BHP H/Y Report-Dec 2000Pt1
BHP Limited
13 March 2001
PART 1
BHP Half Year Report
December 2000
(£)BHP
BHP Limited
Australian Business Number 49 004 028 077
Registered Office:
45th Floor BHP Tower - Bourke Place
600 Bourke Street Melbourne 3000 Australia
CONTENTS
Page
REVIEW OF OPERATIONS 1
DIRECTORS' REPORT 8
FINANCIAL STATEMENTS 9
Profit & loss statement 10
Balance sheet 11
Statement of cash flows 12
Notes to the financial statements 13
DIRECTORS' DECLARATION 29
INDEPENDENT REVIEW REPORT 30
STATISTICS 31
Notes to the financial statements
1. Basis of preparation of half year 13
financial statements
2. Revenue 13
3. Depreciation and amortisation 14
4. Borrowing costs 14
5. Abnormal items 15
6. Income tax 15
7. Segment results 16
8. Dividends 18
9. Earnings per share 18
10. Investments in associated entities 19
11. Property, plant and equipment 19
12. Exploration, evaluation and 20
development expenditure capitalised
13. Share capital 20
14. Reserves 23
15. Retained profits 24
16. Notes to the statement of cash flows 24
17. Reconciliation to United States 25
generally accepted accounting
principles disclosures
18 Significant events after end of 28
half year
All amounts are expressed in Australian dollars unless otherwise stated.
BHP LIMITED AND ITS CONTROLLED ENTITIES
The Directors present their report together with the consolidated financial
statements for the half year ended 31 December 2000 and the auditors' review
report thereon.
REVIEW OF OPERATIONS
Half year ended
Results Summary 31 30 Change
December November
2000 1999
Revenue ($ million) 10 506 9 527
- Sales revenue +10.3%
- Other revenue 248 610 -59.3%
10 754 10 137 +6.1%
Net profit 1 427 1 081
attributable to
BHP Entity
shareholders ($ million) +32.0%
Basic earnings per 80.0 61.5 +30.1%
share (cents)
The profit after tax attributable to BHP shareholders for the half year ended
31 December 2000 was $1 427 million. This was a record result and an increase
of $346 million or 32.0% compared with the corresponding half year ended 30
November 1999.
Basic earnings per share were 80.0 cents compared with 61.5 cents for the
corresponding period.
The following major factors affected profit after tax attributable to BHP
shareholders for the half year ended 31 December 2000 compared with the
corresponding period:
Prices (positive impact of $380 million)
Higher prices after commodity hedging for petroleum products and copper
increased profit by approximately $355 million compared with the
corresponding period.
Exchange rates (positive impact of $315 million)
Foreign currency fluctuations net of hedging had a favourable effect of
approximately $315 million compared with the corresponding period.
New operations (positive impact of $100 million)
Profits from the Laminaria/Corallina and Buffalo oil fields (North West
Australia) contributed approximately $150 million for the period. These were
partly offset by increased losses of approximately $50 million from HBI
Venezuela and HBI Western Australia. These losses were mainly due to
production ramp-up difficulties at both facilities, the cessation of interest
capitalisation following commissioning at HBI Venezuela, and the expensing of
capital to resolve process and operational difficulties at HBI Western
Australia.
Asset sales (negative impact of $60 million)
Profits from asset sales were approximately $60 million lower than in the
corresponding period.
Costs (negative impact of $60 million)
Costs had an unfavourable effect of approximately $60 million compared with
the corresponding period. This was partly due to higher superannuation
contributions following the cessation of a superannuation contribution
holiday in December 1999, and implementation costs associated with the
introduction of Shared Business Services. These were partly offset by lower
borrowing costs due mainly to reduced debt levels.
Exploration (negative impact of $45 million)
Exploration expenditure charged to profit was approximately $45 million
higher than in the corresponding period mainly reflecting activity in the
Gulf of Mexico (USA), Latin America and Australia.
Volumes (negative impact of $35 million)
Lower petroleum sales volumes at Bass Strait (Victoria) due to natural field
decline and pipeline damage between Longford and Long Island Point decreased
profits by approximately $60 million compared with the corresponding period.
