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BHP Billiton PLC (BLT)

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Tuesday 25 August, 2015

BHP Billiton PLC

BHP Billiton Results for Year Ended 30 June 2015

RNS Number : 9749W
BHP Billiton PLC
25 August 2015
 



 

 NEWS RELEASE

Release Time

IMMEDIATE

Date

25 August 2015

Number

17/15

 

BHP BILLITON RESULTS FOR THE YEAR ENDED 30 JUNE 2015

 

Information in this report has been presented on a continuing operations basis to exclude the contribution from assets that were demerged with South32, unless otherwise noted. The contribution of the South32 assets to the Group's results are disclosed as discontinued operations within the Group's financial statements.

 

·       The health and safety of our people is our first priority. After no fatalities in the 2014 financial year, we tragically lost five colleagues this year. It is our ongoing goal to have a workplace free from fatalities and serious injury and we have implemented a company-wide program to improve performance.

·       Underlying EBITDA(1) of US$21.9 billion and an Underlying EBITDA margin(2) of 50% for the 2015 financial year demonstrate the quality of our portfolio and its resilience in challenging markets. Underlying EBIT(1) declined by 46% to US$11.9 billion.

·       Our focus on best-in-class performance delivered productivity gains of US$4.1 billion(3), two years ahead of target. We expect further cost reductions in the 2016 financial year across all businesses.

·       Capital and exploration expenditure(4) decreased by 24% to US$11.0 billion in the period and is expected to decline to US$8.5 billion in the 2016 financial year and US$7.0 billion in the 2017 financial year.

·       Improved operating and capital productivity combined with the flexibility of our investment program supported free cash flow(2) of US$6.3 billion.

·       We maintained our solid A credit rating(5) and finished the period with net debt(2) of US$24.4 billion, a decline of US$1.4 billion.

·       Our commitment to the progressive dividend is unchanged. Our full-year dividend increased by 2% to 124 US cents per share.

 

Year ended 30 June

2015

US$M

2014

US$M

Change

%

Statutory

Profit from operations (EBIT) - continuing operations

 

8,670

 

22,649

 

(61.7%)

Attributable profit

1,910

13,832

(86.2%)

Basic earnings per share (cents)

35.9

260.0

(86.2%)

Dividend per share (cents)

124.0

121.0

2.5%

Net operating cash flow

19,296

25,364

(23.9%)

Continuing operations

Underlying EBITDA(1)

 

21,852

 

30,292

 

(27.9%)

Underlying EBIT(1)

11,866

22,098

(46.3%)

Underlying attributable profit(1)

6,417

13,263

(51.6%)

Underlying basic earnings per share (cents)(2)

120.7

249.3

(51.6%)

Net operating cash flow

Capital and exploration expenditure(4)

17,794

11,040

23,640

14,608

(24.7%)

(24.4%)

Total operations

Attributable profit excluding exceptional items(2)

 

7,109

 

13,447

 

(47.1%)

 

Results for the 2015 financial year

 

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "We are all deeply saddened by the tragic loss of five colleagues over the past year. These fatalities have had a permanent impact on our Company and on the families and friends of those who died. The health and safety of our people must come first and we are making an even greater effort to improve our performance as we strive for a fatality-free workplace. Across BHP Billiton we have held a series of safety interventions to reaffirm our commitment to focus on the things that matter most.

 

"The success of our productivity initiatives generated strong cash flow which supported our dividend commitment, funded continued investment in growth and enabled a reduction in net debt, despite the dramatic fall in commodity prices. And while we recorded a sector-leading EBITDA margin of 50 per cent, we will cut costs further and exercise our growing capital flexibility to improve our competitiveness and support our progressive dividend policy through the cycle.

 

"In the short term we expect ongoing economic reforms in China to contribute to periods of market volatility. And, while we remain confident in the long-term outlook for commodities demand as emerging economies continue to urbanise and industrialise, we have lowered our forecast of peak Chinese steel demand to between 935 million tonnes and 985 million tonnes in the mid 2020's. This backdrop will favour low-cost producers with economies of scale.

 

"Importantly, we do not require the same level of investment to grow as in the past. Improved productivity can further stretch the capacity of our existing operations to increase volumes at very low cost. For example, in Western Australia Iron Ore we can increase the capacity of our system from 254 million tonnes today to 290 million tonnes over time with minimal investment, while making more than US$20 per tonne margin at today's prices. Beyond this, we continue to reduce development costs within our project portfolio. However, we remain focused on value and will only approve projects when the time is right."

 

The health and safety of our people is core to our values

 

The health and safety of our people is our first priority. After no fatalities in the 2014 financial year, we tragically lost five colleagues this year. It is our ongoing goal to have a workplace free from fatalities and serious injury and we are making an even greater effort to improve our performance. This includes launching a company-wide safety intervention with more than 40,000 of our people having participated in sessions so far.

During the 2015 financial year, BHP Billiton reported a Total Recordable Injury Frequency of 4.1 per million hours worked(6), a two per cent improvement compared with the 2014 financial year.

 

Delivered strong cash flow, funded the dividend, invested in growth and reduced net debt

 

BHP Billiton delivered Underlying EBITDA of US$21.9 billion in the 2015 financial year, down 28 per cent, as lower realised prices reduced earnings by US$16.4 billion and more than offset the substantial productivity gains that continue to be achieved across the portfolio. Non-cash charges increased by US$1.3 billion and contributed to a 46 per cent decline in Underlying EBIT to US$11.9 billion.

 

Despite the significant decline in commodity prices, we generated US$6.3 billion of free cash flow during the period as we further improved both operating and capital productivity and exercised the flexibility in our investment program. In this regard, we invested US$11.0 billion in capital projects and exploration(4) during the year.

 

We maintained our solid A credit rating, finishing the period with net debt of US$24.4 billion, a decline of US$1.4 billion, and a gearing ratio(2) of 25.7 per cent (2014: 23.2 per cent). We remain committed to our strong balance sheet which allows us to maintain our progressive dividend and invest through the cycle.

 

In line with our progressive dividend policy, we increased our full-year dividend by two per cent to 124 US cents per share.

 

Early delivery of our productivity target provides a strong platform to generate further improvements

 

BHP Billiton's focus on operational excellence continued to yield significant results in the 2015 financial year. We reduced costs faster than expected in all our major businesses, with unit cash costs down by 31 per cent at Western Australia Iron Ore, 23 per cent at Queensland Coal, eight per cent at Escondida(7) while Black Hawk well costs fell 19 per cent. This contributed to the delivery of US$4.1 billion(3) of productivity gains during the period, two years ahead of our 2017 target, comprising a reduction in controllable cash costs of US$2.7 billion, productivity-led volume efficiencies of US$1.2 billion and a US$142 million reduction in capitalised exploration expenditure.

 

Following the successful demerger of South32, BHP Billiton is almost exclusively focused on its exceptionally large, long-life petroleum, copper, iron ore, coal and potash assets. With a significantly simpler portfolio, we are even better placed to achieve further productivity improvements in the assets that underpin the value of the Company.

 

Historical costs and guidance for the 2016 financial year are summarised in the following table:

 

Year ended 30 June

2012

2013

2014

2015

2016(i)

guidance

2016e vs 2015

Black Hawk drilling cost per well (US$ million)

4.7

5.0

4.2

3.4

2.5

(26%)

Escondida unit cost(7) (US$ per pound)

1.47

1.15

1.16

1.07

1.18

10%

Escondida grade-adjusted unit cost(7) (US$ per pound)

1.21

1.16

1.08

1.07

0.91(ii)

(15%)

Western Australia Iron Ore unit cost (US$ per tonne)

30

29

27

19

15

(20%)

Queensland Coal unit cost (US$ per tonne)

148

115

84

65

61

(6%)

(i) 2016 financial year guidance is based on exchange rates of AUD/USD 0.74 and USD/CLP 674.

(ii) Guidance is presented on a grade-equivalent basis relative to the 2015 financial year. Grades are expected to decline by 27 per cent in the 2016 financial year.

 

Capital productivity, the release of latent capacity and our high-quality growth options will create value

 

The successful ramp-up of the Jimblebar mining hub and growth in Onshore US liquids volumes increased Underlying EBIT by US$1.8 billion in the 2015 financial year. Improved capital productivity and the flexibility of our investment program, allowed us to reduce capital and exploration expenditure(4) by 24 per cent to US$11.0 billion during the period and is expected to lead to a 23 per cent reduction to US$8.5 billion in the 2016 financial year. We forecast capital and exploration expenditure will further reduce to US$7.0 billion in the 2017 financial year.

 

Over the short to medium term, the release of latent capacity across the portfolio will deliver production growth at low capital cost.

·       Better productivity will be the sole source of volume growth at Western Australia Iron Ore in the 2016 financial year and will contribute to an increase in system capacity to 290 Mtpa over time.

·       As we improve the efficiency of our capital, we expect to maintain aggregate Black Hawk and Permian volumes in the 2016 financial year despite cutting shale investment by over 50 per cent. We retain the option to rapidly ramp-up Onshore US production, however we will continue to monitor market conditions to optimise value. In addition, we now see the potential of the Permian field at over 150 kboe/d.

·       At Escondida, our three concentrator strategy with the commissioning of the desalination plant, is expected to offset grade decline and support a strong recovery in production post the 2016 financial year.

 

Our medium and longer-term development options are expected to support our production growth rates over the cycle and generate strong returns on investment.

·       In Copper, we recently filed two Environmental Impact Statements in relation to the Spence Growth Option project and continue to progress the Olympic Dam underground expansion option.

·       In Petroleum, Mad Dog 2 and Haynesville present excellent development options.

·       We continue to make good progress in shaft excavation at the Jansen potash project.

 

Outlook

 

Economic outlook

 

The global economy grew at a modest rate in the 2015 financial year with a mild improvement in developed economies offsetting a moderation in emerging markets. In the short to medium term, we expect moderate growth of the global economy. In the longer term, urbanisation and industrialisation will remain the primary drivers of commodity demand. The transition to consumption-led growth in emerging economies should provide particular support for industrial metals, energy and fertilisers.

 

In China, a slowdown in the property sector and fixed asset investment led to lower economic growth following policy tightening in the 2014 calendar year. Consumer spending remained resilient reflecting the continued rebalancing of the economy. A number of interest rate reductions, cuts in bank reserve requirements, boosts to infrastructure spending and administrative measures supporting the property market are likely to buttress growth over the remainder of the 2015 calendar year. In line with our expectations, the economy is growing more slowly, though off a higher base, as it matures over the medium term and the government's reform program promotes domestic consumption over investment. We expect near-term volatility to continue as the authorities press ahead with reform in a cautious but sustained manner as they seek to improve the efficiency of capital allocation in the economy while maintaining support for employment. However, our robust longer-term outlook for China remains intact as the economy transitions.

 

The United States economy continued to improve despite weakness in the March 2015 quarter caused by severe weather in the North-East and a stronger US dollar. Ongoing strength in the labour market, rising disposable incomes, higher equity markets and improved housing prices supported consumer demand. After a period in which businesses failed to respond to improved economic conditions and higher levels of profitability, corporate investment has begun to show signs of recovery. The Federal Reserve is expected to begin increasing interest rates in the first half of the 2016 financial year.

 

The European Central Bank began a program of quantitative easing in March 2015, which appears to be driving a modest pick-up in economic growth. Activity has improved across the Eurozone, with the exception of Greece, reflecting a broad-based lift in domestic demand and we expect the improvement in growth to continue in the 2016 financial year.

 

Japan's economy saw growth improve in annualised terms as the year progressed, supported by the Bank of Japan's quantitative easing and a weaker yen. Growth should be supported by stronger business investment into the 2016 financial year. A longer-term, sustainable recovery is contingent on the scale and speed of structural reform.

 

Commodities outlook

 

Commodity prices generally trended down in the 2015 financial year, with prices for most of our commodities notably lower going into the new financial year.

 

Chinese steel production declined by 1.3 per cent in the second half of the 2015 financial year versus the corresponding period in 2014, triggered largely by a slowing construction sector. New construction starts were lower this year due to considerable levels of existing stock. Although China's steel exports are at an all-time high, we expect subdued crude steel production growth over the remainder of the 2015 calendar year with some upside potential should the construction sector recover. However with steel stock per capita still well below that of developed nations, we expect moderate but sustainable growth in Chinese steel production over the next decade. An extended view on the life cycle of steel usage has resulted in a lower but longer plateau for crude steel production, peaking between 935 Mt and 985 Mt in the middle of the next decade. The implications for pig iron demand, and therefore iron ore and metallurgical coal, are mitigated in the medium term by lower scrap availability as the scrap cycle in China will take longer to develop. Outside China, steel production growth is improving steadily driven by India, the Middle East and South-East Asia.

 

The supply of most steelmaking raw materials has grown faster than demand. In iron ore, we estimate that approximately 100 Mt of incremental lower cost seaborne supply will enter the market in the 2015 calendar year, outweighing demand growth. In this context, higher cost Chinese domestic production, along with high-cost seaborne exports, continues to exit the market. Private mines in China have seen their operating rates fall from approximately 90 per cent in the 2011 calendar year to approximately 35 per cent today. Many producers have also cut their costs. As a result, the iron ore cost curve has both flattened and fallen from previous levels. 

 

In metallurgical coal, while uneconomic high-cost supply has slowly withdrawn from the seaborne market, prices remain subdued as industry-wide cost reductions and weaker producer currencies against the US dollar support continued production from marginal suppliers. Recent quality restrictions have also weakened China's import demand but this was partially offset by growth in traditional markets. The long-term outlook remains robust as the supply of premium hard coking coals becomes scarce.

 

Depreciating currencies have sustained Indonesian and Australian thermal coal exports, prolonging the weak pricing environment. Despite healthy seaborne demand growth from India, China's import demand has weakened, limiting prospects for price recovery in the near term.

 

In copper, prices were affected by weaker than expected consumption and the strengthening US dollar. In the near term, new supply under development is expected to keep the market well supplied. However, a deficit is expected to emerge at the end of this decade as grade decline, rising costs and a scarcity of high-quality future development opportunities are likely to constrain the industry's ability to meet attractive demand growth.

 

Global crude oil demand growth was outpaced by supply growth putting pressure on prices throughout the year. Despite strong demand growth, liquids supply exceeded demand by 2.6 MMboe/d in the second half of the 2015 financial year. We expect prices to remain range bound in the short term due to available supply capacity from the United States and OPEC. The long-term demand outlook remains healthy, underpinned by the transport sector, notably in the Asian region.

 

US natural gas prices declined during the year as production growth was only partially offset by increased consumption in the power sector. In the longer term, demand is expected to benefit from increasing industrial use, growth in gas-fired power generation and the start of LNG exports. As core acreage is depleted, less productive and higher-cost shale areas will be required to meet growing demand. In the LNG market, weaker North Asian end-user demand and ample supply have kept prices subdued.

 

Projects

 

Historical capital and exploration expenditure and guidance for the 2016 and 2017 financial years are summarised in the following table:

 

Year ended 30 June

2017e

US$B

2016e

US$B

2015
US$M

2014
US$M

Capital expenditure (purchases of property, plant and equipment)

7.0

8.9

11,947

15,224

Add: exploration expenditure

0.8

0.9

816

986

Capital and exploration expenditure (cash basis)

7.8

9.8

12,763

16,210

Add: equity accounted investments

0.4

0.5

434

871

Less: capitalised deferred stripping(i)

(0.7)

(0.8)

(815)

(1,275)

Less: non-controlling interests

(0.5)

(1.0)

(1,342)

(1,198)

Capital and exploration expenditure (BHP Billiton share) - continuing operations

7.0

8.5

11,040

14,608

Capital and exploration expenditure (BHP Billiton share) - discontinued operations

541

573

Capital and exploration expenditure (BHP Billiton share) - total operations

7.0

8.5

11,581

15,181

 

(i)    Capitalised deferred stripping includes US$142 million attributable to non-controlling interests in the 2015 financial year (2014: US$243 million).

 

During the 2015 financial year, three major projects achieved first production, namely: Escondida Oxide Leach Area Project, BMA Hay Point Stage Three Expansion and Escondida Organic Growth Project 1. At the end of the period, BHP Billiton had four major projects under development with a combined budget of US$7.0 billion.

