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BIL
BIBLT
BIL - BHP Billiton plc - BHP Billiton results for the year ended 30 June 2011
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
News Release
24 August 2011
26/11
BHP BILLITON RESULTS FOR THE YEAR ENDED 30 JUNE 2011
* Record financial results including Underlying EBITDA(1) up 51% to US$37.1
billion, Underlying EBIT(1)(2) up 62% to US$32.0 billion and Attributable
profit (excluding exceptional items) up 74% to US$21.7 billion.
* Strong margins and returns illustrated by increase in Underlying EBIT
margin(3) to 47% and Underlying return on capital to 39%.
* Record production across four commodities and ten operations.
* Record operating cash flow(4) of US$30.1 billion and gearing of 9% confirms
capacity to comfortably fund the Group`s US$15.1 billion(5) acquisition of
Petrohawk Energy Corporation and extensive organic growth program.
* Completion of expanded US$10 billion capital management program highlights
commitment to maintain an appropriate capital structure through all points of
the economic cycle.
* 22% rebasing of final dividend for full year dividend payout of 101 US cents
per share.
Year ended 30 June 2011 2010 Change
US$M US$M %
Revenue 71,739 52,798 35.9%
Underlying EBITDA(1) 37,093 24,513 51.3%
Underlying EBIT(1)(2) 31,980 19,719 62.2%
Profit from operations 31,816 20,031 58.8%
Attributable profit - excluding 21,684 12,469 73.9%
exceptional items
Attributable profit 23,648 12,722 85.9%
Net operating cash flow(4) 30,080 16,890 78.1%
Basic earnings per share - excluding 393.5 224.1 75.6%
exceptional items (US cents)
Basic earnings per share (US cents) 429.1 228.6 87.7%
Underlying EBITDA interest coverage 102.8 64.4 59.6%
(times)(1)(6)
Dividend per share (US cents) 101.0 87.0 16.1%
Refer to page 15 for footnotes, including explanations of the non-GAAP
measures used in this announcement. The financial results are prepared in
accordance with IFRS and are unaudited. All references to the prior period are
to the year ended 30 June 2010 unless otherwise stated.
RESULTS FOR THE YEAR ENDED 30 JUNE 2011
Record results and superior return on capital
BHP Billiton`s strategic focus on large, low cost and expandable assets once
again delivered record financial performance and returns. Underlying EBITDA
and Attributable profit (excluding exceptional items) increased by 51 per cent
and 74 per cent respectively, while Underlying return on capital, excluding
investment associated with projects not yet in production, increased to 50 per
cent. The strong increase in the Group`s Underlying EBIT margin to 47 per cent
emphasises the quality of BHP Billiton`s diversified portfolio.
An ongoing commitment to invest through all points of the economic cycle
delivered record annual production across four commodities and ten operations.
Our decision to invest in our Western Australia Iron Ore business during the
depths of the global financial crisis facilitated an eleventh consecutive
annual increase in iron ore production, as prices continued to test new highs.
Three major projects delivered first production in the 2011 financial year
including the New South Wales Energy Coal MAC20 Project (Australia), which was
completed ahead of schedule.
Robust demand, industry wide cost pressures and persistent supply side
constraints continued to support the fundamentals for the majority of BHP
Billiton`s core commodities. In that context, another strong year of growth in
Chinese crude steel production ensured steelmaking material prices were the
major contributing factor to the US$17.2 billion price related increase in
Underlying EBIT.
However, BHP Billiton has regularly highlighted its belief that costs tend to
lag the commodity price cycle as consumable, labour and contractor costs are
broadly correlated with the mining industry`s level of activity. In the
current environment, tight labour and raw material markets are presenting a
challenge for all operators, and BHP Billiton is not immune from that trend.
The devaluation of the US dollar and inflation reduced Underlying EBIT by a
further US$3.2 billion.
Record cash flow and substantial investment in tier 1 growth
Record operating cash flow of US$30.1 billion continues to create substantial
flexibility for the Group. In the twelve month period alone, BHP Billiton
invested US$12.4 billion across its tier 1 portfolio of minerals and energy
assets, completed a US$10 billion capital management program, and finalised
the acquisition of Chesapeake Energy Corporation`s interests in the
Fayetteville shale (USA). Notwithstanding those achievements, net gearing of
nine per cent at the end of the 2011 financial year ensures BHP Billiton has
the capacity to comfortably fund its extensive organic growth program and the
US$15.1 billion acquisition of Petrohawk Energy Corporation that was announced
on 14 July 2011. Importantly, the Group remains committed to a solid A credit
rating.
Rebasing the progressive dividend and completion of expanded capital
management program
The consistent and disciplined manner in which BHP Billiton returns excess
capital to shareholders was further illustrated by the completion of its
expanded, US$10 billion capital management program on 29 June 2011, six months
ahead of schedule. Completion of the substantial program in such a timely
manner highlights BHP Billiton`s commitment to maintain an appropriate capital
structure, irrespective of the economic cycle. Since 2004, BHP Billiton has
repurchased a cumulative US$22.6 billion of Limited (Ltd) and Plc shares,
representing 15 per cent of then issued capital.
Confidence in the long term outlook for our core commodity markets and the
accelerated purchase and cancellation of four per cent of issued capital
during the 2011 financial year, has enabled the BHP Billiton Board to declare
a 22 per cent rebasing of the final dividend. The increase in the full year
payout to 101 US cents per share is consistent with the Group`s commitment to
its progressive dividend policy.
Outlook
Economic outlook
Global economic growth slowed during the second half of the 2011 financial
year as emerging economies tightened monetary policy, the Japanese tsunami
disrupted trade flows and fiscal austerity measures adversely affected demand.
Global imbalances and high levels of sovereign debt continue to create
uncertainty and a protracted recovery remains our base case assumption for the
developed world. However, a coordinated policy response has the potential to
engender confidence and ease the volatility that has been the dominant theme
of recent years.
Across the important growth economies of China and India, recent economic data
suggests monetary policy is having the intended effect. That said, growth in
fixed asset investment in China has remained resilient and is yet to fully
reflect the recent policy response.
Despite these near term challenges, we remain positive on the longer term
outlook for the global economy. Over the past decade, emerging economies have
contributed more to global growth than the developed world and we expect their
share to expand as the process of urbanisation and industrialisation
continues.
Commodities outlook
Commodities remained an asset of choice in the 2011 financial year as strong
underlying fundamentals supported prices for a number of BHP Billiton`s core
products. Robust demand driven by the emerging economies, a general elevation
and steepening of global (commodity) cost curves, and the persistent theme of
supply side constraint, were all catalysts for generally higher prices.
However, we should highlight that several commodities, including metallurgical
coal, iron ore, copper and crude oil, experienced supply side disruptions in
the second half of the 2011 financial year that are not expected to persist
beyond the short term.
We expect robust demand in the short and medium term, supported by commodities
intensive emerging economic growth. A more positive demand dynamic remains a
distinct possibility should policy be enacted to further stimulate growth in
the developed world.
The strong pace of growth in demand for steelmaking raw materials,
particularly in China, is expected to slow in the longer term, as underlying
growth reverts to a more sustainable level and resource intensity per unit of
GDP declines. However, the fundamentals for iron ore and metallurgical coal
remain compelling as the supply response is expected to remain constrained and
capital costs are expected to rise.
Over the longer term, we expect strong demand for our core commodities to be
underpinned by the industrialisation and urbanisation of China, India and
other emerging economies. Progressively higher cost sources of new supply will
be required, supporting long run commodity prices and operating margins for
the low cost producers.
Development projects
BHP Billiton approved 11 major projects for a total investment commitment of
US$12.9 billion (BHP Billiton share) during the 2011 financial year. Following
the progression of the Jansen Potash Project into feasibility during the March
2011 quarter, BHP Billiton also announced an additional US$488 million of pre-
commitment funding to support development of the project in Saskatchewan,
Canada. The progression of these projects forms a meaningful component of the
Group`s anticipated organic growth program that is expected to exceed US$80
billion over the five years to the end of the 2015 financial year.
Industry wide cost pressures remain a feature of the development landscape and
reflect stronger producer currencies as well as underlying inflation on raw
material and labour costs. BHP Billiton approved revised capital budgets and
schedules during the 2011 financial year for the Esso Australia Resources Pty
Ltd operated Kipper (US$900 million, BHP Billiton share) and Turrum (US$1.4
billion, BHP Billiton share) Petroleum projects and the BHP Billiton operated
Worsley Efficiency and Growth (US$3.0 billion, BHP Billiton share) alumina
refinery expansion (all Australia).
Three major projects delivered first production in the twelve month period:
namely the New South Wales Energy Coal MAC20 Project, the Douglas Middelburg
Optimisation Project in South Africa Coal and Angostura Gas Phase II (Trinidad
and Tobago).
Projects completed during the 2011 financial year
Customer Project Capacity(i) Capital Date of initial
Sector expenditure production(ii)
Group (US$M)(i)
Budget Actual Target Actual
Petroleum Angostura Gas 280 million 180 157(iii) H1 2011 H1 2011
Phase II cubic feet of
(Trinidad and gas per day.
Tobago)
BHP Billiton
- 45%
Energy Douglas 10 million 975 760(iii) Mid July
Coal Middelburg tonnes per 2010 2010
Optimisation annum export
(South thermal coal
Africa) and 8.5
BHP Billiton million tonnes
- 100% per annum
domestic
thermal coal
(sustains
current
output).
MAC20 Project Increases 260 285(iii) H1 2011 H1 2011
(Australia) saleable
BHP Billiton thermal coal
- 100% production by
approximately
3.5 million
tonnes per
annum.
1,415 1,202
(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(ii)
(US$M)(i)
Petroleum Bass Strait 10,000 barrels of 900(iii) 2012(iii)(iv)
Kipper condensate per day and
(Australia) processing capacity of
BHP Billiton - 80 million cubic feet
32.5% - 50% of gas per day.
Bass Strait 11,000 barrels of 1,350(iii) 2013(iii)
Turrum condensate per day and
(Australia) processing capacity of
BHP Billiton - 200 million cubic feet
50% of gas per day.
North West Replacement vessel with 245 2011
Shelf CWLH Life capacity of 60,000
Extension barrels of oil per day.
(Australia)
BHP Billiton -
16.67%
North West 2,500 million cubic 850 2013
Shelf feet of gas per day.
North Rankin B
Gas Compression
(Australia)
BHP Billiton -
16.67%
Aluminium Worsley 1.1 million tonnes per 2,995(iii) Q1 2012(iii)
Efficiency and annum of additional
Growth alumina capacity.
(Australia)
BHP Billiton -
86%
Base Antamina Increases ore 435 Q4 2011
Metals Expansion processing capacity to
(Peru) 130,000 tonnes per day.
