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BIL
BIBLT
BIL - BHP Billiton Plc - Report for the half year ended 31 December 2010
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
16 February 2011
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 2010
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 2010 compared with the half year ended 31 December 2009.
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
31 31 30
December December June
2010 2009 2010
US$M US$M US$M
Earnings attributable to ordinary 10,524 6,135 12,722
shareholders
Adjusted for:
Cost relating to the withdrawn offer for 314 - -
Potash Corporation of Saskatchewan
Gain on sale of PP&E, Investments and (44) (95) (114)
Operations
Impairments/(reversal of impairments) 47 (587) (284)
Recycling of re-measurements from equity to (27) - 4
the income statement
Tax effect of above adjustments (1) 203 193
Subtotal of Adjustments 289 (479) (201)
Headline Earnings 10,813 5,656 12,521
Diluted Headline Earnings 10,825 5,668 12,542
Basic earnings per share denominator 5,563 5,564 5,565
(millions)
Diluted earnings per share denominator 5,588 5,598 5,595
(millions)
Headline Earnings per share (US cents)
194.4 101.7 225.0
Diluted Headline Earnings per share (US
cents) 193.7 101.3 224.2
NEWS RELEASE
16 February 2011
04/11
BHP BILLITON RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
*Record financial results including Underlying EBITDA(1) up 60% to US$17.3
billion, Underlying EBIT(1)(2) up 74% to US$14.8 billion and Attributable
profit (excluding exceptional items) up 88% to US$10.7 billion.
*Strong margins and returns reflected by the increase in Underlying EBIT
margin(3) to 46% and Underlying return on capital to 41%.
*The consistent deployment of capital towards high quality growth projects
delivered half yearly production records across three commodities and five
businesses.
*Operating cash flow(4) of US$12.2 billion and an ungeared balance sheet
supports significant investment in organic growth that is expected to exceed
US$80 billion over five years.
*A 10% increase in the interim dividend to 46 US cents per share.
*An expanded capital management program of US$10 billion.
Half year ended 31 December 2010 2009 Change
US$M US$M %
Revenue 34,166 24,576 39.0%
Underlying EBITDA (1) 17,304 10,838 59.7%
Underlying EBIT (1) (2) 14,829 8,502 74.4%
Profit from operations 14,515 9,120 59.2%
Attributable profit - excluding 10,700 5,702 87.7%
exceptional items
Attributable profit 10,524 6,135 71.5%
Net operating cash flow (4) 12,193 5,468 123.0%
Basic earnings per share - excluding 192.4 102.5 87.7%
exceptional items (US cents)
Basic earnings per share (US cents) 189.2 110.3 71.5%
Underlying EBITDA interest coverage 77.6 42.0 84.8%
(times) (1) (5)
Dividend per share (US cents) 46.0 42.0 9.5%
Refer to page 14 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 2009 unless otherwise stated.
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2010
Record half year results
BHP Billiton`s diversified, tier one business strategy delivered another
record half year result with Underlying EBITDA and Attributable profit
(excluding exceptional items) increasing by 60 per cent and 88 per cent
respectively.
The consistently high margins and returns that characterise BHP Billiton`s
business strategy were again evident with an Underlying EBIT margin of 46 per
cent and Underlying return on capital of 41 per cent. Excluding capital
investment associated with projects not yet in production, Underlying return
on capital was 48 per cent.
The Group`s ongoing commitment to invest through the cycle has ideally
positioned BHP Billiton to deliver consistent and high value production growth
into generally tight and growing commodity markets. In that context, robust
operating performance was reported across the portfolio with three commodities
and five businesses achieving production records in the December 2010 half
year. Western Australia Iron Ore (Australia) shipments rose to an annualised
rate of 148 million tonnes per annum in the December 2010 quarter, while first
production was achieved for the Hunter Valley Energy Coal (Australia) MAC20
project.
An improving economic backdrop and broader supply constraints continued to
support the fundamentals for the majority of BHP Billiton`s core commodities.
Stronger realised prices in the December 2010 half year increased Underlying
EBIT by US$8,531 million, net of price linked costs. Industry wide operating
and capital cost pressures are, however, being experienced across a range of
businesses and BHP Billiton is not immune from that trend. The devaluation of
the US dollar and inflationary pressures reduced Underlying EBIT by a combined
US$1,415 million.
Investing in the future
Operating cash flow of US$12,193 million resulted in the Group ending the
December 2010 half year in a net cash position. This balance sheet strength
affords BHP Billiton substantial flexibility as it embarks on significant
investment in organic growth that is expected to exceed US$80 billion over the
five years to the end of the 2015 financial year. Major projects, including
those in iron ore and metallurgical coal, are at an advanced stage of the
approvals process and should result in a substantial increase in sanctioned
project capital expenditure.
Progressive dividend and expanded capital management program
Notwithstanding the significant commitment towards growth, BHP Billiton has
declared a ten per cent increase in its interim dividend to 46 US cents per
share and has announced an expanded US$10 billion capital management program.
BHP Billiton will continue to consider both on and off-market execution for
the US$10 billion program and, subject to market conditions, expects to
largely complete the initiative by the end of the 2011 calendar year.
Today`s announcement continues BHP Billiton`s strong track record of returning
excess capital to shareholders. On completion of the US$10 billion capital
management program, BHP Billiton will have repurchased a cumulative US$22.6
billion of BHP Billiton Limited (Ltd) and BHP Billiton Plc (Plc) shares since
2004, representing 15 per cent of then issued capital (6).
Outlook
Economic Outlook
BHP Billiton is cautiously optimistic on the short term outlook for the global
economy given the continuation of robust growth in emerging markets and
further positive signs of a sustainable recovery in major developed economies
such as the United States.
In the 2010 calendar year, Chinese Gross Domestic Product (GDP) grew by more
than ten per cent, with fourth quarter growth accelerating from the third
quarter level, while India`s GDP growth approximated nine per cent. The strong
growth has been accompanied by higher inflation in these and other emerging
economies and will inevitably bring further tightening measures. Should
monetary policy tools continue to be implemented effectively and proactively,
then inflation should be contained. However, inflation does remain a serious
challenge as the underlying drivers are structural rather than cyclical in
nature. We expect that the Chinese government will continue to control loan
growth as it strives to dampen investment from unsustainable levels while
restructuring its economy from being investment driven, to consumption led.
Calendar year 2011 GDP and capital spending growth in China is expected to
remain strong in absolute terms, despite growth rates decelerating from 2010
calendar year levels.
Global industrial production, retail sales and consumer confidence improved
throughout the last quarter with the United States and the two largest
economies within Europe (Germany and France) increasing capacity utilisation
and experiencing broad based growth. An ongoing risk remains the significant
level of European sovereign debt. We believe that any solution remains
dependent on the stronger members of the European Union (Germany, the
Netherlands and France) and their willingness to underwrite the fiscal
position of the weaker economies in order to maintain a monetary union.
Despite the short term risks, we remain positive on the longer term outlook
for the global economy. We expect markets to be volatile and event driven,
however the continuing urbanisation and industrialisation of emerging
economies, which is still in its early stages, should provide strong
structural support over the long term.
Commodities Outlook
The increase in prices across the majority of BHP Billiton`s core commodities
during the December 2010 half year has been driven by a combination of robust
emerging market demand, stronger than expected developed market growth and
ongoing supply constraints. Adverse weather patterns in many producing
countries, such as Australia, Brazil, Colombia, South Africa and Indonesia
have had a substantial impact on supply, leading to tighter market
fundamentals and stronger prices for commodities such as coal, iron ore and
copper. There will likely be a lag effect before normal levels of production
flow through to the supply chain.
Macroeconomic themes are still a dominant influence on short term price
movements and sentiment. While we expect a slowdown in the growth rate of
global commodity demand in calendar year 2011, the economic environment still
underpins a robust near term outlook for our products.
The publication and implementation of China`s twelfth five year plan in March
2011 will have important implications for commodity demand in the medium term.
We expect a slower but more sustainable economic growth model to lead to a
reduction in resource intensity per unit of GDP, however absolute demand for
our commodities is likely to remain strong.
Longer term, we remain confident in the outlook for our core commodities based
on emerging markets being the principal drivers of growth. Prices will
ultimately be determined by the marginal cost of supply, with the quality of
our tier one assets well positioned to sustainably deliver strong margins and
investment returns through the cycle.
Development Projects
During the period, we completed one project in energy coal and approved the
US$1,050 million (BHP Billiton share) Macedon gas project, located offshore
Western Australia. In addition, we emphasised our commitment to maximise
capacity in the Port Hedland inner harbour with the approval of a further
US$570 million (BHP Billiton share) investment in our Western Australia Iron
Ore business.
Industry wide cost pressures are being experienced across a broad range of
projects and reflect stronger producer currencies, particularly in Australia,
as well as underlying inflation on raw material and labour costs. In that
context, BHP Billiton approved revised capital budgets and schedules for the
Esso Australia Resources Pty Ltd operated Kipper (US$900 million, BHP Billiton
share) and Turrum (US$1,350 million, BHP Billiton share) Petroleum projects,
located in Bass Strait (Australia), based upon additional design and
fabrication of key structural components, an increased offshore hook up
campaign, and the underlying inflation of raw material and labour costs.
Projects completed during the December 2010 half year
Customer Project Capacity (i) Capital Date of initial
Sector expenditure production (ii)
Group (US$M) (i)
Budget Actual Target Actual
Energy Douglas- 10 million 975 760 Mid July
Coal Middelburg tonnes per (iii) 2010 2010
Optimisation annum export
(South Africa) thermal coal
BHP Billiton - and 8.5
100% million tonnes
per annum
domestic
thermal coal
(sustains
current
output)
975 760
(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.
