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BIL
BIBLT
BIL - BHP Billiton Plc - Report for the half-year ended 31 December 2009
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
10 February 2010
For Announcement to the Market
Name of Companies: BHP Billiton Limited (ABN 49 004 028 077) and BHP
Billiton Plc (Registration No. 3196209)
Report for the half-year ended 31 December 2009
This statement includes the consolidated results of the BHP Billiton Group,
comprising BHP Billiton Limited and BHP Billiton Plc, for the half-year
ended 31 December 2009 compared with the half-year ended 31 December 2008.
The results are prepared in accordance with IFRS and are presented in US
dollars.
Headline Earnings
In accordance with the JSE Listing Requirements, Headline Earnings is
presented below.
Half-year Half-year Year ended
ended ended 30 June
31 December 31 December 2009
2009 2008
US$M US$M US$M
Earnings attributable to ordinary 6,135 2,617 5,877
shareholders
Adjusted for:
Cost relating to the lapsed offers - 450 450
for Rio Tinto
(Gain)/Loss on sale of PP&E, (95) 17 (38)
Investments and Operations
(Reversal of (587) 3,700 4,640
impairments)/impairments
Recycling of re-measurements from - - (26)
equity to the income statement
Tax effect of above adjustments 203 (1,014) (1,044)
Subtotal of Adjustments (479) 3,153 3,982
Headline Earnings 5,656 5,770 9,859
Diluted Headline Earnings 5,668 5,780 9,881
Basic earnings per share denominator 5,564 5,565 5,565
(millions)
Diluted earnings per share 5,598 5,598
denominator (millions) 5,605
Headlines Earnings per share (US 101.7 177.2
cents) 103.7
Diluted Headline Earnings per share 101.2 176.5
(US cents) 103.5
News Release
10 February 2010
10/10
BHP BILLITON RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2009
*Record sales volumes in three key commodities delivered a sound financial
performance.
*However, lower commodity prices and a weak US dollar adversely impacted
earnings compared to the prior period.
*Underlying EBIT margin remained strong, at 37.9% and Underlying return on
capital was 24.0%.
*Solid volume growth achieved from good operating performance and the ramp
up of new projects.
*Continued investment through the cycle, with three major projects
commissioned and one project sanctioned during the period.
*We continued to replenish our growth pipeline and since December 2009 we
have announced further capital approvals of US$2.7 billion.
*Our balance sheet remains strong, with net gearing of 15.1%, net debt of
US$7.9 billion, and Underlying EBITDA interest cover of 42 times.
*Current period cash flow was negatively impacted by increased working
capital on the back of a recovery in demand and prices.
*Interim dividend of 42 US cents per share, highlighting a continued
commitment to our progressive dividend policy.
Half-year ended 31 December 2009 2008 Change
US$M US$M %
Revenue 24,576 29,780 (17.5%)
Underlying EBITDA(3) 10,838 13,939 (22.2%)
Underlying EBIT(3) (4) 8,502 11,899 (28.5%)
Profit from operations 9,120 7,224 26.2%
Attributable profit - excluding 5,702 6,128 (7.0%)
exceptional items
Attributable profit 6,135 2,617 134.4%
Net operating cash flow(1) 5,716 13,094 (56.3%)
Basic earnings per share - excluding 102.5 110.1 (6.9%)
exceptional items (US cents)
Basic earnings per share (US cents) 110.3 47.0 134.7%
Underlying EBITDA interest coverage 42.0 86.6 (51.5%)
(times)(3) (5)
Dividend per share (US cents) 42.0 41.0 2.4%
Refer to page 12 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 half-year ended 31 December 2008 unless otherwise stated.
RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2009
Commentary on the Group Results
BHP Billiton delivered a sound financial result, despite significant
volatility and continued uncertainty in the global economy. Strong sales
volume growth on the back of demand recovery, particularly in the
steelmaking raw materials (Iron Ore, Metallurgical Coal and Manganese) and
good cost control across the business helped to partially offset the
negative impacts of lower prices and stronger producers` currencies.
Commodity prices recovered during the December 2009 half-year, however
realised prices for most of our products were lower than the prices achieved
during the December 2008 half-year. The strength of operating currencies
against a weak US dollar also negatively impacted costs. In comparison to
the prior period, Underlying EBIT and attributable profit excluding
exceptional items decreased by 28.5 per cent and 7.0 per cent respectively,
mainly due to these two factors. However, Underlying EBIT margin remained at
a healthy 37.9 per cent and Underlying return on capital was 24.0 per cent,
despite new not yet productive capital from continued investment.
Attributable profit increased by 134.4 per cent to US$6.1 billion due to the
reversal of impairment charge for Ravensthorpe as well as a number of
exceptional items reported in the prior period. Exceptional items reported
in the prior period include costs associated with portfolio rationalisation,
impairment of assets and increased rehabilitation provisions for Newcastle
steelworks (Australia). We undertook further portfolio rationalisation
during the period, with the announced sales of both the Ravensthorpe and
Yabulu nickel operations (both Australia) and the divestment of Suriname
alumina operations. The restructuring of the nickel portfolio is now
complete, leaving us with a stronger and simpler nickel business.
The ongoing investment program continued to deliver volume growth, which
contributed to half-year production records in Iron Ore and Petroleum. We
delivered first production in three major projects during the period (iron
ore, alumina and energy coal) and announced the approval of the Hunter
Valley Energy Coal (Australia) MAC20 project. Subsequent to the period end
we also announced the approval of US$2.2 billion pre-commitment capital
expenditure for projects in iron ore, metallurgical coal and potash and the
approval of the Antamina expansion in Peru. On 5 December 2009, BHP Billiton
and Rio Tinto announced they had concluded definitive agreements to
establish the Western Australia Iron Ore Production Joint Venture. These
agreements are another milestone in delivering significant additional value
to both sets of shareholders and our joint venture partners in the Pilbara.
Current period net operating cash flow was impacted by increased working
capital on the back of recovering demand and prices, and together with the
large capital expenditure program, resulted in net gearing climbing slightly
to 15.1 per cent. Our strong balance sheet continues to give us significant
flexibility to progressively grow production capacity, return to
shareholders and opportunistically consider acquisitions.
Outlook
Economic Outlook
Global economic conditions have improved over the past six months as the
United States and Europe lifted industrial output from previously depressed
levels and China returned to double digit growth. Government stimulus
measures appear to have supported the restocking activities in the developed
economies and a gradual return to normalised global trade. For example,
inventory movements accounted for 3.4 per cent of the 5.7 per cent US real
GDP annualised growth rate in the December 2009 quarter. In China, fixed
asset investment continues to be a driving force behind the recovery. India
has proven resilient, with industrial production surging towards the end of
calendar year 2009.
Despite this positive momentum, we remain cautious about the speed and
strength of the global economic recovery across the developed world. It
appears that stimulus measures that supported the recovery have not fully
addressed structural issues such as weak labour markets and excess
production capacity in developed economies. A further variable will be the
impact of any measures to control loan growth in China. It is evident that
in the short term, the Chinese Government will focus on containing asset
inflation.
Notwithstanding our caution in the short term, over the long term we
continue to expect emerging economies` growth to strongly outperform the
developed economies as they follow a path of continued urbanisation and
industrialisation.
Commodities Outlook
During the December 2009 half-year there was a strong price recovery from a
low base across the commodity suite. This was mainly driven by rapid
economic recovery in China and restocking across the developed economies.
Commodity prices were also supported by a weak US dollar relative to
currencies of resource producing countries.
Physical demand for bulk commodities continues to be very strong in most
regions following the aggressive de-stocking during the economic downturn.
However real end demand for metals still appears sporadic.
Commodity markets will continue to be largely dependent on Chinese and
Indian demand. In the short term, it is critical to monitor the pace of
monetary tightening and the rate of loan growth for commodity intensive
sectors in China. We do not expect China to stop lending, however, reduced
credit liquidity in key segments of the commodity market may have a flow-on
impact on prices. Real commodity demand in the developed economies remains
restrained and the impact of the gradual withdrawal of government stimulus
will be a key driver.
In the long term we continue to expect strong growth in demand for our
commodities. Any effects on commodity demand due to potential weakness in
developed countries are likely to be offset over time by continuing growth
as China and India urbanise and industrialise. However, with reduced capital
investment in new mining capacity since 2007, supply may struggle to keep
pace with demand in the medium and longer term.
Growth Projects
During the period, we completed three major growth projects (aluminium, iron
ore and energy coal) and approved one major growth project (energy coal).
Subsequent to the period end we announced the approval of US$2.7 billion of
capital investments, including one project (base metals) in execution and
pre-approval capital expenditure for a further four projects (iron ore, two
in metallurgical coal and potash).
Completed projects
Customer Project Capacity Capital expenditure Date of initial
Sector (i) (US$M) (i) production (ii)
Group
Budget Actual(iii) Target Actual
Aluminium Alumar 2 million 900(iv) 861 Q2 2009(iv) Q3 2009
Refinery tonnes per
Expansion annum of
(Brazil) additional
BHP alumina
Billiton - capacity
36%
Iron Ore WA Iron Ore 26 million 1,850 1,850 H1 2010 H2 2009
Rapid tonnes per
Growth annum of
Project 4 additional
(Australia) iron ore
BHP system
Billiton - capacity
86.2%
Energy Klipspruit 1.8 450 400 H2 2009 H2 2009
Coal (South million
Africa) tonnes per
BHP annum
Billiton - export and
100% 2.1
million
tonnes per
annum
domestic
thermal
coal
3,200 3,111
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
(iii) Number subject to finalisation. For projects where capital expenditure
is required after initial production, the costs represent the estimated
total capital expenditure.
(iv) As per revised budget and schedule.