BHP Billiton -
33.75%
Iron Ore WAIO Rapid Project integrated into 4,800 H2 2011
Growth Project subsequent expansion
5 (Australia) approvals that will
BHP Billiton - increase WAIO capacity
85% to 220 million tonnes
per annum(v).
11,575
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
(iii) As per revised budget and schedule.
(iv) Facilities ready for first production pending resolution of mercury
content.
(v) Consistent with the revised scope of the iron ore development sequence.
Projects approved during the 2011 financial year
Customer Project Capacity(i) Budgeted Target date
Sector Group capital for initial
expenditure production(ii)
(US$M)(i)
Petroleum Macedon 200 million cubic 1,050 2013
(Australia) feet of gas per
BHP Billiton day.
- 71.43%
Base Metals Escondida Ore The relocation of 319 Q2 2012
Access the in-pit
(Chile) crushing and
BHP Billiton conveyor
- 57.5% infrastructure
provides access to
higher grade ore.
Diamonds & EKATI Misery Project consists 323 2015
Specialty Open Pit of a pushback of
Products Project the existing
(Canada) Misery open pit
BHP Billiton which was mined
- 80% from 2001 to 2005.
Iron Ore WAIO Increases mining 3,300(iii) Q1 2014
Jimblebar and processing
Mine capacity to 35
Expansion million tonnes per
(Australia) annum.
BHP Billiton
- 96%
WAIO Port Increases total 1,900(iii) H2 2012
Hedland Inner inner harbour
Harbour capacity to 220
Expansion million tonnes per
(Australia) annum with
BHP Billiton debottlenecking
- 85% opportunities to
240 million tonnes
per annum.
WAIO Port Optimises resource 1,400(iii) H2 2014
Blending and and enhances
Rail Yard efficiency across
Facilities the WAIO supply
(Australia) chain.
BHP Billiton
- 85%
Samarco Increases iron ore 1,750 H1 2014
Fourth Pellet pellet production
Plant capacity by 8.3
(Brazil) million tonnes per
BHP Billiton annum to 30.5
- 50% million tonnes per
annum.
Metallurgical Daunia Greenfield mine 800 2013
Coal (Australia) development with
BHP Billiton capacity to
- 50% produce 4.5
million tonnes per
annum of export
metallurgical
coal.
Broadmeadow Increases 450 2013
Life productive
Extension capacity by 0.4
(Australia) million tonnes per
BHP Billiton annum and extends
- 50% the life of the
mine by 21 years.
Hay Point Increases port 1,250(iii) 2014
Stage Three capacity from 44
Expansion million tonnes per
(Australia) annum to 55
BHP Billiton million tonnes per
- 50% annum and reduces
storm
vulnerability.
Energy Coal RX1 Project Increases run-of- 400 H2 2013
(Australia) mine thermal coal
BHP Billiton production by
- 100% approximately 4
million tonnes per
annum.
12,942
(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) Excludes announced pre-commitment funding.
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 difference
between Underlying EBIT and Profit from operations is set out in the following
table:
Year ended 30 June 2011 2010
US$M US$M
Underlying EBIT 31,980 19,719
Exceptional items (before taxation) (164) 312
Profit from operations 31,816 20,031
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 2011 financial year
compared with the 2010 financial year:
US$M US$M
Underlying EBIT for the year ended 30 June 19,719
2010
Change in volumes:
Increase in volumes 841
Decrease in volumes (1,422)
(581)
Net price impact:
Change in sales prices 18,648
Price-linked costs (1,420)
17,228
Change in costs:
Costs (rate and usage) (1,412)
Exchange rates (2,526)
Inflation on costs (635)
(4,573)
Asset sales (85)
Ceased and sold operations (140)
New and acquired operations 1,153
Exploration and business development (328)
Other (413)
Underlying EBIT for the year ended 30 June 31,980
2011
Volumes
BHP Billiton achieved production records across four commodities and ten
operations during the 2011 financial year. Western Australia Iron Ore
shipments rose to a record annualised rate of 155 million tonnes per annum
(mtpa) in the June 2011 quarter and, when combined with strong operating
performance at Samarco (Brazil), enabled iron ore volumes to contribute an
additional US$572 million to Underlying EBIT.
The completion and successful ramp up of the MAC20 Project ahead of schedule
underpinned record production at New South Wales Energy Coal in the period.
When considered in conjunction with a 13 per cent increase in South Africa
Coal production, Energy Coal volumes increased Underlying EBIT by US$177
million in the 2011 financial year.
However, broader challenges continued to delay the supply response of the
industry over the twelve month period. For example, metallurgical coal supply
was significantly affected by persistent wet weather in the Bowen Basin
(Australia) while ongoing permitting delays in the Gulf of Mexico (USA)
continued to impact drilling activity. In aggregate, volumes reduced BHP
Billiton Underlying EBIT by US$581 million in the 2011 financial year despite
generally strong operating performance.
Prices
Robust demand driven by the emerging economies, a general elevation and
steepening of global (commodity) cost curves and the persistent theme of
supply side constraint, were all catalysts for higher commodity prices that
increased Underlying EBIT by US$18.6 billion in the period. Another strong
year of growth in Chinese crude steel production ensured steelmaking material
prices were the major contributing factor, as they alone increased Underlying
EBIT by US$11.1 billion. Price linked costs (including royalties) reduced
Underlying EBIT by US$1.4 billion.
Costs
BHP Billiton has regularly highlighted its belief that costs tend to lag the
commodity price cycle as consumable, labour and contractor costs are broadly
correlated with the mining industry`s level of activity. In the current
environment of elevated commodity prices, tight labour and raw material
markets are presenting a challenge for all operators. Excluding the impact of
a weaker US dollar, inflation and an increase in non-cash items, costs
decreased Underlying EBIT by US$1.2 billion.
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$878 million.
Cost performance in the large, bulk commodity businesses is heavily influenced
by the ability to leverage infrastructure and maximise volumes. In this
regard, the weather related disruption at our Queensland Coal (Australia)
business had a negative impact on unit costs in the period. The major cost
offset was related to the recovery in operating performance that followed last
year`s Clark Shaft outage at Olympic Dam (Australia).
Non-cash items, predominantly depreciation, reduced Underlying EBIT by a
further US$255 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$2.5 billion, which included a US$735 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$2.1 billion, which included a US$640 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$807 million in the 2011 financial year.
The following exchange rates against the US dollar have been applied:
Average Average
Year ended Year ended As at As at As at
30 June 30 June 30 June 30 June 30 June
2011 2010 2011 2010 2009
Australian 0.99 0.88 1.07 0.85 0.81
dollar(i)
Chilean peso 486 529 470 545 530
Colombian 1,843 1,970 1,779 1,920 2,159
peso
Brazilian 1.68 1.80 1.57 1.81 1.95
real
South 7.01 7.59 6.80 7.68 7.82
African rand
(i) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressure on costs across all businesses had an unfavourable
impact on Underlying EBIT of US$635 million. The pressure was most evident in
Australia and South Africa, which accounted for over two thirds of the total
impact.
Asset sales
The profit on the sale of assets was US$85 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 prior
period.
Ceased and sold operations
The currency revaluation of rehabilitation and closure provisions for ceased
operations was the major driver of the US$140 million reduction in Underlying
EBIT.
New and acquired operations
Assets are reported as new and acquired operations until there is a full year
comparison. New operations increased Underlying EBIT by US$1.2 billion
primarily due to strong performance at the BHP Billiton operated Pyrenees oil
facility (Australia) and the inaugural contribution from the recently acquired
Fayetteville shale assets.
Exploration and business development
Group exploration expense increased marginally in the 2011 financial year to
US$1.1 billion. Within Minerals (US$577 million expense) the focus centred
upon copper targets in South America, Mongolia and Zambia; nickel and copper
targets in Australia; and diamond targets in Canada. Exploration for iron ore,
potash, uranium and manganese was undertaken in a number of regions including
Australia, Asia, Africa and the Americas.
Petroleum exploration expense was US$477 million and included a US$73 million
impairment of exploration previously capitalised. Exploration drilling
activity was delayed in the Gulf of Mexico due to new regulatory permitting
processes but was partially offset by an increase in the acquisition and
processing of geophysical data. BHP Billiton`s proven operating capability in
the deepwater remains an important competitive advantage and the Group will
continue to invest in an extensive exploration program that is focused on the
Gulf of Mexico, South China Sea and Australia.
Expenditure on business development reduced Underlying EBIT by an additional
US$303 million compared with the prior period as Base Metals progressed a
number of its development options, including the Olympic Dam Project (ODP1)
and the Spence Hypogene project (Chile). Increased activity on the Scarborough
and Browse liquefied natural gas projects (both Australia) in the 2011
financial year also contributed to the rise in the business development
expense.
Other
Other items decreased Underlying EBIT by US$413 million and included
provisions totalling US$189 million related to indirect taxes in the Aluminium
and Iron Ore businesses, and the Colombian net worth tax in Stainless Steel
Materials and Energy Coal.
Net finance costs
Net finance costs increased to US$561 million from US$459 million in the
corresponding period. This was primarily driven by exchange rate variations on
net debt and lower amounts of interest capitalised.
Taxation expense
Excluding the impacts of royalty related taxation, exceptional items and
exchange rate movements, taxation expense was US$10.1 billion representing an
underlying effective tax rate of 32.1 per cent (2010: 30.9 per cent; 2009:
31.4 per cent).
Government imposed royalty arrangements calculated by reference to profits
after adjustment for temporary differences are reported as royalty related
taxation. Royalty related taxation contributed US$828 million to taxation
expense representing an effective rate of 2.6 per cent (2010: US$451 million
and 2.3 per cent; 2009: US$495 million and 4.3 per cent).
Other royalty and excise arrangements which do not have these characteristics
are recognised as operating costs within profit before taxation. These
amounted to US$2.9 billion during the period (2010: US$1.7 billion; 2009:
US$1.9 billion).
Exceptional items decreased taxation expense by US$2.1 billion (2010: increase
of US$59 million; 2009: decrease of US$1.2 billion) predominantly due to the
reversal of deferred tax liabilities of US$1.5 billion following the election
of eligible Australian entities to adopt a US dollar tax functional currency,
as well as the release of tax provisions of US$718 million following the
Group`s position being confirmed with respect to ATO amended assessments.
Exchange rate movements decreased taxation expense by US$1.5 billion (2010:
increase of US$106 million; 2009: increase of US$444 million) predominantly
due to the revaluation of local currency deferred tax assets arising from
future tax depreciation of US$2.5 billion, partly offset by the revaluation of
local currency tax liabilities and deferred tax balances arising from other
monetary items and temporary differences which amounted to US$1.0 billion.
Total taxation expense including royalty related taxation and the
predominantly non-cash exceptional items and exchange rate movements described
above, was US$7.3 billion, representing an effective rate of 23.4 per cent
(2010: 33.5 per cent; 2009: 45.4 per cent).
