Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

August 20, 2019

 

 

 

BHP GROUP LIMITED

(ABN 49 004 028 077)

(Exact name of Registrant as specified in its charter)

  

BHP GROUP PLC

(REG. NO. 3196209)

(Exact name of Registrant as specified in its charter)

 

VICTORIA, AUSTRALIA

(Jurisdiction of incorporation or organisation)

  

 

ENGLAND AND WALES

(Jurisdiction of incorporation or organisation)

 

171 COLLINS STREET, MELBOURNE,

VICTORIA 3000 AUSTRALIA

(Address of principal executive offices)

  

 

NOVA SOUTH, 160 VICTORIA STREET

LONDON, SW1E 5LB

UNITED KINGDOM

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:  

Form 20-F    ☐ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  ☐ Yes    ☒ No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a

 

 

 


Table of Contents

20 August 2019

Results for announcement to the market

 

Name of Companies:      BHP Group Limited (ABN 49 004 028 077) and
     BHP Group Plc (Registration No. 3196209)

Report for the year ended 30 June 2019

This statement includes the consolidated results of BHP for the year ended 30 June 2019 compared with the year ended 30 June 2018.

This page and the following 54 pages comprise the year end information given to the ASX under Listing Rule 4.3A and released to the market under UK Listing Rule 9.7A. The 2019 BHP Group annual financial report will be released in September.

The results are prepared in accordance with IFRS and are presented in US dollars.

 

                       US$ Million  

Revenue from continuing operations

   up      3     to        44,288  

Revenue from discontinued operations

   down      61     to        851  

Total revenue

   flat        at        45,139  

Profit after taxation from continuing operations attributable to the members of the BHP Group

   up      30     to        8,648  

Loss after taxation from discontinued operations attributable to the members of the BHP Group

   up      88     to        (342

Profit after taxation attributable to the members of the BHP Group

   up      124     to        8,306  

Net Tangible Asset Backing:

Net tangible assets per fully paid share were US$10.11 as at 30 June 2019, compared with US$11.25 as at 30 June 2018.

Dividends per share:

 

Final dividend for current period

(record date 6 September 2019; payment date

25 September 2019)

   US 78 cents fully franked
Final dividend for previous corresponding period    US 63 cents fully franked

This statement was approved by the Board of Directors.

 

LOGO

Caroline Cox

Group Company Secretary

BHP Group Limited and BHP Group Plc


Table of Contents
NEWS RELEASE    LOGO

 

Release Time      IMMEDIATE
Date      20 August 2019
Number      15/19

BHP RESULTS FOR THE YEAR ENDED 30 JUNE 2019

 

 

Safety and sustainability: Our highest priority

 

 

Tragically we had a fatality at Saraji in Queensland in December 2018. This was despite improvements in our safety leading indicators with increased proactive hazard reporting and in-field safety leadership engagements.

Value and returns: Record US$17 billion of total announced returns to shareholders for the year

 

 

Record final dividend of 78 US cents per share, which includes an additional amount of 25 US cents per share (equivalent to US$1.3 billion) above the 50% minimum payout policy. Total ordinary dividends announced of US$1.33 per share or US$6.7 billion, equivalent to a 74% payout ratio.

 

 

Onshore US sales process completed, with net proceeds of US$10.4 billion returned to shareholders through a combination of an off-market buy-back (A$27.64 per share) and a special dividend (US$1.02 per share).

 

 

Underlying return on capital employed(i), excluding Onshore US assets, of 18%.

Maximise cash flow: Strong free cash flow generation and high margin

 

 

Attributable profit of US$8.3 billion and Underlying attributable profit(i) of US$9.1 billion up 2% from the prior year.

 

 

Profit from operations of US$16.1 billion and Underlying EBITDA(i) of US$23.2 billion at a margin(i) of 53% for continuing operations.

 

 

Net operating cash flow of US$17.4 billion and free cash flow(i) of US$10.0 billion from continuing operations.

Capital discipline: Investment in high returning projects, exploration success and strong balance sheet

 

 

Capital and exploration expenditure(i) within guidance at US$7.6 billion. Guidance unchanged for the 2020 financial year at below US$8 billion. In accordance with our Capital Allocation Framework, we expect capital and exploration expenditure to be approximately US$8 billion for the 2021 financial year.

 

 

At the end of the year, we had five major projects under development that are all tracking to plan. The Ruby (Trinidad and Tobago) oil and gas development was approved in August 2019.

 

 

In exploration, seven out of nine petroleum wells drilled encountered hydrocarbons over the year, across Trinidad and Tobago, Mexico and the US Gulf of Mexico, and acreage acquired in the Orphan Basin (offshore Canada). We increased our early stage optionality in copper with three new investments completed across Canada, Mexico and Ecuador, in addition to a stake acquired in SolGold (Ecuador). Further evaluation of the Oak Dam discovery (Australia) is underway.

 

 

Net debt(i) of US$9.2 billion, down by US$1.7 billion, reflects continued strong free cash flow. The application of IFRS 16 Leases, inclusion of derivatives and new leases increases net debt by US$3.8 billion in the 2020 financial year. As a result, we have revised our net debt target range from US$10 to US$15 billion to US$12 to US$17 billion. We expect net debt to remain at the lower end of this range in the near term. There is no change to underlying cash flows.

 

Year ended 30 June

   2019
US$M
     2018
US$M
     Change
%
 

Total operations

        

Attributable profit

     8,306        3,705        124

Basic earnings per share (cents)

     160.3        69.6        130

Dividend per share (cents)

     133.0        118.0        13

Net operating cash flow

     17,871        18,461        (3 %) 

Capital and exploration expenditure

     7,566        6,753        12

Net debt

     9,215        10,934        (16 %) 

Underlying attributable profit

     9,124        8,933        2

Underlying basic earnings per share (cents)(i)

     176.1        167.8        5
  

 

 

    

 

 

    

 

 

 

Continuing operations

        

Profit from operations

     16,113        15,996        1

Underlying EBITDA

     23,158        23,183        (0 %) 

Underlying attributable profit(i)

     9,466        9,622        (2 %) 
  

 

 

    

 

 

    

 

 

 

Net operating cash flow

     17,397        17,561        (1 %) 
  

 

 

    

 

 

    

 

 

 

 

1


Table of Contents

News Release

 

 

Results for the year ended 30 June 2019

 

BHP Chief Executive Officer, Andrew Mackenzie:

“Today we announced a record final dividend of 78 US cents per share, or US$3.9 billion. This is on top of a record US$17 billion already returned to shareholders in the 2019 financial year.

Our performance over the past five years has delivered an increase in volumes of 10 per cent and a reduction in unit costs of more than 20 per cent across our major assets. Over the 2019 financial year, underlying improvements in our operational performance were offset by the impacts of weather, resource headwinds and unplanned outages in the first half of the year. At Western Australia Iron Ore, unit costs on a C1 basis were below US$13 per tonne for the 2019 financial year.

Higher prices and record production from several of our operations contributed to strong operating cash flows. We used that cash to invest in attractive growth projects, advance our exploration programs and increase returns to shareholders. We now have six major projects under development in petroleum, copper, iron ore and potash, following the approval of the Ruby oil and gas development this month. All of them are on schedule and budget.

This disciplined approach sets us up to deliver strong returns over the long term. Our transformation programs have the potential to unlock significant value through more productive and stable operations, as we embrace new ways of working and harness new technology.

We enter the 2020 financial year with positive momentum and a strong outlook for both volume and cost.”

We are committed to making our workplaces safer

Safety, health, environment and community

Our highest priority is the health and safety of our employees and contractors, and that of the broader communities in which we operate. Tragically, one of our colleagues died at our Saraji mine in Queensland in December 2018. Our investigation of the incident has been completed, and we are in the process of implementing lessons learnt across the business. The frequency rate for high potential injuries, which are injury events where there was the potential for a fatality, declined by 18 per cent over the 2019 financial year(ii). Our Total Recordable Injury Frequency (TRIF) was 4.7 per million hours worked(ii), seven per cent higher than the previous year predominantly relating to minor injuries with low potential severity. We continued to focus on leading indicators to improve our safety performance, with further increases in proactive hazard reporting from the workforce and in-field safety leadership engagements throughout the 2019 financial year.

We are resolute in our determination that all of our people go home safe, every day. Our transformation programs, focus on asset integrity and our ongoing commitment to safety leadership across the company, will help us achieve this.

We continue to take action on climate change and are well placed to meet our five-year target to maintain total operational greenhouse gas emissions at or below 2017 financial year levels. Our operational greenhouse gas emissions totalled 14.2 Mt CO2-e on a continuing operations basis for the 2019 financial year(iii), a three per cent decrease compared to our 2017 financial year baseline (excluding Onshore US). Operational greenhouse gas emissions (including Onshore US) totalled 14.7 Mt CO2-e for the 2019 financial year.

We invested US$93 million in social and environmental projects (including donations) that contribute to an improved quality of life in the communities where we operate, meeting our social investment target.

 

2


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Samarco

BHP remains committed to supporting the Renova Foundation with the recovery of communities and ecosystems affected by the Samarco tragedy.

Resettlement of the Bento Rodrigues, Paracatu and Gesteira communities remains one of the Renova Foundation’s priority social programs and they continue to engage and consult with a large number of stakeholders. Increases to the technical scope for resettlement of the communities and licencing delays from authorities have impacted the timeline for completion, however, construction of the resettlement sites continues to progress. At Bento Rodrigues, construction of housing and a public school is underway, while infrastructure works are progressing; at Paracatu, earthworks to prepare the town site have started; and at Gesteria, the urban plan is being designed in consultation with the community.

Under the compensation program, more than 8,700 general damages claims have been resolved, in addition to approximately 260,000 claims for temporary interruption to water supplies resolved immediately following the dam failure. The Renova Foundation continues to assist 13,160 families with income support. River stabilisation is largely completed, while other river remediation works continue to progress, including improvements in water quality and re-vegetation of riverbanks and floodplains. In May 2019, Brazil’s National Sanitary Surveillance Agency (ANVISA) attested to the safe consumption in certain quantities of fish and crustaceans from the Doce River basin and coastal region.

BHP continues to support Samarco in its efforts to restart, provided it is safe, economically viable and has the support of the community. To restart, Samarco also requires the necessary licencing approvals and the funding for restart preparation works.

Samarco is currently progressing plans for the accelerated decommissioning of its upstream tailings dams in the Germano dam complex following legislative changes in Brazil. This accelerated timing has resulted in BHP recognising a provision for decommissioning of US$263 million. Combined with the impact of US$586 million related to updated assumptions for the lifting of the fishing ban, financial assistance and compensation programs and resettlement of communities, and other movements, BHP recorded a total income statement charge of US$1.1 billion (after tax) in relation to the Samarco dam failure for the 2019 financial year. This charge is recognised as an exceptional item. Additional commentary is included on page 37.

Financial performance

Earnings and margins

 

 

Attributable profit of US$8.3 billion includes an exceptional loss of US$818 million (2018: US$3.7 billion, which includes a US$5.2 billion exceptional loss). The 2019 financial year exceptional loss is related to the Samarco dam failure, partially offset by the reversal of provisions for global taxation matters which were resolved during the period.

 

 

Underlying attributable profit of US$9.1 billion (2018: US$8.9 billion).

 

 

Profit from operations (continuing operations) of US$16.1 billion (2018: US$16.0 billion) increased as a result of higher prices, lower depreciation and amortisation charges and the favourable impacts of exchange rate movements, offset by the impact from resource headwinds (copper grade decline, petroleum natural field decline and higher coal strip ratios), production outages, and adverse weather (including Tropical Cyclone Veronica).

 

 

Underlying EBITDA (continuing operations) of US$23.2 billion (2018: US$23.2 billion), with higher prices and favourable exchange rate movements offset by higher costs (including outages), inflation, the impact of weather, and other net movements.

 

 

Underlying EBITDA margin (continuing operations) of 53 per cent (2018: 55 per cent).

 

 

Underlying return on capital employed of 16.1 per cent (2018: 14.4 per cent), or 18.0 per cent excluding Onshore US.

 

3


Table of Contents

News Release

 

 

Costs and productivity

 

 

Improvements in our operational performance (record volumes at Jimblebar; record throughput at our Chilean copper assets; record production at South Walker Creek and Poitrel) were offset by significant resource headwinds (grade decline at our copper assets; higher strip ratios at our coal assets; natural field decline in petroleum) and the impact of unplanned production outages in the first half of the 2019 financial year.

