Interim Report 31 Dec 2001
BHP Billiton Limited
14 February 2002
PART 1
BHP BILLITON
INTERIM REPORT
31 DECEMBER 2001
Table of Contents
Highlights................................................................. 3
Financial Review........................................................... 6
Basis of Preparation of Financial Information.............................. 6
Turnover................................................................... 7
EBIT....................................................................... 7
Depreciation............................................................... 9
Net Interest............................................................... 9
Taxation................................................................... 10
Equity Minority Interests.................................................. 10
Earnings................................................................... 10
Dividends.................................................................. 10
Cash Flow.................................................................. 11
Balance Sheet.............................................................. 12
Currency................................................................... 13
Portfolio Risk Management.................................................. 14
Share Price Performance.................................................... 14
Operational Review......................................................... 15
Growth Projects............................................................ 15
Portfolio Management....................................................... 16
Projects Under Development................................................. 17
Merger Integration......................................................... 18
Board & Management......................................................... 19
Customer Sector Group Results.............................................. 20
Aluminium.................................................................. 21
Base Metals................................................................ 22
Carbon Steel Materials..................................................... 23
Stainless Steel Materials.................................................. 24
Energy Coal................................................................ 25
Exploration, Technology and New Business................................... 26
Other Activities........................................................... 26
Petroleum.................................................................. 27
Steel...................................................................... 28
Group and Unallocated Items................................................ 28
Interim Financial Information.............................................. 29
Independent review report of the auditors of BHP Billiton Plc.............. 30
Financial Statements....................................................... 31
Notes to the Financial Statements.......................................... 33
Customer Sector Group Results.............................................. 44
BHP Billiton Group Financial Results under Australian GAAP................. 54
BHP BILLITON INTERIM REPORT
31 DECEMBER 2001
Highlights
• Attributable profit of US$1,198 million, despite a generally unfavourable
economic environment and depressed commodity prices in key businesses.
• Key factors impacting the interim result, compared with the corresponding
period, include lower commodity prices, offset by the significant
devaluation of the South African rand against the US dollar during the
period.
• Excellent progress on merger integration.
• Since late June 2001, commitment of US$1.8 billion to new growth projects.
• Production commenced at Typhoon oil and gas (US) and Antamina copper/zinc
(Peru).
• Record West Australian iron ore production.
2001 2000 Change
Half year ended 31 December US$M US$M %
Group turnover (1) 8 894 9 396 -5.3
EBITDA (1) (2) 2 514 2 683 -6.3
EBIT (1) (3) 1 651 1 870 -11.7
Attributable profit 1 198 1 158 3.5
Operating cash flow and dividends from joint ventures 2 109 2 519 -16.3
Capital & investment expenditure 1 173 2 727 -57.0
EBITDA interest coverage (times)(4) 9.4 9.1 3.3
Basic earnings per share (US cents) 19.9 19.7 1.0
31 Dec 2001 30 Jun 2001 Change
As at US$M US$M %
Attributable net assets 12 179 11 340 7.4
Gearing (net debt/(net debt + net assets)) 37.6% 38.4%
Debt to equity ratio (net debt/attributable net 62.0% 64.6%
assets)
(1) Including the group's share of joint ventures and associates.
(2) EBITDA is profit before net interest, taxation, and depreciation and amortisation.
(3) EBIT is profit before net interest and taxation.
(4) For this purpose, net interest includes capitalised interest and excludes the
effect of discounting on provisions and exchange differences arising from net
debt.
The above financial results are prepared in accordance with UK generally
accepted accounting principles (GAAP). Financial results prepared under
Australian GAAP are provided on page 54.
FROM THE CHAIRMAN
Financial Results
On behalf of my fellow Directors, I am pleased to report that BHP Billiton's
financial results for the half year ended 31 December 2001 demonstrate the
substantial benefits of commodity and market diversification that characterise
the merged Group. BHP Billiton's earnings of US$1,198 million represents a 3.5%
increase on the corresponding period, while earnings per share increased 1.0% to
19.9 US cents.
The results also indicate the opportunities for high quality growth within the
portfolio, with a number of new projects now contributing to earnings, several
in development and others expected to be sanctioned shortly.
Excellent progress has been made on the integration of the two organisations.
The first stage of the integration - bringing two organisations and management
systems together - has been substantially completed. The focus now is on
sequencing the major growth opportunities within the portfolio and in capturing
the potential for operational efficiencies across the Group.
The financial results for the half year are a pleasing outcome in a market
environment where prices for copper, oil, nickel, chrome, steel products and
aluminium were all markedly lower than the corresponding period. In fact, lower
commodity prices reduced turnover by approximately US$405 million and, after
adjusting for price linked costs, the net effect on EBIT was US$280 million
relative to the corresponding half year.
For many companies in the natural resources sector, this alignment of weaker
commodity prices would present a major threat to both earnings and the ability
to fund future growth. In BHP Billiton's case, stronger price performances in
Carbon Steel Materials (iron ore and metallurgical coal), Energy Coal and
natural gas have partially offset the adverse impact of price declines
elsewhere. Furthermore, our operating base in countries with depreciating
currencies, notably the South African rand and Australian dollar benefited our
result substantially. In addition, BHP Billiton has had the flexibility in
adverse market conditions to temporarily reduce copper output.
Growth
BHP Billiton's commitment to delivering high quality growth projects was
demonstrated with the approval of a number of major projects including the Mozal
II aluminium expansion in Mozambique, the Mount Arthur North energy coal mine
and the Dendrobium metallurgical coal mine, both in New South Wales (Australia),
the Bream Gas Pipeline in Bass Strait, Victoria (Australia), the Hillside III
aluminium expansion in South Africa and the Mad Dog oil and gas field
development in the US. The depth of the inventory of projects under
construction, as well as new projects awaiting sanction, is a clear
distinguishing feature of the BHP Billiton portfolio.
Merger Integration
Progress has been made on other fronts. The merger integration work has
delivered an organisational structure with clear accountabilities and
responsibilities, a group wide marketing organisation and an established
governance and risk management framework. The process for capturing the US$270
million of merger benefits in financial year 2003 has been established and we
are on track to achieving this goal.
While at an early stage of the Group's development, significant progress is
being made in addressing the real value propositions from the merger - the
sequencing of the deep inventory of high quality growth projects, extracting
benefits across the organisation through common business systems, and a rigorous
approach to achieving operating cost performance improvements.
A stronger focus on operating performance and cost reduction is taking root in
the organisation. Already, an operating excellence programme is being
implemented in key businesses, harnessing the ideas and skills of our employees
to improve business, safety and community outcomes. Progress in our West
Australian iron ore operations in reducing railing and port loading costs over
the past year is one example of improvement, and provides a framework for best
practices in one area to be transferred across the organisation.
Additional highlights for the period include a credit rating upgrade by Standard
& Poors to A/A-1. Also BHP Billiton made its first post merger approach to the
debt market for a US$2.5 billion syndicated multi-currency revolving credit
facility and then a A$1 billion corporate debt security issue. Both transactions
were very successful and contribute to diversifying our debt portfolio as well
as improving our cost of funds.
The Customer Sector Groups have developed strategic plans and we expect to
announce the BHP Billiton strategic framework to the investment market shortly.
I have been impressed with the strong working relationship between Paul Anderson
and Brian Gilbertson. I am confident that the recent announcement of the
formation of the Office of the Chief Executive will facilitate a smooth
transition when Paul Anderson leaves the Company later this year.
Portfolio Management
From a portfolio management perspective, we have made significant progress in
aligning the combined asset portfolio, including the sell down or divestiture of
a number of assets, which are detailed in this report. As recently announced, we
have also finalised our responsible exit from the Ok Tedi copper mine in Papua
New Guinea, in the process establishing a programme fund to support the future
social and economic development of the people of Papua New Guinea and, in
particular the Western Province. We also announced the sale of our interest in
the PT Arutmin Indonesian coal operations.
The public listing of BHP Steel remains on track. We expect to make an
announcement to the market in May 2002 that includes the release of scheme
documents, a prospectus and details of a sales facility. Shareholder approvals
will be sought by means of Shareholder Meetings in Australia and the United
Kingdom, and subject to such approvals, the public listing should be completed
around the middle of the year.
Business Outlook
In calendar 2001, the global economy experienced the sharpest annual contraction
in industrial production since 1975. Production across member countries of the
Organisation for Economic Co-Operation and Development (OECD) is estimated to
have declined by over 5% in the year to October 2001 as companies reduced
production and pared back inventories in the face of falling demand. Growth
across the major Asian economies also slowed with only China, South Korea,
Indonesia and Thailand managing to avoid a recession. The events of 11 September
2001 only reinforced the downward momentum already evident in major markets. As
yet, there is little evidence of a recovery in the major economies. Though
demand and prices remain strong for some of our products and in certain markets,
others are experiencing challenging conditions. While we are confident of the
medium term outlook, the current half year will continue to be difficult. Our
robust cash flows and diversified income stream leave us well placed in this
downturn and in a strong position to take advantage of the recovery when it
comes.
Don Argus
Chairman
Financial Review
Basis of Preparation of Financial Information
The financial results included in this document release are prepared in
accordance with UK generally accepted accounting principles (GAAP). On 29 June
2001 BHP Billiton Limited and BHP Billiton Plc entered into a Dual Listed
Companies (DLC) merger. Under UK GAAP the DLC merger is accounted for using the
merger method of accounting. The results of BHP Billiton Limited and BHP
Billiton Plc for the period have been combined and the prior period results have
been prepared as if the companies have always been combined. The reporting
currency is US dollars which is the dominant currency in which the BHP Billiton
Group operates.
The combined results for the half year ended 31 December 2001, prepared in
accordance with UK GAAP, are generally consistent with the combined results
under Australian GAAP as required by the Australian Securities and Investments
Commission in respect of dual listed companies. However, in contrast to UK GAAP,
Australian regulatory requirements do not allow the combination of the results
of BHP Billiton Limited with those of BHP Billiton Plc for periods prior to
consummation of the DLC merger on 29 June 2001. Financial results prepared in
accordance with Australian GAAP are provided on page 54.
With effect from 1 July 2001, the majority of BHP Billiton Limited's businesses
changed their reporting currencies to US dollars, the functional currency of the
combined BHP Billiton Group. This is consistent with BHP Billiton Plc and is the
basis on which the combined BHP Billiton Group manages its businesses. Most BHP
Billiton commodities are sold in US dollars and are predominantly destined for
export markets.
Except for the effect of the functional currency change, the financial
information has been prepared on the same basis and using the same accounting
policies as were used in preparing the results for the BHP Billiton Group as
presented in the BHP Billiton Plc financial statements (but not the BHP Billiton
Limited financial statements) for the year ended 30 June 2001.
The financial information included in this document provides an analysis of the
results for the half year ended 31 December 2001 compared with the half year
ended 31 December 2000. All references to the corresponding period are to the
half year ended 31 December 2000.
Turnover
Turnover, including the group's share of joint ventures and associates,
decreased by 5.3% to US$8,894 million mainly reflecting the effect of lower
prices for crude oil, stainless steel materials, base metals, aluminium,
alumina, diamonds and steel products. These factors were partly offset by the
higher prices for metallurgical coal, energy coal, iron ore and gas, and the
inclusion of a full half year's results of Rio Algom, the energy coal operations
in Colombia, the additional 29% interest in the EkatiTM diamond mine (Canada)
and the additional 56% interest in Worsley alumina refinery (Australia). The
corresponding period included turnover from OneSteel Limited.
EBIT
Earnings before interest and tax (EBIT) was US$1,651 million, down by 11.7%
compared with the corresponding period. This mainly reflects a significant
decline in commodity sales prices, lower profits from ceased, sold and
discontinuing operations, increased exploration expenditure and the inflation
impact on operating costs. These factors were partly offset by profits from new
and acquired operations, the favourable effect of exchange rates, lower price
linked costs, and increased profits from asset sales.
The following table details the approximate impact of major factors affecting
EBIT for the half year ended 31 December 2001 compared with the corresponding
period:
US$M
EBIT for the half year ended 31 December 2000 1,870
Change in sales prices ( 405 )
Change in volumes 5
Price linked costs 125
Inflation on costs ( 70 )
Costs ( 5 )
New and acquired operations 170
Ceased, sold and discontinuing operations ( 165 )
Exchange rates 175
Asset sales 30
Exploration ( 75 )
Other items ( 4 )
EBIT for the half year ended 31 December 2001 1,651
Prices
Lower prices for crude oil, nickel, chrome, copper, aluminium, alumina,
diamonds, silver and zinc decreased turnover by approximately US$645 million.
