TIDMBLT
RNS Number : 2434Y
BHP Billiton PLC
19 February 2013
NEWS RELEASE
Release Time IMMEDIATE
Date 20 February 2013
Number 04/13
BHP BILLITON RESULTS FOR THE HALF YEAR Ended 31 DECEMBER
2012
-- The December 2012 half year was more challenging for the
global resources industry. Against this backdrop, BHP Billiton's
solid financial results were built on the foundations of strong
operating performance, our continued focus on costs and the
benefits of our differentiated strategy.
-- Underlying EBIT(1)(2) declined by 38% to US$9.8 billion.
Substantially lower commodity prices, a weak US dollar and
inflation more than offset the positive contribution from stronger
volumes and operating cost savings.
-- The Group's Underlying EBIT margin(3) of 32% was supported by
a US$1.9 billion reduction in controllable cash costs(4) on an
annualised basis.
-- Attributable profit excluding exceptional items(3) declined
by 43% to US$5.7 billion. Exceptional items totalling US$1.4
billion contributed to the 58% decrease in Attributable profit to
US$4.2 billion.
-- A targeted divestment program continues to realise
significant value for shareholders with asset sales totalling
US$4.3 billion announced or completed during the period.
-- A four per cent increase in the interim dividend takes the
compound annual growth rate of our progressive dividend to 24% over
the last 10 years.
2012 2011 Change
Half year ended 31 December US$M US$M %
------------------------------------------------------------------- ------- ------- --------
Revenue 32,204 37,480 (14.1%)
------------------------------------------------------------------- ------- ------- --------
Underlying EBITDA(1) 13,244 18,743 (29.3%)
------------------------------------------------------------------- ------- ------- --------
Underlying EBIT(1)(2) 9,782 15,853 (38.3%)
------------------------------------------------------------------- ------- ------- --------
Profit from operations 7,005 15,853 (55.8%)
------------------------------------------------------------------- ------- ------- --------
Attributable profit - excluding exceptional items 5,683 10,045 (43.4%)
------------------------------------------------------------------- ------- ------- --------
Attributable profit 4,238 10,045 (57.8%)
------------------------------------------------------------------- ------- ------- --------
Net operating cash flows(5) 6,402 12,280 (47.9%)
------------------------------------------------------------------- ------- ------- --------
Basic earnings per share - excluding exceptional items (US cents) 106.8 188.7 (43.4%)
------------------------------------------------------------------- ------- ------- --------
Basic earnings per share (US cents) 79.6 188.7 (57.8%)
------------------------------------------------------------------- ------- ------- --------
Underlying EBITDA interest coverage (times)(1)(3) 34.3 60.5 (43.3%)
------------------------------------------------------------------- ------- ------- --------
Dividend per share (US cents) 57.0 55.0 3.6%
------------------------------------------------------------------- ------- ------- --------
The financial report on pages 19 to 46 is prepared in accordance
with IFRS. This news release including the financial report is
unaudited. Refer to page 16 for footnotes, including explanations
of the non-IFRS measures used in this announcement. Variance
analysis relates to the relative financial and/or production
performance of BHP Billiton and/or its operations during the
December 2012 half year compared with the December 2011 half year,
unless otherwise noted.
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2012
Safety is a priority
BHP Billiton's safety performance continued to improve in the
December 2012 half year as the Group's Total Recordable Injury
Frequency (TRIF) declined to 4.6 per million hours worked.
Regrettably, however, the tragic loss of two colleagues in the
current financial year underlines the need to eliminate fatal risks
across the industry and within our business.
Solid financial results despite substantially lower prices
The December 2012 half year was more challenging for the global
resources industry as substantially lower commodity prices and
resilient producer currencies, such as the Australian dollar and
the Chilean peso, weighed on margins and profitability. Against
this backdrop, BHP Billiton's solid financial results were built on
the foundations of strong operating performance, our continued
focus on costs, and the benefits of our differentiated strategy
which is to own and operate large, long life, low cost, expandable,
upstream assets diversified by commodity, geography and market.
Underlying EBIT for the December 2012 half year declined by 38
per cent or US$6.1 billion to US$9.8 billion, while Attributable
profit excluding exceptional items decreased by 43 per cent to
US$5.7 billion. The external influence of lower commodity prices, a
weak US dollar and inflation reduced Underlying EBIT by a
cumulative US$6.2 billion and more than offset the contribution
from stronger volumes and operating cost savings. Exceptional items
totalling US$1.4 billion (after tax) contributed to the 58 per cent
reduction in Attributable profit to US$4.2 billion.
Despite these challenges, the Group's Underlying EBIT margin
remained in excess of 30 per cent, while Underlying return on
capital(3) (excluding capital investment associated with projects
not yet in production(6)) was a robust 18 per cent. BHP Billiton's
interim dividend increased by four per cent to 57 US cents per
share.
On track to deliver strong growth at a lower unit cost
At the end of the December 2012 half year, BHP Billiton's 20
relatively low risk, largely brownfield projects remained on
schedule and budget, with the majority expected to deliver first
production before the end of the 2015 financial year. Over 95 per
cent of the US$22.2 billion capital budget associated with these
projects has been allocated to Customer Sector Groups (CSGs) that
have generated an average Underlying EBITDA margin of 40 per cent
or more during the last five financial years. The quality of this
project pipeline and the attractive investment returns on offer
reflects the disciplined manner in which shareholder capital is
being deployed within the business.
This high margin volume growth and the release of latent
capacity at a number of our major businesses is expected to deliver
a compound annual production growth rate of 10 per cent, in copper
equivalent terms, over the two years to the end of the 2014
financial year. The associated increase in productivity, broader
economies of scale and our ongoing cost reduction program is
expected to underpin the Group's superior operating margins.
On an annualised basis, controllable cash costs(4) declined by
US$1.9 billion in the first six months of the year. A number of
ongoing initiatives are expected to deliver additional gains.
US$4.3 billion from our targeted divestment program
BHP Billiton's targeted divestment program realised significant
value for our shareholders during the December 2012 half year with
asset sales totalling US$4.3 billion either announced or completed
during the period. Consistent with our ongoing commitment to
simplify the portfolio over time, we will continue to selectively
pursue asset divestment opportunities, with a firm focus on
value.
In addition to the proceeds realised from transactions completed
during the period, BHP Billiton reported net operating cash flows
of US$6.4 billion. The Group's strong cash generating capacity,
gearing of 31 per cent and a net debt to Underlying EBITDA ratio of
1.1 times, aligns the Company's capital structure within the
parameters defined by its solid A credit rating.
Outlook
Economic outlook
The start of the 2013 financial year was characterised by
slowing global growth and a heightened level of economic
uncertainty. International trade had contracted and China, the most
significant driver of recent global economic growth, had
implemented measures aimed at rebalancing its economy. China was
also preparing for a transition in leadership, the United States
was heading towards its Presidential elections, and there were
significant concerns about the level of sovereign indebtedness,
most notably in Europe.
Since then, measured economic stimulus has helped stabilise
China's economy. The United States economy has made steady
progress, partly driven by an improvement in the housing market and
underlying construction activity, despite ongoing uncertainty
regarding fiscal policy. Eurozone markets have stabilised somewhat
following the European Central Bank's commitment to provide more
financial support and the region's governments now appear more
likely to implement the necessary structural reforms.
Notwithstanding short term volatility, a modest improvement in
the global economy is therefore anticipated over the next 12
months. In China, infrastructure investment and fiscal policy are
likely to be adjusted in a prudent manner to underpin stable
growth, consistent with the Government's target. The United States
appears well placed to benefit from relatively low energy costs and
the ongoing recovery of the housing market. More broadly, lower
inflation has provided policy makers in India with the scope to
stimulate the economy, while Japan's economic performance is likely
to improve should the central bank move more aggressively to end
deflation.
Commodities outlook
Commodity prices were particularly volatile in the December 2012
half year, consistent with the prevailing level of uncertainty in
the global economy, although a number of markets strengthened
towards the end of the period as sentiment improved and economic
growth accelerated. The iron ore market was affected by this change
in sentiment and prices responded following a deep inventory cycle
within China that temporarily disrupted the supply demand balance.
The price of oil and liquefied natural gas (LNG) remained
relatively strong and the Henry Hub gas price continued to recover
from the lows recorded in the 2012 financial year.
In the short term, we expect a general improvement in the global
economy to support demand and prices for a number of commodities.
However, the addition of low cost supply in many markets is
expected to dampen the pricing upside. In iron ore, substantial new
supply from the low cost basins of the Pilbara (Australia) and
Brazil is either in construction or planned, while demand growth
rates are expected to decelerate as the Chinese economy matures
following a period of steel-intensive, infrastructure-led growth.
Similarly, rising metallurgical coal demand is likely to be met by
supply from the low cost, high quality basins, while overcapacity
in the aluminium and nickel industries is likely to persist for the
foreseeable future.
Copper supply growth in the very near term is expected to result
in a more balanced market, despite numerous project delays and
curtailments. The longer term outlook for the copper price,
however, continues to be underpinned by operating and capital cost
pressure associated with rising strip ratios and grade decline at
existing operations and a scarcity of advanced, high quality
development opportunities.
In summary, the global economy is expected to strengthen over
the next 12 months, providing support for commodities demand and
pricing. The longer term outlook remains robust, although supply is
now better placed to keep pace with demand for some commodities.
BHP Billiton's low cost, upstream strategy and broader level of
diversification ensures the company is well positioned for this
ongoing transition.
Development projects
At the end of the December 2012 half year, BHP Billiton's 20
relatively low risk, largely brownfield projects remained on
schedule and budget, with the majority expected to deliver first
production before the end of the 2015 financial year.
During the December 2012 half year, BHP Billiton approved the
US$520 million (BHP Billiton share) Longford Gas Conditioning Plant
(LGCP) project as part of the Gippsland Basin Joint Venture
(Australia). The LGCP will add carbon dioxide (CO2) removal
capacity which is necessary to condition production from the Bass
Strait Turrum project currently in development.
The Western Australia Iron Ore (WAIO) Port Hedland Inner Harbour
Expansion project achieved first production following the
commissioning of the fifth car dumper at Finucane Island during the
December 2012 half year. Debottlenecking and optimisation projects
across the WAIO supply chain are currently being evaluated and have
the potential to underpin significant growth well beyond recently
expanded port capacity of 220 million tonnes per annum (100 per
cent basis). WAIO Orebody 24 also delivered first production during
the period.
The Bass Strait Kipper gas field (Australia) offshore production
facilities were completed in the December 2012 half year and are
ready to commence production pending resolution of the mercury
content.
Projects completed during the December 2012 half year
Customer Sector Capital expenditure
Group Project Capacity(i) (US$M) (i) Date of initial production (ii)
---------------- ---------------- --------------- --------------------- ----- ---------------------------- -----
Budget Actual (iii) Target Actual
---------------- ---------------- --------------- ---------- --------- ----- ------------ -------------- -----
10,000 barrels
of condensate
Bass Strait per day and
Kipper processing
(Australia) capacity of 80
BHP Billiton million cubic
32.5% - 50% feet of gas
Petroleum Non operator per day. 900 900 2012 Q3 2012 (iv)
---------------- ---------------- --------------- ---------- --------- ----- ------------ -------------- -----
900 900
------------------------------------------------- ---------- --------- ----- ------------ -------------- -----
(i) All references to capacity are 100 per cent unless noted
otherwise. All references to capital expenditure are BHP Billiton's
share unless noted otherwise.
(ii) References are based on calendar years.
(iii) Number subject to finalisation.
(iv) Facilities ready for first production pending resolution of
mercury content.
Projects approved during the December 2012 half year
Target date
Budgeted capital for initial
Customer Sector Group Project Capacity(i) expenditure (US$M) (i) production (ii)
--------------------- -------------------- -------------------- ------------------- --- ------------------- ----
Bass Strait Longford
Gas Conditioning Designed to process
Plant approximately 400
(Australia) million cubic feet
BHP Billiton - 50% per day of high CO2
Petroleum Non operator gas. 520 2016
--------------------- -------------------- -------------------- ------------------- --- ------------------- ----
520
--------------------------------------------------------------- ------------------- --- ------------------- ----
(i) All references to capacity are 100 per cent unless noted
otherwise. All references to capital expenditure are BHP Billiton's
share unless noted otherwise.
(ii) References are based on calendar years.
Projects currently under development (approved in prior
years)
Target date
Customer Sector Budgeted capital for initial
Group Project Capacity(i) expenditure (US$M) (i) production (ii)
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
Macedon (Australia)
BHP Billiton -
71.43% 200 million cubic
Petroleum Operator feet of gas per day. 1,050 2013
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
11,000 barrels of
condensate per day
and processing
Bass Strait Turrum capacity of 200
(Australia) million cubic feet
BHP Billiton - 50% of
Non operator gas per day. 1,350 2013 (iii)
-------------------- -------------------- -------------------- ------------------- --- -------------------
North West Shelf
North Rankin B Gas
Compression
(Australia)
BHP Billiton -
16.67% 2,500 million cubic
Non operator feet of gas per day. 850 2013
-------------------- -------------------- -------------------- ------------------- --- -------------------
North West Shelf
Greater Western
Flank-A (Australia) To maintain LNG
BHP Billiton - plant throughput
16.67% from the North West
Non operator Shelf operations. 400 2016
-------------------- -------------------- -------------------- ------------------- --- -------------------
Replaces the Los
Escondida Organic Colorados
Growth Project 1 concentrator with a
(Chile) new 152,000 tonnes
Base Metals BHP Billiton - 57.5% per day plant. 2,207 H1 2015
-------------------- -------------------- -------------------- ------------------- --- -------------------
New dynamic leaching
Escondida Oxide pad and mineral
Leach Area Project handling system.
