Results for the Half Year Ended 31 December 2014

BHP BILLITON RESULTS FOR THE HALF YEAR Ended 31 DECEMBER 2014

§ The tragic loss of two of our colleagues is a stark reminder that the health and safety of our people must always come first.

§ Underlying EBIT(1) of US$9.2 billion and an Underlying EBIT margin(2) of 32% for the December 2014 half year results demonstrate the strength of BHP Billiton's strategy and the resilience of our portfolio in weaker markets.

§ Improved productivity and reduced capital expenditure allowed us to generate US$4.1 billion of free cash flow(2) and strengthen the balance sheet despite lower prices.

§ We are extending our productivity gains faster than initially anticipated with US$2.4 billion(3) achieved in the period. We expect over US$4.0 billion of productivity gains by the end of the 2017 financial year(4).

§ Our cost competitiveness continues to improve in all our major businesses, with unit cash costs reduced by 29% Western Australia Iron Ore, 15% at Queensland Coal, 13% at Escondida and 8% at Onshore US.

§ We reduced capital and exploration expenditure(5) by 23% to US$6.4 billion in the half year and plan to invest a total of US$12.6 billion in the 2015 financial year and US$10.8 billion in the 2016 financial year.

§ We will remain disciplined. Our plans are flexible and we continue to expect an average investment return(6) of greater than 20% for our portfolio of high-quality development options.

§ Our balance sheet is strong. Net debt(2) at period end fell to US$24.9 billion for a gearing ratio of 22.4% and our A+ credit rating was recently reaffirmed.

§ The Group's interim dividend increased by 5% to 62 US cents per share, representing and Underlying payout ratio(7) of 62%.

§ Should the proposed demerger of South32 be approved, we do not plan to rebase our progressive dividend downwards, implying a higher underlying payout ratio, and South32 will adopt its own dividend policy.

Results for the half year ended 31 December 2014

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "These results demonstrate the effectiveness of our strategy and the quality of our people, assets and processes. Despite significant falls in the prices of our main commodities over the last six months, Group margins remain healthy, free cash flow has increased and we have strengthened our balance sheet. We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns.

We started to prepare for a sustained period of lower prices almost three years ago by increasing our focus on efficiency and lowering our investment. Since then, we have achieved annualised productivity gains approaching US$10 billion and reduced capital spending by almost 40 per cent. We have seen rapid improvement across all of our major businesses. For example, in the last six months alone we have cut unit costs at Western Australia Iron Ore by 29 per cent to nearly US$20 per tonne, achieving an Underlying EBIT margin of 49 per cent despite the structural shift in prices. 

This push for productivity must continue and our proposed demerger will be a catalyst for further progress. Simplification will ensure BHP Billiton's organisation, systems and processes are dedicated to its core assets, allowing us to further improve their productivity. Meanwhile, South32 will benefit from a dedicated management team who can tailor their strategy to suit their own distinct portfolio. Following the proposed demerger, BHP Billiton will maintain its progressive dividend policy and any dividends from South32 will represent additional cash returns to shareholders.

We remain confident about the outlook for our Company. We have the best quality assets and operating capability, a deep understanding of global markets, a portfolio of very high-return growth projects, a strong balance sheet and offer outstanding cash returns to shareholders. The demerger will allow us to continue the process of building an organisation that is truly unique in our sector, and one that is well positioned for success in the face of ever-increasing volatility."

Our overriding commitment is to sustainability

Our commitment is to ensure the health and safety of our people. BHP Billiton reported a Total Recordable Injury Frequency (TRIF) of 4.0 per million hours worked in the December 2014 half year. Despite the continued improvement in TRIF, the tragic loss of two of our colleagues is a stark reminder that the health and safety of our teams must always come first. This is far ahead of any commercial challenge. We achieve nothing if we don't achieve it safely and sustainably. We must continue to pursue effective material and fatal risk management at our operations.

Robust results underpinned by our structured approach to productivity

BHP Billiton delivered robust financial results in the December 2014 half year, a period characterised by volatile commodity markets. Underlying EBITDA declined by 12 per cent to US$14.5 billion as lower average realised prices more than offset the substantial productivity gains that continue to be achieved across the portfolio.

Group production(8) increased by nine per cent during the December 2014 half year with records achieved for eight operations and five commodities. We remain on track to deliver Group production growth of 16 per cent over the two years to the end of the 2015 financial year.

The Group extended its track record of delivering sustainable performance improvement with US$2.4 billion(3) of productivity gains achieved during the period. We remain on track to deliver at least US$4.0 billion(4) of productivity gains from our core portfolio by the end of the 2017 financial year. Volume growth from the ramp up of our high-return development projects increased Underlying EBIT by a further US$1.3 billion. However, lower average realised prices reduced Underlying EBIT by US$6.1 billion, net of price-linked costs, and were the major contributor to the 25 per cent decline in Underlying EBIT to US$9.2 billion. Underlying attributable profit declined by 31 per cent to US$5.4 billion.

By further improving productivity and reducing our rate of investment we delivered a substantial US$4.1 billion of free cash flow during the period, despite weaker commodity prices. BHP Billiton's share of capital and exploration expenditure(5) declined by 23 per cent during the period to US$6.4 billion. Continued improvement in the Group's capital productivity is expected to support a reduction in forecast capital and exploration expenditure for the 2015 financial year to US$12.6 billion, 15 per cent below original guidance. We expect capital and exploration expenditure will further reduce to US$10.8 billion in the 2016 financial year.

