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 21, 2018

 

 

 

BHP BILLITON LIMITED

(ABN 49 004 028 077)

(Exact name of Registrant as specified in its charter)

  

BHP BILLITON 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

21 August 2018

Results for announcement to the market

 

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

Report for the year ended 30 June 2018

This statement includes the consolidated results of BHP for the year ended 30 June 2018 compared with the year ended 30 June 2017.

This page and the following 57 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 2018 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      21     to        43,638  

Revenue from discontinued operations

   up      1     to        2,171  

Total revenue

   up      20     to        45,809  

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

   up      4     to        6,652  

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

   down      508     to        (2,947

Profit after taxation attributable to the members of the BHP Group

   down      37     to        3,705  

Net Tangible Asset Backing:

Net tangible assets per fully paid share were US$11.25 as at 30 June 2018, compared with US$11.04 as at 30 June 2017.

Dividends per share:

 

Final dividend for current period

(record date 7 September 2018; payment date

25 September 2018)

   US 63 cents fully franked
Final dividend for previous corresponding period    US 43 cents fully franked

This statement was approved by the Board of Directors.

 

LOGO

Margaret Taylor

Group Company Secretary

BHP Billiton Limited and BHP Billiton Plc


Table of Contents
NEWS RELEASE    LOGO

 

Release Time      IMMEDIATE
Date      21 August 2018
Number      14/18

BHP RESULTS FOR THE YEAR ENDED 30 JUNE 2018

Following BHP’s sale of the Onshore US assets, as announced on 27 July 2018, the contribution of these assets has been presented in this report as discontinued operations and related assets and liabilities reclassified as held for sale.

 

 

Safety and sustainability: Our highest priority

 

 

Tragically, we had two fatalities during the year, one at our Permian operations and one at Goonyella Riverside.

 

 

Samarco Governance Agreement settles the BRL20 billion Civil Claim, enhances community participation in Renova Foundation programs and establishes a process to progress settlement of the BRL155 billion Civil Claim.

Maximise cash flow: US$12.5 billion free cash flow from higher prices and strong operating performance

 

 

Attributable profit of US$3.7 billion, Underlying attributable profit of US$8.9 billion up 33%, supported by 8% Group copper equivalent volume growth.

 

 

Underlying EBITDA(ii) of US$23.2 billion at a margin(iii) of 55% for continuing operations.

 

 

Net operating cash flow of US$18.5 billion and free cash flow(i) of US$12.5 billion reflect higher prices and volumes, with annual production records at nine operations across iron ore, coal, copper and petroleum.

 

 

Productivity up US$374 million in the second half to negative US$96 million from continuing operations for the full year.

 

 

Productivity gains of ~US$1 billion now expected for the 2019 financial year, with strong momentum to be carried into the 2020 financial year.

Capital discipline: Net debt in the lower half of target range and investment plans on track

 

 

Net debt(i) of US$10.9 billion, down US$15 billion in two years, reflects capital discipline and strong free cash flow.

 

 

Capital and exploration expenditure(v) within guidance at US$6.8 billion. Future guidance unchanged at below US$8 billion per annum for the 2019 and 2020 financial years.

Value and returns: Record final dividend of 63 US cps, ROCE up to 14.4%, Onshore US exit announced

 

 

The Board has determined to pay a record final dividend of 63.0 US cents per share which includes an additional amount of 17 US cents per share above the 50% minimum payout policy (equivalent to US$0.9 billion).

 

 

Underlying return on capital employed(iii) of 14.4% (after tax) with further improvement expected.

 

 

Onshore US sale announced for US$10.8 billion and we expect to return the net proceeds to shareholders.

 

Year ended 30 June(1)

   2018
US$M
     2017
US$M
     Change
%
 

Total operations

        

Attributable profit

     3,705        5,890        (37 %) 

Basic earnings per share (cents)

     69.6        110.7        (37 %) 

Dividend per share (cents)

     118.0        83.0        42

Net operating cash flow

     18,461        16,804        10

Capital and exploration expenditure(v)

     6,753        5,220        29

Net debt(i)

     10,934        16,321        (33 %) 

Underlying attributable profit(ii)

     8,933        6,732        33

Underlying basic earnings per share (cents)(iii)

     167.8        126.5        33
  

 

 

    

 

 

    

 

 

 

Continuing operations

        

Profit from operations

     15,996        12,554        27

Underlying EBITDA(ii)

     23,183        19,350        20

Underlying attributable profit(ii)

     9,622        7,217        33
  

 

 

    

 

 

    

 

 

 

Underlying EBITDA including the contribution from the Onshore US assets

     24,111        n/a        n/a  
  

 

 

    

 

 

    

 

 

 

 

(1)

Where we have used alternate performance measures they are identified by a footnote, and definitions can be found on pages 24 and 25.

 

1


Table of Contents

News Release

 

 

Results for the year ended 30 June 2018

 

BHP Chief Executive Officer, Andrew Mackenzie:

“We have announced a record final dividend for shareholders which reflects strong operating performance, solid prices and capital discipline. Our relentless focus on safety and productivity has released additional volumes across our supply chain, with eight per cent volume growth for the year. Our balance sheet is strong, with net debt now at the lower end of our target range, and our investment plans on track across iron ore, copper, coal and petroleum.

We have started the new year with the sale of our Onshore US business for US$10.8 billion, and once completed we expect to return the net proceeds to shareholders. Across our dramatically simplified portfolio of tier one assets, we see this year’s strong momentum carried into the medium term as our leadership, technology and culture drive further increases in productivity, value and returns. Our rich suite of options coupled with our rigorous Capital Allocation Framework will make sure we get the most out of every dollar we invest.”

We are committed to making our workplaces safer

The health and safety of our employees and contractors, and that of the broader communities in which we operate, are central to the success of our organisation. Tragically, two of our colleagues died during the period, one at our Permian Basin operations in November 2017 and one at Goonyella Riverside in August 2017. Our Total Recordable Injury Frequency (TRIF) was 4.4 per million hours worked in the 2018 financial year, a five per cent increase from the prior year. The number of high potential injuries, which are injury events where there was the potential for a fatality, declined by eight per cent in the year.

We are committed to becoming safer through how we engage with our teams on risk and controls, how we design our facilities and how we plan and execute our work. We are focused on leading indicators to improve safety performance, with a significant increase in proactive hazard reporting from the workforce and in-field safety leadership engagements throughout the 2018 financial year. We are improving the integrity of our facilities and equipment, and are increasing the application of technology to help make our work places safer.

Making significant progress on the social and environmental remediation programs in Brazil

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. Resettlements are expected to be completed by mid-2020 with engagement from a large number of stakeholders critical to success. The Bento Rodrigues resettlement has achieved major milestones, and construction has now commenced. Good progress is being made with the compensation program with approximately 260,000 claims resolved for temporary interruption to water supplies immediately following the dam failure. The river remediation programs continue to deliver improvements in water quality, aquatic habitat and fish levels, and support the restoration of fishing livelihoods.

Restart of Samarco’s operations remains a focus but is subject to separate negotiations with relevant parties and will occur only if it is safe, economically viable and has the support of the community. Resuming operations requires the granting of licences by state and federal authorities, community hearings and an appropriate restructure of Samarco’s debt.

In the 2018 financial year, BHP reported an exceptional loss of US$650 million (after tax) in relation to the Samarco dam failure. Additional commentary is included on page 39.

 

2


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Financial performance

Earnings and margins

 

 

Attributable profit of US$3.7 billion includes an exceptional loss of US$5.2 billion (after tax), compared to an attributable profit of US$5.9 billion, including an exceptional loss of US$842 million (after tax), in the prior period. The 2018 financial year exceptional loss is related to the impairment of Onshore US assets, US tax reform and the Samarco dam failure.

 

 

Underlying attributable profit of US$8.9 billion, compared to US$6.7 billion in the prior period.

 

 

Profit from operations (continuing operations) of US$16.0 billion, compared to US$12.6 billion in the prior period, has increased as a result of higher prices and an eight per cent increase in Group copper equivalent volumes, partially offset by higher costs.

 

 

Underlying EBITDA (continuing operations) of US$23.2 billion, with higher prices, increased volumes and one-off items (in total US$5.6 billion) more than offsetting the impacts of higher costs, unfavourable exchange rate movements, inflation and other net movements (in total US$1.8 billion).

 

 

Underlying EBITDA margin (continuing operations) of 55 per cent, achieved this year and last year.

 

 

Underlying return on capital employed of 14.4 per cent (after tax), compared with 10 per cent in the prior period. Underlying return on capital employed, excluding Onshore US assets, is approximately 18 per cent (after tax).

Productivity and costs

 

 

Unit costs at our major assets(vi) were broadly in line with guidance (at 2018 financial year guidance exchange rates of AUD/USD 0.75 and USD/CLP 663).

 

 

Unit cost guidance for the 2019 financial year (based on exchange rates of AUD/USD 0.75 and USD/CLP 663) reflects improved labour productivity and maintenance strategies across the portfolio, offset by higher diesel and other input costs, lower copper grades at Escondida, higher strip ratios at Queensland Coal and natural field decline at Conventional Petroleum.

 

 

Strong operating performance at Escondida and Western Australia Iron Ore (WAIO) underpinned a US$374 million productivity gain in the second half of the year, bringing the total full year movement to negative US$96 million (continuing operations).

 

 

Productivity gains of approximately US$1 billion are now expected for the 2019 financial year with strong momentum carried into the 2020 financial year. This guidance is lowered from US$2 billion over the two years to the end of the 2019 financial year and reflects:

 

   

the announced divestments of Onshore US and Cerro Colorado - reduction of US$200 million related to forecast productivity improvements as these assets are no longer included in guidance; and

 

   

modified assumptions in respect of the pace of productivity uplift over the two year period at Queensland Coal – reduction of approximately US$700 million following the challenging operating conditions at the Broadmeadow and Blackwater mines during the 2018 financial year.

 

 

Historical costs and guidance are summarised below:

 

                         FY18 at               
     Medium-term             FY19e     guidance      realised      FY18(2)        
     FY19      vs     exchange      exchange      vs        
     guidance(1)      guidance(1)      FY18(2)     rates(1)      rates(2)      FY17     FY17  

Conventional Petroleum unit cost (US$/boe)

     <13        <11        9     9.87        10.06        16     8.65  

Escondida unit cost (US$/lb)

     <1.15        <1.15        7     1.04        1.07        15     0.93  

Western Australia Iron Ore unit cost (US$/t)

     <13        <14        (2 %)      13.80        14.26        (2 %)      14.60  

Queensland Coal unit cost (US$/t)

     ~57        68 - 72        0%  -  6     65.77        68.04        14     59.67  

 

(1)

2018 unit costs and guidance for 2019 and medium-term unit costs are based on exchange rates of AUD/USD 0.75 and USD/CLP 663.

