Further re Final Results
BHP Billiton Limited
09 September 2002
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.
Further to the release of the BHP Billiton Group's Preliminary Financial Results
for the year ended 30 June 2002 on 7 August, please find following the balance
of the information required by the Listing Rules of the Australian Stock
Exchange. The information is provided to you in accordance with the BHP Billiton
Group policy of making such announcements to all stock exchanges on which BHP
Billiton Limited and BHP Billiton Plc have primary or secondary listings. YOU
SHOULD NOTE HOWEVER THAT THE INFORMATION HAS BEEN PREPARED IN ACCORDANCE WITH
AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. It is anticipated that the
2002 Annual Reports of BHP Billiton Limited and BHP Billiton Plc will be
despatched to shareholders at the end of this month, together with the notices
of shareholder meetings to be held on 4 November.
K J Wood - Company Secretary
BHP Billiton Group
2001/2002 FINANCIAL RESULTS
9 September 2002
The following information is provided in relation to the results for the
year ended 30 June 2002.
Basis of presentation of financial information
On 29 June 2001, BHP Billiton Limited (previously known as BHP Limited),
an Australian listed company, and BHP Billiton Plc (previously known as
Billiton Plc), a UK listed company, entered into a Dual Listed Companies
(DLC) merger. This was effected by contractual arrangements between the
companies and amendments to their constitutional documents.
The effect of the DLC merger is that BHP Billiton Limited and its
subsidiaries (the BHP Billiton Limited Group) and BHP Billiton Plc and
its subsidiaries (the BHP Billiton Plc Group) operate together as a
single economic entity (the BHP Billiton Group) from 29 June 2001, with
neither assuming a dominant role.
Accounting and Reporting on the DLC Merger
In accordance with the Australian Investments and Securities Commission
(ASIC) Practice Note 71 'Financial Reporting by Australian Entities in
Dual-Listed Company Arrangements', and an order issued by ASIC under
section 340 of the Corporations Act 2001 on 2 September 2002, this
financial information presents the financial results of the BHP Billiton
Group as follows:
• Results for the year ended 30 June 2002 are of the combined entity
including both BHP Billiton Limited and its subsidiary companies and BHP
Billiton Plc and its subsidiary companies;
• Comparative period results are of BHP Billiton Limited and its
subsidiary companies only, except for the Statement of Financial
Position as at 30 June 2001 which includes both BHP Billiton Limited and
its subsidiary companies and BHP Billiton Plc and its subsidiary
companies; and
• Results are presented in US dollars unless otherwise stated.
Results for financial year 2002
Overview
The financial results for the year ended 30 June 2002 for the BHP
Billiton Group demonstrate the financial strength of the merged group,
exemplified by strong operating cash flow generation and underlying
balance sheet strength.
Net profit attributable to members of the BHP Billiton Group for 2002 of
US$1 648 million was an increase of 49 per cent from the previous year
(2001: US$1 109 million). Earnings per share were 27.3 US cents (2001:
30.1 US cents).
Profit before borrowing costs and tax
Profit before borrowing costs and tax was US$3 099 million compared with
a profit of US$1 735 million for 2001.
Excluding significant items (refer below), profit before borrowing costs
and tax was US$3 311 million compared with a profit of US$2 640 million
for 2001.
The following represents major factors affecting profit before borrowing
costs and tax (excluding significant items and outside equity interests)
for the year ended 30 June 2002:
• The inclusion of financial results for the BHP Billiton Plc Group.
• Lower prices for crude oil, copper, diamonds, silver and zinc were
partly offset by higher prices for metallurgical coal, energy coal, and
gas.
• Lower sales volumes from Base Metals, Carbon Steel Materials,
Petroleum products and Energy Coal businesses.
• Lower price linked costs were mainly due to lower royalties and taxes
for petroleum products together with lower costs for London Metals
Exchange (LME) listed commodities partially offset by increased royalty
costs at metallurgical coal operations mainly reflecting higher
metallurgical coal prices.
Merger benefit initiatives generated net cost savings during the year.
Results for financial year 2002 (continued)
Profit before borrowing costs and tax (continued)
Costs increased at Escondida (Chile) mainly reflecting the decision to
reduce production in response to weaker Base Metals markets and
increased costs at metallurgical coal operations (Australia) and energy
coal operations (New Mexico) were due to operational issues. These
factors were partly offset by lower operating costs at Liverpool Bay
(UK) and Hillside (South Africa), primarily reflecting higher
maintenance activities in the corresponding period, cost reductions at
the Gulf of Mexico (US) petroleum operations mainly due to increased
productivity, and savings at WA Iron Ore operations (Australia) due to
lower port and rail costs.
• New and acquired operations that contributed to the current period
include commencement of production of petroleum from Typhoon (US),
Zamzama (Pakistan) and Keith (North Sea) and the acquisition of an
additional 29 per cent interest in the EkatiTM diamond business.
• Steel profits (excluding OneSteel Limited) reduced by approximately
US$130 million. The corresponding period included contribution to profit
before borrowing costs and tax of approximately US$125 million from a
higher ownership interest in metallurgical coal (Queensland), the sale
of Buffalo oilfield (Australia), spun-out steel operations (OneSteel
Limited), and the Ok Tedi copper mine (PNG), partly offset by losses
from HBI Venezuela. The current period included a lower contribution
from PT Arutmin Indonesian Energy Coal operations due to sale of the
business in November 2001.
• Profits from asset sales were higher than the corresponding period
mainly due to the profit on sale of PT Arutmin Energy Coal operations in
Indonesia.
• Exploration charged to profit was approximately US$287 million, and
included the write-off of La Granja copper exploration activities
(Peru), together with increased petroleum activity in the Gulf of
Mexico.
Significant items
Significant items totalling US$212 million (before tax) were expensed at
year end. These included one-off costs of US$80 million relating to the
merger and restructuring of the Group during the year.