This decrease was partly offset by higher energy coal, metallurgical coal, iron
ore and gas prices which increased turnover by approximately US$240 million.
Volumes
Higher sales volumes mainly from Stainless Steel Materials, Petroleum and
Ekati(TM) increased EBIT by US$60 million but lower volumes from Base Metals and
Aluminium businesses reduced the net volume gain to approximately US$5 million.
Costs
Cost reductions increased EBIT by approximately US$120 million compared to the
corresponding period. Lower price linked costs for London Metals Exchange (LME)
listed commodities together with lower royalties and taxes for petroleum
products resulted in cost reductions totalling approximately US$125 million.
Costs increased during the period due to operational issues at energy coal
operations (New Mexico) and metallurgical coal operations (Australia) together
with higher business development costs at Petroleum, partly offset by transport
costs savings at Iron Ore operations (Western Australia).
Inflation increased costs by approximately US$70 million.
New and acquired operations
New and acquired operations increased EBIT by approximately US$170 million
compared with the corresponding period mainly due to:
• increased ownership interests in the Worsley alumina refinery;
• a full six months contribution from Carbones del Cerrejon and Cerrejon
Zona Norte Coal (Colombia);
• the fully commissioned Mozal aluminium smelter (Mozambique);
• a full six months contribution from Rio Algom base metals businesses;
• the acquisition of an additional 29% interest in the Ekati(TM) diamond
business;
• commencement of production of petroleum products from Typhoon (America),
Zamzama (Pakistan) and Keith (North Sea); and
• improved operating performance at Boodarie(TM) Iron (Western Australia).
These factors were partially offset by a downturn in the Metals Distribution
(US) business compared with the corresponding period.
Ceased, sold and discontinuing operations
Steel profits (excluding spun-out steel operations) reduced by approximately
US$120 million. The corresponding period included contribution to EBIT of
approximately US$45 million from a higher ownership interest in metallurgical
coal (Queensland), spun-out steel operations (OneSteel Limited), the Buffalo
oilfield (Australia) and the Ok Tedi copper mine (PNG), partly offset by losses
from HBI Venezuela.
Foreign exchange
Foreign currency fluctuations had a favourable effect of approximately US$175
million compared with the corresponding period mainly due to the impact of lower
Rand/US$ and A$/US$ exchange rates on related operating costs, including
translation of provision balances, partly offset by increased losses on legacy
A$/US$ currency hedging.
Asset sales
Profits from asset sales were approximately US$30 million higher than the
corresponding period mainly due to the profit on sale of PT Arutmin Energy Coal
operations in Indonesia.
Exploration
Exploration charged to profit was approximately US$75 million higher than the
corresponding period mainly reflecting the write-off of La Granja copper
exploration activities (Peru), together with increased petroleum activity in the
Gulf of Mexico.
EBIT by Customer Sector Group is discussed on pages 20 to 27.
Depreciation
The depreciation charge of US$863 million increased by US$50 million compared
with the corresponding period. This primarily reflects the commissioning of
Cerro Matoso Line 2 (Stainless Steel Materials), the additional 29% interest
acquired in Ekati(TM) (Exploration Technology and New Business) and the additional
56% interest in the Worsley alumina refinery (Aluminium). Increased production
across various petroleum businesses also contributed to the higher charge
compared with the corresponding period. These factors were partly offset by
reduced depreciation charges from ceased, sold and discontinuing operations,
including the effect on depreciation of the write-off in the year ended 30 June
2001 of Ok Tedi (Other Activities). The breakdown by Customer Sector Group is as
follows:
Half year ended Half year ended Year ended
31 Dec 2001 31 Dec 2000 30 Jun 2001
US$M US$M US$M
Aluminium 115 87 198
Base metals 118 101 216
Carbon steel materials 87 90 186
Stainless steel materials 51 36 82
Energy coal 89 87 184
Exploration technology and new business 35 15 31
Other activities 6 38 79
Petroleum 283 251 500
Steel 69 99 174
Group & unallocated items 10 9 22
Depreciation 863 813 1 672
Net Interest
Net interest payable, before exchange gains, capitalised interest and
discounting on provisions, reduced from US$296 million to US$268 million. The
reduction of US$28 million included a benefit of US$73 million from lower market
interest rates, partly offset by US$45 million additional interest on higher net
borrowing levels.
Exchange gains on net debt were US$242 million compared with US$95 million in
the corresponding period, primarily arising on the period end translation of
Rand denominated debt of companies which account in US dollars as their
functional currency. The Rand depreciated by 32% during the current period
compared with the 10% depreciation in the corresponding period.
EBITDA interest coverage was 9.4 times compared with 9.1 times in the
corresponding period (excluding the effect of differences on exchange and
discounting on provisions).
Taxation
The tax charge for the half year ended 31 December 2001 of US$402 million (2000
- US$480 million) represents an effective tax rate of 24.8% (2000 - 28.8%). This
is lower than the nominal tax rate of 30% primarily due to non-tax effected
foreign exchange gains and other functional currency translation adjustments,
and recognition of prior year tax losses. These factors were partly offset by
non-tax effected operating losses and exploration expenditure, together with
secondary taxes on dividends paid and payable by South African entities.
Equity Minority Interests
Equity minority interests for the half year ended 31 December 2001 were US$22
million compared with US$29 million in the corresponding period.
Earnings
Attributable profit rose by 3.5% to US$1,198 million compared with US$1,158
million for the corresponding period.
There were no exceptional items in the half year ended 31 December 2001 (2000 -
nil).
Basic earnings per share was 1% higher at 19.9 US cents (based on 6,024 million
shares outstanding) compared with 19.7 US cents (based on 5,885 million shares
outstanding) in the corresponding period. In the corresponding period, shares
held under the share repurchase scheme and the Billiton Employee Share Ownership
Trust were excluded from the calculation of earnings per share, and the
dividends on these shares were excluded from the profit and loss account.
Diluted earnings per share were 1% higher at 19.8 US cents (based on 6,040
million shares outstanding) compared with 19.6 US cents (based on 5,900 million
shares outstanding) in the corresponding period.
Dividends
During the half year ended 31 December 2001, a dividend of 6.5 US cents per
fully paid ordinary share was declared and paid by BHP Billiton Limited and BHP
Billiton Plc. The dividend was paid on 5 December 2001. The BHP Billiton Limited
dividend was fully franked for Australian taxation purposes.
The corresponding period included a dividend of 12.1 Australian cents (adjusted
for bonus issue) per fully paid ordinary share paid to BHP Billiton Limited
shareholders and a dividend of 4.0 US cents per fully paid ordinary share paid
to BHP Billiton Plc shareholders.
Dividends are determined in US dollars. BHP Billiton Limited dividends are paid
in Australian dollars and BHP Billiton Plc dividends are paid in pounds
sterling. For the December 2001 dividend, conversion from US currency was at
exchange rates applicable on 5 November 2001. BHP Billiton Limited shareholders
received 12.8 Australian cents per fully paid ordinary share and BHP Billiton
Plc shareholders received 4.46 pence per fully paid ordinary share.
BHP Billiton's final dividend for the year ending 30 June 2002 will be declared
at the announcement of the third quarter results on 1 May 2002. The dividend
will be paid to shareholders in July 2002.
Cash Flow
The following table summarises the major elements of the Group's cash flow and
net debt movements:
Half year ended Half year ended Year ended
31 Dec 2001 31 Dec 2000 30 Jun 2001
US$M US$M US$M
Operating cash flows and dividends from joint
ventures and associates 2 109 2 519 4 959
Taxation ( 400) ( 232) ( 587)
Maintenance capital expenditure ( 407) ( 369) ( 759)
Exploration ( 202) ( 172) ( 341)
Disposal of fixed assets 144 44 339
Net interest payable and investment income ( 240) ( 227) ( 485)
Dividends paid to ordinary shareholders and minorities ( 815) ( 670) ( 801)
Available cash flow 189 893 2 325
Expansionary capital expenditure ( 674) ( 263) (2 279)
Net acquisitions of businesses and investments 74 (2 276) (2 688)
Net cash flow before management of liquid ( 411) (1 646) (2 642)
resources and financing
Share issue/buy back 7 890 937
Foreign exchange adjustment 178 209 476
Movement in net debt ( 226) ( 547) (1 229)
Net debt at start of period (7 321) (6 092) (6 092)
Net debt at end of period (7 547) (6 639) (7 321)
Operating cash flows (including dividends from joint ventures and associates) of
US$2,109 million is a reduction of US$410 million from the corresponding period
reflecting the lower operating profit for the period. In addition higher tax
payments and a one-off timing difference in dividends paid to shareholders left
available cash flow of US$189 million compared with US$893 million for the
corresponding period.
Net expansionary capital and investment expenditure decreased to US$600 million
from US$2,538 million, primarily reflecting the acquisition of the Rio Algom
businesses in the corresponding period.
After exchange gains, net debt increased by US$226 million over the period.
Balance Sheet
Equity shareholders' funds increased from US$11,340 million at 30 June 2001 to
US$12,179 million at 31 December 2001.
Net debt comprises US$8,208 million of total debt offset by US$661 million of
cash, including money market deposits. Net debt of US$7,547 million at 31
December 2001 represents 62.0% of shareholders' funds and 37.6% of net debt plus
net assets.
The breakdown of net debt by currency is as follows:
US$M
Net debt denominated in:
US dollars 5 322
South African rand 358
Australian dollars 1 341
Canadian dollars 223
Other currencies 303
Net debt 7 547
Capital Management
During the half year, BHP Billiton Limited commenced the on-market re-purchase
of shares in accordance with the previously announced share buyback programme
resulting in the re-purchase of 4,134,622 shares at a weighted average price of
A$8.83 per share.
BHP Billiton Limited's buy-back program allows for the purchase of up to 186
million BHP Billiton Limited shares (adjusted for bonus issue), less the number
of BHP Billiton Plc shares purchased on-market by Nelson Investment Limited.
The successful completion of a US$2.5 billion syndicated multi-currency
revolving facility occurred in September 2001. This facility replaced the US$1.2
billion credit facility of BHP Billiton Limited and the US$1.5 billion and
US$1.25 billion credit facilities of BHP Billiton Plc. The facility was the
first financing transaction post merger and is the Group's cornerstone credit
facility. The facility includes a US$1.25 billion 364-day revolving credit
component, and a US$1.25 billion five-year revolving credit component.
Prior to the merger BHP had a long term credit rating of A-/A3 and a short term
rating of A2/P2. Billiton was not rated. Following the announcement of the
merger, independent rating agencies confirmed their ratings but with a positive
outlook. Recently Standard & Poors upgraded their rating to A/A-1 from A-/A-2
with a positive outlook to reflect the excellent market position, substantial
portfolio diversification, strong cost profile, and conservative financial
policies which either resulted from, or improved substantially, subsequent to
the merger.
During November 2001, the Group issued A$1 billion in debt securities in two
tranches, as follows:
• A$750 million for 7 years, 6.25% notes maturing August 2008; and
• A$250 million for 3 years, floating rate notes maturing November 2004.
In October 2001, the A$ Commercial Paper Program limit was increased from A$1
billion to A$2 billion.
Currency
Currency fluctuations affect the profit and loss account in two principal ways.
Sales are predominantly based on US dollar pricing (the principal exceptions
being Petroleum's gas sales, Steel's sales to Australian customers and Energy
Coal's sales to South African domestic customers). However, a proportion of
operating costs (particularly labour) arises in the local currency of the
operations, most significantly the Australian dollar and South African rand, but
also the Brazilian real, Chilean peso and Colombian peso. Accordingly, changes
in the exchange rates between these currencies and the US dollar can have a
significant impact on the Group's reported results.
Several subsidiaries hold certain monetary assets and liabilities denominated in
currencies other than their functional currency (US dollars), in particular
non-US dollar denominated debt, tax liabilities and provisions. Monetary assets
and liabilities are converted into US dollars at the closing rate. The resultant
differences are accounted for in the profit and loss account in accordance with
UK GAAP.
