Final Results
BHP Billiton Limited
28 August 2003
BHP Billiton Limited is issuing this announcement to fulfil disclosure
obligations arising from its secondary listing on the London Stock Exchange.
The text of this release is identical to that issued by BHP Billiton Plc
earlier.
Date 28 August 2003
Number 30/03
BHP BILLITON RESULTS FOR THE YEAR ENDED 30 JUNE 2003
• EBITDA up 9.2% to US$5,129 million and EBIT up 12.2% to US$3,481 million,
both from continuing operations.
• Attributable profit of US$1,920 million and earnings per share of 30.9 US
cents (both from continuing operations) impacted by adverse movements in
exchange rates compared with the corresponding period.
• Total merger benefits and cost savings of US$595 million since the merger,
against a target of US$770 million by 30 June 2005.
• Production for all major minerals commodities higher or in line with last
year:
• Record Western Australian iron ore production and shipments, in
response to strong demand in all Asian markets, particularly China.
• Record nickel production and record plant throughput at EkatiTM
diamonds, reflecting benefits of Operating Excellence programs.
• Available cash flow (after interest and tax) remains strong at US$3,590
million.
• Five projects commissioned since 1 July 2002 - all on or below budget and
on or ahead of schedule. Three major projects approved.
• 14 major projects in development; 13 currently tracking on or ahead of
cost and commissioning targets.
• Dividends of 14.5 US cents per share declared during the year, an increase
of 11.5%.
FROM CONTINUING OPERATIONS AND 2003 2002 Change %
EXCLUDING EXCEPTIONAL ITEMS US$M US$M
Year ended 30 June
Turnover (1) (2) 17 506 15 228 15.0%
EBITDA (1) (2) (3) (4) 5 129 4 697 9.2%
EBIT (1) (2) (3) (4) 3 481 3 102 12.2%
Attributable profit (1) (2) (3) 1 920 1 866 2.9%
Available cash flow (1) (5) 3 590 3 600 (0.3)%
Basic earnings per share (US cents) (1) (2) (3) 30.9 31.0 (0.3)%
EBITDA interest coverage (times) (1) (2) (3) (4) (6) 12.7 10.9 16.5%
Dividends per share (US cents) 14.5 13.0 11.5%
(1) From continuing operations, excluding the results of the Group's Steel
business, which was demerged in July 2002. Refer pages 16, 17 and 19.
(2) Including the Group's share of joint ventures and associates.
(3) Excluding exceptional items.
(4) EBIT is earnings before interest and tax. EBITDA is EBIT before
depreciation and amortisation of Group companies of US$1,648 million and
US$1,595 million for the years ended 30 June 2003 and 2002 respectively. We
believe that EBIT and EBITDA provide useful information, but should not be
considered as an indication of, or alternative to, attributable profit as an
indicator of operating performance or as an alternative to cash flow as a
measure of liquidity.
(5) Available cash flow is operating cash flow including dividends from joint
ventures and associates and after net interest and tax.
(6) For this purpose, net interest includes capitalised interest and excludes
the effect of discounting on provisions and exchange differences arising from
net debt.
The above financial results are prepared in accordance with UK generally
accepted accounting principles (GAAP) and are unaudited. Financial results in
accordance with Australian GAAP are provided on page 26. All references to the
corresponding period are to the year ended 30 June 2002.
RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Commentary on the Group Results
Introduction
Global economic conditions remained weak during the year ended 30 June 2003. In
what has been a challenging climate, BHP Billiton's operating and financial
results clearly demonstrate our ability to consistently generate stable cash
flows, improve underlying profitability and increase returns to shareholders
whilst still continuing our investment in value accretive growth projects.
Attributable profit from continuing operations and excluding exceptional items
was US$1,920 million, 2.9% above last year's result of US$1,866 million.
Compared with the corresponding period, the financial results reflect an
unfavourable non-cash exchange impact of approximately US$560 million arising
mainly from the translation of non US dollar denominated net monetary
liabilities. Excluding this non-cash impact, attributable profit was 36.4%
higher than the corresponding period reflecting generally higher prices and
sales volumes and the benefits from our cost savings program.
Production of all major minerals commodities was higher than, or in line with,
the prior period and a number of production records were achieved during the
year. Record Western Australian iron ore production of 76.5 million tonnes (100
per cent terms) and shipments of 80.3 million tonnes (100 per cent terms)
reflect strong demand in all Asian markets, particularly China. Record nickel
production at both QNI Yabulu refinery (Australia) and Cerro Matoso (Colombia),
and record plant throughput at Ekati TM (Canada) all reflect the benefits of
Operating Excellence programs. Fourth quarter production of all petroleum and
major minerals commodities was higher than, or in line with, the third quarter.
It is significant to note that a general improvement in our safety results
accompanied the solid production performance.
Our diversified asset base generated US$3,590 million in available cash flow
(after interest and tax) during the year, which allowed us to progress
investment in sanctioned growth projects. Following the recent commissioning of
Zamzama (Pakistan) and Mozal 2 (Mozambique), there are now 14 major capital
projects under development. 13 of these are either on or under budget and are
currently tracking on or ahead of schedule. Three projects, representing
US$1,657 million of capital expenditure (BHP Billiton share) were sanctioned
during the year. Our ability to deliver projects on or ahead of budgeted
parameters is illustrated by the five projects commissioned since 1 July 2002,
all on or under budget, and on or ahead of schedule. The projects commissioned
since 1 July 2002 involved capital expenditures amounting to US$1,073 million.
At the time of the merger, a target was set to capture US$270 million of merger
benefits by 30 June 2003. US$285 million of on-going annual benefits had been
achieved by 31 December 2002, six months ahead of schedule. Cost saving
initiatives continued, with total annual savings (including merger benefits) of
US$375 million being achieved in the current year. Of this total, US$65 million
were merger benefits achieved in the first half of the current year and US$310
million represents steady progress towards our cost savings target of US$500
million by 30 June 2005.
The confidence of the Board of Directors in the stable cash generating ability
of the business allowed an increase in dividends declared to shareholders for
the full year from 13.0 US cents per share last year to 14.5 US cents per share
in the full year ended 30 June 2003, an increase of 11.5%.
The Income Statement
During the period, the Group's Steel business was demerged. In order to provide
meaningful comparison the discussion in this section is based on the Group's
continuing operations, excluding exceptional items and the Group's Steel
business.
Turnover (including turnover from third party products) rose by 15.0% to
US$17,506 million, mainly due to higher sales volumes of iron ore, energy coal,
copper, aluminium, diamonds and manganese and higher prices for petroleum
products, nickel, ferrochrome, copper, hot briquetted iron and manganese alloy.
These factors were partly offset by lower sales volumes of petroleum products
and lower prices for export energy coal and iron ore.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
by 9.2% to US$5,129 million from US$4,697 million in the corresponding period.
Earnings before interest and tax (EBIT) were US$3,481 million compared with
US$3,102 million in the corresponding period, an increase of 12.2%. This
increase was due to generally higher commodity prices, increased sales volumes,
cost savings, lower exploration expense and increased profits from new and
acquired operations. Offsetting factors were inflationary pressures, principally
in South Africa, exchange rate impacts, increased price linked costs, lower
profits from ceased and sold operations and profits from asset sales recorded in
the corresponding period. Please refer to pages 9 and 10 for further analysis of
the factors affecting turnover and EBIT.
Net interest on borrowings and cash fell from US$432 million to US$403 million,
principally driven by lower market interest rates, lower average debt levels and
management of the Group's debt portfolio.
