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BlueScope Steel Limited
ABN 16 000 011 058
Interim financial report - 31 December 2006
Contents
Page
Directors' report
2
Interim financial report
Consolidated income statement
6
Consolidated balance sheet
7
Consolidated statement of recognised income and expense
8
Consolidated cash flow statement
9
Notes to the consolidated financial statements
11
Directors' declaration
18
Independent review report to the members
19
BlueScope Steel LimitedDirectors' report
31 December 2006
Directors' report
Your directors present their report on the consolidated entity consisting of BlueScope Steel Limited and the entities it
controlled at the end of, or during, the half-year ended 31 December 2006.
Directors
The following persons were directors of BlueScope Steel Limited during the whole of the half-year and up to the date of
this report:
G J Kraehe AO
R J McNeilly
K C Adams
D J Grady
H K McCann AM
P J Rizzo
Y P Tan
D B Grollo was appointed a director on 27 September 2006.
Review of operations
A summary of consolidated revenues and results by reporting segments is set out below:
Segment revenues
Segment EBIT
2006
2005
2006
2005
$M
$M
$M
$M
Hot Rolled Products Australia
2,000.8
1,816.0
438.3
410.4
Coated and Building Products Australia
1,699.8
1,429.5
20.4
(30.4)
New Zealand and Pacific Island Products
365.8
361.0
42.6
65.8
Coated and Building Products Asia
678.3
465.2
30.8
2.0
Hot Rolled Products North America
289.0
188.3
111.6
67.1
Coated and Building Products North America
660.1
612.0
36.5
1.7
Corporate and Group
230.5
191.1
(14.2)
(42.3)
Intersegment eliminations
(1,404.9)
(1,194.6)
(33.8)
(18.8)
Total continuing operations
4,519.4
3,868.5
632.2
455.5
Unallocated revenue less unallocated expenses
(68.4)
(33.2)
Profit before income tax
563.8
422.3
Income tax expense
(168.5)
(105.7)
Profit from continuing operations
395.3
316.6
Profit/(loss) from discontinued operations (net of tax)
2.4
(4.8)
Profit for the year
397.7
311.8
Profit/(loss) attributable to minority interest
(9.9)
0.2
Profit attributable to members of BlueScope Steel
Limited
387.8
312.0
Earnings per share for profit from continuing operations (cents per share):
Basic earnings per share
54.3
44.5
Diluted earnings per share
54.2
44.0
Earnings per share for profit (cents per share):
Basic earnings per share
54.7
44.0
Diluted earnings per share
54.6
43.5
-2-
BlueScope Steel LimitedDirectors' report
31 December 2006(continued)
Review of operations (continued)
The company’s half-year revenue from continuing operations of $4,519 million was 16% above the previous comparativeperiod primarily due to higher international steel prices, higher sales volumes and a favourable domestic/export productmix. Total revenue, including discontinued operations, of $4,528 million was a half-year record.
Net profit after tax increased by $76 million (24%) to $388 million. This increase was due primarily to the higher salesvolumes, a favourable domestic/export mix, higher international steel prices and higher margins from North StarBlueScope Steel. These were partly offset by the consumption of higher priced raw materials, mainly iron ore and zinc. Inaddition, the fire at Western Port (Coated and Building Products Australia) cost the group $40 million in additional costsand lost margins in the previous comparative period.
Hot Rolled Products Australia
The earnings contribution from this segment increased as a result of higher export slab and hot rolled coil prices, togetherwith a favourable domestic/export mix primarily due to higher demand in the pipe and tube market and higher domesticdemand from Coated and Building Products Australia. These were partly offset by higher iron ore costs, mainly as a
result of consuming lower priced iron ore in stock at the start of the previous comparative period.
Coated and Building Products Australia
The earning contribution from this segment increased to a profit, compared to a loss in the previous comparative period.This improvement reflected higher domestic sales volumes, the negative effect of the Western Port fire in the previouscomparative period and lower steel feed costs from Hot Rolled Products Australia. These benefits were partly offset bysignificantly higher coating metal costs, particularly for zinc. The segment continues to be affected by the loss-makingtinplate manufacturing, which will cease operation in the second half of the financial year.
