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BIL
BIBLT
BIL - Bhp Billiton - Results For The Half-Year Ended 31 December 2007 and
dividend
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
6 February 2008
Number 06/08
BHP BILLITON RESULTS FOR THE
HALF-YEAR ENDED 31 DECEMBER 2007
* Underlying EBITDA of US$11.2 billion and Underlying EBIT of US$9.6 billion
up 6.4% and 5.4% respectively.
* Attributable profit of US$6.0 billion down 2.8% and EPS of 106.8 US cents
up 2.8%, with EPS benefiting from share buy-backs (both measures excluding
exceptionals).
* Net operating cash flows(1) of US$7.9 billion, up 10.6%.
* Record half-year production(2) from seven commodities with significant
increases in another six.
* Costs, net of non-cash costs, increased 1.9%, an outstanding achievement in
the current environment.
* Record half-year results for Iron Ore, Petroleum and Manganese.
* Seven major projects completed and a further four projects approved.
Significant volume growth expected in H2 of 2008 in high margin commodities.
* Interim dividend up 45% to 29 US cents per share, demonstrating confidence
in our cash generating ability and strategy.
* US$8.8 billion of a US$13.0 billion capital management program completed,
representing 6.5%(3) of total issued shares.
Half-Year ended 31 December 2007 2006
US$M US$M Change
Revenue 25,539 22,113 15.5%
Underlying EBITDA (4) 11,167 10,494 6.4%
Underlying EBIT (4) (5) 9,623 9,134 5.4%
Profit from operations 9,486 9,134 3.9%
Attributable profit - excluding 5,995 6,168 (2.8%)
exceptional items
Attributable profit 6,017 6,168 (2.4%)
Net operating cash flows (1) 7,870 7,116 10.6%
Basic earnings per share - 106.8 103.9 2.8%
excluding exceptional items (US
cents)
Basic earnings per share (US cents) 107.2 103.9 3.2%
Underlying EBITDA interest coverage 34.9 37.6 (7.2%)
(times) (4) (6)
Dividend per share (US cents) 29.0 20.0 45.0%
Refer to page 15 for footnotes, including explanations of the non-GAAP
measures used in this announcement.
The above financial results are prepared in accordance with IFRS and are
unaudited. All references to the corresponding or prior period are to the
half-year ended 31 December 2006.
RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007
Commentary on the Group Results
Strong half-year results
The results presented today represent an excellent operating and financial
performance. These results are based on a strong production performance
across the breadth of our business, outstanding cost control in the face of
significant cost pressures and additional volumes from newly commissioned
growth projects. Our performance has not only benefited from the unique
diversification across petroleum, bulk and non ferrous commodities, but also
the diversification within each of these broad categories. In particular,
record half year earnings results in iron ore and manganese demonstrated that
we were able to capture strong market conditions in the steel-making sector.
Record half year earnings from petroleum in an environment of strong prices,
were the result of excellent management of natural field decline and volume
growth from new projects.
Our Underlying EBIT of US$9.6 billion is an increase of 5.4 per cent over
last half-year. Underlying EBIT margin(7) was 44.4 per cent. Earnings per
share, excluding exceptional items, were up 2.8 per cent at 106.8 US cents
reflecting the benefit of the share buy-back program. This result has been
achieved in an environment in which input prices have increased significantly
and currencies have appreciated strongly. The reduction in Underlying EBIT,
as a result of the weaker US dollar, was US$506 million more than the
corresponding period.
In pursuit of our strategy, we continue to focus on the fundamental drivers
of value creation for shareholders: by operating large, long-life, low cost
expandable assets while taking a disciplined and value-focused approach to
pursuing additional organic and non-organic growth options.
We achieved record or equal record production(2)for seven major commodities
and significantly increased production across a further six commodities.
Production records(2) were achieved by 12 assets in six of our Customer
Sector Groups. This performance reinforces our track record of consistent
growth on the back of predictable project delivery coming from a deep
inventory of projects that will continue to underpin our growth plans. This
increased production from high returning assets has allowed us to capture the
benefits of strong first half conditions in key commodity markets.
First production was successfully achieved at seven major projects: Genghis
Khan, Atlantis South and Stybarrow (oil and gas), Koala Underground
(diamonds), Pinto Valley (copper in concentrate), Rapid Growth Project 3
(iron ore) and Ravensthorpe (contained nickel in concentrate). We expect to
deliver significant volume growth in the second half of FY 2008 with
continued ramp up of these projects, and the expected commissioning of an
additional four projects.
During the period we approved three new projects; the Kipper project (gas),
Klipspruit (energy coal), the Gemco expansion project (manganese concentrate)
and in January 2008, we approved the Newcastle Third Port Project (energy
coal export capacity). All of these projects will support continued growth
across a number of our businesses in future years.
Creating options for the future
Our traditional resource base of Australia, the Americas and Southern Africa
continues to provide a strong platform for future growth opportunities. This
large asset base in relatively stable regions allows us to pursue development
options in the emerging resource basins of the world. In particular we have
had good first results from our drilling program in Guinea. We have also
identified substantial potash acreage in Canada. We have continued with an
active diamond exploration program in Angola. We also announced the signing
of an agreement with the government of the Democratic Republic of Congo (DRC)
for the funding of a feasibility study for a major hydro-electric project,
which could support significant future aluminium smelting opportunities.
In our Petroleum CSG, we are increasing our exploration budget to
approximately US$600 million (up by 20 per cent) for the year ending 30 June
2008. This will enable us to further strengthen our position in the Gulf of
Mexico in the United States.
Our project pipeline provides significant future value, with 26 projects in
either execution or feasibility representing an expected capital investment
of US$16.1 billion. We also have further medium-term options in our
portfolio with expected capital expenditure requirements in excess of US$70
billion.
Growth Projects
During this reporting period we completed seven major growth projects.
Completed projects
Customer Project Capacity Capital Date of initial
Sector expenditure production (i)
Group (US$ million)
Budget Actual Target Actual
Base Pinto Valley 70,000 tonnes 140 144 Q4 Q4
Metals (US) per annum of (ii) 2007 2007
BHP Billiton - copper in
100% concentrate
Petroleum Atlantis South 200,000 1,630 1,630 H2 H2
(US) barrels of (iii) (ii) 2007 2007
BHP Billiton - oil and 180 (iii)
44% million cubic
feet of gas
per day
(100%)
Stybarrow 80,000 380 380 Q1 Q4
(Australia) barrels of (ii) 2008 2007
BHP Billiton - oil per day
50% (100%)
Genghis Khan 55,000 365 365 H2 H2
(US) barrels of (ii) 2007 2007
BHP Billiton - oil per day
44% (100%)
Iron Ore WA Iron Ore 20 million 1,300 1,300 Q4 Q4
Rapid Growth tonnes per (ii) 2007 2007
Project 3 annum of iron
(Australia) ore
BHP Billiton - (100%)
85%
Stainless Ravensthorpe Up to 50,000 2,200 2,079( Q1 Q4
Steel Nickel tonnes per (iii) ii) 2008 2007
Materials (Australia) annum of (iii)
BHP Billiton contained
-100% nickel in
concentrate
Diamonds Koala 3,300 tonnes 200 176 End End
and Underground per day of 2007 2007
Specialty (Canada) ore processed
Products BHP Billiton - (100%)
80%
6,215 6,074
(i) References to quarters and half-years are based on calendar years.
(ii) Number subject to finalisation.
(iii) As per revised budget and schedule.
There are 14 major projects (defined as BHP Billiton`s share of capital
expenditure of greater than US$100 million) under development with a total
budgeted investment of US$9,405 million. Details for these were given in the
quarterly Exploration and Development Report that was released on 23 January
2008.
Projects currently under development (approved in prior years)
Customer Sector Project Capacity (i) Budgeted Target
Group capital date for
expenditure initial
(US$ production
million) (ii)
(i)
Petroleum Neptune 50,000
(US) barrels of 405 Q1 2008
BHP Billiton - oil and 50
35% million
cubic feet
of gas per
day (100%)
North West LNG
Shelf 5th processing 350 Late 2008
Train capacity 4.2
(Australia) million
BHP Billiton - tonnes per
16.67% annum (100%)
North West 800 million
Shelf Angel cubic feet 200 End 2008
(Australia) of gas per
BHP Billiton - day and
16.67% 50,000
barrels of
condensate
per day
(100%)
Shenzi 100,000
(US) barrels of 1,940 Mid 2009
BHP Billiton - oil and 50
44% million
cubic feet
of gas per
day (100%)
Pyrenees 96,000
(Australia) barrels of 1,200 H1 2010
BHP Billiton - oil and 60
71.43% million
cubic feet
gas per day
(100%)
Aluminium Alumar 2 million
Refinery tonnes per 725 Q2 2009
Expansion annum of
(Brazil) alumina
BHP Billiton - (100%)
36%
Stainless Steel Yabulu 45,000 Q1 2008
Materials Extension tonnes per 556
(Australia) annum of
BHP Billiton - nickel
100%
Cliffs 360,000
(Australia) tonnes per 139 H1 2008
BHP Billiton annum nickel
- 100% ore
Iron Ore Samarco 7.6 million
(Brazil) tonnes per 590 H1 2008
BHP Billiton - annum of
50% iron pellets
(100%)
WA Iron Ore 26 million
Rapid Growth tonnes per 1,850 H1 2010
Project 4 annum of
(Australia) iron ore
BHP Billiton - (100%)
86.2%
7,955
(i) All references to capital expenditure and capacity are BHP Billiton`s
share unless noted otherwise.
(ii) References to quarters and half-years are based on calendar years.