 

Projects completed or which delivered first production during the 2015 financial year

Business

Project and

ownership

Capacity(i)

Capital

expenditure

US$M(i)




Date of initial production



Actual(ii)


Budget


Actual


Target


Copper

Escondida Oxide Leach Area Project (Chile)
57.5%

New dynamic leaching pad and mineral handling system. Maintains oxide leaching capacity.

899


933(iii)

 

 

Q4CY14


H2CY14(iii)



Escondida Organic Growth Project 1 (Chile)
57.5%

New concentrator with 152 ktpd capacity.

4,279


4,199(iii)


Q2CY15


H1CY15


Coal

Hay Point Stage Three Expansion (Australia)
50%

Increases port capacity from 44 Mtpa to 55 Mtpa and reduces storm vulnerability.

1,505


1,505(iii)(iv)


Q1CY15


H1CY15(iii)





6,683


6,637






Projects in execution at the end of the 2015 financial year

Business

Project and ownership

Capacity(i)

Capital

 expenditure

 US$M(i)

Date of initial production



Budget


Target

Petroleum

North West Shelf Greater Western Flank-A
(Australia)
16.67% (non-operator)

To maintain LNG plant throughput from the North West Shelf operations.


400


CY16


Bass Strait Longford Gas Conditioning
Plant (Australia)
50% (non-operator)

Designed to process approximately 400 MMcf/d of high CO2 gas.


520


CY16

Copper

Escondida Water Supply (Chile)

57.5%

New desalination facility to ensure continued water supply to Escondida.


3,430


CY17





4,350



Other projects in progress at the end of the 2015 financial year

Business

Project and ownership

Scope

Capital

expenditure

US$M(i)




Budget

Potash

Jansen Potash (Canada)
100%

Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities.

2,600

(i) Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis and references to capital expenditure from joint operations are reported on a proportionate consolidation basis.

(ii) Amount subject to finalisation.

(iii) As per revised budget and/or schedule.

(iv) Excludes announced pre-commitment funding.

 

Income statement

 

To provide clarity into the underlying performance of our operations, Underlying attributable profit and Underlying EBIT are set out in the following tables:

 

Year ended 30 June

2015

US$M

2014

US$M

Underlying attributable profit

6,417

13,263

Attributable loss - discontinued operations

(1,573)

184

Exceptional items (after taxation) - refer to pages 10 and 42

(2,946)

385

Minority interest in exceptional items

12

Attributable profit

1,910

13,832

 

Year ended 30 June

2015

US$M

2014

US$M

Underlying EBIT

11,866

22,098

Exceptional items (before taxation) - refer to pages 10 and 42

(3,196)

551

Profit from operations (EBIT)

8,670

22,649

 

Underlying EBIT

 

The following table and commentary describes the approximate impact of the principal factors that affected Underlying EBIT for the 2015 financial year compared with the 2014 financial year:

 



US$M

Underlying EBIT for the year ended 30 June 2014

22,098

Net price impact:



Change in sales prices


(16,433)

Price-linked costs


1,209



(15,224)

Change in volumes:



Productivity


1,220

Growth


1,822



3,042

Change in controllable cash costs:



Operating cash costs


2,678

Exploration and business development


29



2,707

Change in other costs:



Exchange rates


1,567

Inflation


(433)

Fuel and energy


518

Non-cash

One-off items


(1,304)

(456)



(108)

Asset sales


(72)

Ceased and sold operations


22

Other items


(599)

Underlying EBIT for the year ended 30 June 2015


11,866

 

The following table reconciles relevant factors with the Group's productivity gains:

 

Year ended 30 June

2015

US$M

Change in controllable cash costs

2,707

Change in volumes attributed to productivity

1,220

Total productivity gains in Underlying EBIT

3,927

Change in capitalised exploration

142

Total benefits attributable to productivity initiatives

4,069

 

Prices

 

Lower realised prices reduced Underlying EBIT by US$16.4 billion in the 2015 financial year. A 41 per cent decline in the average realised price of iron ore was the major contributor and reduced Underlying EBIT by US$9.5 billion. Weaker average realised prices for our Petroleum, Copper and Coal businesses decreased Underlying EBIT by US$4.2 billion, US$1.6 billion and US$1.1 billion, respectively. A reduction in price-linked costs increased Underlying EBIT by US$1.2 billion and primarily reflected lower royalty charges in our Iron Ore business.

 

The average realised prices achieved for our major commodities are summarised in the following table:

 

Average realised prices(i)

Half year ended

30 June
2015

Half year ended

31 Dec
2014

Year ended

30 June
2015

Year ended

30 June
2014

FY15 vs

 FY14

June H15 vs

 June H14

June H15 vs

Dec H14

Oil (crude and condensate) (US$/bbl)

52

85

68

102

(33%)

(49%)

(39%)

Natural gas (US$/Mscf)

3.29

4.21

3.77

4.35

(13%)

(33%)

(22%)

US natural gas (US$/Mscf)

2.59

3.89

3.27

4.10

(20%)

(46%)

(33%)

LNG (US$/Mscf)

9.40

13.76

11.65

14.67

(21%)

(36%)

(32%)

Copper (US$/lb)(ii)

2.61

2.98

2.78

3.22

(14%)

(16%)

(12%)

Iron ore (US$/wmt, FOB)

53

70

61

103

(41%)

(45%)

(24%)

Hard coking coal (US$/t)

99

110

105

131

(20%)

(18%)

(10%)

Weak coking coal (US$/t)

85

92

88

111

(21%)

(18%)

(8%)

Thermal coal (US$/t)(iii)

56

61

58

74

(22%)

(21%)

(8%)

Nickel metal (US$/t)

13,688

16,905

15,301

15,273

0%

(18%)

(19%)

(i) Prices exclude third party product and internal sales, and represent the weighted average of various sales terms (for example: FOB, CIF and CFR), unless otherwise noted.

(ii) Includes third party product and the impact of provisional pricing and finalisation adjustments which decreased EBIT by US$382 million in the 2015 financial year (2014: US$73 million increase).

(iii) Export sales only; excludes Cerrejón. Includes thermal coal sales from metallurgical coal mines.

 

Volumes

 

Productivity-led volume efficiencies and the ramp up of major projects underpinned a US$3.0 billion increase in Underlying EBIT. Western Australia Iron Ore (WAIO) was the major contributor as the improved performance of our integrated supply chain and the successful ramp up of the Jimblebar mining hub supported a US$1.9 billion increase in Underlying EBIT. A doubling of liquids production from both Black Hawk and Permian supported a further US$799 million volume-related increase in Petroleum's Underlying EBIT.

 

Controllable cash costs

 

Operating cash costs

 

Our focus on best-in-class performance underpinned a US$2.7 billion reduction in operating cash costs during the 2015 financial year.

 

A reduction in labour, contractor and maintenance costs increased Underlying EBIT by US$1.5 billion during the period. This was most evident in WAIO where the standardisation of our equipment and maintenance systems, and the insourcing of third party services facilitated a step change in the performance of our mining operations. Mining-related efficiencies contributed to a further US$580 million reduction in cash costs and largely reflected improved productivity at Escondida.

 

Exploration and business development

 

The Group's exploration and business development expenditure was broadly in line with the 2014 financial year. Our exploration program remains focused on greenfield copper targets within Chile, Peru and the South-West United States, and petroleum liquids opportunities in the Gulf of Mexico, Western Australia and Trinidad and Tobago.

 

Other costs

 

Exchange rates

A stronger US dollar increased Underlying EBIT by US$1.6 billion during the period. This included the restatement of monetary items in the balance sheet which increased Underlying EBIT by US$637 million relative to the 2014 financial year.

The following exchange rates have been applied:


Average

Year ended

30 June

2015

Average

Year ended

30 June

2014

As at

30 June

 2015

As at

30 June

 2014

As at

30 June

 2013

Australian dollar(i)

0.84

0.92

0.77

0.94

0.92

Chilean peso

604

532

635

551

504

(i) Displayed as US$ to A$1 based on common convention.

 

Inflation

 

The impact of inflation reduced Underlying EBIT by US$433 million during the period. This was most notable in Australia and Chile, which accounted for over 85 per cent of the total variance.

 

Fuel and energy

 

A reduction in diesel prices across our minerals businesses supported a US$518 million increase in Underlying EBIT.

 

Non-cash

 

An increase in non-cash charges reduced Underlying EBIT by US$1.3 billion during the period.

 

An US$839 million increase in non-cash charges in our Copper business reflects: higher ore mined which resulted in increased depletion of stripping capitalised in previous periods in line with mine plans at Escondida; increased depreciation following the completion of the Escondida Oxide Leach Area Project; and a US$199 million impairment driven by a lower copper price and permitting uncertainty for the proposed mine life extension at Cerro Colorado.

 

A US$639 million increase in non-cash charges in our Petroleum business reflects: US$316 million of higher depreciation and amortisation charges in Onshore US following the ramp-up of liquids production at Black Hawk and the progressive development of our Permian acreage; and US$328 million of impairment charges associated with the divestment of assets in North Louisiana and the Pecos field in the Permian. During the period, a US$79 million impairment of Neptune was also recognised as the fall in near-term oil prices has affected its value due to its short field life.

 

The decrease in non-cash charges in our Potash business relates to a mine site rehabilitation provision charge recognised in the 2014 financial year for the Group's North American closed mines.

One-off items
One-off items recognised during the period comprise a US$268 million expense related to the mill outage at Olympic Dam and a US$188 million cost associated with the implementation of the Escondida Voluntary Redundancy Program.
Asset sales

The contribution of asset sales to Underlying EBIT decreased by US$72 million from the 2014 financial year which included the sale of Liverpool Bay.

Ceased and sold operations

Underlying EBIT from ceased and sold operations increased by US$22 million in the 2015 financial year. This largely reflected an unfavourable US$143 million adjustment to the Browse divestment proceeds, due to unitisation changes subsequent to the completion of sale, offset by the closure of the Nickel West Leinster Perseverance underground mine, both during the 2014 financial year.

 

Other items

 

Lower average realised prices received by our equity accounted investments more than accounted for the US$599 million decrease in Underlying EBIT reported in other items.

 

Net finance costs

 

Net finance costs decreased by US$300 million to US$614 million. The decrease reflected foreign exchange gains on finance leases and the early redemption of the Petrohawk Energy Corporation Senior Notes in August 2014, which resulted in a gain on redemption and lower interest expense.

 

Taxation expense

 

The Group's adjusted effective tax rate(2), which excludes the influence of exchange rate movements, remeasurement of deferred tax assets associated with the Minerals Resource Rent Tax (MRRT) and exceptional items, was 31.8 per cent (2014: 32.2 per cent). The adjusted effective tax rate is expected to be in the range of 33 per cent to 37 per cent for the 2016 financial year. This anticipated increase reflects the expected higher proportion of profit from Australian petroleum assets (which are subject to a higher rate of tax due to the Petroleum Resource Rent Tax) in the Group's overall profit, and finalisation of MRRT balances in the 2015 financial year.

Total taxation expense, including royalty-related taxation, exceptional items and exchange rate movements, was US$3.7 billion, representing a statutory effective tax rate of 45.5 per cent (2014: 31.2 per cent).

Government imposed royalty arrangements calculated by reference to profits are reported as royalty-related taxation. An exceptional item of US$698 million tax expense (2014: US$ nil) was recognised on a continuing operations basis for the derecognition of deferred tax assets upon the repeal of the MRRT legislation in Australia.

Exchange rate movements increased taxation expense by US$339 million (2014: decrease of US$34 million).

Year ended 30 June

2015


2014


Profit before taxation

US$M

Income tax

expense

US$M

%


Profit

before taxation

US$M

Income tax

expense

US$M

%

Statutory effective tax rate

8,056

(3,666)

45.5%


21,735

(6,780)

31.2%

Adjusted for:








Exchange rate movements

-

339



-

(34)


Remeasurement of deferred tax assets associated with the MRRT

-

-



-

(170)


Exceptional items

3,196

(250)



(551)

166


Adjusted effective tax rate

11,252

(3,577)

31.8%


21,184

(6,818)

32.2%

 

Other royalty and excise arrangements which are not profit based are recognised as operating costs within Profit before taxation. These amounted to US$1.7 billion during the period (2014: US$2.4 billion).

 

Exceptional items

 

Year ended 30 June 2015

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category




Impairment of Onshore US assets

(2,787)

829

(1,958)

Impairment of Nickel West assets

(409)

119

(290)

Repeal of Minerals Resource Rent Tax legislation(i)

-

(698)

(698)


(3,196)

250

(2,946)

(i) Includes amounts attributable to non-controlling interests of US$(12) million.

 

Impairment of Onshore US assets

 

The Group recognised an impairment charge of US$2.0 billion (after tax benefit) in relation to its Onshore US assets. The gas-focused Hawkville field accounts for the substantial majority of this charge reflecting its geological complexity, product mix, acreage relinquishments and amended development plans. The remainder relates to the impairment of goodwill associated with the Petrohawk acquisition.

 

Impairment of Nickel West assets

 

On 12 November 2014, the Group announced that the review of its Nickel West business was complete and the preferred option, the sale of the business, was not achieved on an acceptable basis. As a result of operational decisions made subsequent to the conclusion of this process, an impairment charge of US$290 million (after tax benefit) was recognised in the 2015 financial year.

 

Repeal of Minerals Resource Rent Tax legislation

 

The legislation to repeal the MRRT in Australia took effect on 30 September 2014. As a result, the Group derecognised a MRRT deferred tax asset of US$809 million, and corresponding taxation charges of US$698 million related to continuing operations and US$111 million related to discontinued operations were recognised in the 2015 financial year.

 

Discontinued operations

 

On 25 May 2015 the Group announced that it completed the demerger of a selection of its aluminium, coal, manganese, nickel and silver assets to create an independent metals and mining company, South32.

 

South32's contribution to BHP Billion's 2015 financial year results comprised a US$753 million profit after taxation excluding exceptional items. Exceptional items comprised a tax expense of US$111 million related to the repeal of the MRRT and a net loss on demerger of US$2.2 billion (after tax benefit). This contribution has been included in attributable loss after taxation from discontinued operations of US$1.6 billion.

 

Cash flows

 

Free cash flow, comprising net operating cash flows less net investing cash flows, decreased by US$2.2 billion to US$6.3 billion during the 2015 financial year.

 

Net operating cash flows after interest and tax decreased by 25 per cent to US$17.8 billion during the 2015 financial year. The major contributor was the US$7.7 billion decrease in cash generated from operations (after changes in working capital balances), which was partially offset by a decrease of US$2.1 billion in net tax paid.

 

Net investing cash outflows decreased by US$3.6 billion to US$11.5 billion during the 2015 financial year and reflected a US$3.4 billion reduction in capital and exploration expenditure. Expenditure on growth projects totalled US$9.3 billion, including US$4.5 billion on Petroleum projects and US$4.8 billion on Minerals projects. Sustaining capital expenditure and other items totalled US$2.6 billion. Exploration expenditure was US$816 million, including US$670 million classified within net operating cash flows.

 

Net financing cash outflows increased by US$1.6 billion to US$8.1 billion. A decrease in proceeds from interest bearing liabilities of US$2.6 billion, a decrease in contributions from non-controlling interests of US$1.4 billion and higher dividends paid to non-controlling interests of US$435 million were partially offset by a decrease in repayments of interest bearing liabilities of US$2.9 billion during the 2015 financial year.

 

Net debt, comprising interest bearing liabilities less cash, finished the 2015 financial year at US$24.4 billion, a decrease of US$1.4 billion compared to the net debt position at 30 June 2014.

 

Dividend

 

BHP Billiton has a progressive dividend policy. The aim of this policy is to steadily increase or at least maintain the dividend per share in US dollar terms at each financial half year. Our Board today determined to pay a final dividend of 62 US cents per share. The final dividend to be paid by BHP Billiton Limited will be fully franked for Australian taxation purposes.