New Zealand and Pacific Island Products
The earnings contribution from this segment decreased as a result of higher unit costs arising from an unplannedextended maintenance shut-down on the primary kiln and higher coating metal costs. These were partly offset by higherdomestic sales volumes.
Coated and Building Products Asia
The earnings contribution from this segment increased as a result of higher domestic sales volumes across all regions,together with higher prices and lower business development and pre-operating costs. These were partly offset by higherunit costs as a result of the commissioning and ramp-up of production volumes at the Vietnam and China coating lines.
Hot Rolled Products North America
The earnings contribution from this segment increased primarily as result of hot rolled coil prices increasing more thanthe price of scrap feed at North Star BlueScope Steel.
Coated and Building Products North America
The earnings contribution from this segment increased as a result of improved sales volumes and margins from both theBuildings and Vistawall business units, together with start-up costs at the Jackson, Tennessee plant in the previouscomparative period.
-3-
BlueScope Steel LimitedDirectors' report
31 December 2006(continued)
Significant changes in the state of affairs
The following significant events occurred during the half-year:
The company is progressing a range of growth initiatives aimed at expanding the manufacture and distribution of metallic
coating and painted steel products. The status of these projects are:
Commenced production during the half-year:
• Australia: the expansion of the Hot Strip Mill (capacity increase: 2.4 to 2.8 million tones per annum) at the Port
Kembla Steelworks commenced operation in July 2006;
• China: the new metallic coating (capacity: 250,000 tonnes per annum) facility commenced operation in
September 2006); and
• India: the new Butler/Lysaght facilities at Bhiwadi and Chennai commenced operations in December 2006 and
January 2007 respectively (in addition to the third facility at Pune which commenced operations in April 2006).
Approved projects under construction:
• Australia: a new painting facility (capacity: 120,000 tonnes per annum) in western Sydney. The facility will cost
approximately $120 million and is expected to commence operation mid-calendar year 2007; and
• India: the project schedule for the new metallic coating and paint line is under review and start-up could
potentially extend into calendar year 2009.
Projects approved during the half-year:
• There were no new growth projects approved.
In August the company acquired a 19.9% interest in Smorgon Steel for $319 million.
Auditors' independence declaration
The auditors' independence declaration for the half-year ended 31 December 2006 has been received from Ernst &
Young. This can be referred to on page 5 of the directors' report.
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 the directors' report and half-year financial report. Amounts in
the directors' and financial report have been rounded off in accordance with that Class Order to the nearest hundred
thousand dollars.
This report is made in accordance with a resolution of directors.
G J Kraehe AO
Chairman
K C Adams
Managing Director & CEO
Melbourne
23 February 2007
-4-
BlueScope Steel LimitedDirectors' report
31 December 2006(continued)
Auditor's Independence Declaration to the Directors of BlueScope Steel Limited
We have obtained the following independence declaration from our auditors, Ernst & Young.