The following exchange rates have been utilised in this report:
Half year ended Half year ended
31 Dec 2001 31 Dec 2000 As at
Versus US dollar average average 31 Dec 2001 30 Jun 2001 31 Dec 2000
South African rand 9.29 7.30 11.89 8.08 7.56
Australian dollar 1.95 1.81 1.96 1.98 1.80
Brazilian real 2.55 1.87 2.32 2.30 1.95
Chilean peso 679.7 561.9 654.8 631.8 572.2
Colombian peso 2,280 2,176 2,310 2,297 2,232
Canadian dollar 1.56 1.50 1.58 1.52 1.50
Portfolio Risk Management
This table summarises the next four quarters as at 31 December 2001 with respect
to the BHP Billiton Group's significant derivative financial instruments used to
hedge Australian dollar costs that are sensitive to changes in exchange rates
for the forthcoming twelve months.
Weighted average A$/US$ Contract amounts
exchange rate
Forwards Call options Put options A$ Million US$ Million
US dollars
Q3 2002 - forwards 1.4603 - - 394 270
- collar options - 1.4691 1.5131 88 60
- purchased options - 1.8182 - 55 30
- sold options - - - - -
Q4 2002 - forwards 1.4697 - - 441 300
- collar options - 1.4609 1.5300 73 50
- purchased options - 1.8182 - 18 10
- sold options - - - - -
Q1 2003 - forwards 1.4482 - - 362 250
- collar options - 1.4273 1.4912 43 30
- purchased options - 1.8182 - 55 30
- sold options - - - - -
Q2 2003 - forwards 1.4797 - - 355 240
- collar options - 1.4611 1.5279 15 10
- purchased options - 1.8182 - 55 30
- sold options - - - - -
Commodity price risk management
As at 31 December 2001 there were no significant commodity price derivative
financial instruments outstanding.
Strategic financial transactions
As at 31 December 2001 there were no strategic financial derivative transactions
outstanding.
Share Price Performance
BHP Billiton Plc BHP Billiton Limited
UK pence Australian dollars
Closing price at 31.12.01 347.5 10.50
Closing price at 30.6.01 354.3 10.39 (1)
Closing price at 31.12.00 258.0 9.18 (1)
High during the period 387.5 (2) 11.37 (4)
Low during the period 254.0 (3) 7.95 (5)
(1) adusted for bonus issue.
(2) on 22 May 2001.
(3) on 3 January 2001.
(4) on 22 May 2001 adjusted for bonus issue.
(5) on 21 September 2001.
Operational Review
Growth Projects
Since late June 2001, BHP Billiton has committed approximately US$1.8 billion to
new growth projects.
All references to production volumes and capital expenditure are BHP Billiton's
share, unless otherwise stated.
Customer Sector Group Project Capital Production Completion
Expenditure
US$M
Aluminium Mozal 2 expansion 405 120,000 Initial
tonnes per production
Mozambique annum of late 2003
additional
BHP Billiton 47.1% production
Hillside 3 expansion 450 132,000 Initial
tonnes per production
South Africa annum of mid 2004
additional
BHP Billiton 100% production
Energy Coal Mount Arthur North 411 12.1 million Initial
tonnes production
energy coal mine per annum of from 2003
saleable
New South Wales coal by 2006
BHP Billiton 100%
Carbon Steel Materials Dendrobium metallurgical 126 5.2 million Initial
tonnes per production
coal mine annum of raw from 2005
coal
New South Wales
BHP Billiton 100%
Petroleum Mag Dog oil & gas field 335 20,000 boe/ Initial
day production
development from 2004
US
BHP Billiton 23.9%
Bream Gas Pipeline 50 15 million Initial
bbls over production
Bass Strait (Victoria) 10 years mid 2003
BHP Billiton 50%
Potential Growth Projects
Feasibility and planning work continued on a number of new projects, both
brownfield expansions of existing projects and greenfield developments. A number
of these projects are expected to be presented for capital approval during 2002.
The projects include:
• Escondida Norte copper development (Chile) - pre-feasibility study for
potential 110,000 tonnes per annum of additional production (BHP Billiton
57.5%).
• Spence copper mine (Chile) - pre-feasibility work has been completed and a
full feasibility study is now in progress for potential 160,000 tonnes per
annum (BHP Billiton 100%).
• Carbonnes del Cerrejon expansion (Colombia) - a feasibility study is
underway to increase capacity of the steaming coal mine from 3 million
tonnes per annum to 9 - 10 million tonnes per annum gross (BHP Billiton
33%).
• Mining Area C iron ore development (Australia) - 15 million tonnes per
annum mining operation, expected to be commissioned in 2004 (BHP Billiton
85%).
• Yabulu/Ravensthorpe (Australia) - feasibility study on the expansion of
the back end of the Yabulu nickel refinery to treat intermediate product
from the Ravensthorpe nickel laterite mine and acid leach plant producing
additional throughput of 30,000 to 35,000 tonnes per annum of nickel (BHP
Billiton 100%).
• Minerva Gas field development (Australia) - final feasibility work has
been completed for the development of this gas field and the supply of gas
into the South Australian market (BHP Billiton 90%).
• Atlantis oil field development (US) - pre-development work for this
deepwater Gulf of Mexico oil field has commenced. Estimated recoverable
reserves of 400-800 million barrels oil-equivalent gross (BHP Billiton 44%).
• Zamzama gas field development (Pakistan) - expansion of production from
the current contracted level of 70 million standard cubic feet per day gross
to an estimated 300 million standard cubic feet per day is expected to be
approved this financial year (BHP Billiton 47.5%).
During the half year, BHP Billiton also undertook successful exploration
drilling activities in Trinidad, with the Kiari-1 and Canteen-1 wells in Block 2
(c). The results of these two wells indicate a high quality hydrocarbon
reservoir formation, representing a significant oil discovery. To date, BHP
Billiton has drilled four successful wells in Trinidad. Further appraisal
drilling will be undertaken to delineate the resource and move towards
commercial sanction.
Portfolio Management
Since the merger, BHP Billiton has announced a number of operational and
portfolio management initiatives. These included:
• BHP Billiton Base Metals announced its intention to temporarily reduce
copper production by an estimated 170,000 tonnes per annum from its Tintaya
and Escondida copper mines. The action was taken as a result of the
significant fall in demand for copper arising from unfavourable economic
conditions.
• The closure of the Palmiet Ferrochrome operation in South Africa. Palmiet
is a three-furnace operation with a total installed capacity of 110,000
tonnes per annum.
• The closure of the Ingwe Coal Corporation Rietspruit coal mine in South
Africa by May 2002. Rietspruit production was 4 million tonnes per annum of
energy coal for the export market.
• The sale of BHP Billiton's 80% interest in the PT Arutmin Indonesia energy
coal mining operations in Kalimantan for US$140 million. BHP Billiton
retains marketing rights for 75% of production.
• BHP Billiton announced on 1 February 2002 that it had, in conjunction with
Anglo American plc and Glencore International AG, signed an agreement to
acquire all of the ownership interests in International Colombia Resources
Corporation from Exxon Mobil Corporation. The transaction increases BHP
Billiton's interest in the Cerrejon Zona Norte energy coal mining operation
in Colombia to 33.33% from 16.67% prior to the acquisition.
• BHP Billiton concluded a joint venture with Alcoa for its North American
Metals Distribution business.
• An agreement between the partners of the Columbus Stainless Steel joint
venture and the Spanish steel producer, Acerinox, for the sale of 64% of the
joint venture. BHP Billiton holds its interest in Columbus via its 60%
ownership of Samancor. The sale will result in BHP Billiton's effective
interest in Columbus reducing from 20% to 7.2%.
• The successful acquisition of Dia Met Minerals Ltd following the purchase
of all outstanding Class A subordinate voting shares and Class B multiple
voting shares. This transaction increased BHP Billiton's stake in the
EkatiTM diamond mine in Canada to 80% from 51%.
• BHP Billiton has completed its withdrawal from the Ok Tedi copper mine
(Papua New Guinea). BHP Billiton transferred its 52% interest to an
independent Program Company that will operate for the benefit of the people
of Papua New Guinea. A series of legal releases, indemnities and warranties
have been established which will protect BHP Billiton from certain legal
liabilities for the period after its exit.
BHP Billiton will provide financial support to the Program Company by way of a
fully repayable, interest free facility of up to US$100 million for a period of
three years (until it has built up its own funds) with repayment arrangements if
these are used and, in the event of an Ok Tedi Mining Ltd request in a drought
situation, has agreed to pre-purchase copper concentrate up to an agreed level.
Progress continued to be made on the plans for the demerger of BHP Steel from
BHP Billiton Limited. BHP Billiton Plc shareholders are expected to be
compensated for the distribution to the shareholders of BHP Billiton Limited by
way of a bonus issue. During the half year, Graham Kraehe was appointed as
Chairman of BHP Steel Limited. It is planned, by mid year, to release the scheme
document and prospectus for the demerger and to subsequently hold an
Extraordinary Shareholders Meeting for both BHP Billiton Limited and BHP
Billiton Plc shareholders to seek approval for the transaction. Pending
shareholder approvals, it is expected that the public listing of BHP Steel will
occur about the middle of this year.
Projects Under Development
Progress continued on a number of projects approved prior to the merger or as
part of acquisition activities. These include:
• Escondida Phase IV (Chile) - incremental production of 400,000 tonnes per
annum (increasing average annual production to 1.2 million tonnes per annum
over the first five years) is expected in financial year 2003. Capital cost
is US$600 million net to BHP Billiton (BHP Billiton 57.5%).
• Tintaya Oxide project (Peru) - first production is expected in the second
half of this financial year. The project involves the construction of a
copper leaching and solvent extraction electrowinning (SX/EW) facility to
produce initially 34,000 tonnes per annum, reaching 40,000 tonnes per annum,
of copper contained in cathode. Estimated capital cost is US$138 million
(BHP Billiton 99.96%).
• San Juan underground mine (US) - full production of 6.5 million tonnes per
annum from this underground longwall mine at the San Juan thermal coal
operations in New Mexico is expected in late 2002. Production from San Juan
will replace production from two of BHP Billiton's three existing surface
mines. Estimated capital expenditure is US$146 million (BHP Billiton 100%).
• Blackwater mine (Queensland) - the expansion of this metallurgical coal
mine will increase production by 5 million tonnes per annum to estimated
full production of 13.5 million tonnes per annum by 2002. Capital cost is
US$30 million net to BHP Billiton (BHP Billiton 50%).
• Laminaria Phase II development (Australia) - this project will accelerate
production from existing reserves and result in an additional 21 million
barrels of production from the first two years after start up. The increased
production is scheduled to commence in mid 2002 with an initial production
rate of 65,000 barrels per day (gross). The capital cost is US$23 million
net to BHP Billiton (BHP Billiton 32.26 %).
• North West Shelf expansion (Australia) - this project involves the
construction of the fourth liquefaction processing train at the North West
Shelf with a capacity of 4.2 million tonnes per annum (700,000 tonnes net to
BHP Billiton). Initial production is expected from mid 2004. Capital
expenditure is estimated at US$260 million net to BHP Billiton (BHP Billiton
16.67%).
• ROD oil field (Algeria) - development of oil fields with estimated proven
and probable reserves of around 300 million barrels. Gross peak production
of 80,000 barrels per day expected in the first half of 2003. Capital
expenditure estimated at US$190 million net to BHP Billiton (BHP Billiton
45% and operator).
• Ohanet development (Algeria) - this development of four gas condensate
reservoirs is expected to establish commercial production of 710 million
standard cubic feet of gas per day and 58,000 barrels per day of liquids
(gross). First production expected in October 2003. Capital expenditure is
estimated at US$430 million net to BHP Billiton (BHP Billiton 45% and
operator).
Merger Integration
Significant progress continued to be made during the half year in ensuring the
effective integration of BHP and Billiton. Organisationally, senior management
appointments were completed and seven Customer Sector Groups (Aluminium, Base
Metals, Carbon Steel Materials, Stainless Steel Materials, Energy Coal,
Petroleum and Steel) were formed. Each of the Customer Sector Groups has
developed a financial plan for the 2002 financial year and a medium term
strategic plan which have been reviewed by the Group Executive Committee and the
Board. These plans are being integrated into the BHP Billiton Strategic
Framework.
