Ladies and gentlemen, welcome to today's presentation of BHP Billiton's Interim Results for the 6 months ended December 2010. I'm speaking to you today from Sydney, and Alex Vanselow, our CFO, will be presenting from London. We're also joined by members of the BHP Billiton management committee and have Mike Yeager, Marcus Randolph and Andrew McKenzie on the phone lines, and I have Alberto Calderon here with me in Sydney. Before we begin, I want to point you to the disclaimer and remind you that this is important in relation to today's presentation. I will start by giving you a brief overview of what has been a very strong 6 months for BHP Billiton. I will then hand over to Alex, who will take you through the detailed financials and then I will talk to you after Alex has spoken about how BHP Billiton is positioned to continue to deliver that value to shareholders. Today, we announced record results for the half year. Our underlying EBITDA was up 60% to USD $17.3 billion and underlying EBIT was up 74% to USD $14.8 billion. Attributable profit was USD $10.7 billion before exceptional items and that is up 88%. And our operating cash flow was up by 123% to USD $12.2 billion. The strong cash flow and healthy balance sheet meant that we were able to increase our interim dividend by 10% over the corresponding period and today, we also announced the substantial capital management program expanding our programs to USD $10 billion, which we expect to largely complete within this calendar year. Now let me turn to our operating performance. In addressing performance, I would like to start with safety. Health and safety performance is critical to the well being of our people and to the success of our company. The…

Thank you, Marius. We are very pleased to see our well-tested strategy, delivering another record set of results. Importantly, this was achieved during a period that presented a number of unique challenges to our management team. Their readiness and pursuit of best practice has ensured that the impact on our business has been minimized. The same external events have further impacted on an already tight commodity market and the resulting stronger prices were a dominant driver of our results for this half year period. Let's start by looking at these drivers in more detail. As you can see from our usual EBIT chart, waterfall chart, the stronger commodity prices, net of price link costs increased underlying EBIT by USD $8.5 billion in the December 2010 half year. Higher iron ore and copper prices were the 2 major contributors for the period and increased underlying EBIT by a combined USD $5.4 billion. Such a significant benefit at the revenue line can only be delivered by a strong operating team, consistent operating performance and disciplined investment in growth through all points in the cycle. And in that context, let's take a look at volumes in closer detail. You will notice that volumes in aggregate increased underlying EBIT by USD $372 million. This positive contribution was achieved despite a USD $464 million reduction in petroleum-based volumes that largely reflected the deferral of drilling in the Gulf of Mexico. As Marius noted, record iron ore production and sales volumes were a major contributor as Western Australian iron ore exports rose to an annualized 148 million-tonne rate in the December 2010 quarter. In addition, half year production and sales records for Samarco lay the foundation for future capacity expansion beyond the existing 3 pellet plants. And as you no doubt be aware, our team in…

Thank you, Alex. Now let me cover some of the macroeconomic factors impacting our business. Last year, we witnessed continued strong emerging market demand with Chinese domestic -- sorry, gross domestic product increasing by over 10%. We are also now seeing increasingly positive developed market data, economic growth, retail sales and finally, employment, continue to improve in the major economies of the U.S. and Germany. And in Japan, exports are leading a pickup in economic activity. However, we would caution that given the level of sovereign indebtedness that remains, we cannot rule out any discontinuities to these improving economic fundamentals. Another factor to watch is the overheating in some of the emerging economies notably China, India and Brazil, where we don't, as of yet, know how policy decisions to tackle these problems will play out. If I had to summarize, however, we are cautiously optimistic on the short-term outlook for the global economy, given the continued robust growth in the emerging economies and further positive signs for recovery in the major developed economies. From a commodity respective, if anything, the picture looks even better. And this is due to the substantial interruptions to the supply side: Firstly, resulting from weather and other impacts more in the short term to current supply; and secondly, due to the challenges of bringing on new supply, particularly given an industry-wide withdrawal of capital during the financial crisis. And as a consequence, we are seeing currently as evidenced by prices, good short-term supply-demand fundamentals for base metals, for energy, as well as for steel-making raw materials. Of course, in the longer term, the continued urbanization and industrialization of these emerging economies that we've spoken about should continue to provide strong support for commodity demand. Against this backdrop, BHP Billiton continues to be very well positioned…

It's Paul Young from Deutsche Bank. I have 2 questions in your Oil and Gas division. First of all, can you provide an update on the Gulf of Mexico and the likely impact of the new regulations on CapEx, OpEx and project development schedules? And then secondly, can you talk more broadly about your growth strategy of this division, development projects, such as Knotty Head, Mad Dog and Gunflint in the Gulf and Scarborough West Australia will likely only maintain production at around the 160 to 170 million barrel per annum level. But the question is, and I know you're exploring actively or aggressively this year, would you like to see a higher production from this division and growth and a higher proportion of earnings from oil?