Projects approved since we last reported
Customer Sector Project Capacity (i) Budgeted Target
Group capital date for
expenditure initial
(US$ production
million) (ii)
(i)
Petroleum Bass Strait 10,000 bpd
Kipper condensate 500 CY 2011
(Australia) and
BHP Billiton - processing
32.5% - 50% capacity of
80 million
cubic feet
gas per day
(100%)
Manganese Gemco Additional 1
(Australia) million 110 H1 CY 2009
(Australia) tonnes per
BHP Billiton - annum
60% manganese
concentrate
(100%)
Energy Coal Klipspruit Incremental
(South 1.8 million 450 H2 CY 2009
Africa) tonnes per
BHP Billiton annum export
- 100% coal
Incremental
2.1 million
tonnes per
annum
domestic
Newcastle Third coal
Third Export berth 390 Late CY
Coal Terminal capable of 2010
(Australia) handling an
BHP Billiton - estimated 30
35.5% million
tonnes per
annum (100%)
1,450
(i) All references to capital expenditure and capacity are BHP Billiton`s
share unless noted otherwise.
(ii) References to half-years and years are based on calendar years.
In addition to the above projects the Board approved pre expenditure of
US$930 million for Rapid Growth Project 5 (Western Australia Iron Ore).
Dividend and Capital Management
Today we announced a 45 per cent increase in our interim dividend to 29 US
cents per share, the twelfth consecutive dividend increase.
During the half-year we continued to purchase shares under the previously
announced US$13 billion program. Over the same period we repurchased
96,904,086 BHP Billiton Plc shares, via on-market buy-backs, at an
approximate average price of US$31.57 (A$36.46 / GBP15.51). To date, we have
cancelled 71,388,736 of these shares and we intend to cancel the balance. On
14 December 2007, the buy-back was suspended. To date, we have returned
US$8.8 billion of the US$13 billion.
Since August 2004 we have announced capital management initiatives totalling
US$17 billion. Since the first buy-back in 2004, 680.23 million shares have
been repurchased representing approximately 11 per cent of the total shares
on issue at an approximate average price of US$18.53 (A$23.25 / GBP9.57).
At completion of all announced initiatives we will have returned US$29.8
billion to shareholders through capital management initiatives and dividends
since June 2001.
The Income Statement
To provide clarity into the underlying performance of our operations, we
present Underlying EBIT which is a measure used internally and in our
Supplementary Information that excludes any exceptional items. The difference
between Underlying EBIT and Profit from operations is set out in the
following table:
Half-year ended 31 2007 2006
December
US$M US$M
Underlying EBIT 9,623 9,134
Exceptional items (137) -
(before taxation)
Profit from operations 9,486 9,134
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT for the half-year ended 31
December 2007 compared with the corresponding half-year period:
US$ Million
Underlying EBIT for the half-year ended 31 9,134
December 2006
Change in volumes:
Increase in volumes 500
Decrease in volumes (363)
New operations 324
Increase in volumes
461
Net price impact:
Change in sales prices 1,481
Price-linked costs 154
1,635
Change in costs:
Costs (rate and usage) (260)
Exchange rates (506)
Inflation on costs (206)
(972)
Asset sales 58
Ceased and sold operations (105)
Exploration and business development (222)
Other (366)
Underlying EBIT for the half-year ended 31 9,623
December 2007
Volumes
Higher sales volumes for copper, lead, zinc, silver, iron ore and
metallurgical coal were the largest contributors to the increased volume
impact on Underlying EBIT. This was partially offset by lower nickel volumes
attributable to lower sales due to a 15 day shutdown of the Kalgoorlie
smelter (Australia), longer lead times on sales due to the further
diversification of our customer base into US and Europe and softer market
conditions.
The continuing ramp up of copper production from Spence (Chile) and the
recently commissioned petroleum projects contributed an additional US$254
million and US$69 million respectively to this total.
Prices
Changes in prices, including price-linked costs, increased Underlying EBIT by
US$1,635 million. Higher prices for petroleum products, manganese ore and
alloy, lead, copper, energy coal and iron ore were the main positive
contributors. Lower metallurgical coal, zinc and nickel matte prices had a
negative impact.
Price-linked costs increased Underlying EBIT by US$154 million compared with
the corresponding reporting period, with decreased charges for third party
nickel ore and lower treatment and refining charges for copper being the main
contributing factors.
Costs
Costs (net of non-cash costs) increased by 1.9 per cent compared to the
corresponding period. This is an excellent result and continues our trend of
tight cost control, increased volume performance and a focus on Business
Excellence improvements. This was principally due to higher raw material,
fuel, energy and labour costs.
Our continued focus on Business Excellence has helped to mitigate these costs
by US$84 million.
Exchange rates
Exchange rate movements had a negative impact on Underlying EBIT of US$506
million. In particular, the weakening of the US dollar against the Australian
dollar during the period, had a negative impact of US$420 million, consisting
of a negative US$475 million on costs offset by a positive impact on net
monetary items. Western Australia Iron Ore, Nickel West, Olympic Dam, Worsley
Alumina and Queensland Coal operations (all Australia) were significantly
impacted by this weakening.
The following exchange rates against the US dollar have been applied:
Half-year Half-year 31 31
ended 31 ended 31 December 30 June December
December December 2007 2007 2006
2007 2006 closing closing closing
average average
Australian 0.87 0.76 0.88 0.85 0.79
dollar (a)
South 6.94 7.23 6.80 7.08 7.00
African rand
(a) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressures on input costs across all our businesses had an
unfavourable impact on Underlying EBIT of US$206 million. These pressures
were most evident in Australia and South Africa.
Asset Sales
The sale of assets increased Underlying EBIT by US$58 million. This was
positively impacted by the sale of the Elouera mine (Illawarra Coal,
Australia) and Queensland Coal (Australia) mining leases. Asset sales in the
corresponding period included our interests in the Eyesizwe coal mine in
South Africa and the Moranbah gas plant (Australia).
Ceased and sold operations
The unfavourable impact on Underlying EBIT of US$105 million was mainly due
to insurance recoveries in the corresponding period.
Exploration and business development
Gross exploration expenditure was US$598 million, an increase of US$325
million on the corresponding period. Minerals exploration activity increased
principally at Olympic Dam, nickel targets in Western Australia and diamond
targets in Angola. The main expenditure for the Petroleum CSG was on targets
in Gulf of Mexico, Colombia and Australia.
Expenditure on business development was US$54 million higher than the
corresponding period mainly due to the continuing pre-feasibility study on
the Olympic Dam expansion.
Other
Other items decreased Underlying EBIT by US$366 million. These included a
lower contribution from third party trading and the obligations arising from
the intended sale of the Optimum (South Africa) energy coal asset. The start-
up of operations at Ravensthorpe and Line 2 at Yabulu (both Australia)
adversely impacted earnings by US$132 million.
Net finance costs
Net debt increased to US$12.2 billion, an increase of US$3.7 billion from the
corresponding period largely due to the share buy-back program. Consequently
net finance costs increased to US$341 million, from US$301 million in the
corresponding period.
Taxation expense
The total taxation expense on profit before tax was US$2,952 million,
representing an effective rate of 32.3 per cent.
Excluding the impacts of royalty-related taxation, non tax-effected foreign
currency adjustments, translation of tax balances and other functional
currency translation adjustments and exceptional items, the underlying
effective rate was 30.1 per cent compared to the UK and Australian statutory
tax rate (30 per cent). Royalty-related taxation represents an effective rate
of 2.9 per cent for the current period.
The corresponding period included the recognition of US tax benefits of
US$140 million.
Exceptional Items
Tax losses incurred by WMC Resources Limited (WMC), acquired by BHP Billiton
in June 2005, were not recognised as a deferred tax asset at acquisition
pending a ruling application to the Australian Tax Office. The ruling has
now been issued confirming the availability of those losses. This has
resulted in the recognition of a deferred tax asset (US$197 million) and
consequential adjustment to deferred tax liabilities (US$38 million) through
income tax expense at current $A/$US exchange rates. As a further
consequence the Group has recognised an expense for a reduction in goodwill
measured at the $A/$US exchange rate at the date of acquisition.
Gross Tax Net
Half-year ended 31 December 2007 US$M US$M US$M
Exceptional items by category
Recognition of benefit of tax (137) 159 22
losses in respect of the
acquisition of WMC and consequent
reduction in goodwill
(137) 159 22
Exceptional items by Customer
Sector Group
Base Metals (99) (34) (133)
Stainless Steel Materials (38) (4) (42)
Group and unallocated - 197 197
(137) 159 22
Cash Flows
Net operating cash flow after interest and tax increased by 10.6 per cent to
US$7.9 billion which was primarily attributable to higher profits increasing
cash generated from operating activities together with a decrease in working
capital, partially offset by increased taxation payments.
Capital and exploration expenditure totalled approximately US$4.4 billion for
the period. Expenditure on growth projects was approximately US$3.0 billion,
including US$1.2 billion on Petroleum projects and US$1.8 billion on Minerals
projects. Capital expenditure on maintenance, sustaining and minor capital
items was approximately US$0.7 billion. Exploration expenditure was US$598
million, including US$166 million which has been capitalised.
Financing cash flows include US$4.6 billion in relation to the capital
management program and dividend payments from the increased FY2007 final
dividend declared.
Net debt, comprising cash and interest-bearing liabilities, was US$12.2
billion, an increase of US$2.1 billion, or 20.1 per cent, compared to 30 June
2007. Gearing, which is the ratio of net debt to net debt plus net assets,
was 28.0 per cent at 31 December 2007, compared with 25.3 per cent at 30 June
2007.
Dividend
An interim dividend for the half-year ended 31 December 2007 of 29.0 US cents
per share will be paid to shareholders on 18 March 2008.
The dividend paid by BHP Billiton Limited (Ltd) will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, Ltd dividends are paid mainly
in Australian dollars. BHP Billiton Plc (Plc) dividends are paid mainly in
pounds sterling to shareholders on the UK section of the register and South
African rands to shareholders on the South African section of the register.
Currency conversions were based on the foreign currency exchange rates two
business days before the declaration of the dividend.
The timetable in respect of this dividend will be:
Currency conversion date 4 February 2008
Last day to trade cum dividend on JSE Limited (JSE) 22 February 2008
Ex-dividend Australian Securities Exchange (ASX) 25 February 2008
Ex-dividend Johannesburg Stock Exchange (JSE) 25 February 2008
Ex-dividend London Stock Exchange (LSE) 27 February 2008
Ex-dividend New York Stock Exchange (NYSE) 27 February 2008
Record date 29 February 2008
Payment date 18 March 2008
American Depositary Receipts (ADRs) each represent two fully paid ordinary
shares and receive dividends accordingly.
