Prelim Rslts Y/E 30/06/01-PT4
BHP Billiton Limited
20 August 2001
PART 4
BHP BILLITON
PRELIMINARY RESULTS
FOR THE YEAR ENDED 30 JUNE 2001
PART D
BHP BILLITON LTD GROUP RESULTS
20 August 2001
For Announcement to the Market
Name of Company: BHP Billiton Limited
A.B.N: 49 004 028 077
Preliminary Final Statement for the 12 months to 30/6/01
This preliminary final statement includes the results for the year ended 30
June 2001 compared with the year ended 30 June 2000.
$A Million
Revenues from ordinary activities up 2.5% to 22,479
Profit from ordinary activities after tax
attributable to members up 26.9% to 2,007
Profit from extraordinary items after tax
attributable to members Nil
Net profit for the period
attributable to members up 26.9% to 2,007
Profit from ordinary activities after tax
(before amortisation of goodwill) attributable to members up 26.1% to 2,012
Final dividend per share declared:
Current period (paid on 2 July 2001) 26.0 cents fully franked at 30%
Previous corresponding period 26.0 cents unfranked
This preliminary final statement was approved by resolution of the Board of
Directors.
K J Wood
Company Secretary
BHP Billiton Limited
_______________________________________________________________________________
20 August 2001
BHP Billiton Ltd Group
Profit Report
Year Ended 30 June 2001
(all amounts are expressed in Australian dollars unless otherwise indicated)
Year ended 30 June
Change %
Results Summary 2001 2000
Revenue ($ million)
- Sales revenue 20 698 19 872 +4.2
- Other revenue 1 781 2 050 -13.1
22 479 21 922 +2.5
Profit from ordinary activities
before tax ($ million) 2 575 1 600 +60.9
Net profit attributable to
BHP Billiton Ltd shareholders ($ million) 2 007 1 581 +26.9
Basic earnings per share (cents) 54.4 43.3 +25.6
(adjusted for bonus issue)
Return on BHP Billiton Ltd
shareholders equity (%) 18.2 15.3 +19.0
Significant Features
* merger with Billiton Plc completed 29 June 2001;
* a record annual profit;
* benefits from lower A$/US$ exchange rates;
* higher prices for petroleum products;
* a profit of $248 million from the sale of interests in Queensland Coal;
* lower debt levels and gearing; and
* charges related to HBI Venezuela ($811 million) and Ok Tedi ($286
million), partly offset by benefits due to changes in accounting policies
($320 million).
Group Result
Significant Developments
On 29 June 2001 BHP Ltd (BHP) and Billiton Plc (Billiton) completed a merger
to establish a diversified global resources group, called BHP Billiton. The
legal entities have been renamed BHP Billiton Ltd and BHP Billiton Plc.
Under the terms of the merger one existing Billiton share had an economic
interest equivalent to 0.4842 existing BHP shares and to ensure that the
economic and voting interest of each BHP and Billiton share was equivalent
there was a bonus issue to BHP shareholders at a ratio of 1.0651 additional
BHP shares for each existing BHP share held on 5 July 2001.
The Dual Listed Companies (DLC) structure of the merger means that the
existing primary listings on the Australian and London stock exchanges will be
maintained, as will the secondary listing on the Johannesburg Stock Exchange,
(and an American Depositary Receipt listing on the New York Stock Exchange).
Basis of Profit Report Preparation
This Profit Report presents the BHP Billiton Ltd Group stand-alone profit for
the year ended 30 June 2001 under Australian generally accepted accounting
principles in Australian dollars on the basis that the BHP Billiton Ltd Group
was a stand-alone group for the full year ended 30 June 2001.
The profit results of BHP Billiton (Combined Group) and BHP Billiton Plc as a
stand-alone entity for the year ended 30 June 2001 under United Kingdom
generally accepted accounting principles in United States dollars have been
presented in separate Profit Reports.
In this report all references to the corresponding period are to the 12 months
ended 30 June 2000 which has been restated to treat items previously regarded
as abnormal to be included within the determination of profit or loss from
ordinary activities.
Annual Result
The profit after tax attributable to the BHP Billiton Ltd Group shareholders
for the year ended 30 June 2001 was $2,007 million. This was an increase of
$426 million or 26.9% compared with the corresponding period.
Basic earnings per share (adjusted for the bonus issue) were 54.4 cents
compared with 43.3 cents for the corresponding period.
The following major factors affected profit after tax attributable to BHP
Billiton Ltd Group shareholders for the year ended 30 June 2001 compared with
the corresponding period:
Exchange rates (positive impact of $610 million)
Foreign currency fluctuations net of hedging had a favourable effect of
approximately $610 million compared with the corresponding period.
Prices (positive impact of $360 million)
Higher prices, after commodity hedging, for petroleum products and iron ore
increased profit by approximately $460 million compared with the corresponding
period. These increases were partly offset by lower prices for steel products
which decreased profit by approximately $85 million compared with the
corresponding period.
