RNS Number:8447H
BHP Billiton PLC
24 February 2003
Date 24 February 2003
Number 05/03
BHP BILLITON RESULTS FOR THE
HALF YEAR ENDED 31 DECEMBER 2002
* Strong performance from diversified asset base in challenging market
conditions.
* EBITDA of US$2,451 million and EBIT of US$1,659 million, both from
continuing operations, solid for the half year.
* Attributable profit of US$931 million and earnings per share of 15.0 US
cents (both from continuing operations and before exceptional items) reflect
adverse movements in exchange rates compared with the corresponding period.
* Merger benefits (prior to one-off costs) of US$285 million delivered.
These are comprised of US$220 million achieved in fiscal 2002 and a further
US$65 million achieved this half year.
* In addition to merger benefits, further cost savings of US$70 million
delivered since the merger against target of US$500 million by 30 June 2005.
* First half dividend of 7.0 US cents per share paid in December 2002, an
increase of 7.7%.
2002 2001 Change %
Half year ended 31 December US$M (1) US$M (1)
Turnover (2) 8 048 7 649 5.2%
EBITDA (2) (3) (4) 2 451 2 395 2.3%
EBIT (2) (3) (4) 1 659 1 596 3.9%
Attributable profit (2) (3) 931 1 155 -19.4%
Basic earnings per share (US cents) (2) (3) 15.0 19.2 -21.9%
EBITDA interest coverage (times) (2) (3) (4) (5) 12.3 9.1 35.2%
Dividend per share (US cents) 7.0 6.5 7.7%
(1) From continuing operations, excluding the results of the Group's Steel
business which was demerged in July 2002. Refer pages 15 - 17.
(2) Including the Group's share of joint ventures and associates.
(3) There were no exceptional items in relation to continuing operations in
either period.
(4) EBIT is earnings before interest and tax. EBITDA is EBIT before depreciation
and amortisation of Group companies of US$792 million for the half year ended 31
December 2002 and US$799 million for the half year ended 31 December 2001.
(5) For this purpose, net interest includes capitalised interest and excludes
the effect of discounting on provisions and exchange differences arising from
net debt.
The above financial results are prepared in accordance with UK generally
accepted accounting principles (GAAP) and are unaudited. Financial results in
accordance with Australian GAAP are provided on page 27.
All references to the corresponding period are to the half year ended 31
December 2001.
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2002
Commentary on the Group Interim Results
Introduction
These results build on the progress made since the merger and illustrate the
continued success of the Customer Sector Group business model and the Group's
strategy. In a period of global economic weakness and despite self imposed
cut-backs at some of our operations, financial results have remained solid and
cash flow generation from our portfolio of high quality assets is strong. We
have exceeded our merger benefits target six months ahead of schedule and have
delivered further cost savings against our additional target of US$500 million.
Strong available cash flow (after interest and tax) of US$1,259 million has
enabled us to proceed with sanctioned growth projects. Progress on all projects
continues to be on or ahead of schedule and budget. Notable milestones were
reached during the half year with the mechanical completion and commissioning of
Escondida Phase IV (Chile), the commencement of operations at the San Juan
underground project (US) and the commencement of natural gas flow through the
Bream gas pipeline in Bass Strait (Australia). Currently 13 major capital
projects are under development, including the recently approved Atlantis full
field development in the Gulf of Mexico.
Strong cash flows enabled the Board to increase dividends paid to shareholders
by 7.7% compared with the corresponding period. A dividend of 7.0 US cents per
share was paid on 4 December 2002.
The Income Statement
During the period, the Group's Steel business was demerged. In order to provide
meaningful comparison the discussion in this section is based on the Group's
continuing operations, excluding exceptional items and the Group's Steel
business.
Turnover rose by 5.2% to US$8,048 million, mainly due to higher sales volumes of
iron ore, energy coal, diamonds and aluminium and higher prices for petroleum
products, nickel, copper, manganese, metallurgical coal and chrome. These
factors were partly offset by lower sales volumes of petroleum products and
lower prices for export energy coal, diamonds, iron ore and aluminium.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
by 2.3% to US$2,451 million from US$2,395 million in the corresponding period.
Earnings before interest and tax (EBIT) were US$1,659 million compared with
US$1,596 million in the corresponding period, an increase of 3.9%. This increase
was due to increased sales volumes, lower exploration expense, cost savings,
generally higher commodity prices, the favourable net effect of exchange rate
movements and increased profits from new and acquired operations (including
commencement of commercial production at Antamina (Peru) in October 2001 and the
higher ownership interest in Cerrejon Zona Norte (Colombia) from February 2002).
Offsetting factors were inflationary pressures, principally in South Africa,
lower profits from ceased, sold and discontinued operations, increased price
linked costs and lower profits as a consequence of asset sales recorded in the
corresponding period. Please refer to pages 7 and 8 for further analysis of the
factors affecting turnover and EBIT.
Net interest on borrowings and cash fell from US$262 million to US$200 million,
principally driven by lower market interest rates and lower average debt levels.
Exchange losses on net debt were US$58 million compared with gains of US$242
million in the corresponding period, mainly in relation to the translation of
Rand denominated debt of companies which account in US dollars as their
functional currency. The Rand appreciated by 16% during the current period
compared with depreciation of 47% in the corresponding period.
The tax charge was US$466 million, representing an effective rate of 33.0%.
Excluding the impacts on tax of non tax-effected foreign currency, translation
of tax balances and other functional currency translation adjustments, the
effective rate was 32.4%.
Attributable profit (after minority interests of US$17 million) was US$931
million, a decrease of 19.4%, from US$1,155 million (after minority interests of
US$19 million), largely due to benefits in net interest and taxation in the
corresponding period attributable to the significant devaluation of the South
African rand against the US dollar during the half year ended 31 December 2001.
Basic earnings per share was 15.0 US cents per share against 19.2 US cents per
share in the corresponding period, a reduction of 21.9%, reflecting the
reduction in attributable profit and an increased number of shares on issue
(including the equalisation issue associated with the BHP Steel demerger).
Discontinued Operations / Exceptional Items
The demerger of the Group's Steel business became unconditional on 1 July 2002.
The contribution of the Group's Steel business in the corresponding period has
been disclosed as discontinued operations. The 6% interest in BHP Steel retained
by BHP Billiton was sold in July 2002 for US$75 million and the loss of US$19
million associated with this sale has been recognised in the half year and is
disclosed as an exceptional item in relation to discontinued operations. The
demerger was effected through a Court approved capital reduction of A$0.69 per
BHP Billiton Limited share totalling approximately US$1.5 billion (A$2.6
billion) via the transfer of BHP Steel Limited shares to BHP Billiton Limited
shareholders. Consequently, BHP Billiton Plc shareholders received approximately
149 million equalisation shares.
