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BIL - BHP Billiton Plc - Report for the half year ended 31 December 2011
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
08 February 2012
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 2011
This statement includes the consolidated results of the BHP Billiton Group,
comprising BHP Billiton Limited and BHP Billiton Plc, for the half year ended 31
December 2011 compared with the half year ended 31 December 2010.
The results are prepared in accordance with IFRS and are presented in US
dollars.
Headline Earnings
In accordance with the JSE Listing Requirements, Headline Earnings is presented
below.
Half Year Half Year Year
Ended Ended ended
31 31 December 30 June
December
2011 2010 2011
Earnings attributable to ordinary shareholders 9,941 10,524 23,648
Adjusted for:
Cost relating to the withdrawn offer for Potash - 314 314
Corporation of Saskatchewan
Gain on sale of PP&E, Investments and (87) (44) (41)
Operations
Impairments/(reversal of impairments) 19 47 74
Recycling of re-measurements from equity to the 1 (27) (38)
income statement
Tax effect of above adjustments 17 (1) (11)
Subtotal of Adjustments (50) 289 298
Headline Earnings 9,891 10,813 23,946
Diluted Headline Earnings 9,891 10,825 23,946
Basic earnings per share denominator (millions) 5,323 5,563 5,511
Diluted earnings per share denominator 5,346 5,588 5,540
(millions)
Headline Earnings per share (US cents) 185.8 194.4 434.5
Diluted Headline Earnings per share (US cents) 185.0 193.7 432.2
NEWS RELEASE
08 February 2012
05/12
BHP BILLITON RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011
*Strong financial results with Underlying EBITDA(1) up 8% to US$18.7 billion and
Underlying EBIT(1)(2) up 6% to US$15.7 billion. Attributable profit down 6% and
Attributable profit excluding exceptional items(3) down 7% to US$9.9 billion.
*Underlying EBIT margin(4) remained in excess of 40% despite significant
volatility across many of our core markets while Underlying return on capital
was 28%.
*Record production for two commodities and six operations.
*Robust operating cash flow(5) of US$12.3 billion and a rigorous project
approvals process underpin our fundamental commitment to a solid A credit
rating.
*Gearing increased to 25% following the successful acquisition of Petrohawk
Energy Corporation. We will continue to focus efforts on the most productive
areas of our high quality Onshore US acreage as we strive to maximise economic
returns from our investment program.
*Interim dividend of 55 US cents per share, up 20%.
Half year ended 31 December 2011 US$M 2010 US$M Change %
Revenue 37,480 34,166 9.7%
Underlying EBITDA(1) 18,743 17,304 8.3%
Underlying EBIT(1)(2) 15,689 14,829 5.8%
Profit from operations 15,689 14,515 8.1%
Attributable profit - excluding exceptional 9,941 10,700 (7.1%)
items
Attributable profit 9,941 10,524 (5.5%)
Net operating cash flow(5) 12,280 12,193 0.7%
Basic earnings per share - excluding 186.8 192.4 (2.9%)
exceptional items (US cents)
Basic earnings per share (US cents) 186.8 189.2 (1.3%)
Underlying EBITDA interest coverage 60.5 77.6 (22.0%)
(times)(1)(3)
Dividend per share (US cents) 55.0 46.0 19.6 %
The financial report on pages 19 to 46 is prepared in accordance with IFRS. This
news release including the financial report is unaudited. Refer to page 15 for
footnotes, including explanations of the non-IFRS measures used in this
announcement. Variance analysis relates to the relative financial and/or
production performance of BHP Billiton and/or its operations during the December
2011 half year compared with the December 2010 half year, unless otherwise
noted.
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2011
Strong financial results
BHP Billiton`s diversified portfolio of world class minerals and energy assets
delivered another strong set of financial results. Underlying EBITDA for the
December 2011 half year increased by eight per cent to US$18.7 billion while the
Group`s Underlying EBIT margin remained in excess of 40 per cent despite
significant volatility across many of BHP Billiton`s core markets. Underlying
return on capital remained at the robust level of 28 per cent. The substantial
rebasing of the company`s progressive dividend at the end of the 2011 financial
year facilitated a 20 per cent increase in the interim dividend to 55 US cents
per share.
Record Western Australia Iron Ore production and stronger bulk commodity and
petroleum product prices were the major catalysts for the six per cent increase
in Underlying EBIT. A series of operational challenges did, however, constrain
margins across the broader portfolio as the temporary reduction in production at
leading businesses such as Escondida (Chile) and Queensland Coal (Australia)
further exacerbated underlying cost pressure.
Flexibility and focus
Importantly, those same challenges provide us with a significant opportunity as
the release of latent capacity across a number of our major businesses is
expected to underpin strong, positive momentum in the short to medium term. As
an example, Escondida copper production is expected to increase substantially
from the annualised rate recorded in the December 2011 half year as mining
operations progress towards the remaining higher grade ore in the main pit.
Similarly, we retain significant flexibility within our extensive investment
pipeline. In that regard, we will intensify our focus on businesses where a
sustainable competitive advantage exists and superior investment returns can be
generated. Our growth projects in execution now exceed US$27 billion(6).
Robust operating cash flow of US$12.3 billion in the December 2011 half year and
our rigorous project approvals process underpin our fundamental commitment to a
solid A credit rating. Portfolio management will also remain an integral
component of our overarching strategy, consistent with our commitment to
maintain a simple and scalable organisation.
Prioritising development of the liquids rich Eagle Ford shale
BHP Billiton`s net gearing ratio increased to 25 per cent in the December 2011
half year following our successful acquisition of Petrohawk Energy Corporation.
We are pleased to report that the majority of Petrohawk`s highly skilled
operating team have been retained with the strong production results for the
December 2011 quarter a testament to the smooth nature of the transition
process.
Onshore US drilling and development expenditure totalled US$1.3 billion during
the December 2011 half year. In the current environment of depressed gas prices,
we will continue to focus our efforts on the most productive areas of our high
quality acreage as we strive to maximise the economic returns from our
investment program. The development of the liquids rich Eagle Ford shale and our
exploration activity within the Permian Basin is a priority and is expected to
underpin an increase in the valuable liquids contribution to 20 per cent of
total Onshore US production by the end of the 2015 financial year.
Outlook
Economic outlook
The first half of the 2012 financial year had its challenges in terms of global
economic growth reflecting continued difficulties in Europe and slowing levels
of activity in the high growth economies of China and India. Two bright spots
were the United States, which saw stronger growth on the back of robust
performance in the manufacturing sector, and Japan, which saw a rebound in
activity following the impacts of the March 2011 tsunami.
Barring an acceleration of activity in the United States housing market, both of
these developed economies are likely to see modest growth in the coming quarters
as the challenging global economic environment and generally weak consumer
confidence is expected to weigh on underlying activity. Our base case is a
protracted recovery for the developed world with the disorderly unwinding of
European government debt remaining one of the key downside risks.
In China, after an extended period of policy tightening, the expected slowdown
in fixed asset investment and industrial production is now occurring. As a
result, growth rates are weaker although there is evidence that monetary policy
is becoming more accommodating. Providing there are no large external shocks, it
is expected that China will pursue targeted, albeit moderate measures to support
balanced growth in its economy. While Indian growth contracted more quickly than
anticipated as inflation forced policy makers to tighten aggressively, inflation
has started to slow, which in time is expected to increase the scope for the
relaxation of monetary policy.
In the longer term, we remain positive on the outlook for the global economy as
the drivers of urbanisation and industrialisation in China, India and other
emerging economies are expected to underpin global growth and robust commodities
demand.
Commodities outlook
Prices for many of BHP Billiton`s products declined during the latter part of
the 2011 calendar year as concerns surrounding broader European liquidity
culminated in a general deterioration in commodities demand. We expect
volatility in commodity markets to persist as the European sovereign debt crisis
and general weakness in the manufacturing and construction sectors across key
markets are expected to weigh on customer behaviour and sentiment.
However, we expect underlying demand growth rates to remain robust, so long as
the macroeconomic policy setting of the developing world retains a growth bias.
Of the commodities, copper and iron ore are expected to remain supported by
their compelling supply-demand fundamentals while the structural shift in
Chinese demand for metallurgical coal remains well entrenched. Geopolitical
factors are once again likely to influence crude oil pricing. In contrast, the
outlook for the aluminium, nickel and manganese alloy industries remains
challenging and has led to significant margin compression for most producers,
almost irrespective of their position on the various global cost curves.
In the longer term, we expect the rate of growth in steelmaking raw materials
demand, particularly in China, to decelerate as underlying economic growth rates
revert to a more sustainable level. Slowing activity in the steel intensive
construction and infrastructure sectors is, however, expected to be partially
offset by robust growth in consumption related sectors such as machinery and
transportation, thereby supporting the fundamentals for iron ore and
metallurgical coal. More broadly, higher cost sources of new supply will be
required in an expanding market which, in turn, are expected to support long run
margins for the incumbent low cost producers such as BHP Billiton.
Development projects
BHP Billiton approved five major projects during the December 2011 half year for
a total investment commitment of US$4.0 billion (BHP Billiton share).
Significant growth projects in the Metallurgical Coal and Energy Coal businesses
moved into execution while pre-commitment expenditure of US$1.2 billion for the
first phase of the Olympic Dam Project (Australia) was activated following
environmental approval by the Government of South Australia and the
Commonwealth, and the successful passage of the Indenture agreement through the
South Australian Parliament. Subsequent to period end, BHP Billiton also
announced the approval of US$779 million (BHP Billiton share) in pre-commitment
funding for the first phase of the Western Australia Iron Ore (WAIO) Outer
Harbour Development. Our growth projects in execution now exceed US$27
billion(6), of which US$17 billion was yet to be invested as at 31 December
2011.
Two major projects were completed in the six month period: WAIO Rapid Growth
Project 5 (RGP5) and the North West Shelf CWLH Life Extension project
(Australia).
Projects completed during the December 2011 half year
Customer Project Capacity(i) Capital expenditure Date of initial
Sector (US$M)(i) production(ii)
Group
Budget Actual Target Actual
Petroleum North West Shelf Replacement 245 211(iii) 2011 Q3
CWLH Life vessel with 2011
Extension capacity of
(Australia) BHP 60,000 barrels
Billiton - of oil per
16.67% day.
Iron Ore WAIO Rapid Project 4,800 4,800(iii) H2 Q3
Growth Project 5 integrated 2011 2011
(Australia) BHP into
Billiton - 85% subsequent
expansion
approvals that
will increase
WAIO capacity
to 220 million
tonnes per
annum(iv).
5,045 5,011
(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) Consistent with the revised scope of the iron ore development sequence.
Projects approved during the December 2011 half year
Customer Project Capacity(i) Budgeted Target datefor
Sector Group capital initial
expenditure production(ii)
(US$M)(i)
Petroleum North West To maintain LNG 400 2016
Shelf Greater plant throughput
Western Flank- from the North West
A (Australia) Shelf operations.
BHP Billiton -
16.67%
Iron Ore WAIO Orebody Maintains iron ore 698 H2 2012
24 (Australia) production output
BHP Billiton - from the Newman
85% Joint Venture
operations.
Metallurgical Caval Ridge Greenfield mine 2,100(iii) 2014
Coal (Australia) development and
BHP Billiton - expansion of the
50% Peak Downs Mine
with capacity to
produce 8 million
tonnes per annum of
export
metallurgical coal.
Energy Coal Cerrejon P40 Increases saleable 437 2013
Project thermal coal
(Colombia) BHP production by 8
Billiton - million tonnes per
33.3% annum to
approximately 40
million tonnes per
annum.
Newcastle Increases total 367 2014
Third Port coal terminal
Project Stage capacity from 53
3 (Australia) million tonnes per
BHP Billiton - annum to 66 million
35.5% tonnes per annum.
