BHP BILLITON LIMITED GROUP APPENDIX 4B DISCLOSURES

Transcription

1 3 September 2001 Company Announcements Office Australian Stock Exchange BHP BILLITON LIMITED GROUP APPENDIX 4B DISCLOSURES The following document contains the balance of the BHP Billiton Limited Group Appendix 4B disclosures to the Australian Stock Exchange (ASX) for the year ended 30 June This document should be read in conjunction with the preliminary results for the BHP Billiton Limited Group released to the ASX on 20 August Karen J Wood Company Secretary BHP Billiton Limited ABN Registered in Australia Registered Office: 600 Bourke Street Melbourne Victoria 3000 Australia (GPO Box 86A Melbourne Victoria 3001 Australia) Telephone (61 3) Telex AA30408 Facsimile (61 3) A member of the BHP Billiton Group, which is headquartered in Australia

2 BHP Billiton Limited Group 2000/2001 FINANCIAL RESULTS The following additional information is provided in relation to the results for the year ended 30 June September 2001 Statement of Financial Performance for the financial period ended 30 June June 2000 (1) $m $m Revenue from ordinary activities Sales Interest revenue Other revenue deduct Expenses from ordinary activities, excluding depreciation, amortisation and borrowing costs Depreciation and amortisation Borrowing costs Share of net profit of associated entities accounted for using the equity method deduct Income tax expense attributable to ordinary activities Net profit add Outside equity interests in net profit Net profit attributable to members of BHP Billiton Limited Adjustment for initial adoption of revised accounting standard AASB 1016: Accounting for Investments in Associates Net exchange fluctuations on translation of foreign currency net assets and foreign currency interest bearing liabilities net of tax Total direct adjustments to equity attributable to members of BHP Billiton Limited Total changes in equity other than those resulting from transactions with owners (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 1

3 Statement of Financial Position as at 30 June 30 June Assets $m $m Current assets Cash assets Receivables Other financial assets Inventories Other assets Total current assets Non-current assets Receivables Investments accounted for using the equity method Other financial assets Inventories Property, plant and equipment Intangible assets Deferred tax assets Other assets Total non-current assets Total assets Liabilities Current liabilities Payables Interest bearing liabilities Tax liabilities Other provisions Total current liabilities Non-current liabilities Payables Interest bearing liabilities Deferred tax liabilities Other provisions Total non-current liabilities Total liabilities Net assets Equity Equity attributable to members of BHP Billiton Limited Contributed equity Reserves Retained profits Equity attributable to outside equity interests Total equity

4 Statement of Cash Flows for the financial period ended Cash flows related to operating activities 30 June 30 June (1) $m $m Receipts from customers Payments to suppliers, employees, etc... (14 821) (16 210) Dividends received Interest received Borrowing costs... (650) (916) HBI Venezuela guarantee payment... (615) Proceeds from gas sales contract price re-negotiation Other Operating cash flows before income tax Income taxes paid... (609) (600) Net operating cash flows Cash flows related to investing activities Purchases of property, plant and equipment... (1 966) (1 102) Exploration expenditure... (518) (373) Purchases of investments... (686) (438) Purchases of, or increased investment in, controlled entities and joint venture interests net of their cash... (704) - Investing outflows... (3 874) (1 913) Proceeds from sale of property, plant and equipment Proceeds from sale or redemption of investments Proceeds from OneSteel spin-out Proceeds from sale or partial sale of controlled entities and joint venture interests net of their cash Net investing cash flows... (2 188) (232) Cash flows related to financing activities Proceeds from ordinary share issues, etc Proceeds from interest bearing liabilities Repayment of interest bearing liabilities... (2 683) (4 867) Dividends paid... (926) (498) Other Net financing cash flows... (2 698) (3 350) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Effect of foreign currency exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 3

5 Statement of Cash Flows (continued) Reconciliation of cash 30 June 30 June (1) $m $m Cash and cash equivalents comprise: Cash Short term deposits Cash assets Bank overdrafts... (72) (102) Total cash and cash equivalents Non-cash financing and investing activities Shares issued: Bonus Share Plan Dividend Investment Plan Other: Employee Share Plan loan instalments The Bonus Share Plan (BSP) is in lieu of dividends and the Dividend Investment Plan (DIP) is an application of dividends. The DIP was suspended following payment of the November 1999 half yearly dividend. Since that dividend was unfranked the BSP was suspended in accordance with BHP Billiton Limited s Constitution and Rule 8 of the BSP on 17 September The Employee Share Plan loan instalments represent the repayment of loans outstanding with the BHP Billiton Limited Group, by the application of dividends. Control gained over entities having material effect There were no acquisitions during the year having a material effect on profit. (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 4