Asset sales (positive impact of $225 million)
Profits from asset sales were approximately $225 million higher than in the
corresponding period mainly reflecting a profit of $248 million (no tax
effect) from the sale of interests in the Central Queensland Coal Associates
(CQCA) and Gregory joint ventures.
New operations (positive impact of $180 million)
Higher profits from the Laminaria/Corallina oil fields (North West Australia)
and equity accounted profits from QCT Resources Limited (QCT) contributed
approximately $170 million for the year.
Ceased, Sold and Discontinuing operations (negative impact of $185 million)
Increased equity accounted losses from HBI Venezuela had an unfavourable
effect on results of approximately $80 million compared with the corresponding
period. The corresponding period included profits from discontinued steel
operations of approximately $45 million, and profits of approximately $35
million from the Kutubu, Gobe and Moran producing fields (Papua New Guinea)
and the Buffalo oil field (North West Australia) which have been sold.
Exploration (negative impact of $115 million)
Exploration expenditure charged to profit was approximately $115 million
higher than in the corresponding period mainly reflecting petroleum
exploration activity in the Gulf of Mexico (USA), Latin America and Algeria,
and the write-off of previously capitalised exploration expenditure for the
Agua Rica copper project (Argentina).
Costs (negative impact of $80 million)
Costs had an unfavourable impact of approximately $80 million compared with
the corresponding period. This was mainly due to implementation costs
associated with the introduction of Shared Business Services, higher
development and work-over costs at petroleum operations in the Gulf of Mexico,
dragline maintenance shutdowns at Queensland coal operations, higher royalty
and diesel costs at West Australian iron ore operations, and higher
superannuation contributions following cessation of a contribution holiday in
the corresponding period. These were partly offset by lower borrowing costs.
Other (negative impact of $579 million)
The result for the current year includes the following significant items:
* a charge to profit of $811 million after tax for the write-off of the
equity investment in HBI Venezuela and the establishment of provisions for
related financial obligations to banks and other associated costs;
* a charge to profit of $286 million after tax including outside equity
interests for the write-off of the BHP Billiton Ltd Group's interest in
the Ok Tedi copper mine (Papua New Guinea);
* a charge to profit of $71 million (no tax effect) for merger transaction
costs;
* a charge to profit of $63 million for non-deductibility of financing
costs in connection with the acquisition of the Utah Group in the early
1980s;
* a charge to profit of $62 million after tax for organisation
restructuring costs and provisions mainly related to the merger; and
* a profit of $320 million after tax for changes in accounting policy to
align treatment of defined benefit pension plans and restoration and
rehabilitation for the Combined Group.
The result for the corresponding period included a charge to profit of $394
million comprising losses from the write-down of assets and provisions for
restructuring costs of $862 million, partly offset by tax benefits of $468
million arising from the restatement of deferred tax balances as a consequence
of the change in the Australian company tax rate and from the finalisation of
funding arrangements.
Details of significant items by category and segment are included in
Supplementary Information on pages 19 and 20.
Segment Results (after tax)
Year ended 30 June
2001 2000
$ million $ million Change %
Minerals 624 436 +43.1
Petroleum 1 916 1 286 +49.0
Steel 323 283 +14.1
Services (1) 94
Net unallocated ( 343) ( 472)
interest
Group and (1 011) ( 78)
unallocated items
Net profit before
outside equity 1 509 1 549 -2.6
interests
Outside equity 498 32
interests
Net profit attributable to members
of BHP Billiton Ltd 2 007 1 581 +26.9
(1) Following various asset sales and an internal reorganisation the
Services segment is no longer reported. Transport and Logistics is now
reported in Steel, and Shared Business Services, Insurances and Corporate
Services are reported in Group and unallocated items. Comparative data has
been adjusted accordingly. 2000 data for Services mainly relates to
profits from businesses which have been sold.
A detailed analysis of the segments' results is discussed on pages 6 to 13.
This analysis is based on results before outside equity interests.
Minerals
Minerals' result for the year was a profit of $624 million, an increase of
$188 million or 43.1% compared with the corresponding period.
Major factors which affected comparison of results were:
* favourable effect of the lower A$/US$ exchange rate;
* a profit from the sale of interests in the CQCA and Gregory joint
ventures to Mitsubishi Development Pty Ltd (Mitsubishi);
* higher iron ore prices and volumes; and
* higher coal prices and volumes.
These were partly offset by:
* a net loss from write-offs as follows:
* an $804 million loss after tax excluding outside equity interests from
the write-off of the BHP Billiton Ltd Group's interest in the Ok Tedi
copper mine;
* a $356 million loss (no tax effect) from the write-off of the equity
investment in HBI Venezuela and the establishment of provisions for other
associated costs; and
* a $41 million loss (no tax effect) from the write-off of the Agua Rica
copper project and related investments; the above were reduced by
* a $794 million loss after tax in the corresponding period from the
write-off of HBI Western Australia.
