Origin Energy Limited

Okay, good morning everyone and welcome to Origin Energy's results for the 2026 financial year. It's Frank Calabria here and I'm joined by my executive leadership team. I want to welcome a few people. Firstly, you'll all know Andrew Thornton but welcome him in his new role of Executive General Manager Energy Supply and Operations. We welcome Alita Nicol as the Energy General Manager for Integrated Gas and also welcome Alicia Purtell, our new Executive General Manager of People and Culture. I'll provide a brief overview of performance and outlooks. Tony will speak to the financial results and this will be followed by an opportunity for all of you to ask questions. Turning to slide two, Origin's delivered a good result for the 2026 financial year. The energy markets EBITDA of 1.701 million EBITDA is towards the upper end of guidance. integrated gas at $1.62 billion. EBITDA is in line with expectations for APLNG and LNG trading. And in relation to Octopus Energy and Kraken, it recorded a combined EBITDA of minus $8 million, with the UK retail contributing $134 million, and that's enabled funding investment in growth as they scale the non-UK retail markets, energy services and also Kraken migrations. There are a number of business highlights for the year. Customer accounts increased by 243,000. We achieved our 100 million to 150 million cost out target. The batteries are on time and budget and we now have 1.3 gigawatts operational. Origin received $911 million fully franked dividends from APLNG and increased its 2p reserves at 100% there by 332 petajoules and that's before production. The Octopus Energy team have grown their customer accounts by 2.2 million, 800,000 those in the UK, but now 1.4 million of them are outside the UK. Kraken increased its revenue by 19% through the year and now has contracted accounts at 95 million at the end of June. The Kraken and Octopus legal separation is complete and as part of that, the equity raise of $1 billion by Kraken was completed in July. On the back of that, the board have determined the 30 cent fully franked interim dividend and that's obviously supported by strong cash flow and balance sheet strength. Turning to the financial highlights, you can see there that the statutory profit is $1.574 billion. The underlying profit is $1.159 billion and the underlying EBITDA are $3.22 billion. which comprises improvements in energy markets and octopus energy and the expected lower earnings in integrated gas. The adjusted free cash flow was very strong. It increased by over $700 million to be in excess of $2 billion for the year. That strong cash flow has led to a reduction in our net debt to EBITDA metric which now sits at 1.6 times. and I mentioned the final dividend that takes the full year dividends for the year consistent with 2025 to be 60 cents fully franked. I wanted to touch on the data security incident. In July we advised there'd been an unauthorised access to customer information to 900,000 customers. Our priority right now is supporting those affected customers. Initial notifications have gone out. We're continuing to communicate with them. We're providing support through extended customer support hours, dedicated contact number, web page and access to specialist identity and cyber support services. We've taken steps to secure our systems. We've been working with cyber security and forensic specialists. We continue our review, continue to work closely with the authorities and regulators and as I commented when I last spoke to this, the matter does remain subject to an ongoing criminal investigation which does will limit some of the things I can say today, but I understand there'll be some interest in that. Turning to our purpose on the next slide, five, of getting energy right for our customers, communities and planet, and firstly for customers, our focus right now is on supporting those impacted by the data security incident. I'm pleased that we were able to pass through our lower average prices in July for the 2027 financial year. We continue to support customers in hardship, spending $40 million. and we have new energy plans being introduced that are tailored to customer usage patterns and we remain one of the largest East Coast gas suppliers through APL&G. For the communities, it's good to see that we continue to support regional procurement and First Nations suppliers in a meaningful way and also community benefits through our Raring Community Fund and our foundation where we contribute both dollars and also volunteer hours by our employees. continues to be a key part of what ORIGIN stands for. I'm also pleased to advise that our recordable injury frequency rate at 2.9 is an improvement on last year. When it comes to planet, our Scope 1 to 3 equity emissions are down 2% and included in that is a reduction of our Scope 1 emissions by 7%. Our batteries, it's good to see both Super Node 2 and Mortlake are now operational and that's earlier than anticipated. Also pleased to see that the ash reuse at Eraring has jumped to 77% up from 61% last year. And we continue to apply 85% of the produced water at APLNG to a beneficial use, including agriculture. And we now have 50 megawatts of community batteries under operation. Turning to slide six, we have established assets and capabilities that we continue to build on but differentiate us. They span customer, energy supply, energy resource, international markets through Octopus and also global technology through Kraken and that's something we continue to focus on as we want to deliver the best outcomes through the energy transition. Our investment proposition on slide seven remains consistent. We have energy markets and APL&G both leading Australian energy businesses generating strong cash flows, fully franked dividends, and an ability to continue to invest in the energy transition and our dividend yield is 5.7% before franking benefit. In addition to that, we now have significant global growth potential through two independent businesses following separation, Octopus and Kraken. I wanted to turn just to the commodity markets because they have shifted significantly so far in 2026 and that's highlighted by the charts on slide 8. Recent electricity prices have been impacted by both cyclical and structural drivers. We've seen unseasonably mild weather, very high base load availability and also increased renewables and battery storage. At the same time, what we're seeing is the cost of new build is rising and that just makes it more challenging to invest at these prices. In relation to East Coast gas prices, while there's been a rise in global LNG prices, you can see the East Coast remains well supplied. and has been insulated from those rises, and we've seen the domestic demand be lower over the last 12 months, particularly in relation to gas-fired generation and the demand from LNG producers. Now, we also include the Japanese Customs Cleared Crude, and for people, as most will be familiar, that's the index that actually flows through to our long-term LNG export contracts. It's obviously risen sharply since the commencement of the Middle East crisis. You can see on the right-hand chart But given the time lag that exists in our LNG export contracts, those higher oil prices will be realised in the 2027 financial year. And based on the current forward prices, Origin expects continued strong cash flows from APLNG in FY27, and there will be some losses from the oil hedges in place that will partially offset this. And then just a reminder, we've communicated this previously as part of our quarterly presentation, but it's a significant event. The separation of Octopus and Kraken has now been completed. You can see there the stake in Origin economically in both of those businesses remains at 22.7%. The graphic on the left, though, is to highlight the fact that Octopus holds a 13.7% stake in Kraken when you're calculating that. Both of those businesses are well positioned to pursue ambitious growth and it was pleasing that Kraken was able to raise that $1 billion equity and that was completed in July at a look through valuation of US dollars $8.65 billion. We'll talk more about those businesses later. So on that note, I'm going to hand over to Tony Lucas to talk through the financial review.