In our Petroleum Business, we have moved quickly in response to lower prices and will reduce our operated rig count at Onshore US by approximately 40 per cent by the end of the 2015 financial year. This decisive response exemplifies the Group's value-focused approach to developing our tier-one resource base and the flexibility we have to respond to external market conditions.

Disciplined approach to capital management

BHP Billiton's capital management framework is unchanged. The Group remains committed to a strong balance sheet and a solid A credit rating. These are fundamental enablers of our strategy and have allowed us to maintain our progressive dividend and to invest through the cycle. In this context, net debt finished the period at US$24.9 billion for a gearing ratio of 22.4 per cent and our A+ credit rating was recently reaffirmed.

The Group increased its interim dividend by five per cent to 62 US cents per share which represents a payout ratio of 62 per cent. Following the proposed demerger of South32, BHP Billiton will maintain its progressive dividend policy and any dividends from South32 will represent additional cash returns to shareholders.

Our high-quality portfolio remains a key point of differentiation. We will maintain our track record of investing selectively in high-return growth options within our portfolio through the cycle. By operating within a disciplined framework and by testing all investment decisions against challenging criteria, including buying back our own shares, we will increase the capital efficiency of the Group. We continue to forecast an average investment return of greater than 20 per cent(6) for our portfolio of high-quality development options.

Proposed demerger will largely complete our simplification process in a single step

On 8 December 2014, BHP Billiton announced that the new company it intends to create through its proposed demerger will be called South32. A final Board decision on the proposed demerger will be made once all necessary third party approvals are secured on satisfactory terms. On this basis, BHP Billiton expects to release all shareholder documentation with full details of the demerger in mid-March 2015, with a shareholder vote taking place in early May 2015. The proposed demerger remains on track to be completed in the first half of the 2015 calendar year.

If completed, the proposed demerger has the potential to unlock shareholder value by significantly simplifying the Group and dividing it into two distinct portfolios, each reflecting the common characteristics of their assets. Management processes will be optimised for each portfolio to enable higher levels of performance than possible if managed together. Once simplified, BHP Billiton will be almost exclusively focused on its exceptionally large, long-life iron ore, copper, coal, petroleum and potash basins, retaining full exposure to the early, middle and late stages of the economic development cycle. With fewer assets and a greater upstream focus, BHP Billiton will be able to reduce costs and further improve the productivity of its largest businesses. As a result, BHP Billiton is expected to generate stronger growth in free cash flow and a superior return on its investment. South32 will be an independent global metals and mining company based on a selection of high-quality aluminium, coal, manganese, nickel and silver assets.

Outlook

Economic outlook

Global economic growth slowed slightly over the December 2014 half year with variable performance across the major economies. Chinese growth experienced a moderate slowdown while some other large emerging economies, notably Brazil and Russia, saw periods of contraction. Among developed economies, both the United States and the United Kingdom saw solid growth supported by expansionary monetary policies. In contrast, Europe lost momentum as deflationary pressures increased and Japan saw a pause in its recovery.

The Chinese economy was healthy with slightly slower growth over the period consistent with government targets. Household incomes and consumer spending were resilient and both monetary and fiscal policies remain focused on rebalancing the economy. Consumption will become increasingly important over the medium term as economic reforms promote slower but more sustainable growth.

The United States economy continued to improve with strong employment growth boosting both consumer confidence and spending. Business investment, which had been a soft spot in the recovery, also rose moderately. The economic recovery is expected to continue, supported by lower energy prices and growth in consumer spending, bolstering expectations that the Federal Reserve will raise interest rates in the next 12 months.

Although the Japanese economy was weak over the December 2014 half year, leading indicators such as industrial production and business confidence have begun to show signs of improvement. We expect the recovery to continue at a modest pace, supported by lower energy prices and the weaker yen.

Commodities outlook

Demand for our products remained solid, despite growth moderating as anticipated. However, strong supply growth, most notably in iron ore and petroleum, contributed to weaker prices in the December 2014 half year.

In China, domestic steel demand was subdued due to weakness in the property sector, resulting in record exports to overseas markets where demand saw steady growth. In the 2015 calendar year Chinese demand is expected to recover moderately, supplemented by healthy demand growth in the rest of the world. While overall Chinese demand for iron ore was flat over the period, imports nonetheless increased as high-cost domestic mine supply was displaced by lower-cost seaborne supply. As the marginal cost of supply fell, the iron ore spot price also declined to levels which are now more reflective of the medium-term fundamentals.

In metallurgical coal, China's seaborne demand declined following a rise in domestic supply. Although several producers outside China have announced production cuts, the volume removed from the market has been less than anticipated and surplus supply is expected to persist in the short term. The thermal coal market also continued to be well supplied by Indonesian and Australian exports while strong import demand growth from India, driven by seasonal restocking, partially compensated for moderating Chinese demand.

Crude oil prices fell in the first half of the 2015 financial year as a result of growing supply, a lower demand outlook and OPEC's decision to maintain production levels. With prices at approximately half the average of the previous three years, the supply response required for a cyclical rebalancing of the market is under way. While a near-term recovery in price depends on the rate that production growth slows, the medium-term outlook appears positive as higher prices will be required to induce the new supply needed to offset natural field decline.

In the United States, domestic gas prices came under pressure as continued supply growth allowed storage inventories to rebuild despite relatively normal seasonal demand. In the longer term, industrial demand growth, rising gas-fired power generation and LNG exports are expected to support prices. In the LNG market, mild winter temperatures across North Asia and high storage levels have limited spot demand while the ramp-up of new export projects and lower crude oil prices are expected to temper the market in the second half of the financial year.

