of a quarterly bill. However, this relationship is changing.

With considerable upward pressure on power prices in recent years, there has been a significant increase in the focus on energy by media, politicians, regulators and a wide range of interest groups. At the same time, customers’ expectations of the services provided by retailers have increased. For example, customers expect access to the same technology that banks and telecommunications companies use to provide them with real-time access to their data and an ability to manage their account when, where and with whichever device they choose. In the energy sector, significant investment has been required in new technology systems in order to deliver these services. Indeed, we recently completed the migration of 2.6 million of our customers to a major new SAP billing and customer relationship management system which will help us deliver these services over time.

Origin has led the industry in developing innovative new solutions such as Origin Smart, an online solution that provides Origin customers with visibility of their daily household energy consumption and an ability to predict future bills, helping customers gain

greater control. Origin Smart is currently only available in Victoria where smart meters have a high penetration, but we expect that over time this will be a key solution to address community and customer concerns, particularly if smart meter technology is adopted in other states. In the meantime, Origin will continue its efforts to empower customers with information about their energy use, and advocate through our engagement with policy makers and regulators, the importance of a stable regulatory framework that supports the provision of efficient, secure, reliable, and competitively priced energy to consumers.

Safe and efficient production Origin, through our 37.5 per cent interest in Australia Pacific LNG, is one of the largest holders of gas reserves in eastern Australia and a leading gas producer with a portfolio of onshore and offshore gas producing facilities. Our domestic assets include oil and gas operations in Queensland, South Australia and Western Australia and offshore gas operations in the Bass Strait and Otway Basin.

Also through our interest in Australia Pacific LNG, we are Australia’s largest producer of CSG. We have interests, through our shareholding in Australia Pacific LNG, in major CSG fields at Spring Gully, Talinga and Peat in the Surat and Bowen basins in central Queensland. In New Zealand, we have offshore gas assets at Kupe and onshore at Rimu. These upstream operations have a unique set of sustainability challenges.

A sustainable upstream business for Origin is one which extracts oil and gas safely and efficiently, while minimising impacts on the community, our host landholders and the environment. Origin continues to examine the processes involved in our extraction activities to identify opportunities to minimise or reuse by-products and maximise outcomes in order to drive incremental improvements to the sustainability of our upstream operations.

Working with landholders is critical across our upstream operations. We aim to build open, transparent long-term relationships with the landholders that host us, not only during development of the project, but for the duration of our operations on their land. We respect landholders’ use of their land and plan our activities with them to, where possible, ensure minimal disruption to their activities. We also run sustainable rural operations consistent with our commitment to demonstrate how our operations can successfully co-exist with agricultural activities.

Water is also a critical issue, both now and over the longer term. Oil and gas production activities necessarily involve the extraction of underground water resources. We understand that water is a precious resource and therefore how we reuse or dispose of that water is of considerable interest to many of our

stakeholders. Origin is committed to viewing produced water as a resource for beneficial use, and we are continuing to grow our water management expertise. In addition to our water management work for Australia Pacific LNG, we have recently sought approval to use water extracted from our offshore Kupe facilities in New Zealand to inject into oil wells at our Manutahi facility to improve oil flow rates. Origin recognises that it remains critically important for us to consider the impact of our water extraction and ensure that produced water is beneficially used wherever possible, especially where we can distribute the value of this resource within the communities in which we operate or develop.

Providing today’s electricityOrigin is one of Australia’s largest power generators, with approximately 5,900 MW of owned and contracted capacity, which is diverse across fuels, geographies and operations. Origin’s portfolio includes coal, gas, wind and hydroelectric generation.

A sustainable generation business for Origin is one where we operate our generation fleet to maximise outcomes for the business, while minimising our impact on the environment, using resources responsibly and reducing waste.

The Darling Downs Power Station, which is fuelled by CSG, is Origin’s cleanest gas-fired power station in terms of its carbon emissions, emitting less than half of the greenhouse gas emissions and using three per cent of the water of a typical coal-fired power station of similar size.

Water management innovation across our upstream business is also being applied to our generation operations. We are currently working with the Queensland Government to obtain approval to use treated CSG water as an alternative water source for our Darling Downs Power Station, which will reduce the amount of water required from underground aquifers. This increases Origin’s water security while preserving the local community’s natural water resources.

Where possible, we also work with leaders in other industries to improve our performance. We are currently working with Siemens on a world-first smart Monitoring and Support Centre, which will monitor all aspects of our generation operations around the clock, including environmental performance and risk. While we are still in the early stages of the project, the centre is expected to allow Origin to proactively manage operations and coordinate generation capacity across our fleet.

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OUR 5-YEARSUSTAINABILITY OBJECTIVES

Business snapshot

In 2007, we set ourselves a series of 5-Year Sustainability Objectives to help us deliver on the commitments we made to each of our key stakeholder groups at that time. We also laid out 5-Year Strategies to meet these objectives, and in this the final year of our journey, we report our progress in four sections – Our Customers,Our Communities, Our Employees and Our Investors.

ENVIRONMENTECONOMIC

SOCI

AL

SOCI

AL

ENVIRONMENT ENVIRONMENT

SOCIA

L

SOCIAL

INVESTORS

EMPL

OYE

ES

COMMUNITIE

S

CUSTOM

ERS

ObjectiveTo reduce the greenhousegas intensity of our customers’ energy consumption.

Objective To maintain community

support and goodwill for the Company’s activities.

ObjectiveTo take all feasible

steps to eliminate or minimise any adverse impact

that our activities have on the environment.

ObjectiveTo eliminate or

manage hazards and practices in our business

that could cause accident, injury or illness to people,

damage to property or unacceptable impacts

on the environment.

ObjectiveTo provide and maintain a satisfying and rewarding work environment forall employees.

ObjectiveTo reduce the greenhouse gas intensity of our energy production and distribution and non-producing assets.

Objective To provide sustainable returns to Origin’s key economic stakeholders.

by market capitalisation

owned and contracted generation capacity

Australia, Chile, Papua New Guinea and Indonesia

shareholders

interest in Contact Energy, New Zealand

green energy provider

customers across Australia

employees


Origin sustained its leadership of the Australian energy market during the year. As Australia’s largest energy retailer with 4.4 million customers, Origin is also one of the largest power generators, with approximately 5,900 MW of owned and contracted capacity, the leading green energy provider and a leading installer of rooftop solar PV systems. Origin also holds a 53.0 per cent interest in Contact Energy, one of New Zealand’s leading energy companies with more than 567,000 customers.

To deliver on our customer-related objectives, we laid out four 5-Year Strategies, which we report against in this section. Given 2012 was the last year of our 5-Year Strategies, this year we also report whether we achieved what we set out to do.

5-Year Strategies

1. Be recognised as the leading provider of green energy products.

Origin had approximately 594,000 green energy customers at the end of March 2012, demonstrating our continued leadership in providing green energy solutions to Australians. Of these total customers, approximately 466,000 were GreenPower electricity customers and approximately 128,000 were green gas customers.

Origin extended its GreenPower market share over the past 12 months from 58 per cent to 62 per cent, while our nearest competitor holds approximately 12 per cent of the market. Late 2011, Origin introduced a 10 per cent GreenPower product at no extra cost to the Origin GreenPower range, with approximately 100,000 customers choosing this product since its inception in November 2011.

Reflecting on the past five years, Origin was able to grow its market leadership in GreenPower almost every year, thereby achieving this target. See Graph 1 for an outline of Origin’s GreenPower market share compared to our nearest competitor.

2. Increase our sales of low carbon intensity products by 10 per cent asa proportion of total retail revenue by 2012 (1).

Origin is recognised as a genuine leader in the sale of low carbon intensity products. We have continued to demonstrate our ability to innovate and our commitment to helping customers develop a view of energy solutions beyond that of a basic commodity. We are the leading green energy retailer, a leading installer of rooftop solar PV systems, and have been at the forefront of the installation of cogeneration and trigeneration plants to deliver cleaner and more efficient energy for commercial buildings.

Origin’s sale of low carbon intensity products grew significantly between 2007 and 2011, moving from representing just 0.5 per cent of retail revenue in 2007 to 18 per cent in the 2011 financial year. In the 2012 financial year the sale of low carbon intensity products represented 10 per cent of Origin’s total retail revenue, meaning the target has been met. This year’s result represents a reduction on last year’s performance, impacted predominantly by the inclusion of a full year of revenue from the acquired New South Wales energy businesses, Country Energy and Integral Energy (2), and a 61 per cent year-on-year fall in sales of rooftop solar PV systems due to the removal of State-based solar feed-in tariff schemes. See Graph 2 for our performance.

ENERGYFOR OUR CUSTOMERS

Our Commitment: Create value for our customers, by understanding their needs and delivering relevant and competitive energy solutions to meet those needs both today and into the future.

1Customers using Origin’s smart energy management portal.

2Origin is the leading energy retailer with 4.4 million customers.

OUR CUSTOMERS

(1) This target has been restated to focus on increasing the take up of low carbon intensity product options by our customers. It originally focused on increasing sales of low carbon intensity products as a proportion of Origin’s total supply chain greenhouse gas emissions.

(2) Refers to acquisition of the Integral Energy and Country Energy retail businesses and the Eraring GenTrader arrangements in March 2011.

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3. Lead industry policy on access and hardship response.

The number of customers contacting Origin to discuss difficulty in meeting their energy costs increased this year. This occurred in an environment of rising power prices, and broader cost of living pressures, faced by many consumers.

At the end of the 2012 financial year, 11,310 customers were being financially supported under a specialised payment plan – an increase of more than 30 per cent from the 8,537 customers supported in the prior year.