All corporate functions (such as Treasury, Mergers & Acquisitions, Business
Development, Taxation and Exploration) which had separate functions in both BHP
and Billiton have been fully integrated. Twin marketing hubs in The Hague and
Singapore have been established and are operational. In terms of capturing
merger benefits, the Group is on track to deliver the US$270 million in merger
savings by the end of financial year 2003. Programmes have been established in
each of the areas identified to deliver merger savings, such as eliminating
duplicated functions, strategic sourcing, the capture of savings through
operating excellence programmes and better structuring of funding arrangements.
The Group is in the process of reducing its non-operational workforce by 700
full time employees and 300 contractors. This is a reduction of about one third
in non-operational personnel. A programme has also commenced to reduce the
number of offices from 32 globally to 14.
Governance and capital approval processes have been established within the
Group. These include an Investment Review Committee, responsible for the review
and corporate endorsement of major investments, divestments and acquisitions
involving a commitment of US$100 million or more. Such projects are submitted to
the Executive Committee and the Board for approval, after a comprehensive risk
review by the Investment Review Committee. As part of its portfolio risk
management review, a quantitative analysis of the entire portfolio of assets has
been undertaken to determine the ratio of cash flow at risk to cash flow of the
portfolio. The findings of the BHP Billiton Financial Risk Management review
have been presented to the investment market in the United Kingdom and
Australia, and details are available on the Company's website.
A review of all assets in the portfolio has been undertaken in relation to their
fundamental value, size and scale, strategic fit and risk profile. Work out
plans have been established.
Board & Management
Ron McNeilly, Executive Director Global Markets, retired from the Board during
the half year. Charles Goodyear, Chief Development Officer, was appointed to the
Board.
The following senior management appointments were made:
• Chris Lynch was appointed to the position of Chief Financial Officer,
following the earlier announcement of the appointment of Charles Goodyear
(formerly Chief Financial Officer) to the position of Chief Development
Officer. Mr Lynch was previously Chief Financial Officer of Minerals.
• Karen Wood was appointed as the BHP Billiton Plc Company Secretary. She
will also continue in her role as Company Secretary for BHP Billiton
Limited.
In January 2002, BHP Billiton announced enhancements to its senior management
organisation and the composition of the Group's Executive Committee. The
enhancements followed excellent progress in BHP Billiton's integration programme
and are designed to establish a more streamlined and efficient management
structure. The changes included:
• The creation of an Office of the Chief Executive to facilitate the
transition between Paul Anderson and Brian Gilbertson as CEO and Managing
Director.
• The elimination of the role of President and CEO of Minerals.
• The appointment of the Presidents of Base Metals (Brad Mills), Energy Coal
(Mike Oppenheimer), Carbon Steel Materials (Bob Kirkby) to the Executive
Committee, as well as the Vice President and Chief Marketing Officer (Marius
Kloppers) and the Vice President, Group Human Resources (Ian Fraser).
• Mike Salamon will continue as Senior Minerals Executive and Chairman of
Stainless Steel Materials, as well as acting as President of Aluminium.
Customer Sector Group Results
The following table provides a summary of the Customer Sector Group results for
the half year ended 31 December 2001.
Half year ended December
(US$ Million) Turnover (1) EBIT (2)
2001 2000 Change % 2001 2000 Change %
Aluminium 1 371 1 294 6.0 191 218 - 12.4
Base metals 826 860 - 4.0 68 253 - 73.1
Carbon steel materials 1 660 1 603 3.6 565 422 33.9
Stainless steel materials 370 436 - 15.1 ( 33) 63 - 152.4
Energy coal 1 045 905 15.5 350 157 122.9
Exploration, technology and 167 116 44.0 42 26 61.5
new business
Other activities 750 768 - 2.3 100 103 - 2.9
Petroleum 1 434 1 768 - 18.9 576 706 - 18.4
Steel 1 480 2 096 - 29.4 69 212 - 67.5
Group and unallocated items 48 ( 159) 130.2 ( 277) ( 290) 4.5
BHP Billiton Group 8 894 9 396 - 5.3 1 651 1 870 - 11.7
(1) Turnover does not add to the BHP Billiton Group figure due to inter-segment transactions.
(2) EBIT is earnings before net interest and taxation.
A detailed explanation of the factors influencing the performance of the
Customer Sector Groups is included below on pages 20 to 27. All references to
production volumes are BHP Billiton's share of production unless otherwise
indicated.
Aluminium
(US$ Million) 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Turnover 1,371 1,294 6.0 Alumina production 1,929 1,072 79.9
EBIT 191 218 -12.4 Aluminium production 479 484 -1.0
Net Operating Assets 4,773 3,290 45.1 LME aluminium price 1,349 1,539 -12.3
(cash, US$/t, ave)
Aluminium contributed EBIT of US$191 million, a decrease of US$27 million or
12.4% compared with the corresponding period.
Major factors which affected the comparison of results were:
• a 12% or US$190 per tonne decrease in the average LME price;
• lower volumes at Alumar and Valesul (Brazil) mainly due to power
curtailments; and
• lower volumes from Hillside (South Africa) due to a power outage
partially offset by:
• higher profits from Worsley following the acquisition of an additional 56%
interest in January 2001;
• increased profits from the fully commissioned Mozal aluminium smelter;
• lower LME price linked production costs; and
• favourable effect of US dollar exchange rate movements against Rand (South
Africa) and Real (Brazil) related operating costs.
Aluminium smelters produced 479,000 tonnes of metal, a decrease of 1% compared
with the corresponding period mainly due to lower production in Brazil and at
Hillside. Production in Brazil decreased 24% due to a government enforced power
rationing programme and Hillside production was affected by a power outage in
September 2001. This was partly offset by Mozal, which contributed 64,000
tonnes, compared with 30,000 tonnes for the corresponding period.
Alumina production increased by 857,000 tonnes to 1,929,000 tonnes, an 80%
increase on the corresponding period mainly reflecting the additional 56%
interest in Worsley.
Average aluminium unit cash costs decreased 7% compared to the corresponding
period, mainly due to a decrease in LME linked production costs together with
currency devaluations in South Africa and Brazil, partly offset by the
accelerated rate of pot relining at Hillside.
Alumina unit cash costs decreased by 9% compared to the corresponding period
mainly due to lower unit cash costs at Worsley and currency devaluations in
Brazil.
Base Metals
(US$ Million) 2001 2000 Change% 2001 2000 Change%
Turnover 826 860 -4.0 Copper production 424 380 11.5
EBIT 68 253 -73.1 ('000 tonnes)
Net Operating Assets 4,183 3,614 15.7 Realised copper price 0.65 0.84 -22.6
(cash; US$/lb, ave)
Base Metals contributed EBIT of US$68 million, a decrease of US$185 million or
73.1% compared with the corresponding period.
The major factors which affected the comparison of results were:
• a significant decline in the average realised copper price to US$0.65/lb
compared to US$0.84/lb in the corresponding period;
• the write-off of the La Granja exploration activities (Peru) (US$38
million, no tax-effect); and
• lower volumes at Escondida, reflecting the decision to temporarily reduce
production in reaction to the global deterioration of base metals markets
partially offset by:
• lower LME linked treatment and refining costs; and
• inclusion of profits for a full half year from the various Rio Algom
operations (Cerro Colorado, Alumbrera and Highland Valley) which were
acquired in October 2000.
Results of Ok Tedi (including the corresponding period) are now reported in
Other Activities.
Exploration expenditure for the half year was US$18 million (2000 - US$45
million); exploration charged to profit, including the write-off of La Granja
was US$52 million (2000 - US$9 million).
Production of payable copper increased by 2% compared with the corresponding
period mainly due to the first full half year contribution from the Rio Algom
businesses together with the commencement of production at Antamina (Peru). This
was partly offset by lower production at Escondida reflecting the decision to
scale back production due to weaker markets. Refined production increased by
37,000 tonnes or 44% compared with the corresponding period primarily reflecting
the first full six months production from Cerro Colorado.
Zinc production was 76,000 tonnes, an increase of 20% compared with the
corresponding period, mainly due to the commencement of commercial production at
Antamina.
Silver and lead production increased by 8% and 3% respectively, mainly
reflecting strong operational performance at Cannington (Australia), together
with the commencement of commercial production from Antamina.
Sales of copper increased by 68,000 tonnes to 423,000 tonnes or 19% compared to
the corresponding period mainly reflecting the acquisition of the Rio Algom
businesses.
Carbon Steel Materials
(US$ Million) 2001 2000 Change% (Million tonnes) 2001 2000 Change%
Turnover 1,660 1,603 3.6 Iron ore production 34.4 33.5 2.5
EBIT 565 422 33.9 Metallurgical coal 17.2 16.8 2.0
production
Net Operating Assets 2,407 3,217 -25.2 Manganese alloy production 0.284 0.348 -18.4
Manganese ore production 1.860 1.921 -3.2
Carbon Steel Materials contributed EBIT of US$565 million, an increase of US$143
million or 33.9% compared with the corresponding period.
Major factors which affected the comparison of results were:
• favourable effect of the lower A$/US$ and Rand/US$ exchange rates on
related operating costs;
• higher metallurgical coal prices;
• improved operating performance and lower capital expenditure (which is
charged to profit) at BoodarieTM Iron (West Australia);
• lower port demurrage and rail costs at Iron Ore; and
• higher iron ore volumes and prices
partially offset by:
• higher costs at metallurgical coal operations in Queensland mainly due to
higher royalty costs, increased stripping costs at Saraji and Peak Downs,
higher dragline costs at Saraji and a mine roof failure at Crinum;
• lower manganese alloy and ore prices; and
• lower manganese ore sales.
West Australian iron ore operations sold 37.1 million wet tonnes, an increase of
5% compared with the corresponding period mainly due to increased demand for
fines in China and Japan. Samarco (Brazil) iron ore production was 2.2 million
tonnes which was 42% lower than the corresponding period mainly due to lower
market demand for pellets.
Queensland coal shipments were 13.3 million tonnes (including 100% interest in
BHP Mitsui Coal, gross of the 20% interest held by equity minority interests,
and 50% interest in the South Blackwater mine), 2% more than the corresponding
period. The increase reflects the integration of South Blackwater production of
1.2 million tonnes, partly offset by the impact of the sell-down of BHP
Billiton's interest in the Central Queensland Coal Associates (CQCA) and Gregory
joint ventures. Illawarra coal despatches were 3.3 million tonnes, an increase
of 7% compared with the corresponding period mainly due to higher production.
Manganese alloy production was 284,000 tonnes, a decrease of 18% compared to the
corresponding period mainly due to furnace shutdowns, relining and efficiency
problems. Despite the reduced manganese alloy production volumes, alloy
despatches were consistent with the corresponding period. Manganese ore
production was 1.86 million tonnes, a decrease of 3% compared with the
corresponding period. Manganese ore sales were 36% lower than the corresponding
period due to lower off-take by both internal and external ore customers.
Boodarie(TM) Iron shipments were 660,000 tonnes, an increase of 499,000 tonnes
compared with the corresponding period mainly reflecting continued production
ramp-up at the West Australian plant.
Stainless Steel Materials
(US$ Million) 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Turnover 370 436 -15.1 Nickel production 33.4 27.2 22.8
EBIT -33 63 -152.4 Ferrochrome production 413 522 -20.9
Net Operating Assets 1,612 1,602 0.6 LME nickel price 2.39 3.57 -33.1
(cash, US$/lb, ave)
Stainless Steel Materials EBIT was a loss of US$33 million, a decrease of US$96
million compared with a US$63 million profit in the corresponding period.
Major factors that affected the comparison of results were:
• significantly lower nickel and chrome prices;
• the write-off of previously capitalised exploration expenditure; and
• costs associated with the closure of Palmiet Ferrochrome (South Africa)
partially offset by:
• higher nickel volumes; and
• favourable effect of the lower Rand/US$ exchange rate on related operating
costs.
Exploration expenditure for the half year was US$3 million (2000 - US$6
million). Exploration charged to profit was US$12 million (2000 - US$3 million).
Nickel production was 33,400 tonnes, an increase of 23% compared with the
corresponding period mainly reflecting the production from Cerro Matoso Line 2,
which commenced production on 1 January 2001.
Planned shutdown programmes in the first quarter were designed to allow maximum
production for the remainder of the year. This resulted in production at Yabulu
refinery being 4% below the corresponding period. Shutdowns for planned
maintenance, combined with lower grades, resulted in Cerro Matoso Line 1
production being 12% lower compared with the corresponding period.