 

Events in respect of the final dividend

Date

Last day to trade cum dividend on JSE Limited (JSE) and currency conversion into rand

4 September 2015

Ex-dividend Date JSE

7 September 2015

Ex-dividend Date Australian Securities Exchange (ASX) and New York Stock Exchange (NYSE)

9 September 2015

Ex-dividend Date London Stock Exchange (LSE)

10 September 2015

Record Date (including currency conversion and currency election dates for ASX and LSE)

11 September 2015

Payment Date

29 September 2015

 

BHP Billiton Plc shareholders registered on the South African section of the register will not be able to dematerialise or rematerialise their shareholdings between the dates of 7 and 11 September 2015 (inclusive), nor will transfers between the UK register and the South African register be permitted between the dates of 4 and 11 September 2015 (inclusive). American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly.

 

Details of the currency exchange rates applicable for the dividend will be announced to the relevant stock exchanges following conversion and will appear on the Group's website.

 

Debt management and liquidity

 

During the 2015 financial year, the Group issued a three tranche Euro denominated bond under its Euro Medium Term Note Programme, comprising EUR600 million Floating Rate Notes due 2020 paying interest at 3 month Euribor plus 35 basis points, EUR650 million 0.75 per cent bonds due 2022 and EUR750 million 1.50 per cent bonds due 2030. The Group also priced a five year A$1.0 billion note issue under its Australian Medium Term Note Program, paying interest at 3.00 per cent due 2020. 

 

In August 2014, the Group redeemed all outstanding Petrohawk Energy Corporation 7.25 per cent Senior Notes due August 2018 and 6.25 per cent Senior Notes due June 2019 at the applicable call prices. The aggregate principal value of the notes redeemed was approximately US$1.8 billion.

 

The Group has a US$6.0 billion commercial paper program backed by a US$6.0 billion revolving credit facility. The facility expires in May 2020 and has a one-year extension option. As at 30 June 2015, the Group had US$nil outstanding in the US commercial paper market and the Group's cash and cash equivalents on hand were US$6.8 billion.

 

Corporate governance

 

As announced on 1 May 2015, Margaret Taylor was appointed Group Company Secretary effective 1 June 2015 to coincide with the resignation of Jane McAloon from the position.

 

On 22 May 2015, we confirmed the retirement of Keith Rumble as an independent, Non-executive Director, effective from that date. On 14 July 2015, we advised the passing of Sir John Buchanan on 13 July 2015, who was up until the time of his death an independent, Non-executive Director and Senior Independent Director of BHP Billiton Plc.

 

On 14 August 2015, we announced the appointment of Anita Frew to the Board as an independent, Non-executive Director, effective 15 September 2015.  We also announced that Carlos Cordeiro would be retiring from the Board at the conclusion of the BHP Billiton Limited Annual General Meeting in November 2015, and that Shriti Vadera had been appointed as the Senior Independent Director of BHP Billiton Plc and as a member of the Nomination and Governance Committee. 

 

The current members of the Board's committees are:

 

Risk and Audit

Committee

Nomination and Governance Committee

Remuneration

Committee

Sustainability

Committee

Mr L Maxsted (Chair)

Mr M Broomhead

Mr W Murdy

Baroness S Vadera

Mr J Nasser (Chair)

Dr J Schubert

Baroness S Vadera

Ms C Hewson (Chair)

Mr C Cordeiro

Mr P Davies

Baroness S Vadera

Dr J Schubert (Chair)

Mr M Broomhead

Mr M Brinded

Mr P Davies

 

Business summary(i)

 

A summary of the performance of the businesses for the 2015 and 2014 financial years is presented below.

 

Year ended

30 June 2015

US$M

 

 

Revenue(ii)


 

Underlying EBIT(iii)


 

Exceptional items


Profit from operations (EBIT)


Net operating assets


Capital expenditure


 

Exploration gross(iv)


 

Exploration to profit(v)


Petroleum and Potash

11,447


1,802


(2,787)


(985)


36,287


5,359


570


532


Copper

11,453


3,353


 −


3,353


23,701


3,822


90


90


Iron Ore

14,753


6,932


 −


6,932


23,954


1,930


118


38


Coal

5,885


348


 −


348


11,769


729


20


20


Group and unallocated items(vi)

1,469


(569)


(409)


(978)


33


107


18


18


Inter-segment adjustment

(371)


 −


 −


 −


 −


 −


 −


 −


BHP Billiton Group

44,636


11,866


(3,196)


8,670


95,744


11,947


816


698


 

Year ended

30 June 2014

(Restated)

US$M

 

 

Revenue(ii)


 

Underlying EBIT(iii)


 

Exceptional items


Profit from operations (EBIT)


Net operating assets


Capital expenditure


 

Exploration gross(iv)


 

Exploration to profit(v)


Petroleum and Potash

14,833


5,287



5,287


39,514


6,423


647


544


Copper

12,789


4,668


551


5,219


21,997


3,697


111


111


Iron Ore

21,356


12,102



12,102


23,390


2,949


169


56


Coal

6,563


575



575


11,909


1,971


29


29


Group and unallocated items(vi)

1,696


(534)



(534)


1,232


184


30


30


Inter-segment adjustment

(475)









BHP Billiton Group

56,762


22,098


551


22,649


98,042


15,224


986


770


(i) Group and business level information is reported on a statutory basis which, in relation to Underlying EBIT, includes net finance costs and taxation expense related to equity accounted investments.

(ii) Revenue is based on Group realised prices and includes third party products. Sale of third party products by the Group contributed revenue of US$1,179 million and Underlying EBIT of US$14 million (2014: US$1,717 million and US$15 million).

(iii) Underlying EBIT includes the Group's share of net finance costs and taxation expense of US$418 million related to equity accounted investments (2014: US$528 million).

(iv) Includes US$146 million capitalised exploration (2014: US$288 million).

(v) Includes US$28 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2014: US$72 million).

(vi) Comprises Group Functions, other unallocated operations including Nickel West (previously disclosed in the former Aluminium, Manganese and Nickel business), consolidation adjustments and external sales of freight and fuel to third parties.

 

Nickel West (US$M)

 

Revenue


Underlying EBITDA


 

D&A(1)


Underlying EBIT


Exceptional items


Profit from operations (EBIT)


Net operating assets


 

Capital expenditure

Year ended 30 June 2015

1,393


38


112


(74)


(409)


(483)


(82)


103

Year ended 30 June 2014

1,605


(91)


117


(208)


-


(208)


534


163

 

Petroleum and Potash

 

Petroleum

 

Underlying EBIT for Petroleum decreased by US$3.9 billion to US$1.9 billion in the 2015 financial year.

 


US$M

Underlying EBIT for the full year ended 30 June 2014

5,870

Net price impact(i)

(4,079)

Change in volumes: growth

799

Change in controllable cash costs

35

Change in other costs:


    Inflation

(27)

    Non-cash

(639)

Other(ii)

(20)

Underlying EBIT for the full year ended 30 June 2015

1,939

(i) Average realised price: crude and condensate oil US$68/bbl (2014: US$102/bbl); US natural gas US$3.27/Mscf (2014: US$4.10/Mscf); LNG US$11.65/Mscf (2014: US$14.67/Mscf).

(ii) Other includes: exchange rates; asset sales; ceased and sold operations; other items. Also includes Onshore US rig termination charges of US$123 million (2014: US$75 million).

 

Total petroleum production increased by four per cent in the 2015 financial year to a record 256 MMboe. A 17 per cent increase in liquids production to 125 MMboe was supported by a 67 per cent increase in Onshore US liquids volumes and strong uptime performance in the Gulf of Mexico. Natural gas production declined by six per cent to 787 bcf due to weaker seasonal demand at Bass Strait, along with lower Onshore US gas volumes as a result of the decision to defer development activity for longer-term value.

 

Petroleum production is forecast to decrease by seven per cent in the 2016 financial year to 237 MMboe (Conventional: 125 MMboe; Onshore US: 112 MMboe). In Onshore US, further improvements in drilling and completions efficiency will support stable volumes in the liquids-rich Black Hawk and Permian despite lower capital spend in the 2016 financial year. However, we anticipate a 19 per cent decline in the combined production of the predominantly gas-rich, and currently lower-margin Haynesville, Fayetteville and Hawkville fields as we continue to defer development of these assets for longer-term value. Conventional volumes are expected to decrease as a result of planned maintenance programs and natural field decline.

 

The increase in non-cash costs includes: US$316 million of higher depreciation and amortisation charges in Onshore US following the ramp-up of liquids production at Black Hawk and the progressive development of our Permian acreage; and US$328 million of impairment charges associated with the divestment of conventional assets in North Louisiana (Haynesville) and unconventional gas assets in the Pecos field (Permian). The rate of depreciation in Onshore US will continue to rise as the proportion of currently higher-margin liquids volumes increase relative to gas. During the period, a US$79 million impairment of Neptune was also recognised as the fall in near-term oil prices has affected its value due to its short field life.

 

Petroleum capital expenditure declined by 15 per cent to US$5.0 billion in the 2015 financial year. This included US$3.7 billion of Onshore US drilling and development expenditure. We continued to realise significant improvements in shale drilling efficiency during the period as spud to sales timing in the Black Hawk improved by 17 per cent and drilling costs declined by 19 per cent to US$3.4 million per well. In the 2016 financial year, we expect to reduce drilling costs even further to US$2.5 million per well, lower than our previous guidance of US$2.9 million per well.

 

Black Hawk (US$M)

H2 FY15

H1 FY15

FY15

FY14

Drilling cost per well

2.9

3.7

3.4

4.2

 

In our Conventional business, investment remained focused on high-return infill drilling opportunities in the Gulf of Mexico and life extension projects at Bass Strait and North West Shelf.

 

Petroleum capital expenditure of approximately US$3.1 billion is planned in the 2016 financial year. Onshore US capital expenditure is expected to account for US$1.5 billion of this and support a development program of 10 operated rigs. Completions activity will continue to be tailored to market conditions and we will exercise further flexibility should there be greater value in deferral. Drilling activity will be focused on our liquids-rich Black Hawk and Permian acreage with our dry-gas development program in Haynesville and Fayetteville deferred for longer-term value.

 

2015 financial year


Liquids focused areas

Gas focused areas


(2014 financial year)


Eagle Ford

Permian

Haynesville

Fayetteville

Total

Capital expenditure(i)

US$ billion

2.3 (3.1)

0.8 (0.5)

0.4 (0.4)

0.2 (0.2)

3.7 (4.2)

Rig allocation

At period end

7 (17)

3 (4)

0 (3)

0 (0)

10 (24)

Net wells drilled and completed(ii)

Period total

188 (262)

45 (43)

25 (38)

45 (71)

303 (414)

Net productive wells(iii)

At period end

836 (647)

75 (57)

395 (899)

1,070 (1,023)

2,376 (2,626)

(i) Includes land acquisition, site preparation, drilling, completions, well site facilities, mid-stream infrastructure and pipelines.

(ii) Can vary between periods based on changes in rig activity and the inventory of wells drilled but not yet completed at period end.

(iii) Change in productive well count includes reduction associated with the divestment of assets in North Louisiana (Haynesville) and Pecos (Permian).

 

Petroleum exploration expenditure for the 2015 financial year was US$567 million, of which US$481 million was expensed. Activity for the period was largely focused on the Gulf of Mexico, Western Australia and Trinidad and Tobago. A US$600 million exploration program is planned for the 2016 financial year, largely focused on acreage access and seismic data acquisition.

 

On 16 February 2015, BHP Billiton signed an agreement with Tri-Resources, a subsidiary of the Hashoo Group, for the sale of our gas business in Pakistan. The transaction is subject to regulatory approval.

 

Potash

 

Potash recorded an Underlying EBIT loss of US$184 million in the 2015 financial year. The excavation and lining of the Jansen Potash project shafts is steadily progressing and the pre-development project was 46 per cent complete at the end of the period. We expect to spend approximately US$350 million in the 2016 financial year. With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to review the appropriate pace and level of development activity and capital expenditure for the project.

 

Financial information for the Petroleum and Potash business for the 2015 and 2014 financial years is presented below.

 

Year ended

30 June 2015

US$M

 

Revenue(i)


Underlying EBITDA


 

D&A


Underlying EBIT


Net operating assets


 

Capital expenditure


Exploration gross(ii)


Exploration to profit(iii)


Australia Production Unit(iv)

1,003


862


337


525


1,091


44






Bass Strait

1,291


1,025


127


898


3,055


328






North West Shelf

1,899


1,351


186


1,165


1,400


135






Atlantis

1,071


904


368


536


2,146


354






Shenzi

973


868


287


581


1,399


268






Mad Dog

175


87


34


53


581


101






Eagle Ford(v)

2,932


1,792


2,172


(380)


10,754


2,315






Permian(v)(vi)

263


69


502


(433)


1,096


773






Haynesville(v)(vi)

532


13


554


(541)


5,916


411






Fayetteville(v)

448


162


195


(33)


2,960


183






Trinidad/Tobago(iv)

220


159


28


131


827


10






Algeria

309


247


38


209


97


23






Exploration

 −


(481)


48


(529)


733


 −






Other(vii)(viii)

276


98


342


(244)


2,518


78






Total Petroleum

11,392


7,156


5,218


1,938


34,573


5,023


567


529


Potash

 −


(178)


6


(184)


2,684


336


3


3


Other(ix)

 −


47


 −


47


(970)


 −


 −


 −


Total Petroleum and Potash from Group production

11,392


7,025


5,224


1,801


36,287


5,359


570


532


Third party products

69


1


 −


1


 −


 −






Total Petroleum and Potash

11,461


7,026


5,224


1,802


36,287


5,359


570


532


Statutory adjustments(x)

(14)


(3)


(3)


 −


 −


 −


 −


 −


Total Petroleum and Potash statutory result

11,447


7,023


5,221


1,802


36,287


5,359


570


532


 

Year ended

30 June 2014

(Restated)

US$M

 

Revenue(i)


Underlying EBITDA


 

D&A


Underlying EBIT


Net operating assets


 

Capital expenditure


Exploration gross(ii)


Exploration to profit(iii)


Australia Production Unit(iv)

1,418


1,220


309


911


1,464


419






Bass Strait

1,885


1,555


132


1,423


2,864


259






North West Shelf(xi)

2,432


1,599


175


1,424


1,691


193






Atlantis

1,535


1,407


335


1,072


2,272


385






Shenzi

1,430


1,281


243


1,038


1,598


210






Mad Dog

217


171


16


155


461


68






Onshore US(v)

4,264


2,270


2,426


(156)


23,377


4,226






Trinidad/Tobago(iv)

273


374


52


322


709


8






Algeria

465


396


30


366


104


19






Exploration

 −


(369)


113


(482)


464


 −






Other(vii)(viii)(xii)

491


220


426


(206)


3,264


92






Total Petroleum

14,410


10,124


4,257


5,867


38,268


5,879


600


497


Potash

 −


(211)


74


(285)


2,255


544


47


47


Other(ix)

 −


(298)



(298)


(1,009)


 −


 −


 −


Total Petroleum and Potash from Group production

14,410


9,615


4,331


5,284


39,514


6,423


647


544


Third party products

437


3


 −


3


 −


 −






Total Petroleum and Potash

14,847


9,618


4,331


5,287


39,514


6,423


647


544


Statutory adjustments(x)

 (14)


 (3)


(3)


 −


 −


 −


 −


 −


Total Petroleum and Potash statutory result

14,833


9,615


4,328


5,287


39,514


6,423


647


544


(i) Petroleum revenue from Group production includes: crude oil US$6,592 million (2014: US$8,645 million), natural gas US$2,489 million (2014: US$3,119 million), LNG US$1,366 million (2014: US$1,614 million), NGL US$665 million (2014: US$916 million) and other US$266 million (2014: US$102 million).

(ii) Includes US$86 million of capitalised exploration (2014: US$231 million).

(iii) Includes US$48 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2014: US$128 million).

(iv) Australia Production Unit includes Macedon, Pyrenees, Minerva and Stybarrow. Comparative period has been restated to report Australia Production Unit and Trinidad/Tobago separately from Other.

(v) Onshore US is now reported separately between Eagle Ford, Permian, Haynesville and Fayetteville.