* increased equity accounted losses from HBI Venezuela during the year
resulting from production ramp-up difficulties and the cessation of
interest capitalisation following commissioning;
* the restatement of deferred tax balances in the corresponding period due
to changes in the Australian company tax rates;
* higher costs at Queensland coal operations due to dragline maintenance
shutdowns and West Australian iron ore operations due to higher royalty
and diesel costs;
* a charge to profit for a change in accounting policy for restoration and
rehabilitation;
* additional tax benefits in the corresponding period in respect of
certain overseas exploration expenditure for which no deduction had
previously been recognised; and
* organisation restructuring costs and provisions resulting from the BHP
Billiton merger.
Over the last year the BHP Billiton Ltd Group has been negotiating with the
other shareholders on the terms and conditions related to its exit from Ok
Tedi. Based on the status of these negotiations it has been decided to
write-off the BHP Billiton Ltd Group's share of Ok Tedi's net assets ($286
million after tax and outside equity interests). The Minerals segment results
include an $804 million write-off adjustment reflecting 100% of the net assets
of Ok Tedi which is prior to deducting outside equity interests of $518
million. From 1 July 2001 no profit will be recognised for Ok Tedi except to
the extent that dividends are received by the BHP Billiton Ltd Group.
The decision to cease further investment in HBI Venezuela was announced in the
third quarter following a detailed review of the future economic value of the
asset. The review identified that, in the context of changed operating and
market conditions, the BHP Billiton Ltd Group does not expect the plant to
meet the BHP Billiton Ltd Group's operational and financial performance
targets necessary to justify any further investment in the project, nor would
it satisfy bank completion requirements for project financing. These factors
coupled with possible partner funding issues influenced the decision.
The average price booked for copper shipments for the year, after hedging and
finalisation adjustments, was US$0.78 per pound (2000 - US$0.79). Finalisation
adjustments after tax, mainly representing adjustments on prior period
shipments settled since 30 June 2000, were $16.3 million unfavourable (2000 -
$28.1 million favourable).
Unhedged copper shipments not finalised at 30 June 2001 have been brought to
account at the London Metal Exchange (LME) copper spot price on Friday 29 June
2001 of US$0.70 per pound.
Exploration expenditure was $137 million for the year (2000 - $101 million)
and the charge against profit was $156 million (2000 - $92 million). The
charge against profit includes $33 million of previously capitalised
exploration expenditure that has been written off (Agua Rica).
Significant developments during the year included:
* the BHP Billiton Ltd Group successfully acquired 98.2% of the Class A
subordinate voting shares (Class A shares) and 84.9% of the Class B
multiple voting shares (Class B shares) in Dia Met Minerals Ltd (Dia Met)
for C$21.00 per share. This price valued Dia Met at $813 million. The BHP
Billiton Ltd Group intends to exercise its statutory right to compulsorily
acquire the remaining Class A shares. Following this, the BHP Billiton Ltd
Group may consider a 'going private' transaction to acquire the remaining
Class B shares. Dia Met is a publicly traded Canadian minerals exploration
and development company with a primary focus on diamonds. Dia Met's
principal asset is a 29% joint venture interest in the EkatiTM diamond
mine;
* the BHP Billiton Ltd Group and Mitsubishi jointly acquired QCT. In
December 2000, a range of integration activities was announced, including
the closure of South Blackwater (Queensland) underground mining by
December 2001 and the combining of the South Blackwater open cut
operations with the existing CQCA Blackwater mine. Subsequently in June
2001, the BHP Billiton Ltd Group and Mitsubishi completed an agreement to
move to equal ownership of their interests in the CQCA and Gregory joint
ventures (JV). The agreement resulted in the transfer of 18.285% of the
CQCA JV and 30.325% of the Gregory JV from the BHP Billiton Ltd Group to
Mitsubishi for $1,005 million, comprising net proceeds from the sale of
approximately $760 million together with $245 million mainly representing
the assumption by Mitsubishi of the BHP Billiton Ltd Group's share of debt
held by QCT. The BHP Billiton Ltd Group and Mitsubishi will jointly
operate the assets and market the coal produced;
* approval was granted for the $130 million expansion of the CQCA
Blackwater coal mine. Production from the Blackwater mine will be
increased by five million tonnes per annum which is currently being
sourced from the higher cost South Blackwater operation;
* the BHP Billiton Ltd Group announced it would continue to operate its
West Australian HBI plant based on strict technical and financial
performance criteria relating to campaign length, productivity,