Thank you Frank. Tony Lucas here, CFO of Origin. Good morning everyone and thank you for joining. I'll spend the next few minutes on the segment results, our cash generation and then our balance sheet. Today's strong result reflects three consistent themes. Firstly, we delivered what we said we would on earnings, on cost and on the battery program. Second, we had strong cash conversion and we strengthened an already strong balance sheet. And finally, we kept investing in the portfolio through the energy transition for what it needs, while maintaining disciplined, sustainable returns to shareholders. So starting with the EBITDA, Group EBITDA of $3.2 billion reflects strong growth in energy markets and an improved contribution from Octopus, and as expected, a reduction from integrated gas. Energy markets EBITDA of $1.7 billion was up 21% and at the upper end of guidance. Electricity was $179 million higher. There was really three drivers. We had higher wholesale costs flowing through to tariffs with the lag. We had a lower cost of energy, and that lower cost of energy was partially offset by last year's unusually strong wholesale portfolio benefits, which didn't repeat. Gas was $20 million higher as both sale and purchase contracts repriced, partially offset by lower trading volumes. Cost to serve reduced a further $56 million this year. That's against our 10-year 24 baseline. We delivered $126 million of savings before the two retail acquisitions, and that's delivering the $100 to $150 million cost-out target we set two years ago. With the customer base growing, the battery fleet now operating and cost discipline embedded, the business enters thin year 27 well positioned. With the battery ramp up, we expect that to offset lower wholesale prices flowing through customer tariffs. Turning to integrated gas, APL&T delivered operationally well. Availability improved to 96%. 82 wells driven and 2P reserves increased 332 petajoules before production, and that's at 100% APLNG level. Earnings were in line with expectations, reflecting a realised oil price of US$72 per barrel, the full year effect of the Cyanopec price review, and LNG trading gains of $140 million. As Frank indicated, the higher oil prices we've seen since February are expected to be realised in thin year 27. and that supports a continued, strong, fully-ranked distribution from APL&G. And finally, Octopus and Kraken. Our share of EBITDA improved $80 million on Fin Year 25 to a loss of $8 million. UK Retail contributed $134 million. That's the fourth consecutive year of profitability for UK Retail, inclusive of the continued investment in smart tariffs to grow connected customers. Non-UK accounts grew by more than 50%. Energy services improved materially on productivity and is trending towards break-even and Kraken grew revenue 19% while investing in migration capacity or capability and product development. As Frank indicated, legal separation complete and the equity raise finalised in July. Both businesses are well set up for growth and Origin continues to build substantial long-term value through these investments. Just turning to cash flow, which is the standout of this result, cash from operating activities $1.9 billion. That's up almost $1.5 billion on the prior year. We saw energy markets cash conversion above 100% with strong credit and collections activity. The warmer winter weather driving lower working capital also. and we had much lower cash tax paid. You'll remember in year 24 we had a large balancing payment in that year. We received $911 million in fully-ranked dividends from ATL&G. The CAPEX expenditure reduced by $500 million as the Battery Build Program passed its peak. So adjusted free cash flow of $2.1 billion. which is up $867 million. So the underlying story here is two strong businesses converting those earnings to cash. Now to focus on the balance sheet. So strong operating cash flows and dividends from APL&G more than covered the CapEx program and shareholder dividends. Adjusted net debt at 30 June 26 of $4.85 billion increased slightly over the prior year. and that's once the battery tolling increases are included. Adjusted net debt to adjusted underlying EBITDA was 1.6 times. That's below our two to three times target range. Again, driven by strong cash performance. So just as a reminder, the metric now includes the franked credits attached to APL&G distribution. We think this better reflects the pre-tax nature of that metric and better aligns with our Moody's credit ratings. Over thin year 27 we expect to move into the lower end of the target range. This would be reflecting completion of the battery program and the remaining battery leases and the Kraken investment made in July and we will have lower LNG trading gains in thin year 27. The balance sheet settings remain prudent given market conditions. Overall the balance sheet is strong and flexible with capacity to continue to fund the portfolio through the transition. And finally, capital allocation. The board has determined a fully franked dividend of $0.30 per share. As Frank said, that brings Finyear 26 distributions to $0.60 fully franked. That's a yield of 5.6% before the franking benefit, and this represents 50% of adjusted free cash flow. It was an exceptionally strong cash year. If you look at the dividend payout average over thin year 24 to 26, it's more like 70% of adjusted free cash flow. And over this period, we've used 62% of our adjusted free cash flow has been directed to major growth projects, and that's predominantly that battery fleet, which is now generating earnings. The dividend is consistent with our policy of delivering sustainable distributions through the business cycle. So my reflection on the result is our consistency in delivering what we said we would, earnings at the upper end of guidance, battery program on time, on budget, and now earning and converting to cash, and a balance sheet that lets us invest through the transition while sustaining fully franked returns. I'll hand back to Frank to take us through the business.

