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1. Segment information

Operating Segments

AGL reports segment information on the same basis as the internal management reporting structure. The operating segments reflect the manner in which products are sold, whether retail or wholesale, and the nature of the services provided.

AGL views the business as four interrelated segments collectively servicing our customers’ needs. AGL’s segments are:

  • Customer Markets comprises the Consumer and Large Business customer portfolios and is responsible for the retailing of electricity, gas, solar and energy efficiency products and services to residential, small and large business customers. Customer Markets sources its energy from Wholesale Markets at a transfer price based on methodologies that reflect the prevailing wholesale market conditions and other energy costs in each state. Customer Markets also includes product innovation, sales, marketing, brand and operations.
  • Wholesale Markets comprises Wholesale Electricity, Wholesale Gas and Eco Markets and is responsible for managing the price risk associated with procuring electricity and gas for AGL’s customers and for managing AGL’s obligations in relation to renewable energy schemes. Wholesale Markets also controls the dispatch of AGL’s owned and contracted generation assets and associated portfolio of energy hedging products.
  • Group Operations comprises AGL’s power generation portfolio and other key sites and operating facilities.
  • Investments comprises AGL’s interests in the ActewAGL Retail Partnership, Powering Australian Renewables Fund, Digital Energy Exchange, Advanced Microgrid Solutions Inc, Energy Impact Partners’ Fund, Activate Capital Partners, Solar Analytics Pty Limited, Sunverge Energy Inc and Ecobee Inc.

In the segment financial results, the ‘Other’ category consists of various Corporate activities. These are not considered to be reportable segments.

Segment financial results

The measurement of segment results is in line with the basis of information presented to the Board of Directors for internal management reporting purposes. The performance of each segment is measured based on their Underlying earnings before interest and tax (Underlying EBIT) contribution to AGL. Certain items of income and expense are excluded from the segment results to show a measure of underlying performance. These items include changes in fair value of financial instruments and significant items.

AGL operates as an integrated business and uses a portfolio approach to manage the operations and assets to drive value and efficiency. AASB 8 Operating Segments requires AGL to report segment information on the same basis as the internal management structure. As a result, the Customer Markets and Wholesale Markets segments report the revenue and margin associated with satisfying the gas and electricity requirements of AGL’s wholesale consumer and business customer portfolio. In contrast, the Group Operations segment reports the majority of expenses associated with these operations and is therefore a cost centre.

For the purposes of reviewing the carrying values of AGL’s assets, the segments impute a revenue transfer between Customer Markets, Wholesale Markets and Group Operations. Revenues are derived to approximate prices similar to transactions with third parties.

2019

Customer
Markets
$m

Wholesale
Markets
$m

Group
Operations
$m

Investments
$m

Other
$m

Total
$m

Revenue

Total segment revenue

7,554

9,100

188

1

-

16,843

Inter-segment revenue

(14)

(3,539)

(44)

-

-

(3,597)

External revenue

7,540

5,561

144

1

-

13,246

Underlying earnings before interest, tax, depreciation and amortisation (Underlying EBITDA)

295

2,778

(556)

33

(265)

2,285

Depreciation and amortisation

(101)

(21)

(480)

-

(23)

(625)

Underlying EBIT

194

2,757

(1,036)

33

(288)

1,660

Net financing costs

(193)

Underlying profit before tax

1,467

Underlying income tax expense

(427)

Underlying profit after tax

1,040

Segment assets

2,576

2,951

7,560

239

266

13,592

Segment liabilities

543

884

887

-

181

2,495

Other segment information

Share of profits of associates and joint ventures

-

-

1

32

-

33

Investments in associates and joint ventures

-

-

4

146

-

150

Additions to non-current assets

134

71

688

60

104

1,057

Other non-cash expenses

(120)

-

-

-

(6)

(126)

Restated
20181

Customer
Markets
$m

Wholesale
Markets
$m

Group
Operations
$m

Investments
$m

Other
$m

Total
$m

Revenue

Total segment revenue

7,746

8,624

234

-

1

16,605

Inter-segment revenue

(50)

(3,680)

(59)

-

-

(3,789)

