Final Results
BROKEN HILL PROPRIETARY COMPANY LIMITED
4 August 1999
The Broken Hill Proprietary Company Limited
1998/99 FINANCIAL RESULTS
The following additional information is provided in relation to the results for
the year ended 31 May 1999. This information should be considered
in conjunction with the information released on 25 June 1999.
Profit and loss statement
Year ended 31 May
1999 1998
$ million $ million
Operating revenue
Sales 19229 21189
Interest revenue 175 157
Other revenue 2517 3318
21921 24664
Operating profit including abnormal items,
before depreciation, amortisation and 805 1932
borrowing costs
deduct
Depreciation and amortisation 2218 2206
Borrowing costs (a) 732 739
*Operating loss before income tax (2145) (1013)
deduct
**Income tax expense including abnormal items
attributable to operating loss 164 518
Operating loss after income tax (2309) (1531)
Outside equity interests in operating
(profit)/loss after income tax (3) 57
Operating loss after income tax,
attributable to members of the BHP Entity (2312) (1474)
Retained profits at the beginning of the 4826 7077
financial year
Total available for appropriation 2514 5603
(deduct)/add
Dividends provided for or paid (766) (777)
Aggregate of amounts transferred from reserves 78 -
Retained profits at the end of the financial 1826 4826
year
The operating loss after income tax, attributable
to members of the BHP Entity comprises:
* Operating profit before abnormal
items and income tax 934 2083
**Income tax expense attributable to
operating profit before abnormal items (566) (821)
Operating profit after income tax before 368 1262
abnormal items
Outside equity interests in operating
(profit)/loss after (3) 40
income tax before abnormal items
Operating profit after income tax, before
abnormal items, attributable to members of 365 1302
the BHP Entity
*Abnormal items included in operating loss
before income tax (b) (3079) (3079)
**Abnormal income tax benefit (b) 402 303
Abnormal items after income tax (b) (2677) (2776)
Operating loss after income tax, attributable to
members of the BHP Entity (2312) (1474)
(a) Excludes capitalised interest of 194 226
(b) Excludes abnormal item attributable to - 17
outside equity interests (no tax effect) of
Balance Sheet
31 May 31 May 30 November
1999 1998 1998
Assets $ million $ million $ million
Current assets
Cash 460 977 728
Receivables 2661 2986 2576
Investments 273 175 202
Inventories 2262 2829 2784
Other 196 251 297
Total current assets 5852 7218 6587
Non-current assets
Receivables 323 455 422
Investments 483 847 792
Inventories 187 184 188
Property, plant and equipment 20465 23238 23251
Exploration, evaluation and 2166 2855 2913
development
Intangibles 175 389 369
Other (a) 1836 1896 1804
Total non-current assets 25635 29864 29739
Total assets 31487 37082 36326
Liabilities
Current liabilities
Accounts payable 2635 3096 2402
Borrowings 1381 1365 1335
Provisions 2178 1714 1368
Total current liabilities 6194 6175 5105
Non-current liabilities
Accounts payable 156 173 128
Borrowings 9990 12801 13121
Provisions 5786 5524 5232
Total non-current liabilities 15932 18498 18481
Total liabilities 22126 24673 23586
Net assets 9361 12409 12740
Shareholders' equity
Shareholders' equity attributable to
members of the BHP Entity
Share capital 6533 2043 8619
Reserves 287 6803 539
Retained profits 1826 4826 4887
BHP shares held by controlled - (2087) (2087)
entities (b)
8646 11585 11958
Shareholders' equity attributable to
outside equity interests 715 824 782
Total shareholders' equity 9361 12409 12740
(a) 'Other' comprises the following
amounts:-
- future income tax benefits 1110 1174 1064
- deferred charges, 726 722 740
prepayments and other
(b) BHP shares previously held by the Beswick Group were bought back and
cancelled during the year ended 31 May 1999.
