Interim Results

6th Feb 2008 07:00

BHP Billiton PLC06 February 2008 6 February 2008Number 06/08 BHP BILLITON RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 • Underlying EBITDA of US$11.2 billion and Underlying EBIT of US$9.6 billion up 6.4% and 5.4% respectively. • Attributable profit of US$6.0 billion down 2.8% and EPS of 106.8 US cents up 2.8%, with EPS benefiting from share buy-backs (both measures excluding exceptionals). • Net operating cash flows(1) of US$7.9 billion, up 10.6%. • Record half-year production(2) from seven commodities with significant increases in another six. • Costs, net of non-cash costs, increased 1.9%, an outstanding achievement in the current environment. • Record half-year results for Iron Ore, Petroleum and Manganese. • Seven major projects completed and a further four projects approved. Significant volume growth expected in H2 of 2008 in high margin commodities. • Interim dividend up 45% to 29 US cents per share, demonstrating confidence in our cash generating ability and strategy. • US$8.8 billion of a US$13.0 billion capital management program completed, representing 6.5%(3) of total issued shares. +---+----------------------------------------+---------+------------+-------+---+| |Half-Year ended 31 December | 2007| 2006|Change | || | | | | | || | | US$M| US$M| | |+---+----------------------------------------+---------+------------+-------+---+| |Revenue | 25,539| 22,113| 15.5%| |+---+----------------------------------------+---------+------------+-------+---+| |Underlying EBITDA (4) | 11,167| 10,494| 6.4%| |+---+----------------------------------------+---------+------------+-------+---+| |Underlying EBIT (4) (5) | 9,623| 9,134| 5.4%| |+---+----------------------------------------+---------+------------+-------+---+| |Profit from operations | 9,486| 9,134| 3.9%| |+---+----------------------------------------+---------+------------+-------+---+| |Attributable profit - excluding | 5,995| 6,168| (2.8%)| || |exceptional items | | | | |+---+----------------------------------------+---------+------------+-------+---+| |Attributable profit | 6,017| 6,168| (2.4%)| |+---+----------------------------------------+---------+------------+-------+---+| |Net operating cash flows (1) | 7,870| 7,116| 10.6%| |+---+----------------------------------------+---------+------------+-------+---+| |Basic earnings per share - excluding | 106.8| 103.9| 2.8%| || |exceptional items (US cents) | | | | |+---+----------------------------------------+---------+------------+-------+---+| |Basic earnings per share (US cents) | 107.2| 103.9| 3.2%| |+---+----------------------------------------+---------+------------+-------+---+| |Underlying EBITDA interest coverage | 34.9| 37.6| (7.2%)| || |(times) (4) (6) | | | | |+---+----------------------------------------+---------+------------+-------+---+| |Dividend per share (US cents) | 29.0| 20.0| 45.0%| |+---+----------------------------------------+---------+------------+-------+---+ Refer to page 15 for footnotes, including explanations of the non-GAAP measuresused in this announcement. The above financial results are prepared in accordance with IFRS and areunaudited. All references to the corresponding or prior period are to thehalf-year ended 31 December 2006. RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Commentary on the Group Results Strong half-year results The results presented today represent an excellent operating and financialperformance. These results are based on a strong production performance acrossthe breadth of our business, outstanding cost control in the face of significantcost pressures and additional volumes from newly commissioned growth projects.Our performance has not only benefited from the unique diversification acrosspetroleum, bulk and non ferrous commodities, but also the diversification withineach of these broad categories. In particular, record half year earnings resultsin iron ore and manganese demonstrated that we were able to capture strongmarket conditions in the steel-making sector. Record half year earnings frompetroleum in an environment of strong prices, were the result of excellentmanagement of natural field decline and volume growth from new projects. Our Underlying EBIT of US$9.6 billion is an increase of 5.4 per cent over lasthalf-year. Underlying EBIT margin(7) was 44.4 per cent. Earnings per share,excluding exceptional items, were up 2.8 per cent at 106.8 US cents reflectingthe benefit of the share buy-back program. This result has been achieved in anenvironment in which input prices have increased significantly and currencieshave appreciated strongly. The reduction in Underlying EBIT, as a result of theweaker US dollar, was US$506 million more than the corresponding period. In pursuit of our strategy, we continue to focus on the fundamental drivers ofvalue creation for shareholders: by operating large, long-life, low costexpandable assets while taking a disciplined and value-focused approach topursuing additional organic and non-organic growth options. We achieved record or equal record production(2) for seven major commodities andsignificantly increased production across a further six commodities. Productionrecords(2) were achieved by 12 assets in six of our Customer Sector Groups. Thisperformance reinforces our track record of consistent growth on the back ofpredictable project delivery coming from a deep inventory of projects that willcontinue to underpin our growth plans. This increased production from highreturning assets has allowed us to capture the benefits of strong first halfconditions in key commodity markets. First production was successfully achieved at seven major projects: GenghisKhan, Atlantis South and Stybarrow (oil and gas), Koala Underground (diamonds),Pinto Valley (copper in concentrate), Rapid Growth Project 3 (iron ore) andRavensthorpe (contained nickel in concentrate). We expect to deliver significantvolume growth in the second half of FY 2008 with continued ramp up of theseprojects, and the expected commissioning of an additional four projects. During the period we approved three new projects; the Kipper project (gas),Klipspruit (energy coal), the Gemco expansion project (manganese concentrate)and in January 2008, we approved the Newcastle Third Port Project (energy coalexport capacity). All of these projects will support continued growth across anumber of our businesses in future years. Creating options for the future Our traditional resource base of Australia, the Americas and Southern Africacontinues to provide a strong platform for future growth opportunities. Thislarge asset base in relatively stable regions allows us to pursue developmentoptions in the emerging resource basins of the world. In particular we have hadgood first results from our drilling program in Guinea. We have also identifiedsubstantial potash acreage in Canada. We have continued with an active diamondexploration program in Angola. We also announced the signing of an agreementwith the government of the Democratic Republic of Congo (DRC) for the funding ofa feasibility study for a major hydro-electric project, which could supportsignificant future aluminium smelting opportunities. In our Petroleum CSG, we are increasing our exploration budget to approximatelyUS$600 million (up by 20 per cent) for the year ending 30 June 2008. This willenable us to further strengthen our position in the Gulf of Mexico in the UnitedStates. Our project pipeline provides significant future value, with 26 projects ineither execution or feasibility representing an expected capital investment ofUS$16.1 billion. We also have further medium-term options in our portfolio withexpected capital expenditure requirements in excess of US$70 billion. Growth Projects During this reporting period we completed seven major growth projects. Completed projects+-----------+------------------+----------------+-----------------+-----------------+| Customer | Project | Capacity | Capital | Date of initial || Sector | | | expenditure | || Group | | | | production (i) || | | | (US$ million) | |+-----------+------------------+----------------+--------+--------+--------+--------+| | | | Budget | Actual | Target | Actual |+-----------+------------------+----------------+--------+--------+--------+--------+|Base Metals|Pinto Valley |70,000 tonnes | 140 |144(ii) |Q4 2007 |Q4 2007 || | |per annum of | | | | || |(US) |copper in | | | | || | |concentrate | | | | || |BHP Billiton - | | | | | || |100% | | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+|Petroleum |Atlantis South |200,000 barrels | 1,630 | 1,630 |H2 2007 |H2 2007 || | |of oil and 180 | (iii) | (ii) | (iii) | || |(US) |million cubic | | | | || | |feet of gas per | | | | || |BHP Billiton - 44%|day (100%) | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+| |Stybarrow |80,000 barrels | 380 |380(ii) |Q1 2008 |Q4 2007 || | |of oil per day | | | | || |(Australia) |(100%) | | | | || | | | | | | || |BHP Billiton - 50%| | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+| |Genghis Khan |55,000 barrels | 365 |365(ii) |H2 2007 |H2 2007 || | |of oil per day | | | | || |(US) |(100%) | | | | || | | | | | | || |BHP Billiton - 44%| | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+|Iron Ore |WA Iron Ore Rapid |20 million | 1,300 |1,300 |Q4 2007 |Q4 2007 || |Growth Project 3 |tonnes per annum| |(ii) | | || | |of iron ore | | | | || |(Australia) | | | | | || | |(100%) | | | | || |BHP Billiton - 85%| | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+|Stainless |Ravensthorpe |Up to 50,000 | 2,200 | 2,079 |Q1 2008 |Q4 2007 ||Steel |Nickel |tonnes per annum| (iii) | (ii) | (iii) | ||Materials | |of contained | | | | || |(Australia) |nickel in | | | | || | |concentrate | | | | || |BHP Billiton -100%| | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+|Diamonds |Koala Underground |3,300 tonnes per| 200 | 176 |End 2007|End 2007||and | |day of ore | | | | ||Specialty |(Canada) |processed (100%)| | | | ||Products | | | | | | || |BHP Billiton - 80%| | | | | |+-----------+------------------+----------------+--------+--------+--------+--------+| | | | 6,215 | 6,074 | | |+-----------+------------------+----------------+--------+--------+--------+--------+ (i) References to quarters and half-years are based on calendar years.(ii) Number subject to finalisation.(iii) As per revised budget and schedule. There are 14 major projects (defined as BHP Billiton's share of capitalexpenditure of greater than US$100 million) under development with a totalbudgeted investment of US$9,405 million. Details for these were given in thequarterly Exploration and Development Report that was released on 23 January2008. Projects currently under development (approved in prior years)+----------------------+------------------+---------------+-------------+-------------+|Customer Sector Group | Project | Capacity (i) | Budgeted | Target date || | | | capital | for initial || | | | expenditure | production || | | | | (ii) || | | |(US$ million)| || | | | (i) | |+----------------------+------------------+---------------+-------------+-------------+|Petroleum |Neptune |50,000 barrels | 405 | Q1 2008|| | |of oil and 50 | | || |(US) |million cubic | | || | |feet of gas per| | || |BHP Billiton - 35%|day (100%) | | |+----------------------+------------------+---------------+-------------+-------------+| |North West Shelf |LNG processing | 350 | Late 2008|| |5th Train |capacity 4.2 | | || | |million tonnes | | || |(Australia) |per annum | | || | |(100%) | | || |BHP Billiton - | | | || |16.67% | | | |+----------------------+------------------+---------------+-------------+-------------+| |North West Shelf |800 million | 200 | End 2008|| |Angel |cubic feet of | | || | |gas per day and| | || |(Australia) |50,000 barrels | | || | |of condensate | | || |BHP Billiton - |per day (100%) | | || |16.67% | | | |+----------------------+------------------+---------------+-------------+-------------+| |Shenzi |100,000 barrels| 1,940 | Mid 2009|| | |of oil and 50 | | || |(US) |million cubic | | || | |feet of gas per| | || |BHP Billiton - 44%|day (100%) | | |+----------------------+------------------+---------------+-------------+-------------+| |Pyrenees |96,000 barrels | 1,200 | H1 2010|| | |of oil and 60 | | || |(Australia) |million cubic | | || | |feet gas per | | || |BHP Billiton - |day (100%) | | || |71.43% | | | |+----------------------+------------------+---------------+-------------+-------------+|Aluminium |Alumar Refinery |2 million | 725 | Q2 2009|| |Expansion |tonnes per | | || | |annum of | | || |(Brazil) |alumina (100%) | | || | | | | || |BHP Billiton - 36%| | | |+----------------------+------------------+---------------+-------------+-------------+|Stainless Steel |Yabulu Extension |45,000 tonnes | 556 | Q1 2008||Materials | |per annum of | | || |(Australia) |nickel | | || | | | | || |BHP Billiton - | | | || |100% | | | |+----------------------+------------------+---------------+-------------+-------------+| |Cliffs |360,000 tonnes | 139 | H1 2008|| | |per annum | | || |(Australia) |nickel ore | | || | | | | || |BHP Billiton - | | | || |100% | | | |+----------------------+------------------+---------------+-------------+-------------+|Iron Ore |Samarco |7.6 million | 590 | H1 2008|| | |tonnes per | | || |(Brazil) |annum of iron | | || | |pellets (100%) | | || |BHP Billiton - 50%| | | |+----------------------+------------------+---------------+-------------+-------------+| |WA Iron Ore Rapid |26 million | 1,850 | H1 2010|| |Growth Project 4 |tonnes per | | || | |annum of iron | | || |(Australia) |ore | | || | |(100%) | | || |BHP Billiton - | | | || |86.2% | | | |+----------------------+------------------+---------------+-------------+-------------+| | | | 7,955| |+----------------------+------------------+---------------+-------------+-------------+ (i) All references to capital expenditure and capacity are BHP Billiton's shareunless noted otherwise.(ii) References to quarters and half-years are based on calendar years. Projects approved since we last reported+----------------------+------------------+---------------+-------------+-------------+|Customer Sector Group | Project | Capacity (i) | Budgeted | Target date || | | | capital | for initial || | | | expenditure | production || | | | | (ii) || | | |(US$ million)| || | | | (i) | |+----------------------+------------------+---------------+-------------+-------------+|Petroleum |Bass Strait Kipper| 10,000 bpd | 500 | CY 2011 || | (Australia) |condensate and | | || | | processing | | || | BHP Billiton - |capacity of 80 | | || | 32.5% - 50% | million cubic | | || | | feet gas per | | || | | day (100%) | | |+----------------------+------------------+---------------+-------------+-------------+|Manganese |Gemco (Australia) | Additional 1 | 110 | H1 CY 2009 || | |million tonnes | | || | (Australia) | per annum | | || | | manganese | | || |BHP Billiton - 60%| concentrate | | || | | (100%) | | |+----------------------+------------------+---------------+-------------+-------------+|Energy Coal | Klipspruit |Incremental 1.8| 450 | H2 CY 2009 || | |million tonnes | | || | (South Africa) | per annum | | || | | export coal | | || | BHP Billiton - |Incremental 2.1| | || | 100% |million tonnes | | || | | per annum | | || | | domestic | | |+----------------------+------------------+---------------+-------------+-------------+| | Newcastle Third | Third coal | 390 |Late CY 2010 || | Export Coal | berth capable | | || | Terminal |of handling an | | || | | estimated 30 | | || | (Australia) |million tonnes | | || | | per annum | | || | BHP Billiton - | (100%) | | || | 35.5% | | | |+----------------------+------------------+---------------+-------------+-------------+| | | | 1,450 | |+----------------------+------------------+---------------+-------------+-------------+ (i) All references to capital expenditure and capacity are BHP Billiton's shareunless noted otherwise.