This was partly offset by higher iron ore shipments which increased profits
by approximately $20 million compared with the corresponding period.
Other (negative impact of $245 million)
The corresponding period included a tax benefit of approximately $270 million
comprising a benefit of $160 million arising from the restatement of deferred
tax balances as a consequence of the Australian company tax rate changes and
a benefit of approximately $110 million arising from finalisation of funding
arrangements related to the Beenup mineral sands project (Western Australia).
The half year ended 31 December 2000 included additional tax benefits of
approximately $75 million in respect of certain overseas exploration
expenditure for which no deduction has previously been recognised.
Outside equity interests' share of net profit increased by approximately $50
million mainly due to improved results at the Ok Tedi (PNG) copper mine and
adjustments in the corresponding period attributable to minority shareholders
of the Moura (Queensland) coal mine following its sale in August 1999.
Dividend
An unfranked dividend of 25 cents per share was declared and paid during the
half year, unchanged from dividends declared in the corresponding period.
Segment Results (after tax)
Following various asset sales and an internal reorganisation, the Services
segment ceased to be reported from 1 July 2000.
As a consequence, Transport and Logistics is reported in Steel and remaining
Services' activities including Shared Business Services, Insurances and
Corporate Services are reported in Group and unallocated items. Comparative
data has been adjusted accordingly. 1999 data for Services mainly relates to
profits from businesses which have been sold.
Half year ended
31 December 2000 30 November 1999
$ million $ million Change %
Minerals 834 582 +43.3
Petroleum 897 459 +95.4
Steel 252 272 -7.4
Services 3
Net unallocated interest (220) (256)
Group and unallocated (307) 2
items
Net profit before outside 1 456 1 062 +37.1
equity interests
Outside equity interests (29) 19
Net profit attributable 1 427 1 081 +32.0
to BHP shareholders
Minerals
Minerals' result for the half year was a profit of $834 million, an increase
of $252 million or 43.3% compared with the corresponding period.
Major factors which contributed to the result were:
* favourable effect of the lower A$/US$ exchange rate;
* higher average copper prices, net of hedging; and
* higher iron ore prices and volumes.
These were partly offset by:
* increased equity accounted losses from HBI Venezuela following production
ramp-up difficulties and the cessation of interest capitalisation following
commissioning;
* the restatement of deferred tax balances in the corresponding period
following the Australian company tax rate changes;
* profits in the corresponding period from the sale of assets; and
* increased losses from HBI Western Australia, including the expensing of
capital to resolve process and operational difficulties.
Persistent commissioning difficulties at HBI Venezuela, a significant
deterioration in the price received for the product, and possible partner
funding issues, have led BHP to commence a review of its continued investment
in this asset. The review will be conducted during the third quarter.
The average price booked for copper shipments for the period, after hedging
and finalisation adjustments, was US$0.84 per pound (1999 - US$0.76).
Finalisation adjustments after tax, representing adjustments on shipments
settled since 30 June 2000, were $15 million favourable (1999 - $32 million
favourable).
Unhedged copper shipments not finalised at 31 December 2000 have been brought
to account at the London Metal Exchange (LME) copper spot price on Friday 29
December 2000 of US$0.82 per pound.
Exploration expenditure was $51 million for the half year (1999 - $30
million) and the charge against profit was $45 million (1999 - $25 million).
Significant developments during the half year included:
* BHP and Mitsubishi Development Pty Ltd jointly acquired QCT Resources Limited
(QCT). In December 2000, a range of integration activities was announced,
including the closure of South Blackwater (Queensland) underground mining by
December 2001 and the combining of the South Blackwater open cut operations
with the existing CQCA Blackwater mine;
* BHP and its joint venture partners in the Escondida (Chile) copper mine
approved the US$1.045 billion Escondida Phase IV expansion project (BHP share
US$600 million (A$1.090 billion)). The expansion will be completed within two
years and will increase ore processing facilities by 85% resulting in an
average increase in copper production of 400,000 tonnes per annum, boosting
average total production to 1.2 million tonnes per annum over the first five
years of full production;
* approval was granted for the US$148 million development of an underground
longwall mine at the San Juan thermal coal operations in New Mexico (USA).