Projects currently under development (approved in prior years)
Customer Project Capacity (i) Budgeted Target
Sector capital date for
Group expenditure initial
(US$M) (i) production
(ii)
Petroleum Pyrenees 96,000 barrels of oil 1,200 H1 2010
(Australia) and 60 million cubic
BHP Billiton - feet of gas per day
71.43%
Angostura Gas 280 million cubic 180 H1 2011
Phase II feet of gas per day
(Trinidad and
Tobago)
BHP Billiton -
45%
Bass Strait 10,000 barrels of 500 2011
Kipper (iii) condensate per day
(Australia) and processing
BHP Billiton - capacity of 80
32.5% - 50% million cubic feet
gas per day
Bass Strait 11,000 barrels of 625 2011
Turrum condensate per day
(Australia) and processing
BHP Billiton - capacity of 200
50% million cubic feet of
gas per day
North West Replacement vessel 245 2011
Shelf CWLH with capacity of
Extension 60,000 barrels of oil
(Australia) per day
BHP Billiton -
16.67%
North West 2,500 million cubic 850 2012
Shelf North feet of gas per day
Rankin B Gas
Compression
(Australia)
BHP Billiton -
16.67%
Aluminium Worsley 1.1 million tonnes 1,900 H1 2011
Efficiency and per annum of
Growth additional alumina
(Australia) capacity
BHP Billiton -
86%
Iron Ore WA Iron Ore 50 million tonnes per 4,800 H2 2011
Rapid Growth annum additional iron
Project 5 ore system capacity
(Australia)
BHP Billiton -
85%
Energy Douglas- 10 million tonnes per 975 Mid 2010
Coal Middelburg annum export thermal
Optimisation coal and 8.5 million
(South Africa) tonnes per annum
BHP Billiton - domestic thermal coal
100% (sustains current
output)
Newcastle Third 30 million tonnes per 390 2010
Port Project annum export coal
(Australia) loading facility
BHP Billiton -
35.5%
11,665
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
(iii) Schedule and budget under review following advice from operator.
Projects approved during the December 2009 half-year
Customer Project Capacity (i) Budgeted Target
Sector capital date for
Group expenditure initial
(US$M) (i) production
(ii)
Energy MAC20 Project Increases saleable 260 H1 2011
Coal (Australia) thermal coal
BHP Billiton - production by
100% approximately 3.5
million tonnes per
annum
260
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
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 that excludes any exceptional items. The
differences between Underlying EBIT and Profit from operations are set out
in the following table:
Half-year ended 31 December 2009 2008
US$M US$M
Underlying EBIT 8,502 11,899
Exceptional items (before taxation) 618 (4,675)
Profit from operations 9,120 7,224
Refer to page 8 for further details of the Exceptional items.
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT for the half-year ended
December 2009 compared with the half-year ended December 2008:
US$M US$M
Underlying EBIT for the half-year ended 11,899
31 December 2008
Change in volumes:
Increase in volumes 1,182
Decrease in volumes (113)
1,069
Net price impact:
Change in sales prices (4,695)
Price-linked costs 476
(4,219)
Change in costs:
Costs (rate and usage) 745
Exchange rates (1,543)
Inflation on costs (200)
(998)
Asset sales 113
Ceased and sold operations 269
New and acquired operations 350
Exploration and business development 350
Other (331)
Underlying EBIT for the half-year ended 8,502
31 December 2009
Volumes
A focus on the optimisation and growth of our portfolio of low-cost, world
class operations has positioned us to capitalise on improved demand.
Underlying EBIT increased by US$1,069 million due to stronger sales volumes,
with record half-year sales achieved for Petroleum, Iron Ore and coking
coal. All CSGs delivered higher sales volumes, with the exception of Base
Metals and Aluminium.
Iron Ore achieved another record production and shipments for the half year,
as operations benefited from the Western Australia Iron Ore Rapid Growth
Project 4 (RGP4) infrastructure improvements and Samarco (Brazil) operating
at full capacity. Higher Manganese and Metallurgical Coal sales volumes,
which were previously impacted by significant demand contraction, increased
Underlying EBIT by US$746 million.
Despite stronger production from Escondida (Chile), Base Metals production
was impacted by the Clark Shaft outage at Olympic Dam (Australia) and
industrial action at Spence (Chile). The Clark Shaft accounts for
approximately 75 per cent of Olympic Dam`s ore hoisting capacity. The
recommissioning of Olympic Dam`s Clark Shaft is expected to commence in
March 2010. The ramp up to full capacity is expected to be achieved by the
end of the June 2010 quarter.
Prices
Underlying EBIT decreased by US$4,695 million (excluding the impact of newly
commissioned projects) due to changes in commodity prices. Lower average
realised prices for commodities such as metallurgical coal, iron ore,
manganese, and energy products reduced Underlying EBIT by US$7,885 million.
Despite the prices improving from June 2009, the average realised prices
were generally lower than the December 2008 half-year. This decrease was
partially offset by higher average realised prices for Base Metals and
nickel, which increased Underlying EBIT by US$3,190 million.
Price-linked costs were US$476 million lower than the corresponding period
mainly due to reduced royalty costs.
Costs
Operating costs, excluding the impact of exchange rates and inflation, were
US$745 million lower than the corresponding period. We have lowered our cost
base and increased the efficiency of our operations, particularly in Nickel
West (Australia). We have also successfully negotiated lower contract prices
for some of our key supply contracts. Lower raw materials prices,
particularly for energy and fuel, decreased costs by US$381 million.
This was partially offset by higher labour and contractor costs. The
increase was mainly driven by higher labour costs, including one-off bonus
payments, which reduced South American Base Metals assets` earnings by US$93
million.
Exchange rates
The US dollar was weaker against all major operating currencies, which
resulted in US$1,543 million unfavourable impact to Underlying EBIT. The
Australian operations` Underlying EBIT decreased by US$1,292 million. The
South African rand also negatively impacted Underlying EBIT by a further
US$182 million.
The following exchange rates against the US dollar have been applied:
Half-year Half-year
ended ended 31 30 June 31
31 31 December 2009 December
December December 2009 Closing 2008
2009 2008 Closing Closing
Average Average
Australian 0.87 0.78 0.90 0.81 0.69
dollar (i)
Chilean peso 532 578 507 530 642
Colombian peso 1,991 2,092 2,043 2,159 2,249
Brazilian real 1.81 1.96 1.74 1.95 2.33
South African 7.65 8.83 7.40 7.82 9.39
rand
(i) Displayed as US$ 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$200 million. The inflationary
pressures were most evident in Australia, South Africa and South America.
Asset Sales
The profit on the sale of assets increased Underlying EBIT by US$113
million. This was mainly due to the profit on the dissolution of the Douglas
Tavistock Joint Venture arrangement (South Africa).
Ceased and sold operations
Lower operational losses for Yabulu and Ravensthorpe and the Suriname
alumina refinery resulted in a favourable impact of US$445 million. This was
partly offset by the negative impact of the currency revaluation of the
rehabilitation and closure provisions for closed operations, resulted in a
net positive variance of US$269 million.
New and acquired operations
New greenfield operations will remain in new and acquired variance until
there is a full year comparison. Shenzi (USA), which was commissioned in the
prior year, contributed to a US$350 million increase in Underlying EBIT.
Exploration and business development
Exploration expense for the half-year was US$294 million, a decrease of
US$202 million. The main activities for minerals exploration remained in
potash (Canada), nickel targets in Western Australia and brownfield
exploration for assets such as Western Australia Iron Ore, Escondida, Spence
and Queensland Coal (Australia). The main expenditure for the Petroleum CSG
was on targets in Gulf of Mexico (USA), Malaysia, Colombia, Canada and
Philippines. Expenditure on business development was US$148 million lower
than the corresponding period. This was mainly due to reduced activities for
earlier stage developments in the Base Metals and Stainless Steel Materials
CSGs.
We are committed to capturing value accretive opportunities through various
exploration activities. Despite the half-year decrease in exploration
expense, we expect the gross exploration spending for the 2010 financial
year will be approximately US$1,300 million. This includes a revised
Petroleum full year exploration budget, which increased from US$600 million
to US$800 million.
Other
Other items decreased Underlying EBIT by US$331 million, predominantly due
to the contribution of third party product sales and unrealised losses on
derivative contracts.
Net finance costs
Net finance costs decreased to US$232 million, from US$332 million in the
corresponding period. This was driven predominantly by higher capitalised
interest, the revaluation of debt related derivatives and foreign exchange
impacts, partly offset by higher interest charges due to higher debt levels.
Taxation expense
The taxation expense including tax on exceptional items was US$2,682
million. This represents an effective rate of 30.2 per cent on profit before
tax including exceptional items of US$8,888 million. Excluding the impacts
of exceptional items, the taxation expense was US$2,497 million.
Exchange rate movements decreased the taxation expense by US$306 million.
The stronger Australian dollar against the US dollar has significantly
increased the Australian deferred tax assets for future tax depreciation
since 30 June 2009. This was partly offset by the revaluation of local
currency tax liabilities due to the weaker US dollar. Royalty-related
taxation represents an effective rate of 2.1 per cent for the current
period. Excluding the impacts of royalty-related taxation, the impact of
exchange rate movements included in taxation expense and tax on exceptional
items, the underlying effective rate was 31.6 per cent.
Exceptional Items
On 9 December 2009, the Group announced it had signed an agreement to sell
the Ravensthorpe Nickel Operation. As a result of this agreement, impairment
charges recognised as exceptional items in the financial year ended 30 June
2009 have been partially reversed. The assets and liabilities of the
operation are classified as held for sale as at 31 December 2009.
Half-year ended 31 December Gross Tax Net
2009 US$M US$M US$M
Exceptional items by category
Reversal of impairment charge 618 (185) 433
relating to the suspension of
Ravensthorpe nickel operations
618 (185) 433
Cash Flows
Net operating cash flow after interest and tax decreased by 56.3 per cent to
US$5,716 million. This was primarily attributable to decreased cash
generated from operating activities, the favourable impact on prior period
cash flows from the collection of trade receivables, partly offset by other
working capital movements.
Capital and exploration expenditure totalled US$5,045 million for the
period. Expenditure on major growth projects was US$3,834 million, including
US$1,011 million on Petroleum projects and US$2,823 million on Minerals
projects. Capital expenditure on sustaining and other items was US$772
million. Exploration expenditure was US$439 million, including US$144
million which has been capitalised.
Financing cash flows include net debt repayments of US$340 million and
dividend payments of US$2,282 million. Net debt, comprising cash and
interest-bearing liabilities, was US$7,915 million, an increase of US$2,329
million, or 41.7 per cent, compared to 30 June 2009. Gearing, which is the
ratio of net debt to net debt plus net assets, was 15.1 per cent at 31
December 2009, compared with 12.1 per cent at 30 June 2009.