Copper prices trended lower during the period reflecting concerns over Chinese demand and a stronger US dollar. While prices are expected to remain volatile, market fundamentals are compelling over the medium term with robust demand growth expected and supply constrained by declining ore grades and a lack of quality development options. The current low prices are expected to intensify the looming supply deficit, as projects are deferred or delayed.

The nickel price declined following a sharp rise in the second half of the 2014 financial year, as the market remained well supplied despite the ban on ore exports from Indonesia. Aluminium demand growth remained strong but new supply, mostly from China, continues to offset the curtailment of high cost capacity. Strong aluminium demand flowed through to higher alumina prices during the period. The alumina price was also supported by the Indonesian ore ban, which removed low-cost bauxite supply for Chinese alumina refineries.

Wealth creation and urbanisation will remain the primary drivers of commodities demand while the ongoing development of emerging economies provides particular support for industrial metals, energy and fertilisers. Our iron ore, copper, coal, petroleum and potash businesses provide exposure to this long-term development cycle and will allow us to target high-return investments as markets continue to evolve.

In summary, we expect sustained growth in China, stronger consumer spending in the US and lower energy prices to support an improvement in global economic activity over the course of the 2015 calendar year. However some commodity prices will remain relatively volatile and oversupply in many of our markets will continue to moderate prices. In the medium term, the structural requirement to induce new supply to meet demand should be supportive for prices in some of our core commodities, most notably in copper and oil. Our diversification, competitive cost position, strong balance sheet and the success of our ongoing productivity initiatives are competitive advantages and provide us with unrivalled flexibility in the face of ever-increasing volatility.

Projects

At the end of the December 2014 half year, BHP Billiton had seven major projects under development with a combined budget of US$13.5 billion.

The Escondida Oxide Leach Area Project (OLAP) was successfully completed during the December 2014 half year and the BMA Hay Point Stage Three Expansion project loaded first coal on 12 January 2015, both on revised schedule and budget. During the period, the Group approved a US$361 million increase to the budget of the Escondida Organic Growth Project 1 to US$4.2 billion. The budget revision reflected challenges associated with contractor progress which have since been addressed and the project remains on original schedule.

BHP Billiton's share of capital and exploration expenditure(5) declined by 23 per cent during the December 2014 half year to US$6.4 billion. Continued improvement in the Group's capital productivity has supported a further reduction in planned capital and exploration expenditure for the 2015 financial year to US$12.6 billion, 15 per cent below original guidance.

(i) Includes US$88 million of capitalised deferred stripping attributable to non-controlling interests (December 2013 half year: US$126 million; June 2014 financial year: US$243 million).

Projects completed during the December 2014 half year

Other projects in progress at the end of the December 2014 half year

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

(ii) Amount subject to finalisation.

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

(iv) Excludes announced pre-commitment funding.

Income statement

To provide additional clarity into the underlying performance of our operations we present Underlying EBIT, which is a measure used internally. Underlying EBIT represents Profit from operations excluding exceptional items (which are described on pages 10 and 11) as set out in the following table:

Underlying EBIT

The following table and commentary describes the approximate impact of the principal factors that affected Underlying EBIT for the December 2014 half year compared with the December 2013 half year:

The following table reconciles principal factors shown on the previous page with the Group's productivity gains:

Volumes

Productivity-led volume efficiencies and the ramp up of major projects underpinned a nine per cent increase in Group production(8) in the December 2014 half year and a US$1.9 billion increase in Underlying EBIT. Western Australia Iron Ore was the major contributor as the ramp-up of Jimblebar and improvements in availability, utilisation and rate across its integrated supply chain supported a US$1.2 billion increase in Underlying EBIT. Significant growth in Onshore US liquids volumes, which reflected continued momentum in the Black Hawk and Permian, supported a US$601 million volume-related increase in Petroleum's Underlying EBIT.

We remain on track to generate Group production(8) growth of 16 per cent over the two years to the end of the 2015 financial year.

Prices

Demand for our products remained solid, despite growth moderating as anticipated. However strong supply growth, most notably in iron ore and petroleum, contributed to weaker prices in the December 2014 half year.

Lower average realised prices reduced Underlying EBIT by US$6.6 billion in the December 2014 half year. A 38 per cent decline in the average realised price of iron ore was the major contributor and reduced Underlying EBIT by US$4.6 billion. A 17 per cent reduction in average realised oil prices reduced Underlying EBIT by US$802 million, while weaker coal prices, both thermal and coking, reduced Underling EBIT by a further US$775 million.

A reduction in price-linked costs increased Underlying EBIT by US$413 million during the period and primarily reflected lower royalty charges in our Iron Ore Business.

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

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

(ii) Excludes internal sales.

(iii) Includes third party product.

(iv) Includes impact of provisional pricing and finalisation adjustments which decreased EBIT by US$210 million in the December 2014 half year (December 2013 half year: US$196 million increase).

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

Controllable cash costs

A broad-based improvement in productivity underpinned a significant US$1.8 billion reduction in controllable cash costs during the period.

Operating cash costs

Across our business, the productivity of our workforce continued to improve as we sharpened our focus on the highest value-adding activities. In total, improved labour and contractor productivity increased Underlying EBIT by US$725 million. An improvement in Group equipment productivity, as exemplified by a 14 per cent increase in truck utilisation at Escondida, supported a further US$516 million increase in Underlying EBIT. In total, operating cash costs declined by US$1.8 billion during the period.