(Chile) Maintains oxide
BHP Billiton - 57.5% leaching capacity. 414 H1 2014
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
Project consists of
a pushback of the
EKATI Misery Open existing Misery open
Pit Project(iv) pit which was mined
Diamonds & Specialty (Canada) from 2001 to
Products BHP Billiton - 80% 2005. 323 2015
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
Increases mining and
processing capacity
to 35 million tonnes
per annum with
incremental
WAIO Jimblebar Mine debottlenecking
Expansion opportunities to 55
(Australia) million tonnes per
Iron Ore BHP Billiton - 96% annum. 3,300 (v) Q1 2014
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
Increases total
inner harbour
capacity to 220
million tonnes per
annum.
Debottlenecking
WAIO Port Hedland opportunities
Inner Harbour that would add Delivered first
Expansion substantial, low production in
(Australia) cost capacity are Q4 2012, as
BHP Billiton - 85% being evaluated. 1,900 (v) planned.
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
WAIO Port Blending Optimises resource
and Rail Yard and enhances
Facilities efficiency across
(Australia) the WAIO supply
BHP Billiton - 85% chain. 1,400 (v) H2 2014
-------------------- -------------------- -------------------- ------------------- --- -------------------
Maintains iron ore
production output Delivered first
WAIO Orebody 24 from the Newman production in
(Australia) Joint Venture Q4 2012, as
BHP Billiton - 85% operations. 698 planned.
-------------------- -------------------- -------------------- ------------------- --- -------------------
Increases iron ore
pellet production
capacity by 8.3
Samarco Fourth million tonnes per
Pellet Plant annum to 30.5
(Brazil) million
BHP Billiton - 50% tonnes per annum. 1,750 H1 2014
-------------------- -------------------- -------------------- ------------------- --- -------------------
Greenfield mine
development with 4.5
million tonnes per
annum of export
Daunia (Australia) metallurgical coal
Metallurgical Coal BHP Billiton - 50% capacity. 800 2013
-------------------- -------------------- -------------------- ------------------- --- -------------------
Increases productive
capacity by 0.4
Broadmeadow Life million tonnes per
Extension annum and extends
(Australia) the life of the
BHP Billiton - 50% mine by 21 years. 450 2013
-------------------- -------------------- -------------------- ------------------- --- -------------------
Increases port
capacity from 44
million tonnes per
Hay Point Stage annum to 55 million
Three Expansion tonnes per annum and
(Australia) BHP reduces storm
Billiton - 50% vulnerability. 1,250 (v) 2014
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
Greenfield mine
development to
produce an initial
5.5 million tonnes
Caval Ridge per annum of export
(Australia) metallurgical
BHP Billiton - 50% coal. 1,870 (v) 2014
-------------------- -------------------- -------------------- ------------------- --- -------------------
Maintains Illawarra
Coal's production
capacity with a
replacement mining
domain and capacity
to produce 3.5
Appin Area 9 million tonnes per
(Australia) annum of
BHP Billiton - 100% metallurgical coal. 845 2016
-------------------- -------------------- -------------------- ------------------- --- -------------------
Increases saleable
thermal coal
production by 8
million tonnes per
annum to
Cerrejon P40 Project approximately
(Colombia) 40 million tonnes
Energy Coal BHP Billiton - 33.3% per annum. 437 2013
-------------------- -------------------- -------------------- ------------------- --- -------------------
Increases total coal
terminal capacity
Newcastle Third Port from 53 million
Project Stage 3 tonnes per annum to
(Australia) 66 million tonnes
BHP Billiton - 35.5% per annum. 367 2014
-------------------- -------------------- -------------------- ------------------- --- ------------------- -----
21,661
-------------------------------------------------------------- ------------------- --- ------------------- -----
(i) All references to capital expenditure are BHP Billiton's
share unless noted otherwise. All references to capacity are 100
per cent unless noted otherwise.
(ii) References are based on calendar years.
(iii) Initial production through the Turrum facilities,
scheduled for the 2013 calendar year, will be low CO2 gas.
Additional high CO2 production from the Turrum reservoir will come
online with completion of the Longford Gas Conditioning Plant in
the 2016 calendar year.
(iv) BHP Billiton has agreed to sell its diamonds business,
comprising its interests in the EKATI Diamond Mine and Diamonds
Marketing operations, to Harry Winston Diamond Mines Ltd. The
transactions are subject to regulatory approval and other customary
conditions. Completion is expected in the first half of the 2013
calendar year.
(v) Excludes announced pre-commitment funding.
Income statement
To provide clarity into the underlying performance of our
operations we present Underlying EBIT, which is a measure used
internally and in our Supplementary Information, that excludes any
exceptional items. The difference between Underlying EBIT and
Profit from operations is set out in the following table:
2012 2011
Half year ended 31 December US$M US$M
------------------------------------- ---------- ---------
Underlying EBIT 9,782 15,853
------------------------------------- ---------- ---------
Exceptional items (before taxation) (2,777) -
------------------------------------- ---------- ---------
Profit from operations 7,005 15,853
------------------------------------- ---------- ---------
Underlying EBIT
The following table and commentary describes the approximate
impact of the principal factors that affected Underlying EBIT for
the December 2012 half year compared with the December 2011 half
year:
US$M US$M
---------------------------------------------------------- -------- --------
Underlying EBIT for the half year ended 31 December 2011 15,853
---------------------------------------------------------- -------- --------
Change in volumes:
---------------------------------------------------------- -------- --------
Increase in volumes 809
---------------------------------------------------------- -------- --------
Decrease in volumes (374)
---------------------------------------------------------- -------- --------
435
---------------------------------------------------------- -------- --------
Net price impact:
---------------------------------------------------------- -------- --------
Change in sales prices (5,714)
---------------------------------------------------------- -------- --------
Price linked costs 287
---------------------------------------------------------- -------- --------
(5,427)
---------------------------------------------------------- -------- --------
Change in costs:
---------------------------------------------------------- -------- --------
Costs (rate and usage) 59
---------------------------------------------------------- -------- --------
Exchange rates (418)
---------------------------------------------------------- -------- --------
Inflation on costs (337)
---------------------------------------------------------- -------- --------
(696)
---------------------------------------------------------- -------- --------
Asset sales (61)
---------------------------------------------------------- -------- --------
Ceased and sold operations (119)
---------------------------------------------------------- -------- --------
New and acquired operations (303)
---------------------------------------------------------- -------- --------
Exploration and business development 209
---------------------------------------------------------- -------- --------
Other (109)
---------------------------------------------------------- -------- --------
Underlying EBIT for the half year ended 31 December 2012 9,782
---------------------------------------------------------- -------- --------
Volumes
At the end of the December 2012 half year, BHP Billiton's 20
relatively low risk, largely brownfield projects remained on
schedule and budget, with the majority expected to deliver first
production before the end of the 2015 financial year. Over 95 per
cent of the US$22.2 billion capital budget associated with these
projects has been allocated to CSGs that have generated an average
Underlying EBITDA margin of 40 per cent or more during the last
five financial years. The quality of this project pipeline and the
attractive investment returns on offer reflects the focused manner
in which shareholder capital is being deployed within the business.
This high margin volume growth and the release of latent capacity
at a number of our major businesses is expected to deliver a
compound annual production growth rate of 10 per cent, in copper
equivalent terms, over the two years to the end of the 2014
financial year.
In that context, strong operating performance at Escondida
(Chile) and record sales volumes at WAIO, Antamina (Peru) and
Illawarra Coal (Australia) were the major contributors to the
US$435 million volume related variance in Underlying EBIT in the
December 2012 half year. Notwithstanding the general level of
improvement recorded across the Group, natural field decline in our
conventional Petroleum business and lower diamonds production at
EKATI (Canada) reduced Underlying EBIT by US$374 million in the
period.
Prices
Substantially lower prices reduced Underlying EBIT by US$5.4
billion in the December 2012 half year, net of price linked costs.
The level of price volatility that characterised the period was
most acute in the iron ore market as a deep inventory cycle in
China temporarily disrupted the supply demand balance. The
resultant decline in iron ore prices reduced Underlying EBIT by
US$3.2 billion in the December 2012 half year, net of price linked
costs.
Weak demand and a recovery in low cost supply also led to a
significant decline in metallurgical coal prices, which reduced
Underlying EBIT by further US$1.6 billion, net of price linked
costs. Overcapacity in the nickel, aluminium and energy coal
industries also weighed on profitability, although a four per cent
increase in the average realised price of copper contributed to a
US$249 million increase in Underlying EBIT in the period.
Costs
BHP Billiton has responded to general inflationary pressure
across the industry and the persistent strength of producer
currencies, such as the Australian dollar and Chilean peso. In this
regard, the Company's continuing focus on its operating costs and
sustaining capital requirements has intensified over the recent six
month period.
This focused approach, the release of latent capacity at a
number of our high margin businesses and a reduction in our
exploration and business development expenditure has enabled BHP
Billiton to reduce its controllable cash costs(4) by US$944 million
during the December 2012 half year, excluding one-off items. This
included operating cost efficiencies of US$397 million, a general
reduction in overhead costs of US$87 million and a decline in
exploration and business development expenditure of US$557 million.
Conversely, the decision to increase our operating capability at
WAIO prior to the full ramp-up of expanded capacity more than
offset volume related efficiencies achieved across the business. In
addition, price linked costs declined by US$287 million during the
period, although this was partially offset by a US$98 million
increase in fuel and energy input costs.
From an earnings perspective, a US$41 million decrease in
non-cash costs during the December 2012 half year was more than
offset by a number of one-off items. These one-off items, many of
which relate to the Group's restructuring initiatives, reduced
Underlying EBIT by US$271 million in the period. Consequently,
despite the sustainable reduction in cash costs achieved in the
December 2012 half year, total costs (including one-off items)
increased Underlying EBIT by a lesser US$59 million.
Exchange rates
The Australian dollar strengthened in the December 2012 half
year, despite a significant decline in iron ore and coal prices,
while the Chilean peso continued to reflect the compelling longer
term fundamentals of the copper market. The restatement of monetary
items in the balance sheet associated with the general strength of
these and other producer currencies reduced Underlying EBIT by
US$574 million.
The following exchange rates against the US dollar have been
applied:
Average Average
Half year ended Half year ended As at As at As at
31 December 31 December 31 December 31 December 30 June
2012 2011 2012 2011 2012
---------------------- ----------------- ----------------- -------------- -------------- ----------
Australian dollar(i) 1.04 1.03 1.04 1.01 1.00
---------------------- ----------------- ----------------- -------------- -------------- ----------
Chilean peso 480 491 480 520 510
---------------------- ----------------- ----------------- -------------- -------------- ----------
Colombian peso 1,802 1,857 1,768 1,941 1,807
---------------------- ----------------- ----------------- -------------- -------------- ----------
Brazilian real 2.04 1.70 2.04 1.87 2.08
---------------------- ----------------- ----------------- -------------- -------------- ----------
South African rand 8.48 7.61 8.49 8.18 8.41
---------------------- ----------------- ----------------- -------------- -------------- ----------
(i) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflation had an unfavourable impact on all CSGs and reduced
Underlying EBIT by US$337 million during the December 2012 half
year. The pressure was most notable in Australia and South Africa,
which accounted for approximately 75 per cent of the total
variance.
Asset sales
The contribution of asset sales to Underlying EBIT declined by
US$61 million in the December 2012 half year. This variance was
largely attributable to a post-closing payment received during the
December 2011 half year that followed the 2006 divestment of our
interests in Cascade and Chinook (US).
Ceased and sold operations
Underlying EBIT from ceased and sold operations, which included
a reduced contribution from Richards Bay Minerals (South Africa)
following the sale of our 37 per cent interest in the operation to
Rio Tinto, declined by US$119 million in the December 2012 half
year.
New and acquired operations
Assets are reported as new and acquired operations until there
is a full year period for comparison. New and acquired operations
reduced Underlying EBIT by US$303 million in the December 2012 half
year. The Onshore US result in the prior corresponding period
included a one-off gain of US$222 million associated with legacy US
gas derivatives.
Exploration and business development
A 39 per cent reduction in BHP Billiton's exploration
expenditure to US$671 million in the December 2012 half year
reflected the Group's sharpened focus on high value petroleum and
greenfield copper porphyry targets, as well as a broader commitment
to reduce discretionary expenditure. The associated decline in the
Group's exploration expense increased Underlying EBIT by US$78
million, despite a US$97 million impairment of previously
capitalised exploration.
A general reduction in business development expenditure
increased Underlying EBIT by a further US$131 million in the
December 2012 half year.
Other
A US$109 million decline in Underlying EBIT in the December 2012
half year was largely accounted for by a number of non-recurring
items at Queensland Coal (Australia), which included flood-related
insurance proceeds received in the prior corresponding period.
Net finance costs
A US$161 million increase in net finance costs to US$544 million
in the December 2012 half year was primarily attributable to
increased net interest expense on higher net debt and exchange rate
variations.
Taxation expense
Total taxation expense including royalty related taxation,
exceptional items and exchange rate movements was US$2.2 billion,
representing an effective rate of 33.5 per cent (31 December 2011:
34.4 per cent; 30 June 2012: 32.5 per cent).
Excluding the impacts of royalty related taxation, exceptional
items and exchange rate movements, taxation expense was US$2.8
billion representing an Underlying effective tax rate(3) of 30.4
per cent (31 December 2011: 31.0 per cent; 30 June 2012: 30.5 per
cent).
Government imposed royalty arrangements calculated by reference
to profits after adjustment for temporary differences are reported
as royalty related taxation. Royalty related taxation (excluding
exceptional items) contributed US$566 million to taxation expense
representing an effective rate of 8.8 per cent (31 December 2011:
US$462 million and 3.0 per cent; 30 June 2012: US$889 million and
3.9 per cent). The increase from the December 2011 half year
largely reflected a US$150 million revaluation of deferred tax
balances associated with Australian resource rent taxes.
