RNS Number:8459H
BHP Billiton PLC
24 February 2003
For the information of the local market (which has been released to the ASX)
please find attached the Interim Report for BHP Billiton Limited for BHP
Billiton Limited for the half year ended 31 December 2002 prepared in accordance
with Australian Generally Accepted Accounting Principles (GAAP), which includes
disclosures to satisfy Appendix 4B requirements.
Karen Wood
Company Secretary
BHP Billiton Limited
Interim Report
For The Half Year Ended 31 December 2002
Prepared in Accordance with Australian Generally
Accepted Accounting Principles (GAAP)
BHP Billiton Limited
Australian Business Number 49 004 028 077
Registered Office:
45th Floor BHP Billiton Tower - Bourke Place
600 Bourke Street Melbourne 3000 Australia
CONTENTS
Page
DIRECTORS' REPORT
Review of operations 1
Board of Directors 7
INTERIM CONDENSED FINANCIAL STATEMENTS
Statement of Financial Performance 9
Statement of Financial Position 10
Statement of Cash Flows 11
Notes to Financial Statements 12
DIRECTORS' DECLARATION 27
INDEPENDENT REVIEW REPORT 28
Notes to financial statements
1. Basis of preparation of interim condensed financial statements 12
2. Significant items 13
3. Discontinued operations 14
4. Revenue from ordinary activities 16
5. Expenses from ordinary activities, excluding depreciation, amortisation and borrowing costs 16
6. Depreciation and amortisation 17
7. Borrowing costs 17
8. Segment results 18
9. Dividends 19
10. Investments accounted for using the equity method 19
11. Exploration, evaluation and development expenditure capitalised 20
12. Contributed equity and called up share capital 21
13. Share options 22
14. Retained profits 24
15. Total equity 24
16. Notes to the statement of cash flows 25
17. Contingent liabilities and contingent assets 25
18. Significant events after end of half year 25
19. Statement of Financial Position - Australian Dollars 26
All amounts are expressed in US dollars unless otherwise stated.
DIRECTORS' REPORT
The Directors present their report together with the interim condensed financial
statements for the half year ended 31 December 2002 and the auditors' review
report thereon.
REVIEW OF OPERATIONS
Stability and Growth
These results build on the progress made since the merger and illustrate the
continued success of the Customer Sector Group business model and the Company'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 operational cash flow (after interest and tax) of US$1,189 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 half year ended 31 December 2001 (the "corresponding
period"). A dividend of 7.0 US cents per share was paid on 4 December 2002.
Financial Results
Group Result
The profit after tax attributable to BHP Billiton shareholders for the half year
ended 31 December 2002 was US$891 million (31 December 2001 US$1,177 million).
Basic earnings per share were 14.4 US cents (31 December 2001 19.5 US cents).
This included the loss on sale of the remaining 6% interest in the Group's Steel
business following demerger of that business in July 2002 which has been
disclosed as a significant item in the half year ended 31 December 2002. The
contribution of the Group's Steel business in the corresponding period has been
disclosed as discontinued operations (Refer note 3 to the financial statements).
There were no significant items reported in the half year ended 31 December
2001.
Revenue was US$7,277 million, compared with US$8,825 million for the
corresponding period, mainly due to the demerger of the Group's Steel business
in July 2002. For other information relating to revenue, refer below under
Petroleum, Aluminium, Base Metals, Carbon Steel Materials, Stainless Steel
Materials, Energy Coal, Diamonds and Specialty Products and Group and
Unallocated Items.
Profit from ordinary activities before taxation was US$1,275 million compared
with a profit of US$1,696 million for the corresponding period. There were a
number of factors which affected the results for current half year including:
* Foreign currency fluctuations had an unfavourable effect of approximately
US$450 million compared with the corresponding period. This was principally
due to foreign exchange losses on conversion of Rand denominated monetary
assets and liabilities at balance date, with the Rand appreciating by 16%
during the current period compared with a depreciation of 47% in the
corresponding period. The conversion of A$ denominated monetary assets and
liabilities and the impact of the stronger A$/US$ exchange rates on
operating costs also had an unfavourable impact on profit. This was partly
offset by reduced losses on legacy A$/US$ currency hedging compared with the
corresponding period and lower average Rand/$US and Colombian peso/US$
exchange rate impacts on operating costs.
* Inflationary pressures, principally in South Africa, increased costs by
approximately US$140 million.
* Ceased, sold and discontinuing businesses had an unfavourable effect on
profit before taxation of approximately US$135 million, mainly due to the
demerger of the Group's Steel business, and the inclusion in the
corresponding period of profits from PT Arutmin which was divested in
November 2001 and the Rietspruit energy coal mine which was closed in May
2002.
* Increases in price linked costs depressed profits by approximately US$50
million, mainly due to higher royalties and taxes for petroleum products.
* The impact of asset sales is a reduction in profits of approximately US$60
million mainly from the divestment of PT Arutmin in the corresponding period
and the loss on sale of 6% of the Group's Steel business in the current
period.
These factors were partly offset by:
* Higher sales volumes of iron ore, energy coal, diamonds and aluminium
partly offset by lower sales volumes of petroleum products, resulting in a
positive net volume impact on profits of approximately US$130 million.
* 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.
* 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.
* Favourable operating cost performance increased profits 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, 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.
Refer below to the discussions relating to the relevant Customer Sector Groups
for other factors affecting the December 2002 results.
Depreciation and amortisation expense decreased US$77 million to US$807 million
in the current half year. This was mainly due to the lower depreciation expense
as a direct result of the demerger of the Group's Steel business in July 2002.
Borrowing costs decreased US$115 million to US$144 million in the current half
year. Including capitalised interest, total borrowing costs decreased US$79
million to US$195 million, principally driven by lower market interest rates and
lower average debt levels.
The tax expense for the period ended 31 December 2002 was US$367 million,
compared with US$497 million for the period ended 31 December 2001. The
effective taxation rate for the current half year was 28.8% compared with 29.3%
in the corresponding period, while the nominal taxation rate was 30% for the
current half year.
Segment Results
Petroleum
Petroleum contributed US$650 million to profit before tax, up from US$568
million, an increase of 14.4% compared with the corresponding period.
The increase in profit before tax 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 profit before tax.
Aluminium
Aluminium contributed US$242 million to profit before tax, up from US$233
million, an increase of 3.9% compared with the corresponding period.
The increase in profit before tax was mainly attributable to improved
operational cost performance at Hillside, Worsley and Alumar, resulting from
increased production and reduced maintenance costs. Increased production at
Hillside and Worsley was mainly attributable to the continued success of
Operating Excellence projects and increased production at Alumar was due to the
end of power restrictions in Brazil. Lower maintenance costs at Hillside were
mainly a result of a lower number of pots being relined in the current period,
combined with the absence of the net costs associated with the September 2001
power outage. The weakening of the Rand/US$ and Brazilian Real/US$ average
exchange rates also had a favourable impact on operating costs.
These factors were partially offset by foreign exchange losses arising on
conversion of Rand denominated tax provisions at balance date, compared with
foreign exchange gains in the corresponding period. 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 also had an unfavourable impact on
profits.
