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BIL
BIBLT
BIL - BHP Billiton Plc - Results for the year ended 30 June 2007
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
22 August 2007
Number 26/07
BHP BILLITON RESULTS FOR THE
YEAR ENDED 30 JUNE 2007
* Records achieved across all key earnings measures including Underlying
EBITDA up 27.1% to US$23.0 billion and Underlying EBIT up 31.4% to US$20.1
billion.
* Attributable profit up 34.7% to US$13.7 billion and EPS up 39.1%,
benefiting from ongoing buy-backs (both measures excluding exceptionals).
* Record Underlying EBIT margin(1) and Return on Capital Employed increased
to 48.4% and 38.4% respectively. This is the sixth consecutive record for
both measures.
* Record net operating cash flow(2) of US$15.6 billion, up 48.9%.
* Annual production records for natural gas, alumina, aluminium, copper,
nickel, iron ore, manganese ore and metallurgical coal(3).
* Costs, net of non-cash costs, increased 3.6%, continuing a declining
trend of cost increases.
* Significant volume growth expected in 2008 in oil, copper, iron ore and
nickel.
* Final dividend rebased to 27 US cents per share demonstrating our
confidence in the outlook. This is an increase of 46% on last year`s final
dividend.
* US$6.3 billion of US$13.0 billion capital management program, announced
in 2007, completed representing 5.2%(4) of outstanding shares.
Year ended 30 June 2007 2006
US$M US$M Change
Revenue together with share of 47,473 39,099 21.4%
jointly controlled entities`
revenue
Underlying EBITDA (5) 22,950 18,053 27.1%
Underlying EBIT (5) (6) 20,067 15,277 31.4%
EBIT - Profit from operations 18,401 14,671 25.4%
Attributable profit - excluding 13,675 10,154 34.7%
exceptional items
Attributable profit 13,416 10,450 28.4%
Net operating cash flow (2) 15,595 10,476 48.9%
Basic earnings per share - 233.9 168.2 39.1%
excluding exceptional items (US
cents)
Basic earnings per share (US cents) 229.5 173.2 32.5%
Underlying EBITDA interest coverage 54.0 44.3 21.9%
(times) (5) (7)
Dividend per share (US cents) 47.0 36.0 30.6%
Refer to page 16 for footnotes, including explanations of the non-GAAP
measures used in this announcement.
The above financial results are prepared in accordance with IFRS and are
unaudited. All references to the prior period are to the year ended 30
June 2006.
RESULTS FOR THE YEAR ENDED 30 JUNE 2007
Commentary on the Group Results
Record annual results
The consistent execution of our strategy has once again allowed the Company
to deliver outstanding financial and operational results. Our strategy is
simple. We create long term value by focusing on owning and operating
large, long-life, low-cost, expandable assets diversified by geography and
commodity and pursuing growth opportunities consistent with our core
skills. Our business excellence model promotes and deploys best practices
and operating efficiencies across these assets, further enhancing their
value. Our priority for cash is to reinvest in the business. In line with
our strategy, we have grown our business rapidly and consistently through
project development and acquisitions.
We achieved record production for eight major commodities and increased
annual production for three further commodities. Production records were
set by 17 assets(3). This reflects our key operating objective of
delivering consistent, predictable and sustainable operating performance
across all of our businesses providing a stable platform for growth.
Our continued focus on growing production from high returning assets
throughout the cycle has allowed us to take advantage of strong global
market conditions and underpins the financial results we have announced
today. Our attributable profit (excluding exceptional items) of US$13.7
billion represents an increase of 34.7 per cent over last year and a more
than sevenfold increase since our 2002 result (our inaugural result
following the BHP and Billiton merger). It is our fourth consecutive record
annual result, with five of our nine CSGs generating record EBIT.
Underlying EBIT(1) margins rose to 48.4 per cent, from 44.4 per cent last
year while Return on Capital Employed increased from 34.6 per cent to 38.4
per cent. This was the sixth consecutive record for both of these metrics.
Our world-class asset suite continues to provide us with an array of value-
accretive, growth opportunities. We have a diversified minerals portfolio
and a unique portfolio of energy assets; oil, gas, LNG, energy coal and
uranium, all with important growth opportunities. Our project pipeline
provides significant future value, with 33 projects in either execution or
feasibility representing an expected capital investment of US$20.9 billion.
We also have further medium-term options in our portfolio with capital
expenditure requirements in excess of US$50 billion. During the year we
continued the ramp up of 5 projects, approved three additional projects and
commissioned Spence, a 200,000 tonnes per annum copper operation in Chile.
We also commissioned two projects at our Queensland Coal Operations
(Australia). In addition to these brownfield opportunities, we also
acquired the Genghis Khan oil field, in the Gulf of Mexico, and a one-third
share of the Guinea Alumina project, which consists of high-quality bauxite
reserves and the development of an alumina refinery in Guinea. We are
expecting to deliver further significant growth in the next financial year
with new projects commissioning or ramping up across our Petroleum, Base
Metals, Iron Ore and Stainless Steel Materials CSGs.
Creating options for the future
We are focused on delivering an enhanced resource endowment to underpin
future generations of growth. We have an abundance of tier one resources in
fiscally stable countries that provide us with a unique set of options to
deliver decades of brownfield growth. We also have strong experience
operating in emerging resource regions and the capability to capture
additional opportunities as they emerge. This experience enables us to
continue to build and strengthen our position for long term value creation.
Exploration continues to be an important focus. In our minerals businesses
we are undertaking exploration in 28 countries, while Petroleum exploration
is underway in eight countries.
The quality of our assets and the diversity of our portfolio underpin the
strength of our cash flow. This allows us to both identify and invest in
growth opportunities while continuing to deliver outstanding returns to
shareholders.
Growth Projects
During the 2007 financial year we completed one major growth project.
Completed projects
Customer Project Capacity Capital expenditure Date of initial
Sector (US$ million) production (1)
Group
Budget Actual Target Actual
Base Spence 200,000
Metals (Chile) tonnes per 990 1,100(2) Q4 2006 Q4 2006
BHP Billiton annum of
- 100% copper
cathode
990 1,100
(1) References to quarters are based on calendar years.
(2) Excluding the impact of foreign exchange the cost was US$990 million.
There are 15 major projects (defined as BHP Billiton`s share of capital
expenditure of greater than US$100 million) under development with a total
budgeted investment of US$12,781 million. Details for these are given in
the quarterly Exploration and Development Report, released on 24 July 2007.
Projects currently under development (approved in prior years)
Customer Sector Project Capacity (1) Budgeted Target date
Group capital for initial
expenditure production
(US$ million) (2)
(1)
Petroleum Atlantis South 200,000 1,630(3) H2 2007
(US) barrels of
BHP Billiton - oil and 180
44% million
cubic feet
of gas per
day (100%)
Neptune 50,000
(US) barrels of 405(3) End 2007
BHP Billiton - oil and 50
35% million
cubic feet
of gas per
day (100%)
Stybarrow 80,000
(Australia) barrels of 380 Q1 2008
BHP Billiton - oil per day
50% (100%)
North West LNG
Shelf 5th processing 300 Late 2008
Train capacity 4.2
(Australia) million
BHP Billiton - tonnes per
16.67% annum (100%)
North West 800 million
Shelf Angel cubic feet 200 End 2008
(Australia) of gas per
BHP Billiton - day (100%)
16.67%
Shenzi 100,000
(US) barrels of 1,940 Mid 2009
BHP Billiton - oil and 50
44% million
cubic feet
of gas per
day (100%)
Aluminium Alumar 2 million
Refinery tonnes per 725 Q2 2009
Expansion annum of
(Brazil) alumina
BHP Billiton - (100%)
36%
Diamonds and Koala 3,300 tonnes
Specialty Products Underground per day of 200 End 2007
(Canada) ore
BHP Billiton - processed
80% (100%)
Stainless Steel Ravensthorpe Up to 50,000 2,200 Q1 2008
Materials Nickel tonnes per
(Australia) annum of
BHP Billiton contained
-100% nickel in
concentrate
Yabulu 45,000 556 Q1 2008
Extension tonnes per
(Australia) annum of
BHP Billiton - nickel
100%
Iron Ore WA Iron Ore 20 million
Rapid Growth tonnes per 1,300 Q4 2007
Project 3 annum of
(Australia) iron ore
BHP Billiton - (100%)
85%
Samarco 7.6 million
(Brazil) tonnes per 590 H1 2008
BHP Billiton - annum of
50% iron pellets
(100%)
10,426
(1) All references to capital expenditure and capacity are BHP Billiton`s
share unless noted otherwise.
(2) References to quarters and half years are based on calendar years.
(3) Project costs and schedule have been finalised.
Projects approved during the year
Customer Sector Project Capacity (1) Budgeted Target date
Group capital for initial
expenditure production
(US$ (2)
million) (1)
Petroleum Genghis Khan 55,000
(US) barrels of 365 H2 2007
BHP Billiton - oil per day
44% (100%)
Base Metals Pinto Valley 70,000
(US) tonnes per 140 Q4 2007
BHP Billiton - annum of
100% copper in
concentrate
Iron Ore WA Iron Ore 26 million
Rapid Growth tonnes per 1,850 H1 2010
Project 4 annum of
(Australia) iron ore
BHP Billiton - (100%)
86.2%
2,355
(1) All references to capital expenditure and capacity are BHP Billiton`s
share unless noted otherwise.
(2) References to quarters and half years are based on calendar years.
We also have further medium term options in our portfolio with capital
expenditure requirements in excess of US$50 billion.
Dividend and Capital Management
The Board today declared a final dividend of 27 US cents per share. This
rebased dividend represents a 46 per cent increase over last year`s final
dividend of 18.5 US cents per share. This brings the total dividends for
the 2007 financial year to 47 US cents per share, an increase of 11 US
cents per share, or 30.6 per cent, over last year. Today`s declaration
represents our eleventh consecutive dividend increase and signals both our
confidence in the outlook and our ability to consistently deliver future
earnings and cash flow to underpin this increased dividend. Our dividend
has increased more than fourfold since the interim dividend paid in 2002.