Statement of cash flows
Year ended 31 May
1999 1998
$ million $ million
Cash flows related to operating activities
Receipts from customers 19331 21466
Payments to suppliers, employees, etc (15248) (16654)
Dividends received 20 40
Interest received 221 147
Borrowing costs (1087) (1058)
Proceeds from gas sales contract price re- 708 -
negotiation
Other 348 136
Operating cash flows before income tax 4293 4077
Income taxes paid (708) (518)
Net operating cash flows 3585 3559
Cash flows related to investing activities
Purchases of property, plant and equipment (2608) (3782)
Exploration expenditure (643) (712)
Purchases of investments (137) (136)
Purchases of, or increased investment in,
controlled entities net of their cash (75) (19)
Investing outflows (3463) (4649)
Proceeds from sale of property, plant and 548 408
equipment
Proceeds from sale or redemption of investments 361 1938
Proceeds from sale or partial sale of controlled
entities joint venture interests net of their cash 1290 780
Net investing cash flows (1264) (1523)
Cash flows related to financing activities
Proceeds from ordinary share issues, etc 149 355
Proceeds from sale of employee share plan loans - 110
Proceeds from issue or renegotiation of - 646
preference shares
Borrowings 2018 2548
Repayment of borrowings (4310) (4317)
Redemption of preference shares - (632)
Dividends paid (520) (449)
Other (14) 224
Net financing cash flows (2677) (1515)
Net (decrease)/increase in cash and cash (356) 521
equivalents
Cash and cash equivalents at beginning of year 949 363
Effect of exchange rate changes on cash and cash (20) 65
equivalents
Cash and cash equivalents at end of year 573 949
Reconciliation of cash
Cash and cash equivalents comprise:
Cash 460 977
Short term deposits 270 167
Bank overdrafts (157) (195)
Total cash and cash equivalents 573 949
Non-cash financing and investing activities
Shares issued:
Bonus Share Plan 107 73
Dividend Investment Plan 279 312
Other:
Employee Share Plan Loan instalments 36 38
The Bonus Share Plan is in lieu of dividends and the Dividend Investment
Plan is an application of dividends. The Employee Share Plan loan
instalments represent the repayment of loans outstanding with the Company,
by the application of dividends.
During the year ended 31 May 1998, the BHP Group negotiated the sale and
finance leaseback of property, plant and equipment with a value of $64
million.
Control gained over entities having material effect
No major acquisitions.
Loss of control over entities having material effect
On 18 December 1998, the BHP Group sold its principal manganese assets and
realised an abnormal profit of $353 million after tax. There was no material
contribution by these assets to the Group's operating profit for the current or
prior year.
Franking Credits
The BHP Group had a franking account balance of $230 million at 36 cents in
the dollar available at 31 May 1999. An amount of $453 million was used as
a result of the of the 2 June 1999 dividend payment. 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 following twelve months.
Income Tax
Year ended 31 May
1999 1998
$ million $ million
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 934 2083
income tax
Tax calculated at 36 cents in the dollar on 336 750
operating profit before abnormal items and
income tax
deduct tax effect of
Investment and development allowance 32 55
Rebate for dividends 2 12
Exempt income 6 6
Amounts over provided in prior years 100 -
Recognition of prior year tax losses 85 99
Overseas tax rate change 5 16
Research and development incentive 9 15
97 547
add/(deduct) tax effect of
Non-deductible accounting depreciation and 67 84
amortisation
Non-deductible dividends on redeemable 65 67
preference shares
Non tax effected operating losses 213 28
Tax differential-non-Australian income (7) (4)
Amounts under provided in prior years - 9
Foreign expenditure including exploration not 134 89
presently deductible
Foreign exchange/other (3) 1
Income tax attributable to operating profit 566 821
before abnormal items
deduct tax effect of abnormal items 402 303
Income tax attributable to operating profit 164 518
Exploration, evaluation and development expenditure capitalised
Year end 31 May
1999 1998
$ million $ million
Exploration, evaluation and
development expenditure- not yet in production 616 778
- in production 1550 2077
Total exploration, evaluation and development 2166 2855
expenditure capitalised
Details of exploration, evaluation and
development expenditure not yet in
production:
In exploration In development
and/or stage
evaluation stage
31 May 31 May
1999 1998 1999 1998
$ million $ million $ million $ million
