Bluescope Steel

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Annual Report 2004

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BlueScope Steel Limited Consolidated Statement of Financial Performance for the Year Ended 30 June 2004

 
Notes
2004
$M
2003
$M
 
Revenue from ordinary activities  
5,769.6
5,302.1
Changes in inventories of finished goods and work in progress  
1.7
36.1
Raw materials and consumables used  
(2,145.6)
(2,029.3)
Employee benefits expense  
(1,075.2)
(1,031.9)
Depreciation and amortisation expenses  
(286.7)
(270.1)
Diminution in value of non-current assets  
(1.4)
(12.6)
External services  
(800.0)
(734.7)
Freight on external despatches  
(418.7)
(410.0)
Carrying amount of non-current assets sold  
(6.0)
(4.5)
Other expenses from ordinary activities  
(288.7)
(298.7)
Borrowing costs expense  
(16.8)
(22.0)
Shares of net profits of associates and joint venture partnership accounted for using the equity method  
71.2
69.2
 
Profit from ordinary activities before income tax expense  
803.4
593.6
Income tax expense  
(201.6)
(120.9)
 
Profit from ordinary activities after income tax expense  
601.8
472.7
Net profit attributable to outside equity interest  
(17.7)
(21.0)
 
Net profit attributable to members of BlueScope Steel Limited
584.1
451.7
Decrease in retained profits on adoption of revised accounting standard: AASB 1028 'Employee Benefits'  
-
(2.8)
Net increase (decrease) in foreign currency translation reserve  
12.7
(77.9)
 
Total revenue, expenses and valuation adjustments attributable to members of BlueScope Steel Limited recognised directly in equity.  
12.7
(80.7)
 
Total changes in equity other than those resulting from transactions with owners as owners  
596.8
371.0
 
   
Cents
Cents
Basic earnings per share
77.8
57.1

The above consolidated statement of financial performance should be read in conjunction with the accompanying notes and discussion and analysis.

DISCUSSION AND ANALYSIS OF CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

A breakdown of revenue and profit from ordinary activities before income tax by reporting segment is set out in note 2.

Key points to note on revenue from ordinary activities are:
- The BlueScope Steel Group acquired Butler Manufacturing Company and its controlled entities on 27 April 2004. In addition, a number of other minor controlled entities were acquired during the year. These acquisitions contributed an additional $237.5 million revenue for the year.
- Revenue from existing operations increased primarily due to higher steel prices and higher product despatches, partly offset by the impact of a higher AUD/USD on USD denominated revenues.

Key points to note on the profit from ordinary activities before income tax expense are:
- Earnings before interest and tax (EBIT) increased 34% from $611.1 million to $817.9 million. This improvement was due primarily to higher international and domestic steel prices, and higher product despatches. These were partly offset by the higher raw material and operating costs, and by the net impact of a stronger AUD/USD on USD denominated revenues and costs.
- The previous corresponding period included significant one-off costs associated with changing the Company's name to BlueScope Steel ($20.0 million) and improving the financial position of the Australian and New Zealand defined benefit superannuation funds ($31.8 million).

INCOME TAX

The effective tax rate for the 12 months ended 30 June 2004 was 25.1% (2003: 20.4%).

Following a company-wide review of tax accounting practices the Company has:
- Recognised an under provision of deferred tax liabilities in relation to prior period North Star BlueScope Steel income;
- Commenced tax effecting North Star BlueScope Steel's income;
- Recognised the tax benefit of certain carried forward tax losses in New Zealand and Asia, reflecting increased certainty of recoverability; and
- Recognised an over provision for deferred tax liabilities at Port Kembla Steelworks in relation to depreciable assets. As this related to timing differences that existed prior to the acquisition of the Port Kembla Steelworks in July 2002, the adjustment was made against net tangible assets rather than benefiting tax expense.

These changes, together with the continued utilisation of unbooked tax losses in New Zealand and utilisation of unbooked tax losses and tax exemptions in certain Asian operations explain the difference from the Australian tax rate of 30%.

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