4. Other Required Disclosures
4.1. Changes in state of affairs
In the opinion of the Directors there were no significant changes in the state of affairs of the AGL consolidated entity that occurred during the financial year other than those included in this Directors’ Report.
4.2. Proceedings on behalf of the company
No person has applied under Section 237 of the Corporations Act for leave of the Court to bring proceedings on behalf of AGL or intervene in any proceedings to which AGL is a party for the purpose of taking responsibility on behalf of AGL for all or any part of those proceedings. AGL was not a party to any such proceedings during the year.
4.3. Commercial in confidence information
Further information about likely developments in the operations of AGL and its consolidated entity and the expected results of those operations in the future has been included in this Directors’ Report except to the extent disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity.
The type of information not disclosed includes commercial in confidence information such as detailed operational plans and strategies that would provide third parties with a commercial advantage.
4.4. Non-audit services
Non-audit services have been provided during the year by the external auditor, Deloitte Touche Tohmatsu Australia. Disclosure of the details of these services can be found in Note 25 of the Financial Report 2020.
The Board has a formal policy on the provision of auditing and related services. Specifically, the external auditor is precluded from providing any services that might threaten its independence or conflict with its assurance and compliance role. Semi-annual reports on the provision of auditing and related services are provided to the Board through the Audit & Risk Management Committee. The Directors are satisfied that the provision of $95,000 of other accounting advice and services by the external auditor is compatible with the general standard of independence for auditors.
The policy and procedures in place, and the review by the Audit & Risk Management Committee, enable the Directors to conclude that non-audit services provided did not compromise the external auditor’s independence requirements of the Corporations Act. There is also in place an agreed rotation policy for the senior auditor of Deloitte Touche Tohmatsu Australia. The external auditor annually provides a letter to the Company Secretary on its independence within the meaning of relevant legislation and professional standards. No officers of AGL were partners or directors of Deloitte Touche Tohmatsu Australia during this or prior periods.
AGL is an entity to which ASIC Corporations Instrument 2016/191 applies and, in accordance with that Instrument, amounts in the Financial Report and this Directors’ Report have been rounded to the nearest million dollars, unless otherwise stated.
4.6. Auditor’s Independence Declaration
A copy of the external auditor’s declaration under Section 307C of the Corporations Act in relation to the audit for the financial year is attached to the AGL Financial Report 2020.
4.7. Indemnification and insurance of officers
AGL’s constitution indemnifies, to the extent permitted by law, officers of the consolidated entity when acting in their capacity in respect of:
- liability to third parties (other than related entities) when acting in good faith; and
- costs and expenses of successfully defending legal proceedings and ancillary matters.
The Directors named earlier in this Report and the Company Secretaries, have the benefit of the indemnity, together with any other person concerned in or who takes part in the management of the consolidated entity.
During the year, AGL paid premiums in respect of contracts insuring all Directors of AGL as listed earlier, all Directors of related bodies corporate of AGL, secretaries and other officers of the consolidated entity against liabilities incurred in their capacity as Director or Officer, as the case may be, of the consolidated entity.
The contract prohibits disclosure of the nature of the liabilities covered and the amount of premium.
4.8. Subsequent events
Subsequent to the end of the financial year and as described in Note 1 of the Financial Report, effective 1 July 2020, AGL formed the Integrated Energy operating segment. Integrated Energy will be reported as a separate segment in future financial reports.
Apart from the matters identified in the financial statements or notes thereto, there has not been any matter or circumstance that has arisen since 30 June 2020 that has significantly affected or may significantly affect the operations of AGL, the results of those operations, or the state of affairs of AGL in the future.
4.9. Non-IFRS Financial Information
The Operating & Financial Review attached to and forming part of this Directors’ Report includes a number of non-International Financial Reporting Standards (IFRS) financial measures. AGL management uses these non-IFRS financial measures to assess the performance of the business and make decisions on the allocation of resources.
Principal among these non-IFRS financial measures is Underlying Profit. This measure is Statutory Profit/(Loss) adjusted for:
- significant items (which are material items of revenue or expense that are unrelated to the underlying performance of the business); and
- changes in the fair value of financial instruments recognised in the statement of profit or loss (to remove the volatility caused by mismatches in valuing financial instruments and the underlying asset differently).