Plc shareholders registered on the South African section of the register will
not be able to dematerialise or rematerialise their shareholdings, and
transfers between the UK register and the South African register will not be
permitted between the dates of 25 February 2008 and 29 February 2008.
The following table details the currency exchange rates applicable for the
dividend:
Dividend 29.0 US cents Exchange Rate Dividend per ordinary
share in local currency
Australian cents 0.908021 31.937587
British pence 1.975855 14.677190
South African cents 7.390733 214.331257
New Zealand cents 0.794600 36.496350
Portfolio Management
Portfolio management activities continued during the period with proceeds
amounting to US$139 million being realised. The Group divested the Elouera
coal mine (Illawarra Coal Operation, Australia) and mining leases at Poitrel
(Queensland Coal, Australia). The sale of the Optimum energy coal mine in
South Africa continues to progress.
Proceeds from the sale or distribution of our assets and interests since 2001
now surpass US$6 billion.
Debt management and liquidity
No long-term debt securities were issued in the debt capital markets during
the current period. The Group continues to manage its short-term liquidity
by issuing commercial paper in the US market and drawing down from its US$3.0
billion Revolving Credit Facility which expires in October 2011. Our
liquidity position is supported by our strong and stable credit rating and
committed debt facilities.
Corporate Governance
The following Board changes occurred during the period:
* Mr Charles (Chip) Goodyear resigned as an Executive Director of both BHP
Billiton Limited and BHP Billiton Plc on 30 September 2007.
* Dr David Brink retired from the Boards of BHP Billiton Limited and BHP
Billiton Plc at the conclusion of the Annual General Meeting of BHP Billiton
Limited on 28 November 2007.
* On 17 December 2007, the Board announced the appointment of Dr David Morgan
as a Non-executive Director of BHP Billiton Limited and BHP Billiton Plc with
effect from 1 January 2008.
Outlook
Global Economic Outlook
Despite robust economic growth in many major economies, the pace of global
economic activity has moderated. In an attempt to address the credit crisis
and stabilise financial markets, major central banks have implemented a
number of initiatives, including liquidity injections. The longer term
effectiveness of these remains to be seen. While emerging market economies
continue to grow strongly, downside risks to the global economy exist with
persistently high oil prices and the downturn in the US economy.
Led by China and India, Asian economies have shown little sign of slowing.
Rapid economic growth in China has continued, led by increasing domestic
consumption, strong industrial production and rapid growth in exports and
investment. In India, economic growth is being driven by robust investment
while inflation has recently been contained through a combination of fiscal
and monetary policy measures. Supported by a depreciating US dollar, US
export levels have experienced healthy growth. However, fears of a US
recession have been reflected in the recent instability in global equity
markets. The US housing market has also deteriorated further, sentiment
indicators have worsened and industrial production has weakened. Western
Europe has also been affected by the ongoing financial market instability
with an appreciating euro relative to the currencies of its trading partners
contributing to a moderation in export growth. Meanwhile, Japanese economic
growth has moderated alongside sluggish consumption growth and deteriorating
business confidence.
In the short-term, the global economy is expected to slow as developed
economies experience a moderation in economic activity. We have lowered our
expectations for US growth in FY2008 as consumption is expected to weaken and
business investment is likely to fall. In Western Europe the slowdown in
activity is expected to continue as monetary conditions in the region
tighten, manufacturing growth decelerates alongside reduced exports and
housing market activity slows. As a result of the slowdown in developed
economies, we expect some flow-on effects to emerging market economies`
export growth yet their overall economic growth should remain solid. Since
much of the future incremental demand for commodities will come from China
and India, a slowdown in the US is likely to have less impact on commodity
prices than in the past. As FY2009 progresses, global economic growth should
improve as major developed economies recover from the recent instability and
the emerging market economies continue to grow.
Commodities Outlook
For the first half of FY2008, average prices for almost all of our major
commodities have been higher than the prior year`s average prices. Sustained
robust demand, continuing supply side constraints and a weakening of the US
dollar, relative to currencies of natural resource producing countries, have
contributed to the higher prices.
Bulk commodity spot prices have continued to increase, driven by ongoing
strong demand from China and India and continuing supply-side pressures.
Accordingly, we expect bulk commodity contract prices to remain strong.
Energy commodity prices, particularly crude oil and thermal coal, have
increased strongly and market conditions remain firm.
Contrary to the general trend, the nickel spot price has eased from its
record high in May 2007 due to stainless steel distributors de-stocking their
nickel inventories and Chinese stainless steel mills increasing the use of
low-grade nickel pig iron. However nickel prices have remained well above
long term average historical prices.
In the medium-term, demand growth for our major commodities should remain
robust. Any effects on commodity demand of potential weakness in developed
countries should be offset over time by continued growth in developing
countries, particularly China and India. We maintain our expectation that
commodity prices are likely to stay above their historical levels over the
medium-term, albeit remaining subject to ongoing volatility.
In the longer-term, with continued strong demand growth driven by the
industrialisation of China and India, structurally higher cost sources of new
supply will be required. We continue to expect commodity prices will be
driven by long run marginal costs of supply.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the six months ended 31 December 2007 and the corresponding
period.
Half-Year Revenue Underlying EBIT (1)
ended 31
December
(US$
Million)
2007 2006 Change % 2007 2006 Change %
Petroleum 3,770 2,958 27.5 1,972 1,612 22.3
Aluminium 2,744 2,828 (3.0) 680 840 (19.0)
Base Metals 6,557 5,644 16.2 3,367 2,889 16.5
(incl.
Uranium)
Diamonds and 418 393 6.4 72 78 (7.7)
Specialty
Products
Stainless 2,419 2,805 (13.8) 799 1,427 (44.0)
Steel
Materials
Iron Ore 3,578 2,749 30.2 1,673 1,404 19.2
Manganese 1,013 575 76.2 431 105 310.5
Metallurgica 1,900 1,833 3.7 523 657 (20.4)
l Coal
Energy Coal 2,907 2,321 25.2 277 242 14.5
Group and 647 304 112.8 (171) (120) N/A
unallocated
items (2)
Less: inter- (414) (297) N/A - - -
segment
revenue
BHP Billiton 25,539 22,113 15.5 9,623 9,134 5.4
Group
(1) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT is defined on page 15.
(2) Includes consolidation adjustments, unallocated items and external
sales from the Group`s freight, transport and logistics operations.
Petroleum
Underlying EBIT was US$1,972 million, an increase of US$360 million, or 22.3
per cent, over the comparative period. Total production for the half year of
60.54 million barrels of oil equivalent was 5 per cent higher than both the
corresponding and the prior periods reflecting the contribution of newly
commissioned projects, strong gas demand in Australia, strong operating
uptime, and infill and development drilling.
The increase in Underlying EBIT was mainly due to higher average realised oil
prices per barrel of US$81.20 (compared with US$63.77), higher average
realised gas prices of US$3.42 per thousand standard cubic feet (compared
with US$3.27), higher average realised prices for liquefied natural gas of
US$7.79 per thousand standard cubic feet (compared to US$7.44) and higher
average realised prices for natural gas liquids of US$51.89 per barrel
(compared to US$40.04).
Petroleum successfully commenced oil production at Genghis Khan and Atlantis
South in the Gulf of Mexico, and at Stybarrow in Western Australia. Stybarrow
was brought on two months ahead of schedule and is exceeding early production
forecasts.
Gross exploration expenditure was US$295 million of which US$196 million was
expensed. We successfully captured acreage in the October 2007 Gulf of Mexico
lease sale process, made the Thebe gas discovery (offshore Australia) and
continued to build a diverse portfolio of opportunities with seismic data
acquired in Colombia, Brazil, Namibia, Australia and the Gulf of Mexico
during the half-year.
Aluminium
Underlying EBIT was US$680 million, a decrease of US$160 million or 19.0 per
cent over the corresponding period. Lower LME prices for aluminium, partially
offset by higher premiums, had an unfavourable impact. The average LME
aluminium price decreased to US$2,494 per tonne (compared with US$2,602 per
tonne). Realised alumina prices were in line with the corresponding period.
Half-year production records were achieved at the Worsley (Australia),
Paranam (Suriname), Alumar (Brazil) and Hillside (South Africa) operations.
In particular, production from the Worsley DCP expansion has exceeded
nameplate capacity. Mozal (Mozambique) equalled its previous record
production.
Unfavourable exchange rate movements as a result of a weaker US dollar had an
unfavourable impact of US$49 million on Underlying EBIT.
Underlying EBIT also reduced due to higher charges for energy, depreciation,
maintenance, raw materials and labour. However, an intensive focus on cost
containment through various Business Excellence initiatives resulted in
Underlying EBIT benefits being added, dampening the full impact of cost
increases. Earnings from third party trading were lower than the
corresponding period.
Base Metals (incl. Uranium)
Underlying EBIT was US$3,367 million, an increase of US$478 million, or 16.5
per cent, over the corresponding period. This increase is predominantly
attributable to higher production of copper, zinc, silver and lead. Higher
copper production was largely due to the continued ramp-up of Spence and the
Escondida Sulphide Leach Project (both Chile). This was partially reduced by
lower volumes at Olympic Dam and Cerro Colorado (Chile). Cannington
(Australia) also produced higher volumes. Copper concentrate production for
the half-year was a record, despite two earthquakes in Chile and unplanned
SAG mill outages at Antamina (Peru).
Higher average prices for copper, lead, silver, molybdenum and gold increased
Underlying EBIT, partially offset by lower average zinc prices. Lower
Treatment and Refining Charges also positively impacted Underlying EBIT.
Underlying EBIT gains were partially offset by higher costs in the period,
mostly due to higher energy, shipping, fuel and labour charges. The effect of
inflation and the weaker US$ against the A$ and Chilean Peso also impacted
negatively. Higher costs were partially mitigated by cost reductions achieved
through several Business Excellence projects. In addition, the Olympic Dam
Expansion pre-feasibility study expenditures have increased as the project
studies progress, also reducing reported earnings. Underlying EBIT was
negatively impacted by the purchase of third party uranium from the spot
market to meet contractual requirements.
