15th Feb 2006 07:00
BHP Billiton PLC15 February 2006 PART 1 Date 15 February 2006Number 03/06 BHP BILLITON RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2005 •Record half year financial results. Underlying EBITDA up 42% to US$8.0 billion and underlying EBIT up 43% to US$6.7 billion. •Attributable profit up 48% to US$4.4 billion. •Underlying EBIT margin increased to 42% and solid Return on Capital Employed at 31%. •Record half year production volumes for aluminium, copper, nickel and LNG. •Five major growth projects approved. The current project pipeline, consisting of projects in execution or in feasibility, now includes 25 projects, comprising US$14.4 billion of investments. •Integration of WMC Resources Ltd (WMC) completed ahead of schedule. •Interim dividend of 17.5 US cents per share, an increase of 30% on the prior period interim dividend. •US$2 billion Capital Management initiative announced. +----------------------------------------------------------------------+---------+---------+--------+|Half year ended 31 December | 2005| 2004| || | | | || | US$M| US$M| Change|+----------------------------------------------------------------------+---------+---------+--------+|Revenue together with share of jointly controlled entities' revenue | 18 172| 15 207| 19.5%|+----------------------------------------------------------------------+---------+---------+--------+|Underlying EBITDA (1) | 7 971| 5 619| 41.9%|+----------------------------------------------------------------------+---------+---------+--------+|Underlying EBIT (1) (2) | 6 671| 4 665| 43.0%|+----------------------------------------------------------------------+---------+---------+--------+|EBIT - Profit from operations | 6 259| 4 369| 43.3%|+----------------------------------------------------------------------+---------+---------+--------+|Attributable profit | 4 364| 2 953| 47.8%|+----------------------------------------------------------------------+---------+---------+--------+|Net operating cash flow (3) | 4 308| 3 197| 34.8%|+----------------------------------------------------------------------+---------+---------+--------+|Basic earnings per share (US cents) | 72.1| 47.7| 51.2%|+----------------------------------------------------------------------+---------+---------+--------+|Underlying EBITDA interest coverage (times) (1) (4) | 40.1| 46.6| (13.9)%|+----------------------------------------------------------------------+---------+---------+--------+|Dividend per share (US cents) | 17.5| 13.5| 29.6%|+----------------------------------------------------------------------+---------+---------+--------+ The following definitions apply throughout this profit release: (1) Underlying EBIT is earnings before net finance costs and taxation, andjointly controlled entities' net finance costs and taxation. Underlying EBITDAis underlying EBIT before depreciation, impairments, and amortisation of US$1300 million (comprising Group depreciation, impairments and amortisation of US$1137 million and jointly controlled entities' depreciation and amortisation ofUS$163 million) for the half year ended 31 December 2005 and US$954 million(comprising Group depreciation, impairments and amortisation of US$809 millionand jointly controlled entities' depreciation and amortisation of US$145million) for the half year ended 31 December 2004. We believe that UnderlyingEBIT and Underlying EBITDA provide useful information, but should not beconsidered as an indication of, or alternative to, attributable profit as anindicator of operating performance or as an alternative to cash flow as ameasure of liquidity. (2) Underlying EBIT is used to reflect the underlying performance of BHPBilliton's operations. Underlying EBIT is reconciled to EBIT - Profit fromoperations on page 3. (3) Net operating cash flow includes dividends from jointly controlled entitiesand is after net interest and taxation. (4) For this purpose, net interest includes net finance costs of jointlycontrolled entities, and capitalised interest and excludes the effect ofdiscounting on provisions and other liabilities, and exchange differencesarising from net debt. The above financial results are prepared in accordance with IFRS and areunaudited. All references to the corresponding period are to the half year ended31 December 2004. RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2005 Commentary on the Group Interim Results Introduction The first half of the 2006 financial year generated a strong result for BHPBilliton and today we have announced the fifth consecutive half year of recordresults for the Group. Attributable profit was US$4.4 billion, which is anincrease of 47.8% over the same period last year. The consistent focus on theoptimisation and growth of our portfolio of world class assets, combined withour unique customer centric marketing structure has positioned the company toactively participate in the current strong demand and price environment for ourcommodities. Half year operational records were also accomplished, with recordproduction achieved for four major and two minor commodities. Our strategy of investing throughout the cycle in sustainable, value creatinggrowth continued, with five additional major growth projects approved in theperiod. These projects have an expected spend of US$2.9 billion, bringing ourtotal project pipeline to US$14.4 billion of investment. (This includes 18projects currently under development totalling US$8.9 billion.) Each of theseprojects has been subject to our rigorous evaluation and approval process toensure they will return value to our shareholders, regardless of global economicconditions. However, we continue to be faced with industry challenges in thedelivery of these projects to budget. These challenges include shortages ofskilled labour, construction and drilling plant and machinery, and currencystrength against the US dollar. All of these have led to rising input costs. These pressures have also added significantly to operating costs. However,increased commodity prices and volumes, along with the continuation of ourbusiness excellence programme, has led to a Group Underlying EBIT margin andReturn on Capital Employed of 41.9% and 31.2% respectively. Integration of the WMC assets was completed during the period and the target forcost efficiencies (of A$115 million per annum) was exceeded. Record half yearproduction was achieved at both the Nickel West and Southern Cross Fertiliseroperations (both Australia), while drilling continues at Olympic Dam (Australia)in advance of the proposed expansion. Dividend and Capital Management The Board today declared an interim dividend of 17.5 US cents per share. Thisfollows on from the rebasing of the dividend in February 2005 from 9.5 US centsper share to 13.5 US cents per share. Today's declared dividend is an increaseof 3.0 US cents per share (20.7%) over last year's final dividend of 14.5 UScents per share, or up 29.6% year on year. The interim dividend has increased by118.8% (from 8.0 to 17.5 US cents per share) over the past 2 years, reflectingthe strength of the underlying cash flows of the business, the continued strongpricing environment and confidence in our ability to consistently deliverearnings and cash flow to support this higher level of dividend going forward.We intend to continue with our progressive dividend policy, with furtherincreases dependent upon the expectations for future investment opportunitiesand market conditions at the time of declaration. We also intend to return a further US$2.0 billion to shareholders over the next18 months through a series of share buy-backs. As outlined today in a separateannouncement, this will commence immediately with an off-market buy-back ofapproximately A$1.5 billion (US$1.1billion) in BHP Billiton Limited