4,002
(i) All references to capital expenditure are BHP Billiton`s share unless noted
otherwise. All references to capacity are 100 per cent unless noted otherwise.
(ii) References are based on calendar years.
(iii) Excludes announced pre-commitment funding.
Projects currently under development (approved in prior years)
Customer Project Capacity(i) Budgeted Target date
Sector Group capital for initial
expenditure production(ii)
(US$M)(i)
Petroleum Macedon 200 million cubic 1,050 2013
(Australia) feet of gas per day.
BHP Billiton
- 71.43%
Bass Strait 10,000 barrels of 900(iii) 2012(iii)(iv)
Kipper condensate per day
(Australia) and processing
BHP Billiton capacity of 80
- 32.5% - 50% million cubic feet
of gas per day.
Bass Strait 11,000 barrels of 1,350(iii) 2013(iii)
Turrum condensate per day
(Australia) and processing
BHP Billiton capacity of 200
- 50% million cubic feet
of gas per day.
North West 2,500 million cubic 850 2013
Shelf North feet of gas per day.
Rankin B Gas
Compression
(Australia)
BHP Billiton
- 16.67%
Aluminium Worsley 1.1 million tonnes 2,995(iii) Q1 2012(iii)
Efficiency per annum of
and Growth additional alumina
(Australia) capacity.
BHP Billiton
- 86%
Base Metals Antamina Increases ore 435 Q1 2012(iii)
Expansion processing capacity
(Peru) BHP to 130,000 tonnes
Billiton - per day.
33.75%
Escondida Ore The relocation of 319 Q2 2012
Access the in-pit crushing
(Chile) BHP and conveyor
Billiton - infrastructure
57.5% provides access to
higher grade ore.
Diamonds & EKATI Misery Project consists of 323 2015
Specialty Open Pit a pushback of the
Products Project existing Misery open
(Canada) BHP pit which was mined
Billiton - from 2001 to 2005.
80%
Iron Ore WAIO Increases mining and 3,300(v) Q1 2014
Jimblebar processing capacity
Mine to 35 million tonnes
Expansion per annum.
(Australia)
BHP Billiton
- 96%
WAIO Port Increases total 1,900(v) H2 2012
Hedland Inner inner harbour
Harbour capacity to 220
Expansion million tonnes per
(Australia) annum with
BHP Billiton debottlenecking
- 85% opportunities to 240
million tonnes per
annum.
WAIO Port Optimises resource 1,400(v) H2 2014
Blending and and enhances
Rail Yard efficiency across
Facilities the WAIO supply
(Australia) chain.
BHP Billiton
- 85%
Samarco Increases iron ore 1,750 H1 2014
Fourth Pellet pellet production
Plant capacity by 8.3
(Brazil) BHP million tonnes per
Billiton - annum to 30.5
50% million tonnes per
annum.
Metallurgical Daunia Greenfield mine 800 2013
Coal (Australia) development with
BHP Billiton capacity to produce
- 50% 4.5 million tonnes
per annum of export
metallurgical coal.
Broadmeadow Increases productive 450 2013
Life capacity by 0.4
Extension million tonnes per
(Australia) annum and extends
BHP Billiton the life of the mine
- 50% by 21 years.
Hay Point Increases port 1,250(v) 2014
Stage Three capacity from 44
Expansion million tonnes per
(Australia) annum to 55 million
BHP Billiton tonnes per annum and
- 50% reduces storm
vulnerability.
Energy Coal RX1 Project Increases run-of- 400 H2 2012(iii)
(Australia) mine thermal coal
BHP Billiton production by
- 100% approximately 4
million tonnes per
annum.
19,472
(i) All references to capital expenditure are BHP Billiton`s share unless noted
otherwise. All references to capacity are 100 per cent unless noted otherwise.
(ii) References are based on calendar years.
(iii) As per revised budget and/or schedule.
(iv) Facilities ready for first production pending resolution of mercury
content.
(v) Excludes announced pre-commitment funding.
Income statement
To provide clarity into the underlying performance of our operations we present
Underlying EBIT, which is a measure used internally and in our Supplementary
Information, that excludes any exceptional items. The difference between
Underlying EBIT and Profit from operations is set out in the following table:
Half year ended 31 December 2011 US$M 2010 US$M
Underlying EBIT 15,689 14,829
Exceptional items (before taxation) - (314)
Profit from operations 15,689 14,515
Underlying EBIT
The following table and commentary describes the approximate impact of the
principal factors that affected Underlying EBIT for the December 2011 half year
compared with the December 2010 half year:
US$M US$M
Underlying EBIT for the half year ended 31 14,829
December 2010
Change in volumes:
Increase in volumes 1,415
Decrease in volumes (1,899)
(484)
Net price impact:
Change in sales prices 2,895
Price linked costs (120)
2,775
Change in costs:
Costs (rate and usage) (1,902)
Exchange rates 543
Inflation on costs (401)
(1,760)
Asset sales 43
Ceased and sold operations 145
New and acquired operations 252
Exploration and business development (381)
Other 270
Underlying EBIT for the half year ended 31 15,689
December 2011
Volumes
Record production was achieved for iron ore and natural gas in the December 2011
half year.
Western Australia Iron Ore production rose to a record annualised rate of 178
million tonnes per annum (100 per cent basis) during the December 2011 quarter,
reflecting the ramp up of Ore Handling Plant 3 at Yandi, dual tracking of the
company`s rail infrastructure and additional ship loading capacity at Port
Hedland. The well timed growth in iron ore volumes increased Underlying EBIT by
US$1.2 billion in the December 2011 half year. In Energy Coal, stronger volumes
and a higher proportion of export sales, largely associated with the accelerated
expansion of our New South Wales Energy Coal business (Australia), increased
Underlying EBIT by US$65 million in the period.
Notwithstanding the step change in performance achieved within those businesses,
broader production challenges across the portfolio resulted in total volume
related decline in Underlying EBIT of US$484 million during the December 2011
half year. A temporary reduction in copper production at Escondida, as a result
of lower grades and industrial action, was the primary driver of the decline
while industrial action and the remnant effects of wet weather continued to
constrain the performance of our leading Queensland Coal business.
Prices
Prices for many of BHP Billiton`s products declined during the latter part of
the 2011 calendar year as concerns surrounding broader European liquidity
culminated in a general deterioration in commodities demand. Despite that broad
based correction, higher average realised prices increased Underlying EBIT by
US$2.8 billion during the December 2011 half year, net of price linked costs.
Our key steelmaking raw materials remained well supported by strong underlying
demand from emerging economies such as China and India. In that regard, higher
average realised prices for iron ore and metallurgical coal increased Underlying
EBIT by US$2.0 billion in the December 2011 half year.
In our Petroleum business, a 38 per cent and 35 per cent increase in average
realised oil and liquefied natural gas prices, respectively, contributed to a
US$1.3 billion price related increase in Underlying EBIT in the December 2011
half year. In addition, higher average realised energy coal prices increased
Underlying EBIT by a further US$436 million in the period.
Prices for our non-ferrous products were most affected by the decline in global
economic activity and the associated shift in market sentiment. Lower average
realised metals prices reduced Underlying EBIT across our Base Metals and
Stainless Steel Materials businesses by a combined US$857 million.
Costs
Industry wide cost pressures remain a feature of the operating environment as
consumable, labour and contractor costs continue to reflect an elevated level of
mining activity. Excluding the impacts of inflation, exchange rate volatility
and non-cash items, costs reduced Underlying EBIT by US$1.6 billion during the
December 2011 half year. Broad increases in labour and contractor costs
accounted for the majority of the reduction while the temporary decline in
production at both Escondida and Queensland Coal represented another notable
impact.
Non-cash items reduced Underlying EBIT by a further US$317 million reflecting
the ongoing delivery of our organic growth program and exchange rate related
adjustments on the carrying value of inventory.
Exchange rates
The cost related impact of the stronger Australian dollar that persisted for
much of the December 2011 half year reduced Underlying EBIT by US$632 million.
However, the general strengthening of the US dollar against a basket of
currencies at the end of the period led to a US$1.0 billion increase in
Underlying EBIT related to the positive restatement of monetary items in the
balance sheet. In total, exchange rate volatility increased Underlying EBIT by
US$543 million in the December 2011 half year.
The following exchange rates against the US dollar have been applied:
Average Average
Half year Half year As at As at As at
ended ended 31 December 31 December 30 June
31 December 31 December 2011 2010 2011
2011 2010
Australian 1.03 0.94 1.01 1.02 1.07
dollar(i)
Chilean peso 491 496 520 468 470
Colombian 1,857 1,848 1,941 1,920 1,779
peso
Brazilian 1.70 1.72 1.87 1.66 1.57
real
South 7.61 7.13 8.18 6.63 6.80
African rand
(i) Displayed as US$ to A$1 based on common convention.
Inflation on costs
Inflationary pressure had an unfavourable impact on all Customer Sector Groups
and reduced Underlying EBIT by US$401 million during the December 2011 half
year. The impact was most notable in our Australian and South African
businesses, which accounted for 78 per cent of the total impact.
Asset sales
The contribution of asset sales to Underlying EBIT increased by US$43 million
from the corresponding period and primarily reflected the receipt of a post
closing payment that followed the 2006 divestment of our interests in Cascade
and Chinook (USA).
Ceased and sold operations
The favourable currency revaluation of rehabilitation and closure provisions for
ceased operations (US$138 million) was the major contributor to the US$145
million increase in Underlying EBIT.
New and acquired operations
Assets are reported as new and acquired operations until there is a full year
period for comparison. New and acquired operations increased Underlying EBIT by
US$252 million in the December 2011 half year and primarily reflected the
contribution from our recently acquired Onshore US business.
Exploration and business development
BHP Billiton`s exploration expense increased by US$313 million to US$723 million
in December 2011 half year. The company`s US$532 million investment in minerals
exploration in the period (of which US$451 million was expensed) continued to
yield significant results that included a near 700 per cent increase in the
Mineral Resource tonnage of the wholly owned Spence mine in northern Chile(7).
In addition, potash exploration in Canada and drilling programs in the Pilbara
and Bowen Basin (both Australia) have further increased BHP Billiton`s level of
confidence in the Mineral Resource underpinning its extensive growth pipeline.
Petroleum exploration expenditure for the December 2011 half year was US$565
million, of which US$265 million was expensed. Guidance for petroleum
exploration expenditure for the 2012 financial year is US$1.4 billion, including
the new Onshore US exploration program.
Business development expenditure reduced Underlying EBIT by US$68 million in the
December 2011 half year as our Metallurgical Coal business progressed its suite
of growth options.
Other
The absence of specific provisions and non-cash charges that impacted the
Aluminium and Base Metals businesses in the prior corresponding period largely
accounted for a US$270 million increase in Underlying EBIT in the December 2011
half year.
Net finance costs
Net finance costs increased to US$383 million from US$371 million in the
corresponding period. This was primarily driven by increased net interest
expense on higher net debt, offset by exchange rate variations on net debt.
Taxation expense
Excluding the impacts of royalty related taxation, exceptional items and
exchange rate movements, taxation expense was US$4.7 billion representing an
underlying effective tax rate(3) of 30.9 per cent (31 December 2010: 30.3 per
cent; 30 June 2011: 32.1 per cent).
Government imposed royalty arrangements calculated by reference to profits after
adjustment for temporary differences are reported as royalty related taxation.
Royalty related taxation contributed US$462 million to taxation expense
representing an effective rate of 3.0 per cent (31 December 2010: US$340 million
and 2.4 per cent; 30 June 2011: US$828 million and 2.6 per cent).
Other royalty and excise arrangements which do not have these characteristics
are recognised as operating costs within profit before taxation. These amounted
to US$1.7 billion during the period (31 December 2010: US$1.3 billion; 30 June
2011: US$2.9 billion).
There were no exceptional items impacting taxation expense (31 December 2010:
decrease of US$138 million; 30 June 2011: decrease of US$2.1 billion).
