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BIL
BIBLT
BIL - BHP Billiton Plc - Report for the half-year ended 31 December 2008
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
4 February 2009
For Announcement to the Market
Name of Companies: BHP Billiton Limited (ABN 49 004 028 077) and BHP Billiton
Plc (Registration No. 3196209)
Report for the half-year ended 31 December 2008
This statement includes the combined results of the BHP Billiton Group,
comprising BHP Billiton Limited and BHP Billiton Plc, for the half-year ended
31 December 2008 compared with the half-year ended 31 December 2007.
The results are prepared in accordance with IFRS and are presented in US
dollars.
Headline Earnings
In accordance with the JSE Listing Requirements, Headline Earnings is
presented below.
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
US$M US$M US$M
Earnings attributable to ordinary 2,617 6,017 15,390
shareholders
Adjusted for:
Cost relating to the lapsed offers for 450 - -
Rio Tinto
Loss/(Gain) on sale of PP&E, 17 (132) (129)
Investments and Operations
Impairments 3,700 157 274
Tax effect of above adjustments (1,014) 33 (5)
Recognition of tax losses in respect of - (159) (159)
business combination
Subtotal of Adjustments 3,153 (101) (19)
5,770 5,916 15,371
Headline Earnings
5,780 5,922 15,383
Diluted Headline Earnings
Basic earnings per share denominator 5,565 5,615 5,590
(millions)
Diluted earnings per share denominator 5,586 5,634 5,605
(millions)
103.7 105.4 275.0
Headlines Earnings per share (US cents)
Diluted Headline Earnings per share (US 103.5 105.1 274.4
cents)
News Release
4 February 2009
04/09
BHP BILLITON RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
* A robust financial performance in the context of a rapid deterioration in
market conditions.
* Underlying EBITDA up 25% to US$13.9 billion and Underlying EBIT up 24% to
US$11.9 billion.
* Strong Underlying EBIT margin(1) of 46% despite significant pressures from
lower prices and a lagged effect of input costs benefit.
* Record net operating cash flow(2) of US$13.1 billion, up 74%, which is an
excellent result given market conditions and our strong growth pipeline.
* Attributable profit up 2% to US$6.1 billion and EPS up 3% to 110.1 US cents
(both measures excluding exceptional items).
* Strong balance sheet with net debt decreased by 51% to US$4.2 billion.
Gearing of 9.5% and Underlying EBITDA interest cover of 86.6 times.
* Interim dividend of 41.0 US cents per share, an increase of 41% on last
year`s interim dividend.
* A disciplined and value-accretive commitment to invest through the cycle,
with one iron ore and three oil and gas projects sanctioned during the half-
year.
Half-Year ended 31 December 2008 2007 Change
US$M US$M
Revenue 29,780 25,539 16.6%
Underlying EBITDA(4) 13,939 11,167 24.8%
Underlying EBIT(4)(5) 11,899 9,623 23.7%
Profit from operations 7,224 9,486 (23.8%)
Attributable profit - excluding exceptional 6,128 5,995 2.2%
items
Attributable profit 2,617 6,017 (56.5%)
Net operating cash flows(2) 13,094 7,528 73.9%
Basic earnings per share - excluding 110.1 106.8 3.1%
exceptional items (US cents)
Basic earnings per share (US cents) 47.0 107.2 (56.2%)
Underlying EBITDA interest coverage 86.6 34.9 148.1%
(times)(4)(6)
Dividend per share (US cents) 41.0 29.0 41.4%
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 prior period are to the half-year ended 31
December 2007 unless otherwise stated.
RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
Commentary on the Group Results
The results released today represent a robust operating and financial
performance achieved in an environment that deteriorated significantly during
the period, particularly over the last quarter. Our results benefited from
strong volume additions in Petroleum and Iron Ore, as the growth projects in
these two CSGs continued to ramp up.
Underlying EBIT increased by 23.7 per cent over the corresponding period to
US$11.9 billion, with a healthy Underlying EBIT margin of 45.6 per cent. We
continue to focus on our cost performance and expect to see the benefits of
falling input prices, albeit with some lag. The strength of the US dollar
against our main operating currencies positively impacted the Underlying EBIT
for the first half by US$1.5 billion.
Attributable profit and profit from operations fell 56.5 per cent and 23.8 per
cent respectively as a result of a number of exceptional items, the majority
of which are non-cash. These items include the indefinite suspension of
Ravensthorpe (Australia), costs relating to the Rio Tinto offers, impairment
of assets and increased rehabilitation provisions for Newcastle steelworks
(Australia).
Net operating cash flow was outstanding and increased by 73.9 per cent to
US$13.1 billion. The strong cash flow performance has reduced our net debt to
US$4.2 billion, with a net gearing of 9.5 per cent and Underlying EBITDA
interest cover of 87 times. This strong balance sheet is a competitive
advantage and leaves us resilient in these challenging times. It also means
that we are well positioned to take full advantage of an eventual recovery in
the market.
During the six months to December 2008, we have witnessed an unprecedented
fall in commodity prices, with market prices falling in order of 50 per cent
during this period. As the global economy continues to deteriorate, we are
witnessing further demand contraction for our products. We believe it is
likely that uncertainty will extend into the medium term. As a consequence of
the macro economic environment we have taken a number of actions consistent
with our focus to maximise long term shareholder value. These actions include
the decision not to proceed with the Rio Tinto offers, adjustments in
production where physical demand decreased, suspending cash negative
operations and deferrals of low priority capital expenditures.
Notwithstanding the current economic uncertainty, we continue to believe that
the needs of the developing world will drive long term demand for our
products. Furthermore, the supply adjustments we are now witnessing could
result in a constrained supply side when economic recovery does take place.
The financial and operating strength of the Group means that we are able to
continue to take a long term view, not compromising long term value as a
result of short term pressures.
Growth Projects
During the period we commissioned three oil and gas projects and, highlighting
our commitment to long term growth, we approved a total of US$5.9 billion of
growth expenditure in one iron ore and three oil and gas projects.
We are continuing to progress well against budget and schedule for those
projects which have already been approved.
Completed projects
Customer Project Capacity(iv) Capital Date of
Sector Group expenditure initial
(US$ production(i)
million)(iv)
Budget Actual Target Actual
Petroleum Neptune 50,000 barrels 405(iii) 418 Q1 Q3
(US) of oil and 50 2008 2008
BHP Billiton - million cubic
35% feet of gas per
day (100%)
North West LNG processing 350 350(ii) H2 H2
Shelf 5th capacity 4.4 2008 2008
Train million tonnes
(Australia) per annum
BHP Billiton - (100%)
16.67%
North West 800 million 200 200(ii) H2 H2
Shelf Angel cubic feet of 2008 2008
(Australia) gas per day and
BHP Billiton - 50,000 barrels
16.67% of condensate
per day (100%)
968
955
(i) References to quarters and half-years are based on calendar years.
(ii) Number subject to finalisation. For projects where capital expenditure
is required after initial production, the costs represent the estimated total
capital expenditure.
(iii) As per revised budget or schedule.
(iv) All references to capital expenditure and capacity are BHP Billiton`s
share unless noted otherwise.
Projects currently under development (approved in prior years)
Customer Project Capacity(i) Budgeted Target date
Sector capital for initial
Group expenditure production
(US$ (ii)
million)(i)
Petroleum Shenzi (US) 100,000 barrels of 1,940 Mid 2009
BHP Billiton - oil and 50 million
44% cubic feet of gas per
day (100%)
Atlantis North Tie back to Atlantis 185 H2 2009
(US) South
BHP Billiton -
44%
Pyrenees 96,000 barrels of oil 1,200 H1 2010
(Australia) and 60 million cubic
BHP Billiton - feet of gas per day
71.43% (100%)
Bass Strait 10,000 bpd condensate 500 2011
Kipper and processing
(Australia) capacity of 80
BHP Billiton - million cubic feet of
32.5% - 50% gas per day (100%)
North West 2,500 million cubic 850 2012
Shelf North feet of gas per day
Rankin B (100%)
(Australia)
BHP Billiton -
16.67%
Aluminium Alumar Refinery 2 million tonnes per 900 Q2 2009
Expansion annum of alumina
(Brazil) (100%)
BHP Billiton -
36%
Worsley 1.1 million tonnes 1,900 H1 2011
Efficiency and per annum (100%)
Growth
(Australia)
BHP Billiton -
86%
Iron Ore WA Iron Ore 26 million tonnes per 1,850 H1 2010
Rapid Growth annum of iron ore
Project 4 (100%)
(Australia)
BHP Billiton -
86.2%
Manganese Gemco 1 million tonnes per 110 H1 2009
(Australia) annum manganese
BHP Billiton - concentrate (100%)
60%
Energy Klipspruit 1.8 million tonnes 450 H2 2009
Coal (South Africa) per annum export and
BHP Billiton - 2.1 million tonnes
100% per annum domestic
thermal coal
Douglas- 10 million tonnes per 975 Mid 2010
Middelburg annum export thermal
Optimisation coal and 8.5 million
(South Africa) tonnes per annum
BHP Billiton - domestic thermal coal
100% (sustains current
output)
Newcastle Third Third coal berth, 30 390 2010
Export Coal million tonnes per
Terminal annum (100%)
(Australia)
BHP Billiton -
35.5%
11,250
(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 30 June 2008
Customer Project Capacity(i) Budgeted Target date
Sector capital for initial
Group expenditure production(i
(US$ i)
million)(i)
Petroleum Bass Strait 11,000 bpd condensate 625 2011
Turrum and processing
(Australia) capacity of 200
BHP Billiton - million cubic feet of
50% gas per day (100%)
North West Replacement vessel 245 2011
Shelf CWLH with capacity of
Extension 60,000 barrels of oil
(Australia) per day (100%)
BHP Billiton -
16.67%
Angostura Gas 280 million cubic 180 H1 2011
Phase II feet of gas per day
(Trinidad and (100%)
Tobago)
BHP Billiton -
45%
Iron Ore WA Iron Ore 50 million tonnes per 4,800 H2 2011
Rapid Growth annum of iron ore
Project 5 (100%)
(Australia)
BHP Billiton -
85%
5,850
(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.