6 Loss of control of entities having material effect The following entities formed part of the OneSteel Limited Group that was spun-out with effect from 31 October 2000: A J Forsyth & Co Ltd Aquila Steel Company Pty Ltd Australian Wire Industries Pty Ltd AWI Holdings Pty Ltd Corumba Pty Ltd CP Reinforcing Ltd CP Steel Ltd David Crozier Ltd EMCO Group Ltd Fastening Supplies Ltd J Murray-More (Holdings) Pty Ltd John Stansfield-Smith Pty Ltd Longrun Industries Ltd Macinery Ltd Metal Sales Ltd Metpol Pty Ltd NZMC Ltd OneSteel Limited (a) OneSteel Finance Pty Limited (b) OneSteel Investments Pty Limited (a) OneSteel Manufacturing Pty Limited OneSteel NSW Pty Limited OneSteel Queensland Pty Limited OneSteel Reinforcing Pty Limited OneSteel Wire Pty Limited Reosteel Pty Ltd Steel & Tube Holdings Ltd Steel & Tube New Zealand Ltd Stewart Steel Ltd Stube Industries Ltd Tubemakers of Australia Ltd Tubemakers of New Zealand Ltd Tubemakers Properties Pty Ltd Tubemakers Somerton Pty Ltd (a) The names of these entities were changed in OneSteel Limited was previously OneSteel Pty Limited and OneSteel Investment Pty Limited was previously Votraint No 1243 Pty Ltd. (b) This entity was incorporated/formed in The OneSteel Limited Group contributed $35 million to the BHP Billiton Limited Group net profit during the current period until the effective spin-out date. Contribution to the BHP Billiton Limited Group net profit during the previous twelve month period was $124 million. There was no net profit recognised by the BHP Billiton Limited Group on spin-out of these entities, other than one-off benefits of approximately $29 million previously treated on consolidation as intercompany profits within the BHP Billiton Limited Group. Franking credits The BHP Billiton Limited Group had a franking account balance of $225 million at 34 cents in the dollar available at 30 June 2001 before the 2 July 2001 dividend payment. An amount of $466 million at 30 cents in the dollar was used as a result of the 2 July 2001 dividend payment. (The BHP Billiton Limited Group had a franking account balance of $24 million at 36 cents in the dollar available at 30 June 2000). It is anticipated that dividends payable in the following year will be fully franked. Retained profits 30 June 30 June (1) $m $m Retained profits at the beginning of the period Adjustment for initial adoption of revised accounting standard AASB1016: Accounting for Investments in Associates Dividends provided for or paid... (912) (903) Aggregate of amounts transferred from reserves... (6) 41 Net profit (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 5

7 Retained profits at the end of the financial period Income tax Income tax expense 30 June 30 June (1) $m $m Profit from ordinary activities before income tax Prima facie tax calculated at 34 cents (2000: 36 cents) in the dollar on profit from ordinary activities deduct/(add) tax effect of Investment and development allowance Rebate for dividends Amounts over provided in prior years Deferred tax restatement Non-tax effected gains/(losses) (28) Non-tax effected capital gains Recognition of prior year tax losses Overseas tax rate changes Research and development incentive add/(deduct) tax effect of Non-deductible accounting depreciation and amortisation Non-deductible dividends on redeemable preference shares Tax differential non Australian income (12) Foreign expenditure including exploration not presently deductible Investment and asset write-offs and associated losses/(gains) (236) Non-deductible financing costs Foreign exchange/other Income tax attributable to profit from ordinary activities deduct Income tax benefit arising from items taken to exchange fluctuation account Total income tax taken to account (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 6

8 Exploration, evaluation and development expenditure capitalised 30 June 30 June (1) $m $m Exploration, evaluation and development expenditure - not yet in production in production Total exploration, evaluation and development expenditure capitalised Details of exploration, evaluation and development expenditure not yet in production: In exploration and/or evaluation stage In development stage 30 June June 2000 (1) 30 June June 2000 (1) $m $m $m $m Opening balance Expenditure incurred during the period Expenditure expensed during the period... (427) (309) - - Transferred from evaluation to development... (10) (146) Transferred to production... (5) 9 (27) (92) Disposals... - (46) - - Depreciation... (60) (13) (5) (4) Exchange fluctuations and other movements Closing balance (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 7

9 Depreciation and amortisation 30 June June 2000 (1) $m $m Depreciation relates to Buildings Plant, machinery and equipment Mineral rights Exploration, evaluation and development expenditure Capitalised leased assets Total depreciation Amortisation (a)(b) Total depreciation and amortisation Before tax Related Tax 2001 $m Related outside equity interests Amount (after tax) attributable to members of BHP Billiton Limited (a) Amortisation relates to Amortisation of goodwill Amortisation of other intangibles Total amortisation (b) Profit from ordinary activities restated to exclude amortisation of goodwill (1) $m $m Net profit before outside equity interests add amortisation of goodwill Net profit before outside equity interests and amortisation of goodwill add outside equity interests Net profit (before amortisation of goodwill) attributable to members of BHP Billiton Limited (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 8