The mine will replace the existing San Juan and La Plata surface mines and
will be the sole coal source for the adjacent San Juan Generating Station;
* BHP announced it would continue to operate its West Australian HBI plant
based on strict technical and financial performance criteria relating to
campaign length, productivity, maintenance turnaround and input costs.
Continued operation requires an additional $110 million capital investment
over the next 18 months to implement additional technical modifications
across the plant; and
* BHP reached agreement with Falconbridge Limited on the formation of a joint
venture which may lead to the development of the Gag Island nickel laterite
project in Indonesia.
Petroleum
Petroleum's result for the half year was a profit of $897 million, an
increase of $438 million or 95.4% compared with the corresponding period.
Major factors which contributed to the result were:
* higher average realised oil price net of commodity hedging of A$53.28 per
barrel (1999 - A$29.47 per barrel), reflecting higher US dollar prices (2000
US$29.26 per barrel; 1999 - US$19.16 per barrel). The average realised oil
price before commodity hedging was US$31.34 per barrel (1999 - US$21.41 per
barrel);
* profits from the Laminaria/Corallina and Buffalo oil fields which commenced
operations in November 1999 and December 1999 respectively;
* favourable effect of lower A$/US$ exchange rate;
* higher LPG, LNG and natural gas prices; and
* additional tax benefits in respect of certain overseas exploration
expenditure for which no deduction has previously been recognised.
These were partly offset by:
* lower Bass Strait oil sales volumes;
* the restatement of deferred tax balances in the corresponding period
following the Australian company tax rate changes; and
* higher exploration charged to profit reflecting activity in the Gulf of
Mexico, Latin America and Australia.
Oil and condensate production was 15.7% higher than the corresponding period
due to the start-up of the Laminaria/Corallina and Buffalo oil fields and
additional oil production from Cossack Pioneer (North West Australia). These
were partly offset by lower oil volumes at Bass Strait due to natural field
decline and pipeline damage between Longford and Long Island Point.
Natural gas production was 8.1% higher than the corresponding period. This
was largely attributable to higher volumes from Bass Strait due to weather
conditions, higher nominations at Bruce (UK), and increased facility capacity
of the US producing properties, partly offset by lower volumes at Liverpool
Bay (UK) due to a planned shutdown in September 2000.
Liquefied natural gas (LNG) production at the North West Shelf (Western
Australia) was 5.5% lower than the corresponding period. This was largely
attributable to the Train 2 planned shutdown and the unplanned Train 1
shutdown in October 2000.
Exploration expenditure for the half year was $162 million (1999 - $100
million). Exploration expenditure charged to profit was $104 million (1999 -
$79 million).
Significant developments during the half year included:
* a Risk Service Contract was signed with the Algerian national oil company,
SONATRACH, for the development of four gas/condensate reservoirs in the
Ohanet region of Algeria;
* BHP agreed to sell a parcel of interests in its Algerian oil and gas
exploration and development activities to Woodside Petroleum Ltd. Woodside
will take a 15 per cent interest in the Ohanet Risk Service Contract, a 50
per cent interest in the Boukhechba Production Sharing Contract and a 50 per
cent interest in the Ouest Hassi R'Mel Gas Study Agreement. The transaction
is subject to Algerian government and SONATRACH approvals;
* BHP agreed to sell its interest in the Buffalo oil field to a subsidiary of
InterOil Corporation. However, BHP's joint venture partner Nexen Petroleum
Australia Pty Ltd exercised its pre-emptive right to purchase the interest.
The sale, on the same terms and conditions, is subject to government
approvals and is expected to be completed before April 2001;
* Letters of Intent were signed with Tokyo Gas Co. Ltd and Toho Gas Co. Ltd of
Japan for the sale and purchase of LNG from the North West Shelf (NWS). The
agreements were signed by the six NWS LNG sellers and cover the supply of LNG
for a period of 25 years starting in 2004, building to a volume of one
million tonnes per annum (mtpa) by 2006. (BHP share 0.17mtpa);
* approval was granted for the development of the Echo/Yodel gas condensate
field on the NWS;
* results from the Atlantis-2 appraisal well and sidetrack confirmed a major
oil accumulation with a multi-hundred million barrel resource potential.
