Purpose of this report is to analyze
an annual report of a company which is listed on Australian Securities Exchange
and to research on the nature of its disclosure documents and how they
practicing accounting standards.
have chosen to analyzethe 2011 annual report of BlueScope Steel Ltd.BlueScope
Steel is a leading supplier of premium metallic coated and painted steel
building products, and one of the world’s largest manufacturers of
pre-engineered steel buildings. It is a company limited by shares incorporated
in Australia whose shares are publicly traded on Australian Securities
Exchange. The registered office of the
company is located on Level11, 120 Collins Street, Melbourne Victoria. The
modern BlueScope Steel Limited has evolved from the coming together of three
pioneer companies in the Australian steel industry (The Broken Hill Proprietary
Company Limited, John Lysate (Australia) Pty Ltd and Australian Iron &
Steel Limited). BlueScope Steel Limited (formerly known as BHP Steel) was
listed on the Australian Stock Exchange on 15 July 2002. Since the public
listing, BlueScope Steel has expanded further in to Asia with the development
of new plants in China, Indonesia, Thailand and Vietnam. At present, the
business operates in 17 countries around the world with about 18,000 employees.
The company adopted its new name of BlueScope Steel in November 2003.
Iâ€™ll develop a list of disclosures in the report and will identify whether they
are mandatory or voluntary. Also there will be an analysis of how the company
complies with its related AASBs (Australian Accounting Standard Broad).
295 of the Corporations Act 2011states a number of mandatory disclosure
requirements as to be included in the annual report.
According to Corporations Act 2001, Contents of a annual
financial report are:-
report for a.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_year”>financial
Â§ The.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_statements”>financial statements for the year
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash flows
Â§ The notes to the.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_statements”>financial.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_statements”>statements
Disclosures required by.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1363.html#the_regulations”>the.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1363.html#the_regulations”>regulations
Notes required by the.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#accounting_standard”>accounting.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#accounting_standard”>standards
Any other.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#information”>information necessary to give a true
and fair view
Â§ The.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#director”>directors’ declaration about the
statements and notes.
(2) Annual Directorâ€™s Report
(3) Auditorâ€™s Report
Iâ€™vecompared above model withBlueScope
Steelâ€™s annual disclosure index to identify each disclosure as mandatory or
Table of contents in BlueScope
steel annual report 2011: –
Report is a mandatory disclosure, whichmust be disclosed to the public as an important
source of public information. Principle activities, Significant changes in
state of affairs, Matters subsequent to the year ended 30 June 2011, Likely
developments and expected result, Group review, Review and results of
operations, Dividends and Underlying earnings are some of the important
information that board of directors at BlueScope disclose to the public.
is a non-mandatoryreport, which reveals the composition of director board and
particulars of each directorâ€™s skills, experiences, expertise and special
Summary – Unaudited (Voluntary)
summaryis a voluntary disclosure, whichmentions about the key remuneration
decisions taken by board of directors during the year. This section also
highlights about BlueScope share holding policy.
BlueScopeâ€™s approach to remuneration strategy is to
support the delivery of long-term shareholder returns and to ensure executive
rewards reflect achievements during the year. As a company undergoing
structural change, it is important that the remuneration practices enable the
Company to retain and motivate its executive talent in a different business
Report – Audited (Mandatory)
According to section 300 of
Corporations Act, itâ€™s compulsory that the.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#director”>directors’ report for a.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_year”>financial.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#financial_year”>year must include details of:
(a) Dividends or distributions paid to.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#member”>members during the year
(b) Dividends or distributions recommended or declared for payment to.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#member”>members, but not paid, during the
(c) The name of each.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761a.html#person”>person who has been a.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#director”>director of the.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#company”>company,.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1276.html#registered”>registered scheme or.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#disclosing_entity”>disclosing entity at any time during or
since the end of the year and the period for which they were a.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#director”>director
The Directors of the Company present the Remuneration
Report prepared in accordance with section 300A of the Corporations Act 2001 for the Company and the consolidated
entity for the year ended 30 June 2011. The information provided in this
Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This
Remuneration Report forms part of the Directorsâ€™ Report.
