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BIL - BHP Billiton results for the year ended 30 June 2010
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
News Release
25 August 2010
22/10
BHP BILLITON RESULTS FOR THE YEAR ENDED 30 JUNE 2010
* Another strong set of financial results, with growth in Underlying EBITDA
and Attributable profit (excluding exceptional items) of 10% and 16%
respectively.
* Record sales volumes achieved in iron ore, metallurgical coal and
petroleum with local currency costs well controlled across the Group.
* Underlying EBIT margin(1) of 41% and Underlying return on capital of 26%
demonstrates the strength of our uniquely diversified business model.
* Continued investment in our business successfully delivered another five
growth projects.
* Cash flow for the year remained strong and resulted in net debt declining
further to US$3.3 billion while net gearing declined to 6%.
* Final dividend of 45 US cents per share, resulting in a dividend for the
full year of 87 US cents per share.
Year ended 30 June 2010US$M 2009US$M Change
%
Revenue 52,798 50,211 5.2%
Underlying EBITDA (2) 24,513 22,275 10.0%
Underlying EBIT (2) (3) 19,719 18,214 8.3%
Profit from operations 20,031 12,160 64.7%
Attributable profit - excluding exceptional items 12,469 10,722 16.3%
Attributable profit 12,722 5,877 116.5%
Net operating cash flow (4) 17,920 18,863 (5.0)%
Basic earnings per share - excluding exceptional 224.1 192.7 16.3%
items (US cents)
Basic earnings per share (US cents) 228.6 105.6 116.5%
Underlying EBITDA interest coverage (times)(2) (5) 64.4 56.8 13.4%
Dividend per share (US cents) 87 82 6.1%
Refer to page 14 for footnotes, including explanations of the non-GAAP
measures used in this announcement.
The above financial results are prepared in accordance with IFRS and are
unaudited. All references to the prior period are to the year ended 30 June
2009 unless otherwise stated.
RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Commentary on the Group Results
BHP Billiton delivered another strong set of results despite significant
volatility in the macro economic environment with growth in Underlying
EBITDA and Attributable profit (excluding exceptional items) of 10 per cent
and 16 per cent, respectively. Record sales volumes were achieved in three
of our major commodities as our focus on efficiency and productivity at all
points in the cycle ensured we were well positioned to capitalise on the
recovery in demand and prices. Local currency costs were well controlled
across the Group, however the weaker US dollar had a negative exchange rate
impact of US$2,150 million.
The combination of these factors underpinned strong margins and returns. For
the sixth consecutive year, BHP Billiton recorded an Underlying EBIT margin
of around 40 per cent, while Underlying return on capital for the past
financial year was 26 per cent. Excluding capital investment associated with
projects not yet in production, Underlying return on capital was 30 per
cent.
Operating cash flow for the year remained strong at US$17,920 million and
resulted in net debt declining further to US$3,308 million, with net gearing
falling to six per cent. These results continue to demonstrate the strength
of our uniquely diversified business model and world class, low cost asset
portfolio.
We invested heavily in our business and successfully delivered another five
growth projects including those in petroleum and iron ore. We approved two
major growth projects (with a combined budget of US$695 million) and made
pre-commitments totalling US$2,237 million (BHP Billiton share) to
accelerate early works for another four. To underline the depth of our
project pipeline, we have 20 projects in various stages of execution and
definition with an estimated budget in excess of US$25 billion.
In the Pilbara (Australia), we continued to progress the proposed Iron Ore
Production Joint Venture with Rio Tinto with a key focus on gaining
regulatory approval. We also bolstered our upstream resource base with the
acquisition of Athabasca Potash Inc. (Canada) and United Minerals
Corporation NL (Australia, iron ore).
On 18 August 2010, BHP Billiton announced its intention to make an all-cash
offer to acquire all of the issued and outstanding common shares of Potash
Corporation of Saskatchewan Inc. (PotashCorp), at a price of US$130 in cash
per PotashCorp common share.
Outlook
Economic Outlook
BHP Billiton remains cautious on the short term outlook for the global
economy. After a period of rapid recovery in the developing world, economies
such as Brazil and India have returned to full output and the focus has now
shifted away from supporting growth, towards controlling inflation. In
China, the government has implemented meaningful measures aimed at
controlling rapid economic expansion and asset inflation. Fiscal policy has
been adjusted with renewed focus on the economy`s inevitable transition away
from a dependence on investment, towards more balanced, consumption led
growth. With this recent policy tightening, property sales volumes and
prices have started to decline in Tier 1 cities over the last quarter. While
BHP Billiton sees these measures as the normal continuation of China`s
economic management, we do expect Chinese Gross Domestic Product (GDP)
growth to slow towards the more sustainable level of circa eight per cent in
the first half of fiscal year 2011.
Uncertainty continues to surround the developed world as governments adjust
fiscal policies following a period of significant stimulus and subsequent
increase in sovereign debt levels. Significant public spending cuts and
higher taxes have been announced in Europe, however are yet to be fully
implemented, implying the inevitable negative impact on growth from fiscal
consolidation remains ahead. Industrial output, a core measure of economic
activity, remains well below previous peaks despite the positive impact
attributable to re-stocking that now appears largely complete. In the
absence of any additional inventory adjustment, improvement in end demand is
essential to drive overall economic growth. Some positive signs have
emerged, with strong private investment in equipment and software seen in
some parts of the United States economy, although ongoing de-leveraging and
weak confidence are hampering efforts to revive demand.
Despite our short term caution, we remain positive on the longer term
prospects for the global economy, driven by the continuing urbanisation and
industrialisation of emerging economies. This path, however, will not be
without volatility, reflecting normal business cycles.
Commodities Outlook
Following a broad recovery in prices for the majority of BHP Billiton`s
products, the short term outlook for commodities is mixed. There is strong
physical demand for some commodities, such as copper, where consumers are
restocking and premiums continue to rise. Elsewhere, there is weaker demand
for those commodities where short term demand is likely to be satisfied by
inventory rather than primary supply.
With global steel production running ahead of real demand in the quarter
ended June 2010, we expect output to soften from the record highs achieved
in April this year. This will impact near term demand for steel making raw
materials, however the fundamentals remain strong in those commodities,
particularly iron ore, where there is a lack of low cost supply response
expected over the next one to two years.
In the medium term, we expect commodity demand to remain heavily dependent
on emerging market demand as the gradual withdrawal of government stimulus
is expected to constrain growth in the developed world. While China`s rapid
growth is expected to slow from recent highs, domestic consumption is
expected to remain strong and investment spending is likely to remain
commodity intensive.
There is no change to our expectation of strong growth in demand for our
commodities in the longer term. With long run prices determined by the
marginal cost of supply, our position at the lower end of the cost curve is
expected to underpin strong margins and investment returns.
Growth Projects
During the period, we completed five major growth projects (oil and gas,
iron ore, alumina and energy coal). Highlighting our commitment to re-invest
through the cycle, we approved two major growth projects (base metals and
energy coal) and made pre-commitments of US$2,237 million for another four
(iron ore, metallurgical coal and potash).
Completed projects
Customer Project Capacity Capital Date of initial
Sector (i) expenditure(US$M) production (ii)
Group (i)
Budget Actual Target Actual
Petroleum Pyrenees 96,000 1,200 1,247 H1 2010 H1
(Australia) barrels of 2010
BHP Billiton - oil and 60
71.43% million
cubic feet
gas per
day
Aluminium Alumar 2 million 900(iv) 851 Q2 Q3
Refinery tonnes per 2009(iv) 2009
Expansion annum of
(Brazil)BHP additional
Billiton - 36% alumina
capacity
Iron Ore WA Iron Ore 26 million 1,850 1,850(iii) H1 2010 H2
Rapid Growth tonnes per 2009
Project 4 annum of
(Australia)BHP additional
Billiton - iron ore
86.2% system
capacity
Energy Klipspruit 1.8 450 400(iii) H2 2009 H2
Coal (South million 2009
Africa)BHP tonnes per
Billiton - annum
100% export and
2.1
million
tonnes per
annum
domestic
thermal
coal
Newcastle 30 million 390 390(iii) 2010 H1
Third Port tonnes per 2010
Project annum
(Australia)BHP export
Billiton - coal
35.5% loading
facility
4,790 4,738
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
(iii) Number subject to finalisation.
(iv) As per revised budget and schedule.
Projects currently under development (approved in prior years)
Customer Project Capacity(i) Budgeted Target date for
Sector capital initial
Group expenditure production(ii)
(US$M)(i)
Petroleum Angostura Gas 280 million 180 H1 2011
Phase II cubic feet of
(Trinidad and gas per day
Tobago)BHP
Billiton - 45%
Bass Strait 10,000 barrels 500 2011
Kipper(iii) of condensate
(Australia)BHP per day and
Billiton - 32.5% processing
- 50% capacity of 80
million cubic
feet gas per day
Bass Strait 11,000 barrels 625 2011
Turrum(iii) of condensate
(Australia)BHP per day and
Billiton - 50% processing
capacity of 200
million cubic
feet of gas per
day
North West Shelf Replacement 245 2011
CWLH Extension vessel with
(Australia)BHP capacity of
Billiton - 16.67% 60,000 barrels
of oil per day
North West Shelf 2,500 million 850 2012
North Rankin B cubic feet of
Gas Compression gas per day
(Australia)BHP
Billiton - 16.67%
Aluminium Worsley 1.1 million 1,900 H1 2011
Efficiency and tonnes per annum
Growth of additional
(Australia)BHP alumina capacity
Billiton - 86%
Iron Ore WA Iron Ore Rapid 50 million 4,800 H2 2011
Growth Project 5 tonnes per annum
(Australia)BHP additional iron
Billiton - 85% ore system
capacity
Energy Douglas- 10 million 975 Mid 2010
Coal Middelburg tonnes per annum
Optimisation export thermal
(South Africa)BHP coal and 8.5
Billiton - 100% million tonnes
per annum
domestic thermal
coal (sustains
current output)
10,075
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
(iii) Schedule and budget under review following advice from operator.
Projects approved during the June 2010 financial year
Customer Project Capacity(i) Budgeted Target datefor
Sector capital initial
Group expenditure production(ii)
(US$M)(i)
Base Antamina Increases ore 435 Q4 2011
Metals Expansion processing
(Peru) capacity to
BHP Billiton - 130,000 tonnes
33.75% per day
Energy MAC20 Project Increases 260 H1 2011
Coal (Australia)BHP saleable thermal
Billiton - 100% coal production
by approximately
3.5 million
tonnes per annum
695
(i) All references to capital expenditure are BHP Billiton`s share unless
noted otherwise. All references to capacity are 100 per cent unless noted
otherwise.