Atlantis-2, located in the Atwater Foldbelt ultra deepwater area of the Gulf
of Mexico, encountered oil bearing sands with net pay in excess of 153 metres
(500 feet). Results of the Atlantis-2 sidetrack well confirmed a lateral
extension of the known range of the Atlantis hydrocarbon accumulation of up
to 1.6 kilometres (one mile) from the original wellbore, and also confirmed
the continuity and quality of the Miocene reservoir sands with a net pay in
excess of 92 metres (300 feet true vertical thickness); and
* BHP Petroleum acquired a 4.95 per cent interest in the Genesis field in the
deep water Gulf of Mexico.
Steel
Steel's result for the half year was a profit of $252 million, a decrease of
$20 million or 7.4% compared with the corresponding period.
Major factors which contributed to the result were:
* the benefits from lower A$/US$ exchange rates;
* one-off benefits realised on the spin-out of OneSteel Limited;
* higher prices; and
* improved performance from overseas businesses.
These were offset by:
* the restatement of deferred tax balances in the corresponding period
following the Australian company tax rate changes; and
* lower sales volumes of coated products to the Australian market.
Steel despatches from continuing flat and coated operations were 2.47 million
tonnes for the half year, 3% above the corresponding period:
- Australian domestic despatches were 0.99 million tonnes, down 4%
compared with the corresponding period. A decline in the domestic market was
partly offset by the inclusion of despatches to OneSteel Limited from 1
November 2000;
- Australian export despatches were 1.06 million tonnes, up 15%;
- New Zealand steel despatches were 0.25 million tonnes, down 12%; and
- despatches from overseas plants were 0.17 million tonnes, up 19%.
Steel despatches from discontinuing operations for the half year were 0.69
million tonnes, 58% below the corresponding period. This was primarily due to
the spin-out of OneSteel Limited and the sale of the US West Coast businesses
in June 2000.
Significant developments during the half year included:
* the spin-out of the Long Products business, OneSteel Limited, in October
2000; and
* the signing of an agreement with e-STEEL Corporation to build and operate a
customised steel-based e-commerce network.
Net unallocated interest
Net unallocated interest expense was $220 million for the half year compared
with $256 million for the corresponding period. This decrease was mainly due
to significantly lower funding levels, partly offset by higher interest rates
in the US and Australia, the unfavourable effect of exchange rate movements,
and lower capitalised interest.
Group and unallocated items
The result for Group and unallocated items was a loss of $307 million for the
half year compared with a profit of $2 million for the corresponding period.
The corresponding period included a tax benefit of $112 million arising from
finalisation of funding arrangements related to the Beenup mineral sands
project.
The result for the half year included losses of $208 million after tax from
external foreign currency hedging compared with losses of $80 million after
tax in the corresponding period. This predominantly reflects the lower value
of the Australian dollar relative to the US dollar for hedging contracts
settled in the half year.
The result also included implementation costs associated with the
introduction of Shared Business Services.
Significant developments during the half year included:
* on 18 October 2000, following appeal by the Australian Taxation Office (ATO)
the Full Bench of the Federal Court ruled in favour of the ATO concerning the
deductibility of financing costs paid to General Electric Company in
connection with the acquisition of the Utah Group in the early 1980s. BHP is
seeking leave to appeal to the High Court of Australia. The Company disclosed
a contingent liability of $211 million, as at 30 June 2000, in the 2000
Annual Report. No adjustments will be made to the Group accounts pending
finalisation of this matter; and
* a 'self insurance' model to manage commodity and currency price risks was
adopted. The 'self insurance' model utilises natural hedges as the principal
means of managing market risk. Hedging transactions will only be undertaken
when it is necessary to mitigate residual risk from underlying exposures in
order to support the Company's strategic objectives. Based on the current
composition of BHP's asset portfolio, there is no requirement to hedge for
the oreseeable future. Current hedged positions in oil will be allowed to
mature over the remainder of this financial year and currency positions will
be allowed to mature through to 2004. BHP may infrequently and to a limited
extent enter into strategic financial transactions when there is perceived to
be a significant under or over valuation of a commodity market represented
within the BHP portfolio. Such transactions would not be accounted for as
hedging transactions.