In relation to our review of the financial report of BlueScope Steel Limited for the half-year ended 31 December 2006, to
the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of
the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Bruce Meehan
Partner
Melbourne
23 February 2007
-5-
BlueScope Steel LimitedConsolidated income statement
For the half-year ended 31 December 2006
Half-year
2006
2005
$M
$M
Revenue from continuing operations
4,519.4
3,868.5
Other income
8.2
14.9
Changes in inventories of finished goods and work in progress
101.4
203.2
Raw materials and consumables used
(2,177.2)
(1,876.6)
Employee benefits expense
(729.1)
(707.9)
Depreciation and amortisation expense
(159.4)
(143.8)
Diminution in value of non-current assets
(0.6)
(0.6)
Freight on external despatches
(299.2)
(256.4)
External services
(502.8)
(475.2)
Finance costs
(71.4)
(34.7)
Other expenses
(228.6)
(234.1)
Share of net profits of associates and joint venture partnerships accounted for using the
equity method
103.1
65.0
Profit before income tax
563.8
422.3
Income tax expense
(168.5)
(105.7)
Profit from continuing operations
395.3
316.6
Profit/(loss) from discontinued operations (net of tax)
2.4
(4.8)
Profit for the half-year
397.7
311.8
(Profit)/loss attributable to minority interest
(9.9)
0.2
Profit attributable to members of BlueScope Steel Limited
387.8
312.0
Cents
Cents
Earnings per share for profit from continuing operations attributable to the
ordinary equity holders of the company:
Basic earnings per share
54.3
44.5
Diluted earnings per share
54.2
44.0
Cents
Cents
Earnings per share for profit attributable to the ordinary equity holders of the
company:
Basic earnings per share
54.7
44.0
Diluted earnings per share
54.6
43.5
The above consolidated income statement should be read in conjunction with the accompanying notes.
-6-
BlueScope Steel LimitedConsolidated balance sheet
As at 31 December 2006
31 December
30 June
2006
2006
$M
$M
ASSETS
Current assets
Cash and cash equivalents
58.0
61.9
Receivables
1,157.3
1,319.2
Inventories
1,351.1
1,270.2
Derivative financial instruments
0.4
0.2
Available-for-sale financial assets
333.2
-
Other
79.3
55.9
Total current assets
2,979.3
2,707.4
Non-current assets classified as held for sale
-
34.1
Total current assets
2,979.3
2,741.5
Non-current assets
Receivables
49.5
24.5
Retirement benefit assets
33.0
24.8
Inventories
58.4
59.2
Investments accounted for using the equity method
345.3
302.8
Property, plant and equipment
3,736.2
3,743.2
Deferred tax assets
109.5
121.1
Intangible assets
227.9
226.8
Other
14.2
16.7
Total non-current assets
4,574.0
4,519.1
Total assets
7,553.3
7,260.6
LIABILITIES
Current liabilities
Payables
832.5
957.6
Interest bearing liabilities
798.0
689.7
Current tax liabilities
65.8
31.2
Provisions
474.6
504.1
Deferred income
64.6
76.8
Derivative financial instruments
2.2
0.6
Total current liabilities
2,237.7
2,260.0
Non-current liabilities
Payables
0.5
-
Interest bearing liabilities
1,185.4
1,262.3
Deferred tax liabilities
243.0
284.2
Provisions
185.6
178.7
Retirement benefit obligations
209.9
189.3
Derivative financial instruments
2.8
1.2
Total non-current liabilities
1,827.2
1,915.7
Total liabilities
4,064.9
4,175.7
Net assets
3,488.4
3,084.9
EQUITY
Contributed equity
1,830.2
1,653.9
Reserves
(71.9)
(87.0)
Retained profits
1,668.8
1,467.1
Parent entity interest
3,427.1
3,034.0
Minority interest
61.3
50.9
Total equity
3,488.4
3,084.9
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
-7-
BlueScope Steel LimitedConsolidated statement of recognised income and expense
For the half-year ended 31 December 2006
Half-year
2006
2005
$M
$M
Gain/(loss) on cash flow hedges taken to equity
(2.7)
0.7
Gain/(loss) on available-for-sale financial assets
13.9
-
Net gain/(loss) on hedge of net investments
(73.3)
(18.7)
Exchange differences on translation of foreign operations
62.2
67.2
Actuarial gain/(loss) on defined benefit superannuation plans
(24.8)
41.0
Income tax on items taken directly to or transferred from equity
26.0
2.1
Net income/(expense) recognised directly in equity
1.3
92.3
Profit for the half-year
397.7
311.8
Total recognised income and expense for the half-year
399.0
404.1
Total recognised income and expense for the half-year is attributable to:
Members of BlueScope Steel Limited
389.4
402.7
Minority interest
9.6
1.4
399.0
404.1
The above consolidated statement of recognised income and expense should be read in conjunction with the
accompanying notes.