Exploration and business development

The Group's exploration and business development expenditure was in line with the December 2013 half year. Our exploration program remains focused on greenfield copper targets within Chile, Peru and the South-West United States, and petroleum liquids opportunities in the Gulf of Mexico, Western Australia and Trinidad and Tobago.

Other costs

Exchange rates

A stronger US dollar increased Underlying EBIT by US$626 million during the period. This included the restatement of monetary items in the balance sheet which increased Underlying EBIT by US$220 million.

The following exchange rates have been applied:

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

Inflation

Inflation had an unfavourable impact on all businesses and reduced Underlying EBIT by US$359 million during the period. This was most notable in Australia, Chile and South Africa, which accounted for over 85 per cent of the total variance.

Fuel and energy

A reduction in diesel prices and lower consumption, particularly in our Iron Ore and Coal Businesses, supported a US$233 million increase in Underlying EBIT.

Non-cash

An increase in non-cash charges reduced Underlying EBIT by US$938 million during the December 2014 half year. Impairment charges associated with the divestment of conventional petroleum assets in North Louisiana and unconventional gas assets in the Pecos field in the Permian totalled US$328 million. An increase in non-cash charges in our Copper Business reduced Underlying EBIT by US$442 million and reflected a lower capitalisation rate for deferred stripping at Escondida and Pampa Norte.

Asset sales

The contribution of asset sales to Underlying EBIT was largely unchanged from the prior period.

Ceased and sold operations

Underlying EBIT from ceased and sold operations decreased by US$39 million in the period and largely reflected the closure of the Nickel West Leinster Perseverance underground mine in November 2013.

Other items

Lower average realised prices received by our equity accounted investments and transaction costs associated with the proposed demerger accounted for the US$197 million decrease in Underlying EBIT reported in other items.

Net finance costs

Net finance costs decreased by US$296 million to US$232 million. The decrease reflected foreign exchange gains on finance leases and the early redemption of the Petrohawk Energy Corporation Senior Notes in August 2014, resulting in a gain on redemption and lower interest expense.

Taxation expense

The Group's adjusted effective tax rate, which excludes the influence of exchange rate movements, remeasurement of deferred tax assets associated with the Minerals Resource Rent Tax (MRRT) and exceptional items, was 31.3 per cent (31 December 2013: 32.5 per cent). This adjusted effective tax rate is expected to remain in the range of 30 per cent to 34 per cent for the 2015 financial year.

Total taxation expense, including royalty-related taxation, exceptional items and exchange rate movements, was US$3.8 billion, representing a statutory effective tax rate of 44.2 per cent (31 December 2013: 28.4 per cent).

Government imposed royalty arrangements calculated by reference to profits are reported as royalty-related taxation. The MRRT increased taxation expense by US$643 million in the December 2014 half year (December 2013 half year: decrease of US$462 million). This included an exceptional item of US$809 million tax expense (December 2013 half year: US$ nil) for the derecognition of deferred tax assets upon the repeal of the MRRT legislation in Australia.

Exchange rate movements increased taxation expense by US$290 million (December 2013 half year: decrease of US$46 million).

Other royalty and excise arrangements which are not profit based are recognised as operating costs within Profit before taxation. These amounted to US$1.1 billion during the period (December 2013 half year: US$1.4 billion).

Exceptional Items

Repeal of Minerals Resource Rent Tax legislation

On 2 September 2014, legislation to repeal the Minerals Resource Rent Tax (MRRT) in Australia received the support of both Houses of Parliament and took effect on 30 September 2014. As a result, the Group derecognised an MRRT deferred tax asset of US$809 million (after tax consequences) and a corresponding taxation charge of US$809 million was recognised in the December 2014 half year.

Impairment of Nickel West assets

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

Cash flows

Free cash flow, comprising net operating cash flows less net investing cash flows, increased by US$709 million to US$4.1 billion during the period.

Net operating cash flows after interest and tax decreased by 12 per cent to US$10.4 billion for the period. The major contributor was the US$1.5 billion decrease in cash generated from operations (after changes in working capital balances).

Net investing cash outflows decreased by US$2.1 billion to US$6.3 billion for the period and reflected a US$1.9 billion reduction in capital and exploration expenditure. Expenditure on major projects totalled US$5.2 billion, including US$2.5 billion on Petroleum projects and US$2.7 billion on Minerals projects. Sustaining capital expenditure and other items totalled US$1.6 billion. Exploration expenditure was US$422 million, including US$359 million classified within net operating cash flows.

Net financing cash flows changed from a net inflow of US$1.8 billion to a net outflow of US$6.8 billion primarily due to a decrease in proceeds from borrowings of US$5.2 billion. An increase in repayments of interest bearing liabilities of US$1.7 billion and a decrease in contributions from non-controlling interests of US$1.3 billion also contributed to the change during the period.

Net debt, comprising interest bearing liabilities less cash, finished the period at US$24.9 billion, a decrease of US$847 million compared to the net debt position at 30 June 2014.

Dividend

BHP Billiton has a progressive dividend policy. The aim of this policy is to at least maintain or steadily increase our base dividend in US dollars terms at each half-yearly payment. Our Board today determined to pay an interim dividend of 62 US cents per share. We will seek to steadily increase or at least maintain the dividend per share in US dollar terms at each half-yearly payment following the proposed demerger, implying a higher payout ratio.