shares. Thiswill be followed at a later stage by on-market purchases, most likely of BHPBilliton Plc shares, using the balance of the US$2.0 billion not used in theoff-market buy-back. Today's announcement follows on from last year's US$2.0 billion capitalmanagement initiative and is consistent with our practice of returning surpluscapital to shareholders where appropriate, and in a form that maximises theoverall value to the Group and its shareholders. The Board remains committed todemonstrating strong capital discipline while ensuring BHP Billiton is able tofinance its significant pipeline of growth opportunities regardless of shortterm commodity price movements. At the conclusion of this initiative, BHPBilliton will have returned US$11.4 billion to shareholders since June 2001. WMC Integration The acquisition of WMC was completed on 2 August 2005 and financial results forthe former WMC assets are reported separately in the Base Metals, StainlessSteel Materials and Diamonds and Specialty Products CSGs. In an environment ofcontinued high prices, cash flow for the first six months has exceededexpectations. At the time of the announcement to acquire WMC, BHP Billiton estimated thatannual cost efficiencies of A$115 million would be achieved by eliminatingduplicate functions and using common systems and processes. As at December 2005,on-going pre-tax cost efficiencies of A$160 million per annum plus A$14 millionper annum in tax benefits are estimated to have been achieved. More than 430people (including contractors) have left the organisation. It is expected that final annualised cost efficiencies will exceed A$180 millionplus A$14 million per annum in tax benefits. In total, we expect approximately500 people (including contractors) to leave the organisation. The final one-off cost to achieve these cost efficiencies is now estimated atA$103 million, compared to the A$120 million indicated at the time of theannouncement to acquire WMC. The current period results include A$20 million ofsuch costs and A$17 million are expected for the remainder of the 2006 financialyear. A$66 million was expensed in the 2005 financial year. The Income Statement IFRS and Underlying EBIT BHP Billiton has adopted International Financial Reporting Standards (IFRS) from1 July 2005, and has restated comparative amounts on a consistent basis. Themeasurement differences from previous GAAP are set out in note 15 of the InterimFinancial Report. IFRS also has presentational differences from previous GAAP,including the treatment of income from jointly controlled entities, as notedbelow, and the treatment of royalty and petroleum related taxes of US$323million (corresponding period US$375 million) which are presented as taxation,rather than operating costs. The introduction of IFRS has led to us reporting Underlying EBIT, which is ameasure used internally and in our Supplementary Information to reflect theunderlying performance of BHP Billiton's operations. Underlying EBIT excludesall net finance costs and taxation, including net finance costs and taxation ofjointly controlled entities and any significant one-off items. Under IFRS, theseamounts are included in Profit from Operations in the Income Statement. Thedifferences between Underlying EBIT and EBIT (Profit from operations) are setout in the following table:+---------------------------------------------------+----+------+------+|Half Year ended 31 December | | 2005| 2004|+---------------------------------------------------+----+------+------+| | | US$M| US$M|+---------------------------------------------------+----+------+------+|Underlying EBIT | | 6 671| 4 665|+---------------------------------------------------+----+------+------+|Impact of equity accounting for statutory purposes: | | || | | ||Share of jointly controlled entities' net finance costs | (412)| (296)||and taxation | | |+--------------------------------------------------------+------+------+|EBIT - Profit from operations | 6 259| 4 369|+--------------------------------------------------------+------+------+ There were no significant items in either the current or corresponding period. Earnings Revenue (including revenue from third party product and our share of jointlycontrolled entities) was US$18.2 billion, up 19.5% from US$15.2 billion in thecorresponding period. The increase was due primarily to higher commodity prices.Metallurgical coal, iron ore, base metals, and petroleum prices contributedsignificantly to the increase in revenue. We also experienced increased volumesfrom new and acquired operations. Underlying EBITDA increased by 41.9% to US$8.0 billion (from US$5.6 billion inthe corresponding period). Underlying EBIT was US$6.7 billion compared withUS$4.7 billion for the same period last year, an increase of 43.0%. The following table and commentary detail the approximate impact of theprincipal factors that affected Underlying EBIT for the current half yearcompared with the corresponding period:+----+---------------------------------------------------------------------------+-----------------+----+| | | US$ Million| |+----+---------------------------------------------------------------------------+-----------------+----+| |Underlying EBIT for the half year ended 31 December 2004 | 4 665| |+----+---------------------------------------------------------------------------+-----------------+----+| |Change in volumes: | | |+----+---------------------------------------------------------------------------+-----------------+----+| |Existing operations |(110) | |+----+---------------------------------------------------------------------------+-----------------+----+| |New and acquired operations |445 | |+----+---------------------------------------------------------------------------+-----------------+----+| | | 335| |+----+---------------------------------------------------------------------------+-----------------+----+| |Change in sales prices | 2 915| || | | | || | | | |+----+---------------------------------------------------------------------------+-----------------+----+| |Change in costs: | | |+----+---------------------------------------------------------------------------+-----------------+----+| |Costs |(795) | |+----+---------------------------------------------------------------------------+-----------------+----+| |Exchange rates |105 | |+----+---------------------------------------------------------------------------+-----------------+----+| |Price-linked costs |(275) | |+----+---------------------------------------------------------------------------+-----------------+----+| |Inflation on costs |(130) | || | | | || | | | |+----+---------------------------------------------------------------------------+-----------------+----+| | | (1 095)| |+----+---------------------------------------------------------------------------+-----------------+----+| |Asset sales | 30| |+----+---------------------------------------------------------------------------+-----------------+----+| |Ceased and sold operations | (35)| |+----+---------------------------------------------------------------------------+-----------------+----+| |Exploration | (90)| |+----+---------------------------------------------------------------------------+-----------------+----+| |Other | (54)| |+----+---------------------------------------------------------------------------+-----------------+----+| | | | |+----+---------------------------------------------------------------------------+-----------------+----+| |Underlying EBIT for the half year ended 31 December 2005 | 6 671| |+----+---------------------------------------------------------------------------+-----------------+----+| | | | |+----+---------------------------------------------------------------------------+-----------------+----+ Volumes Existing