Base Metals
Base Metals contributed US$53 million to profit before tax, up from US$51
million, an increase of 3.9% compared with the corresponding period.
The increase in profits 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 profits 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.
Profits 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 US$490 million to profit before tax, down
from US$550 million, a decrease of 10.9% compared with the corresponding period.
The decrease in profits was mainly attributable to the unfavourable impact of
stronger A$/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 profits.
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 year for Samarco (Brazil) pellets also had a favourable impact on profits.
Diamonds and Specialty Products
Diamonds and Specialty Products contributed US$84 million to profit before tax,
down from US$144 million, a decrease of 41.7% compared with the corresponding
period.
The decrease in profit before tax was mainly attributable to foreign exchange
losses arising from conversion of Rand denominated tax provisions and debt at
balance date, compared with foreign exchange gains in the corresponding period.
Profits were also unfavourably impacted by lower average realised diamond prices
(down 28%) as a result of a change in product mix compared with the
corresponding period and during the current period Integris' volumes have been
adversely affected by market conditions in North America.
These factors were partially offset by 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.
Energy Coal
Energy Coal contributed US$94 million to profit before tax, down from US$391
million, a decrease of 76.0% compared with the corresponding period.
The decrease in profits was primarily due to the foreign exchange losses arising
from conversion of Rand denominated monetary liabilities at balance date,
compared with foreign exchange gains in the corresponding period, and 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 profits 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 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 profits.
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 US$58 million to profit before tax,
compared with a loss of US$25 million in the corresponding period.
The increase in profits was driven by higher realised prices for nickel, up by
29%. In addition, a 12% increase in ferrochrome production, associated with the
restart of idle furnaces in the period in response to increasing market demand,
and a 15% increase in nickel production reflecting the continued ramp-up of
production from Cerro Matoso Line 2 (Colombia) improved results. Benefits from
ongoing improvement programs at both Cerro Matoso and QNI (Australia) and the
impact of the weaker average Rand/US$ exchange rates on operating costs also had
a favourable impact on profits.
Group and Unallocated
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.
Equity Minority Interests
The share of net profit or loss attributable to equity minority interests was
US$17 million compared with US$22 million in the corresponding period.
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 synergies, 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, to be measured by looking at commodity based unit costs using the
year ended 30 June 2001 as the base year, will be delivered 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.
Cash Flows
Net operating cash flows (after interest and tax) remained strong at US$1,189
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$223 million and
exploration expenditure was US$130 million. These outflows were offset by the
proceeds on demerger of the Group's Steel business of US$272 million, proceeds
on the sale of the residual 6% share in BHP Steel after demerger of US$75
million, the repayment of loans by equity accounted associates of US$90 million,
and proceeds from sale of property plant and equipment totalling US$33 million,
contributed to an investing cash outflow of US$903 million. Whilst not reflected
in cash flows, US$232 million of debt was retained by BHP Steel upon demerger.
After dividend payments of US$855 million (up from US$815 million in the prior
half year), financing cash outflows were US$536 million.
Net debt comprises US$7,937 million of total debt offset by US$874 million of
cash, including money market deposits.
Financial Ratios
At 31 December 2002 BHP Billiton's gearing ratio was 36.7% compared to 33.7% at
30 June 2002.
Based on earnings before interest and tax (EBIT), interest cover for the half
year was 7.3 times compared to 7.2 times for the half year ended 31 December
2001. Based on earnings before interest, tax and depreciation (EBITDA), interest
cover for the half year was 11.4 times compared with 10.4 times in the
corresponding period.
Profit from ordinary activities before tax as a percentage of revenue was 17.5%
for the half year ended 31 December 2002 compared with 19.2% for the
corresponding period.
Net profit as a percentage of equity was 15.0% for the half year ended 31
December 2002 compared to 18.6% in the corresponding period.
Net tangible assets per fully paid share were US$1.84 as at 31 December 2002
compared with US$2.01 as at 31 December 2001.
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.
Significant Events After End of Half Year
No matter or circumstance has arisen since the end of the half year that
significantly affected or may significantly affect the operations, the results
of operations or state of affairs of the Group in subsequent financial periods.
BOARD OF DIRECTORS
The Directors of the Company in office during or since the end of the half year
are:
Mr D R Argus - Chairman since April 1999 (on the Board of Directors since
November 1996)
Mr D A Crawford - a Director since May 1994
Mr M A Chaney - a Director since May 1995
Dr D A Jenkins - a Director since March 2000
Dr J M Schubert - a Director since June 2000
Mr C W Goodyear - an Executive Director since November 2001
Mr B P Gilbertson - an Executive Director since June 2001, resigned 5 January
2003
Dr D C Brink - a Director since June 2001
Mr C A Herkstroter - a Director since June 2001
Lord Renwick of Clifton - a Director since June 2001
Dr John Buchanan - a Director since February 2003
On 24 February 2003, the Board announced the appointment of Mr Miklos Salamon as
an Executive Director to the Board of Directors, with immediate effect.
ROUNDING OF AMOUNTS
The Company is a company of a kind referred to in Class Order No. 98/0100 dated
10 July 1998 issued by the Australian Securities and Investments Commission.
Amounts in this report, unless otherwise indicated, have been rounded in
accordance with that Class Order to the nearest million dollars.
Signed in accordance with a resolution of the Board.
D R Argus
Chairman
Dated in Melbourne this 24th day of February 2003.
Interim Condensed Financial Statements
For The Half Year Ended 31 December 2002
Statement of Financial Performance
For the half year ended 31 December 2002
Half year ended Half year ended
31 December 2002 31 December 2001
Notes US$M US$M (a)
Revenue from ordinary activities
Sales revenue 4 7 056 8 067
Other revenue 4 221 758
8 7 277 8 825
deduct
Expenses from ordinary activities, excluding depreciation, 5 5 140 6 136
amortisation and borrowing costs
add
Share of net profit of associated entities accounted for
using the equity method 10 89 150
2 226 2 839
deduct
Depreciation and amortisation 6 807 884
Borrowing costs 7 144 259
Profit from ordinary activities before income tax 8 1 275 1 696
deduct
Income tax expense attributable to ordinary activities 367 497
Net profit 908 1 199
deduct
Outside equity interests in net profit of controlled entities 17 22
Net profit attributable to members of the BHP Billiton Group 891 1 177
Net exchange fluctuations on translation of foreign currency 39 26
net assets and foreign currency interest bearing liabilities
net of tax
Total direct adjustments to equity attributable to members of 39 26
the BHP Billiton Group
Total changes in equity other than those resulting from 930 1 203
transactions with owners
Basic earnings per share (US cents) (a) (b) 14.4 19.5
Diluted earnings per share (US cents) (a) (b) 14.3 19.5
(a) Effective July 2002, the BHP Steel business was demerged from the BHP
Billiton Group. The Statement of Financial Performance for the half year ended
31 December 2001 includes results pertaining to BHP Steel. Refer note 3
"Discontinued Operations".