(ii) References to half-years and years are based on calendar years. In addition to the above projects the Board approved pre expenditure of US$930million for Rapid Growth Project 5 (Western Australia Iron Ore). Dividend and Capital Management Today we announced a 45 per cent increase in our interim dividend to 29 US centsper share, the twelfth consecutive dividend increase. During the half-year we continued to purchase shares under the previouslyannounced US$13 billion program. Over the same period we repurchased 96,904,086BHP Billiton Plc shares, via on-market buy-backs, at an approximate averageprice of US$31.57 (A$36.46 / GBP15.51). To date, we have cancelled 71,388,736 ofthese shares and we intend to cancel the balance. On 14 December 2007, thebuy-back was suspended. To date, we have returned US$8.8 billion of the US$13billion. Since August 2004 we have announced capital management initiatives totallingUS$17 billion. Since the first buy-back in 2004, 680.23 million shares have beenrepurchased representing approximately 11 per cent of the total shares on issueat an approximate average price of US$18.53 (A$23.25 / GBP9.57). At completion of all announced initiatives we will have returned US$29.8 billionto shareholders through capital management initiatives and dividends since June2001. The Income Statement To provide clarity into the underlying performance of our operations, we presentUnderlying EBIT which is a measure used internally and in our SupplementaryInformation that excludes any exceptional items. The difference betweenUnderlying EBIT and Profit from operations is set out in the following table:+---------------------------+-----------------+-----------------+---------------+|Half-year ended 31 December| | 2007| 2006|+---------------------------+-----------------+-----------------+---------------+| | | US$M| US$M|+---------------------------+-----------------+-----------------+---------------+|Underlying EBIT | | 9,623| 9,134|+---------------------------+-----------------+-----------------+---------------+|Exceptional items (before | | (137)| -||taxation) | | | |+---------------------------+-----------------+-----------------+---------------+|Profit from operations | 9,486| 9,134|+---------------------------------------------+-----------------+---------------+ Underlying EBIT The following table and commentary describes the approximate impact of theprincipal factors that affected Underlying EBIT for the half-year ended 31December 2007 compared with the corresponding half-year period:+--+-----------------------------------------------------+---------+----------+--+| | | | | |+--+-----------------------------------------------------+---------+----------+--+| | | US$ Million | |+--+-----------------------------------------------------+---------+----------+--+| |Underlying EBIT for the half-year ended 31 December | | 9,134 | || |2006 | | | |+--+-----------------------------------------------------+---------+----------+--+| |Change in volumes: | | | |+--+-----------------------------------------------------+---------+----------+--+| |Increase in volumes | 500| | |+--+-----------------------------------------------------+---------+----------+--+| |Decrease in volumes | (363)| | |+--+-----------------------------------------------------+---------+----------+--+| |New operations | 324| | |+--+-----------------------------------------------------+---------+----------+--+| | | | 461 | |+--+-----------------------------------------------------+---------+----------+--+| |Net price impact: | | | |+--+-----------------------------------------------------+---------+----------+--+| |Change in sales prices | 1,481| | |+--+-----------------------------------------------------+---------+----------+--+| |Price-linked costs | 154| | |+--+-----------------------------------------------------+---------+----------+--+| | | | 1,635 | |+--+-----------------------------------------------------+---------+----------+--+| |Change in costs: | | | |+--+-----------------------------------------------------+---------+----------+--+| |Costs (rate and usage) | (260)| | |+--+-----------------------------------------------------+---------+----------+--+| |Exchange rates | (506)| | |+--+-----------------------------------------------------+---------+----------+--+| |Inflation on costs | (206)| | |+--+-----------------------------------------------------+---------+----------+--+| | | | (972) | |+--+-----------------------------------------------------+---------+----------+--+| |Asset sales | | 58 | |+--+-----------------------------------------------------+---------+----------+--+| |Ceased and sold operations | | (105) | |+--+-----------------------------------------------------+---------+----------+--+| |Exploration and business development | | (222) | |+--+-----------------------------------------------------+---------+----------+--+| |Other | | (366) | |+--+-----------------------------------------------------+---------+----------+--+| | | | | |+--+-----------------------------------------------------+---------+----------+--+| |Underlying EBIT for the half-year ended 31 December | | 9,623 | || |2007 | | | |+--+-----------------------------------------------------+---------+----------+--+| | | | | |+--+-----------------------------------------------------+---------+----------+--+ Volumes Higher sales volumes for copper, lead, zinc, silver, iron ore and metallurgicalcoal were the largest contributors to the increased volume impact on UnderlyingEBIT. This was partially offset by lower nickel volumes attributable to lowersales due to a 15 day shutdown of the Kalgoorlie smelter (Australia), longerlead times on sales due to the further diversification of our customer base intoUS and Europe and softer market conditions. The continuing ramp up of copper production from Spence (Chile) and the recentlycommissioned petroleum projects contributed an additional US$254 million andUS$69 million respectively to this total. Prices Changes in prices, including price-linked costs, increased Underlying EBIT byUS$1,635 million. Higher prices for petroleum products, manganese ore and alloy,lead, copper, energy coal and iron ore were the main positive contributors.Lower metallurgical coal, zinc and nickel matte prices had a negative impact. Price-linked costs increased Underlying EBIT by US$154 million compared with thecorresponding reporting period, with decreased charges for third party nickelore and lower treatment and refining charges for copper being the maincontributing factors. Costs Costs (net of non-cash costs) increased by 1.9 per cent compared to thecorresponding period. This is an excellent result and continues our trend oftight cost control, increased volume performance and a focus on BusinessExcellence improvements. This was principally due to higher raw material, fuel,energy and labour costs. Our continued focus on Business Excellence has helped to mitigate these costs byUS$84 million. Exchange rates Exchange rate movements had a negative impact on Underlying EBIT of US$506million. In particular, the weakening of the US dollar against the Australiandollar during the period, had a negative impact of US$420 million, consisting ofa negative US$475 million on costs offset by a positive impact on net monetaryitems. Western Australia Iron Ore, Nickel West, Olympic Dam, Worsley Alumina andQueensland Coal operations (all Australia) were significantly impacted by thisweakening. The following exchange rates against the US dollar have been applied:+---------------+------------+------------+-----------+-----------+-----------+| | Half-year| Half-year|31 December| 30 June|31 December|| | ended 31| ended 31| 2007| 2007| 2006|| | December| December| | | || | 2007| 2006| closing| closing| closing|| | average| average| | | |+---------------+------------+------------+-----------+-----------+-----------+| | | | | | |+---------------+------------+------------+-----------+-----------+-----------+|Australian | 0.87| 0.76| 0.88| 0.85| 0.79||dollar (a) | | | | | |+---------------+------------+------------+-----------+-----------+-----------+|South African | 6.94| 7.23| 6.80| 7.08| 7.00||rand | | | | | |+---------------+------------+------------+-----------+-----------+-----------+ (a) Displayed as US$ to A$1 based on common convention. Inflation on costs Inflationary pressures on input costs across all our businesses had anunfavourable impact on Underlying EBIT of US$206 million. These pressures weremost evident in Australia and South Africa. Asset Sales The sale of assets increased Underlying EBIT by US$58 million. This waspositively impacted by the sale of the Elouera mine (Illawarra Coal, Australia)and Queensland Coal (Australia) mining leases. Asset sales in the correspondingperiod included our interests in the Eyesizwe coal mine in South Africa and theMoranbah gas plant (Australia). Ceased and sold operations The unfavourable impact on Underlying EBIT of US$105 million was mainly due toinsurance recoveries in the corresponding period. Exploration and business development Gross exploration expenditure was US$598 million, an increase of US$325 millionon the corresponding period. Minerals exploration activity increased principallyat Olympic Dam, nickel targets in Western Australia and diamond targets inAngola. The main expenditure for the Petroleum CSG was on targets in Gulf ofMexico, Colombia and Australia. Expenditure on business development was US$54 million higher than thecorresponding period mainly due to the continuing pre-feasibility study on theOlympic Dam expansion. Other Other items decreased Underlying EBIT by US$366 million. These included a lowercontribution from third party trading and the obligations arising from theintended sale of the Optimum (South Africa) energy coal asset. The start-up ofoperations at Ravensthorpe and Line 2 at Yabulu (both Australia) adverselyimpacted earnings by US$132 million. Net finance costs Net debt increased to US$12.2 billion, an increase of US$3.7 billion from thecorresponding period largely due to the share buy-back program. Consequently netfinance costs increased to US$341 million, from US$301 million in thecorresponding period. Taxation expense The total taxation expense on profit before tax was US$2,952 million,representing an effective rate of 32.3 per cent. Excluding the impacts of royalty-related taxation, non tax-effected foreigncurrency adjustments, translation of tax balances and other functional currencytranslation adjustments and exceptional items, the underlying effective rate was30.1 per cent compared to the UK and Australian statutory tax rate (30 percent). Royalty-related taxation represents an effective rate of 2.9 per cent forthe current period. The corresponding period included the recognition of US tax benefits of US$140million. Exceptional Items Tax losses incurred by WMC Resources Limited (WMC), acquired by BHP Billiton inJune 2005, were not recognised as a deferred tax asset at acquisition pending aruling application to the Australian Tax Office. The ruling has now been issuedconfirming the availability of those losses. This has resulted in therecognition of a deferred tax asset (US$197 million) and consequentialadjustment to deferred tax liabilities (US$38 million) through income taxexpense at current $A/$US exchange rates. As a further consequence the Group hasrecognised an expense for a reduction in goodwill measured at the $A/$USexchange rate at the date of acquisition. +--------------------------------------+---------+---------+----------+| | Gross| Tax| Net|| | | | ||Half-year ended 31 December 2007 | US$M| US$M| US$M|+--------------------------------------+---------+---------+----------+|Exceptional items by category | | | |+--------------------------------------+---------+---------+----------+|Recognition of benefit of tax losses | (137)| 159| 22||in respect of the acquisition of WMC | | | ||and consequent reduction in goodwill | | | |+--------------------------------------+---------+---------+----------+| | (137)| 159| 22|+--------------------------------------+---------+---------+----------+|Exceptional items by Customer Sector | | | ||Group | | | |+--------------------------------------+---------+---------+----------+|Base Metals | (99)| (34)| (133)|+--------------------------------------+---------+---------+----------+|Stainless Steel Materials | (38)| (4)| (42)|+--------------------------------------+---------+---------+----------+|Group and unallocated | -| 197| 197|+--------------------------------------+---------+---------+----------+| | (137)| 159| 22|+--------------------------------------+---------+---------+----------+ Cash Flows Net operating cash flow after interest and tax increased by 10.6 per cent toUS$7.9 billion which was primarily attributable to higher profits increasingcash generated from operating activities together with a decrease in workingcapital, partially offset by increased taxation payments. Capital and exploration expenditure totalled approximately US$4.4 billion forthe period. Expenditure on growth projects was approximately US$3.0 billion,including US$1.2 billion on Petroleum projects and US$1.8 billion on Mineralsprojects. Capital expenditure on maintenance, sustaining and minor capital itemswas approximately US$0.7 billion. Exploration expenditure was US$598 million,including US$166 million which has been capitalised. Financing cash flows include US$4.6 billion in relation to the capitalmanagement program and dividend payments from the increased FY2007 finaldividend declared. Net debt, comprising cash and interest-bearing liabilities, was US$12.2 billion,an increase of US$2.1 billion, or 20.1 per cent, compared to 30 June 2007.Gearing, which is the ratio of net debt to net debt plus net assets, was 28.0per cent at 31 December 2007, compared with 25.3 per cent at 30 June 2007. Dividend An interim dividend for the half-year ended 31 December 2007 of 29.0 US centsper share will be paid to shareholders on 18 March 2008. The dividend paid by BHP Billiton Limited (Ltd) will be fully franked forAustralian taxation purposes. Dividends for the BHP Billiton Group aredetermined and declared in US dollars. However, Ltd dividends are paid mainly inAustralian dollars. BHP Billiton Plc (Plc) dividends are paid mainly in poundssterling to shareholders on the UK section of the register and South Africanrands to shareholders on the South African section of the register. Currencyconversions were based on the foreign currency exchange rates two business daysbefore the declaration of the dividend. The timetable in respect of this dividend will be:Currency conversion date 4 February 2008 Last day to trade cum dividend on JSE Limited (JSE) 22 February 2008 Ex-dividend Australian Securities Exchange (ASX) 25 February 2008 Ex-dividend Johannesburg Stock Exchange (JSE) 25 February 2008 Ex-dividend London Stock Exchange (LSE) 27 February 2008 Ex-dividend New York Stock Exchange (NYSE) 27 February 2008 Record date 29 February 2008 Payment date 18 March 2008 American Depositary Receipts (ADRs) each represent two fully paid ordinaryshares and receive dividends accordingly. Plc shareholders registered on the South African section of the register willnot be able to dematerialise or rematerialise their shareholdings, and transfersbetween the UK register and the South African register will not be permittedbetween the dates of 25 February 2008 and 29 February 2008. The following table details the currency exchange rates applicable for thedividend:+----------------------+-------------------------+----------------------------+|Dividend 29.0 US cents| Exchange Rate| Dividend per ordinary share|| | | in local currency|+----------------------+-------------------------+----------------------------+|Australian cents | 0.908021| 