Dividend
BHP Billiton maintains a progressive dividend policy and our Board today
declared an interim dividend of 42 US cents per share, an increase of 1 US
cent per share.
The dividend to be paid by BHP Billiton Limited will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, BHP Billiton Limited
dividends are mainly paid in Australian dollars, and BHP Billiton Plc
dividends are mainly paid in pounds sterling and South African rand to
shareholders on the UK section and the South African section of the
register, respectively. Currency conversions will be based on the foreign
currency exchange rates on the Record Date, except for the conversion into
South African rand, which will take place on the last day to trade on JSE
Limited, being 26 February 2010. Please note that all currency conversion
elections must be registered by the Record Date, being 5 March 2010. Any
currency conversion elections made after this date will not apply to this
dividend.
The timetable in respect of this dividend will be:
Last day to trade cum dividend on JSE Limited and 26 February 2010
currency conversion into rand
Ex-dividend Australian Securities Exchange (ASX) 1 March 2010
and JSE Limited (JSE)
Ex-dividend London Stock Exchange (LSE) and New 3 March 2010
York Stock Exchange (NYSE)
Record date (including currency conversion and 5 March 2010
currency election dates, except for rand)
Payment date 23 March 2010
American Depositary Shares (ADSs) each represent two fully paid ordinary
shares and receive dividends accordingly.
BHP Billiton Plc shareholders registered on the South African section of the
register will not be able to dematerialise or rematerialise their
shareholdings between the dates of 1 and 5 March 2010, both dates inclusive.
Transfers between the UK and South African sections of the register will not
be permitted between the dates of 26 February and 5 March 2010, both dates
inclusive.
Details of the currency exchange rates applicable for the dividend will be
announced to the relevant stock exchanges following conversion and will
appear on the Group`s website.
Debt Management and Liquidity
No long term debt securities were issued in the debt capital markets during
the half-year ended 31 December 2009. The Group has access to the US
commercial paper market and an undrawn US$3.0 billion Revolving Credit
Facility, which expires in October 2011. We have a strong liquidity position
with US$8.4 billion of cash on hand, and is supported by our solid A credit
rating.
Corporate Governance
On 4 August 2009, the Board announced that Mr Jac Nasser will succeed Mr Don
Argus as Chairman when Mr Argus retires as Chairman and a Non-executive
Director in early 2010.
On 24 November 2009, the Board announced the resignation of Dr David Morgan
as a Director with effect from 24 November 2009.
On 29 January 2010, the Board announced the resignations of Mr Paul Anderson
and Dr E Gail de Planque as Non-executive Directors with effect from 31
January 2010 and the appointments of Mr Malcolm Broomhead and Ms Carolyn
Hewson as Non-executive Directors with effect from 31 March 2010.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the half-year ended 31 December 2009 and the corresponding
prior year.
Half-year ended 31 December Revenue Underlying EBIT (i)
(US$M) 2009 2008 Change 2009 2008 Change
% %
Petroleum 4,177 4,212 (0.8%) 2,326 2,675 (13.0%)
Aluminium 2,004 2,518 (20.4%) 154 289 (46.7%)
Base Metals 5,471 3,286 66.5% 2,462 (111) N/A
Diamonds and Specialty 566 457 23.9% 170 79 115.2%
Products
Stainless Steel Materials 1,655 1,101 50.3% 200 (752) N/A
Iron Ore 4,478 6,020 (25.6%) 2,091 4,143 (49.5%)
Manganese 888 1,916 (53.7%) 190 1,245 (84.7%)
Metallurgical Coal 2,715 4,913 (44.7%) 772 3,123 (75.3%)
Energy Coal 2,142 4,363 (50.9%) 332 1,072 (69.0%)
Group and unallocated 505 1,106 N/A (195) 136 N/A
items(ii)
Less: inter-segment revenue (25) (112) N/A - - N/A
BHP Billiton Group 24,576 29,780 (17.5%) 8,502 11,899 (28.5%)
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT is reconciled to Profit from operations on
page 5.
(ii) Includes consolidation adjustments, unallocated items and external
sales from the Group`s freight, transport and logistics operations.
Petroleum
Underlying EBIT was US$2,326 million, a decrease of US$349 million, or 13.0
per cent from the corresponding period. The decrease in Underlying EBIT was
mainly due to lower average realised prices. For the December 2009 half-
year, BHP Billiton received an average realised oil price of US$70.46 per
barrel (compared with US$85.22), an average realised natural gas price of
US$3.62 per thousand standard cubic feet (compared with US$3.97) and an
average realised liquefied natural gas price of US$6.70 per thousand
standard cubic feet (compared with US$12.82). Higher non-cash depreciation
and amortisation from new operations also decreased Underlying EBIT.
Strong volume growth particularly in the higher margin liquids delivered in
areas of strong fiscal regimes has partially offset this decline. The
delivery of a series of major growth projects and strong operational
performance has led to another half-year production record.
Gross exploration expenditure was US$200 million, a decrease of US$63
million. This was mostly due to lower seismic activity. Despite the
decrease, gross exploration expenditure is expected to be US$800 million for
the 2010 financial year as we resume a strong exploration program after
several years of focus on drilling development wells.
Aluminium
Underlying EBIT was US$154 million, a decrease of US$135 million or 46.7 per
cent from the corresponding period. Lower prices and premiums for aluminium
had an unfavourable impact of US$302 million. This was partially offset by a
US$19 million positive impact of price-linked costs. The average LME
aluminium price decreased to US$1,907 per tonne (compared with US$2,304 per
tonne). The average realised alumina prices were US$260 per tonne (compared
with US$354 per tonne).
Overall, operating costs were lower mainly due to reduced raw materials and
energy costs. However, this was partially offset by a weaker US dollar
against the Australian dollar and South African rand, and inflationary
pressures in Australia and South Africa.
Underlying EBIT was favourably impacted by US$37 million as a result of the
divestment of Suriname on 31 July 2009.
Base Metals
Underlying EBIT was US$2,462 million, an increase of US$2,573 million from
the corresponding period. A significant increase in average realised prices
favourably impacted Underlying EBIT by US$2,769 million. The average
realised prices for all the key commodities in Base Metals, except uranium,
were higher compared to last half-year.
Stronger production from Escondida due to higher grade and the successful
repair of the Laguna Seca SAG mill also contributed to higher earnings.
Despite stronger production from Escondida, earnings were negatively
impacted by lower copper sales volumes due to the Clark Shaft incident at
Olympic Dam and industrial disruptions at Spence (Chile). The Clark Shaft
accounts for approximately 75 per cent of Olympic Dam`s ore hoisting
capacity. The recommissioning of Olympic Dam`s Clark Shaft is expected to
commence in March 2010. The ramp up to full capacity is expected to be
achieved by the end of the June 2010 quarter.
Cost efficiency improved during the period, driven by lower prices for key
consumables including fuel and energy. The strong cost performance was
partially offset by higher labour costs (including one-off bonus payments)
incurred in the South American operations. Costs were also negatively
impacted by the devaluation of the US dollar and inflation effect in Chile
and Australia.
Provisional pricing of outstanding copper shipments, including the impact of
finalisations, resulted in the average realised price for the reporting
period being US$3.23/lb versus an average LME price of US$2.84/lb. The
average realised price was US$1.71/lb in the corresponding period last year.
The positive impact of provisional pricing and finalisations for copper for
the period was US$467 million. Outstanding copper volumes, subject to the
fair value measurement, amounted to 260,240 tonnes at 31 December 2009.
These were re-valued at a weighted average price of US$3.31/lb.
Diamonds and Specialty Products
Underlying EBIT was US$170 million, an increase of US$91 million or 115.2
per cent compared with the corresponding period. This was mainly due to
higher realised diamond prices and continued improvement in cost
efficiencies at EKATI (Canada). Lower exploration expenditure reflecting
reduced diamonds exploration activities, also increased earnings by US$19
million. Potash exploration expenditure of US$48 million was consistent with
the corresponding period. Higher earnings were partially offset by a
reduction in operating earnings in Titanium Minerals due to lower realised
prices and higher energy costs.
Stainless Steel Materials
Underlying EBIT was US$200 million, an increase of US$952 million compared
with the corresponding period. Higher average LME prices for nickel of
US$7.99/lb (compared to US$6.76/lb) increased Underlying EBIT (net of price-
linked costs) by US$326 million. The negative impact of price-linked costs
was US$94 million.
In addition, proactive portfolio restructuring and improved operational
performance of existing assets also contributed to the strong results. Lower
operational losses from Yabulu and Ravensthorpe increased Underlying EBIT by
US$408 million.
Nickel West delivered record production, following from the furnace rebuild
at the Kalgoorlie Nickel Smelter and concurrent maintenance at the Kwinana
Nickel Refinery (both Australia) in the corresponding period. Costs were
lower across all operations despite the adverse impact of the devaluation in
the US dollar, as a result of cost saving initiatives, production
efficiencies and lower labour costs following restructuring activities.
Iron Ore
Underlying EBIT was US$2,091 million, a decrease of US$2,052 million or 49.5
per cent compared with the corresponding period. This was mainly driven by
lower average realised prices which decreased Underlying EBIT by US$1,858
million. Offsetting this was the positive impact of price-linked costs of
US$52 million.
Western Australia Iron Ore and Samarco operations delivered record half-year
sales volumes. RGP4 project achieved first production ahead of schedule and
within budget. The additional infrastructure from RGP4 contributed to the
record half yearly production for Western Australia Iron Ore operations.
With the completion of RGP4, Western Australia Iron Ore operations have more
than doubled its installed capacity since the accelerated growth program
commenced in 2002. Samarco also set new production records as all three
pellet plants operated at full capacity to meet improved demands.
Overall production costs were well controlled. However, the weaker US dollar
had an adverse impact on costs.
Manganese
Underlying EBIT was US$190 million, a decrease of US$1,055 million or 84.7
per cent compared with the corresponding period. Average realised prices
were significantly lower than the corresponding period, resulting in a
US$1,671 million negative impact on Underlying EBIT. In comparison to the
December 2008 half-year, average realised prices for ore fell by 70.3 per
cent and alloy prices fell by 58.7 per cent. Offsetting this was the
positive impact of price-linked costs of US$185 million.