Exchange rate movements increased taxation expense by US$70 million (31 December
2010: decrease of US$1.1 billion; 30 June 2011: decrease of US$1.5 billion). The
decrease compared to prior periods is predominately due to eligible Australian
entities electing to adopt a US dollar tax functional currency from 1 July 2011.
Total taxation expense including royalty related taxation, exceptional items and
exchange rate movements described above, was US$5.3 billion, representing an
effective rate of 34.4 per cent (31 December 2010: 24.4 per cent; 30 June 2011:
23.4 per cent).
Exceptional items
There were no exceptional items in the December 2011 half year.
Cash flows
Net operating cash flows after interest and tax increased by one per cent to
US$12.3 billion in the December 2011 half year. An increase in cash generated
from operations (after changes in working capital balances) of US$2.2 billion
was predominantly offset by higher net income tax paid of US$1.5 billion and
higher royalty related taxation payments of US$489 million.
Investing cash flows increased by US$15.7 billion primarily driven by investment
in subsidiaries and operations of US$12.5 billion in the December 2011 half
year. Capital and exploration expenditure totalled US$9.0 billion in the
December 2011 half year. Expenditure on major growth projects was US$6.8
billion, including US$1.9 billion on Petroleum projects and US$4.9 billion on
Minerals projects. Capital expenditure on sustaining and other items was US$1.1
billion. Exploration expenditure was US$1.1 billion, including US$716 million
classified within net operating cash flows.
Net financing cash flows include proceeds from borrowings of US$7.3 billion
partially offset by dividend payments of US$2.9 billion and debt repayments of
US$1.7 billion. Proceeds from borrowings include the issuance of a three tranche
Global Bond of US$3.0 billion and proceeds from Commercial Paper of US$2.8
billion.
Net debt, comprising interest bearing liabilities less cash, was US$21.5 billion
which is an increase of US$15.6 billion compared to the net debt position at 30
June 2011.
Dividend
BHP Billiton has a commitment to its progressive dividend policy, irrespective
of the economic climate and the Group`s growth aspirations. In that context, our
Board today declared an interim dividend of 55 US cents per share, which
represents a 20 per cent increase on the December 2010 equivalent payout.
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 24 February 2012. Please note
that all currency conversion elections must be registered by the Record Date,
being 2 March 2012. 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
24 February 2012
Ex-dividend Australian Securities Exchange (ASX) and JSE Limited (JSE) 27
February 2012
Ex-dividend London Stock Exchange (LSE) and New York Stock Exchange (NYSE) 29
February 2012
Record Date (including currency conversion and currency election dates, except
for rand) 2 March 2012
Payment date 22 March 2012
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 27 February and 2 March 2012 (inclusive), nor will
transfers between the UK register and the South African register be permitted
between the dates of 24 February and 2 March 2012 (inclusive).
Details of the currency exchange rates applicable for the dividend will be
announced to the relevant stock exchanges following conversion and will appear
on the Group`s website.
Capital management
The strong and predictable nature of BHP Billiton`s earnings and cash flow
provides the Group with the flexibility required to sustain our progressive
dividend policy while planning and executing our world class development
program.
In addition, the release of latent capacity at major businesses such as
Escondida, Queensland Coal and the Gulf of Mexico (USA) is expected to underpin
strong momentum and returns for the company in the short to medium term as it
progressively exercises its longer term growth options. In that regard, we will
continue to intensify our focus on businesses where a sustainable competitive
advantage exists and superior investment returns can be generated. Portfolio
management will also remain an integral component of our overarching strategy,
consistent with our commitment to maintain a simple and scalable organisation.
That flexibility, when coupled with a disciplined and value focused investment
process, underpins our commitment to a solid A credit rating.
Debt management and liquidity
In August 2011, the Group arranged a new unsecured 364 day multicurrency term
and revolving credit facility to fund the acquisition of all of the issued and
outstanding shares of Petrohawk Energy Corporation. The US$7.5 billion facility
consisted of two tranches: a US$5.0 billion term loan and a US$2.5 billion
revolving credit facility. The full amount of the term loan together with US$1.0
billion of the revolving credit facility has been cancelled. The US$1.5 billion
of the revolving credit facility that remains will expire in August 2012.
The Group issued a three tranche Global Bond comprising US$1.0 billion 1.125%
Senior Notes due 2014, US$750 million 1.875% Senior Notes due 2016 and US$1.25
billion 3.250% Senior Notes due 2021. As at 31 December 2011, the Group had
US$2.8 billion outstanding in the US commercial paper market and the Group`s
cash on hand was US$3.6 billion.
Our commitment to retain a solid A credit rating remains unchanged.
Corporate governance
There were no appointments to, or resignations from, the Board during the
period.
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the performance of the Customer Sector
Groups for the December 2011 half year and the corresponding period.
Half year ended 31 Revenue Underlying EBIT(i)
December
(US$M) 2011 2010 Change % 2011 2010 Change %
Petroleum 6,754 4,905 37.7% 3,936 2,854 37.9%
Aluminium 2,557 2,343 9.1% (67) 17 (494.1%)
Base Metals 5,250 7,067 (25.7%) 1,641 3,580 (54.2%)
Diamonds and Specialty 654 675 (3.1%) 86 221 (61.1%)
Products
Stainless Steel 1,358 1,905 (28.7%) 1 357 (99.7%)
Materials
Iron Ore 12,149 9,382 29.5% 7,901 5,811 36.0%
Manganese 1,087 1,196 (9.1%) 149 430 (65.3%)
Metallurgical Coal 4,390 3,952 11.1% 1,538 1,453 5.8%
Energy Coal 3,135 2,561 22.4% 787 334 135.6%
Group and unallocated 173 206 N/A (283) (228) N/A
items(ii)
Less: inter-segment (27) (26) N/A - - N/A
revenue
BHP Billiton Group 37,480 34,166 9.7% 15,689 14,829 5.8%
(i) Underlying EBIT includes trading activities comprising the sale of third
party product. Underlying EBIT for the Group is reconciled to Profit from
operations on page 6.
(ii) Includes consolidation adjustments, unallocated items and external sales
from the Group`s freight, transport and logistics operations.
Petroleum
Petroleum production increased by 36 per cent in the December 2011 half year to
109 million barrels of oil equivalent following the successful integration of
the Fayetteville and Petrohawk Onshore US businesses, first production from the
North West Shelf CWLH Life Extension project and strong underlying performance
from our global asset portfolio.
Underlying EBIT for the December 2011 half year increased by US$1.1 billion, or
38 per cent, to US$3.9 billion. Higher prices were the major contributor to the
increase in Underlying EBIT (US$1.3 billion, net of price linked costs) and
reflected a 38 per cent increase in average realised oil prices to US$110.24 per
barrel and a 35 per cent increase in average realised liquefied natural gas
prices to US$14.03 per thousand standard cubic feet. The average realised
natural gas price remained largely unchanged at US$3.85 per thousand standard
cubic feet. Onshore US Underlying EBIT included a US$222 million benefit
associated with legacy US gas derivatives that are in the final process of being
closed out, while a US$118 million non-cash gain on the revaluation of embedded
derivatives was recorded at Angostura (Trinidad and Tobago). A US$100 million
post closing payment was received following the 2006 divestment of our interests
in Cascade and Chinook.
From a longer term perspective, the growth potential of the Petroleum business
has been significantly enhanced by the acquisition of the large, long life
Fayetteville shale and Petrohawk resource basins. Onshore US drilling and
development expenditure totalled US$1.3 billion during the December 2011 half
year as we continued to focus on our high quality acreage. Our commitment to
increase the valuable liquids contribution to 20 per cent of total Onshore US
production by the end of the 2015 financial year remains unchanged.
Aluminium
Alumina sales volumes increased when compared with the corresponding period as
the Alumar refinery (Brazil) continued to deliver into expanded capacity. Our
smelters in southern Africa and Brazil continue to produce at, or close to,
maximum technical capacity.
Underlying EBIT for the December 2011 half year declined by US$84 million to a
loss of US$67 million as a modest improvement in realised prices was not
sufficient to offset underlying cost pressure in the business. In that regard,
higher raw material costs for inputs such as coke and caustic soda contributed
to a US$104 million reduction in Underlying EBIT for the period. The average
realised aluminium price increased by three per cent to US$2,391 per tonne while
the average realised alumina price rose by eight per cent to US$344 per tonne.
In what remains a particularly challenging environment for the broader aluminium
industry, BHP Billiton continues to drive productivity and efficiency across its
integrated Aluminium business with a strong emphasis on cash flow. Completion of
the US$3.0 billion (BHP Billiton share) Worsley Efficiency and Growth project
(Australia) remains a priority with initial production anticipated in the first
quarter of calendar year 2012. The expansion will raise capacity at the Worsley
refinery by 1.1 million tonnes per annum to 4.6 million tonnes per annum (100
per cent basis).
Base Metals
Despite a strong recovery in copper volumes in the December 2011 quarter,
production declined in the December 2011 half year as lower grades and
industrial activity heavily constrained Escondida performance. Consistent with
prior guidance, Escondida production is expected to improve significantly beyond
the 2012 financial year as mining activities progress towards higher grade ore
with completion of the Escondida Ore Access project in the main pit. Record
mining rates were achieved at Pampa Norte (Chile) and Antamina (Peru) following
the expansion of their mining fleets, while record milling rates were achieved
at Cannington (Australia) and Antamina.
Underlying EBIT for the December 2011 half year decreased by US$1.9 billion to
US$1.6 billion. Lower production and realised prices were the major contributors
to the decline as they reduced Underlying EBIT by a combined US$1.5 billion. The
impact on costs of lower ore grades at Escondida and broader cost pressure
across the Base Metals portfolio contributed to a further US$487 million
reduction in Underlying EBIT.
At 31 December 2011, the Group had 219,718 tonnes of outstanding copper sales
that were revalued at a weighted average price of US$3.45 per pound. The final
price of these sales will be determined over the remainder of the 2012 financial
year. In addition, 239,156 tonnes of copper sales from the 2011 financial year
were subject to a finalisation adjustment in the current period. The
finalisation adjustment and provisional pricing impact as at 31 December 2011
decreased Underlying EBIT by US$258 million for the period.
During the December 2011 half year, pre-commitment expenditure of US$1.2 billion
for the first phase of the Olympic Dam Project was activated following
environmental approval by the Government of South Australia and the
Commonwealth, and the successful passage of the Indenture agreement through the
South Australian Parliament. In addition, the longer term development potential
of the Base Metals portfolio was further enhanced by a near 700 per cent
increase in the Mineral Resources tonnage(7) at Spence.
Diamonds and Specialty Products
As anticipated, diamond production in the December 2011 half year was lower than
the prior corresponding period. EKATI (Canada) production is expected to remain
constrained in the medium term as the operations extract lower grade material,
consistent with the mine plan.
Underlying EBIT for the December 2011 half year declined by US$135 million to
US$86 million despite stronger diamond and titanium prices that increased
Underlying EBIT by US$160 million. The decline in production at EKATI, which
reduced Underlying EBIT by US$160 million, was the major contributing factor to
the compression of operating margins. The acceleration of our potash exploration
program in Canada and Africa reduced Underlying EBIT by a further US$81 million.
In potash, significant progress continues to be achieved at Jansen (Canada)
following completion of the freeze plant in August 2011. Ground freezing is now
well underway and excavation has commenced for both the production and service
shafts. The Port of Vancouver has been selected as the preferred port location
and the permitting process is underway.
During the December 2011 quarter, BHP Billiton announced a review of its
diamonds business, including the Group`s interests in the EKATI Diamond Mine.
The process is ongoing and could continue through the first half of the 2012
calendar year. Subsequent to period end, BHP Billiton announced that it had
exercised an option to sell its 37 per cent non-operated interest in Richards
Bay Minerals (South Africa) to Rio Tinto. Completion of the sale is conditional
upon the fulfilment of customary regulatory approvals with the final
consideration to be determined according to an agreed valuation process.