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 2011 financial year.
The Group recognised a decrease of US$150 million (US$45 million tax charge)
to rehabilitation obligations in respect of former operations at the Newcastle
steelworks (Australia) following a full review of the progress of the Hunter
River Remediation Project (Australia) and estimated costs to completion.
The Australian Taxation Office (ATO) issued amended assessments in prior years
denying bad debt deductions arising from the investments in Beenup and
Boodarie Iron and the denial of capital allowance claims made on the Boodarie
Iron project. The Group challenged the assessments and was successful on all
counts before the Full Federal Court. The ATO obtained special leave in
September 2010 to appeal to the High Court in respect of the denial of capital
allowance claims made on the Boodarie Iron project. The Group`s position in
respect of the capital allowance claims on the Boodarie Iron project was
confirmed by the High Court in June 2011. As a result of these appeals, US$138
million was released from the Group`s income tax provision in September 2010
and US$580 million in June 2011.
Consistent with the functional currency of the Group`s operations, eligible
Australian entities elected to adopt a US dollar tax functional currency from
1 July 2011. As a result, the deferred tax liability relating to certain US
dollar denominated financial arrangements has been derecognised, resulting in
a credit to income tax expense of US$1.5 billion.
Year ended 30 June 2011 Gross US$M Tax US$M Net US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Newcastle steelworks rehabilitation 150 (45) 105
Release of income tax provisions - 718 718
Reversal of deferred tax - 1,455 1,455
liabilities
(164) 2,128 1,964
Cash flows
Net operating cash flows after interest and tax increased by 78 per cent to
US$30.1 billion. This was primarily driven by an increase in cash generated
from operations (before changes in working capital balances) of US$12.3
billion and changes in working capital balances having a positive year on year
impact on operating cash flow of US$2.6 billion.
In accordance with IFRS, exploration expenditure incurred which has not been
capitalised is now classified within net operating cash flows, which has
resulted in the classification of US$981 million in net operating cash flows
for the 2011 financial year and US$1.0 billion for the 2010 financial year.
Capital and exploration expenditure totalled US$12.4 billion for the year.
Expenditure on major growth projects was US$9.2 billion, including US$1.8
billion on Petroleum projects and US$7.4 billion on Minerals projects. Capital
expenditure on sustaining and other items was US$2.0 billion. Exploration
expenditure was US$1.2 billion, including US$981 million classified within net
operating cash flows.
Financing cash flows include payments related to the US$10 billion capital
management program, dividend payments of US$5.1 billion and net debt
repayments of US$577 million.
Net debt, comprising interest bearing liabilities less cash, was US$5.8
billion which is an increase of US$2.5 billion compared to the net debt
position at 30 June 2010.
Dividend
BHP Billiton has a commitment to its progressive dividend policy, irrespective
of the economic climate and the Group`s growth aspirations. In that context,
our Board today declared a final dividend of 55 US cents per share, which
represents a 22 per cent increase on last year`s equivalent payout. Together
with the interim dividend of 46 US cents per share paid to shareholders on 31
March 2011, this brings the total dividend for the year to 101 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 2 September 2011. Please note
that all currency conversion elections must be registered by the Record Date,
being 9 September 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 - 2 September 2011
Ex-dividend Australian Securities Exchange (ASX) and JSE Limited (JSE) - 5
September 2011
Ex-dividend London Stock Exchange (LSE) and New York Stock Exchange (NYSE) - 7
September 2011
Record Date (including currency conversion and currency election dates, except
for rand) - 9 September 2011
Payment date - 29 September 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 5 and 9 September 2011, nor will transfers
between the UK register and the South African register be permitted between
the dates of 2 and 9 September 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
Notwithstanding BHP Billiton`s commitment to invest more than US$80 billion in
the growth of its tier 1 portfolio, the Group reactivated the remaining US$4.2
billion component of a previously suspended US$13 billion buy-back program on
15 November 2010. BHP Billiton subsequently expanded that capital management
initiative to US$10 billion and committed to complete the program by the end
of the 2011 calendar year.
The subsequent completion of a US$6.3 billion off-market tender buy-back of
BHP Billiton Ltd shares during the period enabled the Group to successfully
complete its US$10 billion capital management program on 29 June 2011, six
months ahead of schedule.
During the 2011 financial year, the combination of on-market purchases of Plc
shares and the off-market purchase of Ltd shares enabled BHP Billiton to buy
(and cancel) 241.8 million shares, representing four per cent of total issued
capital.
Completion of this substantial program in such a timely manner highlighted BHP
Billiton`s commitment to maintain an appropriate capital structure through all
points of the economic cycle. Since 2004, BHP Billiton has repurchased a
cumulative US$22.6 billion of Ltd and Plc shares, representing 15 per cent of
then issued capital. Total returns to shareholders, including dividends paid
and share buy-backs, have exceeded US$48 billion since the formation of BHP
Billiton in 2001.
Debt management and liquidity
No long term debt securities were issued in the debt capital markets by the
Group during the 2011 financial year. The Group has access to an undrawn US$4
billion Revolving Credit Facility, which expires in December 2015. We have
maintained a strong liquidity position and at 30 June 2011, had US$10.1
billion of cash on hand. Surplus cash will be absorbed by the US$15.1 billion
Petrohawk acquisition and our net gearing position will increase accordingly.
Our commitment to retain a solid A credit rating remains unchanged.
Corporate governance
On 13 December 2010, the Board announced the appointment of Baroness Shriti
Vadera as a Non-executive Director with effect from 1 January 2011.
On 23 March 2011, the Board announced the resignation of Mr Alan Boeckmann as
a Non-executive Director and the appointment of Mr Lindsay Maxsted as a Non-
executive Director, both with effect from that date.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the 2011 financial year and the corresponding period.
Year ended 30 June Revenue Underlying EBIT(i)
(US$M) 2011 2010 Change 2011 2010 Change
% %
Petroleum 10,737 8,782 22.3% 6,330 4,573 38.4%
Aluminium 5,221 4,353 19.9% 266 406 (34.5%)
Base Metals 14,152 10,409 36.0% 6,790 4,632 46.6%
Diamonds and 1,517 1,272 19.3% 587 485 21.0%
Specialty Products
Stainless Steel 3,861 3,617 6.7% 588 668 (12.0%)
Materials
Iron Ore 20,412 11,139 83.2% 13,328 6,001 122.1%
Manganese 2,423 2,150 12.7% 697 712 (2.1%)
Metallurgical Coal 7,573 6,059 25.0% 2,670 2,053 30.1%
Energy Coal 5,507 4,265 29.1% 1,129 730 54.7%
Group and unallocated 385 802 N/A (405) (541) N/A
items(ii)
Less: inter-segment (49) (50) N/A - - N/A
revenue
BHP Billiton Group 71,739 52,798 35.9% 31,980 19,719 62.2%
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT for the Group is reconciled to Profit from
operations on page 5.
(ii) Includes consolidation adjustments, unallocated items and external sales
from the Group`s freight, transport and logistics operations.
Petroleum
The successful integration of the Fayetteville shale gas assets, the start-up
of the Angostura Gas Phase II project on schedule, and strong underlying
performance from existing assets, delivered 159.4 million barrels of oil
equivalent for the 2011 financial year, the fourth consecutive increase in
annual petroleum production. BHP Billiton brought the first new deepwater well
into production since the Gulf of Mexico moratorium was enacted in May 2010
and this important milestone, achieved at the BHP Billiton operated Shenzi
field (USA), followed previous regulatory approvals for water injection and
production well drilling.
Underlying EBIT of US$6.3 billion represented an increase of US$1.8 billion or
38 per cent when compared with the prior period. Higher average realised
prices were a major contributor to the increase in Underlying EBIT (US$1.5
billion, net of price linked costs) and reflected a 28 per cent increase in
oil prices to US$93.29 per barrel, a 22 per cent increase in realised
liquefied natural gas prices to US$11.03 per thousand standard cubic feet, and
a 17 per cent increase in natural gas prices to US$4.00 per thousand standard
cubic feet. BHP Billiton`s operating capability was further underscored by the
success of Pyrenees although natural field decline worldwide was further
impacted by the deferral of high volume wells in the Gulf of Mexico. Gross
exploration spend of US$557 million was similarly impacted, although an
increase in seismic acquisition and processing partially offset the decrease
in drilling activity. Recommencement of development drilling at Atlantis (USA)
is still pending although a step out exploration well at Mad Dog (USA) is
currently underway.
From a longer term perspective, the growth potential of the Petroleum business
has been significantly enhanced by the acquisition of onshore US shale gas
resources while organic growth projects, such as the Macedon gas project
(Australia), continue to move through the execution phase.
Aluminium
The ongoing ramp up of the Alumar refinery (Brazil) contributed to a seven per
cent increase in total alumina production for the 2011 financial year. Metal
production remained largely unchanged with all operations running at or close
to technical capacity.
Underlying EBIT was US$266 million, a decrease of US$140 million or 34 per
cent when compared with the corresponding period. Higher prices and premia for
aluminium had a favourable impact of US$559 million (net of price linked
costs) but were offset by a US$519 million increase in costs largely
associated with the devaluation of the US dollar, inflation and rising raw
material and energy costs. The average realised aluminium price increased by
19 per cent to US$2,515 per tonne while the average realised alumina price
rose 21 per cent to US$342 per tonne. Underlying EBIT was unfavourably
impacted by a provision related to indirect taxes in the 2011 financial year.
The US$3.0 billion (BHP Billiton share) Worsley Efficiency and Growth project
will confirm Worsley as one of the world`s leading alumina refineries. The
investment will raise capacity at the refinery by 1.1 mtpa to 4.6 mtpa (100
per cent basis) and first production is now scheduled for the first quarter of
calendar year 2012.
Base Metals
Copper production increased during the 2011 financial year as Olympic Dam
reported annual material mined and milling records. Strong operating
performance was similarly reported at Pampa Norte (Chile) and Antamina (Peru),
where record annual milling rates mitigated the impact of lower grades. Total
copper cathode production represented another record for the period.
Underlying EBIT for the 2011 financial year increased by US$2.2 billion or 47
per cent, to US$6.8 billion. Higher average realised prices for all of our
core products favourably impacted Underlying EBIT by US$3.3 billion (net of
price linked costs). The supportive pricing environment was similarly
reflected in a number of our key input costs with higher energy, fuel and
contractor costs the major offset. The devaluation of the US dollar and
inflation reduced Underlying EBIT by US$418 million. In addition, BHP Billiton
refined the basis on which the metal content of its leach pads is estimated at
Escondida (Chile) and Pampa Norte, which resulted in a non-cash reduction in
Underlying EBIT of US$168 million.