(2)

Average exchange rates for 2018 of AUD/USD 0.78 and USD/CLP 625.

 

3


Table of Contents

News Release

 

 

 

Production and guidance are summarised below:

 

     FY19      FY19e            FY18        
     vs            vs        

Production

   guidance      FY18     FY18      FY17     FY17  

Continuing operations

            

Petroleum - Conventional (MMboe)

     113 - 118        (6%) - (2 %)      120        (6 %)      128  

Copper (kt)

     1,675 - 1,770        (4%) - 1     1,753        32     1,326  

Escondida (kt)

     1,120 - 1,180        (8%) - (3 %)      1,213        57     772  

Other copper(1) (kt)

     555 - 590        3% - 9     540        (3 %)      554  

Iron ore(2) (Mt)

     241 - 250        1% - 5     238        3     231  

WAIO (100% basis) (Mt)

     273 - 283        (1%) -3     275        3     268  

Metallurgical coal(2) (Mt)

     43 - 46        1% - 8     43        7     40  

Energy coal(2) (Mt)

     28 - 29        (4%) -  (1 %)      29        0     29  

Discontinued operations

            

Petroleum - Onshore US (MMboe)

     Refer footnote(3)          72        (10 %)      80  

 

(1)

Other copper comprises Pampa Norte (including Cerro Colorado production for the first half of the 2019 financial year), Olympic Dam and Antamina.

(2)

Excludes production from Samarco, Haju (IndoMet Coal) and New Mexico Coal.

(3)

Given our announcement to divest Onshore US, no annual guidance for the 2019 financial year for these assets will be provided; however, until completion, we expect a production run rate broadly consistent with the second half of the 2018 financial year.

 

 

We achieved Group copper equivalent production growth of eight per cent in the 2018 financial year(vii), with record production at WAIO, Queensland Coal and Spence.

 

 

Group copper equivalent production for the 2019 financial year is expected to be broadly in line with the 2018 financial year(vii), despite the impacts from higher strip ratios at Queensland Coal and New South Wales Energy Coal (NSWEC), lower copper grades at Escondida and Spence and natural field decline at Conventional Petroleum.

Cash flow and balance sheet

 

 

Net operating cash flows of US$18.5 billion reflect higher commodity prices and a strong operating performance during the year.

 

 

Free cash flow of US$12.5 billion, which is the second consecutive year above US$12 billion.

 

 

Our balance sheet is strong with net debt at US$10.9 billion at year end (2017: US$16.3 billion; 2016: US$26.1 billion), a reduction of more than US$15 billion over two years. The reduction of US$5.4 billion in the 2018 financial year reflects strong free cash generation as well as a favourable non-cash fair value adjustment of US$108 million related to interest rate and exchange rate movements(viii), partially offset by dividends to shareholders of US$5.2 billion and dividends paid to non-controlling interests of US$1.6 billion.

 

 

Gearing ratio(i) of 15.3 per cent (2017: 20.6 per cent; 2016: 30.3 per cent).

 

 

We will maintain a strong balance sheet through the commodity price cycle, with net debt in the target range of US$10 to US$15 billion. We expect net debt to remain at the lower end of the target range while commodity prices are strong.

 

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Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Dividends

 

 

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 2018 half year period is 46 US cents per share.

 

 

The Board has determined to pay an additional amount of 17 US cents per share or US$0.9 billion, taking the final dividend to a record 63.0 US cents per share. This is equivalent to a 69 per cent payout ratio.

 

 

In total, dividends of US$6.3 billion (118 US cents per share) have been determined for the 2018 financial year, including an additional amount of US$1.8 billion above the minimum payout policy.

Capital and exploration

 

 

Capital and exploration expenditure of US$6.8 billion in the 2018 financial year was in line with guidance. This included maintenance spend(ix) of US$1.9 billion and exploration of US$874 million.

 

 

Capital and exploration expenditure guidance is unchanged at below US$8 billion per annum for the 2019 and 2020 financial years, subject to exchange rate movements.

 

 

A US$0.9 billion exploration program is planned for the 2019 financial year and includes petroleum exploration and appraisal expenditure of US$750 million.

 

 

Historical capital and exploration expenditure and guidance are summarised below:

 

     2019e      2018      2017  

Year ended 30 June

   US$B      US$M      US$M  

Maintenance(1)(2)

     2.1        1,930        1,219  

Development

        

Minerals

     4.1        2,494        1,677  

Conventional Petroleum(2)

     0.6        555        801  
  

 

 

    

 

 

    

 

 

 

Capital expenditure (purchases of property, plant and equipment)

     6.8        4,979        3,697  
  

 

 

    

 

 

    

 

 

 

Add: exploration expenditure

     0.9        874        966  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – continuing operations

     7.7        5,853        4,663  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – discontinued operations

     0.3        900        557  
  

 

 

    

 

 

    

 

 

 

Capital and exploration expenditure – total operations

     <8.0        6,753        5,220  
  

 

 

    

 

 

    

 

 

 

 

(1)

Includes capitalised deferred stripping of US$1.0 billion for the 2019 financial year and US$880 million for the 2018 financial year (2017: US$416 million).

(2)

Conventional Petroleum capital expenditure for the 2019 financial year includes US$600 million of development and US$130 million of maintenance.

 

 

Average annual sustaining capital expenditure guidance over the medium term is unchanged and forecast to be approximately:

 

   

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

 

   

US$8 per tonne for Queensland Coal; and

 

   

US$5 per tonne for NSWEC.

 

 

At the end of the 2018 financial year, BHP had five major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$10.6 billion over the life of the projects.

 

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News Release

 

 

Major projects are summarised below:

 

              Capital     Date of       

Commodity

  

Project and
ownership

  

Project scope / capacity(1)

  expenditure(1)     initial      Progress/
  US$M     production     

comments

              Budget     Target       

Projects in execution at 30 June 2018

      

Iron Ore

  

South Flank (Australia)

85%

   Sustaining iron ore mine to replace production from the 80 Mtpa Yandi mine.    
3,061
(2) 
  
    CY21      Project approved on 14 June 2018
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       FY21      14% complete Project approved on 17 August 2017

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      87% complete Reduction in budget of US$98 million as tracking ahead of schedule

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      23% complete

Other projects in progress at 30 June 2018

      

Potash(3)

  

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        79% complete Increase in budget of US$122 million to fund support services at the site

 

(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)

Includes initial funding of US$184 million announced on 26 June 2017.

(3)

Potash capital expenditure of approximately US$239 million is expected for the 2019 financial year.

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.

 

     2018     2017  

Year ended 30 June

   US$B     US$B  

Net operating cash flow – total operations

     18.5       16.8  

Our priorities for capital

    

Maintenance capital

     1.9       1.2  

Strong balance sheet

         ✓           ✓  

Minimum 50% payout ratio dividend

     3.8       2.0  
  

 

 

   

 

 

 

Excess cash(1)

     11.8       13.6  
  

 

 

   

 

 

 

Balance sheet

     5.6       9.4  

Additional dividends

     1.4       0.9  

Organic development

     4.9       4.0  

Acquisitions/(Divestments)

     (0.1     (0.7

 

(1)

Includes dividends paid to non-controlling interests of US$1.6 billion for the 2018 financial year (2017: US$0.6 billion); excludes exploration expenses of US$0.6 billion (2017: US$0.6 billion) which is classified as organic development in accordance with the Capital Allocation Framework; net cash outflow of US$1.0 billion (2017: nil).

With net debt at US$10.9 billion, currently at the lower end of our target range of US$10 to US$15 billion, and consistent with our Capital Allocation Framework, we expect to return the net proceeds from the sale of our Onshore US assets to shareholders. We will confirm how, and when, at the time of completion of the sales.

 

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BHP Results for the year ended 30 June 2018

 

 

Outlook

Economic outlook

World economic growth strengthened to 3.8 per cent in the 2017 calendar year, with a notable rebound in global trade. A similar outcome is expected in the 2018 calendar year, although downside risks have increased due to rising trade protectionism.

We continue to expect China’s economic growth to slow modestly in the 2018 calendar year. The official GDP target of around six and a half per cent is likely to be achieved, assuming the current trends of slowing activity in the housing and automobile markets, and resilience in infrastructure and machinery, continue. We expect China’s policymakers to continue to seek a balance between the pursuit of reform and maintenance of macroeconomic and financial stability. Over the longer term, China’s economic growth rate is expected to decelerate as the working age population falls and the capital stock matures.

Near-term prospects for the US economy are sound, with cyclical fundamentals solid. However, we expect the increase in protectionism to weigh on consumer purchasing power and international competitiveness. In Europe and Japan, business confidence and manufacturing momentum may have peaked early in the 2018 calendar year, although conditions remain healthy, on balance. India’s growth is on a recovery trajectory. Higher oil prices and tighter external financing conditions are near-term headwinds.

Commodities outlook

Crude oil prices trended higher during the 2018 financial year. Larger than agreed production cuts by the ‘Vienna Group’ and strong demand growth both contributed to a substantial reduction in the inventory overhang. A roughly balanced market is forecast for the 2018 calendar year. The outlook remains positive, underpinned by rising demand from the developing world and natural field decline.

Copper prices rose over the 2018 financial year, with gains in the first half sustained for most of the second half. Broad-based demand strength and the threat of supply disruption both contributed to the improvement in prices. The rise in trade tensions pushed copper prices down early in the 2019 financial year. Grade decline, increased input costs, water constraints and a scarcity of high-quality future development opportunities will require attractive prices to secure sufficient investment to balance the market, with new mine supply required in the early part of the next decade.

Global steel production saw broad-based growth across the major regions during the 2018 financial year. Solid downstream demand together with policy-driven supply cuts in China sent the industry-wide utilisation rate and profitability higher. China stepped up its efforts to curb air pollution over the winter, with production restrictions and more stringent emission standards. These developments have increased customer preferences for high-quality raw materials. In the long term, the global steel market is expected to continue to grow modestly, with moderating demand growth in China offset by incremental demand from India and other populous emerging markets.

The Platts 62% Fe Iron Ore Fines index remained firm in the 2018 financial year, underpinned by the preference for high-quality iron ore. The price spread between different grades remained wide, as mills focused on maximising efficiency through higher grade iron ore. In the short term, supply growth from seaborne high-quality iron ore suppliers and ample inventories at Chinese ports (much of which are lower grade) are expected to put a cap on benchmark prices. We expect quality differentiation to remain an important element in price formation.

The metallurgical coal price performed strongly in the 2018 financial year, with healthy demand conditions and relatively tight supply. In the near term, supply constraints should ease with additional volumes expected from various regions. The application of China’s coal supply side reform, and its environmental policies, remain a source of uncertainty. Over the longer term, emerging markets such as India are expected to support seaborne demand growth, while high-quality metallurgical coals will continue to offer steelmakers value-in-use benefits.