 

 

We achieved unit cost(i) guidance at Petroleum, Escondida and Western Australia Iron Ore (WAIO). WAIO unit costs, on a C1 basis excluding third party royalties, were lower than the prior year at US$12.86 per tonne, despite the impact from the Tropical Cyclone Veronica. Queensland Coal and New South Wales Energy Coal (NSWEC) unit costs were marginally above guidance (based on exchange rate of AUD/USD 0.75).

 

 

Unit cost guidance for the 2020 financial year (based on exchange rates of AUD/USD 0.70 and USD/CLP 683) reflects: natural field decline at Conventional Petroleum; lower copper grades, lower by-product credits and higher deferred stripping costs at Escondida; maintenance strategies to improve equipment reliability at WAIO; and increased wash plant maintenance and inflationary pressures at Queensland Coal.

 

 

Historical costs and guidance are summarised below:

 

                          FY19 at                
     Medium-term
guidance(1)
     FY20
guidance(1)
     FY20e
vs
FY19(2)
     guidance
exchange
rates(3)
     realised
exchange
rates(2)
     FY18      FY19(2)
vs
FY18
 

Conventional Petroleum unit cost (US$/boe)

     <13        10.50 - 11.50        0% - 9%        10.82        10.54        10.06        5

Escondida unit cost (US$/lb)

     <1.15        1.20 - 1.35        5% - 18%        1.15        1.14        1.07        7

WAIO unit cost (US$/t)

     <13        13 - 14        (1%) - (8%)        14.84        14.16        14.26        (1 %) 

Queensland Coal unit cost (US$/t)

     54 - 61        67 - 74        (4%) - 7%        72.83        69.44        68.04        2

 

(1)

FY20 and medium-term unit cost guidance are based on exchange rates of AUD/USD 0.70 and USD/CLP 683.

(2)

Average exchange rates for 2019 of AUD/USD 0.72 and USD/CLP 673.

(3)

FY19 unit costs at guidance exchange rates of AUD/USD 0.75 and USD/CLP 663.

 

 

Underlying improvements in productivity of US$1.0 billion were offset by the impact of unplanned production outages of US$0.8 billion during the December 2018 half year, in addition to grade decline at Escondida of US$0.8 billion and higher unit costs in coal (lower volumes, wet weather, and higher strip ratio and contractor stripping costs) and Nickel West (mine plan changes) of US$0.4 billion. Overall, a negative movement of US$1.0 billion was recorded for the 2019 financial year.

 

 

Production and guidance are summarised below:

 

Production

   FY20
guidance
     FY20e
vs
FY19
     FY19      FY18      FY19
vs
FY18
 

Petroleum (MMboe)

     110 - 116        (9%) -  (4%)        121        120        1

Copper (kt)

     1,705 -  1,820        1% -  8%        1,689        1,753        (4 %) 

Escondida (kt)

     1,160 -  1,230        2% -  8%        1,135        1,213        (6 %) 

Other copper(1) (kt)

     545 -  590        (2%) -  6%        554        540        3

Iron ore(2) (Mt)

     242 -  253        2% -  6%        238        238        0

WAIO (100% basis) (Mt)

     273 -  286        1% -  6%        270        275        (2 %) 

Metallurgical coal (Mt)

     41 -  45        (3%) -  6%        42        43        (1 %) 

Queensland Coal (100% basis) (Mt)

     73 -  79        (2%) -  6%        75        76        (1 %) 

Energy coal (Mt)

     24 -  26        (13%) -  (5%)        27        29        (6 %) 

NSWEC (Mt)

     15 -  17        (18%) -  (7%)        18        19        (2 %) 

Cerrejon (Mt)

     ~9        Broadly unchanged        9        11        (13 %) 

Nickel (kt)

     ~87        Broadly unchanged        87        91        (6 %) 

 

(1)

Other copper comprises Pampa Norte, Olympic Dam and Antamina.

(2)

Increase in BHP’s share of volumes reflects the expiry of the Wheelarra Joint Venture sublease in March 2018, with control of the sublease area reverted to the Jimblebar Joint Venture, which is accounted for on a consolidated basis with minority interest adjustments.

 

 

Group copper equivalent production declined by two per cent(iv), with annual production records at two petroleum and four minerals operations offset by grade and natural field decline, weather-related interruptions and unplanned outages.

 

 

Group copper equivalent production for the 2020 financial year is expected to be slightly higher than the 2019 financial year(iv), despite an expected seven per cent decline in petroleum volumes largely due to natural field decline.

 

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Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Cash flow and balance sheet

 

 

Net operating cash flows (continuing operations) of US$17.4 billion (2018: US$17.6 billion) reflect strong commodity prices offset by increased costs and higher Australian and Chilean income tax payments in the 2019 financial year.

 

 

Free cash flow (continuing operations) of US$10.0 billion, after investment of US$7.4 billion. Total free cash flow of US$20.5 billion, including US$10.4 billion of proceeds from the sale of Onshore US.

 

 

Our balance sheet remains strong, with net debt at US$9.2 billion at 30 June 2019 (31 December 2018: US$9.9 billion; 30 June 2018: US$10.9 billion). The reduction of US$1.7 billion in net debt reflects strong free cash flow generation, including proceeds received from the sale of Onshore US, partially offset by record returns to shareholders of US$16.6 billion, dividends paid to non-controlling interests of US$1.2 billion and an unfavourable non-cash fair value adjustment of US$0.4 billion related to interest rate and exchange rate movements(v).

 

 

The application of IFRS 16 Leases from 1 July 2019 will increase the Group’s assets and liabilities by approximately US$2.3 billion as operating leases and certain other leases are recognised on the balance sheet. A change in our definition of net debt to include the fair value of derivatives used to hedge foreign exchange and interest rate risks relating to net debt (which are recognised in other financial assets and other financial liabilities on the balance sheet) will also increase net debt by US$0.2 billion. Had these changes, which have a combined impact of approximately US$2.5 billion, been in effect at 30 June 2019, net debt would have been approximately US$11.7 billion. Additional new leases commencing in the 2020 financial year (including the Spence Growth Option desalination plant and renewals of existing lease arrangements) are expected to increase net debt by a further US$1.3 billion to bring the overall increase to US$3.8 billion. Included within leases are vessel lease contracts that are priced with reference to a freight index that can be volatile. While these contracts make up less than a quarter of the total lease liability balance on 1 July 2019, they must be remeasured at each reporting date and could potentially cause significant movements in lease assets, lease liabilities and net debt. Reflecting these impacts, the Group has revised its net debt target range from US$10 to US$15 billion, to US$12 to US$17 billion. There is no change to the Group’s underlying cash flows.

 

 

We remain committed to a strong balance sheet through the commodity price cycle, and expect net debt to remain at the lower end of the revised target range in the near term.

 

 

Gearing ratio(i) of 15.1 per cent (31 December 2018: 15.2 per cent; 30 June 2018: 15.3 per cent).

Dividends and share buy-back

 

 

On 17 December 2018, a US$5.2 billion off-market buy-back of BHP Group Limited shares was successfully completed and enabled the buy-back of 265.8 million shares at A$27.64 per share. On 30 January 2019, a special dividend of US$1.02 per share, representing the balance of US$5.2 billion of the net proceeds from the sale of Onshore US, was paid to shareholders.

 

 

The dividend policy provides for a minimum 50 per cent payout of Underlying attributable profit at every reporting period. The minimum dividend payment for the June 2019 half year period is 53 US cents per share, or US$2.7 billion.

 

 

The Board has determined to pay an additional amount of 25 US cents per share or US$1.3 billion, taking the final dividend to a record 78 US cents per share. This is equivalent to a 73 per cent payout ratio (2018: 69 per cent).

 

 

In total, dividends of US$11.9 billion (US$2.35 per share) have been determined for the 2019 financial year, including the special dividend of US$5.2 billion (US$1.02 per share) and an additional amount of US$2.2 billion above the minimum payout policy.

 

 

This brings the total announced cash returns to shareholders for the 2019 financial year to US$17.1 billion.

 

5


Table of Contents

News Release

 

 

Capital and exploration

 

 

Capital and exploration expenditure of US$7.6 billion in the 2019 financial year was within guidance. This included maintenance expenditure(vi) of US$2.0 billion and exploration of US$873 million.

 

 

Capital and exploration expenditure guidance for the 2020 financial year is unchanged at below US$8 billion. Capital and exploration expenditure of approximately US$8 billion is expected for the 2021 financial year. Guidance is subject to exchange rate movements.    

 

 

This guidance includes a US$0.9 billion exploration program in the 2020 financial year, with US$0.7 billion for petroleum exploration and appraisal expenditure.

 

 

Historical capital and exploration expenditure and guidance are summarised below:

 

     FY20e
US$B
     FY19
US$M
     FY18
US$M
 

Maintenance(1)(2)

     2.1        1,978        1,930  

Development

        

Minerals

     3.9        3,680        2,494  

Conventional Petroleum(2)

     1.1        592        555  
  

 

 

    

 

 

    

 

 

 

Capital expenditure (purchases of property, plant and equipment)

     7.1        6,250        4,979  
  

 

 

    

 

 

    

 

 

 

Add: exploration expenditure

     0.9        873        874  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – continuing operations

     <8.0        7,123        5,853  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – discontinued operations

     0.0        443        900  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – total operations

     <8.0        7,566        6,753  
  

 

 

    

 

 

    

 

 

 

 

(1)

Includes capitalised deferred stripping of US$1.0 billion for FY19 (FY18: US$880 million) and US$0.8 billion for FY20.

(2)

Conventional Petroleum capital expenditure for FY20 includes US$1.1 billion of development and US$0.1 billion of maintenance.

 

 

Average annual sustaining capital expenditure guidance over the medium term, excluding costs associated with our Value Chain Automation program, is unchanged for WAIO and Queensland Coal and forecast to be approximately:

 

   

US$4 per tonne for WAIO, including the capital cost for South Flank; and

 

   

US$8 per tonne for Queensland Coal.

 

 

NSWEC sustaining capital expenditure guidance has increased from US$5 per tonne to US$6 per tonne as a result of lower than expected volumes in the medium term, as we focus on higher quality products.

Projects

 

 

Our three latent capacity projects under development are tracking to plan:

 

   

Escondida Water Supply Extension project is expected to deliver first water in the 2020 financial year;

 

   

West Barracouta project is expected to achieve first production in the 2021 calendar year; and

 

   

WAIO to sustainably achieve supply chain capacity of 290 Mtpa over the medium-term.

 

 

At the end of the 2019 financial year, BHP had five major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$11.1 billion over the life of the projects. All projects remain on time and on budget.

 

   

The Spence Growth Option project remains on budget and is expected to achieve first production in the first half of the 2021 financial year.

 

 

On 7 August 2019, the BHP Board approved an investment of US$283 million (BHP share) for the development of the Ruby oil and gas project in Trinidad and Tobago.

 

 

BHP continues to progress feasibility studies on the phased roll-out of autonomous haul trucks across a number of our Australian operations (coal and iron ore). In accordance with our Capital Allocation Framework, a decision on the deployment of autonomous trucks will be made on a site by site basis, considering return and risk metrics, as we look to replicate the improvement in haulage costs and reduction in safety incidents seen at Jimblebar.

 

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Table of Contents

BHP Results for the year ended 30 June 2019

 

 

 

Major projects are summarised below:

 

Commodity

  

Project and
ownership

  

Project scope / capacity(1)

  Capital
expenditure(1)
US$M
    Date of
initial
production
    

Progress/
comments

              Budget     Target       

Projects completed during the 2019 financial year

      

Petroleum

   North West Shelf Greater Western Flank- B (Australia) 16.67% (non-operator)    To maintain LNG plant throughput from the North West Shelf operations     216       CY19      Completed in May 2019.

Projects in execution at the end of the 2019 financial year

      
Copper    Spence Growth Option (Chile) 100%    New 95 ktpd concentrator is expected to increase Spence’s payable copper in concentrate production by approximately 185 ktpa in the first 10 years of operation and extend the mining operations by more than 50 years.     2,460       H1 FY21      On schedule and budget. The overall project is 60% complete.
Iron Ore    South Flank (Australia) 85%    Sustaining iron ore mine to replace production from the 80 Mtpa Yandi mine.     3,061       CY21      On schedule and budget. The overall project is 39% complete.
Petroleum    Atlantis Phase 3 (US Gulf of Mexico) 44% (non-operator)    New subsea production system that will tie back to the existing Atlantis facility, with capacity to produce up to 38,000 gross barrels of oil equivalent per day.     696       CY20      On schedule and budget. The overall project is 13% complete.
Petroleum    Mad Dog Phase 2 (US Gulf of Mexico) 23.9% (non-operator)    New floating production facility with the capacity to produce up to 140,000 gross barrels of crude oil per day.     2,154       CY22      On schedule and budget. The overall project is 53% complete.

