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Note 1. Basis Of Preparation Of The Concise Financial Report
Note 2. Australian Equivalents to International Financial Reporting Standards (AIFRS)
Note 7. Movements in Ordinary Share Capital
NOTE 1
BASIS OF PREPARATION OF THE CONCISE FINANCIAL REPORT
The concise financial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Accounting Standard AASB 1039 "Concise Financial Reports".
The concise financial report relates to the consolidated entity incorporating the assets and liabilities of all entities controlled by BlueScope Steel Limited as at 30 June 2005 and the results of all controlled entities for the year then ended. The accounting policies adopted are consistent with those of the previous year.
ROUNDING OF AMOUNTS
The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in financial reports. Amounts in the concise financial report have been rounded off in accordance with that Class Order to the nearest hundred thousand dollars.
Note 2
Australian equivalents to International Financial Reporting Standards (AIFRS)
The Australian Accounting Standards Board (AASB) is adopting Australian equivalents to International Financial Reporting Standards (AIFRS) for application to reporting periods beginning on or after 1 January 2005. The adoption of AIFRS will be first reflected in the consolidated entity's financial statements for the half-year ending 31 December 2005 and the year ending 30 June 2006.
Entities complying with AIFRS for the first time are required to restate their comparative financial statements to reflect the application of AIFRS. The majority of AIFRS transition adjustments will be made retrospectively against opening retained earnings at 1 July 2004.
BlueScope Steel Limited is well advanced in transitioning its accounting policies, systems and financial reporting from current Australian accounting standards.
Set out below are the key areas where accounting policies are expected to change on adoption of AIFRS and our best estimate of the quantitative impact on the changes on total equity as at the date of transition and 30 June 2005 and on net profit for the year ended 30 June 2005. The amounts disclosed are the company's best estimates as at the date of preparing the year-end financial report. These figures could change due to potential amendments to, and interpretations of, current AIFRS by the standard setters together with ongoing work undertaken by the company's AIFRS project team.
(a) RECONCILIATION OF EQUITY AS PRESENTED UNDER AGAAP TO THAT UNDER AIFRS
 |
|
Consolidated | |
|
Notes | 30 Jun 2005 | 1 Jul 2004 |
| $M | $M | ||
| Total equity under AGAAP | |
3,500.5 | 3,193.6 |
| Adjustments to retained earnings (net of tax) | |||
| Defined benefit superannuation | (i) | (193.2) | (130.5) |
| Impairment of assets | (ii) | (125.7) | (71.6) |
| Income tax methodology | (iii) | 86.3 | 80.6 |
| Foreign currency translation | (iv) | (12.6) | - |
| Business combinations | (v) | 5.0 | - |
| Share based payments | (vi) | (9.0) | (2.6) |
| Equity accounting | (vii) | (0.1) | 0.7 |
| Opening exchange fluctuation reserve | (viii) | (77.5) | (77.5) |
| Adjustments to other reserves (net of tax) | |||
| Share based payments | (vi) | 9.0 | 2.6 |
| Opening exchange fluctuation reserve | (viii) | 77.5 | 77.5 |
| Total equity under AIFRS | 3,260.2 | 3,072.8 | |
| Estimated change $m | (240.3) | (120.8) | |
| Estimated change % | (6.9%) | (3.8%) | |
(b) RECONCILIATION OF NET PROFIT AS PRESENTED UNDER AGAAP TO THAT UNDER AIFRS
| Consolidated | ||
| Notes | Year ended 30 Jun 2005 |
|
| $M | ||
| Net profit as reported under AGAAP | 1,354.1 | |
| Defined benefit superannuation | (i) | 19.8 |
| Impairment of assets | (ii) | (77.2) |
| Foreign currency translation | (iv) | 22.0 |
| Business combinations | (v) | 4.9 |
| Share based payments | (vi) | (6.4) |
| Equity accounting | (vii) | (0.9) |
| Net profit before tax under AIFRS | 1,316.3 | |
| Income tax (expense)/benefit - AGAAP | (347.0) | |
| Income tax (expense)/benefit - AIFRS Adjustment | 12.7 | |
| Net profit after tax under AIFRS | 982.0 | |
| Net profit after tax under AGAAP | 1,007.1 | |
| Estimated change to net profit after tax $m | (25.1) | |
| Estimated change to net profit after tax % | (2.5%) |
(i) Defined benefit superannuation
Under AASB 119 Employee Benefits, employer sponsors are required to recognise the net surplus or deficit in employer sponsored defined benefit superannuation funds as an asset or liability. This asset or liability is measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial losses (less unrecognised actuarial gains) less the fair value of the superannuation fund's assets at that date. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
The requirements of AASB 119 change the group's current accounting policy whereby a liability is only recognised where a legal obligation exists and the defined benefit superannuation expense matches the company contribution. Under AASB 119, the defined benefit superannuation expense is actuarially determined and includes current service cost, interest cost, and plan expenses offset by employee contributions and the expected return on fund assets. This expense is grossed up for any contributions tax payable (Australia 15%, New Zealand 33%).