Provisional pricing of outstanding copper shipments, including the impact of
finalisations, resulted in the average realised price for the reporting
period being US$3.22/lb versus an average LME price of US$3.38/lb. The
average realised price was US$3.13/lb in the corresponding period last year.
The negative impact of provisional pricing and finalisations for the period
was US$240 million. Outstanding copper volumes, subject to the fair value
measurement, amounted to 323,469 tonnes at 31 December 2007. These were re-
valued at a weighted average price of US$6,662 per tonne.
Diamonds and Specialty Products
Underlying EBIT was US$72 million, a decrease of US$6 million, or 7.7 per
cent compared with the corresponding period. This was mainly due to increased
exploration activity on diamond targets in Angola, lower value per carat
diamonds and unfavourable exchange rate movements for Canadian Dollar and
Rand against the US$. This was partly offset by higher diamond sales volumes
and lower unit costs at Ekati (Canada) due to the processing of higher grade
material, moving to underground mining areas and increased cost efficiencies.
Stainless Steel Materials
Underlying EBIT was US$799 million, a decrease of US$628 million or 44.0 per
cent compared with the corresponding period. Lower sales volume was the main
reason for the decrease, negatively impacting Underlying EBIT by US$223
million. A lower level of demand in Q1 FY08 for ferronickel from Cerro Matoso
(Colombia) adversely impacted sales, while production volumes were lower at
the Kalgoorlie Nickel Smelter and Yabulu (both Australia) principally due to
planned shutdowns.
The average LME nickel price was slightly lower at US$13.48/lb compared with
US$13.81/lb in the corresponding period. The positive impact on price linked
costs of US$110 million was disproportionately high due to favourable
provisional price revaluations on purchases of ore.
Other negative impacts on Underlying EBIT included the weaker US$ against the
A$, start up of operations at Ravensthorpe and Line 2 at Yabulu, higher
exploration activity in Australia, South America and Asia, as well as higher
raw material and labour costs at Nickel West (Australia) and Cerro Matoso.
Iron Ore
Underlying EBIT was US$1,673 million up US$269 million, or 19.2 per cent
higher. This was driven by increased prices, higher sales volumes and higher
priced spot sales.
Record production was achieved at our Western Australia Iron Ore operation
with additional capacity implemented as a result of RGP2 and the early
realisation of efficiencies resulting from the commissioning of the RGP3
assets. Samarco (Brazil) also achieved record production as a result of
production efficiencies. Record sales volumes reflected business improvement
initiatives undertaken to promote increased shipping efficiency.
Higher operating costs were largely attributable to the weaker US$ against
the A$, price linked costs, freight and the impact of tie-in activity
associated with RGP3. A number of cost saving initiatives that commenced in
the year ended June 2007, including the negotiation of contract mining rates,
the extension of selected contract terms, and strategic sourcing of input
materials and services have alleviated to some extent the full impact of
external cost pressures on the business.
Depreciation expense was up 58 per cent for the period due to the
commissioning of expanded capacity at Western Australia Iron Ore resulting
from RGP2 and RGP3.
Manganese
Underlying EBIT was US$431 million, an increase of US$326 million or 310.5
per cent. This increase was mainly due to higher sales prices achieved for
alloy and ore as well as record manganese ore sales volumes.
Manganese alloy production at 393,000 tonnes was 12 per cent higher than the
corresponding period mainly as a result of operating efficiencies at the
alloy plants and reduced down time for major rebuilds. Manganese ore
production was 3.1 million tonnes, an increase of 1 per cent compared to the
corresponding period. Both were new production records.
Metallurgical Coal
Underlying EBIT was US$523 million, a decrease of US$134 million, or 20.4 per
cent. This decrease was mainly attributable to lower prices (a negative
US$217 million) however this was partially offset by higher sales volumes at
both Queensland and Illawarra Coal. The increase in sales volume reflects
strong demand and was supported by the expanded capacity at the Hay Point
terminal.
Operating costs were higher due to increased demurrage and labour costs which
was offset by improved mining conditions at Illawarra Coal. A weaker US$
against the A$ had an unfavourable impact as did Australian inflationary
pressures.
Profits on the sale of the Elouera mine and the sale of mining leases to
Millennium was realised in the current period.
Energy Coal
Underlying EBIT was US$277 million, an increase of US$35 million, or 14.5 per
cent, compared with the corresponding period. Higher export prices resulting
from continued strong demand in the Atlantic and Pacific markets and higher
production volumes at Hunter Valley Coal (Australia) and Cerrejon Coal
(Colombia) had a favourable impact on results. This was offset by recognition
of obligations associated with the intended sale of the Optimum asset, the
weakening of the US$ against the Rand, the Australian dollar and the
Colombian Peso, the cessation of Underlying EBIT from the Koornfontein mine
(South Africa) following its divestment during last year and the profit on
the divestment of Eyesizwe included in the corresponding period. Lower
earnings from the trading of third party product and increased freight cost
also negatively impacted Underlying EBIT.
Group and Unallocated items
Corporate Costs were US$171 million compared to US$120 million in the
corresponding period, an increase of US$51 million, mainly due to negative
impacts of the stronger Australian dollar.
The following notes explain the terms used throughout this profit release:
(1) Net operating cash flows are after net interest and taxation.
(2) Unless otherwise stated production volumes exclude suspended and sold
operations. Includes one equal record production for aluminium.
(3) Based on share price of US$22.92.
(4) 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$1,544 million for the half-year ended 31
December 2007 and US$1,360 million for the half-year ended 31 December 2006.
From 1 July 2007, the Group adopted the accounting policy of recognising its
proportionate interests in the assets, liabilities, revenues and expenses of
jointly controlled entities rather than equity accounting its interest.
Jointly controlled entities` net finance costs and taxation are therefore
included in their respective line items and are no longer reconciling items
between profit from operations and Underlying EBIT or Underlying EBITDA.
Comparative information has been restated on this basis, however the change
did not result in a change to comparative Underlying EBIT and Underlying
EBITDA information contained within this profit release.
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.
(5) 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.
(6) For this purpose, net interest includes capitalised interest and excludes
the effect of discounting on provisions and other liabilities, fair value
change on hedged loans, net of hedging derivatives, exchange differences
arising from net debt and return on pension plan assets.
(7) Underlying EBIT margin is calculated net of third party product
activities.
Forward-looking statements Certain statements contained in this release,
including statements in the section entitled `Strong half-year results`,
`Creating options for the future`, `Growth projects` and `Outlook`, may
constitute `forward-looking statements` within the meaning of the US Private
Securities Litigation Reform Act of 1995. We undertake no obligation to
revise the forward-looking statements included in this release to reflect any
future events or circumstances. Our actual results, performance or
achievements could differ materially from the results expressed in, or
implied by, these forward-looking statements. Factors that could cause or
contribute to such differences are discussed in the sections entitled `Key
Information - Risk factors`; `Operating and financial review and prospects
-External Factors and Trends Affecting Our Results` included in our annual
report on Form 20-F for the fiscal year ended 30 June 2007, which we filed
with the US Securities and Exchange Commission (SEC) on 26 September 2007 and
is available on the SEC`s website at `www.sec.gov`. Nothing in this release
should be construed as either an offer to sell or a solicitation of an offer
to buy or sell securities in any jurisdiction.
HALF-YEAR FINANCIAL REPORT
For the half-year ended
31 December 2007
CONTENTS
Half-Year Financial Statements Page
Consolidated Income Statement 18
Consolidated Statement of
Recognised Income and Expense 19
Consolidated Balance Sheet 20
Consolidated Cash Flow Statement 21
Notes to the Half-Year Financial Statements 22
Notes to the Half-Year Financial Statements
1 Accounting policies 22
2 Business segments 23
3 Exceptional items 27
4 Interests in jointly controlled entities 27
5 Net finance costs 28
6 Taxation 28
7 Earnings per share 28
8 Dividends 29
9 Assets classified as held for sale 29
10 Total equity 30
11 Contingent liabilities 30
12 Subsequent events 30
Directors` Report 31
Directors` Declaration 32
Lead Auditor`s Independence Declaration 32
Review Report 33
Consolidated Income Statement
For the half-year ended 31 Half-year Half-year Year ended
December 2007 ended ended 30 June
31 December 31 December 2007
2007 2006 Restated
Restated (a)
(a)
Notes US$M US$M US$M
Revenue
Group production 21,858 19,046 41,271
Third party products 3,681 3,067 6,202
Revenue 25,539 22,113 47,473
Other income 361 311 621
Expenses excluding net (16,414) (13,290) (28,370)
finance costs
Profit from operations 9,486 9,134 19,724
Comprising:
Group production 9,574 9,022 19,649
Third party products (88) 112 75
9,486 9,134 19,724
Financial income 5 124 114 264
Financial expenses 5 (465) (415) (776)
Net finance costs 5 (341) (301) (512)
Profit before taxation 9,145 8,833 19,212
Income tax expense (2,683) (2,408) (5,305)
Royalty related taxation (269) (225) (411)
(net
of income tax benefit)
Total taxation expense 6 (2,952) (2,633) (5,716)
Profit after taxation 6,193 6,200 13,496
Profit attributable to 176 32 80
minority interests
Profit attributable to 6,017 6,168 13,416
members of BHP Billiton
Group
Earnings per ordinary 7 107.2 103.9 229.5
share (basic) (US cents)
Earnings per ordinary 7 107.2 103.8 229.0
share (diluted) (US cents)
Dividends per ordinary 8 27.0 18.5 38.5
share - paid during the
period
(US cents)
Dividends per ordinary 8 29.0 20.0 47.0
share - declared in
respect of the
period (US cents)
The accompanying notes form part of these half-year financial statements.
(a) Comparative periods have been restated as described in Note 1.