Following a reassessment of the Group's asset disposal and closure plans
relating to its South West Copper business in the US (where the Group
ceased operations in 1999), impairment provisions, principally related
to the San Manuel smelter, were increased by US$171 million. This was
offset by a reduction of US$70 million in provisions relating to the
expected timing of site restoration expenditure.
Sulphide operations at Tintaya (Peru) have been suspended until at least
January 2003. A charge of US$31 million recognised the costs of the
suspension and a write-down of obsolete equipment.
In June 2002 a change in legislation increased the corporation taxation
rate for oil and gas companies in the United Kingdom from 30 per cent to
40 per cent, resulting in deferred taxation balances being restated,
with an adverse impact of US$56 million on the full year's results. The
tax effects of other significant items were a benefit of US$24 million.
Excluding significant items, net profit attributable to members of the
BHP Billiton Group for 2002 of US$1 892 million was a decrease of 0.9
per cent from the previous year (2001: US$1 909 million).
The major significant items before taxation for the year ended 30 June
2001 included a charge to profit of:
• US$520 million associated with the write-off of BHP Billiton's equity
investment in HBI Venezuela and the establishment of provisions for
related financial obligations to banks and other associated costs;
• US$430 million from the write-off of the Ok Tedi copper mine;
• US$37 million related to merger transaction costs; and
• US$46 million related to organisational restructuring costs and
provisions mainly related to the merger.
These items are partially offset by a US$128 million profit from sale of
interests in the Central Queensland Coal Associates (CQCA) and Gregory
Joint Ventures to Mitsubishi. A taxation charge of US$33 million was
incurred for non-deductibility of financing costs as a consequence of an
income tax audit. The tax effects of other significant items were a
benefit of US$138 million.
Results for financial year 2002 (continued)
Borrowing costs
Borrowing costs were US$449 million, impacted by an improved credit
rating, higher average debt levels (impacted by the inclusion of the BHP
Billiton Plc Group) and lower market interest rates.
Taxation
The tax charge for the year was US$955 million, representing an
effective rate of 36.0 per cent. This rate is above the nominal rate of
30 per cent mainly due to non tax-effected losses in the current year,
non-deductible accounting depreciation and amortisation, and secondary
taxes on dividends paid and payable by South African entities, partly
offset by the recognition of prior year tax losses.
Comparison to results under UK GAAP
As a consequence of the DLC merger, the BHP Billiton Limited Group and
the BHP Billiton Plc Group have aligned accounting policies, as far as
is possible, to minimise differences and simplify determination and
reporting of the combined results. The item where alignment is not
possible in terms of UK and Australian GAAP and which impacts the year
ended 30 June 2002 is described below.
Under UK GAAP, until 30 June 1998 goodwill arising upon acquisition was
written off directly against equity. Subsequently and currently under UK
GAAP, goodwill is to be retained as an asset and amortised. This current
treatment is consistent with that required under Australian GAAP.
As of 30 June 1998, the BHP Billiton Plc Group had written off a net
amount of goodwill of US$513 million directly against equity. For
Australian GAAP reporting on a combined basis, this goodwill is
reinstated on the Statement of Financial Position as an intangible
asset, with a corresponding credit to equity. The net balance at 30 June
2002 (after amortisation) is US$471 million and the impact on the
Australian GAAP Statement of Financial Performance is a charge to profit
of US$42 million (no tax effect) for the year ended 30 June 2002. Thus,
the attributable profit of the BHP Billiton Group of US$1 690 million
under UK GAAP compares to that recorded by the BHP Billiton Group of
US$1 648 million for the same period under Australian GAAP.
Cash flow
Operating cash inflows for the year were US$3 724 million with a total
cash outflow of US$9 million.
Expenditure on growth projects of US$1 590 million, including Escondida
Phase IV, the ROD oil and Ohanet wet gas projects in Algeria, Mozal II
and Petroleum projects in the Gulf of Mexico and exploration expenditure
of US$390 million, was an increase of US$114 million from the prior
year.
Combined with maintenance capital expenditure and investment expenditure
on Colombian coal assets and EkatiTM, partially offset by proceeds from
the sale of PT Arutmin, this contributed to an investing cash outflow of
US$2 538 million.
After dividend payments of US$831 million, financing cash outflows were
US$1 195 million.
Portfolio management
The demerger of BHP Steel in July 2002 was a landmark event, severing a
link of many decades. The outcome was embraced by both organisations,
launching BHP Steel as an independent, world-class steel business and
releasing the BHP Billiton Group to focus on its upstream interests.
Strong demand for the BHP Steel shares, which were sold through the Sale
Facility to participants under the Retail and Institutional offers, took
the final price to A$2.80 per BHP Steel share. The 6 per cent retained
by the BHP Billiton Group and sold through the Sale Facility brought a
cash benefit of US$75 million in July 2002. Accounting rules will see
the difference between this selling price and the book value - some
US$19 million - appear as a loss in the 2003 financial statements. BHP
Billiton Plc shareholders received approximately 149 million bonus
shares to match the demerger value distributed to BHP Billiton Limited
shareholders.
During the year the BHP Billiton Group also finalised its responsible
exit from the Ok Tedi copper mine in Papua New Guinea, in the process
establishing a fund to support its future social and economic
development of the people of Papua New Guinea and, in particular of the
Western Province. The BHP Billiton Group also announced the sale of its
interest in the PT Arutmin Indonesia Energy Coal operations, and the
acquisition, in conjunction with its partners, of the 50 per cent
interest in Cerrejon Zona Norte Energy Coal mine in Colombia, bringing
its interest to 33 per cent.
Balance sheet
Net assets for the BHP Billiton Group were US$13 153 million at 30 June
2002, an increase of US$921 million from the 30 June 2001 position.