operations Increased sales volumes of copper, iron ore and export thermal coal contributedapproximately US$138 million to Underlying EBIT (measured at the prior period'saverage margins). Sales volumes of oil were lower than the corresponding perioddue to natural field decline, increased down time and the loss of productionfrom the Typhoon/Boris facility (US). Decreased sales volumes of metallurgicalcoal due to increased mine maintenance activity, expansion tie-in activity atHay Point Coal Terminal (Australia), and the depletion of reserves at Riverside(Australia) also had a negative impact. Decreased sales volumes of manganese orein line with market demand also impacted the half year. Overall, sales volumesfrom existing operations decreased Underlying EBIT by US$110 million. New and acquired operations New operations increased Underlying EBIT by US$445 million, primarily due to acontribution of US$262 million from the WMC operations acquired in June 2005,and a full six months production from ROD (Algeria), which commenced commercialproduction in October 2004, and Mad Dog (US) and Angostura (Trinidad and Tobago)which were both commissioned in January 2005. Prices Stronger commodity prices for most products increased Underlying EBIT byUS$2,915 million. Higher prices for metallurgical coal, iron ore, copper,petroleum products and aluminium contributed approximately US$3,077 million,which was partially offset by lower prices for manganese alloy, diamonds andlower export prices for energy coal at Ingwe (South Africa). Costs An increased level of activity across the resources industry has led toshortages and rising costs for labour and raw materials. This has led toincreased costs for the Group of US$795 million. A portion of the increase in costs was deliberately incurred by the Group tomaximise production to capture current prices. Specific areas of cost increasesinclude labour and contractor charges, fuel, freight and consumables, as well asmaintenance and other operating costs. Depreciation charges also increased dueto changes in the estimates of economic lives of certain operations and thecommissioning of a number of new operations. Exchange rates Exchange rate movements had a positive impact on Underlying EBIT of US$105million compared with the same period from last year. The translation of netmonetary liabilities had a favourable impact on Underlying EBIT of US$155million principally due to exchange gains from the strengthening of the USdollar against the Australian dollar in the six months to 31 December 2005,compared to losses in the corresponding period. This was partly offset by anunfavourable impact of exchange rate movements on operating costs of US$50million. +-----------------+---------------+---------------+--------+------------+-----------+------------+|Currency |Half year ended|Half year ended| 31 Dec|30 June 2005|31 Dec 2004|30 June 2004|| | | | | | | || | 31 Dec 2005| 31 Dec 2004| 2005| closing| closing| closing|| | | | | | | || | average| average| closing| | | |+-----------------+---------------+---------------+--------+------------+-----------+------------+| | | | | | | |+-----------------+---------------+---------------+--------+------------+-----------+------------+|US dollar : | 0.75| 0.73| 0.73| 0.76| 0.78| 0.69||Australian dollar| | | | | | |+-----------------+---------------+---------------+--------+------------+-----------+------------+|South African | 6.52| 6.21| 6.33| 6.67| 5.65| 6.27||rand : US dollar | | | | | | |+-----------------+---------------+---------------+--------+------------+-----------+------------+| | | | | | | |+-----------------+---------------+---------------+--------+------------+-----------+------------+ Price-linked costs Higher price-linked costs decreased Underlying EBIT by US$275 million, primarilybecause of higher royalties being imposed for all Carbon Steel Material productsand increased TCRCs, including price participation charges, for copper. Inflation on costs Inflationary pressures, mainly in South Africa and Australia, had anunfavourable impact on Underlying EBIT of US$130 million. Asset sales Underlying EBIT increased US$30 million from the corresponding period due toasset sales. This was a reflection of current period asset sales of US$86million, principally relating to the sale of BHP Billiton's interest in theWonderkop joint venture (South Africa). This was partially offset by the profiton the sale of an equity participation in the North West Shelf Project's(Australia) gas reserve to China National Offshore Oil Corporation of US$56million in the corresponding period. Ceased and sold operations The net loss of earnings from ceased or sold operations had a US$35 millionunfavourable impact on Underlying EBIT. Current period Underlying EBIT primarilyexcludes results from disposal of the Chrome business (South Africa) and theLaminaria and Corallina oil fields (Australia) totalling US$110 million. Thiswas partly offset by a favourable impact of US$75 million in relation to careand maintenance costs incurred at Boodarie Iron (Australia) in the correspondingperiod. These were fully provided for in June 2005. Exploration Exploration expense was US$90 million higher, due mainly to increased spend onpetroleum activity in the Gulf of Mexico. Other Other items decreased Underlying EBIT by US$54 million. These include one-offcosts caused by hurricane activity in the Gulf of Mexico and freight activities.Partially offsetting these was an increase in the Underlying EBIT contributionfrom sales of third party product of US$80 million. Net finance costs Net finance costs increased to US$215 million, from US$192 million in thecorresponding period. This increase was driven largely by higher average debtbalances following the funding of the acquisition of WMC in June 2005, partiallyoffset by exchange gains on debt, higher capitalised interest and higherinterest rates on deposits. Taxation expense The taxation expense on profit before tax was US$1,616 million, representing aneffective rate of 26.7%. Excluding the impacts of royalty and petroleum resource related taxation and nontax-effected foreign currency adjustments, translation of tax balances and otherfunctional currency translation adjustments, and including the taxation expenseof jointly controlled entities, the underlying effective rate was 27.8%. Whencompared to the UK and Australian statutory tax rate (30%), the underlyingeffective tax rate benefited 2.7% due to the recognition of US tax losses(US$175 million). Following the transition to IFRS, royalty and petroleum resource related taxesare treated as taxation arrangements when they have the characteristics of atax. This is considered to be the case when they are imposed under Governmentauthority and the amount payable is calculated by reference to revenue derived(net of any allowable deductions) as determined by relevant legislation. As aresult, such royalty costs which would previously have been reported as anoperating cost in Underlying EBIT are now reported as a taxation expense.Obligations arising from royalty arrangements that do not satisfy these criteriacontinue to be recognised in operating expenses. Cash Flows Statutory net operating cash flow after interest and tax increased by 34.8% toUS$4.3 billion. This included increased cash generated from operating activities(mainly due to higher profits), which was partly offset by increased taxationpayments. Capital and exploration expenditure totalled US$2,665 million for the period.Expenditure on major growth projects amounted to US$1,482 million, includingUS$254 million on petroleum projects and US$1,228 million on minerals projects.Other capital expenditure was US$835 million. Investment cash flow was US$505million, due mainly to the purchase of the remaining shares to