Projects currently under development (approved in prior years)
Customer Project Capacity (i) Budgeted Target date
Sector capital for initial
Group expenditure production
(US$M) (i) (ii)
Petroleum 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 900(iii) 2012 (iii)
Kipper condensate per day (iv)
(Australia) and processing
BHP Billiton - capacity of 80
32.5% - 50% million cubic feet of
gas per day
Bass Strait 11,000 barrels of 1,350 (iii) 2013 (iii)
Turrum condensate per day
(Australia) and processing
BHP Billiton - capacity of 200
50% million cubic feet of
gas per day
North West Shelf Replacement vessel 245 2011
CWLH Extension with capacity of
(Australia) 60,000 barrels of oil
BHP Billiton - per day
16.67%
North West Shelf 2,500 million cubic 850 2012
North Rankin B feet of gas per day
Gas Compression
(Australia)
BHP Billiton -
16.67%
Aluminium Worsley 1.1 million tonnes 1,900 (v) H1 2011
Efficiency and per annum of
Growth additional alumina
(Australia) capacity
BHP Billiton -
86%
Base Antamina Increases ore 435 Q4 2011
Metals Expansion (Peru) processing capacity
BHP Billiton - to 130,000 tonnes per
33.75% day
Iron Ore WA Iron Ore 50 million tonnes per 4,800 H2 2011
Rapid Growth annum additional iron
Project 5 ore system
(Australia) capacity(vi)
BHP Billiton -
85%
Energy MAC20 Project Increases saleable 260 H1 2011
Coal (Australia) thermal coal (vii)
BHP Billiton - production by
100% approximately 3.5
million tonnes per
annum
10,920
(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) As per revised budget and schedule.
(iv) Facilities ready for first production pending resolution of mercury
content.
(v) Budget is under review.
(vi) The scope of the iron ore development sequence is under review.
(vii) The Hunter Valley Energy Coal MAC20 project reported first production in
the December 2010 half year and was subsequently completed after the close of
the December 2010 half year.
Projects approved during the December 2010 half year
Customer Project Capacity (i) Budgeted Target
Sector capital datefor
Group expenditure initial
(US$M) (i) production
(ii)
Petroleum Macedon 200 million cubic 1,050 2013
(Australia) feet of gas per day
BHP Billiton -
71.43%
1,050
(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 2010 2009
US$M US$M
Underlying EBIT 14,829 8,502
Exceptional items (before taxation) (314) 618
Profit from operations 14,515 9,120
Refer to page 9 for 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 December 2010 half
year compared with the December 2009 half year:
US$M US$M
Underlying EBIT for the half year ended 31 8,502
December 2009
Change in volumes:
Increase in volumes 305
Decrease in volumes (520)
(215)
Net price impact:
Change in sales prices 9,361
Price-linked costs (830)
8,531
Change in costs:
Costs (rate and usage) (613)
Exchange rates (1,132)
Inflation on costs (283)
(2,028)
Asset sales (53)
Ceased and sold operations (46)
New and acquired operations 587
Exploration and business development (223)
Other (226)
Underlying EBIT for the half year ended 31 14,829
December 2010
Volumes
Record iron ore shipments reflected the ongoing ramp up of BHP Billiton`s
Western Australia Iron Ore growth projects, as exports increased to an
annualised 148 million tonnes per annum rate (100% basis) in the December 2010
quarter, despite the ongoing impact of tie-in activities. When combined with
record performance at Samarco (Brazil), iron ore volumes increased Underlying
EBIT by US$99 million in the December 2010 half year.
Within the Base Metals business, higher grades at Cannington (Australia) and
record milling and ore hoisting rates at Olympic Dam (Australia) contributed
to the US$138 million volume related increase in Underlying EBIT for the
December 2010 half year. Industrial action at Pampa Norte (Chile) and the
Clark Shaft incident at Olympic Dam impacted the December 2009 half year.
The deferral of production well drilling in the Gulf of Mexico (USA) was a
major constraint on our business as a decline in base volumes in the December
2010 half year reduced Underlying EBIT by US$464 million (excluding Pyrenees,
Australia, as a new operation which increased Underlying EBIT by US$587
million). No permits were issued in the Gulf of Mexico for production drilling
in the December 2010 half year. BHP Billiton was, however, one of the first
operators to return both of its deepwater rigs to (water injection) drilling
operations. Our current expectation is that production for the 2011 financial
year will be in line with the 2010 financial year.
Prices
An improving economic backdrop and persistent supply side constraint ensured
the majority of BHP Billiton`s core products achieved (often substantially)
higher prices in the December 2010 half year. In total, stronger commodity
prices increased Underlying EBIT by US$9,361 million, offset by higher price
linked costs (including royalties) of US$830 million.
Costs
Industry wide cost pressures are being experienced, with tight labour and raw
material markets presenting a challenge for all operators. BHP Billiton is not
immune from that trend. Excluding the significant impact of a weaker US
dollar, inflation and an increase in non-cash items, broad and increasing cost
pressures were evident across the Group and reduced Underlying EBIT by US$521
million in the December 2010 half year.
Higher fuel and energy prices (of which BHP Billiton is a net beneficiary),
together with increased maintenance, labour and contractor costs, accounted
for the majority of the impact and reduced Underlying EBIT by US$468 million.
Non-cash items reduced Underlying EBIT by a further US$92 million and
reflected the ongoing delivery of our organic growth program.
Exchange rates
A weaker US dollar against producer currencies reduced Underlying EBIT by
US$1,132 million which included a US$465 million variance related to the
restatement of monetary items in the balance sheet. The Australian operations
were the most heavily impacted. The strong Australian dollar reduced
Underlying EBIT by US$909 million which included a US$400 million variance
related to the restatement of monetary items in the balance sheet. The
absolute impact on costs as a result of the restatement of monetary items in
the balance sheet was a loss of US$743 million in the December 2010 half year.
The following exchange rates against the US dollar have been applied:
Average Average
Half year Half year As at As at As at
ended ended 31 December 31 December 30 June
31 December 31 December 2010 2009 2010
2010 2009
Australian 0.94 0.87 1.02 0.90 0.85
dollar (i)
Chilean peso 496 532 468 507 545
Colombian 1,848 1,991 1,920 2,043 1,920
peso
Brazilian 1.72 1.81 1.66 1.74 1.81
real
South 7.13 7.65 6.63 7.40 7.68
African rand
(i) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressure on input costs across all businesses had an unfavourable
impact on Underlying EBIT of US$283 million. The effect was most evident in
Australia and South Africa.
Asset Sales
The profit on the sale of assets was US$53 million lower than the
corresponding period largely due to the dissolution of the Douglas Tavistock
Joint Venture (South Africa) which increased Underlying EBIT in the December
2009 half year.
Ceased and sold operations
The currency revaluation of rehabilitation and closure provisions for closed
operations was the major driver of the US$46 million reduction in Underlying
EBIT.
New and acquired operations
New greenfield assets are reported in new and acquired operations variance
until there is a full year comparison. The BHP Billiton operated Pyrenees oil
development contributed an additional US$587 million to Underlying EBIT.
Exploration and business development
Exploration expense increased by US$116 million in the December 2010 half year
to US$410 million. Within Minerals (US$228 million expense) the focus centred
upon copper targets in Chile and Zambia; nickel targets in Australia;
manganese targets in Gabon; and diamond targets in Canada. Exploration for
iron ore, coal, bauxite, potash and manganese was undertaken in a number of
regions including Australia, Canada, South America and Africa.
The Petroleum CSGs exploration expense was US$182 million for the December
2010 half year, including the impairment of exploration previously capitalised
which reduced Underlying EBIT by US$47 million. BHP Billiton continues to
progress all necessary submissions to allow a return to exploration well
drilling in the Gulf of Mexico, although a degree of uncertainty is associated
with the new regulatory environment. Outside of the Gulf of Mexico, BHP
Billiton will continue to pursue its significant exploration program over the
next six months with wells planned for Malaysia, Brunei, Colombia and
Australia.
Expenditure on business development was US$107 million higher than the
corresponding period with the majority of the increase related to the ongoing
assessment of various Petroleum projects.
Other
Other items decreased Underlying EBIT by US$226 million and included a US$111
million provision related to indirect taxes in the Aluminium and Iron Ore
businesses.
Net finance costs
Net finance costs increased to US$371 million from US$232 million in the
corresponding period. This was primarily driven by exchange variations on net
debt and fair value changes on hedging derivatives and hedged loans.
Taxation expense
Excluding the impacts of royalty related taxation, exchange rate movements and
tax on exceptional items, the underlying effective tax rate was 30.3 per cent
(31 December 2009: 31.6 per cent, 30 June 2010: 30.9 per cent).
Exchange rate movements decreased taxation expense by US$1,127 million (31
December 2009: decrease of US$306 million, 30 June 2010: increase of US$106
million) predominantly due to the increase in the US dollar value of future
tax depreciation of US$1,750 million offset by the revaluation of local
currency tax liabilities, other monetary items and temporary differences which
amounted to US$623 million.
Total taxation expense including royalty related taxation and tax on
exceptional items was US$3,458 million, representing an effective rate of 24.4
per cent (31 December 2009: 30.2 per cent, 30 June 2010: 33.5 per cent).
Excluding the impacts of exceptional items, the taxation expense was US$3,596
million (31 December 2009: US$2,497 million; 30 June 2010: US$6,504 million).