The interim dividend to be paid by BHP Billiton Limited will be fully franked for Australian taxation purposes. Dividends for the BHP Billiton Group are determined in US dollars. However, BHP Billiton Limited dividends are mainly paid in Australian dollars, and BHP Billiton Plc dividends are mainly paid in pounds sterling and South African rand to shareholders on the UK section and the South African section of the register, respectively. Currency conversions will be based on the foreign currency exchange rates on the Record Date, except for the conversion into South African rand, which will take place on the last day to trade (cum dividend) on JSE Limited, being 6 March 2015. Please note that all currency conversion elections must be registered by the Record Date, being 13 March 2015. Any currency conversion elections made after this date will not apply to this interim dividend.

The timetable in respect of this dividend will be:

American Depositary Shares (ADSs) each represent two fully paid ordinary shares receive dividends accordingly.

BHP Billiton Plc shareholders registered on the South African section of the register will not be able to dematerialise or rematerialise their shareholdings between the dates of 9 and 13 March 2015 (inclusive), nor will transfers between the UK register and the South African register be permitted between the dates of 6 and 13 March 2015 (inclusive).

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

Debt management and liquidity

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

The Group has a US$6.0 billion commercial paper program backed by a US$6.0 billion revolving credit facility. The facility has a five year maturity and expiry date in May 2019 with two one-year extension options. As at 31 December 2014, the Group had US$240 million outstanding in the US commercial paper market and the Group's cash and cash equivalents on hand were US$6.1 billion.

Corporate governance

As announced on 19 August 2014, David Crawford retired as an independent, Non-executive Director on 20 November 2014.

On 12 December 2014, we announced the appointment of Ms Carolyn Hewson as Chairman of the Remuneration Committee. The current members of the Board's committees are:

On 1 January 2015 the Finance Committee was dissolved and the responsibilities of the former Finance Committee have been assumed by the Risk and Audit Committee or the Board.

Business summary(i)

A summary of the performance of the Business for the December 2014 and December 2013 half year is presented below.

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

(ii) Revenue is based on Group realised prices and includes third party products. Sale of third party products by the Group contributed revenue of US$1,034 million and Underlying EBIT of US$31 million (2013: US$1,739 million and US$85 million).

(iii) Underlying EBIT is earnings before net finance costs, taxation expense and any exceptional items. Underlying EBIT includes the Group's share of net finance costs and taxation expense of US$269 million related to equity accounted investments (2013: net finance costs and taxation expense of US$367 million).

(iv) Capital expenditure is presented on a cash basis and excludes capitalised interest and capitalised exploration. Comparative period capital expenditure was previously reported on an accruals basis and has been restated on a cash basis.

(v) Includes US$63 million capitalised exploration (2013: US$162 million).

(vi) Includes a net reversal of US$8 million exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2013: US$98 million exploration expenditure previously capitalised, written off as impaired).

(vii) Includes Group Functions, unallocated operations, consolidation adjustments and external sales of freight and fuel to third parties.

Petroleum and Potash

Total petroleum production increased by nine per cent in the December 2014 half year to a record 131.0 MMboe. A 24 per cent increase in liquids production to 62.1 MMboe was supported by a 71 per cent increase in Onshore US liquids volumes and strong performance at both Pyrenees and Atlantis. Natural gas production declined by two per cent to 413 bcf as improved uptime at North West Shelf and Macedon was offset by lower seasonal demand at Bass Strait and the divestment of Liverpool Bay which was completed in the 2014 financial year.

Total petroleum production guidance for the 2015 financial year remains unchanged at 255 MMboe.

Underlying EBIT for Petroleum decreased by US$390 million to US$2.2 billion in the December 2014 half year. Strong volume growth increased Underlying EBIT by US$601 million, although this was offset by lower average realised petroleum prices which reduced Underlying EBIT by US$754 million, net of price-linked costs. Impairment charges (non-cash) associated with the divestment of conventional petroleum assets in North Louisiana and unconventional gas assets in the Pecos field in the Permian reduced Underlying EBIT by US$328 million.

Petroleum capital expenditure declined by 14 per cent to US$2.6 billion in the December 2014 half year and included US$1.9 billion of Onshore US drilling and development expenditure. We continue to realise significant improvements in shale drilling and completions efficiency as drilling costs in the Black Hawk declined by 17 per cent to US$3.7 million per well during the period and spud to sales timing improved by 11 per cent. In addition to improved capital efficiency, we achieved an eight per cent reduction in unit cash costs at Onshore US. In our Conventional business, we remain focused on high-return infill drilling opportunities in the Gulf of Mexico and life extension projects at Bass Strait and North West Shelf.

(i) Production volumes are reported net of royalties and are closely aligned with sales volumes.

In response to weaker prices, the Company will reduce its Onshore US operated rig count from 26 at period end to 16 by the end of the 2015 financial year. The majority of the revised drilling program will be focused on our liquids-rich Black Hawk acreage with activity in the Permian and Hawkville limited to the retention of core acreage. The Company's dry gas development program will be reduced to one operated rig in the Haynesville, with a focus on continued drilling and completions optimisation ahead of full field development.

The reduction in drilling activity will not impact 2015 financial year production guidance and we remain confident that shale liquids volumes will rise by approximately 50 per cent in the period. As a result of the reduction in drilling activity, we now expect Onshore US drilling and development expenditure of approximately US$3.4 billion for the 2015 financial year, 15 per cent below original guidance of US$4 billion. A further reduction to approximately US$2.2 billion is expected in the 2016 financial year. We continue to monitor market conditions and will exercise the flexibility within our shale portfolio to maximise value.