10 Segment results Industry classification Net profit (a) $m Gross segment assets Industry classification 2001 External revenue from ordinary activities Intersegment revenue from ordinary activities Minerals Petroleum Steel (b) Net unallocated interest... (343) 93 Group and unallocated items (c)... (1 011) (181) 85 BHP Billiton Limited Group Net profit (a) $m Gross segment assets Industry classification 2000 (1) External revenue from ordinary activities Intersegment revenue from ordinary activities Minerals Petroleum Steel (b) Services (d) Net unallocated interest... (515) 65 Group and unallocated items (c)... (100) (227) 9 BHP Billiton Limited Group (a) Net profit is before deducting outside equity interests. (b) Includes the OneSteel Limited business, which was spun-out in October (c) Includes consolidation adjustments (d) Following various asset sales and an internal reorganisation, the Services segment ceased to exist from 1 July As a consequence, Transport and Logistics is reported in the Steel segment and remaining services businesses including Shared Business Services, Insurances and Corporate Services are reported in Group and unallocated items. Comparative data has been adjusted accordingly data for Services mainly relates to businesses now sold. (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page 15. 9

11 Segment results Geographical classification Net profit (a) $m Gross segment assets Geographical classification 2001 External revenue from ordinary activities Intersegment revenue from ordinary activities Australia North America United Kingdom South America... (25) Papua New Guinea... (778) New Zealand South East Asia Other countries Net unallocated interest... (343) 93 BHP Billiton Limited Group Net profit (a) $m Gross segment assets Geographical classification 2000 (1) External revenue from ordinary activities Intersegment revenue from ordinary activities Australia North America United Kingdom South America Papua New Guinea New Zealand South East Asia Other countries Net unallocated interest... (515) 65 BHP Billiton Limited Group (a) Net profit is before deducting outside equity interests. (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page

12 Contributed equity at end of financial period Paid-up Number Of which value on issue quoted cents (a) Ordinary shares: Fully paid Partly paid Partly paid of which issued during period: ESP Options exercised Performance Rights exercised Bonus shares issued (b) Partly paid shares converted to fully paid BHP Special Voting Share (c) 1 - (a) Unless otherwise indicated shares are fully paid. (b) The Dual Listed Company (DLC) structure between BHP Billiton Limited and BHP Billiton Plc was established on 29 June 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 (c) Issued during the current year. 11

13 Options and Performance Rights Month of issue Number issued Number of recipients Number exercised Shares issued on exercise Number lapsed Options and Performance Rights outstanding at balance date Exercise price (b) Exercise period Employee Share Plan options December ,668, ,668,000 $19.43 July Dec 2010 December ,121, ,121,500 $19.42 July Dec 2010 November , , ,500 $18.52 July Oct 2010 November ,760, ,500 3,736,500 $18.51 July Oct 2010 April , ,000 $17.13 April April 2010 April , ,000 $17.12 April April 2010 December , ,000 $19.21 April April 2009 December , ,000 $16.92 April April 2009 October , ,000 50,000 $17.06 April April 2009 October , ,000 36,000 $17.05 April April 2009 July , ,000 $17.13 April April 2009 April ,536,400 45, ,926,100 12,610,300 $15.73 April April 2009 April ,184, ,028,150 6,156,150 $15.72 April April 2009 April , ,500 29, ,000 $14.74 April April 2003 April , ,500 42,500 5,000 92,500 $14.73 April April 2003 November ,579,400 3, , , , ,100 $15.55 Nov Nov 2002 November ,910,900 16,411 5,447,150 5,447, ,250 1,689,500 $15.56 Nov Nov 2002 October ,440, ,059,500 2,059,500 43,000 3,337,500 $15.32 Oct Oct 2002 October ,992, ,752,000 1,752, ,000 2,120,000 $15.33 Oct Oct 2002 July , ,000 $18.96 July July 2002 July , ,500 62,500 55, ,000 $18.97 July July 2002 October , , , , ,500 $15.56 Oct Oct 2001 October ,086, , ,700 14, ,500 $15.55 Oct Oct 2001 April , ,000 35, ,000 - $17.63 April April 2001 April , ,500 45, $17.62 April April 2001 October , ,000 17, $18.23 Oct Oct 2000 October , ,500 38, $18.22 Oct Oct 2000 July , ,000 48, $18.59 July July 2000 July , ,000 63,000 13,000 - $18.58 July July ,135,550 Performance Rights (c) (d) December , ,691 - July Dec 2010 November ,006, ,006,333 - July Dec 2010 March ,000, , , ,000 - Mar Mar ,794,024 (a) The Dual Listed Companies (DLC) structure between BHP Billiton Limited and BHP Billiton Plc was established on 29 June 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 (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 $0.66. (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. 12