The Income Statement
To provide clarity into the underlying performance of our operations, we
present Underlying EBIT which is a measure used internally and in our
Supplementary Information that excludes any exceptional items. The differences
between Underlying EBIT and Profit from operations are set out in the
following table:
Half-year ended 31 December 2008 2007
US$M US$M
Underlying EBIT 11,899 9,623
Exceptional items (before taxation) (4,675) (137)
Profit from operations 7,224 9,486
Refer to page 8 for further details of Exceptional items.
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT for the half-year ended
December 2008 compared with the December 2007 half-year:
US$ Million
Underlying EBIT for the half-year ended 31 December 2007 9,623
Change in volumes:
Increase in volumes 204
Decrease in volumes (1,104)
New operations 649
(251)
Net price impact:
Change in sales prices 3,503
Price-linked costs (543)
(2,960)
Change in costs:
Costs (rate and usage) (1,872)
Exchange rates 1,457
Inflation on costs (423)
(838)
Asset sales (141)
Ceased and sold operations 195
Exploration and business development (113)
Other 464
Underlying EBIT for the half-year ended 31 December 2008 11,899
Volumes
During the half-year ended December 2008, we delivered first production in
three oil and gas projects and continued to deliver strong volume growth in
Petroleum. The new oil and gas operations contributed US$649 million to
Underlying EBIT. Underlying EBIT also increased by US$204 million due to
record production and sales in Iron Ore.
Lower sales volumes in all other products and natural field declines in
existing Petroleum operations reduced Underlying EBIT by US$1,104 million.
Copper sales volumes were lower mainly due to declining ore grade and
electrical motor reliability issues at the Laguna Seca SAG mill at Escondida
(Chile). Manganese sales volumes were impacted as the global economy continues
to deteriorate and demand contracted.
In Western Australia Iron Ore and our metallurgical coal operations, we have
received requests for deferrals from some long term contract customers.
However, this has not impacted iron ore or metallurgical coal production in
the half-year ended December 2008. We have sold the deferred long term iron
ore tonnages into the spot market. However, it is likely that we will
opportunistically adjust our metallurgical coal production in line with the
weaker demand, during the second half of the 2009 financial year (as already
announced in our Production Report released on 21 January 2009).
As announced in our Production Report, Western Australia Iron Ore is expected
to produce 130 million tonnes (100 per cent basis) in the 2009 financial year.
At the end of November 2008, in response to weak demand Samarco (Brazil)
announced the temporary suspension of two of its three pellet plants to mid-
January 2009. Following a subsequent reassessment of the market conditions,
the suspension will continue until the end of March 2009, at which time
Samarco management will reassess the situation.
Prices
Net changes in prices increased Underlying EBIT by US$2,960 million (excluding
the impact of newly commissioned projects).
Higher realised prices for metallurgical coal, iron ore, manganese, energy
coal, oil and gas increased Underlying EBIT by US$7,629 million. However, this
was offset by a negative impact of US$4,126 million due to lower realised
prices for copper, nickel and aluminium.
Higher price-linked costs reduced Underlying EBIT by US$543 million primarily
due to higher royalties. This was offset by decreased charges for third party
nickel ore and more favourable rates for copper treatment and refining charges
(TCRCs).
Costs
Costs increased by US$1,872 million compared to the corresponding period. This
includes the impact of higher non-cash costs of US$262 million.
While we continue to focus on our cost performance, the benefits of falling
input prices will have a lagged effect on reducing costs. Approximately US$592
million of the increase was due to higher costs for fuel and energy, and raw
materials such as coke, sulphuric acid, pitch and explosives. In addition,
labour and contractor costs have increased by US$368 million. A portion of the
increase in costs was deliberately incurred to maximise production to take
advantage of the high prices.
Unexpected events such as the severe weather interruptions in Queensland and
the furnace rebuild at the Kalgoorlie Nickel Smelter (Australia) had an
adverse cost impact of US$298 million.
Exchange rates
The strength of the US dollar positively impacted Underlying EBIT for the
first half by US$1,457 million. All Australian operations were positively
impacted by the weaker Australian dollar, which increased Underlying EBIT by
US$1,207 million. The depreciation of the South African rand also positively
impacted Underlying EBIT by US$165 million.
The following exchange rates against the US dollar have been applied:
Half-year Half-year 31 December 30 June 31 December
ended ended 2008 2008 2007
31 December 31 December Closing Closing Closing
2008 2007
Average Average
Australian 0.78 0.87 0.69 0.96 0.88
dollar(i)
Chilean peso 578 511 642 522 498
Colombian peso 2,092 2,030 2,249 1,899 2,017
Brazilian real 1.96 1.85 2.33 1.60 1.78
South African 8.83 6.94 9.39 7.91 6.80
rand
(i) Displayed as US$ to A$1 based on common convention
Inflation on costs
Inflationary pressures on input costs across all our businesses had an
unfavourable impact on Underlying EBIT of US$423 million. The inflationary
pressures were most evident in Australia and South Africa.
Asset Sales
The sale of assets reduced Underlying EBIT by US$141 million. This was mainly
due to the sale of the Elouera mine (Illawarra Coal, Australia) and other
Queensland Coal mining leases in the corresponding period.
Ceased and sold operations
The favourable impact of US$195 million was mainly due to higher insurance
recoveries and movements in the restoration and rehabilitation provisions for
closed operations.
Exploration and business development
With our outstanding operating cash flow and strong balance sheet, we
continued to focus on finding new long term growth options, with a highly
disciplined and value-focused approach.
Exploration expense for the half-year was US$496 million, an increase of US$64
million. We increased exploration expenses at Escondida, Cerro Colorado and
Spence (all Chile), manganese targets in Gabon, and nickel targets in Western
Australia. The main expenditure for the Petroleum CSG was on targets in the
Gulf of Mexico (USA), Colombia, Australia, Philippines and Western India.
Expenditure on business development was US$49 million higher than last year.
This was mainly due to earlier stage development activities in the Base
Metals, Stainless Steel Materials and Iron Ore CSGs.
Other
Other items increased Underlying EBIT by US$464 million, predominantly due to
the contribution of third party product sales which were US$380 million higher
compared to the corresponding period.
Net finance costs
Net finance costs decreased to US$332 million, from US$341 million in the
corresponding period. This was driven predominantly by lower interest rates,
offset by foreign exchange impacts and lower capitalised interest.
Taxation expense
The taxation expense including tax on exceptional items was US$3,888 million,
representing an effective rate of 56.4 per cent. Excluding the impacts of
exceptional items the taxation expense was US$5,052 million.
Exchange rate movements increased the taxation expense by US$1,163 million.
The weaker Australian dollar against the US dollar has significantly reduced
the Australian deferred tax assets for future tax depreciation since 30 June
2008. This was partly offset by the devaluation of local currency tax
liabilities due to the stronger US dollar. Royalty-related taxation
represents an effective rate of 3.0 per cent for the current period.
Excluding the impacts of royalty-related taxation, the impact of exchange rate
movements included in taxation expense and tax on exceptional items the
underlying effective rate was 30.6 per cent.
Exceptional Items
On 21 January 2009 the Group announced the indefinite suspension of
Ravensthorpe Nickel Operations (Australia) and as a consequence will stop the
processing of the mixed nickel cobalt hydroxide product at Yabulu (Australia).
As a result, an impairment charge and increased provisions for rehabilitation
of US$3,361 million (US$1,008 million tax benefit) were recognised for the
half-year ended December 2008.