Opening balance 465 366 313 890
Expenditure incurred during the year 630 712 27 87
Expenditure expensed during the year (475) (497) - (1)
Transferred from evaluation to (25) (111) 25 111
development
Transferred to production - (2) (226) (607)
Disposals (42) (11) (1) -
Depreciation (35) (45) - -
Exchange fluctuations and other (32) 53 (8) (167)
movements
Closing balance 486 465 130 313
Depreciation and amortisation
Year end 31 May
1999 1998
$ million $ million
Depreciation relates to
Buildings 123 101
Plant, machinery and equipment 1780 1772
Mineral rights 61 96
Exploration, evaluation and development 213 190
expenditures carried forward
Capitalised leased assets 8 15
Total depreciation 2185 2174
Amortisation (a)(b) 33 32
Total depreciation and amortisation 2218 2206
31 May 1999
$ million
Before Related Related Amount (after
Tax Tax outside tax) attributable
equity to members
interests
(a) Amortisation relates to
Amortisation of goodwill 31 - - 31
Amortisation of other 2 - - 2
intangibles
Total amortisation 33 - - 33
31 May
1999 1998
$million $ million
(b) Operating loss restated to exclude
amortisation of goodwill
Operating loss after tax before outside
equity interests (2 309) (1 531)
Add amortisation of goodwill 31 29
Operating loss after tax
before outside equity interests and
amortisation of goodwill (2 278) (1 502)
Less outside equity interests (3) 57
Operating loss after tax
(before amortisation of goodwill)
attributable to members of the BHP Entity (2 281) (1 445)
Segment results
Industry classification
$ million
Operating Operating
profit after profit after
income tax, Abnormal income tax Gross External Intersegment
before items net and segment operating operating
abnormal of tax abnormal assets revenue revenue
items(a) items (a)
--------------------------------------------------------------------------------
Industry Year ended 31 May 1999
classification(b)
--------------------------------------------------------------------------------
Minerals 361 (2649) (2288) 13159 9235 498
Steel 220 (105) 115 8670 8096 26
Petroleum 251 (89) 162 7823 3093 10
Services 97 173 270 756 1267 1 500
Net unallocated
interest (449) (449) 111
Group and
unallocated (112) (7) (119) 1079 119 3
items (c)
BHP Group 368 (2 677) (2309) 31487 21921 2037
Year ended 31 May 1998
Minerals 490 (2483) (1993) 16079 8303 575
Steel (d) 448 (246) 202 9784 8320 36
Petroleum 672 (163) 509 8337 5054 15
Services 153 99 252 1037 2530 1599
Net unallocated
interest (493) (493) 127
Group and
unallocated (8) - (8) 1845 330 10
items (c)
BHP Group 1 262 (2793) (1531) 37082 24664 2235
(a) Operating profit after income tax is before deducting
outside equity interests.
(b) Figures reflect the integration of the former Ferrous
Minerals, Coal, World Minerals and Copper Divisions into a single
Minerals business, integration of the former Steel Products and
Integrated Steel Divisions into a single Steel business, the
transfer of Insurances and Information Systems from Group and
unallocated items to Services and the transfer of BHP Research from
Group and unallocated items to Minerals. Comparatives have been
restated accordingly.
(c) Includes consolidation adjustments.
(d) Steel 1998 abnormal item includes $17 million (no tax effect)
attributable to outside equity interests.
Segment results
Geographical classification
$ million
Operating Operating
profit profit
after Abnormal after Gross External Intersegment
income items income segment operating operating
tax, net of tax and assets revenue revenue
before tax abnormal
items(a) items(a)
Geographical Year ended 31 May 1999
classification
Australia 933 (96) 837 19225 14043 199
North America (236) (2013) (2249) 3135 2889 27
United Kingdom 71 (75) (4) 2575 594 5
South America 190 (91) 99 3394 1558 33
Papua New Guinea 65 - 65 1100 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 (2677) (1860) 31487 21810 265
Net unallocated
interest (449) (449) 111
BHP Group 368 (2677) (2309) 31487 21921 265
Year ended 31 May 1998
Australia 1 541 (447) 1094 21 298 15 947 518
North America (116) (1 634) (1 750) 5 144 4 045 29
United Kingdom 155 - 155 3 051 737 4
South America 277 (129) 148 3 269 1 658 61
Papua New Guinea (26) - (26) 1 332 465 9
New Zealand 60 (156) (96) 1 097 699 -
South East Asia (b) 12 (70) (58) 1 092 723 -
Other countries (167) (357) (524) 799 263 -
1 736 (2 793) (1 057) 37 082 24 537 621
Net unallocated
interest (474) (474) 127
BHP Group 1 262 (2 793) (1 531) 37 082 24 664 621
(a) Operating profit after income tax is before deducting outside equity
interests.
(b) South East Asia 1998 abnormal item includes $17 million (no tax effect)
attributable to outside equity interests.