(ii) References are based on calendar years.
The Income Statement
To provide clarity into the underlying performance of our operations, we
present Underlying EBIT which is a measure used internally and in our
Supplementary Information that excludes any exceptional items. The
differences between Underlying EBIT and Profit from operations are set out
in the following table:
Year ended 30 June 2010US$M 2009US$M
Underlying EBIT 19,719 18,214
Exceptional items (before taxation) 312 (6,054)
Profit from operations 20,031 12,160
Refer to page 8 for details of the Exceptional items.
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT
for the year ended June 2010 compared with the year ended June 2009:
US$M US$M
Underlying EBIT for the year ended 30 June 2009 18,214
Change in volumes:
Increase in volumes 2,142
Decrease in volumes (206)
1,936
Net price impact:
Change in sales prices 778
Price-linked costs 241
1,019
Change in costs:
Costs (rate and usage) (2)
Exchange rates (2,150)
Inflation on costs (400)
(2,552)
Asset sales 82
Ceased and sold operations 526
New and acquired operations 966
Exploration and business development 239
Other (711)
Underlying EBIT for the year ended 30 June 2010 19,719
Volumes
Strong performance from steelmaking raw materials was the major contributor
to the volume related increase in Underlying EBIT of US$1,936 million. In
that context, our strategy to maximise production from our low cost assets
at all points in the cycle ideally positioned our Metallurgical Coal and
Manganese businesses to capitalise on the improvement in market demand. In
Western Australia`s Pilbara region, ongoing commitment to growth delivered
the tenth consecutive record in iron ore sales while a recovery in pellet
demand enabled Samarco (Brazil) to return to full capacity.
Solid operating performance was recorded across the remaining Customer
Sector Groups (CSGs). In Base Metals, Escondida (Chile) and Cannington
(Australia) both benefited from higher throughput and grade whilst Olympic
Dam (Australia) and Spence (Chile) were impacted by unplanned interruptions.
Escondida production is expected to decline by five to 10 per cent in the
2011 financial year, mainly due to lower grade.
Prices
Prices (including the impact of linked costs) increased Underlying EBIT by
US$1,019 million with iron ore and the base and precious metals complex
contributing US$5,265 million of the benefit. Lower prices for coal (both
forms) and manganese were the offsetting factors and reduced Underlying EBIT
by US$4,401 million.
Price-linked costs were US$241 million lower than the corresponding period.
During the second half of the financial year, the old benchmark pricing
system for iron ore and metallurgical coal was substantially replaced by
shorter term market based pricing. The transformation ensures the majority
of BHP Billiton`s bulk commodities (iron ore, manganese, metallurgical coal
and energy coal) are now linked to market based prices.
Costs
Excluding the significant impact of a weaker US dollar and an increase in
non-cash items (US$219 million), costs were well controlled across the
Group, adding US$217 million to Underlying EBIT in the period.
Raw materials, including fuel and energy, generated the greatest benefit and
increased Underlying EBIT by US$576 million although the majority of the
benefit was non structural in nature.
In contrast, higher labour and contractor rates continued to negatively
impact the cost base, particularly in South America and Australia. At
Spence, Escondida and Cerro Colorado (Chile), one-off wage negotiations,
bonuses and contractor payments reduced Underlying EBIT by US$145 million.
Similarly, Western Australia`s higher labour costs associated with the tight
labour market reduced Western Australia Iron Ore Underlying EBIT by US$45
million.
Non-cash and other items reduced Underlying EBIT by a combined US$537
million. The major negative factors were higher depreciation in Western
Australia Iron Ore and a provision for a payment to the West Australian
(State) Government that is expected to follow the recently announced
amendments to the State Agreements.
Exchange rates
A weaker US dollar against all producer currencies reduced Underlying EBIT
by US$2,150 million. The Australian operations were the most impacted with
the strong Australian dollar decreasing Underlying EBIT by US$1,779 million.
The following exchange rates against the US dollar have been applied:
Year ended Year ended
30 June 30 June 30 June 30 June 30 June
2010 2009 2010 2009 2008
Average Average Closing Closing Closing
Australian 0.88 0.75 0.85 0.81 0.96
dollar(i)
Chilean peso 529 582 545 530 522
Colombian peso 1,970 2,205 1,920 2,159 1,899
Brazilian real 1.80 2.08 1.81 1.95 1.60
South African 7.59 9.01 7.68 7.82 7.91
rand
(i) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressure on input costs across all businesses had an
unfavourable impact on Underlying EBIT of US$400 million. The effect was
most evident in Australia and South Africa.
Asset Sales
The profit on the sale of assets increased Underlying EBIT by US$82 million.
This was mainly due to the profit that followed dissolution of the Douglas
Tavistock Joint Venture arrangement (South Africa).
Ceased and sold operations
Lower operational losses for Yabulu and Ravensthorpe (both Australia) and
the Suriname alumina refinery, which were sold during the year ended June
2010, resulted in a favourable impact on Underlying EBIT of US$526 million.
New and acquired operations
New greenfield assets are reported in new and acquired operations variance
until there is a full year comparison. BHP Billiton operated oil and gas
facilities, Shenzi (USA) and Pyrenees (Australia), contributed an additional
US$966 million to Underlying EBIT in the period.
Exploration and business development
Exploration expense was broadly flat for the year at US$1,030 million.
Within minerals (US$467 million expense) the focus centred upon copper in
Chile and Zambia, nickel in Australia, manganese in Gabon, and diamonds in
Canada. Exploration for iron ore, coal, bauxite, potash and manganese was
also undertaken in a number of regions including Australia, Canada, South
America, Russia and Africa.
The Petroleum CSG`s exploration expense increased to US$563 million as the
business commenced a multi year drilling campaign.
Expenditure on business development was US$195 million lower than the
corresponding period. This was mainly due to reduced activity in the Base
Metals and Stainless Steel Materials CSGs.
Other
Other items decreased Underlying EBIT by US$711 million, predominantly due
to the influence of third party product sales and the fair value adjustment
of derivative contracts.
Net finance costs
Net finance costs decreased to US$459 million from US$543 million in the
corresponding period. This was primarily driven by higher levels of
capitalised interest.
Taxation expense
The taxation expense including royalty-related taxation and tax on
exceptional items was US$6,563 million. This represented an effective rate
of 34 per cent on profit before tax including exceptional items of US$59
million. Excluding the impacts of exceptional items, the taxation expense
was US$6,504 million.
Exchange rate movements increased the taxation expense by US$106 million
predominantly due to the revaluation of local currency tax liabilities and
other monetary items which amounted to US$502 million. This was offset by
the increase in the US dollar value of future tax depreciation of US$396
million.
Royalty-related taxation represents an effective rate of two per cent for
the current period. Excluding the impacts of royalty-related taxation, the
impact of exchange rate movements included in taxation expense and tax on
exceptional items, the underlying effective rate was 31 per cent.
Government imposed royalty arrangements which are calculated by reference to
profits (revenue net of allowable deductions) after the adjustment for items
comprising temporary differences, is reported as royalty-related taxation.
Other royalty and excise arrangements which do not have these
characteristics are recognised as operating costs (US$1,653 million).
Exceptional Items
On 22 February 2010 a settlement was reached in relation to the Pinal Creek
(US) groundwater contamination which resulted in other parties taking on
full responsibility for ground water remediation and partly funding the
Group for past and future rehabilitation costs. As a result, a gain of
US$186 million (US$53 million tax expense) has been recognised reflecting
the release of rehabilitation provisions and cash received.
On 9 December 2009, the Group announced it had signed an agreement to sell
the Ravensthorpe nickel operations. The sale was completed on 10 February
2010. As a result of the sale, impairment charges recognised as exceptional
items in the financial year ended 30 June 2009 have been partially reversed
totalling US$611 million (US$183 million tax expense). In addition, certain
obligations that remained with the Group were mitigated and related
provisions released; together with minor net operating costs this resulted
in a gain of US$42 million (US$13 million tax expense).
Continuing power supply constraints impacting the Group`s three Aluminium
smelters in southern Africa, and temporary delays with the Guinea Alumina
project, have given rise to charges for the impairment of property, plant
and equipment and restructuring provisions. A total charge of US$298 million
(US$12 million tax benefit) was recognised by the Group in the year ended 30
June 2010.
Renegotiation of long term power supply arrangements in southern Africa have
impacted the value of embedded derivatives contained within those
arrangements. A total charge of US$229 million (US$50 million tax benefit)
was recognised by the Group in the year ended 30 June 2010.
The Australian Taxation Office (ATO) issued amended assessments in prior
years denying bad debt deductions arising from the investments in Hartley
(Zimbabwe), Beenup and Boodarie Iron (both Australia) and the denial of
capital allowance claims made on the Boodarie Iron project. BHP Billiton
lodged objections and has been successful on all counts in the Federal Court
and the Full Federal Court. The ATO has not sought to appeal the Boodarie
Iron bad debt disallowance but has sought special leave to appeal to the
High Court in relation to the Beenup bad debt disallowance and the denial of
the capital allowance claims on the Boodarie Iron project. These outcomes
have resulted in a release of US$128 million from the Group`s income tax
provision. The special leave to appeal to the High Court is scheduled to be
heard on 3 September 2010. The decision of the High Court at that time may
result in an additional adjustment to the Group`s income tax provision.
Year ended 30 June 2010 GrossUS$M TaxUS$M NetUS$M
Exceptional items by category
Pinal Creek rehabilitation 186 (53) 133
Disposal of the Ravensthorpe nickel operation 653 (196) 457
Restructuring of operations and deferral of (298) 12 (286)
projects
Renegotiation of power supply agreements (229) 50 (179)
Release of income tax provisions - 128 128
312 (59) 253
Cash Flows
Net operating cash flow after interest and tax decreased by five per cent to
US$17,920 million. This was primarily driven by changes in working capital
balances having a negative year on year impact on operating cash flow of
US$4,780 million; offset by higher levels of cash generated from operations
(before changes in working capital balances) of US$2,874 million, lower net
tax and royalty-related tax payments of US$528 million and a tax refund of
US$552 million.