Consolidated Statement of Recognised Income and Expense
For the half-year ended 31 December 2007
Half-year Half-year Year ended
ended ended 30 June
31 December 31 December 2007
2007 2006
Notes US$M US$M US$M
Profit after taxation 6,193 6,200 13,496
Amounts recognised directly
in equity
Actuarial (losses)/gains on (27) (48) 79
pension and medical schemes
Available for sale
investments:
Valuation (losses)/gains (30) 113 147
taken to equity
Cash flow hedges:
Losses)/gains taken to (67) 87 (50)
equity
(Gains)/losses transferred (132) (17) (88)
to the initial carrying
amount of hedged items
Exchange fluctuations on (6) 22 12
translation of foreign
operations
Tax on items recognised 106 (22) 82
directly in, or transferred
from, equity
Total amounts recognised (156) 135 182
directly in equity
Total recognised income and 6,037 6,335 13,678
expense for the period
Attributable to minority 10 176 32 82
interests
Attributable to members of 10 5,861 6,303 13,596
BHP Billiton Group
The accompanying notes form part of these half-year financial statements.
Consolidated Balance Sheet
as at 31 December 2007
31 December 31 December 30 June
2007 2006 2007
Restated Restated
(a) (a)
Notes US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 2,142 1,751 2,297
Trade and other receivables 5,986 4,810 6,382
Other financial assets 1,182 949 1,059
Inventories 4,410 3,599 3,744
Other 458 336 265
Total current assets 14,178 11,445 13,747
Non-current assets
Trade and other receivables 871 700 744
Other financial assets 1,113 1,052 1,051
Inventories 192 172 166
Property, plant and equipment 44,667 38,302 42,016
Intangible assets 591 767 713
Deferred tax assets 2,008 2,264 2,832
Other 226 116 135
Total non-current assets 49,668 43,373 47,657
Total assets 63,846 54,818 61,404
LIABILITIES
Current liabilities
Trade and other payables 5,108 4,237 5,137
Interest bearing liabilities 2,580 1,617 1,640
Other financial liabilities 985 492 655
Current tax payable 1,592 2,105 2,193
Provisions 1,474 1,194 1,383
Deferred income 389 273 299
Total current liabilities 12,128 9,918 11,307
Non-current liabilities
Trade and other payables 201 171 140
Interest bearing liabilities 11,718 8,598 10,780
Other financial liabilities 628 189 595
Deferred tax liabilities 1,352 1,711 2,260
Provisions 6,063 5,396 5,859
Deferred income 498 608 545
Total non-current liabilities 20,460 16,673 20,179
Total liabilities 32,588 26,591 31,486
Net assets 31,258 28,227 29,918
EQUITY
Share capital - BHP Billiton 1,226 1,498 1,221
Limited
Share capital - BHP Billiton 1,128 1,234 1,183
Plc
Share premium account 518 518 518
Treasury shares held (1,336) (1,768) (1,457)
Reserves 386 492 473
Retained earnings 28,958 26,006 27,729
Total equity attributable to 10 30,880 27,980 29,667
members of BHP Billiton Group
Minority interests 10 378 247 251
Total equity 31,258 28,227 29,918
The accompanying notes form part of these half-year financial statements.
(a) Comparative periods have been restated as described in Note 1.
Consolidated Cash Flow Statement
For the half-year ended 31 December 2007
Half-year Half-year
ended ended Year
31 December 31 December ended
2007 2006 30 June
Restated (a) 2007
Restated
(a)
US$M US$M US$M
Operating activities
Profit before taxation 9,145 8,833 19,212
Adjustments for:
Depreciation and amortisation 1,524 1,291 2,754
expense
Exploration and evaluation 432 222 539
expense (excluding impairment)
Net gain on sale of non current (132) (73) (101)
assets
Impairments of property, plant 157 69 305
and equipment, investments and
intangibles
Employee share awards expense 40 37 72
Net finance costs 341 301 512
Other (221) (109) (382)
Changes in assets and liabilities
net of effects from acquisitions
and disposals of subsidiaries
and exchange fluctuations:
Trade and other receivables (333) 171 (1,282)
Inventories (692) (560) (732)
Net financial assets and 423 (227) 21
liabilities
Creditors 563 (7) 439
Provisions and other liabilities 344 225 589
Cash generated from operations 11,591 10,173 21,946
Dividends received 9 15 38
Interest received 80 54 139
Interest paid (393) (285) (633)
Income tax paid (2,945) (2,492) (5,007)
Royalty related taxation paid (472) (349) (554)
Net operating cash flows 7,870 7,116 15,929
Investing activities
Purchase of property, plant and (3,753) (3,466) (7,130)
equipment
Exploration expenditure (598) (312) (804)
(including amounts expensed)
Purchase of intangibles (6) - (18)
Purchase of financial assets (23) (19) (38)
Purchase of, or increased (124) (12) (701)
investment in, subsidiaries,
operations and jointly controlled
entities, net of their cash
Cash outflows from investing (4,504) (3,809) (8,691)
activities
Proceeds from sale of property, 19 72 77
plant and equipment
Proceeds from sale of financial 37 23 98
assets
Proceeds from sale or partial 78 203 203
sale of subsidiaries, operations
and jointly controlled entities,
net of their cash
Net investing cash flows (4,370) (3,511) (8,313)
Financing activities
Proceeds from ordinary share 11 12 22
issues
Proceeds from interest bearing 3,389 2,401 7,395
liabilities
Repayment of interest bearing (2,260) (2,902) (5,779)
liabilities
Repayment of finance leases (4) (2) (2)
Purchase of shares by Employee (103) (131) (165)
Share Ownership Plan Trusts
Share buy-back - - (2,824)
- BHP Billiton Limited
Share buy-back (3,115) (1,355) (2,917)
- BHP Billiton Plc
Dividends paid (1,523) (1,100) (2,271)
Dividends paid to minority (48) (22) (68)
interests
Net financing cash flows (3,653) (3,099) (6,609)
Net (decrease)/increase in cash (153) 506 1,007
and cash equivalents
Cash and cash equivalents, net 1,227 1,227
of overdrafts, at beginning of 2,246
period
Effect of foreign currency (2) 12
exchange rate changes on cash and 23
cash equivalents
Cash and cash equivalents, net of 2,116 1,731 2,246
overdrafts, at end of period
The accompanying notes form part of these half-year financial statements.
(a) Comparative periods have been restated as described in Note 1.
Notes to the Half-Year Financial Statements
1 Accounting policies
This general purpose financial report for the half-year ended 31 December
2007 is unaudited and has been prepared in accordance with IAS 34 `Interim
Financial Reporting` as issued by the IASB, IAS 34 `Interim Financial
Reporting` as adopted by the EU, AASB 134 `Interim Financial Reporting` and
the requirements of the Disclosure and Transparency Rules of the Financial
Services Authority in the United Kingdom and the Australian Corporations Act
2001 as applicable to interim financial reporting.
The half-year financial statements represent a `condensed set of financial
statements` as referred to in the UK Disclosure and Transparency Rules issued
by the Financial Services Authority. Accordingly, they do not include all of
the information required for a full annual financial report and are to be
read in conjunction with the most recent annual financial report. The
comparative figures for the financial year ended 30 June 2007 are not the
statutory accounts of BHP Billiton for that financial year. Those accounts,
which were prepared under IFRS, have been reported on by the Company`s
auditors and delivered to the registrar of companies. The report of the
auditors was unqualified and did not contain statements under Section 237(2)
or (3) of the UK Companies Act 1985.
The half-year financial statements have been prepared on the basis of
accounting policies consistent with those applied in the 30 June 2007 annual
financial statements contained within the Annual Report of the BHP Billiton
Group, except for the impact of adopting AASB 2007-4 `Amendments to
Australian Accounting Standards Arising from ED 151 and Other Amendments`.
AASB 2007-4 reinstates optional accounting treatments permitted by IFRS that
were not initially available under Australian Accounting Standards. AASB 2007-
4 will be applied in the Group`s annual financial statements for the year
ending 30 June 2008 and has therefore been applied in these half-year
financial statements. The principal impacts of AASB 2007-4 are described
below.
Proportionate consolidation
As permitted by AASB 2007-4 and IAS 31 `Interests in Joint Ventures`, the
Group has adopted the policy of recognising its proportionate interests in
the assets, liabilities, revenues and expenses of jointly controlled entities
within each applicable line item of the financial statements. All such
interests were previously recognised using the equity method. The Group
believes the change in policy to proportionate consolidation of jointly
controlled entities provides more relevant information about the financial
performance and financial position of the Group.
Following this change in policy, comparative information has been restated
for all periods included in these half-year financial statements, with the
impact summarised below. There was no impact on profit attributable to
members of the Group or total equity in the current or comparative periods.
Half-year ended 31 Year ended 30 June
December 2006 2007
Restated Published Restated Published
US$M US$M US$M US$M
Revenue 22,113 18,503 47,473 39,498
Other income 311 293 621 588
Expenses excluding net (13,290) (12,292) (28,370) (26,352)
finance costs
Share of profits from - 2,015 - 4,667
jointly controlled
entities
Net finance costs (301) (222) (512) (390)
Total taxation expense (2,633) (2,097) (5,716) (4,515)
Profit after taxation 6,200 6,200 13,496 13,496
31 December 2006 30 June 2007
Restated Published Restated Published
US$M US$M US$M US$M
Current and non-current
assets:
Cash and cash 1,751 1,423 2,297 1,937
equivalents
Trade and other 5,510 4,796 7,126 5,499
receivables
Other financial assets 2,001 1,859 2,110 1,968
Inventories 3,771 3,326 3,910 3,409
Investments in jointly - 3,772 - 4,924
controlled entities
Property, plant and 38,302 33,282 42,016 36,705
equipment
Intangible assets 767 686 713 615
Deferred tax assets 2,264 2,230 2,832 2,810
Other assets 452 366 400 301
Total assets 54,818 51,740 61,404 58,168
Current and non-current
liabilities:
Trade and other payables 4,408 4,114 5,277 4,869
Interest bearing 10,215 8,629 12,420 10,643
liabilities
Other financial 681 578 1,250 1,107
liabilities
Current tax payable 2,105 1,734 2,193 2,102
Deferred tax liabilities 1,711 1,379 2,260 1,822
Provisions 6,590 6,193 7,242 6,860
Deferred income 881 886 844 847
Total liabilities 26,591 23,513 31,486 28,250
Net assets 28,227 28,227 29,918 29,918
Half-year ended Year ended
31 December 2006 30 June 2007
Restated Published Restated Published
US$M US$M US$M US$M
Net operating cash flows 7,116 7,018 15,929 15,595
Net investing cash flows (3,511) (3,152) (8,313) (7,624)
Net financing cash flows (3,099) (3,221) (6,609) (6,843)
Cash flow presentation
The Group has also elected to adopt the indirect method of cash flow
presentation as permitted by AASB 2007-4 and IAS 7 `Cash Flows Statements`.