At 30 June 2005, an actuarially determined liability is to be recorded for the deficit in the New Zealand defined benefit superannuation fund and a small asset for the Australian defined benefit superannuation fund. Due to existing legal obligations arising from defined benefit funds in the Coated and Building Products North America Group a liability for the defined benefit shortfall was taken up under AGAAP. However, an additional liability is required to be recognised due to the requirements of AASB 119 to discount the accrued benefit liability using the corporate bond rate (or equivalent) which is lower than the expected return on the fund's assets.
Actuarial valuations have been undertaken for each defined benefit superannuation fund in the Group. A breakdown of the AASB 119 adjustment for the surplus and shortfalls of the Group's funds, including the associated tax adjustment, is as follows:
| Consolidated | ||
| 30 June 2005 | 1 Jul 2004 | |
| $M | $M | |
| Australia entities | 0.5 | (14.3) |
| New Zealand Steel | (168.7) | (116.6) |
| Coated and Building Products North America | (40.2) | (6.3) |
| Deferred tax asset / liability | 15.2 | 6.7 |
| Net adjustment | (193.2) | (130.5) |
The increase in the liability from July 2004 is primarily due to a reduction in corporate bond interest rates in New Zealand and North America.
The AIFRS balance sheet asset and liability to be recognised under AASB 119 for the Australian and New Zealand defined benefit superannuation fund positions differs from the information disclosed in Note 38 to the full financial report due to:
AASB 119 requiring the fund surplus or deficit to be grossed up for employer contributions tax (Australia 15%, New Zealand 33%); and
the accrued benefits liability is to be discounted using a corporate bond rate with terms to maturity that match, as closely as possible, the estimated future cash outflows.
Under current AGAAP, the accrued benefits liability is not grossed up for employer contribution tax and is discounted using the expected return on the fund assets, which is typically a higher rate than the corporate bond rate.
In December 2004, AASB 119 was reissued to provide options in accounting for actuarial gains and losses by allowing either a direct adjustment against retained earnings, a progressive profit and loss 'corridor' approach or immediate recognition in the profit and loss. The company intends to early adopt the revised standard to enable actuarial gains and losses to be taken directly to retained earnings. The post tax amount to be taken to retained earnings as an actuarial loss at 30 June 2005 is $80.2M (pre tax $92.9M).
The company will recognise a $19.8M lower employment cost in the year ended June 2005 under AIFRS as current company contributions are in excess of the actuarial determined expense. This benefit is split between Hot Rolled Products $6.7M, Coated and Building Products Australia $5.1M, Corporate and Group $1.2M and New Zealand and Pacific Steel Products $6.8M.
AASB 136 Impairment of Assets determines the recoverable amount of cash generating units by assessing the higher of fair value less costs to sell and value in use. In determining value in use, future cash flows are discounted using a risk adjusted pre-tax discount rate. Cash generating units (CGUs) are described as the smallest group of assets that generate cash flows from continuing use that are largely independent.