Other royalty and excise arrangements which do not have these
characteristics are recognised as operating costs within profit
before taxation. These amounted to US$1.4 billion during the period
(31 December 2011: US$1.7 billion; 30 June 2012: US$3.1
billion).
Exchange rate movements increased taxation expense by US$119
million (31 December 2011: increase of US$70 million; 30 June 2012:
increase of US$250 million).
Exceptional items decreased taxation expense by US$1.3 billion
(31 December 2011: no exceptional items; 30 June 2012: decrease of
US$1.7 billion).
Exceptional items
Gross Tax Net
Half year ended 31 December 2012 US$M US$M US$M
------------------------------------------------------- -------- ------ --------
Exceptional items by category
Sale of Yeelirrie uranium deposit 420 - 420
Sale of Richards Bay Minerals 1,373 (185) 1,188
Announced sale of diamonds business (287) 76 (211)
Announced sale of East and West Browse Joint Ventures - 211 211
Impairment of Nickel West assets (1,172) 307 (865)
Impairment of Worsley assets (2,190) 657 (1,533)
Other impairments arising from capital project review (921) 266 (655)
(2,777) 1,332 (1,445)
------------------------------------------------------- -------- ------ --------
On 27 August 2012, the Group announced the sale of its wholly
owned Yeelirrie uranium deposit (Australia) and the transaction was
completed on 19 December 2012. A gain on sale of US$420 million was
recorded, while the associated tax expense was offset by the
recognition of deferred tax benefits on available tax losses.
On 7 September 2012, the Group announced it had completed the
sale of its 37 per cent interest in Richards Bay Minerals. A gain
on sale of US$1.2 billion (after tax expense) was recognised in the
December 2012 half year.
On 13 November 2012, the Group announced the sale of its
diamonds business, comprising its interests in the EKATI Diamond
Mine and Diamond Marketing operations, for an aggregate cash
consideration of US$500 million. An impairment charge of US$211
million (after tax benefit) has been recognised. The transaction is
expected to close in the first half of the 2013 calendar year and
the business has been classified as held for sale.
On 12 December 2012, the Group signed a definitive agreement to
sell its 8.33 per cent interest in the East Browse Joint Venture
and 20 per cent interest in the West Browse Joint Venture
(Australia). Given completion of the sale is highly probable, a tax
benefit of US$211 million, mainly due to the recognition of
deferred tax benefits on available tax losses, has been reported in
the December 2012 half year.
As a result of continued strength in the Australian dollar and
the weak nickel and alumina pricing environment, BHP Billiton has
recognised an impairment of US$865 million (after tax benefit) at
Nickel West (Australia) and an impairment of US$1.5 billion (after
tax benefit) at Worsley (Australia) in the December 2012 half
year.
In the December 2012 half year, WAIO refocused its attention on
the capital efficient expansion opportunity that exists within the
Port Hedland inner harbour and all early works associated with the
outer harbour development option were suspended. This revision to
the WAIO development sequence and the change in status of other
minor capital projects across the Group has resulted in the
recognition of impairment charges totalling US$618 million (after
tax benefit) and other restructuring costs of US$37 million (after
tax benefit) in the December 2012 half year.
Cash flows
Net operating cash flows decreased by 48 per cent to US$6.4
billion in the December 2012 half year. The major contributor to
the decline was a US$6.1 billion decrease in cash generated from
operations (after changes in working capital balances). A US$154
million increase in net interest payments further reduced net
operating cash flows, however this was more than offset by a US$374
million reduction in royalty related taxation payments.
Investing cash flows included proceeds from the divestment of
jointly controlled entities of US$1.7 billion and disposal of
property, plant and equipment of US$523 million. Capital and
exploration expenditure totalled US$12.2 billion in the December
2012 half year. Expenditure on major growth projects was US$9.7
billion, including US$3.4 billion on Petroleum projects and US$6.3
billion on Minerals projects. Capital expenditure on sustaining and
other items was US$1.8 billion. Exploration expenditure was US$671
million, including US$548 million classified within net operating
cash flows.
Net financing cash flows included proceeds from borrowings of
US$7.8 billion, partially offset by dividend payments of US$3.1
billion and debt repayments of US$945 million. Proceeds from
borrowings included the issuance of a two tranche Euro bond of
EUR2.0 billion, a two tranche Sterling bond of GBP1.75 billion and
a single tranche Australian bond of A$1.0 billion.
Net debt, comprising interest bearing liabilities less cash and
cash equivalents, was US$30.4 billion, an increase of US$6.8
billion compared to the net debt position at 30 June 2012.
Dividend
BHP Billiton has a progressive dividend policy. The aim of this
policy is to steadily increase or at least maintain the dividend in
US dollars at each half yearly payment. Our Board today declared an
interim dividend of 57 cents per share.
The dividend to be paid by BHP Billiton Limited will be fully
franked for Australian taxation purposes. Dividends for the BHP
Billiton Group are determined and declared in US dollars. However,
BHP Billiton Limited dividends are mainly paid in Australian
dollars, and BHP Billiton Plc dividends are mainly paid in pounds
sterling and South African rand to shareholders on the UK section
and the South African section of the register, respectively.
Currency conversions will be based on the foreign currency exchange
rates on the Record Date, except for the conversion into South
African rand, which will take place on the last day to trade (cum
dividend) on JSE Limited, being 1 March 2013. Please note that all
currency conversion elections must be registered by the Record
Date, being 8 March 2013. Any currency conversion elections made
after this date will not apply to this dividend.
The timetable in respect of this dividend will be:
Last day to trade cum dividend on JSE Limited (JSE) and currency
conversion into rand 1 March 2013
Ex-dividend date Australian Securities Exchange (ASX) and JSE 4
March 2013
Ex-dividend date London Stock Exchange (LSE) and New York Stock
Exchange (NYSE) 6 March 2013
Record Date (including currency conversion and currency election
dates, except for rand) 8 March 2013
Payment date 28 March 2013
American Depositary Shares (ADSs) each represent two fully paid
ordinary shares and receive dividends accordingly.
BHP Billiton Plc shareholders registered on the South African
section of the register will not be able to dematerialise or
rematerialise their shareholdings between the dates of 4 and 8
March 2013 (inclusive), nor will transfers between the UK register
and the South African register be permitted between the dates of 1
and 8 March 2013 (inclusive).
Details of the currency exchange rates applicable for the
dividend will be announced to the relevant stock exchanges
following conversion and will appear on the Group's website.
Debt management and liquidity
During the December 2012 half year, the Group issued a two
tranche Euro bond comprising EUR1.25 billion 2.250% bonds due 2020
and EUR750 million 3.250% bonds due 2027; a two tranche Sterling
bond comprising GBP750 million 3.250% bonds due 2024 and GBP1.0
billion 4.300% bonds due 2042; and a single tranche Australian bond
of A$1.0 billion 3.750% bonds due 2017.
In October 2012, the Group increased its existing Revolving
Credit Facility from US$4.0 billion to US$5.0 billion. This
facility expires in December 2015. In December 2012, the Group
arranged a new US$1.0 billion Revolving Credit Facility which
expires in December 2013. An option to extend the term of this
facility is included in the agreement. Both facilities are undrawn
and support the Group's commercial paper program.
As at 31 December 2012, the Group had US$1.5 billion outstanding
in the US commercial paper market and the Group's cash and cash
equivalents on hand was US$5.1 billion.
Our commitment to retain a solid A credit rating remains
unchanged.
Corporate governance
There were no appointments to, or resignations from, the Board
during the period.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the
Customer Sector Groups for the December 2012 half year and the
corresponding period.
Half year ended 31 December (US$M) Revenue Underlying EBIT(i)
2012 2011 Change % 2012 2011 Change %
------------------------------------ ------- ------- --------- ------ ------- ---------
Petroleum 6,654 6,754 (1.5%) 3,161 4,100 (22.9%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Aluminium and Nickel 3,485 3,915 (11.0%) (285) (66) (331.8%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Base Metals 6,121 5,250 16.6% 1,967 1,641 19.9%
------------------------------------ ------- ------- --------- ------ ------- ---------
Diamonds and Specialty Products 320 654 (51.1%) (118) 86 (237.2%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Iron Ore 9,166 12,149 (24.6%) 4,814 7,901 (39.1%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Manganese 1,012 1,087 (6.9%) 177 149 18.8%
------------------------------------ ------- ------- --------- ------ ------- ---------
Metallurgical Coal 2,817 4,390 (35.8%) (101) 1,538 (106.6%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Energy Coal 2,579 3,135 (17.7%) 246 787 (68.7%)
------------------------------------ ------- ------- --------- ------ ------- ---------
Group and unallocated items(ii) 88 173 N/A (79) (283) N/A
------------------------------------ ------- ------- --------- ------ ------- ---------
Less: inter-segment revenue (38) (27) N/A - - N/A
------------------------------------ ------- ------- --------- ------ ------- ---------
BHP Billiton Group 32,204 37,480 (14.1%) 9,782 15,853 (38.3%)
------------------------------------ ------- ------- --------- ------ ------- ---------
(i) Underlying EBIT includes trading activities comprising the
sale of third party product. Underlying EBIT for the Group is
reconciled to Profit from operations on page 7.
(ii) Includes consolidation adjustments, unallocated items and
external sales from the Group's freight, transport and logistics
operations.
Petroleum
Petroleum production of 121 million barrels of oil equivalent
for the December 2012 half year underpins full year guidance, which
remains unchanged at 240 million barrels of oil equivalent. The
ongoing development of our Onshore US liquids and gas assets
contributed to the strong production performance of the
business.
Underlying EBIT for the December 2012 half year declined by
US$939 million to US$3.2 billion. This variance largely reflected
the impact of a series of one-off items that increased Underlying
EBIT by US$440 million in the prior corresponding period. Natural
field decline at Pyrenees and Stybarrow (both Australia), a four
per cent reduction in the realised price of oil (to US$105.42 per
barrel) and a six per cent decline in the realised price of natural
gas (to US$3.63 per thousand cubic feet) also contributed to the
fall in Underlying EBIT. In contrast, the realised liquefied
natural gas price increased by six per cent (to US$14.93 per
thousand standard cubic feet) during the period.
BHP Billiton invested US$2.1 billion in Onshore US drilling and
development in the December 2012 half year and guidance for the
2013 financial year remains unchanged at US$4.0 billion. More than
80 per cent of this expenditure will be deployed in the liquids
rich areas of the Eagle Ford and Permian. In Australia, the
operated US$1.1 billion (BHP Billiton share) Macedon gas project
was 90 per cent complete at the end of the period and initial
production is anticipated on schedule in the 2013 calendar
year.
BHP Billiton also signed a definitive agreement with PetroChina
International Investment (Australia) Pty Ltd to sell its 8.33 per
cent interest in the East Browse Joint Venture and 20 per cent
interest in the West Browse Joint Venture, located offshore Western
Australia, for a cash consideration of US$1.63 billion. The
transaction is subject to regulatory approval and other customary
conditions. Completion is expected in the first half of the 2013
calendar year.
Aluminium and Nickel
Strong performance at Worsley contributed to record alumina
production in the December 2012 half year. In contrast, aluminium
metal production was lower as Hillside (South Africa) recovered
from a major unplanned outage that occurred in the March 2012
quarter. Hillside production returned to full technical capacity in
the December 2012 quarter, ahead of schedule.
Nickel production was broadly unchanged from the prior
corresponding period as robust operating performance at Cerro
Matoso (Colombia) was offset by planned maintenance at both the
Nickel West Kalgoorlie smelter and Kwinana refinery, which was
completed during the period.
Underlying EBIT for the December 2012 half year declined by
US$219 million to a loss of US$285 million. An eight per cent
reduction in the average realised price of aluminium (to US$2,191
per tonne), a 15 per cent fall in the average realised price of
alumina (to US$291 per tonne) and a 15 per cent decline in the
average realised price of nickel (to US$16,433 per tonne) reduced
Underlying EBIT by US$385 million, net of price linked costs. This
was partially offset by a US$159 million reduction in controllable
cash costs(4) achieved in the period, which included lower
overheads associated with the formation of the combined Aluminium
and Nickel CSG.
Base Metals
Copper in concentrate production at Escondida increased by 70
per cent in the December 2012 half year. Production benefited from
a transition to higher grade ore feed and the successful completion
of large scale maintenance programs that have increased
concentrator throughput. The average copper grade mined during the
period increased to 1.37 per cent and total Escondida copper
production is on track to increase by 20 per cent in the 2013
financial year. Record production at Antamina also contributed to
the 14 per cent increase in total copper production in the
period.
Underlying EBIT for the December 2012 half year increased by
US$326 million to US$2.0 billion. The strong recovery in copper
production and higher realised prices were the major contributors
to this result and increased Underlying EBIT by US$457 million, net
of price linked costs. In addition, controllable cash cost(4)
savings associated with productivity gains and broader economies of
scale increased Underlying EBIT by US$237 million. This was
partially offset by major planned maintenance programs at Escondida
and Olympic Dam (Australia), which reduced Underlying EBIT by
US$144 million.
At 31 December 2012, the Group had 311,847 tonnes of outstanding
copper sales that were revalued at a weighted average price of
US$7,915 per tonne. The final price of these sales will be
determined over the remainder of the 2013 financial year. In
addition, 278,547 tonnes of copper sales from the 2012 financial
year were subject to a finalisation adjustment in the current
period. The finalisation adjustment and provisional pricing impact
as at 31 December 2012 increased earnings before interest and tax
by US$48 million for the period.
The successful completion of the Escondida Ore Access and Laguna
Seca debottlenecking projects underpins the forecast increase in
Escondida copper production to over 1.3 million tonnes (100 per
cent basis) in the 2015 financial year. The Escondida Organic
Growth Project 1 and the Oxide Leach Area Project are expected to
sustain Escondida copper production at an elevated level for the
remainder of this decade. Mining operations at Pinto Valley (US)
restarted in the December 2012 quarter, as planned, and are
expected to add 60 thousand tonnes per annum of copper in
concentrate to the Group's production profile. Mill throughput is
expected to reach capacity in the September 2013 quarter.
