| Thu 18 Dec 2008, 7:30 | | BIL - BHP Billiton Plc - Update |
|
BIL
BIBLT
BIL - BHP Billiton Plc - Update
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
18 December 2008
Chairman`s Office
Dear Shareholder
Update
In my last letter to you of 8 September I undertook to write to you to inform
you of material developments in relation to BHP Billiton, particularly in
relation to our offer to acquire Rio Tinto.
You will no doubt by now have heard or read in the media that on 25 November
2008, your Board decided not to proceed with the Rio Tinto transaction and
subsequently the Offers have lapsed. This was a difficult decision but one we
believe is right for BHP Billiton shareholders. Over the last 14 months we have
actively engaged with many of our shareholders and we have sincerely appreciated
your support over this period. If you wish to read more about our decision, you
can find information on our website at www.bhpbilliton.com.
A strong future
As to the future, I want to be very clear that BHP Billiton, as a standalone
company, is in a strong financial and operating position. We believe we are
better placed than our competitors in these challenging times to respond to the
fluctuating demand for our products. We have:
- a portfolio of long-life, low-cost, expandable, tier one assets. As a
result of this portfolio, and low-cost position, BHP Billiton`s margins are
the highest among the industry and in these difficult times, we expect to
outperform our peers.
- a very strong balance sheet, with a net debt level of just US$6.3 billion
at 31 October 2008 against a market capitalisation of around US$115 billion
as at the date of this letter, as well as robust cash flows to support
investments through the commodity cycle.
These two elements give us the flexibility in these volatile times to respond to
any changes in business activity as considered necessary by your management team
and Board, and we can continue to invest for future growth in shareholder value.
For now, in developing our projects, our emphasis is on lower risk brown-field
expansions in areas we know, rather than start up projects in new geographies.
Our recent announcement of an investment of US$4.8 billion in Western Australian
Iron Ore to increase our tonnes to 205 million per annum by 2011 is evidence of
this confidence in the future and our on-going investment in brown-field sites
in known geographies.
Having said that, there is no doubt that these are challenging times for all of
us. Uncertainty in the world`s commodity markets remains particularly high in
the short-term, and we do not expect to be immune from these changes. However,
we have excellent customer relationships and so far we have been able to
substantially maintain our sales volumes through a combination of our normal
long term contract and spot business. If these uncertain conditions persist and
significant production cuts become necessary, or any of our operations are cash
negative and are set to remain so, we will respond accordingly and advise
shareholders and the market.
Conclusion
Your Board and management team believe that BHP Billiton is very well placed for
the current environment. Our priorities for cash flows remain to invest in core
businesses, manage our balance sheet to a solid single A credit rating, maintain
our progressive dividend policy and return any surplus cash to shareholders.
You have a first class senior management team led by our Chief Executive Officer
Marius Kloppers. They are disciplined and focussed on the pursuit of shareholder
value and on your behalf I thank them for their leadership and excellent
stewardship of BHP Billiton over the past year.
Again thank you for your support and on behalf of my Board colleagues and the
senior management team I wish you a safe and happy festive season.
Yours sincerely
Don Argus
Chairman
BHP Billiton Limited ABN 49 BHP Billiton Plc Registration
004 028 077 number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 180 Registered Office: Neathouse
Lonsdale Street Melbourne Place London SW1V 1BH United
Victoria 3000 Kingdom
The BHP Billiton Group is headquartered in Australia
Date: 18/12/2008 07:30:20 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
