BROKEN HILL PROPRIETARY CO LTD
6-K, 2000-09-22
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)
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The Broken Hill Proprietary Company Limited

1999/2000 FINANCIAL RESULTS

4 September 2000

The following additional information is provided in relation to the results for the thirteen months ended 30 June 2000. This information should be considered in conjunction with the information released on 27 July 2000.

Profit and loss statement
for the financial period ended
(a)
 

30 June
2000

31May
1999

   

$m

$m

Operating revenue      
Sales   21 506 19 229
Interest revenue   96 175
Other revenue   2 081 2 517
       
    23 683 21 921
Operating profit including abnormal items, before depreciation, amortisation and borrowing costs    
4 725
 
805
       
Deduct      
Depreciation and amortisation   2 292 2 218
Borrowing costs (1)   723 732
* Operating profit/(loss) before income tax   1 710 (2 145)
       
Deduct       
** Income tax expense including abnormal items attributable to operating profit/(loss)     
117
 
164
Operating profit/(loss) after income tax   1 593 (2 309)
Outside equity interests in operating loss/(profit) after income tax   34 (3)
Operating profit/(loss) after income tax, attributable to members of the BHP Entity    
1 627
 
(2 312)
Retained profits at the beginning of the financial period   1 826 4 826
Adjustment for initial adoption of revised accounting standard
AASB 1016: Accounting for Investments in Associates
   
250
 
-
       
Total available for appropriation   3 703 2 514
       
(deduct)/add      
Dividends provided for or paid   (903) (766)
Aggregate of amounts transferred from reserves   41 78
       
Retained profits at the end of the financial period   2 841 1 826
       
The operating profit/(loss) after income tax, attributable to members
of the BHP Entity comprises:
* Operating profit before abnormal items and income tax   2 965 934
**Income tax expense attributable to operating profit before abnormal items   (967) (566)
Operating profit after income tax before abnormal items   1998 368
Outside equity interests in operating loss/(profit) after
income tax before abnormal items
  34 (3)
Operating profit after income tax, before abnormal items, attributable to members of the BHP Entity   2 032 365
* Abnormal items included in operating profit/(loss) before income tax   (1 255) (3 079)
**Abnormal income tax benefit   850 402
Abnormal items after income tax   (405) (2677)
Operating profit/(loss) after income tax, attributable to members
of the BHP Entity
   
1627
 
(2312)
       
(1) Excludes capitalised interest of   19 194


(a) 30 June 2000 refers to the thirteen months ended 30 June 2000. 31 May refers to the year ended 31 May. Refer "Change of financial year" on page 12.


Balance sheet

as at (a)

   

30 June
2000

31 May
1999

30 Nov
1999

Assets  

$m

$m

$m

Current assets        
Cash   684 460 464
Receivables   2 629 2 661 2 634
Investments   359 273 481
Inventories   2 138 2 262 2 239
Other   271 196 228
         
Total current assets   6 081 5 852 6 046
         
Non-current assets        
Receivables   189 323 189
Investments   1 131 483 683
Inventories   159 187 172
Property, plant and equipment   17 567 20 465 19 839
Exploration, evaluation and development   2 019 2 166 2 115
Intangibles   130 175 168
Other1   2 068 1 836 1 704
         
Total non-current assets   23 263 25 635 24 870
         
Total assets   29 344 31 487 30 916
         
Liabilities        
Current liabilities        
Accounts payable   2 566 2 635 2 308
Borrowings   2 530 1 381 1 918
Provisions   1 727 2 178 1 564
         
Total current liabilities   6 823 6 194 5 790
         
Non-current liabilities        
Accounts payable   45 156 76
Borrowings   5 868 9 990 9 010
Provisions   5 603 5 786 5 526
         
Total non-current liabilities   11 516 15 932 14 612
         
Total liabilities   18 339 22 126 20 402
         
Net assets   11 005 9 361 10 514
         
Shareholders' equity        
Shareholders' equity attributable to members of the BHP Entity        
Share capital   7 093 6 533 6 944
Reserves   419 287 309
Retained profits   2 841 1 826 2 590
         
    10 353 8 646 9 843
Shareholders' equity attributable to outside equity interests   652 715 671
         
Total shareholders' equity   11 005 9 361 10 514
1 "Other" comprises the following amounts:-        
- future income tax benefits   1 268 1 110 958
- deferred charges, prepayments and other   800 726 746
         


(a) Refer "Change of financial year" on page 12.