After including discontinued operations and exceptional items, the attributable
profit for the period was US$912 million, US$286 million lower than the US$1,198
million for the corresponding period, again, primarily due to exchange gains in
the prior period. Basic earnings per share, including discontinued operations
and exceptional items, was 14.7 US cents per share, 26.1% lower than the 19.9 US
cents per share of the corresponding period.
Cash Flows
Available cash flow (after interest and tax) remained strong at US$1,259
million.
Expenditure on growth projects and investments amounted to US$1,020 million,
including Petroleum projects in the Gulf of Mexico, the Mt Arthur North energy
coal project in Australia, the ROD oil and Ohanet wet gas projects in Algeria,
the Mining Area C, Yandi and Port and Capacity Expansion (PACE) iron ore
projects in Australia, the Hillside 3 expansion in South Africa and the Mozal 2
expansion in Mozambique. Maintenance capital expenditure was US$248 million and
exploration expenditure was US$130 million, whilst disposals of fixed assets,
sale of investments and repayments of loans by joint ventures generated US$198
million.
Additionally, a net cash inflow of US$272 million was derived from the proceeds
on demerger of the Group's Steel business. Whilst not reflected in cash flows,
US$232 million of debt was retained by BHP Steel upon demerger.
Net cash flow before dividend payments was US$331 million. After dividend
payments of US$835 million (up from US$811 million in the prior half year), net
cash outflow (before management of liquid resources and financing) amounted to
US$504 million.
Net debt of US$7,063 million at 31 December 2002 represents 37.5% of net debt
plus net assets. Net debt comprises US$7,937 million of total debt offset by
US$874 million of cash, including money market deposits.
Dividend
On 4 December 2002, a dividend of 7.0 US cents per share was paid to BHP
Billiton Limited and BHP Billiton Plc shareholders, which represents an increase
of 7.7% compared with the corresponding period. The BHP Billiton Limited
dividend was 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 sterling to shareholders on
the UK section of the register and South African rand to shareholders on the
South African section of the register.
Capital Management
The Group's inaugural Eurobond issue, under the US$1.5 billion Euro Medium Term
Note programme established in June 2002, took place in early October 2002. The
issue of Euro750 million five year notes, which were swapped into US dollars, was
oversubscribed and priced at the lower end of market expectations. The success
of this issue, in light of the then prevailing market conditions, is a clear
reflection of the Group's strong credit profile.
The US$1.25 billion 364 day revolving credit component of the US$2.5 billion
syndicated multi-currency revolving credit facility that was due for expiry in
September 2002 was extended for a further period of 364 days to September 2003.
In October 2002, Moody's Investor Services upgraded the Group's long term credit
rating to A2 from A3 and short term credit rating to P-1 from P-2. This upgrade
reflects the successful combination of the Group's operations following the
merger in June 2001, the benefit of a substantially diversified portfolio and
our continued focus on maintaining disciplined financial policies. Standard &
Poor's rating for the Group remains on positive watch after being upgraded in
September 2001 to its current long term credit rating of A and short term credit
rating of A-1.
Merger Benefits and Further Cost Savings
During the year ended 30 June 2002, merger benefits (before one-off costs) of
US$220 million were delivered. A further US$65 million of merger-related
benefits have been achieved during the six months to 31 December 2002, bringing
the total to US$285 million. This exceeds our target for merger benefits, set at
the time of the merger, of US$270 million by the end of financial year 2003, and
has been achieved six months ahead of schedule. One-off costs of US$130 million
in total were incurred to deliver these on-going annual benefits, US$15 million
of which were incurred in the current period.
A further target, to achieve additional annual cost savings and efficiency gains
of US$500 million by June 2005 was set in our Strategic Framework last April.
This target is to be measured by looking at commodity based unit costs using the
year ended 30 June 2001 as the base year. Cost savings will be driven through
the continuation of our Operating Excellence programme and productivity
improvements, ongoing strategic sourcing and marketing initiatives. During the
six months to December 2002, we achieved savings and efficiency gains of US$70
million in addition to the merger benefits set out above, largely as a result of
Operating Excellence initiatives in our Aluminium, Base Metals and Stainless
Steel Materials CSGs and other productivity gains in our Aluminium and Diamonds
and Specialty Products CSGs.
Corporate Governance
The board appointed Mr Charles Goodyear as Chief Executive Officer on 5 January
2003 following the resignation of Mr Brian Gilbertson.
As yet, no payments have been made to Mr Gilbertson in connection with the
cessation of his employment, nor has agreement been reached on the quantum of
any payments to be made. Any payments will be disclosed immediately they are
finalised. The terms under which Mr Gilbertson was employed, including the basis
upon which the contracts of employment could be brought to an end, are set out
in the Remuneration Report that forms part of the Annual Report published in
September 2002. Details were also included in the explanatory material provided
to shareholders ahead of their consideration of the merger. The Remuneration
Report was put to the last Annual General Meeting and shareholders were invited
to consider and approve the remuneration policy for the Group, which they did.
The Group will continue to seek the approval of shareholders for its
Remuneration Report.
In addition to the payments to be made under the terms of Mr Gilbertson's
employment contracts, Mr Gilbertson has accrued entitlements under the
applicable pension/superannuation arrangements which have been in place for the
duration of his employment with the Group or predecessor companies. Mr
Gilbertson's period of pensionable service is over 30 years. The amount payable
under these pension/superannuation arrangements has been reported each year in
the Remuneration Report.
Since the merger, the number of Directors on the Board has reduced from 17. The
Board has continued with its regular review and appraisal process aimed at
assessing the appropriate mix of skills, attributes and the performance of
individual Directors. As part of this process, Dr John Buchanan was appointed to
the Board of Directors with effect from 1 February 2003.
The Board today announced the appointment of Mr Miklos Salamon as an Executive
Director to the Board of Directors, with immediate effect. In addition, Mr David
Munro was appointed Chief Development Officer and a member of the Executive
Committee. Mr Chris Pointon and Mr Marcus Randolph, presidents of the Stainless
Steel Materials and Diamonds and Specialty Products CSGs respectively, were also
appointed members of the Executive Committee. Please see separate press releases
dated today's date for further details.
Outlook
In general, London Metals Exchange commodity prices showed improvement during
the December 2002 quarter. Prices continued to show some improvement in the
opening weeks of calendar 2003. Prices for oil have risen as a result of the
ongoing uncertainty in the Middle East and Venezuela, while steel making raw
materials are well positioned to benefit from strong North East Asian and, in
particular, Chinese demand.
The global economy continues to encounter both economic and geo-political
tensions. Despite continued buoyancy in China, the Organisation for Economic
Cooperation and Development (OECD) leading indicator is signalling continued
weakness in global industrial production.
In the short term, the uncertainty regarding developments in the Middle East,
continued high oil prices and weak global equity markets are weighing heavily on
consumer and business sentiment with the latter delaying the new investment
spending and employment growth needed before there will be any sustained
improvement in the world economy. Demand in China, an important influence on
many of our products, continues to be strong.