Stainless Steel Materials
Nickel production was lower during the December 2011 half year reflecting
restricted hydrogen supply and maintenance at the Nickel West (Australia)
smelter and refinery operations. Cerro Matoso (Colombia) returned to full
capacity during the December 2011 half year following the successful replacement
of the Line 1 furnace.
Underlying EBIT for the December 2011 half year decreased by US$356 million to
US$1 million. Lower volumes and weaker prices (net of price linked costs)
reduced Underlying EBIT by US$133 million and US$106 million respectively.
Higher maintenance charges at Nickel West and an increase to the electricity
tariff at Cerro Matoso contributed to broader cost pressure which reduced
Underlying EBIT by US$96 million.
The commissioning of the Nickel West Mt Keith Talc Redesign Project and
construction of the new hydrogen plant at Nickel West Kwinana form part of a
targeted program of business improvement.
Iron Ore
The consistent deployment of capital across BHP Billiton`s world class Iron Ore
business underpinned yet another period of record iron ore production. The ramp
up of Ore Handling Plant 3 at Yandi, dual tracking of the company`s rail
infrastructure and additional ship loading capacity at Port Hedland facilitated
an increase in WAIO production to the annualised rate of 178 million tonnes per
annum (100 per cent basis) in the December 2011 quarter.
Underlying EBIT for the December 2011 half year increased by US$2.1 billion to
US$7.9 billion. Record production and an 11 per cent and 14 per cent increase in
fines and lump iron ore prices, respectively, increased Underlying EBIT by
US$2.2 billion, net of price linked costs. While the reduction in contractor
margin that followed the acquisition of the HWE Mining subsidiaries will be
sustained in future periods, one-off integration costs, an increase in
exploration expense and a rise in depreciation more than accounted for the cost
savings achieved in the December 2011 half year.
BHP Billiton`s commitment to respond to growing customer demand for iron ore was
further reinforced by the approval of the US$698 million (BHP Billiton share)
WAIO Orebody 24 mine in the December 2011 quarter. Subsequent to period end, BHP
Billiton also announced the approval of US$779 million (BHP Billiton share) in
pre-commitment funding for the first phase of the WAIO Outer Harbour
Development. This investment takes the cumulative commitment to iron ore growth
projects in execution to over US$11 billion(8)(9).
Manganese
Record half year sales volumes at Hotazel (South Africa) contributed to an 11
per cent increase in manganese ore sales in the December 2011 half year while
alloy production remained unchanged from the prior corresponding period.
Underlying EBIT decreased by US$281 million in the December 2011 half year to
US$149 million. A 22 per cent decline in average realised ore prices and a 10
per cent decline in average realised alloy prices represented the major drag on
profitability and reduced Underlying EBIT by US$223 million, net of price linked
costs. Margin compression was further exacerbated by an increase in raw material
costs which reduced Underlying EBIT by US$69 million.
The US$167 million (BHP Billiton share) GEEP2 expansion project will further
solidify GEMCO (Australia) as the largest and lowest cost operation in the
industry. On completion, the GEEP2 project will increase processing capacity
from 4.2 to 4.8 million tonnes per annum (100 per cent basis) with first
production scheduled for the second half of the 2013 calendar year.
Metallurgical Coal
Metallurgical Coal production remained constrained in the December 2011 half
year as our leading Queensland Coal business was affected by the remnant effects
of wet weather, industrial action associated with ongoing labour negotiations
and geotechnical issues at the Gregory Crinum longwall. While system capability
is no longer constrained by the 2011 floods, the extent to which industrial
action will continue to impact production, sales and unit costs is difficult to
predict.
Underlying EBIT increased by US$85 million to US$1.5 billion in the December
2011 half year. The 31 per cent and 20 per cent increase in hard coking coal and
weak coking coal prices, respectively, increased Underlying EBIT by US$927
million (net of price linked costs) and underpinned record profitability at
Illawarra Coal (Australia) over the six month period. In contrast, a 15 per cent
decline in sales volumes at Queensland Coal reduced Underlying EBIT by US$216
million while higher costs, that partly reflected our flood recovery efforts,
reduced Underlying EBIT by a further US$481 million. The rapid progression of
our development pipeline also led to an increase in exploration and business
development costs in the period.
BHP Billiton announced approval of the Caval Ridge mine development and
associated Peak Downs mine expansion (both Australia) in the December 2011 half
year. The US$2.1 billion project (BHP Billiton share) will add eight million
tonnes per annum (100 per cent basis) of high quality coking coal capacity with
first production anticipated in the 2014 calendar year. A subsequent, low cost
expansion to 10 million tonnes per annum is anticipated. Following this
significant investment commitment, metallurgical coal projects in execution
total US$4.9 billion(8).
Energy Coal
Half yearly production records were achieved at New South Wales Energy Coal and
Cerrejon Coal (Colombia), two of BHP Billiton`s high value, export oriented
energy coal operations. A decline in production was reported at the domestically
focused San Juan Coal mine (USA) following an underground fire which led to the
suspension of operations in the period.
Underlying EBIT increased by US$453 million to US$787 million. A 22 per cent and
11 per cent increase in export and domestic coal prices, respectively, increased
Underlying EBIT by US$391 million, net of price linked costs. Stronger volumes
and a higher proportion of export sales, largely associated with the accelerated
expansion of New South Wales Energy Coal, increased Underlying EBIT by US$65
million.
During the December 2011 half year, BHP Billiton approved a further eight
million tonne per annum (100 per cent basis) expansion of the world class
Cerrejon coal mine. The US$437 million project (BHP Billiton share) will
increase export capacity to approximately 40 million tonnes per annum (100 per
cent basis), with first production anticipated in the 2013 calendar year. In
addition, the partners approved the third phase of expansion of the Newcastle
Coal Infrastructure Group`s (NCIG) coal handling facility in Newcastle
(Australia). BHP Billiton also confirmed that first production from the New
South Wales Energy Coal RX1 project is expected in the second half of the 2012
calendar year, one year ahead of schedule. The RX1 project will increase run-of-
mine thermal coal production by approximately four million tonnes per annum.
Group and Unallocated items
The Underlying EBIT expense for Group and Unallocated in the December 2011 half
year increased by US$55 million to US$283 million. Higher corporate and
information technology costs were partly offset by a foreign exchange related
restatement of the Newcastle steelworks rehabilitation provision.
The following notes explain the terms used throughout this profit release:
(1) Underlying EBIT is earnings before net finance costs, taxation and any
exceptional items. Underlying EBITDA is Underlying EBIT before depreciation,
impairments and amortisation of US$3,054 million for the half year ended 31
December 2011 and US$2,475 million for the half year ended 31 December 2010. We
believe that Underlying EBIT and Underlying EBITDA provide useful information,
but should not be considered as an indication of, or alternative to,
Attributable profit as an indicator of operating performance or as an
alternative to cash flow as a measure of liquidity.
(2) Underlying EBIT is used to reflect the underlying performance of BHP
Billiton`s operations. Underlying EBIT is reconciled to Profit from operations
on page 6.
(3) Other non-IFRS measures are defined as follows:
* Attributable profit excluding exceptional items - comprises Profit after
taxation attributable to members of BHP Billiton Group less exceptional items as
described in note 3 to the financial report.
* Underlying EBITDA interest coverage - for the purpose of deriving interest
coverage, net interest comprises Interest on bank loans and overdrafts, Interest
on all other borrowings, Finance lease and hire purchase interest less Interest
income.
* Underlying effective tax rate - comprises Total taxation expense excluding
Royalty related taxation, Exceptional items and Exchange rate movements included
in taxation expense divided by Profit before taxation and exceptional items.
(4) Underlying EBIT margin comprises Underlying EBIT excluding third party EBIT,
divided by revenue net of third party product revenue.
(5) Net operating cash flows are after net interest and taxation.
(6) Includes announced pre-commitment funding for projects in execution, and
pre-
commitment funding for the Jansen potash project, the Olympic Dam Project and
the WAIO Outer Harbour Development. All references to capital expenditure are
BHP Billiton`s share.
(7) Competent Person - J. Cespedes (MAusIMM).
The statement of Mineral Resources is presented on a 100 per cent basis and is
based on information compiled by the above named Competent Person and relates to
Mineral Resources estimates as at 31 December 2011 disclosed in the BHP Billiton
Exploration and Development Report for the quarter ended 31 December 2011. The
detailed breakdown of Spence Mineral Resources is 241mt @ 0.92% Cu Measured,
1,278mt @ 0.47% Cu Indicated, 1,174mt @ 0.39% Cu Inferred. Mr. Cespedes is a
full time employee of BHP Billiton Limited, has sufficient experience relevant
to the style of mineralisation and type of deposit under consideration and to
the activity he is undertaking to qualify as a Competent Person as defined in
the JORC Code, and he is a member of the Australasian Institute of Mining &
Metallurgy (AusIMM). The Competent Person consents to the inclusion in this
report of the matters based on their information in the form and context in
which it appears.
(8) Includes announced pre-commitment funding for projects in execution. All
references to capital expenditure are BHP Billiton`s share.
(9) Includes announced pre-commitment funding for the WAIO Outer Harbour
Development. All references to capital expenditure are BHP Billiton`s share.
(10) Unless otherwise stated, production volumes exclude suspended and sold
operations.
Forward-Looking Statements
This release includes forward-looking statements within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 regarding future events,
conditions, circumstances and the future financial performance of BHP Billiton,
including for capital expenditures, production volumes, project capacity, and
schedules for expected production. Often, but not always, forward-looking
statements can be identified by the use of the words such as "plans", "expects",
"expected", "scheduled", "estimates", "intends", "anticipates", "believes" or
variations of such words and phrases or state that certain actions, events,
conditions, circumstances or results "may", "could", "would", "might" or "will"
be taken, occur or be achieved. These forward-looking statements are not
guarantees or predictions of future performance, and involve known and unknown
risks, uncertainties and other factors, many of which are beyond our control,
and which may cause actual results to differ materially from those expressed in
the statements contained in this release. For more detail on those risks, you
should refer to the sections of our annual report on Form 20-F for the year
ended 30 June 2011 entitled "Risk factors", "Forward looking statements" and
"Operating and financial review and prospects" filed with the U.S. Securities
and Exchange Commission. All estimates and projections in this release are
illustrative only. Our actual results may be materially affected by changes in
economic or other circumstances which cannot be foreseen. Nothing in this
release is, or should be relied on as, a promise or representation either as to
future results or events or as to the reasonableness of any assumption or view
expressly or impliedly contained herein.
Non-IFRS Financial Information
BHP Billiton results are reported under International Financial Reporting
Standards (IFRS) including Underlying EBIT and Underlying EBITDA which are used
to measure segment performance. This presentation also includes certain non-IFRS
measures including Attributable profit excluding exceptional items, Underlying
EBIT margin, Underlying EBITDA interest coverage and Underlying effective tax
rate. These measures are used internally by management to assess the performance
of our business, make decisions on the allocation of our resources and assess
operational management. Non-IFRS measures have not been subject to audit or
review.
No Offer of Securities
Nothing in this release should be construed as either an offer to sell or a
solicitation of an offer to buy or sell BHP Billiton securities in any
jurisdiction.
Reliance on Third Party Information
The views expressed in this release contain information that has been derived
from publicly available sources that have not been independently verified. No
representation or warranty is made as to the accuracy, completeness or
reliability of the information. This release should not be relied upon as a
recommendation or forecast by BHP Billiton.