Issued and Quoted Securities at End of Financial Year
Paid-up
Number Of which value
on issue quoted cents
Ordinary shares
Fully paid 1,742,907,069 1,742,907,069 100
Partly paid 10,120,000 - 1
Partly paid 830,000 - 5
of which issued during year
Dividend Investment Plan 20,661,480 20,661,480 100
Bonus Share Plan 7,950,806 7,950,806 100
ESP Options Exercised 3,004,230 3,004,230 100
Performance Rights Exercised 25,000 25,000 100
Share Purchase Scheme 4,342,398 4,342,398 100
Options and Performance Rights
Number of Number Shares
Month options of Number issued on Number
of issue issued recipients exercised exercise lapsed
Employee Share Plan
April 1999 21 536 400 45 595 - - -
April 1999 8 184 300 944 - - -
April 1998 177 500 16 - - -
April 1998 140 000 23 - - 5 000
November 1997 7 910 900 16 411 45 300 45 300 31 000
November 1997 1 579 400 3 501 15 800 15 800 3 300
October 1997 3 992 000 379 84 450 84 450 25 000
October 1997 5 440 000 511 105 500 105 500 -
July 1997 395 500 36 - - -
July 1997 200 000 1 - - -
October 1996 848 100 46 43 000 43 000 181 500
October 1996 1 086 700 66 - - -
April 1996 295 000 5 - - 250 000
April 1996 45 500 6 - - -
October 1995 17 000 3 - - -
October 1995 38 500 5 - - -
July 1995 48 000 2 - - -
July 1995 76 000 9 - - 5 500
May 1995 10 565 900 9 187 290 000 319 000 1 934 400
May 1995 2 574 800 194 30 000 33 000 191 900
May 1994 5 782 100 5 802 4 120 200 4 532 220 1 661 900
Performance Rights
March 1999 1 000 000 1 25 000 25 000 -
Options and Performance Rights
Shares
under
option/
Options/ Performance
Performance Rights at
Rights date of Exer-
Month outstanding at Directors' cise Expiration
of issue balance date Report (1) price Exercise period dates
Employee Share Plan
April 1999 21 536 400 $16.39 Apr 2002-Apr 2009 22 Apr 2009
April 1999 8 184 300 $16.38 Apr 2002-Apr 2009 22 Apr 2009
April 1998 177 500 $15.40 Apr 2001-Apr 2003 15 Apr 2003
April 1998 135 000 $15.39 Apr 2001-Apr 2003 15 Apr 2003
Nov. 1997 7 834 600 $16.22 Nov 2000-Nov 2002 4-6 Nov 2002
Nov. 1997 1 560 300 $16.21 Nov 2000-Nov 2002 3-6 Nov 2002
Oct. 1997 3 882 550 $15.99 Oct 2000-Oct 2002 1-10 Oct 2002
Oct. 1997 5 334 500 $15.98 Oct 2000-Oct 2002 1-10 Oct 2002
July 1997 395 500 $19.63 Jly 2000-Jly 2002 14 July 2002
July 1997 200 000 $19.62 Jly 2000-Jly 2002 14 July 2002
Oct. 1996 623 600 $16.22 Oct 1999-Oct 2001 8 Oct 2001
Oct. 1996 1 086 700 $16.21 Oct 1999-Oct 2001 8 Oct 2001
April 1996 45 000 $18.29 Apr 1999-Apr 2001 15 Apr 2001
April 1996 45 500 $18.28 Apr 1999-Apr 2001 15 Apr 2001
Oct. 1995 17 000 $18.23 Oct 1998-Oct 2000 10 Oct 2000
Oct. 1995 38 500 $18.22 Oct 1998-Oct 2000 10 Oct 2000
July 1995 48 000 $18.59 Jly 1998-Jly 2000 24 Jly 2000
July 1995 70 500 $18.58 Jly 1998-Jly 2000 24 Jly 2000
May 1995 8 341 900 $19.10 May 1998-May 2000 1-12 May 2000
May 1995 2 352 900 $19.09 May 1998-May 2000 1-2 May 2000
May 1994 - $17.06 May 1997-May 1999 4-11 May 1999
61 909 850
===========
Performance Rights
March 1999 975 000 - Mar 1999-Mar 2009 March 2009
==========
(1) Following the 1995 bonus issue, holders of options issued in May 1995
and prior will receive 11 shares for each 10 options exercised.
Events occurring since balance date:
No material events have occurred since balance date.
New Accounting Standard
Australian Accounting Standard AASB 1036: Borrowing Costs was adopted in
1999. In accordance with that standard, Borrowing costs comprise both
interest expense and ancillary borrowing costs. Ancillary costs which were
previously reported as operating expenses have been reclassified as
borrowing costs. Comparative information has been restated accordingly, and
has resulted in $23 million for the year ended 31 May 1998 being
reclassified as Borrowing costs. Adoption of this standard had no material
effect on profits. In addition, ancillary borrowing costs were previously
included in the segment results of each business. Following a change in
accounting policy, these costs are now included in Net unallocated interest.
Comparatives have been restated accordingly.
Change in Accounting Polices
The significant accounting policies adopted in the current year are
consistent, in all material respects with those applied in the prior year.
For further information please contact: Rick Thiele
BHP Investor Relations - Melbourne
Tel: +61 3 9609-3885 (bh)
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