Thanks very much Tony. Now turning to business performance and we're on slide 16 and in energy markets we have delivered on our short and medium term targets in 2026. On the left hand side the electricity gross profit continues to sit above the medium term target of $25 to $40 a megawatt hour. In 2027 it's expected to remain above the target range with the batteries coming online and that will be partially offset by lower wholesale prices flowing into tariffs. In 2028 we do expect a moderation of gross profit as lower forward prices flow through to tariffs. For gas earnings they're also above the medium term target of $3 to $4 a gigajoule. There were lower trading volumes in the 2026 financial year with the 35 petajoule GLNG contract ending just prior to it in May 2025 and in 2027 we do expect our oil JKM link supply costs to be lower with our current contract positions. And just a reminder, the Beach Otway contract is subject to price review, which hasn't yet concluded, but on conclusion is effective from July 2026. And then just lastly, the cost to serve target, as we said, in 2024 has been achieved between 100 to 150 million. And that also is achieved even including the two new acquisitions that were made this year. And we also were able to lower our bad and doubtful debt with improved collections through our automated credit decision engine. Turning to customer on the next slide, the growth momentum continues. We've added 243,000 customer accounts this year. That's both in organic and inorganic. The acquisitions of First Energy and Energy Locals added 135,000 of those accounts. We have a community energy services business which may otherwise known as Abetted Networks in the residential space and businesses at 484,000 customers and we've achieved a 46% compound annual growth in internet customers over the last three years. Our churn continues to be lowest in the market and we continued improvement in customer experience as measured by the Customer Happiness Index. We've introduced new propositions as distributed assets increase. We have increased the number of interactions that are now being fully digital and we continue to scale AI across our business and our virtual power plant once again grew to 1.6 gigawatts. Now just turning to what's happening in the market over the last 12 months, in particular what's happened with batteries, you'll see that grid scale batteries in the NEM have more than doubled in the last 12 months. and they're now able to meet about 25% of peak demand. At the same time, you can see there's greater than four times growth in behind-the-meter batteries in the last 12 months, and that's having an impact on the shape of residential grid demand. The role of batteries and gas work well together, with batteries being suited to managing those evening peaks and the short, sharp spikes. That means that we start our gas fleet less, that defers maintenance costs, and gas peakers continue to play an important role managing extreme and long duration volatility events. We build on that further on the next slide, which shows that batteries will survive most days, while gas peakers and hydro will firm the seasons. In the context of a market with the growing renewable energy, there'll be more variability, meaning there'll be both daily and seasonal periods of both over and under supply. so batteries will solve most days in summer and spring where we have an abundance of renewable energy however they cannot shift energy between seasons and then if you turn to winter and autumn the renewable output is less meaning batteries are more often depleted before the demand is met the long duration firming of gas peakers and hydro will be required to solve those seasonal swings and I just note that in winter we're going through now it's been very mild conditions and we've also had very high coal availability, the highest in the last five years. So Origin holds the battery and gas peaking portfolio that positions it well to manage both daily and seasonal variability in a changing energy market. Turning to APLNG, and some of this information was provided in the quarterly, but APLNG revenue has declined in line with expectations. We've had lower sales volumes and realised prices. As I stated earlier, the recent high oil prices will be realised in the 2027 financial year and costs have increased by 5% to $3 billion as we continue to drive increased investment in our well optimisation projects, development infrastructure and exploration program and they were partially upset by some lower power costs. We've stated before that the cash distribution was $911 million. Just worth noting that $335 million of those dividends related to the cash generated in the 2025 financial year. And based on about a week or so ago, 40% of APL&G's JCC all exposure for the next financial year, or the 27th financial year I should say, has been priced at $100 US a barrel and that's before any origin hedging. Turning to slide 21, APL&G has 2P reserves of 9,619 petajoules, 61% operated 2P reserves replaced in the financial year 26 and as you can see on the left-hand chart, greater than 50% of our reserves and resources extend beyond the existing export contracts and we also have further reserves growth potential through exploration success. On the right-hand side, you can see production of 668 petajoules for the year. The team have done a very good job delivering their program through the year and you can see that base optimisation, which we set out to achieve, has now improved well availability to 96%. We now have our work over industry to optimal levels and we've completed a number of infrastructure projects that have had benefits to de-bottleneck to enable that production. We drilled 82 operated wells during the year. We commissioned 92 wells and really to note that in 2027 financial year we'll be ramping up our drilling. Slide 22 just highlights the way we think about our production levers and the first three of those blocks really just do talk about more of that optimisation activity as we focus for the 2027 financial year. Probably just want to make note of the ramp-up of new well development. Our increased drilling that I just noted before will include new asset east fields, and just to note that it takes approximately two years for new wells to reach peak production. In relation to mid-term investment, we do continue to evaluate opportunities to unlock reserves in the asset west. Joint venture approval would be required for those, and that will be informed by both market and regulatory outlook. In terms of mid-term investment, we do also remain very focused on growing reserves and resources through exploration and appraisal opportunities, including the Troom trough. We're very excited by the Troom trough and APL&G holds a large tenure footprint across both operated and not operated holdings. And just to note that most of that is near existing gas infrastructure. Turning to Octopus Energy and you can really see that the Octopus brand and service just underpins impressive growth. The brand in the UK is a standout market leader as you can see in that top left and that's driving their continued growth in the UK market on the top right where it really is leading the market and has grown another 800,000 customers to have 26% market share. You can see that replicating now through to the non-UK markets where they now have 4.1 million customer accounts. And when we think about energy services, what they're doing there is building an ecosystem of assets and platform that enables them to meet all those customer needs and that really extends across scaling installations. It's an electric vehicle leasing fleet and they've grown their VPP to 3.2 gigawatts. The development of that business then links back into continuing to grow value and customers in the UK retail business and other markets, in the markets that are rapidly transitioning. On the next slide for UK Retail, I'll really just highlight how we and they think about the business. With the UK retail strength, and as Tony said earlier, they've reported their fourth consecutive year of profitability, and this year, They earn £39 per customer on that 7.8 million average customers and that's enabling them to invest in growth. It's funding customer growth that you can see on the dark colour on the right-hand bar chart in the non-UK markets. They've invested in smart retail tariffs in the UK and they've also then invested in their energy services business. Each of these businesses have a strong growth outlook. The brand and service drives customer growth in the UK. And when you think about the large addressable market they're now going for across non-UK markets, that represents another significant growth opportunity. And what we're seeing now is it's only firmed, in fact, over the last six months, is strong government and customer support for electrification and increased adoption of distributed assets. And in the UK, that's in particular electric vehicles. They are catalysts for ongoing growth growth in the energy services business. Now turning to the Kraken business on slide 25. I said earlier they've got 95 million contracted to customer accounts. That growth of 21 million includes the entry into the Saudi market through Saudi Energy Partnership that's added 10 million accounts and of that 95 million accounts, 52 million are live and what that means is that they're what's generating revenue. and that translates into the revenue growth you can see on the right-hand chart that's grown by 19% to £300 million. Clearly, they continue to get contract annual revenue growth and the pull-throughs of the P&L is really driven by that live revenue. And they're expanding products now. They're really working across now CNI markets, water, telecoms, flexibility and field services. So that continues to widen their aggressible markets. In terms of financial results for the Kraken in FY26, they certainly invested more heavily to accelerate customer migrations. That particularly plays out when you are going into new markets but also when you're accelerating migration of large accounts that they're bringing on live for a live revenue and so those costs around £64 million have been incurred ahead of the revenue and what we've done is highlight the EBITDA with and without those accelerated migration investment costs that you can see on the left-hand chart. There are a number of achievements in FY26. I'll just draw out a couple. They grew the contracted annual recurring revenue by 44%. and the average EBITDA margin since 23, even including all of that delivery investment, has been 35%. You can see then we've also highlighted what the underlying subscription gross margin is for that business, which is very strong as well. So I'll now go to guidance. So I'm now on slide 28. Energy markets EBITDA for the 2027 financial year is between $1.55 billion and $1.85 billion. The total CapEx you'll see is reduced since this financial year as we complete more of the batteries and that's between 450 and 650 million. We provided the APL&G guidance in our quarterly results but for completeness you can see the guidance on production is between 625 and 670 petajoules and the CapEx and OpEx guidance excluding purchases is between 3 and 3.3 billion. We've provided guidance here for both Octopus and Kraken. On Octopus, we've guided the UK retail EBITDA per customer, and that's a guidance of between £25 and £50 a customer. And I'll just make a couple of comments as to why we've chosen that. You would have seen on the earlier side that really Octopus Energy comprises a number of businesses. One, the ongoing operations and growth of the UK retail business. but then it's making choices as to how fast it invests in non-UK retail and energy services. And because they do drive a lot of that growth, through organic means that goes through the P&L. So we think it's more meaningful for you to understand the ongoing profitability for Yucca Retail EBITDA and they will continue to make decisions based on the way they want to grow those other businesses and as more of that information unfolds, we're happy to share that but we think this is a more meaningful way of understanding the profitability of the core business. And secondly, we've now provided guidance on CRAC and revenue which is growing. at greater than 20% is the guidance for FY27. And just to wrap up, continue to believe we have advantaged assets and capabilities for the energy transition. We've got strong cash flows and returns from energy markets and integrated gas. We've got global growth potential from two now independent businesses. Pleased with the balance sheet strength. We've declared stable dividends at a good yield and that continues to position us well to allocate capital to the right opportunities for shareholders over the coming years. So on that note, I will now open up the discussion for questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2 and if you're on a speakerphone, please pick up the handset to ask your question. The first question comes from Tom Allen from UBS. Please go ahead.