Our compound annual dividend growth rate has been 24 per cent over this
period. We will continue with our progressive dividend policy from this new
base, with further increases dependent upon the expectations for future
market conditions and investment opportunities.
During the year we also announced US$13 billion of capital management
initiatives. We have returned US$6.3 billion of this to our shareholders
and will return the remaining US$6.7 billion during the next 12 months. We
repurchased 305,545,269 shares, via both on-market and off-market buy-
backs, at an approximate average price of US$20.57. To date, we have
cancelled 262,433,555 of these shares.
Since August 2004 we have announced capital management initiatives
totalling US$17 billion. Since November 2004 601 million shares have been
repurchased, representing approximately 10.1 per cent of the total shares
on issue at an approximate price of US$16.79 (A$21.42 / GBP 8.74). At the
completion of all announced initiatives we will have returned US$28.2
billion in total to shareholders through capital initiatives and dividends
since June 2001.
The Income Statement
To provide clarity into the underlying performance of our operations, we
present Underlying EBIT which is a measure used internally and in our
Supplementary Information. Underlying EBIT excludes all net finance costs
and taxation (including net finance costs and taxation of jointly
controlled entities) and any exceptional items. The differences between
Underlying EBIT and EBIT (Profit from operations) are set out in the
following table:
Year ended 30 June 2007 2006
US$M US$M
Underlying EBIT 20,067 15,277
Impact of equity accounting for
statutory purposes: (122) (95)
Share of jointly controlled entities`
net finance costs
Share of jointly controlled entities` (1,201) (950)
total taxation expense
Exceptional items (before taxation) (343) 439
EBIT - Profit from operations 18,401 14,671
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT for the year ended 30 June
2007 compared with last year:
US$ Million
Underlying EBIT for the year ended 30 June 2006 15,277
Change in volumes:
Increase in volumes 438
Decrease in volumes (220)
New operations 368
586
Net price impact
Change in sales prices 7,101
Price-linked costs (979)
6,122
Change in costs:
Costs (rate and usage) (859)
Exchange rates (271)
Inflation on costs (416)
(1,546)
Asset sales (61)
Ceased and sold operations (198)
Exploration and business development (149)
Other 36
Underlying EBIT for the year ended 30 June 2007 20,067
Volumes
Continued strong demand underpinned increased sales volumes of
metallurgical coal, petroleum products, nickel, manganese ore, alumina,
zinc, iron ore, aluminium and energy coal, which contributed approximately
US$438 million more (measured at last year`s average margins) to Underlying
EBIT than last year. Sales volumes of base metals were lower at Olympic
Dam (Australia) due to a smelter shutdown and at Cannington (Australia) due
to the temporary closure of the southern zone. However this was more than
offset by copper sales from Spence, which commenced operations in December
2006, and added US$363 million and the ramp-up of the Sulphide Leach
project at Escondida (Chile). We experienced a decrease in diamond sales
for the year as a result of inventory sales in the prior year.
Prices
Net changes in price increased Underlying EBIT by US$7,101 million. Lower
prices for metallurgical coal and manganese ore had a negative impact.
Higher price-linked costs reduced Underlying EBIT by US$979 million with
increased charges for third party nickel ore contributing US$658 million to
this amount. Higher royalties for nickel, iron ore, and higher LME-linked
power charges in Aluminium were offset by lower metallurgical coal
royalties (in line with lower prices) and more favourable rates for copper
treatment and refining charges (TCRCs), including the removal or limiting
of price participation in new contracts.
Costs
Continued strong global demand for resources has led to increased costs
across the industry for labour, contractors, raw materials, fuel, energy
and other input costs. In addition, port congestion and other third party
infrastructure constraints resulted in increased demurrage costs and
shipping, freight and other distribution charges. In this environment,
costs for the Group have increased by US$859 million. Excluding non cash
costs of US$145 million, this represents an increase on our June 2006 total
cost base of 3.6 per cent. Given the current market tightness, this
represents an outstanding performance.
Specific areas of cost increase include labour and contractor charges,
consumables and fuels, maintenance and other operating costs. Changed
mining conditions, particularly at Cannington, where we had a temporary
closure of the southern zone, and higher strip ratios at Queensland Coal
(Australia) had an adverse impact. However, we generated savings of US$203
million on our 2006 cost base through a wide range of business improvement
initiatives across the Group.
The current environment continues to be challenging across the resource
industry and the pressure on access to labour and other inputs to our
business remains. However the quality of ore bodies, our supplier
relationships, systems and capabilities of our people have allowed us to
manage these challenges.
Exchange rates
Exchange rate movements had a negative impact on Underlying EBIT of US$271
million. The stronger Australian dollar had a negative impact of US$478
million. This was partially offset by the favourable impact of a weaker
South African rand on operating costs for our South African businesses. The
Western Australia Iron Ore and Queensland Coal operations were both
significantly impacted by the strength of the Australian dollar.
The following exchange rates against the US dollar have been applied:
Year ended Year ended
30 June 2007 30 June 2006 30 June 2007 30 June 2006
average average closing closing
Australian 0.79 0.75 0.85 0.74
dollar (a)
South 7.20 6.41 7.08 7.12
African rand
(a) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressures on input costs across all our businesses had an
unfavourable impact on Underlying EBIT of US$416 million. These pressures
were most evident in Australia and South Africa.
Asset Sales
The sale of assets and interests decreased Underlying EBIT by US$61
million. The current period was principally impacted by the sale of 1
million tonnes of annual capacity at the Richards Bay Coal Terminal (South
Africa), the Moranbah Coal Bed Methane assets (Australia), the Koornfontein
energy coal mine (South Africa), the interest in Eyesizwe (South Africa)
and Alliance Copper (Chile). In the corresponding period we had higher
profits arising largely from the divestment of our interest in the
Wonderkop chrome joint venture (South Africa), the Vincent Van Gogh
undeveloped oil discovery (Australia) and the Green Canyon oil fields (US).
Ceased and sold operations
The current period was negatively impacted by the loss of US$343 million of
Underlying EBIT from Tintaya (Peru) (divested in June 2006) and the
Southern Cross Fertiliser operations (Australia) (divested in August 2006).
This was partly offset by a US$82 million year on year impact of movements
in restoration and rehabilitation provisions for closed operations.
Exploration and business development
Gross exploration expenditure increased to US$805 million during the year.
We increased activity on nickel targets in Western Australia, Guatemala,
Indonesia and the Philippines, on energy coal targets in New South Wales
(Australia) and on diamond targets in Angola. This increased expenditure
however, was offset by a higher level of capitalisation of oil and gas
exploration expenditure, primarily in Australia. This resulted in
exploration expense, being US$17 million lower than last year.
Expenditure on business development was US$166 million higher than last
year mainly due to the pre-feasibility study on the Olympic Dam expansion
and other Base Metals activities.
Other
Other items increased Underlying EBIT by US$36 million. These included
higher insurance recoveries than last year partially offset by a lower
contribution from freight and other activities.
Net finance costs
Net finance costs decreased to US$390 million, from US$505 million last
year. This was driven predominantly by higher capitalised interest,
partially offset by higher average interest rates and foreign exchange
impacts.
Taxation expense
The total taxation expense on profit before tax was US$4,515 million,
representing an effective rate of 25.1 per cent.
Excluding the impacts of royalty-related taxation, non tax-effected foreign
currency adjustments, translation of tax balances and other functional
currency translation adjustments and including the taxation expense of
jointly controlled entities, the underlying effective rate was 29.6 per
cent. When compared to the UK and Australian statutory tax rate (30 per
cent), the underlying effective tax rate included a benefit of 1.4 per cent
due to the recognition of prior year US tax benefits (US$282 million). All
of the prior year US tax losses have now been utilised. Royalty-related
taxation represents an effective rate of 2.1 per cent for the current
period.
Exceptional Items
As part of our regular review of asset carrying values, a charge of US$142
million (net of a taxation benefit of US$34 million) has been recorded in
relation to coal operations in South Africa.
We have recognised a charge of US$117 million (net of a taxation benefit of
US$50 million) for additional rehabilitation obligations in respect of
former operations at the Newcastle Steelworks (Australia). The obligations
relate to sediment in the Hunter River requiring remediation and treatment.
Gross Tax Net
Year ended 30 June 2007 US$M US$M US$M
Exceptional items by category
Impairment of South African coal (176) 34 (142)
operations
Newcastle Steelworks rehabilitation (167) 50 (117)
(343) 84 (259)
Exceptional items by Customer Sector
Group
Energy Coal (176) 34 (142)
Group & Unallocated (167) 50 (117)
(343) 84 (259)
Last year we sold our interest in the Tintaya copper mine in Peru. The
profit on disposal was US$296 million (net of a taxation charge of US$143
million).
Refer note 2 in the Financial Information for further details.
Cash Flows
Net operating cash flow after interest and tax increased by 48.9 per cent
to US$15.6 billion. Higher profits increased cash generated from operating
activities, offset by an increase in working capital (principally due to
higher prices) and increased taxation payments.
Capital and exploration expenditure totalled US$7.2 billion for the period.
Expenditure on major growth projects was US$5.1 billion, including US$1.7
billion on Petroleum projects and US$3.4 billion on Minerals projects.
Capital expenditure on maintenance, sustaining and minor capital items was
US$1.2 billion. Exploration expenditure was approximately US$800 million,
including US$265 million which has been capitalised. Other investing cash
flows included the purchase of interests in the Genghis Khan oil field, and
the Guinea Alumina project.
Financing cash flows include US$8.0 billion in relation to the capital
management program and increased dividend payments.
Net debt, comprising cash and interest-bearing liabilities, was US$8.7
billion, an increase of US$0.5 billion, or 5.7 per cent, compared to 30
June 2006. Gearing, which is the ratio of net debt to net debt plus net
assets, was 22.5 per cent at 30 June 2007, compared with 25.2 per cent at
30 June 2006.
Underlying net debt (which varies from net debt above as it includes net
debt of jointly controlled entities) was US$10.0 billion up from US$9.2
billion at 30 June 2006. Underlying gearing was 25.0 per cent at 30 June
2007 compared to 27.2 per cent at 30 June 2006.