complete the WMCacquisition. In addition, the corresponding period includes US$1.78 billiondistributed to shareholders as part of the US$2.0 billion capital managementprogramme. Net debt, comprising cash and interest bearing liabilities, was US$8.7 billion,the same level as at 30 June 2005. Gearing, which is the ratio of net debt tonet debt plus net assets, was 28.9% at 31 December 2005, compared with 32.7% at30 June 2005. Underlying net debt (which varies from net debt above as it includes net debt ofjointly controlled entities) was US$9.9 billion, down from US$10.0 billion at 30June 2005. Underlying gearing was 31.5% at 31 December 2005, compared to 35.8%at 30 June 2005. In October 2005 BHP Billiton filed a US$3.0 billion shelf registration statementwith the US Securities and Exchange Commission (SEC) and in December 2005,issued a SEC Global Bond comprising US$600 million of 5.00% Senior Notes due2010 and US$750 million of 5.25% Senior Notes due 2015. The proceeds were usedto partially repay the financing arranged to fund the WMC acquisition and torepay commercial paper. Dividend An interim dividend for the half year ended 31 December 2005 of 17.5 US centsper share will be paid to shareholders on 22 March 2006. The dividend paid by BHP Billiton Limited will be fully franked for Australiantaxation purposes. Dividends for the BHP Billiton Group are determined anddeclared in US dollars. However, BHP Billiton Limited dividends are mainly paidin Australian dollars. BHP Billiton Plc dividends are mainly paid in poundssterling to shareholders on the UK section of the register and South Africanrands to shareholders on the South African section of the register. The foreigncurrency exchange rates that applied two business days before the declaration ofthe dividend were used for conversion of currencies (detailed in the tablebelow). As announced on 27 January, shareholders who wish to alter the currencyin which they receive dividends must lodge an election form with the ShareRegistry at least two days prior to the announcement of the dividend. The timetable in respect of this dividend will be: Currency conversion - 13 February 2006 Last day to trade Johannesburg Stock Exchange (JSE) - 24 February 2006 Ex-dividend Australian Stock Exchange (ASX) - 27 February 2006 Ex-dividend Johannesburg Stock Exchange (JSE) - 27 February 2006 Ex-dividend London Stock Exchange (LSE) - 1 March 2006 Record - 3 March 2006 Payment - 22 March 2006 American Depositary Shares (ADSs) each represent two fully paid ordinary sharesand receive dividends accordingly. BHP Billiton Plc shareholders registered on the South African section of theregister will not be able to dematerialise or rematerialise their shareholdings,and transfers between the UK register and the South African register will not bepermitted, between the dates of 27 February 2006 and 3 March 2006. The following table details the currency exchange rates applicable for thedividend:+--------------------------+-------------+---------------------------------+|Dividend 17.5 US cents | Exchange| Dividend per ordinary|| | | || | Rate| share in local currency|+--------------------------+-------------+---------------------------------+|Australian cents | 0.737679| 23.723056|+--------------------------+-------------+---------------------------------+|British pence | 1.740344| 10.055483|+--------------------------+-------------+---------------------------------+|South African cents | 6.174017| 108.045298|+--------------------------+-------------+---------------------------------+|New Zealand cents | 0.678210| 25.803217|+--------------------------+-------------+---------------------------------+ Portfolio Management During the half year we disposed of a number of assets and interests includingthe divestment of our 50% interest in the Wonderkop joint venture (SouthAfrica), the Green Canyon 18 and 60 oil fields in the Gulf of Mexico (US), ourone third interest in the Hi-Fert fertiliser business (Australia) and ourownership of the Zululand Anthracite Colliery (South Africa). Corporate Governance The Hon. E Gail de Planque was appointed a Non-executive Director of BHPBilliton Limited and BHP Billiton Plc with effect from 19 October 2005. MrMichael Chaney and Lord Renwick of Clifton retired as Directors of both Boardson 25 November 2005. On 8 December 2005 it was announced that Mr Marius Kloppers(Group President Non-Ferrous Materials) and Mr Chris Lynch (Chief FinancialOfficer) would join the Board as Executive Directors from 1 January 2006. Following a review of the Sustainability Committee, the Board restructured theCommittee. Its members are now Dr David Brink (Chairman), The Hon. E Gail dePlanque and Dr John Schubert. Mr Carlos Cordeiro has been appointed a member ofthe Remuneration Committee, and Dr Schubert has ceased being a member of thatCommittee. Outlook Over the last six months the global economy has continued to be buoyant witheconomic growth becoming more broadly based towards the end of last year asemerging recoveries in Japan and Europe offset a slowing in the US. China andother countries in Asia have benefited from the robust global economy, whilestrong commodity prices have led to significant gains in the Russian and LatinAmerican economies. Global economic resilience has continued despite a series ofpotential disruptions including rising oil prices and a move to higher interestrates in the US. The immediate outlook for the global economy continues to be promising.Industrial production growth in the OECD is accelerating and the rise in theleading indicators suggests further improvement. In China, recent revisionspoint to the economy growing at an average of around ten per cent per annum overthe past three years and although Chinese economic growth is likely to slowsomewhat in 2006 it will remain at a relatively high level. Elsewhere, emergingmarkets are likely to enjoy robust economic conditions, although for somecountries a high level of indebtedness and/or political uncertainty could dampenthe outlook. The positive demand environment and the continued inability of the supply sideto respond fast enough to increased demand means prices continue to remainstrong relative to historical levels. This imbalance in demand and supply iscaused by the demand growth in emerging economies and the lack of latent minecapacity. In addition, delays to new capacity caused by increasing pressures onconstruction costs, the availability of skilled labour and raw materials lookset to continue for at least the next several years. While the impact of this onprices will vary by commodity, the fundamentals of our business remain solid aswe bring on new volumes to take advantage of strong demand and high relativeprices. Our confidence in the demand outlook for the next 18-24 months (in theabsence of unforeseen circumstances) and higher than expected prices means weare able to continue to return surplus capital to shareholders while meeting ourneeds to continue to expand our productive capacity. CUSTOMER SECTOR GROUP SUMMARY The following table provides a summary of the Customer Sector Group results forthe half year ended 31 December 2005 and the corresponding period.