Royalty related taxation represents an effective rate of 2.4 per cent (31
December 2009: 2.1 per cent, 30 June 2010: 2.3 per cent).
Government imposed royalty arrangements which are calculated by reference to
profits (revenue net of allowable deductions) after the adjustment for items
comprising temporary differences, are reported as royalty related taxation.
Other royalty and excise arrangements which do not have these characteristics
are recognised as operating costs (US$1,332 million).
Exceptional Items
The Group withdrew its offer for Potash Corporation of Saskatchewan
(PotashCorp) on 15 November 2010 following the Board`s conclusion that the
condition of the offer relating to receipt of a net benefit as determined by
the Minister of Industry under the Investment Canada Act could not be
satisfied. The Group incurred fees associated with the US$45 billion debt
facility (US$240 million), investment bankers`, lawyers` and accountants`
fees, printing expenses and other charges (US$74 million) in progressing this
matter during the period up to the withdrawal of the offer, which were
expensed as operating costs in the half year ended 31 December 2010.
The Australian Taxation Office (ATO) issued amended assessments in prior years
denying bad debt deductions arising from the investments in Hartley
(Zimbabwe), Beenup and Boodarie Iron (both Australia) and the denial of
capital allowance claims made on the Boodarie Iron project. BHP Billiton
lodged objections and was successful on all counts in the Federal Court and
the Full Federal Court. The Hartley matter was settled with the ATO in
September 2009. The ATO sought special leave to appeal to the High Court in
relation to the Beenup bad debt disallowance and the denial of the capital
allowance claims on the Boodarie Iron project. Special leave was not sought by
the ATO for the Boodarie Iron bad debt disallowance. In September 2010 the
High Court granted special leave only in relation to the denial of the capital
allowance claims on the Boodarie Iron project which resulted in a release of
US$138 million from the Group`s income tax provisions in the half year ended
31 December 2010.
Half year ended 31 December 2010 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Release of income tax provisions - 138 138
(314) 138 (176)
Cash Flows
Net operating cash flows after interest and tax increased by 123 per cent to
US$12,193 million compared with $5,468 million for the corresponding six month
period. This was primarily driven by an increase in cash generated from
operations (before changes in working capital balances) of US$6,306 million
and changes in working capital balances having a positive year on year impact
on operating cash flow of US$463 million.
Exploration expenditure incurred which has not been capitalised is now
classified within net operating cash flows, which has resulted in the re-
classification of US$295 million from net investing cash flows to net
operating cash flows for the corresponding six month period and US$1,030
million in the year ended 30 June 2010.
Capital and exploration expenditure totalled US$5,619 million for the period.
Expenditure on major growth projects was US$4,274 million, including US$792
million on Petroleum projects and US$3,482 million on Minerals projects.
Capital expenditure on sustaining and other items was US$893 million.
Exploration expenditure was US$452 million, including US$363 million
classified within net operating cash flows.
Financing cash flows include net debt repayments of US$98 million and dividend
payments of US$2,506 million.
Net cash, comprising cash less interest bearing liabilities, was US$200
million, an improvement of US$3,508 million, compared to the net debt position
at 30 June 2010. The Group had a net cash position at 31 December 2010,
compared with net gearing of 6 per cent at 30 June 2010, which is the ratio of
net debt to net debt plus net assets.
Dividend
BHP Billiton maintains a progressive dividend policy and our Board today
declared an interim dividend of 46 US cents per share.
The dividend to be paid by BHP Billiton Ltd will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, BHP Billiton Ltd 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 4 March 2011. Please note that
all currency conversion elections must be registered by the Record Date, being
11 March 2011. 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 currency conversion into
rand 4 March 2011
Ex-dividend Australian Securities Exchange (ASX) and JSE Limited (JSE) 7 March
2011
Ex-dividend London Stock Exchange (LSE) and New York Stock Exchange (NYSE) 9
March 2011
Record date (including currency conversion and currency election dates, except
for rand) 11 March 2011
Payment date 31 March 2011
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 7 and 11 March 2011, nor will transfers
between the UK register and the South African register be permitted between
the dates of 4 and 11 March 2011.
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.
Capital Management
On 15 November 2010, BHP Billiton reactivated the remaining US$4.2 billion
component of the previously suspended US$13 billion buy-back program. During
the half year 6,825,007 BHP Billiton Plc shares were repurchased on-market at
an average cost of US$37.23 per share (GBP23.58 per share).
Notwithstanding a significant commitment towards growth, BHP Billiton has
announced an expanded US$10 billion capital management program. BHP Billiton
will continue to consider both on and off-market execution for the US$10
billion program and, subject to market conditions, expects to largely complete
the initiative by the end of the 2011 calendar year.
Today`s announcement continues BHP Billiton`s strong track record of returning
excess capital to shareholders. On completion of the US$10 billion capital
management initiative, BHP Billiton will have repurchased a cumulative US$22.6
billion of Ltd and Plc shares since 2004, representing 15 per cent of then
issued capital.
Debt Management and Liquidity
No long term debt securities were issued in the debt capital markets during
the December 2010 half year. The Group has access to the US commercial paper
market and an undrawn US$4 billion Revolving Credit Facility, which expires in
December 2015. We have a strong liquidity position with US$16.1 billion of
cash on hand, and have maintained our solid A credit rating throughout the
year.
Corporate Governance
On 13 December 2010, the Board announced the appointment of Baroness Shriti
Vadera as a Non-executive Director with effect from 1 January 2011.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the December 2010 half year and the corresponding half year.
Half year ended 31 Revenue Underlying EBIT (i)
December
(US$M) 2010 2009 Change % 2010 2009 Change
%
Petroleum 4,905 4,177 17.4% 2,854 2,326 22.7%
Aluminium 2,343 2,004 16.9% 17 154 (89.0%)
Base Metals 7,067 5,471 29.2% 3,580 2,462 45.4%
Diamonds and 675 566 19.3% 221 170 30.0%
Specialty Products
Stainless Steel 1,905 1,655 15.1% 357 200 78.5%
Materials
Iron Ore 9,382 4,478 109.5% 5,811 2,091 177.9%
Manganese 1,196 888 34.7% 430 190 126.3%
Metallurgical Coal 3,952 2,715 45.6% 1,453 772 88.2%
Energy Coal 2,561 2,142 19.6% 334 332 0.6%
Group and 206 505 N/A (228) (195) N/A
unallocated items
(ii)
Less: inter-segment (26) (25) N/A - - N/A
revenue
BHP Billiton Group 34,166 24,576 39.0% 14,829 8,502 74.4%
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT is reconciled to Profit from operations on page
6.
(ii) Includes consolidation adjustments, unallocated items and external sales
from the Group`s freight, transport and logistics operations.
Petroleum
Underlying EBIT was US$2,854 million, an increase of US$528 million or 23 per
cent when compared with the corresponding period. The favourable variance was
primarily driven by higher prices, which increased Underlying EBIT by US$526
million in the December 2010 half year. The improvement in realised pricing
was evident across all of BHP Billiton`s Petroleum products and included a 13
per cent increase for oil to US$79.69 per barrel, a six per cent increase for
natural gas to US$3.84 per thousand standard cubic feet and a 56 per cent
increase for liquefied natural gas to US$10.43 per thousand standard cubic
feet.
Total production for the December 2010 half year was in line with the prior
period as the successful ramp up of Pyrenees was offset by the deferral of
production well drilling in the Gulf of Mexico and severe flooding in
Pakistan. Volumes, including new production from greenfield development
projects, increased Underlying EBIT by US$123 million for the period.
No permits were issued in the Gulf of Mexico for production drilling in the
December 2010 half year. BHP Billiton was, however, one of the first operators
to return both of its deepwater rigs to drilling operations with the
commencement of water injection wells at the BHP Billiton operated Shenzi
(USA) field. Our current expectation is that production for the 2011 financial
year will be in line with the 2010 financial year.
Gross exploration expenditure for the December 2010 half year was US$173
million, of which US$135 million was expensed. The impairment of exploration
capitalised in the prior period reduced Underlying EBIT by a further US$47
million. BHP Billiton continues to progress all necessary submissions to allow
a return to exploration well drilling in the Gulf of Mexico although a degree
of uncertainty is associated with the new regulatory environment. Outside of
the Gulf of Mexico, BHP Billiton will continue to pursue its significant
exploration program over the next six months with wells planned for Malaysia,
Brunei, Colombia and Australia.
Aluminium
Underlying EBIT was US$17 million, a decrease of US$137 million or 89 per cent
compared to the corresponding period. Higher aluminium and alumina prices
increased Underlying EBIT by US$197 million (net of price linked costs) but
were more than offset by broader cost pressures which included a combined
US$110 million impact from the devaluation of the US dollar and inflation. The
average realised aluminium price increased by 16 per cent to US$2,321 per
tonne while the average realised alumina price rose 22 per cent to US$318 per
tonne. Aluminium Underlying EBIT was unfavourably impacted by a US$76 million
provision related to indirect taxes in the December 2010 half year.
Base Metals
Underlying EBIT of US$3,580 million represented an increase of US$1,118
million or 45 per cent over the corresponding period. Higher average realised
prices favourably impacted Base Metals Underlying EBIT by US$1,379 million,
net of price linked costs, as all key commodities were higher when compared
with the corresponding period.