(b) Basic earnings per share are calculated based on 6 201 million (31 December
2001: 6 024 million) weighted average number of shares. Diluted earnings per
share are calculated based on 6 219 million (31 December 2001: 6 040 million)
weighted average number of shares.
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 weighted average diluted number of ordinary shares has been adjusted for the
effect of Employee Share Plan options, Executive Share Scheme partly paid shares
and Performance Rights to the extent they were dilutive at balance date. Refer
note 13 for details of shares issued under these plans.
The accompanying notes form part of these interim condensed financial
statements.
Statement of Financial Position
As at 31 December 2002
As at As at As at
31 December 2002 30 June 2002 31 December 2001
Notes US$M US$M (a) US$M (a)
Current assets
Cash assets 16 874 1 499 661
Receivables 2 126 2 294 2 048
Other financial assets 107 117 175
Inventories 1 294 1 509 1 550
Other assets 163 108 155
Total current assets 4 564 5 527 4 589
Non-current assets
Receivables 804 889 661
Investments accounted for using the equity
method 1 538 1 505 1 492
Other financial assets 480 581 505
Inventories 51 80 77
Property, plant and equipment 16 086 17 304 16 813
Exploration, evaluation and development
expenditure 11 2 180 2 180 1 820
Intangible assets 488 513 536
Deferred tax assets 434 480 422
Other assets 834 803 717
Total non-current assets 22 895 24 335 23 043
Total assets 27 459 29 862 27 632
Current liabilities
Payables 2 072 2 435 1 885
Interest bearing liabilities 1 269 1 797 1 217
Tax liabilities 354 493 270
Other provisions 609 1 116 512
Total current liabilities 4 304 5 841 3 884
Non-current liabilities
Payables 112 121 131
Interest bearing liabilities 6 668 6 383 6 807
Deferred tax liabilities 1 365 1 600 1 355
Other provisions 2 802 2 764 2 462
Total non-current liabilities 10 947 10 868 10 755
Total liabilities 15 251 16 709 14 639
Net assets 12 208 13 153 12 993
Equity
Contributed equity - BHP Billiton Limited 12 1 759 3 143 3 065
Called up share capital - BHP Billiton Plc 12 1 752 1 752 1 752
Reserves 334 471 479
Retained profits 14 8 055 7 455 7 369
Total BHP Billiton interest 11 900 12 821 12 665
Outside equity interest 308 332 328
Total equity 15 12 208 13 153 12 993
(a) Effective July 2002, the BHP Steel business was demerged from the BHP
Billiton Group. The Statement of Financial Position as at 31 December 2001 and
30 June 2002 include BHP Steel assets and liabilities accordingly. Refer note 3
"Discontinued Operations".
The accompanying notes form part of these interim condensed financial
statements.
Statement of Cash Flows
For the half year ended 31 December 2002
Half year ended Half year ended
31 December 2002 31 December 2001
Notes US$M US$M (a)
Cash flows related to operating activities
Receipts from customers 6 928 8 411
Payments to suppliers, employees, etc. (5 228) (6 480)
Dividends received 84 69
Interest received 6 47
Borrowing costs (170) (298)
Other 109 134
Operating cash flows before income tax 1 729 1 883
Income taxes paid net of refunds received (540) (400)
Net operating cash flows 1 189 1 483
Cash flows related to investing activities
Purchases of property, plant and equipment (1 191) (1 080)
Exploration expenditure (130) (202)
Purchases of investments and funding of joint ventures (52) (47)
Purchases of, or increased investment in, controlled entities - (45)
and joint venture interests net of their cash
Investing cash outflows (1 373) (1 374)
Proceeds from sale of property, plant and equipment 33 144
Proceeds from sale or redemption of investments 165 36
Proceeds from sale, or partial sale, of controlled entities 272 130
and joint venture interests net of their cash
Net investing cash flows (903) (1 064)
Cash flows related to financing activities
Proceeds from ordinary share issues, etc. 147 31
Proceeds from interest bearing liabilities 2 878 3 659
Repayment of interest bearing liabilities (2 695) (3 511)
Redemption of secured Employee Share Plan program - (134)
Purchase of shares under Share Buy-Back program - (19)
Dividends paid (855) (815)
Other (11) 11
Net financing cash flows (536) (778)
Net decrease in cash and cash equivalents (250) (359)
Cash and cash equivalents at beginning of the half year 990 998
Effect of foreign currency exchange rate changes on cash and
cash equivalents 18 (6)
Cash and cash equivalents at end of the half year 16 758 633
(a) Effective July 2002, the BHP Steel business was demerged from the BHP
Billiton Group. The Statement of Cash Flows for the half year ended 31 December
2001 includes cash flows pertaining to BHP Steel. Refer note 3 "Discontinued
Operations".
The accompanying notes form part of these interim condensed financial
statements.
Notes to Financial Statements
NOTE 1. BASIS OF PREPARATION OF INTERIM CONDENSED FINANCIAL STATEMENTS, DUAL
LISTED COMPANY STRUCTURE AND ACCOUNTING POLICIES
Basis of preparation of interim financial statements
These statements are general purpose interim consolidated financial statements
that have been prepared in accordance with the requirements of the Corporations
Act 2001, Australian Stock Exchange Listing Rules, Australian Accounting
Standard AASB 1029 "Interim Financial Reporting" and Urgent Issues Group
Consensus Views, and give a true and fair view of the matters disclosed. These
interim financial statements and reports should be read in conjunction with the
annual financial statements for the year ended 30 June 2002 and any public
announcements made by the BHP Billiton Group and its controlled entities during
the half year in accordance with continuous disclosure obligations arising under
the Corporations Act 2001 and Australian Stock Exchange Listing Rules. The notes
to the financial statements do not include all information normally contained
within the notes to an annual financial report.
Merger terms
On 29 June 2001, BHP Billiton Limited (previously known as BHP Limited), an
Australian listed Company, and BHP Billiton Plc (previously known as Billiton
Plc), a UK listed Company, entered into a Dual Listed Companies (DLC) merger.
This was effected by contractual arrangements between the companies and
amendments to their constitutional documents.
The effect of the DLC merger is that BHP Billiton Limited and its subsidiaries
(the BHP Billiton Limited Group) and BHP Billiton Plc and its subsidiaries (the
BHP Billiton Plc Group) operate together as a single economic entity (the BHP
Billiton Group), with neither assuming a dominant role. Under the arrangements:
* The shareholders of BHP Billiton Limited and BHP Billiton Plc have a
common economic interest in both groups;
* The shareholders of BHP Billiton Limited and BHP Billiton Plc take key
decisions, including the election of Directors, through a joint electoral
procedure under which the shareholders of the two companies effectively vote
on a joint basis;
* BHP Billiton Limited and BHP Billiton Plc have a common Board of
Directors, a unified management structure and joint objectives;
* Dividends and capital distributions made by the two companies are
equalised; and
* BHP Billiton Limited and BHP Billiton Plc each executed a deed poll
guarantee, guaranteeing (subject to certain exceptions) the contractual
obligations (whether actual or contingent, primary or secondary) of the
other incurred after 29 June 2001 together with specified obligations
existing at that date.