+-+--------------------------+---------------------------------------------+-+----------------------+-+| | | | | | || | | | | | || | | | | | |+-+--------------------------+---------------------------------------------+-+----------------------+-+| |Half year ended 31 | Revenue together with share of jointly | | Underlying EBIT (1) | || |December (US$ Million) | controlled entities' revenues (1) | | | || | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| | | 2005| 2004| Change| | 2005| 2004| Change| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| | | | | | | | | | || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Petroleum | 2 960| 3 171| (6.7%)| | 1 436| 1 265| 13.5%| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Aluminium | 2 344| 2 318| 1.1%| | 406| 449| (9.6%)| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Base Metals | 4 031| 2 341| 72.2%| | 1 893| 1 040| 82.0%| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Carbon Steel Materials | 4 728| 3 224| 46.7%| | 2 275| 991| 129.6%| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Diamonds and Specialty | 679| 1 114| (39.0%)| | 261| 406| (35.7%)| || |Products | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Energy Coal | 1 769| 1 640| 7.9%| | 205| 296| (30.7%)| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Stainless Steel Materials | 1 358| 1 013| 34.1%| | 374| 337| 11.0%| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Group and unallocated | 352| 417| (15.6%)| | (179)| (119)| N/A| || |items (2) | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |Less: inter-segment | (49)| (31)| N/A| | -| -| -| || |turnover | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+| |BHP Billiton Group | 18 172| 15 207| 19.5%| | 6 671| 4 665| 43.0%| || | | | | | | | | | || | | | | | | | | | |+-+--------------------------+--------------+--------------+---------------+-+------+------+--------+-+ (1) Revenue together with share of jointly controlled entities' revenue, andUnderlying EBIT include trading activities comprising the sale of third partyproduct. Underlying EBIT is defined on page 1. (2) Includes consolidation adjustments, unallocated items and external salesfrom the Group's freight, transport and logistics operations. Petroleum Underlying EBIT was US$1,436 million, an increase of US$171 million or 13.5%,compared with the same period last year. This was mainly due to higher averagerealised prices for all petroleum products, including higher averaged realisedoil prices per barrel of US$58.25 (compared with US$44.85), higher averagerealised natural gas prices of US$3.13 per thousand standard cubic feet(compared with US$2.94), and higher liquefied natural gas prices of US$6.81 perthousand standard cubic feet (compared to US$5.68). Production from ROD(Algeria), which commenced commercial production in October 2004, and Mad Dog(US) and Angostura (Trinidad and Tobago), which were both commissioned inJanuary 2005, and a positive impact from foreign exchange movements also had afavourable impact. These factors were partly offset by lower production volumes from existingoperations. The corresponding period had also included a US$56 million profit onthe sale of an equity participation in the North West Shelf Project's(Australia) gas reserves to China National Offshore Oil Corporation. Otherunfavourable impacts included one-off costs for the investigation and salvage ofthe Typhoon facility (US) following hurricane damage and the loss of earningsfollowing the divestment in the corresponding period of our interests in theLaminaria and Corallina (Australia) oil fields. Exploration expenditure charged to profit was US$123 million (correspondingperiod: US$55 million) reflecting a capitalisation rate of 51.0% (correspondingperiod: 59.9%). Gross expenditure on exploration of US$251 million was US$114million higher than the corresponding period as a result of increased spendingon activity in the Gulf of Mexico. Aluminium Underlying EBIT of US$406 million fell US$43 million or 9.6% compared with thesame period last year. This was mainly due to higher fuel, power and rawmaterial costs (principally caustic soda), as well as increased pot reliningcosts. In addition, the application of IFRS required Aluminium to account forembedded derivatives which reduced Underlying EBIT by US$22 million in thecurrent period. Higher realised prices for aluminium, and an improved result dueto the unwinding of a metal take-off contract of US$35 million in the previousperiod partly offset this result. The average LME aluminium price increased toUS$1,952 per tonne, compared with US$1,764 per tonne for the correspondingperiod. Base Metals Underlying EBIT was US$1,893 million, an increase of US$853 million, or 82.0%compared with the corresponding period. This was mainly as a result of higheraverage LME prices for all base metals products. In particular copper LME pricesincreased to US$1.84/lb compared with US$1.35/lb for the same period last year.The inclusion of Olympic Dam (Australia) results for the current period,following its acquisition in June 2005, also contributed positively. Highersales volumes for all Base Metals products, but particularly for copper andmolybdenum (in which record production levels were achieved during the period),also led to the higher EBIT result. However, higher price-linked and input costs (mainly reflecting increased TCRCcosts including price participation), higher statutory labour and productionbonuses, and increased fuel and other commodity linked costs, all had an impact.Reduced production at Cerro Colorado (Chile) following an earthquake in June2005 also had an unfavourable impact, although this was partially mitigated bybusiness interruption insurance. Carbon Steel Materials Underlying EBIT was US$2,275 million, up US$1,284 million or 129.6% from thecorresponding period. Contributing factors included stronger commodity pricesfor iron ore and metallurgical coal, although manganese alloy prices were lower.Increased operating costs at most operations also affected Underlying EBIT. Inparticular this included price linked royalties and higher contractor and dieselcosts, which are reflective of the current heated market conditions. Increasedmining costs are being incurred across most Carbon Steel Materials operations tomaximise production in the current high demand environment. These additionalcosts are largely cyclical in nature. Inflationary pressures on Australian andSouth African operations also had an unfavourable impact compared with thecorresponding period. Depreciation charges increased at Western Australian IronOre, Queensland Coal and Illawarra Coal operations (all Australia) due to thecommissioning of new plant at these operations. The same period last year included costs in relation to Boodarie Iron while theplant was on care and maintenance. There was no impact on Underlying EBIT in thecurrent period as all anticipated closure costs were provided for in June 2005following the decision to close this operation. Diamonds and Specialty Products Underlying EBIT was US$261 million, a decrease of US$145 million or 35.7%,compared with the corresponding period. This was due to lower realised pricesfor diamonds (down 19.6% from the corresponding period) because of lower caratquality, higher costs in relation to the processing of lower grade material andlower diamond sales volumes (down 3.1% from the corresponding period). Inaddition, the corresponding period included earnings from Integris Metals (US),which was sold in January 2005. However, the inclusion for the first time ofearnings from Southern Cross Fertiliser operations (Australia) (formerlyQueensland Fertilizer Operations) acquired in June 2005 was positive, as washigher realised prices and sales volumes for titanium feedstock. Half yearly Ekati (Canada) diamond production decreased by 21.1% compared to thecorresponding period mainly reflecting the processing of lower grade ore. Thesecond half of the 30 June 2006 financial year will continue to be negativelyimpacted by the processing of lower grade and lower value material at Ekati. Energy Coal Underlying EBIT was US$205 million, a decrease of US$91 million or 30.7%,compared with the corresponding period. This was mainly a result of higher unitcosts across all operations. Costs increased at Ingwe (South Africa) because ofhigher depreciation resulting from changes in the estimates of the