Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — H1 2005 Earnings Presentation
28 slides from Bhp's earnings presentation, May 19, 2005
Slide 1: International Financial Reporting Standards
International Financial Reporting Standards Draft interim results – Half year ended 31 December 2004 19 May 2005
Slide 2: Disclaimer
Disclaimer The information provided in this presentation is our current best estimate of the consequences for BHP Billiton of adopting International Financial Reporting Standards (IFRS) and has not been independently verified or audited. Consequently the information provided remains subject to chang
Slide 3: IFRS for BHP Billiton
IFRS for BHP Billiton • International Financial Reporting Standards (IFRS) become applicable for year ending 30 June 2006 – First IFRS reporting period is half year ended 31 December 2005 and will include December 2004 comparatives • As a Dual Listed Company, both Australian and UK IFRS applies, whi
Slide 4: Impact of IFRS for BHP Billiton
Impact of IFRS for BHP Billiton Application of IFRS does not impact: –BHP Billiton’s strategy and underlying business operations –Cash flows, the ability to borrow funds or pay dividends • Majority of International Financial Reporting Standards will have little or no impact on BHP Billiton results o
Slide 5: Pension and medical schemes
Pension and medical schemes 1 • IAS 19 key concept: – Recognition on the basis of the underlying obligations and assets of the plans 2 – Election by BHP Billiton to take gains and losses associated with actuarial assumptions (either variations to actual outcomes or changes in future assumptions) dir
Slide 6: Goodwill
Goodwill • IFRS 3 key concept: – Goodwill is not amortised, but tested for impairment on a periodic basis 1 • December 2004 impact: – US$389 million 2 classified as goodwill – US$1 million credit to profit and loss to reverse amortisation 1 Previously, goodwill was amortised on a straight line basis
Slide 7: Employee share schemes
Employee share schemes • IFRS 2 key concept: – The cost of equity-based compensation is measured at fair value 1 – The cost is accrued over the vesting period • December 2004 impact: – BHP Billiton awards deferred shares, performance shares and/or options, to eligible employees under the Group Incen
Slide 8: Income tax
Income tax • IAS 12 key concepts: – Deferred taxes are measured using the balance sheet approach, being the difference between the carrying value of assets and liabilities and their tax base 1 – Where applicable, withholding taxes must be provided where distribution of retained profits is ‘probable’
Slide 9: Income tax cont.
Income tax cont. December 2004 impact cont: Footnote Tax benefit/ Tax asset/ (expense) (provision) US$m US$m Deferred tax on non depreciable assets acquired in business combinations 1 45 (578) Foreign exchange movements – tax provisions 2 396 613 Foreign exchange movements – USD debt 3 (347) (700) W
Slide 10: Dividend provision
Dividend provision • IAS 37 key concept: – A dividend provision can only be recognised when formally declared • December 2004 impact: – Currently BHP Billiton recognises a dividend provision where it is declared after period end, but prior to the release of financial results – US$817 million adjustm
Slide 11: Jointly controlled entities
Jointly controlled entities • IAS 31 key concept: – While IFRS allows a choice of proportional consolidation or equity accounting, Australian IFRS mandates equity accounting • December 2004 impact: – Compliance with Australian IFRS requires equity accounting for interests in Escondida, Mozal and Val
Slide 12: Financial Instruments
Financial Instruments • IAS 39 key concepts: – Deferred application date – year ended 30 June 2006 for BHP Billiton – All derivative financial instruments must be recognised in the balance sheet and measured at fair value – Application of hedge accounting is only available where specific designation
Slide 13: Consolidated Income Statement, Half year ended 31 December 2004
Consolidated Income Statement 1 Half year ended 31 December 2004 US$million UKGAAP 2 Gross Measurement differences 4 IFRS with Jointly IFRS equity consolidated controlled acc’g 3 Pension Goodwill Employee Income jointly entities 5 & medical share tax controlled schemes schemes entities 5 Gross Reven
Slide 14: Consolidated Balance Sheet as at 31 December 2004
Consolidated Balance Sheet As at 31 December 2004 US$million UKGAAP Liquidity 1 Other 1 Measurement differences2 IFRS with Jointly IFRS consolidated controlled Pension Goodwill Employee Income Dividend jointly entities3 & share tax controlled medical schemes entities 3 schemes Current Assets 8 520 (