As part of the Group`s regular impairment review of assets, a total charge of
US$356 million (US$60 million tax charge including the de-recognition of tax
benefits) was recognised primarily in relation to withdrawal from Suriname
operations, suspension of copper sulphide mining at Pinto Valley (US) and the
write down of the Corridor Sands mineral sands resource (Mozambique).
The Group recognised an additional US$508 million (US$152 million tax benefit)
for the rehabilitation obligations at the Newcastle steelworks.
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 fees associated with
the US$55 billion debt facility (US$156 million cost, US$5 million tax
benefit), and other charges (US$294 million cost, US$59 million tax benefit)
in progressing this matter over the eighteen months up to the lapsing of the
offers have been expensed in the half-year ended 31 December 2008.
Gross Tax Net
Half-year ended 31 December 2008 US$M US$M US$M
Exceptional items by category
Suspension of Ravensthorpe nickel operations (3,361) 1,008 (2,353)
Impairment of other operations (356) (60) (416)
Newcastle steelworks rehabilitation (508) 152 (356)
Lapsed offers for Rio Tinto (450) 64 (386)
(4,675) 1,164 (3,511)
Exceptional items by segment
Petroleum (11) 4 (7)
Aluminium (128) - (128)
Base Metals (147) (64) (211)
Diamonds and Specialty Products (70) - (70)
Stainless Steel Materials (3,361) 1,008 (2,353)
Group and Unallocated (958) 216 (742)
(4,675) 1,164 (3,511)
Cash Flows
Net operating cash flow after interest and tax increased by 73.9 per cent to
US$13,094 million. This was primarily attributable to higher profits generated
from operating activities and a decrease in receivables partly offset by
increases in other working capital items.
Capital and exploration expenditure totalled US$5,967 million for the period.
Expenditure on major growth projects was US$4,116 million, including US$705
million on Petroleum projects and US$3,411 million on Minerals projects.
Capital expenditure on maintenance, sustaining and minor capital items was
US$1,231 million. Exploration expenditure was US$620 million, including
US$124 million which has been capitalised.
Financing cash flow include US$2,486 million in relation to increased dividend
payments and net debt repayments of US$1,099 million.
Net debt, comprising cash and interest-bearing liabilities, was US$4,168
million, a decrease of US$4,290 million, or 50.7 per cent, compared to 30 June
2008. Gearing, which is the ratio of net debt to net debt plus net assets,
was 9.5 per cent at 31 December 2008, compared with 17.8 per cent at 30 June
2008.
Dividend
An interim dividend for the half-year ended 31 December 2008 of 41.0 US cents
per share will be paid to shareholders on 17 March 2009.
The dividend to be paid by BHP Billiton Limited will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, BHP Billiton Limited
dividends are mainly paid in Australian dollars, and BHP Billiton Plc
dividends are mainly paid in pounds sterling and South African rands to
shareholders on the UK section and the South African section of the register,
respectively. Currency conversions were based on the foreign currency exchange
rates two business days before the declaration of the dividend. Please note
that all currency conversion elections had to have occurred by the Currency
Conversion Date, being 2 February 2009. Any currency conversion elections
made after this date will not apply to this dividend.
The timetable in respect of this dividend will be:
Currency conversion 2 February 2009
Last day to trade cum dividend on JSE Limited 20 February 2009
Ex-dividend Australian Securities Exchange 23 February 2009
Ex-dividend Johannesburg Stock Exchange (JSE) 23 February 2009
Ex-dividend London Stock Exchange (LSE) 25 February 2009
Ex-dividend New York Stock Exchange (NYSE) 25 February 2009
Record 27 February 2009
Payment 17 March 2009
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, nor will transfers between the UK register and the South
African register be permitted, between the dates of 23 and 27 February 2009.
The following table details the currency exchange rates applicable for the
dividend:
Dividend 41.0 US cents Exchange Rate Dividend per ordinary
share in local
currency
Australian cents 0.631250 64.950495
British pence 1.423705 28.798101
South African cents 10.192345 417.886145
New Zealand cents 0.499500 82.082082
Debt Management and Liquidity
No long term debt securities were issued in the debt capital markets during
the half-year ended December 2008. The Group has access to the US commercial
paper market and a committed and undrawn US$3.0 billion Revolving Credit
Facility, which expires in October 2011. Our liquidity position is supported
by our strong credit rating.
Corporate Governance
On 14 August 2008, the Board announced the appointment of Mr Alan Boeckmann
and Mr Keith Rumble as Non-executive Directors of BHP Billiton Limited and BHP
Billiton Plc with effect from 1 September 2008.
Outlook
Global Economic Outlook
In August 2008 we highlighted the short term global challenges that were
evident. At that time, global economic activity was moderating, financial
markets were volatile, and inflationary pressures were apparent. Since then,
the global economy has deteriorated at an unprecedented rate taking most
observers by surprise.
Economic growth has been impacted by a worldwide dislocation of financial
markets that quickly moved into the real economy as credit markets froze and
consumer and business confidence collapsed. Deflating asset values,
particularly home values in the United States and parts of Europe continue to
impact credit availability and confidence. The contraction that began in the
United States has extended to impact growth rates in emerging economies as
demand for their exports slows.
We expect global economic growth to be weak over the short to medium term as
developed economies such as the United States and Europe enter recession and
the rate of growth of emerging economies like China slows. Like many
governments around the world, the Chinese government has introduced wide
ranging stimulus measures. However, it is likely that these measures will take
some time to have a positive flow through to economic activity. In reaction to
deteriorating financial and economic conditions, there is a risk of increasing
protectionism by governments which may hamper any global recovery.
Whilst the global economy faces significant challenges, our long term outlook
remains unchanged. We expect emerging economies` long term growth to be robust
as they continue on the path to urbanisation and industrialisation.
Commodities Outlook
Amid uncertainty surrounding the outlook for the global economy, weakness and
volatility in the commodity markets has prevailed during the first half of the
2009 financial year. During this period, spot prices for key commodities have
fallen steeply in US dollar terms. However, weaker local currencies against
the US dollar and the benefits of falling input prices, albeit with some lag,
have partially offset the impact on margins.
The unprecedented deceleration in the global economy has sharply reduced
demand for commodities. Producers in both developed and emerging economies
have responded quickly by closing marginal sources of supply and deferring
projects. In the short term, it is expected that many producers will
primarily focus on cash conservation to cope with financial distress. We
expect that commodity prices weakness and volatility will persist.
However in the long term, we expect continued strong growth in demand for
commodities from China and other emerging economies. We continue to expect
that long-run commodity prices will be driven by their long-run marginal cost
of supply. Reductions in current capital spending across the industry may
constrain industry supply when demand growth recovers.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the half-year ended 31 December 2008 and the corresponding
prior year.
Half-Year ended 31 Revenue Underlying EBIT(i)
December
(US$ Million)
2008 2007 Change 2008 2007 Change %
%
Petroleum 4,212 3,268 28.9% 2,675 1,968 35.9%
Aluminium 2,518 2,744 (8.2%) 289 680 (57.5%)
Base Metals 3,286 6,557 (49.9%) (111) 3,367 (103.3%)
Diamonds and Specialty 457 418 9.3% 79 72 9.7%
Products
Stainless Steel Materials 1,101 2,419 (54.5%) (752) 799 (194.1%)
Iron Ore 6,020 3,578 68.3% 4,143 1,673 147.6%
Manganese 1,916 1,013 89.1% 1,245 431 188.9%
Metallurgical Coal 4,913 1,900 158.6% 3,123 523 497.1%
Energy Coal 4,363 2,907 50.1% 1,072 277 287.0%
Group and unallocated 1,106 801 N/A 136 (167) N/A
items(ii)
Less: inter-segment (112) (66) N/A - - N/A
turnover
BHP Billiton Group 29,780 25,539 16.6% 11,899 9,623 23.7%
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT is reconciled to Profit from operations on page
4.
(ii) Includes consolidation adjustments, unallocated items and external sales
from the Group`s freight, transport and logistics operations.
Petroleum
Underlying EBIT was US$2,675 million, an increase of US$707 million, or 35.9
per cent, compared to the corresponding period.
The increase in Underlying EBIT was mainly due to higher production. Strong
growth in production was driven by the successful delivery of a series of
growth projects and continued strong gas sales in Western Australia and
Pakistan. Production was successfully commenced at Neptune, our first
deepwater Gulf of Mexico operated project, and at the North West Shelf LNG
Joint Venture`s Train 5 (Australia), which came online ahead of schedule.
This strong growth was achieved despite the continuing impact of two
hurricanes in the Gulf of Mexico.
Underlying EBIT was also positively impacted by higher average realised oil
prices per barrel of US$85.22 (compared with US$81.20), higher average
realised natural gas prices of US$3.97 per thousand standard cubic feet
(compared with US$3.42) and higher average realised prices for liquefied
natural gas of US$12.82 per thousand standard cubic feet (compared with
US$7.79).
