On 29 June 2001, BHP Billiton Limited (previously known as BHP Limited), an Australian listed company, and BHP Billiton Plc (previously known as Billiton Plc), a UK listed company, entered into a Dual Listed Companies (DLC) merger. This was effected by contractual arrangements between the companies and amendments to their constitutional documents.

The effect of the DLC merger is that BHP Billiton Limited and its subsidiaries (the BHP Billiton Limited Group) and BHP Billiton Plc and its subsidiaries (the BHP Billiton Plc Group) operate together as a single economic entity (the BHP Billiton Group) from 29 June 2001, with neither assuming a dominant role.

In accordance with the Australian Investments and Securities Commission (ASIC) Practice Note 71 'Financial Reporting by Australian Entities in Dual-Listed Company Arrangements', and an order issued by ASIC under section 340 of the Corporations Act 2001 on 2 September 2002, this financial information presents the financial results of the BHP Billiton Group as follows:

- Comparative period results are of BHP Billiton Limited and its subsidiary companies only, except for the Statement of Financial Position as at 30 June 2001 which includes both BHP Billiton Limited and its subsidiary companies and BHP Billiton Plc and its subsidiary companies; and

- Results are presented in US dollars unless otherwise stated.

The financial results for the year ended 30 June 2002 for the BHP Billiton Group demonstrate the financial strength of the merged group, exemplified by strong operating cash flow generation and underlying balance sheet strength.

Net profit attributable to members of the BHP Billiton Group for 2002 of US$1 648 million was an increase of 49 per cent from the previous year (2001: US$1 109 million). Earnings per share were 27.3 US cents (2001: 30.1 US cents).

Profit before borrowing costs and tax was US$3 099 million compared with a profit of US$1 735 million for 2001.

Excluding significant items (refer below), profit before borrowing costs and tax was US$3 311 million compared with a profit of US$2 640 million for 2001.

The following represents major factors affecting profit before borrowing costs and tax (excluding significant items and outside equity interests) for the year ended 30 June 2002:

- The inclusion of financial results for the BHP Billiton Plc Group.

- Lower prices for crude oil, copper, diamonds, silver and zinc were partly offset by higher prices for metallurgical coal, energy coal, and gas.

- Lower sales volumes from Base Metals, Carbon Steel Materials, Petroleum products and Energy Coal businesses.

- Lower price linked costs were mainly due to lower royalties and taxes for petroleum products together with lower costs for London Metals Exchange (LME) listed commodities partially offset by increased royalty costs at metallurgical coal operations mainly reflecting higher metallurgical coal prices.

Merger benefit initiatives generated net cost savings during the year.

Costs increased at Escondida (Chile) mainly reflecting the decision to reduce production in response to weaker Base Metals markets and increased costs at metallurgical coal operations (Australia) and energy coal operations (New Mexico) were due to operational issues. These factors were partly offset by lower operating costs at Liverpool Bay (UK) and Hillside (South Africa), primarily reflecting higher maintenance activities in the corresponding period, cost reductions at the Gulf of Mexico (US) petroleum operations mainly due to increased productivity, and savings at WA Iron Ore operations (Australia) due to lower port and rail costs.

- New and acquired operations that contributed to the current period include commencement of production of petroleum from Typhoon (US), Zamzama (Pakistan) and Keith (North Sea) and the acquisition of an additional 29 per cent interest in the Ekati™ diamond business.

- Steel profits (excluding OneSteel Limited) reduced by approximately US$130 million. The corresponding period included contribution to profit before borrowing costs and tax of approximately US$125 million from a higher ownership interest in metallurgical coal (Queensland), the sale of Buffalo oilfield (Australia), spun-out steel operations (OneSteel Limited), and the Ok Tedi copper mine (PNG), partly offset by losses from HBI Venezuela. The current period included a lower contribution from PT Arutmin Indonesian Energy Coal operations due to sale of the business in November 2001.

- Profits from asset sales were higher than the corresponding period mainly due to the profit on sale of PT Arutmin Energy Coal operations in Indonesia.

- Exploration charged to profit was approximately US$287 million, and included the write-off of La Granja copper exploration activities (Peru), together with increased petroleum activity in the Gulf of Mexico.

Significant items totalling US$212 million (before tax) were expensed at year end. These included one-off costs of US$80 million relating to the merger and restructuring of the Group during the year.