Exchange losses on net debt were US$140 million compared with gains of US$180
million in the corresponding period, mainly in relation to the translation of
rand denominated debt of companies which account in US dollars as their
functional currency. The rand appreciated by 27% during the current period
compared with depreciation of 27% in the corresponding period.
The tax charge was US$984 million, representing an effective rate of 33.4%.
Excluding the impacts on tax of non tax-effected foreign currency adjustments,
translation of tax balances and other functional currency translation
adjustments, the effective rate was 26.3%. The Group recognises tax losses to
the extent that it can reasonably foresee future profits which can absorb those
losses. Following promising progress in the Group's Gulf of Mexico (US)
projects, previously unrecognised tax losses in the US have been recouped and
have been recognised this year resulting in a reduction in the effective tax
rate of approximately 3%. If and when the projects reach appropriate milestones
that provide greater certainty over projected future profits, further benefits
in respect of past losses may be recognised.
Basic earnings per share was 30.9 US cents per share against 31.0 US cents per
share in the corresponding period, reflecting the increased number of shares on
issue (including the equalisation issue associated with the BHP Steel demerger).
Discontinued Operations / Exceptional Items
The demerger of the Group's Steel business became unconditional on 1 July 2002.
The contribution of the Group's Steel business in the corresponding period has
been disclosed as discontinued operations. The 6% interest in BHP Steel retained
by BHP Billiton was sold in July 2002 for US$75 million and the loss of US$19
million associated with this sale has been recognised in the current year and is
disclosed as an exceptional item in relation to discontinued operations. The
demerger was effected through a Court approved capital reduction of A$0.69 per
BHP Billiton Limited share totalling approximately US$1.5 billion (A$2.6
billion) via the transfer of BHP Steel Limited shares to BHP Billiton Limited
shareholders. Consequently, BHP Billiton Plc shareholders received approximately
149 million BHP Billiton Plc equalisation shares.
After including discontinued operations and exceptional items, the attributable
profit for the period was US$1,901 million, US$211 million higher than the
US$1,690 million for the corresponding period, which included profits from
discontinued operations of US$68 million, together with exceptional losses of
US$244 million. Basic earnings per share, including discontinued operations and
exceptional items, was 30.6 US cents per share, 9.3% higher than the 28.0 US
cents per share of the corresponding period.
Cash Flows
Available cash flow (after interest and tax) remained strong at US$3,590
million.
Expenditure on growth projects and investments amounted to US$1,995 million,
including US$814 million on petroleum projects and US$1,181 million on minerals
and other corporate projects. Maintenance capital expenditure was US$671 million
and exploration expenditure was US$348 million, whilst disposals of fixed
assets, sale of investments and associates and repayments of loans by joint
ventures generated US$792 million.
Additionally, a net cash inflow of US$272 million was derived from the proceeds
on demerger of the Group's Steel business. Whilst not reflected in cash flows,
Group debt further declined by US$232 million which was retained by BHP Steel
upon demerger.
Net cash inflow before dividend payments was US$1,640 million. After dividend
payments of US$830 million (up from US$811 million in the prior year), net cash
inflow (before management of liquid resources and financing) amounted to US$810
million.
Net debt of US$5,772 million at 30 June 2003 was 15.4% (US$1,050 million) lower
than last year and represents 31.9% of net debt plus net assets. Net debt
comprises US$7,324 million of total debt offset by US$1,552 million of cash,
including money market deposits.
Dividends
An interim dividend of 7.0 US cents per fully paid ordinary share was paid in
December 2002 and a final dividend of 7.5 US cents per fully paid ordinary share
was paid in July 2003, bringing the declared total for the year to 14.5 US
cents. This compares to total dividends declared in the corresponding period of
13.0 US cents per share. The BHP Billiton Limited dividends were fully franked
for Australian taxation purposes.
Dividends for the BHP Billiton Group are determined and declared 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 to
shareholders on the UK section of the register and South African rand to
shareholders on the South African section of the register.
Portfolio Management
During the year, a number of portfolio management activities were finalised.
Proceeds of US$345 million were received from the sale of our indirect 2.1%
interest in Companhia Vale do Rio Doce (CVRD), during March 2003. Our interests
in the Agua Rica prospect and Alumbrera mine in Argentina were also sold during
the year, which generated US$136 million in cash proceeds, with an additional
US$63 million deferred for receipt until June 2005.
Capital Management
Moody's Investor Services upgraded our long-term credit rating to A2 from A3 and
our short-term rating to P-1 from P-2 during the year ended 30 June 2003. This
was as a result of the successful integration of the Group's operations
following the merger, the benefits of our substantially diversified portfolio
and our focus on maintaining disciplined financial policies.
The Group's stronger credit profile enabled further diversification of funding
sources, resulting in the issuance of our inaugural €750 million Eurobond under
the US$1.5 billion Euro Medium Term Note program and issuance of our inaugural
US$850 million Global Bond with a 10 year maturity.
In February 2003, a US$2 billion commercial paper program was established and
issuance from this program commenced during June 2003. This provides additional
diversification of our short term funding programs and enhances flexibility.
Merger Benefits and Cost Savings
At the time of the merger, a target was set to capture US$270 million of merger
benefits by 30 June 2003. US$285 million of on-going annual benefits had been
achieved by 31 December 2002, six months ahead of schedule.
A further target, to achieve additional cost savings and efficiency gains of
US$500 million by 30 June 2005, was set in our Strategic Framework in April
2002. This target is to be measured by comparing commodity-based unit costs
against base year costs for the year ended 30 June 2001. During the current
year, US$310 million of annual cost savings and efficiency gains were achieved,
which is additional to the US$285 million of merger benefits captured as
detailed above. These additional savings have been largely driven through the
continuation of our Operating Excellence program and resulting productivity
improvements across most divisions, and ongoing strategic sourcing and marketing
initiatives.
Outlook
For the third consecutive year global economic growth has been anaemic. The
fragile economic recovery felt the impact of a number of adverse developments
including the conflict in Iraq, Severe Acute Respiratory Syndrome (SARS), a
weakening US dollar and the ongoing threat of deflation. Across the industrial
economies, a combination of lower interest rates and expansionary fiscal
policies was insufficient to raise consumer and business confidence and
expectations were consistently revised downwards during the year as the forward
momentum faltered. In contrast, despite a feared SARS induced slowdown, Asian
economies have demonstrated growth, driven in particular by strong demand for
commodities in China.
In spite of the generally weak economic environment, commodity markets made some
notable gains. Nickel and aluminium prices rose and stock levels for copper and
nickel fell, average West Texas Intermediate (WTI) oil prices were just under
US$30 per barrel for the year and prices for steel making raw materials were
generally stronger, reflecting record global steel production.
China appears set for another year of strong growth. The outlook for other key
commodity markets remains fragile, although there are some promising early signs
that the more expansionary fiscal policies in some markets are starting to
create increased demand for our products. The diversity of our portfolio, and in
particular the exposure we have to the stronger Asian economies, places us well
to benefit from any global economic upturn. In the meantime, the strength of our
cash flows allows us to respond to opportunities as and when they arise and to
build on the progress we have made over the last two years.
Annual General Meetings
The Annual General Meeting of BHP Billiton Plc will be held at the Queen
Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London, on Friday
24 October 2003 commencing at 10:30 am. The Annual General Meeting of BHP
Billiton Limited will be held at the Melbourne Concert Hall, St Kilda Road,
Melbourne, on Thursday 13 November 2003 commencing at 11:00 am. The Annual
Report and details of the business to be conducted at the meetings will be
mailed to shareholders in early October 2003.