Outside equity interests
Outside equity interests' share of net profit increased mainly due to
improved results at the Ok Tedi copper mine and adjustments in the
corresponding period attributable to minority shareholders of the Moura coal
mine following its sale in August 1999.
CONSOLIDATED FINANCIAL RESULTS
Revenue
Sales revenue of $10 506 million increased by $979 million or 10.3% compared
with the corresponding period. This mainly reflects the effect of the lower
A$/US$ exchange rate and higher prices for petroleum products and copper.
Other revenue, including interest income, decreased by $362 million mainly
reflecting lower proceeds from asset sales. Total revenue increased by $617
million to $10 754 million.
Depreciation and Amortisation
Depreciation and amortisation charges increased by $95 million to $1 057
million. This mainly reflects depreciation on recently commissioned
operations and the unfavourable effect of exchange rate variations, partly
offset by depreciation in the corresponding period on businesses now sold.
Borrowing Costs
Borrowing costs decreased by $43 million to $312 million, mainly due to
significantly lower funding levels, partly offset by higher interest rates,
the unfavourable effect of exchange rate movements and lower capitalised
interest.
Tax Expense
Tax expense of $621 million was $469 million higher than for the
corresponding period. The charge for the half year represented an effective
tax rate of 29.9% (1999 - 12.5%). This is lower than the nominal Australian
tax rate of 34% primarily due to the recognition of tax benefits in respect
of certain prior year overseas exploration expenditure for which no deduction
has previously been recognised. This was partly offset by overseas
exploration expenditure for which no deduction is presently available,
non-deductible interest expense on preference shares, and non-deductible
accounting depreciation and amortisation.
Financial Ratios
At 31 December 2000 BHP's gearing ratio was 38.6% compared to 42.7% at 30
June 2000.
Based on earnings before interest paid and tax (EBIT), interest cover for the
half year was 7.6 times compared with 3.3 times for the thirteen months ended
June 2000 and 4.2 times for the corresponding period. Based on earnings
before interest paid, tax and depreciation (EBITDA), interest cover for the
half year was 10.9 times compared with 8.1 times for the thirteen months
ended June 2000 and 6.8 times for the corresponding period.
SIGNIFICANT EVENTS AFTER END OF HALF YEAR
No matter or circumstance has arisen since the end of the half year that has
significantly affected or may significantly affect the operations, the
results of operations or state of affairs of the Company in subsequent
financial periods, other than the following:
* BHP entered into an agreement to acquire a 20 per cent equity interest in
Brazilian company Caemi Mineracao e Metalurgia S.A. (Caemi) from the current
controlling shareholders for a consideration of US$332 million. The 20 per
cent equity interest comprises 60 per cent of voting capital in Caemi, which
is a diversified company with interests in iron ore, kaolin and transport and
logistics. Completion of the acquisition is subject to competition law
approval by the European Commission and a waiver, or non-exercise, by Mitsui
& Co. Ltd. Of its right of first refusal, which exists for 60 days. Following
completion of the acquisition, BHP will make a delisting tender offer for
preferred shares subject to Caemi shareholder approval; and
* BHP announced that it would implement an on-market buyback program for the
purchase of up to 90 million of its shares (approximately five per cent of
issued capital). No time period has been set for the share buyback.
DIRECTORS' REPORT
Board of Directors
The Directors of the Company in office during or since the end of the half
year are:
B C ALBERTS - a Director since January 2000;
P M ANDERSON - Managing Director and Chief Executive Officer since December
1998;
D R ARGUS - Chairman since April 1999;
M A CHANEY - a Director since May 1995;
J C CONDE - a Director since March 1995;
D A CRAWFORD - a Director since May 1994;
D A JENKINS - a Director since March 2000;
R J McNEILLY - Executive Director since July 1991;
J T RALPH - a Director since November 1997; and
J M SCHUBERT - a Director since June 2000.