31.937587|+----------------------+-------------------------+----------------------------+|British pence | 1.975855| 14.677190|+----------------------+-------------------------+----------------------------+|South African cents | 7.390733| 214.331257|+----------------------+-------------------------+----------------------------+|New Zealand cents | 0.794600| 36.496350|+----------------------+-------------------------+----------------------------+ Portfolio Management Portfolio management activities continued during the period with proceedsamounting to US$139 million being realised. The Group divested the Elouera coalmine (Illawarra Coal Operation, Australia) and mining leases at Poitrel(Queensland Coal, Australia). The sale of the Optimum energy coal mine in SouthAfrica continues to progress. Proceeds from the sale or distribution of our assets and interests since 2001now surpass US$6 billion. Debt management and liquidity No long-term debt securities were issued in the debt capital markets during thecurrent period. The Group continues to manage its short-term liquidity byissuing commercial paper in the US market and drawing down from its US$3.0billion Revolving Credit Facility which expires in October 2011. Our liquidityposition is supported by our strong and stable credit rating and committed debtfacilities. Corporate Governance The following Board changes occurred during the period: * Mr Charles (Chip) Goodyear resigned as an Executive Director of both BHP Billiton Limited and BHP Billiton Plc on 30 September 2007. * Dr David Brink retired from the Boards of BHP Billiton Limited and BHP Billiton Plc at the conclusion of the Annual General Meeting of BHP Billiton Limited on 28 November 2007. * On 17 December 2007, the Board announced the appointment of Dr David Morgan as a Non-executive Director of BHP Billiton Limited and BHP Billiton Plc with effect from 1 January 2008. Outlook Global Economic Outlook Despite robust economic growth in many major economies, the pace of globaleconomic activity has moderated. In an attempt to address the credit crisis andstabilise financial markets, major central banks have implemented a number ofinitiatives, including liquidity injections. The longer term effectiveness ofthese remains to be seen. While emerging market economies continue to growstrongly, downside risks to the global economy exist with persistently high oilprices and the downturn in the US economy. Led by China and India, Asian economies have shown little sign of slowing. Rapideconomic growth in China has continued, led by increasing domestic consumption,strong industrial production and rapid growth in exports and investment. InIndia, economic growth is being driven by robust investment while inflation hasrecently been contained through a combination of fiscal and monetary policymeasures. Supported by a depreciating US dollar, US export levels haveexperienced healthy growth. However, fears of a US recession have been reflectedin the recent instability in global equity markets. The US housing market hasalso deteriorated further, sentiment indicators have worsened and industrialproduction has weakened. Western Europe has also been affected by the ongoingfinancial market instability with an appreciating euro relative to thecurrencies of its trading partners contributing to a moderation in exportgrowth. Meanwhile, Japanese economic growth has moderated alongside sluggishconsumption growth and deteriorating business confidence. In the short-term, the global economy is expected to slow as developed economiesexperience a moderation in economic activity. We have lowered our expectationsfor US growth in FY2008 as consumption is expected to weaken and businessinvestment is likely to fall. In Western Europe the slowdown in activity isexpected to continue as monetary conditions in the region tighten, manufacturinggrowth decelerates alongside reduced exports and housing market activity slows.As a result of the slowdown in developed economies, we expect some flow-oneffects to emerging market economies' export growth yet their overall economicgrowth should remain solid. Since much of the future incremental demand forcommodities will come from China and India, a slowdown in the US is likely tohave less impact on commodity prices than in the past. As FY2009 progresses,global economic growth should improve as major developed economies recover fromthe recent instability and the emerging market economies continue to grow. Commodities Outlook For the first half of FY2008, average prices for almost all of our majorcommodities have been higher than the prior year's average prices. Sustainedrobust demand, continuing supply side constraints and a weakening of the USdollar, relative to currencies of natural resource producing countries, havecontributed to the higher prices. Bulk commodity spot prices have continued to increase, driven by ongoing strongdemand from China and India and continuing supply-side pressures. Accordingly,we expect bulk commodity contract prices to remain strong. Energy commodity prices, particularly crude oil and thermal coal, have increasedstrongly and market conditions remain firm. Contrary to the general trend, the nickel spot price has eased from its recordhigh in May 2007 due to stainless steel distributors de-stocking their nickelinventories and Chinese stainless steel mills increasing the use of low-gradenickel pig iron. However nickel prices have remained well above long termaverage historical prices. In the medium-term, demand growth for our major commodities should remainrobust. Any effects on commodity demand of potential weakness in developedcountries should be offset over time by continued growth in developingcountries, particularly China and India. We maintain our expectation thatcommodity prices are likely to stay above their historical levels over themedium-term, albeit remaining subject to ongoing volatility. In the longer-term, with continued strong demand growth driven by theindustrialisation of China and India, structurally higher cost sources of newsupply will be required. We continue to expect commodity prices will be drivenby long run marginal costs of supply. CUSTOMER SECTOR GROUP SUMMARY The following table provides a summary of the performance of the Customer SectorGroups for the six months ended 31 December 2007 and the corresponding period.+--+------------------+---------------------------+----------------------------+--+| | | | | |+--+------------------+---------------------------+----------------------------+--+| |Half-Year ended 31| Revenue | Underlying EBIT (1) | || |December | | | || | | | | || |(US$ Million) | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| | | 2007| 2006|Change % |2007 | 2006| Change %| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| | | | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Petroleum | 3,770| 2,958| 27.5| 1,972| 1,612| 22.3| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Aluminium | 2,744| 2,828| (3.0)| 680| 840| (19.0)| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Base Metals (incl.| 6,557| 5,644| 16.2| 3,367| 2,889| 16.5| || |Uranium) | | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Diamonds and | 418| 393| 6.4| 72| 78| (7.7)| || |Specialty Products| | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Stainless Steel | 2,419| 2,805| (13.8)| 799| 1,427| (44.0)| || |Materials | | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Iron Ore | 3,578| 2,749| 30.2| 1,673| 1,404| 19.2| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Manganese | 1,013| 575| 76.2| 431| 105| 310.5| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Metallurgical Coal| 1,900| 1,833| 3.7| 523| 657| (20.4)| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Energy Coal | 2,907| 2,321| 25.2| 277| 242| 14.5| |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Group and | 647| 304| 112.8| (171)| (120)| N/A| || |unallocated items | | | | | | | || |(2) | | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |Less: | (414)| (297)| N/A| -| -| -| || |inter-segment | | | | | | | || |revenue | | | | | | | |+--+------------------+-------+--------+----------+---------+--------+---------+--+| |BHP Billiton Group| 25,539| 22,113| 15.5| 9,623| 9,134| 5.4| |+--+------------------+-------+--------+----------+---------+--------+---------+--+ (1) Underlying EBIT includes trading activities comprising the sale of thirdparty product. Underlying EBIT is defined on page 15. (2) Includes consolidation adjustments, unallocated items and external salesfrom the Group's freight, transport and logistics operations. Petroleum Underlying EBIT was US$1,972 million, an increase of US$360 million, or 22.3 percent, over the comparative period. Total production for the half year of 60.54million barrels of oil equivalent was 5 per cent higher than both thecorresponding and the prior periods reflecting the contribution of newlycommissioned projects, strong gas demand in Australia, strong operating uptime,and infill and development drilling. The increase in Underlying EBIT was mainly due to higher average realised oilprices per barrel of US$81.20 (compared with US$63.77), higher average realisedgas prices of US$3.42 per thousand standard cubic feet (compared with US$3.27),higher average realised prices for liquefied natural gas of US$7.79 per thousandstandard cubic feet (compared to US$7.44) and higher average realised prices fornatural gas liquids of US$51.89 per barrel (compared to US$40.04). Petroleum successfully commenced oil production at Genghis Khan and AtlantisSouth in the Gulf of Mexico, and at Stybarrow in Western Australia. Stybarrowwas brought on two months ahead of schedule and is exceeding early productionforecasts. Gross exploration expenditure was US$295 million of which US$196 million wasexpensed. We successfully captured acreage in the October 2007 Gulf of Mexicolease sale process, made the Thebe gas discovery (offshore Australia) andcontinued to build a diverse portfolio of opportunities with seismic dataacquired in Colombia, Brazil, Namibia, Australia and the Gulf of Mexico duringthe half-year. Aluminium Underlying EBIT was US$680 million, a decrease of US$160 million or 19.0 percent over the corresponding period. Lower LME prices for aluminium, partiallyoffset by higher premiums, had an unfavourable impact. The average LME aluminiumprice decreased to US$2,494 per tonne (compared with US$2,602 per tonne).Realised alumina prices were in line with the corresponding period. Half-year production records were achieved at the Worsley (Australia), Paranam (Suriname), Alumar (Brazil) and Hillside (South Africa) operations. Inparticular, production from the Worsley DCP expansion has exceeded nameplatecapacity. Mozal (Mozambique) equalled its previous record production. Unfavourable exchange rate movements as a result of a weaker US dollar had anunfavourable impact of US$49 million on Underlying EBIT. Underlying EBIT also reduced due to higher charges for energy, depreciation,maintenance, raw materials and labour. However, an intensive focus on costcontainment through various Business Excellence initiatives resulted inUnderlying EBIT benefits being added, dampening the full impact of costincreases. Earnings from third party trading were lower than the correspondingperiod. Base Metals (incl. Uranium) Underlying EBIT was US$3,367 million, an increase of US$478 million, or 16.5 percent, over the corresponding period. This increase is predominantly attributableto higher production of copper, zinc, silver and lead. Higher copper productionwas largely due to the continued ramp-up of Spence and the Escondida SulphideLeach Project (both Chile). This was partially reduced by lower volumes atOlympic Dam and Cerro Colorado (Chile). Cannington (Australia) also producedhigher volumes. Copper concentrate production for the half-year was a record,despite two earthquakes in Chile and unplanned SAG mill outages at Antamina (Peru). Higher average prices for copper, lead, silver, molybdenum and gold increasedUnderlying EBIT, partially offset by lower average zinc prices. Lower Treatmentand Refining Charges also positively impacted Underlying EBIT. Underlying EBIT gains were partially offset by higher costs in the period,mostly due to higher energy, shipping, fuel and labour charges. The effect ofinflation and the weaker US$ against the A$ and Chilean Peso also impactednegatively. Higher costs were partially mitigated by cost reductions achievedthrough several Business Excellence projects. In addition, the Olympic DamExpansion pre-feasibility study expenditures have increased as the projectstudies progress, also reducing reported earnings. Underlying EBIT wasnegatively impacted by the purchase of third party uranium from the spot marketto meet contractual requirements. Provisional pricing of outstanding copper shipments, including the impact offinalisations, resulted in the average realised price for the reporting periodbeing US$3.22/lb versus an average LME price of US$3.38/lb. The average realisedprice was US$3.13/lb in the corresponding period last year. The negative impactof provisional pricing and finalisations for the period was US$240 million.Outstanding copper volumes, subject to the fair value measurement, amounted to323,469 tonnes at 31 December 2007. These were re-valued at a weighted averageprice of US$6,662 per tonne. Diamonds and Specialty Products Underlying EBIT was US$72 million, a decrease of US$6 million, or 7.7 per centcompared with the corresponding period. This was mainly due to increasedexploration activity on diamond targets in Angola, lower value per caratdiamonds and unfavourable exchange rate movements for Canadian Dollar and Randagainst the US$. This was partly offset by higher diamond sales volumes andlower unit costs at Ekati (Canada) due to the processing of higher gradematerial, moving to underground mining areas and increased cost efficiencies. Stainless Steel Materials Underlying EBIT was US$799 million, a decrease of US$628 million or 44.0 percent compared with the corresponding period. Lower sales volume was the mainreason for the decrease, negatively impacting Underlying EBIT by US$223 million.A lower level of demand in Q1 FY08 for ferronickel from Cerro Matoso (Colombia)adversely impacted sales, while production volumes were lower at the KalgoorlieNickel Smelter and Yabulu (both Australia) principally due to planned shutdowns. The average LME nickel price was slightly lower at US$13.48/lb compared withUS$13.81/lb in the corresponding period. The positive impact on price linkedcosts of US$110 million was disproportionately high due to favourableprovisional price revaluations on purchases of ore. Other negative impacts on Underlying EBIT included the weaker US$ against theA$, start up of operations at Ravensthorpe and Line 2 at Yabulu, higherexploration activity in Australia, South America and Asia, as well as higher rawmaterial and labour costs at Nickel West (Australia) and Cerro Matoso. Iron Ore Underlying EBIT was US$1,673 million up US$269 million, or 19.2 per cent higher.This was driven by increased prices, higher sales volumes and higher priced spotsales. Record production was achieved at our Western Australia Iron Ore operation withadditional capacity implemented as a result of RGP2 and the early realisation ofefficiencies resulting from the commissioning of the RGP3 assets. Samarco (Brazil) also achieved record production as a result of production efficiencies.Record sales volumes reflected business improvement initiatives undertaken topromote increased shipping efficiency. Higher operating costs were largely attributable to the weaker US$ against theA$, price linked costs, freight and the impact of tie-in activity associatedwith RGP3. A number of cost saving initiatives that commenced in the year endedJune 2007, including the negotiation of contract mining rates, the extension ofselected contract