Stronger production at Olympic Dam, Cannington and Pampa Norte increased
Underlying EBIT by US$141 million. Record ore hoisting rates at Olympic Dam
for the December 2010 half year were reported following the successful repair
of the Clark Shaft while record milling rates at Pampa Norte Cerro Colorado
(Chile) supported an increase in production for Pampa Norte. Higher ore grades
and recoveries had a favourable impact on Cannington silver and lead volumes.
Controllable costs declined in the half year ended December 2010 and were
favourably impacted by the return of the Olympic Dam Clark Shaft to full
production. Higher energy and raw material costs were the major offsetting
factors while labour costs increased for the South American assets and
reflected revised terms negotiated in the 2010 financial year. The devaluation
of the US dollar and underlying inflation increased costs by US$176 million.
BHP Billiton has refined the basis on which the metal content of its leach
pads is estimated at Escondida (Chile) and Pampa Norte, resulting in a non-
cash reduction in Underlying EBIT of US$168 million for the December 2010 half
year. The change will have no impact on forecast production for the Chilean
assets.
At 31 December 2010, the Group had 287,276 tonnes of outstanding copper sales
that were revalued at a weighted average price of US$4.30 per pound. The final
price of these sales will be determined over the remainder of the 2011
financial year. In addition, 236,584 tonnes of copper sales from the 2010
financial year were subject to a finalisation adjustment in the current
period. The finalisation adjustment and provisional pricing impact as at 31
December 2010 increased Underlying EBIT by US$667 million for the period.
Diamonds and Specialty Products
Underlying EBIT was US$221 million, an increase of US$51 million or 30 per
cent over the corresponding period. Significantly higher diamond and titanium
prices contributed an additional US$160 million to Underlying EBIT. Strong
prices were partially offset by lower diamond sales and significantly higher
energy prices at Titanium Minerals (South Africa). The weaker US dollar and
inflation reduced Underlying EBIT by a further US$39 million.
On 2 February 2011, BHP Billiton announced progression of the Jansen Potash
Project (Canada) into the Feasibility study phase, an advanced stage of the
Group`s project approvals process. Based on the current schedule, Jansen is
expected to start producing saleable potash from its 3,370 million tonne in
situ Mineral Resource in calendar year 2015. The Project is designed to
ultimately produce approximately eight million tonnes per annum of
agricultural grade potash over an estimated 70 year life(7).
Stainless Steel Materials
Underlying EBIT was US$357 million, an increase of US$157 million or 79 per
cent when compared with the corresponding period. The higher average LME price
for nickel of US$10.16 per pound increased Underlying EBIT by US$386 million.
Price linked costs associated with the purchase of third party ore and
concentrate at Nickel West (Australia) were the major offsetting factors,
reducing Underlying EBIT by US$142 million. Costs were also negatively
affected by a combined US$92 million impact of a weaker US dollar and
inflation.
Iron Ore
Underlying EBIT increased by 178 per cent over the corresponding period to
US$5,811 million as Western Australia Iron Ore achieved record production and
sales despite ongoing tie-in activities related to its sequence of growth
projects. When combined with another strong half year at Samarco, iron ore
volumes increased Underlying EBIT by US$99 million.
Persistent tightness in iron ore markets and the associated rise in various
iron ore indices was a major feature of the December 2010 half year. When
adjusting for the impact of price linked costs, higher average realised prices
contributed an additional US$4,276 million to Underlying EBIT.
BHP Billiton remains committed to its long term customer relationships and the
move to shorter term pricing has already meant a significant reduction in risk
to the parties. During the December 2010 half year, over 97 per cent of BHP
Billiton`s iron ore exports were sold on the basis of shorter term, landed,
market based prices that incorporated index-linked monthly and quarterly
average prices.
Tight labour and contractor markets, particularly in Western Australia,
continued to place pressure on costs and reduced Underlying EBIT by US$117
million in the period. Similarly, the devaluation of the US dollar and broader
inflation had an unfavourable impact on Underlying EBIT of US$366 million. Non-
cash depreciation also increased with the ongoing ramp up of expanded Western
Australia Iron Ore capacity while a provision at Samarco related to indirect
taxes reduced Underlying EBIT by a further US$41 million.
Manganese
Underlying EBIT increased by 126 per cent to US$430 million as new manganese
ore production records were set during the December 2010 half year. Average
realised prices were the major positive driver of the strong financial result,
increasing Underlying EBIT by US$286 million, net of price linked costs. For
the period, average realised ore and alloy prices increased by 53 per cent and
23 per cent respectively.
Controllable costs were largely unchanged in the December 2010 half year,
although the adverse movement in the US dollar and inflation reduced
Underlying EBIT by a combined US$89 million.
Metallurgical Coal
Underlying EBIT was US$1,453 million, an increase of US$681 million or 88 per
cent from the corresponding period. The significant improvement in EBIT margin
was largely attributable to higher realised prices. Hard coking coal, weak
coking coal and thermal coal prices increased by 50 per cent, 57 per cent and
43 per cent respectively. In total, higher prices increased Underlying EBIT by
US$1,147 million, after allowing for the royalty related increase in price
linked costs.
Queensland Coal (Australia) production was significantly affected by the
persistent rain and flooding that impacted the Bowen Basin in the December
2010 half year. The effect on Queensland Coal sales was minimised by the
healthy level of inventory that was held across our supply chain at the
commencement of the December 2010 half year. However, weather related
disruption and higher labour and contractor rates contributed to an increase
in costs for the period. Furthermore, the combined impact of a weaker US
dollar and inflation reduced Underlying EBIT by US$291 million.
BHP Billiton continues to assess the impact of the extreme weather events and
confirms that force majeure has been declared for the majority of our Bowen
Basin products, including Goonyella Riverside, Peak Downs, Norwich Park,
Gregory Crinum, South Walker, Blackwater and Saraji.
The decision to double pumping capacity following severe wet weather in the
March 2008 quarter has minimised in-pit water accumulation, although heavy
rainfall that persisted for much of the December 2010 half year has
significantly restricted overburden removal. When combined with disruptions to
external infrastructure, we expect an ongoing impact on production, sales and
unit costs for the remainder of the 2011 financial year.
Energy Coal
Underlying EBIT was US$334 million, an increase of US$2 million from the
corresponding period. Record exports from Hunter Valley Energy Coal for the
half year reflected first production from the MAC20 project, a greater
proportion of high ash sales and the ongoing ramp up of the Newcastle Coal
Infrastructure Group (NCIG) port facilities. Higher volumes increased Energy
Coal Underlying EBIT by US$45 million for the December 2010 half year.
Higher average realised prices favourably benefited Underlying EBIT by US$318
million, net of price linked costs, and were largely offset by broad cost
pressures that were accentuated by an increase in cash and non-cash costs
associated with the ramp up of growth projects in Australia and South Africa.
The devaluation of the US dollar and inflation reduced Underlying EBIT by
US$140 million in the December 2010 half year.
The dissolution of the Douglas Tavistock Joint Venture arrangement increased
Underlying EBIT in the corresponding period by US$69 million.
Group and Unallocated items
Underlying EBIT was a loss of US$228 million. A weaker US dollar and inflation
reduced Underlying EBIT by US$62 million in the December 2010 half year.
The following notes explain the terms used throughout this profit release:
(1) 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$2,475 million for the half year ended 31
December 2010 and US$2,336 million for the half year ended 31 December 2009
(excluding exceptional items of US$605 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.
(2) Underlying EBIT is used to reflect the underlying performance of BHP
Billiton`s operations. Underlying EBIT is reconciled to Profit from operations
on page 6.
(3) Underlying EBIT margin excludes the impact of third party product
activities.
(4) Net operating cash flows are after net interest and taxation.
(5) Net interest includes interest capitalised and excludes the effect of
discounting on provisions and other liabilities, fair value change on hedged
loans, fair value change on hedging derivatives, exchange variations on net
debt and expected return on pension scheme assets.
(6) For illustrative purposes only as BHP Billiton will continue to consider
both on and off-market execution for the US$10 billion capital management
program. In this instance, we have assumed that the remainder of the program
is completed through an on-market buy-back of BHP Billiton Plc shares. Based
upon volume weighted average price during January 2011 of GBP24.64 per share,
and issued capital at 30 June 2004.
(7) Competent Persons - J.McElroy (MAusIMM) BHP Billiton, B.Nemeth (MAusIMM)
BHP Billiton, A. D. Mackintosh (APEGS) A.D.M Consulting. The statement of
Mineral Resources is presented on a 100 per cent basis and includes Indicated
and Inferred categories. The detailed breakdown is shown in the BHP Billiton
Annual Report 2010. Resources are based on information compiled by the above
named Competent Persons and relates to Mineral Resources estimates as at 30
June 2010. Competent Persons are full time employees of BHP Billiton (unless
otherwise stated), have sufficient experience relevant to the style of
mineralisation and type of deposit under consideration and to the activity
they are undertaking to qualify as a Competent Person as defined in the JORC
Code. All Competent Persons are members of either the Australasian Institute
of Mining & Metallurgy (AusIMM) or a Recognised Overseas Professional
Organisation (ROPO). The Competent Persons consent to the inclusion in this
report of the matters based on their information in the form and context in
which it appears.
(8) 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, estimated reserves, trends
in commodity prices, demand for commodities, plans, strategies and objectives
of management, closure or divestment of certain operations or facilities
(including associated costs), anticipated production or construction
commencement dates, expected costs or production output, anticipated
productive lives of projects, mines and facilities, provisions and contingent
liabilities.
These forward looking statements can be identified by the use of terminology
such as `intend`, `aim`, `project`, `anticipate`, `estimate`, `plan`,
`believe`, `expect`, `may`, `should`, `will`, `continue` or similar words.