Paul, thank you. We've indicated in the past that we are keen to continue to grow this business. Of course, the major impact of the Gulf of Mexico events has been that, to memory, about $460 million volume impact that Alex showed on one of the slides, which is the profit manifestation of the volume impact. The way we looked at this business is that we do not believe that the return characteristics of the portfolio that we've got in the Gulf of Mexico will be materially impacted by the new regulations that will be put in place. Of course, there will be investments to be made in things like containment schemes and there are clearly going to be some changes in the way that permitting and execution is carried out and that will have a flow-on effect on our procedures. However, we don't believe that these will be material from an overall return expectation from that business. The way that I personally view the impact in the Gulf of Mexico that what we've got is we have got a hiatus in volume growth from those as a result of the moratorium. Importantly is to understand that the barrels that are in the ground are not disappearing, in fact they are just being displaced from one period to another and will be taken out of the ground in future. And once the permitting process runs starts operating in a normal rhythm, we expect business there to return as normal. Beyond those items that you've mentioned, I can't comment very much. I do want to point out that the growth opportunities in Atlantis and of course, the undeveloped potential in Mad Dog, which is already known today, obviously constitute very substantially investments going forward. The oil industry has got a history of being on a slightly quicker development cycle than the minerals business. And so I probably can't give you more than that today. But Paul, we are keen to continue to grow this business as a core constituent of our portfolio.

Marius, Peter O'Connor from Merrill Lynch. Marius, my question is on the cost outlook and Alex mapped it out in detail how you are facing the cost pressures in the near term. Are the 2 hotspots still WA and South Africa? And what type of growth rate in cost should we look at going forward in the environment we're currently operating in? Is the number closer to 10% inflation per year from a mining cost inflation a better number to use or can you keep it to a lesser number?

Peter, I think we've got a split and I'll ask Alex to make a few comments as well. But I think we've got to split the impact on our costs on a number of dimensions. We've got to split it by capital and by operating costs. And then within those 2 categories, we probably can take a look at raw material and labor again or labor-related elements. I think that where we've probably seen the quicker level of overall escalation is probably been on the capital side or put more simply for the same amount of money, you tend to get less. And that has been a trend not only over the last 6 months but really has been the trend in the industry over the last couple of years, which has been exacerbated, of course, by the impact of the currencies and where there is still considerable amount of locally-denominated currency spend in those items. I think on the operational side we've obviously got the currency impact, which we've already spoken about. I think what Alex tried to pointedly emphasize today is that where we have seen prices move, particularly over the last 6 months, normally on our cost line because of the nature of how those materials flow through our inventory pipeline -- sorry, consumption pipeline, we tend to see a lag effect of raw material costs as they manifest on the consumption line. And then I should note that the overall environment for labor cost inflation is clearly weakened in Australia, South Africa, but also if I look at places where we've had recent wage negotiations, for example, Colombia. Alex, I don't know if you can give more granularity on a forward look at what you expect or if you can complement that?

Yes, just I think you covered most of the point, Marius, and the intention of what I said was to create the awareness and remind everybody of the lagged effect of costs. But I think the most important message here, especially on the capital intensity, is that investing through the cycle it has great value. So the capital that we've deployed in the time of the great financial crisis got more units, a lot more units than we are getting now in this start of an inflationary period in capital expenditure.

Well, certainly, Peter, I think the capital cost inflation has been well above that number that you've mentioned. I'll take one more question here in Sydney and then I'll take a couple of questions from the phone.

Marius, Lee Bowers from Macquarie. Just a couple of quick questions. The first one was on the capital management program. Are you able to confirm that you're in a position now from a regulatory perspective to launch an off-market buyback? And if not, what timing do you think is appropriate there in terms of when you will be in a position to launch one? And the second question just relates to the indicative 5-year CapEx guidance that you gave. Thank you for that, and I guess it does raise the question in terms of iron ore as to how much of that amount that you flagged is attributable to a post-RGP6 environment? And therefore, I guess, what implication should we draw therefore in terms of your view on the Outer Harbour and the Quantum projects?