Gross exploration expenditure was US$263 million, a decrease of US$32 million
from last half-year, mostly due to timing. During the December 2008 half-year,
we acquired exploration rights to a significant acreage position onshore in
the Llanos Basin in Colombia, offshore acreage in the Palawan Basin in the
Philippines, and seven deepwater blocks offshore Western India. Evaluation
work has commenced, or continues, on our numerous acreage acquisitions from
previous years.
Aluminium
Underlying EBIT was US$289 million, a decrease of US$391 million or 57.5 per
cent from the corresponding period. Lower LME prices and premiums for
aluminium had an unfavourable impact. This was partially offset by the
positive impact of price-linked costs. The average LME aluminium price
decreased to US$2,304 per tonne (compared with US$2,494 per tonne). The
average realised alumina prices were in line with the corresponding period.
Half-year production and sales were impacted as the Southern African smelters
continued to operate at reduced levels to comply with the mandatory reduction
in power consumption. The December 2008 half-year includes the complete
shutdown of the B and C potlines at Bayside (South Africa).
Higher operating costs also had an adverse impact. This was due to higher
charges for energy, depreciation, maintenance, raw materials, and labour. Due
to the significant deterioration in prices, inventory revaluation adjustments
reduced Underlying EBIT by US$53 million. However, an intensive focus on cost
containment through various business excellence initiatives and the benefit of
a stronger US dollar reduced the full impact of cost increases.
Base Metals
Underlying EBIT was a loss of US$111 million, a decrease of US$3,478 million
or 103.3 per cent from the corresponding period. This decrease was mainly due
to a significant reduction in the prices for all commodities in Base Metals.
Lower average realised prices decreased Underlying EBIT by US$2,905 million.
This includes the impact of Escondida forward contracts losses. Since 2005
Escondida has executed forward contracts for the physical delivery of copper
in order to achieve the average market prices over the relevant quotational
periods. Due to the significant fluctuations in copper prices and unplanned
interruptions at Escondida, this reduced Underlying EBIT by US$333 million for
the period.
Lower sales volumes due to declining grades and electrical motor reliability
issues at the Laguna Seca SAG mill at Escondida reduced Underlying EBIT. This
was partially offset by the continued ramp up of Spence and Escondida Sulphide
Leach.
Also impacting lower EBIT were higher costs in the period, mostly due to the
impact of lower grades at Escondida and higher energy, fuel, acid and labour
charges at all assets. The effect of inflation also impacted negatively.
Higher costs were partially mitigated by a cost reduction program initiated
during the December 2008 half-year in response to the rapid drop in prices and
changing business environment. A stronger US dollar also contributed to
mitigate the drop in commodity prices. Underlying EBIT was also impacted
favourably by lower purchases of third party uranium from the spot market.
Provisional pricing of outstanding copper shipments, including the impact of
finalisations, resulted in the average realised price for the reporting period
being US$1.71/lb versus an average LME price of US$2.63/lb. The average
realised price was US$3.22/lb in the corresponding period last year. The
negative impact of provisional pricing and finalisations for the period was
US$1,297 million. Outstanding copper volumes, subject to the fair value
measurement, amounted to 242,640 tonnes at 31 December 2008. These were re-
valued at a weighted average price of US$3,063 per tonne.
Diamonds and Specialty Products
Underlying EBIT was US$79 million, in line with the corresponding period.
Underlying EBIT was positively impacted by a stronger US dollar and reduced
exploration and business development costs.
Stainless Steel Materials
Underlying EBIT was a loss of US$752 million, a decrease of US$1,551 million
compared with the corresponding period. This was mainly due to lower average
LME prices for nickel of US$6.76/lb (compared to US$13.48/lb) reducing
Underlying EBIT (net of price linked costs) by US$916 million. The positive
impact of price-linked costs was US$127 million.
The furnace rebuild at the Kalgoorlie Nickel Smelter and concurrent
maintenance at the Kwinana Nickel Refinery (Australia) adversely impacted
Underlying EBIT due to lower production and sales volumes (US$234 million) and
higher operating costs (US$104 million).
Higher labour, depreciation and energy costs also had an adverse impact. This
was in part offset by a favourable impact of the weaker Australian dollar
against the US dollar.
Underlying EBIT also decreased by US$101 million due to the continued ramp-up
of operations at Ravensthorpe and the Yabulu Extension Project. Total
Underlying EBIT for these operations for the half-year was a loss of US$233
million.
Iron Ore
Underlying EBIT of US$4,143 million increased significantly by US$2,470
million or 147.6 per cent. This was mainly driven by higher average realised
prices which increased the Underlying EBIT by US$2,195 million. The negative
impact of price-linked costs was US$152 million.
In Western Australia Iron Ore we have received some requests for deferrals
from long term contract customers. However, sales volumes were a record
despite a weak demand environment. This reflects our strong relationship with
long term customers and our ability to sell into the spot market. As we have
been able to sell the deferred long term iron ore tonnages into the spot
market, production adjustments during the half-year were limited to Samarco
only.
Higher operating costs had an adverse impact on Underlying EBIT. This was
largely due to inflationary pressures in Australia, increased labour and
contractor costs. Depreciation expense was higher due to the successful
expansions at Western Australia Iron Ore and Samarco. This was in part offset
by a favourable impact of the weaker Australian dollar and Brazilian real
against the US dollar.
Manganese
Underlying EBIT was US$1,245 million, a significant increase of US$814 million
or 188.9 per cent. This increase was due to higher sales prices achieved for
alloy and ore and a favourable exchange rate impact.
Manganese ore and alloy are entirely dependent on the steel industry and are
therefore directly impacted by the current weak steel markets. As a result,
lower sales volumes had a negative US$193 million impact on Underlying EBIT.
Other operating costs were higher due to increased distribution costs, and
higher ore development, coke and labour costs. A portion of the increase in
costs was deliberately incurred to maximise production to meet the strong
demand earlier in the December 2008 half year.
Metallurgical Coal
Underlying EBIT was US$3,123 million, an increase of US$2,600 million, or
497.1 per cent from the corresponding period. The increase in Underlying EBIT
was mainly due to the higher realised prices for hard coking coal (198 per
cent), weak coking coal (233 per cent) and thermal coal (61 per cent). This
was offset by a negative impact on price-linked royalty costs. Higher royalty
costs associated with the introduction of a two tier royalty structure in
Queensland from 1 July 2008 reduced Underlying EBIT by US$82 million.
A stronger US dollar against the Australian dollar had a favourable impact of
US$328 million. The cost impact attributable to the recovery from the rainfall
events at Queensland Coal had an unfavourable impact of US$122 million in the
period. Other operating costs were higher due to increased labour costs,
longwall discontinuity at Appin Mine and extended changeout at Dendrobium
(both Australia). Inflationary pressures also had an unfavourable impact on
Underlying EBIT.
In addition, in the corresponding period profit on the sales of Elouera mine
(Australia) and Queensland coal mining leases were realised.
Energy Coal
Underlying EBIT was US$1,072 million, an increase of US$795 million, or 287.0
per cent from the corresponding period. The increase in Underlying EBIT was
mainly due to the higher export prices, favourable exchange rate impact on
costs and record production at Hunter Valley Coal (Australia) and Cerrejon
Coal (Colombia). These gains were partially offset by higher costs due to
inflationary pressures, and increased diesel, labour and contractor costs.
Group and Unallocated items
Underlying EBIT was positively impacted by a stronger US dollar against local
currency costs and the revaluation of rehabilitation and closure provisions.
The following notes explain the terms used throughout this profit release.
(1) Underlying EBIT margin is calculated net of third party product
activities.
(2) Net operating cash flows are after net interest and taxation.
(3) Unless otherwise stated, production volumes exclude suspended and sold
operations.
(4) Underlying EBIT is earnings before net finance costs and taxation and any
exceptional items. Underlying EBITDA is Underlying EBIT before depreciation,
impairment and amortisation of US$2,040 million (excluding exceptional items
of US$3,613 million) for the half year ended 31 December 2008 and US$1,544
million for the half-year ended 31 December 2007 (excluding exceptional items
of US$137 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.
(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 4.
(6) 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.
Forward-looking statements: Certain statements in this presentation are
forward-looking statements, including statements regarding the cost and timing
of development projects, future production volumes, increases in production
and infrastructure capacity, the identification of additional mineral Reserves
and Resources and project lives and, without limitation, other statements
typically containing words such as "intends," "expects," "anticipates,"
"targets," plans," "estimates" and words of similar import. These statements
are based on current expectations and beliefs and numerous assumptions
regarding BHP Billiton`s present and future business strategies and the
environments in which BHP Billiton will operate in the future and such
assumptions, expectations and beliefs may or may not prove to be correct and
by their nature, are subject to a number of known and unknown risks and
uncertainties that could cause actual results, performance and achievements to
differ materially.