Other projects in progress at the end of the 2019 financial year

      
Potash(2)    Jansen Potash (Canada) 100%    Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities.     2,700        The project is 84% complete and within the approved budget.

 

(1)

Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis and references to capital expenditure from joint operations reflects BHP’s share.

(2)

Potash capital expenditure of approximately US$215 million is expected for FY20.

Capital Allocation Framework

Adherence to our Capital Allocation Framework aims to balance value creation, cash returns to shareholders and balance sheet strength in a transparent and consistent manner.

 

     FY19
US$B
    FY18
US$B
 

Net operating cash flow – total operations

     17.9       18.5  

Our priorities for capital

    

Maintenance capital

     2.0       1.9  

Strong balance sheet

         ✓           ✓  

Minimum 50% payout ratio dividend

     4.4       3.8  
  

 

 

   

 

 

 

Excess cash(1)

     10.2       12.0  
  

 

 

   

 

 

 

Balance sheet

     2.8       5.8  

Additional dividends(2)

     7.0       1.4  

Buy-backs

     5.2       —    

Organic development

     5.6       4.9  

Acquisitions/(Divestments)

     (10.4     (0.1

 

(1)

Includes dividends paid to non-controlling interests of US$(1.2) billion (FY18: US$(1.6) billion); net investment and funding of equity accounted investments of US$(0.6) billion (FY18: US$0.2 billion); excludes exploration expenses of US$0.5 billion (FY18: US$0.6 billion) which is classified as organic development in accordance with the Capital Allocation Framework; total net cash outflow of US$1.3 billion (FY18: US$0.8 billion).

(2)

Includes a special dividend of US$5.2 billion (US$1.02 per share) paid in January 2019.

 

7


Table of Contents

News Release

 

 

Outlook - further information can be found at: bhp.com/prospects

Economic outlook

The global economy grew by around 334 per cent in the 2018 calendar year, with a notable pick up in the US economy, and resilient growth in China. We expect global growth to register near the lower end of a range of 314 per cent to 334 per cent for the 2019 calendar year. Any further escalation in trade protection or loss of business confidence is a downside risk for consensus views of the world economy, commodity demand and energy and metals prices in the 2020 financial year. We actively consider the plausibility of this outcome in our range analysis.

We continue to expect China’s economic growth to slow modestly in the 2019 calendar year to around 614 per cent. The negative impact of weaker exports is expected to be partially offset by easier monetary and fiscal policy. China’s policymakers are likely to seek a balance between the pursuit of reform and maintenance of macroeconomic and financial stability. Over the longer term, we expect China’s economic growth rate to decelerate as the working age population falls and the capital stock matures.

The US performed strongly in the 2018 calendar year but near-term prospects are less certain. The expansionary impact of tax cuts is expected to progressively fade and trade policies remain unpredictable. The European and Japanese economies have slowed and we expect growth to be modest next year. In India, growth prospects remain solid.

Commodities outlook

Global steel production has maintained healthy growth in the second half of the 2019 financial year, continuing the upswing from the trough towards the end of the 2015 calendar year. However, the growth profile has become unbalanced recently, with robust expansion in China and the US offsetting weakness in Europe and Japan. As anticipated, steel mill margins have begun to normalise. We expect iron ore quality differentiation to remain a durable element in price formation for steel making raw materials.

The Platts 62% Fe Iron Ore Fines price index has been elevated since the Brumadinho tailings dam tragedy in Brazil first disrupted the market in late January 2019. The lump premium has also been strong. In addition to the decline in Brazilian exports, prices have responded to stronger than expected Chinese pig iron production and cyclone disruptions to Australian supply. We expect supply conditions will return to a more normal path on a one to three year timeframe, and prices are likely to be volatile as that adjustment plays out. In the longer term, the marginal price setting tonne will be provided by a higher-cost, lower value-in-use exporter from Australia or Brazil.

The Platts Premium Low-Volatile Metallurgical Coal price index reached a high in the middle of the 2019 financial year amid supply constraints in Queensland. Prices eased from the peak on weaker European demand and improved Australian supply. China’s import policies remain a source of uncertainty. Longer term, we expect India to sustain strong demand growth, while high-quality metallurgical coals are expected to continue to offer steelmakers value-in-use benefits.

Copper prices have been heavily influenced by swings in global trade uncertainty in the second half of the 2019 financial year. Against this backdrop, we believe underlying fundamentals remain sound. Copper demand should grow steadily. Grade decline, rising input costs, water constraints and a scarcity of high-quality future development opportunities continue to constrain the industry’s ability to meet this growing demand at low cost. Scrap supply and aluminium substitution are constraints on the upside.

Nickel prices have also been heavily affected by trade uncertainty in the second half of the 2019 financial year. In our view, growth in supply should keep pace with demand from traditional uses in the near term. The electrification of transport will require on-going investment in new sources of supply in the coming decades.

Crude oil prices were volatile in the second half of the 2019 financial year. Swings in global growth expectations, strategic behaviour of major producers, falling production in Venezuela and Iran, and geopolitical risk, all contributed to price volatility over the last six months. The fundamental outlook remains positive, underpinned by rising demand from the developing world and natural field decline in supply.

The Japan-Korea Marker price for LNG was lower on average in the second half of the 2019 financial year, reflecting slower growth in North Asian demand and a large increment of new supply from project ramp-ups. Longer term, we expect LNG to grow faster than overall gas demand, with price formation progressing towards global harmonisation.

Potash prices continued their gradual upward trend in the second half of the 2019 financial year, but weakness has recently started to appear in some markets. Regional demand has been mixed in the 2019 calendar year to date, with China the positive standout. We expect annual demand growth of two to three per cent over the next decade, resulting in demand exceeding available supply from on-stream, latent and forthcoming capacity by the mid-to-late 2020s.

 

8


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Underlying EBITDA

The following table and commentary describes the impact of the principal factors(i) that affected Underlying EBITDA for the 2019 financial year compared with the 2018 financial year:

 

    US$M      

Year ended 30 June 2018

    23,183    

Net price impact:

   

Change in sales prices

    1,555     Higher average realised prices for petroleum, iron ore and metallurgical coal, offset by lower average realised prices for copper and thermal coal.

Price-linked costs

    (353   Increased royalties reflect higher realised prices related to iron ore, petroleum and hard coking coal.
 

 

 

   
    1,202    
 

 

 

   

Change in volumes:

   

Productivity

    143     Record throughput at Escondida following the Los Colorados Extension commissioning and increased sales volumes at WAIO (record production at Jimblebar and improved material handling and equipment reliability), partially offset by lower head grade at Escondida, the WAIO train derailment and fire at the Spence electro-winning plant.

Growth

    (75   Planned Pyrenees dry-dock maintenance, higher gas to liquids production mix and natural field decline, partially offset by higher uptime in the US Gulf of Mexico and Australia and increased tax barrels in Trinidad and Tobago.
 

 

 

   
    68    
 

 

 

   

Change in controllable cash costs(i):

   

Operating cash costs

    (1,176   Unfavourable fixed cost dilution related to unplanned production outages during the first half, higher strip ratios and contractor stripping costs at our Australian coal operations, increased maintenance activities, partially offset by favourable inventory movements and the benefit from higher overall volumes at Olympic Dam as a result of the smelter maintenance campaign in the prior year.

Exploration and business development

    142     Lower petroleum exploration expenses (the Ocean Bottom Node survey acquisition costs in the Gulf of Mexico were less than the prior year impact of expensing the Scimitar well) and lower study costs (following development approval of the Escondida Water Supply Extension project in March 2018).
 

 

 

   
    (1,034  
 

 

 

   

Change in other costs:

   

Exchange rates

    997     Impact of the weakening Australian dollar and Chilean peso against the US dollar.

Inflation

    (400   Impact of inflation on the Group’s cost base.

Fuel and energy

    (180   Predominantly higher diesel prices at our minerals assets.

Non-Cash

    81     Lower deferred stripping depletion at Escondida.

One-off items

    (396   Reflects the impact of Tropical Cyclone Veronica in March 2019 and restructuring and redundancies in relation to our World Class Functions initiative.
 

 

 

   
    102    
 

 

 

   

Asset sales

    29    

Ceased and sold operations

    (241   Reflects an increase in the closure and rehabilitation provision for closed mines, partially offset by the sale of the Bruce and Keith oil and gas fields in the United Kingdom.

Other items

    (151   Lower average realised copper prices received by Antamina and lower sales volumes at Cerrejón; settlement of a royalty dispute with the Western Australian Government; partially offset by a favourable impact from the revaluation of the embedded derivatives in the Trinidad and Tobago gas contract.
 

 

 

   

Year ended 30 June 2019

    23,158    
 

 

 

   

Productivity

Underlying improvements in productivity of US$1.0 billion were offset by the impact of unplanned production outages of US$0.8 billion during the December 2018 half year; higher than expected unit costs at Queensland Coal (lower volumes, wet weather and increased contractor stripping costs), New South Wales Energy Coal (higher strip ratio and contractor stripping costs) and Nickel West (mine plan changes) of US$0.4 billion; and grade decline at Escondida of US$0.8 billion. Overall, a negative movement in productivity of US$1.0 billion was recorded for the 2019 financial year.

The following table reconciles relevant factors with changes in the Group’s productivity:

 

Year ended 30 June 2019

   US$M  

Change in controllable cash costs

     (1,034

Change in volumes attributed to productivity

     143  
  

 

 

 

Change in productivity in Underlying EBITDA

     (891

Change in capitalised exploration

     (124
  

 

 

 

Change attributable to productivity measures

     (1,015
  

 

 

 

 

9


Table of Contents

News Release

 

 

Prices and exchange rates

The average realised prices achieved for our major commodities are summarised in the following table and are presented on a continuing operations basis:

 

Average realised prices(1)

   H2 FY19      H1 FY19      FY19      FY18      FY19
vs
FY18
    H2 FY19
vs

H2 FY18
    H2 FY19
vs

H1 FY19
 

Oil (crude and condensate) (US$/bbl)

     63.29        69.91        66.59        60.57        10     (7 %)      (9 %) 

Natural gas (US$/Mscf)(2)

     4.42        4.67        4.55        4.44        2     (8 %)      (5 %) 

LNG (US$/Mscf)

     8.53        10.19        9.43        8.07        17     (1 %)      (16 %) 

Copper (US$/lb)(3)

     2.70        2.54        2.62        3.00        (13 %)      (8 %)      6

Iron ore (US$/wmt, FOB)

     77.74        55.62        66.68        56.71        18     37     40

Metallurgical coal (US$/t)

     179.53        179.82        179.67        177.22        1     (5 %)      (0 %) 

Hard coking coal (HCC) (US$/t)(4)

     201.33        197.86        199.61        194.59        3     (2 %)      2

Weak coking coal (WCC) (US$/t)(4)

     126.46        134.12        130.18        131.70        (1 %)      (12 %)      (6 %) 

Thermal coal (US$/t)(5)

     72.18        84.15        77.90        86.94        (10 %)      (17 %)      (14 %) 

Nickel metal (US$/t)

     12,444        12,480        12,462        12,591        (1 %)      (11 %)      (0 %) 

 

(1)

Based on provisional, unaudited estimates. Prices exclude sales from equity accounted investments, third party product and internal sales, and represent the weighted average of various sales terms (for example: FOB, CIF and CFR), unless otherwise noted. Includes the impact of provisional pricing and finalisation adjustments.

(2)

Includes internal sales.

(3)

Comparative financial information has been restated for the new accounting standard, IFRS 15 Revenue from Contracts with Customers, which became effective from 1 July 2018.

(4)

Hard coking coal (HCC) refers generally to those metallurgical coals with a Coke Strength after Reaction (CSR) of 35 and above, which includes coals across the spectrum from Premium Coking to Semi Hard Coking coals, while weak coking coal (WCC) refers generally to those metallurgical coals with a CSR below 35.

(5)

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

In Copper, the provisional pricing and finalisation adjustments decreased Underlying EBITDA by US$242 million in the 2019 financial year and is included in the average realised copper price in the above table.

