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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