The potash industry is navigating a period of excess capacity better than expected. Prices have performed strongly due to record import volumes, with the Brazilian benchmark moving above US$300 per tonne for the first time since September 2015 despite the commissioning of several major capacity additions. We expect annual demand growth of between two and three per cent over the next decade, resulting in demand outstripping supply by the mid-to-late 2020s.

Further information on BHP’s economic and commodity outlook can be found at: bhp.com/prospects

 

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Table of Contents

News Release

 

 

Unless otherwise noted, information in this section has been presented on a continuing operations basis to exclude the contribution from Onshore US assets that are held for sale. The contribution of the Onshore US assets to the Group’s results are disclosed as discontinued operations within the Group’s financial statements.

Income statement

Underlying attributable profit and Underlying EBITDA are presented below.

 

     Combined continuing              
    

and discontinued

operations

    Continuing operations  
     2018     2017     2018     2017  

Year ended 30 June

   US$M     US$M     US$M     US$M  

Underlying EBITDA

     24,111       20,296       23,183       19,350  

Depreciation and amortisation(1)

     (7,942     (7,719     (6,288     (5,972

Impairments of property, plant and equipment, financial assets and intangibles(2)

     (333     (188     (333     (188

Exceptional items (before net finance costs and taxation)(3) – refer to pages 11 and 35

     (3,425     (636     (566     (636
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit from operations

     12,411       11,753       15,996       12,554  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net finance costs

     (1,267     (1,431     (1,245     (1,417

Total taxation expense

     (6,321     (4,100     (7,007     (4,443

Exceptional items (after taxation) – refer to pages 11 and 35

     5,228       1,006       2,970       1,006  

Profit attributable to non-controlling interests

     (1,118     (496     (1,092     (483
  

 

 

   

 

 

   

 

 

   

 

 

 

Underlying attributable profit

     8,933       6,732       9,622       7,217  
  

 

 

   

 

 

   

 

 

   

 

 

 

Exceptional items (after taxation) – refer to pages 11 and 35

     (5,228     (1,006     (2,970     (1,006

Non-controlling interest in exceptional items

     —         164       —         164  
  

 

 

   

 

 

   

 

 

   

 

 

 

Attributable profit

     3,705       5,890       6,652       6,375  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit attributable to non-controlling interests

     1,118       332       1,092       319  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit/(loss) after taxation from continuing and discontinued operations

     4,823       6,222       7,744       6,694  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Depreciation and amortisation for continuing operations excludes exceptional items of US$ nil million (2017: US$212 million).

(2)

Impairments of property, plant and equipment, financial assets and intangibles for continuing operations excludes exceptional items of US$ nil million (2017: US$5 million).

(3)

Exceptional items excludes net finance costs of US$(84) million (2017: US$(127) million) related to the Samarco dam failure.

Profit from operations has increased as a result of favourable realised price movements across most major commodities and higher volumes, partially offset by higher costs, and higher depreciation at Escondida after a full year of production following the industrial action in the previous year, the commissioning of the Escondida Water Supply project in June 2017, and impairment charges predominantly related to conveyors at Escondida.

 

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Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Underlying EBITDA

The following table and commentary describes the impact of the principal factors(iii) that affected Underlying EBITDA for the 2018 financial year compared with the 2017 financial year:

 

    US$M      

Year ended 30 June 2017

    19,350    

Net price impact:

   

Change in sales prices

    4,269     Higher average realised prices for all our major commodities, except iron ore.

Price-linked costs

    (124   Increased royalties reflect higher realised prices.
 

 

 

   
    4,145    
 

 

 

   

Change in volumes:

   

Productivity

    1,024     Release of latent capacity at Escondida (ramp-up of Los Colorados Extension project) and WAIO (improved productivity and stability across the supply chain), partially offset by lower volumes from Olympic Dam (smelter maintenance campaign) and the impact of challenging operating conditions at two Queensland Coal mines (Broadmeadow and Blackwater).

Growth

    (256   Lower petroleum volumes due to Hurricane Harvey and Hurricane Nate, and expected natural field decline.
 

 

 

   
    768    
 

 

 

   

Change in controllable cash costs(iv):

   

Operating cash costs

    (1,114   Higher costs reflect: unfavourable fixed cost dilution at Olympic Dam (smelter maintenance campaign) and Conventional Petroleum (natural field decline), challenging operating conditions at two Queensland Coal mines (Broadmeadow and Blackwater); and a favourable change in estimated recoverable copper in the Escondida sulphide leach pad in the prior period, partially offset by lower labour and contractor costs at WAIO.

Exploration and business development

    (129   Increase in planning activity in Mexico and the Scimitar well write-off, partially offset by expensing of the Burrokeet and Wildling wells in the prior year.
 

 

 

   
    (1,243  
 

 

 

   

Change in other costs:

   

Exchange rates

    (248   Impact of the stronger Australian dollar and Chilean peso against the US dollar.

Inflation

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

Fuel and energy

    (224   Predominantly higher diesel prices at minerals assets.

Non-Cash

    425     Higher capitalisation of deferred stripping at Escondida and increased underground mine development capitalisation at Olympic Dam as development extends into the Southern Mine Area.

One-off items

    719     Reflects the impacts from industrial action at Escondida, power outage at Olympic Dam, and Cyclone Debbie at Queensland Coal in the prior year.
 

 

 

   
    283    
 

 

 

   

Asset sales

    (142   Reflects divestment of 50 per cent interest in Scarborough in the prior year.

Ceased and sold operations

    4    

Other items

    18     Higher average realised prices received by our equity accounted investments and higher sales volumes from Antamina, offset by the revaluation of embedded derivative in the Trinidad and Tobago gas contract.
 

 

 

   

Year ended 30 June 2018

    23,183    
 

 

 

   

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

 

Year ended 30 June 2018

   US$M  

Change in controllable cash costs

     (1,243

Change in volumes attributed to productivity

     1,024  
  

 

 

 

Change in productivity in Underlying EBITDA

     (219

Change in capitalised exploration

     123  
  

 

 

 

Change attributable to productivity measures

     (96
  

 

 

 

 

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 total operations basis:

 

                                 FY18     H2 FY18     H2 FY18  
                                 vs     vs     vs  

Average realised prices(1)

   H2 FY18      H1 FY18      FY18      FY17      FY17     H2 FY17     H1 FY18  

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

     67.07        53.76        60.12        47.61        26     35     25

Natural gas (US$/Mscf)(2)

     3.71        3.54        3.62        3.34        8     7     5

US natural gas (US$/Mscf)

     2.77        2.84        2.80        2.88        (3 %)      (7 %)      (2 %) 

LNG (US$/Mscf)

     8.65        7.48        8.07        6.84        18     17     16

Copper (US$/lb)

     3.05        3.20        3.12        2.54        23     13     (5 %) 

Iron ore (US$/wmt, FOB)

     56.86        56.54        56.71        58.42        (3 %)      (8 %)      1

Metallurgical coal (US$/t)

     189.66        164.22        177.22        163.30        9     16     15

Hard coking coal (HCC) (US$/t)(3)

     205.80        182.29        194.59        179.83        8     14     13

Weak coking coal (WCC) (US$/t)(3)

     143.40        120.99        131.70        121.32        9     19     19

Thermal coal (US$/t)(4)

     86.47        87.49        86.94        74.67        16     15     (1 %) 

Nickel metal (US$/t)

     13,974        11,083        12,591        10,184        24     43     26

 

(1)

Based on provisional, unaudited estimates. Prices exclude sales from Antamina, 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)

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.

(4)

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$2 million in the 2018 financial year.

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

 

     Average      Average                       
     Year ended      Year ended      As at      As at      As at  
     30 June      30 June      30 June      30 June      30 June  
     2018      2017      2018      2017      2016  

Australian dollar(1)

     0.78        0.75        0.74        0.77        0.75  

Chilean peso

     625        662        648        663        661  

 

(1)

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

Depreciation, amortisation and impairments

Depreciation, amortisation and impairments increased by US$461 million to US$6.6 billion, reflecting higher depreciation at Escondida after a full year of production following the industrial action in the previous year, the commissioning of the Escondida Water Supply project in June 2017, and impairment charges predominantly related to conveyors at Escondida.

Net finance costs

Net finance costs decreased by US$172 million to US$1.2 billion mainly due to a lower average debt balance following the bond repurchase program and repayment on maturity of Group debt. This was partially offset by higher benchmark interest rates in the period as well as costs related to September 2017 bond repurchase.

 

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BHP Results for the year ended 30 June 2018

 

 

Taxation expense

 

     2018      2017  
     Profit before      Income tax            Profit before      Income tax        
     taxation      expense            taxation      expense        

Year ended 30 June

   US$M      US$M     %      US$M      US$M     %  

Statutory effective tax rate

     14,751        (7,007     47.5        11,137        (4,443     39.9  

Adjusted for:

               

Exchange rate movements

     —          (152        —          88    

Exceptional items(1)

     650        2,320          763        243    
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Adjusted effective tax rate

     15,401        (4,839     31.4        11,900        (4,112     34.6  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)

Refer exceptional items below for further details.

The Group’s adjusted effective tax rate(iii), which excludes the influence of exchange rate movements and exceptional items, was 31.4 per cent (2017: 34.6 per cent). The decrease in the 2018 financial year was largely due to the resolution of matters with tax authorities and other tax items compared to the prior year. The adjusted effective tax rate is expected to be in the range of 30 to 35 per cent for the 2019 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$2.2 billion during the period (2017: US$2.0 billion).

Exceptional items

The following table sets out the exceptional items for the 2018 financial year. Additional commentary is included on page 35.

 

     Gross     Tax     Net  

Year ended 30 June 2018

   US$M     US$M     US$M  

Exceptional items by category

      

Samarco dam failure(1)

     (650     —         (650

US tax reform(2)

     —         (2,320     (2,320
  

 

 

   

 

 

   

 

 

 

Total

     (650     (2,320     (2,970
  

 

 

   

 

 

   

 

 

 

Attributable to non-controlling interests

     —         —         —    

Attributable to BHP shareholders

     (650     (2,320     (2,970
  

 

 

   

 

 

   

 

 

 

 

(1)

Financial impact of US$(650) million from the Samarco dam failure relates to US$(80) million share of loss from US$(80) million funding provided during the period, US$(57) million direct costs incurred by BHP Billiton Brasil Ltda and other BHP entities, US$(84) million amortisation of discounting impacting net finance costs, US$(560) million change in estimate and US$131 million exchange translation. Refer to note 1 Exceptional items and note 8 Significant events – Samarco dam failure of the Financial Report for further information.