The Group believes this change in presentation more effectively conveys the
relationship between its financial performance and operating cash flows.
Rounding of amounts
Amounts in this financial report have, unless otherwise indicated, been
rounded to the nearest million dollars.
Exchange rates
The following exchange rates against the US dollar have been applied in the
financial report:
Average Average Average
Half-year Half-year Year As at As at As at
ended 31 ended 31 ended 31 31 30 June
December December 30 June December December 2007
2007 2006 2007 2007 2006
Australian 0.87 0.76 0.79 0.88 0.79 0.85
dollar (a)
Brazilian real 1.85 2.16 2.10 1.78 2.14 1.93
Canadian dollar 1.01 1.13 1.13 0.98 1.16 1.06
Chilean peso 511 534 534 498 534 528
Colombian peso 2,030 2,372 2,247 2,017 2,240 1,960
South African 6.94 7.23 7.20 6.80 7.00 7.08
rand
Euro 0.71 0.78 0.77 0.68 0.76 0.74
UK pound 0.49 0.53 0.52 0.50 0.51 0.50
sterling
(a) Displayed as US$ to A$1 based on common convention.
2 Business segments
The BHP Billiton Group has grouped its major operating assets into the
following reporting segments:
* Petroleum (exploration for and production, processing and marketing of
hydrocarbons including oil, gas and LNG)
* Aluminium (exploration for and mining of bauxite, processing and marketing
of aluminium and alumina)
* Base Metals (exploration for and mining, processing and marketing of
copper, silver, zinc, lead, uranium and copper by-products including gold)
* Diamonds and Specialty Products (exploration for and mining of diamonds and
titanium minerals, and prior to divestment in August 2006, fertiliser
operations)
* Stainless Steel Materials (exploration for and mining, processing and
marketing of nickel)
* Iron Ore (exploration for and mining, processing and marketing of iron ore)
* Manganese (exploration for and mining, processing and marketing of
manganese)
* Metallurgical Coal (exploration for and mining, processing and marketing of
metallurgical coal)
* Energy Coal (exploration for and mining, processing and marketing of energy
coal)
Group and unallocated items represent Group centre functions and certain
comparative data for divested assets and investments. Exploration and
technology activities, which were previously recognised as part of Group and
unallocated items, are now recognised within relevant segments as a result of
a change in management responsibilities over such activities. This change in
segment reporting has been reflected in all periods presented and resulted in
operating costs of US$93 million (31 December 2006: US$60 million; 30 June
2007: US$139 million) being reported in individual segments rather than Group
and unallocated items. Amounts allocated to any individual segment are not
material.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
Notes to the Half-Year Financial Statements continued
2 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Half-year
ended 31
December
2007
Revenue
Sale of 3,058 2,254 5,561 418 2,413 3,538
group
production
Sale of 310 490 996 - 6 -
third
party
product
Rendering of 6 - - - - 22
services
Inter- 396 - - - - 18
segment
revenue
Segment 3,770 2,744 6,557 418 2,419 3,578
revenue
Segment 1,969 680 3,268 69 761 1,673
result
Other 3 - - 3 - -
Attributable
income (1)
Profit from 1,972 680 3,268 72 761 1,673
operations
Net finance
costs
Total
taxation
expense
Profit after
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
US$M Manganese Metallurgical Group and BHP
Coal Energy unallocated Billiton
Coal items/ Group
eliminations
Half-year
ended 31
December
2007
Revenue
Sale of 950 1,856 1,725 7 21,780
group
production
Sale of 63 10 1,182 624 3,681
third
party
product
Rendering of - 34 - 16 78
services
Inter- - - - (414) -
segment
revenue
Segment 1,013 1,900 2,907 233 25,539
revenue
Segment 431 523 277 (165) 9,486
result
Other - - - (6) -
Attributable
income (1)
Profit from 431 523 277 (171) 9,486
operations
Net finance (341)
costs
Total (2,952)
taxation
expense
Profit after 6,193
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
2 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Half-year
ended 31
December
2006
Revenue
Sale of 2,490 2,157 4,630 393 2,762 2,717
group
production
Sale of 169 667 1,014 - 43 15
third
party
product
Rendering of 4 4 - - - 17
services
Inter- 295 - - - - -
segment
revenue
Segment 2,958 2,828 5,644 393 2,805 2,749
revenue
Segment 1,607 840 2,877 76 1,421 1,404
result
Other 5 - 12 2 6 -
Attributable
income (1)
Profit from 1,612 840 2,889 78 1,427 1,404
operations
Net finance
costs
Total
taxation
expense
Profit after
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Half-year
ended
31 December
2006
Revenue
Sale of 535 1,829 1,494 - 19,007
group
production
Sale of 40 - 827 292 3,067
third
party
product
Rendering of - 2 - 12 39
services
Inter- - 2 - (297) -
segment
revenue
Segment 575 1,833 2,321 7 22,113
revenue
Segment 105 657 221 (74) 9,134
result
Other - - 21 (46) -
Attributable
income (1)
Profit from 105 657 242 (120) 9,134
operations
Net finance (301)
costs
Total (2,633)
taxation
expense
Profit after 6,200
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
2 Business segments (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended
30
June 2007
Revenue
Sale of 4,846 4,564 10,756 893 6,800 5,421
group
production
Sale of 454 1,315 1,879 - 101 29
third
party
product
Rendering of 7 - - - -
services 55
Inter- 578 - - - -
segment 19
revenue
Segment 5,885 5,879 12,635 893 6,901 5,524
revenue
Segment 3,007 1,833 6,875 189 3,665 2,728
result
Other 7 23 - 8 10 -
Attributable
income (1)
Profit from 3,014 1,856 6,875 197 3,675
operations 2,728
Net finance
costs
Total
taxation
expense
Profit after
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Year ended
30
June 2007
Revenue
Sale of 1,149 3,712 2,980 14 41,135
group
production
Sale of 95 10 1,595 724 6,202
third
party
product
Rendering of - 41 1 32 136
services
Inter- - 6 - (603) -
segment
revenue
Segment 1,244 3,769 4,576 167 47,473
revenue
Segment 253 1,246 255 (327) 19,724
result
Other - 1 50 (99) -
Attributable
income (1)
Profit from 253 1,247 305 (426) 19,724
operations
Net finance (512)
costs
Total (5,716)
taxation
expense
Profit after 13,496
taxation
(1) Other attributable income represents the re-allocation of certain items
recorded in the segment result of Group and unallocated items / eliminations
to the applicable business segment.
Notes to the Half-Year Financial Statements
3 Exceptional items
Exceptional items are those items where their nature and amount is considered
material to the financial report. Such items included within the BHP
Billiton Group profit for the period are detailed below.
Half-year ended 31 December 2007
Gross Tax Net
US$M US$M US$M
Exceptional items by category
Recognition of benefit of tax (137) 159 22
losses in respect of the
acquisition of WMC and consequent
reduction in goodwill
(137) 159 22
Exceptional items by segment
Base Metals (99) (34) (133)
Stainless Steel Materials (38) (4) (42)
Group and unallocated - 197 197
(137) 159 22
Recognition of benefit of tax losses in respect of the acquisition of WMC and
consequent reduction in goodwill
Tax losses incurred by WMC Resources Limited (WMC) were not recognised as a
deferred tax asset at acquisition pending a ruling application to the
Australian Tax Office. The ruling has now been issued confirming the
availability of those losses. This has resulted in the recognition of a
deferred tax asset (US$197 million) and consequential adjustment to deferred
tax liabilities (US$38 million) through income tax expense at current
exchange rates. As a further consequence the Group has recognised an expense
for a reduction in goodwill measured at the exchange rate at the date of
acquisition.
Half-year ended 31 December 2006
There were no exceptional items for the half-year ended 31 December 2006.
Year ended 30 June 2007
Gross Tax Net
US$M US$M US$M
Exceptional items by category
Impairment of South African coal (176) 34 (142)
operations
Newcastle steelworks rehabilitation (167) 50 (117)
(343) 84 (259)
Exceptional items by segment
Energy Coal (176) 34 (142)
Group and unallocated (167) 50 (117)
(343) 84 (259)
Impairment of South African coal operations
As part of the Group`s regular review of assets whose value may be impaired,
a charge of US$176 million (US$34 million tax benefit) was recorded in
relation to coal operations in South Africa.
Newcastle steelworks rehabilitation
The Group recognised a charge against profits of US$167 million (US$50
million tax benefit) for additional rehabilitation obligations in respect of
former operations at the Newcastle steelworks (Australia). The increase in
obligations relate to increases in the volume of sediment in the Hunter River
requiring remediation and treatment, and increases in treatment costs.
4 Interests in jointly controlled entities
Major Ownership interest at BHP Contribution to profit
shareholdings Billiton Group reportingdate after taxation
in jointly (a)
controlled
entities
31 Dec 31 Dec 30 June Half-year Half-year Year
2007 2006 2007 ended 31 ended 31 end
% % % December December 30
2007 2006 June
US$M US$M 2007
US$M
Samarco 50 50 50 121 121 239
Mineracao SA
Minera 33.75 33.75 33.75 271 246 506
Antamina SA
Carbones del 33.3 33.3 33.3 47 73 112
Cerrejon LLC
Minera 57.5 57.5 57.5 1,705 1,412 3,44
Escondida 2
Limitada
Mozal SARL 47.1 47.1 47.1 105 123 259
Other (b) 18 40 109
Total 2,267 2,015 4,66
7
(a) The ownership interest at the BHP Billiton Group`s and the jointly
controlled entity`s reporting date are the same. When the annual financial
reporting date is different to the Group`s, financial information is obtained
as at 31 December in order to report on a consistent basis with the Group`s
reporting date.