Dividend
A final dividend for the year ended 30 June 2007 of 27.0 US cents per share
will be paid to shareholders on 28 September 2007. Together with the
interim dividend of 20.0 US cents per share paid to shareholders on 20
March 2007, this brings the total dividend for the year to 47.0 US cents
per share.
The dividend paid by BHP Billiton Limited will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, BHP Billiton Limited
dividends are mainly paid in Australian dollars, and BHP Billiton Plc
dividends are mainly paid in pounds sterling and South African rands to
shareholders on the UK section and the South African section of the
register, respectively. Currency conversions were based on the foreign
currency exchange rates two business days before the declaration of the
dividend. Please note that all currency conversion elections need to have
occurred by the Currency Conversion Date being 20 August 2007. Any
currency conversion elections made after this date will not apply to this
dividend.
The timetable in respect of this dividend will be:
Currency conversion 20 August 2007
Last day to trade cum dividend on
JSE Limited 7 September 2007
Ex-dividend Australian Stock Exchange 10 September 2007
Ex-dividend JSE Limited 10 September 2007
Ex-dividend London Stock Exchange 12 September 2007
Record 14 September 2007
Payment 28 September 2007
American Depositary Shares (ADSs) each represent two fully paid ordinary
shares and receive dividends accordingly.
BHP Billiton Plc shareholders registered on the South African section of
the register will not be able to dematerialise or rematerialise their
shareholdings, nor will transfers between the UK register and the South
African register be permitted, between the dates of 10 September 2007 and
14 September 2007.
The following table details the currency exchange rates applicable for the
dividend:
Dividend 27.0 US cents Exchange Rate Dividend per ordinary
share
in local currency
Australian cents 0.802847 33.630318
British pence 1.986838 13.589432
South African cents 7.351446 198.489042
New Zealand cents 0.696900 38.743005
Portfolio Management
Our strategy is focused on long-life, low-cost, expandable assets and we
continually review our portfolio to identify assets which do not fit this
strategy. These activities continued during the year with proceeds of
US$444 million being recorded. We disposed of a number of assets and
interests including Southern Cross Fertilisers, 1 million tonnes of annual
capacity in the Richards Bay Coal Terminal, Koornfontein, our Moranbah Coal
Bed Methane assets, our interest in Eyesizwe and Alliance Copper. Proceeds
from the sale or distribution of our assets and interests over the last six
years surpasses US$6 billion.
Also during the year we announced the potential sale of Optimum, an energy
coal mine in South Africa.
We will also purchase interests in assets where they fit our strategy. We
acquired interests in the Genghis Khan oil field for US$583 million and the
Guinea Alumina project for US$140 million.
Capital management and liquidity
In October 2006 the Group signed a new US$3.0 billion multi-currency
revolving credit facility. This new credit facility, which expires in
October 2011, replaces the previous US$3.0 billion credit facility that was
due to expire in 2009.
In February 2007, we issued Euro 600 million (US$788 million) of Floating
Rate Notes due in 2008 and Euro 600 million (US$788 million) of 4.375 per
cent Euro Bonds due in 2014. The proceeds were used to refinance short-
term debt.
In March 2007 we filed a new shelf registration statement with the US
Securities and Exchange Commission (SEC) and, during the same month, issued
a SEC registered Global Bond comprising US$875 million of Floating Rate
Notes due in 2009, US$625 million of 5.125 per cent Senior Notes due in
2012, and US$750 million of 5.40 per cent Senior Notes due in 2017. The
proceeds were used for general corporate purposes.
Corporate Governance
On 7 February 2007, Mr Charles (Chip) Goodyear announced his intention to
retire from the Company on 1 January 2008. He will not seek re-election to
the Board and will retire as an Executive Director at the conclusion of the
BHP Billiton Limited AGM on 28 November 2007. On 31 May 2007 the Board
announced that Mr Marius Kloppers will succeed Mr Goodyear as Chief
Executive Officer of BHP Billiton, effective 1 October 2007.
Mr Chris Lynch retired as an Executive Director on 30 June 2007.
The membership of the Sustainability Committee changed during the year.
Its members are now Dr John Schubert (Chairman), Mr Paul Anderson and The
Hon. E Gail de Planque.
Outlook
Global macroeconomic outlook
The global economy remains robust, driven by solid activity in Asia and
Europe. Economic fundamentals remain relatively strong. Unemployment
remains low and the supply of labour is still constrained. This is
resulting in rising wages and increased household consumption.
Asian economies, led by China, continue to demonstrate strong growth.
India`s economy continues to gather pace, recently recording its fastest
economic growth rate in 18 years. In Europe, solid growth is being
supported by accommodative monetary conditions, rebounding consumption and
strong German industrial activity. The US economy continues to soften,
with the housing sector acting as a drag on activity. The Japanese
household sector is also experiencing weakness, increasing risks of
deflation later in the year. Key central banks have reacted to recent
global financial market instability by injecting liquidity, in an attempt
to calm markets.
The rate of growth of the Chinese economy has shown no signs of abating
with economic growth expected to be maintained or perhaps accelerate over
the second half of 2007. This has largely been driven by strong demand,
domestic retail sales, healthy investment growth and exports. Continued
monetary tightening, new export taxes and cuts in value added tax rebates
have had a minimal effect on economic behaviour to date. While the Chinese
currency continues to appreciate against the US dollar, the appreciation
has been controlled as the government desires to limit speculative inflows.
On the producer side, higher energy and raw material prices are likely to
mean a gradual increase in factory gate prices through the first half of
2008. We expect GDP growth close to 10 per cent for 2008, with risks
remaining to the upside.
Despite moderating US economic growth, global economic fundamentals remain
strong and the ongoing strength shown by emerging Asian economies
(including China) should support global growth. Moreover, the
competitiveness of open Asian economies is likely to continue to place
downward pressure on inflation which should in turn provide greater
flexibility for accommodative monetary policy stances taken by key central
banks. Consumer spending in the US may slow through 2008 due to wealth
effects associated with the housing market deterioration. However, despite
these risks, growth in the US is expected to be maintained as low
unemployment, low interest rates and a solid global economy support
economic activity. Solid domestic demand will remain a key driver of
healthy economic growth in Europe. Our outlook for Japan remains unchanged
with expected strong investment and further employment growth likely to
promote an improvement in consumption.
Commodities outlook
In 2007 real prices for all our major commodities remained at or near their
highest levels since the 1970s as Chinese demand for raw materials
continued. Over the last year the LME traded metals performed very well.
Bulk commodity prices also continued to be strong and demand remains firm.
Energy prices are very strong with crude oil near record highs. Looking
forward, supply side pressures will remain high and demand growth from
China is expected to remain robust. With continuing strong demand,
structurally higher cost sources of supply will be required. Higher energy
prices are also likely to have a flow-on effect to commodity prices.
Recent discussions with our customers have indicated that they do not
expect the volatility in the US and European credit markets to have a
material impact on raw material demand. In particular, our customers in
China and India believe domestic supply and demand criteria are much more
important factors in their markets. We will continue to assess impacts from
this recent volatility.
Currencies of resource-rich countries should continue to be strong relative
to the US dollar, impacting commodity prices in US dollar terms. Major non-
US consumer countries like China are likely to be able to absorb these
higher prices as their currencies have also strengthened against the US
dollar.
Over time we expect commodity prices to move towards long run marginal
costs of supply. However, given strong demand and supply side constraints,
this is only likely over the medium-term and, in the interim, prices are
likely to stay high relative to historical levels, albeit with increased
volatility.
Annual General Meetings
The Annual General Meeting of BHP Billiton Plc will be held at the Queen
Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P
3EE, UK, on Thursday 25 October 2007, commencing at 10:30am.
The Annual General Meeting of BHP Billiton Limited will be held at the
Hilton Adelaide, Ballroom, 233 Victoria Square, Adelaide, South Australia,
Australia on Wednesday 28 November 2007, commencing at 10.30am.
BHP Billiton Limited will accept nominations for the election of directors
up until 4.30pm on 12 September 2007.
The Annual Report and details of the business to be conducted at the
meetings will be mailed to shareholders in mid to late September 2007.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the year ended 30 June 2007 and last year.
Year ended 30 June Revenue together with Underlying EBIT (1)
(US$ Million) share of jointly
controlled entities`
revenues (1)
2007 2006 Change 2007 2006 Change
% %
Petroleum 5,885 5,230 12.5 3,014 2,968 1.5
Aluminium 5,879 5,084 15.6 1,856 1,191 55.8
Base Metals 12,635 10,294 22.7 6,905 5,400 27.9
Diamonds and 893 1,263 (29.3) 261 345 (24.3)
Specialty Products
Stainless Steel 6,901 2,955 133.5 3,697 901 310.3
Materials
Iron Ore 5,524 4,782 15.5 2,738 2,537 7.9
Manganese 1,244 1,037 20.0 253 132 91.7
Metallurgical Coal 3,769 3,941 (4.4) 1,249 1,834 (31.9)
Energy Coal 4,576 3,965 15.4 484 327 48.0
Group and 770 667 15.4 (390) (358) N/A
unallocated items
(2)
Less: inter- (603) (119) N/A - - -
segment turnover
BHP Billiton Group 47,473 39,099 21.4 20,067 15,277 31.4
(1) Revenue together with share of jointly controlled entities` revenues,
and Underlying EBIT include trading activities comprising the sale of third
party product. Underlying EBIT is defined on page 16.
(2) Includes consolidation adjustments, exploration and technology
activities, unallocated items and external sales from the Group`s freight,
transport and logistics operations.
Petroleum
Underlying EBIT was US$3,014 million, an increase of US$46 million, or 1.5
per cent, compared to last year. This was mainly due to higher average
realised oil prices per barrel of US$63.87 (compared with US$61.90) and
higher average realised prices for liquefied petroleum gas of US$529.96 per
tonne (compared to US$483.74 per tonne). This was partially offset by lower
average realised natural gas prices of US$3.19 per thousand standard cubic
feet (compared with US$3.33). Production volumes were in line with last
year despite no new major project start ups. The impact of foreign exchange
(A$ and GBP) and price-linked costs was unfavourable.