maintenance turnaround and input costs. At the time of the announcement in
December 2000 continued operation required an additional $110 million
capital investment to implement additional technical modifications across
the plant;
* the BHP Billiton Ltd Group and Pohang Iron & Steel Co Ltd (POSCO) signed
a Letter of Intent to enter into a joint venture for the development and
operation of an iron ore mine within the 'C Deposit' sub lease which is
part of the broader Mining Area C area in the central Pilbara, Western
Australia. The BHP Billiton Ltd Group managed Goldsworthy Mining
Associates Joint Venture and POSCO will undertake a feasibility study for
the development with full scale mining expected to commence in late
calendar 2003;
* approval was granted for the US$148 million development of an
underground longwall mine at the San Juan thermal coal operations in New
Mexico (USA). The mine will replace the existing San Juan and La Plata
surface mines and will be the sole coal source for the adjacent San Juan
Generating Station;
* approval was granted for the US$138 million expansion of the Tintaya
copper operations in Southern Peru. The expansion includes a new solvent
extraction electrowinning (SX/EW) facility that will initially produce
34,000 tonnes of copper cathode per annum. First production is expected in
mid calendar 2002;
* the BHP Billiton Ltd Group and its joint venture partners in the
Escondida (Chile) copper mine approved the US$1,045 million Escondida
Phase IV expansion project (BHP Billiton Ltd Group share US$600 million
($1,090 million)). The expansion will be completed within two years and
will increase ore processing facilities by 85% resulting in an average
increase in copper production of 400,000 tonnes per annum, boosting
average total production to 1.2 million tonnes per annum over the first
five years of full production;
* agreement was reached between the BHP Billiton Ltd Group and Nippon
Steel on iron ore prices for the year which commenced 1 April 2001. The
prices of Mt Newman fine ore, Yandi fines products and Mt Goldsworthy
fines will increase by 4.3%. The price premium for lump ore will be
maintained at US 9.05 cents per dry long ton unit;
* the BHP Billiton Ltd Group settled terms for the majority of its
annually priced metallurgical coal contracts as they relate to the
Queensland Coal operations. Hard coking coal US dollar prices have
increased by a weighted average 16% across all markets. Tonnages are
expected to increase by 2 million tonnes to 35.5 million tonnes in 100%
terms. Semi-soft coal US dollar prices have increased across all markets
by a weighted average of 22%. Volumes are expected to be similar to 2001
at 9.5 million tonnes; and
* the BHP Billiton Ltd Group reached agreement with Falconbridge Limited
on the formation of a joint venture which may lead to the development of
the Gag Island nickel laterite project in Indonesia.
Petroleum
Petroleum's result for the year was a profit of $1,916 million, an increase of
$630 million or 49.0% compared with the corresponding period.
Major factors which affected comparison of results were:
* favourable effect of lower A$/US$ exchange rate;
* higher average realised oil price net of commodity hedging of US$28.04
(A$52.16) per barrel compared to US$22.86 (A$36.67) per barrel in the
corresponding period. The average realised oil price before commodity
hedging was US$29.39 per barrel (2000 - US$25.21 per barrel);
* higher natural gas, liquefied natural gas (LNG) and liquefied petroleum
gas (LPG) prices;
* higher profits from the Laminaria/Corallina oil fields which commenced
operations in November 1999; and
* profit from a change in accounting policy for restoration and
rehabilitation.
These were partly offset by:
* lower Bass Strait (Victoria) oil sales volumes;
* lower profits from the sale of assets; and
* higher exploration charged to profit reflecting exploration activity in
the Gulf of Mexico, Latin America and Algeria.
Oil and condensate production was 1% lower than the corresponding period due
to natural field decline at Bass Strait, the sale of the Buffalo oil field and
lower Bruce (UK) production due to shut-ins for repairs. These were partly
offset by higher volumes at the Laminaria/Corallina oil fields in their first
full year of production, Liverpool Bay (UK) due to strong performance
following a major maintenance shutdown, and Griffin (North West Australia) due
to the impact of the infill wells and favourable weather conditions for
operations.
Natural gas production was 15% higher than the corresponding period which was
largely attributable to higher volumes from Bass Strait, higher volumes from
Bruce and Griffin, and the commencement of production at the Zamzama field
(Pakistan) late in March 2001.
LNG production at the North West Shelf (NWS) in Western Australia was 5% lower
than the corresponding period mainly due to longer than planned maintenance
shut-downs in October 2000.
Exploration expenditure for the year was $385 million (2000 - $247 million).
Exploration expenditure charged to profit was $271 million (2000 - $190
million).