Despite this uncertain outlook, our diversified portfolio of high quality assets
provides relatively stable cashflows, leaving us well placed to continue to
invest in value adding opportunities and to prosper from any uptick in economic
activity.
TRADING REVIEW
EBIT
The following table details the approximate impact of major factors affecting
EBIT for the half year ended 31 December 2002 compared with the corresponding
period.
US$M
EBIT from continuing operations for the half year ended 31 1 596
December 2001
Change in volumes 130
Change in sales prices 60
Price-linked costs (50)
Inflation on costs (140)
Costs 80
New and acquired operations 20
Exchange rates 30
Ceased, sold and discontinuing operations (80)
Asset sales (40)
Exploration 90
Other items (37)
EBIT from continuing operations for the half year ended 31 1 659
December 2002
Volumes
Higher sales volumes of iron ore, energy coal, diamonds and aluminium were
partly offset by lower sales volumes of petroleum products, resulting in a
positive net volume impact on EBIT of approximately US$130 million.
Prices
Higher prices for petroleum products, nickel, copper, manganese, metallurgical
coal and chrome increased turnover by approximately US$290 million. This
increase was partly offset by lower prices for export energy coal, diamonds,
iron ore and aluminium that decreased turnover by approximately US$230 million.
Costs
Favourable operating cost performance increased EBIT by approximately US$80
million compared with the corresponding period. The Group's cost reduction
initiatives and reduced maintenance costs at Hillside (South Africa) lowered
costs by approximately US$190 million. These factors were partially offset by
higher costs at Escondida, due to voluntary restraints on production,
maintenance outages and higher depreciation from the start-up of Phase IV.
Higher operating costs at Bass Strait and increased depreciation charges in
Energy Coal (as a result of a review of asset lives) and in Petroleum also had
an unfavourable impact on operating costs.
Increases in price-linked costs depressed EBIT by approximately US$50 million,
mainly due to higher royalties and taxes for petroleum products.
Inflationary pressures, principally in South Africa, increased costs by
approximately US$140 million.
New and acquired operations
New and acquired operations increased EBIT by approximately US$20 million due to
the commencement of commercial production at Antamina in October 2001 and the
higher ownership interest in Cerrejon Zona Norte from February 2002.
Ceased, sold and discontinuing operations
The corresponding period included EBIT of approximately US$80 million mainly
from PT Arutmin (Indonesia), divested in November 2001, and the Rietspruit
energy coal mine (South Africa), which was closed in May 2002.
Asset sales
The impact of asset sales is a reduction in EBIT of approximately US$40 million
mainly from the divestment of PT Arutmin in the corresponding period.
Exchange rates
Reduced losses on legacy A$/US$ currency hedging compared with the corresponding
period had a favourable effect on EBIT of approximately US$80 million. In
addition, the lower average Rand/US$ and Colombian peso/US$ exchange rates had a
favourable impact on operating costs (approximately US$50 million). This was
partly offset by the impact of stronger A$/US$ exchange rates on operating costs
(approximately US$65 million) and the conversion of Rand denominated monetary
assets and liabilities (approximately US$40 million) at balance sheet date.
Exploration
Exploration expense was down by approximately US$90 million. The prior period
included the write off of exploration expenditure at La Granja (Peru) and higher
exploration expense in Petroleum.
Currency
The Group has adopted the US$ as its reporting currency and, subject to some
specific exceptions, its functional currency. Currency fluctuations affect the
profit and loss account in two principal ways.
Sales are predominantly based on US dollar pricing (the principal exceptions
being Petroleum's gas sales to Australian and UK domestic customers and Energy
Coal's sales to South African domestic customers). However, a proportion of
operating costs (particularly labour) arises in the local currency of the
operations, most significantly the Australian dollar and the South African rand,
but also the Brazilian real, Chilean peso and Colombian peso. Accordingly,
changes in the exchange rates between these currencies and the US dollar can
have a significant impact on the Group's reported results.
Several subsidiaries hold certain monetary assets and liabilities denominated in
currencies other than their functional currency (US dollars), in particular
non-US dollar denominated debt, tax liabilities and provisions (mainly employee
provisions and resource rent tax). Monetary assets and liabilities are converted
into US dollars at the closing currency exchange rates. The resultant
differences are accounted for in the profit and loss account in accordance with
UK GAAP.
The following exchange rates have been utilised in this report:
Currency Half year ended Half year ended As at
per US$ 31 Dec 2002 31 Dec 2001 31 Dec 2002 30 June 2002 31 Dec 2001
average average
South African rand 10.06 9.29 8.59 10.25 11.89
Australian dollar 1.81 1.95 1.76 1.77 1.96
Brazilian real 3.39 2.55 3.53 2.82 2.32
Chilean peso 714 680 719 698 655
Colombian peso 2 709 2 280 2 854 2 399 2 310
Canadian dollar 1.56 1.56 1.57 1.50 1.58
UK Sterling 0.64 0.69 0.62 0.65 0.69
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the Customer Sector Group results for
the half year ended 31 December 2002 and the comparative period (for continuing
operations and before exceptional items).
Half year ended 31 December (US$ Turnover (1) EBIT
Million)
2002 2001 Change % 2002 2001 Change %
Petroleum 1 511 1 434 5.4 660 576 14.6
Aluminium 1 535 1 371 12.0 266 191 39.3
Base Metals 897 817 9.8 83 69 20.3
Carbon Steel Materials 1 747 1 660 5.2 506 565 -10.4
Diamonds and Specialty Products 716 752 -4.8 150 138 8.7
Energy Coal 947 1 045 -9.4 124 350 -64.6
Stainless Steel Materials 491 449 9.4 61 -36
Group and unallocated items 424 378 12.2 -191 -257 25.7
BHP Billiton Group from continuing 8 048 7 649 5.2 1 659 1 596 3.9
operations
(1) Turnover does not add to BHP Billiton Group due to intersegment
transactions.
An explanation of the factors influencing EBIT, including joint ventures and
associates, by Customer Sector Group, is as follows:
Petroleum
Petroleum contributed EBIT of US$660 million, up from US$576 million, an
increase of 14.6% compared with the corresponding period.
The increase in EBIT was due mainly to a higher average realised oil price of
US$27.19 per barrel compared to US$22.54 per barrel in the corresponding period,
together with lower exploration costs in the current period and higher volumes
at North West Shelf (Australia) due to timing of shipments and strong
production.
These factors were partly offset by lower overall sales and production volumes
at Liverpool Bay (UK) due to scheduled maintenance, and lower production at Bass
Strait and Laminaria (Australia), due to natural field decline. An increase in
price-linked costs (royalties and taxes), higher depreciation and an increase in
costs at Bass Strait also had an unfavourable impact on EBIT.