During the year we acquired a 44 per cent interest in the Genghis Khan oil
and gas field. This development, together with Atlantis and Neptune (both
Gulf of Mexico), Stybarrow (Australia) and Zamzama Phase 2 (Pakistan) is
scheduled to commence producing within the next six months, significantly
increasing petroleum production.
Gross expenditure on exploration of US$395 million was US$52 million lower
than last year. Exploration expenditure charged to profit was US$334
million including US$82 million of previously capitalised expenditure.
Aluminium
Underlying EBIT was US$1,856 million, an increase of US$665 million or 55.8
per cent over last year. Higher prices for aluminium and alumina had a
favourable impact, with the average LME aluminium price increasing to
US$2,692 per tonne (compared with US$2,244 per tonne).
Full year production records were achieved at the Worsley (Australia),
Paranam (Suriname) and Alumar (Brazil) refineries, and the Hillside,
Bayside and Mozal smelters (Southern Africa). The recent expansion at
Worsley reached nameplate capacity in the fourth quarter.
Favourable exchange rate movements as a result of a weaker Rand and foreign
exchange contracts associated with the Alumar refinery expansion increased
Underlying EBIT. Last year the write-down of our interest in Valesul (a
smelter in Brazil) to fair value, in line with the value achieved on its
subsequent divestment, decreased Underlying EBIT by US$50 million.
Earnings were adversely impacted by higher charges for electricity,
depreciation, maintenance, raw materials and labour. Despite these higher
costs, Underlying EBIT margins(1) improved to 40 per cent (30 per cent last
year) and are at record levels. This improved translation of higher prices
to the bottom line reflects an intensive focus on cost containment through
various Business Excellence initiatives. The contribution from third party
trading was lower than the comparative period.
In April, we announced the acquisition of a 33.3 per cent interest in
Global Alumina`s refinery project in Guinea, West Africa. The project, to
be known as the Guinea Alumina Project, comprises the design, construction
and operation of a 3.2 mtpa alumina refinery, a 9.6 mtpa bauxite mine and
associated infrastructure.
Base Metals
Underlying EBIT was US$6,905 million, an increase of US$1,505 million, or
27.9 per cent, over last year. This increase is predominantly attributable
to higher average LME prices for copper of US$3.21/lb (compared to
US$2.28/lb), as well as higher prices for lead, silver, zinc and gold.
Record copper production, from continuing operations, was achieved due to
the commissioning of Spence in December 2006, the ramp-up of Sulphide Leach
at Escondida and the recovery at Cerro Colorado (Chile) following the
earthquake. This was partially reduced by lower volumes at Olympic Dam due
to a scheduled smelter shutdown, lower head grades and lower tonnes milled.
Lower volumes were also reported at Cannington as the rehabilitation of
ground support was successfully completed during the period.
These gains were partially offset by higher labour and contractor costs,
higher price-linked costs at Antamina (Peru), higher fuel and energy
charges and the impact of industrial activity at Escondida. Increased
expenditure on the Cannington rehabilitation project and the combined
effect of inflation and the impact of a stronger A$/US$ exchange rate also
negatively impacted the result. Higher costs were partially mitigated by
cost reductions achieved through several improvement projects which
continue to deliver strong savings. In addition, the Olympic Dam Expansion
pre-feasibility study expenditures increased. The cessation of the
contribution from Tintaya, which was sold in June 2006, also reduced
Underlying EBIT.
Provisional pricing of copper shipments, including the impact of
finalisations and revaluations of outstanding shipments resulted in the
calculated average realised price being $3.24/lb versus $2.66/lb last year.
The positive impact of provisional pricing for the period was US$108
million. Outstanding copper volumes, subject to the fair value
measurement, amounted to 346,610 tonnes at 30 June 2007. These were
revalued at a weighted average price of US$7,152 per tonne.
Diamonds and Specialty Products
Underlying EBIT was US$261 million, a decrease of US$84 million, or 24.3
per cent over last year. This was due to lower sales volumes for diamonds
(down 23 per cent following inventory sales in the prior year), and higher
unit costs reflecting variations in the mix of ore processed. The cessation
of earnings from the Southern Cross Fertiliser operation, which was sold
effective 1 August 2006, also had a negative impact. This was partially
offset by higher value per carat diamonds and good performance at Richards
Bay Minerals (South Africa) with a firm market for metallic and zircon co-
products.
Stainless Steel Materials
Underlying EBIT was a record US$3,697 million, an increase of US$2,796
million or 310 per cent over last year. Higher nickel and cobalt prices
were the main contributors with an average LME nickel price of US$17.21/lb
(compared to US$7.03/lb). The higher prices, (net of price-linked costs)
added US$3,109 million to underlying EBIT.
Record annual nickel production was driven by strong performances at all
operations. Annual production at Yabulu (Australia) increased by almost 40
per cent.
Higher use of third party ore at Nickel West and Yabulu and higher costs at
the Kwinana refinery (all Australia) impacted Underlying EBIT negatively as
did the impact of the stronger A$/US$ exchange rate on operating costs at
the Australian operations. In addition, Underlying EBIT was impacted by
higher electricity and gas costs at Cerro Matoso (Colombia) and higher
maintenance and depreciation at Yabulu.
Exploration expenditure was higher than last year due to increased activity
in Western Australia, Indonesia, the Philippines and Guatemala.
The comparative period included a US$61 million profit on the sale of BHP
Billiton`s interest in the Wonderkop joint venture (South Africa).
Iron Ore
Underlying EBIT was US$2,738 million up US$201 million, or 7.9 per cent
over last year. This was driven mainly by increased prices together with
higher sales volumes.
Record production was achieved despite cyclonic events unfavourably
impacting production in the third quarter. Record sales reflected business
improvement initiatives implemented to promote increased shipping
efficiency.
Higher operating costs had an adverse impact during the period, largely
attributable to the stronger A$/US$ exchange rate but also to higher
contractor and labour costs, price-linked royalties, freight costs and
demurrage. A number of initiatives were undertaken during the year to
minimise the impact of external cost pressures on the business with the
benefits mainly realised in the second six months of the year.
Depreciation was higher, due to the commissioning of the expanded capacity
at Western Australia Iron Ore.
Manganese
Underlying EBIT was US$253 million up US$121 million compared to last year.
Stronger demand drove increased sales volumes of manganese ore and higher
prices for manganese alloy. Production volumes were also higher than last
year with manganese alloy up 17 per cent and manganese ore setting a
production record, up 14 per cent. Operating costs were lower resulting
from production efficiencies but were partly offset by increased
distribution costs.
Metallurgical Coal
Underlying EBIT was US$1,249 million, a decrease of US$585 million, or 31.9
per cent over last year. This was mainly attributable to lower prices for
hard coking coal (down 10 per cent) and weak coking coal (down 32 per
cent). Higher sales volumes at both Queensland Coal and Illawarra Coal
(Australia) impacted Underlying EBIT. The increase in sales volumes at
Queensland Coal was supported by the expanded capacity at our Hay Point
coal terminal. Royalties were lower due to lower prices.
Operating costs were higher at Queensland Coal following the startup of the
new longwall panel at Broadmeadows and higher demurrage costs. Difficult
mining conditions and an extended longwall change-out at Illawarra Coal
also increased operating costs. A stronger A$/US$ exchange rate had an
unfavourable impact across our operations as did inflationary pressure.
Depreciation and amortisation costs were higher due to commissioning of new
projects during the year, the write off of the coal dryer at Dendrobium
(Australia) and higher amortisation of deferred development costs at
Illawarra Coal.
Energy Coal
Underlying EBIT was US$484 million, an increase of US$157 million, or 48
per cent, over last year. The increase was mainly attributable to higher
export prices resulting from continued strong demand and a favourable
movement of the Rand against the US dollar. The profit on divestment of
Koornfontein, 1 million tonnes of Richards Bay Coal Terminal annual
capacity and the Eyesizwe investment increased Underlying EBIT.
Despite adverse weather conditions in the last quarter and high demurrage
costs in Australia, Hunter Valley Coal achieved record production volumes
as well as increased cost efficiencies. At Cerrejon Coal (Colombia) higher
volumes also had a favourable impact on results. In South Africa unit
costs were adversely affected by inflationary pressure, a redundancy
provision for the closure of the Douglas underground mine and lower
production as a result of safety interventions and equipment availability.
The divestment of the Zululand Anthracite Colliery (South Africa) during
the year, reduced Underlying EBIT.
Group and Unallocated items
Underlying net corporate operating costs, excluding exchange impacts, were
US$231 million compared to US$251 million in the corresponding period, a
decrease of US$20 million.
The current period benefited from lower insurance claims, offset by higher
costs for corporate projects, sponsorships, and regulatory compliance.
One-off costs in relation to the acquisition of WMC were incurred in the
prior period. There were no similar costs in this period.
The minerals exploration group expenditure, charged to Corporate, increased
from US$115 million to US$131 million in the current period, mainly due to
increased exploration activity on diamond targets in Angola and the
Democratic Republic of Congo, and on nickel targets in Australia. In
addition, the prior year included a US$60 million profit on the sale of an
option held over an exploration property in Pakistan.
The following notes explain the terms used throughout this profit release:
(1) Underlying EBIT margin is calculated net of third party product
activities.
(2) Net operating cash flow includes dividends from jointly controlled
entities and is after net interest and taxation.
(3) Unless otherwise stated production volumes exclude suspended and sold
operations.
(4) Based on share price of US$20.57.