Corporate Governance
Dr John Buchanan and Mr Miklos (Mike) Salamon were appointed as Directors during
the year. Shareholders will be asked to approve these appointments at the Annual
General Meetings. Mr Charles Goodyear was appointed Chief Executive Officer on 5
January 2003 following the resignation of Mr Brian Gilbertson.
Growth Projects
Of the 14 projects currently in development, 13 are on or under budget and are
currently tracking on or ahead of schedule.
Since 1 July 2002, five projects reached commissioning stage, all either on or
under budget and on or ahead of schedule. With costing yet to be finalised on
two projects, total capital expenditure throughout the development stage is
assessed at approximately US$1,073 million, which is US$168 million or 13.5%
below budget.
Completed Projects
Customer Sector Project Production (1) Capital expenditure Date of initial
Group
(US$ million) (1) production (2)
Budget Actual Target Actual
Petroleum Zamzama 123 million cubic feet
(Pakistan) of gas per day 40 <40(3) Q3 2003 Q2 2003
BHP Billiton - 38.5%
Bream Gas Pipeline 7.5 million barrels of
(Australia) oil equivalent over 10 50 34 Q2 2003 Q4 2002
BHP Billiton - 50% years
Aluminium Mozal 2 120,000 tonnes per annum
(Mozambique) of aluminium metal 405 313(3) Q4 2003 Q2 2003
BHP Billiton - 47.1%
Base Metals Escondida Phase IV 230,000 tonnes per annum
(Chile) of copper 600 543 Q3 2002 Q3 2002
BHP Billiton - 57.5%
Energy Coal San Juan Underground 6.5 million tonnes per
(US) annum of energy coal 146 143 Q3 2002 Q3 2002
BHP Billiton - 100%
1,241 1,073
New Growth Projects
Customer Sector Group Project Production (1) Budgeted capital Target date for
expenditure initial production
(US$ million) (1) (2)
Petroleum Atlantis 79,200 barrels of oil
(US) equivalent per day 1,100(4) Q3 2006
BHP Billiton - 44%
Angostura 45,000 bbl oil per day
(Trinidad) 327 Q4 2004
BHP Billiton - 45%
Base Metals Escondida Norte Maintain capacity at
(Chile) 1.25 million tonnes 230 Q4 2005
BHP Billiton - 57.5% per annum of copper
(100%)
1,657
(1) All references to capital expenditure and production volumes are BHP
Billiton's share unless noted otherwise.
(2) References to quarters are based on calendar years.
(3) Total project costs yet to be finalised. Share of actual capital
expenditure is indicative only.
(4) US$355 million was approved in May 2002 to fund detailed engineering and
design work, purchasing of long lead time items, and awarding of major
contracts. Full capital funding was approved in February 2003, bringing the
total project capital cost to US$1.1 billion.
Projects Approved in Prior Years
Customer Sector Group Project Production (1) Budgeted capital Target date for
expenditure (US$ initial production
million) (1) (2)
Petroleum Ohanet (Algeria) 26,100 barrels of oil 464 Q3 2003
BHP Billiton - 45% equivalent per day
ROD (Algeria) 28,800 barrels of oil 192 Q1 2004
BHP Billiton - 36% equivalent per day
Mad Dog (US) 20,700 barrels of oil 335 Q4 2004
BHP Billiton - 23.9% equivalent per day
Gulf of Mexico Pipelines Capacities of 100 Q4 2004
Infrastructure (US) Oil - 450,000 bbl/day
BHP Billiton - 22/25% (100%)
Gas - 500 million
standard cubic feet
per day (100%)
North West Shelf Train 4 4.2 million tonnes per 237 Q2 2004
(Australia) annum of LNG
BHP Billiton - 16.7% liquification
processing facility
(100%)
Minerva (Australia) 150 terrajoules of gas 123 Q1 2004(3)
BHP Billiton - 90% per day
Aluminium Hillside 3 (South Africa) 132,000 tonnes of 449 Q4 2003
BHP Billiton - 100% aluminium per annum
Carbon Steel Materials Area C (Australia) 12.75 million tonnes 181 Q4 2003
BHP Billiton - 85% per annum of iron ore
Products & Capacity Increase export 299 Q1 2004
Expansion (Australia) capacity to 100
BHP Billiton - 85% million tonnes per
annum of iron ore
(100%)
Dendrobium (Australia) 5.2 million tonnes per 170 Q1 2005
BHP Billiton - 100% annum of raw met coal
(3.6 million tonnes
per annum of clean met
coal)
Energy Coal Mt Arthur North 15 million tonnes per
(Australia) annum of raw energy 411 Q4 2003
BHP Billiton - 100% coal (12.1 million
tonnes per annum of
saleable energy coal)
2,961
(1) All references to capital expenditure and production volumes are BHP
Billiton's share unless noted otherwise.
(2) References to quarters are based on calendar years.
(3) Some delays have been experienced against the project's original
schedule, where first gas production was expected in the first quarter of 2004.
OPERATING REVIEW
EBIT
The following table details the approximate impact of major factors affecting
EBIT (from continuing operations and excluding exceptional items) for the year
ended 30 June 2003 compared with the corresponding period.
US$M
EBIT from continuing operations and excluding exceptional items for the year ended 30 June 2002 3 102
Change in volumes 235
Change in sales prices 545
Price-linked costs (160)
Inflation on costs (275)
Costs 360
New and acquired operations 25
Exchange rates (190)
Ceased and sold operations (95)
Asset sales (30)
Exploration 45
Other items (81)
EBIT from continuing operations and excluding exceptional items for the year ended 30 June 2003 3 481
Volumes
Higher sales volumes of iron ore, energy coal, copper, aluminium, diamonds and
manganese were partly offset by lower sales volumes of petroleum products,
resulting in a positive net volume impact on EBIT of approximately US$235
million.
Prices
Higher realised prices for petroleum products, nickel, ferrochrome, copper, hot
briquetted iron and manganese alloy increased turnover by approximately US$785
million. This increase was partly offset by lower prices for export energy coal
and iron ore that decreased turnover by approximately US$240 million.
Costs
Favourable unit operating cost performance increased EBIT by approximately
US$360 million compared with the corresponding period. The Group's cost
reduction initiatives together with increased production lowered costs by
approximately US$480 million. These factors were partially offset by higher
costs at Escondida (Chile) from processing lower grade ore due to the voluntary
production cut-backs and higher depreciation from the start-up of the Phase IV
expansion project.
Increases in price-linked costs depressed EBIT by approximately US$160 million,
mainly due to higher royalties and taxes for petroleum products and higher
nickel ore supply costs to the QNI Yabulu refinery (Australia).
Inflationary pressures, principally in South Africa, and to a lesser extent in
Australia, increased costs by approximately US$275 million.
New and acquired operations
New and acquired operations increased EBIT by approximately US$25 million due to
the commencement of commercial production at Antamina (Peru) in October 2001 and
the increased ownership interest in Cerrejon Coal Company (Colombia) from
February 2002.
Ceased and sold operations
EBIT was impacted unfavourably by approximately US$95 million mainly due to the
disposal of PT Arutmin (Indonesia), divested in November 2001 and the Rietspruit
energy coal mine (South Africa), which was closed in May 2002, together with
higher pension and medical plan costs at Southwest Copper (US).
Asset sales
The impact of asset sales is a reduction in EBIT of approximately US$30 million
mainly from the profit on divestment of PT Arutmin in the corresponding period,
partly offset by profits on sale of BHP Billiton's interests in Alumbrera and
Agua Rica, during the current year.