Significant developments during the year included:
* the BHP Billiton Ltd Group announced approval for a fourth train
expansion of the NWS LNG processing facilities. This expansion provides
additional capacity of 4.2 mtpa (BHP Billiton Ltd Group share 0.70 mtpa)
at a total cost of $2.4 billion (BHP Billiton Ltd Group share $400
million). NWS LNG sales arrangements were agreed with five Japanese gas
and power companies for the supply of LNG for delivered plateau volumes of
3.3 mtpa, and cover the supply of LNG for a long-term period starting in
mid-calendar 2004;
* the BHP Billiton Ltd Group and Esso Australia Resources Pty Ltd signed a
long-term supply agreement with Duke Energy International enabling the
introduction of natural gas to Tasmania. The supply agreement will provide
substantial underpinning volumes for the pipeline for up to 15 years
starting in 2002;
* a production enhancement project on the Laminaria oil field has been
approved. The project will accelerate production from the existing
reserves base and also access undeveloped oil reserves, resulting in an
additional 21 million barrels of production (BHP Billiton Ltd Group share
6.8 million barrels) over the first two years after start up. The capital
cost of the project is approximately $130 million (BHP Billiton Ltd Group
share $44 million);
* results from the Atlantis-2 appraisal well and sidetrack confirmed a
major oil accumulation with a multi-hundred million barrel resource
potential. Atlantis-2, located in the Atwater Foldbelt ultra deepwater
area of the Gulf of Mexico, encountered oil bearing sands with net pay in
excess of 153 metres (500 feet). Results of the Atlantis-2 sidetrack well
confirmed a lateral extension of the known range of the Atlantis
hydrocarbon accumulation of up to 1.6 kilometres (one mile) from the
original wellbore, and also confirmed the continuity and quality of the
Miocene reservoir sands with a net pay in excess of 92 metres (300 feet)
true vertical thickness;
* results from the drilling of Mad Dog £3 appraisal well, located in Green
Canyon Block 783 in the Gulf of Mexico, indicated the extent of the
previously recognised Miocene reservoirs and provided a better
understanding of the structural complexity of the field. A sidetrack was
drilled to a total depth of 22,426 feet, confirming the lateral extent and
thickness of the hydrocarbon-bearing Miocene reservoirs penetrated in the
original wellbore;
* the BHP Billiton Ltd Group acquired a 4.95 per cent interest in the
Genesis field in the deep water Gulf of Mexico. The BHP Billiton Ltd
Group's share of this field is expected to generate 3,000 barrels of oil
equivalent per day for the first two years of production;
* the BHP Billiton Ltd Group was successful in purchasing 12 blocks in the
Outer Continental Shelf Central Gulf of Mexico Lease Sale;
* the sale of the BHP Billiton Ltd Group's interest in the Buffalo oil
field to Nexen Petroleum Australia Pty Limited was successfully completed;
* the BHP Billiton Ltd Group agreed to sell a parcel of interests in its
Algerian oil and gas exploration and development activities to Woodside
Petroleum Ltd. Woodside have taken a 15 per cent interest in the Ohanet
Risk Service Contract, a 50 per cent increase in the Boukhechba production
sharing contract and a 50 per cent interest in the Ouest Hassi R'Mel Gas
Study Agreement. The transaction is subject to Algerian government
approvals;
* the BHP Billiton Ltd Group began contractual gas sales from its Extended
Well Test on the Zamzama gas field in southern Pakistan in March 2001 at a
rate of 70 mmcf/d;
* approval was granted for the development of the Echo/Yodel gas
condensate field on the NWS; and
* results were released from the drilling of the Chinook prospect, an
ultra-deepwater exploratory well, representing the first test of the BHP
Billiton Ltd Group's Walker Ridge acreage in the Gulf of Mexico.
Hydrocarbons were found, but not in commercial quantities. The well has
been plugged and abandoned.
Steel
Steel's result for the year was a profit of $323 million, an increase of $40
million or 14.1% compared with the corresponding period.
Major factors which affected comparison of results were:
* items in the corresponding period totalling approximately $100 million
loss, comprising a loss on sale of US West Coast businesses, overall
profits from discontinued businesses and tax benefits from changes in
Australian company tax rates;
* favourable effect of the lower A$/US$ exchange rate;
* improved operating performance from the Asian businesses;
* one-off benefits realised on the spin-out of OneSteel Limited; and
* additional tax benefits in respect of losses from New Zealand
operations, for which no deduction has previously been recognised.
These were partly offset by:
* lower international prices;
* lower sales volumes of coated products to the Australian market
reflecting reduced building activity; and
* the impact of industrial action at Port Kembla steelworks (New South
Wales).
Steel despatches from flat and coated operations were 5.34 million tonnes for
the year, 10% above the corresponding period:
- Australian domestic despatches were 2.09 million tonnes, 9% above
the corresponding period. The inclusion of despatches to OneSteel
Limited (previously treated as despatches within the BHP Billiton Ltd
Group) were partly offset by lower sales volumes of coated products;
- Australian export despatches were 2.36 million tonnes, up 15%;
- New Zealand steel despatches were 0.54 million tonnes, down 3%; and
- despatches from overseas plants were 0.36 million tonnes, up 9%.
Steel despatches from discontinued operations for the year were 0.70 million
tonnes, 77% below the corresponding period primarily due to the spin-out of
OneSteel Limited in October 2000 and sale of the US West Coast businesses in
the fourth quarter of the corresponding period.
Significant developments during the year included:
* BHP Billiton Ltd announced its intention to spin-out the remaining Steel
businesses. The spin-out is expected to be completed no later than the end
of fiscal 2002;
* approval was granted for the upgrade of the Port Kembla steelworks
sinter plant. The $94 million upgrade will significantly reduce both dust
levels and other emissions in and around the steelworks;
* the spin-out of the Long Products business, OneSteel Limited, in October
2000; and
* the signing of an agreement with e-STEEL Corporation to build and
operate a customised steel-based e-commerce network.