Equity shareholders' funds for the BHP Billiton Group were US$13 153
million at 30 June 2002, an increase of US$921 million from the previous
year. Net borrowings for the BHP Billiton Group were US$6 681 million at
30 June 2002.
As a consequence of the above, the gearing ratio decreased to 33.7 per
cent compared with 36.5 per cent for the previous year.
Currency
Currency fluctuations affect the Statement of Financial Performance in
two principal ways.
Sales are predominantly based on US dollar pricing (the principal
exceptions being Petroleum's gas sales, Steel's sales to Australian
customers and Energy Coal's sales to South African domestic customers).
However, a proportion of operating costs (particularly labour) arises in
the local currency of the operations, most significantly the Australian
dollar and South African rand, but also the Brazilian real, Chilean peso
and Colombian peso. Accordingly, changes in the exchange rates between
these currencies and the US dollar can have a significant impact on the
Group's reported results.
Several subsidiaries hold certain monetary assets and liabilities
denominated in currencies other than their functional currency (US
dollar), in particular non-US dollar denominated debt, tax liabilities
and provisions. Monetary assets and liabilities are converted into US
dollar at the closing rate. The resultant differences are accounted for
in the Statement of Financial Performance in accordance with Australian
GAAP.
Capital management
A US$2.5 billion syndicated multi-currency revolving facility was
completed in September 2001. This facility replaced the US$1.2 billion
credit facility of the BHP Billiton Limited Group and the US$1.5 billion
and US$1.25 billion credit facilities of the BHP Billiton Plc Group. The
facility includes a US$1.25 billion 364-day revolving credit component,
and a US$1.25 billion five-year revolving credit component.
In October 2001, the BHP Billiton Group increased its A$ Commercial
Paper Program limit from A$1 billion to A$2 billion. During November
2001, the Group issued A$1 billion in debt securities in two tranches:
A$750 million of seven-year, 6.25 per cent notes maturing August 2008;
and A$250 million of three-year, floating rate notes maturing November
2004. In addition a US$1.5 billion Euro Medium Term Note (EMTN) program
was established during June 2002.
In accordance with the announced share buy-back program, BHP Billiton
Limited re-purchased 4 134 622 shares during the year at a weighted
average price of A$8.83 per share. The buy-back program allows for the
purchase of either BHP Billiton Limited or BHP Billiton Plc shares, up
to a limit of 186 million shares.
Dividends
An interim dividend of 6.5 US cents per fully paid ordinary share was
paid in December 2001 and a final dividend of 6.5 US cents per fully
paid ordinary share was paid in July 2002, bringing the total for the
year to 13.0 US cents. The BHP Billiton Limited dividends were fully
franked for Australian taxation purposes.
The corresponding period for BHP Billiton Limited shareholders included
an unfranked interim dividend of 12.1 Australian cents per fully paid
share (adjusted for merger bonus issue) and a fully franked final
dividend of 12.6 Australian cents per fully paid share (adjusted for
merger bonus issue).
Dividends for the BHP Billiton Group are determined and declared in US
dollars. However, BHP Billiton Limited dividends are mainly paid in
Australian dollars and BHP Billiton Plc dividends are mainly paid in
pounds sterling to shareholders on the UK section of the register and
South African rand to shareholders on the South African section of the
register.
The rates of exchange applicable two business days before the
declaration date were used for conversion.
Statement of Financial Performance (a)
2002 2001
for the financial period ended 30 June
US$M US$M
Revenue from ordinary activities
Sales 15 896 11 134
Interest revenue 142 61
Other revenue 1 024 875
17 062 12 070
deduct
Expenses from ordinary activities, excluding depreciation, amortisation and
borrowing costs 12 433 9 064
Depreciation and amortisation 1 753 1 286
Borrowing costs 449 299
2 427 1 421
Share of net profit of associated entities accounted for using the equity
method 223 15
2 650 1 436
deduct
Income tax expense attributable to ordinary activities 955 583
Net profit 1 695 853
(deduct)/add
Outside equity interests in net profit (47) 256
Net profit attributable to members of the BHP Billiton Group . 1 648 1 109
Net exchange fluctuations on translation of foreign currency net assets and
foreign currency interest bearing liabilities net of tax 25 292
Total direct adjustments to equity attributable to members of the BHP 25 292
Billiton Group
Total changes in equity other than those resulting from transactions with
owners 1 673 1 401
(a) Financial information for 2002 represents the financial
performance of the BHP Billiton Group. Financial information for 2001
represents the financial performance of the BHP Billiton Limited Group
only.
Statement of Financial Position (a)
as at 30 June
2002 2001
Assets US$M US$M
Current assets
Cash assets 1 499 1 285
Receivables 2 294 2 246
Other financial assets 117 215
Inventories 1 509 1 700
Other assets 108 130
Total current assets 5 527 5 576
Non-current assets
Receivables 889 376
Investments accounted for using the equity method 1 505 1 236
Other financial assets 581 554
Inventories 80 90
Property, plant and equipment 19 484 18 632
Intangible assets 513 608
Deferred tax assets 480 459
Other assets 803 693
Total non-current assets 24 335 22 648
Total assets 29 862 28 224
Liabilities
Current liabilities
Payables 2 435 2 255
Interest bearing liabilities 1 797 1 807
Tax liabilities 493 321
Other provisions 1 116 1 046
Total current liabilities 5 841 5 429
Non-current liabilities
Payables 121 144
Interest bearing liabilities 6 383 6 521
Deferred tax liabilities 1 600 1365
Other provisions 2 764 2 533
Total non-current liabilities 10 868 10 563
Total liabilities 16 709 15 992
Net assets 13 153 12 232
Equity
Contributed equity - BHP Billiton Limited 3 143 3 039
Called up share capital - BHP Billiton Plc 1 752 1 752
Reserves 471 530
Retained profits 7 455 6 526
12 821 11 847
Equity attributable to outside equity interests 332 385
Total equity 13 153 12 232
(a) Financial information for 2002 and 2001 represents the financial position of
the BHP Billiton Group.