Exchange rates
The impact of stronger A$/US$, rand/US$ and Canadian$/US$ exchange rates on
operating costs had an unfavourable impact on EBIT of approximately US$390
million. The conversion of rand and Australian dollar denominated net monetary
liabilities at balance sheet date also had an unfavourable impact (approximately
US$60 million) on EBIT. This was partly offset by reduced losses on legacy A$/
US$ currency hedging compared with the corresponding period of approximately
US$220 million. In addition, the lower average Colombian peso/US$ and Brazilian
real/US$ exchange rates had a favourable impact (approximately US$40 million) on
operating costs.
Exploration
Exploration expense was down by approximately US$45 million compared with the
corresponding period, which included the write off of exploration expenditure at
La Granja (Peru).
CUSTOMER SECTOR GROUP SUMMARY
The following table provides a summary of the Customer Sector Group results for
the year ended 30 June 2003 and the corresponding period (from continuing
operations and excluding exceptional items).
Year ended 30 June Turnover (1)(2) EBIT(2)
(US$ Million)
2003 2002 Change % 2003 2002 Change %
Petroleum 3 264 2 815 16.0% 1 178 1 073 9.8%
Aluminium 3 386 2 857 18.5% 581 492 18.1%
Base Metals 1 954 1 821 7.3% 286 192 49.0%
Carbon Steel Materials 3 714 3 306 12.3% 1 045 1 084 (3.6)%
Diamonds and Specialty Products 1 485 1 480 0.3% 299 272 9.9%
Energy Coal 2 089 1 919 8.9% 190 536 (64.6)%
Stainless Steel Materials 1 106 868 27.4% 150 3 -(3)
Group and unallocated items 1 014 730 38.9% (248) (550) 54.9%
BHP Billiton Group from 17 506 15 228 15.0% 3 481 3 102 12.2%
continuing operations
(1) BHP Billiton Group turnover is stated after the elimination of
intersegment transactions.
(2) Turnover and EBIT include third party product activities.
(3) Not meaningful.
An explanation of the factors influencing EBIT, including the Group's share of
joint ventures and associates, by Customer Sector Group, is as follows:
Petroleum
Petroleum contributed EBIT of US$1,178 million, up from US$1,073 million, an
increase of 9.8% compared with the corresponding period.
The increase in EBIT was primarily due to higher average realised prices for all
products compared with the corresponding period, including higher average
realised oil prices of US$28.14 per barrel compared to US$22.58 per barrel,
higher average realised LPG prices of US$283.48 per tonne compared to US$232.87
per tonne and higher average realised natural gas prices of US$2.21 per thousand
standard cubic feet compared with US$1.84 per thousand standard cubic feet.
These were partly offset by higher price-linked costs (royalties and taxes).
Overall, production of petroleum products on a barrel of oil equivalent basis
declined by 9% from 134 to 122 million barrels of oil equivalent, in line with
management expectations. The decrease in production and sales volumes, which had
an unfavourable impact on EBIT, was mostly due to natural field decline at Bass
Strait (Australia), Griffin (Australia), Laminaria (Australia) and Liverpool Bay
(UK). Liverpool Bay was also impacted by downtime from scheduled maintenance in
the first quarter of the period. North West Shelf (Australia) however, achieved
higher volumes due to increased LNG demand and timing of shipments.
EBIT was also unfavourably impacted by a write down of the Group's Bolivian
assets in the third quarter due to a government driven change to fiscal
arrangements announced in January 2003. The effect of the stronger A$/US$
exchange rate on translation of Australian dollar denominated resource rent tax
liabilities also reduced EBIT.
Exploration charged to profit was US$154 million a similar level to that in the
corresponding period (US$151 million). The exploration spending profile for this
period was weighted to the fourth quarter, including increased spending on
seismic acquisition in the Gulf of Mexico. The capitalisation rate of 36.6% this
period compared to a capitalisation rate of 47.6% in the corresponding period
was due mainly to a higher proportion of appraisal drilling in the corresponding
period, and the return to a more normal level in the year ended 30 June 2003.
Aluminium
Aluminium contributed EBIT of US$581 million, up from US$492 million, an
increase of 18.1% compared with the corresponding period.
The increase in EBIT was mainly attributable to improved operational cost
performance resulting from reduced maintenance costs, lower costs of consumables
and increased production. Lower maintenance costs at Hillside (South Africa)
were mainly a result of a lower number of pots being relined in the current
period, combined with the absence of the net costs associated with the September
2001 power outage. Lower costs at Worsley (Australia) were due to reduced costs
of consumables. Increased production at Alumar (Brazil) and Valesul (Brazil) was
due to the end of power restrictions in Brazil and increased production at
Hillside, Worsley and Suriname was mainly attributable to the continued success
of Operating Excellence projects. The weakening of Brazilian real/US$ average
exchange rate also had a favourable impact on operating costs.
These factors were partially offset by the unfavourable impact of the
strengthening of the rand/US$ and A$/US$ average exchange rates on operating
costs and the effect of inflationary pressure on costs in South Africa.
Base Metals
Base Metals contributed EBIT of US$286 million, up from US$192 million, an
increase of 49% compared with the corresponding period.
The increase in EBIT was mainly attributable to the higher average realised
copper price at US$0.73 per pound for the year ended 30 June 2003, compared to
US$0.69 per pound in the corresponding period and increased production from
Escondida as a result of the Escondida Phase IV expansion which was completed in
October 2002. EBIT was also favourably impacted by lower exploration expense
with US$38 million relating to the write off of La Granja included in the
corresponding period and the gain on sale of US$23 million of BHP Billiton's
interests in Alumbrera and Agua Rica, realised in June 2003. EBIT also benefited
from a full year of operations from Antamina, which commenced commercial
production in October 2001.
These factors were partially offset by increased unit costs at Escondida due to
the mining of lower grade ore (due to voluntary production cut-backs), costs
associated with the start up of Phase IV production and higher depreciation
charges associated with the Phase IV expansion project. Higher pension and
medical plan costs at Southwest Copper, together with costs incurred in the
current year associated with the development of the Alliance Copper prototype
plant and lower realised lead and zinc prices also had an unfavourable impact on
EBIT.
Carbon Steel Materials
Carbon Steel Materials contributed EBIT of US$1,045 million, down from US$1,084
million, a decrease of 3.6% compared with the corresponding period.
The decrease in EBIT was mainly attributable to the unfavourable impact of
stronger A$/US$ average exchange rates on operating costs compared to the
corresponding period and inflationary pressures on costs in Australia and South
Africa. Lower iron ore prices, following the contract settlements announced in
May 2002, also negatively impacted EBIT.
These factors were partially offset by record production and shipments of
Western Australian iron ore in response to continued strong demand from all
Asian markets, as well as higher production of Samarco (Brazil) pellets and
manganese products, which also reflected increased customer demand. Improved
operating performance at BoodarieTM Iron (Australia), lower costs due to
increased production at Illawarra Coal (Australia) and higher prices for
BoodarieTM Iron and manganese alloy also had a favourable impact on EBIT.
Diamonds and Specialty Products
Diamonds and Specialty Products contributed EBIT of US$299 million, up from
US$272 million, an increase of 9.9% compared with the corresponding period.
The increase in EBIT was primarily due to increased diamond production and lower
costs at EkatiTM, mainly as a result of increased plant throughput and
processing efficiencies. Whilst the titanium market remains oversupplied, an
increase in titanium shipments in the current period favourably impacted EBIT.
Cost efficiencies were also achieved by Integris Metals (US) subsequent to the
merger of BHP Billiton's and Alcoa Metals' metals distribution businesses on 1
November 2001.