Review of operations
Refer pages 1 - 7.
Rounding of amounts
The Company is a company of a kind referred to in Class Order No. 98/0100
dated 10 July 1998 issued by the Australian Securities and Investments
Commission. Amounts in this report, unless otherwise indicated, have been
rounded in accordance with that Class Order to the nearest million dollars.
Signed in accordance with a resolution of the Board.
D R Argus
Chairman of Directors
Dated in Melbourne this 13th day of March 2001.
Financial Statements
for the half year ended 31 December 2000
PROFIT & LOSS STATEMENT
for the half year ended (a)
Notes 31 December 30 November
2000 1999
$ million $ million
Revenue from ordinary activities
Sales 2 10 506 9 527
Share of net results of associated 2 (22) 17
entities
Other revenue 2 270 593
10 754 10 137
Operating expenses and cost of 7 308 7 606
sales
Depreciation and amortisation 3 1 057 962
Borrowing costs 4 312 355
Profit from ordinary activities before 2 077 1 214
income tax
deduct
Tax expense attributable to ordinary 6 621 152
activities
Net profit 7 1 456 1 062
deduct/(add)
Outside equity interests in net profit 29 (19)
Net profit attributable to members of 1 427 1 081
the BHP Entity
Adjustment for initial adoption of 124
revised accounting standard
AASB 1016: Accounting for Investments
in Associates
Net exchange fluctuations on 271 19
translation of foreign currency net
assets and foreign currency borrowings
net of tax
Total direct adjustments to equity 271 143
attributable to members of the BHP
Entity
Total changes in equity other than 1 698 1 224
those resulting from transactions with
owners
(a) 31 December refers to the six months ended 31 December 2000. 30
November refers to the six months ended 30 November 1999. Refer Note 1
(Impact of change of financial year).
The accompanying notes form part of these financial statements.
BALANCE SHEET
as at
31 December 30 June 30 November
Notes 2000 2000 1999
Assets $ million $ million $ million
Current assets
Cash assets 397 684 464
Receivables 2 498 2 629 2 634
Investments 355 359 481
Inventories 1 768 2 138 2 239
Other 263 271 228
Total current assets 5 281 6 081 6 046
Non-current assets
Receivables 194 189 189
Investments in associated 10 1 130 632 307
entities
Other financial assets 303 499 376
Inventories 135 159 172
Property, plant and 11 16 240 17 567 19 839
equipment
Exploration, evaluation and 12 2 306 2019 2 115
development expenditure
capitalised
Intangible assets 2 130 168
Tax assets 988 1 268 958
Other 870 800 746
Total non-current assets 22 168 23 263 24 870
Total assets 27 449 29 344 30 916
Liabilities
Current liabilities
Payables 2 444 2 566 2 308
Interest bearing liabilities 882 2 530 1 918
Tax liabilities 191 192 236
Other provisions 980 1 535 1 328
Total current liabilities 4 497 6 823 5 790
Non-current liabilities
Payables 36 45 76
Interest bearing liabilities 6 331 5 868 9 010
Tax liabilities 1 826 1 896 2 006
Other provisions 3 680 3 707 3 520
Total non-current liabilities 11 873 11 516 14 612
Total liabilities 16 370 18 339 20 402
Net assets 11 079 11 005 10 514
Shareholders' equity
Shareholders' equity
attributable to members of the
BHP Entity
Share capital 13 5 919 7 093 6 944
Reserves 14 675 419 309
Retained profits 15 3 814 2 841 2 590
10 408 10 353 9 843
Shareholders' equity 671 652 671
attributable to outside equity
interests
Total shareholders' equity 11 079 11 005 10 514
The accompanying notes form part of these financial statements.