Following a reassessment of the Group's asset disposal and closure plans relating to its South West Copper business in the US (where the Group ceased operations in 1999), impairment provisions, principally related to the San Manuel smelter, were increased by US$171 million. This was offset by a reduction of US$70 million in provisions relating to the expected timing of site restoration expenditure.

Sulphide operations at Tintaya (Peru) have been suspended until at least January 2003. A charge of US$31 million recognised the costs of the suspension and a write-down of obsolete equipment.

In June 2002 a change in legislation increased the corporation taxation rate for oil and gas companies in the United Kingdom from 30 per cent to 40 per cent, resulting in deferred taxation balances being restated, with an adverse impact of US$56 million on the full year's results. The tax effects of other significant items were a benefit of US$24 million.

Excluding significant items, net profit attributable to members of the BHP Billiton Group for 2002 of US$1 892 million was a decrease of 0.9 per cent from the previous year (2001: US$1 909 million).

The major significant items before taxation for the year ended 30 June 2001 included a charge to profit of:

- US$520 million associated with the write-off of BHP Billiton's equity investment in HBI Venezuela and the establishment of provisions for related financial obligations to banks and other associated costs;

- US$430 million from the write-off of the Ok Tedi copper mine;

- US$37 million related to merger transaction costs; and

- US$46 million related to organisational restructuring costs and provisions mainly related to the merger.

These items are partially offset by a US$128 million profit from sale of interests in the Central Queensland Coal Associates (CQCA) and Gregory Joint Ventures to Mitsubishi. A taxation charge of US$33 million was incurred for non-deductibility of financing costs as a consequence of an income tax audit. The tax effects of other significant items were a benefit of US$138 million.

Borrowing costs were US$449 million, impacted by an improved credit rating, higher average debt levels (impacted by the inclusion of the BHP Billiton Plc Group) and lower market interest rates.

The tax charge for the year was US$955 million, representing an effective rate of 36.0 per cent. This rate is above the nominal rate of 30 per cent mainly due to non tax-effected losses in the current year, non-deductible accounting depreciation and amortisation, and secondary taxes on dividends paid and payable by South African entities, partly offset by the recognition of prior year tax losses.

As a consequence of the DLC merger, the BHP Billiton Limited Group and the BHP Billiton Plc Group have aligned accounting policies, as far as is possible, to minimise differences and simplify determination and reporting of the combined results. The item where alignment is not possible in terms of UK and Australian GAAP and which impacts the year ended 30 June 2002 is described below.

Under UK GAAP, until 30 June 1998 goodwill arising upon acquisition was written off directly against equity. Subsequently and currently under UK GAAP, goodwill is to be retained as an asset and amortised. This current treatment is consistent with that required under Australian GAAP.

As of 30 June 1998, the BHP Billiton Plc Group had written off a net amount of goodwill of US$513 million directly against equity. For Australian GAAP reporting on a combined basis, this goodwill is reinstated on the Statement of Financial Position as an intangible asset, with a corresponding credit to equity. The net balance at 30 June 2002 (after amortisation) is US$471 million and the impact on the Australian GAAP Statement of Financial Performance is a charge to profit of US$42 million (no tax effect) for the year ended 30 June 2002. Thus, the attributable profit of the BHP Billiton Group of US$1 690 million under UK GAAP compares to that recorded by the BHP Billiton Group of US$1 648 million for the same period under Australian GAAP.

Operating cash inflows for the year were US$3 724 million with a total cash outflow of US$9 million.

Expenditure on growth projects of US$1 590 million, including Escondida Phase IV, the ROD oil and Ohanet wet gas projects in Algeria, Mozal II and Petroleum projects in the Gulf of Mexico and exploration expenditure of US$390 million, was an increase of US$114 million from the prior year.

Combined with maintenance capital expenditure and investment expenditure on Colombian coal assets and Ekati™, partially offset by proceeds from the sale of PT Arutmin, this contributed to an investing cash outflow of US$2 538 million.

After dividend payments of US$831 million, financing cash outflows were US$1 195 million.