Statement of Cash Flows (a)
for the financial period ended 30 June
2002 2001
US$M US$M
Cash flows related to operating activities
Receipts from customers 16 129 11 369
Payments to suppliers, employees, etc (11 836) (7 796)
Dividends received 187 42
Interest received 156 64
Borrowing costs (525) (348)
HBI Venezuela guarantee payment - (310)
Other 128 14
Operating cash flows before income tax 4 239 3 035
Income taxes paid net of refunds received (515) (328)
Net operating cash flows 3 724 2 707
Cash flows related to investing activities
Purchases of property, plant and equipment (2 359) (1 046)
Exploration expenditure (390) (276)
Purchases of investments (321) (367)
Purchases of, or increased investment in, controlled entities and joint
venture interests net of their cash (45) (366)
Investing outflows (3 115) (2 055)
Proceeds from sale of property, plant and equipment 200 86
Proceeds from sale or redemption of investments 232 275
Proceeds from OneSteel spin-out - 366
Proceeds from sale or partial sale of controlled entities
and joint venture interests net of their cash 145 156
Net investing cash flows (2 538) (1 172)
Cash flows related to financing activities
Proceeds from ordinary share issues, etc 140 76
Proceeds from interest bearing liabilities 3 975 411
Repayment of interest bearing liabilities (4 331) (1 448)
Redemption of secured Employee Share Plan program (134) -
Purchase of shares under Share Buy-Back program (19) -
Dividends paid (831) (524)
Other 5 (10)
Net financing cash flows (1 195) (1 495)
Net increase in cash and cash equivalents (9) 40
Cash and cash equivalents at beginning of period 998 562
Effect of foreign currency exchange rate changes on cash and cash equivalents 1 (41)
BHP Billiton Plc Group (b) - 437
Cash and cash equivalents at end of period 990 998
a. Financial information for 2002 represents the financial performance of the
BHP Billiton Group. Financial information for 2001 represents the financial
performance of the BHP Billiton Limited Group only.
b. This amount represents the inclusion of the BHP Billiton Plc Group as a
consequence of the DLC merger on 29 June 2001.
Statement of Cash Flows (continued)
2002 2001
Reconciliation of cash US$M US$M
Cash and cash equivalents comprise: 1 199 836
Short term deposits 300 449
Cash assets 1 499 1 285
Bank overdrafts (509) (287)
Total cash and cash equivalents 990 998
Non-cash financing and investing activities
Shares issued:
Dividend Investment Plan - 1
Other
Employee Share Plan loan instalments 6 11
The Dividend Investment Plan (DIP) is an application of dividends.
The Employee Share Plan loan instalments represent the repayment of
loans outstanding with the BHP Billiton Limited Group, by the
application of dividends.
Comparison of half year profits
2002 2001
US$M US$M
Net profit attributable to members of the BHP Billiton Group reported for the
1st half year 1 177 801
Net profit attributable to members of the BHP Billiton Group reported for the
2nd half year 471 308
Ratios
2002 2001
Profit before tax / revenue 15.5% 11.9%
Profit from ordinary activities before tax as a percentage of revenue
Profit after tax / equity interests
Profit from ordinary activities after tax attributable to members as a
percentage of equity at the end of the period 12.5% 9.4%
Control gained over entities having material effect
There were no acquisitions during the year having a material effect on
profit.
Loss of control of entities having material effect
There were no disposals during the year having a material effect on profit.
Franking credits
The BHP Billiton Group had an adjusted franking account balance of
US$591 million at 30 cents in the dollar available at 30 June 2002
before the 3 July 2002 dividend payment. An amount of US$252 million at
30 cents in the dollar was used as a result of the 3 July 2001 dividend
payment. It is anticipated that dividends payable in the following year
will be fully franked.
From 1 July 2002, the Australian Income Tax Assessment Act 1997 requires
measurement of franking credits based on the amount of income tax paid,
rather than after tax profits. As a result, the 'franking credits
available' were converted from US$591 million to US$253 million as at 1
July 2002. This change in the basis of measurement does not change the
value of franking credits to shareholders who may be entitled to
franking credit benefits.
Discontinued Operations
Refer ' Significant events after year end'.
Retained profits
2002 2001
US$M US$M
Retained profits at the beginning of the period 6 526 1706
Dividends provided for or paid (784) (476)
Aggregate of amounts transferred from reserves 84 (3)
BHP Billiton Limited share buy-back program (19) -
Net profit 1 648 1 109
Exchange variations - (348)
BHP Billiton Plc Group (a) - 4 538
Retained profits at the end of the financial period 7 455 6 526
(a) This amount represents the inclusion of the BHP Billiton Plc
Group as a consequence of the DLC merger on 29 June 2001.