-8-
BlueScope Steel LimitedConsolidated cash flow statement
For the half-year ended 31 December 2006
Half-year
2006
2005
$M
$M
Cash flows from operating activities
Receipts from customers
4,864.4
4,037.3
Payments to suppliers and employees
(4,252.7)
(3,873.0)
611.7
164.3
Dividends received
10.7
2.9
Joint venture partnership distributions received
65.1
34.0
Interest received
3.6
1.3
Other revenue
9.8
8.5
Financing costs paid
(80.0)
(31.1)
Income taxes paid
(125.7)
(239.5)
Net cash inflow (outflow) from operating activities
495.2
(59.6)
Cash flows from investing activities
Payment for purchase of subsidiary, net of cash acquired
-
(2.7)
Payments for property, plant and equipment
(216.9)
(353.4)
Payments for intangibles
(3.6)
(12.7)
Payments for investment in joint venture partnerships
(27.0)
(0.6)
Payments for investment in business assets
(5.3)
(11.3)
Payments for available-for-sale financial assets
(319.3)
-
Loans to related parties
(29.4)
-
Proceeds from sale of property, plant and equipment
33.8
13.0
Repayment of loans by related parties
3.8
2.3
Net cash (outflow) from investing activities
(563.9)
(365.4)
Cash flows from financing activities
Proceeds from issues of shares
119.3
1.0
Payments for shares bought back
-
(74.4)
Proceeds from shares issued to minority interests
2.2
-
Proceeds from borrowings
5,927.0
3,826.8
Repayment of borrowings
(5,873.7)
(3,019.5)
Dividends paid to company’s shareholders
(119.3)
(313.4)
Dividends paid to minority interests in subsidiaries
(1.3)
(2.5)
Capital return to minority interests in subsidiaries
-
(0.3)
Net cash inflows from financing activities
54.2
417.7
Net increase (decrease) in cash and cash equivalents
(14.5)
(7.3)
Cash and cash equivalents at the beginning of the half-year
59.0
82.9
Effects of exchange rate changes on cash and cash equivalents
(0.8)
1.9
Cash and cash equivalents at end of the half-year
43.7
77.5
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
-9-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006
Contents of the notes to the financial statements
Page
1
Summary of significant accounting policies
11
2
Critical accounting estimates
11
3
Segment information
12
4
Equity securities issued
14
5
Unusual items
15
6
Discontinued operation
15
7
Dividends
17
8
Contingencies
17
-10-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006(continued)
1
Summary of significant accounting policies
This general purpose financial report for the interim half-year reporting period ended 31 December 2006 has been prepared in
accordance with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Act 2001 and other mandatory
professional reporting requirements.
This interim financial report does not include all the notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2006 and any public
announcements made by BlueScope Steel Ltd during the interim reporting period in accordance with the continuous
disclosure requirements of the Corporations Act 2001.
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting
period.
2
Critical accounting estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i)
Income taxes
The group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is
required in determining the worldwide provision for income taxes. There are many jurisdictions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were actually reported, such differences will impact the current and deferred tax provisions in
the period in which such determination is made.
(ii)
Defined benefit superannuation plans and workers compensation
Calculations for the group's defined benefit superannuation plans and self-insured workers compensation are determined by
external actuaries. These calculations require assumptions in relation to the expectation of future events.
(iii)
Product claims
Provision for claims is based on sales volume and past experience of the level of repairs and replacement. The provision
requires the use of assumptions in relation to the level of future claims made.
(iv)
Share based payment transactions
The group measures the cost of equity settled transactions with employees by reference to the fair value of equity
instruments at grant date. The fair value is determined by an external valuer using a binomial model. These calculations
require assumptions to be made.
(v)
Restructuring and redundancy provisions
Provisions for restructuring and redundancy are based on the group's best estimate of the outflow of resources required to
settle commitments made by the group. Where the outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income statement in the period in which such determination is made.
