Bluescope Steel

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Annual Report 2004

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Graham Kraehe AO, Chairman


Since our public listing on 15 July 2002, BlueScope Steel has become known as a company that creates shareholder value, and a company that rewards its shareholders. In the 2003/04 financial year we continued building this reputation.

We also changed our name from BHP Steel to BlueScope Steel, and we are delighted at how seamlessly this transition was achieved. We are now identified by a unique name that befits our strong reputation, and our new corporate brand is widely recognised.


The ability of BlueScope Steel to reward our shareholders is an indication of our strength. Our Total Shareholder Return (growth in share price plus dividends) from 15 July 2002 to 30 June 2004 ranks 'BSL' as one of the best performing stocks on the ASX.

The dividends we have declared represent an attractive yield. Total dividends were 40 cents per share (fully franked), an increase of 11 cents over last year. Our return on invested capital was a strong 18.5 per cent.

We have also had great success with our Employee Share Ownership initiatives. Over 99 per cent of our employees have become BlueScope Steel shareholders. In March 2004, we completed a share buyback program which resulted in some 60 million shares being re-purchased, at an average price of $4.70 per share. The effect of this buyback is that earnings per share this year are 4.2 cents higher than they otherwise would have been.


Over the past year, the major measures of our Company's performance continued to climb. NPAT increased by 29 per cent to $584 million and earnings per share by 36 per cent to 77.8 cents.

In addition, the strong net cash flow generated by BlueScope Steel - $315 million in FY04 - has allowed us to fund our growth without placing undue strain on our balance sheet.

At 30 June 2004, total debt outstanding was $593 million, a gearing ratio on a net debt/net debt plus equity basis of 12.9 per cent. BlueScope Steel has one of the strongest balance sheets in the global steel industry.

Tragically, on 29 June 2004, a fatality occurred in our business, at our Brisbane Logistics Terminal. This terrible occurrence marred an otherwise impressive safety performance.


Our strategy is about increasing our market presence as a steel solutions company. In line with this strategy, BlueScope Steel has embarked on a significant growth program. Our product range is growing, new offerings are available for our customers, and we have made strategic acquisitions.

New manufacturing facilities are also being constructed, and existing plants upgraded. These initiatives are summarised in this Report. We are now well advanced in construction of our major new metallic coating and painting facilities in China, at Suzhou west of Shanghai, and Vietnam, near Ho Chi Minh City, while a number of other new plant expansions are underway.

In total, the Board has, over the course of the past year, made commitments to new capital projects with a planned value of over A$1 billion. This includes a major landmark in the evolution of our Company - the acquisition of Butler Manufacturing for US$206 million (net of cash acquired). Acquiring this company, which was formerly listed on the New York Stock Exchange, will increase our revenue by over A$1 billion on a full year basis.

The Butler acquisition brings exciting new possibilities, intellectual property and capabilities to BlueScope Steel. It also establishes our Company as the leading pre-engineered building business in both North America and China.


The corporate governance arrangements in place at BlueScope Steel comply with the ASX Principles of Good Corporate Governance and Best Practice Recommendations. These arrangements are summarised in this Report. Ours is an effective Board, a talented and experienced team with the vision to help shape our future. I thank my fellow Directors for the leadership they have provided. I would also like to acknowledge the contribution made by John Crabb, who recently retired as a Director.

This financial year has seen BlueScope Steel achieve growth and greater financial strength, while simultaneously rewarding our shareholders. Our success has been made possible by adherence to the principles of 'Our Bond', BlueScope Steel's values statement. Each of our 16,000 employees, under the leadership of Managing Director and CEO Kirby Adams, can feel very proud of their achievements since our public listing two years ago.

So, on behalf of the Board of Directors and all shareholders, I congratulate and thank them for their efforts and their skill.


The Company's Board and management are focused on creating shareholder value. The strong performance over the two years since public listing has delivered excellent returns for shareholders.

The Company's Board and management are focused on creating shareholder value. The strong performance over the two years since public listing has delivered excellent returns for shareholders.

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