Diamonds and Specialty Products
During the period, BHP Billiton announced the sale of its
diamonds business, comprising its interests in the EKATI Diamond
Mine and Diamonds Marketing operations, to Harry Winston Diamond
Mines Ltd for an aggregate cash consideration of US$500 million.
The transactions are subject to regulatory approval and other
customary conditions. Completion is expected in the first half of
the 2013 calendar year.
In addition, BHP Billiton completed the sale of its 37 per cent
non-operated interest in Richards Bay Minerals to Rio Tinto for a
cash consideration of US$1.9 billion (before adjustments).
Underlying EBIT declined by US$204 million in the December 2012
half year, to a loss of US$118 million. Lower production at EKATI
was the major contributor to this fall in profitability, although
this was partially offset by a reduction in the potash exploration
expense, which reflected the cessation of activities in Ethiopia.
Construction of the production and service shafts at our Jansen
potash project (Canada) continued as planned during the period. The
project remains subject to Board approval.
Iron Ore
WAIO delivered a twelfth consecutive December half year
production and sales record as the business continued to benefit
from the Company's decade long investment in supply chain capacity.
WAIO production remains on track to grow by five per cent in the
2013 financial year.
Underlying EBIT for the December 2012 half year declined by
US$3.1 billion to US$4.8 billion. A 28 per cent reduction in the
average realised price of iron ore, a stronger Australian dollar
and inflation decreased Underlying EBIT by US$3.5 billion, net of
price linked costs. In contrast, record sales volumes at WAIO
increased Underlying EBIT by US$451 million.
Our Pilbara operations achieved several significant milestones
during the period. For example, first ore was loaded by the two
recently installed ship loaders at Nelson Point and the fifth car
dumper at Finucane Island was commissioned. This car dumper is the
last major piece of infrastructure required to increase WAIO port
capacity from the December 2012 quarter run-rate of 188 million
tonnes per annum to 220 million tonnes per annum (100 per cent
basis). Notably, higher costs associated with our decision to
invest in operating capability ahead of the full commissioning and
ramp-up of this capacity reduced Underlying EBIT by US$164
million.
The Jimblebar Mine Expansion, which is on schedule for first
production in the March 2014 quarter, will broadly match mine and
port capacity at the expanded 220 million tonnes per annum rate,
while the progressive debottlenecking of the supply chain is
expected to underpin substantial low cost, longer term growth in
our WAIO business.
Manganese
Record ore production in the December 2012 half year reflected a
substantial improvement in plant availability at GEMCO (Australia).
The decline in alloy production, however, reflected the permanent
closure of energy intensive silicomanganese production at Metalloys
(South Africa) and the temporary suspension of production at TEMCO
(Australia), both of which contributed to the substantial reduction
in operating costs achieved in recent periods.
Underlying EBIT for the December 2012 half year increased by
US$28 million to US$177 million. Higher manganese ore sales, a
weaker South African rand and controllable cash cost(4) savings
associated with broader productivity gains, increased Underlying
EBIT by a combined US$98 million. In contrast, a four per cent
reduction in the average realised price of ore and a nine per cent
decline in the average realised price of alloy reduced Underlying
EBIT by US$58 million, net of price linked costs.
The US$167 million (BHP Billiton share) GEEP2 expansion project
will strengthen GEMCO's position as one of the lowest cost and
largest manganese mines in the industry. On completion, the GEEP2
project will increase processing capacity from 4.2 to 4.8 million
tonnes per annum (100 per cent basis), with first production
anticipated on schedule in the second half of the 2013 calendar
year.
Metallurgical Coal
Record sales volumes at Illawarra Coal underpinned a five per
cent increase in total metallurgical coal sales in the December
2012 half year. However, the strong recovery in production that
followed the conclusion of the BMA Enterprise Agreement was largely
offset by planned wash plant outages at South Walker Creek and
Goonyella, the closure of high cost capacity at Gregory and Norwich
Park (all Australia), and planned longwall moves at Illawarra
Coal.
Underlying EBIT for the December 2012 half year declined by
US$1.6 billion to a loss of US$101 million. A 39 per cent and 37
per cent fall in hard coking coal and weak coking coal prices,
respectively, reduced Underlying EBIT by US$1.6 billion, net of
price linked costs. A stronger Australian dollar and inflation
reduced Underlying EBIT by a further US$183 million, although this
was more than offset by controllable cash cost(4) savings achieved
in the period.
At the end of the December 2012 half year, Queensland Coal
production was approaching full supply chain capacity. The
associated increase in productivity, broader economies of scale and
the closure of high cost capacity is expected to deliver a
substantial reduction in unit costs in the second half of the 2013
financial year.
The Group's five major metallurgical coal projects remain on
schedule and budget. The Daunia (Australia) development is forecast
to deliver first production in the first half of the 2013 calendar
year, while commissioning of the Caval Ridge (Australia) mine is
expected to commence the following year. In aggregate, these
projects will add 10 million tonnes (100 per cent basis) of
metallurgical coal production capacity by the end of the 2014
calendar year.
Energy Coal
A seven per cent increase in production in the December 2012
half year was underpinned by record production at New South Wales
Energy Coal (Australia), which continued to benefit from the
ramp-up of the RX1 project.
Underlying EBIT for the December 2012 half year declined by
US$541 million to US$246 million. A 21 per cent reduction in export
coal prices, inflation and a stronger Australian dollar reduced
Underlying EBIT by US$515 million, net of price linked costs. In
contrast, a higher proportion of export coal sales associated with
the accelerated expansion of New South Wales Energy Coal, together
with controllable cash cost(4) savings achieved in the period,
increased Underlying EBIT by US$151 million.
The Cerrejon P40 Project (Colombia) is on budget and schedule to
achieve first production in the 2013 calendar year and will
increase export capacity to approximately 40 million tonnes per
annum (100 per cent basis) over a two year period. During the
December 2012 half year, BHP Billiton entered into a non-binding
Memorandum of Understanding to transfer full ownership of the BHP
Navajo Coal Company (US) to the Navajo Nation. The transfer is
subject to ongoing negotiation.
Group and Unallocated items
The Underlying EBIT expense for Group and Unallocated in the
December 2012 half year declined by US$204 million to US$79
million. A fair value adjustment to Group employee share awards,
the partial release of a workers compensation provision and
benefits associated with the closure of the Group's marketing
office in The Hague were the major contributors to this
variance.
The following notes explain the terms used throughout this
profit release:
(1) Underlying EBIT is earnings before net finance costs,
taxation and any exceptional items. Underlying EBITDA is Underlying
EBIT before depreciation, impairments and amortisation of US$3,462
million for the half year ended 31 December 2012 and US$2,890
million for the half year ended 31 December 2011. We believe that
Underlying EBIT and Underlying EBITDA provide useful information,
but should not be considered as an indication of, or alternative
to, Attributable profit as an indicator of operating performance or
as an alternative to cash flow as a measure of liquidity.
(2) Underlying EBIT is used to reflect the underlying
performance of BHP Billiton's operations. Underlying EBIT is
reconciled to Profit from operations on page 7.
(3) Non-IFRS measures are defined as follows:
-- Attributable profit excluding exceptional items - comprises
Profit after taxation attributable to members of BHP Billiton Group
less exceptional items as described in note 3 to the financial
report.
-- Underlying EBITDA interest coverage - for the purpose of
deriving interest coverage, net interest comprises Interest on bank
loans and overdrafts, Interest on all other borrowings, Finance
lease and hire purchase interest less Interest income.
-- Underlying effective tax rate - comprises Total taxation
expense excluding Royalty related taxation, exceptional items and
Exchange rate movements included in taxation expense divided by
Profit before taxation and exceptional items.
-- Underlying EBIT margin - comprises Underlying EBIT excluding
third party EBIT, divided by revenue excluding third party product
revenue.
-- Underlying EBITDA margin - comprises Underlying EBITDA
excluding third party EBITDA, divided by revenue excluding third
party product revenue.
-- Underlying return on capital - represents net profit after
tax, excluding exceptional items and net finance costs (after tax),
divided by average capital employed. Capital employed is net assets
after adding back net debt.
(4) The variance in controllable cash costs comprises operating,
overhead and volume related efficiencies, and exploration and
business development activity; excludes variances in non-cash and
one-off items, price linked costs and fuel and energy.
(5) Net operating cash flows are after net interest and
taxation.
(6) Capital investment associated with projects not yet in
production comprises assets under construction and exploration and
evaluation assets.
(7) Underlying EBIT for the Petroleum Customer Sector Group for
the half year ended 31 December 2011 has been restated to reflect
adjustments from final acquisition accounting for the acquisition
of Petrohawk Energy Corporation.
Forward-Looking Statements
This release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 regarding future events, conditions, circumstances and the
future financial performance of BHP Billiton, including for capital
expenditures, production volumes, project capacity, and schedules
for expected production. Often, but not always, forward-looking
statements can be identified by the use of the words such as
"plans", "expects", "expected", "scheduled", "estimates",
"intends", "anticipates", "believes" or variations of such words
and phrases or state that certain actions, events, conditions,
circumstances or results "may", "could", "would", "might" or "will"
be taken, occur or be achieved. These forward-looking statements
are not guarantees or predictions of future performance, and
involve known and unknown risks, uncertainties and other factors,
many of which are beyond our control, and which may cause actual
results to differ materially from those expressed in the statements
contained in this release. For more detail on those risks, you
should refer to the sections of our annual report on Form 20-F for
the year ended 30 June 2012 entitled "Risk factors", "Forward
looking statements" and "Operating and financial review and
prospects" filed with the U.S. Securities and Exchange Commission.
All estimates and projections in this release are illustrative
only. Our actual results may be materially affected by changes in
economic or other circumstances which cannot be foreseen. Nothing
in this release is, or should be relied on as, a promise or
representation either as to future results or events or as to the
reasonableness of any assumption or view expressly or impliedly
contained herein.
Non-IFRS Financial Information
BHP Billiton results are reported under International Financial
Reporting Standards (IFRS) including Underlying EBIT and Underlying
EBITDA which are used to measure segment performance. This release
also includes certain non-IFRS measures including Attributable
profit excluding exceptional items, Underlying EBITDA interest
coverage, Underlying effective tax rate, Underlying EBIT margin,
Underlying EBITDA margin and Underlying return on capital. These
measures are used internally by management to assess the
performance of our business, make decisions on the allocation of
our resources and assess operational management. Non-IFRS measures
have not been subject to audit or review.
No Offer of Securities
Nothing in this release should be construed as either an offer
to sell or a solicitation of an offer to buy or sell BHP Billiton
securities in any jurisdiction.
Reliance on Third Party Information
The views expressed in this release contain information that has
been derived from publicly available sources that have not been
independently verified. No representation or warranty is made as to
the accuracy, completeness or reliability of the information. This
release should not be relied upon as a recommendation or forecast
by BHP Billiton.
Further information on BHP Billiton can be found on our website:
www.bhpbilliton.com
Media Relations Investor Relations
Australia Australia
Antonios Papaspiropoulos James Agar
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Fiona Hadley Andrew Gunn
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email: Fiona.Hadley@bhpbilliton.com email: Andrew.Gunn@bhpbilliton.com
Eleanor Nichols United Kingdom and South Africa
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email: Eleanor.Nichols@bhpbilliton.com Tara Dines
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United Kingdom email: Tara.Dines@bhpbilliton.com
Ruban Yogarajah Americas
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com Brendan Harris
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BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 180 Lonsdale Street Registered Office: Neathouse Place
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Members of the BHP Billiton Group which is headquartered in Australia
BHP Billiton Group
Financial Report
For the half year ended 31 December 2012
Contents
Half Year Financial Statements Page
Consolidated Income Statement 21
Consolidated Statement of Comprehensive Income 22
Consolidated Balance Sheet 23
Consolidated Cash Flow Statement 24
Consolidated Statement of Changes in Equity 25
Notes to the Half Year Financial Statements 28
1. Accounting policies 28
2. Segment reporting 29
3. Exceptional items 33
4. Interests in jointly controlled entities 36
5. Net finance costs 36
6. Taxation 37
7. Earnings per share 37
8. Dividends 38
9. Subsequent events 38
10. Business combinations 39
Directors' Report 41
Directors' Declaration of Responsibility 43
Lead Auditor's Independence Declaration under
Section 307C of the Corporations Act 2001 44
Independent Review Report 45
Consolidated Income Statement
for the half year ended 31 December 2012
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Notes US$M US$M US$M
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Revenue
Group production 30,735 35,690 68,747
Third party products 2 1,469 1,790 3,479
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Revenue 2 32,204 37,480 72,226
Other income 2,110 359 906
Expenses excluding net finance costs (27,309) (21,986) (49,380)
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Profit from operations 7,005 15,853 23,752
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Comprising:
Group production 6,946 15,779 23,626
Third party products 59 74 126
------------------------------------------------------------- ------ ---------------- ---------------- -----------
7,005 15,853 23,752
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Financial income 5 77 102 225
Financial expenses 5 (621) (485) (955)
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Net finance costs 5 (544) (383) (730)
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Profit before taxation 6,461 15,470 23,022
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Income tax expense (1,629) (4,863) (7,238)
Royalty related taxation (net of income tax benefit) (533) (462) (252)
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Total taxation expense 6 (2,162) (5,325) (7,490)
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Profit after taxation 4,299 10,145 15,532
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Attributable to non-controlling interests 61 100 115
Attributable to members of BHP Billiton Group 4,238 10,045 15,417
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Earnings per ordinary share (basic) (US cents) 7 79.6 188.7 289.6
Earnings per ordinary share (diluted) (US cents) 7 79.4 187.9 288.4
------------------------------------------------------------- ------ ---------------- ---------------- -----------
Dividends per ordinary share - paid during the period (US
cents) 8 57.0 55.0 110.0
Dividends per ordinary share - declared in respect of the
period (US cents) 8 57.0 55.0 112.0
------------------------------------------------------------- ------ ---------------- ---------------- -----------
The accompanying notes form part of these half year financial
statements.