If either BHP Billiton Limited or BHP Billiton Plc proposes to pay a dividend to
its shareholders, then the other Company must pay a matching cash dividend of an
equivalent amount per share to its shareholders. If either Company is prohibited
by law or is otherwise unable to declare, pay or otherwise make all or any
portion of such a matching dividend, then BHP Billiton Limited or BHP Billiton
Plc will, so far as it is practicable to do so, enter into such transactions
with each other as the Boards agree to be necessary or desirable so as to enable
both Companies to pay dividends as nearly as practicable at the same time.
The DLC merger did not involve the change of legal ownership of any assets of
BHP Billiton Limited or BHP Billiton Plc, any change of ownership of any
existing shares or securities of BHP Billiton Limited or BHP Billiton Plc, the
issue of any shares or securities or any payment by way of consideration, save
for the issue by each Company of one special voting share to a trustee company
which is the means by which the joint electoral procedure is operated. In
addition, to achieve a position where the economic and voting interests of one
share in BHP Billiton Limited and one share in BHP Billiton Plc were identical,
BHP Billiton Limited made a bonus issue of ordinary shares to the holders of its
ordinary shares.
NOTE 1. BASIS OF PREPARATION OF INTERIM FINANCIAL STATEMENTS, DUAL LISTED
COMPANY STRUCTURE AND ACCOUNTING POLICIES continued
Treatment of the DLC merger for accounting purposes
In accordance with the Australian Investments and Securities Commission (ASIC)
Practice Note 71 'Financial Reporting by Australian Entities in Dual-Listed
Company Arrangements', and an order issued by ASIC under section 340 of the
Corporations Act 2001 on 2 September 2002, this interim report presents the
financial results of the BHP Billiton Group as follows:
* Results for the half years ended 31 December 2002 and 31 December 2001 are
for the combined entity including both BHP Billiton Limited and its
subsidiary companies and BHP Billiton Plc and its subsidiary companies; and
* Results are presented in US dollars unless otherwise stated.
Accounting policies
Accounting standards and policies have been consistently applied by all entities
in the BHP Billiton Group in the half year ended 31 December 2002 and are
consistent with those applied in the half year ended 31 December 2001 and the
full year ended 30 June 2002.
As a consequence of the enactment of Australian tax consolidation legislation
and since the consolidated tax groups within the BHP Billiton Group have not
notified the Australian Taxation Office at the date of signing this report of
the implementation date for tax consolidation, BHP Billiton Group has applied
UIG 39 "Effect of Proposed Tax Consolidation Legislation on Deferred Tax
Balances".
NOTE 2. SIGNIFICANT ITEMS
Individually significant items (before outside equity interests) included within
the BHP Billiton Group net profit are detailed below.
Gross Tax Net
US$M US$M US$M
Half year ended 31 December 2002
Loss upon sale of 6% interest in BHP Steel (19) - (19)
Total by category (19) - (19)
Discontinued Operations (19) - (19)
Total by Customer Sector Group (19) - (19)
No significant items are included in the results for the half year ended 31
December 2001.
NOTE 3. DISCONTINUED OPERATIONS
Effective July 2002, the BHP Steel business demerged from the BHP Billiton
Group. The demerger of BHP Steel effectively brings to an end the BHP Billiton
Group's involvement as a steel producer and follows the demerger of the OneSteel
business in October 2000 and the disposal of other steel operations, such as the
US West Coast Steel businesses in June 2000.
Prior to the demerger, BHP Steel was the leading steel company in Australia and
New Zealand, specialising in the production of flat steel products, including
slab, hot rolled coil, plate and value-added metallic coated and pre-painted
steel products. The Company supplied customers in Australia, New Zealand, Asia,
the US, Europe, the Middle East and the Pacific. Key steelmaking assets were the
low-cost global scale Port Kembla Steelworks (Australia), BHP New Zealand Steel
and North Star BHP Steel (US). A network of metallic coating and coil painting
facilities operated in Australia, New Zealand and South East Asia.
The financial performance of the Discontinued Steel business (including the loss
upon sale of 6% interest in BHP Steel retained by BHP Billiton), as included in
the Statement of Financial Performance, is detailed as follows:
Discontinued Steel business Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Financial Performance
Revenue from ordinary activities before interest income 75 1 157
Expenses from ordinary activities, excluding borrowing costs (94) (1 131)
Profit from ordinary activities before net borrowing costs and income (19) 26
tax
While the BHP Billiton Group operates its treasury function on a Group basis,
certain financing arrangements not reported in the Steel segment can be
attributed to the discontinued Steel operations. Not included within revenue
from ordinary activities is interest income of US$6 million. The borrowing costs
associated with attributable debt instruments was US$8 million. The income tax
expense related to the discontinued operation, including the tax impact on
financing arrangements included above, was US$3 million.
The contribution to Group cash flows of these businesses, before consideration
of borrowing costs and income tax, as included in the Statement of Cash Flows,
is detailed as follows:
Discontinued Steel business Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Cash Flows
Net operating cash flows (excluding borrowing activities and income - 107
tax)
Net investing cash flows (a) 74 (5)
Net financing cash flows - 25
Total cash flows provided by discontinued operations 74 127
(a) Includes US$75 million in proceeds from the sale of 6% of BHP Steel and
US$1 million in costs associated with the sale.
NOTE 3. DISCONTINUED OPERATIONS continued
The attributable net assets of BHP Steel as included in the Statement of
Financial Position is provided below. In addition, the net assets demerged in
July 2002, which are equivalent to the balances held at 30 June 2002, are also
provided, after allowing for the settlement of intercompany loans by BHP Steel
to the BHP Billiton Group.
Discontinued Steel business As at As at
31 December 2002 30 June 2002
US$M US$M
Financial Position (a)
Total assets - 2 732
Total liabilities - (841)
Outside equity interests - (21)
Total equity - 1 870
Net payments to the BHP Billiton Group by BHP Steel to settle intercompany (294)
loans (post 30 June 2002)
Net assets of BHP Steel 1 576
Elimination of intercompany profits in inventory (9)
Attributable net assets of BHP Steel demerged 1 567
(a) Includes certain assets and liabilities (primarily cash, interest
bearing liabilities and taxation provisions), which are not allocated to Steel
for segment reporting purposes.
The impact on the BHP Billiton Group of the demerger of BHP Steel business in
July 2002 was as follows:
* The BHP Billiton Group's capital was reduced by US$1,489 million,
including US$17 million of costs (net of tax; US$24 million before tax)
directly associated with the demerger. The capital reduction takes into
account the transfer to BHP Billiton Limited shareholders of 94 percent of
the shares of BHP Steel. The remaining 6 percent of BHP Steel shares held by
the Group were subsequently sold;
* A bonus issue of BHP Billiton Plc shares to BHP Billiton Plc shareholders
as a Matching Action to ensure economic benefit equality between
shareholders of both BHP Billiton Limited and BHP Billiton Plc. The bonus
issue resulted in one BHP Billiton Plc share being issued for approximately
each 15.6 BHP Billiton Plc shares held;
* A cash inflow of US$347 million, representing US$294 million from the
settlement by BHP Steel of intercompany loans, less US$22 million demerger
transaction costs paid. US$75 million from the sale of the 6 percent
interest in BHP Steel is included in proceeds from sale or redemption of
investments; and
* A loss of US$19 million (no tax effect) relating to the sale of the 6
percent of BHP Steel.