Structure of this report
1. Remuneration and Organization Committee
2. Non-Executive Directorsâ€™ Remuneration
3. Remuneration Policies and Structure
4. Relationship between Company Performance and
5. Specific Remuneration Details
BlueScope Steel operates
superannuation funds in Australia, New Zealand and North America for its employees.
In these locations there is a combination of defined benefit and defined
contribution type plans. The defined benefit schemes are closed to new members.
Contributions are also made to other international retirement benefit plans for
employees outside of Australia, New Zealand and North America.
per the act, BlueScope steel discloses its remuneration report with information
about; Remuneration and organization committee, Non executive directorsâ€™
remuneration, Remuneration policy and structure, Relationship between company
performance and remuneration, etc.â€¦
Governance Statement (Voluntary)
is a voluntary disclosure to reflect BlueScope steelâ€™s compliance with ASX
corporate governance principles and recommendations.
of Comprehensive Income (Mandatory)
One of the mainmandatory reporting requirements. Also referred to as Profit
and Loss statement. Reports on a company’s income, expenses, and profits over a
period of time.Statement of Comprehensive Income provides information on the operation of the entity
including sale and the various expenses incurred during the financial period.
of Financial Position (Mandatory)
Mandatory report, which can also be
referred as balance sheet illustrates.wikipedia.org/wiki/Asset” title=”Asset”>assets,.wikipedia.org/wiki/Legal_liability” title=”Legal liability”>liabilities,
and.wikipedia.org/wiki/Ownership_equity” title=”Ownership equity”>ownership equity of
a company at a given point in time.
of Changes in Equity (Mandatory)
which explains the changes of the company’s equity throughout the reporting
of Cash flows (Mandatory)
report, which gives a measure of total cash flows from all operating, financial
and investing events of entity for a financial year.
to the Consolidated Financial Statements (Mandatory)
a summary on basis of preparation of concise financial report and some
important corporate information. Additional notes added to the end of the.wikipedia.org/wiki/Financial_statement” title=”Financial statement”>financial statements to
supplement the reader with more information to understand financial statements.
mandatory disclosure declaring by directors of the company mentioning their
opinions, reasonable grounds to believe that the entity.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s601raa.html#will”>will be
able to pay its debts as and when they become due, payable and etc. In
BlueScopeâ€™s directorâ€™s declaration has signed by chairman, G.J.Kraehe and
Managing director P.F.O.Malley.
Auditorâ€™s Report to the Members (Mandatory)
annual reports has audited by Ernst and Young auditors and have come to an
opinion of that the Remuneration report the entity complies with section 300 of
Corporations Act 2011.
is a voluntary report. Contains information about share distribution schedule, twenty
largest registered shareholders and voting rights for ordinary shareholders.
disclosure with a list of executive and non-executive directors. Also gives
information about entityâ€™s registered office, auditor information and share
BlueScope Steel paid a fully franked dividend for the
year ended 30 June 2010 of 5 cents per share in October 2010 and a fully
franked interim dividend of 2 cents per share in April 2011 to its
In view of the financial performance of the Company in
the second half of the year ended 30 June 2011 the Directors determined not to
pay a final dividend for the year ended 30 June 2011.
Further Fixed Cost
In 2011, the Company has been able to achieve a
further $38 million in fixed cost reductions, whilst successfully maintaining
the cumulative savings of $696 million ($340 million in permanent savings and
$356 million in temporary savings), based on FY2008 base levels.
Cost reductions remain an ongoing focus for the
business and we expect further improvements, once the BANZ restructure and the
implementation of todayâ€™s announcement are completed.
CORPORATE GOVERNANCE STATEMENT
As a global organization with businesses operating in
many countries, the BlueScope Steel Group must comply with a range of legal,
regulatory and governance requirements.
The Board places great importance on the proper
governance of the Group.
The Board operates in accordance with a set of
corporate governance principles that take into account relevant best practice
recommendations. These include the Corporate Governance Principles and Recommendations
of the ASX Corporate Governance Council.
The Company complies with each of the recommendations
in the ASX Principles and Recommendations. A summary of BlueScope Steel’s
compliance with the recommendations follows, including details of specific disclosures
required by a recommendation.