Statement of cash flows

for the financial period ended (a)

   

30 June
2000

31 May
1999

   

$m

$m

Cash flows related to operating activities      
       
Receipts from customers   20 959 19 331
Payments to suppliers, employees, etc   (16 210) (15 248)
Dividends received   46 20
Interest received   91 221
Borrowing costs   (916) (1 087)
Proceeds from gas sales contract price re-negotiation   231 708
Other   337 348
       
Operating cash flows before income tax   4 538 4 293
Income taxes paid   (600) (708)
       
Net operating cash flows   3 938 3 585
       
Cash flows related to investing activities      
       
Purchases of property, plant and equipment   (1 102) (2 608)
Exploration expenditure   (373) (643)
Purchases of investments   (438) (137)
Purchases of, or increased investment in, controlled entities      
net of their cash   - (75)
       
Investing outflows   (1 913) (3 463)
       
Proceeds from sale of property, plant and equipment   741 548
Proceeds from sale or redemption of investments   242 361
Proceeds from sale or partial sale of controlled entities      
and joint venture interests net of their cash   698 1 290
       
Net investing cash flows   (232) (1 264)
       
Cash flows related to financing activities      
       
Proceeds from ordinary share issues, etc   275 149
Borrowings   1 658 2 018
Repayment of borrowings   (4 867) (4 310)
Dividends paid   (498) (520)
Other   82 (14)
       
Net financing cash flows   (3 350) (2 677)
       
Net increase/(decrease) in cash and cash equivalents   356 (356)
       
Cash and cash equivalents at beginning of period   573 949
Effect of foreign currency exchange rate changes on cash and cash equivalents   8 (20)
       
Cash and cash equivalents at end of period   937 573
       

 

(a) 30 June 2000 refers to the thirteen months ended 30 June 2000. 31 May refers to the year ended 31 May. Refer "Change of financial year" on page 12.


Statement of cash flows
(continued)

   

2000

1999

Reconciliation of cash
Cash and cash equivalents comprise:
 

$m

$m

       
Cash   684 460
Short term deposits   355 270
Bank overdrafts   (102) (157)
Total cash and cash equivalents   937 573
       
Non-cash financing and investing activities
Shares issued:
     
       
Bonus Share Plan   61 107
Dividend Investment Plan   341 279
       
Other:      
Employee Share Plan loan instalments   28 36


The Bonus Share Plan (BSP) is in lieu of dividends and the Dividend Investment Plan (DIP) is an application of dividends. The DIP was suspended following payment of the November 1999 half yearly dividend. Since that dividend was unfranked the BSP was suspended in accordance with the Company’s Constitution and Rule 8 of the BSP on 17 September 1999.

The Employee Share Plan loan instalments represent the repayment of loans outstanding with the Company, by the application of dividends.

Control gained over entities having material effect

No major acquisitions.

Loss of control over entities having material effect

No material disposals.

Franking credits

The BHP Group had a franking account balance of $24 million at 36 cents in the dollar available at 30 June 2000. The extent to which future dividends will be franked is uncertain, but the current outlook is for no franking of dividends for at least the next twelve months. (The BHP Group had a franking account balance of $230 million available at 31 May 1999. An amount of $453 million was used as a result of the 2 June 1999 dividend payment.)

Income tax

 

2000

1999

 

$m

$m

Income tax arising from items taken to operating profit
The prima facie tax on operating profit before abnormal items differs from the income tax provided in the accounts and is calculated as follows:
   
     
Operating profit before abnormal items and income tax

2 965

934

     
Prima facie tax calculated at 36 cents in the dollar on operating profit before abnormal items

1 067

336

deduct tax effect of    
Investment and development allowance

56

39

Rebate for dividends

2

2

Amounts over provided in prior years

103

100

Recognition of prior year tax losses

187

85

Overseas tax rate change

-

5

Research and development incentive

1

9

 

718

96

add/(deduct) tax effect of    
Non-deductible accounting depreciation and amortisation

60

67

Non-deductible dividends on redeemable preference shares

67

65

Non tax effected operating losses

28

213

Foreign expenditure including exploration not presently deductible

66

134

Foreign exchange/other

28

(9)

     
Income tax attributable to operating profit before abnormal items

967

566

deduct tax effect of abnormal items

850

402

     
Income tax attributable to operating profit

117

164

     

 

Exploration, evaluation and development expenditure capitalised

  2000 1999
  $m $m
Exploration, evaluation and development expenditure    
- not yet in production