14 Investments in associated entities Details of aggregate share of profits/(losses) of associates 30 June 30 June (1) Share of net profit of associated entities $m $m Profit from ordinary activities before income tax Income tax expense (48) (19) Material interests in entities which are not controlled entities Name of Entity Percentage (%) of ownership interest held at end of period Contribution to operating profit after income tax Equity accounted associates 30 June 30 June 30 June 30 June (1) (1) % % $m $m Samarco Mineracao S.A Orinoco Iron C.A (89) (16) QCT Resources Ltd (a) Total (b) (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 (b) There are no other material interests in entities that are not controlled entities. (1) 30 June 2000 refers to the thirteen months ended 30 June Refer Change of financial year on page

15 Significant events after balance date Income tax audit As a consequence of an income tax audit conducted by the Australian Taxation Office (ATO), an amount of $229 million has been subject to litigation. The dispute concerns the deductibility of financing costs paid to General Electric Company in connection with the BHP Billiton Limited Group's acquisition of the Utah Group in the early 1980's. On 23 November 1999, the Federal Court ruled in favour of the BHP Billiton Limited Group. On 18 October 2000, the Full Bench of the Federal Court ruled in favour of the ATO. The BHP Billiton Limited Group sought leave to appeal to the High Court of Australia (High Court) and the hearing occurred on 10 August The High Court has refused the BHP Billiton Limited Group leave to appeal on the general question of deductibility but did allow leave to appeal on the question of whether the ATO had the power to amend the 1985 assessment. An amount of $79 million was paid in 1992 and up to 2001 was accounted for as a non-current asset. At 30 June 2001, the accounts have been adjusted to include a tax expense of $63 million relating to refusal of the High Court to grant leave to appeal on the deductibility of financing costs. A non-current asset of $16 million will be carried forward. In July 2001, the outstanding balance of $150 million was paid. This amount will also be recorded as a non-current asset in the 2002 fiscal year. This together with the $16 million carried forward from the 2001 year represents the tax and interest in dispute in relation to the 1985 assessment. New Accounting Standards - Revised Australian Accounting Standard AASB 1041: Revaluation of Non-Current Assets was first adopted from 1 July 2000 resulting in property plant and equipment and other financial assets previously carried at valuation being reverted to a cost basis of measurement. For the purposes of transitioning to a cost basis, the existing revalued carrying amounts at 1 July 2000 were deemed to be their cost. The change in policy had no impact on net profit attributable to members of BHP Billiton Limited. - Some line items and sub-totals reported in the previous financial year have been reclassified and repositioned in the financial statements as a result of the first time application on 1 July 2000 of the revised standards AASB 1018: Statement of Financial Performance, AASB 1034: Financial Report Presentation and Disclosures and the new AASB 1040: Statement of Financial Position. Change in accounting policies As a consequence of the DLC structure established between BHP Billiton Limited and BHP Billiton Plc, which became effective on 29 June 2001, certain accounting policies of the BHP Billiton Limited Group have been changed to align with the policies of the BHP Billiton Plc Group in order to minimise differences between results reported in the UK and Australian jurisdictions. The following revised accounting policies have been adopted for the year ended 30 June 2001: Provision for restoration and rehabilitation In prior periods the BHP Billiton Limited Group had recognised provisions for restoration on a progressive basis over the life of each asset. At 30 June 2001, this policy was changed such that a provision for the full cost expected to be incurred at the end of the life of each asset on a discounted to net present value basis is recognised at the beginning of each project and capitalised as part of the cost of the asset. The capitalised cost is amortised over the life of the operation and the annual increase in the net present value of the provision for the expected cost is included in expenses from ordinary activities. The effect of this policy change for the year ended 30 June 2001 has been an increase in net profit attributable to members of BHP Billiton Limited of $55 million. Pension costs 14

16 In prior periods the BHP Billiton Limited Group had recognised an expense for defined benefit pensions when contributions were paid. At 30 June 2001, this policy was changed such that expenses for defined benefit pension schemes are recognised so as to allocate the cost systematically over the employees service lives on the basis of independent actuarial advise. A pension obligation or asset is consequently recognised in the Statement of Financial Position to the extent that the contributions paid either lag or precede expense recognition. The effect of this policy change for the year ended 30 June 2001 has been to recognise a net asset representing the fund surplus and an increase in net profit attributable to members of BHP Billiton Limited of $265 million. Employee compensation costs In prior periods, the BHP Billiton Limited Group included in the Statement of Financial Performance the cost associated with Performance Rights at the time they were exercised. Costs associated with the exercise of options were not included in the Statement of Financial Performance. At 30 June 2001, this policy was changed such that the estimated cost to the BHP Billiton Limited Group on exercise of Performance Rights and, where applicable, the cost associated with the discount on issue of options are included in the Statement of Financial Performance over the likely vesting period, with a corresponding provision for employee benefits being included in the Statement of Financial Position. At the time the Performance Rights or options vest, an adjustment is made to reflect the actual cost to the BHP Billiton Limited Group. The effect of this policy change for the year ended 30 June 2001 has been a decrease in net profit attributable to members of BHP Billiton Limited of $5 million. Change of company name During the financial year ended 30 June 2001, The Broken Hill Proprietary Company Limited changed its name to BHP Limited with effect from 30 October 2000, and subsequently to BHP Billiton Limited with effect from 29 June Change of financial year Directors announced on 17 December 1999 that the financial year end for the BHP Billiton Group would change from 31 May to 30 June with effect from 30 June All subsequent financial years will commence on 1 July and end on 30 June. - Australian Securities and Investment Commission (ASIC) Pursuant to Section 340 of the Corporations Act ( the Act ), ASIC granted relief from the requirements of paragraph 323D(2)(b) of the Act permitting BHP Billiton Limited to change its financial year end and adopt a transitional thirteen month financial year of 1 June 1999 to 30 June Australian Stock Exchange (ASX) The ASX has provided BHP Billiton Limited relief from listing rule 4.4 to the extent that an Appendix 4B was not required for the period ended 31 May 2000 following the change in balance date from 31 May to 30 June. Comparative figures for the thirteen months ended 30 June 2000 are in lieu of a 31 May 2000 Appendix 4B. For information contact: Investor Relations: Robert Porter Vice President Investor Relations (BH) (61 3) Mobile (61) robert.r.porter@bhpbilliton.com 15