terms, and strategic sourcing of input materials and serviceshave alleviated to some extent the full impact of external cost pressures on thebusiness. Depreciation expense was up 58 per cent for the period due to the commissioningof expanded capacity at Western Australia Iron Ore resulting from RGP2 and RGP3. Manganese Underlying EBIT was US$431 million, an increase of US$326 million or 310.5 percent. This increase was mainly due to higher sales prices achieved for alloy andore as well as record manganese ore sales volumes. Manganese alloy production at 393,000 tonnes was 12 per cent higher than thecorresponding period mainly as a result of operating efficiencies at the alloyplants and reduced down time for major rebuilds. Manganese ore production was3.1 million tonnes, an increase of 1 per cent compared to the correspondingperiod. Both were new production records. Metallurgical Coal Underlying EBIT was US$523 million, a decrease of US$134 million, or 20.4 percent. This decrease was mainly attributable to lower prices (a negative US$217million) however this was partially offset by higher sales volumes at bothQueensland and Illawarra Coal. The increase in sales volume reflects strongdemand and was supported by the expanded capacity at the Hay Point terminal. Operating costs were higher due to increased demurrage and labour costs whichwas offset by improved mining conditions at Illawarra Coal. A weaker US$ againstthe A$ had an unfavourable impact as did Australian inflationary pressures. Profits on the sale of the Elouera mine and the sale of mining leases toMillennium was realised in the current period. Energy Coal Underlying EBIT was US$277 million, an increase of US$35 million, or 14.5 percent, compared with the corresponding period. Higher export prices resultingfrom continued strong demand in the Atlantic and Pacific markets and higherproduction volumes at Hunter Valley Coal (Australia) and Cerrejon Coal (Colombia) had a favourable impact on results. This was offset by recognition ofobligations associated with the intended sale of the Optimum asset, theweakening of the US$ against the Rand, the Australian dollar and the ColombianPeso, the cessation of Underlying EBIT from the Koornfontein mine (South Africa)following its divestment during last year and the profit on the divestment ofEyesizwe included in the corresponding period. Lower earnings from the tradingof third party product and increased freight cost also negatively impactedUnderlying EBIT. Group and Unallocated items Corporate Costs were US$171 million compared to US$120 million in thecorresponding period, an increase of US$51 million, mainly due to negativeimpacts of the stronger Australian dollar. The following notes explain the terms used throughout this profit release: (1) Net operating cash flows are after net interest and taxation. (2) Unless otherwise stated production volumes exclude suspended and soldoperations. Includes one equal record production for aluminium. (3) Based on share price of US$22.92. (4) Underlying EBIT is earnings before net finance costs and taxation and anyexceptional items. Underlying EBITDA is Underlying EBIT before depreciation,impairments, and amortisation of US$1,544 million for the half-year ended 31December 2007 and US$1,360 million for the half-year ended 31 December 2006.From 1 July 2007, the Group adopted the accounting policy of recognising itsproportionate interests in the assets, liabilities, revenues and expenses ofjointly controlled entities rather than equity accounting its interest. Jointlycontrolled entities' net finance costs and taxation are therefore included intheir respective line items and are no longer reconciling items between profitfrom operations and Underlying EBIT or Underlying EBITDA. Comparativeinformation has been restated on this basis, however the change did not resultin a change to comparative Underlying EBIT and Underlying EBITDA informationcontained within this profit release. We believe that Underlying EBIT and Underlying EBITDA provide usefulinformation, but should not be considered as an indication of, or alternativeto, attributable profit as an indicator of operating performance or as analternative to cash flow as a measure of liquidity. (5) Underlying EBIT is used to reflect the underlying performance of BHPBilliton's operations. Underlying EBIT is reconciled to Profit from operationson page 5. (6) For this purpose, net interest includes capitalised interest and excludesthe effect of discounting on provisions and other liabilities, fair value changeon hedged loans, net of hedging derivatives, exchange differences arising fromnet debt and return on pension plan assets. (7) Underlying EBIT margin is calculated net of third party product activities. Forward-looking statements Certain statements contained in this release,including statements in the section entitled 'Strong half-year results','Creating options for the future', 'Growth projects' and 'Outlook', mayconstitute 'forward-looking statements' within the meaning of the US PrivateSecurities Litigation Reform Act of 1995. We undertake no obligation to revisethe forward-looking statements included in this release to reflect any futureevents or circumstances. Our actual results, performance or achievements coulddiffer materially from the results expressed in, or implied by, theseforward-looking statements. Factors that could cause or contribute to suchdifferences are discussed in the sections entitled 'Key Information - Riskfactors'; 'Operating and financial review and prospects -External Factors andTrends Affecting Our Results' included in our annual report on Form 20-F for thefiscal year ended 30 June 2007, which we filed with the US Securities andExchange Commission (SEC) on 26 September 2007 and is available on the SEC'swebsite at 'www.sec.gov'. Nothing in this release should be construed as eitheran offer to sell or a solicitation of an offer to buy or sell securities in anyjurisdiction. Further information on BHP Billiton can be found on our Internet site:www.bhpbilliton.com Australia United Kingdom Samantha Evans, Media Relations Andre Liebenberg, Investor Relations Tel: +61 3 9609 2898 Mobile: +61 400 693 915 Tel: +44 20 7802 4131 email: [email protected] Mobile: +44 7920 236 974 email: [email protected] Don Carroll, Investor Relations Illtud Harri, Media Relations Tel: +61 3 9609 2686 Mobile: +61 417 591 938 Tel: +44 20 7802 4195 email: [email protected] Mobile: +44 7920 237 246 email: [email protected] United States Tracey Whitehead, Investor & Media Relations South Africa Tel: US +1 713 599 6100 or Alison Gilbert, Investor Relations UK +44 20 7802 4031 Tel: SA +27 11 376 2121 or Mobile: +44 7917 648 093 UK +44 20 7802 4183 email: [email protected] Mobile: +44 7769 936 227 Email: [email protected] HALF-YEAR FINANCIAL REPORT For the half-year ended 31 December 2007 CONTENTS Half-Year Financial Statements Consolidated Income Statement - Page 18 Consolidated Statement of Recognised Income and Expense - Page 19 Consolidated Balance Sheet - Page 20 Consolidated Cash Flow Statement - Page 21 Notes to the Half-Year Financial Statements - Page 22 Notes to the Half-Year Financial Statements 1 Accounting policies - Page 22 2 Business segments - Page 23 3 Exceptional items - Page 27 4 Interests in jointly controlled entities - Page 27 5 Net finance costs - Page 28 6 Taxation - Page 28 7 Earnings per share - Page 28 8 Dividends - Page 29 9 Assets classified as held for sale - Page 29 10 Total equity - Page 30 11 Contingent liabilities - Page 30 12 Subsequent events - Page 30 Directors' Report - Page 31 Directors' Declaration - Page 32 Lead Auditor's Independence Declaration - Page 32 Review Report - Page 33 Consolidated Income Statementfor the half-year 31 December 2007+-----------------------------------+-----+----------+---------+---------+| | | Half-year|Half-year| Year|| | | ended| ended| ended|| | | | | || | | 31| 31| 30 June|| | | December| December| 2007|| | | 2007| 2006| || | | | | Restated|| | | | Restated| (a)|| | | | (a)| |+-----------------------------------+-----+----------+---------+---------+| |Notes| US$M| US$M| US$M|+-----------------------------------+-----+----------+---------+---------+|Revenue | | | | |+-----------------------------------+-----+----------+---------+---------+|Group production | | 21,858| 19,046| 41,271|+-----------------------------------+-----+----------+---------+---------+|Third party products | | 3,681| 3,067| 6,202|+-----------------------------------+-----+----------+---------+---------+|Revenue | | 25,539| 22,113| 47,473|+-----------------------------------+-----+----------+---------+---------+|Other income | | 361| 311| 621|+-----------------------------------+-----+----------+---------+---------+|Expenses excluding net finance | | (16,414)| (13,290)| (28,370)||costs | | | | |+-----------------------------------+-----+----------+---------+---------+|Profit from operations | | 9,486| 9,134| 19,724|+-----------------------------------+-----+----------+---------+---------+|Comprising: | | | | |+-----------------------------------+-----+----------+---------+---------+|Group production | | 9,574| 9,022| 19,649|+-----------------------------------+-----+----------+---------+---------+|Third party products | | (88)| 112| 75|+-----------------------------------+-----+----------+---------+---------+| | | 9,486| 9,134| 19,724|+-----------------------------------+-----+----------+---------+---------+| | | | | |+-----------------------------------+-----+----------+---------+---------+|Financial income | 5| 124| 114| 264|+-----------------------------------+-----+----------+---------+---------+|Financial expenses | 5| (465)| (415)| (776)|+-----------------------------------+-----+----------+---------+---------+|Net finance costs | 5| (341)| (301)| (512)|+-----------------------------------+-----+----------+---------+---------+|Profit before taxation | | 9,145| 8,833| 19,212|+-----------------------------------+-----+----------+---------+---------+|Income tax expense | | (2,683)| (2,408)| (5,305)|+-----------------------------------+-----+----------+---------+---------+|Royalty related taxation (net of | | (269)| (225)| (411)||income tax benefit) | | | | |+-----------------------------------+-----+----------+---------+---------+|Total taxation expense | 6| (2,952)| (2,633)| (5,716)|+-----------------------------------+-----+----------+---------+---------+|Profit after taxation | | 6,193| 6,200| 13,496|+-----------------------------------+-----+----------+---------+---------+|Profit attributable to minority | | 176| 32| 80||interests | | | | |+-----------------------------------+-----+----------+---------+---------+|Profit attributable to members of | | 6,017| 6,168| 13,416||BHP Billiton Group | | | | |+-----------------------------------+-----+----------+---------+---------+| | | | | |+-----------------------------------+-----+----------+---------+---------+|Earnings per ordinary share (basic)| 7| 107.2| 103.9| 229.5||(US cents) | | | | |+-----------------------------------+-----+----------+---------+---------+|Earnings per ordinary share | 7| 107.2| 103.8| 229.0||(diluted) (US cents) | | | | |+-----------------------------------+-----+----------+---------+---------+| | | | | |+-----------------------------------+-----+----------+---------+---------+| | | | | |+-----------------------------------+-----+----------+---------+---------+|Dividends per ordinary share - paid| 8| 27.0| 18.5| 38.5||during the period (US cents) | | | | |+-----------------------------------+-----+----------+---------+---------+|Dividends per ordinary share - | 8| 29.0| 20.0| 47.0||declared in respect of the period | | | | ||(US cents) | | | | |+-----------------------------------+-----+----------+---------+---------+| | | | | |+-----------------------------------+-----+----------+---------+---------+ The accompanying notes form part of these half-year financial statements. (a) Comparative periods have been restated as described in Note 1. Consolidated Statement of Recognised Income and Expensefor the half-year ended 31 December 2007+---------------------------------+-----+------------+------------+--------+| | | Half-year| Half-year| Year|| | | ended| ended| ended|| | | | | || | | 31 December| 31 December| 30 June|| | | 2007| 2006| 2007|+---------------------------------+-----+------------+------------+--------+| |Notes| US$M| US$M| US$M|+---------------------------------+-----+------------+------------+--------+|Profit after taxation | | 6,193| 6,200| 13,496|+---------------------------------+-----+------------+------------+--------+|Amounts recognised directly in | | | | ||equity | | | | |+---------------------------------+-----+------------+------------+--------+|Actuarial (losses)/gains on | | (27)| (48)| 79||pension and medical schemes | | | | |+---------------------------------+-----+------------+------------+--------+|Available for sale investments: | | | | |+---------------------------------+-----+------------+------------+--------+|Valuation (losses)/gains taken to| | (30)| 113| 147||equity | | | | |+---------------------------------+-----+------------+------------+--------+|Cash flow hedges: | | | | |+---------------------------------+-----+------------+------------+--------+|(Losses)/gains taken to equity | | (67)| 87| (50)|+---------------------------------+-----+------------+------------+--------+|(Gains)/losses transferred to the| | (132)| (17)| (88)||initial carrying amount of hedged| | | | ||items | | | | |+---------------------------------+-----+------------+------------+--------+|Exchange fluctuations on | | (6)| 22| 12||translation of foreign operations| | | | |+---------------------------------+-----+------------+------------+--------+|Tax on items recognised directly | | 106| (22)| 82||in, or transferred from, equity | | | | |+---------------------------------+-----+------------+------------+--------+|Total amounts recognised directly| | (156)| 135| 182||in equity | | | | |+---------------------------------+-----+------------+------------+--------+|Total recognised income and | | 6,037| 6,335| 13,678||expense for the period | | | | |+---------------------------------+-----+------------+------------+--------+|Attributable to minority | 10| 176| 32| 82||interests | | | | |+---------------------------------+-----+------------+------------+--------+|Attributable to members of BHP | 10| 5,861| 6,303| 13,596||Billiton Group | | | | |+---------------------------------+-----+------------+------------+--------+ The accompanying notes form part of these half-year financial statements. Consolidated Balance Sheetas at 31 December 2007+------------------------------------+-----+-----------+----------+--------+| | |31 December| 31| 30 June|| | | 2007| December| 2007|| | | | 2006| || | | | |Restated|| | | | Restated| (a)|| | | | (a)| |+------------------------------------+-----+-----------+----------+--------+| |Notes| US$M| US$M| US$M|+------------------------------------+-----+-----------+----------+--------+|ASSETS | | | | |+------------------------------------+-----+-----------+----------+--------+|Current assets | | | | |+------------------------------------+-----+-----------+----------+--------+|Cash and cash equivalents | | 2,142| 1,751| 2,297|+------------------------------------+-----+-----------+----------+--------+|Trade and other receivables | | 5,986| 4,810| 6,382|+------------------------------------+-----+-----------+----------+--------+|Other financial assets | | 1,182| 949| 1,059|+------------------------------------+-----+-----------+----------+--------+|Inventories | | 4,410| 3,599| 3,744|+------------------------------------+-----+-----------+----------+--------+|Other | | 458| 336| 265|+------------------------------------+-----+-----------+----------+--------+|Total current assets | | 14,178| 11,445| 