Origin provided more than $3.1 million to these customers in payment support, through our Power On initiative, a combination of incentive payment plans and energy efficiency programs. We carried out 864 home energy audits, assisting our customers to identify energy saving opportunities within their homes and providing more than $92,000 worth of products as a part of this service, including retrofit items and replacement appliances.

We also implemented new strategies to help us more quickly identify customers who may be in hardship, including incorporating hardship awareness training as part of our staff induction program.

An additional $140,485 was provided in Natural Disaster Relief to support more than 300 of our customers directly impacted by natural disasters across the country during the year.

While over the past five years, the number of customers in financial hardship has increased, we have continued to expand our support and evolve our Power On program to meet the increased demand. Origin pioneered this approach to supporting customers in financial hardship and participated in the process of incorporating it into Australian law. We have also implemented partnerships with organisations such as Kildonan Uniting Care, to extend the reach and relevance of our hardship programs to those that need them most.

4. Reduce Ombudsman complaints by 30 per cent from 2007 levels by 2012 and proactively resolve customer complaints.

During the 2012 financial year, Origin experienced an increase in customer complaints to the Ombudsman, rising from 5.5 per 1,000 customers to 7.2 (1). This was a 62 per cent increase on the prior year, and is an area Origin is determined to improve.

Origin’s share of total energy industry complaints to the Ombudsman rose during the period, from 25.2 per cent to 26.6 per cent. This performance should be considered in the context of Origin’s total market share across the National Electricity Market (NEM) of 33.4 per cent.

A number of factors contributed to the increase in complaints, including Origin’s stabilisation of its major SAP billing and customer relationship management system implementation, the

government and policy landscape including preparation for the introduction of the carbon price and the removal of state-based solar feed-in tariff schemes, and a far greater focus on the energy sector due to cost of living pressures and rising power prices.

In recent years, the size and scale of Origin’s Energy Markets business has changed considerably. This growth has brought with it some challenges. In an effort to increase the efficiency of operations, improve competitiveness and allow us to respond more effectively to customer needs, we underwent a major transformation of our billing and customer relationship management system. We anticipated that during the implementation of the new SAP system there may be an increase in complaints, particularly as staff were trained on the new system, and this has also contributed to an increase in complaints this year.

As we reflect on the past five years, regrettably we have not achieved our target of reducing complaints. Given the significant growth in customers and change in our business during this time, this challenge became much harder to achieve. Having now completed our major SAP system implementation we expect this trend to improve in coming years. See Graph 3 for details of our performance over the past five years.

0807 09 10 11 12

7.2

2.2

2.2

3.9

Target 1.5

4.0 5.

5

3. Number of Ombudsman complaintsper 1,000 customers

0807 09 10 11 12

10.0

0.5

5.0

Target 10.010.0

15.0 18

.02. Retail revenue represented bylow carbon intensity products (%)

07 08 09 10 11 12 12

2,10

2

1,70

8

62

3033

38

12

48

58

1. Green Power market share (%)◊

1

2

(1) Origin’s share of Ombudsman complaints includes complaints from customers gained through the acquisition of the NSW energy businesses.

◊ Includes customer accounts acquired through the sale of NSW electricity assets.

Nearest competitor.


OUR CUSTOMERS:case studies

In Australia, consumers’ approach to energy consumption continues to evolve. There is growing demand for greater choice in energy products and solutions to suit consumers’ individual needs, along with an increasing appetite for them to understand more about how energy is being used currently, and how it could be used more smartly to help save energy and manage their bills.

Origin has a proud history of innovation in the energy market and over the past few years we have continued to invest in new opportunities to expand our portfolio of energy solutions, giving consumers more choice than ever before.

Origin is one of the leading providers of rooftop solar PV systems in Australia and the leading retailer of green energy solutions. We offer online self service in South Australia and Queensland, a tool which will soon be available in other states, so customers can manage their bills when and how best suits them. We also offer a rate freeze product which provides customers with certainty around their energy costs for 24 months, and easy pay offers which provide customers with flexibility by allowing

them to set up regular payments averaged across the year, therefore helping to avoid the challenge of managing bills that are bigger at certain times of the year.

One of our most recent innovations is Origin Smart, an energy solution that gives customers greater visibility and control of their energy usage. With Origin Smart, instead of only receiving four quarterly paper bills per year, customers can now measure their energy usage in half hour blocks – that is 48 times a day or 17,250 times a year. This is beginning a major change in how customers interact with energy.

In the following case studies, we outline in more detail two examples of the way we are innovating to provide choices for energy consumers, from those who want to save money on their power bills to those who are carbon conscious and want access to lower carbon intensive sources of energy.

Origin’s Energy Ambassador Anne Armansin provides simple tips for smarter energy usage in the home and our role as the preferred charging solutions partner for Nissan Australia gives drivers an alternative to using petrol.

Origin is committed to developing innovative and sustainable energy solutions to empower customers in making choices about their energy use and management.

This commitment made Origin an obvious partner for Nissan, one of the world’s leading electric vehicle manufacturers. In March 2012, Origin announced a partnership with Nissan as the preferred Electro Mobility Operator (EMO) for its new electric car, the LEAF.

The Nissan LEAF is the world’s first purpose-built, family-sized, electric passenger car and as EMO for the LEAF, Origin provides charging equipment and services and 100 per cent GreenPower for charging as well as smart electricity management and advice. As a result, customers can reduce to zero the potential carbon emissions of their car compared to a petrol car which on average would produce approximately 3,038 kilograms of CO2e per year (1).

Origin continues to lead the market in the development of low-carbon and renewable energy products and aims, together with Nissan, to encourage a less oil-dependent motoring culture in Australia. Through its partnership with Nissan, Origin is able to support the development of the electric vehicle market in Australia by delivering a simple and effective one-stop solution to customers and commercial and fleet purchasers.

Origin continues to lead the market in the development of low-carbon and renewable energy products.

(1) Results are for the National Average and have been rounded up to the nearest dollar and nearest kg of CO2e, assuming 15,000 kilometres driven per year.

2

1

OUR CUSTOMERS

ENERGYFOR customer choice

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1Origin is the preferred Electro Mobility Operator for the Nissan LEAF.

2Origin provides charging equipment and services, 100 per cent GreenPower for charging and smart electricity management and advice.

3The average number of appliances per household has increased significantly in recent years.

4Anne Armansin, Origin’s Energy Ambassador helps customers to take control of their energy use.

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As Origin’s Energy Ambassador, Anne Armansin sees first-hand the frustration many Australians feel when the energy bill arrives. Anne spends much of her time meeting Origin customers including small businesses, schools, community groups and individual residents, who often feel powerless against rising bills and struggle to understand what changes they can make to better manage their energy use.

Anne analyses customers’ bills over a 12 month period, looking for consumption patterns and seasonal impacts so that she can offer advice about their usage and be on the lookout for solutions when she visits.

“It never fails to surprise me what customers believe is the biggest contributor to their high bills. Very often, customers think the kettle is a big worry because it has such a large heating element, but completely miss the 30-year-old fridge in the garage which uses energy inefficiently and can’t turn off at certain times of the day like newer fridges to conserve energy,” Anne said.

“There are so many little actions customers can implement which will reduce their energy use bit by bit and add up to savings.”

Origin aims to provide solutions which allow customers to take control of their energy use and make choices which save money, increase efficiency and reduce their carbon footprint. In an environment where the average number of appliances per household has increased from 46 in 2000 to 67 in 2010, and 25 appliances use standby power at any point in time, Origin is providing consumers with the tools that can enable greater insight and understanding of their energy use and help them manage their bills.

Anne’s role is to help inform customers about the solutions they can put in place in their homes and businesses and she has been very effective in her more than 10 years with the Company.

“We usually start with the straight forward things that can be done around the house, such as replacing lighting with energy efficient bulbs, upgrading old shower heads with a more water efficient version and, in winter, using door snakes to stop draughts and putting in curtains to stop cold entering through glass and prevent heat escaping,” Anne said.

These simple actions can help reduce customers’ energy use by about 10 per cent up front, all before considering investing in new appliances or upgrading to solar hot water.

“There are so many little actions customers can implement which will reduce their energy use bit by bit and add up to savings.”


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The breadth of Origin’s activities brings us into contact with a diverse range of communitiesin Australia, and increasinglyin other parts of the world.We engage with community representatives ranging from governments and mediathrough to non-government organisations, local community groups and individuals to help create shared value.

To deliver on our community-related objectives, we laid out a series of 5-Year Strategies, which we report against in this section. Given 2012 was the last year of our 5-Year Strategies, this year we also report whether we achieved what we set out to do.

5-Year Strategies

1. Contribute to a policy and industry response to climate change that delivers an effective pricing regime for carbon.

After a number of years of consultation and a lack of policy certainty, legislation was passed during the 2012 financial year to implement the Carbon Pricing Mechanism, which came into effect on 1 July 2012. Under the Commonwealth Government’s Clean Energy Future legislation, the Carbon Pricing Mechanism will have a fixed price for the first three years (starting at $23 per tonne of CO2e for the 2013 financial year) before moving to a floating price scheme from the 2016 financial year.

Origin has been a long time supporter of an emissions trading scheme as the least cost means of achieving Australia’s stated and bipartisan 2020 emissions target of a five per cent carbon reduction on 2000 levels. This support has been in the context of a package of measures which also includes the Renewable Energy Target (RET), funding for emerging renewable technologies and transitional complementary policy measures as required, for example harmonised energy efficiency policies.