We have concluded the marketing of our Fayetteville acreage and have decided to retain it within our portfolio to maximise value. The longer-term development of the Fayetteville remains an attractive option and with the majority of our acreage held by production, we will continue to defer investment for value, consistent with our long-term outlook for gas prices.

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

(i) Fayetteville net wells drilled and completed and net productive wells restated post period end.

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

(iii) The number of wells drilled and completed can vary significantly from period to period based on changes in rig activity and the inventory of wells drilled but not yet completed at period end.

(iv) Change in productive well count includes reduction associated with North Louisiana acreage and Pecos acreage divestments.

Petroleum exploration expenditure for the December 2014 half year was US$268 million, of which US$244 million was expensed. Total petroleum exploration expenditure for the 2015 financial year is now forecast to be US$600 million, a 20 per cent reduction from original guidance. The program will remain focused on the Gulf of Mexico, Western Australia and Trinidad and Tobago.

The seismic acquisition program in Trinidad and Tobago was successfully completed for the seven deep water blocks accessed between 2012 and 2014(9). The acquisition for the two blocks awarded in the 2014 deep water bid round is progressing on schedule(10).

Potash recorded an Underlying EBIT loss of US$112 million which was largely unchanged from the prior period.

On 20 August 2013, BHP Billiton announced an investment of US$2.6 billion to finish the excavation and lining of the Jansen Potash project production and service shafts, and to continue the installation of essential surface infrastructure and utilities. The overall project was 39 per cent complete and within the approved budget at the end of the period.

With our investment premised on the attractive longer-term market fundamentals for potash, we will continue to review the appropriate pace and level of development activity and capital expenditure for the project.

Financial information for the Petroleum and Potash Business for the December 2014 and December 2013 half years is presented below.

(i) Petroleum revenue from Group production includes: crude oil US$4,001 million (2013: US$4,076 million), natural gas US$1,439 million (2013: US$1,380 million), LNG US$833 million (2013: US$803 million), NGL US$429 million (2013: US$420 million) and other US$190 million (2013: US$105 million).

(ii) Includes US$24 million of capitalised exploration (2013: US$138 million).

(iii) Includes US$12 million of exploration expenditure previously capitalised, written off as impaired (included in D&A) (2013: US$98 million).

(iv) Includes US$328 million of impairments as a result of the divestment of assets in North Louisiana and the Pecos field in the Permian.

(v) Includes Macedon, Pyrenees, Stybarrow, Neptune, Minerva, Angostura, Genesis, Pakistan, divisional activities and business development. Also includes the Caesar oil pipeline and the Cleopatra gas pipeline which are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

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

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

(viii) Includes an expense of US$115 million incurred in November 2013 related to the closure of the UK pension plan. Also includes Liverpool Bay which was divested in March 2014.

Copper

Total copper production(11) decreased by two per cent in the December 2014 half year to 813 kt. Escondida copper production decreased by two per cent to 553 kt as strong operating performance was offset by the impact of water restrictions, two days of industrial action and a power outage throughout Northern Chile. Pampa Norte production increased by 22 per cent to 125 kt as Spence benefited from higher grades and recoveries while Olympic Dam copper production increased by four per cent to 82 kt. Antamina copper production declined by 37 per cent to 53 kt as lower grades more than offset record mill throughput for the period, consistent with the mine plan.

BHP Billiton total copper production guidance for the 2015 financial year is under review following an electrical failure which caused a mill outage at Olympic Dam in February 2015. The mill is expected to be offline for approximately six months with an associated reduction in copper production of between 60 to 70 kt. An update will be provided in the March 2015 Operational Review. Escondida remains on track to deliver 1.27 Mt of copper production in the 2015 financial year.

Underlying EBIT for the December 2014 half year declined by US$681 million to US$2.2 billion. Lower average realised prices decreased Underlying EBIT by US$763 million, net of price-linked costs. In contrast, productivity-led cost efficiencies increased Underlying EBIT by US$677 million. In this context, Escondida unit cash costs declined by 13 per cent as the operation benefited from significant productivity improvements, which included a 14 per cent increase in truck utilisation.

(i) Royalties are reported within taxation expense.

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

An increase in non-cash charges reduced Underlying EBIT by US$442 million and reflected a lower capitalisation rate for deferred stripping at Escondida and Pampa Norte, consistent with mine plans. Lower volumes and average realised prices at Antamina contributed to a reduction in our share of profit after tax from equity accounted investments which reduced Underlying EBIT by a further US$170 million.

The Escondida Oxide Leach Area Project was successfully completed during the December 2014 half year on revised schedule and budget. The Escondida Organic Growth Project 1 (OGP1) remains on schedule to commence first production in the first half of the 2015 calendar year and will create 152 kt per day of valuable copper concentrator capacity. Following the commissioning of OGP1, we have the option to extend the life of the Los Colorados concentrator enabling the utilisation of three concentrators. The Escondida Water Supply project, which is on schedule for commissioning in the 2017 calendar year, is a critical component of our three concentrator strategy as we balance increasing water requirements with our commitment to ensure sustainable use of aquifers.

Financial information for the Copper Business for the December 2014 and December 2013 half years is presented below.

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

(ii) Includes Spence and Cerro Colorado.

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

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

(v) Includes statutory adjustments for Antamina and Resolution to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs and taxation expense of US$41 million (2013: net finance costs and taxation expense of US$181 million).