Net unallocated interest
Net unallocated interest expense was $343 million for the year compared with
$472 million for the corresponding period. The decrease was mainly due to
significantly lower funding levels, increased interest income and higher
capitalised interest. These factors were partly offset by higher interest
rates in the United States and Australia and the unfavourable effect of
exchange rate movements.
Group and unallocated items
The result for Group and unallocated items was a loss of $1,011 million for
the year compared with a loss of $78 million for the corresponding period.
The result for the year included a loss of $455 million after tax representing
provisions for related financial obligations to banks and other provisions
related to the decision to cease further investment in HBI Venezuela, and a
loss of $63 million for non-deductibility of financing costs in connection
with the acquisition of the Utah Group in the early 1980s, partly offset by a
profit of $265 million after tax related to a change in accounting policy for
defined benefit pension plans. The corresponding period included a $190
million tax benefit arising from funding arrangements related to HBI Western
Australia and a $112 million tax benefit arising from finalisation of funding
arrangements related to the Beenup mineral sands project.
The current year also included losses of $448 million after tax from external
foreign currency hedging compared with losses of $178 million after tax in the
corresponding period. This mainly reflects the lower value of the Australian
dollar relative to the US dollar for currency hedging contracts settled during
the year.
The result also included costs associated with the BHP Billiton merger and
implementation costs associated with the introduction of Shared Business
Services.
Significant developments during the year included:
* BHP Billiton Ltd announced an on-market share buy-back program for the
purchase of up to 90 million shares (approximately five percent of issued
capital). Following implementation of the DLC, the buy-back program has
been adjusted such that the number of shares purchased continues to
represent approximately five percent of issued capital. The buy-back
program is expected to be completed by September 2002, depending on market
circumstances;
* as a consequence of an income tax audit conducted by the Australian
Taxation Office (ATO), an amount of $229 million has been subject to
litigation.
The dispute concerns the deductibility of financing costs paid to General
Electric Company in connection with the BHP Billiton Ltd Group's
acquisition of the Utah Group in the early 1980's. On 23 November 1999,
the Federal Court ruled in favour of the BHP Billiton Ltd Group. On 18
October 2000, the Full Bench of the Federal Court ruled in favour of the
ATO. The BHP Billiton Ltd Group sought leave to appeal to the High Court
of Australia (High Court) and the hearing occurred on 10 August 2001. The
High Court has refused the BHP Billiton Ltd Group leave to appeal on the
general question of deductibility but did allow leave to appeal on the
question of whether the ATO had the power to amend the 1985 assessment.
An amount of $79 million was paid in 1992 and up to 2001 was accounted for
as a non-current asset. At 30 June 2001, the accounts have been adjusted
to include a tax expense of $63 million relating to refusal of the High
Court to grant leave to appeal on the deductibility of financing costs. A
non-current asset of $16 million will be carried forward.
In July 2001, the outstanding balance of $150 million was paid. This
amount will also be recorded as a non-current asset in the 2002 fiscal
year. This together with the $16 million carried forward from the 2001
year represents the tax and interest in dispute in relation to the 1985
assessment; and
* a 'self insurance' model to manage commodity and currency price risks
was adopted. The 'self insurance' model utilises natural hedges as the
principal means of managing market risk. Hedging transactions will only be
undertaken when it is necessary to mitigate residual risk from underlying
exposures in order to support the BHP Billiton Ltd Group's strategic
objectives.
Outside equity interests
Outside equity interests' share of net profit decreased by $466 million mainly
due to the impact of the Ok Tedi write-off adjustment of $518 million
reflecting outside equity interest's share of Ok Tedi's net assets at 30 June
2001.
Consolidated Financial Results
Year ended 30 June
2001 2000 Change
$ $ %
million million
Revenue from ordinary activities
Sales 20 698 19 872 +4.2
Interest revenue 110 89 +23.6
Other revenue (1) 1 671 1 961 -14.8
22 479 21 922 +2.5
Profit from ordinary activitites before
depreciation, amortisation and borrowing costs 5 530 4 404 +25.6
Deduct: Depreciation and amortisation 2 402 2 140
Borrowing costs (2) 553 664
Profit from ordinary activities before tax 2 575 1 600 +60.9
Deduct: Tax expense attributable to ordinary 1 066 51
activities
Net profit 1 509 1 549 -2.6
Outside equity interests in net profit 498 32
Net profit attributable to members of
BHP Billiton Ltd 2 007 1 581 +26.9
Average A$/US$ hedge settlement rate 54 c 63 c
(1) Excludes share of net profit of associates accounted for using the equity
method.