In the lead up to 1 July 2012, Origin was actively focused on establishing systems to comply with the Carbon Pricing Mechanism to support us in meeting our carbon liabilities from 1 July 2012.

Simultaneously, Origin has continued to advocate for the rationalisation of the range

of other green schemes that exist and impose costs for industry and consumers.

The future of the Carbon Pricing Mechanism and some of the complementary measures in Australia remains uncertain and these are ultimately decisions for governments.

2. Reduce the greenhouse gas emissions intensity of our electricity supply chain to 10 per cent less than the National Electricity Market by 2020.

In the 2012 financial year, the emissions intensity of the electricity supplied to customers was 4.1 per cent (1) below the NEM. This result was driven by an increased proportion of market (NEM) purchased electricity for a larger customer base in NSW following the acquisition of the NSW retail businesses, Integral Energy and Country Energy.

Our progress since establishing this target has been significant due to the contributions of our gas-fired generation portfolio, however, we are still tracking below our target given the growing demand for energy and the need for us to purchase large amounts of electricity from the NEM to service the increased customer base.

Reflecting over the past five years, the environment in which we operate has changed and now includes an emissions trading scheme. The introduction of the Clean Energy Future Package and a range of energy efficiency measures will impact

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ENERGYFOR OUR COMMUNITIES

Our Commitment: Respect the rights and interests of the communities in which we operate, by listening to them, understanding and managing the environmental, economicand social impacts of our activities.

(1) Based on Origin’s estimate of the full fuel cycle of NEM generation and Origin operated generation. The methodology incorporates NEM purchases and Origin generation only.

12 OUR COMMUNITIES

supply and demand initiatives in the market creating opportunities and challenges for our operations into the future. See Graph 1 for our performance over the past five years.

3. Reduce the greenhouse gas emissions intensity of our gas production by 15 per cent by 2012.

As forecast, we exceeded this target in the 2012 financial year. We first achieved this commitment in 2009 and since then have continued to further reduce the greenhouse gas emissions intensity of our gas production year-on-year.

Origin’s emissions intensity for the 2012 financial year was 5.66 ktCO2-e/PJe, a 7.4 per cent improvement on the prior year and 48.6 per cent below the Company’s 2007 emissions intensity of 11.0 ktCO2-e/PJe. The shutdown of the BassGas facility due to the Yolla Mid Life Enhancement (MLE) project contributed to the reduction in emissions during the period as did lower production at the Spring Gully gas plant in Queensland. The shutdown of the BassGas facility due to the Yolla Mid Life Enhancement (MLE) project contributed to the slight reduction in emissions intensity; however, other assets on average delivered no significant change in intensity. See Graph 2 for information on this target.

4. Reduce or offset all greenhouse gas emissions from our non-energy producing sites.

During the 2012 financial year, Origin again achieved its commitment to offset 100 per cent of greenhouse gas emissions from our non-energy producing sites, such as emissions related to commercial offices as well as car and air travel. This commitment was achieved through a mix of accredited GreenPower and eligible voluntary offset certificates under Origin’s Carbon Pollution Reduction Scheme.

Between July and December 2011, Origin purchased accredited GreenPower products to offset 10 per cent of the greenhouse gas emissions associated with electricity consumption in our offices, shops and LPG terminals. For the remaining 90 per cent of emissions, as well as all emissions from business travel, Carbon Offsets were sourced from accredited projects under Origin’s Carbon Pollution Reduction Scheme. Between January and June 2012, we offset 90 per cent of emissions from our non-energy producing sites with voluntary offset certificates and the remaining 10 per cent of emissions were offset with GreenPower.

This commitment was achieved consistently across the five year period.

5. Identify opportunities for the reduction and re-use of waste.

Origin is committed to minimising the consumption of resources and generation of waste materials wherever possible across all business units. An increase in Origin’s operational activities over the past year led to an overall increase in quantities of hazardous wastes and waste oil. Recycling rates for waste oil and other hazardous wastes continues to be higher than 90 per cent. Longer term efforts to reduce general waste are taking effect as recycling rates grow.

Salt is one of the key waste products associated with CSG production, given the water extracted with the gas is often very brackish. Currently, we treat CSG water via our reverse osmosis plants, producing treated water and a concentrated brine waste product. Origin, as Upstream operator of Australia Pacific LNG’s project, is currently evaluating a wide range of disposal options for the salt. As part of our considerations, we are investigating the potential for Australia Pacific LNG to sell the salt in the form of products such as sodium chloride or soda ash or injecting the saline solution into very deep, isolated geological reservoirs that are not used as water supply aquifers.

Origin also continues to investigate ways to manage water produced through CSG operations. More information on this topic is provided in the Australia Pacific LNG case study on page 25.

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9.1

15.0

27.4

Target 15.0

44.5 48

.6

0807 09 10 11 12

2. Reduction in emissions intensity of Origin’s Australian gas production since 2007 (%)

1Origin aims to achieve positive community relationships.

2Australia Pacific LNG’s Talinga water treatment facility.

0807 09 10 11 12

4.1

0.4

0.3 0.7

Target 10.0

2.6

4.9

1. Emissions intensity of supply chain below the NEM since 2007 (%)


Over the past five years, notwithstanding the increase in waste quantities due to the increase in the number and size of Origin’s activities, the Company has diligently investigated and identified opportunities to reduce and re-use waste.

6. Rehabilitate or look for opportunities to offset land we have disturbed.

During the period, Origin newly disturbed 229 hectares of land and rehabilitated approximately 92 hectares. Land disturbance and land rehabilitation will vary from year to year based on the nature and extent of activities being conducted, including drilling and exploration activities, pipe laying and site construction works.

Origin continues to implement new strategies to minimise and manage our land disturbance and rehabilitation. We use innovative new hybrid coil drilling rigs for our CSG operations which disturb approximately one tenth of the land of conventional rigs. Three hybrid coil drilling rigs are currently in use drilling CSG production wells for Phase 1 of the Australia Pacific LNG development program (1).

Origin’s overall land disturbance ratio is forecast to decrease over the next few years as Australia Pacific LNG’s project ramps up.

Over the five year period, disturbed land has been progressively rehabilitated. We continue to look for opportunities to minimise the land that is disturbed and adopt strategies to offset any disturbance.

7. Actively consult with the community at all locations where Origin has a material impact.

Over the past year, Origin has updated its process for engaging with the communities where we are conducting our activities. The community engagement process is underpinned by rigorous social and economic analysis and strong relationships that enable us to better understand and interact with the communities in which we work. The Community Engagement Directive defines the minimum mandatory requirements for the development of Origin community engagement programs, which have been established in line with relevant regulatory requirements, the Equator Principles and the performance standards of the International Finance Corporation.

Wherever possible, Origin recruits our community engagement personnel from local or nearby communities. They listen to and learn from community members to understand their concerns and they also work with the community to identify investment opportunities to contribute to initiatives that deliver meaningful benefits.

Our community engagement programs include activities ranging from information sharing, to engagement and collaboration. Engagement mechanisms include flyers, fact sheets, interactive models, presentations and websites, free call numbers, shop fronts and information sessions. These tools are used in conjunction with face-to-face engagements such as meetings with community members,

and multi-stakeholder forums such as community reference or consultative groups.

In 2012, we participated in community consultative groups domestically associated with our BassGas facility, Otway Gas Plant, Mortlake Power Station, the Cullerin Range Wind Farm, the Ironbark CSG development project and our Townsville operations and internationally associated with Energía Austral SpA (EAL)’s planned 1,000 MW hydroelectric projects in the Aysén Region in southern Chile. We also took part in four consultative committees for Australia Pacific LNG’s project. During the year, a new community reference group was established for the Halladale and Blackwatch development project located offshore Victoria.

These groups provide a collaborative approach to consultation and communication and help establish positive working relationships with communities. The dialogue opened by the community reference group approach encourages two-way communication and provides an opportunity for community voices to be heard. These groups play a key role in identifying possible community investment options and advice in awarding our community grants.

Over the five years since 2007, we have increased the number of dedicated, locally-based community engagement personnel and, as a result, the level of communication with these communities has increased and deepened.

ENERGY FOROUR COMMUNITIES(CONTINUED)

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(1) Origin is a 37.5 per cent shareholder in Australia Pacific LNG and is operator for the upstream segment of Australia Pacific LNG’s CSG to LNG export project.

14 OUR COMMUNITIES

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8. Achieve positive community relationships through regular, open and transparent communication with host communities.

During the 2012 financial year, Origin continued to establish or maintain positive, respectful and mutually beneficial relationships with our host communities. The foundation of our relationships with our communities is the transparent provision of information combined with a commitment to listen and respond to concerns. Origin seeks to achieve this through the consultative methods described above, as well as through targeted measures to support community development and address our impacts.

During the year, Origin representatives met with landowners and neighbours, produced and delivered newsletters for projects and developments, held open days, tours and barbecues, responded to complaints and feedback and delivered presentations to councils and community groups.

The Stockyard Hill Wind Farm project formed an Approvals Working Group during the year, designed to involve representatives from local councils, VicRoads, Country Fire Authority and other government departments in a regular review of progress on the approved permit conditions. A key focus for Stockyard Hill communication and engagement is power transmission infrastructure and our approach has involved community meetings, council updates and face-to-face briefings with

landholders along the proposed transmission line and neighbours around the proposed terminal station.

Development of the Mortlake Power Station was completed in August 2012. The Community Advisory Engagement Committee met five times during the period and will govern continuing long term investments in the local and regional community.

Significant engagement has also been conducted throughout the year with community, industry and government departments regarding proposals to conduct a seismic survey in south-west regions of Victoria for the Otway Gas Project.