13,747|+------------------------------------+-----+-----------+----------+--------+|Non-current assets | | | | |+------------------------------------+-----+-----------+----------+--------+|Trade and other receivables | | 871| 700| 744|+------------------------------------+-----+-----------+----------+--------+|Other financial assets | | 1,113| 1,052| 1,051|+------------------------------------+-----+-----------+----------+--------+|Inventories | | 192| 172| 166|+------------------------------------+-----+-----------+----------+--------+|Property, plant and equipment | | 44,667| 38,302| 42,016|+------------------------------------+-----+-----------+----------+--------+|Intangible assets | | 591| 767| 713|+------------------------------------+-----+-----------+----------+--------+|Deferred tax assets | | 2,008| 2,264| 2,832|+------------------------------------+-----+-----------+----------+--------+|Other | | 226| 116| 135|+------------------------------------+-----+-----------+----------+--------+|Total non-current assets | | 49,668| 43,373| 47,657|+------------------------------------+-----+-----------+----------+--------+|Total assets | | 63,846| 54,818| 61,404|+------------------------------------+-----+-----------+----------+--------+|LIABILITIES | | | | |+------------------------------------+-----+-----------+----------+--------+|Current liabilities | | | | |+------------------------------------+-----+-----------+----------+--------+|Trade and other payables | | 5,108| 4,237| 5,137|+------------------------------------+-----+-----------+----------+--------+|Interest bearing liabilities | | 2,580| 1,617| 1,640|+------------------------------------+-----+-----------+----------+--------+|Other financial liabilities | | 985| 492| 655|+------------------------------------+-----+-----------+----------+--------+|Current tax payable | | 1,592| 2,105| 2,193|+------------------------------------+-----+-----------+----------+--------+|Provisions | | 1,474| 1,194| 1,383|+------------------------------------+-----+-----------+----------+--------+|Deferred income | | 389| 273| 299|+------------------------------------+-----+-----------+----------+--------+|Total current liabilities | | 12,128| 9,918| 11,307|+------------------------------------+-----+-----------+----------+--------+|Non-current liabilities | | | | |+------------------------------------+-----+-----------+----------+--------+|Trade and other payables | | 201| 171| 140|+------------------------------------+-----+-----------+----------+--------+|Interest bearing liabilities | | 11,718| 8,598| 10,780|+------------------------------------+-----+-----------+----------+--------+|Other financial liabilities | | 628| 189| 595|+------------------------------------+-----+-----------+----------+--------+|Deferred tax liabilities | | 1,352| 1,711| 2,260|+------------------------------------+-----+-----------+----------+--------+|Provisions | | 6,063| 5,396| 5,859|+------------------------------------+-----+-----------+----------+--------+|Deferred income | | 498| 608| 545|+------------------------------------+-----+-----------+----------+--------+|Total non-current liabilities | | 20,460| 16,673| 20,179|+------------------------------------+-----+-----------+----------+--------+|Total liabilities | | 32,588| 26,591| 31,486|+------------------------------------+-----+-----------+----------+--------+|Net assets | | 31,258| 28,227| 29,918|+------------------------------------+-----+-----------+----------+--------+| | | | | |+------------------------------------+-----+-----------+----------+--------+|EQUITY | | | | |+------------------------------------+-----+-----------+----------+--------+|Share capital - BHP Billiton Limited| | 1,226| 1,498| 1,221|+------------------------------------+-----+-----------+----------+--------+|Share capital - BHP Billiton Plc | | 1,128| 1,234| 1,183|+------------------------------------+-----+-----------+----------+--------+|Share premium account | | 518| 518| 518|+------------------------------------+-----+-----------+----------+--------+|Treasury shares held | | (1,336)| (1,768)| (1,457)|+------------------------------------+-----+-----------+----------+--------+|Reserves | | 386| 492| 473|+------------------------------------+-----+-----------+----------+--------+|Retained earnings | | 28,958| 26,006| 27,729|+------------------------------------+-----+-----------+----------+--------+|Total equity attributable to members| 10| 30,880| 27,980| 29,667||of BHP Billiton Group | | | | |+------------------------------------+-----+-----------+----------+--------+|Minority interests | 10| 378| 247| 251|+------------------------------------+-----+-----------+----------+--------+|Total equity | | 31,258| 28,227| 29,918|+------------------------------------+-----+-----------+----------+--------+ The accompanying notes form part of these half-year financial statements. (a) Comparative periods have been restated as described in Note 1. Consolidated Cash Flow Statementfor the half-year ended 31 December 2007+--------------------------------------+---+----------+----------+---------+| | | Half-year| Half-year| Year|| | | ended| ended| ended|| | | | | || | | 31| 31| 30 June|| | | December| December| 2007|| | | 2007| 2006| || | | | | Restated|| | | | Restated| (a)|| | | | (a)| |+--------------------------------------+---+----------+----------+---------+| | | US$M| US$M| US$M|+--------------------------------------+---+----------+----------+---------+|Operating activities | | | | |+--------------------------------------+---+----------+----------+---------+|Profit before taxation | | 9,145| 8,833| 19,212|+--------------------------------------+---+----------+----------+---------+|Adjustments for: | | | | |+--------------------------------------+---+----------+----------+---------+|Depreciation and amortisation expense | | 1,524| 1,291| 2,754|+--------------------------------------+---+----------+----------+---------+|Exploration and evaluation expense | | 432| 222| 539||(excluding impairment) | | | | |+--------------------------------------+---+----------+----------+---------+|Net gain on sale of non current assets| | (132)| (73)| (101)|+--------------------------------------+---+----------+----------+---------+|Impairments of property, plant and | | 157| 69| 305||equipment, investments and intangibles| | | | |+--------------------------------------+---+----------+----------+---------+|Employee share awards expense | | 40| 37| 72|+--------------------------------------+---+----------+----------+---------+|Net finance costs | | 341| 301| 512|+--------------------------------------+---+----------+----------+---------+|Other | | (221)| (109)| (382)|+--------------------------------------+---+----------+----------+---------+|Changes in assets and liabilities net | | | | ||of effects from acquisitions and | | | | ||disposals of subsidiaries and exchange| | | | ||fluctuations: | | | | |+--------------------------------------+---+----------+----------+---------+|Trade and other receivables | | (333)| 171| (1,282)|+--------------------------------------+---+----------+----------+---------+|Inventories | | (692)| (560)| (732)|+--------------------------------------+---+----------+----------+---------+|Net financial assets and liabilities | | 423| (227)| 21|+--------------------------------------+---+----------+----------+---------+|Creditors | | 563| (7)| 439|+--------------------------------------+---+----------+----------+---------+|Provisions and other liabilities | | 344| 225| 589|+--------------------------------------+---+----------+----------+---------+|Cash generated from operations | | 11,591| 10,173| 21,946|+--------------------------------------+---+----------+----------+---------+|Dividends received | | 9| 15| 38|+--------------------------------------+---+----------+----------+---------+|Interest received | | 80| 54| 139|+--------------------------------------+---+----------+----------+---------+|Interest paid | | (393)| (285)| (633)|+--------------------------------------+---+----------+----------+---------+|Income tax paid | | (2,945)| (2,492)| (5,007)|+--------------------------------------+---+----------+----------+---------+|Royalty related taxation paid | | (472)| (349)| (554)|+--------------------------------------+---+----------+----------+---------+|Net operating cash flows | | 7,870| 7,116| 15,929|+--------------------------------------+---+----------+----------+---------+|Investing activities | | | | |+--------------------------------------+---+----------+----------+---------+|Purchase of property, plant and | | (3,753)| (3,466)| (7,130)||equipment | | | | |+--------------------------------------+---+----------+----------+---------+|Exploration expenditure (including | | (598)| (312)| (804)||amounts expensed) | | | | |+--------------------------------------+---+----------+----------+---------+|Purchase of intangibles | | (6)| -| (18)|+--------------------------------------+---+----------+----------+---------+|Purchase of financial assets | | (23)| (19)| (38)|+--------------------------------------+---+----------+----------+---------+|Purchase of, or increased investment | | (124)| (12)| (701)||in, subsidiaries, operations and | | | | ||jointly controlled entities, net of | | | | ||their cash | | | | |+--------------------------------------+---+----------+----------+---------+|Cash outflows from investing | | (4,504)| (3,809)| (8,691)||activities | | | | |+--------------------------------------+---+----------+----------+---------+|Proceeds from sale of property, plant | | 19| 72| 77||and equipment | | | | |+--------------------------------------+---+----------+----------+---------+|Proceeds from sale of financial assets| | 37| 23| 98|+--------------------------------------+---+----------+----------+---------+|Proceeds from sale or partial sale of | | 78| 203| 203||subsidiaries, operations and jointly | | | | ||controlled entities, net of their cash| | | | |+--------------------------------------+---+----------+----------+---------+|Net investing cash flows | | (4,370)| (3,511)| (8,313)|+--------------------------------------+---+----------+----------+---------+|Financing activities | | | | |+--------------------------------------+---+----------+----------+---------+|Proceeds from ordinary share issues | | 11| 12| 22|+--------------------------------------+---+----------+----------+---------+|Proceeds from interest bearing | | 3,389| 2,401| 7,395||liabilities | | | | |+--------------------------------------+---+----------+----------+---------+|Repayment of interest bearing | | (2,260)| (2,902)| (5,779)||liabilities | | | | |+--------------------------------------+---+----------+----------+---------+|Repayment of finance leases | | (4)| (2)| (2)|+--------------------------------------+---+----------+----------+---------+|Purchase of shares by Employee Share | | (103)| (131)| (165)||Ownership Plan Trusts | | | | |+--------------------------------------+---+----------+----------+---------+|Share buy-back - BHP Billiton Limited | | -| -| (2,824)|+--------------------------------------+---+----------+----------+---------+|Share buy-back - BHP Billiton Plc | | (3,115)| (1,355)| (2,917)|+--------------------------------------+---+----------+----------+---------+|Dividends paid | | (1,523)| (1,100)| (2,271)|+--------------------------------------+---+----------+----------+---------+|Dividends paid to minority interests | | (48)| (22)| (68)|+--------------------------------------+---+----------+----------+---------+|Net financing cash flows | | (3,653)| (3,099)| (6,609)|+--------------------------------------+---+----------+----------+---------+|Net (decrease)/increase in cash and | | (153)| 506| 1,007||cash equivalents | | | | |+--------------------------------------+---+----------+----------+---------+|Cash and cash equivalents, net of | | 2,246| 1,227| 1,227||overdrafts, at beginning of period | | | | |+--------------------------------------+---+----------+----------+---------+|Effect of foreign currency exchange | | 23| (2)| 12||rate changes on cash and cash | | | | ||equivalents | | | | |+--------------------------------------+---+----------+----------+---------+|Cash and cash equivalents, net of | | 2,116| 1,731| 2,246||overdrafts, at end of period | | | | |+--------------------------------------+---+----------+----------+---------+ The accompanying notes form part of these half-year financial statements. (a) Comparative periods have been restated as described in Note 1. Notes to the Half-Year Financial Statements 1 Accounting policies This general purpose financial report for the half-year ended 31 December 2007is unaudited and has been prepared in accordance with IAS 34 'Interim FinancialReporting' as issued by the IASB, IAS 34 'Interim Financial Reporting' asadopted by the EU, AASB 134 'Interim Financial Reporting' and the requirementsof the Disclosure and Transparency Rules of the Financial Services Authority inthe United Kingdom and the Australian Corporations Act 2001 as applicable tointerim financial reporting. The half-year financial statements represent a 'condensed set of financialstatements' as referred to in the UK Disclosure and Transparency Rules issued bythe Financial Services Authority. Accordingly, they do not include all of theinformation required for a full annual financial report and are to be read inconjunction with the most recent annual financial report. The comparativefigures for the financial year ended 30 June 2007 are not the statutory accountsof BHP Billiton for that financial year. Those accounts, which were preparedunder IFRS, have been reported on by the Company's auditors and delivered to theregistrar of companies. The report of the auditors was unqualified and did notcontain statements under Section 237(2) or (3) of the UK Companies Act 1985. The half-year financial statements have been prepared on the basis of accountingpolicies consistent with those applied in the 30 June 2007 annual financialstatements contained within the Annual Report of the BHP Billiton Group, exceptfor the impact of adopting AASB 2007-4 'Amendments to Australian AccountingStandards Arising from ED 151 and Other Amendments'. AASB 2007-4 reinstatesoptional accounting treatments permitted by IFRS that were not initiallyavailable under Australian Accounting Standards. AASB 2007-4 will be applied inthe Group's annual financial statements for the year ending 30 June 2008 and hastherefore been applied in these half-year financial statements. The principalimpacts of AASB 2007-4 are described below. Proportionate consolidation As permitted by AASB 2007-4 and IAS 31 'Interests in Joint Ventures', the Grouphas adopted the policy of recognising its proportionate interests in the assets,liabilities, revenues and expenses of jointly controlled entities within eachapplicable line item of the financial statements. All such interests werepreviously recognised using the equity method. The Group believes the change inpolicy to proportionate consolidation of jointly controlled entities providesmore relevant information about the financial performance and financial positionof the Group. Following this change in policy, comparative information has been restated forall periods included in these half-year financial statements, with the impactsummarised below. There was no impact on profit attributable to members of theGroup or total equity in the current or comparative periods.