Capital and exploration expenditure totalled US$10,656 million for the
period. Expenditure on major growth projects was US$7,655 million, including
US$1,902 million on Petroleum projects and US$5,753 million on Minerals
projects. Capital expenditure on sustaining and other items was US$1,668
million. Exploration expenditure was US$1,333 million, including US$303
million which has been capitalised.
Cash flows from investing activities included acquisitions of US$508 million
relating to Athabasca Potash Inc. of US$323 million and United Minerals
Corporation NL of US$185 million.
Financing cash flows include net debt repayments of US$485 million and
dividend payments of US$4,618 million.
Net debt, comprising cash and interest-bearing liabilities, was US$3,308
million, a decrease of US$2,278 million, or 41 per cent, compared to 30 June
2009. Net gearing, which is the ratio of net debt to net debt plus net
assets, was six per cent at 30 June 2010, compared with 12 per cent at 30
June 2009.
Dividend
BHP Billiton maintains a progressive dividend policy and our Board today
declared a final dividend of 45 US cents per share. Together with the
interim dividend of 42 US cents per share paid to shareholders on 23 March
2010, this brings the total dividend for the year to 87 US cents per share.
The dividend to be paid by BHP Billiton Limited will be fully franked for
Australian taxation purposes. Dividends for the BHP Billiton Group are
determined and declared in US dollars. However, BHP Billiton Limited
dividends are mainly paid in Australian dollars, and BHP Billiton Plc
dividends are mainly paid in pounds sterling and South African rand to
shareholders on the UK section and the South African section of the
register, respectively. Currency conversions will be based on the foreign
currency exchange rates on the Record Date, except for the conversion into
South African rand, which will take place on the last day to trade on JSE
Limited, being 3 September 2010. Please note that all currency conversion
elections must be registered by the Record Date, being 10 September 2010.
Any currency conversion elections made after this date will not apply to
this dividend.
The timetable in respect of this dividend will be:
Last day to trade cum dividend on JSE Limited and currency conversion into
rand - 3 September 2010
Ex-dividend Australian Securities Exchange (ASX) and JSE Limited (JSE) - 6
September 2010
Ex-dividend London Stock Exchange (LSE) and New York Stock Exchange (NYSE) -
8 September 2010
Record date (including currency conversion and currency election dates,
except for rand) - 10 September 2010
Payment date - 30 September 2010
American Depositary Shares (ADSs) each represent two fully paid ordinary
shares and receive dividends accordingly.
BHP Billiton Plc shareholders registered on the South African section of the
register will not be able to dematerialise or rematerialise their
shareholdings between the dates of 6 and 10 September 2010, nor will
transfers between the UK register and the South African register be
permitted between the dates of 3 and 10 September 2010.
Details of the currency exchange rates applicable for the dividend will be
announced to the relevant stock exchanges following conversion and will
appear on the Group`s website.
Debt Management and Liquidity
No long term debt securities were issued in the debt capital markets during
the year ended 30 June 2010. The Group has access to the US commercial paper
market and an undrawn US$3.0 billion Revolving Credit Facility, which
expires in October 2011. We have a strong liquidity position with US$12.5
billion of cash on hand, and have maintained our solid A credit rating
throughout the year.
Corporate Governance
On 4 August 2009, the Board announced that Mr Jac Nasser would succeed Mr
Don Argus as Chairman when Mr Argus retires as Chairman and a Non-executive
Director in early 2010. On 24 February 2010, the Board announced that Mr
Argus would retire as Chairman and a Non-executive Director on 30 March 2010
and Mr Nasser would assume the role of Chairman from that date.
Dr David Jenkins retired as a Non-executive Director with effect from the
conclusion of the Annual General Meeting of BHP Billiton Limited on 26
November 2009.
On 24 November 2009, the Board announced the resignation of Dr David Morgan
as a Non-executive Director with effect from that date.
On 29 January 2010, the Board announced the resignations of Mr Paul Anderson
and Dr E Gail de Planque as Non-executive Directors with effect from 31
January 2010 and the appointments of Mr Malcolm Broomhead and Ms Carolyn
Hewson as Non-executive Directors with effect from 31 March 2010.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer
Sector Groups for the year ended 30 June 2010 and the corresponding prior
year.
Year ended 30 June Revenue Underlying EBIT(i)
(US$M) 2010 2009 Change % 2010 2009 Change %
Petroleum 7,211 4,085
8,782 22 4,573 12
Aluminium 4,151 192
4,353 5 406 111
Base Metals 7,105 1,292
10,409 47 4,632 259
Diamonds and 896 145
Specialty Products 1,272 42 485 234
Stainless Steel 2,355 (854) N/A
Materials 3,617 54 668
Iron Ore 10,048 6,229
11,139 11 6,001 (4)
Manganese 2,536 1,349
2,150 (15) 712 (47)
Metallurgical Coal 8,087 4,711
6,059 (25) 2,053 (56)
Energy Coal 6,524 1,460
4,265 (35) 730 (50)
Group and 1,469 N/A (395) N/A
unallocated 802 (541)
items(ii)
Less: inter- (171) N/A - - N/A
segment revenue (50)
BHP Billiton Group 50,211 18,214
52,798 5 19,719 8
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT is reconciled to Profit from operations on
page 5.
(ii) Includes consolidation adjustments, unallocated items and external
sales from the Group`s freight, transport and logistics operations.
Petroleum
Underlying EBIT was US$4,573 million, an increase of US$488 million, or 12
per cent, compared to the prior year. The increase in underlying EBIT was
primarily attributable to the growth in high margin crude volumes.
Total production of 159 million barrels of oil equivalent was a record and
an increase of 21 million barrels of oil equivalent compared to the previous
year. The 15 per cent increase in production reflected strong performance
from BHP Billiton operated Shenzi and Pyrenees, the latter being delivered
on schedule during the period. In addition, improved reservoir performance
from Atlantis (USA) and an absence of weather related interruptions
supported the strong production result.
Underlying EBIT also benefited from higher realised oil prices, which
averaged US$73.05 per barrel for the year (compared with US$66.18 per
barrel). The major offsetting factors were a lower average realised natural
gas price of US$3.43 per thousand standard cubic feet (compared with US$3.57
per thousand standard cubic feet) and a lower average realised liquefied
natural gas price of US$9.07 per thousand standard cubic feet (compared with
$12.07 per thousand standard cubic feet).
Gross exploration expenditure was US$817 million, an increase of US$269
million compared to last year (US$548 million), primarily from increased
drilling activity in the Gulf of Mexico (USA), Canada, Malaysia, the
Falklands and the Philippines. Several exploration wells were not commercial
and resulted in an increase in exploration expense of US$163 million (US$563
million compared to US$400 million in the prior year).
Drilling activities at Atlantis and Shenzi ceased during the June 2010
quarter due to the drilling moratorium currently in place in the deepwater
Gulf of Mexico. BHP Billiton continues to monitor and assess the impact of
the six month suspension of certain permitting and drilling activities. All
other drilling operations outside of the Gulf of Mexico progressed as
planned. Underlying EBIT was impacted by a $59 million charge related to
idle rig time in the Gulf of Mexico for operated rigs. This is part of BHP
Billiton`s ongoing management of rig contracts which included negotiating
revised terms for the rigs during the moratorium and will provide BHP
Billiton with continued access to the rigs and experienced crews when the
moratorium ceases.
Aluminium
Underlying EBIT was US$406 million, an increase of US$214 million or 111 per
cent over the prior financial year. Higher prices and premiums for aluminium
had a favourable impact of US$253 million, which was partially offset by a
US$19 million unfavourable impact of price-linked costs. The average LME
aluminium price increased to US$2,018 per tonne (compared with US$1,862 per
tonne). The average realised alumina price was US$291 per tonne for the year
ended June 2010 (compared with US$286 per tonne).
Overall, operating costs were lower, mainly due to reduced raw material and
energy costs. This was partially offset by a weaker US dollar against the
Australian dollar and South African rand, and inflationary pressures in
Australia, South Africa and Brazil.
Lower operational losses from Suriname in the year ended June 2010 increased
Underlying EBIT by US$68 million.
Base Metals
Underlying EBIT was US$4,632 million, an increase of US$3,340 million or 259
per cent from the corresponding period. Higher average realised prices
favourably impacted Underlying EBIT by US$3,977 million. Average realised
prices for all of the key commodities in Base Metals, except uranium, were
higher compared to last year.
Stronger production from Escondida following the successful repair of the
Laguna Seca SAG mill contributed to higher earnings. However, that benefit
was more than offset by lower copper sales due to the Clark Shaft incident
at Olympic Dam and industrial disruptions at Spence.
The Clark Shaft accounts for approximately 75 per cent of Olympic Dam`s ore
hoisting capacity. The incident impacted earnings by US$455 million but was
partially offset by self insurance recoveries of US$297 million. The
recommissioning of Olympic Dam`s Clark Shaft occurred during the final
quarter of the year and has returned to full production.
Cost efficiency was favourably impacted by lower prices for key consumables
including fuel and energy. This was offset by higher labour costs, including
one-off bonus payments from collective labour negotiations completed during
the year in the South American operations. Costs were also negatively
impacted by the devaluation of the US dollar and inflation in Chile and
Australia.
At 30 June 2010 the Group had 236,584 tonnes of outstanding copper sales
that were revalued at a weighted average price of US$2.96 per pound. The
final price of these sales will be determined in the 2011 financial year. In
addition, 234,871 tonnes of copper sales from the 2009 financial year were
subject to a finalisation adjustment in 2010. The finalisation adjustment
and provisional pricing impact as at 30 June 2010 increased earnings by
US$303 million for the year (compared to a loss of US$936 million in the
year ended June 2009).
Diamonds and Specialty Products
Underlying EBIT was US$485 million, an increase of US$340 million or 234 per
cent over the corresponding period. Strong operating earnings at EKATI
(Canada) resulted from higher volumes and realised diamond prices and lower
unit costs, due to the continued emphasis on cost control. There was also a
decrease in exploration expense of US$43 million mainly due to reduced
diamonds exploration activity. Potash exploration expenditure of US$73
million in Saskatchewan, Canada, was US$21 million lower for the year as the
exploration work program for Jansen was completed in the corresponding
period. Higher diamonds earnings were partially offset by a reduction in
operating earnings in Titanium Minerals (South Africa) due to lower realised
prices and higher energy costs.