The demerger of BHP Steel in July 2002 was a landmark event, severing a link of many decades. The outcome was embraced by both organisations, launching BHP Steel as an independent, world-class steel business and releasing the BHP Billiton Group to focus on its upstream interests. Strong demand for the BHP Steel shares, which were sold through the Sale Facility to participants under the Retail and Institutional offers, took the final price to A$2.80 per BHP Steel share. The 6 per cent retained by the BHP Billiton Group and sold through the Sale Facility brought a cash benefit of US$75 million in July 2002. Accounting rules will see the difference between this selling price and the book value - some US$19 million - appear as a loss in the 2003 financial statements. BHP Billiton Plc shareholders received approximately 149 million bonus shares to match the demerger value distributed to BHP Billiton Limited shareholders.

During the year the BHP Billiton Group also finalised its responsible exit from the Ok Tedi copper mine in Papua New Guinea, in the process establishing a fund to support its future social and economic development of the people of Papua New Guinea and, in particular of the Western Province. The BHP Billiton Group also announced the sale of its interest in the PT Arutmin Indonesia Energy Coal operations, and the acquisition, in conjunction with its partners, of the 50 per cent interest in Cerrejon Zona Norte Energy Coal mine in Colombia, bringing its interest to 33 per cent.

Net assets for the BHP Billiton Group were US$13 153 million at 30 June 2002, an increase of US$921 million from the 30 June 2001 position.

Equity shareholders' funds for the BHP Billiton Group were US$13 153 million at 30 June 2002, an increase of US$921 million from the previous year. Net borrowings for the BHP Billiton Group were US$6 681 million at 30 June 2002.

As a consequence of the above, the gearing ratio decreased to 33.7 per cent compared with 36.5 per cent for the previous year.

Currency fluctuations affect the Statement of Financial Performance in two principal ways.

Sales are predominantly based on US dollar pricing (the principal exceptions being Petroleum's gas sales, Steel's sales to Australian customers and Energy Coal's sales to South African domestic customers).

However, a proportion of operating costs (particularly labour) arises in the local currency of the operations, most significantly the Australian dollar and South African rand, but also the Brazilian real, Chilean peso and Colombian peso. Accordingly, changes in the exchange rates between these currencies and the US dollar can have a significant impact on the Group's reported results.

Several subsidiaries hold certain monetary assets and liabilities denominated in currencies other than their functional currency (US dollar), in particular non-US dollar denominated debt, tax liabilities and provisions. Monetary assets and liabilities are converted into US dollar at the closing rate. The resultant differences are accounted for in the Statement of Financial Performance in accordance with Australian GAAP.

A US$2.5 billion syndicated multi-currency revolving facility was completed in September 2001. This facility replaced the US$1.2 billion credit facility of the BHP Billiton Limited Group and the US$1.5 billion and US$1.25 billion credit facilities of the BHP Billiton Plc Group. The facility includes a US$1.25 billion 364-day revolving credit component, and a US$1.25 billion five-year revolving credit component.

In October 2001, the BHP Billiton Group increased its A$ Commercial Paper Program limit from A$1 billion to A$2 billion. During November 2001, the Group issued A$1 billion in debt securities in two tranches: A$750 million of seven-year, 6.25 per cent notes maturing August 2008; and A$250 million of three-year, floating rate notes maturing November 2004. In addition a US$1.5 billion Euro Medium Term Note (EMTN) program was established during June 2002.

In accordance with the announced share buy-back program, BHP Billiton Limited re-purchased 4 134 622 shares during the year at a weighted average price of A$8.83 per share. The buy-back program allows for the purchase of either BHP Billiton Limited or BHP Billiton Plc shares, up to a limit of 186 million shares.

An interim dividend of 6.5 US cents per fully paid ordinary share was paid in December 2001 and a final dividend of 6.5 US cents per fully paid ordinary share was paid in July 2002, bringing the total for the year to 13.0 US cents. The BHP Billiton Limited dividends were fully franked for Australian taxation purposes.

The corresponding period for BHP Billiton Limited shareholders included an unfranked interim dividend of 12.1 Australian cents per fully paid share (adjusted for merger bonus issue) and a fully franked final dividend of 12.6 Australian cents per fully paid share (adjusted for merger bonus issue).

Dividends for the BHP Billiton Group are determined and declared in US dollars. However, BHP Billiton Limited dividends are mainly paid in Australian dollars and BHP Billiton Plc dividends are mainly paid in pounds sterling to shareholders on the UK section of the register and South African rand to shareholders on the South African section of the register.

The rates of exchange applicable two business days before the declaration date were used for conversion.

(a) Refer 'Significant events after balance date'.