At 30 June 2011, the Group had 239,156 tonnes of outstanding copper sales that
were revalued at a weighted average price of US$4.25 per pound. The final
price of these sales will be determined in the 2012 financial year. In
addition, 236,584 tonnes of copper sales from the 2010 financial year were
subject to a finalisation adjustment in 2011. The finalisation adjustment and
provisional pricing impact increased Underlying EBIT by US$650 million for the
period.
BHP Billiton`s Base Metals business is characterised by its large, tier 1
resource position and its numerous options for growth. In that context, a
combined investment of US$492 million (BHP Billiton share) was approved during
the period for the Escondida Ore Access and Laguna Seca Debottlenecking
projects (Chile). The quality of the Base Metals investment pipeline was
further emphasised by the progression of both the Escondida Organic Growth
Project (OGP1) and the Olympic Dam Project (ODP1) development options into
feasibility. A 129 per cent increase in the Escondida district Mineral
Resource tonnage(7) solidifies Escondida`s position as the world`s leading
copper operation for decades to come.
Diamonds and Specialty Products
EKATI (Canada) diamond production for the 2011 financial year was 2.5 million
carats, an 18 per cent decrease from the prior period. BHP Billiton expects
lower average ore grades to impact EKATI production in the medium term,
consistent with the mine plan.
Underlying EBIT for the Diamonds and Specialty Products business increased by
21 per cent to US$587 million. Strong demand and a shortage of rough diamonds
resulted in higher prices, which increased Underlying EBIT by US$254 million.
A 28 per cent increase in titanium prices added a further US$112 million to
Underlying EBIT. Gross exploration expenditure was US$81 million, a decrease
of US$14 million from the prior period. BHP Billiton continues to accelerate
its potash exploration program in Saskatchewan, with a significant increase in
activity planned at the Melville prospect in the 2012 financial year.
BHP Billiton`s goal of becoming a significant producer in the potash market
took another important step forward in the 2011 financial year. The approval
of a further US$488 million of pre-commitment funding during the Jansen Potash
Project feasibility study phase will fund site preparation, the procurement of
long lead time items and the sinking of the first 350 metres of the production
and service shafts.
Stainless Steel Materials
The Nickel West Kalgoorlie smelter (Australia) achieved record matte
production during the 2011 financial year while Cerro Matoso (Colombia)
successfully progressed its planned furnace replacement into the commissioning
phase.
Underlying EBIT decreased by US$80 million or 12 per cent, to US$588 million
for the 2011 financial year as a weaker US dollar impacted both operating
costs and year end balance sheet revaluations. In total, the weaker US dollar
and inflation reduced Underlying EBIT by US$227 million. The planned loss of
production at Cerro Matoso and the absence of stockpiled concentrate sales at
Nickel West that benefited the 2010 financial year decreased Underlying EBIT
by a combined US$122 million. Underlying EBIT at Cerro Matoso was impacted by
a further US$53 million due to a provision related to the Colombian net worth
tax and additional royalty charges. In contrast, a 24 per cent rise in the LME
nickel price for the period increased Underlying EBIT by approximately US$435
million (net of price linked costs).
During the second half of the financial year, the Cerro Matoso Heap Leach
project progressed into feasibility. The Nickel West Talc re-design project
remains on schedule for expected commissioning in the 2012 financial year.
Iron Ore
BHP Billiton`s commitment to invest through all phases of the economic cycle
delivered an eleventh consecutive annual production record in iron ore.
Western Australia Iron Ore (WAIO) benefited from the dual tracking of the
company`s rail infrastructure, which has substantially increased overall
system capability. WAIO shipments rose to a record annualised rate of 155 mtpa
(100 per cent basis) in the June 2011 quarter, confirming the successful ramp
up of recently expanded capacity.
Underlying EBIT increased by 122 per cent to US$13.3 billion for the 2011
financial year driven by record production and a significant improvement in
iron ore prices. For the period, average realised iron ore prices increased
Underlying EBIT by US$8.5 billion following the important transition to
shorter term, landed, market based pricing. The significant appreciation in
product prices and the adjustment of WAIO royalty rates contributed to a
significant increase in price linked costs, which reduced Underlying EBIT by
US$648 million. Broader inflationary pressures and the devaluation of the US
dollar reduced Underlying EBIT by a further US$813 million while non-cash
depreciation also increased with the ramp up of expanded iron ore capacity.
The investment approval for major projects totalling US$8.4 billion(8) (BHP
Billiton share) in the 2011 financial year highlighted the company`s
commitment to accelerate the development of its tier 1, low cost and
expandable iron ore operations. BHP Billiton also continued to lay the
foundations for longer term growth in the WAIO business with the release of
its Public Environmental Review/Draft Environmental Impact Statement that
seeks Commonwealth and Western Australian Government approvals for the
proposed development of an Outer Harbour facility in Port Hedland (Australia).
Manganese
Record annual ore production and sales reflected a full year contribution from
the GEMCO Expansion Phase 1 (GEEP1) project (Australia). Record annual sales
were also achieved for manganese alloy as the business intensified its volume
maximising strategy.
Underlying EBIT remained largely unchanged at US$697 million as stronger
volumes and prices were offset by higher costs. Notably, controllable costs
remained largely unchanged during the period, although the combined impact of
a weaker US dollar and inflation reduced Underlying EBIT by US$186 million.
Average realised ore and alloy prices increased by 9 per cent and 7 per cent
respectively during the 2011 financial year.
After the successful commissioning of the GEEP1 project, the partners have
approved the next phase of expansion that will confirm GEMCO`s status as the
world`s largest and lowest cost producer of manganese ore. The US$167 million
(BHP Billiton share) GEEP2 project will increase GEMCO`s beneficiated product
capacity from 4.2 mtpa to 4.8 mtpa (100 per cent basis). In addition, road and
port capacity will increase to 5.9 mtpa, creating 1.1 mtpa of latent capacity
for future expansion.
Metallurgical Coal
The remnant effects of wet weather that persisted for much of the 2011
financial year continued to restrict our Queensland Coal business, despite an
unrelenting focus on recovery efforts. Although Queensland Coal production did
recover strongly in the June 2011 quarter, total metallurgical coal production
declined by 13 per cent in the 2011 financial year.
Underlying EBIT was US$2.7 billion, an increase of US$617 million or 30 per
cent from the corresponding period. The increase was mainly attributable to
the 48 per cent and 45 per cent improvement in average realised prices for
hard coking coal and weak coking coal, respectively. In total, stronger prices
increased Underlying EBIT by US$2.1 billion, net of price linked costs.
Uncontrollable factors were the major contributor to a significant increase in
operating costs. In that context, inflation and the weaker US dollar reduced
Underlying EBIT by US$664 million, while the weather related disruption to
production at Queensland Coal placed additional pressure on unit costs. We
continue to expect production, sales and unit costs to be impacted, to some
extent, for the remainder of the 2011 calendar year.
In March 2011, BHP Billiton approved three major metallurgical coal projects
located in the Bowen Basin. The projects are expected to add 4.9 million
tonnes of annual capacity (100 per cent basis) through development of the
Daunia operation and a new mining area at Broadmeadow (both Australia). In
addition, 11 million tonnes of valuable port capacity (100 per cent basis)
will be developed at the Hay Point Coal Terminal (Australia). The cumulative
US$2.5 billion(8) (BHP Billiton share) investment establishes the platform for
strong and sustainable metallurgical coal production growth that will be
required to meet the growing needs of our customers.
Energy Coal
Annual production and sales records for New South Wales Energy Coal followed
the successful commissioning and ramp up of the MAC20 Project, while strong
performance at South Africa Coal delivered a 13 per cent increase in annual
production.
Underlying EBIT increased by 55 per cent to US$1.1 billion in the 2011
financial year. The 31 per cent rise in average realised prices, which
increased Underlying EBIT by US$917 million for the period, reflected a higher
proportion of export sales as BHP Billiton continued to optimise its product
mix in response to evolving market demand. Broad cost pressures 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 weaker US dollar and
inflation reduced Underlying EBIT by US$298 million, while a non recurring
charge related to the recognition of the Colombian net worth tax reduced
Underlying EBIT by a further US$32 million. The dissolution of the Douglas
Tavistock Joint Venture arrangement increased Underlying EBIT in the
corresponding period by US$69 million.
The MAC20 Project was successfully completed during the 2011 financial year,
ahead of schedule. The company`s confidence in the outlook for demand in the
Asia Pacific Basin was subsequently illustrated by the approval of the US$400
million RX1 Project (Australia) that is designed to get product to market
rapidly, ahead of further coal preparation plant expansions. Further expansion
of our world class Cerrejon Coal operation (Colombia) to 40 mtpa (100 per cent
basis) was approved by the partners in August 2011 and highlights the strong
growth outlook for BHP Billiton`s Energy Coal business.
Group and Unallocated items
The Underlying EBIT expense for Group and Unallocated decreased by US$136
million in the 2011 financial year, to US$405 million. The weaker US dollar
and inflation had an unfavourable impact on Underlying EBIT of US$105 million.
Self insurance claims related to the Clark Shaft incident at Olympic Dam
reduced Underlying EBIT in the prior period by US$297 million.
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$5,113 million for the year ended 30 June
2011 and US$4,794 million for the year ended 30 June 2010 (excluding
exceptional items of US$319 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 5.
(3) Underlying EBIT margin excludes the impact of third party product
activities.
(4) Net operating cash flows are after net interest and taxation.
(5) Represents total enterprise value of approximately US$15.1 billion.
(6) Net interest includes interest capitalised and excludes the effect of
discounting on provisions and other liabilities, discounting on post-
retirement employee benefits, fair value change on hedged loans, fair value
change on hedging derivatives, exchange variations on net debt and expected
return on pension scheme assets.
(7) This BHP Billiton Mineral Resource information was sourced from and should
be read together with and subject to the notes set out in the June 2011
Exploration and Development Report. This document can be viewed at
www.bhpbilliton.com. The Mineral Resource information is compiled by Richard
Preece (FAusIMM) who is a full time employee of BHP Billiton and who has the
required qualifications and experience to qualify as a Competent Person under
the JORC Code and consents to the form and context in which it appears above.
Mineral Resources are stated on a 100% basis. The detailed breakdown of
Mineral Resources is 3.1bt @0.75%Cu Measured, 4.7bt @0.59%Cu Indicated, 11.7bt
@0.49%Cu Inferred.
(8) Excludes announced pre-commitment funding.
(9) Unless otherwise stated, production volumes exclude suspended and sold
operations.