These factors were partially offset by lower sales volumes at Integris due to
adverse market conditions in North America, together with the unfavourable
impact of the strengthening of the rand/US$ and Canadian$/US$ average exchange
rates on operating costs.
Energy Coal
Energy Coal contributed EBIT of US$190 million, down from US$536 million, a
decrease of 64.6% compared with the corresponding period.
The decrease in EBIT was primarily due to a 15% decline in South African export
market prices. The divestment of PT Arutmin in November 2001 and the closure of
the Rietspruit mine in May 2002 had an unfavourable impact on EBIT with both the
exclusion of the results of these operations in the current period and the US$64
million profit on sale of PT Arutmin recorded in the corresponding period. The
conversion of rand denominated net monetary liabilities at balance date, in
addition to the impact of stronger rand/US$ average exchange rates on operating
costs, also had an unfavourable impact on EBIT. Furthermore, costs in South
Africa have been affected unfavourably by inflationary pressures.
These factors were partially offset by higher sales volumes at Ingwe (South
Africa), and at Hunter Valley (Australia) with the Mount Arthur North project
ramping up production. Cost improvement initiatives across all Energy Coal
operations and the inclusion of profits from the additional share of the
Cerrejon Coal Company operation, acquired in February 2002, also had a
favourable impact on EBIT. The impact of weaker Colombian peso/US$ average
exchange rates on operating costs together with improved results at New Mexico
Coal (US) generated by increased customer demand also favourably impacted EBIT.
Stainless Steel Materials
Stainless Steel Materials contributed EBIT of US$150 million, up from US$3
million, an increase of US$147 million.
The increase in EBIT was driven by higher realised prices for nickel, up by 29%
from US$2.69 per pound to US$3.46 per pound. In addition, the realised price for
ferrochrome was higher in the current period in response to strong demand in a
more balanced market. Benefits from ongoing improvement programs at both Cerro
Matoso and QNI Yabulu refinery, an increase in nickel production, reflecting the
ramp-up of production from Cerro Matoso Line 2, and an increase in ferrochrome
production, associated with the restart of idle furnaces, also had a favourable
impact on EBIT.
These factors were partially offset by the unfavourable impact of inflationary
pressures on costs in South Africa, higher nickel ore supply costs to the QNI
Yabulu refinery and the unfavourable impact of stronger rand/US$ and A$/US$
average exchange rates on operating costs.
Group and Unallocated Items
Losses on legacy A$/US$ currency hedging were US$86 million, compared with
US$305 million in the corresponding period. Corporate costs of US$220 million
were US$105 million lower than the same period last year. These reductions were
partly offset by the unfavourable impact of one-off items.
FINANCIAL INFORMATION
Contents
Consolidated Profit and Loss Account 16
Consolidated Balance Sheet 18
Consolidated Statement of
Total Recognised Gains and Losses 18
Consolidated Statement of Cash Flows 19
Notes to the Financial Information 21
The financial information in this document for the year ended 30 June 2003 is
unaudited, has been derived from the draft financial statements of BHP Billiton
Plc and does not constitute the statutory accounts of BHP Billliton Plc for that
year.
The financial information set out on pages 16 to 25 has been prepared on the
same basis and using the same accounting policies as were applied in drawing up
the financial information contained in the accounts of BHP Billiton Plc for the
year ended 30 June 2002.
In the opinion of the Directors, the financial information for the year ended 30
June 2003 presents fairly the financial position, results of operations and cash
flows for the year in conformity with UK generally accepted accounting
principles (GAAP). The financial information for the year ended 30 June 2002 has
been derived from the audited financial statements of BHP Billiton Plc for that
period as filed with the Registrar of Companies and does not constitute the
statutory accounts of BHP Billiton Plc for that period. The auditors' report on
the statutory accounts of the year ended 30 June 2002 was unqualified and did
not contain statements under Section 237 (2) (regarding adequacy of accounting
records and returns) or under Section 237 (3) (provision of necessary
information and explanations) of the United Kingdom Companies Act 1985. The
statutory accounts for the year ended 30 June 2003 will be finalised on the
basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Annual General Meeting.
The combined results for the year ended 30 June 2003, prepared in accordance
with UK GAAP, are generally consistent with the combined results under
Australian GAAP as required by the Australian Securities and Investments
Commission in respect of dual listed companies. Financial results prepared in
accordance with Australian GAAP are provided on page 26.
Consolidated Profit and Loss Account
For the year ended 30 June 2003
Year ended 30 June 2003
Continuing Discontinued Total
Operations/
Operations Exceptional
Items
Notes US$M US$M US$M
Turnover (including share of joint ventures and
associates)
Group production 14 124 - 14 124
Third party products 3 382 - 3 382
2 17 506 - 17 506
less Share of joint ventures' and associates' turnover
included above (1 898) (1 898)
Group turnover 15 608 - 15 608
Net operating costs 1 (12 554) - (12 554)
Group operating profit/(loss) 3 054 - 3 054
Share of operating profit of joint ventures and 358 - 358
associates
Operating profit/(loss) 3 412 - 3 412
(including share of profit of joint ventures and
associates)
Comprising:
Group production 3 369 - 3 369
Third party products 43 - 43
3 412 - 3 412
Income from other fixed asset investments 16 - 16
Profit on sale of fixed assets 46 - 46
Profit on sale of operations 7 - 7
Loss on termination of operations 1 - - -
Loss on sale of discontinued operations 1 - (19) (19)
Profit/(loss) before net interest and similar items 3 481 (19) 3 462
payable and taxation
Net interest and similar items payable
Group 3 (444) - (444)
Joint ventures and associates 3 (93) - (93)
Profit/(loss) before taxation 2 2 944 (19) 2 925
Taxation 1,6 (984) - (984)
Profit/(loss) after taxation 1 960 (19) 1 941
Equity minority interests (40) - (40)
Profit/(loss) for the financial year (attributable 1 920 (19) 1 901
profit)
Dividends to shareholders (900) - (900)
Retained profit/(loss) for the financial year 1 020 (19) 1 001
Earnings per ordinary share (basic) (US cents) 30.9 (0.3) 30.6
Earnings per ordinary share (diluted) (US cents) 30.9 (0.3) 30.6
Dividend per ordinary share (US cents) 14.5
Consolidated Profit and Loss Account continued
Year ended 30 June 2002
Continuing Exceptional Continuing Discontinued Total
Operations Items Operations Operations
Including
Exceptional
Items
Notes US$M US$M US$M US$M US$M
Turnover (including share of joint ventures and
associates)
Group production 13 038 - 13 038 2 550 15 588
Third party products 2 190 - 2 190 - 2 190
2 15 228 15 228 2 550 17 778
less Share of joint ventures' and associates' turnover
included above (1 666) - (1 666) (206) (1 872)
Group turnover 13 562 - 13 562 2 344 15 906
Net operating costs 1 (10 907) (111) (11 018) (2 285) (13 303)
Group operating profit/(loss) 2 655 (111) 2 544 59 2 603
Share of operating profit of joint ventures and 329 - 329 11 340
associates
Operating profit/(loss)
(including share of profit of joint ventures and 2 984 (111) 2 873 70 2 943
associates)
Comprising:
Group production 2 956 (111) 2 845 70 2 915
Third party products 28 - 28 - 28
2 984 (111) 2 873 70 2 943
Income from other fixed asset investments 37 - 37 1 38
Profit on sale of fixed assets 13 - 13 15 28
Profit on sale of operations 68 - 68 - 68
Loss on termination of operations 1 - (101) (101) - (101)
Loss on sale of discontinued operations 1 - - - - -
Profit/(loss) before net interest and similar items
payable
and taxation 3 102 (212) 2 890 86 2 976
Net interest and similar items payable
Group 3 (208) - (208) (4) (212)
Joint ventures and associates 3 (28) - (28) (9) (37)
Profit/(loss) before taxation 2 2 866 (212) 2 654 73 2 727
Taxation 1,6 (961) (32) (993) 3 (990)
Profit/(loss) after taxation 1 905 (244) 1 661 76 1 737
Equity minority interests (39) - (39) (8) (47)
Profit/(loss) for the financial year (attributable 1 866 (244) 1 622 68 1 690
profit)
Dividends to shareholders (784) - (784) - (784)
Retained profit/(loss) for the financial year 1 082 (244) 838 68 906
Earnings per ordinary share (basic) (US cents) 31.0 (4.1) 26.9 1.1 28.0
Earnings per ordinary share (diluted) (US cents) 31.0 (4.1) 26.9 1.1 28.0
Dividend per ordinary share (US cents) 13.0
For the year ended 30 June 2002 BHP Steel's results were reported as
discontinued operations due to the demerger of the BHP Steel business in July
2002. There are no exceptional items in net operating costs of discontinued
operations for the full year ended 30 June 2002. Net interest shown against
discontinued operations includes that amount of net external interest that is
directly attributable to the discontinued operations. Taxation is the nominal
charge on the profit before taxation.