(2)

Financial impact of US$(2,320) million from US tax reform relates to US$(1,390) million re-measurement of the Group’s deferred tax position as a result of the reduced US corporate income tax rate, US$(834) million impairment of foreign tax credits due to reduced forecast utilisation, US$(194) million net impact of tax charges on the deemed repatriation of accumulated earnings of non-US subsidiaries, US$95 million recognition of Alternative Minimum Tax Credits and US$3 million other impacts. Refer to note 1 Exceptional items and note 4 Income tax expense of the Financial Report for further information.

Discontinued operations

On 27 July 2018 BHP announced it had entered into agreements for the sale of its entire interests in the Eagle Ford, Haynesville, Permian and Fayetteville Onshore US oil and gas assets for a combined base consideration of US$10.8 billion, payable in cash.

The Onshore US contribution to the Group 2018 financial year results comprised a US$2,921 million loss after taxation from discontinued operations, including exceptional items.

The following table sets out the exceptional items related to Onshore US for the 2018 financial year. Refer to note 9 Discontinued operations of the Financial Report for further information.

 

     Gross     Tax      Net  

Year ended 30 June 2018

   US$M     US$M      US$M  

Exceptional items by category

       

US tax reform

     —         492        492  

Impairment of Onshore US assets

     (2,859     109        (2,750
  

 

 

   

 

 

    

 

 

 

Total

     (2,859     601        (2,258
  

 

 

   

 

 

    

 

 

 

Attributable to non-controlling interests

     —         —          —    

Attributable to BHP shareholders

     (2,859     601        (2,258
  

 

 

   

 

 

    

 

 

 

 

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News Release

 

 

Debt management and liquidity

During the 2018 financial year, the Group continued to focus on debt reduction, with no new debt issued and an A$1.0 billion Australian bond repaid at maturity. In addition, a bond repurchase program of US$2.9 billion was completed on 22 September 2017. The total cost in relation to the repurchase program was US$71 million, which has been reported in net finance costs. The program was funded by BHP’s strong cash position and targeted short-dated US dollar, Euro and GBP bonds. The early repayment of the bonds has extended BHP’s average debt maturity profile. The repayment of maturing debt, the bond repurchase program and fair value adjustments contributed to a US$3.7 billion overall decrease in the Group’s gross debt, from US$30.5 billion at 30 June 2017 to US$26.8 billion at 30 June 2018.

At the subsidiary level, Escondida issued US$0.5 billion of new long-term debt to fund capital expenditure and for general corporate purposes.

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 2018, the Group had no outstanding US commercial paper, no drawn amount under the revolving credit facility and US$15.9 billion in cash and cash equivalents.

Dividend

Our Board today determined to pay a final dividend of 63 US cents per share. The final dividend to be paid by BHP Billiton 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

     31 August 2018  

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

     4 September 2018  

Ex-dividend Date JSE

     5 September 2018  

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

     6 September 2018  

Record Date

     7 September 2018  

Dividend Reinvestment Election date (including currency conversion and currency election dates for ASX and LSE)

     10 September 2018  

Payment Date

     25 September 2018  

BHP Billiton Plc shareholders registered on the South African section of the register will not be able to dematerialise or rematerialise their shareholdings between the dates of 5 September and 7 September 2018 (inclusive), nor will transfers between the UK register and the South African register be permitted between the dates of 31 August and 7 September 2018 (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 set out above, or, in the case of shareholdings on the South African branch register of BHP Billiton Plc, in accordance with the instructions of your Central Securities Depository Participant (CSDP) or broker. 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 exchange will made available at bhp.com/DRP.

 

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BHP Results for the year ended 30 June 2018

 

 

Segment summary(1)

A summary of performance for the 2018 and 2017 financial years is presented below and excludes Onshore US.

 

Year ended

30 June 2018

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

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

Copper

     13,287       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)

     1,332       (7     (250     (27     2,789        412        7        7  

Inter-segment adjustment(8)

     (88     —         —         —         —          —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Group

     43,638       23,183       16,562       (566     62,693        4,979        874        717  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

Year ended

30 June 2017

(Restated)

US$M

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

Petroleum

     4,722       3,117       1,367       —         9,011        917        803        573  

Copper

     8,335       3,545       2,006       (546     24,100        1,484        44        44  

Iron Ore

     14,624       9,077       7,197       (203     19,175        805        94        70  

Coal

     7,578       3,784       3,050       164       10,136        246        9        9  

Group and unallocated items(7)

     977       (173     (430     (51     2,446        245        16        16  

Inter-segment adjustment(8)

     (101     —         —         —         —          —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total Group

     36,135       19,350       13,190       (636     64,868        3,697        966        712  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

(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$618 million (2017: US$540 million) related to equity accounted investments. It excludes exceptional items of US$509 million (2017: US$172 million) related to share of loss from equity accounted investments.

Group profit before taxation comprised Underlying EBITDA and exceptional items and depreciation, amortisation and impairments of US$7,187 million (2017: US$6,796 million) and net finance costs of US$1,245 million (2017: US$1,417 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$1,514 million and Underlying EBITDA of US$62 million (2017: US$1,200 million and US$49 million).

(3)

We use various alternate performance measures to reflect our underlying performance. Refer to page 8 for a reconciliation of Underlying EBITDA to our statutory results and page 24 for the definitions and calculation methodology of alternate performance measures used in reporting our performance.

(4)

Exceptional items of US$(566) million excludes net finance costs of US$(84) million included in the total US$(650) million related to the Samarco dam failure. Refer to note 1 Exceptional items for further information.

(5)

Includes US$233 million capitalised exploration (2017: US$356 million).

(6)

Includes US$76 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2017: US$102 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 2018

US$M

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

Potash

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

Nickel West

     1,300        291       76        215       (267     129        7        7  

Year ended

30 June 2017

US$M

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

Potash

     —          (108     10        (118     3,094       162        —          —    

Nickel West

     952        44       87        (43     (337     56        16        16  

 

(8)

Comprises revenue of US$75 million generated by Petroleum (2017: US$83 million) and US$13 million generated by Iron Ore (2017: US$18 million).

 

13


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News Release

 

 

Petroleum

Underlying EBITDA for Petroleum excluding Onshore US, increased by US$224 million to US$3.3 billion in the 2018 financial year.

 

     US$M  

Underlying EBITDA for the year ended 30 June 2017

     3,117  

Net price impact(1)

     975  

Change in volumes: growth

     (256

Change in controllable cash costs

     (164

Profit on sale of assets(2)

     (142

Other(3)

     (189
  

 

 

 

Underlying EBITDA for the year ended 30 June 2018

     3,341  
  

 

 

 

 

(1)

Average realised price: crude and condensate oil US$60.57/bbl (2017: US$47.48/bbl); natural gas US$4.44/Mscf (2017: US$3.87/Mscf); LNG US$8.07/Mscf (2017: US$6.84/Mscf).

(2)

Profit on sale of assets reflects the sale of 50 per cent of BHP’s interest in the undeveloped Scarborough area gas fields in the prior year.

(3)

Other includes: exchange rate; inflation; ceased and sold operations; other items. Other items includes the impact from revaluation of embedded derivatives in Trinidad and Tobago gas contract of US$153 million loss for the 2018 financial year (2017: US$37 million loss).

Conventional Petroleum production for the 2018 financial year declined by six per cent to 120 MMboe due to the impact of Hurricanes Harvey and Nate on US petroleum assets and natural field decline.

Controllable cash costs increased by US$164 million and include:

 

 

US$100 million – unfavourable fixed cost dilution from declining volumes; and

 

 

US$64 million – higher exploration expenses due to expensing the Scimitar well (including side-track) and increased planning activities in Mexico, partially offset by the impact of wells expensed in the prior year.

Conventional Petroleum unit costs increased by 16 per cent to US$10.06 per barrel of oil equivalent due to the impact of lower volumes. Unit cost guidance for the 2019 financial year is expected to be less than US$11 per barrel (based on an exchange rate of AUD/USD 0.75) reflecting the impact of lower volumes, partially offset by productivity improvements.

 

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

   H2 FY18      H1 FY18      FY18      FY17  

Revenue

     2,827        2,581        5,408        4,722  

Underlying EBITDA

     1,771        1,622        3,393        3,133  

Gross costs

     1,056        959        2,015        1,589  

Less: exploration expense(2)

     379        137        516        471  

Less: freight

     84        68        152        140  

Less: development and evaluation

     21        13        34        22  

Less: other(3)

     16        90        106        (151

Net costs

     556        651        1,207        1,107  

Production (MMboe, equity share)

     56        64        120        128  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per boe (US$)(4)(5)

     9.93        10.17        10.06        8.65  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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 and the impact from revaluation of embedded derivatives in the Trinidad and Tobago gas contract.

(4)

FY17 restated to exclude development and evaluation as these costs do not represent our cost performance in relation to current production.

(5)

FY18 based on an exchange rate of AUD/USD 0.78.

Petroleum exploration

Petroleum exploration expenditure for the 2018 financial year was US$709 million, of which US$516 million was expensed. A US$750 million exploration and appraisal program is planned for the 2019 financial year. This program includes two wells in Trinidad and Tobago, one appraisal well at Trion in Mexico and one appraisal well in the Wildling basin in the US Gulf of Mexico.

In the US Gulf of Mexico, we discovered oil in multiple horizons at the Wildling-2 well and side track to the north of the operated Shenzi field. We acquired 50 per cent equity interest in the Murphy operated Samurai prospect (GC432 and GC476), the northern extension of the Wildling sub basin. The Samurai-2 exploration well was spud on 16 April 2018 and encountered hydrocarbons in multiple horizons not previously observed by the Wildling-2 exploration well. The Scimitar prospect, to the north of the Neptune field, was drilled and no commercial hydrocarbons were encountered.

 

14


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

In Trinidad and Tobago, following the gas discovery at LeClerc, we commenced Phase 2 of our deepwater exploration drilling campaign to further assess the commercial potential of the Magellan play. The Victoria-1 exploration well was spud on 12 June 2018 and encountered gas. The well was plugged and abandoned on 18 July 2018. We plan to drill the Concepcion prospect to further test the Magellan play in the 2019 financial year. Following completion of the Victoria-1 well, the Deepwater Invictus has been mobilised to the Bongos prospect in our Northern licence area in Trinidad and Tobago. The Bongos-1 exploration well was spud on 20 July 2018 and experienced mechanical difficulty shortly after spud. The Bongos-2 exploration well was spud on 22 July 2018 and encountered hydrocarbons. Drilling is still in progress.

In Mexico, we expect to begin drilling the first appraisal well at Trion in the December 2018 quarter.