Factors that could cause actual results or performance to differ materially
from those expressed or implied in the forward-looking statements include, but
are not limited to, the risk factors discussed in BHP Billiton`s filings with
the U.S. Securities and Exchange Commission ("SEC") (including in Annual
Reports on Form 20-F) which are available at the SEC`s website
(http://www.sec.gov). Save as required by law or the rules of the UK Listing
Authority and the London Stock Exchange, the UK Takeover Panel, or the listing
rules of ASX Limited, BHP Billiton undertakes no duty to update any forward-
looking statements in this presentation.
This presentation is for information purposes only and does not constitute or
form part of any offer for sale or issue of any securities or an offer or
invitation to purchase or subscribe for any such securities
References in this presentation to "$" are to United States dollars unless
otherwise specified.
****
Further information on BHP Billiton can be found on our website:
www.bhpbilliton.com
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Samantha Evans, Media Relations
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United Kingdom & South Africa
Andre Liebenberg, Investor Relations
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Scott Espenshade, Investor Relations
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Ruban Yogarajah, Media Relations
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BHP Billiton Limited ABN 49 004 028 077
Registered in Australia
Registered Office: 180 Lonsdale Street
Melbourne Victoria 3000 Australia
Tel +61 1300 55 4757 Fax +61 3 9609 3015
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
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A member of the BHP Billiton group which is headquartered in Australia
HALF-YEAR FINANCIAL REPORT
For the half-year ended
31 December 2008
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 22
3 Exceptional items 26
4 Interests in jointly controlled entities 27
5 Net finance costs 27
6 Taxation 27
7 Earnings per share 28
8 Dividends 28
9 Total equity 29
10 Subsequent events 29
Directors` Report 30
Directors` Declaration 31
Lead Auditor`s Independence Declaration 31
Review Report 32
Consolidated Income Statement
for the half-year ended 31 December 2008
Half-year Half-year Year
ended ended ended
31 31 30 June
December December 2008
2008 2007
Notes US$M US$M US$M
Revenue
Group production 25,428 21,858 51,918
Third party product 2 4,352 3,681 7,555
Revenue 2 29,780 25,539 59,473
Other income 287 361 648
Expenses excluding net finance costs (22,843) (16,414) (35,976)
Profit from operations 7,224 9,486 24,145
Comprising:
Group production 6,932 9,574 24,529
Third party product 292 (88) (384)
2 7,224 9,486 24,145
Financial income 5 165 124 293
Financial expenses 5 (497) (465) (955)
Net finance costs 5 (332) (341) (662)
Profit before taxation 6,892 9,145 23,483
Income tax expense (3,537) (2,683) (6,798)
Royalty related taxation (net of (351) (269) (723)
income tax benefit)
Total taxation expense 6 (3,888) (2,952) (7,521)
Profit after taxation 3,004 6,193 15,962
Profit attributable to minority 387 176 572
interests
Profit attributable to members of 2,617 6,017 15,390
BHP Billiton Group
Earnings per ordinary share (basic) 7 47.0 107.2 275.3
(US cents)
Earnings per ordinary share 7 47.0 106.9 274.8
(diluted) (US cents)
Dividends per ordinary share - paid 8 41.0 27.0 56.0
during the period (US cents)
Dividends per ordinary share - 8 41.0 29.0 70.0
declared in respect of the period
(US cents)
The accompanying notes form part of these half-year financial statements.
Consolidated Statement of Recognised Income and Expenses
for the half-year ended 31 December 2008
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
Notes US$M US$M US$M
Profit after taxation 3,004 6,193 15,962
Amounts recognised directly in equity
Actuarial losses on pension and (339) (27) (96)
medical schemes
Available for sale investments:
Valuation losses taken to equity (24) (30) (76)
Valuation gains transferred to the (11) - -
income statement
Cash flow hedges:
Gains/(losses) taken to equity 694 (67) (383)
Realised losses transferred to the 23 - 73
income statement
Unrealised gain transferred to the (48) - -
income statement
Gains transferred to the initial (26) (132) (190)
carrying amount of hedged items
Exchange fluctuations on translation 70 (6) (21)
of foreign operations
Tax on items recognised directly in, (262) 106 306
or transferred from, equity
Total amounts recognised directly in 77 (156) (387)
equity
Total recognised income and expense 3,081 6,037 15,575
Attributable to minority interests 9 366 176 571
Attributable to members of BHP 9 2,715 5,861 15,004
Billiton Group
The accompanying notes form part of these half-year financial statements.
Consolidated Balance Sheet
as at 31 December 2008
31 December 31 December 30 June
2008 2007 2008
Notes US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 7,195 2,294 4,237
Trade and other receivables 5,020 5,986 9,801
Other financial assets 1,640 1,182 2,054
Inventories 4,883 4,410 4,971
Current tax assets 622 - 119
Other 327 458 498
Total current assets 19,687 14,330 21,680
Non-current assets
Trade and other receivables 590 730 720
Other financial assets 1,810 961 1,448
Inventories 182 192 232
Property, plant and equipment 46,739 44,808 47,332
Intangible assets 652 591 625
Deferred tax assets 3,416 2,008 3,486
Other 213 226 485
Total non-current assets 53,602 49,516 54,328
Total assets 73,289 63,846 76,008
LIABILITIES
Current liabilities
Trade and other payables 5,533 5,108 6,774
Interest bearing liabilities 2,156 2,580 3,461
Other financial liabilities 1,871 985 2,088
Current tax payable 2,055 1,592 2,141
Provisions 1,286 1,474 1,596
Deferred income 264 389 418
Total current liabilities 13,165 12,128 16,478
Non-current liabilities
Trade and other payables 196 201 138
Interest bearing liabilities 9,207 11,718 9,234
Other financial liabilities 399 628 1,260
Deferred tax liabilities 3,805 1,352 3,116
Provisions 6,324 6,063 6,251
Deferred income 544 498 488
Total non-current liabilities 20,475 20,460 20,487
Total liabilities 33,640 32,588 36,965
Net assets 39,649 31,258 39,043
EQUITY
Share capital - BHP Billiton 1,227 1,226 1,227
Limited
Share capital - BHP Billiton Plc 1,116 1,128 1,116
Treasury shares held (522) (1,336) (514)
Reserves 1,168 904 750
Retained earnings 35,783 28,958 35,756
Total equity attributable to 9 38,772 30,880 38,335
members of BHP Billiton Group
Minority interests 9 877 378 708
Total equity 39,649 31,258 39,043
The accompanying notes form part of these half-year financial statements.
Consolidated Cash Flow Statement
for the half-year ended 31 December 2008
Half-year Half-year Year
ended ended ended
31 31 30 June
December December 2008
2008 2007
US$M US$M US$M
Operating activities
Profit before taxation 6,892 9,145 23,483
Adjustments for:
Depreciation and amortisation expense 1,953 1,524 3,612
Exploration and evaluation expense (excluding 496 432 859
impairment)
Net loss/(gain) on sale of non-current assets 17 (132) (129)
Impairments of property, plant and equipment, 3,700 157 274
investments and intangibles
Write-down of inventories to net realisable 194 - -
value
Employee share awards expense 89 40 97
Financial income and expenses 332 341 662
Other (243) (221) (629)
Changes in assets and liabilities:
Trade and other receivables 5,367 (70) (4,255)
Inventories (56) (692) (1,313)
Net financial assets and liabilities (556) 178 526
Trade and other payables (863) 441 1,824
Provisions and other liabilities (333) 106 137
Cash generated from operations 16,989 11,249 25,148
Dividends received 15 9 51
Interest received 114 80 169
Interest paid (261) (393) (799)
Income tax paid (3,048) (2,945) (5,867)
Royalty related taxation paid (715) (472) (885)
Net operating cash flows 13,094 7,528 17,817
Investing activities
Purchases of property, plant and equipment (5,347) (3,753) (7,558)
Exploration expenditure (including amounts (620) (598) (1,350)
expensed)
Purchase of intangibles (6) (6) (16)
Purchases of financial assets (15) (23) (166)
Purchases of, or increased investment in, (276) (124) (154)
subsidiaries, operations and jointly
controlled entities, net of their cash
Deferred payment on sale of operations (124) - -
Cash outflows from investing activities (6,388) (4,504) (9,244)
Proceeds from sale of property, plant and 26 19 43
equipment
Proceeds from sale of financial assets 57 37 59
Proceeds from sale or partial sale of - 78 78
subsidiaries, operations and jointly
controlled entities, net of their cash
Net investing cash flows (6,305) (4,370) (9,064)
Financing activities
Proceeds from ordinary shares 20 11 24
Proceeds from interest bearing liabilities 2,755 3,389 9,478
Proceeds from debt related swaps 354 342 342
Repayment of interest bearing liabilities (4,208) (2,264) (10,228)
Purchase of shares by Employee Share (90) (103) (250)
Ownership Plan Trusts
Share buy-back - BHP Billiton Plc - (3,115) (3,115)
Dividends paid (2,281) (1,523) (3,135)
Dividends paid to minority interests (205) (48) (115)
Net financing cash flows (3,655) (3,311) (6,999)
Net increase/(decrease) in cash and cash 3,134 (153) 1,754
equivalents
Cash and cash equivalents, net of overdrafts, 4,173 2,398 2,398
at beginning of period
Effect of foreign currency exchange rate (155) 23 21
changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, 7,152 2,268 4,173
at end of period
The accompanying notes form part of these half-year financial statements.