(b) Includes immaterial jointly controlled entities and the Richards Bay
Minerals joint venture owned 50 per cent (31 December 2006: 50 per cent; 30
June 2007: 50 per cent).
5 Net finance costs
Half-year Half-year Year ended
ended ended 30 June 2007
31 December 31
2007 December
2006
US$M US$M US$M
Financial expenses
Interest on bank loans and 28 29 62
overdrafts
Interest on all other loans 367 304 613
Finance lease interest 6 3 5
Dividends on redeemable 1 1 1
preference shares
Discounting on provisions and 138 125 255
other liabilities
Discounting on pension and 51 63 127
medical benefit entitlements
Interest capitalised (a) (134) (145) (353)
Net fair value change on hedged 8 14 27
loans and related hedging
derivatives
Exchange differences on net - 21 39
debt
465 415 776
Financial income
Interest income (82) (58) (155)
Return on pension plan assets (42) (56) (109)
(124) (114) (264)
Net finance costs 341 301 512
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where
financed through general borrowings, at a capitalisation rate representing
the average interest rate on such borrowings. For the half-year ended 31
December 2007 the capitalisation rate was 5.7 per cent (31 December 2006: 5.5
per cent; 30 June 2007: 5.7 per cent).
6 Taxation
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
US$M US$M US$M
Taxation expense including
royalty related taxation
UK taxation expense 60 9 85
Australian taxation expense 1,361 1,432 2,768
Overseas taxation expense 1,531 1,192 2,863
Total taxation expense 2,952 2,633 5,716
7 Earnings per share
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Basic earnings per ordinary 107.2 103.9 229.5
share (US cents)
Diluted earnings per ordinary 107.2 103.8 229.0
share (US cents)
Basic earnings per American 214.4 207.8 459.0
Depositary Share (ADS)
(US cents) (a)
Diluted earnings per American 214.4 207.6 458.0
Depositary Share (ADS)
(US cents) (a)
Basic earnings (US$M) 6,017 6,168 13,416
Diluted earnings (US$M) (b) 6,040 6,182 13,434
The weighted average number of shares used for the purposes of calculating
diluted earnings per ordinary share reconciles to the number used to
calculate basic earnings per share as follows:
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
Weighted average number of shares Million Million Million
Basic earnings per ordinary share 5,615 5,934 5,846
denominator
Shares and options contingently 19 21 20
issuable under employee share
ownership plans
Diluted earnings per ordinary 5,634 5,955 5,866
share denominator
(a) Each American Depository Share (ADS) represents two ordinary shares of
BHP Billiton Limited or BHP Billiton Plc. Earnings per share and dividends
declared on each ADS represent twice the earnings per share and dividends
declared on BHP Billiton shares.
(b) Diluted earnings are calculated after adding back accrued dividend
entitlements on employee share awards of US$23 million (31 December 2006:
US$14 million; 30 June 2007: US$18 million) that would not be required if
potential ordinary shares were converted to fully paid.
8 Dividends
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2007 2006 2007
US$M US$M US$M
Dividends paid during the period
BHP Billiton Limited 907 647 1,346
BHP Billiton Plc - Ordinary shares 612 453 923
- Preference shares (a) - - -
1,519 1,100 2,269
Dividends declared in respect
of the period
BHP Billiton Limited 974 699 1,605
BHP Billiton Plc - Ordinary shares 640 475 1,097
- Preference shares (a) - - -
1,614 1,174 2,702
Half-year Half-year Year
Ended Ended ended
31 December 31 December 30 June
2007 2006 2007
US cents US cents US
cents
Dividends paid during the period
(per share)
Prior year final dividend 27.0 18.5 18.5
Interim dividend N/A N/A 20.0
27.0 18.5 38.5
Dividends declared in respect of
the period (per share)
Interim dividend 29.0 20.0 20.0
Final dividend N/A N/A 27.0
29.0 20.0 47.0
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each paid and
declared annually (30 June 2007: 5.5 per cent).
Dividends are declared after period end in the announcement of the results
for the period. Interim dividends are declared in February and paid in March.
Final dividends are declared in August and paid in September. Dividends
declared are not recorded as a liability at the end of the period to which
they relate. Subsequent to half-year end, on 6 February 2008, BHP Billiton
declared an interim dividend of 29 US cents per share (US$1,614 million),
which will be paid on 18 March 2008.
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
9 Assets classified as held for sale
31 December 2007
There were no assets or businesses classified as held for sale in the balance
sheet at 31 December 2007.
31 December 2006
During the six months ended 31 December 2006, the sale of Southern Cross
Fertiliser Pty Ltd, the Cascade and Chinook oil and gas prospects, the Coal
Bed Methane assets and BHP Billiton`s 45.5 per cent interest in Valesul
Aluminio SA, were finalised. These assets and businesses were held for sale
at 30 June 2006.
30 June 2007
There were no assets or businesses classified as held for sale in the balance
sheet at 30 June 2007.
10 Total equity
Attributable to members of BHP Billiton Group
Half-Year Half-year
ended 31 ended 31 Year ended
December 2007 December 2006 30 June 2007
US$M US$M US$M
Total equity opening 29,667 24,218 24,218
balance
Total recognised income 5,861 6,303 13,596
and expense for the period
Transactions with owners - 5 8 17
contributed equity
Dividends (1,519) (1,100) (2,269)
Accrued employee 40 37 72
entitlement to share
awards
Purchases of shares made (99) (131) (165)
by ESOP Trusts
BHP Billiton Plc share (3,075) (1,355) (2,957)
buy-back
BHP Billiton Limited - - (2,845)
share buy-back
Total equity closing 30,880 27,980 29,667
balance
Total equity (Continued)
Minority interests
Half-year ended Half-year
31 December ended Year ended
2007 31 December 30 June 2007
2006
US$M US$M US$M
Total equity opening balance 251 237 237
Total recognised income and 176 32 82
expense for the period
Transactions with owners - (1) - -
contributed equity
Dividends (48) (22) (68)
Accrued employee entitlement - - -
to share awards
Purchases of shares made by - - -
ESOP Trusts
BHP Billiton Plc share - - -
buy-back
BHP Billiton Limited share - - -
buy-back
Total equity closing balance 378 247 251
Share buy-backs
On 23 August 2006, BHP Billiton announced a US$3 billion capital return to
shareholders through an 18-month series of on-market share buy-backs. On 7
February 2007, a US$10 billion extension to this scheme was announced. As of
that date, 93,435,000 shares in BHP Billiton Plc had been repurchased under
the August program at a cost of US$1,705 million, leaving US$1,295 million to
be carried forward and added to February`s program. All BHP Billiton Plc
shares bought back are held as Treasury shares within the share capital of
BHP Billiton Plc. A further 53,286,714 BHP Billiton Plc shares were
repurchased between 7 February 2007 and 30 June 2007 at a total cost of
US$1,252 million. As at 30 June 2007, 146,721,714 BHP Billiton Plc shares had
been bought back at a total cost of US$2,957 million.
For the half-year ended 31 December 2007, a further 96,904,086 shares in BHP
Billiton Plc were repurchased at a total cost of US$3,075 million. As at 31
December 2007, 243,625,800 BHP Billiton Plc shares had been bought back at a
total cost of US$6,032 million. The shares were repurchased at an average
price of GBP12.37, representing a discount of 8.7 per cent to the average BHP
Billiton Limited share price between 7 September 2006 and 31 December 2007.
Shares in BHP Billiton Plc held by BHP Billiton Limited were periodically
cancelled, in accordance with the resolutions passed at the 2006 Annual
General Meetings. As at 31 December 2007 BHP Billiton Limited held 25,515,350
shares in BHP Billiton Plc.
During the year ended 30 June 2007, 141,098,555 BHP Billiton Limited shares
were repurchased through an off-market buy-back. In accordance with the
structure of the buy-back, US$286 million was allocated to the share capital
of BHP Billiton Limited and US$2,559 million was allocated to retained
earnings. These shares were then cancelled. The final price for the buy-back
was A$24.81 per share, representing a discount of 14 per cent to the volume
weighted average price of BHP Billiton Limited shares over the five days up
to and including the closing date of the buy-back.
11 Contingent liabilities
31 31 30 June 2007
December2007 December2006
US$M US$M US$M
Contingent liabilities at balance
date, not otherwise provided for
in the financial report, are
categorised as arising from:
Jointly controlled entities
Bank guarantees - - 1
Other (a) 425 410 416
425 410 417
Subsidiaries and jointly
controlled assets (including
guarantees)
Bank guarantees 2 - 1
Performance guarantees (b) 2 1 25
Other (a) 247 282 296
251 283 322
Total contingent liabilities 676 693 739
(a) Other contingent liabilities relate predominantly to actual or potential
litigation of the Group for which amounts are reasonably estimable but the
liability is not probable and therefore the Group has not provided for such
amounts in these half-year financial statements. The amounts relate to a
number of actions against the Group, none of which are individually
significant. Additionally, there are a number of legal claims or potential
claims against the Group, the outcome of which cannot be foreseen at present,
and for which no amounts have been included in the table above.
(b) The BHP Billiton Group has entered into various counter-indemnities of
bank and performance guarantees related to its own future performance in the
normal course of business.
12 Subsequent events
No matters or circumstances have arisen since the end of the half-year that
have significantly affected, or may significantly affect, the operations,
results of operations or state of affairs of the BHP Billiton Group in
subsequent accounting periods.
Directors` Report
The Directors present their report together with the half-year financial
statements for the half-year ended 31 December 2007 and the auditor`s review
report thereon.
Review of Operations
A detailed review of the Group`s operations, the results of those operations
during the half-year ended 31 December 2007 and likely future developments
are given on page 1 to 15. The Review of Operations has been incorporated
into, and forms part of, this Directors` Report.