Slide 15: Other IFRS issues
Other IFRS issues • Exploration and evaluation costs – Election made to continue applying current accounting policies • Resource rent taxes – Unresolved matter of interpretation as to whether such items should be treated as income tax – Currently treated as operating costs – Reclassification and rem
Slide 16: IFRS summary
IFRS summary Application of IFRS does not impact: –BHP Billiton’s strategy and underlying business operations –Cash flows, the ability to borrow funds or pay dividends • Volatility of earnings – Exchange fluctuation exposure related to deferred tax increases – Fair value measurement of financial ins
Slide 17: Ohpodilliton
6de Ohpodilliton
Slide 18: Contacts
Contacts Australia United Kingdom Jane Belcher, Investor Relations Mark Lidiard, Investor & Media Relations Tel: +61 3 9609 3952 Mobile: +61 417 031 653 Tel: +44 20 7802 4156 email: Jane.H.Belcher@bhpbilliton.com email: Mark.Lidiard@bhpbilliton.com Tracey Whitehead, Investor Relations Alison Gilbert
Slide 19: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Half year ended 31 December 2004 US$million UKGAAP 1 Jointly IFRS US$million UKGAAP 1 Jointly IFRS controlled controlled entities 2 entities 2 Cash generated from 4 228 (724) 3 504 Proceeds from issue of ordinary 38 - 38 operations shares Dividends received 3 135 296
Slide 20: Key ratios under IFRS vs UKGAAP
Key ratios under IFRS vs UKGAAP HY ended 31 Dec 04 1 UKGAAP IFRS IFRS with consolidated jointly controlled entities EBIT margin 2 36.9% 34.2% 35.5% Basic earnings per share 44.5 c 45.6 c 45.6 c EBITDA interest cover 33.6 times 53.2 times 39.7 times As at 31 Dec 04 UKGAAP IFRS IFRS with consolidated
Slide 21: Half year ended 31 December 2004
Half year ended 31 December 2004 Revenue US$m UKGAAP Gross equity IFRS with Jointly IFRS accounting 1 consolidated controlled jointly entities 2 controlled entities 2 Group production 11 454 (782) 10 672 (1 380) 9 292 Third party product 4 067 (484) 3 583 236 3 819 Gross revenue 15 521 (1 266) 14 25
Slide 22: As at 31 December 2004
As at 31 December 2004 Current Assets UKGAAP Liquidity Other Non Current UKGAAP Liquidity Other adjustments1 Assets US$m adjustments1 US$m Stocks Stocks - 38 - 2 212 (38) - Debtors - 1 797 - Debtors 5 066 (1 797) 65 3 Goodwill 33 - - Investments 226 - (175) 2 Tangible assets 21 941 - - Cash 1 016 -
Slide 23: Jointly controlled entities – Income Statement
Jointly controlled entities – Income Statement Half year ended 31 December 2004 Jointly controlled entity 1 Intercompany Total adjustments 2 US$m Escondida Mozal Valesul Revenue 1 113 224 43 (236) 1 144 Other income 1 - 1 - 2 Expenses excluding finance costs (430) (144) (39) 236 (377) EBIT 684 80 5
Slide 24: Jointly controlled entities – Balance Sheet
Jointly controlled entities – Balance Sheet As at 31 December 2004 & 30 June 2004 US$m 31 December 2004 30 June 2004 Jointly controlled entity 1 Intercoy Total Jointly controlled entity 1 Intercoy Total Adj’s 2 Adj’s 2 Escondida Mozal Valesul Escondida Mozal Valesul Current Assets 531 127 39 - 697 3
Slide 25: Segment results – 31 December 2004
Segment results – 31 December 2004 Total revenue EBIT 1 US$m UKGAAP IFRS with IFRS UKGAAP IFRS with IFRS consolidated consolidated jointly jointly controlled controlled entities 1 entities 2 Petroleum 3 171 3 171 3 171 909 809 809 Aluminium 2 615 2 615 2 576 458 430 413 Base Metals 2 353 2 133 1 028
Slide 26: Consolidated Balance Sheet as at 30 June 2004
Consolidated Balance Sheet As at 30 June 2004 US$m UKGAAP Liquidity 1 Other 1 Measurement differences IFRS with Jointly IFRS consolidated controlled Pension Goodwill Equity Income Dividend jointly entities2 & based tax controlled medical employee entities schemes costs Current Assets 8 151 (1 527) (
Slide 27: As at 30 June 2004
As at 30 June 2004 Current Assets UKGAAP5 Liquidity Other Non Current UKGAAP5 Liquidity Other adjustments1 Assets US$m adjustments1 US$m Stocks Stocks - 45 - 1 760 (45) - Debtors - 1 482 - Debtors 4 406 (1 482) 30 3 Goodwill 34 - - Investments 167 - (153) 2 Tangible assets 20 945 - - Cash 1 818 - -
Slide 28: Consolidated Income Statement – AGAAP vs UKGAAP
Consolidated Income Statement – AGAAP vs UKGAAP 1 Half year ended 31 December 2004 US$million AGAAP 2 Gross Other Interest Goodwill 4 Other tax Tax loss UKGAAP equity revenue income adjustments 5 benefits6 acc’g 2 allocations 3 Revenue – excluding JV’s 14 216 39 - - - - - 14 255 Other income 197 - (