The following exchange rates relative to the US dollar have been applied in the financial information:

 

     Average
Year ended
30 June
2019
     Average
Year ended
30 June
2018
     As at
30 June
2019
     As at
30 June
2018
     As at
30 June
2017
 

Australian dollar(1)

     0.72        0.78        0.70        0.74        0.77  

Chilean peso

     673        625        680        648        663  

 

(1)

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

Depreciation, amortisation and impairments

Depreciation, amortisation and impairments decreased by US$528 million to US$6.1 billion, reflecting lower depreciation and amortisation at Petroleum (lower volumes at Shenzi and an increase in estimated remaining reserves at Atlantis), lower depreciation at Escondida (increase in asset life of the Escondida Water Supply project), and lower impairment charges compared to the previous period (predominantly related to conveyors at Escondida).

Net finance costs

Net finance costs decreased by US$181 million to US$1.1 billion mainly due to higher interest earned on increased term deposit holdings and a lower average debt balance following the repayment on maturity of Group debt.

 

10


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Taxation expense    

 

     2019      2018  

Year ended 30 June

   Profit before
taxation
US$M
     Income tax
expense
US$M
    %      Profit before
taxation
US$M
     Income tax
expense
US$M
    %  

Statutory effective tax rate

     15,049        (5,529     36.7        14,751        (7,007     47.5  

Adjusted for:

               

Exchange rate movements

     —          (25        —          (152  

Exceptional items(1)

     1,060        (242        650        2,320    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted effective tax rate

     16,109        (5,796     36.0        15,401        (4,839     31.4  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Refer exceptional items below for further details.

The Group’s adjusted effective tax rate, which excludes the influence of exchange rate movements and exceptional items, was 36.0 per cent (2018: 31.4 per cent). The adjusted effective tax rate is above 30 per cent primarily due to profits being subject to rates of tax higher than 30 per cent (for example, Australian petroleum projects and Chilean operations), a reduction in US tax credits related to Chilean taxes and an increase in provision for tax disputes. The adjusted effective tax rate is expected to be in the range of 33 to 38 per cent for the 2020 financial year.

Other royalty and excise arrangements which are not profit based are recognised as operating costs within Profit before taxation. These amounted to US$2.5 billion during the period (2018: US$2.2 billion).

On 19 November 2018, BHP settled its long-standing transfer pricing dispute relating to its marketing operations in Singapore with the Australian Taxation Office. The settlement fully resolved all prior years and provides certainty in relation to the future Australian taxation treatment of BHP’s marketing operations. The settlement did not involve any admission of tax avoidance by BHP. As part of the settlement, BHP paid a total of approximately A$529 million in additional taxes for the prior years, being 2003 to 2018 (BHP paid A$328 million of this amount when the amended assessments were received in prior years, with the balance of A$201 million paid in the December 2018 quarter). From the 2020 financial year, all profits made in Singapore in relation to the Australian assets owned by BHP Group Limited will be fully subject to Australian tax under the Controlled Foreign Company tax rules, due to a change in ownership of the main marketing entity.

Exceptional items

The following table sets out the exceptional items for the 2019 financial year. Additional commentary is included on page 33.

 

Year ended 30 June 2019

   Gross
US$M
    Tax
US$M
     Net
US$M
 

Exceptional items by category

       

Samarco dam failure(1)

     (1,060     —          (1,060

Global taxation matters(2)

     —         242        242  
  

 

 

   

 

 

    

 

 

 

Total

     (1,060     242        (818
  

 

 

   

 

 

    

 

 

 

Attributable to non-controlling interests

     —         —          —    

Attributable to BHP shareholders

     (1,060     242        (818
  

 

 

   

 

 

    

 

 

 

 

(1)

Refer to note 1 Exceptional items and note 8 Significant events – Samarco dam failure of the Financial Information for further information.

(2)

Financial impact of US$242 million relates to the reversal of provisions for global taxation matters which were resolved during the period. Refer to note 1 Exceptional items of the Financial Information for further information.

Debt management and liquidity

During the 2019 financial year, the Group’s gross debt decreased from US$26.8 billion at 30 June 2018 to US$24.8 billion at 30 June 2019. This was mainly due to the redemption of US$2.4 billion of debt (consisting of €1.3 billion of European medium term notes and US$0.8 billion of senior notes, which matured in November 2018 and April 2019 respectively), partially offset by a fair value adjustment of US$0.4 billion related to interest rate and exchange rate movements.

The Group has a US$6.0 billion commercial paper program backed by a US$6.0 billion revolving credit facility, which expires in May 2021. As at 30 June 2019, the Group had no outstanding US commercial paper, no drawn amount under the revolving credit facility and US$15.6 billion in cash and cash equivalents.

 

11


Table of Contents

News Release

 

 

Dividend

Our Board today determined to pay a final dividend of 78 US cents per share. The final dividend to be paid by BHP Group Limited will be fully franked for Australian taxation purposes.

BHP’s Dividend Reinvestment Plan (DRP) will operate in respect of the final dividend. Full terms and conditions of the DRP and details about how to participate can be found at: bhp.com

 

Events in respect of the final dividend

   Date  

Currency conversion into RAND

     30 August 2019  

Last day to trade cum dividend on Johannesburg Stock Exchange Limited (JSE)

     3 September 2019  

Ex-dividend Date JSE

     4 September 2019  

Ex-dividend Date Australian Securities Exchange (ASX), London Stock Exchange (LSE) and New York Stock Exchange (NYSE)

     5 September 2019  

Record Date

     6 September 2019  

DRP and Currency Election date (including announcement of currency conversion for ASX and LSE)

     9 September 2019  

Payment Date

     25 September 2019  

DRP Allocation Date (ASX and LSE) within 10 business days after the payment date

     9 October 2019  

DRP Allocation Date (JSE), subject to the purchase of shares by the Transfer Secretaries in the open market Central Securities Depository Participant (CDSP) accounts credited/updated on or about

     9 October 2019  

BHP Group Plc shareholders registered on the South African section of the register will not be able to dematerialise or rematerialise their shareholdings between the dates of 4 September and 6 September 2019 (inclusive), and transfers between the UK register and the South African register will not be permitted between the dates of 30 August and 6 September 2019 (inclusive). American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly. Details of the currency exchange rates applicable for the dividend will be announced to the relevant stock exchanges following conversion and will appear on the Group’s website.

Any eligible shareholder who wishes to participate in the DRP, or to vary a participation election should do so in accordance with the timetable above, or, in the case of shareholdings on the South African branch register of BHP Group Plc, in accordance with the instructions of your CSDP. The DRP Allocation Price will be calculated in each jurisdiction as an average of the price paid for each share actually purchased to satisfy DRP elections. The Allocation Price applicable to each stock exchange will made available at: bhp.com/DRP

Corporate governance

On 19 March 2019, we announced the appointment of Ian Cockerill and Susan Kilsby to the BHP Board as independent Non-executive Directors, effective 1 April 2019.

The current members of the Board’s committees are:

 

Risk and Audit Committee

  

Nomination and Governance
Committee

  

Remuneration Committee

  

Sustainability Committee

Lindsay Maxsted (Chairman)    Ken MacKenzie (Chairman)    Carolyn Hewson (Chairman)    Malcolm Broomhead (Chairman)
Terry Bowen    Malcolm Broomhead    Anita Frew    John Mogford
Ian Cockerill    Carolyn Hewson    Susan Kilsby    Ian Cockerill
Anita Frew    Shriti Vadera (SID)(1)    Shriti Vadera (SID)   

 

(1)

Senior Independent Director (SID).

 

12


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Segment summary(1)

A summary of performance for the 2019 and 2018 financial years is presented below. Unless otherwise noted, information in this section has been presented on a continuing operations basis to exclude the contribution from Onshore US.

 

Year ended

30 June 2019

US$M

   Revenue(2)     Underlying
EBITDA(3)
    Underlying
EBIT(3)
    Exceptional
items(4)
    Net
operating
assets(3)
     Capital
expenditure
     Exploration
gross(5)
     Exploration
to profit(6)
 

Petroleum

     5,930       3,801       2,220       —         7,228        645        685        409  

Copper

     10,838       4,550       2,587       —         24,088        2,735        62        62  

Iron Ore

     17,255       11,129       9,397       (971     17,486        1,611        93        41  

Coal

     9,121       4,067       3,400       —         9,674        655        23        15  

Group and unallocated items(7)

     1,225       (389     (539     19       3,580        604        10        10  

Inter-segment adjustment(8)

     (81     —         —         —         —          —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Group

     44,288       23,158       17,065       (952     62,056        6,250        873        537  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Year ended

30 June 2018

(Restated)

US$M

   Revenue(2)(9)     Underlying
EBITDA(3)
    Underlying
EBIT(3)
    Exceptional
items
    Net
operating
assets(3)
     Capital
expenditure
     Exploration
gross(5)
     Exploration
to profit(6)
 

Petroleum

     5,408       3,341       1,546       —         8,052        656        709        592  

Copper

     12,781       6,522       4,389       —         23,679        2,428        53        53  

Iron Ore

     14,810       8,930       7,195       (539     18,320        1,074        84        44  

Coal

     8,889       4,397       3,682       —         9,853        409        21        21  

Group and unallocated items(7)

     1,329       (7     (250     (27     2,789        412        7        7  

Inter-segment adjustment(8)

     (88     —         —         —         —          —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Group

     43,129       23,183       16,562       (566     62,693        4,979        874        717  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Group and segment level information is reported on a statutory basis which, in relation to Underlying EBITDA, includes depreciation, amortisation and impairments, net finance costs and taxation expense of US$505 million (2018: US$618 million) related to equity accounted investments. It excludes exceptional items of US$945 million (2018: US$509 million) related to share of loss from equity accounted investments, related impairments and expenses. Refer to note 1 Exceptional items and note 8 Significant events – Samarco dam failure of the Financial Information for further information.

Group profit before taxation comprised Underlying EBITDA, exceptional items, depreciation, amortisation and impairments of US$7,045 million (2018: US$7,187 million) and net finance costs of US$1,064 million (2018: US$1,245 million).

 

(2)

Revenue is based on Group realised prices and includes third party products. Sale of third party products by the Group contributed revenue of US$1,198 million and Underlying EBITDA of US$129 million (2018: US$1,436 million and US$62 million).

(3)

For more information on the reconciliation of certain alternative performance measures to our statutory measures, reasons for usefulness and calculation methodology, please refer to alternative performance measures set on pages 45 and 54.

(4)

Exceptional items of US$(952) million excludes net finance costs of US$(108) million included in the total US$(1,060) million related to the Samarco dam failure. Refer to note 1 Exceptional items and note 8 Significant events – Samarco dam failure of the Financial Information for further information.

(5)

Includes US$357 million capitalised exploration (2018: US$233 million).

(6)

Includes US$21 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2018: US$76 million).

(7)

Group and unallocated items includes Functions, other unallocated operations including Potash, Nickel West and consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties. Exploration and technology activities are recognised within the relevant segments.

 

Year ended

30 June 2019

US$M

   Revenue      Underlying
EBITDA(3)
    D&A      Underlying
EBIT(3)
    Net
operating
assets(3)
    Capital
expenditure
     Exploration
gross
     Exploration
to profit
 

Potash

     —          (127     4        (131     3,737       174        —          —    

Nickel West

     1,193        102       11        91       (158     274        9        9  

Year ended

30 June 2018

US$M

   Revenue(9)      Underlying
EBITDA(3)
    D&A      Underlying
EBIT(3)
    Net
operating
assets(3)
    Capital
expenditure
     Exploration
gross
     Exploration
to profit
 

Potash

     —          (135     4        (139     3,425       205        —          —    

Nickel West

     1,297        291       76        215       (267     129        7        7  

 

(8)

Comprises revenue of US$77 million generated by Petroleum (2018: US$75 million) and US$4 million generated by Iron Ore (2018: US$13 million).

(9)

Comparative financial information has been restated for the new accounting standard, IFRS15 Revenue from Contracts with Customers, which became effective from 1 July 2018.

 

13


Table of Contents

News Release

 

 

Petroleum

Underlying EBITDA for Petroleum, excluding Onshore US, increased by US$460 million to US$3.8 billion in the 2019 financial year.