BlueScope Steel currently assesses the recoverable value of income generating units (IGUs) using future cash flows discounted at a pre-tax companywide discount rate. IGUs are defined as a group of assets working together to generate cash flows.
The CGU approach requires certain assets to be assessed for recoverability on a standalone basis rather than being grouped into an IGU with the discount rate including a country risk premium. Both of these differences increase the possibility of certain BlueScope Steel assets being impaired.
The company has defined its CGUs, reassessed its impairment testing policy and tested all assets for impairment as at transition date and at 30 June 2005. This assessment has necessitated a $102.3M ($71.6M net of tax) impairment write-down for the Packaging Products CGU at 1 July 2004 and an additional $82.3M ($57.6M net of tax) writedown at 30 June 2005. The Packaging Products operational assets will have been written down to nil value at 30 June 2005 under AIFRS.
As a result of the 1 July 2004 write-down, depreciation expense will be $5.1M lower for the year ended 30 June 2005.
Under AGAAP, Packaging Products is grouped with other Australian steel manufacturing assets (Port Kembla Steelworks, Springhill and Western Port operations), which was treated as an IGU, and therefore Packaging Products was not tested for impairment on a standalone basis. Packaging Products is impaired on a standalone basis primarily as a result of low growth and margin compression since the facility was upgraded in the 1990's and further impaired at 30 June 2005 due to increases in unit costs following the withdrawal from export tinplate. The company continues to operate these assets and is investigating ways of improving their profitability.
The reduction in property plant and equipment will be attributable to the Coated and Building Products Australia reporting segment.
AASB 112 Income Taxes requires all tax assets to be recognised if they are probable of realisation. Probable is defined as more likely than not. Under current Australian accounting standards income tax losses can only recognised if they are considered to be virtually certain of realisation. The company has reassessed its accounting policy for the recognition of tax assets in accordance with AASB 112 and recognised an additional tax benefit of $87.5M in the opening AIFRS balance sheet at 1 July 2004 (30 June 2005 $86.3M). As a result of booking this additional benefit, the company expects to commence recognising a tax expense on New Zealand Steel's profit during the second half of FY 2006.
A further change arising from implementing AASB 112 is the requirement to use the balance sheet liability method and to tax effect fair value adjustments arising from business combinations (refer point (v)). The balance sheet approach focuses on the taxation of transactions and other events that affect amounts recognised in either the Balance Sheet or a tax-based balance sheet.
As tax assets are not allocated to reporting segments in accordance with AASB 114 Segment Reporting this adjustment will not impact our individual reporting segments.
(iv) Foreign currency translation
AASB 121 Effect of Changes in Foreign Exchange Rates requires exchange gains and losses arising from loan balances, including intercompany balances, to remain in the consolidated income statement unless they form part of a net investment in a foreign operation. If these tests are met, the exchange fluctuation is able to be reported in a separate component of equity and would be realised upon disposal of the foreign operation.
The company's foreign currency loans, including intercompany loans, not denominated in the functional currency of the business do not currently meet the tests required under AASB 121 for a hedge of a net investment of a foreign operation resulting in exchange fluctuations on loan balances being taken to the income statement. Under AGAAP these items have been recorded against the exchange fluctuation reserve.
Management has undertaken a thorough review of the future impact on the income statement from foreign currency exposures arising from the changes identified above. Future foreign currency exposure is to be managed through balancing foreign exchange debt with foreign exchange intercompany balances and no material earnings volatility is expected.
The profit and loss impact arising from exchange rate fluctuations on loan balances is to be allocated to the Corporate and Group reporting segment.
Under AASB 3 Business Combinations, goodwill will no longer be amortised but instead be subject to annual impairment testing. This has resulted in a change in the group's accounting policy that currently amortises goodwill over its useful life not exceeding 20 years. Impairment testing as at 1 July 2004 and 30 June 2005 have confirmed no impairment of goodwill.
