2001 Annual Report - OneSteel

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OneSteel’s vision is:“To be the safest and most profitableAustralian steel company focused ondelivering value to shareholders, customersand employees”.onebusinOneSteel was created by combining eighthistorically-diverse yet related businesses toform a vertically-integrated mining, steelmanufacturing, and steel and metal productsdistribution company.OneSteel manufactures what is known as steellong products. These include structural steel, pipeand tube, rails, reinforcing steel, rod, bar andwire. The majority of OneSteel’s products are usedin the construction, manufacturing, housing,mining and agricultural industries.In the past, under former management, thesebusinesses were essentially run as independentoperations. The challenge for OneSteelmanagement is to bring these businesses togetherto operate as a single entity, where all elements ofthe operations are in alignment. By achieving this,significant value can be created for shareholders,customers and employees.The OneSteel name was created to encapsulatethe bringing together of its various businesses.ONESTEEL KEY STRENGTHSIn striving to meets its vision, OneSteel alreadyhas a number of key strengths providing a solidfoundation from which to build. They include:Experienced Management Team and WorkforceOneSteel has a strong management team at bothcorporate and operating levels through acombination of experience over many decades insteel production, manufacturing and distribution ofsteel products, combined with new managerial andoperational talent. Furthermore, the OneSteelworkforce has gained significant experience andtraining through a range of technical agreementswith leading international steel manufacturers.Leading Market PositionsOneSteel has leading market positions across itsproduct range (refer Figure One). The market forlong products has exhibited an underlying growthrate of 4% per annum through the cycle over thelast decade. Having leading market positions andassociated strong brands provides the companywith the opportunity to bring innovations tomarket in a faster and more effective manner.Figure One – Market PositionsMarketMarket PositionStructural Products 1Steel Rail Products 1Rod and Bar Products 1Wire Products 1Reinforcing Products 2Pipe and Tube Products 1Metals Distribution Australia 1Metals Distribution New Zealand 1Nationwide Distribution NetworkOneSteel has an extensive metals distributionnetwork in Australia, with a market shareestimated by OneSteel management to be in thevicinity of 35%. Through a combination of directlyowned and franchised outlets in over 200locations around Australia, OneSteel can delivera wide range of steel and steel products to allparts of the country.2
ssVertically-Integrated OperationsOneSteel has vertically integrated operationsfrom the iron ore mines in Whyalla, throughto steel production, long steel productsmanufacture and customer distribution networksthroughout Australia.This provides the company with the opportunityto build a highly market focused business wherecustomer purchasing signals can be easilytranslated back into the production andmanufacturing process.Flexible Steel ProductionOneSteel has two main steel facilities – anintegrated steelworks in Whyalla which convertsiron ore into steel, and a steel mill in Sydneywhich utilises electric arc furnace technology tomelt scrap metal to produce steel. Together thesefacilities produce approximately 1.7 milliontonnes of steel per annum.With its own iron ore mines providing low costraw materials, Whyalla Steelworks providestwo-thirds of OneSteel’s steel requirements, whilethe Sydney Steel Mill, with its ability to quicklyvary production levels, provides the capability tovary output levels to match market requirements.Combined, these facilities give OneSteel thecapability to produce highly specialised steel andsteel products that can demand premium prices.FACING THE CHALLENGESThe challenge for OneSteel is to harness thesestrengths to deliver increased value. In the past,as part of a much larger organisation, OneSteelbusinesses were not fully integrated, and as such,there were duplicated functions. This meant therewere many points of contact for customers andthe potential for coordinated market offerings ofa range of products was not completely realised.It also meant that the signals to fully alignproduction with market demand were not clear,increasing the potential for production and marketdemand to be out of step.The restructuring task to bring OneSteel togetheras one business is immense. On the company’slisting on the Australian Stock Exchange on23 October 2000, OneSteel managementembarked on the restructuring path withachievements to date outlined in the ManagingDirector’s Review.The key strategic thrusts underlying therestructuring of OneSteel can be summarised as:• Being the customers’ preferred supplier;• Improving operating performance;• Optimising the business portfolio;• Investing in people; and• Focused strategic expansion.The company still has a long way to go toachieve its vision. Some hard decisions havealready been taken and measures put in place tomake OneSteel a much more market-sensitive andefficient business. A clear course of action hasbeen set, and some significant achievementsmade in the company’s first eight months ofoperation as a publicly-listed corporation.CUSTOMER SERVICE: OneSteel Wire “Supplier of the Year” Awarded by CRT – February 2001Photo (left to right) – Neil Gibson, OneSteel; John Hughes, CRTOneSteel was awarded the “Supplier of the Year” Award at the annual CRT (Combined Rural Traders)Trade Exposition. This is the 4th time OneSteel has won the award in the last five years. The “Supplier ofthe Year Award” is decided upon by CRT members who rate suppliers on various elements of the business.The elements include product quality, sales support, customer service, support in new product launches,advertising and promotions, distribution and overall perception of the supplier company.3
Page 1 and 2: 2001 ANNUAL REVIEW
Page 3: CONTENTSOne Business 2Year One High
Page 7 and 8: FINANCIAL HIGHLIGHTS - PRO-FORMA*Fi
Page 9 and 10: Inventories were managed down $106.
Page 11 and 12: Figure Two - OneSteel IntegrationWH
Page 13 and 14: Management StructureONESTEEL LIMITE
Page 15 and 16: Figure Ten - Other Manufacturing ($
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
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Directors’ Report (continued)Deta
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Statement of Financial PositionAT 3
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Statement of Cash FlowsFOR THE PERI
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Notes to the Financial StatementsNO
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Independent Audit ReportTo the Memb
Page 89 and 90:
Shareholder Information (continued)
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Company DirectoryDIRECTORSPeter Sme
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2001 Annual Report - OneSteel

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