 

     US$M      

Underlying EBITDA for the year ended 30 June 2018

     3,341    
  

 

 

   

Net price impact

     599     Higher average realised prices:
     Crude and condensate oil US$66.59/bbl (2018: US$60.57/bbl);
     Natural gas US$4.55/Mscf (2018: US$4.44/Mscf);
     LNG US$9.43/Mscf (2018: US$8.07/Mscf).
  

 

 

   

Change in volumes: growth

     (75   Higher uptime in the US Gulf of Mexico and Australia and increased tax barrels in Trinidad and Tobago were more than offset by planned Pyrenees dry-dock maintenance, higher gas to liquids production mix, natural field decline across the portfolio and an increase in overlift positions in Australia.
  

 

 

   

Change in controllable cash costs

     27     Additional maintenance activity at our Australian assets offset by lower exploration expenses due to the Ocean Bottom Node survey acquisition costs in the Gulf of Mexico less than the prior year impact of expensing the Scimitar well.
  

 

 

   

Ceased and sold operations

     (167   Revaluation of closed mines provision (US$191 million) partially offset by the sale of our interests in the Bruce and Keith oil and gas fields.
  

 

 

   

Other

     76     Includes exchange rate, inflation and the impact from revaluation of embedded derivatives in Trinidad and Tobago gas contract of US$14 million loss (2018: US$153 million loss).
  

 

 

   

Underlying EBITDA for the year ended 30 June 2019

     3,801    
  

 

 

   

Conventional Petroleum unit costs increased by five per cent to US$10.54 per barrel of oil equivalent due to additional planned maintenance, partially offset by higher volumes. Unit costs in the 2020 financial year are expected to be between US$10.50 and US$11.50 per barrel (based on an exchange rate of AUD/USD 0.70) reflecting the impact of lower volumes, partially offset by lower maintenance activities at our Australian assets. In the medium term, we expect an increase in unit costs to less than US$13 per barrel (based on an exchange rate of AUD/USD 0.70) as a result of natural field decline.

 

Conventional Petroleum unit costs(1) (US$M)

   H2 FY19      H1 FY19     FY19      FY18  

Revenue

     2,727        3,203       5,930        5,408  

Underlying EBITDA

     1,802        2,259       4,061        3,393  

Gross costs

     925        944       1,869        2,015  

Less: exploration expense(2)

     222        166       388        516  

Less: freight

     88        64       152        152  

Less: development and evaluation

     26        20       46        34  

Less: other(3)

     16        (8     8        106  

Net costs

     573        702       1,275        1,207  

Production (MMboe, equity share)

     58        63       121        120  
  

 

 

    

 

 

   

 

 

    

 

 

 

Cost per boe (US$)(4)

     9.88        11.14       10.54        10.06  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1)

Conventional Petroleum assets exclude divisional activities reported in Other and closed mining and smelting operations in Canada and the United States.

(2)

Exploration expense represents conventional Petroleum’s share of total exploration expense.

(3)

Other includes non-cash profit on sales of assets, inventory movements, foreign exchange, provision for onerous lease contracts and the impact from revaluation of embedded derivatives in the Trinidad and Tobago gas contract.

(4)

FY19 based on an exchange rate of AUD/USD 0.72.

 

14


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Petroleum exploration

Petroleum exploration expenditure for the 2019 financial year was US$685 million, of which US$388 million was expensed. A US$0.7 billion exploration and appraisal program is planned for the 2020 financial year. This program includes the 3DEL appraisal well at Trion in Mexico and additional wells in Trinidad and Tobago to follow up on our discoveries to date.

In Trinidad and Tobago, Phase 2 and 3 of our deepwater drilling campaign were completed. These campaigns included two wells in the Southern licences which further assessed the commercial potential of the Magellan play – the Victoria-1 well encountered gas and no commercial hydrocarbons were encountered at the Concepcion-1 well. Analysis is ongoing. Four wells were drilled in our Northern licences, the Bongos-2 discovery well opened a new play and subsequent wells Bélé-1, Tuk-1 and Hi-Hat-1 all encountered gas. Technical work is underway to evaluate commercial options for the Northern Gas play. The rig will return to our Northern licences during the September 2019 quarter to explore for additional volumes.

In the US Gulf of Mexico, we continue to advance evaluation of the development options to optimise value at Wildling. In the Western US Gulf of Mexico, the Ocean Bottom Node(vii) seismic acquisition was completed in early January 2019 and processed data is expected to be delivered during the March 2020 quarter. On 8 August 2019, we entered into an agreement to sell our 50 per cent interest in the Samurai prospect to a private equity firm. The sale is subject to customary closing conditions and is expected to close in September 2019.

In Mexico, we drilled our first operated well at Trion, following acquisition of the discovery in 2017. Trion 2DEL encountered oil in line with expectations and was followed by a down-dip sidetrack to delineate the field and provide information about the Oil Water Contact. Another appraisal well, Trion 3DEL(viii) spud on 9 July 2019 and we are encouraged by the preliminary results, with the well encountering oil in the reservoirs up dip from all previous well intersections. Evaluation and analysis is ongoing.

In Eastern Canada, we were the successful bidder in October 2018 for licences in the Orphan Basin, offshore Eastern Canada. An exploration plan for the licences 8 and 12 was submitted to the Canada-Newfoundland and Labrador Offshore Petroleum Board on 13 July 2019.

 

15


Table of Contents

News Release

 

 

Financial information for Petroleum for the 2019 and 2018 financial years is presented below.

 

Year ended

30 June 2019

US$M

   Revenue(1)     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
     Exploration
gross(2)
     Exploration
to profit(3)
 

Australia Production Unit(4)

     507       332       192       140       513       13        

Bass Strait

     1,237       915       427       488       2,217       32        

North West Shelf

     1,657       1,220       298       922       1,371       106        

Atlantis

     979       824       261       563       1,060       31        

Shenzi

     540       437       151       286       658       30        

Mad Dog

     319       268       59       209       1,232       362        

Trinidad/Tobago

     287       181       56       125       302       23        

Algeria

     258       201       26       175       49       7        

Exploration

     —         (388     58       (446     1,039       —          

Other(5)

     153       73       55       18       (109     41        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum from Group production

     5,937       4,063       1,583       2,480       8,332       645        685        409  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Closed mines(6)

     —         (260     —         (260     (1,104     —          —          —    

Third party products

     10       —         —         —         —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum

     5,947       3,803       1,583       2,220       7,228       645        685        409  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments(7)

     (17     (2     (2     —         —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum statutory result

     5,930       3,801       1,581       2,220       7,228       645        685        409  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Year ended

30 June 2018

US$M

   Revenue(1)     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
     Exploration
gross(2)
     Exploration
to profit(3)
 

Australia Production Unit(4)

     568       422       247       175       740       —          

Bass Strait

     1,285       948       494       454       2,504       29        

North West Shelf

     1,400       1,058       230       828       1,574       167        

Atlantis

     833       666       332       334       1,307       159        

Shenzi

     576       470       193       277       743       32        

Mad Dog

     229       160       50       110       947       189        

Trinidad/Tobago

     161       (53     38       (91     256       16        

Algeria

     234       186       28       158       37       6        

Exploration

     —         (516     127       (643     953       —          

Other(5)

     126       54       59       (5     (142     58        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum from Group production

     5,412       3,395       1,798       1,597       8,919       656        709        592  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Closed mines(6)

     —         (52     —         (52     (867     —          —          —    

Third party products

     12       1       —         1       —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum

     5,424       3,344       1,798       1,546       8,052       656        709        592  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments(7)

     (16     (3     (3     —         —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum statutory result

     5,408       3,341       1,795       1,546       8,052       656        709        592  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

Total Petroleum statutory result revenue includes: crude oil US$3,171 million (2018: US$2,933 million), natural gas US$1,259 million (2018: US$1,124 million), LNG US$1,179 million (2018: US$920 million), NGL US$263 million (2018: US$294 million) and other US$58 million (2018: US$137 million which includes third party products).

(2)

Includes US$297 million of capitalised exploration (2018: US$193 million).

(3)

Includes US$21 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2018: US$76 million).

(4)

Australia Production Unit includes Macedon, Pyrenees and Minerva.

(5)

Predominantly divisional activities, business development, UK (divested in November 2018), Neptune and Genesis. Also includes the Caesar oil pipeline and the Cleopatra gas pipeline, which are equity accounted investments. The financial information for the Caesar oil pipeline and the Cleopatra gas pipeline presented above, with the exception of net operating assets, reflects BHP’s share.

(6)

Comprises closed mining and smelting operations in Canada and the United States.

(7)

Total Petroleum statutory result Revenue excludes US$17 million (2018: US$16 million) revenue related to the Caesar oil pipeline and the Cleopatra gas pipeline. Total Petroleum statutory result Underlying EBITDA includes US$2 million (2018: US$3 million) D&A related to the Caesar oil pipeline and the Cleopatra gas pipeline.

 

16


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Copper

Underlying EBITDA for the 2019 financial year decreased by US$2.0 billion to US$4.6 billion.

 

    US$M      

Underlying EBITDA for the year ended 30 June 2018

    6,522    
 

 

 

   

Net price impact

    (1,338  

Lower average realised price:

Copper US$2.62/lb (FY18: US$3.00/lb).

Change in volumes: productivity

    (315   Lower grade at Escondida; decreased sales volumes at Pampa Norte after a fire at the electro-winning plant at Spence and heavy rainfall; partially offset by record concentrator throughput at Escondida and record ore milled at Pampa Norte.

Change in controllable cash costs

    (321   Unfavourable fixed cost dilution related to the acid plant outage and lower inventory build at Olympic Dam, end-of-negotiation bonus payments and a change in estimated recoverable copper contained in Escondida sulphide leach pad which benefited costs in the prior year. This was partially offset by Olympic Dam acid plant outage self-insurance recoveries, inventory movements at Pampa Norte and the benefit from higher overall volumes at Olympic Dam as a result of smelter maintenance campaign in the prior year.

Change in other costs:

   

Exchange rates

    283    

Inflation

    (143  

Non-cash

    88     Lower deferred stripping depletion at Escondida.

Other

    (226   Other includes fuel and energy of US$(78) million and other items (including lower profit from equity accounted investments).
 

 

 

   

Underlying EBITDA for the year ended 30 June 2019

    4,550    
 

 

 

   

Escondida unit costs increased by seven per cent to US$1.14 per pound, driven by an expected 12 per cent decline in copper grade and labour settlement costs.

Unit costs in the 2020 financial year are expected to increase to between US$1.20 and US$1.35 per pound (based on an exchange rate of USD/CLP 683) reflecting lower by-product credits and higher deferred stripping costs. The impact of a decline in copper grade of approximately five per cent is expected to be offset by increased concentrator throughput. Unit costs are expected to remain less than US$1.15 per pound in the medium term (based on an exchange rate of USD/CLP 683) with expected higher power and water costs offset by transformation programs focused on efficiency improvements and optimised maintenance strategies.

 

Escondida unit costs (US$M)

   H2 FY19      H1 FY19      FY19      FY18  

Revenue(1)

     3,537        3,339        6,876        8,346  

Underlying EBITDA

     1,814        1,570        3,384        4,921  

Gross costs

     1,723        1,769        3,492        3,425  

Less: by-product credits

     266        224        490        447  

Less: freight

     73        76        149        123  

Net costs

     1,384        1,469        2,853        2,855  

Sales (kt)

     560        571        1,131        1,209  

Sales (Mlb)

     1,234        1,259        2,493        2,664  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per pound (US$)(2)

     1.12        1.17        1.14        1.07  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Comparative financial information has been restated for the new accounting standard, IFRS15 Revenue from Contracts with Customers, which became effective from 1 July 2018.

(2)

FY19 based on exchange rates of AUD/USD 0.72 and USD/CLP 673.

Consistent with our exploration focus on copper we have added to our early stage copper optionality. In the first half of the 2019 financial year we acquired an 11.2 per cent interest in SolGold Plc, the majority owner and operator of the Cascabel porphyry copper-gold project in Ecuador. In the June 2019 quarter, we secured a five per cent interest in Midland Exploration Inc, which has copper exploration tenements in Canada, and entered an exploration financing agreement with Riverside Resources to fund exploration in Mexico’s north-eastern Sonora region. In July 2019 we entered a binding earn-in and joint venture agreement over two mining concessions in Ecuador with Luminex and are preparing to continue exploration activities on the sites, Tarqui and Tarqui 2.

