BHP BILLITON ANNUAL REPORT 2009 - 1 Contents Continued

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BHP BILLITON ANNUAL REPORT 2009 - 1 Contents Continued Annual Report 2009 We are BHP Billiton, a leading global natural resources company. Our purpose is to create long-term shareholder value through the discovery, development and conversion of natural resources and the provision of innovative customer and market-focused solutions. For almost a decade, we have been committed to a long-term strategy of investing in low-cost, world-class, expandable and export-oriented operations that reflect diversification across markets and geographic regions. Today…this strategy remains unchanged. Our Charter Outlining our purpose, plans, values and measures of success Our Charter outlines our purpose and the actions, values and measures by which we judge our success in creating long-term value through discovering, developing and converting natural resources. We recognise that earning the trust of our employees, contractors, customers, suppliers, communities and shareholders is vital to our success. Our values embrace safety and the environment, integrity, high performance, win-win relationships, the courage to lead change and respect for each other. BHP Billiton Limited. ABN 49 004 028 077. Registered in Australia. Registered office: 180 Lonsdale Street, Melbourne, Victoria 3000, Australia. BHP Billiton Plc. Registration number 3196209. Registered in England and Wales. Registered office: Neathouse Place, London SW1V 1BH, UK. Each of BHP Billiton Limited and BHP Billiton Plc are members of the BHP Billiton Group, which is headquartered in Australia. Contents 1 Key information 3 5 Corporate Governance Statement 127 1.1 Our business 5 5.1 Governance at BHP Billiton 129 1.2 Chairman’s Review 6 5.2 Shareholder engagement 130 1.3 Chief Executive Officer’s Report 7 5.3 Board of Directors 130 1.4 Selected key measures 8 5.4 Board of Directors – Review, re-election and renewal 134 1.5 Risk factors 9 5.5 Board Committees 135 1.6 Forward looking statements 12 5.6 Risk management 141 5.7 Management 142 2 Information on the Company 13 5.8 Business conduct 143 2.1 BHP Billiton locations 16 5.9 Market disclosure 143 2.2 Business overview 16 5.10 Conformance with corporate governance standards 144 2.3 Production 50 5.11 Additional UK disclosure 144 2.4 Marketing 55 6 Remuneration Report 145 2.5 Minerals exploration 55 2.6 Resource and Business Optimisation 55 Remuneration Committee Chairman’s introduction 147 2.7 Government regulations 56 6.1 Remuneration policy and structure 148 2.8 Sustainable Development – Health, Safety, 6.2 Summary of remuneration for Marius Kloppers 149 Environment and Community 59 6.3 Remuneration and performance 150 2.9 Closure and rehabilitation 59 6.4 Non-executive Directors 153 2.10 Employees 59 6.5 Remuneration Committee 153 2.11 Organisational structure 61 6.6 Remuneration in detail 154 2.12 Material contracts 62 2.13 Constitution 62 7 Directors’ Report 163 2.14 Reserves and resources 65 7.1 Principal activities, state of affairs 3 Operating and financial review and business review 165 and prospects 95 7.2 Share capital and buy-back programs 166 7.3 Results, financial instruments and going concern 167 3.1 Introduction 97 7.4 Directors 167 3.2 Our strategy 98 7.5 Remuneration and share interests 167 3.3 Key measures 98 7.6 Secretaries 167 3.4 External factors and trends affecting our results 100 7.7 Indemnities and insurance 167 3.5 Application of critical accounting policies 104 7.8 Employee policies and involvement 168 3.6 Operating results 104 7.9 Environmental performance 168 3.7 Liquidity and capital resources 117 7.10 Corporate Governance 168 3.8 Off-balance sheet arrangements and 7.11 Dividends 168 contractual commitments 120 7.12 Auditors 168 3.9 Subsidiaries and related party transactions 120 7.13 Non-audit services 169 3.10 Significant changes 120 7.14 Value of land 169 7.15 Political and charitable donations 169 4 Board of Directors and 7.16 Exploration, research and development 169 Group Management Committee 121 7.17 Creditor payment policy 169 4.1 Board of Directors 123 7.18 Class order 169 4.2 Group Management Committee 126 7.19 Proceedings on behalf of BHP Billiton Limited 169 7.20 Directors’ shareholdings 169 7.21 GMC members’ shareholdings (other than Directors) 170 7.22 Performance in relation to environmental regulation 170 7.23 Share capital, restrictions on transfer of shares and other additional information 170 BHP BILLITON ANNUAL REPORT 2009 - 1 Contents continued 8 Legal proceedings 171 9 Financial Statements 175 Consolidated Income Statement 177 Consolidated Statement of Recognised Income and Expense 178 Consolidated Balance Sheet 179 Consolidated Cash Flow Statement 180 Notes to Financial Statements 181 BHP Billiton Plc 244 Directors’ Declaration 248 Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements 249 Lead Auditor’s Independence Declaration 250 