economiclives of certain operations, the depreciation of rehabilitation assets andinflationary impacts. Increased demurrage at Cerrejon Coal (Colombia) and loweryields and equipment availability combined with increased strip ratios at HunterValley Coal (Australia) also led to higher costs. Lower export prices at Ingwealso had a negative impact. However, increased export sales volumes from Ingwealong with a favourable impact from the depreciation of the rand against the USdollar positively contributed to the result. Stainless Steel Materials Underlying EBIT was US$374 million, an increase of US$37 million or 11.0%,compared with the corresponding period. The inclusion of results from the NickelWest operations (Australia), acquired in June 2005, as well as a US$61 millionprofit on sale of BHP Billiton's interest in the Wonderkop joint venture (SouthAfrica), were the key factors in the increased result. Negative impacts included lower production and increased costs at the QNI Yabulurefinery (Australia) as a result of lower operational performance and tie-inactivity relating to the refinery expansion. The average LME nickel price alsofell to US$6.17/lb from US$6.36/lb in the corresponding period. Also offsettingthe increase in Underlying EBIT was US$59 million included in the comparativeperiod result relating to earnings from the Group's Chrome operations, which BHPBilliton sold effective 1 June 2005. Group and Unallocated Items Underlying net corporate operating costs excluding exchange impacts were US$108million compared to US$51 million in the corresponding period - an increase ofUS$57 million. This was due primarily to higher net insurance costs of US$24million associated with insurance claims arising from natural disasters andincidents, which are primarily offset by insurance income in the CSGs results.Employee share award and pension costs increased US$10 million over thecorresponding period. In addition, higher corporate IT projects and regulatorycompliance, including Sarbanes Oxley, contributed approximately US$12 million tothe increased costs. Increased costs were also incurred in the current period in relation to thetransition and integration of the WMC business. Minerals exploration and technology expenditure has increased from US$27 millionto US$48 million, mainly due to increased exploration activity in Africa andBrazil. Forward-looking statements Certain statements contained in this release,including statements in the section entitled 'Introduction' 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- Our Business - ExternalFactors Affecting Our Results' and 'Trends and Uncertainties' included in ourannual report on Form 20-F as amended by the Form 20-F/A for the fiscal yearended 30 June 2005, which we filed with the US Securities and ExchangeCommission (SEC) on 3 October 2005 and 10 November 2005 respectively and isavailable on the SEC's website at 'www.sec.gov'. Nothing in this release shouldbe construed as either an offer to sell or a solicitation of an offer to buy orsell securities in any jurisdiction. Further information on BHP Billiton can be found on our Internet site:www.bhpbilliton.com Australia United KingdomJane Belcher, Investor Relations Mark Lidiard, Investor & Media RelationsTel: +61 3 9609 3952 Mobile: +61 417 Tel: +44 20 7802 4156 Mobile: +44 7769 934031 653 942email: [email protected] email: [email protected] Evans, Media Relations Ariane Gentil, Media RelationsTel: +61 3 9609 2898 Mobile: +61 400 Tel: +44 20 7802 4177 Mobile: +44 78 81 51693 915 8715email: [email protected] email: [email protected] United States South AfricaTracey Whitehead, Investor & Media Alison Gilbert, Investor RelationsRelations Tel: SA +27 11 376 2121 or UK +44 20 7802Tel: US +1 713 599 6100 or UK +44 20 41837802 4031 email: [email protected]: +44 7917 648 093email:[email protected] INTERIM FINANCIAL REPORT For the half year ended 31 December 2005 CONTENTS Financial Statements - Page Consolidated Income Statement - 15 Consolidated Balance Sheet - 16 Consolidated Cash Flow Statement - 17 Consolidated Statement of Recognised Income and Expense - 18 Notes to the Interim Financial Statements - 19 Notes to Financial Statements - Page 1 Acquired operations - 19 2 Business segments - 20 3 Significant items - 22 4 Investments accounted for using the equity method - 23 5 Net finance costs - 23 6 Taxation - 23 7 Earnings per share - 24 8 Dividends - 24 9 Assets classified as held for sale - 25 10 Interest bearing liabilities - 25 11 Total equity - 25 12 Contingent liabilities - 25 13 Commitments - 26 14 Subsequent events - 26 15 IFRS transition - 26 16 Dual Listed Companies Structure and Basis of Preparation of Interim FinancialStatements - 31 17 Accounting Policies - 33 Directors' Report - 42 Directors' Declaration - 44 Auditor's Independence Declaration - 44 Review Report - 45 Consolidated Income Statementfor the half year ended 31 December 2005 +------------------------------------------------+------+-----------------+-----------------+-------------+| | | Half year ended| Half year ended| Year ended|| | | | | || | | 31 December 2005| 31 December 2004| 30 June 2005|+------------------------------------------------+------+-----------------+-----------------+-------------+| | Notes| US$M| US$M| US$M|+------------------------------------------------+------+-----------------+-----------------+-------------+|Revenue together with share of jointly | | | | ||controlled entities' revenue | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Group production | | 15 638| 11 537| 25 037|+------------------------------------------------+------+-----------------+-----------------+-------------+|Third party products | | 2 534| 3 670| 6 113|+------------------------------------------------+------+-----------------+-----------------+-------------+| | | 18 172| 15 207| 31 150|+------------------------------------------------+------+-----------------+-----------------+-------------+|Less: Share of jointly controlled entities' | | (2 880)| (2 410)| (4 428)||external revenue included above | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Revenue | | 15 292| 12 797| 26 722|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other income | | 297| 179| 757|+------------------------------------------------+------+-----------------+-----------------+-------------+|Expenses excluding finance costs | | (10 771)| (9 469)| (19 995)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Share of profits from jointly controlled | 4| 1 441| 862| 1 787||entities | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Profit from operations | | 6 259| 4 369| 9 271|+------------------------------------------------+------+-----------------+-----------------+-------------+|Comprising: | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Group production | | 6 148| 4 338| 9 157|+------------------------------------------------+------+-----------------+-----------------+-------------+|Third party products | | 111| 31| 114|+------------------------------------------------+------+-----------------+-----------------+-------------+| | | 6 259| 4 369| 9 271|+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Financial income | 5| 93| 96| 216|+------------------------------------------------+------+-----------------+-----------------+-------------+|Financial expenses | 5| (308)| (288)| (547)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Net finance costs | 5| (215)| (192)| (331)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Profit before taxation | | 6 044| 4 177| 8 940|+------------------------------------------------+------+-----------------+-----------------+-------------+|Taxation | 6| (1 389)| (847)| (1 876)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Royalty related taxation (net of