(vi) Includes US$328 million of impairments associated with the divestment of assets in North Louisiana (Haynesville) and the Pecos field (Permian).

(vii) Predominantly divisional activities, business development, Pakistan, UK, Neptune, Genesis and ceased and sold operations. Also includes the Caesar oil pipeline and the Cleopatra gas pipeline which are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

(viii) Goodwill associated with Onshore US of US$3,026 million is included in Other net operating assets (2014: US$3,568 million).

(ix) Includes closed mining and smelting operations in Canada and the United States.

(x) Includes statutory adjustments for the Caesar oil pipeline and the Cleopatra gas pipeline to reconcile the proportionately consolidated business total to the statutory result.

(xi) Includes an expense of US$143 million incurred in May 2014 related to the purchase price adjustment for the Browse asset sale completed in the 2013 financial year.

(xii) Includes an expense of US$112 million incurred in November 2013 related to the closure of the UK pension plan. Also includes a gain of US$120 million related to the sale of the Liverpool Bay asset in March 2014.

 

Copper

 

Underlying EBIT for the 2015 financial year decreased by US$1.3 billion to US$3.4 billion.

 


US$M

Underlying EBIT for the full year ended 30 June 2014

4,668

Net price impact(i)

(1,566)

Change in volumes: productivity

341

Change in controllable cash costs

1,015

Change in other costs:


    Exchange rates

359

    Inflation

(191)

    Non-cash

(839)

    One-off items

(218)

Other(ii)

(216)

Underlying EBIT for the full year ended 30 June 2015

3,353

(i) Average realised price: copper US$2.78/lb (2014: US$3.22/lb).

(ii) Other includes: fuel and energy; asset sales; ceased and sold operations; other items.

 

Total copper production(8) for the 2015 financial year was unchanged at 1.7 Mt. Escondida copper production increased by six per cent to 1.23 Mt as an 11 per cent improvement in truck utilisation and higher grades more than offset the impact of severe wet weather, water restrictions, industrial action and a power outage throughout Northern Chile. Pampa Norte copper production increased by seven per cent to 250 kt as Spence benefited from higher recoveries. Olympic Dam copper production decreased by 32 per cent to 125 kt following an electrical failure which caused a mill outage in January 2015. Antamina copper production decreased by 25 per cent to 108 kt as lower grades more than offset record mill throughput.

 

Total copper production is forecast to decrease by 12 per cent in the 2016 financial year to 1.5 Mt. Escondida copper production of approximately 940 kt is forecast as increased throughput, enabled by the completion of the Escondida Organic Growth Project 1 (OGP1) and further productivity improvements, partly offset an anticipated 27 per cent decline in grade. Pampa Norte production is forecast to remain at a similar level for the 2016 financial year. At Olympic Dam, an increase in full-year production is anticipated following the full ramp-up of the mill at the end of July 2015. Higher average copper grades at Antamina are expected to support an increase in copper volumes in the 2016 financial year.

 

During the 2015 financial year, the Escondida Oxide Leach Area Project delivered first production while OGP1 achieved mechanical completion and is now in the commissioning phase. The commissioning of the Escondida Water Supply (EWS) project remains on schedule to commence in the 2017 calendar year. In the medium term, completion of the EWS project and the life extension of Los Colorados will allow the use of three concentrators at Escondida to offset grade decline and support a strong recovery in production. At Olympic Dam, we will continue with our low-cost underground transition into the higher-grade Southern Mining Area. This high-grade ore will release latent capacity within our existing operations and lay the foundation for the longer-term underground expansion.

 

Unit cash costs at our operated copper assets declined by 14 per cent during the 2015 financial year. At Escondida, the improvement in truck utilisation and significant costs savings resulted in an eight per cent decrease to US$1.07 per pound excluding one-off costs. The one-off costs primarily reflect the implementation of the Escondida voluntary redundancy program which is expected to reduce employee head count by more than 20 per cent.

 

Escondida unit costs (US$M)

H2 FY15

H1 FY15

FY15

FY14

Revenue

4,099

3,720

7,819

8,085

Underlying EBITDA

1,937

2,127

4,064

4,754

Cash costs (gross)

2,162

1,593

3,755

3,331

Less: one-off items

188

-

188

-

Less: freight

56

61

117

139

Less: treatment and refining charges

263

211

474

341

Cash costs (net)(i)

1,655

1,321

2,976

2,851

Sales (kt, equity share)(ii)

696

563

1,259

1,116

Sales (Mlb, equity share)(ii)

1,534

1,241

2,775

2,460

Cash cost per pound (US$)

1.08

1.06

1.07(iii)

1.16

(i) Royalties are reported within taxation expense.

(ii) Sales volumes adjusted to exclude intercompany sales and purchases.

(iii) Unit cost including one-off items is US$1.14 per pound in the 2015 financial year.

 

In the 2016 financial year, despite an anticipated increase in material moved to mitigate grade decline, a further step change in unit cost performance is expected as additional benefits from our productivity agenda are realised. In this context, Escondida unit costs are expected to decline by 15 per cent to US$0.91 per pound on a grade-adjusted basis(9).

 

The increase in non-cash costs largely reflects: increased ore mined resulting in higher depletion of stripping capitalised in previous periods in line with mine plans at Escondida; increased depreciation following the completion of the Escondida Oxide Leach Area Project; and a US$199 million impairment driven by a lower copper price and permitting uncertainty for the proposed mine life extension at Cerro Colorado.

 

On 24 July 2015, Spence filed two Environmental Impact Statements (EIS) in relation to the Spence Growth Option project (Spence Hypogene). The first EIS contemplates the development of a 95 ktpd concentrator and the second is for the development of an 800 litre per second desalination plant. While this project has the potential to extend the life of the operation by 50 years, it remains subject to Board approval.

 

Financial information for the Copper business for the 2015 and 2014 financial years is presented below.

 

Year ended

30 June 2015

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Escondida(i)

7,819


4,064


920


3,144


13,909


3,273




Pampa Norte(ii)

1,437


762


669


93


1,926


242




Antamina(iii)

854


420


107


313


1,379


163





Olympic Dam

1,244


280


253


27


6,665


307






Other(iii)(iv)

 −


(152)


11


(163)


(178)


 −






Total Copper from
Group production

11,354


5,374


1,960


3,414


23,701


3,985






Third party products

953


23


 −


23


 −


 −






Total Copper

12,307


5,397


1,960


3,437


23,701


3,985


91


91


Statutory adjustments(v)

(854)


(192)


(108)


(84)


 −


(163)


(1)


(1)


Total Copper

statutory result

11,453


5,205


1,852


3,353


23,701


3,822


90


90


 

Year ended

30 June 2014

(Restated)

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Escondida(i)

8,085


4,754


760


3,994


11,779


3,186






Pampa Norte(ii)

1,796


785


429


356


2,575


336






Antamina(iii)

1,261


818


84


734


1,341


262






Olympic Dam

1,777


299


265


34


6,320


167






Other(iii)(iv)

101


(193)


7


(200)


(18)


13






Total Copper from
Group production

13,020


6,463


1,545


4,918


21,997


3,964






Third party products

1,030


8



8








Total Copper

14,050


6,471


1,545


4,926


21,997


3,964


113


113


Statutory adjustments(v)

(1,261)


(344)


(86)


(258)



(267)


(2)


(2)


Total Copper

statutory result

12,789


6,127


1,459


4,668


21,997


3,697


111


111


(i) Escondida is consolidated under IFRS 10 and reported on a 100 per cent basis.

(ii) Includes Spence and Cerro Colorado.

(iii) Antamina and Resolution are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

(iv) Predominantly comprises divisional activities, greenfield exploration, business development and ceased and sold operations. Includes Pinto Valley and Resolution. Pinto Valley was sold effective 11 October 2013.

(v) Includes statutory adjustments for Antamina and Resolution to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs and taxation expense of US$84 million (2014: US$258 million).

 

Iron Ore

 

Underlying EBIT for the 2015 financial year decreased by US$5.2 billion to US$6.9 billion.

 


US$M

Underlying EBIT for the full year ended 30 June 2014

12,102

Net price impact(i)

(8,650)

Change in volumes: productivity

823

Change in volumes: growth

1,027

Change in controllable cash costs

1,163

Change in other costs:


    Exchange rates

499

    Inflation

(101)

Other(ii)

69

Underlying EBIT for the full year ended 30 June 2015

6,932

(i) Average realised price: iron ore US$61/wmt, FOB (2014: US$103/wmt, FOB).

(ii) Other includes: fuel and energy; non-cash; asset sales; other items.

 

Total iron ore production increased by 14 per cent in the 2015 financial year to a record 233 Mt, exceeding full-year guidance. Western Australia Iron Ore (WAIO) production increased by 13 per cent to a record 254 Mt (100 per cent basis) as a result of continued improvement in the performance of our integrated supply chain and the successful ramp-up of the Jimblebar mining hub. Continued optimisation of the port facilities and an increase in direct to ship ore resulted in record sales volumes at WAIO of 256 Mt (100 per cent basis). Samarco production increased by 33 per cent to 29 Mt (100 per cent basis) as the fourth pellet plant ramped up to full capacity.

 

Total iron ore production is forecast to increase by six per cent in the 2016 financial year to 247 Mt. WAIO production is forecast to increase to approximately 270 Mt (100 per cent basis) as a result of improved efficiency at Mining Area C, Newman and our rail and port operations.

 

Further productivity improvements and the low-cost expansion of the Jimblebar mining hub(10), which comprises the installation of a new primary crusher and additional conveying capacity, are expected to deliver an increase in system capacity to 290 Mtpa over time. Costs associated with the Jimblebar expansion, as well as the investment to purchase additional tugs and construct a new tug harbour at Port Hedland, are expected to be included within WAIO's average sustaining capital expenditure budget of approximately US$5 per tonne.

 

WAIO unit cash costs declined by 31 per cent to US$19 per tonne, underpinned by reductions in labour, contractor and maintenance costs, lower diesel prices and a stronger US dollar. In the 2016 financial year, unit costs are expected to fall even further to US$15 per tonne(9).

 

WAIO unit costs (US$M)

H2 FY15

H1 FY15

FY15

FY14

Revenue

6,245

8,193

14,438

20,883

Underlying EBITDA

3,519

4,778

8,297

12,966

Cash costs (gross)

2,726

3,415

6,141

7,917

Less: freight

397

658

1,055

1,274

Less: royalties

425

554

979

1,497

Cash costs (net)

1,904

2,203

4,107

5,146

Sales (kt, equity share)

111,916

108,245

220,161

190,843

Cash cost per tonne (US$)

17.01

20.35

18.65

26.96

 

Our WAIO operations continue to underpin substantial free cash flow generation, despite the iron ore price moving towards its historical long-term average. Importantly, the quality of our ore bodies and their concentrated geographic footprint, combined with a low strip ratio, remains a competitive advantage.

 

Financial information for the Iron Ore business for the 2015 and 2014 financial years is presented below.

 

Year ended

30 June 2015

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Western Australia Iron Ore

14,438


8,297


1,713


6,584


22,804


1,911






Samarco(i)

1,406


695


118


577


1,044


170






Other(ii)

135


(8)


3


(11)


106


19






Total Iron Ore from
Group production

15,979


8,984


1,834


7,150


23,954


2,100






Third party products(iii)

180


(10)


 −


(10)


 −


 −






Total Iron Ore

16,159


8,974


1,834


7,140


23,954


2,100


118


38


Statutory adjustments(iv)

(1,406)


(326)


(118)


(208)


 −


(170)


 −


 −


Total Iron Ore

statutory result

14,753


8,648


1,716


6,932


23,954


1,930


118


38


 

Year ended

30 June 2014

(Restated)

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Western Australia Iron Ore(v)

20,883


12,966


1,427


11,539


22,223


2,947






Samarco(i)

1,634


846


56


790


1,072


424






Other(ii)(v)

130


(32)


2


(34)


95







Total Iron Ore from
Group production

22,647


13,780


1,485


12,295


23,390


3,371






Third party products(iii)

343


(3)



(3)








Total Iron Ore

22,990


13,777


1,485


12,292


23,390


3,371


169


56


Statutory adjustments(iv)

(1,634)


(246)


(56)


(190)



(422)




Total Iron Ore

statutory result

21,356


13,531


1,429


12,102


23,390


2,949


169


56


(i) Samarco is an equity accounted investment and is reported on a proportionate consolidation basis (with the exception of net operating assets).

(ii) Predominantly comprises divisional activities, towage services, business development and ceased operations.

(iii) Includes inter-segment and external sales of contracted gas purchases.

(iv) Includes statutory adjustments for Samarco to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs and taxation expense of US$208 million (2014: US$190 million).

(v) The comparative period has been restated to reallocate towage services from Western Australia Iron Ore to Other.

 

Coal

 

Underlying EBIT for the 2015 financial year decreased by US$227 million to US$348 million.

 


US$M

Underlying EBIT for the full year ended 30 June 2014

575

Net price impact(i)

(1,027)

Change in volumes: productivity

38

Change in volumes: growth

(4)

Change in controllable cash costs

418

Change in other costs:


    Exchange rates

406

    Inflation

(71)

Other(ii)

13

Underlying EBIT for the full year ended 30 June 2015

348

(i) Average realised price: hard coking coal US$105/t (2014: US$131/t); weak coking coal US$88/t (2014: US$111/t); thermal coal US$58/t (2014: US$74/t).

(ii) Other includes: fuel and energy; non-cash; asset sales; ceased and sold operations; other items.

 

Metallurgical coal production increased by 13 per cent in the 2015 financial year to a record 43 Mt. Record production and sales volumes at Queensland Coal were supported by the successful ramp-up of the Caval Ridge mine and continued productivity improvements. An increase in equipment and wash-plant utilisation rates underpinned record volumes at six other operations.

 

Energy coal production for the 2015 financial year decreased by five per cent to 41 Mt as anticipated. Lower production reflected drought conditions and the need to manage dust emissions at Cerrejón, as well as reduced demand for our Navajo Coal product.

 

Metallurgical coal production is forecast to decrease in the 2016 financial year to 40 Mt as operations at Crinum are expected to cease in the first quarter of the 2016 calendar year as the mine approaches the end of its economic reserve life. Energy coal production is forecast to remain broadly unchanged in the 2016 financial year at 40 Mt(11).

 

Queensland Coal unit cash costs declined by 23 per cent to US$65 per tonne, supported by increased equipment and wash-plant utilisation rates, a continued reduction in labour, contractor and maintenance costs and a favourable currency movement. In the 2016 financial year, unit costs are expected to decline to US$61 per tonne(9) as the benefits from embedded productivity initiatives and a stronger US dollar, more than offset the removal of low-cost Crinum volumes and the expenses associated with its closure.

 

Queensland Coal unit costs (US$M)

H2 FY15

H1 FY15

FY15

FY14

Revenue

1,970

2,251

4,221

4,666

Underlying EBITDA

528

478

1,006

949

Cash costs (gross)

1,442

1,773

3,215

3,717

Less: freight

63

111

174

237

Less: royalties

144

146

290

331

Cash costs (net)

1,235

1,516

2,751

3,149

Sales (kt, equity share)

20,861

21,428

42,289

37,461

Cash cost per tonne (US$)

59.20

70.75

65.05

84.06

 

The Hay Point Stage Three Expansion project was successfully completed during the 2015 financial year. As a result of a significant improvement in capital productivity, average sustaining capital expenditure of approximately US$6 per tonne is anticipated over the next five years.

On 2 July 2015, BHP Billiton announced that the sale agreement for the San Juan Mine to Westmoreland Coal Company (WCC) had been executed. Subject to regulatory approval, the transaction is expected to be completed at the end of this calendar year with WCC assuming full operation of the mine from 1 January 2016.

 

Financial information for the Coal business for the 2015 and 2014 financial years is presented below.