Stainless Steel Materials
Underlying EBIT was US$668 million, an increase of US$1,522 million compared
with the corresponding period. Higher average LME prices for nickel of
US$8.81/lb (compared to US$6.03/lb) had a favourable impact on Underlying
EBIT of US$1,171 million that was partly offset by a US$305 million
unfavourable impact of price-linked costs.
Proactive portfolio restructuring and ongoing improvements at the operating
level also contributed to the strong result. Lower operational losses from
Yabulu and Ravensthorpe in the year ended June 2010 increased Underlying
EBIT by US$458 million.
The Nickel West Kalgoorlie Smelter furnace rebuild and concurrent
maintenance at the Nickel West Kwinana Refinery (both Australia) in the
prior period set the platform for record total production at Nickel West in
the year ended June 2010. Ongoing cost saving initiatives and lower labour
costs were offset by the devaluation in the US dollar and inflation.
Underlying EBIT also benefited from lower exploration and business
development expenditure.
Iron Ore
Underlying EBIT was US$6,001 million, a decrease of US$228 million or four
per cent compared with the corresponding period. Record production and sales
were the major positive contributors, adding US$546 million to Underlying
EBIT.
Overall operating costs were unfavourably impacted by a weaker US dollar,
general inflationary pressure and the ongoing ramp-up of Western Australia
RGP4, reducing Underlying EBIT by US$759 million. In addition, a provision
that relates to proposed amendments to the Western Australian State
Agreements reduced Underlying EBIT by US$126 million.
For the 2010 financial year, 39 per cent of Western Australia Iron Ore
shipments on a wet metric tonne basis were priced on annually agreed terms,
with the remainder sold on a shorter term basis. During the second half of
the financial year, the old benchmark pricing system was substantially
replaced by shorter term market based, landed pricing. Our expectation is
that future Western Australia Iron Ore shipments will be priced on this
basis.
Manganese
Underlying EBIT was US$712 million, a decrease of US$637 million or 47 per
cent compared with the corresponding period. The decline was directly
attributable to lower realised prices which reduced Underlying EBIT by
US$1,680 million. In comparison to the year ended June 2009, average
realised prices for ore fell by 46 per cent and alloy prices fell by 43 per
cent. Offsetting this was the positive impact of price-linked costs of
US$261 million.
The decrease in realised prices was partially offset by a demand driven rise
in sales volumes that increased Underlying EBIT by US$799 million. Local
operating costs were well controlled throughout the year although the
impacts of inflation and a weaker US dollar mitigated any benefit.
All Manganese assets were running at full supply chain capacity at the end
of the June 2010 quarter.
Metallurgical Coal
Underlying EBIT was US$2,053 million, a decrease of US$2,658 million or 56
per cent from the corresponding period. The decrease was mainly due to lower
realised prices for hard coking coal (34 per cent), weak coking coal (33 per
cent), and thermal coal (11 per cent). This was partly offset by a reduction
in price-linked costs.
Record annual sales volumes were delivered despite wet weather disruptions
in Queensland in the March 2010 quarter. Production for the year was higher
due to improved operational and supply chain performance, supported by
strong demand.
Operating costs were well controlled. However a weaker US dollar and
inflationary pressure had an unfavourable impact of US$632 million on
Underlying EBIT.
As with iron ore, the old benchmark system was substantially replaced by
shorter term market based pricing. For the year ended June 2010, 34 per cent
of metallurgical coal shipments were priced on a shorter term basis. The
majority of product sold in the June 2010 quarter was priced in this manner.
Energy Coal
Underlying EBIT was US$730 million, a decrease of US$730 million or 50 per
cent from the corresponding period. This was mainly due to lower average
export prices which decreased earnings by US$535 million, offset by a US$76
million benefit related to price-linked costs. Dissolution of the Douglas
Tavistock Joint Venture arrangement favourably impacted Underlying EBIT in
the period.
Production was in line with the previous year with a 10 per cent increase in
export sales attributable to the continued ramp up of the Klipspruit (South
Africa) expansion and record production at Mt Arthur (Australia). Weaker
production at New Mexico Coal (USA) reflected a downturn in demand from the
dedicated power generators. Operating costs were well controlled despite the
adverse impacts of a weaker US dollar and inflation.
Group and Unallocated items
Underlying EBIT was a loss of US$541 million. Self insurance claims related
to the Clark Shaft incident at Olympic Dam decreased Underlying EBIT by
US$297 million. A weaker US dollar had an unfavourable impact on Underlying
EBIT of US$140 million.
The following notes explain the terms used throughout this profit release:
(1) Underlying EBIT margin excludes the impact of third party product
activities.
(2) 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$4,794 million (excluding
exceptional items of US$319 million) for the year ended 30 June 2010 and
US$4,061 million for the year ended 30 June 2009 (excluding exceptional
items of US$4,450 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.
(3) 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.
(4) Net operating cash flows are after net interest and taxation.
(5) Net interest includes interest capitalised and excludes the effect of
discounting on provisions and other liabilities, fair value change on hedged
loans, fair value change on hedging derivatives, exchange variations on net
debt and expected return on pension scheme assets.
(6) Unless otherwise stated, production volumes exclude suspended and sold
operations.
Forward-looking statements: Certain statements in this release are forward-
looking statements within the meaning of the US Private Securities
Litigation Reform Act of 1995, including statements regarding the cost and
timing of development projects, future production volumes, increases in
production and infrastructure capacity, the identification of additional
mineral Reserves and Resources and project lives and, without limitation,
other statements typically containing words such as "intends," "expects,"
"anticipates," "targets," plans," "estimates" and words of similar import.
These statements are based on current expectations and beliefs and numerous
assumptions regarding BHP Billiton`s present and future business strategies
and the environments in which BHP Billiton will operate in the future and
such assumptions, expectations and beliefs may or may not prove to be
correct and by their nature, are subject to a number of known and unknown
risks and uncertainties that could cause actual results, performance and
achievements to differ materially.
Factors that could cause actual results or performance to differ materially
from those expressed or implied in the forward-looking statements include,
but are not limited to, the risk factors discussed in BHP Billiton`s filings
with the U.S. Securities and Exchange Commission ("SEC") (including in
Annual Reports on Form 20-F) which are available at the SEC`s website
(http://www.sec.gov). BHP Billiton undertakes no duty to update any forward-
looking statements in this release.
This release is for information purposes only and should not be construed as
either an offer to sell or a solicitation of an offer to buy or sell
securities in any jurisdiction.
The offer to purchase all of the issued and outstanding common shares of
PotashCorp (the "Offer") is being made by BHP Billiton Development 2
(Canada) Limited (the "Offeror"), an indirect wholly-owned subsidiary of BHP
Billiton Plc. This document is for information purposes only and does not
constitute or form part of any offer to purchase or any solicitation of any
offer to sell PotashCorp`s common shares. The Offer (as the same may be
varied or extended in accordance with applicable law) is being made
exclusively by means of, and subject to the terms and conditions set out in,
the offer and the circular, the letter of transmittal, the notice of
guaranteed delivery and other related tender offer materials (the "Offer
Materials"). In connection with the Offer, the Offeror, BHP Billiton Limited
and BHP Billiton Plc have filed with the Canadian securities regulatory
authorities the Offer Materials and have filed with the U.S. Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule TO (the
"Schedule TO"), including the Offer Materials.
THE OFFER MATERIALS AND THE SCHEDULE TO, AS THEY MAY BE AMENDED FROM TIME TO
TIME, CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF
THE OFFER, THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY
OF THE OFFER MATERIALS AND OTHER DOCUMENTS FILED BY THE OFFEROR, BHP
BILLITON LIMITED AND BHP BILLITON PLC WITH THE SEC AT THE WEBSITE MAINTAINED
BY THE SEC AT WWW.SEC.GOV AND WITH THE CANADIAN SECURITIES REGULATORY
AUTHORITIES AT WWW.SEDAR.COM. MATERIALS FILED WITH THE SEC OR THE CANADIAN
SECURITIES REGULATORY AUTHORITIES MAY BE OBTAINED WITHOUT CHARGE AT BHP
BILLITON`S WEBSITE, WWW.BHPBILLITON.COM, OR BY CONTACTING THE INFORMATION
AGENTS FOR THE OFFER, MACKENZIE PARTNERS, INC. AND KINGSDALE SHAREHOLDER
SERVICES INC., BY PHONE AT 1-800-322-2885 AND 1-866-851-3215, RESPECTIVELY,
OR BY EMAIL AT potash@mackenziepartners.com, AND
contactus@kingsdaleshareholder.com, RESPECTIVELY.
While the Offer is being made to all holders of PotashCorp common shares,
the Offer is not being made or directed to, nor will deposits of PotashCorp
common shares be accepted from or on behalf of, holders of PotashCorp common
shares in any jurisdiction in which the making or acceptance of the Offer
would not be in compliance with the laws of such jurisdiction. However, the
Offeror may, in its sole discretion, take such action as it may deem
necessary to extend the Offer in any such jurisdiction.
****
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia
Brendan Harris, Investor Relations
Tel: +61 3 9609 4323 Mobile: +61 437 134 814
email: Brendan.Harris@bhpbilliton.com
Leng Lau, Investor Relations
Tel: +61 3 9609 4202 Mobile: +61 403 533 706
email: Leng.Y.Lau@bhpbilliton.com
Amanda Buckley, Media Relations
Tel: +61 3 9609 2209 Mobile: +61 419 801 349
email: Amanda.Buckley@bhpbilliton.com
Kelly Quirke, Media Relations
Tel: +61 3 9609 2896 Mobile: +61 429 966 312
email: Kelly.Quirke@bhpbilliton.com
Fiona Martin, Media Relations
Tel: +61 3 9609 2211 Mobile: +61 427 777 908
email: Fiona.Martin2@bhpbilliton.com
United Kingdom & South Africa
Andre Liebenberg, Investor Relations
Tel: +44 20 7802 4131 Mobile: +44 7920 236 974
email: Andre.Liebenberg@bhpbilliton.com
Illtud Harri, Media Relations
Tel: +44 20 7802 4195 Mobile: +44 7920 237 246
email: Illtud.Harri@bhpbilliton.com
Americas
Scott Espenshade, Investor Relations
Tel: +1 713 599 6431 Mobile: +1 713 208 8565
email: Scott.Espenshade@bhpbilliton.com
Ruban Yogarajah, Media Relations
Tel: US +1 713 966 2907 or UK +44 20 7802 4033
Mobile: UK +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077
Registered in Australia
Registered Office: 180 Lonsdale Street
Melbourne Victoria 3000 Australia
Tel +61 1300 55 4757 Fax +61 3 9609 3015
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
Registered Office: Neathouse Place
London SW1V 1BH United Kingdom
Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton group which is headquartered in Australia
BHP BILLITON GROUP
FINANCIAL INFORMATION
For the year ended 30 June 2010
Contents
Financial Information
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Financial Information
The financial information included in this document for the year ended 30
June 2010 is unaudited and has been derived from the draft financial report
of the BHP Billiton Group for the year ended 30 June 2010. The financial
information does not constitute the Group`s full financial statements for
the year ended 30 June 2010, which will be approved by the Board, reported
on by the auditors, and subsequently filed with the UK Registrar of
Companies and the Australian Securities and Investments Commission.