-11-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006(continued)
3
Segment information
(a)
Description of segments
Business segments
The consolidated entity has six business reporting segments: Hot Rolled Products Australia, Coated and Building Products
Australia, New Zealand and Pacific Island Products, Coated and Building Products Asia, Hot Rolled Products North America
and Coated and Building Products North America.
Hot Rolled Products Australia
Hot Rolled Products Australia 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 and Coated and
Building Products Asia for further processing, as well as to other domestic and export customers.
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, packaging industry, 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 Australia
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.
New Zealand and Pacific Island Products
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 approximately 0.6 million tonnes. The segment also includes
facilities in New Caledonia, Fiji and Vanuatu which manufacture and distribute the Lysaght range of products.
Coated and Building Products Asia
Coated and Building Products Asia manufactures and distributes a range of metallic coated, painted steel products and pre-
engineered steel building systems primarily to the building and construction industry and to some sections of the
manufacturing industry across Asia.
Hot Rolled Products North America
Hot Rolled Products North America 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 and North American export trading activities.
Coated and Building Products North America
Coated and Building Products North America includes 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.
-12-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006
3
Segment information (continued)
(b)
Primary reporting format - business segments
Half-year
2006
Hot Rolled
Products
Australia
Coated and
Building
Products
Australia
New Zealand
and Pacific
Island
Products
Coated and
Building
Products
Asia
Hot Rolled
Products
North
America
Coated and
Building
Products
North
America Corporate
and Group
Inter-
segment
eliminations/
unallocated
Total
continuing
operations
Discontinued
Operations
(note 6)
Consolidated
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
Segment revenue
2,000.8
1,699.8
365.8
678.3
289.0 660.1
230.5
(1,404.9)
4,519.4
9.1
4,528.5
Segment result
438.3
20.4
41.3
32.9
9.9 34.3
(14.2)
(33.8)
529.1
2.8
531.9Share of net profits of associates and joint venture
partnerships
-
-
1.3
(2.1)
101.7 2.2
-
-
103.1
-
103.1Segment EBIT
438.3
20.4
42.6
30.8
111.6 36.5
(14.2)
(33.8)
632.2
2.8
635.0
Unallocated revenue less unallocated expenses
(68.6)Profit before income tax
566.4
Half-year
2005
Hot Rolled
Products
Australia
Coated and
Building
Products
Australia
New Zealand
and Pacific
Island
Products
Coated and
Building
Products
Asia
Hot Rolled
Products
North
America
Coated and
Building
Products
North
America Corporate
and Group
Inter-
segment
eliminations/
unallocated
Total
continuing
operations
Discontinued
Operations
(note 6)
Consolidated
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
Segment revenue
1,816.0
1,429.5
361.0
465.2
188.3 612.0
191.1
(1,194.6)
3,868.5
23.2
3,891.7
Segment result
410.4
(30.4)
64.2
2.0
5.1 0.3
(42.3)
(18.8)
390.5
(6.4)
384.1Share of net profits of associates and joint venture
partnerships
-
-
1.6
-
62.0 1.4
-
-
65.0
-
65.0Segment EBIT
410.4
(30.4)
65.8
2.0
67.1 1.7
(42.3)
(18.8)
455.5
(6.4)
449.1
Unallocated revenue less unallocated expenses
(33.2)Profit before income tax
415.9
-13-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006
4
Equity securities issued
2006
2005
2006
2005
Shares
Shares
$M
$M
Issues of ordinary shares during the half-year
Opening balance
698,856,440
707,941,710
1,653.9
1,747.5
Dividend reinvestment plan - shareholders
7,494,951
-
48.9
-
Dividend reinvestment plan - underwritten
17,856,029
-
119.3
-
Exercise of share rights issued under the Long Term
Incentive Plan - market price
-
214,300
-
0.6
Share buyback
-
(10,649,578)
-
(74.4)
Issued for no consideration:
Exercise of share rights under the Long Term
Incentive Plan
2,101,057
4,243,608
6.8
-
Exercise of share rights under the Special Share
Rights Plan
40,000
-
0.3
-
General Employee Share Plan issues
204,400
-
1.0
-
Forfeited shares from employee share plans
-
-
-
0.4
726,552,877
701,750,040
1,830.2
1,674.1
Dividend reinvestment plan
The dividend reinvestment plan was established during the period to enable shareholders to receive some or all of their
future dividends as ordinary BlueScope Steel Limited shares instead of cash. The dividend reinvestment plan was fully
underwritten in respect of the financial year 2006 final ordinary dividend.