****
Further information on BHP Billiton can be found on our website:
www.bhpbilliton.com
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BHP Billiton Limited ABN 49 004 028 077
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Members of the BHP Billiton Group which is headquartered in Australia
BHP Billiton Group
Financial Report
For the half year ended 31 December 2011
Contents
Half Year Financial Statements Page
Consolidated Income Statement 21
Consolidated Statement of Comprehensive Income 22
Consolidated Balance Sheet 23
Consolidated Cash Flow Statement 24
Consolidated Statement of Changes in Equity 25
Notes to the Half Year Financial Statements 28
1. Accounting policies 28
2. Segment reporting 29
3. Exceptional items 33
4. Interests in jointly controlled entities 34
5. Net finance costs 35
6. Taxation 35
7. Earnings per share 36
8. Dividends 36
9. Share capital 37
10. Subsequent events 37
11. Business combinations 38
Directors` Report 41
Directors` Declaration of Responsibility 43
Lead Auditor`s Independence Declaration under Section 307C of the Corporations
Act 2001 44
Independent Review Report 45
Consolidated Income Statement
for the half year ended 31 December 2011
Notes Half year Half year Year ended
ended 31 ended 31 30 June
December December 2011 US$M
2011 US$M 2010 US$M
Revenue
Group production 35,690 32,350 67,903
Third party products 2 1,790 1,816 3,836
Revenue 2 37,480 34,166 71,739
Other income 359 279 531
Expenses excluding net finance (22,150) (19,930) (40,454)
costs
Profit from operations 15,689 14,515 31,816
Comprising:
Group production 15,615 14,452 31,718
Third party products 74 63 98
15,689 14,515 31,816
Financial income 5 102 118 245
Financial expenses 5 (485) (489) (806)
Net finance costs 5 (383) (371) (561)
Profit before taxation 15,306 14,144 31,255
Income tax expense (4,803) (3,118) (6,481)
Royalty related taxation (net of (462) (340) (828)
income tax benefit)
Total taxation expense 6 (5,265) (3,458) (7,309)
Profit after taxation 10,041 10,686 23,946
Attributable to non-controlling 100 162 298
interests
Attributable to members of BHP 9,941 10,524 23,648
Billiton Group
Earnings per ordinary share 7 186.8 189.2 429.1
(basic) (US cents)
Earnings per ordinary share 7 186.0 188.6 426.9
(diluted) (US cents)
Dividends per ordinary share - 8 55.0 45.0 91.0
paid during the period (US cents)
Dividends per ordinary share - 8 55.0 46.0 101.0
declared in respect of the period
(US cents)
The accompanying notes form part of these half year financial statements.
Consolidated Statement of Comprehensive Income
for the half year ended 31 December 2011
Half year Half year Year ended
ended 31 ended 31 30 June
December December 2011
2011 US$M 2010 US$M US$M
Profit after taxation 10,041 10,686 23,946
Other comprehensive income
Actuarial (losses)/gains on pension and (44) 76 (113)
medical schemes
Available for sale investments:
Net valuation losses taken to equity (32) (118) (70)
Net valuation losses/(gains) transferred 1 (37) (47)
to the income statement
Exchange fluctuations on translation of (2) 11 19
foreign operations taken to equity
Tax recognised within other comprehensive (58) 68 120
income
Total other comprehensive income for the (135) - (91)
period
Total comprehensive income 9,906 10,686 23,855
Attributable to non-controlling interests 98 152 284
Attributable to members of BHP Billiton 9,808 10,534 23,571
Group
The accompanying notes form part of these half year financial statements.
Consolidated Balance Sheet
as at 31 December 2011
31 December 31 December 30 June
2011 2010 2011
US$M US$M US$M
ASSETS
Current assets
Cash and cash equivalents 3,616 16,156 10,084
Trade and other receivables 8,056 7,876 8,197
Other financial assets 748 441 264
Inventories 6,405 5,620 6,154
Current tax assets 169 153 273
Other 360 332 308
Total current assets 19,354 30,578 25,280
Non-current assets
Trade and other receivables 2,038 1,581 2,093
Other financial assets 1,692 1,449 1,602
Inventories 408 355 363
Property, plant and equipment 95,601 59,174 68,468
Intangible assets 1,162 778 904
Deferred tax assets 3,551 4,177 3,993
Other 161 180 188
Total non-current assets 104,613 67,694 77,611
Total assets 123,967 98,272 102,891
LIABILITIES
Current liabilities
Trade and other payables 10,541 6,743 9,718
Interest bearing liabilities 6,354 1,831 3,519
Other financial liabilities 576 607 288
Current tax payable 2,873 2,451 3,693
Provisions 2,174 1,972 2,256
Deferred income 223 273 259
Total current liabilities 22,741 13,877 19,733
Non-current liabilities
Trade and other payables 456 498 555
Interest bearing liabilities 18,713 14,125 12,388
Other financial liabilities 88 140 79
Deferred tax liabilities 8,137 3,872 2,683
Provisions 8,824 8,296 9,269
Deferred income 391 471 429
Total non-current liabilities 36,609 27,402 25,403
Total liabilities 59,350 41,279 45,136
Net assets 64,617 56,993 57,755
EQUITY
Share capital - BHP Billiton Limited 1,183 1,227 1,183
Share capital - BHP Billiton Plc 1,069 1,113 1,070
Treasury shares (535) (531) (623)
Reserves 1,853 1,838 2,001
Retained earnings 59,886 52,445 53,131
Total equity attributable to members 63,456 56,092 56,762
of BHP Billiton Group
Non-controlling interests 1,161 901 993
Total equity 64,617 56,993 57,755
The accompanying notes form part of these half year financial statements.
Consolidated Cash Flow Statement
for the half year ended 31 December 2011
Half year Half year Year
ended ended ended
31 31 30 June
December December 2011
2011 US$M 2010 US$M US$M
Operating activities
Profit before taxation 15,306 14,144 31,255
Adjustments for:
Non-cash exceptional items - 19 (150)
Depreciation and amortisation expense 3,035 2,428 5,039
Net gain on sale of non-current assets (87) (44) (41)
Impairments of property, plant and equipment, 19 47 74
financial assets and intangibles
Employee share awards expense 125 108 266
Financial income and expenses 383 371 561
Other (250) (123) (384)
Changes in assets and liabilities:
Trade and other receivables 788 (1,584) (1,960)
Inventories (194) (298) (792)
Trade and other payables (556) 134 2,780
Net other financial assets and liabilities (292) 99 46
Provisions and other liabilities (704) 109 387
Cash generated from operations 17,573 15,410 37,081
Dividends received 11 14 12
Interest received 55 49 107
Interest paid (301) (248) (562)
Income tax refunded 225 - 74
Income tax paid (4,545) (2,783) (6,025)
Royalty related taxation paid (738) (249) (607)
Net operating cash flows 12,280 12,193 30,080
Investing activities
Purchases of property, plant and equipment (7,903) (5,167) (11,147)
Exploration expenditure (1,097) (452) (1,240)
Exploration expenditure expensed and included 716 363 981
in operating cash flows
Purchase of intangibles (122) (81) (211)
Investment in financial assets (243) (65) (238)
Investment in subsidiaries, operations and (12,549) - (4,807)
jointly controlled entities, net of their cash
Cash outflows from investing activities (21,198) (5,402) (16,662)
Proceeds from sale of property, plant and 139 24 80
equipment
Proceeds from financial assets 92 84 118
Net investing cash flows (20,967) (5,294) (16,464)
Financing activities
Proceeds from interest bearing liabilities 7,300 892 1,374
Proceeds from debt related instruments - 67 222
Repayment of interest bearing liabilities (1,701) (1,057) (2,173)
Proceeds from ordinary shares 18 18 32
Contributions from non-controlling interests 66 - -
Purchase of shares by Employee Share Ownership (323) (327) (469)
Plan ("ESOP") trusts
Share buy-back - BHP Billiton Limited - - (6,265)
Share buy-back - BHP Billiton Plc (83) (254) (3,595)
Dividends paid (2,943) (2,506) (5,054)
Dividends paid to non-controlling interests (56) (48) (90)
Net financing cash flows 2,278 (3,215) (16,018)
Net (decrease)/increase in cash and cash (6,409) 3,684 (2,402)
equivalents
Cash and cash equivalents, net of overdrafts, 10,080 12,455 12,455
at beginning of period
Effect of foreign currency exchange rate (64) 3 27
changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, 3,607 16,142 10,080
at end of period
The accompanying notes form part of these half year financial statements.
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2011
For the half year Attributable to members of the BHP Billiton Group
ended 31 December
2011
US$M Share capital Share capital Treasury Reserves
- BHP - BHP shares
Billiton Billiton Plc
Limited
Balance as at 1 July 1,183 1,070 (623) 2,001
2011
Profit after taxation - - - -
Other comprehensive
income:
Actuarial losses on - - - -
pension and medical
schemes
Net valuation losses - - - (32)
on available for sale
investments taken to
equity
Net valuation losses - - - 1
on available for sale
investments
transferred to the
income statement
Exchange fluctuations - - - (2)
on translation of
foreign operations
taken to equity
Tax recognised within - - - (113)
other comprehensive
income
Total comprehensive - - - (146)
income
Transactions with
owners:
Purchase of shares by - - (323) -
ESOP trusts
Employee share awards - - 328 (128)
exercised net of
employee
contributions
Employee share awards - - - -
forfeited
Accrued employee - - - 125
entitlement for
unvested awards
BHP Billiton Limited - - - -
shares bought back
and cancelled
BHP Billiton Plc - - - -
shares bought back
BHP Billiton Plc - (1) 83 1
shares cancelled
Distribution to - - - -
option holders
Dividends - - - -
Equity contributed - - - -
Balance as at 31 1,183 1,069 (535) 1,853
December 2011
For the half year Attributable to members of the BHP Billiton Group
ended 31 December
2011
US$M Retained Total equity Non-controlling Total
earnings attributable to interests equity
members of BHP
Billiton Group
Balance as at 1 53,131 56,762 993 57,755
July 2011
Profit after 9,941 9,941 100 10,041
taxation
Other
comprehensive
income:
Actuarial losses (42) (42) (2) (44)
on pension and
medical schemes
Net valuation - (32) - (32)
losses on
available for sale
investments taken
to equity
Net valuation - 1 - 1
losses on
available for sale
investments
transferred to the
income statement
Exchange - (2) - (2)
fluctuations on
translation of
foreign operations
taken to equity
Tax recognised 55 (58) - (58)
within other
comprehensive
income
Total 9,954 9,808 98 9,906
comprehensive
income
Transactions with
owners:
Purchase of shares - (323) - (323)
by ESOP trusts
Employee share (168) 32 - 32
awards exercised
net of employee
contributions
Employee share - - - -
awards forfeited
Accrued employee - 125 - 125
entitlement for
unvested awards
BHP Billiton - - - -
Limited shares
bought back and
cancelled
BHP Billiton Plc - - - -
shares bought back
BHP Billiton Plc (83) - - -
shares cancelled
Distribution to - - - -
option holders
Dividends (2,948) (2,948) (56) (3,004)
Equity contributed - - 126 126
Balance as at 31 59,886 63,456 1,161 64,617
December 2011
The accompanying notes form part of these half year financial statements.