17 BHP BILLITON PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2001 PART B SUMMARY OF RESULTS: Explanation of Structure of the Preliminary Results Report Summary Key Financial Information

18 BHP BILLITON PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2001 PART B BHP BILLITON GROUP RESULTS Explanation of the structure of the Preliminary Results Report On 29 June 2001, BHP Billiton Ltd (previously known as BHP Ltd) and BHP Billiton Plc (previously known as Billiton Plc) 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 Ltd and its subsidiaries and BHP Billiton Plc and its subsidiaries operate together as a single economic entity, with each company s shareholders having common economic interests in both groups. However, the DLC merger did not involve the change of legal ownership of any assets of BHP Billiton Ltd or BHP Billiton Plc or any change of ownership of any existing shares or securities of BHP Billiton Ltd or BHP Billiton Plc and each continue as separate, publicly quoted companies bound by reporting and other regulations in Australia and the UK respectively. Throughout the preliminary results report, BHP Billiton Group, BHP Billiton or Group refers to the combined group comprising BHP Billiton Limited and its subsidiaries, together with BHP Billiton Plc and its subsidiaries. Since reporting requirements differ in the Australian and UK jurisdictions and in view of the proximity of the implementation of the DLC merger to the financial year end, the financial information in this preliminary announcement, which is unaudited, is presented on three different bases as follows. Part C: BHP Billiton Group Results In this Part of the preliminary announcement, the financial information has been prepared under UK GAAP and is presented in US dollars. It is prepared as though the BHP Billiton Ltd Group and the BHP Billiton Plc Group have always been combined using the merger method of accounting. This is the basis of preparation that will be used in preparing the consolidated accounts of BHP Billiton Plc to be included in its Annual Report. 1

19 Part D: BHP Billiton Ltd Group Results In this Part of the preliminary announcement, the financial information has been prepared under Australian GAAP and is presented in Australian dollars. It is presented in 2001 on the basis that the consummation of the DLC merger on 29 June 2001 had no effect on the financial results of the BHP Billiton Ltd Group except that merger related costs have been recognised and certain accounting policies have changed to align where possible with the policies of BHP Billiton Plc. The financial information does not include the results, assets and liabilities or cash flows of the BHP Billiton Plc Group. This is consistent with the basis of preparation of the consolidated financial statements of BHP Billiton Ltd to be reported in its Annual Report. In addition, the financial statements will include this year a note setting out details of the DLC merger and a pro forma Statement of Financial Position combining those of the BHP Billiton Ltd and BHP Billiton Plc Groups, each being prepared in accordance with Australian GAAP. Part E: BHP Billiton Plc Group Pro forma Results In this Part of the preliminary announcement, the financial information has been prepared under UK GAAP (except that it does not reflect the DLC merger) and is presented in US dollars. It is presented on the basis that the consummation of the DLC merger had no effect on the financial information of the BHP Billiton Plc Group for 2001 except that merger related costs have been recognised and certain accounting policies have changed to align where possible with the policies of BHP Billiton Ltd. The financial information does not include the results, assets and liabilities or cash flows of the BHP Billiton Limited Group. This information is pro forma information and will not appear in the statutory accounts of any entity. It is provided to enable users to understand the results of the BHP Billiton Plc Group as they have previously been presented solely in view of the proximity of the implementation of the DLC merger to the financial year end. This is the last time that financial information will be presented for the BHP Billiton Plc Group standalone. 2