Notes to the Half-Year Financial Statements
1 Accounting policies
This general purpose financial report for the half-year ended 31 December 2008
is unaudited and has been prepared in accordance with IAS 34 `Interim
Financial Reporting` as issued by the International Accounting Standards Board
("IASB"), IAS 34 `Interim Financial Reporting` as adopted by the EU, AASB 134
`Interim Financial Reporting` as issued by the Australian Accounting Standards
Board and the Disclosure and Transparency Rules of the Financial Services
Authority in the United Kingdom and the Australian Corporation Act 2001 as
applicable to interim financial reporting.
The half-year financial statements represent a `condensed set of financial
statements` as referred to in the UK Disclosure and Transparency Rules issued
by the Financial Services Authority. Accordingly, they do not include all of
the information required for a full annual report and are to be read in
conjunction with the most recent annual financial report. The comparative
figures for the financial year ended 30 June 2008 are not the statutory
accounts of BHP Billiton for that financial year. Those accounts, which were
prepared under IFRS, have been reported on by the Company`s auditors and
delivered to the registrar of companies. The auditors have reported on those
accounts; their report was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain statements under Section 498(2) or
(3) of the UK Companies Act 2006.
The half-year financial statements have been prepared on the basis of
accounting policies and methods of computation consistent with those applied
in the 30 June 2008 annual financial statements contained within the Annual
Report of the BHP Billiton Group.
Rounding of amounts
Amounts in this financial information have, unless otherwise indicated, been
rounded to the nearest million dollars.
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the same
basis as current period figures.
Exchange rates
The following exchange rates relative to the US dollar have been applied in
the financial information:
Average Average Average As at As at As at
Half-year Half-year Year 31 31 30
ended 31 ended ended December December June
December 31 December 30 June 2008 2007 2008
2008 2007 2008
Australian 0.78 0.87 0.90 0.69 0.88 0.96
dollar (a)
Brazilian real 1.96 1.85 1.78 2.33 1.78 1.60
Canadian 1.12 1.01 1.01 1.22 0.98 1.01
dollar
Chilean peso 578 511 489 642 498 522
Colombian peso 2,092 2,030 1,935 2,249 2,017 1,899
South African 8.83 6.94 7.29 9.39 6.80 7.91
rand
Euro 0.71 0.71 0.68 0.71 0.68 0.63
UK pound 0.58 0.49 0.50 0.69 0.50 0.50
sterling
(a) Displayed as US$ to A$1 based on common convention.
2 Business segments
The Group operates nine Customer Sector Groups aligned with the commodities
which we extract and market:
Customer Sector Principal activities
Group
Petroleum Oil and gas exploration, development, production and
marketing
Aluminium Mining of bauxite, refining of bauxite into alumina and
smelting of alumina into aluminium metal
Base Metals Mining of copper, silver, lead, zinc, molybdenum,
uranium and gold
Diamonds and Specialty Mining of diamonds and titanium minerals
Products
Stainless Steel Mining and production of nickel products
Materials
Iron Ore Mining of iron ore
Manganese Mining of manganese ore and production of manganese
metal and alloys
Metallurgical Coal Mining of metallurgical coal
Energy Coal Mining and marketing of thermal (energy) coal
Group and unallocated items represent Group centre functions and certain
comparative data for divested assets and investments. Exploration and
technology activities are recognised within relevant segments.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Half-year ended
31 December 2008
Revenue
Group production 4,032 1,947 2,987 457 980 5,902
Third party product 127 571 298 - 82 62
Rendering of services 2 - - - - 35
Inter-segment revenue 51 - 1 - 39 21
Segment revenue(a) 4,212 2,518 3,286 457 1,101 6,020
2,662 161 (258) 2 (4,113) 4,143
Segment result
Other attributable 2 - - 7 - -
income(b)
Profit from 2,664 161 (258) 9 (4,113) 4,143
operations
Net finance costs
Income tax expense
Royalty related
taxation
Profit after taxation
US$M Manganese Group and BHP
Metallurgical Energy unallocated Billiton
Coal Coal items/ Group
eliminations
Half-year ended
31 December 2008
Revenue
Group production 1,863 4,854 2,321 1 25,344
Third party product 53 18 2,042 1,099 4,352
Rendering of - 41 - 6 84
services
Inter-segment - - - (112) -
revenue
Segment revenue(a) 1,916 4,913 4,363 994 29,780
1,245 3,123 1,070 (811) 7,224
Segment result
Other attributable - - 2 (11) -
income(b)
Profit from 1,245 3,123 1,072 (822) 7,224
operations
Net finance costs (332)
Income tax expense (3,537)
Royalty related (351)
taxation
Profit after 3,004
taxation
(a) Revenue not reported in business segments reflects sales of freight and
fuel to third parties. Sales of fuel were previously reported as part of
Petroleum. This change better reflects management responsibilities for these
activities. Comparatives have been restated for all periods presented. The
change in presentation results in revenues of US$502 million for the period
ended 31 December 2007 and US$1,165 million for the year ended 30 June 2008,
being reported in Group and unallocated items rather than Petroleum. The
impact on Profit from Operations for Petroleum was immaterial.
(b) Other attributable income represents external dividend income and profit
from the sale of investments that do not form part of the segment result.
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Half-year ended
31 December 2007
Revenue
Group production 3,058 2,254 5,561 418 2,413 3,538
Third party product 156 490 996 - 6 -
Rendering of services 6 - - - - 22
Inter-segment revenue 48 - - - - 18
Segment revenue(a) 3,268 2,744 6,557 418 2,419 3,578
1,965 680 3,268 69 761 1,673
Segment result
Other attributable 3 - - 3 - -
income(b)
Profit from 1,968 680 3,268 72 761 1,673
operations
Net finance costs
Income tax expense
Royalty related
taxation
Profit after taxation
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Half-year ended
31 December 2007
Revenue
Group production 950 1,856 1,725 7 21,780
Third party product 63 10 1,182 778 3,681
Rendering of services - 34 - 16 78
Inter-segment revenue - - - (66) -
Segment revenue(a) 1,013 1,900 2,907 735 25,539
431 523 277 (161) 9,486
Segment result
Other attributable - - - (6) -
income(b)
Profit from operations 431 523 277 (167) 9,486
Net finance costs (341)
Income tax expense (2,683)
Royalty related (269)
taxation
Profit after taxation 6,193
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2008
Revenue
Group production 7,997 4,675 13,231 969 5,040 9,246
Third party product 254 1,071 1,543 - 48 108
Rendering of services 10 - - - - 63
Inter-segment revenue 121 - - - - 38
Segment revenue(a) 8,382 5,746 14,774 969 5,088 9,455
5,482 1,427 7,890 180 1,237 4,631
Segment result
Other attributable 3 38 - 9 - -
income(b)
Profit from 5,485 1,465 7,890 189 1,237 4,631
operations
Net finance costs
Income tax expense
Royalty related
taxation
Profit after taxation
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June 2008
Revenue
Group production 2,844 3,818 3,921 - 51,741
Third party product 68 61 2,639 1,763 7,555
Rendering of services - 62 - 42 177
Inter-segment revenue - - - (159) -
Segment revenue(a) 2,912 3,941 6,560 1,646 59,473
1,644 936 1,057 (339) 24,145
Segment result
Other attributable - 1 - (51) -
income(b)
Profit from operations 1,644 937 1,057 (390) 24,145
Net finance costs (662)
Income tax expense (6,798)
Royalty related (723)
taxation
Profit after taxation 15,962
3 Exceptional Items
Exceptional items are those items where their nature or amount is considered
material to the financial report. Such items included within the Group profit
for the period are detailed below.
Gross Tax Net
Half-year ended 31 December 2008 US$M US$M US$M
Exceptional items by category
Suspension of Ravensthorpe nickel operations (3,361) 1,008 (2,353)
Impairment of other operations (356) (60) (416)
Newcastle steelworks rehabilitation (508) 152 (356)
Lapsed offers for Rio Tinto (450) 64 (386)
(4,675) 1,164 (3,511)
Exceptional items by segment
Petroleum (11) 4 (7)
Aluminium (128) - (128)
Base Metals (147) (64) (211)
Diamonds and Specialty Products (70) - (70)
Stainless Steel Materials (3,361) 1,008 (2,353)
Group and unallocated (958) 216 (742)
(4,675) 1,164 (3,511)
Suspension of Ravensthorpe nickel operations:
On 21 January 2009 the Group announced the suspension of operations at
Ravensthorpe Nickel Operations (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 rehabilitation
of US$3,361 million (US$1,008 million tax benefit) were recognised for the
half-year ended December 2008.