(5) Underlying EBIT is earnings before net finance costs and taxation, and
jointly controlled entities` net finance costs and taxation and any
exceptional items. Underlying EBITDA is Underlying EBIT before
depreciation, impairments, and amortisation of US$2,883 million (comprising
Group depreciation, impairments and amortisation of US$2,550 million and
jointly controlled entities` depreciation and amortisation of US$333
million) for the year ended 30 June 2007 and US$2,776 million (comprising
Group depreciation, impairments and amortisation of US$2,427 million and
jointly controlled entities` depreciation and amortisation of US$349
million) for the year ended 30 June 2006. We believe that Underlying EBIT
and Underlying EBITDA provide useful information, but should not be
considered as an indication of, or alternative to, attributable profit as
an indicator of operating performance or as an alternative to cash flow as
a measure of liquidity.
(6) Underlying EBIT is used to reflect the underlying performance of BHP
Billiton`s operations. Underlying EBIT is reconciled to EBIT - Profit from
operations on page 5.
(7) For this purpose, net interest includes net finance costs of jointly
controlled entities, and capitalised interest and excludes the effect of
discounting on provisions and other liabilities, fair value change on
hedged loans, net of hedging derivatives, and exchange differences arising
from net debt.
Forward-looking statements Certain statements contained in this release,
including statements in the section entitled `Record Annual Results`,
Creating options for the Future` and `Outlook`, may constitute `forward-
looking statements` within the meaning of the US Private Securities
Litigation Reform Act of 1995. We undertake no obligation to revise the
forward-looking statements included in this release to reflect any future
events or circumstances. Our actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these
forward-looking statements. Factors that could cause or contribute to such
differences are discussed in the sections entitled `Key Information - Risk
factors`; `Operating and financial review and prospects - Our Business -
External Factors Affecting Our Results` and `Trends and Uncertainties`
included in our annual report on Form 20-F as amended by our Form 20-F/A
for the fiscal year ended 30 June 2006, which we filed with the US
Securities and Exchange Commission (SEC) on 25 September 2006 and 18
December 2006, respectively, and are available on the SEC`s website at
`www.sec.gov`. Nothing in this release should be construed as either an
offer to sell or a solicitation of an offer to buy or sell securities in
any jurisdiction.
FINANCIAL INFORMATION
For the year ended
30 June 2007
CONTENTS
Financial Information Page
Consolidated Income Statement 19
Consolidated Statement of Recognised Income and Expense 20
Consolidated Balance Sheet 21
Consolidated Cash Flow Statement 22
Notes to the Financial Information 23
The financial information included in this document for the year ended 30
June 2007 is unaudited and has been derived from the draft financial report
of the BHP Billiton Group for the year ended 30 June 2007. The financial
information does not constitute the Group`s full financial statements for
the year ended 30 June 2007, which will be approved by the Board and
reported on by the auditors and subsequently filed with the registrar of
companies and the Australian Securities and Investments Commission.
The financial information set out on pages 19 to 30 for the year ended 30
June 2007 has been prepared on the basis of accounting policies consistent
with those applied in the 30 June 2006 financial statements contained
within the Annual Report of the BHP Billiton Group, except for the
following interpretations which have been adopted for the year ended 30
June 2007:
* IFRIC 4/AASB Interpretation 4 `Determining Whether an Arrangement
Contains a Lease`
* IFRIC 8/ AASB Interpretation 8 `Scope of IFRS 2`
* IFRIC 9/ AASB Interpretation 9 `Reassessment of Embedded Derivatives`
*IFRIC 10/ AASB Interpretation 10 `Interim Financial Reporting and
Impairment`
The application of the above interpretations did not have a material impact
on the current or comparative periods.
The comparative information has also been prepared on this basis, with the
exception of IAS 32/AASB 132 `Financial Instruments: Disclosure and
Presentation` and IAS 39/AASB 139 `Financial Instruments: Recognition and
Measurement` which were adopted effective 1 July 2005.
The comparative figures for the financial years ended 30 June 2006 and 30
June 2005 are not the statutory accounts of BHP Billiton Plc for those
financial years. Those accounts have been reported on by the Company`s
auditors and delivered to the registrar of companies. The reports of the
auditors were (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
237(2) or (3) of the UK Companies Act 1985.
All amounts are expressed in US dollars unless otherwise stated. The BHP
Billiton Group`s presentation currency and the functional currency of the
majority of its operations is US dollars as this is the principal currency of
the economic environment in which it operates.
Amounts in this financial information have, unless otherwise indicated, been
rounded to the nearest million dollars.
Consolidated Income Statement
for the year ended 30 June 2007
2007 2006 2005
Notes US$M US$M US$M
Revenue together with share of
jointly controlled entities`
revenue
Group production 41,271 34,139 24,759
Third party products 6,202 4,960 6,391
47,473 39,099 31,150
Less: Share of jointly controlled (7,975) (6,946) (4,428)
entities` external revenue
included above
Revenue 39,498 32,153 26,722
Other income 588 1,227 757
Expenses excluding net finance (26,352) (22,403) (19,995)
costs
Share of profits from jointly 3 4,667 3,694 1,787
controlled entities
Profit from operations 18,401 14,671 9,271
Comprising:
Group production 18,327 14,560 9,157
Third party products 74 111 114
18,401 14,671 9,271
Financial income 4 260 226 216
Financial expenses 4 (650) (731) (547)
Net finance costs 4 (390) (505) (331)
Profit before taxation 18,011 14,166 8,940
Income tax expense (4,174) (3,207) (1,876)
Royalty related taxation (net of (341) (425) (436)
income tax benefit)
Total taxation expense 5 (4,515) (3,632) (2,312)
Profit after taxation 13,496 10,534 6,628
Profit attributable to minority 80 84 232
interests
Profit attributable to members of 13,416 10,450 6,396
BHP Billiton Group
Earnings per ordinary share 6 229.5 173.2 104.4
(basic) (US cents)
Earnings per ordinary share 6 229.0 172.4 104.0
(diluted) (US cents)
Dividends per ordinary share - 7 38.5 32.0 23.0
paid during the period (US cents)
Dividends per ordinary share - 7 47.0 36.0 28.0
declared in respect of the period
(US cents)
The accompanying notes form part of this financial information.
Consolidated Statement of Recognised Income and Expense
for the year ended 30 June 2007
2007 2006 2005
US$M US$M US$M
Profit after taxation 13,496 10,534 6,628
Amounts recognised directly in equity
Actuarial gains/(losses) on pension and 79 111 (149)
medical schemes
Available for sale investments:
Valuation gains/(losses) taken to 147 (1) -
equity
Cash flow hedges:
Losses taken to equity (50) (27) -
Gains transferred to the initial (88) (25) -
carrying amount of hedged items
Exchange fluctuations on translation of 12 (1) 7
foreign operations
Tax on items recognised directly in, or 82 4 52
transferred from, equity
Total amounts recognised directly in 182 61 (90)
equity
Total recognised income and expense for 13,678 10,595 6,538
the year
Attributable to minority interests 82 84 232
Attributable to members of BHP 13,596 10,511 6,306
Billiton Group
The accompanying notes form part of this financial information.
Consolidated Balance Sheet
as at 30 June 2007
2007 2006
Notes US$M US$M
ASSETS
Current assets
Cash and cash equivalents 1,937 776
Trade and other receivables 4,689 3,831
Other financial assets 952 808
Inventories 3,296 2,732
Assets held for sale - 469
Other 213 160
Total current assets 11,087 8,776
Non-current assets
Trade and other receivables 810 813
Other financial assets 1,016 950
Inventories 113 93
Investments in jointly controlled entities 4,924 4,299
Property, plant and equipment 36,705 30,985
Intangible assets 615 683
Deferred tax assets 2,810 1,829
Other 88 88
Total non-current assets 47,081 39,740
Total assets 58,168 48,516
LIABILITIES
Current liabilities
Trade and other payables 4,724 4,053
Interest bearing liabilities 1,352 1,368
Liabilities held for sale - 192
Other financial liabilities 512 544
Current tax payable 2,102 1,358
Provisions 1,259 1,067
Deferred income 300 279
Total current liabilities 10,249 8,861
Non-current liabilities
Trade and other payables 145 169
Interest bearing liabilities 9,291 7,648
Other financial liabilities 595 289
Deferred tax liabilities 1,822 1,592
Provisions 5,601 4,853
Deferred income 547 649
Total non-current liabilities 18,001 15,200
Total liabilities 28,250 24,061
Net assets 29,918 24,455
EQUITY
Share capital - BHP Billiton Limited 1,221 1,490
Share capital - BHP Billiton Plc 1,183 1,234
Share premium account 518 518
Treasury shares held (1,457) (418)
Reserves 473 306
Retained earnings 27,729 21,088
Total equity attributable to members of BHP 9 29,667 24,218
Billiton Group
Minority interests 9 251 237
Total equity 29,918 24,455
The accompanying notes form part of this financial information.
Consolidated Statement of Cash Flows
For the year ended 30 June 2007
2007 2006 2005
US$M US$M US$M
Operating activities
Receipts from customers 40,284 32,938 28,425
Payments to suppliers and employees (24,330) (20,944) (18,801)
Cash generated from operations 15,954 11,994 9,624
Dividends received 4,257 2,671 1,002
Interest received 138 121 90
Interest paid (518) (499) (315)
Income tax paid (3,682) (3,152) (1,476)
Royalty related taxation paid (554) (659) (551)
Net operating cash flows 15,595 10,476 8,374
Investing activities
Purchases of property, plant and (6,365) (5,239) (3,450)
equipment
Exploration expenditure (including (793) (766) (531)
amounts expensed)
Purchase of intangibles (18) - -
Purchases of investments and funding (155) (65) (42)
of jointly controlled entities
Purchases of, or increased (701) (531) (6,198)
investment in, subsidiaries,
operations and jointly controlled
entities, net of their cash
Cash outflows from investing (8,032) (6,601) (10,221)
activities
Proceeds from sale of property, 77 92 153
plant and equipment
Proceeds from sale or redemption of 128 153 227
investments
Proceeds from sale or partial sale 203 844 675
of subsidiaries, operations and
jointly controlled entities, net of
their cash
Net investing cash flows (7,624) (5,512) (9,166)
Financing activities
Proceeds from ordinary share issues 22 34 66
Proceeds from interest bearing 6,679 5,912 5 668
liabilities
Repayment of interest bearing (5,297) (7,013) (1,735)
liabilities
Purchase of shares by Employee Share (165) (187) (47)
Ownership Plan Trusts
Share buy-back - BHP Billiton (2,824) (1,619) (1,792)
Limited
Share buy-back - BHP Billiton Plc (2,917) (409) -
Dividends paid (2,271) (1,936) (1,404)
Dividends paid to minority interests (68) (190) (238)
Repayment of finance leases (2) (4) (22)
Net financing cash flows (6,843) (5,412) 496
Net increase / (decrease) in cash 1,128 (448) (296)
and cash equivalents
Cash and cash equivalents, net of 760 1,207 1,509
overdrafts, at beginning of year
Effect of foreign currency exchange 11 1 (6)
rate changes on cash and cash
equivalents
Cash and cash equivalents, net of 1,899 760 1,207
overdrafts, at end of year
The accompanying notes form part of this financial information.