Ferrochrome production was 413,000 tonnes, a decrease of 21% compared with the
corresponding period, and chrome ore production was 1,238,000 tonnes, a decrease
of 32% compared with the corresponding period. These decreases were due to
production cut backs which were initiated in response to weakness in the
ferrochrome market.
Energy Coal
(US$ Million) 2001 2000 Change% (Million tonnes) 2001 2000 Change%
Turnover 1,045 905 15.5 Energy coal production 43.0 46.7 -7.9
EBIT 350 157 122.9
Net Operating Assets 1,780 2,033 -12.4
Energy Coal contributed EBIT of US$350 million, an increase of US$193 million or
122.9% compared with the corresponding period.
Major factors which affected the comparison of results were:
• a significant increase in export market prices for both long term
contracts and spot markets;
• favourable effect of lower Rand/US$ exchange rates on related operating
costs;
• a gain on disposal of PT Arutmin (Indonesia) effective 30 November 2001;
and
• inclusion of profits for a full half year from the Carbones del Cerrejon
and Cerrejon Zona Norte operations (Colombia), in which equity interests
were acquired in September 2000 and November 2000 respectively
partially offset by:
• the effect of inflation on operating costs predominantly in South Africa;
and
• operational issues in the US which resulted in increased unit costs.
Exploration expenditure for the period was US$3 million (2000 - US$5 million).
Exploration charged to profit was US$nil (2000 - US$1 million).
Energy coal production was 43.0 million tonnes, a decrease of 8% compared with
the corresponding period:
• South African production was 28.3 million tonnes, a decrease of 13%
compared with the corresponding period reflecting the divestment of Matla
and Glisa, the scaling down of Rietspruit and reduced demand from Eskom;
• US production was 6.3 million tonnes, a decrease of 11% compared with the
corresponding period mainly reflecting reduced production at New Mexico Coal
in response to reduced customer demand;
• Indonesian and Australian production was 6.2 million tonnes, a decrease of
5% compared with the corresponding period; and
• Colombian operations contributed saleable production of 2.2 million
tonnes, an increase of 1.5 million tonnes compared with the corresponding
period, mainly reflecting the full half year contribution from Carbones del
Cerrejon and Cerrejon Zona Norte operations.
Exploration, Technology and New Business
(US$ Million) 2001 2000 Change% ('000 carats) 2001 2000 Change%
Turnover 167 116 44.0 Ekati(TM) diamonds production 1,695 627 170.3
EBIT 42 26 61.5
Net Operating Assets 893 396 125.5
Exploration, Technology and New Business contributed EBIT of US$42 million, an
increase of US$16 million or 61.5% compared with the corresponding period.
Major factors which affected the comparison of results were:
• higher profits from Ekati(TM) following the acquisition of an additional 29%
interest in June 2001; and
• significantly increased production at Ekati(TM)
partially offset by:
• lower diamond prices mainly due to a general downturn in the global
economy.
Exploration expenditure was US$34 million, an increase of US$8 million compared
with the corresponding period. Exploration charged to profit was US$33 million
(2000 - US$24 million).
Ekati(TM) diamond production was 1,695,000 carats, an increase of 1,068,000 carats
or 170%, compared to the corresponding period, mainly reflecting the acquisition
of an additional 29% interest, higher carat grade on core production and higher
recoveries of lower quality diamonds.
Other Activities
Other Activities contributed EBIT of US$100 million, a decrease of US$3 million
compared with the corresponding period.
Major factors which affected the comparison of results were:
• lower volumes at titanium minerals operations reflecting weaker markets;
• weakening of the market for metals products in the North American market;
and
• no profits recognised in the current period from the Ok Tedi copper mine
(PNG)
partially offset by:
• favourable effect of lower Rand/US$ exchange rates on related operating
costs; and
• operating losses in the corresponding period from HBI Venezuela.
During the half year, BHP Billiton and Alcoa Inc. announced agreement had been
reached regarding the merger of the BHP Billiton Group's North American Metals
Distribution business with Alcoa's North American metals distribution business,
Reynolds Aluminium Supply Company. BHP Billiton and Alcoa each own 50% of the
independently managed company Integris Metals Inc. which commenced operations on
1 November 2001.
During November 2001 BHP Billiton, through its 60% owned subsidiary Samancor
Limited (South Africa) reached an agreement with Acerinox S.A, whereby Acerinox
will acquire part of Samancor's interest in the Columbus Stainless Steel Joint
Venture with effect from 1 January 2002. This agreement follows signing of a
memorandum of understanding in July 2001. The sale has resulted in BHP
Billiton's effective interest in Columbus reducing from 20 per cent to 7.2 per
cent.
Petroleum
(US$ Million) 2001 2000 Change% 2001 2000 Change%
Turnover 1,434 1,768 -18.9 Crude oil and condensate 39.2 40.8 -3.9
EBIT 576 706 -18.4 (Millions bbls)
Net Operating Assets 2,722 2,613 4.2 Natural gas (bcf) 116.2 93.6 24.1
Average realised oil price 22.54 29.26 -23.0
(US$/barrel)
Petroleum contributed EBIT of US$576 million, a decrease of US$130 million or
18.4% compared with the corresponding period.
Major factors affecting the comparison of results were:
• lower average realised oil prices net of commodity hedging of US$22.54 per
barrel compared to US$29.26 per barrel in the corresponding period. No
commodity hedging was undertaken in the current half year; the average
realised oil price before commodity hedging was US$31.71 per barrel in the
corresponding period;
• reduced crude oil volumes primarily due to natural field decline in the
Laminaria (Australia) and Griffin (Australia) oil fields; and
• sale of the Buffalo oil field in March 2001
partly offset by:
• higher realised prices for liquefied petroleum gas (LPG) and natural gas;
and
• inclusion of profits from the Typhoon (US) oilfield and the Zamzama field
(Pakistan) which commenced operations in July 2001 and March 2001
respectively.
Exploration expenditure for the year was US$143 million (2000 - US$89 million).
Exploration charged to profit was US$74 million (2000 - US$58 million).
Oil and condensate production was 4% lower than the corresponding period due to
natural field decline at Griffin and Laminaria and the sale of the Buffalo oil
field in the corresponding period. These were partly offset by higher volumes at
Liverpool Bay (UK) due to a strong performance following a major maintenance
shutdown in the corresponding period, together with Typhoon's commencement in
July 2001.
Natural gas production was 24% higher than the corresponding period due to
higher volumes from Bass Strait, Keith and Griffin, and the commencement of
production at the Zamzama field late in March 2001.
Liquefied Natural Gas (LNG) production at the North West Shelf in Western
Australia was 8% higher mainly due to longer than planned maintenance shutdowns
in the corresponding period.
Steel
(US$ Million) 2001 2000 Change% ('000 tonnes) 2001 2000 Change%
Turnover 1,480 2,096 -29.4 Raw steel 2,644 2,827 -6.5
EBIT 69 212 -67.5 Marketable steel products 2,546 2,693 -5.5
Net Operating Assets 2,047 2,454 -16.6
(inc Transport &Logistics; OneSteel in 2000) (excluding discontinuing businesses)
Steel contributed EBIT of US$69 million, a decrease of US$143 million or 67.5%
compared with the corresponding period.
Major factors which affected the comparison of results were:
• lower international prices for steel products;
• exclusion of operating profits from disposed businesses (primarily
OneSteel Limited) which were included in the corresponding period; and
• higher costs at Port Kembla steelworks (Australia), mainly due to
voluntary redundancy and maintenance costs and lower throughput
partly offset by:
• profits on the sale of Australian and US strapping businesses.
Steel despatches from flat and coated operations were 2.5 million tonnes for the
half year, 1% below the corresponding period:
• Australian domestic despatches were 1.3 million tonnes, 28% above the
corresponding period, mainly due to the inclusion of despatches to OneSteel
Limited (previously treated as despatches within the BHP Billiton Group);
• Australian export despatches were 778,000 tonnes, 26% below the
corresponding period mainly reflecting operational and industrial issues at
Port Kembla steelworks (Australia);
• New Zealand steel despatches were 267,000 tonnes, 6% above the
corresponding period; and
• Despatches from overseas plants were 144,000 tonnes, 18% below the
corresponding period.
The corresponding period included steel despatches of 701,000 tonnes related to
OneSteel Limited which was spun-out in October 2000.
Group and Unallocated Items
The net costs of Group and Unallocated Items, excluding losses from legacy A$/
US$ currency hedging was US$91 million, a reduction of US$30 million compared to
the corresponding period.
Group and Unallocated Items includes losses on legacy A$/US$ currency hedging of
approximately US$186 million compared with losses of approximately US$169
million in the corresponding period. These losses mainly reflect the lower value
of hedge settlement rates compared with hedge contract rates for currency
hedging contracts settled during the half year.
Interim Financial Information
The interim financial information set out on pages 30 to 43 has been prepared on
the same basis and using the same accounting policies as were applied in drawing
up the financial information contained in the accounts of BHP Billiton Plc for
the year ended 30 June 2001, except as noted below.
With effect from 1 July 2001, the majority of BHP Billiton Limited's businesses
changed to US dollars, the functional currency of the combined BHP Billiton
Group. This is consistent with BHP Billiton Plc and is the basis on which the
combined BHP Billiton Group manages its businesses. Most BHP Billiton
commodities are sold in US dollars and are predominantly destined for export
markets.
The financial information for the half years ended 31 December 2001 and 31
December 2000 is unaudited. In the opinion of the Directors, the financial
information for these periods presents fairly the financial position, results of
operations and cash flows for the periods in conformity with UK generally
accepted accounting principles. The financial information for the year ended 30
June 2001 has been derived from the audited financial statements of BHP Billiton
Plc for that period as filed with the Registrar of Companies and does not
constitute the statutory accounts of BHP Billiton Plc for that period. The
auditor's report on the statutory accounts for the year ended 30 June 2001 was
unqualified and did not contain statements under Section 237 (2) (regarding
adequacy of accounting records and returns) or under Section 237 (3) (provision
of necessary information and explanations) of the United Kingdom Companies Act
1985.
Independent review report of the auditors of BHP Billiton Plc
We have been instructed by the Company to review the financial information for
the six months ended 31 December 2001 set out on pages 30 to 43. We have read
the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: 'Review of Interim Financial Information' issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. A review is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2001.
KPMG Audit Plc PricewaterhouseCoopers
Chartered Accountants Chartered Accountants
London, 14 February 2002 London, 14 February 2002
Financial Statements
Consolidated Profit and Loss Account
for the half year ended 31 December 2001
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Note US$M US$M US$M
Turnover (including share of joint ventures and 2,3 8 894 9 396 19 079
associates)
Less: share of joint ventures' and associates' ( 815) ( 598) (1 290)
turnover included above
Group turnover 8 079 8 798 17 789
Net operating costs (6 679) (7 079) (14 611)
Group operating profit 1 400 1 719 3 178
Share of operating profit/(loss) of joint 169 122 ( 353)
ventures and associates
Operating profit (including share of profit of 1 569 1 841 2 825
joint ventures and associates)
Income from other fixed asset investments 18 14 32
(Loss)/profit on sale of fixed assets ( 5) 12 200
Profit on sale of subsidiaries 69 3 4
Loss on termination of operations 1 - - ( 430)
Merger transaction costs 1 - - ( 92)
Net interest and similar items payable - Group 4 ( 38) ( 180) ( 413)
Net interest and similar items payable - Joint 4 9 ( 23) ( 63)
ventures and associates
Profit before taxation 2,3 1 622 1 667 2 063
Taxation 5 ( 402) ( 480) ( 811)
Profit after taxation 1 220 1 187 1 252
Equity minority interests ( 22) ( 29) 277
Profit for the financial period (attributable 1 198 1 158 1 529
profit)
Dividends to shareholders ( 392) ( 325) ( 754)
Retained profit for the financial period 806 833 775
Earnings per ordinary share (basic) (US cents) 19.9 19.7 25.7
Earnings per ordinary share (diluted) (US cents) 19.8 19.6 25.6
Dividend per ordinary share
BHP Billiton Plc (US cents) 6.5 4.0 12.0
BHP Billiton Limited (US cents) 6.5 - -
BHP Billiton Limited (Australian cents) - 12.1 24.7
All amounts are derived from continuing activities.
