2001 Annual Report - OneSteel

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Managing Director’s Review (continued)InitiativeEmail Metals acquisitionthe addition of Email inventories in the months ofMay and June) of $144.8 million or 22.4% fromthe peak in December 2000. This reduction wasinstrumental in OneSteel achieving its cashgeneration target of $170 million during the year.Rationalise low margin products. A program hasbeen implemented within OneSteel called“Managing Complexity for Profit” aimed atlessening the complexity of the range of productsoffered by OneSteel and providing unit costproduction savings and improving margins.Systems are being developed to determine productprofitability throughout the production anddistribution process. Those products that aremaking either zero or low margins are beingidentified with associated prices adjusted toincrease returns. In some cases, if prices cannot beadjusted, OneSteel will examine alternate cheaperways of manufacturing the product or contemplateceasing production of that product altogether.At the Whyalla Steelworks, the companyproduces 106 billet grade/sections. Over the next12 months, 25% to 30% of these grade/sectionswill be reduced.This process will streamline the number of productsthe company manufactures, providing unit costproduction benefits while maintaining the sameoffering to the market. This initiative, along withother revenue enhancing programs, delivered$15.2 million in positive contribution during 2000/01.Appropriate reward structure. The rewardstructure has been significantly realigned to reflectthe performance of OneSteel as a corporationrather than being based on the success ofindividual businesses, as was the case in the past.The new structure concentrates on elements suchas profitability, funds employed, cash generation,cost containment and safety across the company.This ensures that decisions taken will be made onthe basis of maximising the benefits across theorganisation rather than just one business.Figure Five – Benefits of Industry Rationalisation InitiativesBenefits• Provides greater leverage for the distributionof steel and steel products to the market fromAustralian manufacturers.• Increases the production pull through forOneSteel’s manufacturing.• Improves OneSteel’s geographic footprint andproduct offering to the market.This incentive structure will develop behavioursacross the businesses centred around integrationbenefits as a way of generating value rather thanmaximising divisional profit which can destroyvalue in other parts of the business.Industry Rationalisation. The “spin-out” ofOneSteel in itself has been a major move towardindustry rationalisation. As outlined in theChairman’s Review (refer to pages 6 to 7),OneSteel undertook two significant strategicmoves during the year to further rationalise theindustry - the acquisition of Email Metals in a jointbid with Smorgon Steel, and the announcedclosure of OneSteel’s Brisbane Bar Mill. Theperceived benefits of these initiatives and theOneSteel “spin-out” are outlined in Figure Five.OneSteel will continue to examine opportunitiesfor further rationalisation of the steel industry tobuild on its critical mass as a domestic nicheplayer within the Australian market.THE YEAR AHEADClearly, the underlying performance of OneSteelin the years ahead has to improve. This will onlyhappen by continued delivery of benefits throughthe business restructuring process. While thetrading conditions experienced over the last12 months masked some of the benefits achievedfrom implementing the OneSteel change program,I am confident the benefits will provide increasedreturns and value for shareholders over themedium term.OneSteel will continue to focus on its key strategyareas outlined above in the year ahead. Ourpriority is to continue to improve the underlyingperformance of the businesses while completingthe integration of the Email Metals’ businesses.Trading activity in the first six months of the2001/02 financial year is expected to remainsubdued with some exceptions such as residentialhousing and rural sector activity.The second six months should see an increase inactivity, particularly for OneSteel stemming fromrail production for the Alice Springs to Darwinrailway, and an expected slight pick up inconstruction sector activity later in thefinancial year.From an operational viewpoint, OneSteel willcontinue to consolidate its current market position,optimise production capability, generate solidcash flow and repay debt to provide balancesheet flexibility. It will be through this disciplinethat OneSteel will be in a position to examinefurther growth opportunities.Brisbane Bar Mill closure • Reduces OneSteel’s annual production capacityby 170,000 tonnes.• Increases the capacity utilisation of OneSteel’sother Bar Mills.10Bob EveryManaging Director &Chief Executive Officer