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2011 (continued)
For the half year Attributable to members of the BHP Billiton Group
ended 31 December
2010
US$M Share capital Share capital Treasury Reserves
- BHP - BHP shares
Billiton Billiton Plc
Limited
Balance as at 1 July 1,227 1,116 (525) 1,906
2010
Profit after taxation - - - -
Other comprehensive
income:
Actuarial gains on - - - -
pension and medical
schemes
Net valuation losses - - - (118)
on available for sale
investments taken to
equity
Net valuation gains - - - (27)
on available for sale
investments
transferred to the
income statement
Exchange fluctuations - - - 11
on translation of
foreign operations
taken to equity
Tax recognised within - - - 41
other comprehensive
income
Total comprehensive - - - (93)
income
Transactions with
owners:
Purchase of shares by - - (327) -
ESOP Trusts
Employee share awards - - 321 (70)
exercised net of
employee
contributions
Accrued employee - - - 108
entitlement for
unvested awards
BHP Billiton Plc - - (254) -
shares bought back
BHP Billiton Plc - (3) 254 3
shares cancelled
Distribution to - - - (16)
option holders
Dividends - - - -
Equity contributed - - - -
Balance as at 31 1,227 1,113 (531) 1,838
December 2010
For the half year Attributable to members of the BHP Billiton Group
ended 31 December
2010
US$M Retained Total equity Non-controlling Total
earnings attributable to interests equity
members of BHP
Billiton Group
Balance as at 1 44,801 48,525 804 49,329
July 2010
Profit after 10,524 10,524 162 10,686
taxation
Other
comprehensive
income:
Actuarial gains on 76 76 - 76
pension and
medical schemes
Net valuation - (118) - (118)
losses on
available for sale
investments taken
to equity
Net valuation - (27) (10) (37)
gains on available
for sale
investments
transferred to the
income statement
Exchange - 11 - 11
fluctuations on
translation of
foreign operations
taken to equity
Tax recognised 27 68 - 68
within other
comprehensive
income
Total 10,627 10,534 152 10,686
comprehensive
income
Transactions with
owners:
Purchase of shares - (327) - (327)
by ESOP Trusts
Employee share (225) 26 - 26
awards exercised
net of employee
contributions
Accrued employee - 108 - 108
entitlement for
unvested awards
BHP Billiton Plc - (254) - (254)
shares bought back
BHP Billiton Plc (254) - - -
shares cancelled
Distribution to - (16) (10) (26)
option holders
Dividends (2,504) (2,504) (48) (2,552)
Equity contributed - - 3 3
Balance as at 31 52,445 56,092 901 56,993
December 2010
Consolidated Statement of Changes in Equity
for the half year ended 31 December 2011 (continued)
For the year ended 30 Attributable to members of the BHP Billiton Group
June 2011
US$M Share capital Share capital Treasury Reserves
- BHP - BHP shares
Billiton Billiton Plc
Limited
Balance as at 1 July 1,227 1,116 (525) 1,906
2010
Profit after taxation - - - -
Other comprehensive
income:
Actuarial losses on - - - -
pension and medical
schemes
Net valuation - - - (71)
(losses)/gains on
available for sale
investments taken to
equity
Net valuation gains on - - - (38)
available for sale
investments
transferred to the
income statement
Exchange fluctuations - - - 19
on translation of
foreign operations
taken to equity
Tax recognised within - - - 24
other comprehensive
income
Total comprehensive - - - (66)
income
Transactions with
owners:
Purchase of shares by - - (469) -
ESOP trusts
Employee share awards - - 454 (121)
exercised net of
employee contributions
Employee share awards - - - (9)
forfeited
Accrued employee - - - 266
entitlement for
unvested awards
BHP Billiton Limited (44) - - -
shares bought back and
cancelled
BHP Billiton Plc - - (3,678) -
shares bought back
BHP Billiton Plc - (46) 3,595 46
shares cancelled
Distribution to option - - - (21)
holders
Dividends - - - -
Equity contributed - - - -
Balance as at 30 June 1,183 1,070 (623) 2,001
2011
For the year ended Attributable to members of the BHP Billiton Group
30 June 2011
US$M Retained Total equity Non-controlling Total
earnings attributable to interests equity
members of BHP
Billiton Group
Balance as at 1 44,801 48,525 804 49,329
July 2010
Profit after 23,648 23,648 298 23,946
taxation
Other comprehensive
income:
Actuarial losses on (105) (105) (8) (113)
pension and medical
schemes
Net valuation - (71) 1 (70)
(losses)/gains on
available for sale
investments taken
to equity
Net valuation gains - (38) (9) (47)
on available for
sale investments
transferred to the
income statement
Exchange - 19 - 19
fluctuations on
translation of
foreign operations
taken to equity
Tax recognised 94 118 2 120
within other
comprehensive
income
Total comprehensive 23,637 23,571 284 23,855
income
Transactions with
owners:
Purchase of shares - (469) - (469)
by ESOP trusts
Employee share (294) 39 - 39
awards exercised
net of employee
contributions
Employee share 9 - - -
awards forfeited
Accrued employee - 266 - 266
entitlement for
unvested awards
BHP Billiton (6,301) (6,345) - (6,345)
Limited shares
bought back and
cancelled
BHP Billiton Plc - (3,678) - (3,678)
shares bought back
BHP Billiton Plc (3,595) - - -
shares cancelled
Distribution to - (21) (17) (38)
option holders
Dividends (5,126) (5,126) (90) (5,216)
Equity contributed - - 12 12
Balance as at 30 53,131 56,762 993 57,755
June 2011
Notes to the Half Year Financial Statements
1. Accounting policies
This general purpose financial report for the half year ended 31 December 2011
is unaudited and has been prepared in accordance with IAS 34 `Interim Financial
Reporting` as issued by the International Accounting Standards Board ("IASB"),
IAS 34 `Interim Financial Reporting` as adopted by the EU, AASB 134 `Interim
Financial Reporting` as issued by the Australian Accounting Standards Board
("AASB") and the Disclosure and Transparency Rules of the Financial Services
Authority in the United Kingdom and the Australian Corporations Act 2001 as
applicable to interim financial reporting.
The half year financial statements represent a `condensed set of financial
statements` as referred to in the UK Disclosure and Transparency Rules issued by
the Financial Services Authority. Accordingly, they do not include all of the
information required for a full annual report and are to be read in conjunction
with the most recent annual financial report. The comparative figures for the
financial year ended 30 June 2011 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
2011 annual financial statements contained within the Annual Report of the BHP
Billiton Group, except for a change to the basis on which borrowings are
classified as current or non-current. Borrowings otherwise due for repayment
within 12 months of balance date are now classified as non-current only if the
committed refinancing facility is with the same lender and on the same or
similar terms. Under the previous policy, it was not necessary for such
facilities to be with the same party for the borrowings to be classified as non-
current. This change in policy was adopted in light of amendments to IAS1
`Presentation of Financial Statements` recommended by the IASB, modifying
criteria for the classification of such borrowings as current. Borrowings of
US$2.8 billion drawn under the Group`s commercial paper program have therefore
been classified as current with no impact on comparative amounts as the program
was undrawn in all prior periods presented in the financial statements.
Rounding of amounts
Amounts in this financial report have, unless otherwise indicated, been rounded
to the nearest million dollars.
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the same
basis as current period figures.
Exchange rates
The following exchange rates relative to the US dollar have been applied in the
financial statements:
Average Average Average
Half year Half year Year As at As at As at
ended ended ended 31 31 30
31 December 31 December 30 June December December June
2011 2010 2011 2011 2010 2011
Australian 1.03 0.94 0.99 1.01 1.02 1.07
dollar(a)
Brazilian 1.70 1.72 1.68 1.87 1.66 1.57
real
Canadian 1.00 1.03 1.00 1.02 1.00 0.97
dollar
Chilean peso 491 496 486 520 468 470
Colombian 1,857 1,848 1,843 1,941 1,920 1,779
peso
South 7.61 7.13 7.01 8.18 6.63 6.80
African rand
Euro 0.72 0.76 0.73 0.77 0.75 0.69
UK pound 0.63 0.64 0.63 0.65 0.65 0.62
sterling
(a) Displayed as US$ to A$1 based on common convention.
2. Segment reporting
The Group operates nine Customer Sector Groups aligned with the commodities
which we extract and market, reflecting the structure used by the Group`s
management to assess the performance of the Group:
Customer Sector Group Principal activities
Petroleum Exploration, development and production of oil and
gas
Aluminium Mining of bauxite, refining of bauxite into alumina
and smelting of alumina into aluminium metal
Base Metals Mining of copper, silver, lead, zinc, molybdenum,
uranium and gold
Diamonds and Specialty Mining of diamonds and titanium minerals; potash
Products development
Stainless Steel Materials Mining and production of nickel products
Iron Ore Mining of iron ore
Manganese Mining of manganese ore and production of manganese
metal and alloys
Metallurgical Coal Mining of metallurgical coal
Energy Coal Mining of thermal (energy) coal
Group and unallocated items represent Group centre functions. Exploration and
technology activities are recognised within relevant segments.
It is the Group`s policy that inter-segment sales are made on a commercial
basis.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless
(a) Metals and Steel
Specialty Materials
Products
Half year ended
31 December 2011
Revenue
Group production 6,596 1,798 5,043 654 1,318
Third party products 125 759 207 - 31
Rendering of services 33 - - - -
Inter-segment revenue - - - - 9
Total revenue(b) 6,754 2,557 5,250 654 1,358
Underlying EBIT(c) 3,936 (67) 1,641 86 1
Net finance costs
Exceptional items
Profit before taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half year ended
31 December 2011
Revenue
Group production 11,969 1,084 4,386 2,682 - 35,530
Third party 45 3 - 447 173 1,790
products
Rendering of 117 - 4 6 - 160
services
Inter-segment 18 - - - (27) -
revenue
Total revenue(b) 12,149 1,087 4,390 3,135 146 37,480
Underlying 7,901 149 1,538 787 (283) 15,689
EBIT(c)
Net finance costs (383)
Exceptional items -
Profit before 15,306
taxation
(a) Total assets in Petroleum increased from US$18.6 billion at 30 June 2011 to
US$42.4 billion at 31 December 2011, predominantly arising from the acquisition
of Petrohawk Energy Corporation - refer to note 11.
(b) Revenue not attributable to reportable segments reflects sales of freight
and fuel to third parties.
(c) Underlying EBIT is earnings before net finance costs, taxation and any
exceptional items.
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless
Metals and Steel
Specialty Materials
Products
Half year ended
31 December 2010
Revenue
Group production 4,853 1,588 6,835 675 1,867
Third party products 46 755 232 - 37
Rendering of services 1 - - - -
Inter-segment revenue 5 - - - 1
Total revenue(b) 4,905 2,343 7,067 675 1,905
Underlying EBIT(c) 2,854 17 3,580 221 357
Net finance costs
Exceptional items
Profit before taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Half year ended
31 December 2010
Revenue
Group production 9,275 1,196 3,947 2,062 - 32,298
Third party 41 - - 499 206 1,816
products
Rendering of 46 - 5 - - 52
services
Inter-segment 20 - - - (26) -
revenue
Total revenue(b) 9,382 1,196 3,952 2,561 180 34,166
Underlying 5,811 430 1,453 334 (228) 14,829
EBIT(c)
Net finance costs (371)
Exceptional items (314)
Profit before 14,144
taxation
2. Segment reporting (continued)
US$M Petroleum Aluminium Base Diamonds Stainless
Metals and Steel
Specialty Materials
Products
Year ended 30 June 2011
Revenue
Group production 10,603 3,601 13,550 1,517 3,698
Third party products 127 1,620 602 - 158
Rendering of services 2 - - - -
Inter-segment revenue 5 - - - 5
Total revenue(b) 10,737 5,221 14,152 1,517 3,861
Underlying EBIT(c) 6,330 266 6,790 587 588
Net finance costs
Exceptional items
Profit before taxation
US$M Iron Manganese Metallurgical Energy Group and BHP
Ore Coal Coal unallocated Billiton
items/ Group
eliminations
Year ended 30
June 2011
Revenue
Group production 20,182 2,423 7,565 4,651 - 67,790
Third party 93 - - 851 385 3,836
products
Rendering of 98 - 8 5 - 113
services
Inter-segment 39 - - - (49) -
revenue
Total revenue(b) 20,412 2,423 7,573 5,507 336 71,739
Underlying 13,328 697 2,670 1,129 (405) 31,980
EBIT(c)
Net finance costs (561)
Exceptional items (164)
Profit before 31,255
taxation
3.Exceptional items
There were no exceptional items in the half year ended 31 December 2011.