Statement of Cash Flows
for the half year ended (a)
Notes 31 December 2000 30 November 1999
$ million $ million
Cash flows related to
operating activities
Receipts from customers 10700 9194
Payments to suppliers, (7595) (7836)
employees, etc
Dividends received 33 1
Interest received 53 39
Borrowing costs (352) (508)
Proceeds from gas sales - 231
contract price re-negotiation
Other 203 253
Operating cash flows before 3042 1374
income tax
Income taxes paid (217) (106)
Net operating cash flows 2825 1268
Cash flows related to
investing activities
Purchases of property, plant (683) (471)
and equipment
Exploration expenditure (212) (137)
Purchases of investments (498) (106)
Investing outflows (1393) (714)
Proceeds from sale of 31 407
property, plant and equipment
Proceeds from sale or 96 -
redemption of investments
Proceeds from OneSteel spin 661
out
Proceeds from disposal, sale
or partial sale of controlled
entities
and joint venture interests - 13
net of their cash
Net investing cash flows (605) (294)
Cash flows related to
financing activities
Proceeds from ordinary share 49 130
issues
Borrowings 650 1531
Repayment of borrowings (2255) (2059)
Dividends paid (891) (485)
Other (36) 107
Net financing cash flows (2483) (776)
Net (decrease)/increase in (263) 198
cash and cash equivalents
Cash and cash equivalents at 937 573
beginning of half year
Effect of exchange rate 7 4
changes on cash and cash
equivalents
Cash and cash equivalents at 16 681 775
end of half year
(a) 31 December refers to the six months ended 31 December 2000. 30
November refers to the six months ended 30 November 1999. Refer Note 1
(Impact of change of financial year).
The accompanying notes form part of these financial statements.
Notes to the Financial Statements
1 Basis of preparation of half year financial statements
These statements are general purpose half year consolidated financial
statements that have been prepared in accordance with the requirements of the
Corporations Law, Australian Stock Exchange Listing Rules, Australian
Accounting Standard AASB 1029: Half Year Accounts and Consolidated Accounts
and Urgent Issues Group Consensus Views, and give a true and fair view of the
matters disclosed. These half year financial statements and reports should be
read in conjunction with the annual financial statements for the 13 month
period ended 30 June 2000 and any public announcements made by BHP Limited
and its controlled entities during the half year in accordance with
continuous disclosure obligations arising under the Corporations Law and
Australian Stock Exchange Listing Rules.
Accounting policies have been consistently applied by all entities in the BHP
Group and are consistent with those of the previous financial year.
Effect of change in financial year
Following the change in financial year for the BHP Group from 31 May to 30
June effective 30 June 2000, the period covered by these financial statements
is the six months ended 31 December 2000. All references to the corresponding
period in these statements are references to the six months ended 30 November
1999.
Half year ended
2000 1999
$ million $ million
2 Revenue
Revenue from ordinary activities
Sales
Sale of goods 10 236 9 255
Rendering of services 270 272
Total sales 10 506 9 527
Share of net results of associated entities (22) 17
Other revenue
Interest revenue 47 42
Dividend income 5 1
Proceeds from sale of assets 137 464
Management fees 29 14
Other revenue 52 72
Total other revenue 270 593
Half year ended
2000 1999
$ mill $ mill
3 Depreciation and amortisation ion ion
Depreciation relates to
Buildings 57 56
Plant, machinery and equipment 834 788
Mineral rights 24 32
Exploration, evaluation and development expenditures 136 76
carried forward
Capitalised leased assets 2 2
Total depreciation 1 053 954
Amortisation (a)(b) 4 8
Total depreciation and amortisation 1 057 962
(a) Amortisation relates to goodwill only (not tax effected).
