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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 responsible for the retailing of electricity, gas, solar and energy efficiency products and services to residential, small and large business customers, and the retailing of telecommunications. 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.
  • 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, 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.

Effective 1 July 2020, AGL formed the Integrated Energy operating segment. Integrated Energy reflects the consolidation of the previous Wholesale Markets and Group Operations operating segments, adjusted for any intra-segment transactions. For the purposes of the year ended 30 June 2020, Wholesale Markets and Group Operations are reported separately.

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.

2020

Customer Markets
$m

Wholesale Markets
$m1

Group Operations
$m1

Investments
$m

Other
$m

Total
$m

Revenue

Total segment revenue

7,717

7,775

183

-

-

15,675

Inter-segment revenue

(32)

(3,437)

(46)

-

-

(3,515)

External revenue

7,685

4,338

137

-

-

12,160

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

318

2,630

(554)

18

(342)

2,070

Depreciation and amortisation

(132)

(17)

(533)

-

(71)

(753)

Underlying EBIT

186

2,613

(1,087)

18

(413)

1,317

Net financing costs

(179)

Underlying profit before tax

1,138

Underlying income tax expense

(322)

Underlying profit after tax

816

Segment assets

2,495

2,322

7,469

253

532

13,071

Segment liabilities

575

664

890

-

182

2,311

Other segment information

Share of profits of associates and joint ventures

-

-

-

17

-

17

Investments in associates and joint ventures

-

-

4

131

-

135

Additions to non-current assets

92

43

541

-

70

746

Other non-cash expenses

(119)

-

-

-

(9)

(128)

  1. 1 Effective 1 July 2020, AGL formed the Integrated Energy operating segment. Integrated Energy reflects the consolidation of Wholesale Markets and Group Operations, adjusted for any intra-segment transactions. Had the new operating model been effective at 30 June 2020, the Integrated Energy segment would have reported External revenue of $4,475 million (2019: $5,705 million), Underlying EBITDA of $2,076 million (2019: $2,222 million) and Underlying EBIT of $1,526 million (2019: $1,721 million).

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)

Segment revenue reconciliation to the Consolidated Statement of Profit or Loss

Reconciliation of segment revenue to total revenue is as follows:

2020
$m

2019
$m

Segment revenue for reportable segments

15,675

16,843

Elimination of inter-segment revenue

(3,515)

(3,597)

Revenue for reportable segments

12,160

13,246

Total revenue

12,160

13,246

Revenue from major products and services

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

2020
$m

2019
$m

Electricity

6,136

6,029

Generation sales to pool

3,276

4,469

Gas

2,247

2,346

Rendering of services

290

206

Other revenue

211

196

Total revenue

12,160

13,246

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

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

2020
$m

2019
$m

Underlying EBIT for reportable segments

1,730

1,948

Other

(413)

(288)

1,317

1,660

Amounts excluded from underlying results:

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

308

(198)

- significant items

(21)

10

Finance income

4

10

Finance costs

(183)

(203)

Profit before tax

1,425

1,279

Segment assets reconciliation to the Consolidated Statement of Financial Position

Reconciliation of segment assets to total assets is as follows:

2020
$m

2019
$m

Segment assets for reportable segments

12,539

13,326

Other

532

266

13,071

13,592

Cash and cash equivalents

141

115

Current tax assets

99

89

Deferred tax assets

252

261

Derivative financial instruments

1,147

764

Total assets

14,710

14,821

Segment liabilities reconciliation to the Consolidated Statement of Financial Position

Reconciliation of segment liabilities to total liabilities is as follows:

2020
$m

2019
$m

Segment liabilities for reportable segments

2,129

2,314

Other

182

181

2,311

2,495

Borrowings

3,108

2,850

Current tax liabilities

25

27

Deferred tax liabilities

273

97

Derivative financial instruments

731

715

Deferred consideration

187

199

Total liabilities

6,635

6,383

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 (2019: 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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