Share buyback
On 11 November 2005, the company announced an on market share buyback program of up to 25 million shares. A total
of 13,543,178 shares were bought back at an average cost of $7.01 (transaction costs $0.1M) before the program ceased
in January 2006.
Long Term Incentive Plan
The Long Term Incentive Plan is an award of share rights to eligible senior managers. The September 2003 award
partially vested (71%) in the current period with the September 2002 award fully vesting in the previous period. The full
details of the operation of the plan are detailed in the June 2006 Remuneration Report.
Special Share Rights Plan
Special share rights are awarded from time to time to meet specific or exceptional demands. Special share rights which
were awarded in 2004 to Mr Lance Hockridge, to facilitate the effective integration and turn around of the North American
Coated and Building Products business, vested and were exercised during the period.
General Employee Share Plan
In New Zealand, shares were granted under the September 2003 General Employee Share Plan which vested during the
period.
The aim of this plan is, in recognition of company performance, to assist employees to build a stake in the company by
enabling each eligible employee to acquire a parcel of shares. Employees who become shareholders have the potential to
benefit from dividends paid on the shares, growth in the market value of their shares and any bonus shares or rights
issues the Board of Directors may approve from time to time.
-14-
BlueScope Steel LimitedNotes to the financial statements
31 December 2006
5
Unusual items
No unusual items occurred in the current year.
In the comparative period, a fire occurred in the electrical control room of the Hot Strip Mill at BlueScope Steel's Western
Port operations in Victoria on 23 August 2005. As a result, the Hot Strip Mill stopped operating until 11 November 2005.
The Hot Strip Mill provides feedstock for Western Port's cold rolling, metallic coating and painting operations. No other
plant or equipment outside of the electrical control room sustained any damage.
The total impact on the income statement during the half-year ended 31 December 2005 was $40M ($28M after tax).
6
Discontinued operation
(a)
Description
Following a series of construction contract losses in the financial year 2006, the company closed down and sold the
assets of its Lysaght Taiwan business during the half-year.
Financial information relating to the discontinued operation for the period is set out below.
(b)
Financial performance and cash flow information
Half-year
2006
2005
$M
$M
Revenue
9.1
23.2
Expenses
(6.5)
(29.6)
Profit/(loss) before income tax
2.6
(6.4)
Income tax (expense)credit
(0.2)
1.6
Profit/(loss) after income tax of discontinued operation
2.4
(4.8)
Net cash inflow (outflow) from operating activities
(0.4)
(2.3)
Net cash inflow (outflow) from investing activities (2006 includes an inflow of $5M from
the sale of property, plant and equipment)
5.0
(1.3)
Net cash inflow (outflow) from financing activities
(4.8)
2.3
Net increase (decrease) in cash generated by the operation
(0.2)
(1.3)
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BlueScope Steel LimitedNotes to the financial statements
31 December 2006
6
Discontinued operation (continued)
(c)
Carrying amounts of assets and liabilities
Half-year
2006
2005
$M
$M
Cash
0.7
1.2
Property, plant and equipment
-
2.1
Receivables external
1.7
9.5
Receivables intercompany
0.2
0.4
Inventories
1.0
3.2
Deferred tax asset
-
1.7
Other
0.1
0.6
Total assets
3.7
18.7
Creditors external
(1.9)
(8.7)
Creditors intercompany
(2.4)
(0.2)
Provisions
(5.2)
-
Interest bearing liabilities
-
(3.1)
Total liabilities
(9.5)
(12.0)
Net assets (liabilities)
(5.8)
6.7
(d)
Details of sale
Half-year
2006
2005
$M
$M
Consideration received:
Cash
5.0
-
Total disposal consideration
5.0
-
Carrying amount of property, plant and equipment sold
(1.8)
-
Gain on sale before income tax
3.2
-
Income tax expense
-
-
Gain on sale after income tax
3.2
-
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BlueScope Steel LimitedNotes to the financial statements
31 December 2006
7
Dividends
Half-year ended
2006
2005
$M
$M
Ordinary shares
Dividends provided for or paid during the half-year
168.3
313.4
A dividend reinvestment plan was established during the period to enable shareholders
to receive some or all of their future dividends as ordinary BlueScope Steel Limited
shares instead of cash, with 29% of shareholders choosing this option. The dividend
reinvestment plan was fully underwritten in respect of the financial year 2006 final
ordinary dividend (71%).