Impairment of other operations:
As part of the Group`s regular review of assets whose values may be impaired,
a total charge of US$356 million (US$60 million tax charge including
derecognition of tax benefits) was recorded primarily in relation to the
withdrawal from Suriname operations, suspension of copper sulphide mining at
Pinto Valley (US) and write down of the Corridor Sands minerals sands resource
(Mozambique).
Newcastle steelworks rehabilitation:
The Group recognised a charge against profits of US$508 million (US$152
million tax benefit) for additional rehabilitation obligations in respect of
former operations at the Newcastle steelworks (Australia). The increase in
obligations relate to increases in the estimated volume of sediment in the
Hunter River requiring remediation and treatment, and increases in treatment
costs.
Lapsed offers for Rio Tinto:
The Group`s offers for Rio Tinto lapsed on 27 November 2008 following the
Board`s decision that it no longer believed that completion of the offers was
in the best interests of BHP Billiton shareholders. The Group incurred fees
associated with the US$55 billion debt facility (US$156 million cost, US$5
million tax benefit), investment bankers`, lawyers` and accountants fees,
printing expenses and other charges (US$294 million cost, US$59 million tax
benefit) in progressing this matter over the eighteen months up to the lapsing
of the offers which have been expensed in the six months ended 31 December
2008.
Half-year ended 31 December 2007 and Gross Tax Net
Year ended 30 June 2008 US$M US$M US$M
Exceptional items by category
Recognition of benefit of tax losses in respect of the (137) 159 22
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 Ltd (WMC) were not recognised as a
deferred tax asset at acquisition pending a ruling application to the
Australian Taxation Office. The ruling has now been issued confirming the
availability of those losses. This resulted in the recognition of a deferred
tax asset (US$197 million) and consequential adjustment to deferred tax
liabilities (US$38 million) through income tax expense at current exchange
rates. As a further consequence the Group recognised an expense for a
corresponding reduction in goodwill measured at the exchange rate at the date
of acquisition.
4 Interests in jointly controlled entities
Major Ownership interest at BHP Contribution to profit after
shareholdings in Billiton Group reporting taxation
jointly date(a)
controlled
entities
31 31 30 Half-year Half-year Year
December December June ended 31 ended 31 end
2008 2007 2008 December December 30
% % % 2008 2007 June
US$M US$M 2008
US$M
Mozal SARL 47.1 47.1 47.1 135 105 207
Compania Minera 33.75 33.75 33.75 18 271 615
Antamina SA
Minera Escondida 57.5 57.5 57.5 (177) 1,705 3,930
Limitada
Samarco Mineracao 50 50 50 320 121 279
SA
Carbones del 33.3 33.3 33.3 136 47 183
Cerrej?n LLC
Other(b) 29 18 90
Total 461 2,267 5,304
(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 2007: 50 per cent; 30
June 2008: 50 per cent).
5 Net finance costs
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
US$M US$M US$M
Financial expenses
Interest on bank loans and overdrafts 21 28 52
Interest on all other borrowings 239 367 670
Finance lease and hire purchase interest 8 6 14
Dividends on redeemable preference shares - 1 1
Discounting on provisions and other 152 138 310
liabilities
Discounting on pension and medical 67 51 138
benefit entitlements
Interest capitalised(a) (64) (134) (204)
Net fair value change on hedged loans and 27 8 2
related hedging derivatives
Exchange differences on net debt 47 - (28)
497 465 955
Financial income
Interest income (107) (82) (168)
Expected return on pension plan assets (58) (42) (125)
(165) (124) (293)
Net finance costs 332 341 662
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
interest rate on such borrowings. For the half-year ended 31 December 2008 the
capitalisation rate was 3.9 per cent (31 December 2007: 5.7 per cent; 30 June
2008: 5.0 per cent).
6 Taxation
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
US$M US$M US$M
Taxation expense including royalty
related taxation
UK taxation expense 428 60 217
Australian taxation expense 2,288 1,361 3,397
Overseas taxation expense 1,172 1,531 3,907
Total taxation expense 3,888 2,952 7,521
The taxation expense including exceptional items was US$3,888 million,
representing an effective rate of 56.4 per cent (31 December 2007: 32.3 per
cent; 30 June 2008: 32.0 per cent). Excluding the impacts of exceptional items
the taxation expense was US$5,052 million (31 December 2007: US$3,111 million;
30 June 2008: US$7,680 million).
Exchange rate movements increased taxation expense by US$1,163 million (31
December 2007: increased taxation expense by US$44 million; 30 June 2008:
decreased taxation expense by US$229 million). The weaker Australian dollar
against the US dollar has significantly reduced the Australian deferred tax
assets for future tax depreciation since 30 June 2008. This was partly offset
by the devaluation of local currency tax liabilities due to the stronger US
dollar.
Excluding the impacts of royalty-related taxation, the impact of exchange rate
movements included in taxation expense and tax on exceptional items the
underlying effective rate was 30.6 per cent (31 December 2007: 30.1 per cent;
30 June 2008: 30.4 per cent).
7 Earnings per share
Half- Half- Year
year year ended
ended ended 30 June
31 31 2008
December December
2008 2007
Basic earnings per ordinary 47.0 107.2 275.3
share (US cents)
Diluted earnings per ordinary 47.0 106.9 274.8
share (US cents)
Basic earnings per American 94.0 214.4 550.6
Depositary Share (ADS) (US
cents)(a)
Diluted earnings per American 94.0 213.8 549.6
Depositary Share (ADS) (US
cents)(a)
Basic earnings (US$M) 2,617 6,017 15,390
Diluted earnings (US$M)(b) 2,627 6,023 15,402
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:
Half- Half- Year
year year ended
ended ended 30 June
31 31 2008
December December
2008 2007
Weighted average number of Million Million Million
shares
Basic earnings per ordinary 5,565 5,615 5,590
share denominator
Shares and options contingently 21 19 15
issuable under employee share
ownership plans
Diluted earnings per ordinary 5,586 5,634 5,605
share denominator
(a) Each American Depository Share (ADS) represents two ordinary shares.
(b) Diluted earnings are calculated after adding back dividend equivalent
payments of US$10 million (31 December 2007: US$6 million; 30 June 2008: US$12
million) that would not be made if potential ordinary shares were converted to
fully paid.
8 Dividends
Half-year Half-year Year ended
ended ended 30 June
31 December 31 December 2008
2008 2007
US$M US$M US$M
Dividends paid during the period
BHP Billiton Limited 1,377 907 1,881
BHP Billiton Plc - Ordinary shares 905 612 1,252
- Preference shares(a) - - -
2,282 1,519 3,133
Dividends declared in respect of
the period
BHP Billiton Limited 1,377 974 2,351
BHP Billiton Plc - Ordinary shares 905 640 1,545
- Preference shares(a) - - -
2,282 1,614 3,896
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2008 2007 2008
US cents US cents US cents
Dividends paid during the period (per
share)
Prior year final dividend 41.0 27.0 27.0
Interim dividend N/A N/A 29.0
41.0 27.0 56.0
Dividends declared in respect of the
period (per share)
Interim dividend 41.0 29.0 29.0
Final dividend N/A N/A 41.0
41.0 29.0 70.0
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each declared
and paid annually (31 December 2007: 5.5 per cent; 30 June 2008: 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 4 February 2009, BHP Billiton
declared an interim dividend of 41.0 US cents per share (US$2,282 million),
which will be paid on 17 March 2009.
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
9 Total equity
Attributable to members of Minority interests
BHP Billiton Group
Half-year Half-year Year Half- Half- Year
ended ended ended year year ended
31 31 30 June ended ended 30
December December 2008 31 31 June
2008 2007 December December 2008
2008 2007
US$M US$M US$M US$M US$M US$M
Total equity 38,335 29,667 29,667 708 251 251
opening balance
Total recognised 2,715 5,861 15,004 366 176 571
income and expense
for the period
Transactions with - 5 6 8 (1) (1)
owners -
contributed equity
Dividends (2,282) (1,519) (3,133) (205) (48) (113)
Accrued employee 89 40 97 - - -
entitlement to
share awards
Purchases of shares (85) (99) (231) - - -
made by ESOP Trusts
BHP Billiton Plc - (3,075) (3,075) - - -
share buy-back
Total equity 38,772 30,880 38,335 877 378 708
closing balance
Share buy-backs
BHP Billiton had previously announced US$13 billion of capital to be returned
to shareholders through on-market share buy-backs. All BHP Billiton Plc shares
bought back are accounted for as Treasury shares within the share capital of
BHP Billiton Plc. Details of the purchases are shown in the table below. Cost
per share represents the average cost per share for BHP Billiton Plc shares
and final cost per share for BHP Billiton Limited shares. Shares in BHP
Billiton Plc purchased by BHP Billiton Limited have been cancelled, in
accordance with the resolutions passed at the 2006 Annual General Meetings.