The success of community consultation can be seen in the progress of works to prepare for infrastructure development associated with construction of the gas gathering facilities, pipeline and LNG facilities for Australia Pacific LNG. During the reporting period, Origin and Australia Pacific LNG consulted extensively with stakeholders, including all affected local government authorities, key state government agencies, departments and communities to identify actions to mitigate the social impacts arising from the project on the communities in which it operates. A Social Impact Management Plan (SIMP) was developed for both Upstream and Downstream project components and was approved by the Queensland Government in July 2012.

The foundation of our relationships with our communities is the transparent provision of information combined with a commitment to listen and respond to concerns.

1Australia Pacific LNG aims to create an environment where both the traditional agricultural industries and its energy projects can co-exist.

2An Australia Pacific LNG gas well situated within rehabilitated land.

3Origin commits to being an active member of the communities in which it operates.


OUR COMMUNITIES:CASE STUDIES

As Upstream operator of Australia Pacific LNG’s project, Origin plans to be working in communities across Queensland for many years and so we want to ensure communities and landholders can share in the benefits of the industry.

As a result, Origin and Skills Queensland have developed the Working Together program, an industry first pilot program which allows farmers and CSG companies to work collaboratively on CSG production on their properties.

The program has been devised to increase landholders’ stake in CSG operations on their land and reflects the agricultural industry’s focus on sustainable practices. Since farmers know their land better than anyone it provides them with the opportunity to gain formal recognition for their knowledge and skills in environment and land management, enabling them to carry out related activities supporting the gas infrastructure located on their properties.

Under the program landholders are provided training, and then contracted by Origin to carry out land management and monitoring work around the company’s gas infrastructure. It provides certainty for those who intend to continue working and living on the land for generations to come.

The Drury family was one of the first families to sign an agreement with Origin under the program. The family runs a 5,000 head feedlot outside of Miles and was approached by Origin five years ago about the possibility of drilling four exploration wells on their land.

“We decided from the outset to embrace CSG as an opportunity,” father of the family Simon Drury said.

“We can co-exist with CSG; we’ve been doing it for five years. The program gives us revenue, another income stream and secures our family’s future on the land.”

Simon Drury’s 18 year old son Will has undertaken the training, returning to the property after finishing school. Will loves the peace and solitude of life on the land, an aspect the program will help maintain.

“The fewer vehicles we have driving on our place the better,” Will said.

“Instead of Origin driving all over our place and monitoring the wells, we can be doing it. I think it’s great that Origin is letting us be a part of the CSG industry.”

“Instead of Origin driving all over our place and monitoring the wells, we can be doing it. I think it’s great that Origin is letting us be a part of the CSG industry.”

In July 2012, the program’s first eight participants were given their Certificate III in Rural Operations qualifications, and a two year implementation trial will continue on selected landowner properties in the gas fields region.

Other gas companies have shown interest in the program, which was developed following industry consultation with landholders. Farming groups AgForce and the Queensland Farmers Federation have been active partners in developing training programs and landholder agreements.

Origin will share the results with others in the industry, and welcomes the prospect of the trial creating a new benchmark for the industry.

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OUR COMMUNITIES16

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Innovation and sustainability are guiding principles of Australia Pacific LNG and were the key drivers behind the decision to invest in innovative new drilling equipment which boosts safety and efficiency while also reducing the potential impact on landowners and their property.

Hybrid drilling rigs employ a unique flexible coil allowing continuous drilling without the numerous physical reconnections of steel pipe in conventional drilling. The portable and compact design means the rigs can be deployed in virtually any location without the need for development of access roads or grading.

The result is increased safety for staff, a faster turnaround time and less land disturbance than conventional drilling. Compared with conventional rigs, hybrid rigs disturb only one tenth of the land area, drilling activity is completed in half the time and the land is left close to its original state with minimal reinstatement required.

It is the first time the purpose built rigs have been used in Australia and there are three currently deployed across the project. The rigs were selected following a two year study by Australia Pacific LNG into global drilling best practice.

The project also uses a simple but effective new solution for managing the effects of wet weather by placing rubber matting along existing roads and paths on landowners’ properties allowing the drilling rigs to be easily moved. The rigs are able to continue drilling activity even during wet weather, resulting in cost and time savings while reducing the impact on the land from the heavy, 110 tonne equipment.

In addition to mitigating the impacts on the environment, Australia Pacific LNG is committed to ensuring the opportunities and benefits of the project flow to the surrounding communities.

In addition to mitigating the impacts on the environment, Australia Pacific LNG is committed to ensuring the opportunities and benefits of the project flow to the surrounding communities.

As part of its contract to supply the drilling equipment, contractor Savanna Energy has established an operational base in Toowoomba to provide training and support facilities to local crews and rig management. This assists in the transfer of specialist skills to local people in a burgeoning area of the industry and provides a unique up-skilling of the local workforce that is transferable across industries.

1Landholder Simon Drury, one of the participants in the Working Together program.

2The first graduates of the Working Together program.

3The hybrid drilling rigs increase safety for staff and reduce land disturbance for landowners.

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Origin’s team grew again over the past year, as the business continued to expand its operations and project activities in the Exploration and Production and Australia Pacific LNG segments. Origin had 5,941 employees at the end of the 2012 financial year, an increase of 14 per cent or 728 people on the prior year. Approximately 93.5 per cent of our workforce is engaged full time.

To deliver on our employee-related objectives, we laid out a series of 5-Year Strategies, which we report against in this section. Given 2012 was the last year of our 5-Year Strategies, this year we also report whether we achieved what we set out to do.

5-Year Strategies

1. Achieve a Total Recordable Injury Frequency Rate of 4.0 by 2012.

Our safety result, which we define as our performance against the company-wide Total Recordable Injury Frequency Rate (TRIFR), measures our success in reducing the number of work-related injuries and marks our progress towards our ultimate aspiration of zero harm.

In 2007, when Origin set its 4.0 TRIFR target, the Company recorded a rate of 16.3. Over the five years since the target was set, the Company has achieved a significant improvement in safety performance, reducing the rate to as low as 5.6 in 2010. However, some of that improvement was lost in 2011 and 2012 and Origin’s TRIFR at the close of the 2012 financial year was 8.0. In light of this, we recognise that we have more work to do to drive meaningful improvements in our safety performance.

Sadly this year, we were reminded in tragic clarity of the risks faced by our people and those who do work on our behalf. In February 2012, an employee was killed in a road accident while on a work-related trip in the Papua New Guinea highlands. In August 2012, two employees of Stena Drilling, a contractor operating the Stena Clyde drilling rig, which was drilling a well for Origin in the Bass Strait, lost their lives as a result of an incident on the rig. Tragic accidents strengthen our resolve to focus on strategies and initiatives to address this unacceptable trend and deliver a zero harm workplace.

During the year, we adopted a new measure of safety performance, targeting observations to encourage us to be more alert to potential risks before they result in incident or injury. We will continue to use this during the 2013 financial year to encourage conversations about safety to ensure that lessons and outcomes are communicated through the business to drive behavioural change. For an outline of our performance, see Graph 1 on page 19.

2. Eliminate barriers to employment, development and workplace opportunities so that our workplace attracts and represents diversity from the communities in which we operate.

Diversity is recognised in Origin’s Compass as intrinsic to the kind of company we are, and aim to be. Origin has made significant progress on this commitment since it was set in 2007, and recognises that diversity needs to be incorporated into all business activities and actions on a sustainable basis rather than as a short term initiative.

The Origin Diversity Council, which consists of the Executive Management Team (EMT) and is chaired by the Managing Director, met quarterly during the year. The Diversity Council has set the following targets for the 2013 financial year:• continue to deliver equal average pay

for men and women at each job grade;• improve our retention of women in

senior roles, with a target to improve our turnover rate by 15 per cent in the 2013 financial year; and

ENERGYFOR OUR EMPLOYEES

Our Commitment: Create a rewarding workplace for our people by valuing everyone’s contribution, encouraging personal development, recognising good performance and fostering equality of opportunity.

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18 OUR EMPLOYEES

• appoint more women to senior roles, with a target to improve our rate of appointment by 15 per cent in the 2013 financial year.

In addition to the ongoing internal reporting of gender diversity statistics, participation by the Managing Director and EMT in external events to highlight gender employment issues, and an ongoing series of internal and external networking events for Origin’s senior women, the Diversity Council also oversaw implementation of a number of activities to support this commitment.

A rigorous centralised process was maintained to deliver gender pay equity at all job levels across the Company. As a result, the difference between average male and average female pay at every job level was plus or minus two per cent, with average pay for women slightly higher in some grades and slightly lower in others.

Senior managers are required to run a bias awareness session at the beginning of any group decision making process in relation to talent, remuneration or performance of their people, and the top 80 managers in the Company all undertook bias awareness training during the year. An internal communication campaign was initiated to promote the proactive application of the Company’s workplace flexibility policies. Through the first half of calendar 2012, we aimed for and largely achieved a goal of including at least one woman on all interview panels for senior roles.

Another key facet of building diversity is Origin’s set of programs aimed at eliminating barriers to employment within the communities in

which we work. We introduced a Living Local Allowance for employees working in our gas production businesses and living within 150 kilometres of one of our gas producing facilities. A separate program, Count Me In, was designed and run in conjunction with the YWCA and local government groups and built a database of women across Queensland’s Darling Downs and Surat regions, canvassing their skills and their level of interest in local employment.

The Company’s Indigenous engagement strategy continued to expand with the establishment of a partnership with Titans 4 Tomorrow to address school retention and careers planning for Indigenous students in Queensland’s gas fields from Years 8 to 12.