+---------------------------------+-----------------------+-----------------------+| | Half-year ended 31 |Year ended 30 June 2007|| | December 2006 | |+---------------------------------+-----------+-----------+-----------+-----------+| | Restated| Published| Restated| Published|| | | | | || | US$M| US$M| US$M| US$M|+---------------------------------+-----------+-----------+-----------+-----------+|Revenue | 22,113| 18,503| 47,473| 39,498|+---------------------------------+-----------+-----------+-----------+-----------+|Other income | 311| 293| 621| 588|+---------------------------------+-----------+-----------+-----------+-----------+|Expenses excluding net finance | (13,290)| (12,292)| (28,370)| (26,352)||costs | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Share of profits from jointly | -| 2,015| -| 4,667||controlled entities | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Net finance costs | (301)| (222)| (512)| (390)|+---------------------------------+-----------+-----------+-----------+-----------+|Total taxation expense | (2,633)| (2,097)| (5,716)| (4,515)|+---------------------------------+-----------+-----------+-----------+-----------+|Profit after taxation | 6,200| 6,200| 13,496| 13,496|+---------------------------------+-----------+-----------+-----------+-----------+ +---------------------------------+-----------------------+-----------------------+| | 31 December 2006 | 30 June 2007 |+---------------------------------+-----------+-----------+-----------+-----------+| | Restated| Published| Restated| Published|| | | | | || | US$M| US$M| US$M| US$M|+---------------------------------+-----------+-----------+-----------+-----------+|Current and non-current assets: | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Cash and cash equivalents | 1,751| 1,423| 2,297| 1,937|+---------------------------------+-----------+-----------+-----------+-----------+|Trade and other receivables | 5,510| 4,796| 7,126| 5,499|+---------------------------------+-----------+-----------+-----------+-----------+|Other financial assets | 2,001| 1,859| 2,110| 1,968|+---------------------------------+-----------+-----------+-----------+-----------+|Inventories | 3,771| 3,326| 3,910| 3,409|+---------------------------------+-----------+-----------+-----------+-----------+|Investments in jointly controlled| -| 3,772| -| 4,924||entities | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Property, plant and equipment | 38,302| 33,282| 42,016| 36,705|+---------------------------------+-----------+-----------+-----------+-----------+|Intangible assets | 767| 686| 713| 615|+---------------------------------+-----------+-----------+-----------+-----------+|Deferred tax assets | 2,264| 2,230| 2,832| 2,810|+---------------------------------+-----------+-----------+-----------+-----------+|Other assets | 452| 366| 400| 301|+---------------------------------+-----------+-----------+-----------+-----------+|Total assets | 54,818| 51,740| 61,404| 58,168|+---------------------------------+-----------+-----------+-----------+-----------+| | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Current and non-current | | | | ||liabilities: | | | | |+---------------------------------+-----------+-----------+-----------+-----------+|Trade and other payables | 4,408| 4,114| 5,277| 4,869|+---------------------------------+-----------+-----------+-----------+-----------+|Interest bearing liabilities | 10,215| 8,629| 12,420| 10,643|+---------------------------------+-----------+-----------+-----------+-----------+|Other financial liabilities | 681| 578| 1,250| 1,107|+---------------------------------+-----------+-----------+-----------+-----------+|Current tax payable | 2,105| 1,734| 2,193| 2,102|+---------------------------------+-----------+-----------+-----------+-----------+|Deferred tax liabilities | 1,711| 1,379| 2,260| 1,822|+---------------------------------+-----------+-----------+-----------+-----------+|Provisions | 6,590| 6,193| 7,242| 6,860|+---------------------------------+-----------+-----------+-----------+-----------+|Deferred income | 881| 886| 844| 847|+---------------------------------+-----------+-----------+-----------+-----------+|Total liabilities | 26,591| 23,513| 31,486| 28,250|+---------------------------------+-----------+-----------+-----------+-----------+|Net assets | 28,227| 28,227| 29,918| 29,918|+---------------------------------+-----------+-----------+-----------+-----------+ +---------------------------------+-----------------------+-----------------------+| | Half-year ended 31 |Year ended 30 June 2007|| | December 2006 | |+---------------------------------+-----------+-----------+-----------+-----------+| | Restated| Published| Restated| Published|| | | | | || | US$M| US$M| US$M| US$M|+---------------------------------+-----------+-----------+-----------+-----------+|Net operating cash flows | 7,116| 7,018| 15,929| 15,595|+---------------------------------+-----------+-----------+-----------+-----------+|Net investing cash flows | (3,511)| (3,152)| (8,313)| (7,624)|+---------------------------------+-----------+-----------+-----------+-----------+|Net financing cash flows | (3,099)| (3,221)| (6,609)| (6,843)|+---------------------------------+-----------+-----------+-----------+-----------+ Cash flow presentation The Group has also elected to adopt the indirect method of cash flowpresentation as permitted by AASB 2007-4 and IAS 7 'Cash Flows Statements'. TheGroup believes this change in presentation more effectively conveys therelationship between its financial performance and operating cash flows. Rounding of amounts Amounts in this financial report have, unless otherwise indicated, been roundedto the nearest million dollars. Exchange rates The following exchange rates against the US dollar have been applied in thefinancial report:+--------------+---------+---------+--------+---------+--------+---------+| | Average| Average| Average| As at| As at| As at|| | | | | | | || |Half-year|Half-year| Year| 31| 31| 30 June|| | ended 31| ended 31| ended| December|December| || | December| December| | 2007| 2006| 2007|| | 2007| 2006| 30 June| | | || | | | | | | || | | | 2007| | | |+--------------+---------+---------+--------+---------+--------+---------+|Australian | 0.87| 0.76| 0.79| 0.88| 0.79| 0.85||dollar (a) | | | | | | |+--------------+---------+---------+--------+---------+--------+---------+|Brazilian real| 1.85| 2.16| 2.10| 1.78| 2.14| 1.93|+--------------+---------+---------+--------+---------+--------+---------+|Canadian | 1.01| 1.13| 1.13| 0.98| 1.16| 1.06||dollar | | | | | | |+--------------+---------+---------+--------+---------+--------+---------+|Chilean peso | 511| 534| 534| 498| 534| 528|+--------------+---------+---------+--------+---------+--------+---------+|Colombian peso| 2,030| 2,372| 2,247| 2,017| 2,240| 1,960|+--------------+---------+---------+--------+---------+--------+---------+|South African | 6.94| 7.23| 7.20| 6.80| 7.00| 7.08||rand | | | | | | |+--------------+---------+---------+--------+---------+--------+---------+|Euro | 0.71| 0.78| 0.77| 0.68| 0.76| 0.74|+--------------+---------+---------+--------+---------+--------+---------+|UK pound | 0.49| 0.53| 0.52| 0.50| 0.51| 0.50||sterling | | | | | | |+--------------+---------+---------+--------+---------+--------+---------+ (a) Displayed as US$ to A$1 based on common convention. 2 Business segments The BHP Billiton Group has grouped its major operating assets into the followingreporting segments: * Petroleum (exploration for and production, processing and marketing of hydrocarbons including oil, gas and LNG) * Aluminium (exploration for and mining of bauxite, processing and marketing of aluminium and alumina) * Base Metals (exploration for and mining, processing and marketing of copper, silver, zinc, lead, uranium and copper by-products including gold) * Diamonds and Specialty Products (exploration for and mining of diamonds and titanium minerals, and prior to divestment in August 2006, fertiliser operations) * Stainless Steel Materials (exploration for and mining, processing and marketing of nickel) * Iron Ore (exploration for and mining, processing and marketing of iron ore) * Manganese (exploration for and mining, processing and marketing of manganese) * Metallurgical Coal (exploration for and mining, processing and marketing of metallurgical coal) * Energy Coal (exploration for and mining, processing and marketing of energy coal) Group and unallocated items represent Group centre functions and certaincomparative data for divested assets and investments. Exploration and technologyactivities, which were previously recognised as part of Group and unallocateditems, are now recognised within relevant segments as a result of a change inmanagement responsibilities over such activities. This change in segmentreporting has been reflected in all periods presented and resulted in operatingcosts of US$93 million (31 December 2006: US$60 million; 30 June 2007: US$139million) being reported in individual segments rather than Group and unallocateditems. Amounts allocated to any individual segment are not material. It is the Group's policy that inter-segment sales are made on a commercialbasis. 2 Business segments (continued) US$M Petroleum Aluminium Base Diamonds Stainless Iron Manganese Metallurgical Energy Group and BHP Metals and Steel Ore Coal Coal unallocated Billiton Specialty Materials items/ Group Products eliminations Half-year ended 31 December 2007 Revenue Sale of group 3,058 2,254 5,561 418 2,413 3,538 950 1,856 1,725 7 21,780production Sale of third 310 490 996 - 6 - 63 10 1,182 624 3,681party product Rendering of 6 - - - - 22 - 34 - 16 78services Inter-segment 396 - - - - 18 - - - (414) -revenue Segment 3,770 2,744 6,557 418 2,419 3,578 1,013 1,900 2,907 233 25,539revenue Segment 1,969 680 3,268 69 761 1,673 431 523 277 (165) 9,486result Other 3 - - 3 - - - - - (6) -attributable income (1) Profit from 1,972 680 3,268 72 761 1,673 431 523 277 (171) 9,486operations Net finance (341)costs Total (2,952)taxation expense Profit after 6,193taxation (1) Other attributable income represents the re-allocation of certain items recorded in the segment result of Group andunallocated items / eliminations to the applicable business segment. (1) Other attributable income represents the re-allocation of certain items recorded in the segment result of Group and unallocated items / eliminations to the applicable business segment. 2 Business segments (continued)US$M Petroleum Aluminium Base Diamonds Stainless Iron Manganese Metallurgical Energy Group and BHP Metals and Steel Ore Coal Coal unallocated Billiton Specialty Materials items/ Group Products eliminations Half-year ended 31 December 2006 Revenue Sale of group 2,490 2,157 4,630 393 2,762 2,717 535 1,829 1,494 - 19,007production Sale of third 169 667 1,014 - 43 15 40 - 827 292 3,067party product Rendering of 4 4 - - - 17 - 2 - 12 39services Inter-segment 295 - - - - - - 2 - (297) -revenue Segment 2,958 2,828 5,644 393 2,805 2,749 575 1,833 2,321 7 22,113revenue Segment 1,607 840 2,877 76 1,421 1,404 105 657 221 (74) 9,134result Other 5 - 12 2 6 - - - 21 (46) -attributable income (1) Profit from 1,612 840 2,889 78 1,427 1,404 105 657 242 (120) 9,134operations Net finance (301)costs Total (2,633)taxation expense Profit after 6,200taxation (1) Other attributable income represents the re-allocation of certain itemsrecorded in the segment result of Group and unallocated items / eliminations tothe applicable business segment. 2 Business segments (continued)US$M Petroleum Aluminium Base Diamonds Stainless Iron Manganese Metallurgical Energy Group and BHP Metals and Steel Ore Coal Coal unallocated Billiton Specialty Materials items/ Group Products eliminations Year ended 30 June 2007 Revenue Sale of group 4,846 4,564 10,756 893 6,800 5,421 1,149 3,712 2,980 14 41,135production Sale of third 454 1,315 1,879 - 101 29 95 10 1,595 724 6,202party product Rendering of 7 - - - - 55 - 41 1 32 136services Inter-segment 578 - - - - 19 - 6 - (603) -revenue Segment 5,885 5,879 12,635 893 6,901 5,524 1,244 3,769 4,576 167 47,473revenue Segment 3,007 1,833 6,875 189 3,665 2,728 253 1,246 255 (327) 19,724result Other 7 23 - 8 10 - - 1 50 (99) -attributable income (1) Profit from 3,014 1,856 6,875 197 3,675 2,728 253 1,247 305 (426) 19,724operations Net finance (512)costs Total (5,716)taxation expense Profit after 13,496taxation (1) Other attributable income represents the re-allocation of certain items recorded in thesegment result of Group and unallocated items / eliminations to the applicable business segment. 3 Exceptional items Exceptional items are those items where their nature and amount is consideredmaterial to the financial report. Such items included within the BHP BillitonGroup profit for the period are detailed below. Half-year ended 31 December 2007+-----------------------------------------+---------+--------+---------+| | Gross| Tax| Net|| | | | || | US$M| US$M| US$M|+-----------------------------------------+---------+--------+---------+|Exceptional items by category | | | |+-----------------------------------------+---------+--------+---------+|Recognition of benefit of tax losses in | (137)| 159| 22||respect of the acquisition of WMC and | | | ||consequent reduction in goodwill | | | |+-----------------------------------------+---------+--------+---------+| | (137)| 159| 22|+-----------------------------------------+---------+--------+---------+|Exceptional items by segment | | | |+-----------------------------------------+---------+--------+---------+|Base Metals | (99)| (34)| (133)|+-----------------------------------------+---------+--------+---------+|Stainless Steel Materials | (38)| (4)| (42)|+-----------------------------------------+---------+--------+---------+|Group and unallocated | -| 197| 197|+-----------------------------------------+---------+--------+---------+| | (137)| 159| 22|+-----------------------------------------+---------+--------+---------+ Recognition of benefit of tax losses in respect of the acquisition of WMC andconsequent reduction in goodwill Tax losses incurred by WMC Resources Limited (WMC) were not recognised as adeferred tax asset at acquisition pending a ruling application to the AustralianTax Office. The ruling has now been issued confirming the availability of thoselosses. This has resulted in the recognition of a deferred tax asset (US$197million) and consequential adjustment to deferred tax liabilities (US$38million) through income tax expense at current exchange rates. As a furtherconsequence the Group has recognised an expense for a reduction in goodwillmeasured at the exchange rate at the date of acquisition. Half-year ended 31 December 2006 There were no exceptional items for the half-year ended 31 December 2006. Year ended 30 June 2007+-----------------------------------------+---------+--------+---------+| | Gross| Tax| Net|| | | | || | US$M| US$M| US$M|+-----------------------------------------+---------+--------+---------+|Exceptional items by category | | | |+-----------------------------------------+---------+--------+---------+|Impairment of South African coal | (176)| 34| (142)||operations | | | |+-----------------------------------------+---------+--------+---------+|Newcastle steelworks rehabilitation | (167)| 50| (117)|+-----------------------------------------+---------+--------+---------+| | (343)| 84| (259)|+-----------------------------------------+---------+--------+---------+|Exceptional items by segment | | | |+-----------------------------------------+---------+--------+---------+|Energy Coal | (176)| 34| (142)|+-----------------------------------------+---------+--------+---------+|Group and unallocated | (167)| 50| (117)|+-----------------------------------------+---------+--------+---------+| | (343)| 84| (259)|+-----------------------------------------+---------+--------+---------+ Impairment of South African coal operations As part of the Group's regular review of assets whose value may be impaired, acharge of US$176 million (US$34 million tax benefit) was recorded in relation tocoal operations in South Africa. Newcastle steelworks rehabilitation The Group recognised a charge against profits of US$167 million (US$50 milliontax benefit) for additional rehabilitation obligations in respect of formeroperations at the Newcastle steelworks (Australia). The increase in obligationsrelate to increases in the volume of sediment in the Hunter River requiringremediation and treatment, and increases in treatment costs. 