Consolidated Statement of Comprehensive Income
for the half year ended 31 December 2012
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
US$M US$M US$M
------------------------------------------------------------------- ------------------ ---------------- -----------
Profit after taxation 4,299 10,145 15,532
Other comprehensive income
Items that may be reclassified subsequently to the income
statement:
Available for sale investments:
Net valuation gains/(losses) taken to equity 3 (32) (32)
Net valuation (gains)/losses transferred to the income statement (2) 1 (2)
Cash flow hedges:
Gains/(losses) taken to equity 454 - (320)
(Gains)/losses transferred to the income statement (297) - 205
Exchange fluctuations on translation of foreign operations taken to
equity (4) (2) 19
Tax recognised within other comprehensive income (48) (5) 23
Total items that may be reclassified subsequently to the income
statement 106 (38) (107)
------------------------------------------------------------------------- ------------ ---------------- -----------
Items that will not be reclassified to the income statement:
Actuarial losses on pension and medical schemes (23) (44) (250)
Tax recognised within other comprehensive income 35 (53) 66
Total items that will not be reclassified to the income statement 12 (97) (184)
------------------------------------------------------------------- ------------------ ---------------- -----------
Total other comprehensive income/(loss) for the period 118 (135) (291)
------------------------------------------------------------------- ------------------ ---------------- -----------
Total comprehensive income 4,417 10,010 15,241
------------------------------------------------------------------- ------------------ ---------------- -----------
Attributable to non-controlling interests 60 98 117
Attributable to members of BHP Billiton Group 4,357 9,912 15,124
------------------------------------------------------------------- ------------------ ---------------- -----------
The accompanying notes form part of these half year financial
statements.
Consolidated Balance Sheet
as at 31 December 2012
31 December 31 December 30 June
2012 2011 2012
US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 5,086 3,616 4,781
Trade and other receivables 7,719 8,061 7,704
Other financial assets 183 748 282
Inventories 6,571 6,406 6,233
Assets classified as held for sale 1,089 - 848
Current tax assets 211 169 137
Other 499 360 466
------------------------------------------------------------ ------------ ------------ --------
Total current assets 21,358 19,360 20,451
------------------------------------------------------------ ------------ ------------ --------
Non-current assets
Trade and other receivables 1,498 2,038 1,475
Other financial assets 2,135 1,692 1,881
Inventories 431 408 424
Property, plant and equipment 97,540 89,575 95,247
Intangible assets 5,207 5,321 5,112
Deferred tax assets 5,347 3,551 4,525
Other 169 161 158
------------------------------------------------------------ ------------ ------------ --------
Total non-current assets 112,327 102,746 108,822
------------------------------------------------------------ ------------ ------------ --------
Total assets 133,685 122,106 129,273
------------------------------------------------------------ ------------ ------------ --------
LIABILITIES
Current liabilities
Trade and other payables 10,740 10,542 12,024
Interest bearing liabilities 3,650 6,354 3,531
Liabilities classified as held for sale 425 - 433
Other financial liabilities 112 576 200
Current tax payable 1,145 2,868 2,811
Provisions 2,505 2,174 2,784
Deferred income 293 223 251
------------------------------------------------------------ ------------ ------------ --------
Total current liabilities 18,870 22,737 22,034
------------------------------------------------------------ ------------ ------------ --------
Non-current liabilities
Trade and other payables 402 456 509
Interest bearing liabilities 31,835 18,713 24,799
Other financial liabilities 101 88 317
Deferred tax liabilities 5,177 6,152 5,287
Provisions 8,837 8,848 8,914
Deferred income 286 391 328
------------------------------------------------------------ ------------ ------------ --------
Total non-current liabilities 46,638 34,648 40,154
------------------------------------------------------------ ------------ ------------ --------
Total liabilities 65,508 57,385 62,188
------------------------------------------------------------ ------------ ------------ --------
Net assets 68,177 64,721 67,085
------------------------------------------------------------ ------------ ------------ --------
EQUITY
Share capital - BHP Billiton Limited 1,186 1,183 1,186
Share capital - BHP Billiton Plc 1,069 1,069 1,069
Treasury shares (549) (535) (533)
Reserves 1,929 1,853 1,912
Retained earnings 63,299 59,990 62,236
------------------------------------------------------------ ------------ ------------ --------
Total equity attributable to members of BHP Billiton Group 66,934 63,560 65,870
Non-controlling interests 1,243 1,161 1,215
------------------------------------------------------------ ------------ ------------ --------
Total equity 68,177 64,721 67,085
------------------------------------------------------------ ------------ ------------ --------
The accompanying notes form part of these half year financial
statements.
Consolidated Cash Flow Statement
for the half year ended 31 December 2012
Half year ended Year ended
31 December Half year ended 30 June
2012 31 December 2011 2012
US$M US$M US$M
---------------------------------------------------------------- ------------------- ------------------ -----------
Operating activities
Profit before taxation 6,461 15,470 23,022
Adjustments for:
Non-cash exceptional items 2,742 - 3,417
Depreciation and amortisation expense 3,365 2,871 6,408
Net gain on sale of non-current assets (23) (87) (116)
Impairments of property, plant and equipment, financial assets and
intangibles 97 19 100
Employee share awards expense 103 125 270
Financial income and expenses 544 383 730
Other (198) (250) (481)
Changes in assets and liabilities:
Trade and other receivables (75) 788 1,464
Inventories (584) (194) (208)
Trade and other payables (552) (556) (288)
Net other financial assets and liabilities 28 (292) (18)
Provisions and other liabilities (434) (704) (1,026)
-------------------------------------------------------------------------- --------- ------------------ -----------
Cash generated from operations 11,474 17,573 33,274
Dividends received 10 11 25
Interest received 36 55 127
Interest paid (436) (301) (715)
Income tax refunded - 225 530
Income tax paid (4,318) (4,545) (7,842)
Royalty related taxation paid (364) (738) (1,015)
-------------------------------------------------------------------------- --------- ------------------ -----------
Net operating cash flows 6,402 12,280 24,384
-------------------------------------------------------------------------- --------- ------------------ -----------
Investing activities
Purchases of property, plant and equipment (11,522) (7,903) (18,385)
Exploration expenditure (671) (1,097) (2,452)
Exploration expenditure expensed and included in operating cash flows 548 716 1,602
Purchase of intangibles (234) (122) (220)
Investment in financial assets (210) (243) (341)
Investment in subsidiaries, operations and jointly controlled entities,
net of their cash - (12,549) (12,556)
Cash outflows from investing activities (12,089) (21,198) (32,352)
Proceeds from sale of property, plant and equipment 523 139 159
Proceeds from financial assets 190 92 151
Proceeds from divestment of subsidiaries, operations and jointly
controlled entities, net
of their cash 1,700 - 6
Net investing cash flows (9,676) (20,967) (32,036)
-------------------------------------------------------------------------- --------- ------------------ -----------
Financing activities
Proceeds from interest bearing liabilities 7,770 7,300 13,287
Proceeds/(settlements) from debt related instruments 11 - (180)
Repayment of interest bearing liabilities (945) (1,701) (4,280)
Proceeds from ordinary shares 8 18 21
Contributions from non-controlling interests 42 66 101
Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts (348) (323) (424)
Share buy-back - BHP Billiton Plc - (83) (83)
Dividends paid (3,065) (2,943) (5,877)
Dividends paid to non-controlling interests (11) (56) (56)
-------------------------------------------------------------------------- --------- ------------------ -----------
Net financing cash flows 3,462 2,278 2,509
-------------------------------------------------------------------------- --------- ------------------ -----------
Net increase/(decrease) in cash and cash equivalents 188 (6,409) (5,143)
Cash and cash equivalents, net of overdrafts, at beginning of period 4,881 10,080 10,080
Effect of foreign currency exchange rate changes on cash and cash
equivalents (1) (64) (56)
-------------------------------------------------------------------------- --------- ------------------ -----------
Cash and cash equivalents, net of overdrafts, at end of period 5,068 3,607 4,881
-------------------------------------------------------------------------- --------- ------------------ -----------
The accompanying notes form part of these half year financial
statements.
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2012
For the half
year ended 31
December 2012
US$M Attributable to members of the BHP Billiton Group
-----------------------------------------------------------------------
Total equity
Share Share attributable
capital capital to members
- BHP - BHP of BHP
Billiton Billiton Treasury Retained Billiton Non-controlling Total
Limited Plc shares Reserves earnings Group interests equity
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Balance as at
1 July 2012 1,186 1,069 (533) 1,912 62,236 65,870 1,215 67,085
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Profit after
taxation - - - - 4,238 4,238 61 4,299
Other
comprehensive
income:
Net valuation
gains on
available for
sale
investments
taken to
equity - - - 2 - 2 1 3
Net valuation
gains on
available for
sale
investments
transferred
to the income
statement - - - (2) - (2) - (2)
Gains on cash
flow hedges
taken to
equity - - - 454 - 454 - 454
Gains on cash
flow hedges
transferred
to the income
statement - - - (297) - (297) - (297)
Exchange
fluctuations
on
translation
of foreign
operations
taken to
equity - - - (4) - (4) - (4)
Actuarial
losses on
pension and
medical
schemes - - - - (20) (20) (3) (23)
Tax recognised
within other
comprehensive
income - - - (58) 44 (14) 1 (13)
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Total
comprehensive
income - - - 95 4,262 4,357 60 4,417
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Transactions
with owners:
Purchase of
shares by
ESOP Trusts - - (348) - - (348) - (348)
Employee share
awards
exercised net
of employee
contributions - - 332 (163) (162) 7 - 7
Accrued
employee
entitlement
for
unexercised
awards - - - 103 - 103 - 103
Dividends - - - - (3,055) (3,055) (11) (3,066)
Equity
contributed - - - - - - 42 42
Divestment of
jointly
controlled
entities - - - (18) 18 - (63) (63)
Balance as at
31 December
2012 1,186 1,069 (549) 1,929 63,299 66,934 1,243 68,177
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
The accompanying notes form part of these half year financial
statements.
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2012 (continued)
For the half
year ended 31
December 2011
US$M Attributable to members of the BHP Billiton Group
-----------------------------------------------------------------------
Total equity
Share Share attributable
capital capital to members
- BHP - BHP of BHP
Billiton Billiton Treasury Retained Billiton Non-controlling Total
Limited Plc shares Reserves earnings Group interests equity
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Balance as at
1 July 2011 1,183 1,070 (623) 2,001 53,131 56,762 993 57,755
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Profit after
taxation - - - - 10,045 10,045 100 10,145
Other
comprehensive
income:
Net valuation
losses on
available for
sale
investments
taken to
equity - - - (32) - (32) - (32)
Net valuation
losses on
available for
sale
investments
transferred
to the income
statement - - - 1 - 1 - 1
Exchange
fluctuations
on
translation
of foreign
operations
taken to
equity - - - (2) - (2) - (2)
Actuarial
losses on
pension and
medical
schemes - - - - (42) (42) (2) (44)
Tax recognised
within other
comprehensive
income - - - (113) 55 (58) - (58)
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Total
comprehensive
income - - - (146) 10,058 9,912 98 10,010
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Transactions
with owners:
BHP Billiton
Plc shares
cancelled - (1) 83 1 (83) - - -
Purchase of
shares by
ESOP Trusts - - (323) - - (323) - (323)
Employee share
awards
exercised net
of employee
contributions - - 328 (128) (168) 32 - 32
Accrued
employee
entitlement
for
unexercised
awards - - - 125 - 125 - 125
Dividends - - - - (2,948) (2,948) (56) (3,004)
Equity
contributed - - - - - - 126 126
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Balance as at
31 December
2011 1,183 1,069 (535) 1,853 59,990 63,560 1,161 64,721
--------------- --------- ---------- ---------- --------- ---------- ------------- ---------------- ----------
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2012 (continued)
For the year
ended 30 June
2012
US$M Attributable to members of the BHP Billiton Group
---------------------------------------------------------------------------
Total equity
Share Share attributable
capital capital to members
- BHP - BHP of BHP
Billiton Billiton Treasury Retained Billiton Non-controlling Total
Limited Plc shares Reserves earnings Group interests equity
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Balance as at 1
July 2011 1,183 1,070 (623) 2,001 53,131 56,762 993 57,755
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Profit after
taxation - - - - 15,417 15,417 115 15,532
Other
comprehensive
income:
Net valuation
losses on
available for
sale
investments
taken to
equity - - - (32) - (32) - (32)
Net valuation
gains on
available for
sale
investments
transferred to
the income
statement - - - (2) - (2) - (2)
Losses on cash
flow hedges
taken to
equity - - - (320) - (320) - (320)
Losses on cash
flow hedges
transferred to
the income
statement - - - 205 - 205 - 205
Exchange
fluctuations
on translation
of foreign
operations
taken to
equity - - - 19 - 19 - 19
Actuarial
(losses)/gains
on pension and
medical
schemes - - - - (253) (253) 3 (250)
Tax recognised
within other
comprehensive
income - - - (33) 123 90 (1) 89
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Total
comprehensive
income - - - (163) 15,287 15,124 117 15,241
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Transactions
with owners:
Proceeds from
the issue of
shares 3 - - - - 3 - 3
BHP Billiton
Plc shares
cancelled - (1) 83 1 (83) - - -
Purchase of
shares by ESOP
Trusts - - (424) - - (424) - (424)
Employee share
awards
exercised net
of employee
contributions - - 431 (189) (213) 29 - 29
Employee share
awards
forfeited - - - (8) 8 - - -
Accrued
employee
entitlement
for
unexercised
awards - - - 270 - 270 - 270
Dividends - - - - (5,894) (5,894) (56) (5,950)
Equity
contributed - - - - - - 161 161
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Balance as at
30 June 2012 1,186 1,069 (533) 1,912 62,236 65,870 1,215 67,085
---------------- --------- --------- --------- --------- --------- ------------- ----------------------- ----------
Notes to the Half Year Financial Statements
1. Accounting policies
This general purpose financial report for the half year ended 31
December 2012 is unaudited and has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as issued by the International
Accounting Standards Board (IASB), IAS 34 'Interim Financial
Reporting' as adopted by the EU, AASB 134 'Interim Financial
Reporting' as issued by the Australian Accounting Standards Board
(AASB) and the Disclosure and Transparency Rules of the Financial
Services Authority in the United Kingdom and the Australian
Corporations Act 2001 as applicable to interim financial
reporting.