20 Summary Key Financial Information BHP Billiton Group Results US$m Change % Turnover 19,079 18, EBITDA - excluding exceptional items - including exceptional items EBIT - excluding exceptional items - including exceptional items Attributable profit - excluding exceptional items - including exceptional items Basic earnings per share (cents) - excluding exceptional items - including exceptional items 5,299 4,211 3,627 2,539 2,189 1,529 4,775 4,015 3,027 2,267 1,743 1, (2.3) Net operating assets 21,468 19, BHP Billiton Limited Group Results A$m Change % Sales revenue 20,698 19, EBITDA 5,530 4, EBIT 2,575 1, Attributable net profit 2,007 1, Basic earnings per share (cents) (adjusted for bonus issue) Net assets 11,248 11, BHP Billiton Plc Group Pro Forma Results US$m Change % Turnover 7,333 5, EBITDA - excluding exceptional items - including exceptional items EBIT - excluding exceptional items - including exceptional items Attributable profit - excluding exceptional items - including exceptional items Basic earnings per share (cents) - excluding exceptional items - including exceptional items 1,646 1,463 1, ,236 1, (8.1) Net operating assets 11,263 7,

21 BHP BILLITON PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2001 PART C BHP BILLITON GROUP RESULTS

22 BHP BILLITON PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2001 PART C BHP BILLITON GROUP RESULTS Highlights Part C1: Operating and Financial Review Attributable profit, excluding exceptional items, for 2001 of US$2,189 million, an increase of 26% from the previous year ( US$1,743 million). Attributable profit, including exceptional items, of US$1,529 million ( US$1,506 million). Higher received prices, higher production and generally favourable exchange rate movements were the principal factors influencing the improved result. Strong EBIT contributions, excluding exceptional items, from Carbon Steel Materials (+US$356m +66%), Petroleum (+US$346m +33%), Energy Coal (+US$245m +179%) and Aluminium (+US$85m +19%) partly offset by lower contributions from Steel (-US$132m -33%) and Stainless Steel Materials (-US$126m -62%). Growth projects successfully commissioned: Aluminium - Mozal 1 and Worsley expansion; Base Metals - Antamina; Stainless Steel Materials - Cerro Matoso 2 and Yabulu. Commitment of approximately US$2.1 billion capital expenditure on new growth projects. Portfolio restructuring: equalisation of Queensland metallurgical coal interests; cessation of investment in HBI Venezuela; progress in agreeing terms to exit the Ok Tedi copper mine, (Papua New Guinea); reduction of equity in Ohanet liquids/gas field (Algeria) and sale of interest in Buffalo oil field; announcement of intention to spin-out BHP Billiton Ltd s remaining Steel assets. Good progress on merger integration with an organisational structure established, senior appointments made and governance structures in place. Restructuring costs committed at year end amounted to US$42 million. Sound financial leverage ratios - EBITDA interest cover (excluding exceptional items) of 11.1x, gearing of 38.4%. 1

23 BHP Billiton Group Financial Strength The financial results for the year ended 30 June 2001 for the BHP Billiton Group demonstrate the financial strength of the new merged group, exemplified by strong cash flow generation, earnings capability across a range of world-class business operations and underlying balance sheet strength. The accompanying table provides the key financial information for the BHP Billiton Group as at 30 June 2001, comparative with the corresponding period. Year ended 30 June US$m % Change Group turnover (a) 19,079 18, EBITDA - excluding exceptional items - including exceptional items EBIT - excluding exceptional items - including exceptional items Attributable profit - excluding exceptional items - including exceptional items Basic earnings per share (cents) - excluding exceptional items - including exceptional items 5,299 4,211 3,627 2,539 2,189 1,529 4,775 4,015 3,027 2,267 1,743 1, (2.3) Net operating assets 21,468 19, EBITDA interest cover 11.1 x 9.1 x 22.0 (excluding exceptional items) (b) Gearing 38.4% 34.2% 12.3 (net debt/[net debt + net assets]) Debt to equity ratio (net debt/attributable net assets) 64.6% 55.2% 17.0 (a) Including share of joint ventures and associates. (b) For this purpose, interest includes capitalised interest and excludes the effect of discounting on provisions. The attributable profit of US$1,529 million was influenced by a number of exceptional items, which in aggregate reduced profit before taxation by US$1,094 million and attributable profit by US$660 million. The major items before taxation and equity minority interests 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; a charge to profit of US$430 million from the write-off of the Ok Tedi copper mine; a US$114 million reduction in the carrying value of the Columbus Stainless Steel Joint Venture following conditional agreement to sell down the Group s interest;

24 a charge to profit of US$92 million related to merger transaction costs; and a charge to profit of US$64 million related to organisational restructuring costs and provisions mainly related to the merger. These items are partially offset by the following: a US$128 million profit from sale of interests in the Central Queensland Coal Associates (CQCA) and Gregory Joint Ventures to Mitsubishi; and a US$61 million profit from the sale of expansion rights at Mozal. Excluding exceptional items, attributable profit increased by US$446 million or 25.6% from US$1,743 million to US$2,189 million. Net interest and similar items payable decreased from US$489 million to US$476 million. Customer Sector Group Financial Results The following table provides a summary of the Customer Sector Group financial results for the year ended 30 June A detailed explanation of the factors influencing the performance of the Customer Sector Groups is included below on pages 11 to pages 18. Year ended 30 June 2001 (US$ million) Turnover EBIT (excluding exceptional items) Net operating assets Aluminium 2, ,730 Base Metals 2, ,834 Carbon Steel Materials 3, ,289 Stainless Steel Materials ,598 Energy Coal 1, ,986 Petroleum 3,361 1,407 2,504 Steel 3, ,965 Exploration, Technology & New Business Other activities 1, Group & Unallocated Items (351) (539) 876 Inter-segment (584) - - BHP Billiton Group 19,079 3,627 21,468 3