Good morning, Frank, Tony and the board of team. You've noted the strength of the balance sheet and free cash flow in this result. And FY27 group CapEx looks to be guided materially lower than market expectations. So considering this, the board appears to have erred on the side of conservatism in the final dividend, Fairfax 26. So given the strength of the balance sheet, the tailwinds in APLNG cash flows... coming through at least in the first half this year that you've called out. What are the main upside and downside drivers we should be focused on with respect to the board's discretion on dividends this year? Particularly, can you understand if there are key headwinds that the board's cautious of or whether there's scale growth that Origin wants to pursue?

Thanks, Tom. We've looked quite hard at the dividend this year. I think you'll see that the cash flow is very strong this year on much higher than 100% cash conversion out of energy markets. And really we wanted to, and we've always stated that we want to keep the dividend, you know, not swing the absolute cents per share around. So when we look at the sort of three-year average of that dividend, it is about 70% of just the free cash flow. It's about 80% of impact. And so just given where the cash flow was for the year, we know we'll probably end up with some of that working capital swing coming back into next year. We chose to leave the dividend where it is. I did highlight that we do expect with the sale of the CapEx and the lower LNG trading gains in the year 27 and into the year 28, that we expect to move into the lower range of our sort of target range. And just given where the environment is at the moment, we're probably preparing to be at the lower end of our target range.

Okay, thanks Tony. And then on the outlook for the Energy Master Divisions, you're noting likely moderation in electricity gross profit into FY28. as lower current futures prices, climate regulated pricing. So I'd estimate there's about 30% of why 28 DMO and VDO prices already factored in. Can you comment on how to frame the spread of outcomes for energy markets on a two-year view, like the key up drivers and potential down drivers?

Yeah, I think there's probably more like 40% priced into the DMO, but So, you know, you'll have a fair indication from the curves of what that number is and then an indication of where the curves are for the balance. You know, and the way to think about it is our sort of fixed energy supply costs. So that's really a raring and, you know, the renewables PPAs has been exposed to sort of that absolute price. We buy a lot of the cover for CNI from the market from swap contracts. I don't expect that to be... flowing through. So, you know, you could probably broadly use the best market sort of sales number times those sort of deltas on the forward curves to get a sort of indication of where that's heading. Yeah, there's still 60% to go and, you know, we're sort of looking at, you know, looking at the market and, you know, can obviously move around. You know, people are predicting maybe an El Nino over the summer. So, it's still a fair bit to run, but could use those numbers as an indication at the moment.

Okay, that's clear. And can you just comment on the RARing in particular? Do you expect to undertake the typical annual engine change out that you've done in the third quarter of the calendar year in years gone by? And now that the government are going to support the ongoing operation of Tomagos and Aldo, that's a big source of power demand in New South Wales that will now extend beyond December 28. There's still an uncertain timeline for the commissioning of Snowy 2.0. Do you seem to understand the potential for Araring to operate longer than the scheduled exit date of April 29?

Sure. So firstly, our plans aren't any different to the April 29. That remains the case today. I'll get Andrew to talk a little bit about Araring and then we can talk a little bit further about the market, because you're right to point out there's a few dynamics going on, including the announcement today. But yeah, that's worth reflecting on. So firstly, just to you, Ant.

Yeah, thanks, Tom. So, I mean, we've proved for a while that we can flex a raring pretty well from the 720 megawatt nameplate down to about 180 megawatts. And that's been the way of operating for a while. We've actually been having to do less of that recently with the batteries coming in and the mild weather that we've been talking about. We're not going to do any major maintenance, so the large turnarounds that we've done in the past that sort of were every five years or so, but we're still continuing to do all the maintenance you'd want us and you'd expect around to continue reliability through for the next few years. So nothing's really changed from that perspective.

Tom, you opened up on a broader question about demand growth and clearly there's a bit playing out. You can see recent announcements around the additionality or really driven by data centres and that flowing through over time. You've got the announcement today which is really an announcement for government around ongoing support for the Tomago. So clearly we think a bit about that demand growth and how we meet that over time and have to respond to that. We've got the ability to respond to the way we operate Araring today and then we have to think a bit about the decisions we make in terms of how we supply the portfolio going forward. But they all go into the mix, Tom. I don't know if you had anything else, Tony? No. That's really the way we think about it. You're right. There's likely to be electricity demand growth and therefore our job is to capture that and create value. Okay. Thanks, Tony and Andrew. Thanks, Tom.

