Annual Report 2004 57
Consolidated Santos Ltd
2004 2003 2004 2003
5. Profit from Ordinary Activities $million $million $million $million
(a) Profit from ordinary activities before tax includes the following items
Depreciation, depletion and amortisation:
Depletion of exploration and development expenditure 344.3 333.8 116.5 119.7
Depreciation of plant and equipment 169.1 168.7 85.8 69.1
Depreciation of buildings 2.0 3.3 1.0 1.8
Future restoration costs 19.8 16.8 7.6 5.2
Amortisation of goodwill 4.5 9.0 – –
539.7 531.6 210.9 195.8
Charges to provisions:
Doubtful debts (0.6) 0.2 (0.2) 0.1
Stock obsolescence 6.4 1.0 3.1 0.2
Employee entitlements and non-executive Directors’ retirement benefits (0.3) 6.7 (0.3) 6.2
Operating lease rentals 42.2 45.6 21.4 22.5
Profit on disposal of non-current assets (52.4) (55.1) (297.7) (45.8)
(Profit)/loss on disposal of controlled entities – (4.5) – 1.0
(b) Individually significant expenses/(gains) included in profit from 
ordinary activities before income tax
Insurance recovery (116.6) – (73.8) –
Costs associated with Moomba liquids recovery plant fire included in cost of sales 17.5 – 11.9 –
Profit on sale of oil and gas assets (43.9) – (298.4) –
Write-down of exploration and development expenditure 22.1 59.7 4.6 6.1
Organisation restructure costs included in selling, general and administrative expenses 21.6 – 21.6 –
Accelerated depreciation – Heytesbury plant – 20.2 – –
Profit on sale of investment in listed shares – (45.8) – (45.8)
6. Taxation
Income tax attributable to profit from ordinary activities
The prima facie income tax attributable to profit from ordinary activities differs from 
income tax expense and is calculated as follows:
Prima facie income tax at 30% (2003: 30%) 162.2 129.3 210.1 58.1
Tax effect of permanent and other differences which increase/(decrease) income 
tax expense:
Non-deductible depletion, depreciation and amortisation 17.9 18.9 2.4 2.5
Write-down of investment in controlled entities – – – 12.2
Other 0.8 10.7 6.2 (14.5)
Impact of the tax consolidation system
Income tax expense allocated to wholly-owned controlled entities under 
tax funding agreement – – (64.0) (131.1)
Income tax expense relating to transactions, events and balances of 
wholly-owned controlled entities in the tax-consolidated group – – 60.5 138.5
Transactions within the tax-consolidated group:
Dividends from controlled entities – – (75.5) –
Non-deductible interest – – 14.2 –
Profit on sale of oil and gas assets – – (76.8) –
Tax benefit arising from reduced deferred tax balances upon entering into 
Australian tax consolidation regime (20.0) (55.0) (20.0) (55.0)
160.9 103.9 57.1 10.7
Income tax comprises amounts set aside to:
Provision for current income tax 143.1 144.7 120.9 126.1
Deferred tax liability 24.6 (16.5) 0.2 15.7
Deferred tax asset (1.6) 12.8 – –
Foreign currency translation reserve (5.2) (37.1) – –
Tax related receivable from wholly-owned controlled entities – – (64.0) (131.1)
160.9 103.9 57.1 10.7
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