The company has elected to apply the exemption under AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards to not restate pre 1 July 2004 business combinations in accordance with AASB 3. AASB 3 applies more stringent tests in identifying acquired intangible assets than current Australian accounting standards. This will result in a lower goodwill number being recorded on post 1 July 2004 acquisitions. AASB 136 Intangible Assets requires intangible assets that do not have indefinite lives to be amortised over their useful life.
Consistent with AASB 112 Income Taxes, business combinations post 1 July 2004 are required to incorporate the tax effect of fair value adjustments. This impacts the amount of goodwill recognised.
Under AASB 2 Share-based Payment, the company is required to expense the fair value of share rights and awards granted to employees as remuneration over the expected vesting period. This standard applies to all share rights and awards issued after 7 November 2002 which have not vested as at 1 January 2005. BlueScope Steel issues share rights to senior executives in the organisation as part of its remuneration strategy which focuses on performance, accountability and aligning performance-related reward with the value delivered to shareholders.
AASB 2 requires the fair value of the share rights granted to executives in September 2003 and September 2004, and any subsequent grants, to be expensed over the expected vesting period with a corresponding increase in an equity reserve. No tax deduction is allowed for the amount expensed. The fair values and other details on share rights granted by BlueScope Steel are disclosed in the Remuneration Report.
A minor component of the September 2003 and September 2004 Employee Share Ownership Program (ESOP) requires BlueScope Steel shares to be issued to employees in certain countries three years from the grant date. The fair value of the future share issue is required to be expensed over the remaining vesting period with a corresponding increase in an equity reserve. Future share ownership programs will require the fair value granted to be expensed to the profit and loss over the vesting period. Under current Australian accounting standards, the shares would have been issued at nil cost and no expense recognised.
Under AASB 128 Investments in Associates, where an investor holds 20% or more of the voting power of the investee, it is presumed that the investor has significant influence, unless it can be clearly demonstrated that this is not the case. The company holds some minor investments in New Zealand Steel whereby equity accounting was not applied with revenue being brought to account when dividends were received.
(viii) Exchange fluctuation reserve
AASB 121 The Effects of Changes In Foreign Exchange Rates introduces a new requirement where upon disposal of a foreign operation the cumulative translation difference for that operation must be taken to the income statement as part of the gain or loss on disposal. Under current Australian Accounting Standards, the cumulative translation difference pertaining to the operation disposed would be transferred directly to retained earnings without impacting the income statement.
In accordance with AASB 1, the company has elected to restate the exchange fluctuation reserve to nil on transition to AIFRS. In adopting this exemption the 1 July 2004 opening exchange fluctuation reserve balance will be transferred directly to opening retained earnings.
(c) RESTATED AIFRS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005
No material impacts are expected to the cash flows presented under AGAAP on adoption of AIFRS.
(d) OTHER IMPACTS FROM ADOPTION OF AIFRS
(i) Hedge accounting
AASB 139 Financial Instruments: Recognition and Measurement states that in order to achieve a qualifying hedge, the company is required to meet the following criteria:
- Identify the type of hedge;
- Identify the hedged item or transaction;
- Identify the nature of the risk being hedged;
- Identify the hedging instrument;
- Demonstrate that the hedge has and will continue to be effective; and
- Document the hedging relationship.
The accounting principles outlined in AASB 139 do not require retrospective application as management have elected to apply the exemption in AASB 1 and will therefore apply from 1 July 2005. The project team is in the process of determining the impact that adopting the standard would have on the financial statements of the Group. The impact of this standard is not expected to have a material impact on the financial statements of the Group given the low level of hedging activity undertaken.
(ii) Sale of receivables program
AASB 139 Financial Instruments: Recognition and Measurement only allows financial assets to be derecognised where an entity transfers substantially all the risks and rewards of ownership of the financial asset. The Group's sale of receivables program does not currently meet the derecognition requirements. As a result, the program will be recorded separately as a liability rather than an offset against receivables and the expense of running the program will be shown as an interest cost rather than an operating expense.
