1 Segment reporting

Reportable segments

The Group operated four reportable segments during FY2018, which are aligned with the commodities that are extracted and marketed and reflect the structure used by the Group’s management to assess the performance of the Group.


Reportable segment		Principal activities

Petroleum		Exploration, development and production of oil and gas

Copper		Mining of copper, silver, lead, zinc, molybdenum, uranium and gold

Iron Ore		Mining of iron ore

Coal		Mining of metallurgical coal and energy coal

Unless otherwise noted, the segment reporting information excludes Discontinued operations, being the Petroleum Onshore US operations comprising the Eagle Ford, Haynesville, Permian and Fayetteville oil and gas assets.

Group and unallocated items includes functions and other unallocated operations, including Potash, Nickel West and consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues from unallocated operations. Exploration and technology activities are recognised within relevant segments.


Year ended 30 June 2018 US$M	Petroleum			Copper			Iron Ore			Coal			Group and unallocated items/ eliminations ⁽⁴⁾			Group total
Revenue		5,333			13,287			14,797			8,889			1,332			43,638
Inter-segment revenue		75			–			13			–			(88	)		–

Total revenue		5,408			13,287			14,810			8,889			1,244			43,638

Underlying EBITDA		3,341			6,522			8,930			4,397			(7	)		23,183

Depreciation and amortisation ⁽¹⁾		(1,719	)		(1,920	)		(1,721	)		(686	)		(242	)		(6,288	)
Impairment losses ⁽²⁾		(76	)		(213	)		(14	)		(29	)		(1	)		(333	)

Underlying EBIT		1,546			4,389			7,195			3,682			(250	)		16,562

Exceptional items ⁽³⁾		–			–			(539	)		–			(27	)		(566	)
Net finance costs																	(1,245	)

Profit before taxation																	14,751

Capital expenditure (cash basis)		656			2,428			1,074			409			412			4,979

Profit/(loss) from equity accounted investments, related impairments and expenses		(4	)		467			(509	)		192			1			147

Investments accounted for using the equity method		249			1,335			–			883			6			2,473

Total assets		12,938			26,824			22,208			12,257			37,766			111,993

Total liabilities		4,886			3,145			3,888			2,404			37,000			51,323


Year ended 30 June 2017 US$M	Petroleum			Copper			Iron Ore			Coal			Group and unallocated items/ eliminations ⁽⁴⁾			Group total
Revenue		4,639			8,335			14,606			7,578			977			36,135
Inter-segment revenue		83			–			18			–			(101	)		–

Total revenue		4,722			8,335			14,624			7,578			876			36,135

Underlying EBITDA		3,117			3,545			9,077			3,784			(173	)		19,350

Depreciation and amortisation ⁽¹⁾		(1,648	)		(1,525	)		(1,828	)		(719	)		(252	)		(5,972	)
Impairment losses ⁽²⁾		(102	)		(14	)		(52	)		(15	)		(5	)		(188	)

Underlying EBIT		1,367			2,006			7,197			3,050			(430	)		13,190

Exceptional items ⁽³⁾		–			(546	)		(203	)		164			(51	)		(636	)
Net finance costs																	(1,417	)

Profit before taxation																	11,137

Capital expenditure (cash basis)		917			1,484			805			246			245			3,697

Profit/(loss) from equity accounted investments, related impairments and expenses		(3	)		295			(172	)		152			–			272

Investments accounted for using the equity method		264			1,306			–			873			5			2,448

Total assets		13,726			26,743			22,781			11,996			41,760			117,006

Total liabilities		4,715			2,643			3,606			1,860			41,456			54,280


Year ended 30 June 2016 US$M	Petroleum			Copper			Iron Ore			Coal			Group and unallocated items/ eliminations ⁽⁴⁾			Group total
Revenue		4,431			8,249			10,516			4,518			853			28,567
Inter-segment revenue		118			–			22			–			(140	)

Total revenue		4,549			8,249			10,538			4,518			713			28,567

Underlying EBITDA		3,038			2,619			5,599			635			(171	)		11,720

Depreciation and amortisation ⁽¹⁾		(1,696	)		(1,560	)		(1,817	)		(890	)		(247	)		(6,210	)
Impairment losses ⁽²⁾		(24	)		(17	)		(42	)		(94	)		(9	)		(186	)