Onshore US – Discontinued operations

Onshore US delivered a strong operating performance in the 2018 financial year, with total production of 72 MMboe, exceeding our full year guidance of between 61 and 67 MMboe as a result of improved well performance from larger completions and longer laterals. Drilling and development expenditure for the 2018 financial year was US$0.9 billion, a reduction of US$0.2 billion relative to guidance reflecting better well performance, and lower drilling and completions activity which was tailored to support value in the exit process.

This strong performance positioned these assets well for divestment and on 27 July 2018, BHP announced it had entered into agreements for the sale of its entire interests in the Eagle Ford, Haynesville, Permian and Fayetteville Onshore US oil and gas assets for a combined base consideration of US$10.8 billion, payable in cash. BP America Production Company, a wholly owned subsidiary of BP Plc, has agreed to acquire 100 per cent of the issued share capital of Petrohawk Energy Corporation, the BHP subsidiary which holds the Eagle Ford, Haynesville and Permian assets, for a consideration of US$10.5 billion. MMGJ Hugoton III, LLC, a company owned by Merit Energy Company, has agreed to acquire 100 per cent of the issued share capital of BHP Billiton Petroleum (Arkansas) Inc. and 100 per cent of the membership interests in BHP Billiton Petroleum (Fayetteville) LLC, which hold the Fayetteville assets, for a total consideration of US$0.3 billion. Both sales are subject to the satisfaction of customary regulatory approvals and conditions precedent.

Until completion of the transactions, expected by the end of October 2018, we intend to operate five rigs in Onshore US and incur capital expenditure at an annualised rate broadly consistent with the 2018 financial year.

Onshore US assets have been classified as held for sale and are disclosed as discontinued operations. Refer to note 9 Discontinued operations of the Financial Report for further information.

 

15


Table of Contents

News Release

 

 

Financial information for Petroleum for the 2018 and 2017 financial years is presented below excluding Onshore US.

 

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  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Year ended

30 June 2017

(Restated)

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)

     601       451       275       176       924       15        

Bass Strait

     1,096       824       261       563       2,981       154        

North West Shelf

     1,190       1,013       199       814       1,630       209        

Atlantis

     677       551       471       80       1,486       174        

Shenzi

     509       402       204       198       956       37        

Mad Dog

     202       155       57       98       722       113        

Trinidad/Tobago

     110       26       33       (7     422       81        

Algeria

     212       167       34       133       22       13        

Exploration

     —         (471     157       (628     892       —          

Other(5)

     133       15       62       (47     (181     121        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum from Group production

     4,730       3,133       1,753       1,380       9,854       917        803        573  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Closed mines(6)

     —         (16     —         (16     (843     —          —          —    

Third party products

     9       3       —         3       —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum

     4,739       3,120       1,753       1,367       9,011       917        803        573  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments(7)

     (17     (3     (3     —         —         —          —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Petroleum statutory result

     4,722       3,117       1,750       1,367       9,011       917        803        573  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

Total Petroleum statutory result Revenue includes: crude oil US$2,933 million (2017: US$2,528 million), natural gas US$1,124 million (2017: US$1,029 million), LNG US$920 million (2017: US$858 million), NGL US$294 million (2017: US$265 million) and other US$137 million which includes third party products (2017: US$42 million).

(2)

Includes US$193 million of capitalised exploration (2017: US$332 million).

(3)

Includes US$76 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (2017: US$102 million).

(4)

Australia Production Unit includes Macedon, Pyrenees and Minerva.

(5)

Predominantly divisional activities, business development, UK, 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. Petroleum manages the closed mines due to their geographic location.

(7)

Total Petroleum statutory result Revenue excludes US$16 million (2017: US$17 million) revenue related to the Caesar oil pipeline and the Cleopatra gas pipeline. Total Petroleum statutory result Underlying EBITDA includes US$3 million (2017: 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 2018

 

 

Copper

Underlying EBITDA for the 2018 financial year increased by US$3.0 billion to US$6.5 billion.

 

     US$M  

Underlying EBITDA for the year ended 30 June 2017

     3,545  
  

 

 

 

Net price impact(1)

     2,302  

Change in volumes: productivity

     959  

Change in controllable cash costs

     (924

Change in other costs:

  

Exchange rates

     (156

Inflation

     (166

Non-cash(2)

     417  

One-off items(3)

     492  

Other(4)

     53  
  

 

 

 

Underlying EBITDA for the year ended 30 June 2018

     6,522  
  

 

 

 

 

(1)

Average realised price: copper US$3.12/lb (2017: US$2.54/lb).

(2)

Non-cash includes: development stripping capitalisation and depletion.

(3)

One-off items reflects lost volumes from the 44 days of industrial action at Escondida (US$387 million) and the state-wide power outage and resultant shutdown at Olympic Dam (US$105 million) in the 2017 financial year.

(4)

Other includes: fuel and energy; other items (including profit from equity accounted investments).

Copper production for the 2018 financial year increased by 32 per cent to 1,753 kt largely due to a full year of production at Escondida following the industrial action in the previous year, supported by the ramp-up of the Los Colorados Extension (LCE) project and record production at Spence. This more than offset reduced volumes at Olympic Dam as a result of the planned smelter maintenance campaign.

We are currently experiencing an outage at the Olympic Dam acid plant following the failure of several boiler tubes and the impact is being assessed. Remediation and mitigation activities are underway, and underground mining operations continue as normal.

Controllable cash costs increased by US$924 million and include:

 

 

US$288 million – a change in estimated recoverable copper contained in the Escondida sulphide leach pad which benefited costs in the prior period;

 

 

US$176 million – increased labour and contractor costs at Olympic Dam, to support operating stability projects and expansion plans;

 

 

US$126 million – planned drawdown of mined ore inventory at Escondida ahead of LCE commissioning; and

 

 

US$89 million – unfavourable fixed cost dilution at Olympic Dam as a result of lower volumes due to the smelter maintenance campaign, partially offset by a build of run-of-mine (ROM) and anode stock.

Non-cash costs (including development stripping) decreased by US$417 million as a result of:

 

 

increased waste movement at Escondida and Pampa Norte reflected in higher capitalised stripping; and

 

 

increased underground mine capitalisation at Olympic Dam as mining expands into the Southern Mine Area.

Unit costs at our operated copper assets increased by nine per cent to US$1.25 per pound during the 2018 financial year and included a 15 per cent increase at Escondida to US$1.07 per pound. Unfavourable exchange rate movements and general inflation also impacted unit costs in the current year.

Escondida unit cost guidance for the 2019 financial year is expected to increase to less than US$1.15 per pound (based on an exchange rate of USD/CLP 663), reflecting the inclusion of costs to settle labour negotiations. A decrease in average concentrator head grade of more than 15 per cent, consistent with the mine plan, and an increase in the usage of higher cost desalinated water is forecast to be offset by improved labour productivity and maintenance optimisation strategies. A lower mining cost per tonne of material moved is expected as continued improvements in truck runtime, labour productivity and targeted maintenance supports higher throughput from three concentrators.

 

17


Table of Contents

News Release

 

 

Escondida (US$M)

   H2 FY18      H1 FY18      FY18      FY17  

Revenue

     4,452        4,322        8,774        4,544  

Underlying EBITDA

     2,403        2,518        4,921        2,397  

Gross costs

     2,049        1,804        3,853        2,147  

Less: by-product credits

     251        196        447        213  

Less: freight

     73        50        123        60  

Less: treatment and refining charges

     218        210        428        302  

Net costs

     1,507        1,348        2,855        1,572  

Sales (kt, equity share)

     631        578        1,209        767  

Sales (Mlb, equity share)

     1,391        1,273        2,664        1,691  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per pound (US$)(1)

     1.08        1.06        1.07        0.93  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

FY18 based on exchange rates of AUD/USD 0.78 and USD/CLP 625.

During the June 2018 quarter, BHP successfully completed the negotiations with Spence Union No1 (operators and maintenance) and Cerro Colorado Union No2 (supervisors and staff) with the new agreements effective from 1 June 2018 and 1 July 2018 respectively, each valid for 36 months. On 17 August 2018, Escondida successfully completed negotiations with Union No1 and signed a new collective agreement, effective for 36 months from 1 August 2018.

On 19 June 2018, BHP entered into an agreement to sell Cerro Colorado to EMR Capital(x). The transaction is expected to close during the December 2018 quarter, subject to financing and customary closing conditions.

Financial information for Copper for the 2018 and 2017 financial years is presented below.

 

Year ended

30 June 2018

US$M

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

Escondida(1)

     8,774       4,921       1,601       3,320       13,666       997       

Pampa Norte(2)

     1,831       924       298       626       1,967       757       

Antamina(3)

     1,438       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

     13,298       6,874       2,246       4,628       23,679       2,611       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Third party products

     1,427       60       —         60       —         —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Copper

     14,725       6,934       2,246       4,688       23,679       2,611       53        53  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjustment for equity accounted investments(5)

     (1,438     (412     (113     (299     —         (183     —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Copper statutory result

     13,287       6,522       2,133       4,389       23,679       2,428       53        53  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Year ended

30 June 2017

US$M

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

Escondida(1)

     4,544       2,397       996       1,401       14,972       999       

Pampa Norte(2)

     1,401       620       314       306       1,662       213       

Antamina(3)

     1,119       664       114       550       1,265       188       

Olympic Dam

     1,287       284       224       60       6,367       267       

Other(3)(4)

     —         (118     7       (125     (166     5       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Total Copper from Group production

     8,351       3,847       1,655       2,192       24,100       1,672       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Third party products

     1,103       23       —         23       —         —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Copper

     9,454       3,870       1,655       2,215       24,100       1,672       44        44  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjustment for equity accounted investments(5)

     (1,119     (325     (116     (209     —         (188     —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Copper statutory result

     8,335       3,545       1,539       2,006       24,100       1,484       44        44  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(1)

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

(2)

Includes Spence and Cerro Colorado.

(3)

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

(4)

Predominantly comprises divisional activities, greenfield exploration and business development. Includes Resolution.

(5)

Total Copper statutory result Revenue excludes US$1,438 million (2017: US$1,119 million) revenue related to Antamina. Total Copper statutory result Underlying EBITDA includes US$113 million (2017: US$116 million) D&A and US$299 million (2017: US$209 million) net finance costs and taxation expense related to Antamina and Resolution that are also included in Underlying EBIT. Total Copper statutory result Capital expenditure excludes US$183 million (2017: US$188 million) related to Antamina.

 

18


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Iron Ore

Underlying EBITDA for the 2018 financial year decreased by US$147 million to US$8.9 billion.