These statements discuss future expectations concerning the results of
operations or financial condition, or provide other forward looking
statements.
These forward looking statements are not guarantees or predictions of future
performance and involve known and unknown risks, uncertainties and other
factors, many of which are beyond our control, and which may cause actual
results to differ materially from those expressed in the statements contained
in this release. Readers are cautioned not to put undue reliance on forward
looking statements.
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. 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
Brendan Harris, Investor Relations
Tel: +61 3 9609 4323 Mobile: +61 437 134 814
email: Brendan.Harris@bhpbilliton.com
Amanda Buckley, Media Relations
Tel: +61 3 9609 2209 Mobile: +61 419 801 349
email: Amanda.Buckley@bhpbilliton.com
Kelly Quirke, Media Relations
Tel: +61 3 9609 2896 Mobile: +61 429 966 312
email: Kelly.Quirke@bhpbilliton.com
Fiona Martin, Media Relations
Tel: +61 3 9609 2211 Mobile: +61 427 777 908
email: Fiona.Martin2@bhpbilliton.com
United Kingdom & South Africa
Andre Liebenberg, Investor Relations
Tel: +44 20 7802 4131 Mobile: +44 7920 236 974
email: Andre.Liebenberg@bhpbilliton.com
United Kingdom & Americas
Ruban Yogarajah, Media Relations
Tel: US +1 713 966 2907 or UK +44 20 7802 4033
Mobile: UK +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com
Americas
Scott Espenshade, Investor Relations
Tel: +1 713 599 6431 Mobile: +1 713 208 8565
email: Scott.Espenshade@bhpbilliton.com
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
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Members of the BHP Billiton group which is headquartered in Australia
FINANCIAL REPORT
For the half year ended 31 December 2010
Contents
Half-Year Financial Statements Page
Consolidated Income Statement 19
Consolidated Statement of Comprehensive Income 20
Consolidated Balance Sheet 21
Consolidated Cash Flow Statement 22
Consolidated Statement of Changes in Equity 23
Notes to the Half-Year Financial Statements 26
1. Accounting policies 26
2. Segment reporting 27
3. Exceptional items 31
4. Interests in jointly controlled entities 33
5. Net finance costs 34
6. Taxation 34
7. Earnings per share 35
8. Dividends 35
9. Share Capital 36
10. Subsequent events 36
Directors` Report 37
Directors` Declaration of Responsibility 39
Lead Auditor`s Independence Declaration 40
Independent Review Report 41
Consolidated Income Statement
for the half year ended 31 December 2010
Notes Half year Half year Year ended
ended 31 ended 30 June
December 31 December 2010
2010 2009 US$M
US$M US$M
Revenue
Group production 32,350 22,195 48,193
Third party products 2 1,816 2,381 4,605
Revenue 2 34,166 24,576 52,798
Other income 279 313 528
Expenses excluding net finance (19,930) (15,769) (33,295)
costs
Profit from operations 14,515 9,120 20,031
Comprising:
Group production 14,452 9,038 19,920
Third party products 63 82 111
14,515 9,120 20,031
Financial income 5 118 111 215
Financial expenses 5 (489) (343) (674)
Net finance costs 5 (371) (232) (459)
Profit before taxation 14,144 8,888 19,572
Income tax expense (3,118) (2,494) (6,112)
Royalty related taxation (net (340) (188) (451)
of income tax benefit)
Total taxation expense 6 (3,458) (2,682) (6,563)
Profit after taxation 10,686 6,206 13,009
Attributable to non-controlling 162 71 287
interests
Attributable to members of BHP 10,524 6,135 12,722
Billiton Group
Earnings per ordinary share 7 189.2 110.3 228.6
(basic) (US cents)
Earnings per ordinary share 7 188.6 109.8 227.8
(diluted) (US cents)
Dividends per ordinary share - 8 45.0 41.0 83.0
paid during the period (US
cents)
Dividends per ordinary share - 8 46.0 42.0 87.0
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 2010
Half year Half year Year ended
ended ended 30 June
31 December 31 2010
2010 December US$M
US$M 2009
US$M
Profit after taxation 10,686 6,206 13,009
Other comprehensive income
Actuarial gains/(losses) on pension and 76 41 (38)
medical schemes
Available for sale investments:
Net valuation (losses)/gains taken to (118) 34 167
equity
Net valuation (gains)/losses transferred (37) - 2
to the income statement
Cash flow hedges:
Gains/(losses) taken to equity - 22 (15)
Realised losses transferred to the income - 2 2
statement
Exchange fluctuations on translation of 11 8 1
foreign operations taken to equity
Exchange fluctuations on translation of - (10) (10)
foreign operations transferred to the
income statement
Tax recognised within other comprehensive 68 104 111
income
Total other comprehensive income for the - 201 220
period
Total comprehensive income 10,686 6,407 13,229
Attributable to non-controlling interests 152 70 294
Attributable to members of BHP Billiton 10,534 6,337 12,935
Group
The accompanying notes form part of these half year financial statements.
Consolidated Balance Sheet
as at 31 December 2010
31 December 31 December 30 June
2010 2009 2010
US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 16,156 8,382 12,456
Trade and other receivables 7,876 6,196 6,543
Other financial assets 441 644 292
Inventories 5,620 5,056 5,334
Assets held for sale - 629 -
Current tax assets 153 397 189
Other 332 295 320
Total current assets 30,578 21,599 25,134
Non-current assets
Trade and other receivables 1,581 1,043 1,381
Other financial assets 1,449 1,822 1,510
Inventories 355 228 343
Property, plant and equipment 59,174 52,206 55,576
Intangible assets 778 670 687
Deferred tax assets 4,177 3,822 4,053
Other 180 163 168
Total non-current assets 67,694 59,954 63,718
Total assets 98,272 81,553 88,852
LIABILITIES
Current liabilities
Trade and other payables 6,743 5,515 6,467
Interest bearing liabilities 1,831 1,362 2,191
Liabilities held for sale - 301 -
Other financial liabilities 607 488 511
Current tax payable 2,451 588 1,685
Provisions 1,972 1,669 1,899
Deferred income 273 283 289
Total current liabilities 13,877 10,206 13,042
Non-current liabilities
Trade and other payables 498 529 469
Interest bearing liabilities 14,125 14,935 13,573
Other financial liabilities 140 91 266
Deferred tax liabilities 3,872 3,626 4,320
Provisions 8,296 7,134 7,433
Deferred income 471 431 420
Total non-current liabilities 27,402 26,746 26,481
Total liabilities 41,279 36,952 39,523
Net assets 56,993 44,601 49,329
EQUITY
Share capital - BHP Billiton Limited 1,227 1,227 1,227
Share capital - BHP Billiton Plc 1,113 1,116 1,116
Treasury shares (531) (527) (525)
Reserves 1,838 1,498 1,906
Retained earnings 52,445 40,617 44,801
Total equity attributable to members of 56,092 43,931 48,525
BHP Billiton Group
Non-controlling interests 901 670 804
Total equity 56,993 44,601 49,329
The accompanying notes form part of these half year financial statements.