The Group suspended its share buy-back program on 14 December 2007 in light of
the Group`s offers for Rio Tinto Plc and Rio Tinto Limited. On 27 November
2008 the offers lapsed and since that date no additional share buybacks have
been executed.
Half- Shares Number Cost per Total Purchased by:
Year / purchased share cost
Year end and US$M
discount
BHP Billiton BHP
Limited Billiton
Plc
Shares US$M Shares US$M
31 BHP 96,904,086 GBP12.37 3,075 96,904,086 3,075 - -
December Billiton
2007 Plc
8.7 per
cent (a)
30 June BHP 96,904,086 GBP12.37 3,075 96,904,086 3,075 - -
2008 Billiton
Plc
8.7 per
cent (a)
(a) Represents the discount to the average BHP Billiton Limited share price
between 7 September 2006 and 14 December 2007.
10 Subsequent events
On 21 January 2009, the Group announced commencement of the ramp down and
indefinite suspension of the Ravensthorpe Nickel Operation. As a consequence,
Yabulu will cease processing product from Ravensthorpe and will revert to
processing ore only. Other operations affected by planned adjustments to
production and development activity are Mount Keith Nickel, Pinto Valley
Copper, Metallurgical Coal, Olympic Dam expansion and copper operations in
Chile. The financial impact on the carrying value of assets was taken up as
at 31 December 2008 (refer Note 3). Additional provisions for redundancy,
contract termination and closure of approximately US$550 million will be
recorded in the second half of the year ending 30 June 2009.
Other than the matters outlined above, no matters or circumstances have arisen
since the end of the half-year that have significantly affected, or may
significantly affect, the operations, results of operation 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 2008 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 2008 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 rates
- Failure to discover new - Influence of China and impact
reserves, maintain or enhance of a slowdown in consumption
existing reserves or develop new
operations
- Actions by governments or - Inability to successfully
political events in the integrate acquired businesses
countries in which we operate
- Inability to recover - Non-compliance to the Group`s
investments in mining and oil standards by non-controlled
and gas projects assets
- Operating cost pressures and - Unexpected natural and
shortages operational catastrophes
- Climate change and greenhouse - Inadequate human resource
effects talent pool
- Breaches in information - Breaches in governance
technology security processes processes
- Impact of health, safety and
environmental exposures
and related regulations on
operations and reputation
Further information on the above risks and uncertainties can be found on pages
9 to 12 of the Group`s Annual Report for the year ended 30 June 2008, a copy
of which is available on the Group`s website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on page 28.
Board of Directors
The Directors of BHP Billiton at any time during or since the end of the half-
year are:
Mr D R Argus - Chairman since Dr E G de Planque - a Director
April 1999 (on the Board of since October 2005
Directors since November 1996)
Mr P M Anderson - a Director Dr D A Jenkins - a Director
since June 2006 since March 2000
Mr A Boeckmann - a Director Mr M Kloppers - an Executive
since September 2008 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 Mr K Rumble - a Director since
since May 1994 September 2008
Dr J M Schubert - a Director
since June 2000
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 31 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 4th day of February
2009
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 BHP
Billiton, the Directors declare that, to the best of their knowledge and in
their reasonable opinion:
(a) the half-year financial statements and notes, set out on pages 18 to 29,
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 2008 and of its performance for the half-year ended on
that date;
(b) the Directors` Report, which incorporates the Review of Operations on
page 1 to 15, includes a fair review of the information required by:
(i) DTR4.2.7R of the Disclosure and Transparency Rules in the United Kingdom,
being an indication of important events during the first six months of the
current financial year and their impact on the half-year financial statements,
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(ii) DTR4.2.8R of the Disclosure and Transparency Rules in the United Kingdom,
being related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the BHP Billiton Group during that period, and any
changes in the related party transactions described in the last annual report
that could have such a material effect; and
(c) in the Directors` opinion, there are reasonable grounds to believe that
each of BHP Billiton Limited and BHP Billiton Plc will be able to pay its
debts as and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors.
D R Argus - Chairman
M Kloppers - Chief Executive Officer
Dated this 4th day of February 2009
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 2008 there have been:
- no contraventions of the auditor independence requirements as set out in the
Australian Corporations Act 2001 in relation to the review; and
- no contraventions of any applicable code of professional conduct in relation
to the review.
This declaration is in respect of BHP Billiton and the entities it controlled
during the financial period.
KPMG
Peter Nash
Partner
Dated in Melbourne this 4th day of February 2009
Independent Review Report of KPMG Audit Plc ("KPMG UK") to BHP Billiton Plc
and of KPMG ("KPMG Australia") to the Members of BHP Billiton Limited
Introduction
For the purposes of these reports, the terms "we" and "our" denote KPMG UK in
relation to its responsibilities under its terms of engagement to report to
BHP Billiton Plc and KPMG Australia in relation to Australian professional and
regulatory responsibilities and reporting obligations to the members of BHP
Billiton Limited.
The BHP Billiton Group ("the Group") consists of BHP Billiton Plc and BHP
Billiton Limited and the entities they controlled at the end of the half-year
or from time to time during the half-year ended 31 December 2008.
We have reviewed the condensed half-year financial statements of the Group for
the half-year ended 31 December 2008 ("half-year financial statements"), set
out on pages 18 to 29, which comprises 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 10. We have read the other
information contained in the half-year financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the half-year financial statements. KPMG Australia has also
reviewed the directors` declaration set out on page 31 in relation to
Australian regulatory requirements contained in section (a) and (c) of the
directors` declaration.
Directors` Responsibilities
The half-year financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-year
financial report:
* in accordance with the Disclosure and Transparency Rules ("the DTR") of the
United Kingdom`s Financial Services Authority ("the UK FSA"), and under those
rules, in accordance with IAS 34 Interim Financial Reporting as adopted by the
European Union; and
* in accordance with Australian Accounting Standards and the Corporations Act
2001. This responsibility includes establishing and maintaining internal
control relevant to the preparation and fair presentation of the half-year
financial statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Respective Responsibilities of KPMG UK and KPMG Australia
KPMG UK`s report is made solely to BHP Billiton Plc in accordance with the
terms of KPMG UK`s engagement to assist BHP Billiton Plc in meeting the
requirements of the DTR of the UK FSA. KPMG UK`s review has been undertaken
so that it might state to BHP Billiton Plc those matters it is required to
state to it in this report and for no other purpose. To the fullest extent
permitted by law, KPMG UK does not accept or assume responsibility to anyone
other than BHP Billiton Plc, for KPMG UK`s review work, for this report, or
for the conclusions it has reached.
KPMG Australia has performed an independent review of the half-year financial
statements and directors` declaration in order to state whether, on the basis
of the procedures described, it has become aware of any matter that makes KPMG
Australia believe that the half-year financial statements and directors`
declaration are not in accordance with the Corporations Act 2001 including:
giving a true and fair view of the Group`s financial position as at 31
December 2008 and its performance for the half-year ended on that date; and
complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Australian Corporations Regulations 2001.
Our responsibility is to express a conclusion on the half-year financial
statements in the half-year financial report based on our review.
Scope of Review
KPMG UK conducted its review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 Review of Interim Financial Reports
performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom.
KPMG Australia conducted its review in accordance with Australian Auditing
Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial
Reports performed by the Independent Auditor of the Entity. As auditor of BHP
Billiton Limited, KPMG Australia is required by ASRE 2410 to comply with the
ethical requirements relevant to the audit of the annual financial report.
A review of half-year financial statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with auditing standards
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Independence
In conducting its review, KPMG Australia has complied with the independence
requirements of the Australian Corporations Act 2001.
Review conclusion by KPMG UK
Based on our review, nothing has come to our attention that causes us to
believe that the condensed half-year financial statements in the half-year
financial report for the six months ended 31 December 2008 are not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting, as adopted by the EU, and the DTR of the UK FSA.
KPMG Audit Plc
Chartered Accountants
London
Dated in London this 4th day of February 2009
Review conclusion by KPMG Australia
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the condensed half-year financial statements
and directors` declaration of the Group are not in accordance with the
Australian Corporations Act 2001, including:
a) giving a true and fair view of the Group`s financial position as at 31
December 2008 and of its performance for the half-year ended on that date; and
b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Australian Corporations Regulations 2001.
KPMG
Peter Nash
Partner
Melbourne
Dated in Melbourne this 4th day of February 2009
Date: 04/02/2009 07:15:19 Produced by the JSE SENS Department.
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