Under the terms of the DLC merger, the rights to dividends of a holder of an
ordinary share in BHP Billiton Plc and a holder of an ordinary share in BHP
Billiton Limited are identical. Consequently, earnings per share has been
calculated on the basis of the aggregate number of ordinary shares ranking for
dividend. The weighted average number of shares used for the purposes of
calculating basic earnings per share is calculated after deduction of the shares
held by the share repurchase scheme and the Billiton Employee Share Ownership
Trust.
The calculation of basic earnings per ordinary share is based on earnings after
tax and minority interest of US$1,901 million (30 June 2002: US$1,690 million)
and the weighted average number of ordinary shares outstanding of 6,207 million
(30 June 2002: 6,029 million). The calculation of diluted earnings per share is
based on earnings after tax and minority interest of US$1,901 million (30 June
2002: US$1,690 million) and the weighted average number of shares outstanding of
6,222 million (30 June 2002: 6,042 million). The exceptional loss of US$19
million upon sale of the 6% interest in BHP Steel for US$75 million in July 2002
reduced basic and diluted earnings per share by 0.3 US cents for the year ended
30 June 2003.
For the periods reported, one American Depositary Share (ADS) represents two
shares. Earnings per ADS were 61.2 US cents for the year ended 30 June 2003 (30
June 2002: 56.0 US cents).
Consolidated Balance Sheet
As at 30 June 2003
As at As at
30 June 2003 30 June 2002
Notes US$M US$M
Fixed assets
Intangible assets
Goodwill 36 42
Negative goodwill (29) (33)
7 9
Tangible assets 19 809 20 179
Investments
Joint ventures - share of gross assets 2 880 2 902
Joint ventures - share of gross liabilities (1 477) (1 434)
1 403 1 468
Associates - 85
Loans to joint ventures and associates and other investments 443 987
Total fixed assets 21 662 22 728
Current assets
Stocks 1 379 1 457
Debtors
Amounts due within one year 2 224 2 554
Amount due after more than one year 1 405 1 197
3 629 3 751
Investments 143 117
Cash including money market deposits 1 552 1 499
Total current assets 6 703 6 824
Creditors - amounts falling due within one year (4 207) (6 229)
Net current assets 2 496 595
Total assets less current liabilities 24 158 23 323
Creditors - amounts falling due after more than one year (6 849) (5 987)
Provisions for liabilities and charges (4 978) (4 654)
Net assets 12 331 12 682
Equity minority interests (318) (326)
Attributable net assets 12 013 12 356
Capital and reserves
Called up share capital - BHP Billiton Plc 1 234 1 160
Share premium account 518 592
Contributed equity - BHP Billiton Limited 1 785 3 143
Profit and loss account 8 496 7 461
Interest in shares of BHP Billiton Plc (20) -
Equity shareholders' funds 4 12 013 12 356
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Balance Sheet as at 30 June 2002 includes BHP Steel
assets and liabilities accordingly.
Consolidated Statement of Total Recognised Gains and Losses
For the year ended 30 June 2003
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
Attributable profit for the financial year 1 901 1 690
Exchange gains and losses on foreign currency net investments 67 25
Total recognised gains for the financial year 1 968 1 715
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Statement of Total Recognised Gains and Losses for the
year ended 30 June 2002 includes the gains and losses of BHP Steel.
Consolidated Statement of Cash Flows
For the year ended 30 June 2003
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
Net cash inflow from Group operating activities (a) 4 793 4 605
Dividends received from joint ventures and associates 197 149
Interest paid (383) (496)
Dividends paid on redeemable preference shares (28) (35)
Interest received 36 156
Other dividends received 15 38
Dividends paid to minorities (38) (20)
Net cash outflow from returns on investments and servicing of finance (398) (357)
Taxes paid (1 002) (606)
Refund of taxes paid - 91
Taxation (1 002) (515)
Available cash flow 3 590 3 882
Purchases of tangible fixed assets (2 571) (2 481)
Exploration expenditure (348) (390)
Disposals of tangible fixed assets 99 200
Purchase of investments and funding of joint ventures (95) (182)
Sale of investments and repayments by joint ventures (b) 560 232
Net cash outflow from capital expenditure and financial investment (2 355) (2 621)
Investment in subsidiaries - (45)
Demerger or sale of subsidiaries (b) 358 190
Cash transferred on demerger or disposal (b) (86) (45)
Investment in joint ventures - (208)
Disposal of joint ventures and associates 133 70
Net cash inflow/(outflow) from acquisitions and disposals 405 (38)
Net cash flow before equity dividends paid, management of liquid resources 1 640 1 223
and financing
Equity dividends paid (830) (811)
Net cash flow before management of liquid resources and financing 810 412
Net cash (outflow)/inflow from management of liquid resources (665) 157
Redeemable preference shares - (423)
Finance lease obligations - (28)
Debt due within one year - repayment of loans (2 683) (1 344)
Debt due within one year - drawdowns 1 435 1 657
Debt due after one year - repayment of loans (1 438) (2 722)
Debt due after one year - drawdowns 2 263 2 318
Net cash outflow from debt and finance leases (423) (542)
Share buy-back program - BHP Billiton Limited - (19)
Share repurchase scheme - BHP Billiton Plc (20) -
Issue of shares 172 140
Net cash outflow from financing (271) (421)
(Decrease)/increase in cash in the financial year (126) 148
Effective July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The Consolidated Statement of Cash Flows for the year ended 30 June 2002
includes the cash flows of BHP Steel. Available cash flow for BHP Steel for that
year amounted to US$282 million.