Cautionary Statement Regarding Forward-Looking Statements
This communication may contain, in addition to historical information, certain
forward-looking statements regarding future events, conditions, circumstances
or the future financial performance of BHP Billiton Plc and BHP Billiton
Limited and their affiliates, including North America Holdings II Inc. and BHP
Billiton Petroleum (North America) Inc. (collectively, the "BHP Billiton
Group"), Petrohawk Energy Corporation ("Petrohawk") or the enlarged BHP
Billiton Group following completion of the tender offer, the merger and other
related transactions in respect of Petrohawk (the "Transactions"). Often, but
not always, forward-looking statements can be identified by the use of words
such as "plans," "expects," "expected," "scheduled," "estimates," "intends,"
"anticipates" or "believes," or variations of such words and phrases or state
that certain actions, events, conditions, circumstances or results "may,"
"could," "would," "might" or "will" be taken, occur or be achieved. Such
forward-looking statements are not guarantees or predictions of future
performance, and are subject to known and unknown risks, uncertainties and
other factors, many of which are beyond our control, that could cause actual
results, performance or achievements of any member of the BHP Billiton Group
or the enlarged BHP Billiton Group following completion of the Transactions to
differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such risks and
uncertainties include: (i) the risk that not all conditions of the merger will
be satisfied or waived, (ii) beliefs and assumptions relating to available
borrowing capacity and capital resources generally, (iii) expectations
regarding environmental matters, including costs of compliance and the impact
of potential regulations or changes to current regulations to which Petrohawk
or any member of the BHP Billiton Group is or could become subject, (iv)
beliefs about oil and gas reserves, (v) anticipated liquidity in the markets
in which BHP Billiton or any member of the BHP Billiton Group transacts,
including the extent to which such liquidity could be affected by poor
economic and financial market conditions or new regulations and any resulting
impacts on financial institutions and other current and potential
counterparties, (vi) beliefs and assumptions about market competition and the
behaviour of other participants in the oil and gas exploration, development or
production industries, (vii) the effectiveness of Petrohawk`s or any member of
the BHP Billiton Group`s strategies to capture opportunities presented by
changes in prices and to manage its exposure to price volatility, (viii)
beliefs and assumptions about weather and general economic conditions, (ix)
beliefs regarding the U.S. economy, its trajectory and its impacts, as well as
the stock price of each of Petrohawk, BHP Billiton Plc and BHP Billiton
Limited, (x) projected operating or financial results, including anticipated
cash flows from operations, revenues and profitability, (xi) expectations
regarding Petrohawk`s or any member of the BHP Billiton Group`s revolver
capacity, credit facility compliance, collateral demands, capital
expenditures, interest expense and other payments, (xii) Petrohawk`s or any
member of the BHP Billiton Group`s ability to efficiently operate its assets
so as to maximize its revenue generating opportunities and operating margins,
(xiii) beliefs about the outcome of legal, regulatory, administrative and
legislative matters, (xiv) expectations and estimates regarding capital and
maintenance expenditures and its associated costs and (xv) uncertainties
associated with any aspect of the Transactions, including uncertainties
relating to the anticipated timing of filings and approvals relating to the
Transactions, the outcome of legal proceedings that may be instituted against
Petrohawk and/or others relating to the Transactions, the expected timing of
completion of the Transactions, the satisfaction of the conditions to the
consummation of the Transactions and the ability to complete the Transactions.
Many of these risks and uncertainties relate to factors that are beyond the
BHP Billiton Group`s ability to control or estimate precisely, and any or all
of the BHP Billiton Group`s forward-looking statements may turn out to be
wrong. The BHP Billiton Group cannot give any assurance that such forward-
looking statements will prove to have been correct. The reader is cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this communication. The BHP Billiton Group disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, conditions,
circumstances or otherwise, except as required by applicable law.
Nothing contained herein shall be deemed to be a forecast, projection or
estimate of the future financial performance of any member of the BHP Billiton
Group, Petrohawk or the enlarged BHP Billiton Group following completion of
the Transactions.
****
Further information on BHP Billiton can be found on our website:
www.bhpbilliton.com
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Members of the BHP Billiton Group which is headquartered in Australia
BHP Billiton Group
Financial Information
For the year ended 30 June 2011
Contents
Financial Information
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Financial Information
The financial information included in this document for the year ended 30 June
2011 is unaudited and has been derived from the draft financial report of the
BHP Billiton Group for the year ended 30 June 2011. The financial information
does not constitute the Group`s full financial statements for the year ended
30 June 2011, which will be approved by the Board, reported on by the
auditors, and subsequently filed with the UK Registrar of Companies and the
Australian Securities and Investments Commission.
The financial information set out on pages 21 to 39 for the year ended 30 June
2011 has been prepared on the basis of accounting policies consistent with
those applied in the 30 June 2010 financial statements contained within the
Annual Report of the BHP Billiton Group, except for the following standards
which have been adopted for the year ended 30 June 2011:
*`Improvements to IFRSs 2009`/AASB 2009-4 `Amendments to Australian Accounting
Standards arising from the Annual Improvements Project` and AASB 2009-5
`Further Amendments to Australian Accounting Standards arising from the Annual
Improvements Project` include a collection of minor amendments to IFRS. These
amendments include a requirement to classify expenditures which do not result
in a recognised asset as a cash flow from operating activities. This has
resulted in exploration cash flows of US$1,030 million for the year ended 30
June 2010 (2009: US$1,009 million), which were not recognised as assets, being
reclassified from net investing cash flows to net operating cash flows in the
Consolidated Cash Flow Statement.
The comparative figures for the financial years ended 30 June 2010 and 30 June
2009 are not the statutory accounts of the BHP Billiton Group for those
financial years. Those accounts have been reported on by the company`s
auditors and delivered to the Registrar of Companies. The reports of the
auditors were (i) unqualified, (ii) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under Section 498(2) or (3)
of the UK Companies Act 2006.
All amounts are expressed in US dollars unless otherwise stated. The BHP
Billiton Group`s presentation currency and the functional currency of the
majority of its operations is US dollars as this is the principal currency of
the economic environment in which it operates.
Where applicable, comparative figures have been adjusted to disclose them on
the same basis as the current period figures. Amounts in this financial
information have, unless otherwise indicated, been rounded to the nearest
million dollars.
Consolidated Income Statement
for the year ended 30 June 2011
Year ended Year ended Year ended
Notes 30 June 30 June 30 June
2011 2010 2009
US$M US$M US$M
Revenue
Group production 67,903 48,193 44,113
Third party products 1 3,836 4,605 6,098
Revenue 1 71,739 52,798 50,211
Other income 531 528 589
Expenses excluding net finance (40,454) (33,295) (38,640)
costs
Profit from operations 31,816 20,031 12,160
Comprising:
Group production 31,718 19,920 11,657
Third party products 98 111 503
31,816 20,031 12,160
Financial income 4 245 215 309
Financial expenses 4 (806) (674) (852)
Net finance costs 4 (561) (459) (543)
Profit before taxation 31,255 19,572 11,617
Income tax expense (6,481) (6,112) (4,784)
Royalty related taxation (net (828) (451) (495)
of income tax benefit)
Total taxation expense 5 (7,309) (6,563) (5,279)
Profit after taxation 23,946 13,009 6,338
Attributable to non-controlling 298 287 461
interests
Attributable to members of BHP 23,648 12,722 5,877
Billiton Group
Earnings per ordinary share 6 429.1 228.6 105.6
(basic) (US cents)
Earnings per ordinary share 6 426.9 227.8 105.4
(diluted) (US cents)
Dividends per ordinary share - 7 91.0 83.0 82.0
paid during the period (US
cents)
Dividends per ordinary share - 7 101.0 87.0 82.0
declared in respect of the
period (US cents)
The accompanying notes form part of this financial information.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2011
Year ended Year ended Year ended
30 June 30 June 30 June
2011 2010 2009
US$M US$M US$M
Profit after taxation 23,946 13,009 6,338
Other comprehensive income
Actuarial losses on pension and medical (113) (38) (227)
schemes
Available for sale investments:
Net valuation (losses)/gains taken to (70) 167 3
equity
Net valuation (gains)/losses transferred (47) 2 58
to the income statement
Cash flow hedges:
(Losses)/gains taken to equity - (15) 710
Realised losses transferred to the income - 2 22
statement
Unrealised gains transferred to the - - (48)
income statement
Gains transferred to the initial carrying - - (26)
amount of hedged items
Exchange fluctuations on translation of 19 1 27
foreign operations taken to equity
Exchange fluctuations on translation of - (10) -
foreign operations transferred to the
income statement
Tax recognised within other comprehensive 120 111 (253)
income
Total other comprehensive income for the (91) 220 266
year
Total comprehensive income 23,855 13,229 6,604
Attributable to non-controlling interests 284 294 458
Attributable to members of BHP Billiton 23,571 12,935 6,146
Group
The accompanying notes form part of this financial information.
Consolidated Balance Sheet
as at 30 June 2011
30 June 30 June
2011 2010
US$M US$M
ASSETS
Current assets
Cash and cash equivalents 10,084 12,456
Trade and other receivables 8,197 6,543
Other financial assets 264 292
Inventories 6,154 5,334
Current tax assets 273 189
Other 308 320
Total current assets 25,280 25,134
Non-current assets
Trade and other receivables 2,093 1,381
Other financial assets 1,602 1,510
Inventories 363 343
Property, plant and equipment 68,468 55,576
Intangible assets 904 687
Deferred tax assets 3,993 4,053
Other 188 168
Total non-current assets 77,611 63,718
Total assets 102,891 88,852
LIABILITIES
Current liabilities
Trade and other payables 9,718 6,467
Interest bearing liabilities 3,519 2,191
Other financial liabilities 288 511
Current tax payable 3,693 1,685
Provisions 2,256 1,899
Deferred income 259 289
Total current liabilities 19,733 13,042
Non-current liabilities
Trade and other payables 555 469
Interest bearing liabilities 12,388 13,573
Other financial liabilities 79 266
Deferred tax liabilities 2,683 4,320
Provisions 9,269 7,433
Deferred income 429 420
Total non-current liabilities 25,403 26,481
Total liabilities 45,136 39,523
Net assets 57,755 49,329
EQUITY
Share capital - BHP Billiton Limited 1,183 1,227
Share capital - BHP Billiton Plc 1,070 1,116
Treasury shares (623) (525)
Reserves 2,001 1,906
Retained earnings 53,131 44,801
Total equity attributable to members of BHP 56,762 48,525
Billiton Group
Non-controlling interests 993 804
Total equity 57,755 49,329
The accompanying notes form part of this financial information.