Consolidated Cash Flow Statement
for the half year ended 31 December 2010
Half year Half year Year
ended ended ended 30
31 31 June
December December 2010
2010 2009 US$M
US$M US$M
Operating activities
Profit before taxation 14,144 8,888 19,572
Adjustments for:
Non-cash exceptional items 19 (618) (255)
Depreciation and amortisation expense 2,428 2,318 4,759
Net gain on sale of non-current assets (44) (95) (114)
Impairments of property, plant and 47 18 35
equipment, financial assets and intangibles
Employee share awards expense 108 61 170
Financial income and expenses 371 232 459
Other (123) (160) (265)
Changes in assets and liabilities:
Trade and other receivables (1,584) (1,001) (1,713)
Inventories (298) (284) (571)
Trade and other payables 134 (242) 565
Net other financial assets and liabilities 99 (143) (90)
Provisions and other liabilities 109 (333) (306)
Cash generated from operations 15,410 8,641 22,246
Dividends received 14 6 20
Interest received 49 61 99
Interest paid (248) (205) (520)
Income tax refunded - - 552
Income tax paid (2,783) (2,646) (4,931)
Royalty related taxation paid (249) (389) (576)
Net operating cash flows 12,193 5,468 16,890
Investing activities
Purchases of property, plant and equipment (5,167) (4,606) (9,323)
Exploration expenditure (452) (439) (1,333)
Exploration expenditure expensed and 363 295 1,030
included in operating cash flows
Purchase of intangibles (81) (39) (85)
Investment in financial assets (65) (103) (152)
Investment in subsidiaries, operations and - - (508)
jointly controlled entities, net of their
cash
Payment on sale of operations - (160) (156)
Cash outflows from investing activities (5,402) (5,052) (10,527)
Proceeds from sale of property, plant and 24 50 132
equipment
Proceeds from sale of financial assets 84 30 34
Proceeds from sale or partial sale of - 37 376
subsidiaries, operations and jointly
controlled entities, net of their cash
Net investing cash flows (5,294) (4,935) (9,985)
Financing activities
Proceeds from interest bearing liabilities 892 346 567
Proceeds from debt related instruments 67 - 103
Repayment of interest bearing liabilities (1,057) (733) (1,155)
Proceeds from ordinary shares 18 4 12
Contributions from non-controlling interests - - 335
Purchase of shares by Employee Share (327) (180) (274)
Ownership Plan ("ESOP") trusts
Share buy-back - BHP Billiton Plc (254) - -
Dividends paid (2,506) (2,282) (4,618)
Dividends paid to non-controlling interests (48) (169) (277)
Net financing cash flows (3,215) (3,014) (5,307)
Net (decrease)/increase in cash and cash 3,684 (2,481) 1,598
equivalents
Cash and cash equivalents, net of 12,455 10,831 10,831
overdrafts, at beginning of period
Effect of foreign currency exchange rate 3 30 26
changes on cash and cash equivalents
Cash and cash equivalents, net of 16,142 8,380 12,455
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 2010
For the half year ended 31 Attributable to members of the BHP Billiton
December 2010 Group
US$M Share Share Treasury Reserves
capital capital shares
- BHP - BHP
Billiton Billiton
Limited Plc
Balance at the beginning of the 1,227 1,116 (525) 1,906
financial period
Profit after taxation - - - -
Other comprehensive income:
Actuarial gains on pension and - - - -
medical schemes
Net valuation losses on - - - (118)
available for sale investments
taken to equity
Net valuation gains on available - - - (27)
for sale investments transferred
to the income statement
Exchange fluctuations on - - - 11
translation of foreign
operations taken to equity
Tax recognised within other - - - 41
comprehensive income
Total comprehensive income - - - (93)
Transactions with owners:
Purchase of shares by ESOP - - (327) -
trusts
Employee share awards exercised - - 321 (70)
net of employee contributions
Accrued employee entitlement for - - - 108
unvested awards
Shares bought back - - (254) -
Shares cancelled - (3) 254 3
Distribution to option holders - - - (16)
Dividends paid - - - -
Equity contributed - - - -
Balance at the end of the 1,227 1,113 (531) 1,838
financial period
For the half year ended Attributable to members of the BHP Billiton Group
31 December 2010
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance at the beginning 44,801 48,525 804 49,329
of the financial period
Profit after taxation 10,524 10,524 162 10,686
Other comprehensive
income:
Actuarial gains on 76 76 - 76
pension and medical
schemes
Net valuation losses on - (118) - (118)
available for sale
investments taken to
equity
Net valuation gains on - (27) (10) (37)
available for sale
investments transferred
to the income statement
Exchange fluctuations on - 11 - 11
translation of foreign
operations taken to
equity
Tax recognised within 27 68 - 68
other comprehensive
income
Total comprehensive 10,627 10,534 152 10,686
income
Transactions with
owners:
Purchase of shares by - (327) - (327)
ESOP trusts
Employee share awards (225) 26 - 26
exercised net of
employee contributions
Accrued employee - 108 - 108
entitlement for unvested
awards
Shares bought back - (254) - (254)
Shares cancelled (254) - - -
Distribution to option - (16) (10) (26)
holders
Dividends paid (2,504) (2,504) (48) (2,552)
Equity contributed - - 3 3
Balance at the end of 52,445 56,092 901 56,993
the financial period
The accompanying notes form part of these half year financial statements.
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2010 (continued)
For the half year ended 31 Attributable to members of the BHP Billiton
December 2009 Group
US$M Share Share Treasury Reserves
capital capital shares
- 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/(losses) on - - - -
pension and medical schemes
Net valuation gains on available - - - 34
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
taken to equity
Exchange fluctuations on - - - (10)
translation of foreign operations
transferred to the income
statement
Tax recognised within other - - - 85
comprehensive income
Total comprehensive income - - - 141
Transactions with owners:
Purchase of shares by ESOP trusts - - (180) -
Employee share awards exercised - - 178 (46)
net of employee contributions
Accrued employee entitlement for - - - 61
unvested awards
Issue of share options to non- - - - 43
controlling interests
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 Attributable to members of the BHP Billiton Group
31 December 2009
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance at the beginning 36,831 39,954 757 40,711
of the financial period
Profit after taxation 6,135 6,135 71 6,206
Other comprehensive
income:
Actuarial gains/(losses) 42 42 (1) 41
on pension and medical
schemes
Net valuation gains on - 34 - 34
available for sale
investments taken to
equity
Gains on cash flow - 22 - 22
hedges taken to equity
Realised losses on cash - 2 - 2
flow hedges transferred
to the income statement
Exchange fluctuations on - 8 - 8
translation of foreign
operations taken to
equity
Exchange fluctuations on - (10) - (10)
translation of foreign
operations transferred
to the income statement
Tax recognised within 19 104 - 104
other comprehensive
income
Total comprehensive 6,196 6,337 70 6,407
income
Transactions with
owners:
Purchase of shares by - (180) - (180)
ESOP trusts
Employee share awards (128) 4 - 4
exercised net of
employee contributions
Accrued employee - 61 - 61
entitlement for unvested
awards
Issue of share options - 43 16 59
to non-controlling
interests
Distribution to option - (6) (4) (10)
holders
Dividends paid (2,282) (2,282) (169) (2,451)
Balance at the end of 40,617 43,931 670 44,601
the financial period
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2010 (continued)
For the year ended 30 June 2010 Attributable to members of the BHP Billiton
Group
US$M Share Share Treasury Reserves
capital capital shares
- 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 losses on pension and - - - -
medical schemes
Net valuation gains on available - - - 160
for sale investments taken to
equity
Net valuation losses on available - - - 2
for sale investments transferred
to the income statement
Losses on cash flow hedges taken - - - (15)
to equity
Realised losses on cash flow - - - 2
hedges transferred to the income
statement
Exchange fluctuations on - - - 1
translation of foreign operations
taken to equity
Exchange fluctuations on - - - (10)
translation of foreign operations
transferred to the income
statement
Tax recognised within other - - - 57
comprehensive income
Total comprehensive income - - - 197
Transactions with owners:
Purchase of shares by ESOP trusts - - (274) -
Employee share awards exercised - - 274 (88)
net of employee contributions
Employee share awards lapsed - - - (28)
Accrued employee entitlement for - - - 170
unvested awards
Issue of share options to non- - - - 43
controlling interests
Distribution to option holders - - - (10)
Dividends paid - - - -
Equity contributed - - - 317
Balance at the end of the 1,227 1,116 (525) 1,906
financial period
For the year ended 30 Attributable to members of the BHP Billiton Group
June 2010
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance at the beginning 36,831 39,954 757 40,711
of the financial period
Profit after taxation 12,722 12,722 287 13,009
Other comprehensive
income:
Actuarial losses on (38) (38) - (38)
pension and medical
schemes
Net valuation gains on - 160 7 167
available for sale
investments taken to
equity
Net valuation losses on - 2 - 2
available for sale
investments transferred
to the income statement
Losses on cash flow - (15) - (15)
hedges taken to equity
Realised losses on cash - 2 - 2
flow hedges transferred
to the income statement
Exchange fluctuations on - 1 - 1
translation of foreign
operations taken to
equity
Exchange fluctuations on - (10) - (10)
translation of foreign
operations transferred
to the income statement
Tax recognised within 54 111 - 111
other comprehensive
income
Total comprehensive 12,738 12,935 294 13,229
income
Transactions with
owners:
Purchase of shares by - (274) - (274)
ESOP trusts
Employee share awards (178) 8 - 8
exercised net of
employee contributions
Employee share awards 28 - - -
lapsed
Accrued employee - 170 - 170
entitlement for unvested
awards
Issue of share options - 43 16 59
to non-controlling
interests
Distribution to option - (10) (6) (16)
holders
Dividends paid (4,618) (4,618) (277) (4,895)
Equity contributed - 317 20 337
Balance at the end of 44,801 48,525 804 49,329
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 2010
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 ("AASB") 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 2010 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 2010 annual financial statements contained within the Annual
Report of the BHP Billiton Group except for the application of `Improvements
to IFRSs 2009`/AASB 2009-5 `Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project`. This has resulted in
exploration cash flows of US$295 million for the half year ended 31 December
2009 (30 June 2010: US$1,030 million), which were not recognised as assets,
being reclassified from net investing cash flows to net operating cash flows
in the Consolidated Cash Flow Statement.
Rounding of amounts
Amounts in this financial report have, unless otherwise indicated, been
rounded to the nearest million dollars.
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the same
basis as current period figures.
Exchange rates
The following exchange rates relative to the US dollar have been applied in
the financial information:
Average Average Average
Half year Half year Year As at As at As at
ended ended ended 31 31 30
31 December 31 December 30 June December December June
2010 2009 2010 2010 2009 2010
Australian 0.94 0.87 0.88 1.02 0.90 0.85
dollar(a)
Brazilian 1.72 1.81 1.80 1.66 1.74 1.81
real
Canadian 1.03 1.08 1.06 1.00 1.05 1.06
dollar
Chilean 496 532 529 468 507 545
peso
Colombian 1,848 1,991 1,970 1,920 2,043 1,920
peso
South 7.13 7.65 7.59 6.63 7.40 7.68
African
rand
Euro 0.76 0.69 0.72 0.75 0.70 0.82
UK pound 0.64 0.61 0.63 0.65 0.62 0.66
sterling
(a) Displayed as US$ to A$1 based on common convention.