The half year financial statements represent a 'condensed set of
financial statements' as referred to in the UK Disclosure and
Transparency Rules issued by the Financial Services Authority.
Accordingly, they do not include all of the information required
for a full annual report and are to be read in conjunction with the
most recent annual financial report. The comparative figures for
the financial year ended 30 June 2012 are not the statutory
accounts of the BHP Billiton Group for that financial year. Those
accounts, which were prepared under IFRS, have been reported on by
the Company's auditors and delivered to the registrar of companies.
The auditors have reported on those accounts; their report was
unqualified, did not include a reference to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and did not contain statements under Section 498(2) or
(3) of the UK Companies Act 2006.
The half year financial statements have been prepared on the
basis of accounting policies and methods of computation consistent
with those applied in the 30 June 2012 annual financial statements
contained within the Annual Report of the BHP Billiton Group.
Rounding of amounts
Amounts in this financial report have, unless otherwise
indicated, been rounded to the nearest million dollars.
Comparatives
Where applicable, comparatives have been adjusted to disclose
them on the same basis as current period figures. Certain
comparatives have also been restated on finalisation of business
combination accounting - refer note 10.
Exchange rates
The following exchange rates relative to the US dollar have been
applied in the financial statements:
Average Average
Half year Half year Average Year
ended ended ended As at As at
31 December 31 December 30 June 31 December 31 December As at
2012 2011 2012 2012 2011 30 June 2012
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Australian
dollar (a) 1.04 1.03 1.03 1.04 1.01 1.00
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Brazilian real 2.04 1.70 1.78 2.04 1.87 2.08
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Canadian dollar 0.99 1.00 1.00 0.99 1.02 1.03
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Chilean peso 480 491 492 480 520 510
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Colombian peso 1,802 1,857 1,825 1,768 1,941 1,807
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
South African
rand 8.48 7.61 7.77 8.49 8.18 8.41
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Euro 0.79 0.72 0.75 0.76 0.77 0.80
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
UK pound
sterling 0.63 0.63 0.63 0.62 0.65 0.64
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
(a) Displayed as US$ to A$1 based on common convention.
2. Segment reporting
The Group operates eight Customer Sector Groups (CSGs) aligned
with the commodities which we extract and market, reflecting the
structure used by the Group's management to assess the performance
of the Group.
During the half year the Group completed the consolidation of
the Stainless Steel Materials and the Aluminium CSGs to form the
Aluminium and Nickel CSG. In view of the new management structure,
the Aluminium and Nickel CSG is now considered to be a single
reportable segment. There were no inter-segment transactions
between the Stainless Steel Materials and Aluminium CSGs and
therefore the comparative amounts reported for Aluminium and Nickel
for the half year ended 31 December 2011 and year ended 30 June
2012 represent an aggregation of previously reported amounts.
Reportable Segment Principal activities
-------------------------------- ------------------------------------------------------------------------------------
Petroleum Exploration, development and production of oil and gas
-------------------------------- ------------------------------------------------------------------------------------
Mining of bauxite, refining of bauxite into alumina and smelting of alumina into
aluminium
metal
Aluminium and Nickel Mining and production of nickel products
-------------------------------- ------------------------------------------------------------------------------------
Base Metals Mining of copper, silver, lead, zinc, molybdenum, uranium and gold
-------------------------------- ------------------------------------------------------------------------------------
Diamonds and Specialty Products Mining of diamonds and titanium minerals; potash development
-------------------------------- ------------------------------------------------------------------------------------
Iron Ore Mining of iron ore
-------------------------------- ------------------------------------------------------------------------------------
Manganese Mining of manganese ore and production of manganese metal and alloys
-------------------------------- ------------------------------------------------------------------------------------
Metallurgical Coal Mining of metallurgical coal
-------------------------------- ------------------------------------------------------------------------------------
Energy Coal Mining of thermal (energy) coal
-------------------------------- ------------------------------------------------------------------------------------
Group and unallocated items represent Group centre functions.
Exploration and technology activities are recognised within
relevant segments.
It is the Group's policy that inter-segment sales are made on a
commercial basis.
2. Segment reporting (continued)
US$M Petroleum Aluminium and Nickel Base Metals Diamonds and Specialty Products Iron Ore
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Half year ended 31 December 2012
Revenue
Group production 6,569 2,823 5,802 320 9,045
Third party products 45 653 319 - 36
Rendering of services 40 - - - 56
Inter-segment revenue - 9 - - 29
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Total revenue (a) 6,654 3,485 6,121 320 9,166
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Underlying EBIT (b) 3,161 (285) 1,967 (118) 4,814
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Net finance costs
Exceptional items
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Profit before taxation
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Energy Group and unallocated items/
US$M Manganese Metallurgical Coal Coal eliminations BHP Billiton Group
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Half year ended
31 December 2012
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Revenue
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Group production 977 2,817 2,286 - 30,639
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Third party products 35 - 293 88 1,469
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Rendering of services - - - - 96
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Inter-segment revenue - - - (38) -
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Total revenue (a) 1,012 2,817 2,579 50 32,204
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Underlying EBIT (b) 177 (101) 246 (79) 9,782
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Net finance costs (544)
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Exceptional items (2,777)
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
Profit before taxation 6,461
------------------------ ---------- ------------------- ------- ----------------------------- -------------------
(a) Revenue not attributable to reportable segments reflects
sales of freight and fuel to third parties.
(b) Underlying EBIT is earnings before net finance costs,
taxation and any exceptional items.
2. Segment reporting (continued)
US$M Petroleum Aluminium and Nickel Base Metals Diamonds and Specialty Products Iron Ore
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Half year ended 31 December 2011
Revenue
Group production 6,596 3,116 5,043 654 11,969
Third party products 125 790 207 - 45
Rendering of services 33 - - - 117
Inter-segment revenue - 9 - - 18
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Total revenue (a) 6,754 3,915 5,250 654 12,149
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Underlying EBIT (b) 4,100 (66) 1,641 86 7,901
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Net finance costs
Exceptional items
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Profit before taxation
------------------------ ---------- --------------------- ------------ -------------------------------- ---------
Metallurgical Energy Group and unallocated
US$M Manganese Coal Coal items/ eliminations BHP Billiton Group
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
Half year ended
31 December
2011
Revenue
Group production 1,084 4,386 2,682 - 35,530
Third party products 3 - 447 173 1,790
Rendering of services - 4 6 - 160
Inter-segment revenue - - - (27) -
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
Total revenue (a) 1,087 4,390 3,135 146 37,480
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
Underlying EBIT (b) 149 1,538 787 (283) 15,853
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
Net finance costs (383)
Exceptional items -
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
Profit before
taxation 15,470
---------------------- ------------ ------------------ ---------- ------------------------- ---------------------
2. Segment reporting (continued)
Diamonds and Specialty
US$M Petroleum Aluminium and Nickel Base Metals Products Iron Ore
------------------------- ---------- --------------------- ------------ ------------------------------- ---------
Year ended 30 June 2012
Revenue
Group production 12,616 6,198 11,162 1,326 22,156
Third party products 230 1,547 434 - 86
Rendering of services 91 - - - 320
Inter-segment revenue - 14 - - 39
Total revenue (a) 12,937 7,759 11,596 1,326 22,601
------------------------- ---------- --------------------- ------------ ------------------------------- ---------
Underlying EBIT (b) 6,348 (259) 3,965 199 14,201
------------------------- ---------- --------------------- ------------ ------------------------------- ---------
Net finance costs
Exceptional items
------------------------- ---------- --------------------- ------------ ------------------------------- ---------
Profit before taxation
------------------------- ---------- --------------------- ------------ ------------------------------- ---------
Energy Group and unallocated
US$M Manganese Metallurgical Coal Coal items/ eliminations BHP Billiton Group
------------------------- ---------- ------------------- ------- ---------------------------- -------------------
Year ended 30 June 2012
Revenue
Group production 2,136 7,569 5,155 - 68,318
Third party products 16 - 856 310 3,479
Rendering of services - 7 11 - 429
Inter-segment revenue - - - (53) -
Total revenue (a) 2,152 7,576 6,022 257 72,226
------------------------- ---------- ------------------- ------- ---------------------------- -------------------
Underlying EBIT (b) 235 1,570 1,227 (248) 27,238
------------------------- ---------- ------------------- ------- ---------------------------- -------------------
Net finance costs (730)
Exceptional items (3,486)
------------------------- ---------- ------------------- ------- ---------------------------- -------------------
Profit before taxation 23,022
------------------------- ---------- ------------------- ------- ---------------------------- -------------------
3. Exceptional items
Gross Tax Net
Half year ended 31 December 2012 US$M US$M US$M
------------------------------------------------------- -------- ------ --------
Exceptional items by category
Sale of Yeelirrie uranium deposit 420 - 420
Sale of Richards Bay Minerals 1,373 (185) 1,188
Announced sale of diamonds business (287) 76 (211)
Announced sale of East and West Browse Joint Ventures - 211 211
Impairment of Nickel West assets (1,172) 307 (865)
Impairment of Worsley assets (2,190) 657 (1,533)
Other impairments arising from capital project review (921) 266 (655)
(2,777) 1,332 (1,445)
------------------------------------------------------- -------- ------ --------
Sale of Yeelirrie uranium deposit:
On 27 August 2012, the Group announced the sale of its wholly
owned Yeelirrie uranium deposit and the transaction was completed
on 19 December 2012. A gain on sale of US$420 million was
recognised in the half year ended 31 December 2012, while the
associated tax expense was offset by the recognition of deferred
tax benefits on available tax losses.
Sale of Richards Bay Minerals:
On 7 September 2012, the Group announced it had completed the
sale of its 37.76 per cent interest in Richards Bay Minerals. As a
result of the sale, a gain on sale of US$1,188 million (after tax
expense) was recognised in the half year ended 31 December
2012.
Announced sale of diamonds business:
On 13 November 2012, the Group announced the sale of its
diamonds business, comprising its interests in the EKATI Diamond
Mine and Diamond Marketing operations for an aggregate cash
consideration of US$500 million. An impairment charge of US$211
million (after tax benefit) has been recognised. Completion of the
sale is expected in the first half of calendar year 2013 and the
assets and liabilities of the diamonds business have been
classified as held for sale.
Announced Sale of East and West Browse Joint Ventures:
On 12 December 2012, the Group signed a definitive agreement to
sell its 8.33 per cent interest in the East Browse Joint Venture
and 20 per cent in the West Browse Joint Venture. The Group's share
of assets and liabilities in the joint ventures, have been
disclosed as held for sale pending completion of the sale. Given
completion of the sale is highly probable, a tax benefit of US$211
million, mainly due to the recognition of deferred tax benefits on
available tax losses, has been reported in the December 2012 half
year.
Impairment of Nickel West assets:
As a result of continued strength in the Australian dollar and
weak nickel prices the Group has recognised an impairment charge of
US$865 million (after tax benefit) in the half year ended 31
December 2012.
Impairment of Worsley assets:
The Group has recognised impairment of assets at Worsley as a
result of continued strength in the Australian dollar and weak
alumina prices. A total impairment charge of US$1,533 million
(after tax benefit) was recognised in the half year ended 31
December 2012.
3. Exceptional items (continued)
Other impairments arising from capital project review:
In the half year ended 31 December 2012, West Australia Iron Ore
(WAIO) refocused its attention on the capital efficient expansion
opportunity that exists within the Port Hedland inner harbour and
all early works associated with the outer harbour development
option were suspended. This revision to the WAIO development
sequence and the change in status of other minor capital projects
across the Group has resulted in the recognition of impairment
charges of US$618 million (gross: US$868 million, tax benefit:
US$250 million) and other restructuring costs of US$37 million
(gross: US$53 million, tax benefit: US$16 million) in the half year
ended 31 December 2012.
Assets held for sale:
At 31 December 2012 the assets and liabilities of the diamonds
business (part of the Diamonds and Specialty Products segment) and
the East and West Browse Joint Ventures (part of the Petroleum
segment) have been classified as current assets held for sale of
US$1,089 million (predominantly comprising inventories of US$232
million and property, plant and equipment of US$751 million), and
as current liabilities held for sale of US$425 million
(predominantly comprising trade and other payables of US$68 million
and provisions of US$293 million).
Gross Tax Net
Half year ended 31 December 2011 US$M US$M US$M
--------------------------------- ------ ------ ------
There were no exceptional items in the half year ended 31
December 2011.
Gross Tax Net
Year ended 30 June 2012 US$M US$M US$M
------------------------------------------------------------------------------------------ -------- ------ --------
Exceptional items by category
Impairment of Fayetteville goodwill and other assets (2,835) 996 (1,839)
Impairment of Nickel West goodwill and other assets (449) 94 (355)
Suspension or early closure of operations and the change in status of specific projects
(a) (502) 108 (394)
Settlement of insurance claims (a) 300 (90) 210
Recognition of deferred tax assets on enactment of MRRT and PRRT extension legislation in
Australia - 637 637
(3,486) 1,745 (1,741)
------------------------------------------------------------------------------------------ -------- ------ --------
(a) Includes amounts attributable to non-controlling interests
of US$(34) million (US$7 million tax expense).