As a result of the exemption to be applied in AASB 1, these requirements will be implemented from 1 July 2005. If the principles were applied to the 30 June 2005 balance sheet, current receivables would have increased by $140 million with a corresponding increase in current interest bearing liabilties.
(iii) Non-operating software
AASB 138 Intangible Assets requires computer software that is not an integral part of computer hardware or is not integral to the operation of a piece of machinery to be classified as an intangible asset. BlueScope Steel currently discloses all capitalised computer software as property, plant and equipment.
A reclassification of non-operating software will reduce the net tangible assets of the company with a corresponding increase in intangible assets. The 30 June 2005 net book value of software to be classified as an intangible asset is approximately $75 million.
Note 3
Segment information
BUSINESS SEGMENTS
The consolidated entity has five business reporting segments: Hot Rolled Products, Coated and Building Products Australia, New Zealand and Pacific Steel Products (formerly New Zealand Steel), Coated and Building Products Asia and Coated and Building Products North America.
Hot Rolled Products
Hot Rolled Products includes the Port Kembla Steelworks, a steel making operation with an annual production capacity of approximately 5.1 million tonnes of crude steel. The Port Kembla Steelworks manufactures and distributes slab, hot rolled coil and plate. Slab and hot rolled coil is supplied to Coated and Building Products Australia for further processing, as well as to other domestic and export customers.
The segment also includes a 50% interest in the North Star BlueScope Steel joint venture, a steel mini-mill in the United States, and a 47.5% shareholding in Castrip LLC.
New Zealand and Pacific Steel Products (formerly New Zealand Steel)
The New Zealand Steel operation at Glenbrook, New Zealand, produces a full range of flat steel products for both domestic and export markets. It has an annual production capacity of 0.6 million tonnes.
This segment also includes facilities in New Caledonia, Fiji and Vanuatu which manufacture and distribute the Lysaght range of products.
Coated and Building Products Australia
Coated and Building Products Australia markets a range of products and material solutions to the Australian building and construction industry and is also a key supplier to the Australian automotive sector, major white goods manufacturers and general manufacturers. Coated and Building Products Australia is a leader in metallic coating and painting technologies supplying a wide range of branded products such as COLORBOND® pre-painted steel, ZINCALUME® zinc/aluminium alloy-coated steel and the LYSAGHT® range of building products. The Coated and Building Products business comprises two main metallic coating production facilities at Springhill in New South Wales and Western Port in Victoria together with a network of manufacturing and distribution facilities throughout Australia.
The segment also includes Packaging Products, an operation producing tinplate in Australia which is used by the packaging industry in applications for food, beverages, paint, oil and other steel packaging.
Coated and Building Products Asia
Coated and Building Products Asia manufactures and distributes a range of metallic coated and painted steel products primarily to the building and construction industry and to some sections of the manufacturing industry across Asia.
On 27 April 2004, BlueScope Steel Limited acquired the Butler Manufacturing Company, which includes BlueScope Butler China, a business which designs, manufacturers and markets pre-engineered steel building systems and components across China. In addition, Vistawall has operations in China which manufacture and sell extruded aluminium and glass products for the building and construction sector.
Coated and Building Products North America
On 27 April 2004, BlueScope Steel Limited acquired Butler Manufacturing Company, a leading designer and manufacturer of pre-engineered steel building systems for the non-residential market with operations in North America and China. This segment includes the North American operations and has two main divisions: the North American Buildings Group, which designs, manufactures and markets pre-engineered steel buildings and component systems; and Vistawall, which manufactures and sells extruded aluminium and glass products for the building and construction sector.