NOTE 4. REVENUE FROM ORDINARY ACTIVITIES
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Sales revenue
Sale of goods 6 823 7 896
Rendering of services 233 171
Total sales revenue 7 056 8 067
Other revenue
Interest income 29 51
Dividend income 14 18
Proceeds from sales of non-current assets 109 655
Management fees 1 2
Other income 68 32
Total other revenue 221 758
NOTE 5. EXPENSES FROM ORDINARY ACTIVITIES, EXCLUDING DEPRECIATION, AMORTISATION
AND BORROWING COSTS
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Employee benefits expense 769 1 000
Raw materials and consumables used 1 195 1 330
External services (including transportation) 1 336 1 311
Costs relating to trading activities 741 933
Changes in inventories of finished goods and work in progress (97) (128)
Net book value of non-current assets sold 116 599
Foreign losses/(gains) on external debt and tax balances 95 (328)
Resource rent tax 226 203
Rental expense in respect of operating leases 97 118
Government royalties paid and payable 162 138
Other 500 960
Total expenses from ordinary activities, excluding depreciation, amortisation
and borrowing costs 5 140 6 136
NOTE 6. DEPRECIATION AND AMORTISATION
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Depreciation relates to
Buildings 52 66
Plant, machinery and equipment 585 696
Mineral rights 65 50
Exploration, evaluation and development expenditure 76 45
Capitalised leased assets 3 4
Total depreciation 781 861
Amortisation relates to
Goodwill (not tax-effected) 26 23
Total amortisation 26 23
Total depreciation and amortisation 807 884
NOTE 7. BORROWING COSTS
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Borrowing costs paid or due and payable
On interest bearing liabilities 193 270
On finance leases 2 4
Total borrowing costs 195 274
deduct
Amounts capitalised 51 15
Borrowing costs charged against net profit from ordinary activities 144 259
NOTE 8. SEGMENT RESULTS
Segment Revenue Profit before tax (a)
US$M US$M
Half year ended 31 December 2002
Petroleum 1 547 650
Aluminium 1 547 242
Base Metals 673 53
Carbon Steel Materials 1 647 490
Diamonds and Specialty Products 184 84
Energy Coal 855 94
Stainless Steel Materials 484 58
Group & unallocated items (b) 457 (262)
Net unallocated interest 29 (115)
Discontinued Operations (b) 75 (19)
Intersegment (221) -
BHP Billiton Group 7 277 1 275
Half year ended 31 December 2001
Petroleum 1 450 568
Aluminium 1 371 233
Base Metals 658 51
Carbon Steel Materials 1 527 550
Diamonds and Specialty Products 852 144
Energy Coal 1 220 391
Stainless Steel Materials 368 (25)
Group & unallocated items (b) 401 (57)
Net unallocated interest 49 (217)
Discontinued Operations (b) 1 189 58
Intersegment (260) -
BHP Billiton Group 8 825 1 696
(a) Before outside equity interests.
(b) For segment reporting, the results of operations formerly presented as the
Steel segment have been split between Discontinued Operations and Continuing
Operations. Discontinued Operations represents the part of the Steel business
that was demerged in July 2002. Steel's Continuing Operations include the
results of operations of Transport and Logistics, until 31 December 2001, and
certain minor residual Steel assets and liabilities (that have not been demerged
as part of BHP Steel) and are now included in Group and unallocated items.
NOTE 9. DIVIDENDS
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
BHP Billiton Limited (a)
Interim dividends paid 261 241
BHP Billiton Plc
Interim dividends paid 173 151
Total dividends paid or payable 434 392
(a) The dividend for the December 2002 half year of US$0.07 per share, paid on 4
December 2002, was fully franked (2001 - US$0.065 per share fully franked). For
the purposes of AASB 1034, the Group has an adjusted franking account balance of
US$176 million (A$310 million) at 31 December 2002. From 1 July 2002 the
Australian Income Tax Assessment Act 1997 requires measurement of franking
account balances based on the amount of income tax paid, rather than on
after-tax profits. The current outlook is that dividends payable in the next
twelve months will be fully franked.
NOTE 10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Ownership interest at BHP Billiton Contribution to operating profit after
Group reporting date (a) income tax
Material interests in associated 31 December 2002 31 December 2001 31 December 2002 31 December 2001
entities % % US$M US$M
Samarco Mineracao S.A. 50 50 22 10
Minera Antamina S.A. 34 34 (3) (6)
Cerrejon Coal Corporation (b) 33 (b) 8 13
Highland Valley Copper 34 34 (3) 7
Minera Alumbrera Limited 25 25 15 5
Other (c) 50 121
Total 89 150
(a) Ownership interest reflects the interest held at the end of the half years
ended 31 December 2002 and 2001 respectively. The proportion of voting power
held corresponds to ownership interest.
(b) At 31 December 2001 the BHP Billiton Group had an ownership interest of 33%
in Carbones del Cerrejon S.A. and 17% in Carbones Zona Norte S.A. Following the
BHP Billiton Group's acquisition of an interest in Intercor LLC in February
2002, the BHP Billiton Group's existing interest in Carbones del Cerrejon S.A.
was merged into Intercor LLC, which was subsequently renamed Carbones del
Cerrejon LLC, in November 2002. The activities of Carbones del Cerrejon LLC and
Carbones Zona Norte S.A. are managed as an integrated operation referred to as
Cerrejon Coal Corporation. The BHP Billiton Group has an effective ownership
interest of 33% in Cerrejon Coal Corporation.
(c) Includes immaterial equity accounted associates and the Richards Bay
Minerals joint venture owned 50% (2001: 50%).