Impairment of Fayetteville goodwill and other assets:
As a result of the fall in United States domestic gas prices and
the company's decision to adjust its development plans, the Group
has recognised impairments of goodwill and other assets in relation
to its Fayetteville shale gas assets. A total impairment charge of
US$1,839 million (after tax benefit) was recognised in the year
ended 30 June 2012.
Impairment of Nickel West goodwill and other assets:
The Group has recognised impairments of goodwill and other
assets at Nickel West as a result of the continued downturn in the
nickel price and margin deterioration. A total impairment charge of
US$355 million (after tax benefit) was recognised in the year ended
30 June 2012.
3. Exceptional items (continued)
Suspension or early closure of operations and the change in
status of specific projects:
As part of our regular portfolio review, various operations and
projects around the Group have either been suspended, closed early
or changed in status. These include: the change in status of the
Olympic Dam expansion project; the temporary suspension of
production at TEMCO and the permanent closure of the Metalloys
South Plant in South Africa; the indefinite cessation of production
at Norwich Park; and the suspension of other minor capital
projects. As a result, impairment charges of US$338 million (gross:
US$422 million, tax benefit: US$84 million), idle capacity costs
and inventory write-down of US$28 million (gross: US$40 million,
tax benefit: US$12 million) and other restructuring costs of US$28
million (gross: US$40 million, tax benefit: US$12 million) were
recognised in the year ended 30 June 2012.
Settlement of insurance claims:
During 2008, extreme weather across the central Queensland
coalfields affected production from the BHP Billiton Mitsubishi
Alliance (BMA) and BHP Billiton Mitsui Coal (BMC) operations. The
Group settled insurance claims in respect of the lost production
and insurance claim income of US$210 million (after tax expense)
was recognised in the year ended 30 June 2012.
Recognition of deferred tax assets on enactment of MRRT and PRRT
extension legislation in Australia:
The Australian MRRT and PRRT extension legislation were enacted
in March 2012. Under the legislation, the Group is entitled to a
deduction against future MRRT and PRRT liabilities based on the
market value of its coal, iron ore and petroleum assets. A deferred
tax asset, and an associated net income tax benefit of US$637
million, was recognised in the year ended 30 June 2012 to reflect
the future deductibility of these market values for MRRT and PRRT
purposes, to the extent they are considered recoverable.
Assets held for sale:
In February 2012 the Group announced it had exercised an option
to sell its non-operated interest in Richards Bay Minerals (part of
the Diamonds and Specialty Products segment) to Rio Tinto. At 30
June 2012 the remaining assets and liabilities of the Richards Bay
Minerals joint venture were classified as current assets held for
sale of US$848 million (predominantly comprising cash and cash
equivalents of US$120 million, trade and other receivables of
US$196 million, inventories of US$128 million and property, plant
and equipment of US$369 million), and as current liabilities held
for sale of US$433 million (predominantly comprising trade and
other payables of US$153 million, interest bearing liabilities of
US$178 million and tax liabilities of US$67 million).
4. Interests in jointly controlled entities
Major shareholdings
in jointly Ownership interest at BHP Billiton Group
controlled entities reporting date (a) Contribution to profit after taxation
-------------------- --------------------------------------------- -------------------------------------------------------------------------------------------
30 June
31 December 2012 31 December 2011 2012 Half year ended 31 December 2012 Half year ended 31 December 2011 Year ended 30 June 2012
% % % US$M US$M US$M
-------------------- ---------------- ---------------- --------- -------------------------------- -------------------------------- -----------------------
Mozal SARL 47.1 47.1 47.1 (14) 14 (5)
Compañia Minera
Antamina SA 33.75 33.75 33.75 313 262 553
Minera Escondida
Limitada 57.5 57.5 57.5 910 461 1,367
Samarco
Mineração
SA 50 50 50 228 549 909
Carbones del Cerrej
n LLC 33.33 33.33 33.33 87 153 294
Other (b) 2 64 145
-------------------- ---------------- ---------------- --------- -------------------------------- -------------------------------- -----------------------
Total 1,526 1,503 3,263
-------------------- ---------------- ---------------- --------- -------------------------------- -------------------------------- -----------------------
(a) The ownership interest at the Group's and the jointly
controlled entity's reporting date are the same. When the annual
financial reporting date is different to the Group's, financial
information is obtained as at 31 December in order to report on a
basis consistent with the Group's reporting date.
(b) Includes the Group's effective interest in the Richards Bay
Minerals joint venture of 37.76 per cent up to the date of its
effective disposal on 3 September 2012 (31 December 2011: 37.76 per
cent; 30 June 2012: 37.76 per cent), the Guinea Alumina project
(ownership interest 33.3 per cent; 31 December 2011: 33.3 per cent;
30 June 2012: 33.3 per cent), the Newcastle Coal Infrastructure
Group Pty Ltd (ownership interest 35.5 per cent; 31 December 2011:
35.5 per cent; 30 June 2012: 35.5 per cent) and other immaterial
jointly controlled entities.
5. Net finance costs
Half year ended
Half year ended 31 December 31 December Year ended
2012 2011 30 June 2012
US$M US$M US$M
-------------------------------------------------- ---------------------------- ---------------- --------------
Financial expenses
Interest on bank loans and overdrafts 5 9 22
Interest on all other borrowings 411 349 696
Finance lease and hire purchase interest 6 5 37
Dividends on redeemable preference shares - - -
Discounting on provisions and other liabilities 256 228 481
Discounting on post-retirement employee benefits 52 60 129
Interest capitalised (a) (140) (143) (314)
Fair value change on hedged loans (75) 185 345
Fair value change on hedging derivatives 87 (184) (376)
Exchange variations on net debt 19 (24) (65)
-------------------------------------------------- ---------------------------- ---------------- --------------
621 485 955
-------------------------------------------------- ---------------------------- ---------------- --------------
Financial income
Interest income (35) (53) (122)
Expected return on pension scheme assets (42) (49) (103)
-------------------------------------------------- ---------------------------- ---------------- --------------
(77) (102) (225)
-------------------------------------------------- ---------------------------- ---------------- --------------
Net finance costs 544 383 730
-------------------------------------------------- ---------------------------- ---------------- --------------
(a) Interest has been capitalised at the rate of interest
applicable to the specific borrowings financing the assets under
construction or, where financed through general borrowings, at a
capitalisation rate representing the average interest rate on such
borrowings. For the half year ended 31 December 2012 the
capitalisation rate was 2.22 per cent (31 December 2011: 2.79 per
cent; 30 June 2012: 2.83 per cent).
6. Taxation
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
US$M US$M US$M
----------------------------------------------------- ---------------- ---------------- -----------
Taxation expense including royalty related taxation
UK taxation expense 14 146 (21)
Australian taxation expense 1,063 3,707 6,043
Overseas taxation expense 1,085 1,472 1,468
----------------------------------------------------- ---------------- ---------------- -----------
Total taxation expense 2,162 5,325 7,490
----------------------------------------------------- ---------------- ---------------- -----------
Total taxation expense including royalty related taxation,
exceptional items and exchange rate movements, was US$2,162
million, representing an effective rate of 33.5 per cent (31
December 2011: 34.4 per cent; 30 June 2012: 32.5 per cent).
Exchange rate movements increased taxation expense by US$119
million (31 December 2011: increase of US$70 million; 30 June 2012:
increase of US$250 million).
Exceptional items decreased taxation expense by US$1,332 million
(31 December 2011: no exceptional item impacting taxation expense;
30 June 2012: decrease of US$1,745 million) - refer to note 3.
Government imposed royalty arrangements calculated by reference
to profits after adjustment for temporary differences are reported
as royalty related taxation. Royalty related taxation (excluding
exceptional items) contributed US$566 million to taxation expense
representing an effective rate of 8.8 per cent (31 December 2011:
US$462 million and 3.0 per cent; 30 June 2012: US$889 million and
3.9 per cent).
7. Earnings per share
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
US$M US$M US$M
--------------------------------------------------------------------- ---------------- ---------------- -----------
Basic earnings per ordinary share (US cents) 79.6 188.7 289.6
Diluted earnings per ordinary share (US cents) 79.4 187.9 288.4
Basic earnings per American Depositary Share (ADS) (US cents) (a) 159.2 377.4 579.2
Diluted earnings per American Depositary Share (ADS) (US cents) (a) 158.8 375.8 576.8
Basic earnings (US$M) 4,238 10,045 15,417
Diluted earnings (US$M) 4,238 10,045 15,417
--------------------------------------------------------------------- ---------------- ---------------- -----------
The weighted average number of shares used for the purposes of
calculating diluted earnings per share reconciles to the number
used to calculate basic earnings per share as follows:
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Million Million Million
--------------------------------------------------------------------- ---------------- ---------------- -----------
Weighted average number of shares
Basic earnings per ordinary share denominator 5,321 5,323 5,323
Shares and options contingently issuable under employee share
ownership plans 17 23 23
--------------------------------------------------------------------- ---------------- ---------------- -----------
Diluted earnings per ordinary share denominator 5,338 5,346 5,346
--------------------------------------------------------------------- ---------------- ---------------- -----------
(a) Each American Depositary Share represents two ordinary
shares.
8. Dividends
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
US$M US$M US$M
--------------------------------------------- ---------------- ---------------- -----------
Dividends paid/payable during the period
BHP Billiton Limited 1,840 1,780 3,559
BHP Billiton Plc - Ordinary shares 1,206 1,168 2,335
- Preference shares (a) - - -
--------------------------------------------- ---------------- ---------------- -----------
3,046 2,948 5,894
--------------------------------------------- ---------------- ---------------- -----------
Dividends declared in respect of the period
BHP Billiton Limited 1,840 1,780 3,621
BHP Billiton Plc - Ordinary shares 1,206 1,168 2,376
- Preference shares (a) - - -
--------------------------------------------- ---------------- ---------------- -----------
3,046 2,948 5,997
--------------------------------------------- ---------------- ---------------- -----------
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1
each declared and paid annually (31 December 2011: 5.5 percent; 30
June 2012: 5.5 percent).
Half year ended Half year ended Year ended
31 December 31 December 30 June
2012 2011 2012
US cents US cents US cents
---------------------------------------------- ---------------- ---------------- -----------
Dividends paid during the period (per share)
Prior year final dividend 57.0 55.0 55.0
Interim dividend N/A N/A 55.0
---------------------------------------------- ---------------- ---------------- -----------
57.0 55.0 110.0
---------------------------------------------- ---------------- ---------------- -----------
Dividends declared in respect of the period (per share)
Interim dividend 57.0 55.0 55.0
Final dividend N/A N/A 57.0
---------------------------------------------- ---------------- ---------------- -----------
57.0 55.0 112.0
---------------------------------------------- ---------------- ---------------- -----------
Dividends are declared after period end in the announcement of
the results for the period. Interim dividends are declared in
February and paid in March. Final dividends are declared in August
and paid in September. Dividends declared are not recorded as a
liability at the end of the period to which they relate. Subsequent
to half year end, on 20 February 2013, BHP Billiton declared an
interim dividend of 57.0 US cents per share (US$3,046 million),
which will be paid on 28 March 2013 (31 December 2011: interim
dividend of 55.0 US cents per share - US$2,948 million; 30 June
2012: final dividend of 57.0 US cents per share - US$3,049
million).
BHP Billiton Limited dividends for all periods presented are, or
will be, fully franked based on a tax rate of 30 per cent.
9. Subsequent events
Other than the matters outlined elsewhere in this financial
report, no matters or circumstances have arisen since the end of
the half year that have significantly affected, or may
significantly affect, the operations, results of operations or
state of affairs of the Group in subsequent accounting periods.
10. Business combinations
The Group's 31 December 2011 half year financial report included
three business combinations reported with provisionally determined
fair values. These transactions were as follows: Petrohawk Energy
Corporation, HWE Mining and Fayetteville Shale gas. As reported in
the 30 June 2012 Annual Report, subsequent to 31 December 2011
final fair values for all three business combinations were
determined. Comparative amounts for 31 December 2011 have been
restated in this financial report, including the consolidated
income statement and consolidated balance sheet as presented below.
Consequential adjustments were also made to comparative amounts in
the consolidated statement of comprehensive income, the
consolidated cash flow statement and the consolidated statement of
changes in equity.