Aluminium
Aluminium contributed EBIT of US$266 million, up from US$191 million, an
increase of 39.3% compared with the corresponding period.
The increase in EBIT was mainly attributable to improved operational cost
performance at Hillside, Worsley and Alumar, resulting from increased production
and reduced maintenance costs. Increased production at Hillside and Worsley was
mainly attributable to the continued success of Operating Excellence projects
and increased production at Alumar was due to the end of power restrictions in
Brazil. Lower maintenance costs at Hillside were mainly a result of a lower
number of pots being relined in the current period, combined with the absence of
the net costs associated with the September 2001 power outage. The weakening of
the Rand/US$ and Brazilian Real/US$ average exchange rates also had a favourable
impact on operating costs.
These factors were partially offset by the lower average LME price for
aluminium, down US$17 per tonne or 1.3% to US$1,332 per tonne and the
strengthening of the A$/US$ exchange rate.
Base Metals
Base Metals contributed EBIT of US$83 million, up from US$69 million, an
increase of 20.3% compared with the corresponding period.
The increase in EBIT was mainly attributable to lower exploration expense with
US$38 million relating to the write off of La Granja included in the
corresponding period. Also contributing to the increase in EBIT was the higher
average realised copper price at US$0.68 per lb, for the half year ended 31
December 2002, compared to US$0.65 per lb in the corresponding period. EBIT also
benefited from a full six months of operations from Antamina. Commercial
production at Antamina commenced in October 2001.
These factors were partially offset by increased unit costs at Escondida due to
the ramp-up of Phase IV production and lower existing plant throughput resulting
from maintenance outages. Production cutbacks at Escondida and Tintaya (Peru)
were partially offset by the completion of the Phase IV expansion in October
2002.
Carbon Steel Materials
Carbon Steel Materials contributed EBIT of US$506 million, down from US$565
million, a decrease of 10.4% compared with the corresponding period.
The decrease in EBIT was mainly attributable to the unfavourable impact of
stronger A$/US$ exchange rates on operating costs compared to the corresponding
period. Lower iron ore prices, following the contract settlements announced in
May 2002, also unfavourably impacted EBIT.
These factors were partially offset by continued strong demand for Western
Australian iron ore from Asian markets, which resulted in record production and
shipping during the December 2002 half year. Increased demand during the current
half for Samarco (Brazil) pellets also had a favourable impact on EBIT.
Diamonds and Specialty Products
Diamonds and Specialty Products contributed EBIT of US$150 million, up from
US$138 million, an increase of 8.7% compared with the corresponding period.
The increase in EBIT was primarily due to increased diamond production, mainly
due to increased plant throughput and processing efficiencies. Cost efficiencies
were achieved by Integris Metals (US) subsequent to the merger of BHP Billiton's
and Alcoa Metals' metals distribution businesses on 1 November 2001.
These factors were partially offset by lower average realised diamond prices
(down 28%) as a result of a change in product mix compared with the
corresponding period. Further, during the current period Integris' volumes have
been adversely affected by market conditions in North America.
Energy Coal
Energy Coal contributed EBIT of US$124 million, down from US$350 million, a
decrease of 64.6% compared with the corresponding period.
The decrease in EBIT was primarily due to a significant decline in export market
prices. The divestment of PT Arutmin in November 2001 and the closure of the
Rietspruit mine in May 2002 had an unfavourable impact on EBIT with both the
exclusion of the results of these operations in the current period and the
profit on sale of PT Arutmin recorded in the corresponding period. The
conversion of Rand denominated net monetary liabilities at balance date, the
unit cost impact from lower Colombian production volumes in response to
depressed European market conditions, higher depreciation charges as a result of
a review of asset lives and inflationary pressure on costs in South Africa and
Colombia also had an unfavourable impact on EBIT.
These factors were partially offset by higher sales volumes at Ingwe (South
Africa) and Hunter Valley (Australia), the inclusion of profits from the
additional share of the Cerrejon Zona Norte operation and cost improvement
initiatives across all Energy Coal operations.
Stainless Steel Materials
Stainless Steel Materials contributed EBIT of US$61 million, compared with a
loss of US$36 million in the corresponding period.
The increase in EBIT was driven by higher realised prices for nickel, up by 29%.
In addition, a 12% increase in ferrochrome production, associated with the
restart of idle furnaces in the period in response to increasing market demand,
and a 15% increase in nickel production reflecting the continued ramp-up of
production from Cerro Matoso Line 2 (Colombia) improved results. Benefits from
ongoing improvement programs at both Cerro Matoso and QNI (Australia) and the
impact of the weaker average Rand/US$ exchange rates on operating costs also had
a favourable impact on EBIT.
Group and Unallocated Items
Corporate overheads for the half year decreased by US$24 million (after taking
account of inflation and exchange impacts) to US$100 million. Losses on legacy
A$/US$ currency hedging also decreased to US$95 million from US$176 million in
the corresponding period, which were partly offset by the unfavourable impact of
one-off items.
INTERIM FINANCIAL INFORMATION
CONTENTS
INDEPENDENT REVIEW REPORT OF THE AUDITORS
TO BHP BILLITON PLC 14
CONSOLIDATED PROFIT AND LOSS ACCOUNT 15
CONSOLIDATED BALANCE SHEET 18
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES 18
CONSOLIDATED STATEMENT OF CASH FLOWS 19
NOTES TO INTERIM FINANCIAL INFORMATION 21
The interim financial information set out on pages 15 to 26 has been prepared on
the same basis and using the same accounting policies as were applied in drawing
up the financial information contained in the accounts of BHP Billiton Plc for
the year ended 30 June 2002. The interim financial information should be read in
conjunction with the accounts of BHP Billiton Plc for the year ended 30 June
2002 and does not include all information normally contained within the notes to
annual accounts. Where applicable, comparatives have been adjusted to disclose
them on the same basis as current period figures.
The Group has yet to decide whether or not to apply consolidations under the new
Australian tax consolidations legislation. If a decision is made to apply
consolidations, any accounting consequences will be recorded as appropriate. In
the event that the Group elects to apply consolidations there is not expected to
be any adverse effect on recorded tax assets.
The financial information for the half years ended 31 December 2002 and 31
December 2001 is unaudited. In the opinion of the Directors, the financial
information for these periods presents fairly the financial position, results of
operations and cash flows for the periods in conformity with UK generally
accepted accounting principles (GAAP).
The financial information for the year ended 30 June 2002 has been derived from
the audited financial statements of BHP Billiton Plc for that period as filed
with the UK Registrar of Companies and does not constitute the statutory
accounts of BHP Billiton Plc for that period. The auditors' report on the
statutory accounts for the year ended 30 June 2002 was unqualified and did not
contain statements under Section 237 (2) (regarding adequacy of accounting
records and returns) or under Section 237 (3) (provision of necessary
information and explanations) of the United Kingdom Companies Act 1985.
INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC AND
PRICEWATERHOUSECOOPERS TO BHP BILLITON PLC
Introduction
We have been engaged by the Company to review the financial information for the
six months ended 31 December 2002 set out on pages 15 to 26 and we have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the United Kingdom Financial Services Authority. Our review has been
undertaken so that we might state to the Company those matters we are required
to state to it in this report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company for our review work, for this report, or for the conclusions we have
reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the United Kingdom Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts except
where they are to be changed in the next annual accounts, in which case any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: "Review of Interim Financial Information" issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions which is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2002.
KPMG Audit Plc
Chartered Accountants
London, 24 February 2003
PricewaterhouseCoopers
Chartered Accountants
London, 24 February 2003
Consolidated Profit and Loss Account
for the half year ended 31 December 2002
Half year ended 31 December 2002
Continuing Discontinued Total
Operations Operations/
Exceptional
items
Notes US$M US$M US$M
Turnover (including share of joint ventures and 8 048 - 8 048
associates)
less Share of joint ventures' and associates' turnover (977) - (977)
included above
Group turnover 7 071 - 7 071
Net operating costs 1 (5 618) - (5 618)
Group operating profit/(loss) 1 453 - 1 453
Share of operating profit/(loss) of joint ventures and 184 - 184
associates
Operating profit/(loss) 1 637 - 1 637
(including share of profit of joint ventures and
associates)
Income from other fixed asset investments 14 - 14
Profit/(loss) on sale of fixed assets 8 - 8
Profit on sale of subsidiaries - - -
Loss on termination of operations 1 - - -
Loss on sale of discontinued operations 1 - (19) (19)
Profit/(loss) before net interest and similar items 1 659 (19) 1 640
payable and taxation
Net interest and similar items payable
Group 4 (199) - (199)
Joint ventures and associates 4 (46) - (46)
Profit/(loss) before taxation 1 414 (19) 1 395
Taxation 1 (466) - (466)
Profit/(loss) after taxation 948 (19) 929
Equity minority interests (17) - (17)
Profit/(loss) for the financial period (attributable 931 (19) 912
profit)
Dividends to shareholders (434) - (434)
Retained profit/(loss) for the financial period 497 (19) 478
Earnings per ordinary share (basic) (US cents) 15.0 (0.3) 14.7
Earnings per ordinary share (diluted) (US cents) 15.0 (0.3) 14.7
Dividend per ordinary share (US cents) 7.0
Consolidated Profit and Loss Account continued
Half year ended 31 December 2001
Continuing Discontinued Total
Operations Operations
Notes US$M US$M US$M
Turnover (including share of joint ventures and 7 649 1 245 8 894
associates)
less Share of joint ventures' and associates' turnover (723) (92) (815)
included above
Group turnover 6 926 1 153 8 079
Net operating costs 1 (5 566) (1 113) (6 679)
Group operating profit/(loss) 1 360 40 1 400
Share of operating profit/(loss) of joint ventures and 171 (2) 169
associates
Operating profit/(loss) 1 531 38 1 569
(including share of profit of joint ventures and
associates)
Income from other fixed asset investments 17 1 18
Profit/(loss) on sale of fixed assets (21) 16 (5)
Profit on sale of subsidiaries 69 - 69
Loss on termination of operations 1 - - -
Loss on sale of discontinued operations 1 - - -
Profit/(loss) before net interest and similar items 1 596 55 1 651
payable and taxation
Net interest and similar items payable
Group 4 (37) (1) (38)
Joint ventures and associates 4 14 (5) 9
Profit/(loss) before taxation 1 573 49 1 622
Taxation 1 (399) (3) (402)
Profit/(loss) after taxation 1 174 46 1 220
Equity minority interests (19) (3) (22)
Profit/(loss) for the financial period (attributable 1 155 43 1 198
profit)
Dividends to shareholders (392) - (392)
Retained profit/(loss) for the financial period 763 43 806
Earnings per ordinary share (basic) (US cents) 19.2 0.7 19.9
Earnings per ordinary share (diluted) (US cents) 19.1 0.7 19.8
Dividend per ordinary share (US cents) 6.5
Consolidated Profit and Loss Account continued
Year ended 30 June 2002
Continuing Exceptional Continuing Discontinued Total
Operations Items Operations Operations
Including
Exceptional
Items
Notes US$M US$M US$M US$M US$M
Turnover (including share of joint ventures and 15 228 - 15 228 2 550 17 778
associates)
less Share of joint ventures' and associates' turnover (1 666) - (1 666) (206) (1 872)
included above
Group turnover 13 562 - 13 562 2 344 15 906
Net operating costs 1 (10 907) (111) (11 018) (2 285) (13 303)
Group operating profit/(loss) 2 655 (111) 2 544 59 2 603
Share of operating profit/(loss) of joint ventures and 329 - 329 11 340
associates
Operating profit/(loss)
(including share of profit of joint ventures and 2 984 (111) 2 873 70 2 943
associates)
Income from other fixed asset investments 37 - 37 1 38
Profit/(loss) on sale of fixed assets 13 - 13 15 28
Profit on sale of subsidiaries 68 - 68 - 68
Loss on termination of operations 1 - (101) (101) - (101)
Loss on sale of discontinued operations 1 - - - - -
Profit/(loss) before net interest and similar items 3 102 (212) 2 890 86 2 976
payable and taxation
Net interest and similar items payable
Group 4 (208) - (208) (4) (212)
Joint ventures and associates 4 (28) - (28) (9) (37)
Profit/(loss) before taxation 2 866 (212) 2,654 73 2 727
Taxation 1 (961) (32) (993) 3 (990)
Profit/(loss) after taxation 1 905 (244) 1,661 76 1 737
Equity minority interests (39) - (39) (8) (47)
Profit/(loss) for the financial period (attributable 1 866 (244) 1,622 68 1 690
profit)
Dividends to shareholders (784) - (784) - (784)
Retained profit/(loss) for the financial period 1 082 (244) 838 68 906
Earnings per ordinary share (basic) (US cents) 31.0 (4.1) 26.9 1.1 28.0
Earnings per ordinary share (diluted) (US cents) 31.0 (4.1) 26.9 1.1 28.0
Dividend per ordinary share (US cents) 13.0
For the year ended 30 June 2002 BHP Steel's results were reported as
discontinued operations due to the demerger of the BHP Steel business in July
2002. The half year ended 31 December 2001 has been restated accordingly. There
are no exceptional items in net operating costs of discontinued operations for
the half year ended 31 December 2001 or the full year ended 30 June 2002. Net
interest shown against discontinued operations includes that amount of net
external interest that is directly attributable to the discontinued operations.
Taxation is the nominal charge on the profit before taxation.