NOTE 11. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE CAPITALISED
As at As at As at
31 December 2002 30 June 2002 31 December 2001
US$M US$M US$M
Exploration, evaluation and development expenditures carried
forward in areas of interest
- now in production 783 986 877
- in development stage but not yet producing (a) 999 852 572
- in exploration and/or evaluation stage (b) 398 342 371
Total exploration, evaluation and development expenditure 2 180 2 180 1 820
capitalised
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
(a) Details of movement in expenditure capitalised in development stage but not
yet producing
Balance at the beginning of the half year 852 393
Expenditure incurred during the half year 141 198
Transferred from exploration and/or evaluation 11 32
Transferred to production - (61)
Depreciation (1) (2)
Exchange fluctuations and other movements (4) 12
Balance at the end of the half year 999 572
(b) Details of movement in expenditure capitalised in exploration and/or
evaluation stage
Balance at the beginning of the half year 342 386
Expenditure incurred during the half year 141 208
Expenditure expensed during the half year (83) (172)
Transferred to development (11) (32)
Depreciation (5) (10)
Exchange fluctuations and other movements 14 (9)
Balance at the end of the half year 398 371
NOTE 12. CONTRIBUTED EQUITY AND CALLED UP SHARE CAPITAL
As at As at As at
31 December 2002 30 June 31 December 2001
US$M 2002 US$M
US$M
BHP Billiton Limited
Paid up contributed equity
3 741 863 290 ordinary shares fully paid
(30 June 2002: 3 724 893 687; 31 December 2001: 3 706 520 347)(a) 1 759 3 143 3 065
260 000 ordinary shares (30 June 2002: 320 000; 31 December - - -
2001: 340 000) paid to A$1.40 (30 June 2002 A$0.71; December 2001:
A$0.71) (b)
1 265 000 ordinary shares (30 June 2002: 2 305 000; 31 December - - -
2001: 3 153 500) paid to A$1.36 (30 June 2002 A$0.67; December 2001:
A$0.67) (b)
1 Special Voting Share (30 June 2002: 1; 31 December 2001: 1) (c) - - -
1 759 3 143 3 065
Number of shares
31 December 2002 30 June 31 December 2001
2002
Movements in ordinary fully paid shares
Opening number of shares 3 724 893 687 3 704 256 885 3 704 256 885
Shares issued on exercise of Employee Share Plan options 14 610 650 22 955 508 5 716 946
Shares issued on exercise of Performance Rights 918 120 - -
Partly paid shares converted to fully paid (b) (d) 1 440 833 1 815 916 681 138
Shares bought back and cancelled (e) - (4 134 622) (4 134 622)
Closing number of shares 3 741 863 290 3 724 893 687 3 706 520 347
As at As at As at
31 December 2002 30 June 31 December 2001
US$M 2002 US$M
US$M
BHP Billiton Plc
Allotted, called up and fully paid share capital
2 468 147 002 ordinary shares of US$0.50 each (30 June 2002: 2 319 1 752 1 752 1 752
147 885; 31 December 2001: 2 319 147 885)
1 752 1 752 1 752
Number of shares
31 December 2002 30 June 31 December 2001
2002
Movements in ordinary fully paid shares
Opening number of shares 2 319 147 885 2 319 147 885 2 319 147 885
Bonus issue (a) 148 999 117 - -
Closing number of shares 2 468 147 002 2 319 147 885 2 319 147 885
NOTE 12. CONTRIBUTED EQUITY AND CALLED UP SHARE CAPITAL continued
(a) Contributed equity decreased by US$1 456 million due to the demerger of BHP
Steel Limited. This reflected a capital reduction of A$0.69 per share. The
demerger resulted in BHP Billiton Limited shareholders being issued one BHP
Steel Limited share for every five BHP Billiton Limited shares held. BHP
Billiton Plc shareholders did not receive shares in BHP Steel Limited. To ensure
the equality of treatment, BHP Billiton Plc shareholders received a bonus issue
to reflect the market value of the BHP Steel shares being distributed. 148 999
117 bonus shares were issued to BHP Billiton Plc shareholders in July 2002.
(b) 60 000 shares (30 June 2002: 65 000, 31 December 2001: 45 000) paid to
A$1.40 and 1 040 000 shares (30 June 2002: 1 351 500; 31 December 2001: 503 000)
paid to A$1.36 were converted to fully paid during the half year ended 31
December 2002. There were no partly paid shares issued during the half years
ended 31 December 2002 and 31 December 2001 or the year ended 30 June 2002. As a
consequence of the BHP Steel Limited demerger, an instalment call of A$0.69 per
share was made on partly paid shares which was then immediately replaced by the
application of the capital reduction. During the period 1 January 2003 to 20
February 2003, 40 000 Executive Share Scheme partly paid shares were paid up in
full and 4 320 261 fully paid ordinary shares (including attached bonus shares)
were issued on the exercise of Employee Share Plan options.
(c) Each of BHP Billiton Limited and BHP Billiton Plc issued one Special Voting
Share to facilitate joint voting by shareholders of BHP Billiton Limited and BHP
Billiton Plc on Joint Electoral Actions.
(d) The DLC Merger bonus issue was accrued for Executive Share Scheme partly
paid shares issued in 1996 and 1997 and as a result the number of shares
converted from partly paid to fully paid will not necessarily be on a 1:1 basis
because the conversion of some partly paid shares also attract the issue of
bonus shares.
(e) During the year ended 30 June 2002, BHP Billiton Limited repurchased 4 134
622 shares (31 December 2001: 4 134 622) at a weighted average price of A$8.83
per share (31 December 2001: A$8.83 per share), in accordance with its announced
share buy-back program. The buy-back program allows for the purchase of up to
186 million BHP Billiton Limited shares (adjusted for the bonus issue), less the
number of BHP Billiton Plc shares purchased on market.
NOTE 13. SHARE OPTIONS
BHP Billiton Group share options
The following tables relate to share options issued under the Employee Share
Plan, performance rights issued under the Performance Share Plan, awards issued
under the Restricted Share Scheme, awards issued under the Co-Investment Plan
and performance shares issued under the Group Incentive Scheme. Unless otherwise
indicated details of the Plans, including comparatives, are presented including,
where applicable, a bonus element to which the participant became entitled with
effect from 29 June 2001, as a result of the DLC merger.