Perhaps the second piece first and then I'll hand for the first piece to Alex. On the 5-year CapEx, clearly, the Outer Harbour, as we articulated more than 3 years ago and we confirmed about a year ago, is a key part of our expansion program. The overall way that we look at our Iron Ore business is that we've got a resource base there, which is really superior in the way that the mineralization occurs. We've got large ore bodies, we've got relatively few of them and so we've got mines that can do 30 million-tonne-plus operating rate per mine and a set of ore bodies that can easily go, in our mind, 350 million tonnes of production and beyond. Clearly, in order to get to that production rate, we've got to do the Outer Harbour. The team has worked very, very hard over the last couple of years in order to get all of the elements of that in place, to get that registered as a major project. However, given that this is a 5-year capital outlook, a substantial chunk of the CapEx that is shown will still be on the infrastructure, new mines and then on the existing projects that we have in execution at the moment, as well as the RGP6 project, which we have long flagged. But the Outer Harbour is an integral part of our strategy and core to us achieving the growth rates that we'd like to achieve. On the off-market buyback, I'm probably not in a position to say anything about that, but Alex, I'm looking at you to see if there's anything we can say today?

What I can say is that $10 billion is a very large number and 1 year is a very ambitious period to return the $10 billion. But I think we'll come back and provide more details in due time.

Thank you, sorry about that Lee. Let me just try and take calls on the phone. I think we've got Jody probably manning the phones. Can I have the first question please?

The first question is from Craig Campbell from Morgan Stanley.

Marius, question regarding some of the minor assets given the focus on the very large asset base, would you look to maybe exit some of the minor minerals that you're in given some of the high multiples that we're seeing in the market? And the second question for you, which is very near term, with relation to copper markets at the moment, are you able to give us some color on where the TC/RC is likely to end up settling for benchmark? And finally, looking at the jellybean chart that you put out, the Olympic Dam project sitting as future option, so has the progress of Olympic Dam slowed down at all or do you think you're still on track for an investment decision within the next 12 months?

Craig, on what people call the minor assets, what you call the minor assets, I should point out that these are very substantial assets. If I look at the Nickel division over which we've had questions in the past, from memory, we made $350 million of profit in that business in the half. So we are very comfortable that the portfolio we've got is manageable, that we can wrap our arms around it and what we -- when we talk about portfolio simplification, it is always about maintaining the portfolio against the backdrop of growth in a place where our management is not to dilute it and I feel very comfortable about where we stand on that dimension. With regard to the copper TC/RCs, I'm probably not the best person to give you an outlook there today, Craig. And on the Olympic Dam expansion, we have continued unabated in the expansion -- in the engineering of the expansion, shape and methodology. I think that what we believe we want to do largely maps to what we have exposed to the market and which you can find on the website, which is the modular expansion because sometimes doing some of these expansions in parallel but taking the decisions in a modular fashion. And while we don't hold all of the regulatory time frame keys in our hands, obviously those are for the various levels of government to decide, I am very confident that the technical work that has been completed by the team, the level of preparation, the surety with what we want to do, that we will be in a position to move that project forward, largely dependent on where the -- what the time frame of the regulatory reviews are. And I have no -- I see no reason to update or change the previous time frames that we've laid out, which essentially as we hope to make an investment decision there over the next 12 months. Jody?

The next question is from Lyndon Fagan from the Royal Bank of Scotland.

I've got 2 questions. The first one is on the dividend policy and the second one is on M&A. It would seem as though you've got the financial capacity to increase the dividend significantly and also go ahead with all the growth CapEx. Can you talk about whether there was any discussion about changing the policy to maybe a payout ratio and what you think an appropriate bid and yield for the stock is? It's about 2% at the moment. And then secondly, has the company changed its view on what appropriate M&A is to potentially small- to medium-sized opportunities in light of your recent activities?

So on the dividend policy, we are very committed to a progressive dividend policy. That dividend policy has seen our payout, again from memory, move in 2006 from a total payout of about USD $2.1 billion, USD $2.2 billion to close to 5 last year and obviously more this year through that progressive 23% per annum growth rate. We are committed to that. Our shareholders really appreciated that during the downturn where we were virtually the only company in the sector that continued to pay the dividend. We want to, to the maximum extent possible, as a company that has not cut a dividend since the Great Depression. We want our shareholders to see that as an annuity and we will continue to grow that dividend basically in line with what the company growth is and obviously if there's a return on capital change expectation, we will progressively -- sorry, sometimes we base that as we've done in the past. I also just want to point out that $0.01 on the dividend is about $50 million on a period. And so it's actually not with a major way in which we can return capital to our shareholders in the short term. The major way and the way that benefits the shareholders in aggregate has historically been off-market buybacks in Australia and on-market buybacks of the Plc register that is from time-to-time traded at a discount and therefore, are the most economical units to retire to the benefit of order of the shareholders. On the M&A side, let me talk about small and large, but let me start off with the large before I talk about the small. We have always said that amongst the world's ore bodies, we only want to own and operate the very large ones. These are…

Absolutely, right. I only have Andre Liebenberg here with me.