Consolidated Income Statement Published Adjustments Restated
for the half year ended 31 December 2011 US$M US$M US$M
------------------------------------------------------ ---------- ------------ ---------
Revenue
Group production 35,690 - 35,690
Third party products 1,790 - 1,790
------------------------------------------------------ ---------- ------------ ---------
Revenue 37,480 - 37,480
Other income 359 - 359
Expenses excluding net finance costs (22,150) 164 (21,986)
Profit from operations 15,689 164 15,853
------------------------------------------------------ ---------- ------------ ---------
Comprising:
Group production 15,615 164 15,779
Third party products 74 - 74
15,689 164 15,853
------------------------------------------------------ ---------- ------------ ---------
Financial income 102 - 102
Financial expenses (485) - (485)
------------------------------------------------------ ---------- ------------ ---------
Net finance costs (383) - (383)
------------------------------------------------------ ---------- ------------ ---------
Profit before taxation 15,306 164 15,470
------------------------------------------------------ ---------- ------------ ---------
Income tax expense (4,803) (60) (4,863)
Royalty related taxation (net of income tax benefit) (462) - (462)
------------------------------------------------------ ---------- ------------ ---------
Total taxation expense (5,265) (60) (5,325)
------------------------------------------------------ ---------- ------------ ---------
Profit after taxation 10,041 104 10,145
------------------------------------------------------ ---------- ------------ ---------
10. Business combinations (continued)
Consolidated Balance Sheet Published Adjustments Restated
as at 31 December 2011 US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 3,616 - 3,616
Trade and other receivables 8,056 5 8,061
Other financial assets 748 - 748
Inventories 6,405 1 6,406
Assets classified as held for sale - - -
Current tax assets 169 - 169
Other 360 - 360
------------------------------------------------------------ ---------- ------------ ---------
Total current assets 19,354 6 19,360
------------------------------------------------------------ ---------- ------------ ---------
Non-current assets
Trade and other receivables 2,038 - 2,038
Other financial assets 1,692 - 1,692
Inventories 408 - 408
Property, plant and equipment 95,601 (6,026) 89,575
Intangible assets 1,162 4,159 5,321
Deferred tax assets 3,551 - 3,551
Other 161 - 161
------------------------------------------------------------ ---------- ------------ ---------
Total non-current assets 104,613 (1,867) 102,746
------------------------------------------------------------ ---------- ------------ ---------
Total assets 123,967 (1,861) 122,106
------------------------------------------------------------ ---------- ------------ ---------
LIABILITIES
Current liabilities
Trade and other payables 10,541 1 10,542
Interest bearing liabilities 6,354 - 6,354
Liabilities classified as held for sale - - -
Other financial liabilities 576 - 576
Current tax payable 2,873 (5) 2,868
Provisions 2,174 - 2,174
Deferred income 223 - 223
------------------------------------------------------------ ---------- ------------ ---------
Total current liabilities 22,741 (4) 22,737
------------------------------------------------------------ ---------- ------------ ---------
Non-current liabilities
Trade and other payables 456 - 456
Interest bearing liabilities 18,713 - 18,713
Other financial liabilities 88 - 88
Deferred tax liabilities 8,137 (1,985) 6,152
Provisions 8,824 24 8,848
Deferred income 391 - 391
------------------------------------------------------------ ---------- ------------ ---------
Total non-current liabilities 36,609 (1,961) 34,648
------------------------------------------------------------ ---------- ------------ ---------
Total liabilities 59,350 (1,965) 57,385
------------------------------------------------------------ ---------- ------------ ---------
Net assets 64,617 104 64,721
------------------------------------------------------------ ---------- ------------ ---------
EQUITY
Share capital - BHP Billiton Limited 1,183 - 1,183
Share capital - BHP Billiton Plc 1,069 - 1,069
Treasury shares (535) - (535)
Reserves 1,853 - 1,853
Retained earnings 59,886 104 59,990
------------------------------------------------------------ ---------- ------------ ---------
Total equity attributable to members of BHP Billiton Group 63,456 104 63,560
Non-controlling interests 1,161 - 1,161
------------------------------------------------------------ ---------- ------------ ---------
Total equity 64,617 104 64,721
------------------------------------------------------------ ---------- ------------ ---------
Directors' Report
The Directors present their report together with the half year
financial statements for the half year ended 31 December 2012 and
the auditor's review report thereon.
Review of Operations
A detailed review of the Group's operations, the results of
those operations during the half year ended 31 December 2012 and
likely future developments are given on pages 1 to 18. The Review
of Operations has been incorporated into, and forms part of, this
Directors' Report.
Principal Risks and Uncertainties
Because of the international scope of the Group's operations and
the industries in which it is engaged, there are a number of risk
factors and uncertainties which could have an effect on the Group's
results and operations. Material risks that could impact on the
Group's performance include those referred to in the 'Outlook'
section as well as:
- Fluctuations in commodity prices and impacts of ongoing - We may not recover our investments in mining and oil
global economic volatility may negatively and gas projects
affect our results
- Our financial results may be negatively affected by - The commercial counterparties we transact with may not
currency exchange rate fluctuations meet their obligations which may
negatively impact our results
- Reduction in Chinese demand may negatively impact our - Operating cost pressures, reduced productivity and
results labour shortages could negatively impact
our operating margins and expansion plans
- Actions by governments or political events in the - Unexpected natural and operational catastrophes may
countries in which we operate could have adversely impact our operations
a negative impact on our business
- Failure to discover new reserves, maintain or enhance - Our non-controlled assets may not comply with our
existing reserves or develop new operations standards
could negatively affect our future results and financial
condition
- We may not be able to successfully complete - Breaches in our information technology security
acquisitions or integrate our acquired businesses processes may adversely impact the conduct
of our business activities
- Our human resource talent pool may not be adequate - Health, safety, environmental and community impacts,
incidents or accidents and related
regulations may adversely affect our people, operations
and reputation or licence to operate
- Increased costs and schedule delays may adversely - Climate change and greenhouse effects may adversely
affect our development projects impact our operations and markets
- If our liquidity and cash flow deteriorate - A breach of our governance processes may lead to
significantly it could adversely affect our ability regulatory penalties and loss of reputation
to fund our major capital programs
Further information on the above risks and uncertainties can be
found on pages 7 to 11 of the Group's Annual Report for the year
ended 30 June 2012, a copy of which is available on the Group's
website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on page 38.
Board of Directors
The Directors of BHP Billiton at any time during or since the
end of the half year are:
Mr J Nasser - Chairman since March 2010 (a Director since Mr M J Kloppers - an Executive Director since January
June 2006) 2006
Mr M W Broomhead - a Director since March 2010 Mr L P Maxsted - a Director since March 2011
Sir J G Buchanan - a Director since February 2003 Mr W W Murdy - a Director since June 2009
Mr C A Cordeiro - a Director since February 2005 Mr K C Rumble - a Director since September 2008
Mr D A Crawford - a Director since May 1994 Dr J M Schubert - a Director since June 2000
Mr L P Davies - a Director since June 2012 Baroness S Vadera - a Director since January 2011
Ms C J Hewson - a Director since March 2010
Auditor's independence declaration
KPMG in Australia are the auditors of BHP Billiton Limited.
Their auditor's independence declaration under Section 307C of the
Australian Corporations Act 2001 is set out on page 44 and forms
part of this Directors' Report.
Rounding of amounts
BHP Billiton Limited is a company of a kind referred to in
Australian Securities and Investments Commission Class Order No
98/100, dated 10 July 1998. Amounts in the Directors' Report and
half year financial statements have been rounded to the nearest
million dollars in accordance with that Class Order.
Signed in accordance with a resolution of the Board of
Directors.
J Nasser AO - Chairman
M Kloppers - Chief Executive Officer
Dated this 20th day of February 2013
Directors' Declaration of Responsibility
The half year financial report is the responsibility of, and has
been approved by, the Directors. In accordance with a resolution of
the Directors of BHP Billiton, the Directors declare that, to the
best of their knowledge and in their reasonable opinion:
(a) the half year financial statements and notes, set out on
pages 21 to 40, have been prepared in accordance with IAS 34
'Interim Financial Reporting' as issued by the IASB, IAS 34
'Interim Financial Reporting' as adopted by the EU, AASB 134
'Interim Financial Reporting' as issued by the AASB and the
Disclosure and Transparency Rules of the Financial Services
Authority in the United Kingdom and the Australian Corporations Act
2001, including:
(i) complying with applicable accounting standards and the
Australian Corporations Regulations 2001; and
(ii) giving a true and fair view of the financial position of
the BHP Billiton Group as at 31 December 2012 and of its
performance for the half year ended on that date;
(b) the Directors' Report, which incorporates the Review of
Operations on pages 1 to 18, includes a fair review of the
information required by:
(i) DTR4.2.7R of the Disclosure and Transparency Rules in the
United Kingdom, being an indication of important events during the
first six months of the current financial year and their impact on
the half year financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(ii) DTR4.2.8R of the Disclosure and Transparency Rules in the
United Kingdom, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the BHP Billiton Group during that period, and any changes in
the related party transactions described in the last annual report
that could have such a material effect; and
(c) in the Directors' opinion, there are reasonable grounds to
believe that each of BHP Billiton Limited and BHP Billiton Plc will
be able to pay its debts as and when they become due and
payable.
Signed in accordance with a resolution of the Board of
Directors.
J Nasser AO - Chairman
M Kloppers - Chief Executive Officer
Dated this 20th day of February 2013
Lead Auditor's Independence Declaration under Section 307C of
the Corporations Act 2001
To: the Directors of BHP Billiton Limited:
I declare that, to the best of my knowledge and belief, in
relation to the review for the half-year ended 31 December 2012
there have been:
i. no contraventions of the auditor independence requirements as
set out in the Australian Corporations Act 2001 in relation to the
review; and
ii. no contraventions of any applicable code of professional
conduct in relation to the review.
This declaration is in respect of BHP Billiton and the entities
it controlled during the financial period.
KPMG
Martin Sheppard
Partner
Melbourne
20 February 2013
KPMG, an Australian partnership and member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative ('KPMG International') a Swiss
entity.
KPMG Australia's liability limited by a scheme approved under
Professional Standards Legislation.
Independent Review Report
Independent Review Report of KPMG Audit Plc ("KPMG UK") to BHP
Billiton Plc and KPMG ("KPMG Australia") to the Members of BHP
Billiton Limited
Introduction
For the purposes of these reports, the terms "we" and "our"
denote KPMG UK in relation to its responsibilities under its terms
of engagement to report to BHP Billiton Plc and KPMG Australia in
relation to Australian professional and regulatory responsibilities
and reporting obligations to the members of BHP Billiton
Limited.
The BHP Billiton Group ("the Group") consists of BHP Billiton
Plc and BHP Billiton Limited and the entities they controlled at
the end of the half-year or from time to time during the half-year
ended 31 December 2012.
We have reviewed the condensed half-year financial statements of
the Group for the half-year ended 31 December 2012 ("half-year
financial statements"), set out on pages 21 to 40, which comprises
the consolidated income statement, consolidated statement of
comprehensive income, consolidated balance sheet, consolidated cash
flow statement, consolidated statement of changes in equity,
summary of significant accounting policies and other explanatory
notes 1 to 10. We have read the other information contained in the
half-year financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the half-year financial statements. KPMG Australia
has also reviewed the directors' declaration set out on page 43 in
relation to Australian regulatory requirements contained in section
(a) and (c) of the directors' declaration.
Directors' Responsibilities
The half-year financial report is the responsibility of, and has
been approved by, the Directors. The Directors are responsible for
preparing the half-year financial report:
-- in accordance with the Disclosure and Transparency Rules
("the DTR") of the United Kingdom's Financial Services Authority
("the UK FSA"), and under those rules, in accordance with IAS 34
Interim Financial Reporting as adopted by the European Union;
and
-- in accordance with Australian Accounting Standards and the
Australian Corporations Act 2001. This responsibility includes
establishing and maintaining internal control relevant to the
preparation and fair presentation of the half-year financial
statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in
the circumstances.
Respective Responsibilities of KPMG UK and KPMG Australia
KPMG UK's report is made solely to BHP Billiton Plc in
accordance with the terms of KPMG UK's engagement to assist BHP
Billiton Plc in meeting the requirements of the DTR of the UK FSA.
KPMG UK's review has been undertaken so that it might state to BHP
Billiton Plc those matters it is required to state to it in this
report and for no other purpose. To the fullest extent permitted by
law, KPMG UK does not accept or assume responsibility to anyone
other than BHP Billiton Plc, for KPMG UK's review work, for this
report, or for the conclusions it has reached.
KPMG Australia has performed an independent review of the
half-year financial statements and directors' declaration in order
to state whether, on the basis of the procedures described, it has
become aware of any matter that makes KPMG Australia believe that
the half-year financial statements and directors' declaration are
not in accordance with the Australian Corporations Act 2001
including: giving a true and fair view of the Group's financial
position as at 31 December 2012 and its performance for the
half-year ended on that date; and complying with Australian
Accounting Standard AASB 134 Interim Financial Reporting and the
Australian Corporations Regulations 2001.
Our responsibility is to express a conclusion on the half-year
financial statements in the half-year financial report based on our
review.
Scope of Review
KPMG UK conducted its review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Reports performed by the Independent Auditor of
the Entity issued by the Auditing Practices Board for use in the
United Kingdom.
KPMG Australia conducted its review in accordance with Auditing
Standard on Review Engagements ASRE 2410 Review of a Financial
Report Performed by the Independent Auditor of the Entity as issued
by the Australian Auditing and Assurance Standards Board. As
auditor of BHP Billiton Limited, KPMG Australia is required by ASRE
2410 to comply with the ethical requirements relevant to the audit
of the annual financial report.
A review of half-year financial statements consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with auditing standards and consequently
does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Independence
In conducting its review, KPMG Australia has complied with the
independence requirements of the Australian Corporations Act
2001.
Review conclusion by KPMG UK
Based on our review, nothing has come to our attention that
causes us to believe that the condensed half-year financial
statements in the half-year financial report for the six months
ended 31 December 2012 are not prepared, in all material respects,
in accordance with IAS 34 Interim Financial Reporting, as adopted
by the EU, and the DTR of the UK FSA.
Stephen Oxley
For and on behalf of KPMG Audit Plc
Chartered Accountants
London
20 February 2013
Review conclusion by KPMG Australia
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the condensed
half-year financial statements and directors' declaration of the
Group are not in accordance with the Australian Corporations Act
2001, including:
a) giving a true and fair view of the Group's financial position
as at 31 December 2012 and of its performance for the half-year
ended on that date; and
b) complying with Australian Accounting Standard AASB 134
Interim Financial Reporting and the Australian Corporations
Regulations 2001.
KPMG
Martin Sheppard
Partner
Melbourne
20 February 2013
KPMG, an Australian partnership and member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative ('KPMG International') a Swiss
entity.
KPMG Australia's liability limited by a scheme approved under
Professional Standards Legislation.
This information is provided by RNS
The company news service from the London Stock Exchange
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