Thank you. Your next question comes from Rob Coe from Morgan Stanley. Please go ahead.

Good morning. Congratulations on the result. Can I, I guess, just ask a question about Australian electricity retail? We've had, I guess, a number of regulatory proposals in Victoria. Inevitably, there's more requirements for customers on older offers. Is it still the case and your intention to maintain... video and DMO as a general ceiling on your customer book?

Yeah. G'day Rob. It's John here. We've got a broad spectrum of products and customers sitting across those different products and we will continue to have that. We may in fact have customers that achieve other types of benefits like for example higher solar feed-in tariffs that may actually sit above those tariffs. We look at that as we sort of think through all of our products. As you know, we also let customers know across each of the bills whether they could be on a better offer. And what we're trying to do over time is just continue to offer them value-add, multi-product services. So, yeah, don't think about that as an absolute ceiling, but it's absolutely a guide.

Thanks, Mr. Bristin. I guess the ACCC is going to be focused a lot more on this than something like 38% of top three customers were above DMO at their last review. So yeah, just wondering specifically if you're changing your settings against that backdrop.

Rob, we're always mindful about it is a competitive market and we continue to make sure we're passing through all the lower cost that we can, in particular as we lower the cost of the retail business. I don't think I can sort of add more, to be honest, around where regulation may go, other than to say that I think we're in a good position, being the lowest cost provider, having a great brand and continuing to offer good products.

We're doing something right with the customer growth. Moving to the Kraken, just wondering how we think about the Kraken Technologies kind of revenue in EBITDA. In the past, we've talked about kind of £6 per live sub. I think we've done £6.19 and Rule of 40. Are those, and I know those were only ever rules of thumb, but any extra colour you could provide on thinking about that?

I think those rules of thumb remain appropriate, Rob. What you can see now is just as they move into more growth and more migrations, you've got a bit of lumpiness as they implement those and they'll come in because you don't generate the revenue until you migrate the customers. And I'd really, that was the idea of just sort of trying to guide that last six months. But in terms of the contracted, you'd look at a couple of things. You look at contracted revenue growing, pull through and timing of live revenue will probably drive that. but the underlying margin and pricing for those customers I think still remains appropriate and so I don't think anything's shifted in terms of how they think about the business.

Okay, okay, that's super helpful. And then just within the Octopus Energy side, there's that energy services team and I think you, correct me if I'm wrong, I think you said they were kind of heading towards break-even. Yes. Should we be thinking that that's just a function of heat pump installs or I'm sure it's more complicated than that but just to draw out the underlying trend?

They made quite a bit of improvement this year and we'd expect further improvement. It's both scale and operational efficiency and it's both those levers. They've certainly achieved benefits as more smart meters and installation of assets has occurred over time and that's pulled through unit economics benefits. but also they've really worked hard on the operating model in an installation business and they made a lot of improvements there. So it's going to be through both of those and pleasingly you continue to see good support for that electrification agenda and the growth of those distributed assets. So those market signals if anything over time have only strengthened but they're the two levers that have really got to go into it. It's You've got to do both to get the improvements they want, and that's what they're working on. Great.

Thank you so much.

Thank you. Your next question comes from Ian Miles from Macquarie. Please go ahead.

Hi, guys. Thanks for the questions. Look... Just on the energy market side, can we just talk a little bit more about the gas side of the business? You did really well this period, but we're seeing gas pricing falling. The government reservation scheme potentially pushes the market into oversupply. Are you resilient to that, or do you face pressures on the gas side as well?

I wonder, Tony, you talk a little bit about gas outlook.

I'll sort of give you a bit of a sort of energy market, I guess, gas outlook. We've sort of been to 27 versus our 26 result. We'd expect it to be maybe broadly the same, sort of maybe just sort of slightly lower. In terms of, you know, margin, we're finding that there's sort of maybe a slight... rotation out of say domestic gas use into power but it's very low at the moment. What we're tending to find is we're just getting lower volumes really through power generation probably at the moment that have not much of a margin impact in the energy markets gas book because we don't put a lot of margin into the gas book from power sales. So at the moment that's proving to be pretty resilient. Maybe I'll hand it to Frank for the reservation.

Yeah, just on the gas market review, we've been supportive for a well-designed one and that really means that it needs to operate in a fashion that gives certainty over a bit longer time rather than an annual discretion. So that's where we really are focused and it should be calibrated to demand. which has got a lot of independent data, as you'd know. And through IAR, AEMO, everyone, they sort of know everything about the gas market. So those would be good features that we think, if it's to achieve the objective of modest modest oversupply. So we're really focused on that and equitable contribution between players, but really that ability to actually not be subject to an annual discretion that creates uncertainty because that's not going to drive certainty for investment, but it also won't drive certainty for contracting by the large customers. So that's where we're focused on and we'll just continue to advocate for it.

Do you see this risk to the downside there in terms of the profitability out of that business, given the way the government's pushing it?

Well, gas prices, you know, effectively gas prices, and Tony can talk to that, they've been pretty modest over the last year in the domestic market, so reasonably resilient, but we should add some colour to that.

Yeah, I mean, I think it's sort of a fine balance, I think, for the government to put supply into the domestic market and then get the right sort of gas price. If you think about the sort of level of coal that's coming out of the market and sort of the price of renewables, it's not – the last thing you do is want to incentivise baseload running of gas because that price sort of differential heads in that direction. I think it is sort of finely balanced. You know, the gas book in the short term is a bit resilient to it. Ultimately, the energy markets gas book does benefit from long-term fixed pricing. So, you know, that does have a benefit from sort of slightly higher pricing. But then a lot of it, you know, a reasonable amount of it is margin-driven. So I think there's still a lot to play in gas reservation and... how, I guess, Indigenous supply can be also incentivised to come into the market over the medium and long term.

I'll just add one. And obviously getting the designer, that's right. And that's an important outcome for a well-functioning market. So whilst it remains that outstanding, that's the key look through as to when we get the design for that, which will be out in the coming weeks and months.

Okay. They should raise another interesting issue. With a roaring, is there a decision date or is there a point where there's no going back, that you reach a stage in this life cycle that you can't actually extend the life?