Half year ended 31 December 2010 Gross US$M Tax US$M Net US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Release of income tax provisions - 138 138
(314) 138 (176)
Withdrawn offer for PotashCorp:
The Group withdrew its offer for PotashCorp on 15 November 2010 following the
Board`s conclusion that the condition of the offer relating to receipt of a net
benefit as determined by the Minister of Industry under the Investment Canada
Act could not be satisfied. The Group incurred fees associated with the US$45
billion debt facility (US$240 million), investment bankers`, lawyers` and
accountants` fees, printing expenses and other charges (US$74 million) in
progressing this matter during the period up to the withdrawal of the offer,
which were expensed as operating costs in the half year ended 31 December 2010.
Release of income tax provisions:
The Australian Taxation Office (ATO) issued amended assessments in prior years
denying bad debt deductions arising from the investments in Hartley (Zimbabwe),
Beenup and Boodarie Iron (both Australia) and the denial of capital allowance
claims made on the Boodarie Iron project. BHP Billiton lodged objections and was
successful on all counts in the Federal Court and the Full Federal Court. The
Hartley matter was settled with the ATO in September 2009. The ATO sought
special leave to appeal to the High Court in relation to the Beenup bad debt
disallowance and the denial of the capital allowance claims on the Boodarie Iron
project. Special leave was not sought by the ATO for the Boodarie Iron bad debt
disallowance. In September 2010 the High Court granted special leave only in
relation to the denial of the capital allowance claims on the Boodarie Iron
project which resulted in a release of US$138 million from the Group`s income
tax provisions in the half year ended 31 December 2010.
Year ended 30 June 2011 Gross US$M Tax US$M Net US$M
Exceptional items by category
Withdrawn offer for PotashCorp (314) - (314)
Newcastle steelworks 150 (45) 105
rehabilitation
Release of income tax provisions - 718 718
Reversal of deferred tax - 1,455 1,455
liabilities
(164) 2,128 1,964
Withdrawn offer for PotashCorp:
The Group withdrew its offer for PotashCorp on 15 November 2010 following the
Board`s conclusion that the condition of the offer relating to receipt of a net
benefit as determined by the Minister of Industry under the Investment Canada
Act could not be satisfied. The Group incurred fees associated with the US$45
billion debt facility (US$240 million), investment bankers`, lawyers` and
accountants` fees, printing expenses and other charges (US$74 million) in
progressing this matter during the period up to the withdrawal of the offer,
which were expensed as operating costs in the year ended 30 June 2011.
3. Exceptional items (continued)
Newcastle steelworks rehabilitation:
The Group recognised a decrease of US$150 million (US$45 million tax charge) to
rehabilitation obligations in respect of former operations at the Newcastle
steelworks (Australia) following a full review of the progress of the Hunter
River Remediation Project and estimated costs to completion.
Release of income tax provisions:
The Australian Taxation Office (ATO) issued amended assessments in prior years
denying bad debt deductions arising from the investments in Beenup and Boodarie
Iron (both Australia) and the denial of capital allowance claims made on the
Boodarie Iron project. The Group challenged the assessments and was successful
on all counts before the Full Federal Court. The ATO obtained special leave in
September 2010 to appeal to the High Court in respect of the denial of capital
allowance claims made on the Boodarie Iron project. The Group`s position in
respect of the capital allowance claims on the Boodarie Iron project was
confirmed by the High Court in June 2011. As a result of these appeals, US$138
million was released from the Group`s income tax provision in September 2010 and
US$580 million in June 2011.
Reversal of deferred tax liabilities:
Consistent with the functional currency of the Group`s operations, eligible
Australian entities elected to adopt a US dollar tax functional currency from 1
July 2011. As a result, the deferred tax liability relating to certain US dollar
denominated financial arrangements has been derecognised, resulting in a credit
to income tax expense of US$1,455 million.
4. Interests in jointly controlled entities
Major Ownership interest at BHP Contribution to profit after
shareholdings in Billiton Group reporting taxation
jointly date(a)
controlled
entities
31 31 30 Half year Half year Year
December December June ended ended ended 30
2011 % 2010 % 2011 31 December 31 December June
% 2011 US$M 2010 US$M 2011
US$M
Mozal SARL 47.1 47.1 47.1 14 22 66
Compania Minera 33.75 33.75 33.75 262 279 602
Antamina SA
Minera Escondida 57.5 57.5 57.5 461 1,554 2,694
Limitada
Samarco Mineracao 50 50 50 549 479 906
SA
Carbones del 33.33 33.33 33.33 153 105 231
Cerrej'n LLC
Other(b) 64 (140) (172)
Total 1,503 2,299 4,327
(a) The ownership interest at the Group`s and the jointly controlled entity`s
reporting date are the same. When the annual financial reporting date is
different to the Group`s, financial information is obtained as at 31 December in
order to report on a basis consistent with the Group`s reporting date.
(b) Includes the Group`s effective interest in the Richards Bay Minerals joint
venture of 37.76 per cent (31 December 2010: 37.76 per cent; 30 June 2011: 37.76
per cent), the Guinea Alumina project (ownership interest 33.3 per cent; 31
December 2010: 33.3 per cent; 30 June 2011: 33.3 per cent), the Newcastle Coal
Infrastructure Group Pty Ltd (ownership interest 35.5 per cent; 31 December
2010: 35.5 per cent; 30 June 2011: 35.5 per cent) and other immaterial jointly
controlled entities.
5. Net finance costs
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011 US$M
2011 US$M 2010 US$M
Financial expenses
Interest on bank loans and 9 11 19
overdrafts
Interest on all other borrowings 349 273 471
Finance lease and hire purchase 5 6 12
interest
Dividends on redeemable - - -
preference shares
Discounting on provisions and 228 206 411
other liabilities
Discounting on post-retirement 60 63 128
employee benefits
Interest capitalised(a) (143) (139) (256)
Fair value change on hedged loans 185 (130) (140)
Fair value change on hedging (184) 116 110
derivatives
Exchange variations on net debt (24) 83 51
485 489 806
Financial income
Interest income (53) (67) (141)
Expected return on pension scheme (49) (51) (104)
assets
(102) (118) (245)
Net finance costs 383 371 561
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
interest rate on such borrowings. For the half year ended 31 December 2011 the
capitalisation rate was 2.79 per cent (31 December 2010: 3.20 per cent; 30 June
2011: 2.87 per cent).
6. Taxation
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011 US$M
2011 US$M 2010 US$M
Taxation expense including
royalty related taxation
UK taxation expense 146 32 21
Australian taxation expense 3,707 1,726 3,503
Overseas taxation expense 1,412 1,700 3,785
Total taxation expense 5,265 3,458 7,309
Total taxation expense including royalty related taxation, exceptional items and
exchange rate movements described below, was US$5,265 million, representing an
effective rate of 34.4 per cent (31 December 2010: 24.4 per cent; 30 June 2011:
23.4 per cent).
There were no exceptional items impacting taxation expense (31 December 2010:
decrease of US$138 million; 30 June 2011: decrease of US$2,128 million).
Exchange rate movements increased taxation expense by US$70 million (31 December
2010: decrease of US$1,127 million; 30 June 2011: decrease of US$1,473 million).
The decrease compared to prior periods is predominately due to eligible
Australian entities electing to adopt a US dollar tax functional currency from 1
July 2011.
7. Earnings per share
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011
2011 2010
Basic earnings per ordinary 186.8 189.2 429.1
share (US cents)
Diluted earnings per ordinary 186.0 188.6 426.9
share (US cents)
Basic earnings per American 373.6 378.4 858.2
Depositary Share (US cents)(a)
Diluted earnings per American 372.0 377.2 853.8
Depositary Share (US cents)(a)
Basic earnings (US$M) 9,941 10,524 23,648
Diluted earnings (US$M) 9,941 10,536 23,648
The weighted average number of shares used for the purposes of calculating
diluted earnings per share reconciles to the number used to calculate basic
earnings per share as follows:
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011 Million
2011 Million 2010 Million
Weighted average number of
shares
Basic earnings per ordinary 5,323 5,563 5,511
share denominator
Shares and options contingently 23 25 29
issuable under employee share
ownership plans
Diluted earnings per ordinary 5,346 5,588 5,540
share denominator
(a)Each American Depositary Share represents two ordinary shares.
8. Dividends
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011 US$M
2011 US$M 2010 US$M
Dividends paid/payable during
the period
BHP Billiton Limited 1,780 1,511 3,076
BHP Billiton Plc - Ordinary 1,168 993 2,003
shares
- Preference shares(a) - - -
2,948 2,504 5,079
Dividends declared in respect of
the period
BHP Billiton Limited 1,780 1,545 3,331
BHP Billiton Plc - Ordinary 1,168 1,012 2,183
shares
- Preference shares(a) - - -
2,948 2,557 5,514
(a) 5.5 per cent dividend on 50,000 preference shares of GBP1 each declared and
paid annually (31 December 2010: 5.5 per cent;30 June 2011: 5.5 percent).
8. Dividends (continued)
Half year Half year Year ended
ended ended 30 June
31 December 31 December 2011 US cents
2011 US cents 2010 US cents
Dividends paid during the period
(per share)
Prior year final dividend 55.0 45.0 45.0
Interim dividend N/A N/A 46.0
55.0 45.0 91.0
Dividends declared in respect of the period (per
share)
Interim dividend 55.0 46.0 46.0
Final dividend N/A N/A 55.0
55.0 46.0 101.0
Dividends are declared after period end in the announcement of the results for
the period. Interim dividends are declared in February and paid in March. Final
dividends are declared in August and paid in September. Dividends declared are
not recorded as a liability at the end of the period to which they relate.
Subsequent to half year end, on 8 February 2012, BHP Billiton declared an
interim dividend of 55.0 US cents per share (US$2,948 million), which will be
paid on 22 March 2012 (31 December 2010: 46.0 US cents per share - US$2,557
million; 30 June 2011: 55.0 US cents per share - US$2,957 million).
BHP Billiton Limited dividends for all periods presented are, or will be, fully
franked based on a tax rate of 30 per cent.
9. Share capital
On 15 November 2010, BHP Billiton announced the reactivation of the remaining
US$4.2 billion component of its previously suspended US$13 billion buy-back
program and subsequently announced an expanded US$10 billion capital management
program on 16 February 2011. This expanded program was completed on 29 June 2011
through a combination of on-market and off-market buy-backs. As at 30 June 2011,
there were 2,181,737 shares (US$83 million) in BHP Billiton Plc bought back on-
market which were cancelled during the half year ended 31 December 2011.
10. Subsequent events
On 1 February 2012, the Group announced that it had exercised an option to sell
its 37 per cent non-operated interest in Richards Bay Minerals (South Africa) to
Rio Tinto. Completion of the sale is conditional upon the fulfilment of
customary regulatory approvals with the final consideration to be determined
according to an agreed valuation process.
Other than the matter outlined above, no matters or circumstances have arisen
since the end of the half year that have significantly affected, or may
significantly affect, the operations, results of operations or state of affairs
of the Group in subsequent accounting periods.
11. Business combinations
Major business combinations completed during the half year ended 31 December
2011 were:
Petrohawk Energy Corporation
On 14 July 2011, the Group announced it had entered into a definitive agreement
to acquire Petrohawk Energy Corporation (Petrohawk) by means of an all-cash
tender offer for all of the issued and outstanding shares of Petrohawk. The
acquisition date of Petrohawk by the Group was 20 August 2011.
Petrohawk is an oil and natural gas company based in the United States. It owns
a number of shale gas assets in Texas and Louisiana and associated midstream
pipeline systems. This acquisition provides the Group with operated positions in
the resource areas of the Eagle Ford shale, Haynesville shale and the Permian
Basin.