3. Maintain a working environment in which our employees are engaged, believe Origin is a great place to work and recommend Origin as a great place to work.

Employee engagement surveys conducted since Origin’s first measurement of this commitment in 2008 have identified clarity in career development as a priority for our people. We made it an objective through the year to increase the proportion of new senior roles filled by existing employees, and were successful in raising the proportion of such roles filled internally by five per cent.

We also saw a steep increase in the number of new external people referred to us and subsequently recruited on the recommendation of existing employees.

Also in the name of improving career development opportunities, this year saw the fruition of investment commenced in response to earlier engagement surveys, with the introduction of a consolidated company-wide Learner Management System. This internal portal allows employees to plan and track their training and professional development and certifications, thereby creating greater visibility of qualifications for management and increasing employees’ awareness of the training and experience-by-learning opportunities available.

In a company recruiting as many new people as Origin recently has, genuine employee engagement requires investment in employees’ understanding of what we do. In addition to annual roadshows held in October each year by the Managing Director Grant King and each March by members of the EMT, there was an extensive internal communication program run during the year in relation to our CSG business. Several sessions across a range of topics were held for our Queensland people, and multiple briefing sessions by executives and experts were given in each major office location. A highlight at these sessions (as at our information sessions with regulators and local communities) was the on-the-spot demonstration by one of our chemical engineers of how to create fracking fluid using regular household and kitchen products.

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8.0

16.3

8.5 9.1

Target 4.0

5.6 6.0

1. Total RecordableInjury Frequency Rate

21Gender diversity is recognised in Origin’s Compass.

2Origin’s team grew in the past year as the business continued to expand operations and activities including Australia Pacific LNG.


4. Encourage and recognise employee-led sustainability initiatives.

Origin’s employees continued to pursue both external and internal initiatives to make a positive contribution to the community. The most material contribution was the number of hours employees contributed to volunteering in the community, more than 23,000 hours over the past five years, and 5,700 hours volunteered during the 2012 financial year alone. This was a four per cent improvement on the hours volunteered in the prior year.

When announced in 2007, this target was designed to encourage volunteering within the Origin workforce. The establishment of the Origin Foundation in 2010 gave this employee-led activity a greater structure and purpose. As expected, in its second year, the Foundation continued to drive improvement in Origin’s approach to volunteering, most specifically through increasing involvement in skilled volunteering.

During the 2012 financial year, 11 per cent of our employees took part in volunteer activities, many of which shared their professional qualifications and expertise with our Foundation partners. Since the establishment of the Origin Foundation, the nature of volunteer activity has shifted from large scale, high volunteer numbers to smaller groups volunteering more frequently and individuals contributing on an ongoing basis.

We discuss the Foundation’s activities in more detail on page 26 and more information is available at www.originfoundation.com.au

The fast growing CSG industry in Queensland has led to a sharp increase in workforce demand and a renewed focus on meeting that demand with skilled workers. For every new job in the resources sector, there are at least four or five more jobs created indirectly to service the sector.

Origin has taken steps towards improving employment prospects for women in this expanding industry by partnering with YWCA QLD in a new research initiative across the Darling Downs and Surat Basin.

The Count Me In project aims to help maximise the opportunity for women to benefit from the flourishing CSG industry by identifying barriers to gaining work and determining where support is needed to help overcome them. One of the main outcomes of the program will be to assist women in finding opportunities that are flexible and family-friendly.

In June 2012, a social researcher surveyed women in the three local government areas of Toowoomba, Western Downs and Maranoa where there are significant opportunities as a result of the growth of the industry. Participants were asked about their work interests, current skills, education, employment obstacles and training needs.

Approximately 500 women from the local population of 25,000 responded to the survey and provided Origin with a pool of women to consider and approach with future employment

opportunities. Participants will also be informed about current and future jobs in local businesses and councils, the CSG industry and the jobs that flow from it.

Origin’s Manager Approvals, Land and Stakeholder Rebecca Pickering said there is great scope for women to build a career in CSG.

“We want to know if there is anything holding them back. Count Me In has evolved from the expansion of CSG in South West Queensland but the scope of the project also moves beyond into the broader community and job market,” Rebecca said.

“There are so many career path choices available for women in the gas industry, not only locally but globally also. Many skills are transferable across borders, and from my experience the industry offers great flexibility, especially for women who have families.”

“There are so many career path choices available for women in the gas industry, not only locally but globally also.”

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OUR EMPLOYEES20

OUR EMPLOYEESCASE STUDY

Origin recognises that employing and partnering with a diverse range of people gives the Company access to a range of perspectives to make the best decisions today to create value for our stakeholders now and into the future.

Underpinning this is a need to eliminate barriers to employment, development and workplace opportunities so that our workplace attracts and represents diversity from the communities in which we operate.

In March 2012 Origin was a proud supporting sponsor of research by the Diversity Council of Australia (DCA) that promotes flexible work practices. Studies such as the DCA report help to educate and inform how the integration of flexibility into business strategy can drive productivity, eliminate barriers to employment and strengthen workplace culture.

The report, Get Flexible: Mainstreaming Flexible Work in Australian Business was developed in partnership with Westpac and supporting sponsors Origin, Stockland and Allens Arthur Robinson.

The DCA report found there is significant evidence that flexible working arrangements optimise resources and productivity. Research involved conducting highly interactive ‘think tanks’ with 57 experts from a range of Australian organisations who have been immersed in flexible work in Australia.

The findings from the research showed that while many people have access to basic flexible working arrangements, meaningful flexible working arrangements are not common practice in Australian workplaces, despite efforts to mainstream flexible working practices and recognition that flexible working practices are capable of:• enabling businesses to be sustainable

and adaptable to change;• providing a pathway to gender equality;• assisting with talent attraction and

retention; and• improving workplace productivity.

The report enables Origin to better understand what flexibility means to individual employees and at different life stages, and provides a foundation for the integration of truly flexible working arrangements into the business.

As always, Origin’s actions are guided by maintaining our current high standards of competence and performance and are in keeping with Origin’s commitment to diversity and to an environment in which individuals are supported and respected.

The report enables Origin to better understand what flexibility means to individual employees and at different life stages.

Origin recognises that flexible working solutions are not just about part-time working arrangements but can also include taking an extended career break, purchasing additional annual leave, working remotely or in a job share arrangement.

We are increasingly looking to provide greater flexibility to our employees.

David Moon, a member of Origin’s Group Financial Reporting team decided to investigate flexible working options after seven years at the company. David took four months unpaid leave as a career break, providing him time to spend with his family. The planning for David’s extended leave began 10 months in advance and included conversations about when might be a good time, how much time might be possible to take, and how his role and responsibilities would be covered during the period.

In addition to the opportunity to offer a secondment position to an employee in a partner business, David’s extended leave also provided development opportunities for his team members through cross-skilling, up-skilling and increased responsibility as each of David’s role requirements were distributed or covered during this time.

Key for David was that taking a flexible option such as this did not impact his career progression. Upon returning to Origin after his time away, David was back in his role for approximately 10 months before receiving a promotion and greater responsibility.

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1Employing a diverse range of people gives Origin access to a range of perspectives to make the best decisions.

2Employees at the Company’s Sydney office.

3Maintaining a work environment in which employees are engaged is a key objective for Origin.


Over the past year, Origin has again delivered strong growth across its operating businesses, largely driven by the first full year contribution from the acquired NSW energy assets. This growth flowed through to strong increases to earnings and profit. At the same time, Origin has laid the foundations for medium and long term growth. The Australia Pacific LNG incorporated joint venture continues to make significant progress, and Origin also continues to work up a number of gas and renewable development opportunities in Australia and internationally.

To deliver on our investor-related objectives, we laid out a series of 5-Year Strategies, which we report against in this section. Given 2012 was the last year of our 5-Year Strategies, this year we also report whether we achieved what we set out to do.

5-Year Strategies

1. Maintain an investment grade rating.

Over the past five years, Origin has maintained an investment grade credit rating, and developed a capital structure that supports the long-term viability of the business.

During the 2012 financial year, we undertook a number of capital management initiatives to strengthen our balance sheet and ensure that we have sufficient liquidity to fund future capital expenditure requirements, including our expected commitments and cash contributions to Australia Pacific LNG.

In September 2011, Origin fully underwrote its final dividend for the 2011 financial year raising $266 million of equity finance.

In October 2011, we undertook a US$500 million ($492 million) Senior Unsecured Notes issuance in the 144A market in the United States. In December 2011, we issued $900 million of Origin Energy Subordinated Notes in the Australian retail bond market. We also raised an additional $750 million of debt facilities during the 12 month period, and repaid $566 million of debt and capital market facilities (1) which matured during the period. These initiatives assisted in diversifying our funding portfolio in terms of currency, market and tenor, and strengthened Origin’s liquidity position.

Australia Pacific LNG also signed project finance agreements during the second quarter of the 2012 calendar year for a US$8.5 billion project finance facility, which are subject to certain conditions precedent.

We remain committed to sustaining a capital structure which underpins the long-term viability of our business.

2. Provide shareholder returns in the top quartile of comparable companies.

We have again achieved our target of delivering shareholder returns that are in the top quartile of comparable ASX-listed companies (ASX 100) over a rolling five year period.

Returns to shareholders are made up of the appreciation of the Origin share price and the dividends we pay. Our policy is to target annual dividends of at least 50 cents per share or 60 per cent of annual Underlying Earnings Per Share (EPS). Consistent with this policy, Origin’s full year dividend was 50 cents per share, representing 61 per cent of Underlying EPS.