In addition, we progressed the second phase of a drilling program at Oak Dam in the June 2019 half after identifying a potential new iron oxide, copper, gold (IOCG) mineralised system 65 kilometres to the south east of BHP’s operations at Olympic Dam in South Australia. The results are currently being analysed and an update will be provided once finalised later in the year.

 

17


Table of Contents

News Release

 

 

Financial information for Copper for the 2019 and 2018 financial years is presented below.

 

Year ended

30 June 2019

US$M

   Revenue     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
    Exploration
gross
    Exploration
to profit
 

Escondida(1)

     6,876       3,384       1,245       2,139       12,726       1,036      

Pampa Norte(2)

     1,502       701       381       320       2,937       1,194      

Antamina(3)

     1,144       723       108       615       1,345       229      

Olympic Dam

     1,351       273       331       (58     7,133       485      

Other(3)(4)

     —         (315     8       (323     (53     21      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Total Copper from Group production

     10,873       4,766       2,073       2,693       24,088       2,965      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Third party products

     1,109       116       —         116       —         —        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Copper

     11,982       4,882       2,073       2,809       24,088       2,965       66       65  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustment for equity accounted
investments(5)

     (1,144     (332     (110     (222     —         (230     (4     (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Copper statutory result

     10,838       4,550       1,963       2,587       24,088       2,735       62       62  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Year ended

30 June 2018

US$M

   Revenue(6)     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
    Exploration
gross
    Exploration
to profit
 

Escondida(1)

     8,346       4,921       1,601       3,320       13,666       997      

Pampa Norte(2)

     1,831       924       298       626       1,967       757      

Antamina(3)

     1,305       955       111       844       1,313       183      

Olympic Dam

     1,255       267       228       39       6,937       669      

Other(3)(4)

     —         (193     8       (201     (204     5      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Total Copper from Group production

     12,737       6,874       2,246       4,628       23,679       2,611      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Third party products

     1,349       60       —         60       —         —        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Copper

     14,086       6,934       2,246       4,688       23,679       2,611       53       53  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustment for equity accounted
investments(5)

     (1,305     (412     (113     (299     —         (183     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Copper statutory result

     12,781       6,522       2,133       4,389       23,679       2,428       53       53  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

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

(2)

Includes Spence and Cerro Colorado.

(3)

Antamina, SolGold and Resolution are equity accounted investments and their financial information presented above with the exception of net operating assets reflects BHP Group’s share.

(4)

Predominantly comprises divisional activities, greenfield exploration and business development. Includes Resolution and SolGold (acquired in October 2018).

(5)

Total Copper statutory result Revenue excludes US$1,144 million (2018: US$1,305 million) revenue related to Antamina. Total Copper statutory result Underlying EBITDA includes US$110 million (2018: US$113 million) D&A and US$222 million (2018: US$299 million) net finance costs and taxation expense related to Antamina, Resolution and SolGold that are also included in Underlying EBIT. Total Copper Capital expenditure excludes US$229 million (2018: US$183 million) related to Antamina and US$1 million (2018: US$ nil) related to SolGold. Exploration gross excludes US$4 million (2018: US$ nil) related to SolGold of which US$3 million (2018: US$ nil) was expensed.

(6)

Comparative financial information has been restated for the new accounting standard, IFRS15 Revenue from Contracts with Customers, which became effective from 1 July 2018.

 

18


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Iron Ore

Underlying EBITDA for the 2019 financial year increased by US$2.2 billion to US$11.1 billion.

 

    US$M      

Underlying EBITDA for the year ended 30 June 2018

    8,930    
 

 

 

   

Net price impact

    2,065    

Higher average realised price:

Iron ore US$66.68/wmt, FOB (2018: US$56.71/wmt, FOB).

Change in volumes: productivity

    382     Increased sales volumes supported by record production at Jimblebar, higher volumes reflecting the expiry of the Wheelarra joint venture(1) and improved supply chain reliability and performance. This was partially offset by a train derailment on 5 November 2018.

Change in controllable cash costs

    103     Favourable inventory movements, partially offset by increased maintenance activities.

Change in other costs:

   

Exchange rates

    227    

Inflation

    (97  

One-off items

    (285   Reflects the impact of Tropical Cyclone Veronica in March 2019.

Other

    (196   Other includes fuel and energy of US$(51) million, non-cash and other items (includes settlement of a royalty dispute with the Western Australian Government).
 

 

 

   

Underlying EBITDA for the year ended 30 June 2019

    11,129    
 

 

 

   

 

(1)

Increased volumes reflecting the expiry of the Wheelarra Joint Venture sublease in March 2018, with control of the sublease areas reverting to the Jimblebar Joint Venture, which is accounted for on a consolidated basis with minority interest adjustments.

WAIO unit costs were lower than the prior year at US$14.16 per tonne (or US$12.86 per tonne on a C1 basis excluding third party royalties(3)), reflecting higher volumes, continued productivity improvements and favourable exchange movements, offset by the impacts of a train derailment in November 2018 and Tropical Cyclone Veronica in March 2019. Unit costs declined by five per cent in the second half of the 2019 financial year following strong operational performance in the June 2019 quarter and optimised maintenance schedules.

Unit costs in the 2020 financial year are expected to decrease to between US$13 and US$14 per tonne (based on an exchange rate of AUD/USD 0.70). In the medium term, we expect to lower our unit costs to less than US$13 per tonne (based on an exchange rate of AUD/USD 0.70).

 

WAIO unit costs (US$M)

   H2 FY19      H1 FY19      FY19      FY18  

Revenue

     9,749        7,317        17,066        14,596  

Underlying EBITDA

     6,753        4,300        11,053        8,869  

Gross costs

     2,996        3,017        6,013        5,727  

Less: freight

     567        741        1,308        1,276  

Less: royalties

     782        540        1,322        1,075  

Net costs

     1,647        1,736        3,383        3,376  

Sales (kt, equity share)(1)

     119,216        119,620        238,836        236,771  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne (US$)(2)

     13.82        14.51        14.16        14.26  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne on a C1 basis excluding third party royalties (US$)(3)

     11.89        13.85        12.86        13.03  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

June 2019 quarter sales has been adjusted since it was previously reported.

(2)

FY19 based on an average exchange rate of AUD/USD 0.72.

(3)

Excludes third party royalties of US$1.00 per tonne (2018: US$0.74 per tonne), net inventory movements US$(0.30) per tonne (2018: US$0.25 per tonne), depletion of production stripping US$0.75 (2018: US$0.58), exploration expenses, demurrage, exchange rate gains/losses, and other income US$(0.15) per tonne (2018: US$(0.35) per tonne).

 

19


Table of Contents

News Release

 

 

Financial information for Iron Ore for the 2019 and 2018 financial years is presented below.

 

Year ended

30 June 2019

US$M

   Revenue      Underlying
EBITDA
     D&A      Underlying
EBIT
     Net
operating
assets
    Capital
expenditure
     Exploration
gross(1)
     Exploration
to profit
 

Western Australia Iron Ore

     17,066        11,053        1,707        9,346        19,208       1,600        

Samarco(2)

     —          —          —          —          (1,908     —          

Other(3)

     157        62        25        37        186       11        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Total Iron Ore from Group production

     17,223        11,115        1,732        9,383        17,486       1,611        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Third party products(4)

     32        14        —          14        —         —          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore

     17,255        11,129        1,732        9,397        17,486       1,611        93        41  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments

     —          —          —          —          —         —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore statutory result

     17,255        11,129        1,732        9,397        17,486       1,611        93        41  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Year ended

30 June 2018

US$M

   Revenue      Underlying
EBITDA
     D&A      Underlying
EBIT
     Net
operating
assets
    Capital
expenditure
     Exploration
gross(1)
     Exploration
to profit
 

Western Australia Iron Ore

     14,596        8,869        1,721        7,148        19,406       1,047        

Samarco(2)

     —          —          —          —          (1,278     —          

Other(3)

     160        60        14        46        192       27        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Total Iron Ore from Group production

     14,756        8,929        1,735        7,194        18,320       1,074        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Third party products(4)

     54        1        —          1        —         —          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore

     14,810        8,930        1,735        7,195        18,320       1,074        84        44  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments

     —          —          —          —          —         —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore statutory result

     14,810        8,930        1,735        7,195        18,320       1,074        84        44  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

Includes US$52 million of capitalised exploration (2018: US$40 million).

(2)

Samarco is an equity accounted investment and its financial information presented above, with the exception of net operating assets, reflects BHP Billiton Brasil Ltda’s share. All financial impacts following the Samarco dam failure have been reported as exceptional items in both reporting periods.

(3)

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

(4)

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

 

20


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Coal

Underlying EBITDA for the 2019 financial year decreased by US$330 million to US$4.1 billion.

 

    US$M      

Underlying EBITDA for the year ended 30 June 2018

    4,397    
 

 

 

   

Net price impact

    (115  

Lower average realised thermal coal prices, partially offset by higher average realised metallurgical coal prices:

Hard coking coal US$199.61/t (2018: US$194.59/t);

Weak coking coal US$130.18/t (2018: US$131.70/t);

Thermal coal US$77.90/t (2018: US$86.94/t).

Change in volumes: productivity

    103     Increased sales volumes supported by record production at South Walker Creek and Poitrel and prior year impacts from lower volumes at Broadmeadow (roof conditions) and Blackwater (geotechnical issues). This was partially offset by unfavourable weather impacts and the scheduled longwall move at Broadmeadow during the year.

Change in controllable cash costs

    (415   Increased contractor stripping activity and rates coupled with higher planned maintenance activity at Queensland Coal, and unfavourable inventory movements and increased contractor mining and stripping activity at NSWEC.

Change in other costs:

   

Exchange rates

    350    

Inflation

    (94  

Other

    (159   Other includes fuel and energy of US$(57) million, ceased and sold operations and other items (including lower profit from equity accounted investments).
 

 

 

   

Underlying EBITDA for the year ended 30 June 2019

    4,067    
 

 

 

   

Queensland Coal unit costs increased by two per cent to US$69 per tonne mainly due to wet weather impacts and higher strip ratios, diesel prices and contractor stripping costs, partially offset by favourable exchange rate movements. Unit costs in the 2020 financial year are expected to be between US$67 and US$74 per tonne (based on an exchange rate of AUD/USD 0.70) as a result of increased wash plant maintenance and local inflationary pressures. In the medium term, we expect to lower our unit costs to between US$54 and US$61 per tonne (based on an exchange rate of AUD/USD 0.70) reflecting higher volumes, lower strip ratios, optimised maintenance strategies and efficiency improvements from the transformation programs.

 

Queensland Coal unit costs (US$M)

   H2 FY19      H1 FY19      FY19      FY18  

Revenue

     3,912        3,767        7,679        7,388  

Underlying EBITDA

     1,911        1,811        3,722        3,647  

Gross costs

     2,001        1,956        3,957        3,741  

Less: freight

     71        85        156        150  

Less: royalties

     411        394        805        740  

Net costs

     1,519        1,477        2,996        2,851  

Sales (kt, equity share)

     22,106        21,039        43,145        41,899  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne (US$)(1)

     68.71        70.20        69.44        68.04  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

FY19 based on an average exchange rate of AUD/USD 0.72.

NSWEC unit costs increased by 10 per cent to US$50 per tonne as a result of higher strip ratios and contractor stripping costs, and unfavourable inventory movements. This was partially offset by the impact of favourable exchange rate movements. Unit costs in the 2020 financial year are expected to be between US$55 and US$61 per tonne (based on an exchange rate of AUD/USD 0.70) reflecting increased stripping costs and lower volumes as we continue to progress through the monocline, increase development stripping and focus on higher quality products. In the medium term, unit costs are expected to be between US$46 and US$50 per tonne (based on an exchange rate of AUD/USD 0.70), reflecting ongoing progression through the monocline and our focus on higher quality products.

 

New South Wales Energy Coal unit costs (US$M)

   H2 FY19      H1 FY19      FY19      FY18  

Revenue

     676        745        1,421        1,501  

Underlying EBITDA

     162        191        353        569  

Gross costs

     514        554        1,068        932  

Less: royalties

     54        60        114        111  

Net costs

     460        494        954        821  

Sales (kt, equity share)

     9,987        9,083        19,070        18,022  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne (US$)(1)

     46.06        54.39        50.03        45.56  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

FY19 based on an average exchange rate of AUD/USD 0.72.

 

21


Table of Contents

News Release

 

 

Financial information for Coal for the 2019 and 2018 financial years is presented below.