Consolidated Statement of Cash Flows continued
For the year ended 30 June 2003
Year ended Year ended
30 June 2003 30 June 2002
Notes US$M US$M
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the financial year (126) 148
Cash flow from debt and finance leases 423 542
Cash flow from management of liquid resources 665 (157)
Decrease in net debt arising from cash flows 962 533
Other non-cash movements 5 232 -
Increase in net debt from exchange adjustments 5 (144) (34)
Decrease in net debt 1 050 499
Net debt at beginning of the financial year 5 (6 822) (7 321)
Net debt at end of the financial year 5 (5 772) (6 822)
(a) Net cash inflow from Group operating activities
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
Operating profit 3 054 2 603
Depreciation and amortisation 1 648 1 727
Impairment of assets 73 119
Employee share awards 60 28
Net exploration charge 248 243
(Increase) in stocks (250) (11)
(Increase) in debtors (286) (382)
Increase in creditors 69 292
Increase/(decrease) in provisions 192 (49)
Other movements (15) 35
Net cash inflow from Group operating activities 4 793 4 605
(b) The impact on the BHP Billiton Group's cash flows of the demerger of the BHP
Steel business in July 2002 was a cash inflow of US$347 million. This represents
US$294 million from the settlement by BHP Steel of intercompany loans, less
US$22 million demerger transaction costs paid, which are both included in net
cash inflow from acquisitions and disposals, and US$75 million from the sale of
the 6% interest in BHP Steel which is included in the sale of investments and
repayments by joint ventures.
NOTE 1. EXCEPTIONAL ITEMS
Gross Tax Net
Year ended 30 June 2003 US$M US$M US$M
Loss on sale of 6% interest in BHP Steel (19) - (19)
Total by category (19) - (19)
Discontinued operations (19) - (19)
Total by Customer Sector Group (19) - (19)
Gross Tax Net
Year ended 30 June 2002 US$M US$M US$M
Termination of operations (net increase in impairment and other provisions (101) - (101)
for Southwest Copper business in US)
Taxation (restatement of deferred taxation balances due to increase of - (56) (56)
corporation taxation rate for petroleum operations in the UK)
Suspension of Tintaya sulphide operations (31) 9 (22)
Merger related restructuring costs (80) 15 (65)
Total by category (212) (32) (244)
Petroleum (4) 1 (3)
Aluminium (4) - (4)
Base Metals (145) 10 (135)
Carbon Steel Materials (6) 1 (5)
Diamonds and Specialty Products (6) 2 (4)
Energy Coal (5) 1 (4)
Stainless Steel Materials (3) - (3)
Group and unallocated items (39) (47) (86)
Total by Customer Sector Group (212) (32) (244)
NOTE 2. ANALYSIS BY BUSINESS SEGMENT
Year ended Year ended
30 June 2003 30 June 2002
Turnover US$M US$M
Petroleum 3 264 2 815
Aluminium 3 386 2 857
Base Metals 1 954 1 821
Carbon Steel Materials 3 714 3 306
Diamonds and Specialty Products 1 485 1 480
Energy Coal 2 089 1 919
Stainless Steel Materials 1 106 868
Group and unallocated items 1 014 730
Intersegment (506) (568)
Total Continuing Operations 17 506 15 228
Discontinued Operations (a) - 2 550
Total BHP Billiton Group 17 506 17 778
Profit before taxation
Petroleum 1 178 1 073
Aluminium 581 492
Base Metals 286 192
Carbon Steel Materials 1 045 1 084
Diamonds and Specialty Products 299 272
Energy Coal 190 536
Stainless Steel Materials 150 3
Group and unallocated items (248) (550)
Exceptional items - (212)
Total Continuing Operations 3 481 2 890
Discontinued Operations (a) (19) 86
Profit before net interest and taxation 3 462 2 976
Net interest (537) (249)
Total BHP Billiton Group 2 925 2 727
Third party product included above
Turnover
Petroleum 296 72
Aluminium 1 333 1 006
Base Metals 38 24
Carbon Steel Materials 26 22
Diamonds and Specialty Products 747 823
Energy Coal 413 122
Stainless Steel Materials 10 9
Group and unallocated items 519 112
Total BHP Billiton Group 3 382 2 190
Profit before taxation
Petroleum 1 1
Aluminium 28 13
Base Metals 5 -
Carbon Steel Materials (2) -
Diamonds and Specialty Products 10 9
Energy Coal (1) 9
Stainless Steel Materials 1 1
Group and unallocated items 1 (5)
Total BHP Billiton Group 43 28
NOTE 2. ANALYSIS BY BUSINESS SEGMENT continued
As at As at
30 June 2003 30 June 2002
Net operating assets US$M US$M
Petroleum 3 293 2 865
Aluminium 5 095 4 727
Base Metals 3 877 4 062
Carbon Steel Materials 2 567 2 412
Diamonds and Specialty Products 1 518 1 620
Energy Coal 2 193 2 092
Stainless Steel Materials 1 695 1 663
Group and unallocated items 340 705
Total Continuing Operations 20 578 20 146
Discontinued Operations (a) - 2 248
Total BHP Billiton Group 20 578 22 394
(a) For the year ended 30 June 2002 BHP Steel's results were reported as
discontinued operations due to the demerger of the BHP Steel business in July
2002. The year ended 30 June 2002 has been restated accordingly.
NOTE 3. NET INTEREST AND SIMILAR ITEMS (PAYABLE)/RECEIVABLE
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
On bank loans and overdrafts (131) (161)
On all other loans (241) (311)
Finance lease and hire purchase interest (4) (5)
(376) (477)
Dividends on redeemable preference shares (24) (39)
Discounting on provisions (97) (42)
Less Amounts capitalised (a) 103 58
(394) (500)
Share of interest of joint ventures and associates (68) (71)
(462) (571)
Interest received/receivable 65 142
(397) (429)
Exchange differences on net debt (b)
Group (115) 146
Joint ventures and associates (25) 34
(140) 180
Net interest and similar items payable (c) (537) (249)
(a) Interest has been capitalised at the rate of interest applicable to the
specific borrowings financing the assets under construction or, where financed
through general borrowings, at a capitalisation rate representing the average
borrowing cost of the Group. For the year ended 30 June 2003 the capitalisation
rate was 5.2 per cent (2002: 5.5 per cent).
(b) Net exchange (losses)/gains primarily represent the effect on borrowings of
the (appreciation)/depreciation of the South African rand against the US dollar.
(c) Disclosed in the consolidated profit and loss account as:
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
Net interest and similar items payable
Group (444) (212)
Joint ventures and associates (93) (37)
Net interest and similar items payable (537) (249)
NOTE 4. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Year ended Year ended
30 June 2003 30 June 2002
US$M US$M
Profit for the financial year 1 901 1 690
Other recognised gains and losses 67 25
Total recognised gains and losses 1 968 1 715
Dividends (900) (784)
Issue of ordinary shares 98 104
Share repurchase scheme - BHP Billiton Plc (20) -
BHP Steel demerger (a) (1 489) -
Share buy-back program - BHP Billiton Limited - (19)
Net movement in shareholders' funds (343) 1 016
Shareholders' funds at beginning of the financial year 12 356 11 340
Shareholders' funds at end of the financial year 12 013 12 356
(a) Includes costs associated with the BHP Steel demerger of US$17 million net
of tax (US$24 million before tax). Additional costs of US$1 million net of tax
(US$2 million before tax) have been charged against profit.
NOTE 5. ANALYSIS OF MOVEMENTS IN NET DEBT
Other
As at Acquisitions non-cash Exchange As at
1 July 2002 & disposals Cash flow movements(a) movements 30 June 2003
US$M US$M US$M US$M US$M US$M
Cash at bank and in hand 1 199 (86) (528) - 2 587
Overdrafts (509) - 488 - - (21)
690 (86) (40) - 2 566
Redeemable preference shares (450) - - - - (450)
Finance lease obligations (35) - - (15) (3) (53)
Other debt due within one year (2 276) - 1 248 82 (65) (1 011)
Other debt due after one year (5 051) - (825) 165 (78) (5 789)
(7 812) - 423 232 (146) (7 303)
Money market deposits (b) 300 - 665 - - 965
Net debt (c) (6 822) (86) 1 048 232 (144) (5 772)
The balance sheet movement in
cash including money market
deposits is as follows:
Cash at bank and in hand 1 199 (86) (528) - 2 587
Money market deposits (b) 300 - 665 - - 965
1 499 (86) 137 - 2 1 552
(a) Net other non-cash movements represent debt transferred on demerger of
BHP Steel.
