BlueScope Annual Report 2018/2019

Safety Regrettably, last November a contractor was fatally injured in Thailand. He was working on an independently managed construction site for a contracting company engaged by BlueScope Lysaght Thailand. We are using the lessons learnt from this tragic incident to make sure we do all we can to prevent this happening again. This includes conducting safety training for customers and contractors at the dedicated training centre at our Map Ta Phut site in Thailand. Your Directors and I continue to drive safety in the business, focusing on better managing risk and ensuring the care of our people. We are reviewing our traditional approach and response to workplace injuries, with a greater focus on the severity of injuries and the time and care given to injured employees to pave their return to meaningful work. During the year we experienced an increased number of soft tissue injuries that often require longer time, care and proper treatment to ensure a full return to work, and this contributed to an increased Lost Time Injury Frequency Rate of 1.16, and Medically Treated Injury Frequency Rate of 5.6 in FY2019. Strategy Our Bond, our Strategy, our Financial Framework and our approach to Sustainability continue to guide what we aim to achieve and how we do it. A new Strategy & Transformation team was charged with designing BlueScope for the future. The team’s work focuses on innovation, digital transformation, strategic marketing and research and development. To date transformation opportunities have been identified in coating and painting technology, while robotics and automation are also unlocking the next wave of productivity and cost savings in manufacturing. Financial Framework Our financial framework is focused on delivering returns to our shareholders, disciplined capital allocation and an optimal capital structure. It guides our measurement and rewarding of financial performance. The Company achieved a very creditable underlying ROIC of 19.5 per cent in FY2019. Underlying EBIT and ROIC across all business units underpin our focus on delivering top quartile shareholder returns. BlueScope finished FY2019 with net cash of nearly $693 million. Given the transformation of the business in recent years – where we now have strong earnings and cash flows through prudent balance sheet management - we will now target a capital structure of around zero net debt for the consolidated Company. We continually watch for appropriate growth opportunities, that fit our strategy. Our capital expenditure focus is: to maintain safe and reliable operations; to invest in foundation and new technologies; to invest to maximise value from ‘best in class’ assets; and to invest for growth in premium branded products. In the short term, we will continue with our 1H FY2020 buy-back of up to $250 million, and your Board approved the payment of a final unfranked dividend of 8 cents per share for FY2019. Sustainability BlueScope continues to embed sustainability in all that we do. Our FY2019 Sustainability Report published in September provides further disclosures aligned to TCFD (Task Force on Climate-related Financial Disclosure), and our achievements to date on supply chain sustainability. Also, the report highlights our progress on the five key material sustainability topics: Safety, health & wellness – A new five year health, safety and environment strategy focuses on rigorously challenging the effectiveness of our critical risk controls, and adopting a more holistic approach. As we have pursued our goal of Zero Harm year on year, it has become harder to make continuous improvements. While we will continue to report on lost time and medically treated injury frequency rates, we are also looking at other indicators to guide us in adequately managing health and safety risks and drive toward Zero Harm. These include building leadership awareness of safety risks, and increasing employee engagement in safety improvement projects. Climate change and energy – We developed a shadow carbon pricing approach in our Capital Investment Framework, climate risk scenarios and GHG emissions intensity reduction target – which we met, with a one per cent reduction of CO 2 emissions per tonne of steel produced. FY2019 FINANCIAL HEADLINES REPORTED NET PROFIT AFTER TAX (NPAT) $1,015.8 million UNDERLYING NPAT $966.3 million UNDERLYING EBIT $1,348.3 million UNDERLYING PRE-TAX ROIC 19.5% CAPITAL MANAGEMENT 1H FY2020 BUY-BACK up to $250 million FINAL DIVIDEND (UNFRANKED) 8 cents per share 2

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