598

616

- in production

1 421

1550

Total exploration, evaluation and development expenditure capitalised

2 019

2166

 

Details of exploration, evaluation and development expenditure not yet in production:    
 

In exploration and/or evaluation stage

In development stage

 

2000

1999

2000

1999

 

$m

$m

$m

$m

Opening balance 486 465 130 313
Expenditure incurred during the period 373 630 43 27
Expenditure expensed during the period (309) (475) - -
Transferred from evaluation to development (146) (25) 146 25
Transferred to production 9 - (92) (226)
Disposals (46) (42) - (1)
Depreciation (13) (35) (4) -
Exchange fluctuations and other movements 21 (32) - (8)
         
Closing balance 375 486 223 130

 

Depreciation and amortisation

 
 

2000

1999

 

$m

$m

Depreciation relates to    
Buildings

132

123

Plant, machinery and equipment

1 857

1 780

Mineral rights

69

61

Exploration, evaluation and development expenditures carried forward

213

213

Capitalised leased assets

4

8

     
Total depreciation

2 275

2 185

Amortisation (a)(b)

17

33

Total depreciation and amortisation

2 292

2 218

 

2000
$m

 

Before tax

Related Tax

Related outside equity interests

Amount (after tax) attributable to members

(a) Amortisation relates to        
Amortisation of goodwill

16

-

-

16

Amortisation of other intangibles

1

-

-

1

Total amortisation

17

-

-

17

 

   

2000

1999

   

$m

$m

(b) Operating profit/(loss) restated to exclude amortisation of goodwill      
       
Operating profit/(loss) after tax before outside equity interests   1 593 (2 309)
add amortisation of goodwill   16 31
Operating profit/(loss) after tax before outside equity interests and amortisation of goodwill  
1 609

(2 278)
add/(deduct) outside equity interests   34 (3)
Operating profit/(loss) after tax (before amortisation of goodwill)
attributable to members of the BHP Entity
   

1 643

 

(2 281)

       

 

Segment results

Industry classification

$m

 

Profit after
income tax,
before
abnormal
items (a)

Abnormal
items net of tax

Profit after
income tax
and
abnormal
items (a)

Gross segment assets

External operating revenue

Intersegment
operating
revenue

Industry classification

2000

             
Minerals 1 224 (744) 480 11 917 8 860 356
Steel (b) 410 (159) 251 7 673 8 569 27
Petroleum 1 155 171 1 326 7 401 5 625 14
Services 73 42 115 553 824 1 271
Net unallocated
interest
(512) (3) (515) 65
Group and   unallocated
items (c)
(352) 288 (64) 1 800 (260) 7
             
BHP Group 1 998 (405) 1 593 29 344 23 683 1 675

 

 

1999 (d)

             
Minerals

678

(2 649) (1 971) 13 187 9 730 498
Steel (b)

268

(105) 163 8 673 8 158 26
Petroleum

321

(89) 232 7 826 3 203 10
Services

97

173 270 756 1 267 1 500
Net unallocated
interest
(449) - (449)   111  
Group and unallocated
items (c)

(547)

(7) (554) 1 045 (548) 3
             
BHP Group

368

(2 677) (2 309) 31 487 21 921 2 037

(a) Operating profit after income tax is before deducting outside equity interests.
(b) Includes the OneSteel business, to be spun-out in the second half of calendar 2000 year.
(c) Includes consolidation adjustments.
(d) Comparative figures have been restated to reflect the transfer of internal currency hedging results from Minerals, Steel and Petroleum to Group and unallocated items where they now eliminate.


Segment results

Geographical classification

 

$m

 

Profit after
tax, before
abnormal
items (a)

Abnormal
items net
of tax

Profit after
tax and
abnormal
items (a)

Gross segment assets

External operating revenue

Intersegment
operating
revenue

Geographical classification

2000

             
Australia 1 466 (323) 1 143 17 358 14 573 263
North America 301 (228) 73 2 531 3 299 -
United Kingdom 226 - 226 2 225 968 -
South America 389 69 458 4 150 1 986 1
Papua New Guinea (9) 80 71 979 1 161 -
New Zealand 59 - 59 602 682 -
South East Asia 22 - 22 1 030 704 -
Other countries 56 - 56 469 245 -
             
  2 510 (402) 2 108 29 344 23 618 264
             
Net unallocated
interest

(512)

(3)

(515)
 
65
 
             
BHP Group 1 998 (405) 1 593 29 344 23 683 264

 