Half year ended
2000 1999
$ million $ million
(b) Profit from ordinary activities
restated to exclude amortisation of
goodwill
Net profit before outside equity 1 456 1 062
interests
Add amortisation of goodwill 4 8
Net profit before outside equity interests 1 460 1 070
and amortisation of goodwill
(deduct)/add outside equity (29) 19
interests
Net profit (before amortisation of 1 431 1 089
goodwill)
attributable to members of the BHP
Entity
Half year ended
2000 1999
$ million $ million
4 Borrowing costs
Borrowing costs paid or due and payable
on borrowings 313 370
on finance leases 2 2
Total borrowing costs 315 372
Deduct Amounts capitalised 3 17
Borrowing costs charged against profit 312 355
5 Abnormal items
The following abnormal items are included in the results for the half years
ended:
$ million
Gross Tax Net
31 December 2000
- - -
30 November 1999
Tax benefit arising from the restatement of - 160 160
deferred tax balances as a consequence of
the Australian company tax rate change to
34% applicable from 1 July 2000, and then to
30% applicable from 1 July 2001
Tax benefit arising from finalisation of - 112 112
funding arrangements related to the Beenup
mineral sands project
Total abnormal items - 272 272
Half year ended
2000 1999
$ million $ million
6Income tax
The prima facie tax on profit from ordinary activities
differs from the income tax
provided in the accounts and is calculated as follows:
Profit from ordinary activities before income tax 2 077 1 214
Tax calculated at 34 cents in the dollar (1999 - 36 cents 706 437
in the dollar) on profit from ordinary activities before
income tax
deduct tax effect of
Australian tax rate change 160
Finalisation of Beenup funding arrangements 112
Recognition of prior year tax losses 173 72
Amounts over provided in prior years 19 45
Investment and development allowance 19 13
Overseas tax rate change 14
Research and development incentive 2 3
Rebate for dividends 2 -
Exempt income 3 -
474 32
Add/(deduct) tax effect of
Foreign expenditure including exploration not 41 24
presently deductible
Non-deductible dividends on redeemable preference 33 34
shares
Non-deductible accounting depreciation and 15 32
amortisation
Non-tax effected operating losses 10 13
Tax differential- non-Australian income 9 (13)
Foreign exchange/other 39 30
Income tax expense attributable to ordinary activities 621 152
Effective tax rate 29.9% 12.5%
7 Segment results
The predominant activities of the BHP Group by industry classification are:
- Minerals (exploration for and mining, processing and marketing of iron
ore, coal, diamonds, silver, lead, zinc, copper and copper by-products
including gold);
- Petroleum (exploration for and production, processing and marketing of
hydrocarbons); and
- Steel (manufacture and marketing of steel products along with transport
and logistics).
Net unallocated interest represents the net after tax cost of debt funding to
the BHP Group excluding interest received by or paid by business segments
involving mainly joint venture partner finance.
Group and unallocated items represent Group Centre functions.
$ million
Inter- Deprecia- Net Segment Capital
External segment tion and profit Assets expenditure
Revenue revenue amortisa- (b) Gross (c)
tion Net
Industry classification (a) 2000
Minerals 4 430 163 426 834 12909 9057 311
Petroleum 3 204 15 447 897 7746 3850 420
Steel (d) 3 289 312 178 252 5381 3829 51
Net 39 (220)
unallocated
interest
Group and (208) 22 6 (307) 1413 (5657) 38
unallocated
items(e)
BHP Group 10 754 512 1 057 1 456 27449 11079 820
$ million
External Inter Deprec Net Segment Capital
Revenue Segment iation profit Assets expenditure
revenue & amort- (b) Gross (c)
isation Net
Industry 1999
classificat
ion (a)
Minerals 4 057 178 413 582 12 865 9337 115
Petroleum 2 070 7 314 459 7 751 4031 231
Steel 3 938 205 222 272 8 760 6894 62
(d)
Services 84 130 6 3 169 (7) 2
Net 25 (256)
unallocated
interest
Group and (37) 5 7 2 1 371 (9741) 11
unallocated
items(e)
BHP Group 10 137 525 962 1062 30 916 10514 421
Following various asset sales and an internal reorganisation, the Services
segment ceased to exist from 1 July 2000. As a consequence, Transport and
Logistics is reported in Steel and remaining Services' businesses including
Shared Business Services, Insurances and Corporate Services are reported in
Group and unallocated items. Comparative data has been adjusted accordingly.
1999 data for Services mainly relates to sold businesses including
Engineering and Information Technology.
Before outside equity interests.
Excluding capitalised borrowing costs and capitalised exploration.
Includes the OneSteel business, which was spun-out with effect from 31
October 2000.
Includes consolidation adjustments.
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