The decrease in sales price was partially offset by higher sales volumes, as
operations are ramping up production in line with improved demand.
Production for ore is expected to return to normal levels in the March 2010
quarter. Alloy furnaces restarted since the September 2009 quarter are
progressively ramping up and are expected to be at full capacity towards the
end of the March 2010 quarter.
Operational costs were well controlled. However, the weaker US dollar and
inflationary pressures in Australia and South Africa had an adverse impact
on costs.
Metallurgical Coal
Underlying EBIT was US$772 million, a decrease of US$2,351 million or 75.3
per cent from the corresponding period. This decrease was mainly due to the
lower realised prices for hard coking coal (50.0 per cent), weak coking coal
(54.6 per cent), and thermal coal (30.5 per cent). Performance of carryover
volumes from the 2008 contract year (Japanese Financial Year) partly offset
the price decrease.
Record quantities of coking coal were shipped in the half-year in response
to stronger market demand. In addition, operating costs were lower due to
full recovery from rainfall events at Queensland Coal and improved mining
conditions at Illawarra Coal. However, a stronger Australian dollar against
the US dollar had an unfavourable impact of US$391 million on Underlying
EBIT.
Energy Coal
Underlying EBIT was US$332 million, a decrease of US$740 million or 69.0 per
cent from the corresponding period. This was mainly due to lower average
export prices which decreased earnings by US$655 million. The positive
impact of price-linked costs was US$49 million. Underlying EBIT was also
adversely impacted by the weaker US dollar and inflationary pressures in
Australia and South Africa. Excluding the impact of currency and inflation,
operational costs were well controlled.
Higher volumes due to record sales from Hunter Valley Energy Coal and the
profit on the dissolution of the Douglas Tavistock Joint Venture arrangement
partially offset the decrease in earnings.
Group and Unallocated items
Underlying EBIT was a loss of US$195 million. The variance to the
corresponding period was primarily driven by a weaker US dollar impacting
the revaluation of net monetary liabilities.
The following notes explain the terms used throughout this profit release:
(1) Net operating cash flows are after net interest and taxation.
(2) Underlying EBIT margin is calculated net of third party product
activities.
(3) Underlying EBIT is earnings before net finance costs and taxation and
any exceptional items. Underlying EBITDA is Underlying EBIT before
depreciation, impairments and amortisation of US$2,336 million (excluding
exceptional items of US$605 million) for the half-year ended 31 December
2009 and US$2,040 million for the half-year ended 31 December 2008
(excluding exceptional items of US$3,613 million). 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.
(4) Underlying EBIT is used to reflect the underlying performance of BHP
Billiton`s operations. Underlying EBIT is reconciled to Profit from
operations on page 5.
(5) Net interest includes capitalised interest and excludes the effect of
discounting on provisions and other liabilities, net fair value change on
hedged loans, net of hedging derivatives, exchange differences arising on
net debt and return on pension plan assets.
(6) Unless otherwise stated, production volumes exclude suspended and sold
operations.
Forward-looking statements: Certain statements in this release are forward-
looking statements within the meaning of the US Private Securities
Litigation Reform Act of 1995, including statements regarding the cost and
timing of development projects, future production volumes, increases in
production and infrastructure capacity, the identification of additional
mineral Reserves and Resources and project lives and, without limitation,
other statements typically containing words such as "intends," "expects,"
"anticipates," "targets," plans," "estimates" and words of similar import.
These statements are based on current expectations and beliefs and numerous
assumptions regarding BHP Billiton`s present and future business strategies
and the environments in which BHP Billiton will operate in the future and
such assumptions, expectations and beliefs may or may not prove to be
correct and by their nature, are subject to a number of known and unknown
risks and uncertainties that could cause actual results, performance and
achievements to differ materially.
Factors that could cause actual results or performance to differ materially
from those expressed or implied in the forward-looking statements include,
but are not limited to, the risk factors discussed in BHP Billiton`s filings
with the U.S. Securities and Exchange Commission ("SEC") (including in
Annual Reports on Form 20-F) which are available at the SEC`s website
(http://www.sec.gov). BHP Billiton undertakes no duty to update any forward-
looking statements in this release.
This release is for information purposes only and should not be construed as
either an offer to sell or a solicitation of an offer to buy or sell
securities in any jurisdiction.
Further information on BHP Billiton can be found on our website:
www.bhpbilliton.com
Australia
Samantha Evans, Media Relations
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email: Samantha.Evans@bhpbilliton.com
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email: Peter.Ogden@bhpbilliton.com
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email: Kelly.Quirke@bhpbilliton.com
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email: Leng.Y.Lau@bhpbilliton.com
United Kingdom & South Africa
Andre Liebenberg, Investor Relations
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Americas
Scott Espenshade, Investor Relations
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BHP Billiton Limited ABN 49 004 028 077
Registered in Australia
Registered Office: 180 Lonsdale Street
Melbourne Victoria 3000 Australia
Tel +61 1300 55 4757 Fax +61 3 9609 3015
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
Registered Office: Neathouse Place
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A member of the BHP Billiton group which is headquartered in Australia
HALF-YEAR FINANCIAL REPORT
For the half-year ended
31 December 2009
CONTENTS
Half-Year Financial Statements Page
Consolidated Income Statement 17
Consolidated Statement of Comprehensive Income 18
Consolidated Balance Sheet 19
Consolidated Cash Flow Statement 20
Consolidated Statement of Changes in Equity 21
Notes to the Half-Year Financial Statements 24
1. Accounting policies 24
2. Segment reporting 25
3. Exceptional items 29
4. Interests in jointly controlled entities 31
5. Net finance costs 32
6. Taxation 32
7. Earnings per share 33
8. Dividends 33
9. Subsequent events 34
Directors` Report 35
Directors` Declaration of Responsibility 37
Lead Auditor`s Independence Declaration 38
Independent Review Report 39
Consolidated Income Statement
for the half-year ended 31 December 2009
Notes Half-year Half-year Year
ended ended ended
31 31 30 June
December December 2009
2009 2008 US$M
US$M US$M
Revenue
Group production 22,195 25,428 44,113
Third party product 2 2,381 4,352 6,098
Revenue 2 24,576 29,780 50,211
Other income 313 287 589
Expenses excluding net finance (15,769) (22,843) (38,640)
costs
Profit from operations 9,120 7,224 12,160
Comprising:
Group production 9,038 6,932 11,657
Third party product 82 292 503
9,120 7,224 12,160
Financial income 5 111 165 309
Financial expenses 5 (343) (497) (852)
Net finance costs 5 (232) (332) (543)
Profit before taxation 8,888 6,892 11,617
Income tax expense (2,494) (3,537) (4,784)
Royalty related taxation (net of (188) (351) (495)
income tax benefit)
Total taxation expense 6 (2,682) (3,888) (5,279)
Profit after taxation 6,206 3,004 6,338
Profit attributable to non- 71 387 461
controlling interests
Profit attributable to members of 6,135 2,617 5,877
BHP Billiton Group
Earnings per ordinary share (basic) 7 110.3 47.0 105.6
(US cents)
Earnings per ordinary share 7 109.8 47.0 105.4
(diluted) (US cents)
Dividends per ordinary share - paid 8 41.0 41.0 82.0
during the period (US cents)
Dividends per ordinary share - 8 42.0 41.0 82.0
declared in respect of the period
(US cents)
The accompanying notes form part of these half-year financial statements.
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2009
Half-year Half-year Year
ended ended ended
31 31 30 June
December December 2009
2009 2008 US$M
US$M US$M
Profit after taxation 6,206 3,004 6,338
Other comprehensive income
Actuarial gains/(losses) on pension 41 (339) (227)
and medical schemes
Available for sale investments:
Net valuation gains/(losses) taken to 34 (24) 3
equity
Net valuation (gains)/losses - (11) 58
transferred to the income statement
Cash flow hedges:
Gains/(losses) taken to equity 22 694 710
Realised losses transferred to the 2 23 22
income statement
Unrealised gain transferred to the - (48) (48)
income statement
Gains transferred to the initial - (26) (26)
carrying amount of hedged items
Exchange fluctuations on translation 8 70 27
of foreign operations taken to equity
Exchange fluctuations on translation (10) - -
of foreign operations transferred to
the income statement
Tax on other comprehensive income 104 (262) (253)
Other comprehensive income for the 201 77 266
period
Total comprehensive income 6,407 3,081 6,604
Attributable to non-controlling 70 366 458
interests
Attributable to members of BHP 6,337 2,715 6,146
Billiton Group
The accompanying notes form part of these half-year financial statements.
Consolidated Balance Sheet
as at 31 December 2009
31 31 30 June
December December 2009
2009 2008 US$M
US$M US$M
ASSETS
Current assets
Cash and cash equivalents 8,382 7,195 10,833
Trade and other receivables 6,196 5,020 5,153
Other financial assets 644 1,640 763
Inventories 5,056 4,883 4,821
Assets held for sale 629 - 213
Current tax assets 397 622 424
Other 295 327 279
Total current assets 21,599 19,687 22,486
Non-current assets
Trade and other receivables 1,043 590 762
Other financial assets 1,822 1,810 1,543
Inventories 228 182 200
Property, plant and equipment 52,206 46,739 49,032
Intangible assets 670 652 661
Deferred tax assets 3,822 3,416 3,910
Other 163 213 176
Total non-current assets 59,954 53,602 56,284
Total assets 81,553 73,289 78,770
LIABILITIES
Current liabilities
Trade and other payables 5,515 5,533 5,619
Interest bearing liabilities 1,362 2,156 1,094
Liabilities held for sale 301 - 363
Other financial liabilities 488 1,871 705
Current tax payable 588 2,055 1,931
Provisions 1,669 1,286 1,887
Deferred income 283 264 251
Total current liabilities 10,206 13,165 11,850
Non-current liabilities
Trade and other payables 529 196 187
Interest bearing liabilities 14,935 9,207 15,325
Other financial liabilities 91 399 142
Deferred tax liabilities 3,626 3,805 3,038
Provisions 7,134 6,324 7,032
Deferred income 431 544 485
Total non-current liabilities 26,746 20,475 26,209
Total liabilities 36,952 33,640 38,059
Net assets 44,601 39,649 40,711
EQUITY
Share capital - BHP Billiton Limited 1,227 1,227 1,227
Share capital - BHP Billiton Plc 1,116 1,116 1,116
Treasury shares (527) (522) (525)
Reserves 1,498 1,168 1,305
Retained earnings 40,617 35,783 36,831
Total equity attributable to members 43,931 38,772 39,954
of BHP Billiton Group
Non-controlling interests 670 877 757
Total equity 44,601 39,649 40,711
The accompanying notes form part of these half-year financial statements.