 

Year ended

30 June 2015

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Queensland Coal

4,221


1,006


719


287


9,154


599






New Mexico

531


134


47


87


173


20






New South Wales Energy Coal(i)

1,225


303


161


142


1,322


121






Colombia(i)

719


231


105


126


924


73






Other(ii)

 −


(91)


1


(92)


196


17






Total Coal from Group production

6,696


1,583


1,033


550


11,769


830






Third party products

7



 −



 −


 −






Total Coal

6,703


1,583


1,033


550


11,769


830


20


20


Statutory adjustments(iii)

(818)


(341)


(139)


(202)


 −


(101)


 −


 −


Total Coal

statutory result

5,885


1,242


894


348


11,769


729


20


20


 

Year ended

30 June 2014

(Restated)

US$M

Revenue


Underlying EBITDA


D&A


Underlying EBIT


Net operating assets


Capital expenditure


Exploration gross


Exploration to profit


Queensland Coal

4,666


949


514


435


9,115


1,790






New Mexico

520


105


46


59


202


26






New South Wales Energy Coal(i)

1,350


324


150


174


1,392


170






Colombia(i)

814


305


85


220


1,037


133






Other(ii)


(166)


2


(168)


162


34






Total Coal from Group production

7,350


1,517


797


720


11,908


2,153






Third party products

27





1







Total Coal

7,377


1,517


797


720


11,909


2,153


29


29


Statutory adjustments(iii)

(814)


(259)


(114)


(145)



(182)




Total Coal

statutory result

6,563


1,258


683


575


11,909


1,971


29


29


(i) Newcastle Coal Infrastructure Group and Cerrejón are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

(ii) Predominantly comprises divisional activities and greenfield projects.

(iii) Includes statutory adjustments for Newcastle Coal Infrastructure Group and Cerrejón to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs and taxation expense of US$126 million (2014: US$80 million).

 

Group and unallocated items

 

Underlying EBIT expense increased by US$35 million to US$569 million in the 2015 financial year, as a US$238 million self insurance claim related to the mill outage at Olympic Dam more than offset a reduction in controllable costs and a favourable exchange rate movement at Nickel West.

 

Reserves and resources changes

 

BHP Billiton has confirmed major changes to Petroleum and Escondida reserves and Western Australia Iron Ore resources since the previous estimates as at 30 June 2014. These changes are set out on pages 55 to 60.

 

 

The financial information on pages 29 to 54 has been prepared in accordance with IFRS. This news release including the financial information is unaudited. Variance analysis relates to the relative financial and/or production performance of BHP Billiton and/or its operations during the 2015 financial year compared with the 2014 financial year, unless otherwise noted.

 

The following abbreviations may have been used throughout this report: barrels (bbl); billion cubic feet (bcf); barrels of oil equivalent (boe); cost and freight (CFR); cost, insurance and freight (CIF), dry metric tonne unit (dmtu); free on board (FOB); grams per tonne (g/t); kilograms per tonne (kg/t); kilometre (km); metre (m); million barrels of oil equivalent (MMboe); million barrels of oil equivalent per day (MMboe/d); thousand cubic feet equivalent (Mcfe); million cubic feet per day (MMcf/d); million pounds (Mlb); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz); pounds (lb); thousand barrels of oil equivalent (Mboe); thousand ounces (koz); thousand standard cubic feet (Mscf); thousand tonnes (kt); thousand tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes (t); and wet metric tonnes (wmt).

 

The following footnotes apply to this profit release:

 

(1)   Underlying attributable profit, Underlying EBIT and Underlying EBITDA are used to reflect the underlying performance of BHP Billiton. Underlying attributable profit is Attributable profit excluding discontinued operations and any exceptional items. Underlying EBIT is earnings before net finance costs, taxation, discontinued operations and any exceptional items. Underlying EBITDA is Underlying EBIT before depreciation, impairments and amortisation of US$9,986 million for the year ended 30 June 2015 and US$8,194 million for the year ended 30 June 2014. We believe that Underlying attributable profit, Underlying EBIT and Underlying EBITDA provide useful information, but should not be considered as an indication of, or as an alternative to, Attributable profit as an indicator of actual operating performance or as an alternative to cash flow as a measure of liquidity.

Underlying EBIT is reported net of net finance costs and taxation expense related to equity accounted investments of US$418 million (2014: US$528 million).

Underlying EBITDA is reported net of net finance costs and taxation expense, depreciation, impairments and amortisation related to equity accounted investments of US$786 million (2014: US$787 million).

(2)   Non-IFRS measures are defined as follows and exclude discontinued operations unless otherwise stated:

·      Adjusted effective tax rate - comprises Total taxation expense excluding remeasurement of deferred tax assets associated with the Minerals Resource Rent Tax (MRRT), exceptional items and exchange rate movements included in taxation expense divided by Profit before taxation and exceptional items.

·      Attributable profit excluding exceptional items - comprises Profit after taxation attributable to members of BHP Billiton Group less exceptional items as described in note 2 to the financial information. It includes Attributable profit from discontinued operations excluding any exceptional items from discontinued operations as described in note 6 to the financial information.

·      Free cash flow - comprises net operating cash flows less net investing cash flows.

·      Gearing ratio - represents the ratio of net debt to net debt plus net assets.

·      Net debt - comprises Interest bearing liabilities less Cash and cash equivalents for the total operations within the Group at the reporting date.

·      Net operating assets - represents operating assets net of operating liabilities including the carrying value of equity accounted investments and predominantly excludes cash balances, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity accounted method represents the balance of the Group's investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities and deferred tax balances of the equity accounted investment.

·      Underlying attributable profit - comprises Profit after taxation attributable to members of BHP Billiton Group less exceptional items as described in note 2 to the financial information.

·      Underlying basic earnings per share - represents basic earnings per share excluding any exceptional items.

·      Underlying EBIT margin - comprises Underlying EBIT excluding third party product profit from operations, divided by revenue excluding third party product revenue.

·      Underlying EBITDA margin - comprises Underlying EBITDA excluding third party product EBITDA, divided by revenue excluding third party product revenue.

·      Underlying EBITDA interest coverage - for the purpose of deriving interest coverage, net interest comprises Interest on bank loans and overdrafts, Interest on all other borrowings, Finance lease and hire purchase interest less Interest income.

·      Underlying return on capital - represents net profit after tax, excluding exceptional items and net finance costs (after tax), divided by average capital employed. Capital employed is net assets before net debt.

(3)   Represents productivity-led volume efficiencies, operating cash cost efficiencies and exploration and business development savings on a continuing operations basis. Productivity-led volume efficiencies refer to volume increases, excluding volume increases from major capital projects, multiplied by the prior period Underlying EBIT margin. Operating cash cost efficiencies refer to the reduction in costs, excluding the impact of volume, price-linked costs, exchange rates, inflation, fuel and energy, non-cash costs, one-off items, ceased and sold operations and other items. Exploration and business development savings refers to the reduction in total exploration and business development costs including capitalised exploration.

(4)   Represents the share of capital and exploration expenditure attributable to BHP Billiton shareholders on a cash basis. Includes BHP Billiton proportionate share of equity accounted investments; excludes capitalised deferred stripping and non-controlling interests.

(5)   BHP Billiton has an A+ credit rating with Standard & Poor's on negative outlook and an A1 credit rating with Moody's on stable outlook. The solid A credit rating target refers to A+ or A from Standard & Poor's or A2 and above from Moody's.

(6)   Total Recordable Injury Frequency for the 2015 financial year includes 10 months contribution from assets that were demerged with South32.

(7)   Movement in Escondida unit cost excludes one-off items.

(8)   Excludes Pinto Valley which was sold during the 2014 financial year.

(9)   WAIO and Queensland Coal unit cash costs exclude freight and royalties; Escondida unit cash costs exclude freight and treatment and refining charges. Escondida grade-adjusted unit cost is on a 2015 financial year grade-equivalent basis. 2016 financial year guidance is based on exchange rates of AUD/USD 0.74 and USD/CLP 674.

(10) Subject to approvals process.

(11) Guidance assumes a full year of production from the San Juan mine.

Forward-looking statements

This release contains forward-looking statements, including statements regarding: trends in commodity prices and currency exchange rates; demand for commodities; plans, strategies and objectives of management; closure or divestment of certain operations or facilities (including associated costs); anticipated production or construction commencement dates; capital costs and scheduling; operating costs and shortages of materials and skilled employees; anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; tax and regulatory developments.

Forward-looking statements can be identified by the use of terminology such as 'intend', 'aim', 'project', 'anticipate', 'estimate', 'plan', 'believe', 'expect', 'may', 'should', 'will', 'continue', 'annualised' or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward-looking statements.

These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are cautioned not to put undue reliance on forward-looking statements.

For example, our future revenues from our operations, projects or mines described in this release will be based, in part, upon the market price of the minerals, metals or petroleum produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing operations.

Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of operations, mines or facilities include our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals, petroleum or metals we produce; activities of government authorities in some of the countries where we are exploring or developing these projects, facilities or mines, including increases in taxes, changes in environmental and other regulations and political uncertainty; labour unrest; and other factors identified in the risk factors discussed in BHP Billiton's filings with the U.S. Securities and Exchange Commission (the "SEC") (including in Annual Reports on Form 20-F) which are available on the SEC's website at www.sec.gov.

Except as required by applicable regulations or by law, the Group does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information or future events.

Past performance cannot be relied on as a guide to future performance.

Non-IFRS financial information

BHP Billiton results are reported under International Financial Reporting Standards (IFRS) including Underlying EBIT and Underlying EBITDA which are used to measure segment performance. This release may also include certain non-IFRS measures including Adjusted effective tax rate, Attributable profit excluding exceptional items, Free cash flow, Gearing ratio, Net debt, Net operating assets, Underlying attributable profit, Underlying basic earnings per share, Underlying EBIT margin, Underlying EBITDA margin, Underlying EBITDA interest coverage and Underlying return on capital. These measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity.

No offer of securities

Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction, or be treated or relied upon as a recommendation or advice by BHP Billiton.

Reliance on third party information

The views expressed in this release contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This release should not be relied upon as a recommendation or forecast by BHP Billiton.

No financial or investment advice - South Africa

BHP Billiton does not provide any financial or investment 'advice' as that term is defined in the South African Financial Advisory and Intermediary Services Act, 37 of 2002, and we strongly recommend that you seek professional advice.

 

Further information on BHP Billiton can be found at: www.bhpbilliton.com

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BHP Billiton Limited ABN 49 004 028 077

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Tel +61 1300 55 4757 Fax +61 3 9609 3015

 

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Members of the BHP Billiton Group which is headquartered in Australia

 

 

 

BHP Billiton Group

Financial Information

For the year ended 30 June 2015

 

Contents

Page

Financial Information


Consolidated Income Statement

31

Consolidated Statement of Comprehensive Income

32

Consolidated Balance Sheet

33

Consolidated Cash Flow Statement

34

Consolidated Statement of Changes in Equity

35

Notes to the Financial Information

38

 

The financial information included in this document for the year ended 30 June 2015 is unaudited and has been derived from the draft financial report of the BHP Billiton Group for the year ended 30 June 2015. The financial information does not constitute the Group's full statutory accounts for the year ended 30 June 2015, which will be approved by the Board, reported on by the auditors, and subsequently filed with the UK Registrar of Companies and the Australian Securities and Investments Commission.

 

The financial information set out on pages 29 to 54 for the year ended 30 June 2015 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2014 financial statements contained within the Annual Report of the BHP Billiton Group except for the adoption of:

 

·     IFRIC 21 'Levies' which confirms that a liability to pay a levy is only recognised when the activity that triggers the payment occurs; and

·     Amendments to IAS 32/AASB 132 'Financial Instruments: Presentation' which clarifies the criteria for offsetting financial assets and liabilities.

 

The adoption of IFRIC 21 and the amendments to IAS 32 did not have a material impact on the BHP Billiton Group and therefore no restatements have been made to the prior year financial statements.

 

The comparative figures for the financial years ended 30 June 2014 and 30 June 2013 are not the statutory accounts of the BHP Billiton Group for those financial years. Those accounts have been reported on by the company's auditor and delivered to the Registrar of Companies. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the reports and (iii) did not contain a statement under Section 498(2) or (3) of the UK Companies Act 2006.

 

All amounts are expressed in US dollars unless otherwise stated. The BHP Billiton Group's presentation currency and the functional currency of the majority of its operations is US dollars as this is the principal currency of the economic environment in which it operates. Amounts in this financial information have, unless otherwise indicated, been rounded to the nearest million dollars.

 

Where applicable, comparative periods have been adjusted to disclose them on the same basis as the current period figures. The financial information for the years ended 30 June 2014 and 30 June 2013 has been restated for the effects of the application of IFRS 5/AASB 5 'Non-current Assets Held for Sale and Discontinued Operations' following the demerger of South32. The nature of each change reflected in the restated financial information is as follows:

 

·     All income and expense items relating to South32 have been removed from the individual line items in the Consolidated Income Statement. The post-tax (loss)/profit of South32 is presented as a single amount in the line item entitled "(Loss)/Profit after taxation from discontinued operations"; and

·     All cash flows and other items relating to South32 have been removed from the individual line items in the Consolidated Cash Flow Statement. The net cash flows attributable to the operating, investing and financing activities of South32 and the cash disposed of on demerger of South32 are each disclosed in single amount in each section of the Consolidated Cash Flow Statement.

 

The Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity for these periods are not required to be restated.

 

Consolidated Income Statement for the year ended 30 June 2015

 


Notes

Year ended

30 June 2015

US$M

Year ended

30 June 2014

US$M

Restated

Year ended

30 June 2013

US$M

Restated

Continuing operations





Revenue





Group production


43,457

55,045

52,637

Third party products


1,179

1,717

1,223

Revenue

1

44,636

56,762

53,860

Other income


496

1,225

3,804

Expenses excluding net finance costs


(37,010)

(36,523)

(36,829)

Share of operating profit of equity accounted investments

3

548

1,185

1,142

Profit from operations


8,670

22,649

21,977






Comprising:





Group production


8,656

22,634

21,913

Third party products


14

15

64



8,670

22,649

21,977






Financial expenses


(702)

(995)

(1,229)

Financial income


88

81

80

Net finance costs

4

(614)

(914)

(1,149)






Profit before taxation


8,056

21,735

20,828






Income tax expense


(2,762)

(6,266)

(5,646)

Royalty-related taxation (net of income tax benefit)


(904)

(514)

(1,050)

Total taxation expense

5

(3,666)

(6,780)

(6,696)






Profit after taxation from continuing operations


4,390

14,955

14,132

 

Discontinued operations





(Loss)/profit after taxation from discontinued operations

6

(1,512)

269

(1,312)

Profit after taxation


2,878

15,224

12,820

Attributable to non-controlling interests


968

1,392

1,597

Attributable to members of BHP Billiton Group


1,910

13,832

11,223






Basic earnings per ordinary share (cents)

7

35.9

260.0

210.9

Diluted earnings per ordinary share (cents)

Basic earnings from continuing operations per ordinary share (cents)

Diluted earnings from continuing operations per ordinary share (cents)

7

7

 

7

35.8

65.5

 

65.3

259.1

256.5

 

255.7

210.2

238.6

 

237.8

 

 






Dividends per ordinary share - paid during the period (cents)

8

124.0

118.0

114.0

Dividends per ordinary share - determined in respect of the period (cents)

8

124.0

121.0

116.0

 

The accompanying notes form part of this financial information.

 

Consolidated Statement of Comprehensive Income for the year ended 30 June 2015

 


Year ended

30 June 2015

US$M

Year ended

30 June 2014

US$M

Year ended

30 June 2013

US$M





Profit after taxation

2,878

15,224

12,820





Other comprehensive income




Items that may be reclassified subsequently to the income statement:




Available for sale investments:




Net valuation losses taken to equity

(21)

(15)

(101)

Net valuation gains transferred to the income statement

(115)

(14)

(1)

Cash flow hedges:




(Losses)/gains taken to equity

(1,797)

681

223

(Losses)/gains transferred to the income statement

1,815

(678)

73

Exchange fluctuations on translation of foreign operations taken to equity

(2)

(1)

2

Tax recognised within other comprehensive income

29

3

(76)

Total items that may be reclassified subsequently to the income statement

(91)

(24)

120





Items that will not be reclassified to the income statement:




Actuarial (losses)/gains on pension and medical schemes

(28)

57

61

Tax recognised within other comprehensive income

(17)

12

(16)

Total items that will not be reclassified to the income statement

(45)

69

45





Total other comprehensive (loss)/income

(136)

45

165





Total comprehensive income

2,742

15,269

12,985

Attributable to non-controlling interests

973

1,392

1,599

Attributable to members of BHP Billiton Group

1,769

13,877

11,386

 

The accompanying notes form part of this financial information.