Notes to the Financial Information
1 Business segments
The BHP Billiton Group has grouped its major operating assets into the
following Customer Sector Groups (CSGs):
* Petroleum (exploration for and production, processing and marketing of
hydrocarbons including oil, gas and LNG)
* Aluminium (exploration for and mining of bauxite, processing and
marketing of aluminium and alumina)
* Base Metals (exploration for and mining, processing and marketing of
copper, silver, zinc, lead, uranium and copper by-products including gold)
* Diamonds and Specialty Products (exploration for and mining of diamonds
and titanium minerals, and prior to divestment in August 2006, fertiliser
operations)
* Stainless Steel Materials (exploration for and mining, processing and
marketing of nickel)
* Iron Ore (exploration for and mining, processing and marketing of iron
ore)
* Manganese (exploration for and mining, processing and marketing of
manganese)
* Metallurgical Coal (exploration for and mining, processing and marketing
of metallurgical coal)
* Energy Coal (exploration for and mining, processing and marketing of
energy coal)
Due to recent growth, and a change in internal reporting structure, Iron
Ore, Manganese and Metallurgical Coal, which were previously reported as
the Carbon Steel Materials CSG are now reported as separate CSGs.
Comparative disclosures have been restated based on the current reporting
structure.
During the 2006 fiscal year, following a change in management
responsibilities, our minerals exploration and technology functions were
removed from the Diamonds and Specialty Products CSG and are now reported
as part of Group and unallocated items. This change in segment reporting
has been reflected in all periods presented and resulted in operating costs
in 2006 of US$71 million (2005: US$69 million) being reported in Group and
unallocated items rather than Diamonds and Specialty Products.
Group and unallocated items represent Group centre functions and certain
comparative data for divested assets and investments and exploration and
technology activities.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
Notes to the Financial Information (continued)
1 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year Ended
30 June 2007
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 4,846 4,564 10,756 893 6,800 5,421
group
production
Sale of 454 1,315 1,879 - 101 29
third party
product
Rendering of 7 - - - - 55
services
Inter- 578 - - - - 19
segment
revenue
5,885 5,879 12,635 893 6,901 5,524
Less: share (6) - (6,510) (359) - (599)
of jointly
controlled
entities`
external
revenue
included
above
Segment 5,879 5,879 6,125 534 6,901 4,925
revenue
Segment 2,977 1,540 1,872 70 3,687 2,444
result
Other 37 23 12 2 10 -
attributable
income (1)
Share of - 259 3,920 116 - 239
profits from
jointly
controlled
entities
Profit from 3,014 1,822 5,804 188 3,697 2,683
operations
Net finance
costs
Taxation
Royalty
related
taxation
Profit after
taxation
Adjusted 3,789 2,042 6,025 281 4,078 2,934
EBITDA
Other (4) 30 145 - (106) (49)
significant
non-cash
items
EBITDA 3,785 2,072 6,170 281 3,972 2,885
Depreciation (689) (235) (358) (93) (275) (202)
and
amortisation
Impairment (82) (15) (13) - - -
losses
recognised
Reversals of - - 5 - - -
previous
impairment
Losses
recognised
Profit from 3,014 1,822 5,804 188 3,697 2,683
operations
Profit from 3,010 1,796 5,892 188 3,697 2,684
group
production
Profit from 4 26 (88) - - (1)
third party
product
Capital 1,687 361 568 144 1,509 1,186
expenditure
Segment 9,464 6,269 9,740 1,620 7,745 4,489
assets
Investments 127 675 2,943 157 - 326
in jointly
controlled
entities
Total assets 9,591 6,944 12,683 1,777 7,745 4,815
Segment 2,524 996 2,696 184 1,150 1,103
liabilities
(1) Other attributable income represents the re-allocation of certain
items recorded in the segment result of Group and unallocated
items / eliminations to the applicable CSG / business segment.
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Year Ended
30 June 2007
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 1,149 3,712 2,980 14 41,135
group
production
Sale of 95 10 1,595 724 6,202
third party
product
Rendering of - 41 1 32 136
services
Inter- - 6 - (603) -
segment
revenue
1,244 3,769 4,576 167 47,473
Less: share - - (488) (13) (7,975)
of jointly
controlled
entities`
external
revenue
included
above
Segment 1,244 3,769 4,088 154 39,498
revenue
Segment 253 1,242 35 (386) 13,734
result
Other - 1 68 (153) -
attributable
income (1)
Share of - 4 149 (20) 4,667
profits from
jointly
controlled
entities
Profit from 253 1,247 252 (559) 18,401
operations
Net finance (390)
costs
Taxation (4,174)
Royalty (341)
related
taxation
Profit after 13,496
taxation
Adjusted 294 1,498 660 (451) 21,150
EBITDA
Other (1) 7 15 (60) (23)
significant
non-cash
items
EBITDA 293 1,505 675 (511) 21,127
Depreciation (40) (236) (247) (46) (2,421)
and
amortisation
Impairment - (22) (176) (2) (310)
losses
recognised
Reversals of - - - - 5
previous
impairment
Losses
recognised
Profit from 253 1,247 252 (559) 18,401
operations
Profit from 251 1,246 122 (559) 18,327
group
production
Profit from 2 1 130 - 74
third party
product
Capital 72 555 242 41 6,365
expenditure
Segment 971 3,066 3,230 6,650 53,244
assets
Investments - 2 690 4 4,924
in jointly
controlled
entities
Total assets 971 3,068 3,920 6,654 58,168
Segment 381 878 2,062 16,276 28,250
liabilities
(1) Other attributable income represents the re-allocation of
certain items recorded in the segment result of Group and unallocated
items / eliminations to the applicable CSG / business segment.
Notes to the Financial Information (continued)
1 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year Ended
30 June 2006
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 4,797 3,704 9,034 1,263 2,916 4,735
group
production
Sale of 321 1,374 1,259 - 37 15
third party
product
Rendering of 3 6 1 - - 32
services
Inter- 109 - - - 2 -
segment
revenue
5,230 5,084 10,294 1,263 2,955 4,782
Less: share (5) (107) (5,393) (377) - (593)
of jointly
controlled
entities`
external
revenue
included
above
Segment 5,225 4,977 4,901 886 2,955 4,189
revenue
Segment 2,963 917 1,998 209 901 2,201
result
Other 5 37 - - - -
attributable
income (1)
Share of - 193 3,015 91 - 263
profits from
jointly
controlled
entities
Profit from 2,968 1,147 5,013 300 901 2,464
operations
Net finance
costs
Taxation
Royalty
related
taxation
Profit after
taxation
Adjusted 3,798 1,468 5,093 396 1,185 2,598
EBITDA
Other (7) (44) 267 (3) (41) 21
significant
non-cash
items
EBITDA 3,791 1,424 5,360 393 1,144 2,619
Depreciation (720) (227) (339) (93) (243) (154)
and
amortisation
Impairment (113) (50) (8) - - (1)
losses
recognised
Reversals of 10 - - - - -
previous
impairment
Losses
recognised
Profit from 2,968 1,147 5,013 300 901 2,464
operations
Profit from 2,963 1,071 5,017 300 901 2,462
group
production
Profit from 5 76 (4) - - 2
third party
product
Capital 1,124 366 861 202 1,423 884
expenditure
Segment 7,420 6,061 9,419 1,630 5,692 3,462
assets
Investments 112 551 2,511 115 - 386
in jointly
controlled
entities
Total assets 7,532 6,612 11,930 1,745 5,692 3,848
Segment 2,208 1,048 2,617 178 898 1,047
liabilities
(1) Other attributable income represents the re-allocation of certainitems
recorded in the segment result of Group and unallocateditems / eliminations
to the applicable CSG / business segment.
1 Business segments (continued)
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Year Ended
30 June 2006
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 965 3,926 2,713 5 34,058
group
production
Sale of 72 1 1,252 629 4,960
third party
product
Rendering of - 6 - 33 81
services
Inter- - 8 - (119) -
segment
revenue
1,037 3,941 3,965 548 39,099
Less: share (33) - (438) - (6,946)
of jointly
controlled
entities`
external
revenue
included
above
Segment 1,004 3,941 3,527 548 32,153
revenue
Segment 126 1,832 131 (301) 10,977
result
Other 8 1 - (51) -
attributable
income (1)
Share of (2) 1 139 (6) 3,694
profits from
jointly
controlled
entities
Profit from 132 1,834 270 (358) 14,671
operations
Net finance (505)
costs
Taxation (3,207)
Royalty (425)
related
taxation
Profit after 10,534
taxation
Adjusted 172 2,002 500 (242) 16,970
EBITDA
Other (1) (5) 17 (76) 128
significant
non-cash
items
EBITDA 171 1,997 517 (318) 17,098
Depreciation (39) (163) (247) (39) (2,264)
and
amortisation
Impairment - - - (1) (173)
losses
recognised
Reversals of - - - - 10
previous
impairment
Losses
recognised
Profit from 132 1,834 270 (358) 14,671
operations
Profit from 137 1,834 233 (358) 14,560
group
production
Profit from (5) - 37 - 111
third party
product
Capital 45 677 131 41 5,754
expenditure
Segment 836 2,607 3,018 4,050 44,195
assets
Investments 24 - 622 - 4,321
in jointly
controlled
entities
Total assets 860 2,607 3,640 4,050 48,516
Segment 340 749 1,759 13,217 24,061
liabilities
(1) Other attributable income represents the re-allocation of certain
items recorded in the segment result of Group and unallocated
items / eliminations to the applicable CSG / business segment.
