Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Merger or Acquisition (March 2015)
39 slides from Bhp's merger presentation, Mar 17, 2015
Slide 1: Demerger of South32 unlocks shareholder value presentation (ASX cover letter)
For personal use only BHP Billiton Limited BHP Billiton Plc 171 Collins Street Neathouse Place Melbourne Victoria 3000 Australia London SW1V 1LH UK GPO BOX 86 Tel +44 20 7802 4000 Melbourne Victoria 3001 Australia Fax + 44 20 7802 4111 Tel +61 1300 55 47 57 Fax +61 3 9609 3015 bhpbilliton.com bhpbil
Slide 2: Demerger of South32 unlocks shareholder value
Escondida For personal use only Demerger of South32 unlocks shareholder value Andrew Mackenzie Chief Executive Officer 17 March 2015
Slide 3: Important information and disclaimer
Important information and disclaimer For personal use only Nature of this presentation The information contained in this presentation does not constitute a prospectus or other listing document in relation to BHP Billiton or the new company proposed to be demerged from BHP Billiton (‘South32’) in any
Slide 4: Important information and disclaimer (continued)
Important information and disclaimer (continued) For personal use only BHP Billiton non-IFRS financial information BHP Billiton results are reported under International Financial Reporting Standards (IFRS) including Underlying EBIT and Underlying EBITDA which are used to measure segment performance.
Slide 5: Important information and disclaimer (continued)
Important information and disclaimer (continued) For personal use only Mineral and Coal Resources This presentation includes information on FY14 Mineral or Coal Resources as compiled by: P. Whitehouse (MAusIMM) – WAIO and Samarco JV; M. Williams (MAusIMM) – Escondida, Pampa Norte, Antamina, Olympic
Slide 6: The demerger will create two great companies
The demerger will create two great companies For personal use only • Focused on upstream, Tier 1 assets, we remain well diversified, resource long and option rich • Core portfolio of 19 assets with a smaller geographical spread and a higher proportion of common characteristics • Simplification facil
Slide 7: BHP Billiton's portfolio will be simpler and more focused on its Tier 1 assets
BHP Billiton’s portfolio will be simpler and more focused on its Tier 1 assets For personal use only Today Core portfolio1 Total assets 41 19 Operated mineral assets 20 7 Operated petroleum assets 10 5 Countries 13 8 Continents 6 3 Jansen project Onshore US Shenzi; Mad Dog; Atlantis Cerrejón Angostu
Slide 8: The demerger is expected to deliver significant benefits
The demerger is expected to deliver significant benefits For personal use only • With a simpler portfolio, BHP Billiton will A simple portfolio3 streamline its organisational model by (copper equivalent production per employee, kt) aggregating functional support and increasing 240 the utilisation of
Slide 9: A more focused portfolio can deliver stronger growth and margins
A more focused portfolio can deliver stronger growth and margins For personal use only • Our core portfolio has generated stronger Higher margins with no material change in volatility growth and margins compared with the (Underlying EBIT margin2,3, %) broader BHP Billiton portfolio over the last 60
Slide 10: An appropriate capital structure for both companies
An appropriate capital structure for both companies For personal use only • South32’s capital structure was carefully South32 pro forma balance sheet items1 considered (31 December 2014, US$ billion) 2.0 – nature and scale of business US$2.2 billion – strategic objectives and access to capital – tar
Slide 11: BHP Billiton's balance sheet will remain strong
BHP Billiton’s balance sheet will remain strong For personal use only • Our strong balance sheet and solid A credit BHP Billiton balance sheet strength rating are fundamental enablers of our (net debt, US$ billion) strategy 30 – following the announcement of the 25 demerger Standard & Poor’s and Moo
Slide 12: Any dividends from South32 will represent additional cash returns to shareholders
Any dividends from South32 will represent additional cash returns to shareholders For personal use only • We remain committed to our policy to steadily We aim to maintain or grow the base dividend increase or at least maintain our base (dividends determined, US cents per share) dividend at each half
Slide 13: A demerger is the preferred approach to achieve simplification
A demerger is the preferred approach to achieve simplification For personal use only • A demerger was selected as the preferred separation approach from the multiple alternative structures considered • The Board believes the selected demerger is more likely to maximise value for shareholders than ot
Slide 14: Advantages of the demerger outweigh the disadvantages and risks
Advantages of the demerger outweigh the disadvantages and risks For personal use only • The Board believes that the demerger has the potential to create more shareholder value than if the South32 assets were to remain within BHP Billiton – even greater focus on our core portfolio to drive substantia
Slide 15: Creating two great companies
Creating two great companies For personal use only • Our strategy has remained unchanged for over a decade and enabled us to deliver superior returns through the cycle • Ongoing simplification of the portfolio has been, and for BHP Billiton will continue to be, a key driver of delivering and sustain
Slide 16: For personal use only
cdl bhpbilliton resourcing the future
Slide 17: Mineral or Coal Resource classifications
Mineral or Coal Resource classifications For personal use only Mineral or Coal Resources (Mt) ROM conversion ROM Resource BHP Asset factors production life Billiton Measured Indicated Inferred (%) (Mt) (years) interest (%) Iron ore1 WAIO 2,600 @ 60.0% Fe 5,600 @ 59.8% Fe 15,000 @ 59.0% Fe 66 250 60
Slide 18: Petroleum Inventory classifications