In each of the past five years, Origin has achieved its target of providing shareholder returns in the top quartile of comparable companies. Despite this achievement, over the past two years Origin’s strong operational and financial performance has not translated into strong share price performance. See Graph 1 for information on this target.

ENERGYFOR OUR INVESTORS

Our Commitment: Deliver market leading performancefor shareholders by identifying, developing, operating and growing value-creating businesses.

1

(1) Excludes debt facilities raised by Contact Energy during the 2012 financial year.

1Employees at Origin’s Darling Downs Power Station, Queensland.

22 OUR INVESTORS

Origin continued its active capital management program during the 2012 financial year, undertaking a number of initiatives to strengthen our balance sheet and ensure that we have sufficient liquidity to fund future capital expenditure needs, including Origin’s funding requirements for Australian Pacific LNG.

Amid challenging local and global financial market conditions, our capital raising initiatives assisted in diversifying Origin’s funding portfolio in terms of currency, market and tenor while at the same time strengthening our liquidity position.

Debt and equity markets showed strong support for our financing initiatives during the year.

In September 2011, we fully underwrote our final dividend for the 2011 financial year, raising $266 million of equity finance.

In October 2011, Origin undertook a US$500 million ($492 million) Senior Unsecured Notes issuance in the 144A market in the United States.

In December 2011, we issued $900 million of Origin Energy Subordinated Notes in the Australian bond market.

We also raised an additional $750 million of debt facilities and repaid $566 million of debt and capital market facilities which matured during the period.

Looking ahead, Origin’s funding requirement for our 37.5 per cent shareholding in Australia Pacific LNG remains our largest capital expenditure. Australia Pacific LNG signed a US$8.5 billion of project finance facility during the fourth quarter of the 2012 financial year, subject to certain conditions precedent. Satisfaction of the conditions precedent and the commencement of drawdown under the project finance facility is expected in the December Quarter 2012. This, together with the payment of Sinopec’s equity subscription amount associated with its increased shareholding in Australia Pacific LNG from 12 July 2012, means Origin’s remaining funding requirement for Australia Pacific LNG for the period from 1 July 2012 to first production from both LNG trains is approximately $3.6 billion, based on current estimates.

We will meet this funding requirement from our existing committed undrawn debt facilities and cash, which as at 30 June 2012, totalled $4.2 billion (excluding Contact Energy). A portion of these existing committed undrawn debt facilities mature within the period to first production from both LNG trains and will be refinanced as required. Origin announced in October 2012 the execution of $2.4 billion of new syndicated facilities to refinance existing maturities in the 2013 and 2014 financial years as well as the issue of €500 million of medium term notes. In addition, Origin’s Free Cash Flow ($1.4 billion for the 2012 financial year) provides a further funding source for Origin’s Australia Pacific LNG obligations, the payment of Origin’s dividends and other growth opportunities.

Our efforts in capital management have been recognised by a number of awards for excellence and innovation associated with various financing transactions over the past few years. Karen Moses Executive Director, Finance and Strategy was awarded CFO of the Year at the 2012 INSTO Distinction Awards. Origin was also named Equity Issuer of the Year and received the Equity Deal of the Year for the Origin Energy PAITREO – Pro-rata Accelerated Institutional Tradeable Renouceable Entitlement Offer.

At the FinanceAsia 2011 Achievement Awards, Origin was named Issuer of the Year, the Company’s €500 million June 2011 hybrid issue was awarded Most Innovative Deal and the PAITREO won Best Secondary Offering.

Our efforts in capital management have been recognised by a number of awards for excellence and innovation associated with various financing transactions over the past few years.

49

(17) 2

1. Total Shareholder Returns over a five year period 30 June 2007 to 30 June 2012 (%)

ASX 100

Target – Top Quartile◊

Origin

Discovermore online

◊ Total Shareholder returns over a five year period required to be in the top quartile of comparable ASX listed companies.


As we outline in our purpose statement, Origin will deliver today’s energy needs and search and innovate to create tomorrow’s energy solutions. Having explained our approach to delivering today’s energy needs through our sustainable operations, in this section we discuss the specific development projects and opportunities Origin is currently exploring – from gas exploration opportunities in Australia, New Zealand, Kenya and Botswana, to renewable energy opportunities in Papua New Guinea, Chile and Indonesia – some or all of which will help us deliver energy solutions and growth for tomorrow.

Energy is the cornerstone of human development. The critical role of energy in society is evidenced by strong growth in global energy demand. In 2011, the International Energy Agency forecast that over the next 25 years, the fast-developing economies of India and China are expected to account for half of the increase in world energy demand. Other developing economies will account for a significant share of the remainder.

The global energy economy – that part of the global economy concerned with the extraction, processing, distribution and resale of energy to end users – accounts for a significant portion of global gross domestic product (GDP). Each country has its own energy economy – suppliers, markets and retailers – but these vary widely according to the relative strengths of resource endowments, market structures, and consumer demand. With the capacity to move energy around the world in both solid and liquid form, there is the capacity to address emerging demand – or excess supply - in particular markets through international flow of energy, providing the optimal solution for each country and further enhancing the global energy economy.

The world’s challenge is also to make energy available so that it supports sustainable human development, and also that it stabilises and redresses the carbon imbalance propagated by our energy use to date.

It is an interconnected global challenge, and as a growing energy company, Origin has an important role to play. By applying our Compass as we develop projects, we will maximise chances of success and be a partner of choice for companies, communities and countries wishing to see resource endowments developed with due care and appropriate distribution of value.

We believe our projects can deliver significant economic and community benefits, and in each case we are committing significant time and resources so that we can share some of the value of our potential project development with our host communities. And no matter where we are developing projects in the world, who our partners are, or the strength of the local regulatory framework, we understand the importance of working to the highest standards of social and environmental performance. This approach has to be deeply embedded in our project management, as performance against international standards is used as guidance by global governments and private financiers.

Within that overall development framework, our approach reflects the unique opportunities and challenges of each country in which we are developing projects.

Gas development opportunities

Australia

Australia is a country blessed with abundant natural resources, and gas is one of those which is being accessed to help meet the demand for cleaner sources of energy. Gas is ideal for domestic use and for electricity generation, and can also be converted to LNG and transported to international markets. Through our shareholding in Australia Pacific LNG, with other shareholders ConocoPhillips and Sinopec, we are developing Australia’s pre-eminent CSG to LNG project based on Australia’s largest 2P CSG reserves in the Spring Gully and Walloons areas with world-class characteristics. Once development of the LNG export project is complete, Australia Pacific LNG will deliver gas to China and Japan, providing a less carbon intensive alternative to coal to assist in meeting the fast-growing energy demand of Asia.

In addition to Australia Pacific LNG, Origin possesses a number of other conventional and unconventional gas development opportunities in Australia, positioning the Company strongly to meet the expected tripling in gas demand over the next five years.

International markets

Acknowledging the important role gas plays in meeting demand for cleaner energy, we are also pursuing a number of other gas development opportunities in New Zealand, Botswana, Kenya and Vietnam. In some of

these markets, the gas resources could be used primarily to meet domestic demand; in others, the size of the resources could far exceed the needs of the domestic market and so LNG export opportunities may exist.

Renewable development opportunities

Origin is currently developing a portfolio of high quality renewable energy opportunities in overseas markets which offer strong growth prospects. We have carefully selected geothermal and hydroelectric options in Chile, Indonesia and Papua New Guinea, which each have unique market dynamics.

Chile

Chile has rapidly increasing energy demand, with six to seven per cent growth in electricity consumption projected between now and 2020, requiring an increase in supply of approximately 8,000 MW from new generation projects (1). Today, Chile is particularly dependent on imported fossil fuels. Yet its location on the Pacific ‘ring of fire’, means it has a strong bank of renewable resources, including conventional geothermal and hydroelectric. For example, it is estimated that Chile has up to 16,000 MW of potential geothermal resources and its hydroelectric potential could easily exceed 9,000 MW. Future development of these renewable resources could support Chile’s economic growth and improve energy security.

With our local partners in Chile we are pursuing two key opportunities: geothermal exploration interests; and a possible large-scale hydroelectric project in the Aysén Region.

The geothermal exploration is being undertaken through Energía Andina S.A. (EASA), in which we have a 40 per cent interest. Our 60 per cent partner, Antofagasta Minerals is one of Chile’s largest copper mining companies with a global reach and extensive knowledge.

EASA has established a portfolio of 12 geothermal exploration projects in the Northern, Central and Southern regions of Chile. Origin is supporting EASA both through direct investment and by leveraging our own and Contact Energy’s exploration and geothermal capabilities.

The hydroelectric project is being developed through Energía Austral SpA (EAL), in which we have a 51 per cent interest (2). Our 49 per cent partner Xstrata Copper is well established in Chile and brings global expertise in the development of large-scale projects. Origin is the lead development partner for EAL’s planned 1,000 MW hydroelectric project in southern Chile. Once completed, the project will comprise up to three hydroelectric plants and a transmission system connecting the project to Chile’s national central electricity grid.

Developing newprojects sustainably

24 sustainable Development

Papua New Guinea

Through our investment in PNG Energy Developments Limited (PNG EDL), we are evaluating the potential development of a hydroelectricity project on the Purari River near Wabo, in the Gulf Province of Papua New Guinea. Capturing the power of existing river flows, the development under consideration would have the capacity to generate up to 2,500 MW of renewable electricity. Papua New Guinea’s hydroelectric potential has the ability to benefit the people of Papua New Guinea and grow the country’s economy by providing a superior electricity supply for its industries.