Notes to the Financial Information (continued)
1 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year Ended
30 June 2005
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 3,953 3,103 4,372 986 2,265 3,311
group
production
Sale of 1,500 1,543 670 523 9 42
third party
product
Rendering of - - 1 - - 29
services
Inter- 62 5 - - - -
segment
revenue
5,515 4,651 5,043 1,509 2,274 3,382
Less: share (3) (80) (2,714) (778) (8) (384)
of jointly
controlled
entities`
external
revenue
included
above
Segment 5,512 4,571 2,329 731 2,266 2,998
revenue
Segment 2,523 758 481 429 828 875
result
Other 6 26 - 19 25 -
attributable
income (1)
Share of - 139 1,285 77 1 148
profits from
jointly
controlled
entities
Profit from 2,529 923 1,766 525 854 1,023
operations
Net finance
costs
Taxation
Royalty
related
taxation
Profit after
taxation
Adjusted 3,151 1,122 1,952 710 1,014 1,329
EBITDA
Other - 15 (33) (14) (19) (174)
significant
non-cash
items
EBITDA 3,151 1,137 1,919 696 995 1,155
Depreciation (616) (214) (153) (171) (141) (132)
and
amortisation
Impairment (6) - - - - -
losses
recognised
Reversals of - - - - - -
previous
impairment
Losses
recognised
Profit from 2,529 923 1,766 525 854 1,023
operations
Profit from 2,515 902 1,777 503 854 1,028
group
production
Profit from 14 21 (11) 22 - (5)
third party
product
Capital 898 268 345 239 475 468
expenditure
Segment 6,448 5,398 7,880 1,429 4,377 2,081
assets
Investments 112 509 1,633 115 - 304
in jointly
controlled
entities
Total assets 6,560 5,907 9,513 1,544 4,377 2,385
Segment 1,955 745 2,240 162 612 870
liabilities
(1) Other attributable income represents the re-allocation of certain
items recorded in the segment result of Group and unallocated
items / eliminations to the applicable CSG / business segment.
1 Business segments (continued)
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Year Ended
30 June 2005
Revenue
together
with share
of jointly
controlled
entities`
revenue
from
external
customers
Sale of 1,334 2,653 2,718 3 24,698
group
production
Sale of 105 91 1,124 784 6,391
third party
product
Rendering of - 5 - 26 61
services
Inter- - 27 - (94) -
segment
revenue
1,439 2,776 3,842 719 31,150
Less: share (45) - (416) - (4,428)
of jointly
controlled
entities`
external
revenue
included
above
Segment 1,394 2,776 3,426 719 26,722
revenue
Segment 569 886 319 (184) 7,484
result
Other - 2 1 (79) -
attributable
income (1)
Share of - - 137 - 1,787
profits from
jointly
controlled
entities
Profit from 569 888 457 (263) 9,271
operations
Net finance (331)
costs
Taxation (1,876)
Royalty (436)
related
taxation
Profit after 6,628
taxation
Adjusted 607 1,162 740 (65) 11,722
EBITDA
Other - (144) (95) (169) (633)
significant
non-cash
items
EBITDA 607 1,018 645 (234) 11,089
Depreciation (38) (130) (179) (27) (1,801)
and
amortisation
Impairment - - (9) (2) (17)
losses
recognised
Reversals of - - - - -
previous
impairment
Losses
recognised
Profit from 569 888 457 (263) 9,271
operations
Profit from 552 886 403 (263) 9,157
group
production
Profit from 17 2 54 - 114
third party
product
Capital 68 527 164 31 3,483
expenditure
Segment 808 1,996 2,359 5,813 38,589
assets
Investments 32 - 549 - 3,254
in jointly
controlled
entities
Total assets 840 1,996 2,908 5,813 41,843
Segment 290 743 1,558 14,752 23,927
liabilities
(1) Other attributable income represents the re-allocation of certain
items recorded in the segment result of Group and unallocated
items / eliminations to the applicable CSG / business segment.
Notes to the Financial Information (continued)
2 Exceptional items
Exceptional items are those items where their nature and amount is considered
material to the financial report. Such items included within the BHP Billiton
Group profit for the year are detailed below.
Gross Tax Net
Year ended 30 June 2007 US$M US$M US$M
Exceptional items by category
Impairment of South African coal (176) 34 (142)
operations
Newcastle steelworks rehabilitation (167) 50 (117)
(343) 84 (259)
Exceptional items by Customer
Sector Group
Energy Coal (176) 34 (142)
Group & Unallocated (167) 50 (117)
(343) 84 (259)
Impairment of South African coal operations
As part of the Group`s regular review of assets whose value may be
impaired, a charge of US$176 million (US$34 million tax benefit) has been
recorded in relation to coal operations in South Africa.
Newcastle steelworks rehabilitation
The Group recognised a charge against profits of US$167 million (US$50
million tax benefit) for additional rehabilitation obligations in respect
of former operations at the Newcastle steelworks (Australia). The increase
in obligations relate to increases in the volume of sediment in the Hunter
River requiring remediation and treatment, and increases in treatment
costs.
Gross Tax Net
Year ended 30 June 2006 US$M US$M US$M
Exceptional items by category
Sale of Tintaya copper mine 439 (143) 296
Exceptional items by Customer
Sector Group
Base Metals 439 (143) 296
Sale of Tintaya copper mine
Effective 1 June 2006, BHP Billiton sold its interests in the Tintaya
copper mine in Peru. Gross consideration received was US$853 million,
before deducting intercompany trade balances. The net consideration of
US$717 million (net of transaction costs) included US$634 million for
shares plus the assumption of US$116 million of debt, working capital
adjustments and deferred payments contingent upon future copper prices and
production volumes.
Gross Tax Net
Year ended 30 June 2005 US$M US$M US$M
Exceptional items by category
Sale of Laminaria and Corallina 134 (10) 124
Disposal of Chrome operations 142 (6) 136
Termination of operations (266) 80 (186)
Closure plans (121) 17 (104)
Total by category (111) 81 (30)
Exceptional items by Customer
Sector Group
Petroleum 134 (10) 124
Base Metals (29) (4) (33)
Carbon Steel Materials (285) 80 (205)
Energy Coal (73) 21 (52)
Stainless Steel Materials 142 (6) 136
Total by Customer Sector Group (111) 81 (30)
Sale of Laminaria and Corallina
In January 2005, the Group disposed of its interest in the Laminaria and
Corallina oil fields. Proceeds on the sale were US$130 million resulting in
a profit before tax of US$134 million (US$10 million tax expense).
Disposal of Chrome operations
Effective 1 June 2005, BHP Billiton disposed of its economic interest in
the majority of its South African chrome business. The total proceeds on
the sale were US$421 million, resulting in a profit before tax of US$127
million (US$1 million tax expense). In addition, the Group sold its
interest in the Palmiet chrome business in May 2005 for proceeds of US$12
million, resulting in a profit before tax of US$15 million (US$5 million
tax expense).
Provision for termination of operations
The Group decided to decommission the Boodarie Iron operations and a charge
of US$266 million (US$80 million tax benefit) relating to termination of
the operation was recognised. The charge primarily relates to settlement of
existing contractual arrangements, plant decommissioning, site
rehabilitation, redundancy and other closure related costs/charges
associated with the closure.
Closure plans
As part of the Group`s regular review of decommissioning and site
restoration plans, the Group reassessed plans in respect of certain closed
operations. A total charge of US$121 million (US$104 million after tax) was
recorded and included a charge of US$73 million (US$21 million tax benefit)
for closed mines at Ingwe in relation to revision of the Group`s assessed
rehabilitation obligation, predominantly resulting from revised water
management plans and a charge of US$48 million (US$4 million tax expense)
in relation to other closed mining operations.
Notes to the Financial Information (continued)
3 Investments accounted for using the equity method
Major shareholdings Ownership interest at BHP Contribution to profit
in jointly Billiton Group reporting after taxation
controlled entities date (a)
30 June 30 June 30 30 June 30 30 June
2007 2006 June 2007 June 2005
% % 2005 US$M 2006 US$M
% US$M
Samarco Mineracao 50 50 50 239 262 148
SA
Minera Antamina SA 33.75 33.75 33.75 506 437 194
Carbones del 33.3 33.3 33.3 112 97 111
Cerrejon LLC
Minera Escondida 57.5 57.5 57.5 3,442 2,595 1,090
Limitada
Mozal SARL 47.1 47.1 47.1 259 185 130
Valesul Aluminio SA - 45.5 45.5 - 8 9
(b)
Other (c) 109 110 105
Total 4,667 3,694 1,787
(a) The ownership interest at BHP Billiton`s reporting date and the
jointly controlled entity`s reporting date are the same. Whilst the
annual financial reporting date may be different to BHP Billiton`s,
financial information is obtained as at 30 June in order to report on
a consistent basis with BHP Billiton`s reporting date.
(b) Subsequent to 30 June 2006, the BHP Billiton Group sold its
interest in Valesul Aluminio SA.
(c) Includes immaterial jointly controlled entities and the Richards
Bay Minerals joint venture owned 50% (30 June 2006: 50%; 30 June 2005:
50%).