Dividends not recognised at the end of the half-year
In addition to the above dividends, since the end of the half-year the directors have
recommended the payment of an interim dividend of 21 cents per fully paid ordinary
share (2005 - 20 cents), fully franked based on tax paid at 30%. The aggregate amount
of the proposed dividend expected to be paid on 2 April 2007 out of retained profits at 31 December 2007, but not recognised as a liability at the end of the half-year, is
152.6
139.8
8
Contingencies
Since the last annual reporting date, there have been no material changes of any contingent liabilities or contingent
assets.
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BlueScope Steel LimitedDirectors' declaration
31 December 2006
Directors' declaration
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 6 to 17 are in accordance with the Corporations Act 2001,
including:
(i)
complying with AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii)
giving a true and fair view of the consolidated entity's financial position as at 31 December 2006 and of
their performance, as represented by the results of their operations and their cash flows, for the half-
year ended on that date; and
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
This declaration is made in accordance with a resolution of the directors.
G J Kraehe AO
Chairman
K C Adams
Managing Director & CEO
Melbourne
23 February 2007
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BlueScope Steel LimitedIndependant review report to the members
31 December 2006To the members of BlueScope Steel Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying financial report of BlueScope Steel Limited and the entities it controlled duringthe half-year ended 31 December 2006, which comprises the balance sheet as at 31 December 2006, and the incomestatement, statement of recognised income and expense and cash flow statement for the half-year ended on that date,a summary of significant accounting policies, other explanatory notes and the directors’ declaration.
Directors’ responsibility for the half-year ended 31 December 2006 Financial Report
The directors of the company are responsible for the preparation and fair presentation of the half-year ended31 December 2006 financial report in accordance with Australian Accounting Standards (including the AustralianAccounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing andmaintaining internal controls relevant to the preparation and fair presentation of the half-year ended 31 December 2006financial report that is free from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express a conclusion on the half-year ended 31 December 2006 financial report based on ourreview. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Reviewof an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on thebasis of the procedures described, we have become aware of any matter that makes us believe that the financial reportis not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’sfinancial position as at 31 December 2006 and its performance for the half-year ended on that date; and complyingwith Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and othermandatory financial reporting requirements in Australia. As the auditor of BlueScope Steel Limited and the entities itcontrolled during the half-year ended 31 December 2006, ASRE 2410 requires that we comply with the ethicalrequirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. A review is substantially less in scope thanan audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtainassurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. Wehave given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included inthe Directors’ Report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that theinterim financial report of BlueScope Steel Limited and the entities it controlled during the half-year ended31 December 2006 is not in accordance with:
(a)
the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 31 December 2006
and of its performance for the half-year ended on that date; and
(ii)
complying with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001; and
(b)
other mandatory financial reporting requirements in Australia.
Ernst & Young
Bruce Meehan
Partner
Melbourne
23 February 2007
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