External revenue

7,696

4,944

175

-

1

12,816

Underlying earnings before interest, tax, depreciation and amortisation (Underlying EBITDA)

304

2,675

(495)

33

(281)

2,236

Depreciation and amortisation

(102)

(10)

(424)

-

(32)

(568)

Underlying EBIT

202

2,665

(919)

33

(313)

1,668

Net financing costs

(224)

Underlying profit before tax

1,444

Underlying income tax expense

(426)

Underlying profit after tax

1,018

Segment assets

2,690

2,599

7,444

162

208

13,103

Segment liabilities

575

862

823

-

202

2,462

Other segment information

Share of profits of associates and joint ventures

-

-

1

38

-

39

Investments in associates and joint ventures

-

-

2

98

-

100

Additions to non-current assets

163

17

504

77

99

860

Other non-cash expenses

(94)

-

-

-

(6)

(100)

  1. 1 Comparatives have been restated for the adoption of AASB 9 Financial Instruments and AASB 16 Leases. Refer to Note 38(c).

Segment revenue reconciliation to the Consolidated Statement of Profit or Loss

Reconciliation of segment revenue to total revenue is as follows:

2019
$m

2018
$m

Segment revenue for reportable segments

16,843

16,604

Elimination of inter-segment revenue

(3,597)

(3,789)

Revenue for reportable segments

13,246

12,815

Other

-

1

Total revenue

13,246

12,816

Revenue from major products and services

The following is an analysis of AGL’s revenue from its major products and services:

2019
$m

2018
$m

Electricity

6,029

6,063

Generation sales to pool

4,469

3,901

Gas

2,346

2,379

Rendering of services

206

158

Other revenue

196

315

Total revenue

13,246

12,816

Segment Underlying EBIT reconciliation to the Consolidated Statement of Profit or Loss

Reconciliation of segment Underlying EBIT to profit before tax is as follows:

2019
$m

Restated
2018
$m1

Underlying EBIT for reportable segments

1,948

1,981

Other

(288)

(313)

1,660

1,668

Amounts excluded from underlying results:

- (loss)/gain in fair value of financial instruments

(198)

803

- significant items2

10

(3)

Finance income included in Underlying EBIT

-

(4)

Finance income

10

10

Finance costs

(203)

(230)

Profit before tax

1,279

2,244

  1. 1 Comparatives have been restated for the adoption of AASB 9 Financial Instruments and AASB 16 Leases. Refer to Note 38(c).
  2. 2 Further details are contained in the Operating & Financial Review attached to and forming part of the Directors’ Report.

Segment assets reconciliation to the Consolidated Statement of Financial Position

Reconciliation of segment assets to total assets is as follows:

2019
$m

Restated
2018
$m1

Segment assets for reportable segments

13,326

12,895

Other

266

208

13,592

13,103

Cash and cash equivalents

115

463

Current tax assets

89

147

Deferred tax assets

261

280

Derivative financial instruments

764

640

Total assets

14,821

14,633

  1. 1 Comparatives have been restated for the adoption of AASB 9 Financial Instruments and AASB 16 Leases. Refer to Note 38(c).

Segment liabilities reconciliation to the Consolidated Statement of Financial Position

Reconciliation of segment liabilities to total liabilities is as follows:

2019
$m

Restated
2018
$m1

Segment liabilities for reportable segments

2,314

2,260

Other

181

202

2,495

2,462

Borrowings

2,850

2,963

Current tax liabilities

27

81

Deferred tax liabilities

97

-

Derivative financial instruments

715

615

Deferred consideration

199

211

Total liabilities

6,383

6,332

  1. 1 Comparatives have been restated for the adoption of AASB 9 Financial Instruments and AASB 16 Leases. Refer to Note 38(c).

Geographical information

AGL principally operates in one geographical area being Australia. All non-current assets and total external revenue from customers is attributed to Australia.

Information about major customers

No single customer amounts to 10 percent or more of AGL’s total external revenue (2018: none).

ACCOUNTING POLICY

Segment reporting

An operating segment is a component of AGL that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with other components of AGL. Operating segments are identified on the basis of internal reports about components of AGL that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The chief operating decision maker has been identified as the Board of Directors.

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