Management StructureONESTEEL LIMITEDBob EveryManaging Director & Chief Executive OfficerAUSTRALIANOPERATIONSLeo SelleckPresidentWHYALLASTEELWORKSMiningIntegrated SteelworksStructural Rolling MillsRail Products FacilitiesCORPORATE STAFFBill GatelyVice PresidentHuman ResourcesGeoff PlummerPresidentMARKET MILLSSydney Steel MillRod MillBar MillsWire MillsWire RoperyPipe and Tube MillsOil and GasMark GellVice PresidentExternal Affairs &Investor RelationsBernard CarrascoChief FinancialOfficer (Retiring inOctober 2001)Robin FreemanPresidentDISTRIBUTION83 OneSteelDistribution Sites39 Reinforcing Mesh andRebar sites89 METALAND FranchisesTony ReevesChief FinancialOfficer (CommencingOctober 2001)INTERNATIONALOPERATIONSNick CalavriasChief Executive OfficerNew ZealandSTEEL ANDTUBE HOLDINGS (NZ)50.32% Shareholding74.66% effectiveshareholding inAJ ForsythPaul LockeCompany SecretaryLEAD TEAMBernard Carrasco – Chief Financial OfficerMr Carrasco is Chief Financial Officer andDirector for OneSteel until his retirement inOctober 2001. Formerly, Mr Carrasco was VicePresident of Finance, BHP Steel. Mr Carrascohas held a number of senior financial andgeneral management positions in theTubemakers Group in Australia, Asia andSouth Africa.Robin Freeman – President OneSteel DistributionMr Freeman joined OneSteel in April 2001from Email where he was Chief FinancialOfficer. He joined Email in 1999 from CSRwhere he worked in commercial and financialroles for four years. Prior to that Mr Freemanworked in financial services with Deloitte wherehe was Managing Partner for the firm’sNSW operations.Bill Gately – Vice President Human ResourcesMr Gately joined OneSteel from BHP wherehe worked since 1979 in a range of HumanResource and Employee Relations positions.During that period he worked for BHP Mineralsin the Northern Territory and in the Newcastleand Port Kembla Steel operations. Mr Gatelyplayed a key role in significant businessimprovement initiatives such as the opening ofmajor new steel facilities at Port Kembla andmore recently the restructuring of the longproducts steel business based in Newcastle.Mark Gell – Vice President External Affairs &Investor RelationsMr Gell joined OneSteel in January 2001following 20 years experience working in thegovernment, banking and business sectors forcompanies such as Citibank, ANI, TNT, Boraland Telstra. He has held senior generalmanagement positions in public policy, investorrelations and corporate affairs.Paul Locke – Company SecretaryMr Locke has over 30 years industryexperience and joined OneSteel from BHP asManager, Corporate Services. Prior to this,Mr Locke worked for Tubemakers as ManagerCorporate Affairs, Group Controller for WilliamAdams and Company Limited, and AuditManager with Price Waterhouse.Geoff Plummer – President Market MillsMr Plummer joined OneSteel from BHP after22 years experience with the Group. Prior to hiscurrent role Mr Plummer was President Rod & BarProducts (BHP Steel). He has also served as ChiefExecutive Officer of the joint venture companyBekaert-BHP Steel Cord and held the positions ofPresident of Australian Logistics Services, BHPTransport and Manager, Operations at BHP wiremills in Sydney and Brisbane.Mr Tony Reeves – Chief Financial OfficerMr Reeves will be appointed Chief FinancialOfficer of OneSteel in October 2001. He hasspent most of his career with ICI/Orica. Hisrecent roles have been Chief Financial Officer ofOrica’s worldwide explosives business (UnitedStates), Director Finance & IT for ICI Polyester(United Kingdom), Controller (Australia/NewZealand) and Corporate Treasurer(Australia/New Zealand). He has also heldcommercial management positions with AlliedMills, Vinidex and Unilever early in his career.Leo Selleck – President Whyalla SteelworksMr Selleck joined OneSteel from BHP where heserved in a variety of operating roles since1972 and also in the areas of environment andsafety management. Mr Selleck has significantexperience in integrated steel making processesand has worked at the Whyalla Steelworkssince 1995 holding the positions of GeneralManager of Steel Operations and GeneralManager of Strategic Operations. Mr Selleckhas been responsible for Whyalla Steelworkssince May 1999.11
Page 1 and 2: 2001 ANNUAL REVIEW
Page 3 and 4: CONTENTSOne Business 2Year One High
Page 5 and 6: ssVertically-Integrated OperationsO
Page 7 and 8: FINANCIAL HIGHLIGHTS - PRO-FORMA*Fi
Page 9 and 10: Inventories were managed down $106.
Page 11: Figure Two - OneSteel IntegrationWH
Page 15 and 16: Figure Ten - Other Manufacturing ($
Page 17 and 18: Map of OperationsCANADAYukonWhiteho
Page 19 and 20: Australian DistributionTHE BUSINESS
Page 21 and 22: OneSteel structural steel used for
Page 23 and 24: Human ResourcesSTANDING ALONEMuch o
Page 25 and 26: EnvironmentOneSteel Duragal product
Page 27 and 28: CommunityOneSteel recognises the im
Page 30 and 31: Corporate Governance (continued)Com
Page 32 and 33: Directors’ ReportDIRECTORSThe fol
Page 34 and 35: Directors’ Report (continued)Deta
Page 36 and 37: Discussion of Pro-forma ResultsPRO-
Page 38 and 39: Pro-forma Results12 months to 30 Ju
Page 40 and 41: Discussion and Analysis ofStatutory
Page 42 and 43: Statement of Financial PerformanceF
Page 44 and 45: Notes to the Concise Financial Repo
Page 46 and 47: Notes to the Concise Financial Repo
Page 48 and 49: Directors’ DeclarationThe directo
Page 50 and 51: Shareholder Information (continued)
Page 53 and 54: 2001 FULL FINANCIAL REPORT
Page 55 and 56: Directors’ ReportDIRECTORSThe fol
Page 57 and 58: Directors’ Report (continued)Deta
Page 59 and 60: Statement of Financial PositionAT 3
Page 61 and 62: Statement of Cash FlowsFOR THE PERI
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Notes to the Financial StatementsNO
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Independent Audit ReportTo the Memb
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Shareholder Information (continued)
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Company DirectoryDIRECTORSPeter Sme
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