Corporate and Group
Corporate and Group relates primarily to logistics and corporate activities
Intersegment pricing and segment accounting policies
Intersegment sales are made on a commercial arms-length basis. Segment accounting policies are the same as the consolidated entity's policies outlined in the full financial report.
note 3 segment information
Primary reporting - business segments
| Hot Rolled Products(1) | New Zealand Steel and Pacific Steel Products | Coated and Building Products Australia | Coated and Building Products Asia |
Coated and Building Products North America | Corporate and Group | Consolidated | |
| 2005
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
| Sales to external customers | 2,112.7 | 615.5 | 2,984.9 | 999.3 | 1,132.1 | 96.2 | 7,940.7 |
| Intersegment sales | 1,826.8 | 140.9 | 205.4 | 52.0 | 2.3 | 263.7 | 2,491.1 |
| Intersegment elimination | (2,491.1) | ||||||
| Total sales revenue | 3,939.5 | 756.4 | 3,190.3 | 1,051.3 | 1,134.4 | 359.9 | 7,940.7 |
| Other revenue | 1.9 | 9.0 | 2.0 | 3.1 | 22.5 | 5.4 | 43.9 |
| Intersegment elimination | (3.0) | ||||||
| Total other revenue | 1.9 | 9.0 | 2.0 | 3.1 | 22.5 | 5.4 | 40.9 |
| Total segment revenue | 3,941.4 | 765.4 | 3,192.3 | 1,054.4 | 1,156.9 | 365.3 | 7,981.6 |
| Segment result | 1,338.5 | 182.8 | (115.7) | 81.8 | (19.7) | (70.2) | 1,397.5 |
| Intersegment elimination | (9.1) | ||||||
| Total segment result | 1,338.5 | 182.8 | (115.7) | 81.8 | (19.7) | (70.2) | 1,388.4 |
| Unallocated revenue less unallocated expenses | (34.3) | ||||||
| Profit from ordinary activities before income tax expense | 1,354.1 | ||||||
| Income tax expense | (347.0) | ||||||
| Net profit | 1,007.1 | ||||||
| Segment assets | 2,593.9 | 578.7 | 1,917.7 | 1,167.6 | 472.2 | 47.3 | 6,777.4 |
| Unallocated assets(2) | 48.8 | ||||||
| Intersegment elimination | (362.5) | ||||||
| Total assets | 6,463.7 | ||||||
| Segment liabilities | 564.1 | 104.3 | 490.4 | 289.4 | 238.0 | 58.1 | 1,744.3 |
| Unallocated liabilities(2) | 1,496.2 | ||||||
| Intersegment elimination | (277.3) | ||||||
| Total liabilities | 2,963.2 | ||||||
| Investments in associates and joint venture partnership | 246.9 | - | - | 1.9 | 4.7 | - | 253.5 |
| Acquisition of property, plant and equipment, intangibles and other non-current segment assets | 140.1 | 36.8 | 175.2 | 342.9 | 50.5 | 1.7 | 747.2 |
| Depreciation and amortisation expense | 131.7 | 28.2 | 98.7 | 25.2 | 20.4 | 1.9 | 306.1 |
| Other non-cash expenses | 1.0 | 1.3 | 3.9 | 0.9 | 2.9 | - | 10.0 |
(1) The Hot Rolled Products segment results includes $194 million share of net profits of joint venture partnership.
(2) External borrowings, sale of receivables program, cash and tax balances are classified as unallocated.