Month of issue Number Number of Number Shares Number Awards Exercise Exercise period
Issued recipients Exercised issued on lapsed outstanding Price A$
(a) exercise at balance (b)
date
Employee Share Plan options (c)
September 2002 67 500 1 - - - 67 500 $8.26 Oct 2004 - Sept 2011
November 2001 6 870 500 113 138 587 138 587 187 413 6 544 500 $8.30 Oct 2004 - Sept 2011
November 2001 7 207 000 153 234 595 234 595 288 405 6 684 000 $8.29 Oct 2004 - Sept 2011
December 2000 3 444 587 67 81 500 168 306 15 432 3 260 849 $8.72 July 2003 - Dec 2010
December 2000 2 316 010 59 201 500 416 118 139 749 1 760 143 $8.71 July 2003 - Dec 2010
November 2000 1 719 196 44 106 500 219 933 136 675 1 362 588 $8.28 July 2003 - Oct 2010
November 2000 7 764 776 197 1 101 250 2 274 191 82 429 5 408 156 $8.27 July 2003 - Oct 2010
April 2000 61 953 3 - - - 61 953 $7.60 April 2003 - April
2010
April 2000 937 555 5 - - 138 361 799 194 $7.60 April 2003 - April
2010
December 1999 413 020 1 - - - 413 020 $8.61 April 2002 - April
2009
December 1999 309 765 1 - - - 309 765 $7.50 April 2002 - April
2009
October 1999 123 906 6 50 000 103 255 20 651 - $7.57 April 2002 - April
2009
October 1999 105 320 3 7 000 14 456 30 976 59 888 $7.57 April 2002 - April
2009
July 1999 206 510 1 - - - 206 510 $7.60 April 2002 - April
2009
April 1999 44 474 822 45 595 5 887 700 12 158 689 19 894 970 12 421 163 $6.93 April 2002 - April
2009
April 1999 16 901 398 944 2 522 800 5 209 834 6 231 749 5 459 815 $6.92 April 2002 - April
2009
April 1998 366 555 16 72 500 149 719 - 216 836 $6.45 April 2001 - April
2003
April 1998 289 114 23 113 000 233 356 10 326 45 432 $6.44 April 2001 - April
2003
November 1997 3 261 619 3 501 1 206 000 2 490 509 771 110 - $6.84 Nov 2000 - Nov 2002
November 1997 16 336 800 16 411 6 614 100 13 658 778 2 678 022 - $6.84 Nov 2000 - Nov 2002
October 1997 11 234 144 511 5 349 500 11 047 252 186 892 - $6.73 Oct 2000 - Oct 2002
October 1997 8 243 879 379 3 788 500 7 823 631 420 248 - $6.73 Oct 2000 - Oct 2002
July 1997 413 020 1 200 000 413 020 - - $8.49 July 2000 - July
2002
July 1997 816 747 36 326 000 673 222 143 525 - $8.50 July 2000 - July
2002
45 081 312
NOTE 13. SHARE OPTIONS continued
Month of issue Number Number of Number Shares Number Awards Exercise Exercise period
Issued recipients Exercised issued on lapsed outstanding Price A$
(a) exercise at balance (b)
date
Performance Rights (c) (d)
November 2001
(LTI) 4 770 800 110 188 117 188 117 236 983 4 345 700 - Oct 2004 - Sept
2011
October 2001 162 200 2 - - - 162 200 - Oct 2004 - Sept
(LTI) 2011
October 2001 222 892 6 - - - 222 892 - Oct 2003 - Mar 2006
(MTI)
December 2000 387 601 11 - - - 387 601 - July 2003 - Dec
(LTI) 2010
November 2000 4 143 278 104 673 111 1 390 042 169 385 2 583 851 - July 2003 - Oct
(LTI) 2010
March 1999 (LTI) 2 141 100 1 1 000 000 2 141 100 - - - Mar 1999 - Mar 2009
7 702 244
Restricted Share Scheme (c) (d)
November 2001 274 914 1 - - - 274 914 - 8 Nov 2004
(Share awards)
October 2001 4 178 100 197 51 320 51 320 222 880 3 903 900 - 1 Oct 2004
(Share awards)
October 2001 863 000 41 1 833 1 833 11 367 849 800 - Oct 2004 - Sept
(Options) 2008
5 028 614
Co-Investment Plan (c) (d)
November 2001 94 851 1 - - - 94 851 - Nov 2003 - Apr 2006
October 2001 866 791 125 6 131 6 131 15 505 845 155 - Oct 2003 - Mar 2006
940 006
Group Incentive Scheme Performance Shares (e)
November 2002 11 477 011 645 - - 17 250 11 459 761 - 30 June 2005
11 459 761
(a) Represents the number of options and Performance Rights exercised or lapsed,
and has not been adjusted to take into account the bonus shares issued on
exercise of options.
(b) Although the exercise price of options was not affected by the bonus issue
of shares, the exercise prices for options as stated have been adjusted to take
into account the bonus issue of shares, which took effect 29 June 2001. Exercise
prices were also reduced, where applicable, by A$0.66 (pre bonus issue)
following the OneSteel Limited spin-out on 31 October 2000 and by A$0.69
following the BHP Steel Limited spin-out on 1 July 2002.
(c) Further details of the Plans can be found in note 31 of the "BHP Billiton
Limited Combined Financial Statements 2002".
(d) Shares issued on exercise of Performance Rights and awards under the
Restricted Share Scheme and Co-Investment Plan include shares purchased on
market.
(e) The Group Incentive Schemes were approved by shareholders at the 2002 Annual
General Meeting. The Group granted Performance Shares to participants in
November 2002 under transition arrangements of the Schemes, subject to
achievement of specified performance conditions. The Performance Shares granted
are subject to meeting the three-year Total Shareholder Return and Earnings Per
Share performance conditions as set out below. The exercise period for the
Performance Shares will be from the date the performance conditions are met (if
at all) to the date, which is three years after the start of the exercise
period. The exercise or award of Performance Shares granted will be based on
Earnings Per Share (EPS) growth and Total Shareholders Return (TSR) during the
period from 1 July 2002 to 30 June 2005 (the Performance Period). Both EPS
growth targets and minimum TSR targets will need to be reached in order for the
conditions to be satisfied. The EPS growth threshold will be satisfied if the
compound EPS growth for the Group during the Performance Period is equal to or
greater than the higher of the increase in the Australian Consumer Price Index
or the increase in the United Kingdom Retail Price Index, plus 2 per cent per
annum, over the Performance Period. The TSR threshold is based on whether the
total shareholder return achieved by the peer group companies is greater than
the total shareholder return achieved by BHP Billiton Limited and BHP Billiton
Plc over the Performance Period. In essence, TSR is measured by the sum of any
increase in share price of, plus dividends paid by, the various companies.
NOTE 14. RETAINED PROFITS
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Balance at the beginning of the half year 7 455 6 526
Dividends provided for or paid (a) (434) (392)
Aggregate of amounts transferred from reserves 143 77
BHP Billiton Limited share buy-back program (b) - (19)
Net profit 891 1 177
Balance at the end of the half year 8 055 7 369
(a) Refer note 9.
(b) Refer note 12 (e).
NOTE 15. TOTAL EQUITY
Half year ended Half year ended
31 December 2002 31 December 2001
US$M US$M
Balance at the beginning of the half year 13 153 12 232
Total changes in equity recognised in the Statement of Financial Performance 930 1 203
Transactions with owners - contributed equity 72 26
Dividends (a) (434) (392)
BHP Billiton Limited share buy-back program (b) - (19)
BHP Steel demerger (c) (1 489) -
Total changes in outside equity interests (24) (57)
Balance at the end of the half year 12 208 12 993
(a) Refer note 9.
(b) Refer note 12 (e).
(c) The BHP Steel business was demerged in July 2002 with a capital reduction of
US$1 489 million, including approximately US$17 million of costs directly
associated with the demerger. The capital reduction decreased Contributed equity
by US$1 456 million and Reserves by US$33 million.
NOTE 16. NOTES TO THE STATEMENT OF CASH FLOWS
For the purpose of the Statement of Cash Flows, cash is defined as cash and cash
equivalents. Cash equivalents include highly liquid investments, which are
readily convertible to cash, bank overdrafts and interest bearing liabilities at
call.
As at As at As at
31 December 2002 30 June 31 December 2001
US$M 2002 US$M
US$M
Reconciliation of cash
Cash and cash equivalents comprise:
Cash assets
Cash 567 1 199 485
Short-term deposits 307 300 176
Total cash assets 874 1 499 661
Bank overdrafts (a) (116) (509) (28)
Total cash and cash equivalents 758 990 633
Half year ended Half year ended
31 December 31 December
2002 2001
US$M US$M
Non-cash financing and investing activities
Disposal of North American Metals Distribution assets to Integris Joint - 341
Venture
Employee Share Plan loan instalments (b) 2 12
(a) Included in the Statement of Financial Position as Interest Bearing
Liabilities (Current)
(b) The Employee Share Plan loan instalments represent the repayment of
loans outstanding with the BHP Billiton Group, by the application of dividends.