AGL believes that Underlying Profit provides a better understanding of its financial performance than Statutory Profit/(Loss) and allows for a more relevant comparison of financial performance between financial periods.
Underlying Profit is presented with reference to ASIC Regulatory Guide 230 “Disclosing non-IFRS financial information”, issued in December 2011. AGL’s policy for reporting Underlying Profit is consistent with this guidance. The Directors have had the consistency of the application of the policy reviewed by the external auditor of AGL.
4.10. Corporate governance
A copy of AGL’s Corporate Governance Statement can be found on the AGL website at agl.com.au/CorporateGovernance.
4.11. Environmental regulation
AGL’s businesses are subject to a range of environmental laws and regulations as well as project and site-specific environmental permits and approvals issued at both the Federal and State Government levels.
During the financial year ended 30 June 2020, a penalty infringement notice was issued to AGL Macquarie Pty Limited (AGLM) in relation to an event that occurred in late February 2019 at the Bayswater Power Station where a spill occurred from a pipeline, known as the ‘lime softening plant pipeline'. The event resulted in approximately 25,000m3 of lime sludge travelling approximately 500m down an unnamed drainage line. This event became the subject of regulatory action by the NSW Environment Protection Authority (EPA) under relevant environmental legislation, with a penalty infringement notice being issued to AGLM for an alleged failure to comply with a licence condition involving the pollution of waters.
An event occurred on 3 July 2019, which resulted in an official caution being issued to AGLM on 21 April 2020. The event, which occurred at the Bayswater Power Station, involved oil leaking into the power station cooling water system. The official caution was issued for an alleged failure to comply with a licence condition that required plant and equipment to be maintained and operated in a proper and efficient condition and manner, respectively.
On 19 February 2020, AGLM reported an event to the EPA where dust from the Liddell Ash Dam was observed leaving the boundary of the premises. On 3 July 2020, the EPA issued a penalty infringement notice to AGLM for an alleged failure to comply with a licence condition which requires AGLM to minimise dust emitting from the premises.
On 16 January 2019, AGLM suspended coal ash sales from the Bayswater and Liddell power stations as a precautionary measure after a number of test results identified elevated levels of metals, including chromium and copper, in the ash that could exceed limits set by the EPA in the Coal Ash Order 2014 (Coal Ash Order). AGL notified the EPA, SafeWork and NSW Health and the four companies in the Upper Hunter that buy and use the coal ash, predominantly in engineering applications for concrete based products. At the time, AGL sought advice from an external expert who confirmed through a comprehensive human health risk assessment that, based on AGL’s coal ash sample test results, the use of the coal ash for all known uses did not pose a risk to human health and would not be considered to be of concern to the environment. In June 2019 AGLM resumed supply of fly ash supply from site, with the resumption of cenosphere supply commencing in July 2019. On 17 December 2019, AGLM entered into an enforceable undertaking with the EPA in relation to this matter. The enforceable undertaking includes requirements that AGLM pay $100,000 towards the delivery of two environmental projects, undertake training for employees, contractors and industry on Coal Ash Order awareness and training for employees on general environmental compliance. Three of the six undertakings have been completed as at the date of this report. The remaining undertakings, which were originally due to be completed by the end of 2020, are now required to be completed by 30 June 2021. These dates were extended by the EPA due to operational interruptions resulting from COVID-19. AGLM is on track to meet its commitments within the required timeframe.
In June 2017, the EPA commenced proceedings against AGL Upstream Investments Pty Limited (AGL Upstream), alleging that AGL Upstream had contravened a condition of its EPL 12003. The alleged offence related to a flood event that occurred in early June 2016 and impacted the Camden Gas Project. There was no allegation that environmental harm occurred. AGL pleaded not guilty to the charge. In March 2020, a decision was made by the EPA to withdraw the charge and the proceedings are now complete.
Approval of Directors’ Report
This Directors’ Report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Board this 13th day of August 2020.