25 Taxation The tax charge for the year was US$811 million and includes US$33 million following the decision of the High Court (Australia) on 10 August 2001 regarding nondeductibility of financing costs. This represents an effective taxation rate of 39.3%, compared to 14.1% for the previous year. The effective rate was higher than the nominal underlying tax rates due to exceptional and one-off items in the year. Excluding exceptional items, the effective tax rate for the year was 29.9%. Investing Cash Flows Investing activities, including exploration, for the year totalled US$6.1 billion (excluding debt acquired) compared with US$2.0 billion in the previous year. This expenditure was funded largely out of the Group s substantial cash generation (operating cashflow less interest and tax of US$3.8 billion) and also through new equity (US$0.9 billion) and borrowings. Acquisitions Principal acquisition activity included: the purchase of an additional 56% interest in Worsley alumina refinery for US$1,490 million; the purchase of Rio Algom for US$1,187 million; the purchase of 98.6% of Class A shares and 88.7% of Class B shares of Dia Met for US$398 million; and BHP Billiton and Mitsubishi acquired QCT Resources (BHP Billiton s share US$221 million). Divestitures Divestitures generated proceeds of US$962 million, including: the spin-out of the OneSteel long products business to BHP Billiton Ltd shareholders; the equalisation of ownership interests of BHP Billiton and Mitsubishi in the CQCA and Gregory Joint Ventures; the cessation of investment in HBI Venezuela; 4

26 the conditional sale of a 15% equity interest in the Ohanet wet gas field development in Algeria to Woodside. The transaction is subject to Algerian government and SONATRACH approval; and the sale of BHP Billiton s interest in the Buffalo oil field (Western Australia). BHP Billiton also announced its intention to spin-out its remaining Steel business to BHP Billiton Ltd shareholders. This transaction is expected to be completed by the end of financial year Negotiations continue with relevant parties with a view to concluding the exit from the Ok Tedi copper mine. Growth Projects During the year, BHP Billiton committed approximately US$2.1 billion to new growth projects, including the following: Aluminium Energy Coal Base Metals Carbon Steel Materials Petroleum Project Mozal II Expansion Mozambique BHP Billiton : 47.1% San Juan Underground USA BHP Billiton : 100% Copper Escondida Phase IV Chile BHP Billiton : 57.5% Tintaya Oxide Peru BHP Billiton : 100% Metallurgical Coal Blackwater Expansion Australia BHP Billiton : 50% Ohanet Wet Gas Field Development Algeria BHP Billiton : 45% North West Shelf Train 4 Expansion Australia BHP Billiton : 16.67% Laminaria II Oil Field Development Australia BHP Billiton : 32.6% Echo Yodel Condensate Development Australia BHP Billiton : 16.67% Share of Capex US$m Share of Production ,000 tonnes per annum of additional production million short tons per annum of replacement production ,000 tonnes per annum average over 5 years of incremental copper production ,000 tonnes per annum of copper in cathode million tonnes per annum of incremental production ,000 barrels per day gross; net reserve entitlement of mmboe grossed up for Algerian taxes ,000 tonnes per annum of LNG 23 21,000 barrels of oil per day incremental oil production at peak 18 5,000 barrels per day of condensate Completion FY04 FY02 FY03 FY02 FY02 FY04 FY04 FY02 FY02 5

27 Progress continued on the development of a number of projects approved in prior financial years, or as part of recent acquisition activity. These include: Typhoon oil field development (Gulf of Mexico) - first production July ,000 barrels of oil per day and 30 million standard cubic feet of gas per day net. Capital expenditure of US$128 million net to BHP Billiton; Cerro Matoso nickel mining and smelting operation (Colombia) - Line 2 produced its first ferronickel in January 2001, ahead of schedule and 15% below budget. Output is expected to double to around 55,000 tonnes per annum (BHP Billiton 100%); the Antamina copper and zinc project (Peru) - reached mechanical completion in May 2001, under budget and more than two months ahead of schedule. It is anticipated that the project will reach its full design capacity of 70,000 tonnes per day of ore well in advance of December 2001 and significantly ahead of the original schedule of February 2002 (BHP Billiton 33.7%); 401/402 oilfield development (Algeria) - first production in financial year 2003, with peak production of 80,000 barrels of oil per day (BHP Billiton s interest under the Production Sharing Contract is 45%). BHP Billiton s reserve entitlement is approximately 60 million barrels grossed up for Algerian taxes. Capital expenditure for BHP Billiton of US$190 million; and Zamzama gas field (Pakistan) - commenced production under an extended well test in March 2001 at a peak rate of 39 mmscfd of gas net to BHP Billiton. Current Growth Projects Feasibility and planning work is continuing on a number of new projects, one already approved and some others which are expected to be presented for capital approval during financial year These projects include the following: Mount Arthur North energy coal mine development (New South Wales) (approved in July 2001) million tonnes of saleable coal by 2006, initial production from Capital expenditure of US$411 million (BHP Billiton 100%); Carbones del Cerrejon Expansion (Colombia) - a feasibility study is underway to increase capacity of the steaming coal mine from 3 million tonnes per annum to 9-10 million tonnes per annum (BHP Billiton 33%); Escondida Norte development (Chile) - pre-feasibility study for potential 110,000 tonnes per annum gross of additional production. (BHP Billiton 57.5%); Cerro Colorado copper (Chile) - debottlenecking of production from the current capacity of 110,000 tonnes per annum to 125,000 tonnes per annum has been approved (BHP Billiton 100%); 6