Petroleum Inventory classifications For personal use only Petroleum Reserves and Contingent Resources 2P+2C Resource life (years) and detail by category 2P/2C 1P 2P 1C 2C FY14 production (years) (years) (years) (years) (years) (MMboe) Macedon 15.3 12.7 14.6 0.4 0.7 5.5 Pyrenees 8.6 5.1 7.8 0.3 0.8 7
Slide 19: For personal use only
cdl bhpbilliton resourcing the future
Slide 20: Making a difference from the ground up
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx For personal use only MAKING A DIFFERENCE FROM THE GROUND UP GRAHAM KERR, CEO ELECT MARCH 2015
Slide 21: Important information and disclaimer
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx IMPORTANT INFORMATION AND DISCLAIMER Nature of this presentation The information contained in this presentation does not constitute a prospectus or other listing document in relati
Slide 22: Important information and disclaimer (continued)
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC IMPORTANT INFORMATION AND DISCLAIMER Submission_v4.pptx (CONTINUED) BHP Billiton non-IFRS financial information BHP Billiton results which have been published in the Disclosure Documents are reported
Slide 23: A new company from the ground up
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A NEW COMPANY FROM THE GROUND UP • An experienced board and management team with clearly defined strategic priorities For personal use only • A cash generator with high quality met
Slide 24: An experienced board and management team
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx AN EXPERIENCED BOARD AND MANAGEMENT TEAM Board1 For personal use only Keith Rumble David Crawford Xolani Mkhwanazi Independent Non-executive Chairman and Independent Non-executive
Slide 25: Clearly defined strategic priorities
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx CLEARLY DEFINED STRATEGIC PRIORITIES • Establish a distinctive, powerful culture For personal use only and identity Cannington, Australia Metalloys, Manganese South Africa • Enhanc
Slide 26: A focus on sustainability will be a source of future competitive advantage
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC A FOCUS ON SUSTAINABILITY WILL BE A SOURCE Submission_v4.pptx OF FUTURE COMPETITIVE ADVANTAGE • Aim to continuously improve safety For personal use only performance South Africa Aluminium, South Afri
Slide 27: A globally diversified metals and mining company
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A GLOBALLY DIVERSIFIED METALS AND MINING COMPANY • Operations in Australia, Nickel 5% South America 12% Americas 7% For personal use only Met. Coal 8% Southern Africa and Colombia
Slide 28: High quality assets competitively positioned in their respective cost curves
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC HIGH QUALITY ASSETS COMPETITIVELY POSITIONED Submission_v4.pptx IN THEIR RESPECTIVE COST CURVES Industry cost/margin1 curve position and FY2014 • Leading assets in the first quartile of production fo
Slide 29: High quality assets competitively positioned in their respective cost curves
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC HIGH QUALITY ASSETS COMPETITIVELY POSITIONED Submission_v4.pptx IN THEIR RESPECTIVE COST CURVES Contribution of key South32 assets3 to H1 FY2015 • Leading assets in the first quartile of combined Und
Slide 30: High quality assets competitively positioned in their respective cost curves
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC HIGH QUALITY ASSETS COMPETITIVELY POSITIONED Submission_v4.pptx IN THEIR RESPECTIVE COST CURVES • Leading assets in the first quartile of Historical combined total capital expenditure3 For personal u
Slide 31: A cash generator through the cycle
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A CASH GENERATOR THROUGH THE CYCLE • Combined Underlying EBITDA1 of more For personal use only Historical combined Underlying EBITDA than US$2.0b p.a. over the last decade and marg
Slide 32: A lean operating model designed to further reduce costs and increase productivity
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC A LEAN OPERATING MODEL DESIGNED TO FURTHER Submission_v4.pptx REDUCE COSTS AND INCREASE PRODUCTIVITY • A focused and lean corporate Chief Executive Officer For personal use only and Executive Directo
Slide 33: Well positioned to pursue investments that meet strict financial criteria
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC WELL POSITIONED TO PURSUE INVESTMENTS THAT Submission_v4.pptx MEET STRICT FINANCIAL CRITERIA • A strong Balance Sheet and investment For personal use only grade credit rating are core to the strategy
Slide 34: A simple approach to capital management
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A SIMPLE APPROACH TO CAPITAL MANAGEMENT Energy Coal South Africa • Well defined priorities for cash flow For personal use only ﹣ Maintain safe and reliable operations and an invest
Slide 35: A simple approach to capital management
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A SIMPLE APPROACH TO CAPITAL MANAGEMENT Energy Coal South Africa • Well defined priorities for cash flow For personal use only ﹣ Maintain safe and reliable operations and an invest
Slide 36: A simple approach to capital management
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A SIMPLE APPROACH TO CAPITAL MANAGEMENT Energy Coal South Africa • Well defined priorities for cash flow For personal use only ﹣ Maintain safe and reliable operations and an invest
Slide 37: A new company from the ground up
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx A NEW COMPANY FROM THE GROUND UP • An experienced board and management team with clearly defined strategic priorities For personal use only • A cash generator with high quality met
Slide 38: For personal use only
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx For personal use only INVESTOR PRESENTATION MARCH 2015 SLIDE 037
Slide 39: For personal use only
cdl bhpbilliton resourcing the future