Income tax
2002 2001
US$M US$M
Income tax expense
Profit from ordinary activities before income tax 2 650 1 436
Prima facie tax calculated at 30 cents (2001: 34 cents) in the dollar on profit
from ordinary activities 795 488
add/(deduct) tax effect of permanent differences
Rebate for dividend - (3)
Investment and development allowance (10) (21)
Amounts over provided in prior years (23) (28)
Recognition of prior year tax losses (103) (142)
Non-deductible accounting depreciation and amortisation 67 17
Non-deductible dividends on redeemable preference shares 13 27
Non-tax effected operating losses 69 (7)
Tax rate differential on non Australian income (1) 28
Non tax-effected capital gains (12) (72)
Foreign expenditure including exploration not presently deductible 16 57
Foreign exchange gains and other translation adjustments 29 16
Tax rate changes 59 (24)
Investment and asset impairments 32 199
Other 24 48
Income tax attributable to profit from ordinary activities 955 583
deduct Income tax benefit arising from items taken to exchange fluctuation
account 1 74
Total income tax taken to account 954 509
Exploration, evaluation and development expenditure capitalised
2001
2002
US$M US$M
Exploration, evaluation and development expenditure - not yet in production 1 194 779
- in production 986 849
Total exploration, evaluation and development expenditure capitalised 2 180 1 628
Exploration, evaluation and development expenditure capitalised (continued)
Details of exploration, evaluation and development expenditure
not yet in production:
In exploration and/or
evaluation stage In development stage
2002 2001 2002 2001
US$M US$M US$M US$M
Opening balance 386 225 393 134
Expenditure incurred during the period 350 288 381 256
Expenditure expensed during the period (287) (236) - -
Transferred from evaluation to development (88) (5) 88 5
Transferred to production (9) (3) (7) (14)
Disposals - - - -
Depreciation (9) (32) (6) (2)
Exchange fluctuations and other movements (1) (5) 3 (15)
BHP Billiton Plc Group (a) - 154 - 29
Closing balance 342 386 852 393
a. This amount represents the inclusion of the BHP Billiton Plc Group as a
consequence of the DLC merger on 29 June 2001.
Depreciation and amortisation
2001 2000
US$M US$M
Depreciation relates to
Buildings 94 75
Plant, machinery and equipment 1 308 1 042
Mineral rights 119 28
Exploration, evaluation and development expenditure 175 136
Capitalised leased assets 9 2
Total depreciation 1 705 1 283
Amortisation (a) 48 3
Total depreciation and amortisation 1 753 1 286
2002
US$M
Before tax Related Tax Related outside Amount (after tax)
equity attributable to members
interests of BHP Billiton Group
(a) Amortisation relates to
Amortisation of goodwill 48 - - 48
Amortisation of other intangibles - - - -
Total amortisation 48 - - 48
Segment results
Industry classification
External Inter- Share of Profit Gross Gross Depreciation Other Capital
revenue segment net profit before segment segment and non-cash expenditure
revenue from tax (a) assets liabilities amortisation expenses (c)
associated (b)
entities
2002 US$M
Aluminium 2 846 - - 502 5 436 746 246 3 291
Base metals 1 415 23 32 27 4 502 1 087 233 165 527
Carbon steel materials 2 949 167 47 1 044 3 240 1 135 175 35 277
Stainless steel 799 - 4 9 1 963 267 94 2 84
materials
Energy coal 2 045 - 18 493 2 895 1 072 191 13 294
Diamonds and specialty
products 1 096 19 122 219 1 410 181 79 2 60
Petroleum 2 801 35 - 1 052 4 539 2 061 571 22 687
Steel (d) 2 495 142 - 91 2 675 800 137 4 100
Group and unallocated 474 224 - (480) 3 202 9 360 27 31 39
items (e) (f)
Net unallocated 142 - - (307) - - - - -
interest
BHP Billiton Group 17 062 610 223 2 650 29 862 16 709 1 753 277 2 359
BHP Billiton Ltd Group
External Inter- Share of Profit Gross Gross Depreciation Other Capital
revenue segment net profit before segment segment and non-cash expenditure
revenue from tax (a) assets liabilities amortisation expenses (c)
associated (b)
entities
2001
US$M
Aluminium - - - - 5 233 545 - - -
Base metals 1 380 - - 391 4 146 1 101 166 8 244
Carbon steel materials 2 642 177 63 873 3 209 1 106 213 84 131
Stainless steel - - - - 1 891 217 - - -
materials
Energy coal 638 - - 128 2 407 838 67 2 52
Diamonds and specialty
products 256 5 - 36 1 609 243 30 6 26
Petroleum 3 413 21 - 1 475 4 112 1 975 540 101 459
Steel (d) 3 271 333 - 234 2 641 849 174 15 69
Group and unallocated 409 38 (48) (1 463) 2 976 9 118 96 572 65
items (e) (f)
-
Net unallocated 61 - - (238) - - - -
interest
BHP Billiton Limited 12 070 574 15 1 436 28 224 15 992 1 286 788 1 046
Group
(a) Before outside equity interests.
(b) Included within gross segment assets are the following carrying
values of associates accounted for using the equity method of
accounting: Base metals; 2002 - US$383million (2001 - US$531mllion),
Carbon steel materials; 2002 - US$278 million (2001 - US$276 million),
Stainless steel materials; 2002 - US$3 million (2001 - US$27 million),
Energy coal; 2002 - US$490 million (2001 - US$265 million), Diamonds and
specialty products; 2002 - US$326 million (2001 - US$137 million),
Petroleum; 2002 - US$25 million (2001 - US$nil), and Group and
unallocated items; 2002 - US$nil (2001 - US$nil).
(c) Excluding investment expenditure, capitalised borrowing costs
and capitalised exploration.
Segment results
Industry classification (continued)
(d) The results of operations and the financial position presented
as the Steel segment, represents substantially all of the Steel business
to be demerged. Amounts not attributable to BHP Steel include results of
operations and financial position of Transport and Logistics, until 31
December 2001, and certain minor residual steel assets and liabilities
that will not be demerged as part of BHP Steel. Refer Significant events
after year end.
(e) Comparative results for the Ok Tedi copper mine and HBI
Venezuela are included in Group and unallocated items. Ok Tedi was
previously included in Base Metals and HBI Venezuela was previously
included in Carbon Steel Materials.
(f) Includes consolidation adjustments.