The financial information set out on pages 19 to 35 for the year end 30 June
2010 has been prepared on the basis of the accounting policies consistent
with those applied in the 30 June 2009 financial statements contained within
the Annual Report of the BHP Billiton Group, except for the following
standards and interpretations which have been adopted for the year ended 30
June 2010:
* Amendment to IFRS 2/AASB 2 `Share-based Payment` which modifies the
definition of vesting conditions and broadens the scope of accounting for
cancellations of share-based payment arrangements.
* Amendment to IFRS 3/AASB 3 `Business Combinations`. This amendment
modifies the application of acquisition accounting for business
combinations. Associated amendments to IAS 27/AASB 127 `Consolidated and
Separate Financial Statements` change the accounting for non-controlling
interests.
* IFRS 8/AASB 8 `Operating Segments` which requires segment information to
be determined on the same basis used for reporting to senior management.
Segment results are therefore presented exclusive of exceptional items.
* `Improvements to IFRSs 2008`/AASB 2008-5 `Amendments to Australian
Accounting Standards arising from the Annual Improvements Project` and AASB
2008-6 `Further Amendments to Australian Accounting Standards arising from
the Annual Improvements Project` include a collection of minor amendments to
IFRS.
*IFRIC 18 `Transfers of Assets from Customers` which provides guidance on
how to account for items of property, plant and equipment received from
customers, or cash received from customers to acquire/construct specific
assets that will be used to supply goods or services.
The adoption of these standards did not have a material impact on the
financial statements of the Group.
As a result of the Group applying IAS 1/AASB 101 `Presentation of Financial
Statements` (revised from 1 July 2009), the financial information includes a
Consolidated Statement of Comprehensive Income (which replaces the
Consolidated Statement of Recognised Income and Expenses) and a Consolidated
Statement of Changes in Equity.
The comparative figures for the financial years ended 30 June 2009 and 30
June 2008 are not the statutory accounts of the BHP Billiton Group for those
financial years. Those accounts have been reported on by the company`s
auditors and delivered to the Registrar of Companies. The reports of the
auditors were (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under Section
498(2) or (3) of the UK Companies Act 2006.
All amounts are expressed in US dollars unless otherwise stated. The BHP
Billiton Group`s presentation currency and the functional currency of the
majority of its operations is US dollars as this is the principal currency
of the economic environment in which it operates.
Where applicable, comparative figures have been adjusted to disclose them on
the same basis as the current period figures. Amounts in this financial
information have, unless otherwise indicated, been rounded to the nearest
million dollars.
Consolidated Income Statement
for the year ended 30 June 2010
Notes Year Year Year
ended30 ended ended
June 30 June 30 June
2010US$M 2009US$M 2008US$M
Revenue
Group production 48,193 44,113 51,918
Third party products 1 4,605 6,098 7,555
Revenue 1 52,798 50,211 59,473
Other income 528 589 648
Expenses excluding net finance costs (33,295) (38,640) (35,976)
Profit from operations 20,031 12,160 24,145
Comprising:
Group production 19,920 11,657 24,529
Third party products 111 503 (384)
20,031 12,160 24,145
Financial income 4 215 309 293
Financial expenses 4 (674) (852) (955)
Net finance costs 4 (459) (543) (662)
Profit before taxation 19,572 11,617 23,483
Income tax expense (6,112) (4,784) (6,798)
Royalty-related taxation (net of (451) (495) (723)
income tax benefit)
Total taxation expense 5 (6,563) (5,279) (7,521)
Profit after taxation 13,009 6,338 15,962
Profit attributable to non- 287 461 572
controlling interests
Profit attributable to members of 12,722 5,877 15,390
BHP Billiton Group
Earnings per ordinary share (basic) 6 228.6 105.6 275.3
(US cents)
Earnings per ordinary share 6 227.8 105.4 274.8
(diluted) (US cents)
Dividends per ordinary share - paid 7 83.0 82.0 56.0
during the period (US cents)
Dividends per ordinary share - 7 87.0 82.0 70.0
declared in respect of the period
(US cents)
The accompanying notes form part of this financial information.
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2010
Year ended Year ended Year
30 June 30 June ended
2010US$M 2009US$M 30 June
2008US$M
Profit after taxation 13,009 6,338 15,962
Other comprehensive income
Actuarial losses on pension and medical (38) (227) (96)
schemes
Available for sale investments:
Net valuation gains/(losses) taken to 167 3 (76)
equity
Net valuation losses transferred to the 2 58 -
income statement
Cash flow hedges:
(Losses)/gains taken to equity (15) 710 (383)
Realised losses transferred to the income 2 22 73
statement
Unrealised gain transferred to the income - (48) -
statement
Gains transferred to the initial carrying - (26) (190)
amount of hedged items
Exchange fluctuations on translation of 1 27 (21)
foreign operations taken to equity
Exchange fluctuations on translation of (10) - -
foreign operations transferred to the
income statement
Tax recognised within other comprehensive 111 (253) 306
income
Other comprehensive income for the year 220 266 (387)
Total comprehensive income 13,229 6,604 15,575
Attributable to non-controlling interests 294 458 571
Attributable to members of BHP Billiton 12,935 6,146 15,004
Group
The accompanying notes form part of this financial information.
Consolidated Balance Sheet
as at 30 June 2010
30 June 30 June
2010 2009US$M
US$M
ASSETS
Current assets
Cash and cash equivalents 12,456 10,833
Trade and other receivables 6,543 5,153
Other financial assets 292 763
Inventories 5,334 4,821
Assets held for sale - 213
Current tax assets 189 424
Other 320 279
Total current assets 25,134 22,486
Non-current assets
Trade and other receivables 1,381 762
Other financial assets 1,510 1,543
Inventories 343 200
Property, plant and equipment 55,576 49,032
Intangible assets 687 661
Deferred tax assets 4,053 3,910
Other 168 176
Total non-current assets 63,718 56,284
Total assets 88,852 78,770
LIABILITIES
Current liabilities
Trade and other payables 6,467 5,619
Interest bearing liabilities 2,191 1,094
Liabilities held for sale - 363
Other financial liabilities 511 705
Current tax payable 1,685 1,931
Provisions 1,899 1,887
Deferred income 289 251
Total current liabilities 13,042 11,850
Non-current liabilities
Trade and other payables 469 187
Interest bearing liabilities 13,573 15,325
Other financial liabilities 266 142
Deferred tax liabilities 4,320 3,038
Provisions 7,433 7,032
Deferred income 420 485
Total non-current liabilities 26,481 26,209
Total liabilities 39,523 38,059
Net assets 49,329 40,711
EQUITY
Share capital - BHP Billiton Limited 1,227 1,227
Share capital - BHP Billiton Plc 1,116 1,116
Treasury shares (525) (525)
Reserves 1,906 1,305
Retained earnings 44,801 36,831
Total equity attributable to members of BHP 48,525 39,954
Billiton Group
Non-controlling interests 804 757
Total equity 49,329 40,711
The accompanying notes form part of this financial information.