Principal Risks and Uncertainties
Because of the international scope of the Group`s operations and the
industries in which it is engaged, there are a number of risk factors and
uncertainties which could have an effect on the Group`s results and
operations. Material risks that could impact on the Group`s performance
include those referred to in the `Outlook` section as well as:
- Fluctuations in commodity - Fluctuations in currency
prices exchange movements
- Failure to discover new - Influence of China and impact
reserves, enhance existing of a slowdown in consumption
reserves or develop new
operations
- Actions by governments and - Inability to successfully
political events in the countries integrate acquired businesses
in which we operate
- Inability to recover - Non-compliance to the Group`s
investments standards by non-controlled
in mining and oil and gas assets
projects
- Operating cost pressures and - Unexpected natural and
shortages operational catastrophes
- Climate change and greenhouse Inadequate human resource
effects talentpool
- Breaches in information Breaches in governance processes
technology security
- Impact of health, safety and
environmental exposures and
related regulations on operations
and reputation
Further information on the above risks and uncertainties can be found on
pages 9 to 11 of the Group`s Annual Report for the year ended 30 June 2007, a
copy of which is available on the Group`s website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on page 29.
Board of Directors
The Directors of the Company in office at any time during or since the endof
the half-year are:
Mr D R Argus - Chairman since Mr C W Goodyear - an Executive
April 1999 (on the Board of Director from November 2001
Directors since November 1996) until 30 September 2007
Mr P M Anderson - a Director Dr D A Jenkins - a Director
since June 2006 since March 2000
Dr D C Brink - a Director from Mr M Kloppers - an Executive
June 1997 until 28 November 2007 Director since January 2006
Dr J G Buchanan - a Director Dr D Morgan - a Director since
since February 2003 January 2008
Mr C A Cordeiro - a Director Mr J Nasser - a Director since
since February 2005 June 2006
Mr D A Crawford - a Director Dr J M Schubert - a Director
since May 1994 since June 2000
Dr E G de Planque - a Director
since October 2005
Auditor`s independence declaration
KPMG in Australia are the auditors of BHP Billiton Limited. Their auditor`s
independence declaration under Section 307C of the Australian Corporations
Act 2001 is set out on page 32 and forms part of this Directors` Report.
Rounding of amounts
BHP Billiton Limited is a company of a kind referred to in Australian
Securities and Investments Commission Class Order No 98/100, dated 10 July
1998. Amounts in the Directors` Report and half-year financial statements
have been rounded to the nearest million dollars in accordance with that
class order.
Signed in accordance with a resolution of the Board of Directors.
D R Argus - Chairman M Kloppers - Chief Executive Officer
Dated this 6th day of February 2008
Directors` Declaration of Responsibility and Lead Auditor`s Independence
Declaration
Directors` Declaration of Responsibility
The half-year financial report is the responsibility of, and has been
approved by, the Directors. In accordance with a resolution of the Directors
of the BHP Billiton Group, the Directors declare that, to the best of their
knowledge and in their reasonable opinion:
(a) the half-year financial statements and notes, set out on pages 18 to 30,
have been prepared in accordance with IAS 34 `Interim Financial Reporting` as
issued by the IASB, IAS 34 `Interim Financial Reporting` as adopted by the
EU, AASB 134 `Interim Financial Reporting` and the Disclosure and
Transparency Rules of the Financial Services Authority in the United Kingdom
and the Australian Corporations Act 2001, including:
(i) complying with applicable accounting standards and the Australian
Corporations Regulations 2001; and
(ii) giving a true and fair view of the financial position of the BHP
Billiton Group as at 31 December 2007 and of its performance for the half-
year ended on that date;
(b) the Directors` Report, which incorporates the Review of Operations on
pages 1 to 15, includes a review of the information required by:
(i) DTR4.2.7R of the Disclosure and Transparency Rules in the United
Kingdom, being an indication of important events during the first six months
of the current financial year and their impact on the half-year financial
statements, and a description of the principal risks and uncertainties for
the remaining six months of the year; and
(ii) DTR4.2.8R of the Disclosure and Transparency Rules in the United
Kingdom, being related party transactions that have taken place in the first
six months of the current financial year and that have materially affected
the financial position or performance of the BHP Billiton Group during that
period, and any changes in the related party transactions described in the
last annual report that could have such a material effect; and
(c) in the Directors` opinion, there are reasonable grounds to believe that
each of the BHP Billiton Group, BHP Billiton Limited and BHP Billiton Plc
will be able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors.
D R Argus - Chairman
M Kloppers - Chief Executive Officer
Dated this 6th day of February 2008
Lead Auditor`s Independence Declaration
To the Directors of BHP Billiton Limited:
I declare that, to the best of my knowledge and belief, in relation to the
review for the half-year ended 31 December 2007 there have been:
- no contraventions of the auditor independence requirements as set out in
the Australian Corporations Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of the BHP Billiton Group and the entities it
controlled during the financial period.
KPMG
Peter Nash
Partner
Dated in Melbourne this 6th day of February 2008
Independent Review Report of KPMG Audit Plc to BHP Billiton Plc and of KPMG
to the Members of BHP Billiton Limited
Scope
For the purposes of these reports, the terms "we" and "our" denote KPMG Audit
Plc in relation to its responsibilities under its terms of engagement to
report to BHP Billiton Plc and KPMG in relation to Australian professional
and regulatory responsibilities and reporting obligations to the members of
BHP Billiton Limited.
The BHP Billiton Group ("the Group") consists of BHP Billiton Plc and BHP
Billiton Limited and the entities they controlled at the end of the half-year
or from time to time during the half-year ended 31 December 2007.
We have reviewed the condensed half-year financial statements of the Group
for the half-year ended 31 December 2007 ("half-year financial statements"),
set out on pages 18 to 30, which comprise the consolidated income statement,
consolidated statement of recognised income and expense, consolidated balance
sheet, consolidated cash flow statement, summary of significant accounting
policies and other explanatory notes 1 to 12. We have read the other
information contained in the half-year financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the half-year financial statements. KPMG has also
reviewed the directors` declaration set out on page 32 in relation to
Australian regulatory requirements contained in section (a) and (c) of the
directors` declaration.
Respective Responsibilities of KPMG Audit Plc and KPMG
KPMG Audit Plc`s report is made solely to BHP Billiton Plc in accordance with
the terms of KPMG Audit Plc`s engagement to assist BHP Billiton Plc in
meeting the requirements of the Disclosure and Transparency Rules of the UK`s
Financial Services Authority ("the UK FSA"). KPMG Audit Plc`s review has
been undertaken so that it might state to BHP Billiton Plc those matters it
is required to state to it in this report and for no other purpose. To the
fullest extent permitted by law, KPMG Audit Plc does not accept or assume
responsibility to anyone other than BHP Billiton Plc, for KPMG Audit Plc`s
review work, for this report, or for the conclusions it has reached.
KPMG has performed an independent review of the half-year financial
statements and directors` declaration in order to state whether, on the basis
of the procedures described, it has become aware of any matter that would
indicate that the half-year financial statements and directors` declaration
are not in accordance with the Corporations Act 2001 including: giving a true
and fair view of the Group`s financial position as at 31 December 2007 and
its performance for the half-year ended on that date; and complying with
Australian Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001.
Our responsibility is to express a conclusion on the half-year financial
statements in the half-year financial report based on our review.
Directors` Responsibilities
The half-year financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-year financial report:
* in accordance with the Disclosure and Transparency Rules of the UK FSA, and
under those rules, in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU; and
* in accordance with Australian Accounting Standard AASB 134 Interim
Financial Reporting and the Corporations Act 2001. This responsibility
includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the half-year financial statements that
are free from material misstatement, whether due to fraud or error; selecting
and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Review work performed
KPMG Audit Plc conducted its review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued by the
Auditing Practices Board for use in the UK.
KPMG conducted its review in accordance with Australian Auditing Standard on
Review Engagements ASRE 2410 Review of an Interim Financial Report Performed
by the Independent Auditor of the Entity. As auditor of BHP Billiton
Limited, KPMG is required by ASRE 2410 to comply with the ethical
requirements relevant to the audit of the annual financial report.
A review of half-year financial statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with auditing standards
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Review conclusion by KPMG Audit Plc
Based on our review, nothing has come to our attention that causes us to
believe that the condensed half-year financial statements in the half-year
financial report for the six months ended 31 December 2007 are not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU, and the Disclosure and Transparency Rules of
the UK FSA.
KPMG Audit Plc
Chartered Accountants
London
Dated in Melbourne this 6th day of February 2008
Review conclusion by KPMG
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the condensed half-year financial
statements and directors` declaration of the Group are not in accordance with
the Corporations Act 2001, including:
a) giving a true and fair view of the Group`s financial position as at 31
December 2007 and of its performance for the half-year ended on that date;
and
b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
KPMG
Peter Nash
Partner
Melbourne
Dated in Melbourne this 6th day of February 2008
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia
Samantha Evans, Media Relations
Tel: +61 3 9609 2898 Mobile: +61 400 693 915
email: Samantha.Evans@bhpbilliton.com
Don Carroll, Investor Relations
Tel: +61 3 9609 2686 Mobile: +61 417 591 938
email: Don.A.Carroll@bhpbilliton.com
United Kingdom
Andre Liebenberg, Investor Relations
Tel: +44 20 7802 4131 Mobile: +44 7920 236 974
email: Andre.Liebenberg@bhpbilliton.com
Illtud Harri, Media Relations
Tel: +44 20 7802 4195 Mobile: +44 7920 237 246
email: Illtud.Harri@bhpbilliton.com
United States
Tracey Whitehead, Investor & Media Relations
Tel: US +1 713 599 6100 or UK +44 20 7802 4031
Mobile: +44 7917 648 093
email: Tracey.Whitehead@bhpbilliton.com
South Africa
Alison Gilbert, Investor Relations
Tel: SA +27 11 376 2121 or UK +44 20 7802 4183
Mobile: +44 7769 936 227
email: Alison.Gilbert@bhpbilliton.com
Date: 06/02/2008 12:56:20 Produced by the JSE SENS Department.
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