The calculation of basic earnings per ordinary share is based on earnings after tax and minority interests of US$1,198
million (31 December 2000: US$1,158 million; 30 June 2001: $1,529 million) and the weighted average number of ordinary
shares outstanding of 6,024 million (31 December 2000: 5,885 million, adjusted for the BHP Billiton Limited bonus issue;
30 June 2001: 5,944 million).
The weighted average number of shares used for the calculation of diluted earnings per share has been adjusted for the
effect of Employee Share options and Executive Share Scheme partly paid shares, to the extent they were dilutive at
balance date. Performance based rights and options are excluded and would only be included where an issue of shares is
expected to occur.
The BHP Billiton Limited dividends for the half year ended 31 December 2000 and the year ended 30 June 2001 were paid
in Australian cents.
The amounts shown above are adjusted for the BHP Billiton Liited bonus issue.
There were no exceptional items in the half years ended 31 December 2001 and 2000. The results for the year ended 30
June 2001 include exceptional items which reduced profit before taxation by US$1,094 million, profit after taxation by
US$962 million and profit for the financial period (attributable profit) by US$660 million in aggregate. The principal
items were an exceptional loss of US$520 million relating to the write-off of BHP Billiton's equity investment in HBI
Venezuela and the establishment of provisions for related financial obligations to banks and other associated costs
(which reduced profit after taxation and profit for the financial period (attributable profit) by US$410 million), and
an exceptional loss of US$430 million relating to the write-off of the Ok Tedi copper mine (which reduced profit after
taxation by US$416 million and profit for the financial period (attributable profit) by US$148 million).
Refer note 1. Basic and diluted earnings per ordinary share before exceptional items for the year ended 30 June 2001
were 36.8 and 36.6 US cents respectively.
Consolidated Statement of Total Recognised Gains and Losses
for the half year ended 31 December 2001
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
US$M US$M US$M
Attributable profit for the financial period 1 198 1 158 1 529
Exchange gains and losses on foreign currency net 26 ( 410) ( 763)
investments
Total recognised gains for the period 1 224 748 766
Prior year adjustment arising from the implementation
of revised accouting policies:
- Deferred taxation ( 200) ( 200)
- Exploration ( 15) ( 15)
Total recognised gains since last annual report 533 551
Balance Sheet
as at 31 December 2001
As at 31 December As at 31 December As at 30 June 2001
2001 2000 (Restated)
Note US$M US$M US$M
Fixed assets
Intangible assets - goodwill 44 111 95
- negative goodwill ( 35) ( 38) ( 36)
9 73 59
Tangible assets 19 279 18 123 19 231
Investments - associates 63 48 58
- joint ventures and 1 254 1 469 1 011
associates
- share of gross 3 084 3 634 2 816
assets
- share of gross (1 830) (2 165) (1 805)
liabilities
- loans to joint
ventures and
associates and
other investments 1 108 902 911
21 713 20 615 21 270
Current assets
Stocks 1 507 1 891 1 675
Debtors 3 257 3 849 3 583
Investments 175 110 215
Cash including money market deposits 7 661 1 013 1 285
5 600 6 863 6 758
Creditors: amounts falling due within one year (3 738) (4 801) (5 235)
Net current assets 1 862 2 062 1 523
Total assets less current liabilities 23 575 22 677 22 793
Creditors: amounts falling due after more than (7 297) (6 138) (7 054)
one year
Provisions for liabilities and charges (3 777) (4 158) (4 019)
Net assets 12 501 12 381 11 720
Equity minority interests ( 322) ( 682) ( 380)
Attributable net assets 12 179 11 699 11 340
Capital and reserves
Called up share capital - BHP Billiton Plc 1 160 1 160 1 160
Share premium account - BHP Billiton Plc 592 592 592
Contributed equity - BHP Billiton Limited 3 065 3 284 3 039
Profit and loss account 7 362 6 663 6 549
Equity shareholders' funds 6 12 179 11 699 11 340
Consolidated Statement of Cash Flows
for the half year ended 31 December 2001 Half year ended Half year Year ended
ended
31 December 2001 31 December 30 June 2001
2000
US$M US$M US$M
Operating profit 1 400 1 719 3 178
Merger transaction costs - - ( 92)
Depreciation and amortisation 863 813 1 672
Impairment - - 34
Employee share awards - - 46
Net exploration charge 172 96 250
Loss/(profit) on sale of fixed assets 8 ( 4) 21
Payments relating to HBI Venezuela guarantee - - ( 310)
(Increase)/decrease in stocks ( 112) ( 171) 41
Decrease/(increase) in debtors 202 ( 92) ( 141)
(Decrease)/increase in creditors ( 332) 212 115
(Decrease)/increase in provisions ( 157) ( 135) 28
Other movements 21 13 ( 37)
Net cash inflow from Group operating activities 2 065 2 451 4 805
Dividends received from joint ventures and associates 44 68 154
Interest paid ( 288) ( 275) ( 587)
Dividends paid on redeemable preference shares ( 16) ( 39) ( 69)
Interest received 46 73 132
Other dividends received 18 14 39
Dividends paid to minorities ( 4) ( 11) ( 50)
Net cash outflow from returns on investments and servicing of ( 244) ( 238) ( 535)
finance
Taxation ( 400) ( 232) ( 587)
Purchases of tangible fixed assets (1 081) ( 632) (3 038)
Exploration expenditure ( 202) ( 172) ( 341)
Disposals of tangible fixed assets 144 44 339
Purchase of investments ( 5) ( 351) ( 469)
Sale of investments 36 55 82
Capital expenditure and financial investment (1 108) (1 056) (3 427)
Investment in subsidiaries ( 45) (1 187) (1 567)
Sale of subsidiaries 150 374 372
Net cash acquired with subsidiary - 102 117
Cash transferred on disposal ( 26) ( 61) ( 61)
Investment in joint ventures ( 42) ( 558) ( 690)
Disposal of joint venture 6 15 193
Acquisitions and disposals 43 (1 315) (1 636)
Equity dividends paid ( 811) ( 659) ( 751)
Net cash flow before management of liquid resources and ( 411) ( 981) (1 977)
financing
Management of liquid resources 236 366 242
Debt due within one year - repayment of loans ( 924) (1 005) ( 668)
Debt due within one year - drawdowns 723 785 849
Debt due after one year - repayment of loans (2 074) ( 25) ( 998)
Debt due after one year - drawdowns 2 688 94 2 072
Finance lease obligations ( 4) ( 8) ( 4)
Redeemable preference shares ( 355) ( 261) ( 425)
Net cash inflow/(outflow) from debt and lease financing 54 ( 420) 826
Share buyback scheme - BHP Billiton Plc - 194 194
Share repurchase sche - BHP Billiton Limited ( 19) - -
Issue of shares 26 696 743
Net cash inflow from financing 61 470 1 763
(Decrease)/increase in cash in the period ( 114) ( 145) 28
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period ( 114) ( 145) 28
Cash flow from debt and lease financing ( 54) 420 ( 826)
Cash flow from management of liquid resources ( 236) ( 366) ( 242)
Change in net debt arising from cash flows ( 404) ( 91) (1 040)
Money market deposits and loans acquired with subsidiaries - ( 665) ( 665)
Exchange adjustments 178 209 476
Movement in net debt ( 226) ( 547) (1 229)
Net debt at start of period (7 321) (6 092) (6 092)
Net debt at end of period (7 547) (6 639) (7 321)
1. Exceptional items
There were no exceptional items in the half years
ended 31 December 2001 and 2000.
Year ended 30 June 2001
Gross Tax Net
US$M US$M US$M
Profit on sale of fixed assets (equalisation of 128 - 128
Queensland Coal interests)
Termination of operations (Ok Tedi copper mine) ( 430) 14 ( 416)
Merger transaction costs ( 92) - ( 92)
Taxation (income tax audit) - ( 33) ( 33)
Sale of Mozal II expansion rights (a) 61 ( 21) 40
Merger and other restructuring costs and provisions ( 64) 16 ( 48)
(a)
Employee share awards accelerated by the merger (a) ( 37) 10 ( 27)
Write down in carrying value of assets (Lakes Mines) ( 26) 6 ( 20)
(a)
Write down in carrying value of assets and provisions ( 520) 110 ( 410)
(HBI Venezuela) (b)
Write down in carrying value of assets (Columbus JV) ( 114) 30 ( 84)
(b)
Total by category (1 094) 132 ( 962)
Aluminium 53 ( 19) 34
Base metals ( 8) 2 ( 6)
Carbon steel materials ( 58) 2 ( 56)
Stainless steel materials ( 5) 1 ( 4)
Energy coal ( 34) 8 ( 26)
Steel ( 22) 7 ( 15)
Exploration, technology and new business ( 13) 3 ( 10)
Other activities (c) ( 544) 44 ( 500)
Group and unallocated items ( 457) 84 ( 373)
Net interest ( 6) - ( 6)
Total by customer sector group (1 094) 132 ( 962)
(a) Included in operating profit with the exception of charges of $6 million (no tax effect) of merger and other
restructuring costs which were charged against net interest and other similar items payable.
(b) Included in share of operating profit/(loss) of joint ventures and associates.
(c) Includes termination of operations (Ok Tedi copper mine) previously included in Base Metals.