4 Interests in jointly controlled entities+----------------+--+-------------------------+--------------------------+|Major | |Ownership interest at BHP| Contribution to profit ||shareholdings in| |Billiton Group reporting | after taxation ||jointly | | date (a) | ||controlled | | | ||entities | | | |+----------------+--+---------+--------+------+---------+---------+------+| | | 31| 31| 30|Half-year|Half-year| Year|| | | December|December| June| ended 31| ended 31|end 30|| | | 2007| 2006| 2007| December| December| June|| | | %| %| %| 2007| 2006| 2007|| | | | | | US$M| US$M| US$M|+----------------+--+---------+--------+------+---------+---------+------+|Samarco | | 50| 50| 50| 121| 121| 239||Mineracao SA | | | | | | | |+----------------+--+---------+--------+------+---------+---------+------+|Minera Antamina | | 33.75| 33.75| 33.75| 271| 246| 506||SA | | | | | | | |+----------------+--+---------+--------+------+---------+---------+------+|Carbones del | | 33.3| 33.3| 33.3| 47| 73| 112||Cerrejon LLC | | | | | | | |+----------------+--+---------+--------+------+---------+---------+------+|Minera Escondida| | 57.5| 57.5| 57.5| 1,705| 1,412| 3,442||Limitada | | | | | | | |+----------------+--+---------+--------+------+---------+---------+------+|Mozal SARL | | 47.1| 47.1| 47.1| 105| 123| 259|+----------------+--+---------+--------+------+---------+---------+------+|Other (b) | | | | | 18| 40| 109|+----------------+--+---------+--------+------+---------+---------+------+|Total | | | | | 2,267| 2,015| 4,667|+----------------+--+---------+--------+------+---------+---------+------+ (a) The ownership interest at the BHP Billiton Group's and the jointly controlled entity's reporting date are the same. When the annual financial reporting date is different to the Group's, financial information is obtained as at 31 December in order to report on a consistent basis with the Group's reporting date. (b) Includes immaterial jointly controlled entities and the Richards Bay Minerals joint venture owned 50 per cent (31 December 2006: 50 per cent; 30 June 2007: 50 per cent). 5 Net finance costs+------------------------------------+-----------+-----------+--------+| | Half-year| Half-year| Year|| | ended| ended| ended|| | | | || |31 December|31 December| 30 June|| | 2007| 2006| 2007|+------------------------------------+-----------+-----------+--------+| | US$M| US$M| US$M|+------------------------------------+-----------+-----------+--------+|Financial expenses | | | |+------------------------------------+-----------+-----------+--------+|Interest on bank loans and | 28| 29| 62||overdrafts | | | |+------------------------------------+-----------+-----------+--------+|Interest on all other loans | 367| 304| 613|+------------------------------------+-----------+-----------+--------+|Finance lease interest | 6| 3| 5|+------------------------------------+-----------+-----------+--------+|Dividends on redeemable preference | 1| 1| 1||shares | | | |+------------------------------------+-----------+-----------+--------+|Discounting on provisions and other | 138| 125| 255||liabilities | | | |+------------------------------------+-----------+-----------+--------+|Discounting on pension and medical | 51| 63| 127||benefit entitlements | | | |+------------------------------------+-----------+-----------+--------+|Interest capitalised (a) | (134)| (145)| (353)|+------------------------------------+-----------+-----------+--------+|Net fair value change on hedged | 8| 14| 27||loans and related hedging | | | ||derivatives | | | |+------------------------------------+-----------+-----------+--------+|Exchange differences on net debt | -| 21| 39|+------------------------------------+-----------+-----------+--------+| | 465| 415| 776|+------------------------------------+-----------+-----------+--------+|Financial income | | | |+------------------------------------+-----------+-----------+--------+|Interest income | (82)| (58)| (155)|+------------------------------------+-----------+-----------+--------+|Return on pension plan assets | (42)| (56)| (109)|+------------------------------------+-----------+-----------+--------+| | (124)| (114)| (264)|+------------------------------------+-----------+-----------+--------+|Net finance costs | 341| 301| 512|+------------------------------------+-----------+-----------+--------+ (a) Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, wherefinanced through general borrowings, at a capitalisation rate representing the average interest rate on such borrowings. For the half-year ended 31 December 2007 the capitalisation rate was 5.7 per cent(31 December 2006: 5.5 per cent; 30 June 2007: 5.7 per cent). 6 Taxation+-------------------------------------+-----------+-----------+--------+| | Half-year| Half-year| Year|| | ended| ended| ended|| | | | || |31 December|31 December| 30 June|| | 2007| 2006| 2007|+-------------------------------------+-----------+-----------+--------+| | US$M| US$M| US$M|+-------------------------------------+-----------+-----------+--------+|Taxation expense including royalty | | | ||related taxation | | | |+-------------------------------------+-----------+-----------+--------+|UK taxation expense | 60| 9| 85|+-------------------------------------+-----------+-----------+--------+|Australian taxation expense | 1,361| 1,432| 2,768|+-------------------------------------+-----------+-----------+--------+|Overseas taxation expense | 1,531| 1,192| 2,863|+-------------------------------------+-----------+-----------+--------+|Total taxation expense | 2,952| 2,633| 5,716|+-------------------------------------+-----------+-----------+--------+ 7 Earnings per share+-------------------------------------+-----------+-----------+--------+| | Half-year| Half-year| Year|| | ended| ended| ended|| | | | || |31 December|31 December| 30 June|| | 2007| 2006| 2007|+-------------------------------------+-----------+-----------+--------+|Basic earnings per ordinary share (US| 107.2| 103.9| 229.5||cents) | | | |+-------------------------------------+-----------+-----------+--------+|Diluted earnings per ordinary share | 107.2| 103.8| 229.0||(US cents) | | | |+-------------------------------------+-----------+-----------+--------+|Basic earnings per American | 214.4| 207.8| 459.0||Depositary Share (ADS) (US cents) (a)| | | |+-------------------------------------+-----------+-----------+--------+|Diluted earnings per American | 214.4| 207.6| 458.0||Depositary Share (ADS) (US cents) (a)| | | |+-------------------------------------+-----------+-----------+--------+|Basic earnings (US$M) | 6,017| 6,168| 13,416|+-------------------------------------+-----------+-----------+--------+|Diluted earnings (US$M) (b) | 6,040| 6,182| 13,434|+-------------------------------------+-----------+-----------+--------+ The weighted average number of shares used for the purposes of calculatingdiluted earnings per ordinary share reconciles to the number used to calculatebasic earnings per share as follows: +-------------------------------------+-----------+-----------+--------+| | Half-year| Half-year| Year|| | ended| ended| ended|| | | | || |31 December|31 December| 30 June|| | 2007| 2006| 2007|+-------------------------------------+-----------+-----------+--------+|Weighted average number of shares | Million| Million| Million|+-------------------------------------+-----------+-----------+--------+|Basic earnings per ordinary share | 5,615| 5,934| 5,846||denominator | | | |+-------------------------------------+-----------+-----------+--------+|Shares and options contingently | 19| 21| 20||issuable under employee share | | | ||ownership plans | | | |+-------------------------------------+-----------+-----------+--------+|Diluted earnings per ordinary share | 5,634| 5,955| 5,866||denominator | | | |+-------------------------------------+-----------+-----------+--------+ (a) Each American Depository Share (ADS) represents two ordinary shares of BHP Billiton Limited or BHP Billiton Plc. Earnings per share and dividends declared oneach ADS represent twice the earnings per share and dividends declared on BHP Billiton shares. (b) Diluted earnings are calculated after adding back accrued dividend entitlements on employee share awards of US$23 million (31 December 2006: US$14 million; 30 June 2007: US$18 million) that would not be required if potential ordinary shares were converted to fully paid. 8 Dividends+--------------------------------------+----------+----------+----------+| | Half-year| Half-year|Year ended|| | ended| ended| || | | | 30 June|| | 31| 31| 2007|| | December| December| || | 2007| 2006| |+--------------------------------------+----------+----------+----------+| | US$M| US$M| US$M|+--------------------------------------+----------+----------+----------+|Dividends paid during the period | | | |+--------------------------------------+----------+----------+----------+|BHP Billiton Limited | 907| 647| 1,346|+--------------------------------------+----------+----------+----------+|BHP Billiton Plc - Ordinary shares | 612| 453| 923|+--------------------------------------+----------+----------+----------+|- Preference shares (a) | -| -| -|+--------------------------------------+----------+----------+----------+| | 1,519| 1,100| 2,269|+--------------------------------------+----------+----------+----------+| | | | |+--------------------------------------+----------+----------+----------+|Dividends declared in respect of the | | | ||period | | | |+--------------------------------------+----------+----------+----------+|BHP Billiton Limited | 974| 699| 1,605|+--------------------------------------+----------+----------+----------+|BHP Billiton Plc - Ordinary shares | 640| 475| 1,097|+--------------------------------------+----------+----------+----------+|- Preference shares (a) | -| -| -|+--------------------------------------+----------+----------+----------+| | 1,614| 1,174| 2,702|+--------------------------------------+----------+----------+----------+ +---------------------------------------+----------+----------+----------+| | Half-year| Half-year|Year ended|| | ended 31| ended 31| || | December| December| 30 June|| | 2007| 2006| 2007|+---------------------------------------+----------+----------+----------+| | US cents| US cents| US cents|+---------------------------------------+----------+----------+----------+|Dividends paid during the period (per | | | ||share) | | | |+---------------------------------------+----------+----------+----------+|Prior year final dividend | 27.0| 18.5| 18.5|+---------------------------------------+----------+----------+----------+|Interim dividend | N/A| N/A| 20.0|+---------------------------------------+----------+----------+----------+| | 27.0| 18.5| 38.5|+---------------------------------------+----------+----------+----------+|Dividends declared in respect of the | | | ||period (per share) | | | |+---------------------------------------+----------+----------+----------+|Interim dividend | 29.0| 20.0| 20.0|+---------------------------------------+----------+----------+----------+|Final dividend | N/A| N/A| 27.0|+---------------------------------------+----------+----------+----------+| | 29.0| 20.0| 47.0|+---------------------------------------+----------+----------+----------+ (a) 5.5 per cent dividend on 50,000 preference shares of £1 each paid anddeclared annually (30 June 2007: 5.5 per cent). Dividends are declared after period end in the announcement of the results forthe period. Interim dividends are declared in February and paid in March. Finaldividends are declared in August and paid in September. Dividends declared arenot recorded as a liability at the end of the period to which they relate.Subsequent to half-year end, on 6 February 2008, BHP Billiton declared aninterim dividend of 29 US cents per share (US$1,614 million), which will be paidon 18 March 2008. BHP Billiton Limited dividends for all periods presented are, or will be, fullyfranked based on a tax rate of 30 per cent. 9 Assets classified as held for sale 31 December 2007 There were no assets or businesses classified as held for sale in the balancesheet at 31 December 2007. 31 December 2006 During the six months ended 31 December 2006, the sale of Southern CrossFertiliser Pty Ltd, the Cascade and Chinook oil and gas prospects, the Coal BedMethane assets and BHP Billiton's 45.5 per cent interest in Valesul Aluminio SA,were finalised. These assets and businesses were held for sale at 30 June 2006. 30 June 2007 There were no assets or businesses classified as held for sale in the balancesheet at 30 June 2007. 10 Total equity+-----------------------------+---------------------------+---------------------------+| |Attributable to members of | Minority interests || | BHP Billiton Group | |+-----------------------------+---------+---------+-------+---------+---------+-------+| |Half-year|Half-year| Year|Half-year|Half-year| Year|| | ended| ended| ended| ended| ended| ended|| | | | | | | || | 31| 31|30 June| 31| 31|30 June|| | December| December| 2007| December| December| 2007|| | 2007| 2006| | 2007| 2006| |+-----------------------------+---------+---------+-------+---------+---------+-------+| | US$M| US$M| US$M| US$M| US$M| US$M|+-----------------------------+---------+---------+-------+---------+---------+-------+|Total equity opening balance | 29,667| 24,218| 24,218| 251| 237| 237|+-----------------------------+---------+---------+-------+---------+---------+-------+|Total recognised income and | 5,861| 6,303| 13,596| 176| 32| 82||expense for the period | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|Transactions with owners - | 5| 8| 17| (1)| -| -||contributed equity | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|Dividends | (1,519)| (1,100)|(2,269)| (48)| (22)| (68)|+-----------------------------+---------+---------+-------+---------+---------+-------+|Accrued employee entitlement | 40| 37| 72| -| -| -||to share awards | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|Purchases of shares made by | (99)| (131)| (165)| -| -| -||ESOP Trusts | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|BHP Billiton Plc share | (3,075)| (1,355)|(2,957)| -| -| -||buy-back | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|BHP Billiton Limited share | -| -|(2,845)| -| -| -||buy-back | | | | | | |+-----------------------------+---------+---------+-------+---------+---------+-------+|Total equity closing balance | 30,880| 27,980| 29,667| 378| 247| 251|+-----------------------------+---------+---------+-------+---------+---------+-------+ Share buy-backs On 23 August 2006, BHP Billiton announced a US$3 billion capital return toshareholders through an 18-month series of on-market share buy-backs. On 7February 2007, a US$10 billion extension to this scheme was announced. As ofthat date, 93,435,000 shares in BHP Billiton Plc had been repurchased under theAugust program at a cost of US$1,705 million, leaving US$1,295 million to becarried forward and added to February's program. All BHP Billiton Plc sharesbought back are held as Treasury shares within the share capital of BHP BillitonPlc. A further 53,286,714 BHP Billiton Plc shares were repurchased between 7February 2007 and 30 June 2007 at a total cost of US$1,252 million. As at 30June 2007, 146,721,714 BHP Billiton Plc shares had been bought back at a totalcost of US$2,957 million. For the half-year ended 31 December 2007, a further 96,904,086 shares in BHPBilliton Plc were repurchased at a total cost of US$3,075 million. As at 31December 2007, 243,625,800 BHP Billiton Plc shares had been bought back at atotal cost of US$6,032 million. The