Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Merger or Acquisition (March 2015)
38 slides from Bhp's merger presentation, Mar 17, 2015
Slide 1: Demerger of South32 unlocks shareholder value
Escondida Demerger of South32 unlocks shareholder value Andrew Mackenzie Chief Executive Officer 17 March 2015
Slide 2: Important information and disclaimer
Important information and disclaimer 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 jurisdiction and is s
Slide 3: Important information and disclaimer (continued)
Important information and disclaimer (continued) 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. This presentation als
Slide 4: Important information and disclaimer (continued)
Important information and disclaimer (continued) 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 Dam; B. Coutts (MAusIM
Slide 5: The demerger will create two great companies
The demerger will create two great companies • 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 facilitates greater focus o
Slide 6: 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 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 Angostura Petroleum and Potas
Slide 7: The demerger is expected to deliver significant benefits
The demerger is expected to deliver significant benefits • 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 global shared service
Slide 8: A more focused portfolio can deliver stronger growth and margins
A more focused portfolio can deliver stronger growth and margins • 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 10 years 50 – producti
Slide 9: An appropriate capital structure for both companies
An appropriate capital structure for both companies • 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$2.2 billion – strategic objectives and access to capital – targeted investment grade
Slide 10: BHP Billiton's balance sheet will remain strong
BHP Billiton’s balance sheet will remain strong • Our strong balance sheet and solid A credit BHP Billiton balance sheet strength rating are fundamental enablers of our (net debt, US$ billion) strategy 30 – following the announcement of the 25 demerger Standard & Poor’s and Moody’s affirmed our A+/A
Slide 11: Any dividends from South32 will represent additional cash returns to shareholders
Any dividends from South32 will represent additional cash returns to shareholders • 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 yearly payment 75 CAG
Slide 12: A demerger is the preferred approach to achieve simplification
A demerger is the preferred approach to achieve simplification • 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 other alternatives, with
Slide 13: Advantages of the demerger outweigh the disadvantages and risks
Advantages of the demerger outweigh the disadvantages and risks • 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 substantial benefits in the long
Slide 14: Creating two great companies
Creating two great companies • 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 sustaining productivity impro
Slide 15: cdl
cdl bhpbilliton resourcing the future
Slide 16: Mineral or Coal Resource classifications
Mineral or Coal Resource classifications 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 60 882 Samarco JV 3,000 @
Slide 17: Petroleum Inventory classifications
Petroleum Inventory classifications 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 7.5 Bass Strait 17.5 10
Slide 18: cdl
cdl bhpbilliton resourcing the future
Slide 19: Making a difference from the ground up
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx MAKING A DIFFERENCE FROM THE GROUND UP GRAHAM KERR, CEO ELECT MARCH 2015
Slide 20: 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 21: 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 22: 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 • A cash generator with high quality metals and mining assets
Slide 23: 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 Keith Rumble David Crawford Xolani Mkhwanazi Independent Non-executive Chairman and Independent Non-executive Director Director Non-
Slide 24: 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 and identity Cannington, Australia Metalloys, Manganese South Africa • Enhance environmental, healt
Slide 25: 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 performance South Africa Aluminium, South Africa ﹣ Aspire to have no
Slide 26: 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% Met. Coal 8% Southern Africa and Colombia Australia 9% Silver Le
Slide 27: 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 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 Contribution of key South32 assets3 to H1 FY2015 • Leading assets in the first quartile of combined Und
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 • Leading assets in the first quartile of Historical combined total capital expenditure3 industry cost
Slide 30: 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 Historical combined Underlying EBITDA than US$2.0b p.a. over the last decade and margin¹ (US$b, %) ﹣ Averag
Slide 31: 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 and Executive Director structure (Perth) •
Slide 32: 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 grade credit rating are core to the strategy ﹣ Opening net debt of
Slide 33: 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 ﹣ Maintain safe and reliable operations and an investment grade credit rati
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 ﹣ Maintain safe and reliable operations and an investment grade credit rati
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 ﹣ Maintain safe and reliable operations and an investment grade credit rati
Slide 36: 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 • A cash generator with high quality metals and mining assets
Slide 37: Investor presentation
TAO2013\Comms\2015.03.16 - South32 Launch Presentation\150305 - South32 launch presentation POST BAC Submission_v4.pptx INVESTOR PRESENTATION MARCH 2015 SLIDE 037
Slide 38: cdl
cdl bhpbilliton resourcing the future