Independent Auditors’ Reports 251 Supplementary Oil and Gas Information – unaudited 253 10 Glossary 259 10.1 Non-mining terms 261 10.2 Mining and mining-related terms 263 10.3 Units of measure 264 11 Shareholder information 265 11.1 Markets 267 11.2 Share ownership 267 11.3 Dividends 270 11.4 Share price information 270 11.5 Taxation 272 11.6 Ancillary information for our shareholders 276 2 - BHP BILLITON ANNUAL REPORT 2009 Section 1 Key information Contents page 1.1 Our business 5 1.2 Chairman’s Review 6 1.3 Chief Executive Officer’s Report 7 1.4 Selected key measures 8 1.4.1 Financial information 8 1.4.2 Operational information 9 1.5 Risk factors 9 1.6 Forward looking statements 12 BHP BILLITON ANNUAL REPORT 2009 - 3 4 - BHP BILLITON ANNUAL REPORT 2009 1 Key information 1.1 Our business We are the world’s largest diversified natural resources company. Our corporate objective is to create long-term value for shareholders through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions. We pursue this objective through our unchanged strategy of investing in ‘tier one’ assets that are large, low-cost and long-life to provide a balanced portfolio of export-oriented commodities: • steelmaking products – iron ore, metallurgical coal, manganese • non-ferrous products – copper, aluminium, nickel, diamonds • energy products – petroleum, liquefied natural gas (LNG), energy coal, uranium. We continue to invest in the future and have a deep inventory of growth assets. Our operations and investments are designed to ensure the Group remains stable in the long term and responsive to market volatility in the short term. The Group is headquartered in Melbourne, Australia, and consists As at 30 June 2009, we had a market capitalisation of of the BHP Billiton Limited Group and the BHP Billiton Plc Group approximately US$144 billion. For the year ended 30 June 2009, as a combined enterprise, following the completion of the Dual we reported net operating cash flow of US$18.9 billion, net profit Listed Company (DLC) merger in June 2001. BHP Billiton Limited attributable to shareholders of US$5.9 billion and revenue of and BHP Billiton Plc have each retained their separate corporate US$50.2 billion. We have approximately 99,000 employees identities and maintained their separate stock exchange listings, and contractors working in more than 100 operations in over but they are operated and managed as if they are a single unified 25 countries. economic entity, with their boards and senior executive We operate nine businesses, called Customer Sector Groups management comprising the same people. (CSGs), which are aligned with the commodities we extract BHP Billiton Limited has a primary listing on the Australian and market: Securities Exchange (ASX) in Australia. It has secondary listings • Petroleum on the Frankfurt Stock Exchange in Germany and the Swiss Stock • Aluminium Exchange in Switzerland and has notified its intention to delist • Base Metals from both these exchanges. These delistings are expected to be completed in 2010. BHP Billiton Plc has a primary listing on the • Diamonds and Specialty Products London Stock Exchange (LSE) in the UK and a secondary listing • Stainless Steel Materials on the Johannesburg Stock Exchange in South Africa. In addition, • Iron Ore BHP Billiton Limited American Depositary Receipts (ADRs) and • Manganese BHP Billiton Plc ADRs trade on the New York Stock Exchange • Metallurgical Coal (NYSE) in the US. • Energy Coal BHP BILLITON ANNUAL REPORT 2009 - 5 1 Key information continued 1.2 Chairman’s Review Our program of Board renewal continued this year. David Jenkins, after nine years on the Board, will retire after the Annual General By any measure, this has been an extraordinary year. Meetings. David has made an outstanding contribution to the The global financial crisis has created the worst business work of the Board; and on your behalf, I would like to thank environment the world has faced in more than 60 years. World David and wish him well for the future. economic activity contracted dramatically and commodity prices We also appointed Wayne Murdy as a non-executive Director. fell sharply. Accompanying this, volatility has been high and should Wayne’s experience will be invaluable to your Board given his remain for the immediate future. While the global economy is background as Chairman and Chief Executive Officer of Newmont showing signs of stabilising, the large developed economies are Mining Corporation and 30 years’ experience in the mining and not expected to show real growth until at least the end of 2010. petroleum industries. BHP Billiton’s strategy has served us well during these volatile We remain committed to achieving the highest level of governance times. Since the merger of BHP and Billiton in 2001, we have and continue to believe that there is a fundamental link between focused on a few key fundamentals.
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