Consolidated Cash Flow Statement
for the half-year ended 31 December 2009
Half-year Half-year Year
ended ended ended
31 31 30 June
December December 2009
2009 2008 US$M
US$M US$M
Operating activities
Profit before taxation 8,888 6,892 11,617
Adjustments for:
Non-cash exceptional items (618) 4,225 5,460
Depreciation and amortisation expense 2,318 1,953 3,871
Exploration and evaluation expense 295 496 1,009
(excluding impairment)
Net (gain)/loss on sale of non-current (95) 17 (38)
assets
Impairments of property, plant and 18 87 190
equipment, investments and intangibles
Employee share awards expense 61 89 185
Financial income and expenses 232 332 543
Other (160) (243) (320)
Changes in assets and liabilities:
Trade and other receivables (1,001) 5,367 4,894
Inventories (284) 34 (116)
Trade and other payables (242) (863) (847)
Net other financial assets and liabilities (190) (556) (769)
Provisions and other liabilities (333) (841) (497)
Cash generated from operations 8,889 16,989 25,182
Dividends received 6 15 30
Interest received 61 114 205
Interest paid (205) (261) (519)
Income tax paid (2,646) (3,048) (5,129)
Royalty related taxation paid (389) (715) (906)
Net operating cash flows 5,716 13,094 18,863
Investing activities
Purchases of property, plant and equipment (4,606) (5,345) (9,492)
Exploration expenditure (including amounts (439) (620) (1,243)
expensed)
Purchase of intangibles (39) (6) (141)
Purchase of financial assets (103) (15) (40)
Purchases of, or increased investment in, - (276) (286)
subsidiaries, operations and jointly
controlled entities, net of their cash
Payment on sale of operations (160) (126) (126)
Cash outflows from investing activities (5,347) (6,388) (11,328)
Proceeds from sale of property, plant and 50 26 164
equipment
Proceeds from sale of financial assets 30 57 96
Proceeds or deposits received from sale or 37 - 17
partial sale of subsidiaries, operations and
jointly controlled entities, net of their
cash
Net investing cash flows (5,230) (6,305) (11,051)
Financing activities
Proceeds from ordinary shares 4 20 29
Proceeds from interest bearing liabilities 346 569 7,323
Proceeds from debt related instruments 47 354 354
Repayment of interest bearing liabilities (733) (2,022) (3,748)
Purchase of shares by Employee Share (180) (90) (169)
Ownership Plan Trusts
Dividends paid (2,282) (2,281) (4,563)
Dividends paid to minority interests (169) (205) (406)
Net financing cash flows (2,967) (3,655) (1,180)
Net (decrease)/increase in cash and cash (2,481) 3,134 6,632
equivalents
Cash and cash equivalents, net of 10,831 4,173 4,173
overdrafts, at beginning of period
Effect of foreign currency exchange rate 30 (155) 26
changes on cash and cash equivalents
Cash and cash equivalents, net of 8,380 7,152 10,831
overdrafts, at end of period
The accompanying notes form part of these
half-year financial statements.
Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2009
For the half-year ended 31 Share Share Treasury Reserves
December 2009 capital capital shares
US$M - BHP - BHP
Billiton Billiton
Limited Plc
Balance at the beginning of the 1,227 1,116 (525) 1,305
financial period
Profit after taxation - - - -
Other comprehensive income:
Actuarial gains on pension and - - - -
medical schemes
Net valuation gains on - - - 34
available for sale investments
taken to equity
Gains on cash flow hedges taken - - - 22
to equity
Realised losses on cash flow - - - 2
hedges transferred to the
income statement
Exchange fluctuations on - - - 8
translation of foreign
operations
Exchange fluctuations on - - - (10)
translation of foreign
operations transferred to the
income statement
Tax on other comprehensive - - - 85
income
Total comprehensive income - - - 141
Purchase of shares by ESOP - - (180) -
Trusts net of employee
contributions
Employee share awards exercised - - 178 (46)
following vesting
Accrued employee entitlement - - - 61
for unvested awards
Accrued share options - - - 43
Distribution to option holders - - - (6)
Dividends paid - - - -
Balance at the end of the 1,227 1,116 (527) 1,498
financial period
For the half-year ended Retained Total equity Non- Total
31 December 2009 earnings attributable to controlling equity
US$M members of BHP interests
Billiton Group
Balance at the 36,831 39,954 757 40,711
beginning of the
financial period
Profit after taxation 6,135 6,135 71 6,206
Other comprehensive
income:
Actuarial gains on 42 42 (1) 41
pension and medical
schemes
Net valuation gains on - 34 - 34
available for sale
investments taken to
equity
Gains on cash flow - 22 - 22
hedges taken to equity
Realised losses on cash - 2 - 2
flow hedges transferred
to the income statement
Exchange fluctuations - 8 - 8
on translation of
foreign operations
Exchange fluctuations - (10) - (10)
on translation of
foreign operations
transferred to the
income statement
Tax on other 19 104 - 104
comprehensive income
Total comprehensive 6,196 6,337 70 6,407
income
Purchase of shares by 4 (176) - (176)
ESOP Trusts net of
employee contributions
Employee share awards (132) - - -
exercised following
vesting
Accrued employee - 61 - 61
entitlement for
unvested awards
Accrued share options - 43 16 59
Distribution to option - (6) (4) (10)
holders
Dividends paid (2,282) (2,282) (169) (2,451
)
Balance at the end of 40,617 43,931 670 44,601
the financial period
The accompanying notes form part of these half-year financial statements.
Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2009 (continued)
For the half-year ended 31 Share Share Treasury Reserves
December 2008 capital capital shares
US$M - BHP - BHP
Billiton Billiton
Limited Plc
Balance at the beginning of the 1,227 1,116 (514) 750
financial period
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension and - - - -
medical schemes
Net valuation losses on - - - (24)
available for sale investments
taken to equity
Net valuation gains on - - - (11)
available for sale investments
transferred to the income
statement
Gains on cash flow hedges taken - - - 694
to equity
Realised losses on cash flow - - - 23
hedges transferred to the
income statement
Unrealised gain on cash flow - - - (48)
hedges transferred to the
income statement
Gains on cash flow hedges - - - (26)
transferred to initial carrying
amount of hedged item
Exchange fluctuations on - - - 70
translation of foreign
operations
Tax on other comprehensive - - - (317)
income
Total comprehensive income - - - 361
Purchase of shares by ESOP - - (90) -
Trusts net of employee
contributions
Employee share awards exercised - - 82 (32)
following vesting
Accrued employee entitlement - - - 89
for unvested awards
Dividends paid - - - -
Transaction with owners - - - - -
contributed equity
Balance at the end of the 1,227 1,116 (522) 1,168
financial period
For the half-year ended Retained Total equity Non- Total
31 December 2008 earnings attributable to controlling equity
US$M members of BHP interests
Billiton Group
Balance at the 35,756 38,335 708 39,043
beginning of the
financial period
Profit after taxation 2,617 2,617 387 3,004
Other comprehensive
income:
Actuarial losses on (318) (318) (21) (339)
pension and medical
schemes
Net valuation losses on - (24) - (24)
available for sale
investments taken to
equity
Net valuation gains on - (11) - (11)
available for sale
investments transferred
to the income statement
Gains on cash flow - 694 - 694
hedges taken to equity
Realised losses on cash - 23 - 23
flow hedges transferred
to the income statement
Unrealised gain on cash - (48) - (48)
flow hedges transferred
to the income statement
Gains on cash flow - (26) - (26)
hedges transferred to
initial carrying amount
of hedged item
Exchange fluctuations - 70 - 70
on translation of
foreign operations
Tax on other 55 (262) - (262)
comprehensive income
Total comprehensive 2,354 2,715 366 3,081
income
Purchase of shares by 5 (85) - (85)
ESOP Trusts net of
employee contributions
Employee share awards (50) - - -
exercised following
vesting
Accrued employee - 89 - 89
entitlement for
unvested awards
Dividends paid (2,282) (2,282) (205) (2,487
)
Transaction with owners - - 8 8
- contributed equity
Balance at the end of 35,783 38,772 877 39,649
the financial period
Consolidated Statement of Changes in Equity
for the year ended 31 December 2009 (continued)
For the year ended 30 June Share Share Treasury Reserves
2009 capital capital shares
US$M - BHP - BHP
Billiton Billiton
Limited Plc
Balance at the beginning of 1,227 1,116 (514) 750
the financial period
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension - - - -
and medical schemes
Net valuation gains on - - - 3
available for sale investments
taken to equity
Net valuation gains on - - - 58
available for sale investments
taken to income statement
Gains on cash flow hedges - - - 710
taken to equity
Realised losses on cash flow - - - 22
hedges transferred to the
income statement
Unrealised gain on cash flow - - - (48)
hedges transferred to the
income statement
Gains on cash flow hedges - - - (26)
transferred to initial
carrying amount of hedged item
Exchange fluctuations on - - - 27
translation of foreign
operations
Tax on other comprehensive - - - (342)
income
Total comprehensive income - - - 404
Purchase of shares by ESOP - - (169) -
Trusts net of employee
contributions
Employee share awards - - 158 (34)
exercised following vesting
Accrued employee entitlement - - - 185
for unvested awards
Dividends paid - - - -
Transaction with owners - - - - -
contributed equity
Balance at the end of the 1,227 1,116 (525) 1,305
financial period
For the year ended 30 Retained Total equity Non- Total
June 2009 earnings attributable to controlling equity
US$M members of BHP interests
Billiton Group
Balance at the beginning 35,756 38,335 708 39,043
of the financial period
Profit after taxation 5,877 5,877 461 6,338
Other comprehensive
income:
Actuarial losses on (224) (224) (3) (227)
pension and medical
schemes
Net valuation gains on - 3 - 3
available for sale
investments taken to
equity
Net valuation gains on - 58 - 58
available for sale
investments taken to
income statement
Gains on cash flow - 710 - 710
hedges taken to equity
Realised losses on cash - 22 - 22
flow hedges transferred
to the income statement
Unrealised gain on cash - (48) - (48)
flow hedges transferred
to the income statement
Gains on cash flow - (26) - (26)
hedges transferred to
initial carrying amount
of hedged item
Exchange fluctuations on - 27 - 27
translation of foreign
operations
Tax on other 89 (253) - (253)
comprehensive income
Total comprehensive 5,742 6,146 458 6,604
income
Purchase of shares by 20 (149) - (149)
ESOP Trusts net of
employee contributions
Employee share awards (124) - - -
exercised following
vesting
Accrued employee - 185 - 185
entitlement for unvested
awards
Dividends paid (4,563) (4,563) (406) (4,969)
Transaction with owners - - (3) (3)
- contributed equity
Balance at the end of 36,831 39,954 757 40,711
the financial period
Notes to the Half-Year Financial Statements
1. Accounting policies
This general purpose financial report for the half-year ended 31 December
2009 is unaudited and has been prepared in accordance with IAS 34 `Interim
Financial Reporting` as issued by the International Accounting Standards
Board ("IASB"), IAS 34 `Interim Financial Reporting` as adopted by the EU,
AASB 134 `Interim Financial Reporting` as issued by the Australian
Accounting Standards Board and the Disclosure and Transparency Rules of the
Financial Services Authority in the United Kingdom and the Australian
Corporations Act 2001 as applicable to interim financial reporting.