(2) After deducting capitalised interest of $28m $15m
Consolidated Financial Results
Revenue
Sales revenue of $20,698 million increased by $826 million or 4.2% compared
with the corresponding period. This mainly reflects the effect of the
significantly lower A$/US$ exchange rate, higher prices for petroleum products
and higher iron ore volumes and prices. This is partly offset by the effect of
reduced steel sales volumes following the spin-out of OneSteel Limited and the
sale of the US West Coast businesses. Other revenue decreased by $290 million
mainly reflecting lower proceeds from asset sales.
Depreciation and Amortisation
Depreciation and amortisation charges increased by $262 million to $2,402
million. This mainly reflects the impact of the change in accounting policy
for restoration and rehabilitation, the unfavourable effect of exchange rate
variations and higher depreciation on recently commissioned operations, partly
offset by depreciation in the corresponding period on businesses that have
been sold.
Borrowing Costs
Borrowing costs decreased by $111 million to $553 million, mainly due to
significantly lower funding levels and higher capitalised interest, partly
offset by higher interest rates and the unfavourable effect of exchange rate
movements.
Tax Expense
Tax expense of $1,066 million was $1,015 million higher than for the
corresponding period. The charge for the year represented an effective tax
rate of 41.4% (2000 - 3.2%). This is higher than the nominal Australian tax
rate of 34% primarily due to the non tax-effecting of the Ok Tedi write-off
and the HBI Venezuela equity investment write-off, overseas exploration
expenditure for which no deduction is presently available, non-deductibility
of financing costs in relation to the Utah Group acquisition in the early
1980s, non-deductible interest expense on preference shares and non-deductible
accounting depreciation and amortisation. These factors were partly offset by
the recognition of tax benefits in respect of certain prior year overseas
exploration expenditure and operating losses and non tax-effected capital
gains.
Consolidated Financial Results - Quarterly and Half Yearly Results
Net profit/(loss) attributable to members
of BHP Billiton Ltd
2001 2000
$ million $ million
First quarter 715 534
Second quarter 712 676
First Half 1 427 1 210
Third quarter 27 ( 46)
Fourth quarter 553 417
Second Half 580 371
Total 2 007 1 581
Basic earnings per share(1)
2001 2000
Cents Cents
First quarter 19.4 14.7
Second quarter 19.3 18.5
Third quarter 0.7 (1.2)
Fourth quarter 15.0 11.3
Total 54.4 43.3
(1) Based on net profit attributable to members of BHP Billiton Ltd divided by
the weighted average number of fully paid ordinary shares. The weighted average
number of shares for the year ended 30 June 2001 was 3,689,327,000 (2000 -
3,654,984,855) after adjusting for the impact of the bonus issue of 1.0651
additional BHP shares for each existing BHP share held on 5 July 2001.
(2) Excluding the bonus issue, basic earnings per share for the year ended 30
June 2001 was 112.3 cents (2000 - 89.3 cents) comprising the first quarter 40.1
cents (2000 - 30.4 cents), second quarter 39.9 cents (2000 - 38.4 cents), third
quarter 1.5 cents (2000 - (2.6) cents) and fourth quarter 30.8 cents (2000 -
23.1 cents).
Other Information
Year ended 30 June
2001 2000
Profit from ordinary activities before tax
as a percentage of sales revenue (%) 12.4 8.1
Return on BHP Billiton Ltd shareholders' equity (%) 18.2 15.3
Basic earnings per share (cents)(1) 54.4 43.3
Diluted earnings per share (cents)(2) 53.9 42.8
Basic earnings per American Depositary Share (US cents)(3) 55.5 51.7
Net tangible assets per fully paid share ($)(4) 3.0 2.8
Gearing ratio (%) 38.3 42.7
Interest cover (times) 5.4 3.3
(1) Based on net profit attributable to members of BHP Billiton Ltd divided by
the weighted average number of fully paid ordinary shares. The weighted average
number of shares for the year ended 30 June 2001 was 3,689,327,000 (2000 -
3,654,709,124), after adjusting for the impact of the bonus issue.
(2) Based on adjusted net profit attributable to members of BHP Billiton Ltd
divided by the weighted average number of fully paid ordinary shares adjusted
for the effect of Employee Share Plan options and Executive Share Scheme partly
paid shares to the extent they were dilutive at balance date. 5,815,536
potential shares for Performance Rights are excluded; these would only be
included when an issue of new shares is expected to occur. The weighted average
diluted number of shares for the year ended 30 June 2001 was 3,766,544,465 (2000
- 3,754,598,996), after adjusting for the impact of the bonus issue
(3) Each American Depositary Share (ADS) represents two fully paid ordinary
shares. Translated at the noon buying rate on Friday 29 June 2001 as certified
by the Federal Reserve Bank of New York A$1=US$0.5100 (2000 - A$1=US$0.5971).
(4) Based on the number of fully paid shares as at 30 June 2001 of
3,704,256,885, after adjusting for the impact of the bonus issue.