I think there will always be a date because you'll be making forward-looking decisions. We haven't reached that date. and just further the comment, a question earlier, I think it came from Tom or someone else that asked about, are you doing large overhauls and when do you get to that point? So we've indicated we're not going to do one this year. We're continuing to maintain, but we have to assess that in an ongoing way and to make sure that we, there will need to be forward looking. And so I think there will be a time in advance of April 29 where we'll have to make a call. But at the moment, you know, The plan really is the one we've articulated previously. We'll continue to maintain no large overhauls, but we'll have to assess that through time. But yes, that would be, I won't put precise timing on it, but it's certainly going to be in advance. You think about that in respect of both capital decisions and probably also people decisions and everything. We give certainty to it, and I think that's worked well to date, but we have to continue to think about things in advance. We just haven't hit that point yet.

Is it better if it's a 12-month sort of lead time, or is it even longer than that?

It might be a little bit longer than that. It might be a little bit longer than that. I don't have a precise time, but I probably have, I mean, I don't know if I was guessing, 18 months, you know what I mean? Okay. I don't, I mean, I wouldn't say 18 months in the model or anything, you know what I mean? But essentially, if you're looking for the fact that if you're doing anything with a large asset and you're forward planning, If you're thinking about 12 months and you wanted to make a decision, you just wouldn't want to put that on critical path if you had to do it. So I think my sort of overarching message would be about 18 months.

Okay. And you've made a big promotion. Origin is very much skewed towards the volatility side of the market because you've got lots of flexible assets and the likes. we've probably seen most of the pain in the cap market occurring out there. This is sort of intriguing. What's been the implications to the profitability of your gas plants? And probably this is more forward-looking, the profitability of your gas plants and the batteries as we're seeing sort of caps come down, energy arms come down, FCAS going towards nothing. What's been the impacts for the business?

Good questions and there's a number of drivers in the marketing and particularly the cap market that interplays with batteries but more broadly in the way we set our portfolio so I might maybe Tony just make a couple of comments about the cap market and batteries and then we can open up on that.

I think as Frank said before the market's come through a pretty benign winter and that combined with low gas prices over that period as well as you know, batteries coming in has really seen that cap curve trade down. We sort of look at that cap curve and it doesn't really impact, as you know, in year 27 because it's mostly, you know, locked in in Paris and et cetera and some of it locked in into 28. But, you know, forward looking, ultimately that, that sort of cap price feeds its way into the DMO and customer tariffs, and that's really where you sort of see the impact in the peakers and the batteries. Once you're in the year, it's really about operating those to protect your retail load. The one thing I would say about the cap market is, you know, there's still a long way to go in the transition. You know, we've still got 20 gigawatts of coal to take out. We've got 30-plus gigawatts of demand coming in. don't expect winter has disappeared out of Australia in its entirety. And so there's still a lot to play out. And we sort of look at maybe an $8 or $10 cap price over the long term and say we'd be a pretty strong buyer at that price if we could lock in term. I just don't see the market not having volatility in the future given the amount of variability that's going to come into it.

Okay. That's great. Thank you. Thanks, Ian.

Thank you. Your next question comes from Amit Kanwatia from Jefferies. Please go ahead.

Morning. Morning, Tim. Just a question. I think, I mean, you've said the lower wholesale price, wholesale cost, and that's being feed. fitting into the retail tariffs and into the customer pricing, but then just a question around the retail competition in general and then how are you seeing those retail margins to be behaving?

Yeah, g'day, it's John here. So we did see more competition in 26 on industry level. I was pleased with the fact that our spread to market churn actually improved, so we still remain the lowest churn in the market. As we think about margin, we think about a few things. I've got confidence in the way which we acquire customers and we try to acquire the most valuable segments. That's a differentiation through products and trying to look at multi-products and how we get the second fuel as well as the broadband to close that margin. Our pricing strategy and then, as I mentioned earlier to Rod, just how we think about pricing different products that may have the different segments. And then finally, there's the focus on ongoing efficiencies across the business and how do we reduce those costs to serve over time. As you think about retail margins going forward, yeah, I think we're in a good position to, you know, hopefully maintain and grow those margins as we go through here.

Right, thanks. Makes sense. And, I mean, just thinking about the retail, the other part of the business, Octopus Retail, and I think, I mean, you've highlighted profitability, Frank, in the UK retail parts, and then I think you've grown international retail. You've got a million accounts in a couple of markets. Maybe if you can provide an update on those non-UK international markets and how are you thinking about the profitability into those markets to be able to deliver something that you're kind of seeing in the UK market?

Yeah, so there are really four markets they're focused on. Germany, Italy, France and Spain. They have focused greater growth in both Italy and Germany and that's why you've seen that they've really seen opportunities in those markets to grow both scale and also improve profitability. A couple of things that are going on. They've moved, they are really, I think 80% of their switches in the Italian market are now coming through their own channels, not through comparison websites and they've now moved to doing the same in the German markets. So they're probably the two focus ones. So they are getting to scale in those markets and the indicators that we're seeing there to date show that they're tracking like the UK but they are still at earlier stages and they haven't really participated in any inorganic consolidation in those markets and they've just preferred to continue to grow them organically. They really haven't focused the same amount of effort into the French market to be clear. and they certainly are operating the Spanish market. I think there's several hundred thousand customers there and they've got some good growth recently. But we will continue to give signals as to that. It's certainly improving over time. They have to actually achieve that with scale over time and that's obviously they need to continue to penetrate into a broader customer base that they operate with in each of those respective markets. Probably the signals that you would look at probably be Italy and Germany, given the scale of where they're at right now. They're the ones that are clearly scaling. But we'll continue to provide indicators as to how they progress over time because it's an ongoing opportunity that they move through.

And then if I think about crack and business, and you're highlighting 40% kind of rule of thumb to be broadly intact, but I think the margins over the last few years seems to be going down in 26. The margin is around 24%. How are you thinking in terms of the medium term to be getting to those kind of historical margins, that 35-40%?

Well, yeah, they've just gone through... I mean, as they've set up and they're now really starting to scale into new markets, you know, and they're moving into new markets and executing a lot of migrations simultaneously, they've just got quite a bit of build that's going on and that's... We're trying to give an indication to that, but that build and timing and lumpiness of it is really setting what's happened over the last couple of years. But in terms of the underlying pricing margin, subscription margin... We're feeling pretty confident about that, but that proves a bit challenging. That last year or so, the reason being is that they just really had front-end weighted as they've gone into new markets simultaneously and executed that. So nothing's really changing from our view overall, but we know that we'll have to continue to help you understand that, and that's what we're endeavouring to do, to see you can sort of look through what's the right way to think about this business longer term.