income tax | 6| (227)| (266)| (436)||benefit) | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Total taxation expense | | (1 616)| (1 113)| (2 312)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Profit after taxation | | 4 428| 3 064| 6 628|+------------------------------------------------+------+-----------------+-----------------+-------------+|Profit attributable to minority interests | | (64)| (111)| (232)|+------------------------------------------------+------+-----------------+-----------------+-------------+|Profit attributable to members of BHP Billiton | | 4 364| 2 953| 6 396||Group | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Earnings per ordinary share (basic) (US cents) | 7| 72.1| 47.7| 104.4|+------------------------------------------------+------+-----------------+-----------------+-------------+|Earnings per ordinary share (diluted) (US cents)| 7| 71.9| 47.5| 103.9|+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Dividends per ordinary share - paid during the | 8| 14.5| 9.5| 23.0||period (US cents) | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Dividends per ordinary share - proposed in the | 8| 17.5| 13.5| 28.0||announcement of the results for the period (US | | | | ||cents) | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+ The accompanying notes form part of these financial statements. Consolidated Balance Sheetas at 31 December 2005+------------------------------------------------+------+-----------------+-----------------+-------------+| | | 31 December 2005| 31 December 2004| 30 June 2005|+------------------------------------------------+------+-----------------+-----------------+-------------+| | Notes| US$M| US$M| US$M|+------------------------------------------------+------+-----------------+-----------------+-------------+|ASSETS | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Current assets | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Cash and cash equivalents | | 809| 757| 1 222|+------------------------------------------------+------+-----------------+-----------------+-------------+|Trade and other receivables | | 3 732| 2 826| 3 216|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other financial assets | | 843| 51| 45|+------------------------------------------------+------+-----------------+-----------------+-------------+|Inventories | | 2 509| 2 042| 2 399|+------------------------------------------------+------+-----------------+-----------------+-------------+|Assets classified as held for sale | 9| 46| -| -|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other | | 142| 202| 150|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total current assets | | 8 081| 5 878| 7 032|+------------------------------------------------+------+-----------------+-----------------+-------------+|Non-current assets | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Trade and other receivables | | 748| 972| 849|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other financial assets | | 927| 251| 255|+------------------------------------------------+------+-----------------+-----------------+-------------+|Inventories | | 83| 8| 71|+------------------------------------------------+------+-----------------+-----------------+-------------+|Investments in jointly controlled entities | | 3 736| 3 045| 3 264|+------------------------------------------------+------+-----------------+-----------------+-------------+|Property, plant and equipment | | 29 005| 19 183| 27 438|+------------------------------------------------+------+-----------------+-----------------+-------------+|Intangible assets | | 455| 481| 461|+------------------------------------------------+------+-----------------+-----------------+-------------+|Deferred tax assets | | 1 180| 2 041| 1 906|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other | | 100| 69| 96|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total non-current assets | | 36 234| 26 050| 34 340|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total assets | | 44 315| 31 928| 41 372|+------------------------------------------------+------+-----------------+-----------------+-------------+|LIABILITIES | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Current liabilities | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Trade and other payables | | 3 633| 2 419| 3 908|+------------------------------------------------+------+-----------------+-----------------+-------------+|Interest bearing liabilities | 10| 1 106| 1 154| 1 298|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other financial liabilities | | 775| -| -|+------------------------------------------------+------+-----------------+-----------------+-------------+|Current tax payable | | 864| 698| 938|+------------------------------------------------+------+-----------------+-----------------+-------------+|Provisions | | 901| 657| 1 040|+------------------------------------------------+------+-----------------+-----------------+-------------+|Deferred income | | 122| 194| 120|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total current liabilities | | 7 401| 5 122| 7 304|+------------------------------------------------+------+-----------------+-----------------+-------------+|Non-current liabilities | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Non-trade payables | | 163| 159| 156|+------------------------------------------------+------+-----------------+-----------------+-------------+|Interest bearing liabilities | 10| 8 425| 4 144| 8 649|+------------------------------------------------+------+-----------------+-----------------+-------------+|Other financial liabilities | | 159| -| -|+------------------------------------------------+------+-----------------+-----------------+-------------+|Deferred tax liabilities | | 1 370| 2 895| 2 372|+------------------------------------------------+------+-----------------+-----------------+-------------+|Provisions | | 4 674| 3 840| 4 613|+------------------------------------------------+------+-----------------+-----------------+-------------+|Deferred income | | 691| 345| 362|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total non-current liabilities | | 15 482| 11 383| 16 152|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total liabilities | | 22 883| 16 505| 23 456|+------------------------------------------------+------+-----------------+-----------------+-------------+|NET ASSETS | | 21 432| 15 423| 17 916|+------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|EQUITY | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Share capital - BHP Billiton Limited | | 1 628| 1 591| 1 611|+------------------------------------------------+------+-----------------+-----------------+-------------+|Share capital - BHP Billiton Plc | | 1 234| 1 234| 1 234|+------------------------------------------------+------+-----------------+-----------------+-------------+|Share premium account | | 518| 518| 518|+------------------------------------------------+------+-----------------+-----------------+-------------+|Reserves | | 265| 145| 153|+------------------------------------------------+------+-----------------+-----------------+-------------+|Retained earnings | | 17 495| 11 508| 14 059|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total equity attributable to members of BHP | | 21 140| 14 996| 17 575||Billiton Group | | | | |+------------------------------------------------+------+-----------------+-----------------+-------------+|Minority interests | | 292| 427| 341|+------------------------------------------------+------+-----------------+-----------------+-------------+|Total equity | 11| 21 432| 15 423| 17 916|+------------------------------------------------+------+-----------------+-----------------+-------------+ The accompanying notes form part of these financial statements. Consolidated Cash Flow Statementfor the half year ended 31 December 2005+-------------------------------------------------------+-+-----------------+-----------------+-------------+| | | Half year ended| Half year ended| Year ended|| | | | | || | | 31 December 2005| 31 December 2004| 30 June 2005|+-------------------------------------------------------+-+-----------------+-----------------+-------------+| | | US$M| US$M| US$M|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Operating activities | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Receipts from customers | | 15 582| 14 161| 28 425|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Payments to suppliers and employees | | (10 246)| (10 329)| (18 801)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Cash generated from operations | | 5 336| 3 832| 9 624|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Dividends received | | 921| 431| 1 002|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Interest received | | 60| 48| 90|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Interest paid | | (209)| (134)| (315)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Income tax paid | | (1 511)| (652)| (1 476)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Royalty related taxation paid | | (289)| (328)| (551)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Net operating cash flows | | 4 308| 3 197| 8 374|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Investing activities | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Purchases of property, plant and equipment | | (2 317)| (1 358)| (3 450)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Exploration expenditure (including amounts capitalised)| | (348)| (199)| (531)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Purchases of investments and funding of jointly | | (5)| (14)| (42)||controlled entities | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Purchases of, or increased investment in, subsidiaries, | (500)| -| (6 198)||operations and jointly controlled entities, net of their | | | ||cash | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Cash outflows from investing activities | | (3 170)| (1 571)| (10 221)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Proceeds from sale of property, plant and equipment | | 37| 38| 153|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Proceeds from sale or redemption of investments | | 108| 73| 227|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Proceeds from sale or partial sale of subsidiaries, | | | | ||operations and jointly controlled entities net of their| | 111| 1| 675||cash | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Net investing cash flows | | (2 914)| (1 459)| (9 166)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Financing activities | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Proceeds from ordinary share issues | | 24| 38| 66|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Proceeds from interest bearing liabilities | | 3 946| 590| 5 668|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Repayment of interest bearing liabilities | | (4 646)| (656)| (1 735)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Purchase of shares by ESOP trusts | | (145)| (29)| (47)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Share repurchase scheme - BHP Billiton Limited | | -| (1 792)| (1 792)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Dividends paid | | (877)| (594)| (1 404)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Dividends paid to minority interests | | (112)| (32)| (238)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Repayment of finance leases | | (1)| (13)| (22)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Net financing cash flows | | (1 811)| (2 488)| 496|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Net increase in cash and cash equivalents | | (417)| (750)| (296)|+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Cash and cash equivalents, net of overdrafts, at | | 1 207| 1 509| 1 509||beginning of period | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Effect of foreign currency exchange rate changes on | | (1)| (5)| (6)||cash and cash equivalents | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+|Cash and cash equivalents, net of overdrafts, at end of| | 789| 754| 1 207||period | | | | |+-------------------------------------------------------+-+-----------------+-----------------+-------------+ The accompanying notes form part of these financial statements. Consolidated Statement of Recognised Income and Expensefor the six months ended 31 December 2005+--------------------------------------------------+------+-----------------+-----------------+-------------+| | | Half year ended| Half year ended| Year ended|| | | | | || | | 31 December 2005| 31 December 2004| 30 June 2005|+--------------------------------------------------+------+-----------------+-----------------+-------------+| | Notes| US$M| US$M| US$M|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Profit for the period | | 4 428| 3 064| 6 628|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Amounts recognised directly in equity | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Actuarial gains/(losses) on pension and medical | | 6| (78)| (149)||plans | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Available for sale investments: | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Valuation gains/(losses) taken to equity | | 4| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Cash flow hedges: | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Gains/(losses) taken to equity | | (35)| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Gains/(losses) transferred to the initial carrying| | (34)| -| -||amount of hedged items | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Exchange fluctuations of foreign currency net | | (12)| 42| 7||assets | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Tax on items recognised directly to or transferred| | 43| 29| 52||from equity | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+| | | (28)| (7)| (90)|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Total recognised income and expense for the period| | 4 400| 3 057| 6 538|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Attributable to minority interests | | (64)| (111)| (232)|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Attributable to members of BHP Billiton Group | | 4 336| 2 946| 6 306|+--------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | || | | | | || | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Effect of change in accounting policy: | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|Impact of adoption of IAS 39 / AASB 139 (net of | | | | ||tax) to: | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+|- retained earnings | 11| 55| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|- hedging reserve | 11| 30| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|- financial assets reserve | 11| 116| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Attributable to minority interests | | -| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+|Attributable to members of BHP Billiton Group | | 201| -| -|+--------------------------------------------------+------+-----------------+-----------------+-------------+| | | | | |+--------------------------------------------------+------+-----------------+-----------------+-------------+ The accompanying notes form part of these financial statements This information is provided by RNS The company news service from the London Stock ExchangeMORE TO FOLLOWRelated Shares:
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