note 3 segment information
Primary reporting - business segments continued
| Hot Rolled Products(2) | New Zealand Steel and Pacific Steel Products | Coated and Building Products Australia | Coated and Building Products Asia |
Coated and Building Products North America | Corporate and Group | Consolidated | |
| 2004(1)
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
| Sales to external customers | 1,517.3 | 514.7 | 2,742.3 | 663.8 | 191.1 | 108.9 | 5,738.1 |
| Intersegment sales | 1,321.3 | 75.5 | 141.2 | 34.8 | 0.4 | 264.0 | 1,837.2 |
| Intersegment elimination | (1,837.2) | ||||||
| Total sales revenue | 2,838.6 | 590.2 | 2,883.5 | 698.6 | 191.5 | 372.9 | 5,738.1 |
| Other revenue | 4.7 | 1.6 | 3.2 | 11.5 | 2.0 | 9.2 | 32.2 |
| Intersegment elimination | (0.7) | ||||||
| Total other revenue | 4.7 | 1.6 | 3.2 | 11.5 | 2.0 | 9.2 | 31.5 |
| Total segment revenue | 2,843.3 | 591.8 | 2,886.7 | 710.1 | 193.5 | 382.1 | 5,769.6 |
| Segment result | 563.8 | 62.1 | 192.9 | 104.0 | (8.8) | (64.0) | 850.0 |
| Intersegment elimination | (32.1) | ||||||
| Total segment result | 563.8 | 62.1 | 192.9 | 104.0 | (8.8) | (64.0) | 817.9 |
| Unallocated revenue less unallocated expenses | (14.5)
|
||||||
| Profit from ordinary activities before income tax expense | 803.4 | ||||||
| Income tax expense | (201.6)
|
||||||
| Net profit | 601.8
|
||||||
| Segment assets | 2,382.6 | 538.7 | 1,684.0 | 813.2 | 518.9 | 45.1 | 5,982.5 |
| Unallocated assets(3) | 124.7 | ||||||
| Intersegment elimination | (325.1)
|
||||||
| Total assets | 5,782.1
|
||||||
| Segment liabilities | 524.1 | 97.7 | 428.7 | 204.0 | 286.9 | 70.7 | 1,612.1 |
| Unallocated liabilities(3) | 1,225.6 | ||||||
| Intersegment elimination | (249.2)
|
||||||
| Total liabilities | 2,588.5
|
||||||
| Investments in associates and joint venture partnership | 232.1 | - | - | - | 4.2 | - | 236.3 |
| Acquisition of property, plant and equipment, intangibles and other non-current segment assets(4) | 64.9 | 27.9 | 101.3 | 162.9 | 176.0 | 3.5 | 536.5 |
| Depreciation and amortisation expense | 127.9 | 36.1 | 93.6 | 21.9 | 3.6 | 3.6 | 286.7 |
| Other non-cash expenses | (0.5) | (0.6) | 1.6 | 0.8 | 0.2 | - | 1.5 |
(1) Minor changes have been made to the comparative period results reported in the 30 June 2004 concise financial report.
These changes relate to the reorganisation of Lysaght Pacific and International Trading activities to align with current management responsibilities.
(2) The Hot Rolled Products segment result includes $71.1 million share of net profits of joint venture partnership.
(3) External borrowings, sale of receivables program, cash and tax balances are classified as unallocated.
(4) Includes property, plant and equipment acquired on 27 April 2004 from the purchase of the Butler Manufacturing for $186.1million.
This is reflected in the Coated and Building Products North America and Asia segments.
note 4
revenue
| 2005 |
2004 | |
| $M | $M | |
| Sale of goods | 7,780.9 | 5,614.5 |
| Services | 159.8 | 123.6 |
| Sales revenue | 7,940.7 | 5,738.1 |
| Other revenue | 40.9 | 31.5 |
| Total revenue | 7,981.6 | 5,769.6 |
note 5
dividends
| 2005 | 2004 | |
| $M | $M | |
| Total dividends | 343.0 | 241.6 |
As at 30 June 2005, the company's franking credits available for subsequent years is $257.8 million (2004: $147.4 million). The franking credits balance includes franking credits that are expected to arise from the payment of income tax payable as at the end of the financial year.
The directors have declared a fully franked final dividend of 24 cents and a fully franked special dividend of 20 cents per fully paid ordinary share. The estimated final dividend payable of $170 million and the special dividend payable of $142 million, to be paid on 24 October 2005 (record date 5 October 2005), have not been recognised as a liability at 30 June 2005.