Iron Ore

Iron ore production increased by 16 per cent in the December 2014 half year to a record 113 Mt. Western Australia Iron Ore (WAIO) production increased by 15 per cent to a record 124 Mt (100 per cent basis) as the ramp-up of Jimblebar continued and we improved the availability, utilisation and rate of our integrated supply chain. WAIO also achieved record sales volumes of 126 Mt (100 per cent basis) as our strategy of increasing the percentage of direct to ship ore unlocks further port capacity. Samarco production increased by 29 per cent to a record 14 Mt (100 per cent basis) as the ramp-up of the fourth pellet plant continues to plan.

Total iron ore production guidance for the 2015 financial year remains unchanged at 225 Mt. Our WAIO business continues to perform strongly and we have maintained production guidance of 245 Mt (100 per cent basis) for the 2015 financial year.

Underlying EBIT for the December 2014 half year decreased by US$2.3 billion to US$4.2 billion. Lower average realised prices reduced Underlying EBIT by US$4.3 billion, net of price-linked costs. In contrast, record sales volumes and a substantial reduction in controllable cash costs increased Underlying EBIT by US$1.2 billion and US$727 million, respectively. In this context, WAIO reduced its unit cash costs by 29 per cent to US$20.35 per tonne as the operation benefited from economies of scale, a reduction in overhead, contractor, labour and maintenance costs and a stronger US dollar. As a result of these substantial gains, WAIO is well placed to achieve its targeted reduction in unit costs to below US$20 per tonne(12) ahead of schedule.

The tie-in of shiploader 2 at WAIO was successfully completed in January 2015. There are currently no major projects in execution at WAIO and further growth in supply chain capacity to 270 Mtpa (100 per cent basis) is expected to be achieved without the need for additional fixed plant investment. Beyond that, the Inner Harbour Debottlenecking and Jimblebar Phase 2 projects(13) have the potential to increase total capacity to 290 Mtpa (100 per cent basis) by the end of the 2017 financial year at very low capital cost.

Financial information for the Iron Ore business for the December 2014 and December 2013 half years is presented below.

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

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

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

(iv) Includes statutory adjustments for Samarco to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance costs and taxation expense of US$151 million (2013: net finance costs and taxation expense of US$145 million).

(v) Comparative period has been restated to reallocate towage services from West Australia Iron Ore to Other.

Coal

Metallurgical coal production increased by 21 per cent in the December 2014 half year to a record 26 Mt. Queensland Coal delivered record production and sales volumes primarily as a result of increased equipment utilisation and the successful ramp-up of the Caval Ridge mine. Illawarra Coal also achieved record production of 4.7 Mt in the December 2014 half year as maintenance efficiencies supported higher equipment utilisation rates.

Energy coal production decreased by three per cent in the December 2014 half year to 36 Mt. As anticipated, drought conditions constrained production volumes at Cerrejón given the need to manage dust emissions, while Navajo Coal production declined following lower customer demand arising from the closure of three of the five power units at the Four Corners Power Plant. New South Wales Energy Coal production also declined as a result of processing lower-yield coal during the period and an additional planned wash-plant outage. At South Africa Energy Coal, higher wash-plant utilisation contributed to a 10 per cent increase from the December 2013 half year which was affected by industrial action.

Metallurgical coal production guidance for the 2015 financial year remains unchanged at 47 Mt ahead of the wet season and planned longwall moves at the Crinum, Dendrobium and West Cliff underground mines. Energy coal production guidance for the 2015 financial year remains unchanged at 73 Mt.

Underlying EBIT for the December 2014 half year declined by US$332 million to US$178 million. Lower average realised prices reduced Underlying EBIT by US$715 million, net of price-linked costs, although this was partially offset by a stronger US dollar which increased Underlying EBIT by US$156 million.

A reduction in controllable cash costs increased Underlying EBIT by US$252 million during the period. At Queensland Coal, unit cash costs declined by 15 per cent to US$70.75 per tonne as the operation benefited from increased equipment and wash-plant utilisation rates and a continued focus on labour, contractor and maintenance productivity.

On 12 January 2015, the BMA Hay Point Stage Three Expansion project loaded first coal on revised schedule and budget. The Appin Area 9 project remains on schedule and budget.

Financial information for the Coal Business for the December 2014 and December 2013 half years is presented below.

(i) Cerrejόn, Newcastle Coal Infrastructure Group, Port Kembla Coal Terminal and Richards Bay Coal Terminal are equity accounted investments and are reported on a proportionate consolidation basis (with the exception of net operating assets).

(ii) Predominantly comprises divisional activities and greenfield projects.

(iii) Includes statutory adjustments for Cerrejόn, Newcastle Coal Infrastructure Group, Port Kembla Coal Terminal and Richards Bay Coal Terminal to reconcile the proportionately consolidated business total to the statutory result. Statutory Underlying EBIT includes net finance income and taxation expense of US$77 million (2013: net finance income and taxation expense of US$41 million).

Aluminium, Manganese and Nickel

Alumina production was broadly unchanged in the December 2014 half year at 2.6 Mt and included record production at the Alumar refinery. Worsley achieved record production in the December 2014 quarter as it recovered from a series of calciner outages in the prior period. Aluminium production decreased by 16 per cent in the December 2014 half year to 517 kt as the suspension of smelter capacity at Alumar and cessation of smelting activities at Bayside during the 2014 financial year more than offset record production at Mozal.

Manganese ore production increased by seven per cent in the December 2014 half year to a record 4.6 Mt as an improvement in ore recovery at Mamatwan and an increase in plant availability at Wessels underpinned record production at Hotazel. Manganese alloy production increased by 23 per cent in the December 2014 half year, supported by increased smelter stability and availability at both TEMCO and Metalloys.