Consolidated Cash Flow Statement
for the year ended 30 June 2010
Year Year Year
ended 30 ended 30 ended 30
June June June
2010US$M 2009US$M 2008US$M
Operating activities
Profit before taxation 19,572 11,617 23,483
Adjustments for:
Non-cash exceptional items (255) 5,460 137
Depreciation and amortisation expense 4,759 3,871 3,612
Exploration and evaluation expense (excluding 1,030 1,009 859
impairment)
Net gain on sale of non-current assets (114) (38) (129)
Impairments of property, plant and equipment, 35 190 137
financial assets and intangibles
Employee share awards expense 170 185 97
Financial income and expenses 459 543 662
Other (265) (320) (629)
Changes in assets and liabilities:
Trade and other receivables (1,713) 4,894 (4,255)
Inventories (571) (116) (1,313)
Trade and other payables 565 (847) 1,824
Net other financial assets and liabilities (90) (769) 526
Provisions and other liabilities (306) (497) 137
Cash generated from operations 23,276 25,182 25,148
Dividends received 20 30 51
Interest received 99 205 169
Interest paid (520) (519) (799)
Income tax refunded 552 - -
Income tax paid (4,931) (5,129) (5,867)
Royalty related taxation paid (576) (906) (885)
Net operating cash flows 17,920 18,863 17,817
Investing activities
Purchases of property, plant and equipment (9,323) (9,492) (7,558)
Exploration expenditure (including amounts (1,333) (1,243) (1,350)
expensed)
Purchase of intangibles (85) (141) (16)
Investment in financial assets (152) (40) (166)
Investment in subsidiaries, operations and (508) (286) (154)
jointly controlled entities, net of their
cash
Payment on sale of operations (156) (126) -
Cash outflows from investing activities (11,557) (11,328) (9,244)
Proceeds from sale of property, plant and 132 164 43
equipment
Proceeds from sale of financial assets 34 96 59
Proceeds from sale or partial sale of 376 17 78
subsidiaries, operations and jointly
controlled entities, net of their cash
Net investing cash flows (11,015) (11,051) (9,064)
Financing activities
Proceeds from interest bearing liabilities 567 7,323 7,201
Proceeds from debt related instruments 103 354 342
Repayment of interest bearing liabilities (1,155) (3,748) (7,951)
Proceeds from ordinary shares 12 29 24
Contributions from non-controlling interests 335 - -
Purchase of shares by Employee Share (274) (169) (250)
Ownership Plan Trusts
Share buy-back - BHP Billiton Plc - - (3,115)
Dividends paid (4,618) (4,563) (3,135)
Dividends paid to non-controlling interests (277) (406) (115)
Net financing cash flows (5,307) (1,180) (6,999)
Net increase in cash and cash equivalents 1,598 6,632 1,754
Cash and cash equivalents, net of overdrafts, 10,831 4,173 2,398
at beginning of year
Effect of foreign currency exchange rate 26 26 21
changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, 12,455 10,831 4,173
at end of year
The accompanying notes form part of this financial information.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010
For the year ended 30 June Attributable to members of the BHP Billiton
2010 Group
US$M Share capital Share Treasury Reserves
- BHP capital - shares
Billiton BHP Billiton
Limited Plc
Balance as at 1 July 2009 1,227 1,116 (525) 1,305
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension - - - -
and medical schemes
Net valuation gains on - - - 160
available for sale
investments taken to equity
Net valuation gains on - - - 2
available for sale
investments transferred to
the income statement
Losses on cash flow hedges - - - (15)
taken to equity
Realised losses on cash - - - 2
flow hedges transferred to
the income statement
Exchange fluctuations on - - - 1
translation of foreign
operations taken to equity
Exchange fluctuations on - - - (10)
translation of foreign
operations transferred to
the income statement
Tax recognised with other - - - 57
comprehensive income
Total comprehensive income - - - 197
Purchase of shares by ESOP - - (274) -
Trusts net of employee
contributions
Employee share awards - - 274 (88)
exercised following vesting
net of employee
contributions
Employee share awards - - - (28)
lapsed
Accrued employee - - - 170
entitlement for unvested
awards
Issue of share options to - - - 43
non-controlling interests
Distribution to option - - - (10)
holders
Dividends paid - - - -
Transactions with owners - - - - 317
contributed equity
Balance as at 30 June 2010 1,227 1,116 (525) 1,906
For the year ended 30 Attributable to members of
June 2010 the BHP Billiton Group
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance as at 1 July 36,831 39,954 757 40,711
2009
Profit after taxation 12,722 12,722 287 13,009
Other comprehensive
income:
Actuarial losses on (38) (38) - (38)
pension and medical
schemes
Net valuation gains on - 160 7 167
available for sale
investments taken to
equity
Net valuation gains on - 2 - 2
available for sale
investments transferred
to the income statement
Losses on cash flow - (15) - (15)
hedges taken to equity
Realised losses on cash - 2 - 2
flow hedges transferred
to the income statement
Exchange fluctuations - 1 - 1
on translation of
foreign operations
taken to equity
Exchange fluctuations - (10) - (10)
on translation of
foreign operations
transferred to the
income statement
Tax recognised with 54 111 - 111
other comprehensive
income
Total comprehensive 12,738 12,935 294 13,229
income
Purchase of shares by - (274) - (274)
ESOP Trusts net of
employee contributions
Employee share awards (178) 8 - 8
exercised following
vesting net of employee
contributions
Employee share awards 28 - - -
lapsed
Accrued employee - 170 - 170
entitlement for
unvested awards
Issue of share options - 43 16 59
to non-controlling
interests
Distribution to option - (10) (6) (16)
holders
Dividends paid (4,618) (4,618) (277) (4,895)
Transactions with - 317 20 337
owners - contributed
equity
Balance as at 30 June 44,801 48,525 804 49,329
2010
The accompanying notes form part of this financial information.
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010 (continued)
For the year ended 30 June Attributable to members of the BHP Billiton
2009 Group
US$M Share capital Share Treasury Reserves
- BHP capital - shares
Billiton BHP Billiton
Limited Plc
Balance as at 1 July 2008 1,227 1,116 (514) 750
Profit after taxation - - - -
Other comprehensive income:
Actuarial losses on pension - - - -
and medical schemes
Net valuation gains on - - - 3
available for sale
investments taken to equity
Net valuation gains on - - - 58
available for sale
investments transferred to
the income statement
Gains on cash flow hedges - - - 710
taken to equity
Realised losses on cash - - - 22
flow hedges transferred to
the income statement
Unrealised gain on cash - - - (48)
flow hedges transferred to
the income statement
Gains on cash flow hedges - - - (26)
transferred to initial
carrying amount of hedged
items
Exchange fluctuations on - - - 27
translation of foreign
operations taken to equity
Tax recognised within other - - - (342)
comprehensive income
Total comprehensive income - - - 404
Purchase of shares by ESOP - - (169) -
Trusts net of employee
contributions
Employee share awards - - 158 (34)
exercised following vesting
net of employee
contributions
Accrued employee - - - 185
entitlement for unvested
awards
Dividends paid - - - -
Transactions with owners - - - - -
contributed equity
Balance as at 30 June 2009 1,227 1,116 (525) 1,305
For the year ended 30 Attributable to members of
June 2009 the BHP Billiton Group
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance as at 1 July 35,756 38,335 708 39,043
2008
Profit after taxation 5,877 5,877 461 6,338
Other comprehensive
income:
Actuarial losses on (224) (224) (3) (227)
pension and medical
schemes
Net valuation gains on - 3 - 3
available for sale
investments taken to
equity
Net valuation gains on - 58 - 58
available for sale
investments
transferred to the
income statement
Gains on cash flow - 710 - 710
hedges taken to equity
Realised losses on - 22 - 22
cash flow hedges
transferred to the
income statement
Unrealised gain on - (48) - (48)
cash flow hedges
transferred to the
income statement
Gains on cash flow - (26) - (26)
hedges transferred to
initial carrying
amount of hedged items
Exchange fluctuations - 27 - 27
on translation of
foreign operations
taken to equity
Tax recognised within 89 (253) - (253)
other comprehensive
income
Total comprehensive 5,742 6,146 458 6,604
income
Purchase of shares by - (169) - (169)
ESOP Trusts net of
employee contributions
Employee share awards (104) 20 - 20
exercised following
vesting net of
employee contributions
Accrued employee - 185 - 185
entitlement for
unvested awards
Dividends paid (4,563) (4,563) (406) (4,969)
Transactions with - - (3) (3)
owners - contributed
equity
Balance as at 30 June 36,831 39,954 757 40,711
2009
Consolidated Statement of Changes in Equity
for the year ended 30 June 2010 (continued)
For the year ended 30 June Attributable to members of the BHP Billiton
2008 Group
US$M Share capital Share Treasury Reserves
- BHP capital - shares
Billiton BHP Billiton
Limited Plc
Balance as at 1 July 2007 1,221 1,183 (1,457) 991
Profit after taxation - - - -
Other comprehensive
income:
Actuarial losses on - - - -
pension and medical
schemes
Net valuation losses on - - - (76)
available for sale
investments taken to
equity
Losses on cash flow hedges - - - (383)
taken to equity
Realised losses on cash - - - 73
flow hedges transferred to
the income statement
Gains on cash flow hedges - - - (190)
transferred to initial
carrying amount of hedged
items
Exchange fluctuations on - - - (21)
translation of foreign
operations taken to equity
Tax recognised within - - - 229
other comprehensive income
Total comprehensive income - - - (368)
Exercise of Employee Share 6 - - -
Plan Options
BHP Billiton Plc shares - (67) - 67
bought back and cancelled
Purchase of shares by ESOP - - (250) -
Trusts net of employee
contributions
Employee share awards - - 260 (37)
exercised following
vesting net of employee
contributions
Shares bought back - - (3,075) -
Shares cancelled - - 4,008 -
Accrued employee - - - 97
entitlement for unvested
awards
Dividends paid - - - -
Transactions with owners - - - - -
contributed equity
Balance as at 30 June 2008 1,227 1,116 (514) 750
For the year ended 30 Attributable to members of
June 2008 the BHP Billiton Group
US$M Retained Total equity Non- Total
earnings attributable to controlling equity
members of BHP interests
Billiton Group
Balance as at 1 July 27,729 29,667 251 29,918
2007
Profit after taxation 15,390 15,390 572 15,962
Other comprehensive
income:
Actuarial losses on (95) (95) (1) (96)
pension and medical
schemes
Net valuation losses - (76) - (76)
on available for sale
investments taken to
equity
Losses on cash flow - (383) - (383)
hedges taken to equity
Realised losses on - 73 - 73
cash flow hedges
transferred to the
income statement
Gains on cash flow - (190) - (190)
hedges transferred to
initial carrying
amount of hedged items
Exchange fluctuations - (21) - (21)
on translation of
foreign operations
taken to equity
Tax recognised within 77 306 - 306
other comprehensive
income
Total comprehensive 15,372 15,004 571 15,575
income
Exercise of Employee - 6 - 6
Share Plan Options
BHP Billiton Plc - - - -
shares bought back and
cancelled
Purchase of shares by - (250) - (250)
ESOP Trusts net of
employee contributions
Employee share awards (204) 19 - 19
exercised following
vesting net of
employee contributions
Shares bought back - (3,075) - (3,075)
Shares cancelled (4,008) - - -
Accrued employee - 97 - 97
entitlement for
unvested awards
Dividends paid (3,133) (3,133) (113) (3,246)
Transactions with - - (1) (1)
owners - contributed
equity
Balance as at 30 June 35,756 38,335 708 39,043
2008
Notes to the Financial Information
1.Segment reporting
Business segments
The Group operates nine Customer Sector Groups aligned with the commodities
which we extract and market, reflecting the structure used by the Group`s
management to assess the performance of the Group:
Customer Sector Group Principal activities
Petroleum Exploration, development and production of oil and
gas
Aluminium Mining of bauxite, refining of bauxite into alumina
and smelting of alumina into aluminium metal
Base Metals Mining of copper, silver, lead, zinc, molybdenum,
uranium and gold
Diamonds and Mining of diamonds and titanium minerals; potash
Specialty Products development
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 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.