Segment results
Geographical classification
2002 2001
US$M US$M
External revenue by location of customer
Continuing operations
Australia 2 012 2 250
North America 1 969 1 262
Europe 3 929 1 405
South America 457 341
Southern Africa 1 193 -
Japan 1 941 1 869
South Korea 1 001 584
Other Asia 1 634 1 091
Rest of World 537 234
Total from continuing operations 14 673 9 036
Discontinued operations
Australia 1 339 1 622
North America 190 260
Europe 112 163
South America 24 23
Japan 17 33
South Korea 43 70
Other Asia 328 461
Rest of World 336 402
Total from discontinued operations (a) 2 389 3 034
BHP Billiton Group 17 062 12 070
Segment results
Geographical classification (continued)
2002 2001
US$M US$M
Gross segment assets
Continuing operations
Australia 9 251 9 158
North America 3 525 4 110
Europe 1 775 1 624
South America 6 722 5 172
Southern Africa 5 163 4 958
Rest of World 694 654
Total from continuing operations 27 130 25 676
Discontinued operations
Australia 1 977 1 760
North America 95 101
Europe 8 32
Rest of World 652 655
Total from discontinued operations (a) 2 732 2 548
BHP Billiton Group 29 862 28 224
Capital expenditure
Continuing operations
Australia 538 303
North America 288 229
Europe 211 60
South America 581 248
Southern Africa 347 -
Rest of World 296 148
Total from continuing operations 2 261 988
Discontinued operations
Australia 73 47
North America - 1
Rest of World 25 10
Total from discontinued operations (a) 98 58
BHP Billiton Group 2 359 1 046
(a) Refer 'Significant events after balance date'.
Export sales from Australia amounted to $4 774 million and US$4 998 million
for 2002 and 2001 respectively. Approximately 26 per cent and 25 per cent of
such sales during 2002 and 2001 respectively were to customers in Japan.
Export sales from UK amounted to US$501 million and US$507 million for 2002
and 2001 respectively. None of these sales were to customers in Japan.
Contributed equity at end of financial period
BHP Billiton Limited
Movements in ordinary fully paid shares Number of shares
On issue Of which quoted
2002
Opening number of shares 3 704 256 885 3 704 256 885
Shares issued on exercise of Employee Share Plan options (a) 22 955 508 22 955 508
Partly paid shares converted to fully paid (b) 1 815 916 1 815 916
Shares bought back and cancelled (4 134 622) (4 134 622)
Closing number of shares (c) 3 724 893 687 3 724 893 687
Special Voting Share (d) 1 -
BHP Billiton Plc
Movements in ordinary called up fully paid shares Number of shares
On issue Of which quoted
2002
Opening number of shares 2 319 147 885 2 319 147 885
Closing number of shares 2 319 147 885 2 319 147 885
Special Voting Share (d) 1 -
(a) Refer 'Employee Share Awards'
(b) 65 000 shares paid to 71 cents and 1 351 500 shares paid to 67
Australian cents were converted to fully paid during 2002. There were no
partly paid shares issued during the year.
(c) During the period 1 July 2002 to 2 September 2002, 1 283 554
Executive Share Scheme partly paid shares were paid up in full and 3 561
997 fully paid ordinary shares (including attached bonus shares) were
issued on the exercise of Employee Share Plan options.
(d) Each of BHP Billiton Limited and BHP Billiton Plc issued one
Special Voting Share to facilitate joint voting by shareholders of BHP
Billiton Limited and BHP Billiton Plc on Joint Electoral Actions.
Employee Share Awards
BHP Billiton Limited employee share awards (a)
Month of issue Number Number of Number Shares Number Awards Exercise Exercise
issued recipients Exercised issued on lapsed outstanding Price A$ (b) period
exercise at Balance
date
Employee Share Plan options
November 2001 6 870 500 113 - - 52 521 6 817 979 $8.99 Oct 2004 - Sept 2011
November 2001 7 207 000 153 8 034 8 034 175 384 7 023 582 $8.98 Oct 2004 - Sept 2011
December 2000 3 444 587 67 25 000 51 627 - 3 392 960 $9.41 July 2003 - Dec 2010
December 2000 2 316 010 59 110 500 228 194 86 734 2 001 082 $9.40 July 2003 - Dec 2010
November 2000 1 719 196 44 30 000 61 953 111 515 1 545 728 $8.97 July 2003 - Oct 2010
November 2000 7 764 776 197 320 500 661 864 48 530 7 054 382 $8.96 July 2003 - Oct 2010
April 2000 61 953 3 - - - 61 953 $8.29 April 2003 - April 2010
April 2000 937 555 5 - - 138 362 799 193 $8.29 April 2003 - April 2010
December 1999 413 020 1 - - - 413 020 $9.30 April 2002 - April 2009
December 1999 309 765 1 - - - 309 765 $8.19 April 2002 - April 2009
October 1999 123 906 6 25 000 51 628 20 651 51 627 $8.26 April 2002 - April 2009
October 1999 105 320 3 2 000 4 130 30 977 70 213 $8.26 April 2002 - April 2009
July 1999 206 510 1 - - - 206 510 $8.29 April 2002 - April 2009
April 1999 44 474 822 45 595 3 630 400 7 498 797 19 586 026 17 389 999 $7.62 April 2002 - April 2009
April 1999 16 901 398 944 1 671 500 3 451 816 6 226 585 7 222 997 $7.61 April 2002 - April 2009
April 1998 366 555 16 67 500 139 394 - 227 161 $7.14 April 2001 - April 2003
April 1998 289 114 23 104 500 215 802 10 326 62 986 $7.13 April 2001 - April 2003
November 1997 3 261 619 3 501 1 022 900 2 112 389 611 271 537 959 $7.53 Nov 2000 - Nov 2002
November 1997 16 336 800 16 411 6 238 950 12 882 403 2 314 255 1 140 142 $7.53 Nov 2000 - Nov 2002
October 1997 11 234 144 511 4 192 934 8 658 827 109 451 2 465 866 $7.42 Oct 2000 - Oct 2002