Consolidated Cash Flow Statement
for the year ended 30 June 2011
Year ended Year Year
30 June ended ended 30
2011 30 June June
US$M 2010 2009
US$M US$M
Operating activities
Profit before taxation 31,255 19,572 11,617
Adjustments for:
Non-cash exceptional items (150) (255) 5,460
Depreciation and amortisation expense 5,039 4,759 3,871
Net gain on sale of non-current assets (41) (114) (38)
Impairments of property, plant and equipment, 74 35 190
financial assets and intangibles
Employee share awards expense 266 170 185
Financial income and expenses 561 459 543
Other (384) (265) (320)
Changes in assets and liabilities:
Trade and other receivables (1,960) (1,713) 4,894
Inventories (792) (571) (116)
Trade and other payables 2,780 565 (847)
Net other financial assets and liabilities 46 (90) (769)
Provisions and other liabilities 387 (306) (497)
Cash generated from operations 37,081 22,246 24,173
Dividends received 12 20 30
Interest received 107 99 205
Interest paid (562) (520) (519)
Income tax refunded 74 552 -
Income tax paid (6,025) (4,931) (5,129)
Royalty related taxation paid (607) (576) (906)
Net operating cash flows 30,080 16,890 17,854
Investing activities
Purchases of property, plant and equipment (11,147) (9,323) (9,492)
Exploration expenditure (1,240) (1,333) (1,243)
Exploration expenditure expensed and included 981 1,030 1,009
in operating cash flows
Purchase of intangibles (211) (85) (141)
Investment in financial assets (238) (152) (40)
Investment in subsidiaries, operations and (4,807) (508) (286)
jointly controlled entities, net of their
cash
Payment on sale of operations - (156) (126)
Cash outflows from investing activities (16,662) (10,527) (10,319)
Proceeds from sale of property, plant and 80 132 164
equipment
Proceeds from financial assets 118 34 96
Proceeds from sale or partial sale of - 376 17
subsidiaries, operations and jointly
controlled entities, net of their cash
Net investing cash flows (16,464) (9,985) (10,042)
Financing activities
Proceeds from interest bearing liabilities 1,374 567 7,323
Proceeds from debt related instruments 222 103 354
Repayment of interest bearing liabilities (2,173) (1,155) (3,748)
Proceeds from ordinary shares 32 12 29
Contributions from non-controlling interests - 335 -
Purchase of shares by Employee Share (469) (274) (169)
Ownership Plan ("ESOP") trusts
Share buy-back - BHP Billiton Limited (6,265) - -
Share buy-back - BHP Billiton Plc (3,595) - -
Dividends paid (5,054) (4,618) (4,563)
Dividends paid to non-controlling interests (90) (277) (406)
Net financing cash flows (16,018) (5,307) (1,180)
Net (decrease)/increase in cash and cash (2,402) 1,598 6,632
equivalents
Cash and cash equivalents, net of overdrafts, 12,455 10,831 4,173
at beginning of period
Effect of foreign currency exchange rate 27 26 26
changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, 10,080 12,455 10,831
at end of period
The accompanying notes form part of this financial information.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2011
For the year ended 30 June 2011 Attributable to members of the BHP
Billiton Group
US$M Share Share Treasury Reserves
capital capital shares
- BHP - BHP
Billiton Billiton
Limited Plc
Balance as at 1 July 2010 1,227 1,116 (525) 1,906
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension and medical - - - -
schemes
Net valuation (losses)/gains on - - - (71)
available for sale investments taken to
equity
Net valuation gains on available for - - - (38)
sale investments transferred to the
income statement
Exchange fluctuations on translation of - - - 19
foreign operations taken to equity
Tax recognised within other - - - 24
comprehensive income
Total comprehensive income - - - (66)
Transactions with owners:
Purchase of shares by ESOP trusts - - (469) -
Employee share awards exercised net of - - 454 (121)
employee contributions
Employee share awards forfeited - - - (9)
Accrued employee entitlement for - - - 266
unvested awards
BHP Billiton Limited shares bought back (44) - - -
and cancelled
BHP Billiton Plc shares bought back - - (3,678) -
BHP Billiton Plc shares cancelled - (46) 3,595 46
Distribution to option holders - - - (21)
Dividends - - - -
Equity contributed - - - -
Balance as at 30 June 2011 1,183 1,070 (623) 2,001
For the year ended 30 June 2011 Attributable to
members of the BHP
Billiton Group
US$M Retained Total equity Non- Total
earnings attributable controlling equity
to members interests
of BHP
Billiton
Group
Balance as at 1 July 2010 44,801 48,525 804 49,329
Profit after taxation 23,648 23,648 298 23,946
Other comprehensive income:
Actuarial losses on pension and (105) (105) (8) (113)
medical schemes
Net valuation (losses)/gains on - (71) 1 (70)
available for sale investments
taken to equity
Net valuation gains on available - (38) (9) (47)
for sale investments transferred
to the income statement
Exchange fluctuations on - 19 - 19
translation of foreign operations
taken to equity
Tax recognised within other 94 118 2 120
comprehensive income
Total comprehensive income 23,637 23,571 284 23,855
Transactions with owners:
Purchase of shares by ESOP trusts - (469) - (469)
Employee share awards exercised (294) 39 - 39
net of employee contributions
Employee share awards forfeited 9 - - -
Accrued employee entitlement for - 266 - 266
unvested awards
BHP Billiton Limited shares (6,301) (6,345) - (6,345)
bought back and cancelled
BHP Billiton Plc shares bought - (3,678) - (3,678)
back
BHP Billiton Plc shares cancelled (3,595) - - -
Distribution to option holders - (21) (17) (38)
Dividends (5,126) (5,126) (90) (5,216)
Equity contributed - - 12 12
Balance as at 30 June 2011 53,131 56,762 993 57,755
The accompanying notes form part of this financial information.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2011 (continued)
For the year ended 30 June 2010 Attributable to members of the BHP
Billiton Group
US$M Share Share Treasury Reserves
capital capital shares
- BHP - BHP
Billiton Billiton
Limited Plc
Balance as at 1 July 2009 1,227 1,116 (525) 1,305
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension and medical - - - -
schemes
Net valuation gains on available for - - - 160
sale investments taken to equity
Net valuation losses on available for - - - 2
sale investments transferred to the
income statement
Losses on cash flow hedges taken to - - - (15)
equity
Realised losses on cash flow hedges - - - 2
transferred to the income statement
Exchange fluctuations on translation of - - - 1
foreign operations taken to equity
Exchange fluctuations on translation of - - - (10)
foreign operations transferred to the
income statement
Tax recognised within other - - - 57
comprehensive income
Total comprehensive income - - - 197
Transactions with owners:
Purchase of shares by ESOP Trusts - - (274) -
Employee share awards exercised net of - - 274 (88)
employee contributions
Employee share awards forfeited - - - (28)
Accrued employee entitlement for - - - 170
unvested awards
Issue of share options to non- - - - 43
controlling interests
Distribution to option holders - - - (10)
Dividends - - - -
Equity contributed - - - 317
Balance as at 30 June 2010 1,227 1,116 (525) 1,906
For the year ended 30 June 2010 Attributable to
members of the BHP
Billiton Group
US$M Retained Total equity Non- Total
earnings attributable controlling equity
to members interests
of BHP
Billiton
Group
Balance as at 1 July 2009 36,831 39,954 757 40,711
Profit after taxation 12,722 12,722 287 13,009
Other comprehensive income:
Actuarial losses on pension and (38) (38) - (38)
medical schemes
Net valuation gains on available - 160 7 167
for sale investments taken to
equity
Net valuation losses on available - 2 - 2
for sale investments transferred
to the income statement
Losses on cash flow hedges taken - (15) - (15)
to equity
Realised losses on cash flow - 2 - 2
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 other 54 111 - 111
comprehensive income
Total comprehensive income 12,738 12,935 294 13,229
Transactions with owners:
Purchase of shares by ESOP Trusts - (274) - (274)
Employee share awards exercised (178) 8 - 8
net of employee contributions
Employee share awards forfeited 28 - - -
Accrued employee entitlement for - 170 - 170
unvested awards
Issue of share options to non- - 43 16 59
controlling interests
Distribution to option holders - (10) (6) (16)
Dividends (4,618) (4,618) (277) (4,895)
Equity contributed - 317 20 337
Balance as at 30 June 2010 44,801 48,525 804 49,329
Consolidated Statement of Changes in Equity
for the year ended 30 June 2011 (continued)
For the year ended 30 June 2009 Attributable to members of the BHP
Billiton Group
US$M Share Share Treasury Reserves
capital capital shares
- BHP - BHP
Billiton Billiton
Limited Plc
Balance as at 1 July 2008 1,227 1,116 (514) 750
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension and medical - - - -
schemes
Net valuation gains on available for - - - 3
sale investments taken to equity
Net valuation losses on available for - - - 58
sale investments transferred to the
income statement
Gains on cash flow hedges taken to - - - 710
equity
Realised losses on cash flow hedges - - - 22
transferred to the income statement
Unrealised gains on cash flow hedges - - - (48)
transferred to the income statement
Gains on cash flow hedges transferred - - - (26)
to initial carrying amount of hedged
items
Exchange fluctuations on translation of - - - 27
foreign operations taken to equity
Tax recognised within other - - - (342)
comprehensive income
Total comprehensive income - - - 404
Transactions with owners:
Purchase of shares by ESOP Trusts - - (169) -
Employee share awards exercised net of - - 158 (34)
employee contributions
Accrued employee entitlement for - - - 185
unvested awards
Dividends - - - -
Equity contributed - - - -
Balance as at 30 June 2009 1,227 1,116 (525) 1,305
For the year ended 30 June 2009 Attributable to
members of the BHP
Billiton Group
US$M Retained Total equity Non- Total
earnings attributable controlling equity
to members interests
of BHP
Billiton
Group
Balance as at 1 July 2008 35,756 38,335 708 39,043
Profit after taxation 5,877 5,877 461 6,338
Other comprehensive income:
Actuarial losses on pension and (224) (224) (3) (227)
medical schemes
Net valuation gains on available - 3 - 3
for sale investments taken to
equity
Net valuation losses on available - 58 - 58
for sale investments transferred
to the income statement
Gains on cash flow hedges taken - 710 - 710
to equity
Realised losses on cash flow - 22 - 22
hedges transferred to the income
statement
Unrealised gains on cash flow - (48) - (48)
hedges transferred to the income
statement
Gains on cash flow hedges - (26) - (26)
transferred to initial carrying
amount of hedged items
Exchange fluctuations on - 27 - 27
translation of foreign operations
taken to equity
Tax recognised within other 89 (253) - (253)
comprehensive income
Total comprehensive income 5,742 6,146 458 6,604
Transactions with owners:
Purchase of shares by ESOP Trusts - (169) - (169)
Employee share awards exercised (104) 20 - 20
net of employee contributions
Accrued employee entitlement for - 185 - 185
unvested awards
Dividends (4,563) (4,563) (406) (4,969)
Equity contributed - - (3) (3)
Balance as at 30 June 2009 36,831 39,954 757 40,711
Notes to the Financial Information
1.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.