 

Consolidated Balance Sheet as at 30 June 2015

 


30 June 2015

US$M

30 June 2014

US$M

ASSETS



Current assets



Cash and cash equivalents

6,753

8,803

Trade and other receivables

4,321

6,741

Other financial assets

83

87

Inventories

4,292

6,013

Current tax assets

658

318

Other

262

334

Total current assets

16,369

22,296

Non-current assets



Trade and other receivables

1,499

1,867

Other financial assets

1,159

2,349

Inventories

466

463

Property, plant and equipment

94,072

108,787

Intangible assets

4,292

5,439

Investments accounted for using the equity method

3,712

3,664

Deferred tax assets

2,861

6,396

Other

150

152

Total non-current  assets

108,211

129,117

Total assets

124,580

151,413

 

LIABILITIES



Current liabilities



Trade and other payables

7,389

10,145

Interest bearing liabilities

3,201

4,262

Other financial liabilities

251

16

Current tax payable

207

919

Provisions

1,676

2,504

Deferred income

129

218

Total current liabilities

12,853

18,064

Non-current liabilities

Trade and other payables

Interest bearing liabilities

Other financial liabilities

Deferred tax liabilities

Provisions

Deferred income

29

27,969

1,031

4,542

7,306

305

 

113

30,327

303

7,066

9,891

267

Total non-current liabilities

41,182

47,967

Total liabilities

54,035

66,031

Net assets

70,545

85,382

 

EQUITY



Share capital - BHP Billiton Limited

1,186

1,186

Share capital - BHP Billiton Plc

1,057

1,069

Treasury shares

(76)

(587)

Reserves

2,557

2,927

Retained earnings

60,044

74,548

Total equity attributable to members of BHP Billiton Group

64,768

79,143

Non-controlling interests

5,777

6,239

Total equity

70,545

85,382

 

The accompanying notes form part of this financial information.

 

Consolidated Cash Flow Statement for the year ended 30 June 2015

 

US$M

Year ended

30 June 2015

Year ended

30 June 2014

Restated

Year ended 30 June 2013

Restated

Operating activities




Profit before taxation

8,056

21,735

20,828

Adjustments for:




Non-cash or non-operating exceptional items

3,196

(551)

(331)

Depreciation and amortisation expense

9,158

7,716

6,067

Net gain on sale of non-current assets

(9)

(73)

(17)

Impairments of property, plant and equipment, financial assets and intangibles

828

478

344

Employee share awards expense

247

247

210

Net finance costs

614

914

1,149

Share of operating profit of equity accounted investments

(548)

(1,185)

(1,142)

Other

265

(79)

5

Changes in assets and liabilities:




Trade and other receivables

1,431

(349)

904

Inventories

151

(158)

(276)

Trade and other payables

(990)

238

(239)

Net other financial assets and liabilities

(8)

(90)

89

Provisions and other liabilities

(771)

475

(565)

Cash generated from operations

21,620

29,318

27,026

Dividends received

17

14

6

Dividends received from equity accounted investments

723

1,250

710

Interest received

86

120

112

Interest paid

(627)

(915)

(960)

Income tax refunded

348

848

Income tax paid

(3,225)

(6,123)

(6,921)

Royalty-related taxation refunded

216

Royalty-related taxation paid

(1,148)

(1,088)

(956)

Net operating cash flows from continuing operations

17,794

23,640

19,017

Net operating cash flows from discontinued operations

1,502

1,724

1,137

Net operating cash flows

19,296

25,364

20,154

Investing activities




Purchases of property, plant and equipment

(11,947)

(15,224)

(21,104)

Exploration expenditure

(816)

(986)

(1,321)

Exploration expenditure expensed and included in operating cash flows

670

698

1,026

Purchase of intangibles

(98)

(192)

(380)

Investment in financial assets

(15)

(1,168)

(455)

Investment in equity accounted investments

(71)

(44)

(84)

Cash outflows from investing activities

Proceeds from sale of property, plant and equipment

Proceeds from sale of intangibles

Proceeds from financial assets

Proceeds from divestment of subsidiaries, operations and joint operations, net of their

cash

Proceeds from sale or partial sale of equity accounted investments

(12,277)

66

8

445

 

256

(16,916)

66

904

 

812

(22,318)

2,274

221

 

502

1,700

Net investing cash flows from continuing operations

(11,502)

(15,134)

(17,621)

Net investing cash flows from discontinued operations

(1,066)

(700)

(1,105)

Cash disposed of on demerger of South32

(586)

Net investing cash flows

(13,154)

(15,834)

(18,726)

Financing activities




Proceeds from interest bearing liabilities

3,440

6,000

9,143

(Settlements)/proceeds from debt related instruments

(33)

37

14

Repayment of interest bearing liabilities

(4,135)

(7,048)

(1,902)

Proceeds from ordinary shares

9

14

12

Contributions from non-controlling interests

53

1,435

73

Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts

(355)

(368)

(445)

Dividends paid

(6,498)

(6,387)

(6,167)

Dividends paid to non-controlling interests

(554)

(119)

(778)

Net financing cash flows from continuing operations

(8,073)

(6,436)

(50)

Net financing cash flows from discontinued operations

(203)

(32)

(148)

Net financing cash flows

(8,276)

(6,468)

(198)

Net (decrease)/increase in cash and cash equivalents from continuing operations

Net increase/(decrease) in cash and cash equivalents from discontinued operations

Cash and cash equivalents, net of overdrafts, at beginning of period

Cash disposed of on demerger of South32

Foreign currency exchange rate changes on cash and cash equivalents

(1,781)

 

233

8,752

(586)

(5)

2,070

 

992

5,667

23

1,346

 

(116)

4,454

(17)

Cash and cash equivalents, net of overdrafts, at end of period

6,613

8,752

5,667

 

The accompanying notes form part of this financial information.

 

Consolidated Statement of Changes in Equity for the year ended 30 June 2015

 

For the year ended 30 June 2015

Attributable to members of the BHP Billiton Group



US$M

Share capital

- BHP Billiton Limited

Share capital

- BHP Billiton

Plc

Treasury shares

 

Reserves

Retained earnings

Total equity attributable to members of BHP Billiton Group

Non-controlling interests

Total equity










Balance as at 1 July 2014

1,186

1,069

(587)

2,927

74,548

79,143

6,239

85,382

Profit after taxation

1,910

1,910

968

2,878

Other comprehensive income:









Net valuation (losses)/gains on available for sale investments taken to equity

(27)

(27)

6

(21)

Net valuation gains on available for sale investments transferred to the income statement

(115)

(115)

(115)

Losses on cash flow hedges taken to equity

(1,797)

(1,797)

(1,797)

Losses on cash flow hedges transferred to the income statement

1,815

1,815

1,815

Exchange fluctuations on translation of foreign operations taken to equity

(2)

(2)

(2)

Actuarial losses on pension and medical schemes

-−

(28)

(28)

(28)

Tax recognised within other comprehensive income

30

(17)

13

(1)

12

Total comprehensive income

(96)

1,865

1,769

973

2,742

Transactions with owners:









Shares cancelled

Purchase of shares by ESOP Trusts

(12)

501

(355)

12

(501)

(355)

(355)

Employee share awards exercised net of employee contributions and other adjustments

363

(461)

101

3

3

Employee share awards forfeited

(13)

13

Accrued employee entitlement for unexercised awards

247

247

247

Distribution to option holders

(1)

(1)

(1)

(2)

Dividends

(6,596)

(6,596)

(639)

(7,235)

In specie dividend on demerger − refer to Note 6 Discontinued operations

(9,445)

(9,445)

(9,445)

Equity contributed

1

1

52

53

Transfers within equity on demerger

(59)

59

Conversion of controlled entities to equity accounted investments

2

2

(847)

(845)

Balance as at 30 June 2015

1,186

1,057

(76)

2,557

60,044

64,768

5,777

70,545

 

The accompanying notes form part of this financial information.

 

Consolidated Statement of Changes in Equity for the year ended 30 June 2015 (continued)

 

For the year ended 30 June 2014

Attributable to members of the BHP Billiton Group



US$M

 

Share capital

- BHP Billiton Limited

Share capital

- BHP Billiton

Plc

Treasury shares

 

Reserves

Retained earnings

Total equity attributable to members of BHP Billiton Group

Non-controlling interests

Total equity

Balance as at 1 July 2013

1,186

1,069

(540)

1,970

66,982

70,667

4,624

75,291

Profit after taxation

13,832

13,832

1,392

15,224

Other comprehensive income:









Net valuation losses on available for sale investments taken to equity

(15)

(15)

(15)

Net valuation gains on available for sale investments transferred to the income statement




(14)


(14)


(14)

Gains on cash flow hedges taken to equity

681

681

681

Gains on cash flow hedges transferred to the income statement

(678)

(678)

(678)

Exchange fluctuations on translation of foreign operations taken to equity

(1)

(1)

(1)

Actuarial gains on pension and medical schemes

57

57

57

Tax recognised within other comprehensive income

3

12

15

15

Total comprehensive income

(24)

13,901

13,877

1,392

15,269

Transactions with owners:









Purchase of shares by ESOP Trusts

(368)

(368)

(368)

Employee share awards exercised net of employee contributions

321

(221)

(91)

9

9

Employee share awards forfeited

(32)

32

Accrued employee entitlement for unexercised awards

247

247

247

Distribution to option holders

(2)

(2)

(2)

(4)

Dividends

(6,276)

(6,276)

(252)

(6,528)

Equity contributed

989

989

477

1,466

Balance as at 30 June 2014

1,186

1,069

(587)

2,927

74,548

79,143

6,239

85,382

 

The accompanying notes form part of this financial information.

 

Consolidated Statement of Changes in Equity for the year ended 30 June 2015 (continued)

 

For the year ended 30 June 2013

Attributable to members of the BHP Billiton Group



US$M

 

Share capital

- BHP Billiton Limited

Share capital

- BHP Billiton

Plc

Treasury shares

 

Reserves

Retained earnings

Total equity attributable to members of BHP Billiton Group

Non-controlling interests

Total equity

Balance as at 1 July 2012

1,186

1,069

(533)

1,912

61,892

65,526

3,789

69,315

Profit after taxation

11,223

11,223

1,597

12,820

Other comprehensive income:









Net valuation (losses)/gains on available for sale investments taken to equity

(103)

(103)

2

(101)

Net valuation gains on available for sale investments transferred to the income statement

(1)

(1)

(1)

Gains on cash flow hedges taken to equity

223

223

223

Losses on cash flow hedges transferred to the income statement

73

73

73

Exchange fluctuations on translation of foreign operations taken to equity

2

2

2

Actuarial gains on pension and medical schemes

60

60

1

61

Tax recognised within other comprehensive income

(117)

26

(91)

(1)

(92)

Total comprehensive income

77

11,309

11,386

1,599

12,985

Transactions with owners:









Purchase of shares by ESOP Trusts

(445)

(445)

(445)

Employee share awards exercised net of employee contributions

438

(243)

(178)

17

17

Employee share awards forfeited

(17)

17

Accrued employee entitlement for unexercised awards

210

210

210

Issue of share options to non-controlling interests

49

49

49

Dividends

(6,076)

(6,076)

(837)

(6,913)

Equity contributed

73

73

Divestment of equity accounted investment

(18)

18

Balance as at 30 June 2013

1,186

1,069

(540)

1,970

66,982

70,667

4,624

75,291

 

The accompanying notes form part of this financial information.

 

Notes to the Financial Information

 

1. Segment reporting

 

The Group operates four Businesses aligned with the commodities which we extract and market, reflecting the structure used by the Group's management to assess the performance of the Group.

 

Reportable segment

Principal activities

Petroleum and Potash

Exploration, development and production of oil and gas

Potash pre-development

Copper

Mining of copper, silver, lead, zinc, molybdenum, uranium and gold

Iron Ore

Mining of iron ore

Coal

Mining of metallurgical coal and thermal (energy) coal

 

The segment reporting information excludes discontinued operations, being BHP Billiton's former interests in its integrated Aluminium business, Manganese business and the Cerro Matoso nickel operation, Energy Coal South Africa, Illawarra metallurgical coal and the Cannington silver-lead-zinc mine. Comparative periods have also been restated.

 

Group and unallocated items includes Group Functions, other unallocated operations including Nickel West (previously disclosed in the former Aluminium, Manganese and Nickel Business demerged with South32) and consolidation adjustments.

 

Exploration and technology activities are recognised within relevant segments.

It is the Group's policy that inter-segment sales are made on a commercial basis.

 

1.   Segment reporting (continued)

 

Year ended 30 June 2015

US$M

Petroleum

and Potash

Copper

Iron Ore

Coal

Group and unallocated items/ eliminations (f)

BHP

 Billiton

Group

Revenue







10,912

10,500

14,438

5,878

1,395

43,123

    Third party products

69

953

76

7

74

1,179

    Rendering of services

199

135

334

    Inter-segment revenue

267

104

(371)

Total revenue(a)

11,447

11,453

14,753

5,885

1,098

44,636








Underlying EBITDA(b)

7,023

5,205

8,648

1,242

(266)

21,852

Depreciation and amortisation

(4,744)

(1,545)

(1,698)

(875)

(296)

(9,158)

Impairment (losses)/reversals

(477)

(307)

(18)

(19)

(7)

(828)

Underlying EBIT(b)

1,802

3,353

6,932

348

(569)

11,866

Comprising:







    Group production

1,801

3,155

6,571

347

(570)

11,304

    Third party products

1

23

(10)

14

    Share of operating profit of equity

    accounted investments

175

371

1

1

548

Underlying EBIT(b)

1,802

3,353

6,932

348

(569)

11,866

Net finance costs(c)






(614)

Exceptional items(d)






(3,196)

Profit before taxation






8,056









Capital expenditure

5,359

3,822

1,930

729

107

11,947

Investments accounted for using the equity method(e)

287

1,422

1,044

956

3

3,712

Total assets(e)

43,183

26,340

26,808

14,182

14,067

124,580

Total liabilities(e)

6,896

2,639

2,854

2,413

39,233

54,035

 

1. Segment reporting (continued)

 

Year ended 30 June 2014

US$M Restated

Petroleum

and Potash

Copper

Iron Ore

Coal

Group and unallocated items/ eliminations (f)

BHP

Billiton

Group

Revenue







    Group production

14,022

11,759

20,883

6,536

1,603

54,803

    Third party products

437

1,030

130

27

93

1,717

    Rendering of services

112

130

242

    Inter-segment revenue

262

213

(475)

Total revenue(a)

14,833

12,789

21,356

6,563

1,221

56,762








Underlying EBITDA(b)

9,615

6,127

13,531

1,258

(239)

30,292

Depreciation and amortisation

Impairment (losses)/reversals

(3,951)

(1,371)

(1,464)

(683)

(247)

(7,716)

(377)

(88)

35

 −

(48)

(478)

Underlying EBIT(b)

5,287

4,668

12,102

575

(534)

22,098

Comprising:







    Group production

5,288

4,222

11,498

435

(545)

20,898

    Third party products

3

8

(3)

7

15

    Share of operating profit of equity

    accounted investments

(4)

438

607

140

4

1,185

Underlying EBIT(b)

5,287

4,668

12,102

575

(534)

22,098

Net finance costs(c)






(914)

Exceptional items(d)






551

Profit before taxation






21,735









Capital expenditure

6,423

3,697 

2,949 

1,971 

184 

15,224 

Investments accounted for using the equity method(e)

115

1,386 

1,069

1,079

15

3,664 

Total assets(e)

47,046

24,255

 27,412

 14,919

37,781

151,413

Total liabilities(e)

7,532

2,258

4,022

3,010

49,209

66,031

 

1. Segment reporting (continued)

 

Year ended 30 June 2013

US$M Restated

Petroleum

and Potash

Copper

Iron Ore

Coal

Group and unallocated items/ eliminations (f)

BHP

Billiton

Group

Revenue







    Group production

12,951

12,472

18,331

6,566

2,098

52,418

    Third party products

175

700

86

8

254

1,223

    Rendering of services

98

 −

121

 −

 −

219

    Inter-segment revenue

 −

 −

55

 −

(55)

 −

Total revenue(a)

13,224

13,172

18,593

6,574

2,297

53,860








Underlying EBITDA(b)

8,910

6,239

12,113

950

(103)

28,109

Depreciation and amortisation

(3,068)

(1,157)

(917)

(526)

(399)

(6,067)

Impairment (losses)/reversals

(206)

(49)

(87)

 −

(20)

(362)

Underlying EBIT(b)

5,636

5,033

11,109

424

(522)

21,680

Comprising:







    Group production

5,616

4,575

10,565

281

(563)

20,474

    Third party products

11

3

31

2

17

64

    Share of operating profit of equity

    accounted investments

9

455

513

141

24

1,142

Underlying EBIT(b)

5,636

5,033

11,109

424

(522)

21,680

Net finance costs(c)






(1,149)

Exceptional items(d)






297

Profit before taxation






20,828








Capital expenditure

7,675

3,891 

5,979 

3,136 

423 

21,104 

Investments accounted for using the equity method(e)

130

1,351 

1,044

1,150

3,675 

Total assets(e)

44,383

22,214

25,877

13,589

33,115

139,178

Total liabilities(e)

6,858

2,346

3,751

2,957

47,975

63,887

(a)   Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues from unallocated operations described in footnote f.