Nickel production declined by 11 per cent in the December 2014 half year to 70 kt. Lower volumes reflected the closure of the Perseverance underground mine at Nickel West in November 2013 and lower grades and recoveries at Cerro Matoso. Nickel West and Cerro Matoso production guidance for the 2015 financial year remains unchanged at 95 kt and 43 kt, respectively. Approximately 55 per cent of Nickel West production is expected to be sourced from third party feed.

Underlying EBIT for the December 2014 half year increased by US$568 million to US$716 million. Higher average realised prices for alumina, aluminium and nickel, net of price-linked costs, and a stronger US dollar increased Underlying EBIT by US$368 million and US$170 million, respectively. A reduction in controllable cash costs increased Underlying EBIT by a further US$51 million and reflected a continued focus on labour and contractor productivity.

On 12 November 2014, the Group announced that the review of its Nickel West business was complete and the preferred option, the sale of the business, was not achieved on an acceptable basis. As a result of operational decisions made subsequent to the conclusion of this process, an impairment charge of US$290 million (after tax benefit) was recognised in the December 2014 half year as an exceptional item. At this time, Nickel West remains in the BHP Billiton portfolio and the Company continues to operate the business to maximise production, reduce operating costs and increase free cash flow.

In contemplation of the proposed demerger, BHP Billiton and Anglo American agreed to make certain changes to the agreement which governs their interests in the Manganese business. Subject to obtaining the required approvals for the agreement, the changes will result in BHP Billiton and Anglo American agreeing to share joint control of the Manganese business. BHP Billiton will discontinue consolidation of the Manganese business and account for its 60 per cent interest as an equity accounted joint venture. BHP Billiton will therefore derecognise the existing carrying amounts of all assets, liabilities and the non-controlling interest in the Manganese business attributed to Anglo American and initially record its retained 60 per cent interest at fair value. The remeasurement at fair value will give rise to an estimated gain of approximately US$2 billion. There are no tax consequences arising from the remeasurement of the Manganese business.

Financial information for the Aluminium, Manganese and Nickel Business for the December 2014 and December 2013 half years is presented below.

(i) Predominantly comprises divisional activities and business development.

The financial report on pages 29 to 51 has been prepared in accordance with IFRS. This news release including the financial report is unaudited. Variance analysis relates to the relative financial and/or production performance of BHP Billiton and/or its operations during the December 2014 half year compared with the December 2013 half year, unless otherwise noted.

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

The following footnotes apply to this profit release:

(1) Underlying attributable profit, Underlying EBIT and Underlying EBITDA are used to reflect the underlying performance of BHP Billiton. Underlying attributable profit is Attributable profit excluding any exceptional items. Underlying EBIT is earnings before net finance costs, taxation and any exceptional items. Underlying EBITDA is Underlying EBIT before depreciation, impairments and amortisation of US$5,268 million for the half year ended 31 December 2014 and US$4,136 million for the half year ended 31 December 2013. We believe that Underlying attributable profit, Underlying EBIT and Underlying EBITDA provide useful information, but should not be considered as an indication of, or as an alternative to, Attributable profit as an indicator of actual operating performance or as an alternative to cash flow as a measure of liquidity.

Underlying EBIT includes net finance costs and taxation expense related to equity accounted investments of US$269 million (2013: US$367 million).

Underlying EBITDA includes depreciation, impairments and amortisation related to equity accounted investments of US$182 million (2013: US$134 million).

(2) Non-IFRS measures are defined as follows:

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

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

· Net debt - comprises Interest bearing liabilities less Cash and cash equivalents.

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

· Underlying attributable profit - comprises Profit after taxation attributable to members of BHP Billiton Group less exceptional items as described in note 3 to the financial report.

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

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

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

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

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

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

(4) Represents planned annualised volume and cost productivity gains to be delivered from our core portfolio only, relative to the 2014 financial year. Core portfolio includes: Western Australia Iron Ore, Samarco, Queensland Coal, NSW Energy Coal, Cerrejón, Escondida, Olympic Dam, Pampa Norte, Antamina, Onshore US, Shenzi, Mad Dog, Atlantis, Angostura, North West Shelf, Bass Strait, Pyrenees, Macedon and the Jansen project.

(5) Represents the share of capital and exploration expenditure attributable to BHP Billiton shareholders on a cash basis. Includes BHP Billiton proportionate share of equity accounted investments; excludes capitalised deferred stripping and non-controlling interests. Capitalised deferred stripping of US$1.0 billion to US$1.3 billion (BHP Billiton share) expected in the 2015 and 2016 financial years.

(6) Ungeared, post tax, nominal rate of return for our future investments; valuation date 1 January 2015.

(7) Underlying payout ratio - represents dividends and buy-backs, divided by Underlying attributable profit.

(8) Refers to copper equivalent production based on average realised prices for the 2013 financial year.

(9) 17,687 square kilometres 3D seismic acquisition completed over Trinidad and Tobago Blocks 5, 6, 14, 23a, 23b, 28 and 29.

(10) 3,528 square kilometres 3D seismic acquisition in progress over Trinidad and Tobago Blocks 3 and 7.

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

(12) Unit cash cost target based on real 2014 terms, AUD:USD exchange rate of 0.91.

(13) Subject to Board approval.

Forward looking statements

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

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

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

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

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

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

Non-IFRS financial information

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

No offer of securities

Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities or securities in the new company (if the demerger is implemented) in any jurisdiction, or be treated or relied upon as a recommendation or advice by BHP Billiton.

Reliance on third party information

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

No financial or investment advice - South Africa

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

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