2. Segment reporting
The Group operates nine Customer Sector Groups aligned with the commodities
which we extract and market, reflecting the structure used by the Group`s
management to assess the performance of the Group:
Customer Sector Group Principal activities
Petroleum Exploration, development and production of oil
and gas
Aluminium Mining of bauxite, refining of bauxite into
alumina and smelting of alumina into aluminium
metal
Base Metals Mining of copper, silver, lead, zinc, molybdenum,
uranium and gold
Diamonds and Specialty Mining of diamonds and titanium minerals; potash
Products development
Stainless Steel Materials Mining and production of nickel products
Iron Ore Mining of iron ore
Manganese Mining of manganese ore and production of
manganese metal and alloys
Metallurgical Coal Mining of metallurgical coal
Energy Coal Mining of thermal (energy) coal
Group and unallocated items represent Group centre functions. Exploration and
technology activities are recognised within relevant segments.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Half year
ended
31 December
2010
Revenue
Group 4,853 1,588 6,835 675 1,867
production
Third party 46 755 232 - 37
products
Rendering of 1 - - - -
services
Inter-segment 5 - - - 1
revenue
Total revenue 4,905 2,343 7,067 675 1,905
(a)
Underlying 2,854 17 3,580 221 357
EBIT (b)
Net finance
costs
Exceptional
items
Profit before
taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half year
ended
31 December
2010
Revenue
Group 9,275 1,196 3,947 2,062 - 32,298
production
Third party 41 - - 499 206 1,816
products
Rendering 46 - 5 - - 52
of services
Inter- 20 - - - (26) -
segment
revenue
Total 9,382 1,196 3,952 2,561 180 34,166
revenue(a)
Underlying 5,811 430 1,453 334 (228) 14,829
EBIT (b)
Net finance (371)
costs
Exceptional (314)
items
Profit 14,144
before
taxation
(a) Revenue not attributable to reportable segments reflects sales of freight
and fuel to third parties.
(b) Underlying EBIT is earnings before net finance costs and taxation and any
exceptional items.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Half year
ended
31 December
2009
Revenue
Group 4,126 1,383 5,076 566 1,470
production
Third party 47 621 395 - 185
products
Rendering of - - - - -
services
Inter-segment 4 - - - -
revenue
Total 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$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half year
ended
31 December
2009
Revenue
Group 4,390 882 2,686 1,555 - 22,134
production
Third party 35 6 - 587 505 2,381
products
Rendering 32 - 29 - - 61
of services
Inter- 21 - - - (25) -
segment
revenue
Total 4,478 888 2,715 2,142 480 24,576
revenue(a)
Underlying 2,091 190 772 332 (195) 8,502
EBIT (b)
Net finance (232)
costs
Exceptional 618
items
Profit 8,888
before
taxation
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds and Stainless
Metals Specialty Steel
Products Materials
Year ended 30
June 2010
Revenue
Group 8,682 2,948 9,528 1,272 3,311
production
Third party 86 1,405 881 - 306
products
Rendering of 3 - - - -
services
Inter-segment 11 - - - -
revenue
Total revenue 8,782 4,353 10,409 1,272 3,617
(a)
Underlying 4,573 406 4,632 485 668
EBIT (b)
Net finance
costs
Exceptional
items
Profit before
taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended
30 June
2010
Revenue
Group 10,964 2,143 6,019 3,214 - 48,081
production
Third party 67 7 - 1,051 802 4,605
products
Rendering 69 - 40 - - 112
of services
Inter- 39 - - - (50) -
segment
revenue
Total 11,139 2,150 6,059 4,265 752 52,798
revenue (a)
Underlying 6,001 712 2,053 730 (541) 19,719
EBIT (b)
Net finance (459)
costs
Exceptional 312
items
Profit 19,572
before
taxation
3. Exceptional items
Exceptional items are those items where their nature and amount is considered
material to the financial report. Such items included within the Group`s
profit for the period are detailed below.
Half year ended 31 December 2010 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Release of income tax provisions - 138 138
(314) 138 (176)
Withdrawn offer for PotashCorp:
The Group withdrew its offer for PotashCorp on 15 November 2010 following the
Board`s conclusion that the condition of the offer relating to receipt of a
net benefit as determined by the Minister of Industry under the Investment
Canada Act could not be satisfied. The Group incurred fees associated with the
US$45 billion debt facility (US$240 million), investment bankers`, lawyers`
and accountants` fees, printing expenses and other charges (US$74 million) in
progressing this matter during the period up to the withdrawal of the offer,
which were expensed as operating costs in the half year ended 31 December
2010.
Release of income tax provisions:
The Australian Taxation Office (ATO) issued amended assessments in prior years
denying bad debt deductions arising from the investments in Hartley
(Zimbabwe), Beenup and Boodarie Iron (both Australia) and the denial of
capital allowance claims made on the Boodarie Iron project. BHP Billiton
lodged objections and was successful on all counts in the Federal Court and
the Full Federal Court. The Hartley matter was settled with the ATO in
September 2009. The ATO sought special leave to appeal to the High Court in
relation to the Beenup bad debt disallowance and the denial of the capital
allowance claims on the Boodarie Iron project. Special leave was not sought by
the ATO for the Boodarie Iron bad debt disallowance. In September 2010 the
High Court granted special leave only in relation to the denial of the capital
allowance claims on the Boodarie Iron project which resulted in a release of
US$138 million from the Group`s income tax provisions in the half year ended
31 December 2010.
Half year ended 31 December 2009 Gross Tax Net
US$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 were partially reversed. The assets and liabilities of the
operation were 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, were classified as held for sale at 31 December
2009.
3. Exceptional items (continued)
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 of US$103 million were classified as held for sale. The sales
transactions were completed during the half year ended 31 December 2009.
Year ended 30 June 2010 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Pinal Creek rehabilitation 186 (53) 133
Disposal of Ravensthorpe nickel 653 (196) 457
operations
Restructuring of operations and (298) 12 (286)
deferral of projects
Renegotiation of power supply (229) 50 (179)
agreements
Release of income tax provisions - 128 128
312 (59) 253
Pinal Creek rehabilitation:
On 22 February 2010 a settlement was reached in relation to the Pinal Creek
(US) groundwater contamination which resulted in other parties taking on full
responsibility for ground water remediation and partly funding the Group for
past and future rehabilitation costs. As a result, a gain of US$186 million
(US$53 million tax expense) was recognised reflecting the release of
rehabilitation provisions and cash received.
Disposal of Ravensthorpe nickel operations:
On 9 December 2009, the Group announced it had signed an agreement to sell the
Ravensthorpe nickel operations (Australia). The sale was completed on 10
February 2010. As a result of the sale, impairment charges recognised as
exceptional items in the financial year ended 30 June 2009 were partially
reversed totalling US$611 million (US$183 million tax expense). In addition,
certain obligations that remained with the Group were mitigated and related
provisions released; together with minor net operating costs this resulted in
a gain of US$42 million (US$13 million tax expense).
Restructuring of operations and deferral of projects:
Continuing power supply constraints impacting the Group`s three Aluminium
smelter operations in southern Africa, and temporary delays with the Guinea
Alumina project, have given rise to charges for the impairment of property,
plant and equipment and restructuring provisions. A total charge of US$298
million (US$12 million tax benefit) was recognised by the Group in the year
ended 30 June 2010.
Renegotiation of power supply arrangements:
Renegotiation of long term power supply arrangements in southern Africa have
impacted the value of embedded derivatives contained within those
arrangements. A total charge of US$229 million (US$50 million tax benefit) was
recognised by the Group in the year ended 30 June 2010.
3. Exceptional items (continued)
Release of income tax provisions:
The ATO issued amended assessments in prior years denying bad debt deductions
arising from the investments in Hartley, Beenup and Boodarie Iron and the
denial of capital allowance claims made on the Boodarie Iron project. BHP
Billiton lodged objections and has been successful on all counts in the
Federal Court and the Full Federal Court. The ATO has not sought to appeal the
Boodarie Iron bad debt disallowance to the High Court which resulted in a
release of US$128 million from the Group`s income tax provisions. The ATO
sought special leave to appeal to the High Court in relation to the Beenup bad
debt disallowance and the denial of the capital allowance claims on the
Boodarie Iron project and has been granted special leave only in relation to
the denial of the capital allowance claims on the Boodarie Iron project.
4. Interests in jointly controlled entities
Major Ownership interest at BHP Contribution to profit after
shareholdings in Billiton Group reporting taxation
jointly date (a)
controlled
entities
31 31 30 June Half Half Year
December December 2010 year year ended
2010 2009 % ended ended 30 June
% % 31 31 2010
December December US$M
2010 2009
US$M US$M
Mozal SARL 47.1 47.1 47.1 22 18 4
Compania Minera 33.75 33.75 33.75 279 239 438
Antamina SA
Minera Escondida 57.5 57.5 57.5 1,554 1,236 2,175
Limitada
Samarco Mineracao 50 50 50 479 126 430
SA
Carbones del 33.33 33.33 33.33 105 83 172
Cerrej?n LLC
Other (b) (140) 12 (145)
Total 2,299 1,714 3,074
(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 the Group`s effective interest in the Richards Bay Minerals joint
venture of 37.76 per cent (31 December 2009: 37.76 per cent; 30 June 2010:
37.76 per cent), the Guinea Alumina project (ownership interest 33.3 per cent;
31 December 2009: 33.3 per cent; 30 June 2010: 33.3 per cent), the Newcastle
Coal Infrastructure Group Pty Ltd (ownership interest 35.5 per cent; 31
December 2009: 35.5 per cent; 30 June 2010: 35.5 per cent) and other
immaterial jointly controlled entities.