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2011
Revenue
Group production 10,603 3,601 13,550 1,517 3,698 20,182
Third party products 127 1,620 602 - 158 93
Rendering of 2 - - - - 98
services
Inter-segment 5 - - - 5 39
revenue
Total revenue (a) 10,737 5,221 14,152 1,517 3,861 20,412
Underlying EBITDA 8,319 596 7,525 779 990 13,946
(b)
Depreciation and (1,913) (330) (735) (192) (404) (618)
amortisation
Impairment (76) - - - 2 -
(losses)/reversals
recognised
Underlying EBIT (b) 6,330 266 6,790 587 588 13,328
Comprising:
Group production 6,325 275 6,796 587 583 13,296
Third party products 5 (9) (6) - 5 32
Underlying EBIT (b) 6,330 266 6,790 587 588 13,328
Net finance costs
Exceptional items
Profit before
taxation
Capital expenditure 1,984 1,329 1,404 319 651 3,627
Total assets 18,645 9,602 15,973 2,833 4,912 17,585
Total liabilities 4,500 1,606 3,118 664 1,579 3,652
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June
2011
Revenue
Group production 2,423 7,565 4,651 - 67,790
Third party products - - 851 385 3,836
Rendering of - 8 5 - 113
services
Inter-segment - - - (49) -
revenue
Total revenue (a) 2,423 7,573 5,507 336 71,739
Underlying EBITDA 780 3,027 1,469 (338) 37,093
(b)
Depreciation and (83) (357) (340) (67) (5,039)
amortisation
Impairment - - - - (74)
(losses)/reversals
recognised
Underlying EBIT (b) 697 2,670 1,129 (405) 31,980
Comprising:
Group production 697 2,670 1,058 (405) 31,882
Third party products - - 71 - 98
Underlying EBIT (b) 697 2,670 1,129 (405) 31,980
Net finance costs (561)
Exceptional items (164)
Profit before 31,255
taxation
Capital expenditure 276 1,172 754 94 11,610
Total assets 2,439 6,731 6,176 17,995 102,891
Total liabilities 1,049 2,088 2,386 24,494 45,136
(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. Underlying EBITDA is Underlying EBIT, before depreciation,
amortisation and impairments.
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2010
Revenue
Group production 8,682 2,948 9,528 1,272 3,311 10,964
Third party products 86 1,405 881 - 306 67
Rendering of 3 - - - - 69
services
Inter-segment 11 - - - - 39
revenue
Total revenue (a) 8,782 4,353 10,409 1,272 3,617 11,139
Underlying EBITDA 6,571 684 5,393 648 1,085 6,496
(b)
Depreciation and (1,998) (278) (729) (163) (427) (495)
amortisation
Impairment
(losses)/reversals - - (32) - 10 -
recognised
Underlying EBIT (b) 4,573 406 4,632 485 668 6,001
Comprising:
Group production 4,570 393 4,639 485 646 6,003
Third party products 3 13 (7) - 22 (2)
Underlying EBIT (b) 4,573 406 4,632 485 668 6,001
Net finance costs
Exceptional items
Profit before
taxation
Capital expenditure 1,951 1,019 763 127 265 3,838
Total assets 12,733 8,078 14,970 2,588 4,507 13,592
Total liabilities 3,175 1,318 2,621 527 1,154 2,526
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June
2010
Revenue
Group production 2,143 6,019 3,214 - 48,081
Third party products 7 - 1,051 802 4,605
Rendering of - 40 - - 112
services
Inter-segment - - - (50) -
revenue
Total revenue (a) 2,150 6,059 4,265 752 52,798
Underlying EBITDA 784 2,363 971 (482) 24,513
(b)
Depreciation and (72) (309) (228) (60) (4,759)
amortisation
Impairment
(losses)/reversals - (1) (13) 1 (35)
recognised
Underlying EBIT (b) 712 2,053 730 (541) 19,719
Comprising:
Group production 717 2,053 642 (540) 19,608
Third party products (5) - 88 (1) 111
Underlying EBIT (b) 712 2,053 730 (541) 19,719
Net finance costs (459)
Exceptional items 312
Profit before 19,572
taxation
Capital expenditure 182 653 881 87 9,766
Total assets 2,082 5,597 5,425 19,280 88,852
Total liabilities 794 1,475 1,965 23,968 39,523
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2009
Revenue
Group production 6,924 3,219 6,616 896 2,202 9,815
Third party products 192 932 488 - 112 132
Rendering of 6 - - - - 61
services
Inter-segment 89 - 1 - 41 40
revenue
Total revenue (a) 7,211 4,151 7,105 896 2,355 10,048
Underlying EBITDA 5,456 476 1,994 370 (366) 6,631
(b)
Depreciation and (1,288) (298) (663) (222) (439) (384)
amortisation
Impairment
(losses)/reversals (83) 14 (39) (3) (49) (18)
recognised
Underlying EBIT (b) 4,085 192 1,292 145 (854) 6,229
Comprising:
Group production 4,081 202 1,326 145 (905) 6,022
Third party products 4 (10) (34) - 51 207
Underlying EBIT (b) 4,085 192 1,292 145 (854) 6,229
Net finance costs
Exceptional items
Profit before
taxation
Capital expenditure 1,905 863 1,018 112 685 1,922
Total assets 12,444 7,575 14,812 2,073 4,767 8,735
Total liabilities 3,388 1,242 2,995 292 1,482 1,501
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June
2009
Revenue
Group production 2,473 7,988 3,830 - 43,963
Third party products 63 18 2,694 1,467 6,098
Rendering of - 81 - 2 150
services
Inter-segment - - - (171) -
revenue
Total revenue (a) 2,536 8,087 6,524 1,298 50,211
Underlying EBITDA 1,397 4,988 1,676 (347) 22,275
(b)
Depreciation and (48) (277) (210) (42) (3,871)
amortisation
Impairment
(losses)/reversals - - (6) (6) (190)
recognised
Underlying EBIT (b) 1,349 4,711 1,460 (395) 18,214
Comprising:
Group production 1,358 4,704 1,174 (396) 17,711
Third party products (9) 7 286 1 503
Underlying EBIT (b) 1,349 4,711 1,460 (395) 18,214
Net finance costs (543)
Exceptional items (6,054)
Profit before 11,617
taxation
Capital expenditure 279 1,562 876 114 9,336
Total assets 1,454 4,929 4,555 17,426 78,770
Total liabilities 571 1,249 2,004 23,335 38,059
2.Exceptional items
Exceptional items are those items where their nature and amount is considered
material to the financial report. Such items included within the Group`s
profit for the year are detailed below.
Year ended 30 June 2011 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Newcastle steelworks 150 (45) 105
rehabilitation
Release of income tax provisions - 718 718
Reversal of deferred tax - 1,455 1,455
liabilities
(164) 2,128 1,964
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 year ended 30 June 2011.
Newcastle steelworks rehabilitation:
The Group recognised a decrease of US$150 million (US$45 million tax charge)
to rehabilitation obligations in respect of former operations at the Newcastle
steelworks (Australia) following a full review of the progress of the Hunter
River Remediation Project and estimated costs to completion.
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 Beenup and
Boodarie Iron and the denial of capital allowance claims made on the Boodarie
Iron project. The Group challenged the assessments and was successful on all
counts before the Full Federal Court. The ATO obtained special leave in
September 2010 to appeal to the High Court in respect of the denial of capital
allowance claims made on the Boodarie Iron project. The Group`s position in
respect of the capital allowance claims on the Boodarie Iron project was
confirmed by the High Court in June 2011. As a result of these appeals, US$138
million was released from the Group`s income tax provision in September 2010
and US$580 million in June 2011.
Reversal of deferred tax liabilities:
Consistent with the functional currency of the Group`s operations, eligible
Australian entities elected to adopt a US dollar tax functional currency from
1 July 2011. As a result, the deferred tax liability relating to certain US
dollar denominated financial arrangements has been derecognised, resulting in
a credit to income tax expense of US$1,455 million.
2.Exceptional items (continued)
Year ended 30 June 2010 Gross Tax Net
US$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, gave 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
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.
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, Beenup
and Boodarie Iron 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 ATO has not
sought to appeal the Boodarie Iron bad debt disallowance to the High Court
which resulted in a release of US$128 million from the Group`s income tax
provisions. The ATO sought special leave to appeal to the High Court in
relation to the Beenup bad debt disallowance and the denial of the capital
allowance claims on the Boodarie Iron project and was granted special leave
only in relation to the denial of the capital allowance claims on the Boodarie
Iron project.
2.Exceptional items (continued)
Year ended 30 June 2009 Gross Tax Net
US$M US$M US$M
Exceptional items by category
Suspension of Ravensthorpe nickel (3,615) 1,076 (2,539)
operations
Announced sale of Yabulu refinery (510) (175) (685)
Withdrawal or sale of other (665) (23) (688)
operations
Deferral of projects and (306) 86 (220)
restructuring of operations
Newcastle steelworks (508) 152 (356)
rehabilitation
Lapsed offers for Rio Tinto (450) 93 (357)
(6,054) 1,209 (4,845)
Suspension of Ravensthorpe nickel operations:
On 21 January 2009, the Group announced the suspension of operations at
Ravensthorpe nickel operations (Australia) and as a consequence stopped the
processing of the mixed nickel cobalt hydroxide product at Yabulu (Australia).
As a result, an impairment charge and increased provisions for contract
cancellation, redundancy and other closure costs of US$3,615 million (US$1,076
million tax benefit) were recognised. This exceptional item did not include
the loss from operations of Ravensthorpe nickel operations of US$173 million.
Announced sale of Yabulu refinery:
On 3 July 2009, the Group announced the sale of the Yabulu nickel operations.
As a result, impairment charges of US$510 million (US$nil tax benefit) were
recognised in addition to those recognised on suspension of the Ravensthorpe
nickel operations. As a result of the sale, deferred tax assets of US$175
million were no longer expected to be realised by the Group and were
recognised as a charge to income tax expense. The remaining assets and
liabilities of the Yabulu operations were classified as held for sale as at 30
June 2009.
Withdrawal or sale of other operations:
As part of the Group`s regular review of the long-term viability of
operations, a total charge of US$665 million (US$23 million tax expense) was
recognised primarily in relation to the decisions to cease development of the
Maruwai Haju trial mine (Indonesia), sell the Suriname operations, suspend
copper sulphide mining operations at Pinto Valley (US) and cease the pre-
feasibility study at Corridor Sands (Mozambique). The remaining assets and
liabilities of the Suriname operations were classified as held for sale as at
30 June 2009.
Deferral of projects and restructuring of operations:
As part of the Group`s regular review of the long-term viability of continuing
operations, a total charge of US$306 million (US$86 million tax benefit) was
recognised primarily in relation to the deferral of expansions at the Nickel
West operations (Australia), deferral of the Guinea Alumina project (Guinea)
and the restructuring of the Bayside Aluminium Casthouse operations (South
Africa).
Newcastle steelworks rehabilitation:
The Group recognised a charge of US$508 million (US$152 million tax benefit)
for additional rehabilitation obligations in respect of former operations at
the Newcastle steelworks (Australia). The increase in obligations related to
changes in the estimated volume of sediment in the Hunter River requiring
remediation and treatment, and increases in estimated treatment costs.