Under the terms of the DLC merger, the rights to dividends of a holder of an
ordinary share in BHP Billiton Plc and a holder of an ordinary share in BHP
Billiton Limited are identical. Consequently, earnings per share has been
calculated on the basis of the aggregate number of ordinary shares ranking for
dividend. The weighted average number of shares used for the purposes of
calculating basic earnings per share is calculated after deduction of the shares
held by the share repurchase scheme and the Billiton Employee Share Ownership
Trust.
The calculation of basic earnings per ordinary share is based on earnings after
tax and minority interest of US$912 million (31 December 2001: US$1,198 million;
30 June 2002: US$1,690 million) and the weighted average number of ordinary
shares outstanding of 6,201 million (31 December 2001: 6,024 million; 30 June
2002: 6,029 million). The calculation of diluted earnings per share is based on
earnings after tax and minority interest of US$912 million (31 December 2001:
US$1,198 million; 30 June 2002: US$1,690 million) and the weighted average
number of shares outstanding of 6,219 million (31 December 2001: 6,040 million;
30 June 2002: 6,042 million). The exceptional loss of US$19 million upon sale of
the 6% interest in BHP Steel for US$75 million in July 2002 reduced basic and
diluted earnings per share by 0.3 US cents for the half year ended 31 December
2002.
For the periods reported, one American Depositary Share (ADS) represents two
shares. Earnings per ADS were 29.4 US cents for the half year ended 31 December
2002 (31 December 2001: 39.8 US cents; 30 June 2002: 56.0 US cents).
Consolidated Balance Sheet
at 31 December 2002
As at As at As at
31 December 2002 31 December 2001 30 June 2002
Notes US$M US$M US$M
Fixed assets
Intangible assets
Goodwill 38 44 42
Negative goodwill (32) (35) (33)
6 9 9
Tangible assets 18 931 19 279 20 179
Investments
Joint ventures - share of gross assets 2 799 3 084 2 902
Joint ventures - share of gross liabilities (1 361) (1 830) (1 434)
1 438 1 254 1 468
Associates 100 63 85
Loans to joint ventures and associates and other 868 1 108 987
investments
21 343 21 713 22 728
Current assets
Stocks 1 253 1 507 1 457
Debtors
Amounts due within one year 2 254 2 388 2 554
Amount due after one year 1 149 869 1 197
3 403 3 257 3 751
Investments 107 175 117
Cash including money market deposits 874 661 1 499
5 637 5 600 6 824
Creditors - amounts falling due within one year (4 397) (3 738) (6 229)
Net current assets 1 240 1 862 595
Total assets less current liabilities 22 583 23 575 23 323
Creditors - amounts falling due after more than one year (6 569) (7 297) (5 987)
Provisions for liabilities and charges (4 256) (3 777) (4 654)
Net assets 11 758 12 501 12 682
Equity minority interests (302) (322) (326)
Attributable net assets 11 456 12 179 12 356
Capital and reserves
Called up share capital - BHP Billiton Plc 1 235 1 160 1 160
Share premium account 517 592 592
Contributed equity - BHP Billiton Limited 1 759 3 065 3 143
Profit and loss account 7 945 7 362 7 461
Equity shareholders' funds 5 11 456 12 179 12 356
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Balance Sheets as at 31 December 2001 and 30 June 2002
include BHP Steel assets and liabilities accordingly.
Consolidated Statement of Total Recognised Gains and Losses
for the half year ended 31 December 2002
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
Attributable profit for the period 912 1 198 1 690
Exchange gains and losses on foreign currency net 39 26 25
investments
Total recognised gains for the period 951 1 224 1 715
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Statement of Total Recognised Gains and Losses for the
half year ending 31 December 2001 and year ending 30 June 2002 includes gains
and losses pertaining to BHP Steel.
Consolidated Statement of Cash Flows
for the half year ended 31 December 2002
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
Net cash inflow from Group operating activities (a) 1 899 2 065 4 641
Dividends received from joint ventures and associates 70 44 149
Interest paid (158) (288) (496)
Dividends paid on redeemable preference shares (12) (16) (35)
Interest received 6 46 156
Other dividends received 14 18 38
Dividends paid to minorities (20) (4) (20)
Net cash outflow from returns on investments and servicing of (170) (244) (357)
finance
Taxes paid (540) (400) (606)
Refund of taxes paid - - 91
Taxation (540) (400) (515)
Available cash flow 1 259 1 465 3 918
Purchases of tangible fixed assets (1 216) (1 081) (2 481)
Exploration expenditure (130) (202) (390)
Disposals of tangible fixed assets 33 144 200
Purchase of investments and funding of joint ventures (52) (5) (182)
Sale of investments and repayments by joint ventures (a) 165 36 232
Net cash outflow from capital expenditure and financial (1 200) (1 108) (2 621)
investment
Investment in subsidiaries - (45) (45)
Sale of subsidiaries (a) 358 150 190
Cash transferred on disposal (a) (86) (26) (45)
Investment in joint ventures - (42) (208)
Disposal of joint venture - 6 70
Net cash inflow/(outflow) from acquisitions and disposals 272 43 (38)
Net cash flow before equity dividends paid, management of 331 400 1 259
liquid resources and financing
Equity dividends paid (835) (811) (811)
Net cash flow before management of liquid resources and (504) (411) 448
financing
Net cash (outflow)/inflow from management of liquid resources (6) 236 157
Redeemable preference shares - (355) (423)
Finance lease obligations - (4) (28)
Debt due within one year - repayment of loans (1 657) (924) (1 344)
Debt due within one year - drawdowns 1 264 723 1 657
Debt due after one year - repayment of loans (1 038) (2 074) (2 722)
Debt due after one year - drawdowns 1 614 2 688 2 318
Net cash inflow/(outflow) from debt and finance leases 183 54 (542)
Share buy-back scheme - BHP Billiton Limited - (19) (19)
Issue of shares 72 26 104
Net cash inflow/(outflow) from financing 255 61 (457)
(Decrease)/Increase in cash in the period (255) (114) 148
(a) The impact on the BHP Billiton Group's cash flows of the demerger of BHP
steel business in July 2002, was a cash inflow of US$347 million. This
represents US$294 million from the settlement by BHP Steel of intercompany
loans, less US$22 million demerger transaction costs paid, which are both
included in net cash inflow from acquisitions and disposals, and US$75 million
from the sale of the 6% interest in BHP Steel is included in the sale of
investments and repayments by joint ventures.
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Statement of Cash Flows for the half year ending 31
December 2001 and year ending 30 June 2002 include cash flows pertaining to BHP
Steel.