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2010
Revenue
Group production 8,682 2,948 9,528 1,272 3,311 10,964
Third party 86 1,405 881 - 306 67
products
Rendering of 3 - - - - 69
services
Inter-segment 11 - - - - 39
revenue
Total revenue (a) 8,782 4,353 10,409 1,272 3,617 11,139
Underlying EBITDA 6,571 684 5,393 648 1,085 6,496
(b)
Depreciation and (1,998) (278) (729) (163) (427) (495)
amortisation
Impairment
(losses)/reversals - - (32) - 10 -
recognised
Underlying EBIT 4,573 406 4,632 485 668 6,001
(b)
Comprising:
Group production 4,570 393 4,639 485 646 6,003
Third party 3 13 (7) - 22 (2)
products
Underlying EBIT 4,573 406 4,632 485 668 6,001
(b)
Net finance costs
Exceptional items
Profit before
taxation
Capital 1,951 1,019 763 127 265 3,838
expenditure
Total assets 12,733 8,078 14,970 2,588 4,507 13,592
Total liabilities 3,175 1,318 2,621 527 1,154 2,526
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June
2010
Revenue
Group production 2,143 6,019 3,214 - 48,081
Third party 7 - 1,051 802 4,605
products
Rendering of - 40 - - 112
services
Inter-segment - - - (50) -
revenue
Total revenue (a) 2,150 6,059 4,265 752 52,798
Underlying EBITDA 784 2,363 971 (482) 24,513
(b)
Depreciation and (72) (309) (228) (60) (4,759)
amortisation
Impairment
(losses)/reversals - (1) (13) 1 (35)
recognised
Underlying EBIT 712 2,053 730 (541) 19,719
(b)
Comprising:
Group production 717 2,053 642 (540) 19,608
Third party (5) - 88 (1) 111
products
Underlying EBIT 712 2,053 730 (541) 19,719
(b)
Net finance costs (459)
Exceptional items 312
Profit before 19,572
taxation
Capital 182 653 881 87 9,766
expenditure
Total assets 2,082 5,597 5,425 19,280 88,852
Total liabilities 794 1,475 1,965 23,968 39,523
(a) Revenue not attributable to reportable segments reflects sales of
freight and fuel to third parties.
(b) Underlying EBIT is earnings before net finance costs and taxation and
any exceptional items. Underlying EBITDA is Underlying EBIT before
depreciation, amortisation and impairments.
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2009
Revenue
Group production 6,924 3,219 6,616 896 2,202 9,815
Third party 192 932 488 - 112 132
products
Rendering of 6 - - - - 61
services
Inter-segment 89 - 1 - 41 40
revenue
Total revenue (a) 7,211 4,151 7,105 896 2,355 10,048
Underlying EBITDA 5,456 476 1,994 370 (366) 6,631
(b)
Depreciation and (1,288) (298) (663) (222) (439) (384)
amortisation
Impairment
(losses)/reversals (83) 14 (39) (3) (49) (18)
recognised
Underlying EBIT 4,085 192 1,292 145 (854) 6,229
(b)
Comprising:
Group production 4,081 202 1,326 145 (905) 6,022
Third party 4 (10) (34) - 51 207
products
Underlying EBIT 4,085 192 1,292 145 (854) 6,229
(b)
Net finance costs
Exceptional items
Profit before
taxation
Capital 1,905 863 1,018 112 685 1,922
expenditure
Total assets 12,444 7,575 14,812 2,073 4,767 8,735
Total liabilities 3,388 1,242 2,995 292 1,482 1,501
US$M Manganese Metallurgical Energy Group and BHP
Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30 June
2009
Revenue
Group production 2,473 7,988 3,830 - 43,963
Third party 63 18 2,694 1,467 6,098
products
Rendering of - 81 - 2 150
services
Inter-segment - - - (171) -
revenue
Total revenue (a) 2,536 8,087 6,524 1,298 50,211
Underlying EBITDA 1,397 4,988 1,676 (347) 22,275
(b)
Depreciation and (48) (277) (210) (42) (3,871)
amortisation
Impairment
(losses)/reversals - - (6) (6) (190)
recognised
Underlying EBIT 1,349 4,711 1,460 (395) 18,214
(b)
Comprising:
Group production 1,358 4,704 1,174 (396) 17,711
Third party (9) 7 286 1 503
products
Underlying EBIT 1,349 4,711 1,460 (395) 18,214
(b)
Net finance costs (543)
Exceptional items (6,054)
Profit before 11,617
taxation
Capital 279 1,562 876 114 9,336
expenditure
Total assets 1,454 4,929 4,555 17,426 78,770
Total liabilities 571 1,249 2,004 23,335 38,059
1.Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless Iron
Metals and Steel Ore
Specialty Materials
Products
Year ended 30 June
2008
Revenue
Group production 7,997 4,675 13,231 969 5,040 9,246
Third party 254 1,071 1,543 - 48 108
products
Rendering of 10 - - - - 63
services
Inter-segment 121 - - - - 38
revenue
Total revenue (a) 8,382 5,746 14,774 969 5,088 9,455
Underlying EBITDA 6,653 1,775 8,657 364 1,739 4,962
(b)
Depreciation and (1,113) (309) (658) (142) (450) (331)
amortisation
Impairment
(losses)/reversals (55) (1) (10) (33) (14) -
recognised
Underlying EBIT 5,485 1,465 7,989 189 1,275 4,631
(b)
Comprising:
Group production 5,483 1,445 8,190 189 1,275 4,748
Third party 2 20 (201) - - (117)
products
Underlying EBIT 5,485 1,465 7,989 189 1,275 4,631
(b)
Net finance costs
Exceptional items
Profit before
taxation
Capital 2,116 556 989 123 1,191 1,832
expenditure
Total assets 11,874 7,672 15,356 1,964 8,477 8,656
Total liabilities 2,980 1,308 4,197 270 1,202 1,862
US$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 68 61 2,639 1,763 7,555
products
Rendering of - 62 - 42 177
services
Inter-segment - - - (159) -
revenue
Total revenue (a) 2,912 3,941 6,560 1,646 59,473
Underlying EBITDA 1,692 1,209 1,326 (346) 28,031
(b)
Depreciation and (48) (272) (241) (48) (3,612)
amortisation
Impairment
(losses)/reversals - - (28) 4 (137)
recognised
Underlying EBIT 1,644 937 1,057 (390) 24,282
(b)
Comprising:
Group production 1,644 941 1,146 (395) 24,666
Third party - (4) (89) 5 (384)
products
Underlying EBIT 1,644 937 1,057 (390) 24,282
(b)
Net finance costs (662)
Exceptional items (137)
Profit before 23,483
taxation
Capital 155 500 438 29 7,929
expenditure
Total assets 1,688 3,916 5,173 11,232 76,008
Total liabilities 534 1,269 3,174 20,169 36,965
1.Segment reporting (continued)
Geographical information
Revenue by location of customer 2010 2009 2008
US$M US$M US$M
Australia 4,515 4,621 5,841
United Kingdom 1,289 3,042 3,091
Rest of Europe 8,554 7,764 11,258
China 13,236 9,873 11,670
Japan 5,336 7,138 6,885
Other Asia 9,840 9,280 10,111
North America 5,547 4,020 4,771
South America 2,013 1,652 2,640
Southern Africa 1,227 1,374 2,003
Rest of world 1,241 1,447 1,203
52,798 50,211 59,473
Non-current assets by location of assets (a) 2010 2009 2008
US$M US$M US$M
Australia 35,267 28,779 28,166
United Kingdom 316 245 388
North America 7,143 7,382 7,050
South America 9,230 9,163 8,823
Southern Africa 5,466 4,286 3,883
Rest of world 733 976 1,084
Unallocated assets 5,563 5,453 4,934
63,718 56,284 54,328
(a) Non-current assets attributed to geographical locations exclude deferred
tax assets and other financial assets.
2.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.
Year ended 30 June 2010 GrossUS$M TaxUS$M NetUS$M
Exceptional items by category
Pinal Creek rehabilitation 186 (53) 133
Disposal of Ravensthorpe nickel operations 653 (196) 457
Restructuring of operations and deferral of (298) 12 (286)
projects
Renegotiation of power supply agreements (229) 50 (179)
Release of income tax provisions - 128 128
312 (59) 253
Pinal Creek rehabilitation:
On 22 February 2010 a settlement was reached in relation to the Pinal Creek
(US) groundwater contamination which resulted in other parties taking on
full responsibility for ground water remediation and partly funding the
Group for past and future rehabilitation costs. As a result, a gain of
US$186 million (US$53 million tax expense) has been recognised reflecting
the release of rehabilitation provisions and cash received.
Disposal of Ravensthorpe nickel operations:
On 9 December 2009, the Group announced it had signed an agreement to sell
the Ravensthorpe nickel operations (Australia). The sale was completed on 10
February 2010. As a result of the sale, impairment charges recognised as
exceptional items in the financial year ended 30 June 2009 have been
partially reversed totalling US$611 million (US$183 million tax expense). In
addition, certain obligations that remained with the Group were mitigated
and related provisions released; together with minor net operating costs
this resulted in a gain of US$42 million (US$13 million tax expense).
Restructuring of operations and deferral of projects:
Continuing power supply constraints impacting the Group`s three Aluminium
smelters in southern Africa, and temporary delays with the Guinea Alumina
project, have given rise to charges for the impairment of property, plant
and equipment and restructuring provisions. A total charge of US$298 million
(US$12 million tax benefit) was recognised by the Group in the year ended 30
June 2010.
Renegotiation of power supply arrangements:
Renegotiation of long term power supply arrangements in southern Africa have
impacted the value of embedded derivatives contained within those
arrangements. A total charge of US$229 million (US$50 million tax benefit)
was recognised by the Group in the year ended 30 June 2010.
Release of income tax provisions:
The Australian Taxation Office (ATO) issued amended assessments in prior
years denying bad debt deductions arising from the investments in Hartley,
Beenup and Boodarie Iron and the denial of capital allowance claims made on
the Boodarie Iron project. BHP Billiton lodged objections and has been
successful on all counts in the Federal Court and the Full Federal Court.
The ATO has not sought to appeal the Boodarie Iron bad debt disallowance but
has sought special leave to appeal to the High Court in relation to the
Beenup bad debt disallowance and the denial of the capital allowance claims
on the Boodarie Iron project. These outcomes have resulted in a release of
US$128 million from the Group`s income tax provision. The special leave to
appeal to the High Court is scheduled to be heard on 3 September 2010. The
decision of the High Court at that time may result in an additional
adjustment to the Group`s income tax provision.