A fully franked final dividend of 18 cents ($134.9 million) and a fully franked special dividend of 10 cents ($74.9 million) per fully paid ordinary share was paid on 18 October 2004. A fully franked interim dividend of 18 cents per fully paid ordinary share was paid on 4 April 2005 ($133.2 million).
note 6
earnings per share
| 2005 | 2004 | |
| Cents | Cents | |
| Basic earnings per share | 137.4 | 77.8 |
There is no diluted earnings per share impact from the senior managers long term incentive plan disclosed in the Remuneration Report as it is the current practice of the company to satisfy these entitlements through the buyback and cancellation of an equivalent number of BlueScope Steel Limited issued shares.
| 2005 | 2004 | |
| Number | Number | |
| Weighted average number of shares | ||
| Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share | 733,031,445 | 750,542,940 |
| 2005 | 2004 | |
| $M | $M | |
| Reconciliation of earnings used in calculating earnings per share | ||
| Basic earnings per share | ||
| Net profit | 1,007.1 | 601.8 |
| Net profit attributable to outside equity interest | (0.1) | (17.7) |
| Earnings used in calculating basic earnings per share | 1,007.0 | 584.1 |
note 7
movements in ordinary share capital
| 2005 |
2004 |
2005 | 2004 | |
| Shares | Shares | $M | $M | |
| Opening balance | 732,320,847 | 784,685,949 | 1,914.9 | 2,182.1 |
| Share buyback | (41,736,292) | (52,365,102) | (204.2) | (257.7) |
| Long term incentive plan | 15,414,055 | - | 36.5 | - |
| Employee share plan | 1,943,100 | - | 0.4 | (9.2) |
| Less: Transaction costs arising on share buyback | 0.1 | 0.3 | ||
| 707,941,710 | 732,320,847 | 1,747.5 | 1,914.9 | |
SHARE BUYBACK
(i) On-market share buyback.
In August 2004, the company announced its intention to buyback on-market 18.4 million shares. Up until 30 April 2005 the company purchased on-market 9,534,633 shares at an average market price of $7.86 per share. In May 2005, the company announced the maximum number for the on-market share buyback program would be increased to 35 million shares. A total of 15,880,095 shares were purchased for the 12 months at an average price of $7.83 per share.
The previous year's share buyback reflects the publicly announced on-market share buyback program, which concluded in March 2004.
(ii) Off-market share buyback.
On 19 April 2005, the company outlayed $200.4 million buying back 3.5% of its issued capital at $7.75 per share which represented a 9% discount to the volume weighted average share price over the five-day period to 8 April 2005.
In accordance with the principles outlined in UIG 22 "Accounting for share Buybacks of No Par Value Shares", the capital component of $3.07 per share has been debited against the Share Capital Account while the remaining amount, including transaction costs of $1.7 million has been debited against retained earnings.
EMPLOYE SHARE PLAN
In September 2004, the company issued 150 BlueScope Steel Limited shares at nil cost to 12,954 eligible employees (1,943,100 shares). In September 2003, the company provided 200 BlueScope Steel shares at nil cost to 9,403 eligible employees (1,880,600 shares). An equivalent number of shares were bought back at $4.88 per share. The objective of these share issues is to recognise and reward employees for their contribution to the BlueScope Steel's financial results and workplace safety performance and provide them with the opportunity to become long term shareholders.
SHARE RIGHTS
The long term incentive plan is an award of share rights to eligible senior managers. The full details of the operation of the plan can be found in the Remuneration Report. In September 2004, 12,808,655 shares were issued at $2.85 per share and 2,605,400 shares were issued at nil cost in accordance with the term outlined in the July 2002 award.
note 8
retained profits
| Notes |
2005 | 2004 | |
| $M | $M | ||
| Retained profits at the beginning of the financial year | 1,302.9 | 961.4 | |
| Net profit attributable to members of BlueScope Steel Limited | 1,007.0 | 584.1 | |
| Share buyback | (122.9) | - | |
| Dividends paid | 5 | (343.0) | (241.6) |
| Aggregate of amounts transferred from reserves | (3.0) | (1.0) | |
| 1,841.0 | 1,302.9 | ||
note 9
full financial report
Further financial information can be obtained from the full financial report which is available from the company, free of charge, on request. A copy may be requested by contacting the company's share registrar whose details appear in the Corporate Directory. Alternatively, both the full financial report and the concise financial report can be accessed via the internet at www.bluescopesteel.com.
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BlueScope Steel Limited ABN 16 000 011 058 BlueScope is a trademark of BlueScope Steel Limited