Investigating Accountants' Report - OneSteel

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150 PART 11 Investigating Accountants’ Report31 August 2000The DirectorsThe Broken Hill Proprietary Company LimitedLevel 45 BHP TowerBourke Place600 Bourke StreetMelbourne Victoria 3000AustraliaDear SirsInvestigating Accountants’ Report1. IntroductionThis report has been prepared at the request of the directors of BHP for inclusion ina shareholder scheme booklet to be dated on or about 31 August 2000 relating to theSpin-out of OneSteel from the BHP Group (the "Scheme Booklet").We have been requested to report on the historical financial information contained inPart 5.4 of the Scheme Booklet. The nature of this financial information, the scopeof the work we have undertaken and the results of that work are set out below.2. Historical Financial InformationThe historical financial information presented in Part 5.4 of the Scheme Bookletcontains the pro forma consolidated financial statements of OneSteel and itscontrolled entities ("the OneSteel Group") as at 30 June 2000 and for the 13months then ended and pro forma consolidated results for the two years ended 31May 1999 and 1998. The historical financial information has been prepared on thebasis that the OneSteel Group has been in existence since 1 June 1997. Inpreparing this historical financial information, management has considered theneed for it to be adjusted to reflect changes in the operations and accountingpolicies of the OneSteel Group to enable comparability of the performance of theOneSteel Group over the three periods and comparability with its performance infuture periods. Details of these assumptions and adjustments are detailed in thenotes to the pro forma consolidated financial statements.The historical financial information presented in Part 5.4 of the Scheme Bookletcomprises:• Pro forma consolidated balance sheet as at 30 June 2000;• Pro forma consolidated profit and loss statements for the 13 months ended 30June 2000 and the two years ended 31 May 1999 and 1998;• Pro forma consolidated statements of operating and investing cash flows forthe 13 months ended 30 June 2000 and the two years ended 31 May 1999 and1998; and• Notes to the financial statements set out above.Information in the pro forma consolidated profit and loss statement is presented tothe EBIT level and cash flow information is presented for certain operating andinvesting activities only.
Investigating Accountants’ Report PART 111513. Scope of Work3.1 Pro forma results for the two years ended 31 May 1999 and 1998The pro forma consolidated profit and loss statement and the pro formaconsolidated statement of operating and investing cash flows for the two yearsended 31 May 1999 and 1998 in Part 5.4 of the Scheme Booklet have not beenaudited. They have been derived from the accounting records, and whereapplicable, the financial statements of the businesses that will comprise theOneSteel Group as if they had been included in the OneSteel Group throughoutthe two years ended 31 May 1999 and 1998.We have performed a review of this information in accordance with AUS 902“Review of Financial Reports” in order to state whether, on the basis of theprocedures described, anything has come to our attention that would indicatethat the pro forma results have not been properly drawn up so as to presentfairly, in accordance with the basis of preparation, assumptions and accountingpolicies as set out in Part 5.4 of the Scheme Booklet, the financial performanceof the OneSteel Group for the two years ended 31 May 1999 and 1998.A review is limited primarily to inquiries of the OneSteel Group personnel andanalytical procedures applied to financial data. These procedures do notprovide all the evidence that would be required in an audit; thus, the level ofassurance provided is less than that provided by an audit. We have notperformed an audit and, accordingly, we do not express an audit opinion on thepro forma results included in Part 5.4 of the Scheme Booklet for the two yearsended 31 May 1999 and 31 May 1998.3.2 Pro forma consolidated financial statements at 30 June 2000 and forthe 13 months then endedWe have audited the pro forma consolidated financial statements of theOneSteel Group at 30 June 2000 and for the 13 months then ended. Our auditwas conducted in accordance with Australian Auditing Standards to providereasonable assurance whether the financial statements were free of materialmisstatement. Our procedures included examination, on a test basis, ofevidence supporting the amounts and other disclosures in the financialstatements and the evaluation of accounting policies and significant accountingestimates. These procedures were undertaken to form an opinion whether, inall material respects, the pro forma consolidated financial statements werepresented fairly in accordance with the bases of preparation, assumptions andaccounting policies set out in Part 5.4 of the Scheme Booklet so as to present aview of the OneSteel Group which was consistent with our understanding of itsfinancial position, results of operations and cash flows.4. Statements of Opinion4.1 Pro forma consolidated results for the two years ended 31 May 1999and 1998Based on our review, which is not an audit, we have not become aware of anymatter that would cause us to believe that the pro forma consolidated results forthe two years ended 31 May 1999 and 1998 have not been properly drawn upin accordance with the bases of preparation, assumptions and accountingpolicies set out in Part 5.4 of the Scheme Booklet, so as to give a true and fairview of the performance of the OneSteel Group for the two years ended31 May 1999 and 1998.11
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