Disposal of Controlled Entities
Effective July 2002, the BHP Steel business demerged from the BHP Billiton
Group. Refer note 3 "Discontinued Operations" for the details of the effect of
the demerger. The inflow of cash as a result of the sale (net of cash disposed)
was US$272 million.
During the half year ended 31 December 2001, BHP Billiton sold its investment in
PT Arutmin Indonesia for proceeds of US$140 million. The net assets of the
entity sold at the time of disposal were US$76 million. BHP Billiton recognised
a profit on sale of PT Arutmin Indonesia of US$64 million during the half year
ended 31 December 2001. The inflow of cash as a result of the sale (net of cash
disposed) was US$141 million.
NOTE 17. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There have been no material changes in contingent liabilities or contingent
assets that existed at 30 June 2002.
NOTE 18. SIGNIFICANT EVENTS AFTER END OF HALF YEAR
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 BHP Billiton Group in subsequent
accounting periods.
NOTE 19. STATEMENT OF FINANCIAL POSITION - AUSTRALIAN DOLLARS
For the convenience of the reader, an Australian dollar Statement of Financial
Position of the BHP Billiton Group is detailed below. A convenience translation
of amounts from US dollars into Australian dollars has been made at an exchange
rate of US$0.5666 = A$1 at 31 December 2002, US$0.5664 = A$1 at 30 June 2002 and
US$0.5114 = A$1 at 31 December 2001. These rates of exchange are based on the
Hedge Settlement Rate ('HSR') on the last day of each financial period
respectively. The HSR is calculated as the average of the spot US$/A$ rates of
exchange quoted at 9.45am each business day by the top licenced foreign exchange
dealers in the Australian market and is used as the basis for settling hedge
contracts maturing on that day.
As at As at As at
31 December 2002 30 June 2002 31 December 2001
A$M A$M A$M
Current assets
Cash assets 1 542 2 646 1 293
Receivables 3 752 4 050 4 004
Other financial assets 189 207 342
Inventories 2 284 2 664 3 032
Other assets 288 191 303
Total current assets 8 055 9 758 8 974
Non-current assets
Receivables 1 419 1 570 1 293
Investments accounted for using the equity method 2 715 2 657 2 917
Other financial assets 847 1 026 987
Inventories 90 141 150
Property, plant and equipment 28 390 30 551 32 877
Exploration, evaluation and development expenditure 3 848 3 849 3 560
Intangible assets 861 905 1 047
Deferred tax assets 766 847 826
Other assets 1 472 1 418 1 401
Total non-current assets 40 408 42 964 45 058
Total assets 48 463 52 722 54 032
Current liabilities
Payables 3 657 4 300 3 685
Interest bearing liabilities 2 239 3 172 2 380
Tax liabilities 625 870 527
Other provisions 1 075 1 970 1 001
Total current liabilities 7 596 10 312 7 593
Non-current liabilities
Payables 198 214 257
Interest bearing liabilities 11 769 11 269 13 310
Deferred tax liabilities 2 409 2 825 2 649
Other provisions 4 945 4 880 4 815
Total non-current liabilities 19 321 19 188 21 031
Total liabilities 26 917 29 500 28 624
Net assets 21 546 23 222 25 408
Equity
Contributed equity - BHP Billiton Limited 3 105 5 549 5 994
Called up share capital - BHP Billiton Plc 3 092 3 093 3 426
Reserves 589 832 937
Retained profits 14 216 13 162 14 410
Total BHP Billiton interest 21 002 22 636 24 767
Outside equity interest 544 586 641
Total equity 21 546 23 222 25 408
Directors' Declaration
I, Don R Argus being a Director of BHP Billiton Limited state on behalf of the
Directors and in accordance with a resolution of the Directors that, in the
opinion of the Directors -
(a) the accompanying financial statements set out on pages 9 to 26 are drawn
up so as to give a true and fair view of the financial position as at 31
December 2002, and the performance for the half year ended 31 December 2002
of the Company;
(b) the interim consolidated financial statements have been made out in
accordance with Australian Accounting Standard AASB1029: "Half Year Accounts
and Consolidated Accounts" and other mandatory professional reporting
requirements; and
(c) at the date of this statement there are reasonable grounds to
believe that the Company will be able to pay its debts as and when they
become due and payable.
D R Argus
Director
Dated in Melbourne this 24th day of February 2003
Independent review report to the members of BHP Billiton Limited
Statement
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the interim condensed financial report, set
out on pages 9 to 27 is not presented in accordance with:
* the Corporations Act 2001 in Australia, including giving a true and fair
view of the financial position of the BHP Billiton Group (as defined in Note
1) as at 31 December 2002 and of its performance for the half-year ended on
that date.
* Accounting Standard AASB 1029: Interim Financial Reporting and the
Corporations Regulations 2001.
* Other mandatory professional reporting requirements in Australia.
This statement must be read in conjunction with the following explanation of the
scope and summary of our role as auditor.
Scope and summary of our role
The financial report - responsibility and content
The preparation of the financial report for the half-year ended 31 December 2002
is the responsibility of the directors of BHP Billiton Limited.
The auditor's role and work
We conducted an independent review of the financial report in order for, and
only for, the Company to lodge the financial report with the Australian
Securities & Investments Commission. Our review has been undertaken so that we
might state to the members of 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
members of the Company for our review work, for this report, or for the
conclusions we have reached. Our role was to conduct the review in accordance
with Australian Auditing Standards applicable to review engagements. Our review
did not involve an analysis of the prudence of business decisions made by the
directors or management.
This review was performed in order to state whether, on the basis of the
procedures described, anything has come to our attention that would indicate
that the interim condensed financial report does not present fairly a view in
accordance with the Corporations Act 2001 in Australia, Accounting Standard AASB
1029: Interim Financial Reporting and other mandatory professional reporting
requirements in Australia, and the Corporations Regulations 2001, which is
consistent with our understanding of the Group's financial position, and its
performance as represented by the results of its operations and cash flows.
The review procedures performed were limited primarily to inquiries of company
personnel and analytical procedures applied to financial data. The review has
not involved a study and evaluation of internal accounting controls, tests of
accounting records or tests of responses to inquiries by obtaining corroborative
evidence from inspection, observation or confirmation. These procedures do not
provide all the evidence that would be required in an audit, thus the level of
assurance provided is less than that given in an audit. We have not performed an
audit, and accordingly, we do not express an audit opinion.
Independent review report to the members of BHP Billiton Limited continued
Independence
As auditor, we are required to be independent of the Group and free of interests
which could be incompatible with integrity and objectivity. In respect of this
engagement, we followed the independence requirements set out by The Institute
of Chartered Accountants in Australia, the Corporations Act 2001 and the
Auditing and Assurance Standards Board.
In addition to our statutory audit and review work, we were engaged to undertake
other services for the Group. In our opinion the provision of these services has
not impaired our independence.
PricewaterhouseCoopers
Geoffrey M. Cottrell Melbourne
Partner 24 February 2003
KPMG
William J. Stevens Melbourne
Partner 24 February 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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