In addition to supplying electricity to meet demand in Papua New Guinea, the hydroelectric potential of Purari also represents a source of exportable power to Australia, which would benefit from the introduction of large-scale baseload renewable electricity supply into the NEM. Consequently, a key focus of the feasibility studies for the Purari project is to assess the potential to export sufficient power into the NEM, to support the economical viability of the project.

Our 50:50 partner in PNG EDL, PNG Sustainable Development Program Ltd (PNG SDP), has been operating in Papua New Guinea for a decade. PNG SDP’s experience provides a solid foundation for the social, environmental and technical studies currently underway for the project.

PNG EDL invited some non-government organisation (NGO) participation in social and environmental workshops to feed into the early-stage options and impact assessment processes for the hydroelectric scheme. The contribution from these groups was highly valuable and will continue to be sought throughout project development.

Indonesia

Indonesia is a developing country with more than 240 million people and growing energy demand. Like New Zealand and Chile, Indonesia is located on the Pacific ‘ring of fire’ and is highly prospective for geothermal energy. The country already has several operating conventional geothermal power stations totalling almost 1,200 MW installed capacity.

In Indonesia, Origin’s 50-50 joint venture with the Tata Power Company of India, OTP Geothermal Pte, holds the Sorik Marapi geothermal concession in consortium with PT Supraco Indonesia. Origin has a 47.5 per cent effective interest in the concession, which is situated in Northern Sumatra. The concession covers an area of 629 km2 and has an estimated potential geothermal resource of up to 240 MW. The project is engaging with landowners and communities as it prepares to drill exploration wells.

Australia Pacific LNG’s $23 billion project, the most advanced, major development project in which Origin is involved, provides a strong foundation on which to deliver energy solutions for the future.

Australia Pacific LNG is a fully sanctioned two train project which will contribute to meeting global demand for less carbon intensive sources of electricity generation. The project enables Origin to become a major provider of gas to meet the demand for energy in fast-growing energy markets including China and Japan.

Over the life of the project, Australia Pacific LNG will make a substantial economic contribution to Queensland and during the construction phase will create up to 6,000 direct jobs as well as provide considerable benefits to the communities in which it operates.

Development of the project has progressed on schedule in the past year and Australia Pacific LNG is on track to deliver first LNG production in mid-2015. Throughout its development a number of sustainability challenges have been identified and addressed, including:

Ensuring access to land

CSG production involves the construction of infrastructure including wells and pipelines, often on privately owned land. Therefore establishing and managing relationships with landholders is critical. During the year Origin, as Upstream operator, added members to its landowner relations team and continued to progress its land access agreements. To date, Origin has entered into more than 650 land access arrangements and the ability to deliver these agreements with landholders provides certainty and security for Origin and Australia Pacific LNG.

The health of landowner relationships is continually monitored, and initiatives such as the Working Together Program discussed earlier in the report, assist in the development and maintenance of strong relationships.

Managing water

Australia Pacific LNG has also made significant investment to ensure that associated water can be treated to a high standard, maximising the potential options for beneficial use.

Implementation of our CSG Water Management Strategy is well underway with projects initiated to beneficially use treated water for crop irrigation. This year we also began a water reinjection study using advanced technology to investigate the injection of CSG water into underground water aquifers. Initial results of

a trial at Spring Gully were encouraging and two additional trial sites will be commissioned at Reedy Creek and Talinga in late 2012.

During the year, Origin successfully managed the release of treated CSG water to surface water courses. Origin is the first proponent to develop a regulator-approved Recycled Water Management Plan for the protection of public health for downstream potable water users. The quality of the treated CSG water released complies with the Australian Drinking Water Guidelines. Environmental monitoring results indicate water has been provided to water ways and maintained the environmental values of the Condamine River.

Managing social impacts

The construction of Australia Pacific LNG’s project comes with social and economic challenges for communities including increased demand on services and facilities, increased traffic, increased competition for labour and escalating housing costs. The Australia Pacific LNG Social Impact Management Plan sets out a strategy for managing these challenges and maximising flow-on benefits to communities. The plan has been developed in close conjunction with local communities and local and state governments and was approved by the Queensland Government in July 2012.

Researching social and environmental issues

In July 2011, Australia Pacific LNG launched a research alliance with the CSIRO to support the sustainable development of the CSG industry. The Gas Industry Social and Environmental Research Alliance (GISERA) is undertaking research in five key areas: groundwater and surface water, biodiversity, land management, the marine environment and socio-economic impacts. As part of the establishment of GISERA, consultation with other research groups took place to ensure its activities complement other research initiatives in this area.

For more information see the GISERA website: www.gisera.org.au

Australia Pacific LNG manages its sustainability issues under a dedicated sustainability framework and will report on its sustainability performance in a separate sustainability report. The management of Australia Pacific LNG’s sustainability issues will continue to educate Origin’s future development portfolio opportunities and provide a platform from which to improve upon its performance in these areas.

(1) Sourced from the Chilean Energy Ministry’s National Energy Strategy (2012-2030) released in February 2012.

(2) 51 per cent voting interest.


The Origin Foundation is our philanthropic foundation, established in 2010 to mark the 10th anniversary of Origin’s listing on the Australian Securities Exchange. The performance of the Foundation is reported annually in a separate document which you can read on Origin’s reporting website. We’ve taken the opportunity here to outline some of their activities through the year.

Education continues to be the Foundation’s focus. Education is a vital building block for a successful life, providing a pathway into employment and financial stability, and enhancing an individual’s capacity to participate in society.

Recognising that education can be a very broad area for effective philanthropy, the Foundation focuses on five main areas:

• Early childhood education – partnerships include Indi Kindi, an early years literacy program for Indigenous children living in some of Australia’s most remote communities;

• School reform – through partnerships with groups like Big Picture, we’re helping to re-engage young people in education;

• Transition to study and work – working in partnership with the Australian Indigenous Mentoring Experience to expand their mentoring program to new regions;

• Scholarships to further the aspirations of high achievers – supporting talented Australians through partnerships with groups like the General Sir John Monash Foundation; and

• Strengthening the non-profit sector – investing in the training and development of the sector’s leaders to improve the capacity of the sector to deliver support.

As of 30 June 2012, the Foundation had provided grants worth a total of $7.3 million to 24 not-for-profit organisations working in the area of education.

Throughout the year the Foundation provided Origin employees with opportunities to volunteer with partners through skilled and unskilled projects. Over the 2012 financial year employees spent 5,700 hours sharing their time and skills with partners.

The Foundation also matches any donations that Origin employees make to charitable organisations through its workplace giving program, Give2. Employees donated $276,879 in the past year, which was matched to provide a total of $553,758 to a range of charities. We look forward to the continued growth and development of the Foundation’s activities in coming years.

Making business investment decisions is difficult no matter how big or small the organisation. The risks can be enormous in financial and reputational terms. As a large business, Origin has teams of highly skilled people who analyse opportunities in a forensic manner. Charities do not have Origin’s capacity when it comes to decision making, but the risks are just the same.

Recently, The Big Issue, Australia’s most successful social enterprise, asked the Origin Foundation for help in making decisions on expansion. Currently The Big Issue magazineis available in capital cities. The magazine is sold by disadvantaged men and women who get 50 per cent of the sales price as payment for their efforts.

The challenge was handed over to a team of five Origin volunteers participating in the ‘Evolve at Origin’ management training program. Not only did the team come up with a recommendation on expansion, they

1

2

26 Origin Foundation

developed a decision-making tool so that management at The Big Issue could have a replicable process for making many types of business decisions.

Sally Hines managed the project at The Big Issue and said Origin’s volunteer team went above and beyond.

“I wanted to know if The Big Issue’s street magazine enterprise had the capacity to extend its reach into Newcastle and Wollongong. I thought I’d get a short report with some advice. But that’s not what I got,” Sally said.

“The Origin team did deliver a comprehensive report, but more importantly, they developed a software tool which allows me to plug in data – for any city or town. The tool analyses the data and then delivers a report which analyses many different variables necessary to consider for any expansion. This tool has so much potential for The Big Issue’s operations. Using the tool, we’ll be able to undertake situational analysis on different cities and towns and make informed, rational decisions.

“So, where to from here? I’ll be using the software tool and my state managers will be undertaking training sessions with Origin’s volunteer team. That’s one of the aspects of the project that I’ve loved – the team didn’t just develop this tool and hand it over. They’ve shown a genuine interest in assisting me to embed the tool into our work practices and to use it as a piece of intelligence that our business team can rely on when considering expansion.”

Sally said Origin and The Big Issue have a long history together and she believed this skilled volunteering opportunity was a three way win.

“The Big Issue got a terrific business tool, Origin’s volunteer team got the opportunity to use their professional skills to benefit those in the community who need it most and our vendors got a win too – this project inspired the volunteers so much that they buy The Big Issue each fortnight.”

Head of the Origin Foundation Sean Barrett said the project was a great example of how we could add value to our Foundation partnerships and contribute to the professional development of Origin people.

“The integration of skilled volunteering with the Evolve program was another example of how the Foundation and Origin’s People and Culture department are working together to use volunteering as a team building and development tool,” Sean said.

During the 2012 financial year, the Origin Foundation was welcomed as a partner in Leading Learning in Education and Philanthropy (LLEAP), a research initiative looking at the relationship between philanthropy, education and the not-for-profit sector.

LLEAP is a three year research project which aims to shed light on how philanthropic foundations and not-for-profit organisations can best work with schools and the education sector. The research will fill a major gap in

current research. Never before have the perspectives of philanthropic foundations and trusts (grant makers in education) and schools and not-for-profits (grant seekers) been sought, let alone analysed and applied to new ways of working. What constitutes effective engagement of philanthropy in education and how to maximise its impact depends on exploring these perspectives.