Dividends or Equivalent Declared
Year ended 30 June
2001 2000
Cents Total Cents Total
per amount per amount
share (1) $ million share (1) $ million
For payment
November 25.0 (2) 440
December 25.0 (2) 446
July 26.0 (3)(4) 466 26.0 (2)(5) 463
Dividends paid/payable 51.0 912 51.0 903
(1) Pre bonus issue.
(2) Unfranked dividends.
(3) Fully franked at 30 cents in the dollar.
(4) Paid on 2 July 2001.
(5) Paid on 3 July 2000.
Financial Data
The financial data upon which this report has been based complies with the
requirements of the Corporations Act 2001, with all applicable Australian
Accounting Standards and Urgent Issues Group Consensus Views, and gives a true
and fair view of the matters disclosed. The results are subject to audit. BHP
Billiton Ltd has a formally constituted Risk Management and Audit Committee of
the Board of Directors.
This report is made in accordance with a resolution of the Board of Directors.
Annual General Meeting
The Annual General Meeting of the BHP Billiton Ltd will be held at the
Melbourne Convention Centre (John Batman Theatre) on 16 October 2001 at
9.30am. The meeting will be broadcast live on the Internet at http://
www.bhpbilliton.com to enable shareholders to observe the proceedings. The
Annual Report and details of the business to be conducted at the meeting will
be mailed to shareholders in mid September 2001.
A further release will be made to the Australian Stock Exchange Limited when
the balance of the information required by its Listing Rules is available.
K J Wood
Company Secretary
BHP Billiton Ltd
Supplementary information - Significant Items (Annual)
Year ended 30 June 2001 $ million
Significant items by category Gross Tax Net
Asset write-offs and provisions:
Minerals Ok Tedi (1) ( 832) 28 ( 804)
HBI Venezuela (2) ( 356) - ( 356)
Group and unallocated HBI Venezuela (2) ( 672) 217 ( 455)
items
(1 860) 245 (1 615)
Asset sales:
Minerals Queensland Coal interests 248 - 248
248 - 248
Restructuring costs and provisions:
Minerals ( 32) 9 ( 23)
Steel ( 44) 15 ( 29)
Group and unallocated items ( 14) 4 ( 10)
( 90) 28 ( 62)
Merger costs:
Group and unallocated items ( 71) - ( 71)
( 71) - ( 71)
Non-deductibility of financing costs:
Group and unallocated items ( 63) ( 63)
( 63) ( 63)
Changes in accounting policy:
Minerals Restoration and ( 78) 24 ( 54)
rehabilitation
Petroleum Restoration and 156 ( 47) 109
rehabilitation
Group and unallocated Pension plans 379 ( 114) 265
items
457 ( 137) 320
Total by category (1 316) 73 (1 243)
Significant items by segment
Minerals (1 050) 61 ( 989)
Petroleum 156 ( 47) 109
Steel ( 44) 15 ( 29)
Group and unallocated items ( 378) 44 ( 334)
Total by segment (1 316) 73 (1 243)
(1) Before deducting the impact on Outside Equity Interests of $518 million.
The impact on The BHP Billiton Ltd Group was $286 million after tax.
(2) The total loss on the write-off of the equity investment in HBI Venezuela
and the establishment of provisions to cover related financial obligations to
banks and other associated costs is $811 million, of which $356 million (no tax
effect) is reported in Minerals and $455 million (after tax) is reported in
Group and unallocated items.
Supplementary information - Significant Items (Annual)
Year ended 30 June 2000 $ million
Significant items by category Gross Tax Net
Asset write-offs:
Minerals (1 138) 344 ( 794)
(1 138) 344 ( 794)
Asset sales:
Petroleum 150 ( 1) 149
Steel ( 227) 4 ( 223)
Services 63 - 63
( 14) 3 ( 11)
Restructuring costs and provisions:
Minerals ( 9) 1 ( 8)
Petroleum ( 21) 7 ( 14)
Steel ( 31) 11 ( 20)
Group and unallocated items ( 42) 16 ( 26)
( 103) 35 ( 68)
Restatement of deferred tax balances: (1)
Minerals 58 58
Petroleum 36 36
Steel 87 87
Net unallocated interest ( 3) ( 3)
Group and unallocated items ( 12) ( 12)
166 166
Tax benefit on finalisation of funding arrangements:
Group and unallocated items 302 302
302 302
Total by category (1 255) 850 ( 405)
Significant items by segment
Minerals (1 147) 403 ( 744)
Petroleum 129 42 171
Steel ( 258) 102 ( 156)
Services (2) 63 - 63
Net unallocated interest - ( 3) ( 3)
Group and unallocated items ( 42) 306 264
Total by segment (1 255) 850 ( 405)
(1) Restatement of deferred tax balances as a consequence of the change in tax
rate from 36% to 34% and 30% applicable from 1 July 2000 and 2001
respectively.
(2) Following various asset sales and an internal reorganisation the Services
segment ceased to be reported from 1 July 2001. Transport and Logistics is now
reported in Steel, and Shared Business Services, Insurances and Corporate
Services are reported in Group and unallocated items.
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