Year ended 30 June 2009 GrossUS$M TaxUS$M NetUS$M
Exceptional items by category
Suspension of Ravensthorpe nickel operations (3,615) 1,076 (2,539)
Announced sale of Yabulu refinery (510) (175) (685)
Withdrawal or sale of other operations (665) (23) (688)
Deferral of projects and restructuring of (306) 86 (220)
operations
Newcastle steelworks rehabilitation (508) 152 (356)
Lapsed offers for Rio Tinto (450) 93 (357)
(6,054) 1,209 (4,845)
Suspension of Ravensthorpe nickel operations:
On 21 January 2009 the Group announced the suspension of operations at
Ravensthorpe nickel operations and as a consequence stopped the processing
of the mixed nickel cobalt hydroxide product at Yabulu (Australia). As a
result, charges relating to impairment, increased provisions for contract
cancellation, redundancy and other closure costs of US$3,615 million
(US$1,076 million tax benefit) were recognised. This exceptional item did
not include the loss from operations of Ravensthorpe nickel operations of
US$173 million.
Announced sale of Yabulu refinery:
On 3 July 2009 the Group announced the sale of the Yabulu nickel operations.
As a result, impairment charges of US$510 million (US$nil tax benefit) were
recognised in addition to those recognised on suspension of the Ravensthorpe
nickel operations. As a result of the sale, deferred tax assets of US$175
million were no longer expected to be realised by the Group and were
recognised as a charge to income tax expense. The remaining assets and
liabilities of the Yabulu operations were classified as held for sale as at
30 June 2009.
Withdrawal or sale of other operations:
As part of the Group`s regular review of the long term viability of
operations, a total charge of US$665 million (US$23 million tax expense) was
recognised primarily in relation to the decisions to cease development of
the Maruwai Haju trial mine (Indonesia), sell the Suriname operations,
suspend copper sulphide mining operations at Pinto Valley (US) and cease the
pre-feasibility study at Corridor Sands (Mozambique). The remaining assets
and liabilities of the Suriname operations were classified as held for sale
as at 30 June 2009.
Deferral of projects and restructuring of operations:
As part of the Group`s regular review of the long term viability of
continuing operations, a total charge of US$306 million (US$86 million tax
benefit) was recognised primarily in relation to the deferral of expansions
at the Nickel West operations (Australia), deferral of the Guinea Alumina
project (Guinea) and the restructuring of the Bayside Aluminium Casthouse
operations (South Africa).
Newcastle steelworks rehabilitation:
The Group recognised a charge of US$508 million (US$152 million tax benefit)
for additional rehabilitation obligations in respect of former operations at
the Newcastle steelworks (Australia). The increase in obligations related
to changes in the estimated volume of sediment in the Hunter River requiring
remediation and treatment, and increases in estimated treatment costs.
Lapsed offers for Rio Tinto:
The Group`s offers for Rio Tinto lapsed on 27 November 2008 following the
Board`s decision that it no longer believed that completion of the offers
was in the best interests of BHP Billiton shareholders. The Group incurred
fees associated with the US$55 billion debt facility (US$156 million cost,
US$31 million tax benefit), investment bankers`, lawyers` and accountants
fees, printing expenses and other charges (US$294 million cost, US$62
million tax benefit) in progressing this matter over the eighteen months up
to the lapsing of the offers which were expensed in the year ended 30 June
2009.
Year ended 30 June 2008 GrossUS$M TaxUS$M NetUS$M
Exceptional items by category
Recognition of benefit of tax losses in respect
of the acquisition of WMC and consequent (137) 159 22
reduction in goodwill
(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 on acquisition pending a ruling application to the
Australian Taxation Office. The ruling was 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$38 million) through income tax expense at current exchange
rates. As a further consequence, the Group recognised an expense for a
corresponding reduction in goodwill measured at the exchange rate at the
date of acquisition.
3.Interests in jointly controlled entities
Major shareholdings Ownership interest at BHP Contribution to profit after
in jointly Billiton Group reporting taxation
controlled entities date (a)
2010% 2009% 2008% 2010US$M 2009US$M 2008US$M
Mozal SARL 47.1 47.1 47.1 4 84 207
Compania Minera 33.75 33.75 33.75 438 185 615
Antamina SA
Minera Escondida 57.5 57.5 57.5 2,175 422 3,930
Limitada
Samarco Mineracao 50 50 50 430 340 279
SA
Carbones del 33.33 33.33 33.33 172 243 183
Cerrej'n LLC
Other (b) (145) 159 90
Total 3,074 1,433 5,304
(a) The ownership interest at the Group`s and the jointly controlled
entity`s reporting date are the same. When the annual financial reporting
date is different to the Group`s, financial information is obtained as at 30
June in order to report on a basis consistent with the Group`s reporting
date.
(b) Includes the impairment of property, plant and equipment at the Guinea
Alumina project (ownership interest 33.3 per cent, 2009: 33.3 per cent,
2008: 33.3 per cent), the Group`s interest in the earnings of Richards Bay
Minerals joint venture (ownership interest 37.76 per cent, 2009: 50 per
cent; 2008: 50 per cent) and the results of other immaterial jointly
controlled entities.
4.Net finance costs
2010US$M 2009US$M 2008US$M
Financial expenses
Interest on bank loans and overdrafts 24 47 52
Interest on all other borrowings 460 527 670
Finance lease and hire purchase interest 14 15 14
Dividends on redeemable preference shares - 1 1
Discounting on provisions and other liabilities 359 315 310
Discounting on post-retirement employee benefits 130 132 138
Interest capitalised (a) (301) (149) (204)
Fair value change on hedged loans 131 390 259
Fair value change on hedging derivatives (138) (377) (257)
Exchange variations on net debt (5) (49) (28)
674 852 955
Financial income
Interest income (117) (198) (168)
Expected return on pension scheme assets (98) (111) (125)
(215) (309) (293)
Net finance costs 459 543 662
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where
financed through general borrowings, at a capitalisation rate representing
the average interest rate on such borrowings. For the year ended 30 June
2010 the capitalisation rate was 3.5 per cent (2009: 4.25 per cent; 2008:
5.0 per cent).
5.Taxation
2010US$M 2009US$M 2008US$M
Taxation expense including royalty related
taxation
UK taxation expense 178 319 217
Australian taxation expense 3,798 3,158 3,397
Overseas taxation expense 2,587 1,802 3,907
Total taxation expense 6,563 5,279 7,521
Total taxation expense including royalty related taxation and tax on
exceptional items was US$6,563 million, representing an effective rate of
33.5 per cent (2009: 45.4 per cent, 2008: 32.0 per cent). Excluding the
impacts of exceptional items the taxation expense was US$6,504 million
(2009: US$6,488 million; 2008: US$7,680 million).
Exchange rate movements increased taxation expense by US$106 million (2009:
increase of US$444 million, 2008: decrease of US$229 million) predominantly
due to the revaluation of local currency tax liabilities and other monetary
items which amounted to US$502 million. This was offset by the increase in
the US dollar value of future tax depreciation of US$396 million.
Royalty-related taxation represents an effective rate of 2.3 per cent (2009:
4.3 per cent, 2008: 3.1 per cent). Excluding the impacts of royalty-related
taxation, the impact of exchange rate movements and tax on exceptional items
the underlying effective rate was 30.9 per cent (2009: 31.4 per cent, 2008:
30.4 per cent).
6.Earnings per share
2010 2009 2008
Basic earnings per ordinary share (US cents) 228.6 105.6 275.3
Diluted earnings per ordinary share (US cents) 227.8 105.4 274.8
Basic earnings per American Depositary Share (ADS) (US 457.2 211.2 550.6
cents) (a)
Diluted earnings per American Depositary Share (ADS) 455.6 210.8 549.6
(US cents) (a)
Basic earnings (US$M) 12,722 5,877 15,390
Diluted earnings (US$M) (b) 12,743 5,899 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:
Weighted average number of shares 2010Million 2009Million 2008
Million
Basic earnings per ordinary share 5,565 5,565 5,590
denominator
Shares and options contingently issuable 30 33 15
under employee share ownership plans
Diluted earnings per ordinary share 5,595 5,598 5,605
denominator
(a) Each American Depositary Share (ADS) represents two ordinary shares.
(b) Diluted earnings are calculated after adding back dividend equivalent
payments of US$21 million (2009: US$22 million; 2008: US$12 million) that
would not be made if potential ordinary shares were converted to fully paid.
7.Dividends
2010US$M 2009US$M 2008US$M
Dividends paid during the period
BHP Billiton Limited 2,787 2,754 1,881
BHP Billiton Plc - Ordinary shares 1,831 1,809 1,252
- Preference shares (a) - - -
4,618 4,563 3,133
Dividends declared in respect of the period
BHP Billiton Limited 2,921 2,754 2,351
BHP Billiton Plc - Ordinary shares 1,920 1,809 1,545
- Preference shares (a) - - -
4,841 4,563 3,896
2010US 2009US 2008US
cents cents cents
Dividends paid during the period (per
share)
Prior year final dividend 41.0 41.0 27.0
Interim dividend 42.0 41.0 29.0
83.0 82.0 56.0
Dividends declared in respect of the
period (per share)
Interim dividend 42.0 41.0 29.0
Final dividend 45.0 41.0 41.0
87.0 82.0 70.0
Dividends are declared after period end in the announcement of the results
for the period. Interim dividends are declared in February and paid in
March. Final dividends are declared in August and paid in September.
Dividends declared are not recorded as a liability at the end of the period
to which they relate. Subsequent to year end, on 25 August 2010, BHP
Billiton declared a final dividend of 45.0 US cents per share (US$2,504
million), which will be paid on 30 September 2010 (2009: 41.0 US cents per
share - US$2,281 million; 2008: 41.0 US cents per shares - US$2,282
million).
BHP Billiton Limited dividends for all periods presented are, or will be,
fully franked based on a tax rate of 30 per cent.
2010US$M 2009US$M 2008US$M
Franking credits as at 30 June 3,861 2,506 1,623
Franking credits arising from the payment of
current tax payable 818 1,265 818
Total franking credits available (b) 4,679 3,771 2,441
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each declared
and paid annually (2009: 5.5 per cent; 30 2008: 5.5 per cent).
(b) The payment of the final 2010 dividend declared after 30 June 2010 will
reduce the franking account balance by US$648 million.
8.Subsequent events
Other than the matters outlined elsewhere in this news release, no matters
or circumstances have arisen since the end of the financial year that have
significantly affected, or may significantly affect, the operations, results
of operations or state of affairs of the Group in subsequent accounting
periods.
25 August 2010
Date: 25/08/2010 08:59:01 Supplied by www.sharenet.co.za
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