5. Net finance costs
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2010
2010 2009 US$M
US$M US$M
Financial expenses
Interest on bank loans and 11 11 24
overdrafts
Interest on all other 273 302 460
borrowings
Finance lease and hire 6 7 14
purchase interest
Dividends on redeemable - - -
preference shares
Discounting on provisions and 206 182 359
other liabilities
Discounting on post-retirement 63 63 130
employee benefits
Interest capitalised (a) (139) (154) (301)
Fair value change on hedged (130) 88 131
loans
Fair value change on hedging 116 (146) (138)
derivatives
Exchange variations on net 83 (10) (5)
debt
489 343 674
Financial income
Interest income (67) (63) (117)
Expected return on pension (51) (48) (98)
scheme assets
(118) (111) (215)
Net finance costs 371 232 459
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
interest rate on such borrowings. For the half year ended 31 December 2010 the
general capitalisation rate was 3.2 per cent (31 December 2009: 3.8 per cent;
30 June 2010: 3.5 per cent).
6. Taxation
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2010
2010 2009 US$M
US$M US$M
Taxation expense including
royalty related taxation
UK taxation expense 32 67 178
Australian taxation expense 1,726 1,273 3,798
Overseas taxation expense 1,700 1,342 2,587
Total taxation expense 3,458 2,682 6,563
Excluding the impacts of royalty related taxation, exchange rate movements and
tax on exceptional items, the underlying effective rate was 30.3 per cent (31
December 2009: 31.6 per cent, 30 June 2010: 30.9 per cent).
Exchange rate movements decreased taxation expense by US$1,127 million (31
December 2009: decrease of US$306 million, 30 June 2010: increase of US$106
million) predominantly due to the increase in the US dollar value of future
tax depreciation of US$1,750 million offset by the revaluation of local
currency tax liabilities, other monetary items and temporary differences which
amounted to US$623 million.
Total taxation expense including royalty related taxation and tax on
exceptional items was US$3,458 million, representing an effective rate of 24.4
per cent (31 December 2009: 30.2 per cent, 30 June 2010: 33.5 per cent).
Excluding the impacts of exceptional items the taxation expense was US$3,596
million (31 December 2009: US$2,497 million; 30 June 2010: US$6,504 million).
Royalty related taxation represents an effective rate of 2.4 per cent (31
December 2009: 2.1 per cent, 30 June 2010: 2.3 per cent).
7. Earnings per share
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2010
2010 2009
Basic earnings per ordinary 189.2 110.3 228.6
share (US cents)
Diluted earnings per ordinary 188.6 109.8 227.8
share (US cents)
Basic earnings per American 378.4 220.6 457.2
Depositary Share (ADS) (US
cents) (a)
Diluted earnings per American 377.2 219.6 455.6
Depositary Share (ADS) (US
cents) (a)
Basic earnings (US$M) 10,524 6,135 12,722
Diluted earnings (US$M) (b) 10,536 6,147 12,743
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 Half year Half year Year ended
shares ended ended 30 June
31 December 31 December 2010
2010 2009 Million
Million Million
Basic earnings per ordinary 5,563 5,564 5,565
share denominator
Shares and options 25 34 30
contingently issuable under
employee share ownership plans
Diluted earnings per ordinary 5,588 5,598 5,595
share denominator
(a) Each American Depositary Share (ADS) represents two ordinary shares.
(b) Diluted earnings are calculated after adding back dividend equivalent
payments of US$12 million (31 December 2009: US$12 million; 30 June 2010:
US$21 million) that would not be made if potential ordinary shares were
converted to fully paid.
8. Dividends
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2010
2010 2009 US$M
US$M US$M
Dividends paid during the
period
BHP Billiton Limited 1,511 1,377 2,787
BHP Billiton Plc - Ordinary 993 905 1,831
shares
- Preference shares (a) - - -
2,504 2,282 4,618
Dividends declared in respect
of the period
BHP Billiton Limited 1,545 1,410 2,921
BHP Billiton Plc - Ordinary 1,012 927 1,920
shares
- Preference shares(a) - - -
2,557 2,337 4,841
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each declared
and paid annually (31 December 2009: 5.5 per cent; 30 June 2010: 5.5 per
cent).
8. Dividends (continued)
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2010
2010 2009 US cents
US cents US cents
Dividends paid during the
period (per share)
Prior year final dividend 45.0 41.0 41.0
Interim dividend N/A N/A 42.0
45.0 41.0 83.0
Dividends declared in respect
of the period (per share)
Interim dividend 46.0 42.0 42.0
Final dividend N/A N/A 45.0
46.0 42.0 87.0
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 16 February 2011, BHP Billiton
declared an interim dividend of 46.0 US cents per share (US$2,557 million),
which will be paid on 31 March 2011 (31 December 2009: 42.0 US cents per share
- US$2,337 million; 30 June 2010: 45.0 US cents per shares - US$2,504
million).
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
9. Share capital
On 15 November 2010, BHP Billiton announced the reactivation of the remaining
US$4.2 billion component of its previously suspended US$13 billion buy-back
program. In accordance with the UK Companies Act 2006 and with the resolutions
passed at the 2010 Annual General Meetings, BHP Billiton Limited purchased
fully paid shares in BHP Billiton Plc on-market and then transferred those
shares to BHP Billiton Plc for nil consideration and cancellation. Details of
the purchases are shown in the table below.
Half year Shares Number Cost per Total Purchased by:
end purchased share cost
(a) US$M
BHP Billiton BHP Billiton
Limited Plc
Shares US$M Shares US$M
31 BHP 6,825,007 GBP23.58 254 6,825,007 254 - -
December Billiton
2010 Plc
(a) Cost per share represents the average cost per share paid on-market by BHP
Billiton Limited for BHP Billiton Plc shares in the six month period ended 31
December 2010. Since the commencement of the buy-back in 2006 the average cost
per share was GBP12.74.
10. Subsequent events
On 16 February 2011 the Group announced an expanded US$10 billion capital
management program. BHP Billiton will continue to consider both on and off-
market execution for the US$10 billion program and, subject to market
conditions, expects to largely complete the initiative by the end of the 2011
calendar year.
Other than the matters outlined above, no matters or circumstances have arisen
since the end of the half year that have significantly affected, or may
significantly affect, the operations, results of operations or state of
affairs of the 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 2010 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 2010 and likely future developments are
given on pages 1 to 15. 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 prices *Fluctuations in currency exchange
and impacts of the global financial rates
crisis
*Failure to discover new reserves, *Influence of China and impact of a
maintain or enhance existing slowdown in consumption
reserves or develop new operations
*Actions by governments or political *Inability to successfully integrate
events in the countries in which we acquired businesses
operate
*Inability to recover investments in *Non-compliance to the Group`s
mining and oil and gas projects standards by non-controlled assets
*Operating cost pressures and *Unexpected natural and operational
shortages could negatively impact catastrophes
our operating margins and expansion
plans
*Climate change and greenhouse *Inadequate human resource talent pool
effects
*Breaches in information technology *Breaches in governance processes
security processes
*Impact of health, safety and *The Group`s commercial counterparties
environmental exposures and related may not meet their obligations
regulations on operations and
reputation
*Increased costs and schedule delays
to our development projects
Further information on the above risks and uncertainties can be found on pages
10 to 13 of the Group`s Annual Report for the year ended 30 June 2010, a copy
of which is available on the Group`s website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on pages 35 to 36.
Board of Directors
The Directors of BHP Billiton at any time during or since the end of the half
year are:
Mr J Nasser - Chairman since Ms C J Hewson - a Director
March 2010 (a Director since June since March 2010
2006)
Mr A L Boeckmann - a Director Mr M J Kloppers - an Executive
since September 2008 Director since January 2006
Mr M W Broomhead - a Director Mr W W Murdy - a Director
since March 2010 since June 2009
Dr J G Buchanan - a Director Mr K C Rumble - a Director
since February 2003 since September 2008
Mr C A Cordeiro - a Director Dr J M Schubert - a Director
since February 2005 since June 2000
Mr D A Crawford - a Director Baroness S Vadera - a Director
since May 1994 since January 2011
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 40 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.
J Nasser AO - Chairman M Kloppers - Chief Executive Officer
Dated this 16th day of February 2011
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 19 to 36,
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` as issued by the AASB 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 2010 and of its performance for the half year ended on
that date;
(b) the Directors` Report, which incorporates the Review of Operations on
pages 1 to 15, 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.
J Nasser AO - Chairman
M Kloppers - Chief Executive Officer
Dated this 16th day of February 2011
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 2010 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
16 February 2011
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 2010.
We have reviewed the condensed half year financial statements of the Group as
at and for the half year ended 31 December 2010 ("half year financial
statements"), set out on pages 19 to 36, 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 10. 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 39 in relation to Australian regulatory
requirements contained in sections (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
- that gives a true and fair view in accordance with Australian Accounting
Standards and the Australian Corporations Act 2001 and for such internal
controls as the Directors determine is necessary to enable the preparation of
the half year financial report that is free from material misstatement,
whether due to fraud or error.
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 the 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 the
Directors` declaration are not in accordance with the Australian Corporations
Act 2001 including: giving a true and fair view of the Group`s financial
position as at 31 December 2010 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 Auditing Standard on
Review Engagements ASRE 2410 Review of a Financial Report Performed by the
Independent Auditor of the Entity as issued by the Australian Auditing and
Assurance Standards Board ("ASRE 2410"). As auditor of BHP Billiton Limited,
ASRE 2410 requires that KPMG Australia complies 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 as at and for the six months ended 31 December 2010 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
16 February 2011
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 the Directors` declaration in the half year financial report of the Group
are not in accordance with the Australian Corporations Act 2001, including:
giving a true and fair view of the Group`s financial position as at 31
December 2010 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
16 February 2011
Date: 16/02/2011 07:08:01 Produced by the JSE SENS Department.
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