2. Segmental analysis by business
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Turnover US$M US$M US$M
Aluminium 1 371 1 294 2 971
Base metals 826 860 1 728
Carbon steel materials 1 660 1 603 3 369
Stainless steel materials 370 436 838
Energy coal 1 045 905 1 982
Exploration, technology and new business 167 116 251
Other activities 750 768 1 754
Petroleum 1 434 1 768 3 361
Steel 1 480 2 096 3 760
Group and unallocated items 48 ( 159) ( 351)
Intersegment ( 257) ( 291) ( 584)
8 894 9 396 19 079
Profit before tax
Aluminium 191 218 576
Base metals 68 253 474
Carbon steel materials 565 422 836
Stainless steel materials ( 33) 63 74
Energy coal 350 157 348
Exploration, technology and new business 42 26 ( 7)
Other activities 100 103 ( 421)
Petroleum 576 706 1 407
Steel 69 212 248
Group and unallocated items ( 277) ( 290) ( 996)
1 651 1 870 2 539
Net interest ( 29) ( 203) ( 476)
1 622 1 667 2 063
Net operating assets
Aluminium 4 773 3 290 4 730
Base metals 4 183 3 614 3 823
Carbon steel materials 2 407 3 217 2 370
Stainless steel materials 1 612 1 602 1 598
Energy coal 1 780 2 033 1 986
Exploration, technology and new business 893 396 869
Other activities 940 1 913 828
Petroleum 2 722 2 613 2 504
Steel 2 047 2 454 2 130
Group and unallocated items 888 800 874
22 245 21 932 21 712
2. Segmental analysis by business (continued)
Trading activities included above Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Turnover US$M US$M US$M
Aluminium 518 446 1 014
Base metals 1 12 13
Carbon steel materials 14 20 40
Stainless steel materials 3 - 6
Energy coal 63 16 100
Exploration, technology and new business - - -
Other activities 431 264 797
Petroleum - - -
Steel - - -
Group and unallocated items 16 - -
1 046 758 1 970
Profit before tax
Aluminium 1 6 14
Base metals - - -
Carbon steel materials - - 1
Stainless steel materials - - -
Energy coal 3 - 6
Exploration, technology and new business - - -
Other activities ( 6) 7 23
Petroleum - - -
Steel - - -
Group and unallocated items - - -
( 2) 13 44
3. Geographical analysis
Analysis by geographical market
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Turnover US$M US$M US$M
Australia 1 623 1 818 3 345
Europe 2 386 2 050 4 621
Japan 953 1 268 2 465
South Korea 445 450 960
Other Asia 1 111 1 043 2 103
North America 1 534 1 619 3 372
Southern Africa 329 489 738
Rest of World 513 659 1 475
8 894 9 396 19 079
3. Geographical analysis (continued)
Analysis by geographical origin Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Turnover US$M US$M US$M
Australia 3 845 4 271 8 254
Europe 1 071 807 1 987
North America 1 164 923 2 126
South America 1 031 1 121 2 350
Southern Africa 1 340 1 605 3 107
Rest of World 443 669 1 255
8 894 9 396 19 079
Profit before tax
Australia 902 1 010 1 619
Europe 115 86 194
North America 67 85 117
South America 128 332 444
Southern Africa 339 319 498
Rest of World 100 38 ( 333)
1 651 1 870 2 539
Net interest ( 29) ( 203) ( 476)
1 622 1 667 2 063
Net operating assets
Australia 7 960 7 789 7 774
Europe 411 768 734
North America 1 922 1 121 1 804
South America 6 491 6 392 6 062
Southern Africa 4 356 4 493 4 311
Rest of World 1 105 1 369 1 027
22 245 21 932 21 712
4. Net interest and similar items payable
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
US$M US$M US$M
On bank loans and overdrafts ( 122) ( 123) ( 236)
On all other loans ( 136) ( 153) ( 339)
Finance lease and hire purchase interest ( 4) ( 3) ( 9)
( 262) ( 279) ( 584)
Dividends on redeemable preference shares ( 18) ( 43) ( 83)
Less amounts capitalised 15 17 39
( 265) ( 305) ( 628)
Share of interest of joint ventures and associates ( 36) ( 44) ( 94)
( 301) ( 349) ( 722)
Other interest receivable 48 70 136
Exchange differences on net debt - Group 197 74 118
- Joint 45 21 31
ventures &
associates
( 11) ( 184) ( 437)
Discounting on provisions ( 18) ( 19) ( 39)
Net interest and similar items payable ( 29) ( 203) ( 476)
5. Tax on profit on ordinary activities
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
US$M US$M US$M
Profit before taxation 1 622 1 667 2 063
Tax on profit @ 30% 487 500 619
Foreign exchange gains and other translation ( 145) ( 41) ( 113)
adjustments
Non-tax effected capital gains ( 6) ( 10) ( 63)
Recognition of prior year tax losses ( 60) ( 106) ( 133)
Tax rate differential ( 12) 53 57
Non-tax effected operating losses 70 17 47
Prior year adjustments / under or over ( 3) ( 15) ( 28)
provisions
Non-deductible accounting depreciation and 15 9 32
amortisation
Foreign expenditure including exploration not 22 23 57
presently deductible
Non-deductible dividends on redeemable 7 25 24
preference shares
South African secondary tax on companies 21 33 46
Investment and asset impairments - - 176
Non-deductible merger costs - - 28
Income tax audit - - 33
Other 6 ( 8) 29
Tax charge for the period (including 402 480 811
exceptionals)
Analysis of tax charge for the period
Group
UK taxation 145 24 206
Less double tax relief ( 96) ( 9) ( 127)
Australian taxation 210 271 365
South African taxation 12 66 116
Other overseas taxation 96 89 199
Joint ventures and associates
Joint ventures 34 39 49
Associates 1 - 3
Tax charge for the period 402 480 811
6. Reconciliation of movements in shareholders' funds
Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
US$M US$M US$M
Profit for the financial period 1 198 1 158 1 529
Other recognised gains and losses 26 ( 410) ( 763)
Total recognised gains 1 224 748 766
Dividends ( 392) ( 325) ( 754)
Issue of ordinary shares for cash 26 696 744
Capital reduction on OneSteel spin-out - ( 650) ( 650)
Share repurchase scheme - BHP Billiton Plc - 194 194
Share repurchasesscheme- BHP Billiton Limited ( 19) - -
Transfer to profit and loss account (goodwill) - - 4
Net movement in shareholders' funds 839 663 304
Shareholders' funds at start of period as 11 340 11 036 11 036
restated
Shareholders' funds at end of period 12 179 11 699 11 340
7. Analysis of movement in net debt
As at Acquisitions Other non-cash Exchange As at
1 July 2001 & disposals Cashflow movements movements 31 December
2001
US$M US$M US$M US$M US$M US$M
Cash at bank and in hand 836 ( 26) ( 353) - ( 12) 445
Overdrafts ( 287) - 265 - ( 6) ( 28)
549 ( 26) ( 88) - ( 18) 417
Redeemable preference shares ( 890) - 355 - 26 ( 509)
Finance lease obligations ( 63) - 4 - 3 ( 56)
Other debt due within one year (1 432) - 201 ( 234) 102 (1 363)
Other debt due after one year (5 934) - ( 614) 234 62 (6 252)
(8 319) - ( 54) - 193 (8 180)
Money market deposits 449 - ( 236) - 3 216
Total (7 321) ( 26) ( 378) - 178 (7 547)
The balance sheet movement in cash
including
money market deposits is as
follows:
Cash at bank and in hand 836 ( 26) ( 353) - ( 12) 445
Money market deposits 449 - ( 236) - 3 216
1 285 ( 26) ( 589) - ( 9) 661
Money market deposits with financial institutions have a maturity of up to
three months.
8. Reconciliation to US generally accepted accounting principles (GAAP)
The reconciliations presented in this note represent the net income for the half
years ended 31 December 2001 and 2000 and the year ended 30 June 2001 and
shareholders' funds as at 31 December 2001 and 2000 and 30 June 2001
respectively had US GAAP been followed by the BHP Billiton Plc Group rather than
UK GAAP.
On 29 June 2001, BHP Billiton Plc (formerly Billiton Plc) consummated the Dual
Listed Companies (DLC) merger with BHP Billiton Limited (formerly BHP Limited).
In accounting for this transaction the most significant difference between UK
GAAP and US GAAP is that under UK GAAP, the DLC merger has been accounted for as
a merger (pooling of interests) in accordance with UK Financial Reporting
Standard 6: Acquisitions and Mergers, whereas under US GAAP the DLC merger is
accounted for as a purchase business combination with the BHP Billiton Limited
Group acquiring the BHP Billiton Plc Group. In a merger, the assets, liabilities
and equity of the BHP Billiton Plc Group and of the BHP Billiton Limited Group
are combined at their respective book values as determined under UK GAAP. Under
US GAAP, the net income for the half year ended 31 December 2001 and the
reconciliation of shareholders' equity at 31 December 2001 and 30 June 2001
include the purchase adjustments required under US GAAP to recognise the BHP
Billiton Plc Group's assets and liabilities at their fair values, with the
excess recorded as goodwill.
Although UK GAAP and US GAAP both require the consolidation of the BHP Billiton
Plc Group with the BHP Billiton Limited Group at 30 June 2001, UK GAAP also
requires that their respective financial statements for periods prior to the
date the DLC merger was consummated are combined. Under purchase accounting, the
retroactive combination of financial statements is not appropriate and, as the
BHP Billiton Limited Group is the accounting acquirer, and is the 'predecessor'
to the BHP Billiton Group, it is necessary to present the BHP Billiton Limited
Group's US GAAP net income for the half year ended 31 December 2000 and the year
ended 30 June 2001 and shareholders' equity at 31 December 2000. Thus, the BHP
Billiton Group's net income and shareholders' funds under UK GAAP, as presented
in the financial statements of the BHP Billiton Plc Group, when represented
under US GAAP, become the net income and shareholders' funds of the BHP Billiton
Limited Group. Because the DLC merger was consummated on 29 June 2001, no
purchase adjustments impacted net income under US GAAP for the half year ended
31 December 2000 or the year ended 30 June 2001.
BHP Billiton Limited is an Australian company which prepares its primary
financial statements in accordance with Australian GAAP. The reconciliation of
the BHP Billiton Group's net income and shareholders' funds under UK GAAP
demonstrate both those adjustments necessary to show the link to the BHP
Billiton Limited Group's net income and shareholders' funds under Australian
GAAP, and then those adjustments necessary to reconcile to their equivalents
presented in accordance with US GAAP. The following categories of adjustments
are therefore made in order to reflect the results of the BHP Billiton Group
under US GAAP:
A. Elimination of the BHP Billiton Plc Group UK GAAP net income for the half
year ended 31 December 2000 and the year ended 30 June 2001 and
shareholders' funds at 31 December 2000 from the combined BHP Billiton Plc
UK GAAP financial statements
B. The reversal of adjustments arising from intergroup transactions between the
BHP Billiton Limited Group and the BHP Billiton Plc Group.
D. The recognition of Australian GAAP/UK GAAP accounting policy alignment
adjustments.
E. The reconciliation of the BHP Billiton Limited Group's net income and
shareholders' funds from Australian GAAP to US GAAP
Items (A) through (D) are discussed in more detail below.
(A) Elimination of the BHP Billiton Plc Group financial information
This adjustment eliminates the pre-acquisition net income and
shareholders' funds of the BHP Billiton Plc group recorded in the BHP
Billiton Group UK GAAP financial statements. This elimination is not
applicable for post-acquisition periods.
(B) Reversal of adjustments arising from intergroup transactions
During December 1998, the BHP Billiton Plc Group acquired certain assets
from the BHP Billiton Limited Group. The BHP Billiton Plc Group
recognised fair value adjustments as a result of this acquisition which
are being amortised over their useful lives. As a result of the
application of merger accounting under UK GAAP, the fair value
adjustment is reversed. For Australian and US GAAP this fair value
adjustment is reinstated.
(C) Australian GAAP/UK GAAP accounting policy alignment adjustments
As at 30 June 2001, the accounting policies of the BHP Billiton Plc
Group and the BHP Billiton Limited Group under both Australian GAAP and
UK GAAP had been aligned to the extent possible. The following
differences between UK GAAP and Australian GAAP impact the net income
due to the effect of changes in accounting policy being recognised in
different reporting periods.
Restoration and rehabilitation costs
Under UK GAAP, the expected cost of any committed decommissioning or
restoration program, discounted to its net present value, is provided
and capitalised at the beginning of each project. The capitalised cost
is amortised over the life of the operation and the increase in the net
present value of the provision as the discount unwinds is included in
net interest and similar items payable. Previously, for Australian GAAP
purposes, the provision was determined on an undiscounted basis and the
charge to profit was generally based on units of production, so that
full provision was made by the end of the assets' economic life.
Pension plans
Under UK GAAP, the net periodic pension cost assessed on an actuarial
basis is charged to profit and loss so as to allocate the costs
systematically over the employees' service lives. Previously, for
Australian GAAP purposes, charges were taken to the profit and loss
account as contributions were made to pension plans.
(D) Reconciliation to US GAAP
The consolidated financial statements of the BHP Billiton Limited Group
are prepared in accordance with Australian GAAP. Material differences
between generally accepted accounting principles as followed by the BHP
Billiton Limited Group in Australia and US GAAP are summarised below.
Acquisition of the BHP Billiton Plc Group
On 29 June 2001, BHP Billiton Limited and BHP Billiton Plc established a
DLC merger. Under US GAAP, the DLC merger is accounted for as a purchase
business combination of the BHP Billiton Plc Group by the BHP Billiton
Limited Group.
The total assumed purchase consideration of $11,529 million was
calculated by multiplying the number of shares held by BHP Billiton Plc
shareholders of 2,319,147,885 on 29 June 2001 by the $4.9559 adjusted
average share price of BHP Billiton Limited's ordinary shares. The
average share price was calculated over a period of three days prior to,
and subsequent to, the announcement of the DLC merger on 19 March 2001.
The average share price is adjusted for the 1:1 equalisation ratio which
is achieved by BHP Billiton Limited's bonus share issue of 1,910,918,073
million shares. The cost of acquisition was therefore $11,529 million,
including direct external acquisition costs of $36 million. The direct
external acquisition costs have been expensed as incurred for UK and
Australian GAAP purposes.
In order to determine proper allocation of the purchase price related to
the acquired assets of the BHP Billiton Plc Group under US GAAP purchase
accounting, the cost of the acquisition is allocated to the fair values
of identifiable assets acquired and liabilities assumed. As a result of
the fair value exercise, increases in the values of the BHP Billiton Plc
Group's inventory, investments, long term contracts and long term debt
were recognised and fair market values attributed to their other
tangible assets mainly property, plant and equipment and undeveloped
properties, together with appropriate deferred taxation effects. The
difference between the cost of acquisition and the fair value of the
assets and liabilities of the BHP Billiton Plc Group has been recorded
as goodwill. Fair value adjustments to the recorded amount of inventory
and long term contracts will be expensed in the period the inventory is
utilised and the long term contracts are delivered into, and additional
amortisation and depreciation will be recorded in respect of the fair
value adjustments of intangible and tangible assets and the resulting
goodwill over the periods of their respective useful economic lives.