(b)   Underlying EBIT is earnings before net finance costs, taxation expense, discontinued operations and any exceptional items. Underlying EBIT is reported net of the Group's share of net finance costs and taxation expense of equity accounted investments. Underlying EBITDA is Underlying EBIT before depreciation, impairments and amortisation.

(c)   Refer to note 4 Net finance costs.

(d)   Refer to note 2 Exceptional items.

(e)   Total segment assets and liabilities of Businesses represents operating assets net of operating liabilities including the carrying amount of equity accounted investments and predominantly excludes cash balances, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity method represents the balance of the Group's investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities and deferred tax balances of the equity accounted investment.

(f)    Includes other unallocated operations including Nickel West (previously disclosed in the former Aluminium, Manganese and Nickel Business) and consolidation adjustments. Total assets, total liabilities and investments accounted for using the equity method include discontinued operation balances for the year ended 30 June 2014 and for the year ended 30 June 2013.

 

2. Exceptional items

 

Exceptional items are those items where their nature and amount is considered material to the financial statements. Such items included within the Group's profit for the year from continuing operations are detailed below and exceptional items attributable to discontinued operations are detailed in note 6 Discontinued operations.

 

Year ended 30 June 2015

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category




Impairment of Onshore US assets

(2,787)

829

(1,958)

Impairment of Nickel West assets

(409)

119

(290)

Repeal of Minerals Resource Rent Tax legislation(a)

-

(698)

(698)


(3,196)

250

(2,946)

(a)   Includes amounts attributable to non-controlling interests of US$(12) million.

 

Impairment of Onshore US assets

 

The Group recognised an impairment charge of US$1,958 million (after tax benefit) in relation to its Onshore US assets. The gas focused Hawkville field accounts for the substantial majority of this charge reflecting its geological complexity, product mix, acreage relinquishments and amended development plans. The remainder relates to the impairment of goodwill associated with the Petrohawk acquisition.

 

Impairment of Nickel West assets

 

On 12 November 2014, the Group announced that the review of its Nickel West business was complete and the preferred option, the sale of the business, was not achieved on an acceptable basis. As a result of operational decisions made subsequent to the conclusion of this process, an impairment charge of US$290 million (after tax benefit) was recognised in the year ended 30 June 2015.

 

Repeal of Minerals Resource Rent Tax legislation

 

The legislation to repeal the Minerals Resource Rent Tax (MRRT) in Australia took effect on 30 September 2014. As a result, the Group derecognised a MRRT deferred tax asset of US$809 million and corresponding taxation charges of US$698 million related to continuing operations and US$111 million related to discontinued operations (refer note 6)  were recognised in the year ended 30 June 2015.

 

Year ended 30 June 2014

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category




Sale of Pinto Valley

551

(166)

385


551

(166)

385

 

Sale of Pinto Valley

 

On 11 October 2013, the Group announced it had completed the sale of its Pinto Valley mining operation for cash consideration of US$653 million, after working capital adjustments. A gain on sale of US$385 million (after tax expense) was recognised in the year ended 30 June 2014.

 

Year ended 30 June 2013

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category




Sale of Yeelirrie uranium deposit

420

420

Sale of Richards Bay Minerals

1,212

(183)

1,029

Sale of diamonds business

(97)

(42)

(139)

Sale of East and West Browse Joint Ventures

1,539

(188)

1,351

Impairment of Nickel West assets

(1,698)

454

(1,244)

Impairment of Permian Basin assets

(266)

99

(167)

Other impairments arising from capital project review

(971)

291

(680)

Newcastle steelworks rehabilitation

158

(47)

111


297

384

681

 

Sale of Yeelirrie uranium deposit

 

On 27 August 2012, the Group announced the sale of its wholly owned Yeelirrie uranium deposit and the transaction was completed on 19 December 2012. A gain on sale of US$420 million was recognised in the year ended 30 June 2013, while the associated tax expense was offset by the recognition of deferred tax benefits on available tax losses of US$126 million.

 

Sale of Richards Bay Minerals

 

On 7 September 2012, the Group announced it had completed the sale of its 37.76 per cent effective interest in Richards Bay Minerals. A gain on sale of US$1,029 million (after tax expense) was recognised in the year ended 30 June 2013.

 

Sale of diamonds business

 

On 13 November 2012, the Group announced the sale of its diamonds business, comprising its interests in the EKATI Diamond Mine and Diamond Marketing operations. The transaction was completed on 10 April 2013 for an aggregate cash consideration of US$553 million (after adjustments). An impairment charge of US$139 million (after tax expense) was recognised based on the final consideration.

 

Sale of East and West Browse Joint Ventures

 

On 12 December 2012, the Group signed a definitive agreement to sell its 8.33 per cent interest in the East Browse Joint Venture and 20 per cent interest in the West Browse Joint Venture. A gain on sale of US$1,539 million was recognised in the year ended 30 June 2013. The associated tax expense of US$462 million was partly offset by the recognition of deferred tax benefits on available tax losses of US$241 million and the derecognition of deferred tax liabilities of US$33 million. The transaction was completed on 7 June 2013.

 

Impairment of Nickel West assets

 

As a result of expected continued strength in the Australian dollar and weak nickel prices, the Group recognised an impairment charge of US$1,244 million (after tax benefit) in the year ended 30 June 2013.

 

Impairment of Permian Basin assets

 

An impairment charge of US$167 million (after tax benefit) was recognised as the performance of specific evaluation wells in certain areas of the Permian Basin (US) do not support economic development.

 

Other impairments arising from capital project review

 

In the year ended 30 June 2013, WAIO refocused its attention on the capital-efficient expansion opportunity that exists within the Port Hedland inner harbour and all early works associated with the outer harbour development option were suspended. This revision to the WAIO development sequence and the change in status of other minor capital projects across the Group has resulted in the recognition of impairment charges of US$604 million (after tax benefit) and other restructuring costs of US$76 million (after tax benefit) in the year ended 30 June 2013.

 

Newcastle steelworks rehabilitation

 

The Group recognised a decrease of US$158 million (before tax expense) to its rehabilitation obligations in respect of former operations at the Newcastle steelworks (Australia). This followed the completion of the Hunter River Remediation Project and reaching agreement with the Environment Protection Authority in March 2013 regarding the necessary scope of work to repeal the Environmental Classification at Steel River.

 

3.  Interests in associates and joint venture entities

 

Major shareholdings in associates and joint venture entities

Ownership interest at BHP Billiton Group reporting date(a)

Share of operating profit of equity

accounted investments


30 June

2015

%

30 June

2014

%

30 June

2013

%

Year ended          30 June 2015

US$M

Year ended        30 June 2014

US$M

Year ended

30 June 2013 US$M

Carbones del Cerrejόn LLC

33.33

33.33

33.33

(20)

115

117

Compañia Minera Antamina SA

33.75

33.75

33.75

229

476

531

Samarco Mineração SA

50

50

50

371

607

513

Other(b)




(32)

 (13)

 (19)

Total




548

1,185

1,142

(a)   The ownership interest at the Group's and the associates and joint venture entities' reporting dates are the same. When the annual financial reporting date is different to the Group's, financial information is obtained as at 30 June in order to report on a basis consistent with the Group's reporting date.

(b)   Includes the Group's effective interest in the Newcastle Coal Infrastructure Group Pty Limited (ownership interest 35.5 per cent; 30 June 2014: 35.5 per cent; 30 June 2013: 35.5 per cent) and other immaterial equity accounted investments.

 

4. Net finance costs

 


Year ended

30 June 2015

US$M

Year ended

30 June 2014

US$M

Year ended

30 June 2013

US$M

Financial expenses




Interest on bank loans and overdrafts

9

11

12

Interest on all other borrowings(a)

517

657

954

Finance lease and hire purchase interest

25

19

7

Discounting on provisions and other liabilities

333

338

335

Net interest expense on post-retirement employee benefits

15

11

7

Interest capitalised(b)

(148)

(182)

(290)

Fair value change on hedged loans

372

328

(505)

Fair value change on hedging derivatives

(358)

(292)

489

Fair value change on non-hedging derivatives(c)

-

101

183

Exchange variations on net debt(d)

(63)

4

37


702

995

1,229

Financial income




Interest income

(88)

(81)

(80)


(88)

(81)

(80)

Net finance costs

614

914

1,149

(a)   Interest on all other borrowings in the year ended 30 June 2015 includes net interest income of US$67 million (30 June 2014: expense of US$116 million; 30 June 2013: expense of US$172 million) with respect to Petrohawk Senior Notes, which included gains of US$80 million on the early redemption of notes in August 2014 (30 June 2014: gains of US$24 million on the early redemption of notes in February 2014; 30 June 2013: nil).

(b)   Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalisation rate representing the average interest rate on such borrowings. For the year ended 30 June 2015, the capitalisation rate was 1.94 per cent (30 June 2014: 1.82 per cent; 30 June 2013: 2.24 per cent).

(c)   Fair value change on non-hedging derivatives in the year ended 30 June 2014 includes unrealised fair value changes of US$101 million on non-hedging derivatives used to manage interest rate risk (30 June 2013: US$183 million). No such derivatives existed in the current period.

(d)   Exchange variations on net debt in year ended 30 June 2015 predominantly comprises revaluations of US$109 million on non-USD finance leases (30 June 2014: US$24 million; 30 June 2013: nil).

 

5. Taxation

 

 


Year ended
30 June 2015

 US$M

Year ended
30 June 2014

US$M

Year ended
30 June 2013

 US$M

Taxation expense attributed to geographical jurisdiction:




UK taxation (benefit)/expense

(38)

(43)

83

Australian taxation expense

Overseas taxation expense

3,548

156

4,712

2,111

4,394

2,219

Total taxation expense(a)

3,666

6,780

6,696

 


Year ended
30 June 2015

 US$M

Year ended
30 June 2014

US$M

Year ended
30 June 2013

 US$M

Total taxation expense comprises:




Income tax expense




Income tax expense

2,762

6,266

5,646


2,762

6,266

5,646

Total royalty-related taxation (net of income tax benefit)(b)




Minerals Resource Rent Tax expense/(benefit)

463

(198)

179

Other royalty-related taxation expense

441

712

871


904

514

1,050

Total taxation expense

3,666

6,780

6,696

(a)   Total taxation expense including royalty-related taxation, exceptional items and exchange rate movements, was US$3,666 million, representing an effective tax rate of 45.5 per cent (30 June  2014: 31.2 per cent; 30 June 2013: 32.1 per cent). Exchange rate movements increased taxation expense by US$339 million, representing an increase in the effective tax rate of 4.2 per cent (30 June 2014: decrease of US$34 million and 0.2 per cent; 30 June 2013: increase of US$134 million and 0.6 per cent). Exceptional items, as described in note 2, decreased taxation expense by US$250 million (30 June 2014: increase of US$166 million; 30 June 2013: decrease of US$384 million).

(b)   Government imposed royalty arrangements calculated by reference to profits, including MRRT, are reported as royalty-related taxation. Total royalty-related taxation contributed to taxation expense of US$904 million resulting in an increase in the effective tax rate of 11.2 per cent (30 June 2014: contribution of US$514 million and 2.4 per cent; 30 June 2013: contribution of US$1,050 million and 5.0 per cent). The MRRT contributed to taxation expense of US$463 million in the period (30 June 2014: reduction of US$198 million; 30 June 2013: contribution of US$179 million). This included an exceptional item of US$698 million tax expense for the derecognition of deferred tax assets upon the repeal of the MRRT legislation in Australia (30 June 2014: nil; 30 June 2013: nil). Refer to note 2.

 

6. Discontinued operations

 

On 25 May 2015 the Group announced that it completed the demerger of a selection of its aluminium, coal, manganese, nickel and silver assets to create an independent metals and mining company, South32(a). This included BHP Billiton's interests in its integrated Aluminium business, Manganese business and the Cerro Matoso nickel operation, Energy Coal South Africa, Illawarra metallurgical coal and the Cannington silver-lead-zinc mine.

 

The contribution of discontinued operations included within the Group's profit until the loss of control is detailed below.

 

Income statement - discontinued operations

 


Year ended
30 June 2015

 US$M

Year ended
30 June 2014

US$M

Year ended
30 June 2013

 US$M

Revenue




Group production

7,007

9,182

10,430

Third party products

624

1,262

1,663

Revenue

7,631

10,444

12,093

Other income

225

299

143

Expenses excluding net finance costs

Share of operating profit of equity accounted investments

(6,582)

(24)

(9,990)

10

(13,211)

-

Profit/(loss) from operations

1,250

763

(975)

Comprising:

Group production

Third party products

 

1,213

37

 

734

29

 

(1,038)

63


1,250

763

(975)

Financial expenses


(74)

(278)

(155)

Financial income


26

16

28

Net finance costs


(48)

(262)

(127)

Profit/(loss) before taxation


1,202

501

(1,102)

Income tax expense


(464)

(272)

(68)

Royalty-related taxation (net of income tax benefit)


(96)

40

(142)

Total taxation expense


(560)

(232)

(210)

Profit/(loss) after taxation from operating activities


642

269

(1,312)

Net loss on demerger of South32 after taxation


(2,154)

-

-

(Loss)/profit after taxation


(1,512)

269

(1,312)

    Attributable to non-controlling interests


61

85

163

    Attributable to members of BHP Billiton Group


(1,573)

184

(1,475)






Basic (loss)/earnings per ordinary share (US cents)


(29.6)

3.5

(27.7)

Diluted (loss)/earnings per ordinary share (US cents)


(29.5)

3.4

(27.6)

 

The total comprehensive income attributable to members of BHP Billiton Group from discontinued operations was a loss of US$1,685 million (2014: profit of US$164 million, 2013: loss of US$1,569 million).

 

(a) The legal entities that were demerged are disclosed in section 15.12 of the South32 Limited ASX Information Memorandum released to the exchanges on 17 March 2015.