 

     US$M  

Underlying EBITDA for the year ended 30 June 2017

     9,077  
  

 

 

 

Net price impact(1)

     (432

Change in volumes: productivity

     293  

Change in controllable cash costs

     275  

Change in other costs:

  

Exchange rates

     (14

Inflation

     (87

Other(2)

     (182
  

 

 

 

Underlying EBITDA for the year ended 30 June 2018

     8,930  
  

 

 

 

 

(1)

Average realised price: iron ore US$56.71/wmt, FOB (2017: US$58.42/wmt, FOB).

(2)

Other includes: fuel and energy; non-cash and other items.

Iron ore production for the 2018 financial year increased by three per cent to a record 238 Mt(Xi) as a result of improved productivity and stability across the supply chain, and production records at Jimblebar and Mining Area C.

Controllable cash costs decreased by US$275 million reflecting continued reductions in labour and maintenance costs through improved equipment productivity and maintenance strategies.

WAIO unit costs declined by two per cent to US$14.26 per tonne (or US$13.03 per tonne on a C1 basis excluding third party royalties(2)) despite the impact of a stronger Australian dollar. In local currency terms, WAIO unit costs declined by five per cent.

Unit cost guidance for the 2019 financial year remains broadly unchanged at less than US$14 per tonne (based on an exchange rate of AUD/USD 0.75). A program of work to optimise maintenance schedules across our supply chain and improve port reliability and performance is planned for the September 2018 quarter and is expected to negatively impact unit costs in this period. In the medium term, we expect to lower our unit costs to less than US$13 per tonne.

 

WAIO unit costs (US$M)

   H2 FY18      H1 FY18      FY2018      FY2017  

Revenue

     7,479        7,117        14,596        14,395  

Underlying EBITDA

     4,604        4,265        8,869        9,001  

Gross costs

     2,875        2,852        5,727        5,394  

Less: freight

     650        626        1,276        983  

Less: royalties

     571        504        1,075        1,035  

Net costs

     1,654        1,722        3,376        3,376  

Sales (kt, equity share)

     121,228        115,543        236,771        231,208  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne (US$)(1)

     13.64        14.90        14.26        14.60  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne on a C1 basis excluding third party royalties (US$)(2)

     12.41        13.68        13.03        13.36  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

FY18 based on an average exchange rate of AUD/USD 0.78.

(2)

Excludes third party royalties of US$0.74 per tonne (2017: US$0.72 per tonne), exploration expenses, depletion of production stripping, demurrage, exchange rate gains/losses, net inventory movements and other income.

On 14 June 2018, the BHP Board approved US$2.9 billion (BHP share; US$3.4 billion 100 per cent) in capital expenditure for the South Flank project. The capital cost fits within WAIO’s previously indicated average annual sustaining capital expenditure of approximately US$4 per tonne over the next five years, with actual sustaining capital expenditure highly variable in any given year during the development of South Flank. The South Flank project will fully replace production from the 80 Mtpa (100 per cent basis) Yandi mine, with first ore targeted in the 2021 calendar year. South Flank will contribute to an increase in WAIO’s average iron grade from 61 per cent to 62 per cent, and the overall proportion of lump from 25 per cent to approximately 35 per cent. It is expected to have a strip ratio in line with the WAIO average.

 

19


Table of Contents

News Release

 

 

Financial information for Iron Ore for the 2018 and 2017 financial years is presented below.

 

Year ended

30 June 2018

US$M

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

Western Australia Iron Ore

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

Samarco(1)

     —          —          —          —          (1,278     —          

Other(2)

     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(3)

     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  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Year ended

30 June 2017

US$M

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

Western Australia Iron Ore

     14,395        9,001        1,873        7,128        20,040       716        

Samarco(1)

     —          —          —          —          (1,049     —          

Other(2)

     148        53        7        46        184       89        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Total Iron Ore from Group production

     14,543        9,054        1,880        7,174        19,175       805        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

       

Third party products(3)

     81        23        —          23        —         —          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore

     14,624        9,077        1,880        7,197        19,175       805        94        70  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjustment for equity accounted investments

     —          —          —          —          —         —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Iron Ore statutory result

     14,624        9,077        1,880        7,197        19,175       805        94        70  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

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.

(2)

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

(3)

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

 

20


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Coal

Underlying EBITDA for the 2018 financial year increased by US$613 million to US$4.4 billion.

 

     US$M  

Underlying EBITDA for the year ended 30 June 2017

     3,784  
  

 

 

 

Net price impact(1)

     1,095  

Change in volumes: productivity

     (189

Change in controllable cash costs

     (430

Change in other costs:

  

Exchange rates

     (55

Inflation

     (77

One-off items(2)

     227  

Other(3)

     42  
  

 

 

 

Underlying EBITDA for the year ended 30 June 2018

     4,397  
  

 

 

 

 

(1)

Average realised price: hard coking coal US$194.59/t (2017: US$179.83/t); weak coking coal US$131.70/t (2017: US$121.32/t); thermal coal US$86.94/t (2017: US$74.67/t).

(2)

One-off items reflects: impact from lower volumes following Cyclone Debbie in the 2017 financial year.

(3)

Other includes: fuel and energy; ceased and sold operations; other items (including profit from equity accounted investments).

Metallurgical coal production increased by seven per cent to a record 43 Mt(xi) as record stripping performance, increased truck hours and higher wash-plant utilisation from low-cost debottlenecking activities offset lower volumes from Broadmeadow and Blackwater (negative impact of US$263 million). Operational conditions at Broadmeadow and Blackwater improved significantly in the June 2018 quarter. One-off items reflects the impact of lower volumes as a result of Cyclone Debbie in the prior year.

Energy coal production was flat at 29 Mt(xi) as a strong performance at New South Wales Energy Coal (NSWEC) was partially offset by the impacts of wet weather and higher strip ratio areas being mined at Cerrejón.

Controllable cash costs increased by US$430 million and include:

 

 

US$150 million – unfavourable fixed cost dilution from reduced volumes at Broadmeadow and Blackwater;

 

 

US$109 million – additional contractor stripping fleet costs and debottlenecking activities;

 

 

US$63 million – increased maintenance costs due to a higher number of planned shutdowns and major component replacements; and

 

 

US$45 million – increased contractor costs from the re-opening of the Ayredale Pit at NSWEC.

Queensland Coal unit costs increased by 14 per cent to US$68 per tonne, including the impact of a stronger Australian dollar. Unit cost guidance for the 2019 financial year is expected to be between US$68 and US$72 per tonne (based on an exchange rate of AUD/USD 0.75) as a result of an eight per cent increase in strip ratios, higher diesel prices, local inflationary pressures and an extensive maintenance program planned for the first half of the 2019 financial year. In the medium term, we expect to lower our unit costs to approximately US$57 per tonne.

NSWEC unit costs(vi) increased by 12 per cent to US$46 per tonne, including the impact of a stronger Australian dollar. Unit cost guidance for the 2019 financial year is expected to be between US$43 and US$48 per tonne (based on an exchange rate of AUD/USD 0.75) reflecting mine progression through geological constraints from the monocline transition, higher strip ratios and diesel prices, as well as increased contract mining costs. Geological constraints are expected to continue into the medium term, with unit costs forecast to remain at approximately US$45 per tonne during this period.

 

Queensland Coal (US$M)

   H2 FY18      H1 FY18      FY18      FY17  

Revenue

     4,038        3,350        7,388        6,316  

Underlying EBITDA

     2,143        1,504        3,647        3,256  

Gross costs

     1,895        1,846        3,741        3,060  

Less: freight

     86        64        150        111  

Less: royalties

     419        321        740        631  

Net costs

     1,390        1,461        2,851        2,318  

Sales (kt, equity share)

     21,383        20,516        41,899        38,846  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost per tonne (US$)(1)

     65.00        71.21        68.04        59.67  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

FY18 based on an average exchange rate of AUD/USD 0.78.

 

21


Table of Contents

News Release

 

 

On 30 May 2018, BHP announced it has entered into an arrangement to sell the Gregory Crinum mine, which was placed into care and maintenance in January 2016, to Sojitz Corporation(xii). Completion of the sale is subject to the fulfilment of conditions precedent including customary regulatory approvals, which could take several months.

Financial information for Coal for the 2018 and 2017 financial years is presented below.

 

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 Mexico

     —         —         —         —         —         —         

New South Wales Energy Coal(2)

     1,605       652       149       503       994       18       

Colombia(2)

     818       395       95       300       883       54       

Other(3)

     —         (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(4)(5)

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal statutory result

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Year ended

30 June 2017

US$M

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

Queensland Coal

     6,316       3,256       605       2,651       8,581       235       

New Mexico(1)

     3       (6     3       (9     —         1       

New South Wales Energy Coal(2)

     1,351       525       154       371       1,080       11       

Colombia(2)

     749       363       96       267       873       34       

Other(3)

     8       (57     4       (61     (398     —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Total Coal from Group production

     8,427       4,081       862       3,219       10,136       281       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

Third party products

     —         —         —         —         —         —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal

     8,427       4,081       862       3,219       10,136       281       9        9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Adjustment for equity accounted investments(4)(5)

     (849     (297     (128     (169     —         (35     —          —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total Coal statutory result

     7,578       3,784       734       3,050       10,136       246       9        9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(1)

Includes the Navajo mine (divested in July 2016).

(2)

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’s share.

(3)

Predominantly comprises divisional activities, IndoMet Coal (divested in October 2016) and ceased operations.

(4)

Total Coal statutory result Revenue excludes US$818 million (2017: US$749 million) revenue related to Cerrejón. Total Coal statutory result Underlying EBITDA includes US$95 million (2017: US$96 million) D&A and US$108 million (2017: US$116 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$54 million (2017: US$34 million) related to Cerrejón.

(5)

Total Coal statutory result Revenue excludes US$106 million (2017: US$100 million) revenue related to Newcastle Coal Infrastructure Group. Total Coal statutory result excludes US$83 million (2017: US$85 million) Underlying EBITDA, US$33 million (2017: US$32 million) D&A and US$50 million (2017: US$53 million) Underlying EBIT related to Newcastle Coal Infrastructure Group until future profits exceed accumulated losses. Total Coal statutory result Capital expenditure excludes US$ nil million (2017: US$1 million) related to Newcastle Coal Infrastructure Group.

(6)

Queensland Coal net operating assets have been restated to reflect ceased operations in Other on a consistent basis with the 2018 financial year. There is no change to the overall net operating assets position.

 

22


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

Group and unallocated items

Underlying EBITDA loss for Group and unallocated items decreased by US$166 million to US$7 million in the 2018 financial year, as a strong performance at Nickel West more than offset unfavourable exchange rate impacts on corporate provision balances.

Nickel West’s Underlying EBITDA increased from US$44 million to US$291 million for the 2018 financial year, predominantly due to higher prices, and improved mill utilisation and concentrator recoveries which supported record metal production.