The half-year financial statements represent a `condensed set of financial
statements` as referred to in the UK Disclosure and Transparency Rules
issued by the Financial Services Authority. Accordingly, they do not
include all of the information required for a full annual report and are to
be read in conjunction with the most recent annual financial report. The
comparative figures for the financial year ended 30 June 2009 are not the
statutory accounts of BHP Billiton for that financial year. Those accounts,
which were prepared under IFRS, have been reported on by the Company`s
auditors and delivered to the registrar of companies. The auditors have
reported on those accounts; their report was unqualified, did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and did not contain statements
under Section 498(2) or (3) of the UK Companies Act 2006.
The half-year financial statements have been prepared on the basis of
accounting policies and methods of computation consistent with those applied
in the 30 June 2009 annual financial statements contained within the Annual
Report of the BHP Billiton Group. As a result of the Group applying IAS 1
Presentation of Financial Statements - Revised from 1 July 2009, the
financial statements include a Consolidated Statement of Comprehensive
Income (which replaces the Consolidated Statement of Recognised Income and
Expenses) and a Consolidated Statement of Changes in Equity.
Rounding of amounts
Amounts in this financial report have, unless otherwise indicated, been
rounded to the nearest million dollars.
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the
same basis as current period figures.
Exchange rates
The following exchange rates relative to the US dollar have been applied in
the financial information:
Average Average Average
Half- Half- Year As at As at As at
year year ended 31 31 30
ended ended 30 June December December June
31 31 2009 2009 2008 2009
December December
2009 2008
Australian 0.87 0.78 0.75 0.90 0.69 0.81
dollar (a)
Brazilian 1.81 1.96 2.08 1.74 2.33 1.95
real
Canadian 1.08 1.12 1.16 1.05 1.22 1.16
dollar
Chilean 532 578 582 507 642 530
peso
Colombian 1,991 2,092 2,205 2,043 2,249 2,159
peso
South 7.65 8.83 9.01 7.40 9.39 7.82
African
rand
Euro 0.69 0.71 0.73 0.70 0.71 0.71
UK pound 0.61 0.58 0.63 0.62 0.69 0.60
sterling
(a)Displayed as US$ to A$1 based on common convention.
2. Segment reporting
The Group operates nine Customer Sector Groups aligned with the commodities
which we extract and market:
Customer Sector Group Principal activities
Petroleum Exploration, development and production of
oil and gas
Aluminium Mining of bauxite, refining of bauxite into
alumina and smelting of alumina into
aluminium metal
Base Metals Mining of copper, silver, lead, zinc,
molybdenum, uranium and gold
Diamonds and Specialty Mining of diamonds and titanium minerals;
Products potash development
Stainless Steel Materials Mining and production of nickel products
Iron Ore Mining of iron ore
Manganese Mining of manganese ore and production of
manganese metal and alloys
Metallurgical Coal Mining of metallurgical coal
Energy Coal Mining of thermal (energy) coal
Group and unallocated items represent Group centre functions and certain
comparative data for divested assets and investments. Exploration and
technology activities are recognised within relevant segments.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Half-year
ended
31 December
2009
Revenue
Group 4,126 1,383 5,076 566 1,470
production
Third party 47 621 395 - 185
product
Rendering of - - - - -
services
Inter-segment 4 - - - -
revenue
Segment 4,177 2,004 5,471 566 1,655
revenue (a)
Underlying 2,326 154 2,462 170 200
EBIT (b)
Net finance
costs
Exceptional
items
Profit before
taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half-year
ended
31 December
2009
Revenue
Group 4,390 882 2,686 1,555 - 22,134
production
Third party 35 6 - 587 505 2,381
product
Rendering 32 - 29 - - 61
of services
Inter- 21 - - - (25) -
segment
revenue
Segment 4,478 888 2,715 2,142 480 24,576
revenue (a)
Underlying 2,091 190 772 332 (195) 8,502
EBIT (b)
Net finance (232)
costs
Exceptional 618
items
Profit 8,888
before
taxation
(a) Revenue not reported in reportable segments reflects sales of freight
and fuel to third parties.
(b) Underlying EBIT is earnings before net finance costs and taxation and
any exceptional items.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Half-year
ended
31 December
2008
Revenue
Group 4,032 1,947 2,987 457 980
production
Third party 127 571 298 - 82
product
Rendering of 2 - - - -
services
Inter-segment 51 - 1 - 39
revenue
Segment 4,212 2,518 3,286 457 1,101
revenue
Underlying 2,675 289 (111) 79 (752)
EBIT
Net finance
costs
Exceptional
items
Profit before
taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half-year
ended
31 December
2008
Revenue
Group 5,902 1,863 4,854 2,321 1 25,344
production
Third party 62 53 18 2,042 1,099 4,352
product
Rendering 35 - 41 - 6 84
of services
Inter- 21 - - - (112) -
segment
revenue
Segment 6,020 1,916 4,913 4,363 994 29,780
revenue
Underlying 4,143 1,245 3,123 1,072 136 11,899
EBIT
Net finance (332)
costs
Exceptional (4,675)
items
Profit 6,892
before
taxation
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Year ended 30
June 2009
Revenue
Group 6,924 3,219 6,616 896 2,202
production
Third party 192 932 488 - 112
product
Rendering of 6 - - - -
services
Inter-segment 89 - 1 - 41
revenue
Segment 7,211 4,151 7,105 896 2,355
revenue
Underlying 4,085 192 1,292 145 (854)
EBIT
Net finance
costs
Exceptional
items
Profit before
taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended
30 June
2009
Revenue
Group 9,815 2,473 7,988 3,830 - 43,963
production
Third party 132 63 18 2,694 1,467 6,098
product
Rendering 61 - 81 - 2 150
of services
Inter- 40 - - - (171) -
segment
revenue
Segment 10,04 2,536 8,087 6,524 1,298 50,211
revenue 8
Underlying 6,229 1,349 4,711 1,460 (395) 18,214
EBIT
Net finance (543)
costs
Exceptional (6,054)
items
Profit 11,617
before
taxation
3. Exceptional items
Exceptional items are those items where their nature or amount is considered
material to the financial report. Such items included within the Group
profit for the period are detailed below.
Half-year ended 31 December 2009 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Reversal of impairment charge 618 (185) 433
relating to the suspension of
Ravensthorpe nickel operations
618 (185) 433
Reversal of impairment charge relating to the suspension of Ravensthorpe
nickel operations:
On 9 December 2009, the Group announced it had signed an agreement to sell
the Ravensthorpe Nickel Operation (Australia). As a result of this
agreement, impairment charges recognised as exceptional items in the
financial year ended 30 June 2009 have been partially reversed. The assets
and liabilities of the operation are classified as held for sale as at 31
December 2009.
Assets held for sale:
The assets and liabilities of Ravensthorpe, comprising inventory of US$30
million, property, plant and equipment of US$599 million, closure and
rehabilitation provisions of US$241 million and other working capital
liabilities of US$60 million, have been classified as held for sale at 31
December 2009.
In the financial year ended 30 June 2009, the assets and liabilities of
Yabulu and Suriname comprising inventory of US$131 million, property, plant
and equipment of US$55 million, other working capital assets of US$27
million, closure and rehabilitation provisions of US$260 million and working
capital liabilities US$103 million were classified as held for sale. The
sales transactions were completed during the half-year ended 31 December
2009.
Half-year ended 31 December Gross Tax Net
2008 US$M US$M US$M
Exceptional items by category
Suspension of Ravensthorpe (3,361) 1,008 (2,353)
nickel operations
Impairment of other operations (356) (60) (416)
Newcastle steelworks (508) 152 (356)
rehabilitation
Lapsed offers for Rio Tinto (450) 64 (386)
(4,675) 1,164 (3,511)
Suspension of Ravensthorpe nickel operations:
On 21 January 2009 the Group announced the suspension of operations at
Ravensthorpe Nickel Operations and as a consequence stopped the processing
of the mixed nickel cobalt hydroxide product at Yabulu (Australia). As a
result, an impairment charge and increased provisions for rehabilitation of
US$3,361 million (US$1,008 million tax benefit) were recognised for the half-
year ended 31 December 2008.
Impairment of other operations:
As part of the Group`s regular review of assets whose values may be
impaired, a total charge of US$356 million (US$60 million tax charge
including derecognition of tax benefits) was recorded primarily in relation
to the withdrawal from Suriname operations, suspension of copper sulphide
mining at Pinto Valley (US) and write down of the Corridor Sands minerals
sands resource (Mozambique).
3. Exceptional Items (continued)
Newcastle steelworks rehabilitation:
The Group recognised a charge against profits of US$508 million (US$152
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 estimated volume of sediment in the
Hunter River requiring remediation and treatment, and increases in treatment
costs.