(b) Money market deposits with financial institutions have a maturity of up
to three months.
(c) The breakdown of net debt by currency is as follows:
US$M US$M
As at As at
30 June 2003 30 June 2002
Net debt is denominated in:
US dollars 5 387 4 631
South African rand 540 348
Australian dollars 34 1 451
Canadian dollars (122) 301
Other currencies (67) 91
Net debt 5 772 6 822
NOTE 6. TAXATION
The Group recognises tax losses to the extent that it can reasonably foresee
future profits which can absorb those losses. Following promising progress in
the Group's Gulf of Mexico (US) projects, previously unrecognised tax losses in
the US have been recouped and have been recognised this year resulting in a
reduction in the effective tax rate of approximately 3%. If and when the
projects reach appropriate milestones that provide greater certainty over
projected future profits, further benefits in respect of past losses may be
recognised.
The Group is considering the implications of adopting the new Australian tax
consolidation regime. At the time the Group makes a decision, an assessment will
be made of the impact, if any, on the financial results.
BHP BILLITON GROUP
STATEMENT OF FINANCIAL PERFORMANCE
(prepared in accordance with Australian GAAP; unaudited)
Year ended 30 June 2003 2002
US$M US$M
Revenue from ordinary activities
Sales 15 608 15 896
Other revenue 941 1 171
16 549 17 067
Profit from ordinary activities before
Depreciation, amortisation and borrowing costs 4 983 4 726
Deduct: Depreciation and amortisation 1 689 1 769
Borrowing costs 511 350
Profit from ordinary activities before tax 2 783 2 607
Deduct: Tax expense attributable to ordinary activities 883 912
Net profit 1 900 1 695
Outside equity interests in net profit (40) (47)
Net profit attributable to members of the BHP Billiton Group 1 860 1 648
Basic earnings per fully paid ordinary share (US cents) 30.0 27.3
Basis of Preparation
The results of the BHP Billiton Group, comprising BHP Billiton Limited and BHP
Billiton Plc and their respective subsidiaries, for the year ended 30 June 2003,
and the corresponding period, have been prepared in accordance with Australian
GAAP and Practice Note 71 'Financial reporting by Australian entities in dual
listed company arrangements' issued by the Australian Securities and Investments
Commission. The financial information has been prepared using the same
accounting policies as were used in preparing the results for the BHP Billiton
Group as presented in the BHP Billiton Limited financial statements for the year
ended 30 June 2002, except as noted below.
Provisions and Contingent Liabilities
Australian Accounting Standard AASB 1044 'Provisions, Contingent Liabilities and
Contingent Assets' was first adopted from 1 July 2002, which resulted in the
Group calculating employee benefit liabilities using remuneration rates expected
to be paid when the liabilities are settled, rather than remuneration rates at
balance date. The financial effect of the change in policy as at 1 July 2002 was
a charge to net profit for the year ended 30 June 2003 of US$6 million.
Foreign Currency Translation
Revised Australian Accounting Standard AASB 1012 'Foreign Currency Translation'
was first adopted from 1 July 2002.
For hedges of specific purchases or sales, the gains or costs on entering the
hedge and the exchange differences up to the date of the purchase or sale are
now deferred and recognised as assets or liabilities on the statement of
financial position from the inception of the hedge contract, rather than when
the specific purchase or sale occurs.
At 30 June 2003, for foreign currency hedge contracts the Group has recognised
deferred costs of US$9 million, deferred exchange gains of US$104 million and a
net foreign currency receivable of US$95 million. There was no impact on opening
retained profits at 1 July 2002 or on net profit for the year ended 30 June
2003.
Disclosure of components of borrowing costs, interest revenue and income tax
expense
The BHP Billiton Group calculates foreign exchange gains and losses in
accordance with AASB 1012. In prior years, a net foreign exchange gain or loss
arising from the restatement of non-US dollar monetary balances by Group
entities that have a US dollar functional currency, has been disclosed as a
single net amount included in Profit from ordinary activities before income tax.
In the current year, the components of this amount that relate to the
restatement of debt, short term deposits and tax balances have been classified
and disclosed as a component of borrowing costs, interest revenue and income tax
expense, respectively. In addition, the unwind of the discounting of provisions
has been classified and disclosed separately as a component of borrowing costs.
This disclosure better presents the impact of these foreign exchange gains or
losses and the discount component on the underlying categories of income or
expense.
Note 3 to the UK GAAP results sets out the amounts for discounting on provisions
and exchange differences on net debt. The change in policy only impacts the
disclosure of individual line items in the Statement of Financial Performance,
as set out below. Comparative amounts have been restated accordingly. There is
no impact on net profit for the year ended 30 June 2003.
2003 Restated As previously disclosed
US$M 2002 2002
US$M US$M
Borrowing costs 511 350 449
Interest revenue 67 147 142
Income tax expense 883 912 955
Tax Consolidation
The Group is considering the implications of adopting the new Australian tax
consolidation regime. At the time the Group makes a decision, an assessment will
be made of the impact, if any, on the financial results.
Forward-looking statements
Certain statements contained in this release, including statements in the
sections entitled 'Outlook', 'Merger Benefits and Cost Savings' and 'Growth
Projects' may constitute 'forward-looking statements' within the meaning of the
US Private Securities Litigation Reform Act of 1995. We undertake no obligation
to revise the forward-looking statements included in this release to reflect any
future events or circumstances. Our actual results, performance or achievements
could differ materially from the results expressed in, or implied by, these
forward-looking statements. Factors that could cause or contribute to such
differences are discussed in the sections entitled 'Risk Factors' and 'Operating
and Financial Review and Prospects-General factors affecting our operating
results' included in our amended annual report on Form 20-F/A for the fiscal
year ended 30 June 2002, which we filed with the US Securities and Exchange
Commission (SEC) on 10 April 2003 and is available on the SEC's website at
'www.sec.gov'.
Further information on BHP Billiton can be found on our Internet site:
http://www.bhpbilliton.com
Australia United Kingdom
Andrew Nairn, Investor Relations Mark Lidiard, Investor & Media Relations
Tel: +61 3 9609 3952 Mobile: +61 408 313 259 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942
email: Andrew.W.Nairn@bhpbilliton.com email: Mark.Lidiard@bhpbilliton.com
Tania Price, Media Relations Ariane Gentil, Media Relations
Tel: +61 3 9609 3815 Mobile: +61 419 152 780 Tel: +44 20 7802 4177 Mobile: +44 7881 518 715
email: Tania.Price@bhpbilliton.com email: Ariane.Gentil@bhpbilliton.com
United States South Africa
Francis McAllister, Investor Relations Michael Campbell, Investor & Media Relations
Tel: +1 713 961 8625 Mobile: +1 713 480 3699 Tel: +27 11 376 3360 Mobile: +27 82 458 2587
email: Francis.R.McAllister@bhpbilliton.com email: Michael.J.Campbell@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 600 Bourke Street Melbourne Registered Office: Neathouse Place London SW1V 1BH United
Victoria 3000 Kingdom
Telephone +61 3 9609 3333 Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111
The BHP Billiton Group is headquartered in Australia
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