Petrohawk was purchased for total consideration of US$12,005 million consisting
of US$11,690 million for existing shares and US$315 million for settlement of
outstanding options, restricted stock and stock appreciation rights
(collectively referred to as employee awards). The vesting of the employee
awards was accelerated at the acquisition date pursuant to a change of control
clause in the original Petrohawk employee award plans. As a result, all of the
consideration for settlement of such awards was included in purchase
consideration. The terms of the acquisition agreement did not include any
contingent consideration.
Acquisition related costs of US$40 million have been expensed and included in
other operating expenses in the Consolidated Income Statement.
The provisionally determined fair values of the assets and liabilities acquired
as of the date of acquisition are as follows:
US$M
ASSETS
Cash and cash equivalents 10
Trade and other receivables(a) 322
Other financial assets 240
Inventories 59
Property, plant and equipment/Intangible assets 21,017
- goodwill(b)
Other assets 68
Total assets 21,716
LIABILITIES
Trade and other payables 645
Interest bearing liabilities 3,800
Other financial liabilities 7
Current tax payable 62
Deferred tax liabilities(c) 5,049
Provisions 88
Total liabilities 9,651
Identifiable net assets acquired 12,065
less non-controlling interest share of (60)
identifiable net assets acquired
Net consideration paid 12,005
Cash and cash equivalents acquired (10)
Net cash consideration paid 11,995
(a) The gross contractual amount for trade and other receivables was US$325
million of which US$3 million was not expected to be collected at acquisition
date.
(b) The majority of property, plant and equipment relates to oil and gas
properties which are still in the process of being valued. The allocation of
fair value between property, plant and equipment and goodwill will be finalised
within 12 months of the acquisition.
(c) The difference between the provisional fair values of the oil and gas
properties acquired and the corresponding tax base gives rise to a deferred tax
liability.
11. Business combinations (continued)
The fair values are provisional pending completion of the valuation process. The
finalisation of the fair value of the assets and liabilities acquired will be
completed within 12 months of the acquisition.
The Group has entered into certain retention arrangements with the employees of
Petrohawk. Pursuant to these arrangements, the Group will make retention
payments at different intervals, subject to mandatory service requirements, and
grant restricted share awards in BHP Billiton Limited with vesting dates ranging
from 31 December 2012 to 22 August 2014. All retention benefits paid to
employees will be accounted for as a post-combination employee benefits expense
in the Consolidated Income Statement, of which US$34 million has been expensed
since the acquisition date.
From the date of the acquisition to 31 December 2011, revenue of US$729 million
and profit after taxation of US$39 million were included in the Consolidated
Income Statement with regards to Petrohawk.
HWE Mining
On 30 September 2011, the Group finalised the purchase of the HWE mining
services business (HWE Mining), comprising three entities and other property,
plant and equipment, which provide contract mining services to the Group`s
Western Australian Iron Ore (WAIO) joint ventures, from Leighton Holdings
Limited (Leighton Holdings). The acquisition was funded by the Group`s available
cash and control was obtained through the purchase of all the issued share
capital of the acquired entities.
The acquisition relates to the mining equipment and related assets that service
the Area C, Yandi and Orebody 23/25 operations and is consistent with the
Group`s previously stated intention to move the WAIO business from contract
mining to owner-operator mining.
Acquisition related costs of US$16 million have been expensed and included in
other operating expenses in the Consolidated Income Statement.
The provisionally determined fair values of the assets and liabilities acquired
as of the date of acquisition are as follows:
US$M
ASSETS
Trade and other receivables(a) 7
Inventories 44
Property, plant and equipment 380
Intangibles - goodwill 171
Deferred tax assets 9
Total assets 611
LIABILITIES
Interest bearing liabilities 109
Provisions 31
Deferred income 22
Total liabilities 162
Identifiable net assets acquired 449
Net cash consideration paid 449
(a) This represents the gross contractual amount for trade and other receivables
all of which is expected to be collected.
The consideration paid was in excess of the provisional estimates of fair value
of the identifiable assets and liabilities and therefore goodwill of US$171
million has been provisionally recognised in respect of the acquisition. The
goodwill is attributable to the skilled work force and the expected synergies to
result from an in-house mining workforce, improved safety and the management of
costs. None of the goodwill recognised is expected to be deductible for tax
purposes.
The fair values are provisional pending completion of the valuation process. The
finalisation of the fair value of the assets and liabilities acquired will be
completed within 12 months of the acquisition.
11. Business combinations (continued)
Prior to the acquisition, the Group and HWE Mining were parties to a contract
under which HWE Mining supplied contract mining services to the Group. At the
time of acquisition, the Group, as manager of the WAIO joint ventures, agreed to
settle outstanding claims which amounted to US$241 million. This resulted in
US$120 million being recognised in other operating expenses in the Consolidated
Income Statement during the half year ended 31 December 2011, with the remaining
balance having been accrued in prior periods. The settlement amount was based on
mutually agreed claims using commercial rates and extinguished any right for
Leighton Holdings to make retrospective claims for work performed prior to the
acquisition date.
A payment of US$17 million was made to Leighton Holdings for transitional
services to be provided post acquisition. This payment has been treated as a
prepayment, will be amortised over its period of use and is included within
other current assets in the Consolidated Balance Sheet.
From the date of the acquisition to 31 December 2011, revenue of US$304 million,
which includes US$246 million of intercompany revenues, and profit after
taxation of US$43 million were included in the Consolidated Income Statement
with regards to HWE Mining.
Notional financial information
The revenue and profit after taxation of the combined Group for the half year
ended 31 December 2011 as though the acquisition date for all business
combinations that occurred during the half year had been as of 1 July 2011 are
US$37.8 billion and US$10.1 billion.
Business combination during the year ended 30 June 2011
Fayetteville Shale gas
On 31 March 2011, the Group completed the acquisition of 100 per cent of
Chesapeake Energy Corporation`s interests in its Fayetteville Shale gas assets,
and associated midstream pipeline system. The fair values of assets and
liabilities acquired as presented at 30 June 2011 remain provisional due to the
complexity of the valuation process. There have been no significant adjustments
to the provisional fair values as at 31 December 2011. The finalisation of the
fair value of the assets and liabilities acquired will be completed within 12
months of the acquisition.
Directors` Report
The Directors present their report together with the half year financial
statements for the half year ended 31 December 2011 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 2011 and likely future developments are
given on pages 1 to 17. 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 and impacts of the global exchange rates
financial crisis
*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 could negatively operational catastrophes
impact our operating margins and
expansion plans
*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 *The Group`s commercial
environmental exposures and counterparties may not meet
related regulations on their obligations
operations and reputation
*Increased costs and schedule
delays to our development
projects
Further information on the above risks and uncertainties can be found on pages 7
to 10 of the Group`s Annual Report for the year ended 30 June 2011, a copy of
which is available on the Group`s website at www.bhpbilliton.com.
Dividend
Full details of dividends are given on pages 36 to 37.
Board of Directors
The Directors of BHP Billiton at any time during or since the end of the half
year are:
Mr J Nasser - Chairman since Mr M J Kloppers - an Executive
March 2010 (a Director since June Director since January 2006
2006)
Mr M W Broomhead - a Director Mr L P Maxsted - a Director
since March 2010 since March 2011
Dr J G Buchanan - a Director Mr W W Murdy - a Director
since February 2003 since June 2009
Mr C A Cordeiro - a Director Mr K C Rumble - a Director
since February 2005 since September 2008
Mr D A Crawford - a Director Dr J M Schubert - a Director
since May 1994 since June 2000
Ms C J Hewson - a Director since Baroness S Vadera - a Director
March 2010 since January 2011
Auditor`s independence declaration
KPMG in Australia are the auditors of BHP Billiton Limited. Their auditor`s
independence declaration under Section 307C of the Australian Corporations Act
2001 is set out on page 44 and forms part of this Directors` Report.
Rounding of amounts
BHP Billiton Limited is a company of a kind referred to in Australian Securities
and Investments Commission Class Order No 98/100, dated 10 July 1998. Amounts in
the Directors` Report and half year financial statements have been rounded to
the nearest million dollars in accordance with that Class Order.
Signed in accordance with a resolution of the Board of Directors.
J Nasser AO - Chairman
M Kloppers - Chief Executive Officer
Dated this 8th day of February 2012
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 21 to 40,
have been prepared in accordance with IAS 34 `Interim Financial Reporting` as
issued by the IASB, IAS 34 `Interim Financial Reporting` as adopted by the EU,
AASB 134 `Interim Financial Reporting` as issued by the AASB and the Disclosure
and Transparency Rules of the Financial Services Authority in the United Kingdom
and the Australian Corporations Act 2001, including:
(i) complying with applicable accounting standards and the Australian
Corporations Regulations 2001; and
(ii) giving a true and fair view of the financial position of the BHP Billiton
Group as at 31 December 2011 and of its performance for the half year ended on
that date;
(b) the Directors` Report, which incorporates the Review of Operations on pages
1 to 17, includes a fair review of the information required by:
(i) DTR4.2.7R of the Disclosure and Transparency Rules in the United Kingdom,
being an indication of important events during the first six months of the
current financial year and their impact on the half year financial statements,
and a description of the principal risks and uncertainties for the remaining six
months of the year; and
(ii) DTR4.2.8R of the Disclosure and Transparency Rules in the United Kingdom,
being related party transactions that have taken place in the first six months
of the current financial year and that have materially affected the financial
position or performance of the BHP Billiton Group during that period, and any
changes in the related party transactions described in the last annual report
that could have such a material effect; and
(c) in the Directors` opinion, there are reasonable grounds to believe that each
of BHP Billiton Limited and BHP Billiton Plc will be able to pay its debts as
and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors.
J Nasser AO - Chairman
M Kloppers - Chief Executive Officer
Dated this 8th day of February 2012
Lead Auditor`s Independence Declaration under Section 307C of the Corporations
Act 2001
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 2011 there have been:
i.no contraventions of the auditor independence requirements as set out in the
Australian Corporations Act 2001 in relation to the review; and
ii.no contraventions of any applicable code of professional conduct in relation
to the review.
This declaration is in respect of BHP Billiton and the entities it controlled
during the financial period.
KPMG
Martin Sheppard
Partner
Melbourne
8 February 2012
Independent Review Report
Independent Review Report of KPMG Audit Plc ("KPMG UK") to BHP Billiton Plc and
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 2011.
We have reviewed the condensed half-year financial statements of the Group for
the half-year ended 31 December 2011 ("half-year financial statements"), set out
on pages 21 to 40, which comprise the consolidated income statement,
consolidated statement of comprehensive income, consolidated balance sheet,
consolidated cash flow statement, consolidated statement of changes in equity,
summary of significant accounting policies and other explanatory notes 1 to 11.
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 of Responsibility set out
on page 43 in relation to Australian regulatory requirements contained in
section (a) and (c) of the Directors` Declaration of Responsibility.
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 ("EU"); 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 of Responsibility 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 of Responsibility 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 2011 and its performance for the half-year
ended on that date; and complying with Australian Accounting Standard AASB 134
Interim Financial Reporting and the Australian Corporations Regulations 2001.
Our responsibility is to express a conclusion on the half-year financial
statements in the half-year financial report based on our review.
Scope of Review
KPMG UK conducted its review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Reports performed
by the Independent Auditor of the Entity issued by the Auditing Practices Board
for use in the United Kingdom.
KPMG Australia conducted its review in accordance with Auditing Standard on
Review Engagements ASRE 2410 Review of Interim and Other Financial Reports
performed by the Independent Auditor of the Entity as issued by the Australian
Auditing and Assurance Standards Board. 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 2011 are not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting, as
adopted by the EU, and the DTR of the UK FSA.
Simon Figgis
For and on behalf of KPMG Audit Plc
Chartered Accountants
London
8 February 2012
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 Responsibility 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 2011 and of its performance for the half-year ended on that date; and
b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Australian Corporations Regulations 2001.
KPMG
Martin Sheppard
Partner
Melbourne
8 February 2012
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