October 1997 8 243 879 379 2 874 064 5 935 229 310 798 1 997 852 $7.42 Oct 2000 - Oct 2002
July 1997 413 020 1 200 000 413 020 - - $9.18 July 2000 - July 2002
July 1997 816 747 36 228 500 471 875 143 525 201 347 $9.19 July 2000 - July 2002
October 1996 1 751 411 46 645 000 1 331 989 419 422 - $7.53 Oct 1999 - Oct 2001
October 1996 2 244 144 66 1 047 200 2 162 572 81 572 - $7.53 Oct 1999 - Oct 2001
60 994 303
Employee Share Awards continued
BHP Billiton Limited employee share awards continued
Month of issue Number Number of Number Shares Number Awards Exercise Exercise period
issued recipients exercised issued on lapsed outstanding Price A$
exercise at Balance
Date
Performance Rights (c) (d)
November 2001 4 770 800 110 8 610 8 610 102 990 4 659 200 - Oct 2004 - Sept
(LTI) 2011
October 2001 162 200 2 - - - 162 200 - Oct 2004 - Sept
(LTI) 2011
October 2001 222 892 6 - - - 222 892 - Oct 2003 - Mar 2006
(MTI)
December 2000 387 601 11 - - - 387 601 - July 2003 - Dec
(LTI) 2010
November 2000 4 143 278 104 372 611 769 479 113 581 3 260 218 - July 2003 - Oct
(LTI) 2010
March 1999 (LTI) 2 141 100 1 575 000 1 231 132 - 909 968 - Mar 1999 - Mar 2009
9 602 079
Bonus Equity Plan awards (e)
November 2001 957 035 117 - - - 957 035 - Nov 2004 - Oct 2006
BHP Billiton Plc employee share awards
Month of issue Number Number of Number Shares Number Awards Exercise Exercise period
issued recipients exercised issued on lapsed outstanding price £
exercise at Balance
date
Restricted Share Scheme
November 2001 274 914 1 - - - 274 914 - 8 Nov 2004
October 2001 4 178 000 197 51 320 51 320 222 880 3 903 900 - 1 Oct 2004
October 2001 863 000 41 1 833 1 833 11 367 849 800 - Oct 2004 - Sept
2008
5 028 614
Co-Investment Plan
November 2001 94 851 1 - - - 94 851 - Nov 2003 - April
2006
October 2001 866 791 125 6 131 6 131 15 505 845 155 - Oct 2003 - Mar 2006
940 006
(a) The Dual Listed Companies (DLC) structure between BHP Billiton
Limited and BHP Billiton Plc was established on 29 June 2001. Under the
terms of the DLC structure BHP Billiton Limited issued fully paid bonus
shares effective 29 June 2001 with the allotment of shares occurring on
9 July 2001. The information presented has been adjusted for the bonus
issue.
(b) Following the OneSteel Limited spin-out the exercise price of
options issued under the Employee Share Plan prior to 31 October 2000
was reduced by A$0.66 (pre-bonus issue).
(c) The number of shares received on exercise of Performance Rights
issued in March 1999 have been increased following the OneSteel Limited
spin-out to reflect the capital reduction impact on the value of BHP
Billiton Limited shares.
(d) Shares issued on exercise of Performance Rights include shares
purchased on market.
(e) The Bonus Equity Share Plan provides eligible employees with the
opportunity to take a portion of their incentive plan award in ordinary
shares in BHP Billiton Limited.
Investments in associated entities
Details of aggregate share of profits/(losses) of associates
2001
2002
Share of net profit of associated entities US$M US$M
Profit from ordinary activities before income tax 301 41
Income tax expense (78) (26)
223 15
Material interests in entities which are not controlled entities
Percentage (%) of ownership interest Contribution to operating profit after
Name of Entity held at end of period income tax
2002 2001 2002 2001
Equity accounted associates % % US$M US$M
Samarco Mineracao S.A. 50 50 32 42
Orinoco Iron C.A. 50 50 - (48)
QCT Resources Ltd (a) - - - 21
South Blackwater (b) 50 - 18 -
Highland Valley Copper (c) 34 34 17 -
Minera Alumbrera Limited (c) 25 25 26 -
Other (d) 130 -
Total 223 15
(a) A 50% interest in QCT Resources Ltd was acquired on 20 October
2000 and equity accounted from
1 November 2000 until its disposal on 28 June 2001.
(b) Acquired on 1 July 2001.
(c) Comparative contribution to operating profit after income tax
for 2001 represents the financial performance for the BHP Billiton
Limited Group only.
(d) Includes immaterial equity accounted associates and the Richards
Bay Minerals joint venture owned 50% (2001: 50%).
Significant events after year end
In July 2002, the BHP Steel business was demerged from the BHP Billiton
Group. The demerger of BHP Steel effectively brings to an end BHP Billiton's
involvment as a steel producer and follows the demerger of the OneSteel
business in October 2000 and the disposal of other steel operations, the US
West Coast Steel businesses in June 2000. These steel businesses, which
comprise the majority of the Steel segment, are reported below.
The financial performance of these businesses, as included in the BHP
Billiton Group financial statements, is detailed below.
Significant events after year end - continued
Discontinuing Steel businesses 2002 US$M 2001 US$M
Financial performance
Revenue from ordinary activities before interest income 2 389 3 034
Expenses from ordinary activities including depreciation 2 315 2 829
and amortisation, excluding borrowing costs
74 205
There were no significant items included within profit from ordinary
activities before net borrowing costs and income tax for 2002. Within profit
from ordinary activities before net borrowing costs and income tax for 2001
is a charge of US$22 million (before tax) relating to restructuring costs
and provisions.