 

Year ended

30 June 2019

US$M

   Revenue     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
    Exploration
gross
     Exploration
to profit
 

Queensland Coal

     7,679       3,722       532       3,190       8,232       549       

New South Wales Energy Coal(1)

     1,527       431       166       265       920       102       

Colombia(1)

     698       274       101       173       853       104       

Other(2)

     2       (110     2       (112     (331     5       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Total Coal from Group production

     9,906       4,317       801       3,516       9,674       760       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Third party products

     19       (1     —         (1     —         —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal

     9,925       4,316       801       3,515       9,674       760       23        15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjustment for equity accounted investments(3)(4)

     (804     (249     (134     (115     —         (105     —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal statutory result

     9,121       4,067       667       3,400       9,674       655       23        15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Year ended

30 June 2018

US$M

   Revenue     Underlying
EBITDA
    D&A     Underlying
EBIT
    Net
operating
assets
    Capital
expenditure
    Exploration
gross
     Exploration
to profit
 

Queensland Coal

     7,388       3,647       596       3,051       8,355       391       

New South Wales Energy Coal(1)

     1,605       652       149       503       994       18       

Colombia(1)

     818       395       95       300       883       54       

Other(2)

     —         (10     3       (13     (379     —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Total Coal from Group production

     9,811       4,684       843       3,841       9,853       463       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Third party products

     2       (1     —         (1     —         —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal

     9,813       4,683       843       3,840       9,853       463       21        21  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjustment for equity accounted investments(3)(4)

     (924     (286     (128     (158     —         (54     —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal statutory result

     8,889       4,397       715       3,682       9,853       409       21        21  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(1)

Newcastle Coal Infrastructure Group and Cerrejón are equity accounted investments and their financial information presented above with the exception of net operating assets reflects BHP Group’s share.

(2)

Predominantly comprises divisional activities and ceased operations.

(3)

Total Coal statutory result Revenue excludes US$698 million (2018: US$818 million) revenue related to Cerrejón. Total Coal statutory result Underlying EBITDA includes US$101 million (2018: US$95 million) D&A and US$70 million (2018: US$108 million) net finance costs and taxation expense related to Cerrejón, that are also included in Underlying EBIT. Total Coal statutory result Capital expenditure excludes US$104 million (2018: US$54 million) related to Cerrejón.

(4)

Total Coal statutory result Revenue excludes US$106 million (2018: US$106 million) revenue related to Newcastle Coal Infrastructure Group. Total Coal statutory result excludes US$78 million (2018: US$83 million) Underlying EBITDA, US$33 million (2018: US$33 million) D&A and US$45 million (2018: US$50 million) Underlying EBIT related to Newcastle Coal Infrastructure Group until future profits exceed accumulated losses. Total Coal Capital expenditure excludes US$1 million (2018: US$ nil) related to Newcastle Coal Infrastructure Group.

 

22


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Group and unallocated items

Underlying EBITDA loss for Group and unallocated items increased by US$382 million to US$(389) million in the 2019 financial year due to self-insurance claims related to the Olympic Dam acid plant outage, restructuring and redundancy costs in relation to our World Class Functions initiative and a decrease in EBITDA at Nickel West. This was partially offset by the impact of favourable exchange rate movements.

Nickel West’s Underlying EBITDA decreased from US$291 million to US$102 million for the 2019 financial year, due to the transition to new ore bodies, which resulted in a drawdown of inventories and unfavourable fixed cost dilution from reduced volumes at Leinster and Mt Keith, and the impact from a fire at the Kalgoorlie smelter in the December 2018 half year.

 

23


Table of Contents

News Release

 

 

The financial information set out on pages 27 to 44 for the year ended 30 June 2019 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2018 financial statements contained within the Annual Report of the Group, with the exception of the following new accounting standards and interpretations which became effective from 1 July 2018:

 

 

IFRS 9/AASB 9 ‘Financial Instruments’ which is a replacement of IAS 39/AASB 139 ‘Financial Instruments: Recognition and Measurement’;

 

 

IFRS 15/AASB 15 ‘Revenue from Contracts with Customers’ which replaces previous revenue requirements, including IAS 18/AASB 118 ‘Revenue’; and

 

 

IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’.

This news release including the financial information is unaudited. Variance analysis relates to the relative financial and/or production performance of BHP and/or its operations during the 2019 financial year compared with the 2018 financial year, unless otherwise noted. Operations includes operated and non-operated assets, unless otherwise noted. Numbers presented may not add up precisely to the totals provided due to rounding.

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

The following footnotes apply to this Results Announcement:

 

(i)

We use various alternative performance measures to reflect our underlying performance. For further information on the reconciliations of certain alternative performance measures to our statutory measures, reasons for usefulness and calculation methodology, please refer to alternative performance measures set out on pages 45 to 54.

 

(ii)

Reported for total operations (including Onshore US).

 

(iii)

Subject to final sustainability assurance review.

 

(iv)

Copper equivalent production based on 2019 financial year average realised prices. Excludes production from Onshore US.

 

(v)

The balances of derivatives used to hedge external debt (included within net other financial assets/(liabilities)) at 30 June 2019 was US$(0.2) billion (2018: US$(0.8) billion). The movement primarily relates to a non-cash fair value adjustment of US$(0.4) billion which offsets in net debt.

 

(vi)

Maintenance capital includes non-discretionary spend for the following purposes: deferred development and production stripping; risk reduction, compliance and asset integrity.

 

(vii)

WGOM OBN 2018 Seismic Permit is OCS Permit T18-010.

 

(viii)

For further information on the Trion-3DEL well, please refer to the BHP Financial Results presentation for the year ended 30 June 2019 (slide 37), released 20 August 2019 on www.bhp.com.

Forward-looking statements

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

Forward-looking statements can be identified by the use of terminology, including, but not limited to, ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’, ‘annualised’ or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward-looking statements.

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

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

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

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

Past performance cannot be relied on as a guide to future performance.

Non-IFRS financial information

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

 

24


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

No offer of securities

Nothing in this release should be construed as either an offer, or a solicitation of an offer, to buy or sell BHP securities in any jurisdiction, or be treated or relied upon as a recommendation or advice by BHP.

Reliance on third party information

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

No financial or investment advice – South Africa

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

BHP and its subsidiaries

In this release, the terms ‘BHP’, ‘Group’, ‘BHP Group’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ are used to refer to BHP Group Limited, BHP Group Plc and, except where the context otherwise requires, their respective subsidiaries as identified in note 13 ‘Related undertaking of the Group’ in section 5.2 of BHP’s 30 June 2018 Annual Report on Form 20-F. Notwithstanding that this release may include production, financial and other information from non-operated assets, non-operated assets are not included in the BHP Group and, as a result, statements regarding our operations, assets and values apply only to our operated assets unless otherwise stated.

 

25


Table of Contents

News Release

 

 

Further information on BHP can be found at bhp.com

 

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26


Table of Contents

BHP

BHP

Financial Information

Year ended

30 June 2019


Table of Contents

News Release

 

 

Contents   
Financial Information    Page  

Consolidated Income Statement for the year ended 30 June 2019

     29  

Consolidated Statement of Comprehensive Income for the year ended 30  June 2019

     29  

Consolidated Balance Sheet as at 30 June 2019

     30  

Consolidated Cash Flow Statement for the year ended 30 June 2019

     31  

Consolidated Statement of Changes in Equity for the year ended 30  June 2019

     32  

Notes to the Financial Information

     33 - 44  

The financial information included in this document for the year ended 30 June 2019 is unaudited and has been derived from the draft financial report of the Group for the year ended 30 June 2019. The financial information does not constitute the Group’s full statutory accounts for the year ended 30 June 2019, which will be approved by the Board, reported on by the auditors, and subsequently filed with the UK Registrar of Companies and the Australian Securities and Investments Commission.

The financial information set out of pages 27 to 44 for the year ended 30 June 2019 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2018 financial statements contained within the Annual Report of the Group, with the exception of the following new accounting standards and interpretations which became effective from 1 July 2018:

 

   

IFRS 9/AASB 9 ‘Financial Instruments’ which is a replacement of IAS 39/AASB 139 ‘Financial Instruments: Recognition and Measurement’;

 

   

IFRS 15/AASB 15 ‘Revenue from Contracts with Customers’ which replaces previous revenue requirements, including IAS 18/AASB 118 ‘Revenue’; and

 

   

IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’.

The comparative figures for the financial years ended 30 June 2018 and 30 June 2017 are not the statutory accounts of the Group for those financial years. Those accounts have been reported on by the company’s auditor and delivered to the Registrar of Companies. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the reports and (iii) did not contain a statement under Section 498(2) or (3) of the UK Companies Act 2006.

All amounts are expressed in US dollars unless otherwise noted. The Group’s presentation currency and the functional currency of the majority of its operations is US dollars as this is the principal currency of the economic environment in which it operates. Amounts in this financial information have, unless otherwise indicated, been rounded to the nearest million dollars.

Where applicable, comparative periods have been adjusted to disclose them on the same basis as the current period figures.

 

28


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Consolidated Income Statement for the year ended 30 June 2019

 

     Notes    2019
US$M
    2018
US$M
Restated
    2017
US$M
Restated
 

Continuing operations

         

Revenue

        44,288       43,129       35,740  

Other income

        393       247       662  

Expenses excluding net finance costs

        (28,022     (27,527     (24,120

(Loss)/profit from equity accounted investments, related impairments and expenses

   2      (546     147       272  
     

 

 

   

 

 

   

 

 

 

Profit from operations

        16,113       15,996       12,554  
     

 

 

   

 

 

   

 

 

 

Financial expenses

        (1,510     (1,567     (1,560

Financial income

        446       322       143  
     

 

 

   

 

 

   

 

 

 

Net finance costs

   3      (1,064     (1,245     (1,417
     

 

 

   

 

 

   

 

 

 

Profit before taxation

        15,049       14,751       11,137  
     

 

 

   

 

 

   

 

 

 

Income tax expense

        (5,335     (6,879     (4,276

Royalty-related taxation (net of income tax benefit)

        (194     (128     (167
     

 

 

   

 

 

   

 

 

 

Total taxation expense

   4      (5,529     (7,007     (4,443
     

 

 

   

 

 

   

 

 

 

Profit after taxation from Continuing operations

        9,520       7,744       6,694  
     

 

 

   

 

 

   

 

 

 

Discontinued operations

         

Loss after taxation from Discontinued operations

   9      (335     (2,921     (472
     

 

 

   

 

 

   

 

 

 

Profit after taxation from Continuing and Discontinued operations

        9,185       4,823       6,222  
     

 

 

   

 

 

   

 

 

 

Attributable to non-controlling interests

        879       1,118       332  

Attributable to BHP shareholders

        8,306       3,705       5,890  
     

 

 

   

 

 

   

 

 

 

Basic earnings per ordinary share (cents)

   5      160.3       69.6       110.7  

Diluted earnings per ordinary share (cents)

   5      159.9       69.4       110.4  

Basic earnings from Continuing operations per ordinary share (cents)

   5      166.9       125.0       119.8  

Diluted earnings from Continuing operations per ordinary share (cents)

   5      166.5       124.6       119.5  

The accompanying notes form part of this financial information.

Consolidated Statement of Comprehensive Income for the year ended 30 June 2019

 

     2019
US$M
    2018
US$M
    2017
US$M
 

Profit after taxation from Continuing and Discontinued operations

     9,185       4,823       6,222  

Other comprehensive income

      

Items that may be reclassified subsequently to the income statement:

      

Net valuation gains/(losses) on investments taken to equity

     —         11       (1

Hedges:

      

(Losses)/gains taken to equity

     (327     82       351  

Losses/(gains) transferred to the income statement

     299       (215     (432

Exchange fluctuations on translation of foreign operations taken to equity

     1       2       (1

Exchange fluctuations on translation of foreign operations transferred to income statement

     (6     —         —    

Tax recognised within other comprehensive income

     8       36       24  
  

 

 

   

 

 

   

 

 

 

Total items that may be reclassified subsequently to the income statement

     (25     (84     (59
  

 

 

   

 

 

   

 

 

 

Items that will not be reclassified to the income statement:

      

Re-measurement (losses)/gains on pension and medical schemes

     (20     1       36  

Equity investments held at fair value

     1       —         —    

Tax recognised within other comprehensive income

     19       (14     (26
  

 

 

   

 

 

   

 

 

 

Total items that will not be reclassified to the income statement

     —         (13     10  
  

 

 

   

 

 

   

 

 

 

Total other comprehensive loss

     (25     (97     (49
  

 

 

   

 

 

   

 

 

 

Total comprehensive income

     9,160       4,726       6,173  
  

 

 

   

 

 

   

 

 

 

Attributable to non-controlling interests

     878       1,118       332  

Attributable to BHP shareholders

     8,282       3,608       5,841  

The accompanying notes form part of this financial information.