Okay, thank you.

Thank you. Your next question comes from Nick Burns from Jarden, Australia. Please go ahead.

Hi, everyone, and thanks for taking my questions. First one's just on growth topics. Stepping down again in FY27, you called out the economics on the Echo Delta look challenging at the moment. Just wondering what's next for Origin in terms of incremental growth topics. Where do you expect to deploy capital and growing the business from FY28, or do you need to invest at all? Are you comfortable with holding off a new investment until we see an improvement in broader energy market conditions? Thanks.

Yeah, thanks, Nick. I mean, we are always making assessments about a market, and you would not think of any particular year. You're actually looking through to seeing where the opportunity lies and where the market presents and that's what we continue to do. Even if you look in the last month or so, we've got announcements about additionality for data centres as it's becoming a gross driver of electricity demand and even today there's an announcement around ongoing growth in renewable demand. likely to be as a result of the announcement regarding Tonigo. So we're going to still continue to see underlying drivers. What sits behind that is we just have to make sure that we continue to remain disciplined around it and we're continuing to focus on bringing Bianco Delta but we're being very clear about where we can get that cost and how we return those assets, how we get a return on those developments. So we continue to look at opportunities across the chain. You'll see we've done and smaller bolt-on activity that John and the team have continued to do and we continue to look at other wholesale market opportunities. But we're not, you know, we feel like we've got a good portfolio but we have to continue to participate in what we see as the long-term trend. So we'll continue to be active about it and that's figures in our thinking and I wouldn't think anything specifically but you do want to have balance sheet capacity that can both distribute to shareholders and invest and we're going through a period where we feel like we've committed the right amount of batteries right now and then we're continuing to focus on the other wave of opportunities. You can see we made an investment in July into Kraken as well. So we've got a range of opportunities across the value chain that we continue to explore. Got it. Thanks for that.

and take this on ATL&G. Your production guide for FY27 I guess at the midpoint went to lower output versus 26 and you've outlined plans to increase investment there but it will take time to see the benefits of that flowing through to production. Just wondering about you know if we look ahead of through FY28 do you think the investment investment you're stepping up in 27 will be sufficient to maybe maintain output at similar levels in 28. And then just more of a higher question back to I guess the question Ian asked around the domestic cash reservation scheme and implications for APL&G. What's the desire to continue to invest here when really the incremental molecules are getting out of the ground of primarily going into the domestic market? has got enough gas for LNG. How is this LNG weighing up that need or desire to invest more right now given uncertainty around what's being proposed? Thanks.

Yeah, sure. I'll get a leader to answer the first question and then I'll come back and give you some comments regarding joint venture and gas market review and other aspects.

Yeah, thanks very much. we will continue to see decline across our fields. That's our natural field decline, and it has meant that we have needed to increase the investments that we're making. So what you have seen for FY27, lower production and also an increase in the investment that we're making in drilling. We'd expect going forward that we'll need to continue to invest in our optimisation activities about the same level that we have been investing to date. we'd expect that the drilling investments would hold at about the levels that we've got for 27. What I would say though is there are mid-term opportunities. So we do have the opportunity to unlock some of the lower cost gas in Reedy Creek. That would be through an expansion of the Reedy Creek facilities that currently we've got additional gas. We don't have additional facilities in that field. but that would be subject to what's happening in the market outlook and the regulatory outlook and will be a call that ATLG Joint Venture will need to make.

And probably just later just add this, so the decline rate does flatten through the work that's planned and then, so it doesn't, so to give a sense for that because I think that's what... Yeah, that's correct.

So in the last probably 18 months, you've been looking at a decline rate of about 1.5 PJs per quarter. we're expecting that over this financial year that will flatten a bit to about one to one and a half PJs per quarter. And then we'd expect in FY28 we'd be more at around one PJ per quarter in terms of the decline rate.

And then what Alita highlighted, Nick, was that one of the investments before us right now is the facilities that would be to support and the drilling to support Reedy Creek. You know, there's a lot of reserves The joint venture is just pretty rational about that. Whilst you've got gas market reviews out there, they really would like to understand the market they're investing in but just to continue to be a rational investor. So the appetite will be there provided they just understand the market settings. That's really the main thing and it's right in the midst of that right now so that will play into it and so will the broader market. Conoco has continued and Sinopec continue to be very constructive joint venture partners. We've spent money into this joint venture over time, but right now I think there's a lot swinging on the gas market reviews. So just need to understand that and get the confidence from that.

That's great. Thanks for those answers. Just one final one for me. Just on the cost of service savings, you've achieved your target. So I was wondering if there's any plans for further cost savings to help offset inflationary impacts in FY27?

Yeah, I mean, we absolutely continue to focus on where we can reduce the sort of activity for customers and increase self-service. One of the key aspects of that is investment in AI. As we think about 27, though, we have the full year impact of First Energy and Energy Local, so we'll absorb that and we'll migrate those customers onto Kraken and get the efficiencies from that. That will be an additional cost that comes with the 135,000 customers. We're also going to reallocate some of the costs associated with the VPP from the future energy segment into the retail business and the costs associated with the data incident. We're working hard to offset those. I think what we've got there is that cost to serve per customer should be 20 to 27. But underneath that, there's a lot of activity going in terms of AI and other efficiencies.

I just have one thing to that is the retail acquisitions will migrate, as Don said, over time. Our cost to serve is probably broadly, I'd say, probably half.

what their cost to serve is.

So it just takes us time to migrate that and get that benefit. But we definitely see value in acquiring more customers and migrating them onto our platform.

Yeah, and obviously just we're pleased that we're through that transformation. You know, the teams are continuing to focus on that continuous improvement every day and that will continue to provide opportunities for us going forward.

Thanks, Frank.

Thanks, Nick.

Thank you. Your next question comes from Gordon Ramsey from Morgan Financial. Please go ahead.

Sorry, that's RBC Capital Markets. Frank and Tony, thanks very much for the presentation today. Just on Kraken, and I'm not asking you for an exact date, but I just want to get my head around what's required to be in a position to IPO it or spin it off. I mean, obviously, the legal separation is complete. And I guess where I'm coming from, is this purely market-driven right now, or are there additional factors at play in terms of maturing the business within Kraken or key aspects of that business?