Findings of the LLEAP year one research have been made available to the public and have already made an impact, influencing recent roundtables on implementation of aspects of the Gonski Review.

The Foundation will support the research program through its second and third years. Sean Barrett, Head of the Origin Foundation will join the LLEAP Advisory Board during this period.

Speaking at the launch of LLEAP’s second year of research, Sean said he wished the LLEAP findings had been available when he began exploring how our Foundation could contribute to the area of education.

“When Origin employees told us they wanted our Foundation to focus on education, it was hard to know where to start.

“The LLEAP research has the potential to improve philanthropic investment in education by providing funders and fundees with practical information on how to improve relationships and drive investments further.”

31The Origin Foundation is supporting the Beacon Foundation to help prepare young people for future employment. Photo courtesy of the Beacon Foundation.

2Origin employees donated 5,700 hours during the 2012 financial year.

3A team of Origin volunteers assisted The Big Issue during the past year.


Online Resources

This is a concise version of Origin’s 2012 Sustainability Report. As the size and complexity of our business continues to increase, so too does the challenge of meeting our commitments to stakeholders. Our concise report focuses primarily on our performance against the 5-Year Objectives we set for each of our key stakeholder groups in our 2007 report.

To complement our concise report our online Sustainability Report discloses our performance to the same extent as in previous years and is compiled using the GRI’s G3 guidelines. It can be viewed at www.reports.originenergy.com.au.

Key performance indicators including GRI management disclosures and our greenhouse gas emissions are detailed online.

During the 2012 financial year, Origin participated in a number of surveys commissioned by different sustainability ratings agencies. Origin also reported its sustainability performance against the internationally recognised GRI indicators. The selected indices and indicators cover a broad range of sustainability issues, meaning that Origin’s performance can be viewed by stakeholders against specific issues or holistically across the whole set of issues.

Our community investment data is independently verified by the London Benchmarking Group (LBG), which promotes a consistent set of criteria for determining community investment, donations and commercial initiatives in the community.

We are a participant in the Carbon Disclosure Project, an independent not-for-profit organisation which holds the largest database of primary corporate climate change information in the world.

We were included in The Global 100 list of the Most Sustainable Corporations in the World, which is an annual project initiated by Corporate Knights, the magazine for clean capitalism.

Since 2004, Origin has been a member of the FTSE4Good Index Series, which is designed to identify companies that meet globally recognised corporate responsibility standards.

Since 2009, Origin has been a signatory to the Energy Supply Association of Australia’s (esaa) Sustainable Practice Framework, which is a major platform for the energy supply sector’s work in improving sustainability in the industry.

The Dow Jones Sustainability Asia Pacific Index, which was launched in 1999, is the first global index designed to track the financial performance of the leading sustainability-driven companies worldwide.

Sustainability Ratingsand Benchmarks

GLOBAL 100

28 Further information

Glossary

Non-IFRS Financial Measures

This document includes certain 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 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 key non-IFRS financial measures included in this report are defined below.Free cash flow Cash available to fund distributions to shareholders and growth capital expenditure.Productive Capital Funds employed including Origin’s share of Australia Pacific LNG and excluding capital works in progress for projects under development which are not yet contributing to earnings.Segment result Underlying EBIT for the Energy Markets, Exploration & Production, Australia Pacific LNG, Contact Energy and Corporate segments. Net financing costs and tax expense/(benefit) are allocated to Australia Pacific LNG, Contact Energy and the Corporate segments in measuring segment result. As disclosed in note 2 of the Origin Consolidated Financial Statements.Total Segment Revenue Total revenue for the Energy Markets, Exploration & Production, Australia Pacific LNG, Contact Energy and Corporate segments, including inter-segment sales, as disclosed in note 2 of the Origin Consolidated Financial Statements.Underlying profit and loss measures:EBIT EBIT marginEBITDAEffective tax rateShare of ITDANet financing costs/incomeEPSConsolidated ProfitIncome tax expenseNon-controlling interestsUnderlying measures are measures used internally by management to assess the profitability of the Origin business. The Underlying profit and loss measures are derived from the equivalent Statutory profit measures disclosed in the Origin Consolidated Financial Statements and exclude the impact of certain items that do not align with the manner in which the Managing Director reviews the financial and operating

performance of the business. Underlying EBIT, Underlying EBITDA and Underlying Consolidated Profit are disclosed in note 2 of the Origin Consolidated Financial Statements. Underlying EPS is disclosed in note 37 of the Origin Consolidated Financial Statements.

Non-financial terms

2C Best Estimate Contingent resource.3C High Estimate Contingent resource.2P reserves The sum of Proved plus Probable reserves. Probable reserves are those reserves which analysis of geological and engineering data indicate are less likely to be recovered than Proved Reserves but more certain than Possible Reserves. It is equally likely that the actual remaining quantities recovered will be greater than or less than the sum of the estimated proved plus Probable Reserves (2P).Capital expenditure Investment in acquisition or improvement of long-term assets, such as property, plant or equipment.Carbon dioxide (CO2) Greenhouse gas produced as a by-product of oil and gas production and when burning fossil fuels and biomass.Equivalent Carbon dioxide (CO2e) The concentration of CO2 which would cause the same level of radiative forcing as a given type and concentration of greenhouse gas.Churn Mass-market energy customers switching suppliers.Coal seam gas (CSG) Natural gas contained within coal seams.Cogeneration Producing two or more forms of energy from one fuel source. Condensate A light oil that separates during gas production processes due to changes in pressure and temperature.Contract Price (CP) An international price for LPG, in US dollars, using the Saudi Aramco Contract Price tender process. Australian LPG producers export LPG or sell into the domestic Australian market at prices that reflect the CP. Development well A well drilled to enable production from a known oil or gas reservoir.EIS Environmental Impact StatementElectricity measures• Watt (W) A measure of power when a one

ampere of current flows under one volt of pressure.

• Kilowatt (kW) One kW = 1,000 watts.• Kilowatt Hour (kWh) Standard unit of

electrical energy representing consumption of one kilowatt over one hour.

• Megawatt (MW) One MW = 1,000 kW or one million watts.

• Gigawatt hour (GWh) One GWh = 1,000 megawatt hours or one million kilowatt hours.

• Terawatt hour (TWh) One TWh = 1,000 gigawatt hours, or one million megawatt hours.

Exploration well A well drilled to identify a new reservoir of natural gas or oil.

FID Final Investment Decision.Gas measures • Joule Primary measure of energy in the

metric system.• Gigajoule (GJ) A gigajoule equals one billion

joules.• Terajoule (TJ) A Terajoule is equal to 1,000

gigajoules.• Petajoule (PJ) A Petajoule is equal to

one million gigajoules.• Petajoules equivalent (PJe) An energy

measurement Origin uses in its annual report to represent the equivalent energy in different products so the amount of energy contained in these products can be compared. The factors used by Origin to convert to PJe are: one million barrels crude oil = 5.8 PJe; one million barrels condensate = 5.4 PJe; one million tonnes LPG = 49.3 PJe; one TWh of electricity = 3.6 PJe.

Geothermal Energy that is generated by converting hot water or steam from deep beneath the Earth’s surface into electricity.Hydrocarbons Oil and gas, including condensate and gas liquids (LPG and ethane).Kbbls Kilobarrels = 1,000 barrels.Kt Kilotonnes = 1,000 tonnes.LNG Liquefied natural gas.LPG Liquefied petroleum gas.NEM National Electricity Market.Offshore exploration The search for hydrocarbon deposits under the sea, such as natural gas or oil.Onshore exploration The search for hydrocarbon deposits beneath the earth’s surface, such as natural gas or oil.Peaking plant A generator that can be quickly started to operate during periods of high electricity demand and/or high prices in the electricity market.Photovoltaic (PV) Photovoltaic cells convert sunlight into electricity.Power On Origin’s hardship program which provides payment options for customers experiencing financial difficulty.QCA Queensland Competition AuthorityRET The Federal Government implemented a Renewable Energy Target, requiring 20 per cent of electricity to come from renewable energy sources by 2020.Seismic survey A geophysical survey to understand rock formations beneath the Earth’s surface.Total Recordable Injury Frequency Rate (TRIFR) The total number of fatalities and injuries resulting in lost time, restricted work duties or medical treatment per million hours worked.Upstream Part of Origin’s business that is involved in the exploration and production of hydrocarbons.


Registered offi ceLevel 45, Australia Square264-278 George StreetSydney NSW 2000

GPO Box 5376Sydney NSW 2001

Telephone (02) 8345 5000Facsimile (02) 9241 7377Internet www.originenergy.com.auEmail [email protected]

Share registerLink Market Services LimitedLevel 12, 680 George StreetSydney NSW 2000

Locked Bag A14Sydney South NSW 1235

Toll Free 1300 664 446Telephone (02) 8280 7155Facsimile (02) 9287 0303

Internet www.linkmarketservices.com.auEmail [email protected]

SecretariesAndrew ClarkeHelen Hardy

AuditorKPMG

This Sustainability Report provides an overview for the 12 months between July 2011 and June 2012. Further information about Origin’s sustainability performance can be found at: www.reports.originenergy.com.au

This report has been printed on Impact paper by Focus Press Pty Ltd. The paper is made from 100% recycled Post Consumer waste recycled paper and is FSC certified. Focus Press operates under an ISO14001 Environmental Management System and an ISO9001 Quality Management system. The printing process is 100% alcohol-free and uses vegetable-based inks. The report has been printed Carbon Neutral as certified under the Australian Government National Carbon Offset Standard.

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