Consolidated Statement of Cash Flows continued
For the half year ended 31 December 2002
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Notes US$M US$M US$M
Reconciliation of net cash flow to movement in net
debt
(Decrease)/increase in cash in the period (255) (114) 148
Cash flow from debt and finance leases (183) (54) 542
Cash flow from management of liquid resources 6 (236) (157)
(Increase)/decrease in net debt arising from cash (432) (404) 533
flows
Other non-cash movements 6 232 - -
(Increase)/decrease in net debt from exchange 6 (41) 178 (34)
adjustments
(Increase)/decrease in net debt (241) (226) 499
Net debt at beginning of period 6 (6 822) (7 321) (7 321)
Net debt at end of period 6 (7 063) (7 547) (6 822)
(a) Net cash inflow from Group operating activities
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
Operating profit 1 453 1 400 2 603
Depreciation and amortisation 792 863 1 727
Impairment of assets - - 119
Employee share awards 15 8 28
Net exploration charge 83 172 243
Increase in stocks (124) (112) (11)
(Increase)/decrease in debtors (118) 202 (346)
(Decrease)/increase in creditors (152) (332) 292
Decrease in provisions (36) (157) (49)
Other movements (14) 21 35
Net cash inflow from Group operating activities 1 899 2 065 4 641
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Statement of Cash Flows for the half year ending 31
December 2001 and year ending 30 June 2002 include cash flows pertaining to BHP
Steel.
NOTE 1. EXCEPTIONAL ITEMS
Gross Tax Net
Half year ended 31 December 2002 US$M US$M US$M
Loss on sale of 6% interest in BHP Steel (19) - (19)
Total by category (19) - (19)
Discontinued operations (19) - (19)
Total by Customer Sector Group (19) - (19)
There were no exceptional items in the half year ended 31 December 2001.
Gross Tax Net
Year ended 30 June 2002 US$M US$M US$M
Termination of operations (net increase in impairment and other provisions for South (101) - (101)
West Copper business in US)
Taxation (restatement of deferred taxation balances due to increase of corporation - (56) (56)
taxation rate for petroleum operations in the UK)
Suspension of Tintaya sulphide operations (31) 9 (22)
Merger related restructuring costs (80) 15 (65)
Total by category (212) (32) (244)
Petroleum (4) 1 (3)
Aluminium (4) - (4)
Base Metals (145) 10 (135)
Carbon Steel Materials (6) 1 (5)
Diamonds and Specialty Products (6) 2 (4)
Energy Coal (5) 1 (4)
Stainless Steel Materials (3) - (3)
Group and unallocated items (39) (47) (86)
Total by Customer Sector Group (212) (32) (244)
NOTE 2. ANALYSIS BY BUSINESS SEGMENT
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Turnover US$M US$M US$M
Petroleum 1 511 1 434 2 815
Aluminium 1 535 1 371 2 857
Base Metals 897 817 1 821
Carbon Steel Materials 1 747 1 660 3 306
Diamonds and Specialty Products 716 752 1 480
Energy Coal 947 1 045 1 919
Stainless Steel Materials 491 449 868
Group and unallocated items 424 378 730
Intersegment (220) (257) (568)
Total Continuing Operations 8 048 7 649 15 228
Discontinued Operations (a) - 1 245 2 550
Total BHP Billiton Group 8 048 8 894 17 778
Profit before taxation
Petroleum 660 576 1 073
Aluminium 266 191 492
Base Metals 83 69 200
Carbon Steel Materials 506 565 1 084
Diamonds and Specialty Products 150 138 272
Energy Coal 124 350 536
Stainless Steel Materials 61 (36) 3
Group and unallocated items (191) (257) (558)
Exceptional items - - (212)
Total Continuing Operations 1 659 1 596 2 890
Discontinued Operations (a) (19) 55 86
Profit before net interest and taxation 1 640 1 651 2 976
Net interest (245) (29) (249)
Total BHP Billiton Group 1 395 1 622 2 727
Trading activities included above
Turnover
Petroleum 33 35 72
Aluminium 557 518 1 006
Base Metals 6 1 24
Carbon Steel Materials 11 14 22
Diamonds and Specialty Products 374 431 823
Energy Coal 145 63 108
Stainless Steel Materials 3 3 9
Group and unallocated 217 16 112
Total BHP Billiton Group 1 346 1 081 2 176
Profit before taxation
Petroleum - 1 1
Aluminium 4 1 1
Base Metals 1 - -
Carbon Steel Materials (2) - -
Diamonds and Specialty Products 7 (6) (6)
Energy Coal 3 3 3
Stainless Steel Materials - - -
Group and unallocated (3) - (5)
Total BHP Billiton Group 10 (1) (6)
NOTE 2. ANALYSIS BY BUSINESS SEGMENT continued
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Net operating assets US$M US$M US$M
Petroleum 3 227 2 722 2 865
Aluminium 4 907 4 773 4 727
Base Metals 4 116 4 149 4 077
Carbon Steel Materials 2 583 2 407 2 573
Diamonds and Specialty Products 1 484 1 672 1 620
Energy Coal 2 172 1 780 2 092
Stainless Steel Materials 1 709 1 747 1 663
Group and unallocated items 602 956 529
Total Continuing Operations 20 800 20 206 20 146
Discontinued Operations (a) - 2 039 2 248
Total BHP Billiton Group 20 800 22 245 22 394
(a) For the year ended 30 June 2002 BHP Steel's results were reported as
discontinued operations due to the demerger of the BHP Steel business in July
2002. The half year ended 31 December 2001 has been restated accordingly.
NOTE 3. ANALYSIS BY GEOGRAPHICAL SEGMENT
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Turnover by geographical market US$M US$M US$M
Continuing operations
Australia 935 670 1 442
Europe 2 272 2 198 4 430
Japan 1 087 997 2 078
South Korea 585 428 1 068
Other Asia 958 1 121 1 998
North America 1 295 1 250 2 344
Southern Africa 418 407 936
Rest of World 498 578 932
Total from continuing operations 8 048 7 649 15 228
Discontinued operations
Australia - 682 1 339
Europe - 41 112
Japan - 9 17
South Korea - 17 42
Other Asia - 141 328
North America - 195 391
Rest of World - 160 321
Total from discontinued operations - 1 245 2 550
Total by geographical market 8 048 8 894 17 778
NOTE 3. ANALYSIS BY GEOGRAPHICAL SEGMENT continued
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Turnover by geographical origin US$M US$M US$M
Continuing operations
Australia 3 048 2 925 5 842
Europe 1 046 1 052 2 049
North America 1 011 1 072 2 143
South America 1 228 1 031 2 255
Southern Africa 1 503 1 340 2 696
Rest of World 212 229 243
Total from continuing operations 8 048 7 649 15 228
Discontinued operations
Australia - 920 1 887
Europe - 19 31
North America - 92 208
Rest of World - 214 424
Total from discontinued operations - 1 245 2 550
Total by geographical origin 8 048 8 894 17 778
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
Profit before tax US$M US$M US$M
Continuing operations
Australia 930 872 1 549
Europe 108 115 233
North America 85 66 22
South America 216 128 301
Southern Africa 323 339 712
Rest of World (3) 76 73
Total from continuing operations 1 659 1 596 2 890
Discontinued operations
Australia (19) 30 25
Europe - - 3
North America - 1 21
Rest of World - 24 37
Total from discontinued operations (19) 55 86
Net interest (245) (29) (249)
Total by geographical origin 1 395 1 622 2 727
NOTE 4. NET INTEREST AND SIMILAR ITEMS (PAYABLE)/RECEIVABLE
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
On bank loans and overdrafts (30) (122) (161)
On all other loans (151) (136) (311)
Finance lease and hire purchase interest (2) (4) (5)
(183) (262) (477)
Dividends on redeemable preference shares (12) (18) (39)
Discounting on provisions (38) (18) (42)
less Amounts capitalised (a) 51 15 58
(182) (283) (500)
Share of interest of joint ventures and associates (34) (36) (71)
(216) (319) (571)
Interest received/receivable 29 48 142
(187) (271) (429)
Exchange differences on net debt (b)
Group (46) 197 146
Joint ventures and associates (12) 45 34
(58) 242 180
Net interest and similar items payable (c) (245) (29) (249)
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
borrowing cost of the Group. For the half year ended 31 December 2002 the
capitalisation rate was 5.26 per cent.