So you've got at least got good company, and now I'll move the questions back to Sydney then at this stage.

Marius, Clarke Wilkins from Citi. Just questions on CapEx. Look at the spend rate in the first half of the year, less than $6 billion but you're looking at the full year number of $15 billion. Is it actually feasible to wrap up the spend that fast, that quickly and in terms of internal resources to be able to manage that process? Also in terms of stay-in-business capital going forward, what is the stay-in-business number for the business as it grows?

Thank you for that question. I'll try and answer that into 2 pieces. It is an important question and one which, no doubt, you can imagine as we've looked at very closely. In the aggregate of our capital number and our exploration number, which we sort of look as the amount of money that we're putting back into the business in sustaining and growth, what we see is that actually the large CapEx programs essentially you've got a pattern of investment which is very, very typical of the CapEx patterns that we always see where our first half is always the lower -- slightly lower number. But the growth -- the major growth project is essentially the capital is going in and we're very comfortable that those projects are being executed like we want to. And that's really to your capability question there. They are in place, they're being done and so on. We have on the exploration side, as these things always work, particularly in the Oil and Gas business is substantial amount of back-end loading in the exploration side this year. And that's just how happenstance the wells have been sequenced this year. From memory, we've got a couple of wells going in Australia, 2 or so. We have got 3 or 4 wells, I think, going in, in Southeast Asia and so on. So there is some element of predictable back-end loading on the exploration side. And then on the smaller projects, the ones where we have not -- where we typically don't break them out in that USD $250 million plus category, I think the CapEx has been a little slower there than usual for us. But if I wrap those 3 elements together and we see where the big projects are going, the small projects are going and where the exploration is going, Alex and I see no reason to change our CapEx expectations or forward look that we've put out for the this year. And Alex, I don't know if you can add to that at all?

No. But I can tackle the second part of the question, which is the sustaining capital. I think you will see on the slides, on the backup slides, we give always a sense of what the sustaining capital is and it's around the $2 billion. But as a rule of thumb, you should use something around a 5% of the applied capital in the business to get pretty close, sometimes a bit higher, a bit lower to the sustaining capital. So 5% of the asset base.

It's Andrew Gardner from MF Global. 2 questions, if I may, relating to things you've already talked about. Firstly, just on the $80 billion CapEx budget. Many of the projects in execution and feasibility stage are well known, but if you could talk about which of those are top of the shortlist in the concept and pre-feasibility stage in that budget? And then the second question is tying a couple of things together really why you've mentioned on aggregating a number of small- or medium-sized players in certain circumstances as well as feeding back into your CapEx plans for RGP6, the Outer Harbour, and wondering how I can kind of word this in terms of what you expect or how you view what is happening in the eastern Pilbara and those other operators that are also fighting for capacity through Port Hedland as well?

Andrew, perhaps, again, to reiterate in Port Hedland, our long-term growth plans are clearly to develop the Outer Harbour. We're committed to it, we've worked at it for years and we believe that, that is necessary in order to get the ore body potential out to the sea, that goes unsaid. In terms of the CapEx programs, I think what you're going to see over the next year and then in the period beyond is really a little different in the various products but let me try and quickly outline those. So firstly, in Jansen, the Potash project, you've seen that we've put that into feasibility. That is really the run up of about $5 billion dollars -- sorry, 5 years of work in order to get there. And my expectation is that consistent with our previous guidance that we want to deliver first product there in 2015, and that is calendar year 2015, and if you work backwards, you will see that our guidance there for approval of that project is still basically the same as what we've given before. So that's clearly one project that is going to feature quite strongly, both in the initial phase and in the subsequent phases of that because all of that stage-by-stage has been meticulously prepared over the last couple of years. I'm talking about the new things first. The second item that is worth noting is then Olympic Dam, because similarly, we've been on a 5-year preparation program there and again, sort of by next year, that is calendar year, we hope to make an investment decision there and again, there are multiple stages of expansion there, some of which you may decide to press the next one on before you've completed the first one, in the same way that I've…

Neil, I normally, and the company normally, does not like to give volume projections per product because things move around within that project portfolio, and one project accelerated, another one goes a little bit slower. But I would say that if I look at the ore body quality here, we really are limited on these big assets, on how many things you can do in parallel. I mean the resources are there. In all of these sets of ore bodies that we spoke about so exhaustively today, there is the potential to double and triple the output and it is not a resource constraint, it really is on how quickly you can get the money into the ground. The last forecast of potential growth rates, I think, we gave 3 years ago and I think the number that Alberto at the time put out was about 5% or 6% and I think that, that is still a reasonable estimate. Let me try and take one or 2 questions from the phone again, and then I'll come back here to Sydney. So Jody?