The adjustments to the assets and liabilities of the BHP Billiton Plc
Group to reflect the fair values and allocation of the excess purchase
consideration over the fair value of net assets acquired, based on
management's best estimates of fair value, are summarised in the
shareholders' funds reconciliation and are discussed below:
a. The increase in fair value of inventory was determined based on the
difference between the carrying value and the market value of these assets.
b. The increase in investments relates to increases to the BHP Billiton Plc
Group's equity investments. These equity investments have been measured at
fair value and any excess of the fair value over the underlying tangible
assets and liabilities has been attributed to mineral reserves within the
underlying investments. These uplifts to mineral properties are being
amortised over their estimated useful lives, on an investment by investment
basis.
c. The increase in property, plant and equipment relates to increases in the
carrying value of the BHP Billiton Plc Group's property, plant and equipment
to their estimated fair value. The increase in carrying value of the
property, plant and equipment is to be amortised over the estimated useful
life of the property, plant and equipment.
d. The amount of total consideration allocated to the BHP Billiton Plc Group's
undeveloped properties has been estimated by the BHP Billiton Group
management using current estimates of the status and prospects of the BHP
Billiton Plc Group's undeveloped property portfolio as contained in the BHP
Billiton Plc Group's strategic plans. The undeveloped properties include
only those identified properties that have advanced to a stage of
development feasibility where management believes reasonable estimates of
projected cash flows can be prepared. The value allocated to the undeveloped
properties was determined utilising a risk adjusted income approach that
included earnings discounted by the appropriate cost of capital for the
investment. Estimates of future cash flows related to individual undeveloped
properties were based on existing estimates of revenues and contribution
margin for the project. The increase in undeveloped properties is being
amortised over their estimated exploitable useful lives on a project by
project basis.
e. The increase in value of the long term contracts was determined by
attributing a fair value to certain long term contracts, which were not
accorded a value in the BHP Billiton Plc Group's financial statements.
f. Goodwill represents the remainder of the unallocated purchase consideration.
Goodwill is to be amortised over its expected useful economic life.
g. Deferred taxes have been computed on the excess of fair value over book
value, other than for goodwill, using the applicable weighted average
statutory tax rates.
h. The decrease in long term debt was as a result of attributing a fair value to
fixed interest rate long term loans which were not recorded at fair value in
the BHP Billiton Plc Group's financial statements.
i. Other differences between UK GAAP and US GAAP included adjustments for
pensions, post retirement benefits and start up costs.
The purchase accounting presented in the reconciliation of net income
and shareholders' funds below is preliminary pending completion of
comprehensive fair value determinations. Any impact arising from the
final purchase price allocation cannot presently be quantified.
Fair value accounting for derivatives
When undertaking risk mitigation transactions hedge accounting
principles are applied, whereby derivatives are matched to the
specifically identified commercial risks being hedged. These matching
principles are applied to both matured and unmatured transactions.
Derivatives undertaken as hedges of anticipated transactions are
recognised when such transactions are recognised. Upon recognition of
the underlying transaction, derivatives are valued at the appropriate
market spot rate.
When an underlying transaction can no longer be identified, gains or
losses arising from a derivative that has been designated as a hedge of
a transaction will be included in the profit and loss account whether or
not such derivative is terminated. When a hedge is terminated, the
deferred gain or loss that arose prior to termination is:
a. Deferred and included in the measurement of the anticipated transaction when
it occurs; or
b. Included in the profit and loss account where the anticipated transaction is
no longer expected to occur
The premiums paid on interest rate options and foreign currency put and
call options are included in other assets and are deferred and included
in the settlement of the underlying transaction. When undertaking
strategic or opportunistic financial transactions, all gains and losses
are included in the profit and loss account at the end of each reporting
period. The premiums paid on strategic financial transactions are
included in the profit and loss account at the inception of the
contract.
For the purpose of deriving US GAAP information, Statement of Financial
Accounting Standards No. 133: Accounting for Derivative Instruments and
Hedging Activities (FAS 133) requires that each derivative instrument be
recorded in the balance sheet as either an asset or liability measured
at its fair value. On initial application of this Standard an
accumulated loss of $312 million was recognised in respect of the fair
value of derivative instruments held on 1 July 2000, which qualified as
cash flow hedge transactions. This amount was reported as a component of
other comprehensive income. An accumulated gain of $11 million was
recognised in respect of the fair value of derivative instruments which
qualified as fair value hedge transactions and their associated hedged
liabilities held at 1 July 2000. This amount was taken directly to
profit and loss.
In the year ended 30 June 2001, subsequent gains and losses on cash flow
hedges were taken to other comprehensive income and reclassified to
profit and loss in the same period the hedged transaction was
recognised. Gains and losses on fair value hedges continued to be taken
to profit and loss in subsequent periods, as were offsetting gains and
losses on hedged liabilities. In both cases, these gains and losses are
not recognised under UK or Australian GAAP until the hedged transaction
is recognised.
In the half year ended 31 December 2001, for US GAAP purposes, BHP
Billiton Limited de-designated existing derivative instruments as hedges
of underlying transactions. As a consequence, the amount previously
included in other comprehensive income in relation to those derivative
instruments previously designated as cash flow hedges will remain until
the transactions originally being hedged are recognised, at which time
the amounts will be taken to the profit and loss account. Movements in
the fair value of derivative instruments since 30 June 2001 are taken to
the profit and loss account.
Asset write-downs
At 31 May 1998, the BHP Billiton Limited Group changed its impairment
test policy for determining the recoverable amount of non-current assets
from an undiscounted to a discounted basis. The discount rate is a risk
adjusted market rate which is applied both to determine impairment and
to calculate the write-down.
Under US GAAP, where an asset is reviewed for impairment, an impairment
test is required utilising undiscounted cash flows. If the asset's
carrying value exceeds the sum of undiscounted future cash flows, the
asset is considered impaired and it is written down to its fair value.
These differences created adjustments to the profit and loss account in
prior years representing the lower charge to profit and resultant higher
asset values for the write-downs calculated under US GAAP. In subsequent
financial periods, the difference in asset carrying values is reduced
through the inclusion of additional depreciation charges in the profit
and loss account. Refer 'Depreciation' below.
Depreciation
Revaluations of property, plant and equipment and investments have
resulted in upward adjustments to the historical cost values reflected
in a revaluation reserve which is part of total equity. In the case of
property, plant and equipment, the depreciation charged against income
increases as a direct result of such a revaluation. Since US GAAP does
not permit property, plant and equipment to be valued at above
historical cost, the BHP Billiton Limited Group depreciation charge has
been restated to reflect historical cost depreciation.
Following smaller asset write-downs, the higher asset values under US
GAAP are being depreciated in accordance with asset utilisation. Refer '
Asset write-downs' above.
Employee benefits
These accounts include provisions for redundancies associated with
organisational restructuring that can be recognised where positions have
been identified as being surplus to requirements, provided the
circumstances are such that a constructive liability exists. Under US
GAAP a provision for redundancies involving voluntary severance offers
is restricted to employees who have accepted these offers. The
adjustment is reversed over subsequent periods as the offers are
accepted.
Pension costs
The BHP Billiton Group recognises periodic pension cost based on
actuarial advice in a manner similar to US GAAP. However, differences in
the actuarial method used and the timing of recognition of expense
components results in different periodic costs and pension assets or
liabilities.
Realised net exchange gains on sale of assets/closure of operations
Net exchange gains or losses reported in shareholders' funds which
relate to assets that have been sold, closed or written down are
transferred to retained earnings. US GAAP requires these net exchange
gains or losses be recognised in the profit and loss reflecting that
they have, in substance, been realised.
Exploration, evaluation and development expenditures
The BHP Billiton Group follows the ' area of interest' method in
accounting for petroleum exploration, evaluation and development
expenditures. This method differs from the 'successful efforts' method
followed by some US companies, and adopted in this reconciliation to US
GAAP, in that it permits certain exploration costs in defined areas of
interest to be capitalised. Such expenditure capitalised by the BHP
Billiton Group is amortised in subsequent years.
Employee Share Plan loans
Under the Employee Share Plan, loans have been made to employees for the
purchase of shares in BHP Billiton Limited. Under US GAAP the amount
outstanding as an obligation to the BHP Billiton Limited Group, which
has financed equity, is required to be eliminated from shareholders'
funds.
Employee compensation costs
In these accounts, the expected cost of awards under the BHP Billiton
Limited Employee Share Plan and the Executive Share Plan is charged to
the profit and loss account over the vesting period. Under US GAAP,
compensation expense arising from variable share, option and Performance
Rights plans are recognised based on movements in their intrinsic value.
Changes to the exercise terms for certain shares and options arising
from the OneSteel spin-out in October 2000 caused the related plan to
become variable.
Costs of start-up activities
The BHP Billiton Group capitalises as part of property, plant and
equipment, costs associated with start-up activities at new plants or
operations which are incurred prior to commissioning date. These
capitalised costs are depreciated in subsequent years. Under US GAAP
costs of start-up activities should be expensed as incurred. In
subsequent financial periods, amounts amortised (which have been
expensed for US GAAP purposes) will be added back when determining net
income according to US GAAP.
Profit on asset sales
Under US GAAP, profits arising from the sale of assets cannot be
recognised in the period in which the sale occurs where the vendor has a
significant continuing association with the purchaser. In such
circumstances, any profit arising from a sale is recognised over the
life of the continuing arrangements.
8. Reconciliation to US generally accepted accounting principles (GAAP) (Continued)
Attributable Profit Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Note US$M US$M US$M
Attributable profit as reported under UK GAAP 1 198 1 158 1 529
add/(deduct)
- BHP Billiton Plc Group's pre acquisition profit (A) - ( 352) ( 565)
attributable to shareholders under UK GAAP
- Reversal of intercompany adjustments (B) ( 4) ( 6) ( 11)
- Restoration and rehabilitation costs (C) - 2 28
- Pension plans (C) - ( 4) 143
1 194 798 1 124
Estimated adjustment required to accord with US GAAP: (D)
add/(deduct)
- Fair value adjustment on acquisition of Billiton Plc
Group
- Depreciation, amortisation & other asset ( 229) - -
movements
- Other 11 - -
- Depreciation
- Write-downs ( 8) ( 11) ( 18)
- Revaluations 2 3 5
- Exploration, evaluation and development expenditures ( 4) ( 2) ( 3)
- Pension plans 8 ( 8) ( 127)
- Consolidation of Tubemakers of Australia Ltd (TOA) ( 1) ( 1)
- Employee compensation costs - - ( 117)
- Restructuring & employee provisions ( 22) ( 4) 23
- Purchase business combination costs - - 38
- Realised net exchange gains/(losses) on sale of assets 3 ( 6) 7
/closure of operations
- Start-up costs ( 1) 1 3
- Profit on asset sales 1 - 1
- Fair value accounting for derivative instruments 27 ( 24) ( 23)
Total adjustment ( 212) ( 52) ( 212)
Net income attributable to members under US GAAP 982 746 912
Earnings per share - US GAAP (US cents) 16.3 20.3 24.7
Earnings per American Depository Share (ADS) - US GAAP (US 32.6 40.6 49.4
cents)
Reconciliation of shareholders' funds Half year ended Half year ended Year ended
31 December 2001 31 December 2000 30 June 2001
Note US$M US$M US$M
Shareholders' funds under UK GAAP 12 179 11 699 11 340
add/(deduct)
- BHP Billiton Plc Group's (A) - (5 869) -
shareholders' funds under
UK GAAP
- Reversal of intercompany (B) 112 122 116
adjustments
- Restoration and (C) - ( 36) -
rehabilitation costs
- Pension plans (C) - ( 141) -
12 291 5 775 11 456
Estimated adjustment required to accord with US GAAP: (D)
add/(deduct)
- Fair value adjustment on acquisition of
Billiton Plc Group
- Inventory - - 157
- Investments 1 012 - 1 034
- Property, plant and 2 006 - 2 058
equipment
- Undeveloped properties 806 - 824
- Long term contracts 40 - 40
- Goodwill 2 450 - 2 500
- Deferred taxation ( 892) - ( 964)
- Long term debt 27 - 29
- Other ( 38) - ( 49)
- Property, plant and equipment revaluations ( 66) ( 78) ( 68)
- Exploration, evaluation and development ( 36) ( 34) ( 32)
expenditures
- Employee Share Plan loans ( 152) ( 30) ( 50)
- Pension plans ( 75) 32 ( 83)
- Asset writedowns 165 197 173
- Restructuring & employee provisions 16 13 38
- Start up costs ( 7) ( 8) ( 6)
- Profit on asset sales ( 13) ( 16) ( 14)
- Fair value accounting for derivative ( 287) ( 366) ( 441)
instruments
Total adjustment 4 956 ( 290) 5 146
Shareholders' funds attributable to members under US 17 247 5 485 16 602
GAAP
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