Oh, I think there's – look, that was obviously a key step. You can see the set-up, independent management team, a team focused on all of the aspects that would be associated with listing, including US GAAP, all of the reporting requirements. They're all underway. They have been for some time, but that's key. They've just got to continue to deliver on their growth and then the board will make a call. But there is work underway, Gordon, as you would know, to prepare a business for IPO. That continues and just to be ready and then there will be a decision based on market at the right time. But yeah, there's work underway, but that's in train, and you would expect them to be delivering against that, and they've got an experienced team that have been through this before that are now focused on that.

That's still pretty vague, Frank. Is it like a six-month, 12-month, 18-month? Yeah.

I think that will be a decision for the board. There's been no committed timeframe. In terms of it being ready, I would expect that it would be ready over that type of timeframe as to when we make a call. I think it will be dependent on when the board, there's no fixed timeframe committed to by the board. But if you're asking it for it to be ready to go for it, I would expect over the next 12 months it would be ready and then we would make a call. And in the meantime... It's got to continue to focus on growing customer accounts, growing into new markets, and it's got to deliver those things as well. But there's no final decision by the board, but you can clearly see we've separated the business. We've raised equity in it. It has a different shareholder base, and everyone will make a decision at the right time.

Excellent. Well, thank you. And just one more for me. I'm really interested in your view on how batteries and gas are working at the moment and whether – you know, we're looking at this as a, or you are looking at this as a temporary, you know, benign kind of market reaction, or is there actually a long-term structural change here where batteries will increasingly displace gas in the marketplace?

That's a good question. I'm like, do you want to give a bit of a view on the whole summer?

Yeah, so I think as Frank highlighted, I think in the summer where you've got plentiful renewable output, particularly with solar, then batteries will do that daily shifting of supply, if I can call it that. And so less need to run, as Frank highlighted in that chart, gas in the summer. Where we do see it differently is the winter. And we have come through, you know, I think two sort of, there's two or three things in the market that we've just seen this winter that I don't, think necessarily hold going forward is one is, you know, you expect the weather to mean revert at some stage. We went through a particularly warm summer. Gas storage was high. Gas prices were low. So that's the second thing. You know, gas was quite plentiful. And then the third thing is you had very high coal availability. And, you know, when we look at the future, there'll be less coal. It gets older. So it's less, you know, it has less availability. We do see the gas market at some stage sort of tightening. We obviously see the gas reservation policy to play in there. And we see the weather mean reverting. So we do see gas having to play a role in those longer duration as renewables come on. But that's just something we haven't seen this winter.

Thank you, Troy.

Thank you. Your next question comes from Tom Wellington from Citigroup. Please go ahead.

Hi friends on the team, thanks for the call. I just wanted to ask you a question on Yanko Delta and noting that you've described the project as being increasingly challenged even with this support. Can you just give us a bit more colour as to what these key commercial hurdles are and clarify that you're still working towards that second half calendar year 26 FID decision date? More broadly, we all know Yanko Delta is a tier one wind resource and it will go a long way in replacing generation capacity once the roaring does come out. I mean, from my view, the market does seem to implicitly be pricing in coal for longer. However, if we do assume that we're working towards that April 2029, a roaring closure date, is it the case that CIS support needs to step up or is it a case that customers really need to reset expectations and we see a re-rate before the swaps and caps. Thank you.

Yeah, thanks Tom. So firstly, a couple of opening remarks. I'll get Andrew to add to this. We agree with you it's a Tier 1 project. The market is going to need more wind energy to be built. and therefore we continue to focus on bringing it to a final investment decision. My comments previously are that the cost of building those assets has risen and you've got very low wholesale prices now. So clearly we have to work through that and that makes that challenging for new build economics right now. We've also got segments of the market that are going to need to bring new renewable energy on it, including data centres. So there's also that aspect associated with it. when I'll get Andrew to talk about that because clearly I get Andrew to talk about Yanko Delta itself because we are very focused on getting its economics as attractive as it possibly can be because we know the market's going to need it and that's our focus right now.

Yeah I'll just jump in there. So I mean we're actually pretty pleased with the progress that Yanko is making from just a pure project hitting milestones perspective but as we've talked about you know there's some cost challenges that are emerging that make it challenging even with CIS support. And so I don't think, you know, we will take FID when we get to a point that it makes sense and it's economic and we can allocate capital to it. What that means is we've got to work on costs, we've got to find opportunities to lower that cost. We've talked about that we'll be using and desire to use third-party capital and so we'll need to, you know, identify and secure a capital partner for that asset as well and that'll take the time it takes. I think back to Araring, as you said, the system does need wind. For us though, based on the April 29 date, I mean, Yanko wouldn't be in place by that time anyway and so we have a portfolio which is flexible enough with the assets that we have and the contracts and market positions we have to manage Araring coming out at that time. Great, thanks for asking that.

Thank you. The next question comes from Cameron Needham from Bank of America. Please go ahead.

Yeah, morning all. Thank you for the presentation. I think most of the key questions have been asked, so just one question from me. You've highlighted the JCC hedge position in FY27. I'm just keen to ask what level of commodity price exposure are you comfortable running over the medium term? more broadly, is there any temptation to change hedging policy going forward, just given the impact that you realised or expect to realise in FY27? Thanks.

Yeah, thanks, Cameron. Yeah, so we put those hedges in basically when we saw the JCC price trend up, at least initially. The thinking there was that... you know, our outlook, particularly at the time, pre the Middle East crisis, was that both the gas and the oil markets looked oversupplied from our sort of macroeconomic view. And so the opportunity to lock in some hedging at higher prices and protect us from that oversupply was what we looked at. It wasn't necessary in this case, balance sheet driven, given our balance sheet was so strong. And I think in hindsight, obviously would have rather been exposed to those prices. So look, I think we sort of see the oil market and APL&G, our exposure to APL&G in that market as a market where we can hedge and firm up some cash flows through time to help manage the balance sheet when it's perhaps a little tighter, but we're not in that position at the moment. So Looking forward, I'd say from here, we'll have a much lower hedge position at least once those hedges roll off in 27.

Great. I appreciate the cover. Thanks very much, all.

Thanks, Cameron.

Thank you. There are no further questions at this time. I'll now hand back to Frank Calabria for any closing remarks.

Thanks very much for your time, everyone. We look forward to meeting investors and analysts over the coming days, and we know everyone's got a busy day today, so we'll leave it there. Thanks very much.