2.Exceptional items (continued)
Lapsed offers for Rio Tinto:
The Group`s offers for Rio Tinto lapsed on 27 November 2008 following the
Board`s decision that it no longer believed that completion of the offers was
in the best interests of BHP Billiton shareholders. The Group incurred fees
associated with the US$55 billion debt facility (US$156 million cost, US$31
million tax benefit), investment bankers`, lawyers` and accountants` fees,
printing expenses and other charges (US$294 million cost, US$62 million tax
benefit) in progressing this matter over the 18 months up to the lapsing of
the offers, which were expensed in the year ended 30 June 2009.
3.Interests in jointly controlled entities
Major shareholdings Ownership interest at BHP Contribution to profit after
in jointly Billiton Group reporting taxation
controlled entities date (a)
2011 2010 2009 2011 2010 2009
% % % US$M US$M US$M
Mozal SARL 47.1 47.1 47.1 66 4 84
Compania Minera 33.75 33.75 33.75 602 438 185
Antamina SA
Minera Escondida 57.5 57.5 57.5 2,694 2,175 422
Limitada
Samarco Mineracao SA 50 50 50 906 430 340
Carbones del 33.33 33.33 33.33 231 172 243
Cerrej?n LLC
Other (b) (172) (145) 159
Total 4,327 3,074 1,433
(a) The ownership interest at the Group`s and the jointly controlled entity`s
reporting date are the same. When the annual financial reporting date is
different to the Group`s, financial information is obtained as at 30 June 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 (2010: 37.76 per cent; 2009: 50 per cent), the
Guinea Alumina project (ownership interest 33.3 per cent; 2010: 33.3 per cent;
2009: 33.3 per cent), the Newcastle Coal Infrastructure Group Pty Ltd
(ownership interest 35.5 per cent; 2010: 35.5 per cent; 2009: 35.5 per cent)
and other immaterial jointly controlled entities.
4.Net finance costs
2011 2010 2009
US$M US$M US$M
Financial expenses
Interest on bank loans and 19 24 47
overdrafts
Interest on all other borrowings 471 460 527
Finance lease and hire purchase 12 14 15
interest
Dividends on redeemable - - 1
preference shares
Discounting on provisions and 411 359 315
other liabilities
Discounting on post-retirement 128 130 132
employee benefits
Interest capitalised (a) (256) (301) (149)
Fair value change on hedged (140) 131 390
loans
Fair value change on hedging 110 (138) (377)
derivatives
Exchange variations on net debt 51 (5) (49)
806 674 852
Financial income
Interest income (141) (117) (198)
Expected return on pension (104) (98) (111)
scheme assets
(245) (215) (309)
Net finance costs 561 459 543
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
interest rate on such borrowings. For the year ended 30 June 2011 the
capitalisation rate was 2.87 per cent (2010: 3.5 per cent; 2009: 4.25 per
cent).
5.Taxation
2011 2010 2009
US$M US$M US$M
Taxation expense including
royalty related taxation
UK taxation expense 21 178 319
Australian taxation expense 3,503 3,798 3,158
Overseas taxation expense 3,785 2,587 1,802
Total taxation expense 7,309 6,563 5,279
Excluding the impacts of royalty related taxation, exceptional items and
exchange rate movements, taxation expense was US$10,082 million representing
an underlying effective tax rate of 32.1 per cent (2010: 30.9 per cent; 2009:
31.4 per cent).
Government imposed royalty arrangements calculated by reference to profits
after adjustment for temporary differences are reported as royalty related
taxation. Royalty related taxation contributed US$828 million to taxation
expense representing an effective rate of 2.6 per cent (2010: US$451 million
and 2.3 per cent; 2009: US$495 million and 4.3 per cent).
Exceptional items decreased taxation expense by US$2,128 million (2010:
increase of US$59 million; 2009: decrease of US$1,209 million) predominantly
due to the reversal of deferred tax liabilities of US$1,455 million following
the election of eligible Australian entities to adopt a US dollar tax
functional currency, as well as the release of tax provisions of US$718
million following the Group`s position being confirmed with respect to ATO
amended assessments.
Exchange rate movements decreased taxation expense by US$1,473 million (2010:
increase of US$106 million; 2009: increase of US$444 million) predominantly
due to the revaluation of local currency deferred tax assets arising from
future tax depreciation of US$2,481 million, partly offset by the revaluation
of local currency tax liabilities and deferred tax balances arising from other
monetary items and temporary differences which amounted to US$1,008 million.
Total taxation expense including royalty related taxation and the
predominantly non-cash exceptional items and exchange rate movements described
above, was US$7,309 million, representing an effective rate of 23.4 per cent
(2010: 33.5 per cent; 2009: 45.4 per cent).
6.Earnings per share
2011 2010 2009
Basic earnings per ordinary 429.1 228.6 105.6
share (US cents)
Diluted earnings per ordinary 426.9 227.8 105.4
share (US cents)
Basic earnings per American 858.2 457.2 211.2
Depositary Share (ADS) (US
cents) (a)
Diluted earnings per American 853.8 455.6 210.8
Depositary Share (ADS) (US
cents) (a)
Basic earnings (US$M) 23,648 12,722 5,877
Diluted earnings (US$M) 23,648 12,743 5,899
The weighted average number of shares used for the purposes of calculating
diluted earnings per share reconciles to the number used to calculate basic
earnings per share as follows:
Weighted average number of 2011 2010 2009
shares Million Million Million
Basic earnings per ordinary 5,511 5,565 5,565
share denominator
Shares and options contingently 29 30 33
issuable under employee share
ownership plans
Diluted earnings per ordinary 5,540 5,595 5,598
share denominator
(a) Each American Depositary Share (ADS) represents two ordinary shares.
7.Dividends
2011 2010 2009
US$M US$M US$M
Dividends paid/payable during
the period
BHP Billiton Limited 3,076 2,787 2,754
BHP Billiton Plc - Ordinary 2,003 1,831 1,809
shares
- Preference shares (a) - - -
5,079 4,618 4,563
Dividends declared in respect
of the period
BHP Billiton Limited 3,331 2,921 2,754
BHP Billiton Plc - Ordinary 2,183 1,920 1,809
shares
- Preference shares (a) - - -
5,514 4,841 4,563
2011 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 46.0 42.0 41.0
91.0 83.0 82.0
Dividends declared in respect of the period
(per share)
Interim dividend 46.0 42.0 41.0
Final dividend 55.0 45.0 41.0
101.0 87.0 82.0
Dividends are declared after period end in the announcement of the results for
the period. Interim dividends are declared in February and paid in March.
Final dividends are declared in August and paid in September. Dividends
declared are not recorded as a liability at the end of the period to which
they relate. Subsequent to year end, on 24 August 2011, BHP Billiton declared
a final dividend of 55.0 US cents per share (US$2,943 million), which will be
paid on 29 September 2011 (2010: 45.0 US cents per share - US$2,504 million;
2009: 41.0 US cents per share - US$2,281 million).
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
2011 2010 2009
US$M US$M US$M
Franking credits as at 30 June 3,971 3,861 2,506
Franking credits arising from 3,218
the payment of current tax 818 1,265
payable
Total franking credits 7,189 4,679 3,771
available (b)
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each declared
and paid annually (2010: 5.5 per cent; 2009: 5.5 per cent).
(b) The payment of the final 2011 dividend declared after 30 June 2011 will
reduce the franking account balance by US$757 million.
8.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 and subsequently announced an expanded US$10 billion capital
management program on 16 February 2011. This expanded program was completed on
29 June 2011 through a combination of on-market and off-market buy-backs as
described below.
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.
An off-market tender buy-back of BHP Billiton Limited shares was completed on
11 April 2011. In accordance with the structure of the buy-back, US$44 million
was allocated to the share capital of BHP Billiton Limited and US$6,301
million was allocated to retained earnings. These shares were then cancelled.
Details of the purchases are shown in the table below.
Year Shares Number Cost per Total Purchased by:
ended purchased share cost
US$M
BHP Billiton BHP
Limited Billiton
Plc
Shares US$M Shares US$M
30 BHP 94,935,748 GBP23.96 3,678 94,935,748 3,678 - -
June Billiton (a) (b) 6,345 146,899,809 6,345 - -
2011 Plc 146,899,809 A$40.85
BHP
Billiton
Limited
(a) Includes 2,181,737 shares in BHP Billiton Plc bought back as part of the
above program but not cancelled as at 30 June 2011.
(b) Cost per share represents the average cost per share paid on-market by BHP
Billiton Limited for BHP Billiton Plc shares in 2011. Since the commencement
of the buy-back in 2006 the average cost per share was GBP15.67.
9.Subsequent events
On 14 July 2011, the Group announced it had entered into a definitive
agreement to acquire Petrohawk Energy Corporation by means of an all-cash
tender offer for all of the issued and outstanding shares of Petrohawk to be
followed by a second-step merger, representing a total equity value of
approximately US$12.1 billion and a total enterprise value of approximately
US$15.1 billion, including the assumption of net debt. On 21 August 2011, the
Group announced that all conditions to the closing of the tender offer to
acquire all outstanding shares of common stock of Petrohawk for US$38.75 per
share net to the seller in cash, without interest, less any applicable
withholding taxes, have been satisfied. The offer expired at 12:00 midnight,
New York City time, at the end of Friday, 19 August 2011, at which time
approximately 293.9 million shares had been validly tendered and not withdrawn
pursuant to the offer, representing approximately 97.4% of the total
outstanding shares. Following payment for the tendered shares and a short-form
merger being effected, the Group will own 100% of the total outstanding
shares. The transaction is expected to close in the third quarter of calendar
year 2011.
On 9 August 2011, the Group signed a Heads of Agreement with Leighton Holdings
to acquire the HWE Mining subsidiaries that provide contract mining services
to its Western Australia Iron Ore operations. The Heads of Agreement relates
to the mining equipment, people and related assets that service the Area C,
Yandi and Orebody 23/25 operations. These operations collectively account for
almost 70 per cent of Western Australia Iron Ore`s total material movement.
The purchase price is US$735 million (A$705 million), subject to working
capital adjustments. Subject to due diligence, definitive agreements and
relevant internal and regulatory approvals, the transaction is expected to
close during the fourth quarter of calendar year 2011.
On 18 August 2011, the Group arranged a new unsecured 364-day multicurrency
term and revolving credit facility for an amount of US$7.5 billion consisting
of two tranches: a US$5 billion term loan and US$2.5 billion revolving credit
facility.
Other than the matters outlined above, elsewhere in this financial information
or in the accompanying news release, no matters or circumstances have arisen
since the end of the financial year that have significantly affected, or may
significantly affect, the operations, results of operations or state of
affairs of the Group in subsequent accounting periods.
Date: 24/08/2011 08:35:01 Produced by the JSE SENS Department.
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