While the BHP Billiton Group operates its treasury function on a Group
basis, certain financing arrangements not reported in the Steel segment can
be attributed to the discontinuing Steel operations. Not included within
revenue from ordinary activities for 2002 is interest income of US$13
million ( 2001 - US$15 million). The borrowing costs associated with
attributable debt instruments was $US15 million for 2002 (2001 - US$30
million). The income tax expense / (benefit) related to discontinuing
operations, including the tax impact on financing arrangements noted above,
was a tax benefit of US$3 million (2001 - US$34 million tax expense).
The contribution to Group cash flows of these businesses before
consideration of borrowing costs and income tax, as included in the BHP
Billiton Group financial statements is detailed below:
Discontinuing Steel businesses 2002 US$M 2001 US$M
Cash flows
Net operating cash flows (excluding borrowing costs and 283 412
income tax)
Net investing cash flows (74) 367
Net financing cash flows (21) (68)
Total cash flows provided by discontinued operations (188) 711
The BHP Billiton Group demerged the BHP Steel business in July 2002 as
follows:
• A capital reduction and a transfer to BHP Billiton Limited
shareholders of 94% of the shares in BHP Steel;
• A bonus issue of BHP Billiton Plc shares to BHP Billiton Plc
shareholders as a Matching Action to ensure economic benefit equality to
shareholders of both BHP Billiton Limited and BHP Billiton Plc (the
bonus issue was one BHP Billiton Plc share for approximately each 15.6
BHP Billiton Plc shares held); and
• The sale by the BHP Billiton Group of the remaining 6% of BHP Steel
shares held by the Group.
The impact of these steps (which have been recorded in July 2002) is:
• The BHP Billiton Group's capital was reduced by approximately
US$1,501 million, including approximately US$19 million of costs
directly associated with the demerger;
• A cash inflow of approximately US$369 million, representing net
US$294 million from the settlement by BHP Steel of intercompany loans,
together with US$75 million from the sale of the 6% of BHP Steel; and
• A loss of approximately US$19 million (no tax effect) relating to the
sale of the 6% of BHP Steel.
Significant events after year end - continued
BHP Steel is the leading steel company in Australia and New Zealand,
specialising in the production of flat steel products, including slab, hot
rolled coil, plate and value-added metallic coated and pre-painted steel
products. The company supplies customers in Australia, New Zealand, Asia,
the US, Europe, the Middle East and the Pacific. Key steel-making assets are
the low-cost global scale Port Kembla Steelworks (Australia), BHP New
Zealand Steel and North Star BHP Steel (USA). A network of metallic coating
and coil painting facilities operates in Australia, New Zealand and South
East Asia.
The attributable net assets of BHP Steel as included in the BHP Billiton
Group's 30 June 2002 Statement of Financial Position is provided below. In
addition, the estimated net assets demerged in July 2002 are provided, after
allowing for the settlement of intercompany loans by BHP Steel to the BHP
Billiton Group. The 2001 financial position presented below represents a
comparable basis by which to evaluate BHP Steel as the OneSteel spin-out and
sale of the US West Coast Steel businesses were completed prior to 30 June
2001.
Discontinuing Steel businesses 2002 2001
US$M US$M
Statement of financial position (a)
Total assets 2 732 2 548
Total liabilities (841) (741)
Outside equity interests (21) (14)
Total equity 1 870 1 793
Net payments to the BHP Billiton Group by BHP Steel to settle (294)
inter-company loans (post 30 June 2002)
Estimated attributable net assets of BHP Steel to be demerged 1 576
(a) Includes certain assets and liabilities (primarily cash,
interest bearing liabilities and taxation provisions) which are not
allocated to Steel for segment reporting purposes.
Change in accounting policies
Functional currency
With effect from 1 July 2001, the majority of the BHP Billiton Limited
Group's businesses changed their functional currency to US dollars, the
functional currency of the combined BHP Billiton Group. This is consistent
with the BHP Billiton Plc Group and is the basis on which the combined BHP
Billiton Group manages its businesses and records its transactions. The
effect of this change for the year ended 30 June 2002 has been a decrease in
net profit attributable to members of US$47 million. Concurrent with this
change, the BHP Billiton Group has changed its policy regarding the
treatment of foreign exchange gains or losses on local currency site
restoration provisions held in the accounts of entities using US dollar
functional currencies. Under the previous policy, the foreign exchange gains
and losses on site restoration provisions were recognised in the Statement
of Financial Performance. Under the revised policy, such foreign exchange
gains and losses are treated as part of the revision to the estimated future
restoration cost and are included in the cost of property, plant and
equipment. The revised policy has been adopted as it better matches the
ultimate cost of site restoration charged in the Statement of Financial
Performance to the profit earned. The impact in the year ended 30 June 2002
has been the capitalisation to property, plant and equipment of foreign
exchange losses of US$40 million.
Change in accounting policies (continued)
Asset impairment tests
With effect from 1 July 2001, asset impairment tests for the BHP Billiton
Limited Group are completed using the risk-adjusted market-based discount
rates (weighted average cost of capital). Previously, an asset's estimated
recoverable amount was determined using expected net cash flows discounted
at an interest rate based on the long-term interest bearing liabilities of
the BHP Billiton Limited Group. This policy change had US$nil effect on the
net profit attributable to members for the year ended 30 June 2002.
Contingent liabilities
2002 2001
Contingent liabilities at balance date, not otherwise provided for in US$M US$M
these accounts, are categorised as arising from
Joint ventures - unsecured 76 82
Other - unsecured 996 1 523
1 072 1 605
For information contact:
Investor Relations: Andrew Nairn - Manager Investor Relations
(BH) (61 3) 9609 3952
Mobile (61) 0408 313 259
E-mail: andrew.w.nairn@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 Victoria Registered Office: 1-3 Strand London WC2N 5HA United Kingdom
3000 Telephone +44 20 7747 3800 Facsimile +44 20 7747 3900
Telephone +61 3 9609 3333 Facsimile +61 3 9609 3015
The BHP Billiton Group is headquartered in Australia
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