shares were repurchased at an average priceof £12.37, representing a discount of 8.7 per cent to the average BHP BillitonLimited share price between 7 September 2006 and 31 December 2007. Shares in BHPBilliton Plc held by BHP Billiton Limited were periodically cancelled, inaccordance with the resolutions passed at the 2006 Annual General Meetings. Asat 31 December 2007 BHP Billiton Limited held 25,515,350 shares in BHP BillitonPlc. During the year ended 30 June 2007, 141,098,555 BHP Billiton Limited shares wererepurchased through an off-market buy-back. In accordance with the structure ofthe buy-back, US$286 million was allocated to the share capital of BHP BillitonLimited and US$2,559 million was allocated to retained earnings. These shareswere then cancelled. The final price for the buy-back was A$24.81 per share,representing a discount of 14 per cent to the volume weighted average price ofBHP Billiton Limited shares over the five days up to and including the closingdate of the buy-back. 11 Contingent liabilities+---------------------------------------+----------+----------+--------+| | 31| 31| 30 June|| | December| December| 2007|| | 2007| 2006| |+---------------------------------------+----------+----------+--------+| | US$M| US$M| US$M|+---------------------------------------+----------+----------+--------+|Contingent liabilities at balance date,| | | ||not otherwise provided for in the | | | ||financial report, are categorised as | | | ||arising from: | | | |+---------------------------------------+----------+----------+--------+|Jointly controlled entities | | | |+---------------------------------------+----------+----------+--------+|Bank guarantees | -| -| 1|+---------------------------------------+----------+----------+--------+|Other (a) | 425| 410| 416|+---------------------------------------+----------+----------+--------+| | 425| 410| 417|+---------------------------------------+----------+----------+--------+|Subsidiaries and jointly controlled | | | ||assets (including guarantees) | | | |+---------------------------------------+----------+----------+--------+|Bank guarantees | 2| -| 1|+---------------------------------------+----------+----------+--------+|Performance guarantees (b) | 2| 1| 25|+---------------------------------------+----------+----------+--------+|Other (a) | 247| 282| 296|+---------------------------------------+----------+----------+--------+| | 251| 283| 322|+---------------------------------------+----------+----------+--------+|Total contingent liabilities | 676| 693| 739|+---------------------------------------+----------+----------+--------+ (a) Other contingent liabilities relate predominantly to actual or potential litigation of the Group for which amounts are reasonably estimable but the liability is not probable and therefore the Group has not provided for such amountsin these half-year financial statements. The amounts relate to a number of actions against the Group, none of which are individually significant. Additionally, there are a number of legal claims or potential claims against the Group, the outcome of which cannot be foreseen at present, and for which no amounts have been included inthe table above. (b) The BHP Billiton Group has entered into various counter-indemnities of bank andperformance guarantees related to its own future performance in the normal course of business. 12 Subsequent eventsOther than the matter outlined below, no matters or circumstances have arisen sincethe end of the half-year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the BHP Billiton Group in subsequent accounting periods. On 6 February 2008, the Board announced an offer to acquire Rio Tinto Plc and Rio Tinto Limited. This announcement had no impact on the Group's financial results or financial position presented in this interim financial report. Directors' Report The Directors present their report together with the half-year financialstatements for the half-year ended 31 December 2007 and the auditor's reviewreport thereon. Review of Operations A detailed review of the Group's operations, the results of those operationsduring the half-year ended 31 December 2007 and likely future developments aregiven on page 1 to 15. The Review of Operations has been incorporated into, andforms part of, this Directors' Report. Principal Risks and Uncertainties Because of the international scope of the Group's operations and the industriesin which it is engaged, there are a number of risk factors and uncertaintieswhich could have an effect on the Group's results and operations. Material risksthat could impact on the Group's performance include those referred to in the'Outlook' section as well as: * Fluctuations in commodity prices • Fluctuations in currency exchange movements • Failure to discover new reserves, • Influence of China and impact of a enhance existing reserves or develop new slowdown in consumption operations • Actions by governments and political • Inability to successfully integrate events in the countries in which we acquired businesses operate • Inability to recover investments in • Non-compliance to the Group's mining and oil and gas projects standards by non-controlled assets • Operating cost pressures and shortages • Unexpected natural and operational catastrophes • Climate change and greenhouse effects • Inadequate human resource talent pool • Breaches in information technology • Breaches in governance processes security • Impact of health, safety and environmental exposures and related regulations on operations and reputation Further information on the above risks and uncertainties can be found on pages 9to 11 of the Group's Annual Report for the year ended 30 June 2007, a copy ofwhich is available on the Group's website at www.bhpbilliton.com. Dividend Full details of dividends are given on page 29. Board of Directors The Directors of the Company in office at any time during or since the end ofthe half-year are:Mr D R Argus - Chairman since April 1999 Mr C W Goodyear - an Executive Director (on the Board of Directors since November from November 2001 until 30 September 1996) 2007 Mr P M Anderson - a Director since June Dr D A Jenkins - a Director since March 2006 2000 Dr D C Brink - a Director from June 1997 Mr M Kloppers - an Executive Director until 28 November 2007 since January 2006 Dr J G Buchanan - a Director since Dr D Morgan - a Director since January February 2003 2008 Mr C A Cordeiro - a Director since Mr J Nasser - a Director since June 2006February 2005 Mr D A Crawford - a Director since May Dr J M Schubert - a Director since June 1994 2000 Dr E G de Planque - a Director since October 2005 Auditor's independence declaration KPMG in Australia are the auditors of BHP Billiton Limited. Their auditor'sindependence declaration under Section 307C of the Australian Corporations Act2001 is set out on page 32 and forms part of this Directors' Report. Rounding of amounts BHP Billiton Limited is a company of a kind referred to in Australian Securitiesand Investments Commission Class Order No 98/100, dated 10 July 1998. Amounts inthe Directors' Report and half-year financial statements have been rounded tothe nearest million dollars in accordance with that class order. Signed in accordance with a resolution of the Board of Directors. D R Argus - Chairman M Kloppers - Chief Executive OfficerDated this 6th day of February 2008 Directors' Declaration of Responsibility and Lead Auditor's IndependenceDeclaration Directors' Declaration of Responsibility The half-year financial report is the responsibility of, and has been approvedby, the Directors. In accordance with a resolution of the Directors of the BHPBilliton Group, the Directors declare that, to the best of their knowledge andin their reasonable opinion: a. the half-year financial statements and notes, set out on pages 18 to 30, have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the IASB, IAS 34 'Interim Financial Reporting' as adopted by the EU, AASB 134 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the Financial Services Authority in the United Kingdom and the Australian Corporations Act 2001, including: (i) complying with applicable accounting standards and the AustralianCorporations Regulations 2001; and (ii) giving a true and fair view of the financial position of the BHP BillitonGroup as at 31 December 2007 and of its performance for the half-year ended onthat date; b. the Directors' Report, which incorporates the Review of Operations on pages 1 to 15, includes a review of the information required by: (i) DTR4.2.7R of the Disclosure and Transparency Rules in the United Kingdom,being an indication of important events during the first six months of thecurrent financial year and their impact on the half-year financial statements,and a description of the principal risks and uncertainties for the remaining sixmonths of the year; and (ii) DTR4.2.8R of the Disclosure and Transparency Rules in the United Kingdom,being related party transactions that have taken place in the first six monthsof the current financial year and that have materially affected the financialposition or performance of the BHP Billiton Group during that period, and anychanges in the related party transactions described in the last annual reportthat could have such a material effect; and c. in the Directors' opinion, there are reasonable grounds to believe that each of the BHP Billiton Group, BHP Billiton Limited and BHP Billiton Plc will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Board of Directors. D R Argus - Chairman M Kloppers - Chief Executive Officer Dated this 6th day of February 2008 Lead Auditor's Independence Declaration To the Directors of BHP Billiton Limited: I declare that, to the best of my knowledge and belief, in relation to thereview for the half-year ended 31 December 2007 there have been: * no contraventions of the auditor independence requirements as set out in the Australian Corporations Act 2001 in relation to the review; and * no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of the BHP Billiton Group and the entities itcontrolled during the financial period. KPMG Peter NashPartner Dated in Melbourne this 6th day of February 2008 Independent Review Report of KPMG Audit Plc to BHP Billiton Plc and of KPMG tothe Members of BHP Billiton Limited Scope For the purposes of these reports, the terms "we" and "our" denote KPMG AuditPlc in relation to its responsibilities under its terms of engagement to reportto BHP Billiton Plc and KPMG in relation to Australian professional andregulatory responsibilities and reporting obligations to the members of BHPBilliton Limited. The BHP Billiton Group ("the Group") consists of BHP Billiton Plc and BHPBilliton Limited and the entities they controlled at the end of the half-year orfrom time to time during the half-year ended 31 December 2007. We have reviewed the condensed half-year financial statements of the Group forthe half-year ended 31 December 2007 ("half-year financial statements"), set outon pages 18 to 30, which comprise the consolidated income statement,consolidated statement of recognised income and expense, consolidated balancesheet, consolidated cash flow statement, summary of significant accountingpolicies and other explanatory notes 1 to 12. We have read the other informationcontained in the half-year financial report and considered whether it containsany apparent misstatements or material inconsistencies with the information inthe half-year financial statements. KPMG has also reviewed the directors'declaration set out on page 32 in relation to Australian regulatory requirementscontained in section (a) and (c) of the directors' declaration. Respective Responsibilities of KPMG Audit Plc and KPMG KPMG Audit Plc's report is made solely to BHP Billiton Plc in accordance withthe terms of KPMG Audit Plc's engagement to assist BHP Billiton Plc in meetingthe requirements of the Disclosure and Transparency Rules of the UK's FinancialServices Authority ("the UK FSA"). KPMG Audit Plc's review has been undertakenso that it might state to BHP Billiton Plc those matters it is required to stateto it in this report and for no other purpose. To the fullest extent permittedby law, KPMG Audit Plc does not accept or assume responsibility to anyone otherthan BHP Billiton Plc, for KPMG Audit Plc's review work, for this report, or forthe conclusions it has reached. KPMG has performed an independent review of the half-year financial statementsand directors' declaration in order to state whether, on the basis of theprocedures described, it has become aware of any matter that would indicate thatthe half-year financial statements and directors' declaration are not inaccordance with the Corporations Act 2001 including: giving a true and fair viewof the Group's financial position as at 31 December 2007 and its performance forthe half-year ended on that date; and complying with Australian AccountingStandard AASB 134 Interim Financial Reporting and the Corporations Regulations2001. Our responsibility is to express a conclusion on the half-year financialstatements in the half-year financial report based on our review. Directors' Responsibilities The half-year financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half-yearfinancial report: * in accordance with the Disclosure and Transparency Rules of the UK FSA, and under those rules, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and * in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Review work performed KPMG Audit Plc conducted its review in accordance with International Standard onReview Engagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. KPMG conducted its review in accordance with Australian Auditing Standard onReview Engagements ASRE 2410 Review of an Interim Financial Report Performed bythe Independent Auditor of the Entity. As auditor of BHP Billiton Limited, KPMGis required by ASRE 2410 to comply with the ethical requirements relevant to theaudit of the annual financial report. A review of half-year financial statements consists of making enquiries,primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially lessin scope than an audit conducted in accordance with auditing standards andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Review conclusion by KPMG Audit Plc Based on our review, nothing has come to our attention that causes us to believethat the condensed half-year financial statements in the half-year financialreport for the six months ended 31 December 2007 are not prepared, in allmaterial respects, in accordance with IAS 34 Interim Financial Reporting, asadopted by the EU, and the Disclosure and Transparency Rules of the UK FSA. KPMG Audit Plc Chartered Accountants London Dated in Melbourne this 6th day of February 2008 Review conclusion by KPMG Based on our review, which is not an audit, we have not become aware of anymatter that makes us believe that the condensed half-year financial statementsand directors' declaration of the Group are not in accordance with theCorporations Act 2001, including: a. giving a true and fair view of the Group's financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and b. complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. KPMG Peter NashPartner MelbourneDated in Melbourne this 6th day of February 2008 BHP Billiton Limited BHP Billiton Plc ABN 49 004 028 077 Registration number 3196209 Registered in Australia Registered in England and Wales Registered Office: Registered Office: Level 27, Neathouse Place 180 Lonsdale Street London Melbourne Victoria 3000 SW1V 1BH Telephone +61 1300 554 757 United Kingdom Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111 The BHP Billiton Group is headquartered in Australia This information is provided by RNS The company news service from the London Stock Exchange

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