Lapsed offers for Rio Tinto:
The Group`s offers for Rio Tinto lapsed on 27 November 2008 following the
Board`s decision that it no longer believed that completion of the offers
was in the best interests of BHP Billiton shareholders. The Group incurred
fees associated with the US$55 billion debt facility (US$156 million cost,
US$5 million tax benefit), investment bankers`, lawyers` and accountants
fees, printing expenses and other charges (US$294 million cost, US$59
million tax benefit) in progressing this matter over the eighteen months up
to the lapsing of the offers which have been expensed in the half-year ended
31 December 2008.
Year ended 30 June 2009 Gross Tax Net
US$M US$M US$M
Exceptional items by
category
Suspension of Ravensthorpe (3,615) 1,076 (2,539)
nickel operations
Announced sale of Yabulu (510) (175) (685)
refinery
Withdrawal or sale of other (665) (23) (688)
operations
Deferral of projects and (306) 86 (220)
restructuring of operations
Newcastle steelworks (508) 152 (356)
rehabilitation
Lapsed offers for Rio Tinto (450) 93 (357)
(6,054) 1,209 (4,845)
Suspension of Ravensthorpe nickel operations:
On 21 January 2009 the Group announced the suspension of operations at
Ravensthorpe nickel operations and as a consequence stopped the processing
of the mixed nickel cobalt hydroxide product at Yabulu. As a result, charges
relating to impairment, increased provisions for contract cancellation,
redundancy and other closure costs of US$3,615 million (US$1,076 million tax
benefit) were recognised. This exceptional item does not include the loss
from operations of Ravensthorpe nickel operations of US$173 million.
Announced sale of Yabulu refinery:
On 3 July 2009 the Group announced the sale of the Yabulu nickel operations.
As a result, impairment charges of US$510 million (US$nil tax benefit) were
recognised in addition to those recognised on suspension of the Ravensthorpe
nickel operations. As a result of the sale, deferred tax assets of US$175
million are no longer expected to be realised by the Group and were
recognised as a charge to income tax expense. The remaining assets and
liabilities of the Yabulu operations have been classified as held for sale
as at 30 June 2009.
Withdrawal or sale of other operations:
As part of the Group`s regular review of the long term viability of
operations, a total charge of US$665 million (US$23 million tax expense) was
recognised primarily in relation to the decisions to cease development of
the Maruwai Haju trial mine (Indonesia), sell the Suriname operations,
suspend copper sulphide mining operations at Pinto Valley (US) and cease the
pre-feasibility study at Corridor Sands (Mozambique). The remaining assets
and liabilities of the Suriname operations have been classified as held for
sale as at 30 June 2009.
Deferral of projects and restructuring of operations:
As part of the Group`s regular review of the long term viability of
continuing operations, a total charge of US$306 million (US$86 million tax
benefit) was recognised primarily in relation to the deferral of expansions
at the Nickel West operations (Australia), deferral of the Guinea Alumina
project (Guinea) and the restructuring of the Bayside Aluminium Casthouse
operations (South Africa).
Newcastle steelworks rehabilitation:
The Group recognised a charge of US$508 million (US$152 million tax benefit)
for additional rehabilitation obligations in respect of former operations at
the Newcastle steelworks (Australia). The increase in obligations relate to
changes in the estimated volume of sediment in the Hunter River requiring
remediation and treatment, and increases in estimated treatment costs.
Lapsed offers for Rio Tinto:
The Group`s offers for Rio Tinto lapsed on 27 November 2008 following the
Board`s decision that it no longer believed that completion of the offers
was in the best interests of BHP Billiton shareholders. The Group incurred
fees associated with the US$55 billion debt facility (US$156 million cost,
US$31 million tax benefit), investment bankers`, lawyers` and accountants
fees, printing expenses and other charges (US$294 million cost, US$62
million tax benefit) in progressing this matter over the eighteen months up
to the lapsing of the offers which have been expensed in the year ended 30
June 2009.
4. Interests in jointly controlled entities
Major Ownership interest at BHP Contribution to profit after
shareholdings in Billiton Group reporting taxation
jointly controlled date(a)
entities
Half- Half-
year year Year
31 31 30 ended ended ended
December December June 31 31 30 June
2009 2008 2009 December December 2009
% % % 2009 2008 US$M
US$M US$M
Mozal SARL 47.10 47.10 47.10 18 135 84
Compa?ia Minera 33.75 33.75 33.75 239 18 185
Antamina SA
Minera Escondida 57.50 57.50 57.50 1,236 (177) 422
Limitada
Samarco Mineracao 50.00 50.00 50.00 126 320 340
SA
Carbones del 33.33 33.33 33.33 83 136 243
Cerrej?n LLC
Other(b) 12 29 159
Total 1,714 461 1,433
(a) The ownership interest at the Group`s and the jointly controlled
entity`s reporting date are the same. When the annual financial reporting
date is different to the Group`s, financial information is obtained as at 31
December in order to report on a basis consistent with the Group`s reporting
date.
(b) Includes immaterial jointly controlled entities and the Group`s
effective interest in the Richards Bay Minerals joint venture of 37.76 per
cent (31 December 2008: 50 per cent; 30 June 2009: 50 per cent).
5. Net finance costs
Half-year Half-year Year ended
ended ended 30 June
31 31 2009
December December US$M
2009 2008
US$M US$M
Financial expenses
Interest on bank loans and 11 21 47
overdrafts
Interest on all other 302 239 527
borrowings
Finance lease and hire 7 8 15
purchase interest
Dividends on redeemable - - 1
preference shares
Discounting on provisions and 182 152 315
other liabilities
Discounting on pension and 63 67 132
medical benefit entitlements
Interest capitalised (a) (154) (64) (149)
Fair value change on hedged 88 (128) 390
loans
Fair value change on hedging (146) 155 (377)
derivatives
Exchange variations on net (10) 47 (49)
debt
343 497 852
Financial income
Interest income (63) (107) (198)
Expected return on pension (48) (58) (111)
scheme assets
(111) (165) (309)
Net finance costs 232 332 543
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where
financed through general borrowings, at a capitalisation rate representing
the average interest rate on such borrowings. For the half-year ended 31
December 2009 the capitalisation rate was 3.8 per cent (31 December 2008:
3.9 per cent; 30 June 2009: 4.25 per cent).
6. Taxation
Half-year Half-year Year ended
ended ended 30 June
31 December 31 December 2009
2009 2008 US$M
US$M US$M
Taxation expense including
royalty related taxation
UK taxation expense 67 428 319
Australian taxation expense 1,273 2,288 3,158
Overseas taxation expense 1,342 1,172 1,802
Total taxation expense 2,682 3,888 5,279
Total taxation expense including exceptional items was US$2,682 million,
representing an effective rate of 30.2 per cent (31 December 2008: 56.4 per
cent, 30 June 2009: 45.4 per cent). Excluding the impacts of exceptional
items the taxation expense was US$2,497 million (31 December 2008: US$5,052
million; 30 June 2009: US$6,488 million).
Exchange rate movements decreased taxation expense by US$306 million
(31 December 2008: increased taxation expense by US$1,163 million, 30 June
2009: increased taxation expense by US$444 million). The stronger Australian
dollar against the US dollar has significantly increased the Australian
deferred tax assets for future tax depreciation since 30 June 2009. This was
partly offset by the revaluation of local currency tax liabilities due to
the weaker US dollar. Royalty-related taxation represents an effective rate
of 2.1 per cent for the current period (31 December 2008: 5.1 per cent, 30
June 2009: 4.3 per cent).
Excluding the impacts of royalty-related taxation, the impact of exchange
rate movements and tax on exceptional items the underlying effective rate
was 31.6 per cent (31 December 2008: 30.6 per cent, 30 June 2009: 31.4 per
cent).
7. Earnings per share
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
Basic earnings per ordinary share (US 110.3 47.0 105.6
cents)
Diluted earnings per ordinary share (US 109.8 47.0 105.4
cents)
Basic earnings per American Depositary 220.6 94.0 211.2
Share (ADS) (US cents) (a)
Diluted earnings per American Depositary 219.6 94.0 210.8
Share (ADS) (US cents) (a)
Basic earnings (US$M) 6,135 2,617 5,877
Diluted earnings (US$M) (b) 6,147 2,627 5,899
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:
Weighted average number of shares Half-year Half-year Year
ended ended ended
31 31 December 30 June
December 2008 2009
2009 Million Million
Million
Basic earnings per ordinary share 5,564 5,565 5,565
denominator
Shares and options contingently 34 21 33
issuable under employee share
ownership plans
Diluted earnings per ordinary share 5,598 5,586 5,598
denominator
(a) Each American Depository Share (ADS) represents two ordinary shares.
(b) Diluted earnings are calculated after adding back dividend equivalent
payments of US$12 million (31 December 2008: US$10 million; 30 June 2009:
US$22 million) that would not be made if potential ordinary shares were
converted to fully paid.
8. Dividends
Half-year Half-year Year
ended ended ended
31 December 31 30 June
2009 December 2009
US$M 2008 US$M
US$M
Dividends paid during the period
BHP Billiton Limited 1,377 1,377 2,754
BHP Billiton Plc - Ordinary shares 905 905 1,809
- Preference shares(a) - - -
2,282 2,282 4,563
Dividends declared in respect of the
period
BHP Billiton Limited 1,410 1,377 2,754
BHP Billiton Plc - Ordinary shares 927 905 1,809
- Preference shares(a) - - -
2,337 2,282 4,563
(a) 5.5 per cent dividend on 50,000 preference shares of ?1 each declared
and paid annually (31 December 2008: 5.5 per cent; 30 June 2009: 5.5 per
cent).
Half-year Half-year Year
ended ended ended
31 December 31 30 June
2009 December 2009
US cents 2008 US
US cents cents
Dividends paid during the period (per
share)
Prior year final dividend 41.0 41.0 41.0
Interim dividend N/A N/A 41.0
41.0 41.0 82.0
Dividends declared in respect of the
period (per share)
Interim dividend 42.0 41.0 41.0
Final dividend N/A N/A 41.0
42.0 41.0 82.0
Dividends are declared after period end in the announcement of the results
for the period. Interim dividends are declared in February and paid in
March. Final dividends are declared in August and paid in September.