 

1999

             
Australia 933 (96) 837 19 225 14 043 199
North America (236) (2 013) (2 249) 3 135 2 889 27
United Kingdom 71 (75) (4) 2 575 594 5
South America 190 (91) 99 3 394 1 558 33
Papua New Guinea 65 - 65 1 100 859 -
New Zealand 15 (105) (90) 697 836 1
South East Asia (29) 70 41 930 786 -
Other countries (192) (367) (559) 431 245 -
             
  817 (2 677) (1 860) 31 487 21 810 265
             
Net unallocated
interest

(449)

-

(449)
 
111
 
             
BHP Group 368 (2 677) (2 309) 31487 21921 265

(a) Operating profit after income tax is before deducting outside equity interests.



Issued and quoted securities at end of financial period

  Number
on issue
Of which
quoted
Paid-up
value
cents
       
Ordinary shares 1,781,493,241 1,781,493,241 100
Fully paid 6,286,500 6,286,500 1
Partly paid 415,000 415,000 5
Partly paid      
       
of which issued during period      
Dividend Investment plan 21,234,886 21,234,886 100
Bonus Share Plan 3,718,755 3,718,755 100
ESP Options exercised 9,309,031 9,309,031 100
Performance Rights exercised 75,000 75,000 100

 

Options and Performance Rights

           

Options and
Performance Rights
Outstanding at

   
Month
of issue

Number
issued

Number of recipients

Number exercised

Shares issued on exercise (1)

Number lapsed

Balance date

Date of Directors’
Report(2)

Exercise price

Exercise
period (3)

Employee Share Plan              
April 2000

30 000

3

-

-

-

30 000

30 000

$17.79

April 2003 – April 2010

April 2000

454 000

5

-

-

-

454 000

454 000

$17.78

April 2003 – April 2010

Dec 1999

200 000

1

-

-

-

200 000

200 000

$19.87

April 2002 – April 2009

Dec 1999

150 000

1

-

-

-

150 000

150 000

$17.58

April 2002 – April 2009

Oct 1999

60 000

6

-

-

-

60 000

60 000

$17.72

April 2002 – April 2009

Oct1999

51 000

3

-

-

15 000

36 000

36 000

$17.71

April 2002– April 2009

July 1999

100 000

1

-

-

-

100 000

100 000

$17.79

April 2002 – April 2009

April 1999

21 536 400

45 595

-

-

4 956 200

16 580 200

15 798 100

$16.39

April 2002 - April 2009

April 1999

8 184 300

944

-

-

822 950

7 361 350

7 112 150

$16.38

April 2002 - April 2009

April 1998

177 500

16

-

-

-

177 500

177 500

$15.40

April 2001 - April 2003

April 1998

140 000

23

15 000

15 000

5 000

120 000

120 000

$15.39

April 2001 - April 2003

Nov 1997

7 910 900

16 411

1 712 100

1 712 100

522 000

5 676 800

5 388 250

$16.22

Nov 2000 - Nov 2002

Nov 1997

1 579 400

3 501

345 000

345 000

106 400

1 128 000

1 050 900

$16.21

Nov 2000 - Nov 2002

Oct 1997

3 992 000

379

555 750

555 750

105 000

3 331 250

3 266 000

$15.99

Oct 2000 - Oct 2002

Oct 1997

5 440 000

511

677 000

677 000

18 000

4 745 000

4 644 300

$15.98

Oct 2000 - Oct 2002

July 1997

395 500

36

-

-

24 000

371 500

357 000

$19.63

July 2000 - July 2002

July 1997

200 000

1

-

-

-

200 000

200 000

$19.62

July 2000 - July 2002

Oct 1996

848 100

46

244 000

244 000

186 500

417 600

401 600

$16.22

Oct 1999 - Oct 2001

Oct 1996

1 086 700

66

172 600

172 600

10 000

904 100

840 100

$16.21

Oct 1999 - Oct 2001

April 1996

295 000

5

-

-

260 000

35 000

27 500

$18.29

April 1999 - April 2001

April 1996

45 500

6

18 000

18 000

-

27 500

27 500

$18.28

April 1999 - April 2001

Oct 1995

17 000

3

-

-

-

17 000

12 000

$18.23

Oct 1998 - Oct 2000

Oct 1995

38 500

5

5 500

5 500

-

33 000

11 000

$18.22

Oct 1998 - Oct 2000

July 1995

48 000

2

-

-

-

48 000

-

$18.59

July 1998 - July 2000

July 1995

76 000

9

16 000

16 000

13 000

47 000

-

$18.58

July 1988 - July 2000

May 1995

10 565 900

9 187

4 106 300

4 516 930

6 459 600

-

-

$19.10

May 1998 - May 2000

May 1995

2 574 800

194

1 524 728

1 677 201

1 050 072

-

-

$19.09

May 1998 - May 2000

May 1994

5 782 100

5 802

4 120 200

4 532 220

1 661 900

-

-

$17.06

May 1997 - May 1999

           