We don't have any questions from the phone at this stage.

Okay, thank you, I'm assuming there's still only André in London, so Glyn?

Marius, it's Glyn Lawcock with UBS. Look, just 2 questions. Firstly, if you could share your views on coal seam gas versus shale gas and your view on the gas market, I think a few years ago, BHP looked at putting gas into the U.S. now it's a complete reverse. So times move. I just wonder if you could share your views on that market. And then secondly, over the last 12 months, you've been successful in spearheading pricing change in a number of commodities, well talked about, are there any commodities that you see out there either in your portfolio or not in your portfolio that still have a mismatch in pricing that probably needs to be sorted out?

Yes, I think on the second question there's obviously some way to go in alumina. For us, it's a relatively minor project -- profit impact but clearly something where if you are in the future want to take a bigger alumina exposure the fact that particularly the Atlantic market is not -- in the Pacific market, essentially the fact that the alumina is priced in China, that market has sort of evolved a little bit more quickly. But in the Atlantic market, it's now following in my mind but not completely, I would say that the overall profit impact for us is probably not enormous but there is a way to go there. In the other products also just while we're exploring a little bit more broadly, we're very comfortable that the price of the day concept is cemented. But for our customers, we really look forward to a world where both the product price and the input price is fully hedgeable. So I don't see any changes there but we do see an evolution towards maturity of that market and we would like to see deep and liquid physical spot markets, we would like to see deep and liquid swaps markets or derivative markets in the raw materials, as well as in the output products because that allows different steel mills that may have different -- for example, different still mills that have different cost structures to take decisions on we want to let it float or we want to profile ourselves as a converter and I think that, that will be a major value add for steel mills as they re-profile and differentiate themselves over future. My expectation is that we're going to continue to see that and we're going to see within the next 12 months a greater physical -- a visible, physical spot market in -- traded spot market in iron ore and we're trying to facilitate that. So that's where I see the evolution. I've just lost my trend of thought, Glyn. What was the first part of your question?

Gas.

Gas. So I'm not the expert here but I have got 2 experts in the team. We've got sort of Andrew McKenzie who is probably the most technical person I know and Andrew says that, look, shale gas hasn't increased the gas resources of the earth by 10%. It's increased it by an order of magnitude and we've got Mike Yeager here who's probably the best guy in the world to get things out of the ground when it looks like a hydrocarbon. So I think Mike is on the line and he's probably the guy that can talk a little bit more about the differences between shale gas and coal seam gas. Mike, I don't know if you want to say a few words on that?

Yes, Marius, can you hear me okay?

Yes, we can.

Well, certainly these are enormous resources and different companies have taken different perspectives on their profitability and on their longevity and how they fit with the technologies that those companies employ. I think in general, we, according to our mission statement, really like to be on the low-cost side of things. So clearly when you talk about the coal seam gas and aggregating it and then trying to liquify it, you're into a higher cost business, not one that can't be good but certainly a higher cost. Following the shale gas, at least right now in North America with the tremendous pipeline infrastructure and the ability to get to the largest gas market in the world, you can do that at a lower cost basis. So I think those are the way we view them. We'll continue to assess these opportunities as we are presented with the chance to participate in them but certainly the shale right now is on the lower cost side and the coal seam gas, a little bit on the higher cost side and that's really how we rank them up.

Glyn, okay? Next question, please?

[indiscernible]

Alex, the question from Charlie Akon [ph] is what the franking credit balance was?

About $5 billion, a little bit over $5 billion.

Any other questions here from Sydney? Then to loop back one last time to the phone. Jody, have we got anymore questions on the phone?

No, there are no further questions.

Thank you very much. I think we have no further questions here in Sydney. Obviously, we'll have the opportunity to talk again over the next couple of days but thank you for coming in this morning and we are very proud of the record set of results. The company is extremely well configured around enormous resource base to continue to grow, deliver value to its shareholders by continuing to increase the amount of money that it invests, continue to make a strong balance sheet proposition and continue to increase the amount of money that we return to shareholders in the form of a progressive dividend and buyback. Thank you very much for coming this morning.