Dividends declared are not recorded as a liability at the end of the period
to which they relate. Subsequent to half-year end, on 10 February 2010, BHP
Billiton declared an interim dividend of 42.0 US cents per share (US$2,337
million), which will be paid on 23 March 2010.
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
9. Subsequent events
As at 10 February 2010, all conditions precedent to the sale of the
Ravensthorpe Nickel Operation (refer Note 3) have been satisfied, enabling
completion of the sale to occur. The assets and liabilities of the operation
are classified as held for sale as at 31 December 2009.
Other than the matters outlined above, no matters or circumstances have
arisen since the end of the financial 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.
Directors` Report
The Directors present their report together with the half-year financial
statements for the half-year ended 31 December 2009 and the auditor`s review
report thereon.
Review of Operations
A detailed review of the Group`s operations, the results of those operations
during the half-year ended 31 December 2009 and likely future developments
are given on page 1 to 13. The Review of Operations has been incorporated
into, and forms part of, this Directors` Report.
Principal Risks and Uncertainties
Because of the international scope of the Group`s operations and the
industries in which it is engaged, there are a number of risk factors and
uncertainties which could have an effect on the Group`s results and
operations. Material risks that could impact on the Group`s performance
include those referred to in the `Outlook` section as well as:
*Fluctuations in commodity *Fluctuations in currency
prices exchange rates
*Failure to discover new *Influence of China and impact
reserves, maintain or enhance of a slowdown in consumption
existing reserves or develop new
operations
*Actions by governments or *Inability to successfully
political events in the integrate acquired businesses
countries in which we operate
*Inability to recover *Non-compliance to the Group`s
investments in mining and oil standards by non-controlled
and gas projects assets
*Operating cost pressures and *Unexpected natural and
shortages operational catastrophes
*Climate change and greenhouse *Inadequate human resource
effects talent pool
*Breaches in information *Breaches in governance
technology security processes processes
*Impact of health, safety and
environmental exposures and
related regulations on
operations and reputation
Further information on the above risks and uncertainties can be found on
pages 9 to 12 of the Group`s Annual Report for the year ended 30 June 2009,
a copy of which is available on the Group`s website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on page 33 to 34.
Board of Directors
The Directors of BHP Billiton at any time during or since the end of the
half-year are:
Mr D R Argus - Chairman since April Dr D A Jenkins - a Director since
1999 (a Director since November March 2000 until 26 November 2009
1996)
Mr P M Anderson - a Director since Mr M Kloppers - an Executive
June 2006 until 31 January 2010 Director since January 2006
Mr A Boeckmann - a Director since Dr D Morgan - a Director since
September 2008 January 2008 until 24 November
2009
Dr J G Buchanan - a Director since Mr W Murdy - a Director since
February 2003 June 2009
Mr C A Cordeiro - a Director since Mr J Nasser - a Director since
February 2005 June 2006
Mr D A Crawford - a Director since Mr K Rumble - a Director since
May 1994 September 2008
Dr E G de Planque - a Director Dr J M Schubert - a Director
since October 2005 until 31 January since June 2000
2010
Auditor`s independence declaration
KPMG in Australia are the auditors of BHP Billiton Limited. Their auditor`s
independence declaration under Section 307C of the Australian Corporations
Act 2001 is set out on page 38 and forms part of this Directors` Report.
Rounding of amounts
BHP Billiton Limited is a company of a kind referred to in Australian
Securities and Investments Commission Class Order No 98/100, dated 10 July
1998. Amounts in the Directors` Report and half-year financial statements
have been rounded to the nearest million dollars in accordance with that
class order.
Signed in accordance with a resolution of the Board of Directors.
D R Argus - Chairman
Dated this 10th day of February 2010 M Kloppers - Chief Executive Officer
Directors` Declaration of Responsibility
The half-year financial report is the responsibility of, and has been
approved by, the Directors. In accordance with a resolution of the
Directors of BHP Billiton, the Directors declare that, to the best of their
knowledge and in their reasonable opinion:
(a) the half-year financial statements and notes, set out on pages 17 to 34,
have been prepared in accordance with IAS 34 `Interim Financial Reporting`
as issued by the IASB, IAS 34 `Interim Financial Reporting` as adopted by
the EU, AASB 134 `Interim Financial Reporting` and the Disclosure and
Transparency Rules of the Financial Services Authority in the United Kingdom
and the Australian Corporations Act 2001, including:
(i) complying with applicable accounting standards and the Australian
Corporations Regulations 2001; and
(ii) giving a true and fair view of the financial position of the BHP
Billiton Group as at 31 December 2009 and of its performance for the half-
year ended on that date;
(b) the Directors` Report, which incorporates the Review of Operations on
page 1 to 13, includes a fair review of the information required by:
(i) DTR4.2.7R of the Disclosure and Transparency Rules in the United
Kingdom, being an indication of important events during the first six months
of the current financial year and their impact on the half-year financial
statements, and a description of the principal risks and uncertainties for
the remaining six months of the year; and
(ii) DTR4.2.8R of the Disclosure and Transparency Rules in the United
Kingdom, being related party transactions that have taken place in the first
six months of the current financial year and that have materially affected
the financial position or performance of the BHP Billiton Group during that
period, and any changes in the related party transactions described in the
last annual report that could have such a material effect; and
(c) in the Directors` opinion, there are reasonable grounds to believe that
each of BHP Billiton Limited and BHP Billiton Plc will be able to pay its
debts as and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors.
D R Argus - Chairman
M Kloppers - Chief Executive Officer
Dated this 10th day of February 2010
Lead Auditor`s Independence Declaration
To the Directors of BHP Billiton Limited:
I declare that, to the best of my knowledge and belief, in relation to the
review for the half-year ended 31 December 2009 there have been:
- no contraventions of the auditor independence requirements as set out in
the Australian Corporations Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of BHP Billiton and the entities it
controlled during the financial period.
KPMG
Martin Sheppard
Partner
10 February 2010
Independent Review Report
Independent Review Report of KPMG Audit Plc ("KPMG UK") to BHP Billiton Plc
and of KPMG ("KPMG Australia") to the Members of BHP Billiton Limited
Introduction
For the purposes of these reports, the terms "we" and "our" denote KPMG UK
in relation to its responsibilities under its terms of engagement to report
to BHP Billiton Plc and KPMG Australia in relation to Australian
professional and regulatory responsibilities and reporting obligations to
the members of BHP Billiton Limited.
The BHP Billiton Group ("the Group") consists of BHP Billiton Plc and BHP
Billiton Limited and the entities they controlled at the end of the half-
year or from time to time during the half-year ended 31 December 2009.
We have reviewed the condensed half-year financial statements of the Group
for the half-year ended 31 December 2009 ("half-year financial statements"),
set out on pages 17 to 34, which comprises the consolidated income
statement, consolidated statement of comprehensive income, consolidated
balance sheet, consolidated cash flow statement, consolidated statement of
changes in equity, summary of significant accounting policies and other
explanatory notes 1 to 9. We have read the other information contained in
the half-year financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in
the half-year financial statements. KPMG Australia has also reviewed the
directors` declaration set out on page 37 in relation to Australian
regulatory requirements contained in section (a) and (c) of the directors`
declaration.
Directors` Responsibilities
The half-year financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-year financial report:
- in accordance with the Disclosure and Transparency Rules ("the DTR") of
the United Kingdom`s Financial Services Authority ("the UK FSA"), and under
those rules, in accordance with IAS 34 Interim Financial Reporting as
adopted by the European Union; and
- in accordance with Australian Accounting Standards and the Corporations
Act 2001. This responsibility includes establishing and maintaining
internal control relevant to the preparation and fair presentation of the
half-year financial statements that are free from material misstatement,
whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the
circumstances.
Respective Responsibilities of KPMG UK and KPMG Australia
KPMG UK`s report is made solely to BHP Billiton Plc in accordance with the
terms of KPMG UK`s engagement to assist BHP Billiton Plc in meeting the
requirements of the DTR of the UK FSA. KPMG UK`s review has been undertaken
so that it might state to BHP Billiton Plc those matters it is required to
state to it in this report and for no other purpose. To the fullest extent
permitted by law, KPMG UK does not accept or assume responsibility to anyone
other than BHP Billiton Plc, for KPMG UK`s review work, for this report, or
for the conclusions it has reached.
KPMG Australia has performed an independent review of the half-year
financial statements and directors` declaration in order to state whether,
on the basis of the procedures described, it has become aware of any matter
that makes KPMG Australia believe that the half-year financial statements
and directors` declaration are not in accordance with the Corporations Act
2001 including: giving a true and fair view of the Group`s financial
position as at 31 December 2009 and its performance for the half-year ended
on that date; and complying with Australian Accounting Standard AASB 134
Interim Financial Reporting and the Australian Corporations Regulations
2001.
Our responsibility is to express a conclusion on the half-year financial
statements in the half-year financial report based on our review.
Scope of Review
KPMG UK conducted its review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 Review of Interim Financial Reports
performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom.
KPMG Australia conducted its review in accordance with Australian Auditing
Standard on Review Engagements ASRE 2410 Review of Interim and Other
Financial Reports performed by the Independent Auditor of the Entity. As
auditor of BHP Billiton Limited, KPMG Australia is required by ASRE 2410 to
comply with the ethical requirements relevant to the audit of the annual
financial report.
A review of half-year financial statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with auditing standards
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Independence
In conducting its review, KPMG Australia has complied with the independence
requirements of the Australian Corporations Act 2001.
Review conclusion by KPMG UK
Based on our review, nothing has come to our attention that causes us to
believe that the condensed half-year financial statements in the half-year
financial report for the six months ended 31 December 2009 are not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU, and the DTR of the UK FSA.
Simon Figgis
For and on behalf of KPMG Audit Plc
Chartered Accountants
London
10 February 2010
Review conclusion by KPMG Australia
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the condensed half-year financial
statements and directors` declaration of the Group are not in accordance
with the Australian Corporations Act 2001, including:
(a) giving a true and fair view of the Group`s financial position as at 31
December 2009 and of its performance for the half-year ended on that date;
and
(b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Australian Corporations Regulations 2001.
KPMG
Martin Sheppard
Partner
Melbourne
10 February 2010
Date: 10/02/2010 08:00:08 Produced by the JSE SENS Department.
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