42 250 800

40 463 900

   
Performance Rights              
March 1999

1 000 000

1

200 000

175 000

-

800 000

700 000

-

March 1999 - March 2009

           

800 000

700 000

   

(1)  Shares issued on exercise of Performance Rights include shares purchased on market.
(2)  Following the 1995 bonus issue, holders of options issued in May 1995 and prior received 11 shares for each 10 options   
      exercised.
(3)  Unexercised options and Performance Rights will expire at the end of the exercise period.

 

Investments in associated entities

Details of aggregate share of profits/(losses) of associates

 

2000

1999(1)

Entity’s share of associates’

$m

$m

     
Operating profit/(loss) before income tax

49

 
Income tax expense

(19)

 
 

30

 

 

Material interests in entities which are not controlled entities

Name of Entity

Percentage (%) of ownership interest held at end of period

Contribution to operating profit/(loss) after income tax

         
Equity accounted associates

2000
%

1999
%

2000
$m

1999(1)
$m

         
Samarco Mineracao S.A.

50

49

46

 
Orinoco Iron C.A.

50

50

(16)

 
         
Total (2)    

30

 

(1) Comparative data has not been provided as AASB 1016: Accounting for Investments in Associates did not apply to the BHP Group for the year ended 31 May 1999.

(2) There are no other material interests in entities that are not controlled entities.

 

Significant events after balance date

On 28 August 2000 BHP announced a joint cash offer of $1.20 per share for QCT Resources Limited (QCT). QCT holds a non-operating 32.37% interest in the Central Queensland Coal Associates and Gregory joint venture and 100% of the South Blackwater coal mining operation in the Bowen Basin (Queensland). The bidding vehicle, MetCoal Holdings (Qld) Pty Ltd, is 50/50 owned by BHP and Mitsubishi Development Pty Ltd (Mitsubishi). The offer values QCT’s equity at $830 million.

BHP and Mitsubishi, who own the remaining interests in these joint ventures, have agreed to form a strategic alliance, designed to ensure the future competitiveness of Bowen Basin metallurgical coal assets. This offer is the first step in furthering this alliance.

 

Revised Accounting Standards

- Revised Australian Accounting Standard AASB 1004: Revenue was first adopted for the period ended 30 June 2000. There was no material effect on profits.

- Revised Australian Accounting Standard AASB 1016: Accounting for Investments in Associates was adopted for the period ended 30 June 2000, resulting in the application of the equity method of accounting for investments in   associates. Previously the cost method was used.

 

Change in accounting policies

With the exception of the above revised Accounting Standards, the significant accounting policies adopted in the current period are consistent, in all material respects with those applied in the prior year.

 

Change of financial year

Directors announced on 17 December 1999 that the financial year end for the BHP Group would change from 31 May to 30 June with effect from 30 June 2000. All subsequent financial years will commence on 1 July and end on 30 June.

- Australian Securities and Investments Commission (ASIC)

Pursuant to Section 340 of the Corporations Law ("the Law"), ASIC has granted relief from the requirements of paragraph 323D(2)(b) of the Law permitting The Broken Hill Proprietary Company Limited to change its financial year end and adopt a transitional thirteen month financial year of 1 June 1999 to 30 June 2000.

- Australian Stock Exchange (ASX)

The ASX has provided The Broken Hill Proprietary Company Limited relief from listing rule 4.4 to the extent that an Appendix 4B is not required for the period ended 31 May 2000 following the change in balance date from 31 May to 30 June. This supplementary release for the thirteen months ended 30 June 2000 is in lieu of a 31 May 2000 Appendix 4B.

For information contact:

Investor Relations:

Robert Porter – Vice President Investor Relations
(BH) (61 3) 9609 3540
Mobile (61) 0419 587 456
E-mail: [email protected]

Candy Ramsey
BHP Investor Relations Houston
Tel: (713) 961-8640
EMail: [email protected]



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