 

23


Table of Contents

News Release

 

 

The financial information set out on pages 29 to 48 for the year ended 30 June 2018 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2017 financial statements contained within the Annual Report of the Group. 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 2018 financial year compared with the 2017 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 other financial measures (each of which is calculated with reference to IFRS measures) to assess our performance, which are defined below and have been calculated on a combined continuing and discontinued operations basis:

 

   

Free cash flow – comprises net operating cash flows less net investing cash flows.

 

   

Gearing ratio – represents the ratio of net debt to net debt plus net assets.

 

   

Net debt – comprises Interest bearing liabilities less Cash and cash equivalents for the Group at the reporting date.

 

(ii)

We use various alternate performance measures to reflect our underlying performance. We believe these alternate performance measures provide useful information, but should not be considered as an indication of, or as a substitute for, Attributable profit and other statutory measures as an indicator of actual operating performance or as an alternative to cash flow as a measure of liquidity.

We consider Underlying attributable profit to be a key measure that provides insight on the amount of profit available to distribute to shareholders, which aligns to our purpose as outlined in Our Charter. Underlying attributable profit is also the key performance indicator against which short-term incentive outcomes for our senior executives are measured and, in our view, is a relevant measure to assess the financial performance of BHP for this purpose.

Underlying EBITDA is the key alternate performance measure that management uses internally to assess the performance of the Group’s segments and make decisions on the allocation of resources. In the Group’s view, this is more relevant to capital intensive industries with long-life assets.

Underlying attributable profit and Underlying EBITDA have been reconciled back to the appropriate statutory measure on page 8.

 

   

Underlying attributable profit is Profit after taxation attributable to owners of the BHP Group (also referred to as ‘Attributable profit’) excluding any exceptional items attributable to the owners of the BHP Group.

 

   

Underlying EBITDA is Earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, and exceptional items. Underlying EBITDA includes net finance costs and taxation expense, depreciation, amortisation and impairments related to equity accounted investments of US$618 million (2017: US$540 million) and excludes exceptional items of US$509 million (2017: US$172 million) related to share of profit/(loss) from equity accounted investments.

 

   

Underlying EBIT is Underlying EBITDA, including depreciation, amortisation and impairments of US$6,621 million for the 2018 financial year (2017: US$6,160 million). Underlying EBIT includes net finance costs and taxation expense of US$407 million (2017: US$325 million) related to equity accounted investments and excludes exceptional items of US$509 million (2017: US$172 million) related to share of profit/(loss) from equity accounted investments.

 

(iii)

Further alternate performance measures are defined as follows:

 

   

Adjusted effective tax rate – comprises Total taxation expense excluding exceptional items and exchange rate movements included in taxation expense divided by Profit before taxation and exceptional items. Management believes this measure provides useful information regarding the tax impacts from underlying operations.

 

   

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

 

   

Underlying basic earnings per share – represents Underlying attributable profit divided by the weighted average number of basic shares.

 

   

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

 

   

Underlying return on capital employed (ROCE) – represents annualised attributable profit after tax excluding exceptional items and net finance costs (after tax) divided by average capital employed. Average capital employed is calculated as the average of net assets less net debt for the last two financial years.

The method of calculation of the Principal factors that affect Underlying EBITDA is as follows:

References to operation/s in each Principal factor excludes equity accounted investments which are included within ‘Other’.

 

   

Change in sales prices – Change in average realised price for each operation from the corresponding period to the current period, multiplied by current period volumes.

 

   

Price-linked costs – Change in price-linked costs for each operation from the corresponding period to the current period, multiplied by current period volumes.

 

   

Productivity volumes – Change in volumes for each operation not included in the Growth category from the corresponding period to the current period, multiplied by the prior year Underlying EBITDA margin. Used to determine changes in productivity in footnote (iv).

 

   

Growth volumes – Volume – Growth comprises Underlying EBITDA for operations that are new or acquired in the current period minus Underlying EBITDA for operations that are new or acquired in the corresponding period, change in volumes for operations identified as a Growth project from the corresponding period to the current period multiplied by the prior year Underlying EBITDA margin, and change in volume for our petroleum assets from the corresponding period to the current period multiplied by the prior year Underlying EBITDA margin.

 

24


Table of Contents

BHP Results for the year ended 30 June 2018

 

 

   

Controllable cash costs – comprises operating cash costs and exploration and business development costs. Management believes this measure provides useful information regarding the Group’s financial performance because it considers these expenses to be the principal operating and overhead expenses that are most directly under the Group’s control. Used to determine changes in productivity in footnote (iv).

 

   

Operating cash costs – Change in total costs, other than price-linked costs, exchange rates, inflation on costs, fuel and energy costs, non-cash costs and one-off items as defined below for each operation from the corresponding period to the current period.

 

   

Exploration and business development – Exploration and business development expense in the current period minus exploration and business development expense in the corresponding period.

 

   

Exchange rates – Change in exchange rate multiplied by current period local currency revenue and expenses. The majority of the Company’s selling prices are denominated in US dollars and so there is little impact of exchange rate changes on Revenue.

 

   

Inflation – Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold operations and expenses in new and acquired operations.

 

   

Fuel and energy – Fuel and energy expense in the current period minus fuel and energy expense in the corresponding period.

 

   

Non-cash - Includes non-cash items mainly depletion of stripping capitalised.

 

   

One-off items – Change in costs exceeding a pre-determined threshold associated with an unexpected event that had not occurred in the last two years and is not reasonably likely to occur within the next two years.

 

   

Asset sales – Profit/loss on the sale of assets or operations in the current period minus profit/loss on sale in the corresponding period.

 

   

Ceased and sold operations – Underlying EBITDA for operations that ceased or were sold in the current period minus Underlying EBITDA for operations that ceased or were sold in the corresponding period.

 

   

Other – Share of operating profit from equity accounted investments for the period minus share of operating profit from equity accounted investments in the corresponding period and variances not explained by the above factors.

 

(iv)

Represents changes in controllable cash costs (refer to footnote (iii)), changes in volumes attributed to productivity (refer to definition of ‘productivity volumes’ in footnote (iii)) and changes in capitalised exploration. Changes in capitalised exploration is capitalised exploration in the current period less capitalised exploration in the prior period.

 

(v)

Capital and exploration expenditure represents purchases of property, plant and equipment plus exploration expenditure from the Consolidated Cash Flow Statement and includes purchases of property, plant and equipment plus exploration expenditure from discontinued operations. Refer to note 9 ‘Discontinued operations’ for further information.

 

(vi)

Conventional petroleum unit cash costs exclude inventory movements, freight, third party, exploration and development and evaluation expense; WAIO, Queensland Coal and NSWEC unit cash costs exclude freight and royalties; Escondida unit cash costs include the grade decline and exclude freight and treatment and refining charges and are net of by-product credits. 2019 financial year and medium-term unit cost guidance are based on exchange rates of AUD/USD 0.75 and USD/CLP 663. Other forward-looking guidance is based on internal exchange rate assumptions.

 

(vii)

Copper equivalent production based on 2017 financial year average realised prices.

 

(viii)

Balances relating to hedging derivatives of external debt included within net other financial assets/(liabilities) for the year ended 30 June 2018 was US$(0.8) billion (30 June 2017: US$(0.7) billion). The movement of US$0.1 billion primarily relates to a non-cash fair value adjustment, which offsets in net debt.

 

(ix)

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

 

(x)

On 19 June 2018, BHP announced it has entered into an agreement to sell the Cerro Colorado copper mine in Chile to EMR Capital. The total cash consideration consists of US$230 million to be paid to BHP after the closing of the transaction, plus approximately US$40 million in proceeds from the post-closing sale of certain copper inventory, and a contingent payment of up to US$50 million to be paid in the future, depending upon copper price performance.

 

(xi)

Iron ore production and guidance excludes production from Samarco; Energy Coal production and guidance excludes production from New Mexico Coal following divestments; Metallurgical coal production and guidance excludes production from Haju following the divestment of IndoMet Coal.

 

(xii)

On 30 May 2018, BHP Billiton Mitsubishi Alliance (BMA) announced it has entered into an agreement to sell the Gregory Crinum coal mine in central Queensland to Sojitz Corporation for A$100 million (100 per cent basis). In addition to the sale of the mine to Sojitz, BHP will be providing appropriate funding for rehabilitation of existing areas of disturbance at the site, with all rehabilitation liabilities transferred to Sojitz on completion.

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.

 

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News Release

 

 

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 alternate performance measures) and other measures including Underlying attributable profit, Underlying EBITDA, Underlying EBIT, Adjusted effective tax rate, Controllable cash costs, 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.

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 Billiton Limited, BHP Billiton 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 2017 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.

 

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BHP Results for the year ended 30 June 2018

 

 

Further information on BHP can be found at: bhp.com

 

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BHP

BHP

Financial Information

Year ended

30 June 2018


Table of Contents

Financial Information

 

 

Contents   
Financial Information    Page  

Consolidated Income Statement for the year ended 30 June 2018

     31  

Consolidated Statement of Comprehensive Income for the year ended 30  June 2018

     31  

Consolidated Balance Sheet as at 30 June 2018

     32  

Consolidated Cash Flow Statement for the year ended 30 June 2018

     33  

Consolidated Statement of Changes in Equity for the year ended 30  June 2018

     34  

Notes to the Financial Information

     35  

The financial information included in this document for the year ended 30 June 2018 is unaudited and has been derived from the draft financial report of the Group for the year ended 30 June 2018. The financial information does not constitute the Group’s full statutory accounts for the year ended 30 June 2018, 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 29 to 48 for the year ended 30 June 2018 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2017 financial statements contained within the Annual Report of the Group.

The comparative figures for the financial years ended 30 June 2017 and 30 June 2016 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. The financial information for the years ended 30 June 2017 and 30 June 2016 has been restated for the effects of the application of IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ following the announcement of the sale of the Onshore US assets on 27 July 2018. The nature of each change reflected in the restated financial information is as follows:

All income and expense items relating to the Onshore US assets have been removed from the individual line items in the Consolidated Income Statement. The post-tax loss of the Onshore US assets is presented as a single amount in the line item entitled ‘Loss after taxation from Discontinued operations’; and

All cash flows and other items relating to the Onshore US assets have been removed from the individual line items in the Consolidated Cash Flow Statement. The net cash flows attributable to operating, investing and financing activities of the Onshore US assets are each disclosed in single amounts in each section of the Consolidated Cash Flow Statement.

The Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity for these periods are not required to be restated.