4 Net finance costs
2007 2006 2005
US$M US$M US$M
Financial expenses
Interest on bank loans and overdrafts 22 134 34
Interest on all other loans 535 382 254
Finance lease and hire purchase interest 5 6 6
Dividends on redeemable preference shares 1 17 25
Discounting on provisions and other 251 266 173
liabilities
Discounting on pension and medical benefit 127 108 114
entitlements
Interest capitalised (a) (353) (144) (78)
Net fair value change on hedged loans and 25 (30) -
related hedging derivatives
Exchange differences on net debt 37 (8) 19
650 731 547
Financial income
Interest income (151) (123) (118)
Return on pension plan assets (109) (103) (98)
(260) (226) (216)
Net finance costs 390 505 331
(a) Interest has been capitalised at the rate of interest applicable to
the specific borrowings financing the assets under construction or, where
financed through general borrowings, at a capitalisation rate representing
the average interest rate on such borrowings. For the year ended 30 June
2007 the capitalisation rate was 5.7 per cent (2006: 5.0 per cent; 2005:
4.6 per cent).
Notes to the Financial Information (continued)
5 Taxation
Year Year Year ended
ended ended 30 June
30 June 30 June 2005
2007 2006
US$M US$M US$M
Taxation expense including royalty related
taxation
UK taxation expense 85 294 206
Australian taxation expense 2,768 2,547 1,613
Overseas taxation expense 1,662 791 493
Total taxation expense 4,515 3,632 2,312
6 Earnings per share
2007 2006 2005
Basic earnings per share (US cents) 229.5 173.2 104.4
Diluted earnings per share (US cents) 229.0 172.4 104.0
Basic earnings per American Depositary Share 459.0 346.4 208.8
(ADS) (US cents) (a)
Diluted earnings per American Depositary 458.0 344.8 208.0
Share (ADS) (US cents) (a)
Basic earnings (US$ million) 13,416 10,450 6,396
Diluted earnings (US$ million) (b) 13,434 10,456 6,399
The weighted average number of shares used for the purposes of calculating
diluted earnings per share reconciles to the number used to calculate basic
earnings per share as follows:
2007 2006 2005
Weighted average number of shares Million Million Million
Basic earnings per share denominator 5,846 6,035 6,124
Shares and options contingently issuable 20 31 32
under employee share ownership plans
Diluted earnings per share denominator 5,866 6,066 6,156
(a) Each ADS represents two ordinary shares.
(b) Diluted earnings are calculated after adding back dividend equivalent
payments of US$18 million (2006: US$6 million; 2005: US$3 million) that
would not be made if potential ordinary shares were converted to fully
paid.
7 Dividends
2007 2006 2005
US$M US$M US$M
Dividends paid during the period
BHP Billiton Limited 1,346 1,148 842
BHP Billiton Plc - Ordinary shares 923 790 567
- Preference shares (a) - - -
2,269 1,938 1,409
Dividends declared in respect of the period
BHP Billiton Limited 1,605 1,275 1,004
BHP Billiton Plc - Ordinary shares 1,097 885 691
- Preference shares (a) - - -
2,702 2,160 1,695
2007 2006 2005
US US US
cents cents cents
Dividends paid during the period (per share)
Prior year final dividend 18.5 14.5 9.5
Interim dividend 20.0 17.5 13.5
38.5 32.0 23.0
Dividends declared in respect of the period
(per share)
Interim dividend 20.0 17.5 13.5
Final dividend 27.0 18.5 14.5
47.0 36.0 28.0
Dividends are declared after period end in the announcement of the results
for the period. Interim dividends are declared in February and paid in
March. Final dividends are declared in August and paid in September.
Dividends declared are not recorded as a liability at the end of the period
to which they relate. Subsequent to year end, on 22 August 2007, BHP
Billiton declared a final dividend of 27.0 US cents per share (US$1,528
million), which will be paid on 28 September 2007 (2006: 18.5 US cents per
share - US$1,100 million; 2005: 14.5 US cents per share - US$878 million).
Each American Depositary Share (ADS) represents two ordinary shares of BHP
Billiton Limited or BHP Billiton Plc. Dividends declared on each ADS
represent twice the dividend declared on BHP Billiton shares.
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30%.
2007 2006 2005
US$M US$M US$M
Franking credits as at 30 June 144 20 115
Franking credits arising from the payment of 923 811 213
current tax payable
Total franking credits available (b) 1,067 831 328
(a) 5.5 per cent dividend on 50,000 preference shares of ?1 each (2006:
5.5 per cent; 2005: 5.5 per cent).
(b) The payment of the final 2007 dividend declared after 30 June 2007
will reduce the franking account balance by US$388 million.
8 Acquisitions and disposals
Significant acquisitions
On 1 February 2007 the BHP Billiton Group acquired a 44% interest in the
operation of the Genghis Khan oil and gas development ("Genghis Khan") for
a total cash consideration of US$583 million.
Genghis Khan includes Green Canyon Blocks (652 and 608) and was discovered
in 2005 in the deepwater Gulf of Mexico. Genghis Khan is located in the
same geological structure and allows the Group to benefit from development
synergies with the Shenzi project, which was sanctioned for development in
the 2006 financial year.
In April, the BHP Billiton Group announced the acquisition of a 33.3 per
cent interest in Global Alumina`s refinery project in Guinea, West Africa
for US$140 million. The project, comprises the design, construction and
operation of a 3.2 mtpa alumina refinery, a 9.6 mtpa bauxite mine and
associated infrastructure.
Disposals
During the year ended 30 June 2007, the sales of Southern Cross Fertiliser
Pty Ltd, the Cascade and Chinook oil and gas prospects, the Coal Bed
Methane assets and BHP Billiton`s 45.5 per cent interest in Valesul
Aluminio SA have been finalised. In addition, during the year, the BHP
Billiton Group sold 1 million tonnes of annual capacity in the Richards Bay
Coal Terminal, interests in Eyesizwe and Alliance Copper, and the
Koornfontein coal operations.
9 Total equity
Attributable to members of
BHP Billiton Group
2007 2006 2005
US$M US$M US$M
Total equity opening balance 24,218 17,575 14,396
Adjustment for adoption of IAS - 55 -
39 / AASB 139
- Retained earnings
- Hedging reserve - 30 -
- Financial asset reserve - 116 -
Total equity opening balance 24,218 17,776 14,396
after adoption of IAS 39 / AASB
139
Total recognised income and 13,596 10,511 6,306
expense for the year
Transactions with owners - 17 24 56
contributed equity
Dividends (2,269) (1,938) (1,409)
Accrued employee entitlement to 72 61 53
share awards
Purchases of shares made by (165) (187) (47)
ESOP Trusts
Cash settlement of share awards - - (3)
BHP Billiton Plc share buy-back (2,957) (409) -
BHP Billiton Limited share buy- (2,845) (1,620) (1,777)
back
Total equity closing balance 29,667 24,218 17,575
9 Total equity (continued)
Minority interests
2007 2006 2005
US$$M US$M US$M
Total equity opening balance 237 341 347
Adjustment for adoption of IAS - - -
39 / AASB 139
- Retained earnings
- Hedging reserve - - -
- Financial asset reserve - - -
Total equity opening balance 237 341 347
after adoption of IAS 39 / AASB
139
Total recognised income and 82 84 232
expense for the year
Transactions with owners - - - -
contributed equity
Dividends (68) (188) (238)
Accrued employee entitlement to - - -
share awards
Purchases of shares made by - - -
ESOP Trusts
Cash settlement of share awards - - -
BHP Billiton Plc share buy-back - - -
BHP Billiton Limited share buy- - - -
back
Total equity closing balance 251 237 341
On 23 August 2006, BHP Billiton announced a US$3.0 billion capital return
to shareholders through an 18 month series of on-market share buy-backs. On
7 February 2007, an additional US$10 billion capital return was announced.
On this date, 93,435,000 shares in BHP Billiton Plc had been repurchased
under the August program at a cost of US$1,705 million, leaving US$1,295
million to be carried forward and added to February`s program. All BHP
Billiton Plc shares bought back are held as Treasury shares within the
share capital of BHP Billiton Plc. As at 30 June 2007, 146,721,714 BHP
Billiton Plc shares had been bought back (6,600,000 by BHP Billiton Plc and
140,121,714 by BHP Billiton Limited) at a total cost of US$2,957 million.
Shares in BHP Billiton Plc held by BHP Billiton Limited were periodically
cancelled in accordance with the resolutions passed at the 2006 Annual
General Meetings. Of the BHP Billiton Plc shares purchased by BHP Billiton
Limited, 67,285,000 and 34,400,000 shares were cancelled on 18 January 2007
and 23 April 2007 respectively. As at 30 June 2007, BHP Billiton Limited
held 38,436,714 shares in BHP Billiton Plc. Subsequent to the year end, on
5 July 2007, a further 19,650,000 BHP Billiton Plc shares purchased by BHP
Billiton Limited were cancelled.
On 26 March 2007, the BHP Billiton Group completed an off-market buy-back
of 141,098,555 million BHP Billiton Limited shares. In accordance with the
structure of the buy-back, US$286 million was allocated to the share
capital of BHP Billiton Limited and US$2,559 million was allocated to
retained earnings. These shares were then cancelled.
10 Subsequent events
Other than the matters disclosed elsewhere in this financial information,
no matters or circumstances have arisen since the end of the 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.
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia
Samantha Evans, Media Relations
Tel: +61 3 9609 2898 Mobile: +61 400 693 915
email: Samantha.Evans@bhpbilliton.com
Jane Belcher, Investor Relations
Tel: +61 3 9609 3952 Mobile: +61 417 031 653
email: Jane.H.Belcher@bhpbilliton.com
United Kingdom
Mark Lidiard, Investor & Media Relations
Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Mark.Lidiard@bhpbilliton.com
Illtud Harri, Media Relations
Tel: +44 20 7802 4195 Mobile: +44 7920 237 246
email: Illtud.Harri@bhpbilliton.com
United States
Tracey Whitehead, Investor & Media Relations
Tel: US +1 713 599 6100 or UK +44 20 7802 4031
Mobile: +44 7917 648 093
email: Tracey.Whitehead@bhpbilliton.com
South Africa
Alison Gilbert, Investor Relations
Tel: SA +27 11 376 2121 or UK +44 20 7802 4183
Mobile: +44 7769 936 227
email: Alison.Gilbert@bhpbilliton.com
Date: 22/08/2007 08:07:02 Produced by the JSE SENS Department.
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