 

29


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News Release

 

 

Consolidated Balance Sheet as at 30 June 2019

 

     2019
US$M
    2018
US$M
 

ASSETS

    

Current assets

    

Cash and cash equivalents

     15,613       15,871  

Trade and other receivables

     3,462       3,096  

Other financial assets

     87       200  

Inventories

     3,840       3,764  

Assets held for sale

     —         11,939  

Current tax assets

     124       106  

Other

     247       154  
  

 

 

   

 

 

 

Total current assets

     23,373       35,130  
  

 

 

   

 

 

 

Non-current assets

    

Trade and other receivables

     313       180  

Other financial assets

     1,303       999  

Inventories

     768       1,141  

Property, plant and equipment

     68,041       67,182  

Intangible assets

     675       778  

Investments accounted for using the equity method

     2,569       2,473  

Deferred tax assets

     3,764       4,041  

Other

     55       69  
  

 

 

   

 

 

 

Total non-current assets

     77,488       76,863  
  

 

 

   

 

 

 

Total assets

     100,861       111,993  
  

 

 

   

 

 

 

LIABILITIES

    

Current liabilities

    

Trade and other payables

     6,717       5,977  

Interest bearing liabilities

     1,661       2,736  

Liabilities held for sale

     —         1,222  

Other financial liabilities

     127       138  

Current tax payable

     1,546       1,773  

Provisions

     2,175       2,025  

Deferred income

     113       118  
  

 

 

   

 

 

 

Total current liabilities

     12,339       13,989  
  

 

 

   

 

 

 

Non-current liabilities

    

Trade and other payables

     5       3  

Interest bearing liabilities

     23,167       24,069  

Other financial liabilities

     896       1,093  

Non-current tax payable

     187       137  

Deferred tax liabilities

     3,234       3,472  

Provisions

     8,928       8,223  

Deferred income

     281       337  
  

 

 

   

 

 

 

Total non-current liabilities

     36,698       37,334  
  

 

 

   

 

 

 

Total liabilities

     49,037       51,323  
  

 

 

   

 

 

 

Net assets

     51,824       60,670  
  

 

 

   

 

 

 

EQUITY

    

Share capital – BHP Group Limited

     1,111       1,186  

Share capital – BHP Group Plc

     1,057       1,057  

Treasury shares

     (32     (5

Reserves

     2,285       2,290  

Retained earnings

     42,819       51,064  
  

 

 

   

 

 

 

Total equity attributable to BHP shareholders

     47,240       55,592  

Non-controlling interests

     4,584       5,078  
  

 

 

   

 

 

 

Total equity

     51,824       60,670  
  

 

 

   

 

 

 

The accompanying notes form part of this financial information.    

 

30


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BHP Results for the year ended 30 June 2019

 

 

Consolidated Cash Flow Statement for the year ended 30 June 2019

 

     Notes      2019
US$M
    2018
US$M
    2017
US$M
 

Operating activities

         

Profit before taxation

        15,049       14,751       11,137  

Adjustments for:

         

Depreciation and amortisation expense

        5,829       6,288       6,184  

Impairments of property, plant and equipment, financial assets and intangibles

        264       333       193  

Net finance costs

        1,064       1,245       1,417  

Loss/(profit) from equity accounted investments, related impairments and expenses

        546       (147     (272

Other

        308       597       194  

Changes in assets and liabilities:

         

Trade and other receivables

        (211     (662     267  

Inventories

        298       (182     (687

Trade and other payables

        406       719       512  

Provisions and other assets and liabilities

        (125     7       (333
     

 

 

   

 

 

   

 

 

 

Cash generated from operations

        23,428       22,949       18,612  

Dividends received

        516       709       636  

Interest received

        443       290       164  

Interest paid

        (1,346     (1,177     (1,148

Proceeds/(settlements) of cash management related instruments

        296       (292     (140

Net income tax and royalty-related taxation refunded

        59       17       337  

Net income tax and royalty-related taxation paid

        (5,999     (4,935     (2,585
     

 

 

   

 

 

   

 

 

 

Net operating cash flows from Continuing operations

        17,397       17,561       15,876  
     

 

 

   

 

 

   

 

 

 

Net operating cash flows from Discontinued operations

     9        474       900       928  
     

 

 

   

 

 

   

 

 

 

Net operating cash flows

        17,871       18,461       16,804  
     

 

 

   

 

 

   

 

 

 

Investing activities

         

Purchases of property, plant and equipment

        (6,250     (4,979     (3,697

Exploration expenditure

        (873     (874     (966

Exploration expenditure expensed and included in operating cash flows

        516       641       610  

Net investment and funding of equity accounted investments

        (630     204       (234

Proceeds from sale of assets

        145       89       529  

Proceeds from divestment of subsidiaries, operations and joint operations, net of their cash

        4       —         187  

Other investing

        (289     (141     (153
     

 

 

   

 

 

   

 

 

 

Net investing cash flows from Continuing operations

        (7,377     (5,060     (3,724
     

 

 

   

 

 

   

 

 

 

Net investing cash flows from Discontinued operations

     9        (443     (861     (437
     

 

 

   

 

 

   

 

 

 

Proceeds from divestment of Onshore US, net of its cash

     9        10,427       —         —    
     

 

 

   

 

 

   

 

 

 

Net investing cash flows

        2,607       (5,921     (4,161
     

 

 

   

 

 

   

 

 

 

Financing activities

         

Proceeds from interest bearing liabilities

        250       528       1,577  

(Settlements)/proceeds of debt related instruments

        (160     (218     36  

Repayment of interest bearing liabilities

        (2,604     (4,188     (7,114

Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts

        (188     (171     (108

Share buy-back – BHP Group Limited

        (5,220     —         —    

Dividends paid

        (11,395     (5,220     (2,921

Dividends paid to non-controlling interests

        (1,198     (1,582     (575
     

 

 

   

 

 

   

 

 

 

Net financing cash flows from Continuing operations

        (20,515     (10,851     (9,105
     

 

 

   

 

 

   

 

 

 

Net financing cash flows from Discontinued operations

     9        (13     (40     (28
     

 

 

   

 

 

   

 

 

 

Net financing cash flows

        (20,528     (10,891     (9,133
     

 

 

   

 

 

   

 

 

 

Net (decrease)/increase in cash and cash equivalents from Continuing operations

        (10,495     1,650       3,047  

Net increase/(decrease) in cash and cash equivalents from Discontinued operations

        18       (1     463  

Proceeds from divestment of Onshore US, net of its cash

        10,427       —         —    

Cash and cash equivalents, net of overdrafts, at the beginning of the financial year

        15,813       14,108       10,276  

Foreign currency exchange rate changes on cash and cash equivalents

        (170     56       322  
     

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, net of overdrafts, at the end of the financial year

        15,593       15,813       14,108  
     

 

 

   

 

 

   

 

 

 

The accompanying notes form part of this financial information.    

 

31


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News Release

 

 

Consolidated Statement of Changes in Equity for the year ended 30 June 2019

 

     Attributable to BHP shareholders              
     Share capital      Treasury shares     Reserves     Retained
earnings
    Total equity     Non-
controlling

interests
    Total
equity
 

US$M

   BHP
Group
Limited
    BHP
Group
Plc
     BHP
Group
Limited
    BHP
Group
Plc
    attributable to
BHP

shareholders
 

Balance as at 1 July 2018

     1,186       1,057        (5     —         2,290       51,064       55,592       5,078       60,670  

Impact of adopting IFRS 9

     —         —          —         —         —         (7     (7     —         (7

Balance as at 1 July 2018

     1,186       1,057        (5     —         2,290       51,057       55,585       5,078       60,663  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —         —          —         —         (24     8,306       8,282       878       9,160  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners:

                   

Purchase of shares by ESOP Trusts

     —         —          (182     (6     —         —         (188     —         (188

Employee share awards exercised net of employee contributions

     —         —          155       6       (100     (61     —         —         —    

Employee share awards forfeited

     —         —          —         —         (18     18       —         —         —    

Accrued employee entitlement for unexercised awards

     —         —          —         —         138       —         138       —         138  

Dividends

     —         —          —         —         —         (11,302     (11,302     (1,205     (12,507

BHP Group Limited shares bought back and cancelled

     (75     —          —         —         —         (5,199     (5,274     —         (5,274

Divestment of subsidiaries, operations and joint operations

     —         —          —         —         —         —         —         (168     (168

Transfer to non-controlling interests

     —         —          —         —         (1     —         (1     1       —    
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 30 June 2019

     1,111       1,057        (32     —         2,285       42,819       47,240       4,584       51,824  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 1 July 2017

     1,186       1,057        (2     (1     2,400       52,618       57,258       5,468       62,726  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —         —          —         —         (87     3,695       3,608       1,118       4,726  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners:

                   

Purchase of shares by ESOP Trusts

     —         —          (159     (12     —         —         (171     —         (171

Employee share awards exercised net of employee contributions

     —         —          156       13       (139     (30     —         —         —    

Employee share awards forfeited

     —         —          —         —         (2     2       —         —         —    

Accrued employee entitlement for unexercised awards

     —         —          —         —         123       —         123       —         123  

Distribution to non-controlling interests

     —         —          —         —         —         —         —         (14     (14

Dividends

     —         —          —         —         —         (5,221     (5,221     (1,499     (6,720

Transfer to non-controlling interests

     —         —          —         —         (5     —         (5     5       —    
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 30 June 2018

     1,186       1,057        (5     —         2,290       51,064       55,592       5,078       60,670  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 1 July 2016

     1,186       1,057        (7     (26     2,538       49,542       54,290       5,781       60,071  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —         —          —         —         (59     5,900       5,841       332       6,173  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners:

                   

Purchase of shares by ESOP Trusts

     —         —          (105     (3     —         —         (108     —         (108

Employee share awards exercised net of employee contributions

     —         —          110       28       (167     29       —         —         —    

Employee share awards forfeited

     —         —          —         —         (18     18       —         —         —    

Accrued employee entitlement for unexercised awards

     —         —          —         —         106       —         106       —         106  

Distribution to non-controlling interests

     —         —          —         —         —         —         —         (16     (16

Dividends

     —         —          —         —         —         (2,871     (2,871     (601     (3,472

Divestment of subsidiaries, operations and joint operations

     —         —          —         —         —         —         —         (28     (28
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 30 June 2017

     1,186       1,057        (2     (1     2,400       52,618       57,258       5,468       62,726  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes form part of this financial information.    

 

32


Table of Contents

BHP Results for the year ended 30 June 2019

 

 

Notes to the Financial Information

 

1.

Exceptional items

Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and amount is considered material to the Financial Statements. Such items included within the Group’s profit for the year are detailed below. Exceptional items attributable to Discontinued operations are detailed in note 9 Discontinued operations.

 

Year ended 30 June 2019

   Gross
US$M
    Tax
US$M
     Net
US$M
 

Exceptional items by category

       

Samarco dam failure

     (1,060     —          (1,060

Global taxation matters

     —         242        242  
  

 

 

   

 

 

    

 

 

 

Total

     (1,060     242        (818
  

 

 

   

 

 

    

 

 

 

Attributable to non-controlling interests

     —         —          —    

Attributable to BHP shareholders

     (1,060     242        (818

Samarco Mineração SA (Samarco) dam failure

The exceptional loss of US$1,060 million related to the Samarco dam failure in November 2015 comprises the following:

 

Year ended 30 June 2019

   US$M  

Other income

     50  

Expenses excluding net finance costs:

  

Costs incurred directly by BHP Billiton Brasil Ltda and other BHP entities in relation to the Samarco dam failure

     (57

Loss from equity accounted investments, related impairments and expenses:

  

Share of loss relating to the Samarco dam failure

     (96

Samarco Germano dam decommissioning

     (263

Samarco dam failure provision

     (586

Net finance costs

     (108
  

 

 

 

Total(1)

     (1,060
  

 

 

 

 

(1)

Refer to note 8 Significant events – Samarco dam failure for further information.    

Global taxation matters

Global taxation matters includes amounts released from provisions for tax matters and other claims resolved during the period.