Ã¼ Lay solid foundations for
management and oversight
Ã¼ Structure the Board to add
Ã¼ Promote ethical and
Ã¼ Safeguard integrity in
Ã¼ Make timely and balanced
Ã¼ Respect the rights of
Ã¼ Recognize and manage risk
Ã¼ Remunerate fairly and
Annual report states that the full finance report is based complies with
Australian accounting standards issued by the Australian accounting standard board
(AASB) and International financing reporting standards (IFRS) issued by the
International accounting standards board (IASB). They also declare that the
concise financial report has been prepared in accordance with Corporations Act
2011 and accounting standard 1039 (Financial reports). The figures of finance
report have been rounded off to nearest hundred thousand dollars, according to
the class order 96/100 issued by Australian securities and investment
part of this assignment, Iâ€™ll be analyzing two accounting areas to clarify how
this entity complies with their relevant AASBs; Property, plant and equipment
(AASB 116), Intangible assets (AASB 138).
AASB 116 – Property, plant
main requirements of AASB 116 are:
Property, plant and equipment must initially be
measured at its cost.
Property, plant and equipment can be measured
at either cost or fair value after initial measurement.
Where property, plant and equipment is
acquired at no or nominal cost by a not for profit entity, the cost is its fair
value as at the date of acquisition.
Revaluations are required to be performed at
the same time for all property, plant and equipment in the same class.
Revaluation increments or decrements relating
to property, plant and equipment held by a not for profit entity can be offset
against a revaluation reserve for a class of similar assets.
Revaluation increments or decrements relating
to property, plant and equipment held by a for-profit entity can be offset
against a revaluation reserve for that asset, not against a class of assets.
Property, plant and equipment shall be misrecognized
on disposal or when no future economic benefits are expected from its use or
focusing on BlueScopeâ€™s Statement of financial position, as at 30 June 2011,
itâ€™s clear that they have recognized Property, plant and equipment as a class
of assets which possibly giving future economic benefits and their costs can be
measured reliably. They have initially
recognized Property, plant and equipment at its original cost on 2010 and then
accounted with a lesser value on 2011, which can be assumed as a fair value.
And theirimpairment losses have been recognised and
reversed in the statement of comprehensive income in accordance with AASB 136.
Reversal of Impairment loss: – In March 2010, Packaging products recognised an
impairment reversal for $5.6M against property, plant and equipment after
securing a contract for the sale of previously impaired No.2 Temper Mill (Notes
6. Annual report 2011, BlueScope Steel Ltd)
important disclosure requirement in AASB116 is that thefinancial statements
should reveal reconciliation for each class of property, plant and equipment of
their carrying amounts at the beginning and end of the period showing the net
exchange differences arising on the translation of the financial statements from
the functional currency into a different presentation currency, including the
translation of a foreign operation into the presentation currency of the
reporting entity. BlueScope Steel Ltd complies with this requirement by
recognising â€œExchange differences on translation of foreign affairsâ€ as an
expense for year 2011 and as an income for year 2010.
AASB 138 â€“ Intangible Assets
Australian Accounting Standards Board developed AASB 138 â€“ Intangible Assets
under section 334 of Corporations Act 2001 on 15 July 2004. This compiled
version of AASB 138 applies to annual reporting periods beginning on or after 1
general, an entity shall disclose the following for each class of intangible
assets, distinguishing between internally generated intangible assets and other
Whether the useful lives are
indefinite or finite and, if finite, the useful lives or the amortisation rates
The amortisation methods
used for intangible assets with finite useful lives
The gross carrying amount
and any accumulated amortisation (aggregated with accumulated impairment
losses) at the beginning and end of the period
The line item(s) of the
statement of comprehensive income in which any amortisation of intangible
assets is included
A reconciliation of the
carrying amount at the beginning and end of the period.
In BlueScopeâ€™s statement of comprehensive
income, they have recognized Depreciation and Amortization as a single item for
the accounting period. They havenâ€™t mentioned anything aboutamortisation
methods used for intangible assets and about finite useful lives. Also thereâ€™s
no list of intangible items given on the statement of comprehensive income. It
doesnâ€™t seem like the entity following much of AASB 138.
The wall street journal
Deal Journal Australia.
Australian Journal of
Mechanical Engineering, Vol. 6, No. 2, 2008