(b) Net exchange (losses)/gains primarily represent the effect on borrowings of
the (appreciation)/depreciation of the South African rand against the US dollar.
(c) Disclosed in the consolidated profit and loss account as:
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
Net interest and similar items payable
Group (199) (38) (212)
Joint ventures and associates (46) 9 (37)
Net interest and similar items payable (245) (29) (249)
NOTE 5. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Half year ended Half year ended Year ended
31 December 2002 31 December 2001 30 June 2002
US$M US$M US$M
Profit for the financial period 912 1 198 1 690
Other recognised gains and losses 39 26 25
Total recognised gains and losses 951 1 224 1 715
Dividends (434) (392) (784)
Issue of ordinary shares 72 26 104
BHP Steel demerger (a) (1 489) - -
Share buy-back program - BHP Billiton Limited - (19) (19)
Net movement in shareholders' funds (900) 839 1 016
Shareholders' funds at beginning of period 12 356 11 340 11 340
Shareholders' funds at end of period 11 456 12 179 12 356
(a) Includes costs associated with the BHP Steel demerger of US$17 million net of tax (US$24 million before tax).
Additional costs of US$1 million net of tax (US$2 million before tax) have been charged against profit. Of the total
costs, US$22 million have been paid at 31 December 2002.
NOTE 6. ANALYSIS OF MOVEMENTS IN NET DEBT
Other As at
As at Acquisitions non-cash Exchange 31 December
1 July 2002 & disposals Cash flow movements(a) movements 2002
US$M US$M US$M US$M US$M US$M
Cash at bank and in hand 1 199 (86) (570) - 24 567
Overdrafts (509) - 401 - (8) (116)
690 (86) (169) - 16 451
Redeemable preference shares (450) - - - - (450)
Finance lease obligations (35) - - (11) - (46)
Other debt due within one year (2 276) - 393 165 (19) (1 737)
Other debt due after one year (5 051) - (576) 78 (39) (5 588)
(7 812) - (183) 232 (58) (7 821)
Money market deposits (b) 300 - 6 - 1 307
Net debt (c) (6 822) (86) (346) 232 (41) (7 063)
The balance sheet movement in
cash including money market
deposits is as follows:
Cash at bank and in hand 1 199 (86) (570) - 24 567
Money market deposits (b) 300 - 6 - 1 307
1 499 (86) (564) - 25 874
(a) Net other non-cash movements represent debt transferred on demerger of BHP
Steel
(b) Money market deposits with financial institutions have a maturity of up to
three months.
(c) The breakdown of net debt by currency is as follows:
US$M US$M US$M
As at As at As at
31 December 2002 31 December 2001 30 June 2002
Net debt is denominated in:
US dollars 6 793 5 322 4 631
South African rand 337 358 348
Australian dollars 20 1 341 1 451
Canadian dollars (68) 223 301
Other currencies (19) 303 91
Net debt 7 063 7 547 6 822
BHP BILLITON GROUP
STATEMENT OF FINANCIAL PERFORMANCE
(prepared in accordance with Australian GAAP)
Half year ended 31 December 2002 2001
US$M US$M
Revenue from ordinary activities
Sales 7 056 8 067
Other revenue 221 758
7 277 8 825
Profit from ordinary activities before
depreciation, amortisation and borrowing costs 2 226 2 839
Deduct: Depreciation and amortisation 807 884
Borrowing costs 144 259
Profit from ordinary activities before tax 1 275 1 696
Deduct: Tax expense attributable to ordinary activities 367 497
Net profit 908 1 199
Outside equity interests in net profit (17) (22)
Net profit attributable to members of the BHP Billiton Group 891 1 177
Basic earnings per fully paid ordinary share (US cents) 14.4 19.5
Basis of Preparation
The results of the BHP Billiton Group, comprising BHP Billiton Limited and BHP
Billiton Plc and their respective subsidiaries, for the half year ended 31
December 2002, and the corresponding period, have been prepared in accordance
with Australian GAAP and Practice Note 71 'Financial reporting by Australian
entities in dual listed company arrangements' issued by the Australian
Securities and Investments Commission.
The financial information has been prepared using the same accounting policies
as were used in preparing the results for the BHP Billiton Group as presented in
the BHP Billiton Limited financial statements for the year ended 30 June 2002.
The results have been subject to an independent review by the auditors.
The statutory BHP Billiton Limited Interim Report will be released to the ASX on
24 February 2003. This information will be available to shareholders on
request.
Further information on BHP Billiton can be found on our Internet site:
http://www.bhpbilliton.com
Australia United Kingdom
Andrew Nairn, Investor Relations Mark Lidiard, Investor & Media Relations
Tel: +61 3 9609 3952 Mobile: +61 408 313 259 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Andrew.W.Nairn@bhpbilliton.com email: Mark.Lidiard@bhpbilliton.com
Tracey Whitehead, Media Relations Ariane Gentil, Media Relations
Tel: +61 3 9609 4202 Mobile: +61 419 404 978 Tel: +44 20 7802 4177
email: Tracey.Whitehead@bhpbilliton.com email: Ariane.Gentil@bhpbilliton.com
United States South Africa
Francis McAllister, Investor Relations Michael Campbell, Investor & Media Relations
Tel: +1 713 961 8625 Mobile: +1 713 480 3699 Tel: +27 11 376 3360 Mobile: +27 82 458 2587
email: Francis.R.McAllister@bhpbilliton.com email: Michael.J.Campbell@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 600 Bourke Street Melbourne Victoria Registered Office: 1-3 Strand London WC2N 5HA United Kingdom
3000 Telephone +44 20 7747 3800 Facsimile +44 20 7747 3900
Telephone +61 3 9609 3333 Facsimile +61 3 9609 3015
The BHP Billiton Group is headquartered in Australia
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USAUROBRUURR