28 Mining Area C iron ore development (Western Australia) - 15 million tonnes per annum mining operation, expected to commission in financial year 2004 (BHP Billiton 85%); Mad Dog oil field development (Gulf of Mexico) - appraisal work and predevelopment work has commenced, with a submission for Board approval expected in calendar year 2001 (BHP Billiton 23.9%); Atlantis oil field development (Gulf of Mexico) - appraisal work and predevelopment work has commenced, with a submission for Board approval expected in financial year 2002 (BHP Billiton 44%); Hillside 3 Aluminium smelter expansion (South Africa) - feasibility study to construct a third potline, adding a further 130,000 tonnes per annum to Hillside s capacity (BHP Billiton 100%); Yabulu/Ravensthorpe (Australia) - feasibility study on the expansion of the back end of the Yabulu nickel refinery to treat intermediate product from the Ravensthorpe nickel laterite mine and acid leach plant producing additional throughput of 30,000 35,000 tonnes per annum of nickel (BHP Billiton 100%); Spence copper mine (Chile) - pre-feasibility work has been completed and a full feasibility study is now in progress (BHP Billiton 100%); Minerva Gas field development (Victoria) - final feasibility work is being undertaken, with a submission for Board approval expected in financial year 2002 (BHP Billiton 90%); and Zamzama full field development (Pakistan) - expansion of production from the current contracted level of 70 mmscfd gross, dependent on securing of gas contracts. Full field production up to 320 mmscfd gross is expected (BHP Billiton 38.5%). Balance Sheet Total assets less current liabilities for the Group were US$22,793 million at 30 June 2001, an increase of US$1,035 million from the figure for 30 June Equity shareholders funds for the Group were US$11,340 million at 30 June 2001 largely unchanged from the previous year due to the impacts of exchange rates, writedowns and provisions. Net debt for the Group increased by 20.2% to US$7,321 million due to financing of investing activities. As a consequence of the above, the gearing ratio increased to 38.4% compared with 34.2% for the previous year. The debt to equity ratio increased from 55.2% to 64.6%. 7

29 Risk Management and Hedging During the year, BHP Billiton Ltd undertook a detailed quantitative analysis of its portfolio of assets, as part of a portfolio risk management review. The outcome was the adoption of a self-insurance model utilising natural hedges as the principal means of managing market risk. This decision was based on the significant degree of diversification of cash flow at risk within the portfolio. The BHP Billiton Ltd quantitative risk management model has been utilised to evaluate the cash flow at risk for the combined BHP Billiton Group portfolio and a proposal covering commodity and currency hedging for BHP Billiton is to be considered by the Board in August Capital Management At the time of announcing BHP Billiton Ltd s third quarter financial results, an onmarket share buyback of up to 90 million shares (approximately 5% of BHP Billiton Ltd s issued capital) was announced. Following implementation of the DLC, the buyback programme has been adjusted so that the number of shares to be re-purchased continues to represent approximately five per cent of issued capital. Commencement of re-purchase of shares had not occurred as at the end of the financial year. Dividends Total dividends for the year amounted to US$754 million, of which US$476 million related to BHP Billiton Ltd and US$278 million related to BHP Billiton Plc. BHP Billiton Ltd paid shareholders a fully franked dividend of A$0.26 per fully paid share on 2 July This franked dividend together with the unfranked dividend of A$0.25 per share in December 2000, takes the total dividend for 2001 to A$0.51 per share on a pre bonus share issue basis. The Board of BHP Billiton Plc declared a second interim dividend (in lieu of a final dividend) of US$0.08 per share, making a total dividend for the year of US$0.12 per share. Merger Integration Good progress has been made in integrating the two companies, including the establishment of: an organisational structure which enabled the merged entity to undertake its business activities on a combined basis from day one. The establishment of this organisational structure included personnel appointments to the vast majority of senior management positions; 8