 

Cash flows from discontinued operations

 


Year ended
30 June 2015

 US$M

Year ended
30 June 2014

US$M

Year ended
30 June 2013

 US$M

Net operating cash flows

1,502

1,724

1,137

Net investing cash flows

(1,066)

(700)

(1,105)

Net financing cash flows

(203)

(32)

(148)

Net increase/(decrease) in cash and cash equivalents from discontinued operations

233

992

(116)

Cash disposed of on demerger of South32

(586)

-

-

Net (decrease)/increase in cash and cash equivalents

(353)

992

(116)

 

Loss on demerger of discontinued operations

 

Details of the net loss on demerger are described below:

 


2015

 US$M

 

Assets


 

Cash and cash equivalents

586

 

Trade and other receivables

1,198

 

Other financial assets

470

 

Investments accounted for using the equity method

Inventories

Property, plant and equipment

Intangible assets

Deferred tax assets

Others

1,643

1,073

9,622

328

142

66

 

Total assets

15,128

 

Liabilities


 

Trade and other payables

Interest bearing liabilities

Provisions

Others

811

1,085

1,916

6

 

Total liabilities

3,818

 

Net assets demerged

11,310

 



 

Less non-controlling interest share of net liabilities disposed

1

 

BHP Billiton share of net assets demerged

11,311

 

Fair value of South32 shares - in specie dividend


9,445

Reclassification of financial asset and foreign currency translation reserves of South32 to income statement


71

Loss on demerger


(1,795)

Transaction costs


(586)

Loss on demerger net of transaction costs before taxation


(2,381)

Income tax benefit


62

Loss on demerger net of transaction costs after taxation


(2,319)

Gain on loss of control of Manganese business


2,146

Impairment of South32 assets upon classification as held for distribution (after tax benefit)


(1,749)

Derecognition of deferred tax assets


(232)

Net loss on demerger of South32


(2,154)

 

Exceptional Items - discontinued operations

 

Exceptional items are those items where their nature and amount is considered material to the financial statements. Items related to discontinued operations included within the Group's profit are detailed below.

 

Year ended 30 June 2015

Gross

US$M

Tax

US$M

Net

US$M

Gain on loss of control of Manganese business

2,146

-

2,146

Impairment of South32 assets upon classification as held for distribution

(1,897)

148

(1,749)

Loss on demerger net of transaction costs

(2,381)

62

(2,319)

Derecognition of deferred tax assets

-

(232)

(232)

Repeal of Minerals Resource Rent Tax legislation

-

(111)

(111)


(2,132)

(133)

(2,265)

 

Gain on loss of control of Manganese business

 

In contemplation of the demerger, BHP Billiton and Anglo American agreed to make certain changes to the agreement which governs their interests in the Manganese business. The changes resulted in BHP Billiton and Anglo American agreeing to share joint control of the Manganese business. On 2 March 2015, BHP Billiton ceased consolidation of the Manganese business and accounted for its 60 per cent interest as an equity accounted joint venture. The remeasurement at fair value at that date gave rise to a gain of US$2,146 million. There were no tax consequences arising from the remeasurement of the Manganese business.

 

Impairment of South32 assets upon classification as held for distribution

 

As the fair value of South32 shares, determined by reference to the Australian Securities Exchange volume weighted average price over the first five days of trading, was less than the book value of the assets distributed, the Group considered whether any of the assets within South32 were impaired at the time they became held for distribution. The Group recognised an impairment of US$1,358 million (after tax benefit) for its Manganese business due to the fall in the price of Manganese and an impairment of US$391 million (after tax benefit) at the Wolvekrans Middelburg complex (WMC) within Energy Coal South Africa due to a decline in export prices and a new rail agreement negatively impacting volumes.

 

Loss on demerger net of transaction costs

 

The Group recognised the demerger in the financial statements as a dividend, reducing retained earnings by the fair value of South32's shares. The US$1,795 million loss on demerger is the difference between the fair value of South32's shares and the book value of the assets distributed and the reclassification of reserves relating to South32 to the income statement. Transaction costs of US$524 million (after tax benefit) comprised stamp duty, professional fees and separation and establishment costs.

 

Derecognition of deferred tax assets

 

The Group derecognised deferred tax assets as a result of internal structuring transactions of South32 assets into the demerged entity.

 

Repeal of Minerals Resource Rent Tax legislation

 

The legislation to repeal the Minerals Resource Rent Tax (MRRT) in Australia took effect on 30 September 2014. As a result, the Group derecognised an MRRT deferred tax asset (net of income tax consequences) of which US$111 million related to South32 assets. A corresponding taxation charge of US$111 million was recognised in the period.

 

There were no exceptional items related to discontinued operations for the year ended 30 June 2014.

 

Items related to discontinued operations included within the Group's profit for the year ended 30 June 2013 are detailed below.  

 

Year ended 30 June 2013

Gross

US$M

Tax

US$M

Net

US$M

Impairment of Worsley assets

(2,190)

559

(1,631)

Other impairments

(35)

-

(35)


(2,225)

559

(1,666)

 

Impairment of Worsley assets

 

The Group recognised an impairment of assets at Worsley as a result of expected continued strength in the Australian dollar and weak alumina prices. A total impairment charge of US$1,631 million (after tax benefit) was recognised in the year ended 30 June 2013.

 

Other impairments

 

The Group reviewed the status of a minor capital project at the Cerro Matoso nickel operation which resulted in the recognition of impairment charges of US$35 million (after tax benefit) in the year ended 30 June 2013.

 

7. Earnings per share

 

Year ended 30 June 2015

Continuing operations

Discontinued

operations

Total

Basic earnings/(loss) per ordinary share (US cents)

65.5

(29.6)

35.9

Diluted earnings/(loss) per ordinary share (US cents)

65.3

(29.5)

35.8

Basic earnings/(loss) per American Depositary Share (ADS) (US cents)(a)

131.0

(59.2)

71.8

Diluted earnings/(loss) per American Depositary Share (ADS) (US cents)(a)

130.6

(59.0)

71.6

Basic earnings/(loss) (US$M)

3,483

(1,573)

1,910

Diluted earnings/(loss) (US$M)

3,483

(1,573)

1,910

 

Year ended 30 June 2014

Continuing operations

Discontinued

operations

Total

Basic earnings per ordinary share (US cents)

256.5

3.5

260.0

Diluted earnings per ordinary share (US cents)

255.7

3.4

259.1

Basic earnings per American Depositary Share (ADS) (US cents)(a)

513.0

7.0

520.0

Diluted earnings per American Depositary Share (ADS) (US cents)(a)

511.4

6.8

518.2

Basic earnings (US$M)

13,648

184

13,832

Diluted earnings (US$M)

13,648

184

13,832

 

Year ended 30 June 2013

Continuing operations

Discontinued

operations

Total

Basic earnings/(loss) per ordinary share (US cents)

238.6

(27.7)

210.9

Diluted earnings/(loss) per ordinary share (US cents)

237.8

(27.6)

210.2

Basic earnings/(loss) per American Depositary Share (ADS) (US cents)(a)

477.2

(55.4)

421.8

Diluted earnings/(loss) per American Depositary Share (ADS) (US cents)(a)

475.6

(55.2)

420.4

Basic earnings/(loss) (US$M)

12,698

(1,475)

11,223

Diluted earnings/(loss) (US$M)

12,698

(1,475)

11,223

 

The weighted average number of shares used for the purposes of calculating diluted earnings per share reconciles to the number used to calculate basic earnings per share as follows:

 


Year ended
30 June 2015

Million

Year ended
30 June 2014

Million

Year ended
30 June

2013 Million

Weighted average number of shares



Basic earnings per ordinary share denominator(b)

5,318

5,321

5,322

Shares and options contingently issuable under employee share ownership plans(c)

15

17

18

Diluted earnings per ordinary share denominator(d)

5,333

5,338

5,340

(a)   Each American Depositary Share represents two ordinary shares.

(b)   The calculation of the number of ordinary shares used in the computation of basic earnings per share is the aggregate of the weighted average number of ordinary shares of BHP Billiton Limited and BHP Billiton Plc outstanding during the period after deduction of the number of shares held by the Billiton Employee Share Ownership Plan Trust and the BHP Billiton Limited Employee Equity Trust.

(c)   Included in the calculation of fully diluted earnings per share are shares contingently issuable under Employee Share Ownership Plans.

(d)   Diluted earnings per share calculation excludes 160,116 of instruments (2014: 183,181; 2013: 357,498) which are considered antidilutive.

8. Dividends


Year ended
30 June 2015

US$M

Year ended
30 June 2014

US$M

Year ended
30 June 2013

US$M

Dividends paid/payable during the period




BHP Billiton Limited

3,983

3,793

3,662

BHP Billiton Plc - Ordinary shares

2,613

2,483

2,404

                          - Preference shares(a)

-

-

-


6,596

6,276

6,066





Dividends determined in respect of the period




BHP Billiton Limited

3,982

3,887

3,721

BHP Billiton Plc - Ordinary shares

2,617

2,555

2,446

                          - Preference shares(a)

-

-

-


6,599

6,442

6,167

 


Year ended
30 June 2015

US cents

Year ended
30 June 2014

US cents

Year ended
30 June 2013

US cents

Dividends paid during the period (per share)




Prior year final dividend

62.0

59.0

57.0

Interim dividend

62.0

59.0

57.0


124.0

118.0

114.0





Dividends determined in respect of the period (per share)




Interim dividend

62.0

59.0

57.0

Final dividend

62.0

62.0

59.0


124.0

121.0

116.0

 

Dividends are determined after period end in the announcement of the results for the period. Interim dividends are determined in February and paid in March. Final dividends are determined in August and paid in September. Dividends determined are not recorded as a liability at the end of the period to which they relate. Subsequent to year-end, on 25 August 2015, BHP Billiton determined a final dividend of 62.0 US cents per share (US$3,301 million), which will be paid on 29 September 2015 (30 June 2014: final dividend of 62.0 US cents per share - US$3,301 million; 30 June 2013: final dividend of 59.0 US cents per share - US$3,147 million).

 

Each American Depositary Share (ADS) represents two ordinary shares of BHP Billiton Limited or BHP Billiton Plc. Dividends determined on each ADS represent twice the dividend determined on BHP Billiton ordinary shares.

 

BHP Billiton Limited dividends for all periods presented are, or will be, fully franked based on a tax rate of 30 per cent.

 


2015

US$M

2014

US$M

2013

US$M

Franking credits as at 30 June  

11,295

13,419

10,516

Franking (debits)/credits arising from the (refund)/payment of current tax

(428)

(29)

824

Total franking credits available (b)

10,867

13,390

11,340

(a)    5.5 per cent dividend on 50,000 preference shares of £1 each determined and paid annually (30 June 2014: 5.5 per cent; 30 June 2013: 5.5 per cent.

(b)    The payment of the final 2015 dividend determined after 30 June 2015 will reduce the franking account balance by US$853 million.

 

9. Subsequent events

 

Other than the matters outlined elsewhere in this financial information, no matters or circumstances have arisen since the end of the year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.

 

Reserves and Resources Update

 

Major reserves and resources changes

 

Petroleum reserves

 

BHP Billiton has confirmed a 535 MMboe decrease in proved oil, NGL and gas reserves in our Petroleum business, comprising 261 MMboe of production and 274 MMboe of other movements, to 1,908 MMboe as at 30 June 2015. The following table describes the approximate impact of the principal factors that affected the reserves during the 2015 financial year.

 


MMboe

Proved oil, NGL and gas reserves as at 30 June 2014

2,443

Production of 261 MMboe, including 5 MMboe of fuel

(261)

Other movements - Australia

62

Other movements - United States

(344)

Other movements - Other regions(i)

8

Proved oil, NGL and gas reserves as at 30 June 2015

1,908

(i)    Other regions comprise Algeria, Pakistan, Trinidad/Tobago and UK.

 

The increase in Australia reserves primarily reflects better than expected performance and new project additions.

 

The decline in United States reserves primarily reflects the transfer of Onshore US reserves from proved to other non-proven categories, as required by the US Securities and Exchange Commission (SEC) regulations. This reflects lower commodity prices and the associated deferral of development activity in Onshore US, predominantly in our gas-rich Hawkville, Haynesville and Fayetteville fields. Under SEC regulatory definitions, the prescribed development timeframe for proved undeveloped reserves is five years.

 

Petroleum's reserves are as of 30 June 2015 and have been estimated with deterministic methodology, with the exception of the North West Shelf gas operation in Australia where probabilistic methodology has been utilised to estimate and aggregate reserves for the reservoirs dedicated to the gas project only. The probabilistic based portion of these reserves totals 38 MMboe (total boe conversion is based on the following: 6,000 scf of natural gas equals 1 boe) and represents approximately two per cent of our total reported proved reserves. Aggregation of proved reserves beyond the field/project level has been performed by arithmetic summation. Due to portfolio effects, aggregates of proved reserves may be conservative. The custody transfer point(s) or point(s) of sale applicable for each field or project are the reference point for reserves.

The Petroleum Reserves Group (PRG) is a dedicated group that provides oversight of the reserves' assessment and reporting processes. The manager of the PRG, Abhijit Gadgil, is a full-time employee of BHP Billiton and is the individual responsible for overseeing and supervising the preparation of the reserve estimates and compiling the information for inclusion in this Annual Report. He has an advanced degree in engineering and more than 30 years of diversified industry experience in reservoir engineering, reserves assessment, field development and technical management and is a 30-year member of the Society of Petroleum Engineers (SPE). He has also served on the Society of Petroleum Engineers Oil and Gas Reserves Committee. Mr Gadgil has the qualifications and experience required to act as a qualified petroleum reserves evaluator under the Australian Securities Exchange (ASX) Listing Rules. The estimates of petroleum reserves are based on, and fairly represent, information and supporting documentation prepared under the supervision of Mr Gadgil and he has reviewed and agrees with the reserves information included herein and has given his prior written consent for its publication. No part of the individual compensation for members of the PRG is dependent on reported reserves.

 

Escondida reserves

 

BHP Billiton has confirmed an 11 per cent increase in the Ore Reserves at Escondida (after mining depletion), compared to the previous estimate as at 30 June 2014 (Table 2). The increase reflects the inclusion of 90 km of infill drilling that has improved the geological confidence and therefore the conversion of Mineral Resources to Ore Reserves. Whilst this includes conversion from Probable Reserves to Proved Reserves, it also incorporates new Probable Reserves due to reclassification from Inferred Resources to Indicated Resources. The Ore Reserves increase was further supported by the copper commodity price protocol used in the Life of Asset plan. Additional information pertaining to the increase in Ore Reserves is contained in Appendix 1.

 

The Escondida Mineral Resources and Ore Reserves include the Escondida and Escondida Norte deposits that jointly provide ore feed to a concentrator and heap leach processing complex. These neighbouring deposits are centred on Eocene-aged feldspar porphyry bodies intruded into Palaeozoic and Mesozoic rhyolite and andesite volcanic units. Vertically extensive hypogene mineralisation (chalcopyrite with or without bornite) has been overprinted by sub-horizontal high-grade supergene enrichment (chalcocite with or without covellite). Oxidised brochantite with or without chalcocite occurs above the supergene enrichment zone.

 

The process for estimating the Mineral Resources is mature and the estimates are updated annually. The most recent estimates are based on a total of approximately 2,400 km of drilling in 7,600 holes. Core samples are hydraulically split and RC chips are riffle split. Samples are crushed to 90 per cent minus 10 mesh and pulverised to 95 per cent minus 150 mesh. Pulps (200 grams) are analysed by 3-acid digestion for total copper, iron and arsenic with Atomic Absorption Spectrometry (AAS). Acid soluble copper is analysed by sulphuric acid digestion and measured by AAS.

 

Resource estimation is performed by ordinary kriging using search criteria consistent with a geostatistical model developed individually for a number of constituents according to the appropriate geological controls. Mineral Resources are classified using an uncertainty model based on conditional simulation models that consider the spatial distribution and density of drill holes, the geological framework and copper grade continuity.

 

Long term mine planning and reserves definition is performed on an annual basis using the updated resources model as part of the planning cycle. The mine planning process is consistent year to year, but includes updated operational parameters as well as revised costs and commodity prices as defined by BHP Billiton.

 

Proprietary software is used to define the optimal economic extraction sequence by evaluating the resource models and incorporating economic parameters and geotechnical constraints to generate a series of nested pits modified from the Lerchs-Grossman algorithm. Net Present Value (NPV) optimal pushback (or mining phase) designs are developed by incorporating mine operational aspects, plant capacity, loading equipment and ore exposure in order to produce an optimised mining production plan. The selection and design options take into account both mines, and are based on the optimal economic sequence according to operational restrictions.