Underlying EBIT		1,318			1,042			3,740			(349	)		(427	)		5,324

Exceptional items ⁽³⁾		–			–			(2,388	)		–			(132	)		(2,520	)
Net finance costs																	(1,013	)

Loss before taxation																	1,791

Capital expenditure (cash basis)		1,278			2,786			1,061			298			284			5,707

Profit/(loss) from equity accounted investments, related impairments and expenses		(7	)		155			(2,244	)		(9	)		1			(2,104	)

Investments accounted for using the equity method		280			1,388			–			901			6			2,575

Total assets		14,120			26,143			24,330			12,754			41,606			118,953

Total liabilities		4,264			2,299			3,789			2,103			46,427			58,882

⁽¹⁾	Depreciation and amortisation excludes exceptional items of US$ nil (FY2017: US$212 million; FY2016: US$ nil).

⁽²⁾	Impairment losses excludes exceptional items of US$ nil (FY2017: US$5 million; FY2016: US$ nil).

⁽³⁾	Exceptional items reported in Group and unallocated include Samarco dam failure costs of US$(27) million (FY2017: US$(51) million; FY2016: US$(62) million). Refer to note 2 ‘Exceptional items’ for further information.

⁽⁴⁾	Total assets and total liabilities include balances for the years ended 30 June 2018, 2017 and 2016 relating to Onshore US assets.

Geographical information


	Revenue by location of customer
	2018		2017		2016
	US$M		US$M		US$M
Australia		2,304		2,037		1,846
Europe		1,886		1,641		1,141
China		22,935		18,875		13,177
Japan		4,709		3,086		2,941
India		2,484		1,938		1,478
South Korea		2,639		2,296		1,919
Rest of Asia		2,620		3,157		2,623
North America		2,715		2,233		2,355
South America		1,106		681		899
Rest of world		240		191		188

		43,638		36,135		28,567


	Non-current assets by location of assets
	2018		2017		2016
	US$M		US$M		US$M
Australia		45,157		46,949		49,465
North America ⁽¹⁾		8,246		22,860		23,943
South America ⁽²⁾		18,267		18,899		18,614
Rest of world ⁽²⁾		154		173		389
Unallocated assets ⁽³⁾		5,039		7,069		8,828

		76,863		95,950		101,239

⁽¹⁾	Balances for the years ended 30 June 2017 and 2016 include non-current assets relating to Onshore US assets.

⁽²⁾	Prior periods have been restated to reflect the location of equity accounted investments operations rather than the location of the holding company.

⁽³⁾	Unallocated assets comprise deferred tax assets and other financial assets.

Underlying EBITDA

Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, Discontinued operations and any exceptional items. Underlying EBITDA includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs, depreciation, amortisation and impairments and taxation expense.

Underlying EBITDA is the key alternative performance measure that management uses internally to assess the performance of the Group’s segments and make decisions on the allocation of resources and, in the Group’s view, is more relevant to capital intensive industries with long-life assets.

We exclude exceptional items from Underlying EBITDA in order to enhance the comparability of such measures from period-to-period and provide our investors with further clarity in order to assess the underlying performance of our operations. Management monitors exceptional items separately. Refer to note 2 ‘Exceptional items’ for additional detail.

Segment assets and liabilities

Total segment assets and liabilities of reportable segments represents operating assets and operating liabilities, including the carrying amount of equity accounted investments and predominantly excludes cash balances, loans to associates, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity method represents the balance of the Group’s investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities or deferred tax balances of the equity accounted investment.

Recognition and measurement

Revenue

Revenue is measured at the fair value of the consideration received or receivable.

Sale of products

Revenue is recognised when the risk and rewards of ownership of the goods have passed to the buyer based on agreed delivery terms and it can be measured reliably. Depending on customer terms this can be based on issuance of a bill of lading or when delivery is completed as per the agreement with the customer.

Provisionally priced sales

Revenue on provisionally priced sales is initially recognised at the estimated fair value of consideration receivable with reference to the relevant forward and/or contractual price and the determined mineral or hydrocarbon specifications. Subsequently, provisionally priced sales are marked to market at each reporting period up until when final pricing and settlement is confirmed with the fair value adjustment recognised in revenue in the period identified. Refer to note 20 ‘Financial risk management’ for details of provisionally priced sales open at reporting period-end. The period between provisional pricing and final invoicing is typically between 60 and 120 days.