 

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BHP Financial Information Year ended 30 June 2018

 

 

Consolidated Income Statement for the year ended 30 June 2018

 

                2017     2016  
          2018     US$M     US$M  
     Notes    US$M     Restated     Restated  

Continuing operations

         

Revenue

        43,638       36,135       28,567  

Other income

        247       662       432  

Expenses excluding net finance costs

        (28,036     (24,515     (24,091

Profit/(loss) from equity accounted investments, related impairments and expenses

   2      147       272       (2,104
     

 

 

   

 

 

   

 

 

 

Profit from operations

        15,996       12,554       2,804  
     

 

 

   

 

 

   

 

 

 

Financial expenses

        (1,567     (1,560     (1,150

Financial income

        322       143       137  
     

 

 

   

 

 

   

 

 

 

Net finance costs

   3      (1,245     (1,417     (1,013
     

 

 

   

 

 

   

 

 

 

Profit before taxation

        14,751       11,137       1,791  
     

 

 

   

 

 

   

 

 

 

Income tax expense

        (6,879     (4,276     (1,858

Royalty-related taxation (net of income tax benefit)

        (128     (167     (245
     

 

 

   

 

 

   

 

 

 

Total taxation expense

   4      (7,007     (4,443     (2,103
     

 

 

   

 

 

   

 

 

 

Profit/(loss) after taxation from Continuing operations

        7,744       6,694       (312
     

 

 

   

 

 

   

 

 

 

Discontinued operations

         

Loss after taxation from Discontinued operations

   9      (2,921     (472     (5,895
     

 

 

   

 

 

   

 

 

 

Profit/(loss) after taxation from Continuing and Discontinued operations

        4,823       6,222       (6,207
     

 

 

   

 

 

   

 

 

 

Attributable to non-controlling interests

        1,118       332       178  

Attributable to BHP shareholders

        3,705       5,890       (6,385
     

 

 

   

 

 

   

 

 

 

Basic earnings/(loss) per ordinary share (cents)

   6      69.6       110.7       (120.0

Diluted earnings/(loss) per ordinary share (cents)

   6      69.4       110.4       (120.0

Basic earnings/(loss) from Continuing operations per ordinary share (cents)

   6      125.0       119.8       (10.2

Diluted earnings/(loss) from Continuing operations per ordinary share (cents)

   6      124.6       119.5       (10.2

The accompanying notes form part of this financial information.

Consolidated Statement of Comprehensive Income for the year ended 30 June 2018

 

     2018     2017     2016  
     US$M     US$M     US$M  

Profit/(loss) after taxation from Continuing and Discontinued operations

     4,823       6,222       (6,207

Other comprehensive income

      

Items that may be reclassified subsequently to the income statement:

      

Available for sale investments:

      

Net valuation gains/(losses) taken to equity

     11       (1     2  

Net valuation losses transferred to the income statement

     —         —         1  

Cash flow hedges:

      

Gains/(losses) taken to equity

     82       351       (566

(Gains)/losses transferred to the income statement

     (215     (432     664  

Exchange fluctuations on translation of foreign operations taken to equity

     2       (1     (1

Exchange fluctuations on translation of foreign operations transferred to income statement

     —         —         (10

Tax recognised within other comprehensive income

     36       24       (30
  

 

 

   

 

 

   

 

 

 

Total items that may be reclassified subsequently to the income statement

     (84     (59     60  
  

 

 

   

 

 

   

 

 

 

Items that will not be reclassified to the income statement:

      

Remeasurement gains/(losses) on pension and medical schemes

     1       36       (20

Tax recognised within other comprehensive income

     (14     (26     (17
  

 

 

   

 

 

   

 

 

 

Total items that will not be reclassified to the income statement

     (13     10       (37
  

 

 

   

 

 

   

 

 

 

Total other comprehensive (loss)/income

     (97     (49     23  
  

 

 

   

 

 

   

 

 

 

Total comprehensive income/(loss)

     4,726       6,173       (6,184
  

 

 

   

 

 

   

 

 

 

Attributable to non-controlling interests

     1,118       332       176  

Attributable to BHP shareholders

     3,608       5,841       (6,360

The accompanying notes form part of this financial information.

 

31


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Financial Information

 

 

Consolidated Balance Sheet as at 30 June 2018

 

          2018     2017  
     Notes    US$M     US$M  

ASSETS

       

Current assets

       

Cash and cash equivalents

        15,871       14,153  

Trade and other receivables

        3,096       2,836  

Other financial assets

        200       72  

Inventories

        3,764       3,673  

Assets held for sale

   9      11,939       —    

Current tax assets

        106       195  

Other

        154       127  
     

 

 

   

 

 

 

Total current assets

        35,130       21,056  
     

 

 

   

 

 

 

Non-current assets

       

Trade and other receivables

        180       803  

Other financial assets

        999       1,281  

Inventories

        1,141       1,095  

Property, plant and equipment

        67,182       80,497  

Intangible assets

        778       3,968  

Investments accounted for using the equity method

        2,473       2,448  

Deferred tax assets

   5      4,041       5,788  

Other

        69       70  
     

 

 

   

 

 

 

Total non-current assets

        76,863       95,950  
     

 

 

   

 

 

 

Total assets

        111,993       117,006  
     

 

 

   

 

 

 

LIABILITIES

       

Current liabilities

       

Trade and other payables

        5,977       5,551  

Interest bearing liabilities

        2,736       1,241  

Liabilities held for sale

   9      1,222       —    

Other financial liabilities

        138       394  

Current tax payable

        1,773       2,119  

Provisions

        2,025       1,959  

Deferred income

        118       102  
     

 

 

   

 

 

 

Total current liabilities

        13,989       11,366  
     

 

 

   

 

 

 

Non-current liabilities

       

Trade and other payables

        3       5  

Interest bearing liabilities

        24,069       29,233  

Other financial liabilities

        1,093       1,106  

Non-current tax payable

        137       —    

Deferred tax liabilities

   5      3,472       3,765  

Provisions

        8,223       8,445  

Deferred income

        337       360  
     

 

 

   

 

 

 

Total non-current liabilities

        37,334       42,914  
     

 

 

   

 

 

 

Total liabilities

        51,323       54,280  
     

 

 

   

 

 

 

Net assets

        60,670       62,726  
     

 

 

   

 

 

 

EQUITY

       

Share capital – BHP Billiton Limited

        1,186       1,186  

Share capital – BHP Billiton Plc

        1,057       1,057  

Treasury shares

        (5     (3

Reserves

        2,290       2,400  

Retained earnings

        51,064       52,618  
     

 

 

   

 

 

 

Total equity attributable to BHP shareholders

        55,592       57,258  

Non-controlling interests

        5,078       5,468  
     

 

 

   

 

 

 

Total equity

        60,670       62,726  
     

 

 

   

 

 

 

The accompanying notes form part of this financial information.

 

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BHP Financial Information Year ended 30 June 2018

 

 

Consolidated Cash Flow Statement for the year ended 30 June 2018

 

           2017     2016  
     2018     US$M     US$M  
     US$M     Restated     Restated  

Operating activities

      

Profit before taxation

     14,751       11,137       1,791  

Adjustments for:

      

Depreciation and amortisation expense

     6,288       6,184       6,210  

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

     333       193       186  

Net finance costs

     1,245       1,417       1,013  

(Profit)/loss from equity accounted investments, related impairments and expenses

     (147     (272     2,104  

Other

     597       194       467  

Changes in assets and liabilities:

      

Trade and other receivables

     (662     267       1,387  

Inventories

     (182     (687     521  

Trade and other payables

     719       512       (1,272

Provisions and other assets and liabilities

     7       (333     (316
  

 

 

   

 

 

   

 

 

 

Cash generated from operations

     22,949       18,612       12,091  

Dividends received

     709       636       301  

Interest received

     290       164       128  

Interest paid

     (1,177     (1,148     (829

Settlement of cash management related instruments

     (292     (140     —    

Net income tax and royalty-related taxation refunded

     17       337       435  

Net income tax and royalty-related taxation paid

     (4,935     (2,585     (2,286
  

 

 

   

 

 

   

 

 

 

Net operating cash flows from Continuing operations

     17,561       15,876       9,840  
  

 

 

   

 

 

   

 

 

 

Net operating cash flows from Discontinued operations

     900       928       785  
  

 

 

   

 

 

   

 

 

 

Net operating cash flows

     18,461       16,804       10,625  
  

 

 

   

 

 

   

 

 

 

Investing activities

      

Purchases of property, plant and equipment

     (4,979     (3,697     (5,707

Exploration expenditure

     (874     (966     (752

Exploration expenditure expensed and included in operating cash flows

     641       610       419  

Net investment and funding of equity accounted investments

     204       (234     (217

Proceeds from sale of assets

     89       529       93  

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

     —         187       166  

Other investing

     (141     (153     (20
  

 

 

   

 

 

   

 

 

 

Net investing cash flows from Continuing operations

     (5,060     (3,724     (6,018
  

 

 

   

 

 

   

 

 

 

Net investing cash flows from Discontinued operations

     (861     (437     (1,227
  

 

 

   

 

 

   

 

 

 

Net investing cash flows

     (5,921     (4,161     (7,245
  

 

 

   

 

 

   

 

 

 

Financing activities

      

Proceeds from interest bearing liabilities

     528       1,577       7,239  

(Settlements)/proceeds from debt related instruments

     (218     36       156  

Repayment of interest bearing liabilities

     (4,188     (7,114     (2,781

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

     (171     (108     (106

Dividends paid

     (5,220     (2,921     (4,130

Dividends paid to non-controlling interests

     (1,582     (575     (62
  

 

 

   

 

 

   

 

 

 

Net financing cash flows from Continuing operations

     (10,851     (9,105     316  
  

 

 

   

 

 

   

 

 

 

Net financing cash flows from Discontinued operations

     (40     (28     (32
  

 

 

   

 

 

   

 

 

 

Net financing cash flows

     (10,891     (9,133     284  
  

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents from Continuing operations

     1,650       3,047       4,138  

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

     (1     463       (474

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

     14,108       10,276       6,613  

Foreign currency exchange rate changes on cash and cash equivalents

     56       322       (1
  

 

 

   

 

 

   

 

 

 

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

     15,813       14,108       10,276  
  

 

 

   

 

 

   

 

 

 

The accompanying notes form part of this financial information.

 

33


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Financial Information

 

 

Consolidated Statement of Changes in Equity for the year ended 30 June 2018

 

    Attributable to BHP shareholders              
    Share capital     Treasury shares                 Total equity              
    BHP     BHP     BHP     BHP                 attributable to     Non-        
    Billiton     Billiton     Billiton     Billiton           Retained     BHP     controlling     Total  

US$M

  Limited     Plc     Limited     Plc     Reserves     earnings     shareholders     interests     equity  

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  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 1 July 2015

    1,186       1,057       (19     (57     2,557       60,044       64,768       5,777       70,545  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive loss

    —         —         —         —         60       (6,420     (6,360     176       (6,184
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners: