Ladies and gentlemen, welcome to today's presentation of BHP Billiton's interim results for the December 2012 half year. I'm speaking to you from Sydney. Our Chief Financial Officer, Graham Kerr, joins us from London. We're also joined on the telephone line by other members of the management team. I'd like to thank you for accommodating a 1-hour delay that was required as a result of our announcement on CEO succession. I would like to personally congratulate Andrew Mackenzie on his election, and I welcome him to Sydney, where he joins me for today's presentation. I'll come back to Andrew's appointment in due course, but I would firstly like to focus on the strong results we've delivered in what has been a more challenging environment for the industry. Before we begin, I would like to point you to the disclaimer and remind you of its importance in relation to today's results. With regard to the format, I will give a general overview of performance. Graham will then review our financial results. I will then conclude by discussing commodity outlook, as well as our unchanged strategy, which has been the cornerstone of our outperformance for more than a decade. As we present results today, I'm sure you will notice the congruence between our operating performance and the primary focus areas of the group are -- as articulated. I'm proud to say that we are delivering on the commitments we've made. We've reported strong and predictable operating results, and our production guidance remains intact. We recognized a changed environment earlier than others in our industry. As a result, our usual focus on costs has been intensified over the last year on an -- and on annualized basis, we've already reduced controllable cash costs by $1.9 billion. Our project slate remains on schedule and…

Think you, Marius. I'm pleased to be here today to present our results for the December 2012 half year. As Marius mentioned, this period has been characterized by significantly weaker commodity prices, which had affected the profitability of the industry. While our profits have declined as a result of these weaker prices, I hope that by drilling down into our financial results with you today, I can highlight the strong underlying performance of the company and the success we have had in managing those things that we control. In this section of the presentation, I would like to cover 4 major topics: our solid financial results were built on the foundations of strong operating performance; the substantial $1.9 billion annualized reduction in controllable cash costs that we have delivered in the period, and the ongoing initiatives that are expected to realize additional gains; our well-defined growth pipeline and then our capital expenditure plans; and, finally, the significant value that our targeted divestment program has delivered for our shareholders. I would like to begin by stepping through the various components of our solid financial results. You will see on this chart that this period was largely a story about reduced price. In fact, lower commodity prices, along with exchange variations and inflation, reduced underlying EBIT by a considerable $6.4 billion, which more than accounted for the 38% decline in overall underlying EBIT during the period. The level of price volatility was most acute in the iron ore market as significant destocking cycle temporarily disrupted the supply-demand balance. Weak demand and the recovery in low-cost supply also led to a significant decline in the metallurgical coal prices. Together, lower iron ore and metallurgical coal prices reduced underlying EBIT by $5.1 billion during the period. This decline in prices would normally be associated…

Thank you, Graham. I'd now like to focus on the factors influencing commodities demand before discussing our unchanged strategy that uniquely positions us for ongoing rebalancing in commodity markets. As mentioned, the start of our 2013 financial year was characterized by global growth slowing and a heightened level of economic uncertainty. As a result, commodity markets were volatile. Since then, the American economy has made steady progress, partly driven by an improvement in the housing market, in combination with loose monetary policy. China's recovery is also in place. Consequently, the world seems set to benefit from a period of improving economic growth as highlighted on the top right-hand slide -- graph of this slide. From a commodities perspective, China, of course, continues to be the primary driver of underlying demand, and while many commentators were, perhaps, too bearish on the prospect for China sometime ago, during the reporting period, in particular citing rising inflation and the real estate bubble, our view China has remained largely unchanged throughout. We continue to believe that measured stimulus, rebalancing of the Chinese economy and the underlying trends of urbanization and industrialization will sustain the Chinese GDP growth rate at the government's target rate. However, just as I've said that many commentators have been too pessimistic on China in the recent past, we would caution those who now expect growth rates in China to rise significantly from this point onwards. Rather, we see infrastructure investment and fiscal policy as measures to be adjusted in the measured manner to underpin stable growth in China rather than cause a sharp acceleration in activity from here onwards. Furthermore, as we've articulated before, the ongoing broader rebalancing of the Chinese economy suggests that the resource intensity per unit of GDP will eventually consolidate at a fraction of GDP, not…

Marius, Paul Young from Deutsche Bank. A couple of questions, first one, is on costs. If I look at your cost reduction targets, to me it's all about reducing controllable, fixed costs, because variable costs are difficult to cut and unit costs are purely an outcome of cost control or cost-cutting and increasing asset utilization. So if I look at your fixed controllable cost base, which in FY '12 was around $20 billion, and majority of your fixed costs were in met coal, iron ore and copper, which are about $3.5 billion each...

That is correct.

I just want know what programs you have in place to reduce that $3.5 billion for both -- for those 3 divisions, and can you quantify your targets? And second question is actually on growth and high-returning growth, because I noticed the bubble chart you put up there really is just projects in execution. I just want to understand the thinking in this -- probably Andrew, into the Q&A as well, is about a high-returning growth such as the Permian and Spence Hypogene, which on my numbers are 15%, 20% IRR plus, where do they fit in? So why aren't they achieving incremental dollars, and where do they fit in the future of the company? And they could be probably, represent all of the high-returning growth going forward.

Paul, let me first describe our program on how we address costs. So when I stood here last time, I explained to all of you how we prioritized our capital, and I remember spending a lot of time with Warren [ph] going through the details of a bottom up program on capital allocation. We're just entering into that part of our budgeting cycle again, and at the full year results, that's going to result in the capital budget. One of the things I've spoken about passionately is a very boring project -- topic, which is the systems to create cost transparency from the bottom up. See, you must understand that our process is perhaps that we're following for cost reductions, is perhaps different from our -- from what our peer group has described. It is not, and I repeat, not a top-down process. It is a bottom-up process, following from deep and detailed data that is available, and that flows up through the organization. We expressed a desire to do 2 things for you as we move forward. We expressed a copper-equivalent unit cost target and our stated objective was to arrest the cost increase and then to decline, and our stated objective was to keep our cash cost per unit of copper production at nominal U.S. dollar flat terms. Now if you go and do the numbers today, and you strip out the implementation cost that Graham has spoken about for those closure costs, you will see, which is not a large amount, you will have seen that we achieved about a 2.5% nominal U.S. dollar cost reduction target. It's perhaps 1 of 2 other things that, if you permit me, I just want to continue to dig in on cost because cost is the theme of the day.…

It's Lyndon Fagan at JPMorgan. First question is on the U.S. onshore business. After you made the acquisitions, you outlined a plan of either $20 billion of CapEx, with some longer dated production targets. Right now all we're really being given is the Eagle Ford production target longer term. Just wondering if you can perhaps give us a bit more detail on the other assets and what level of CapEx is it, is it $4 billion a year, is it more?

Lyndon, let me just give you a little bit more in detail insight into our strategy than we shared in the presentation here today. How does Mike look at his petroleum business? He looks at one curve that is backward-dated, oil, and he looks at another curve that is in contango, gas. And so he concludes that what he wants to do is, he wants to produce the barrels in the commodity that is backward-dated as soon as possible in order to get the highest price for them, given that the market price is the best indication. And he wants to produce the barrels in the market that is in contango later on. And that's what resulted in the prioritization that we've seen. We reassess that over time, and if I look at where the contango and backwardation curves have looked and the well yields and the well productivities are going in that business, I think on balance without wanting to call this completely, Andrew is going to stand up here next time and tell you that we've continued to prioritize oil and we've continued to de-prioritize gas over the year -- over the next financial year. And again, I don't want to make an exact prediction of that because things will change between now and then, but that is what has happened. Which means that the activity rates that you're seeing at the moment is kind of the activity rates that at least for the foreseeable future, you should model, at that $4 billion or maybe a little bit more run rate. As to the Permian, which was another part of the question that Paul asked, we are still in appraisal there. It's looking good, there is some more appraisal to be done. We -- you've got a Chief Executive that is more qualified than I am to update you in the future on exactly what he's seeing there. But the way I look at it is that there's still some infrastructure missing there, there are still some appraisal to be done, and I should stress that in the 2 -- in the Permian and the Eagle Ford combined, we probably had a 100 wells, which at period end were drilled and completed, but not yet tied in. Which means that the business is really probably on balance, on target and on budget, but probably in terms of activities completed, I would say that, Mike, as usual, has probably done a little bit more than he set for himself as a target. There, I hope that helps. Craig?

Craig Sainsbury from Goldman Sachs. Two questions. One is just on Jansen, that's sort of fallen off the bubble chart, that's probably the only mega project that you haven't yet totally walked away from, I think there's meant to be a board approval or board announcement on some side of that this year. I was wondering if you can give a bit of an update on where Jansen is sitting in the growth profile. And then second question is probably a bit more for Graham. You mentioned 53%, I think it was, dividend payout ratio for the half. I know you guys don't model on dividend payout ratio, it's a progressive dividend, but I was just wondering from a financial perspective, is there an upper end of that range where you start to get a little less comfortable from a sustainability standpoint? And is it a 60, 65 and is there a gray band there where you would start to say, "Look, that dividend payout is actually getting a little bit too high, we'd step back from it."

So I can confirm it's the next Chief Executive that will have the Jansen project, so there's no change in guidance from we won't approve it in this financial year, Craig. We like the product. We like the country. We like Saskatchewan as a place to do business. The project continues to track tremendously well. I'm sure that Tim and Andrew, in due course, will update you on our shaft-sinking activities there, which -- where the shaft borers continue to look very good. We continue to be very optimistic that, that project, even in the first phase, is going to clear the financial hurdles and the risk hurdles that we've set. So you are correct in assessing that the teams are working tirelessly there to do that, to do that project. However, they've been handed down a pretty strenuous set of metrics to achieve. And before they achieve those, we're not going to approve it. And it's certainly not within this year. But we do think that, that product is an important part for us in the diversified portfolio in due course. On dividend payout ratio, you're right, we don't model it like that. Instead, what we look at is sort of the at long run prices, and at the trend growth of the portfolio size, what the cash generation for the assets could be. Clearly, we understand that there comes a point where a cent of dividend paid makes us postpone the types of projects that Paul has spoken about that. And I think that you, from the dividend announcement today, you are correctly assuming that we're saying, "Well, perhaps we've just got to see where everything is going before we take another step here." Because we have a finite appetite for CapEx, and that finite appetite next year is lower than the appetite this year. We would, on balance, like to pay some of the debt back over time. And obviously, the dividend decision coming to that as well. Let me perhaps just go to the lines for just 1 or 2 questions, and then I will come back here. Operator, can I have the first question please?

Your first question comes from the line of Clarke Wilkins from Citi.

Marius, just a couple of questions sort of further to your comments on the market. That sort of main reversion in the iron ore prices, do you think that has changed at all in terms of the time frame we take to get there, given the volatility we've seen in iron ore and also some of the projects being pushed out? Also, just on the comment on aluminium, obviously, quite various comments on the markets. In terms of maintaining the aluminium assets within the company, it clearly doesn't fit with those comments, so what sort of options would a divestment of aluminium sort of take? Would you look at in-specie or an IPO of those assets to sort of get them out of the company?

Our view on iron ore probably hasn't changed that much over the last 18 months or so. We saw the destocking cycle in China for exactly -- I think I'm on the record as just saying the end of the destocking cycle will come. However, we have indicated that we think that the absolute global iron ore market starts declining in around 2025 or so in absolute size and continues to decline for a significant period. In terms of -- so no change in that. We do believe in mean reversion, our long-term prices take that into account. We haven't materially updated either the long-run addition of capacity, nor have we made any changes as a result of remodeling to the long-run demand. We more or less where we were 6 months ago, and 6 months ago we were more or less where we were 12 months ago. But a little bit shorter term, order of magnitude, I think, in this year, our expectations are -- and we don't want to make any forecast, is that they will be, from this level onwards, quite a substantial increase in steelmaking capacity in China over the next 6 months. But overall, across the year and across future years, we think that the steel demand growth rate will be at that sort of 0.5 of GDP in China that we've articulated to you earlier. That means order of magnitude, there's maybe -- I don't know, 60 million tonnes of incremental iron ore required on that trend growth. And again, there'll be a difference between the front and back ends of the year. And there's 100 million tonnes of capacity in iron ore that is coming on, and pretty definitively coming on seeing who's building it, who's supplying it and so on. These are…

Your next question comes from the line of Per Gullberg from Churchill Capital.

I was wondering if you could perhaps comment a bit further on the capital management, following on from that previous question on dividends. And at this point in time, how do you look at the decision on whether to return cash to shareholders via buybacks as opposed to dividends. Do you feel that you have the capacity to launch a new buyback program if you chose to do so? Or should shareholders rather expect to receive distributions via dividends in the short to midterm?

Firstly, I would say that we've been at pains to stress in the last period, and I want to stress this period, that our capital priorities are unchanged. Invest in our business, maintain the balance sheet, grow the progressive dividend, return surplus cash. That has always been our priority, and that is going to continue to be our priority. We reprioritized our CapEx, we're going to reprioritize it again over the next couple of months. I've indicated that the second priority, which is to maintain the strong balance sheet, will probably receive a little bit more focus as we make those project decisions. So if you put those together and you add the progressive dividend in there, I don't think that we should expect, over the next short to medium term that there is the capacity available for additional buybacks. And then we get to the question of how do we return capital if there is surplus cash available. There are some investors that would like to see a dividend, and there are other investors that would like to see a buyback. Seeing that as equivalent. Mandates differ. Some funds cannot sell into a buyback and therefore would like a dividend. On balance, the value-maximizing equation for us, given per the peculiarities of the Australian franking credits system, which is available only to Australian taxpayers, but can be utilized in a buyback in a way that it benefits all shareholders. On balance, our bias is towards that. And again, if you call our Investor Relations people, they'd be very happy to take you through the mechanics of that. But it's largely a point that's probably a little bit moot between now and the next period. Let me come back to Melbourne and take another couple of questions here, then I'll loop back to the phones again.

Marius, it's Paul McTaggart from Credit Suisse. We talked a little about aluminium and whether it should or shouldn't be in the portfolio. I just want to get a sense, please, of how you're thinking about bauxite. We talked earlier about -- you talked about China explaining aluminium production. Obviously, there's a potential that Indonesia may not export bauxite, how does the company think about that and does that impact on your view on how the value of aluminum assets plus alumina might change?

Paul, I think your best guidance is what Graham said today in his speech, and he said we have great foresight on aluminium. We wish we had as much foresight on alumina, and one should never -- the retrospectroscope is a remarkably effective instrument. But I did pull out some time ago, an e-mail that I wrote to our aluminium team long before I became CEO, more than 10 years ago now. And it basically said, through decreasing capital costs, things that didn't -- that aren't considered as resource in China will become resource which, in hindsight, is exactly what happened in the alumina business. Now personal view, perhaps not a company view, I do think that we've probably reached some sort of an end point in that process, or we're perhaps a little bit closer to an end point in that process than we are in aluminium. In aluminium, the march goes on. In alumina, maybe the capital cost reductions that could have been made have been made. And there's probably on balance a little bit of upside on the pressure, as a result of those exact factors that you've got. Is that enough to change our view on alumina? No. Are you going to see us invest in alumina? No. Are we, on balance, set for a future with those product -- that product becomes a smaller proportion of the portfolio over time? Yes. So no change there.

Marius, Phil Chippendale from CIMB. A couple of questions, firstly, you referred to a willingness to pay down some debt over time. I think the gearing level at the moment is around 31%. Can you sort of guide us to where you view an appropriate level of gearing for the company? That's my first question. Second question on met coal. You highlighted in the presentation that you believe that met coal prices over the near term are range bound. Can you just make a comment as to what extent your -- if I can put it as cooling towards the met coal business is based on your outlook for the price versus your own cost structure?

Sorry, Phil, my brain goes -- I wrote down the note here that I can't -- what was the first part of it?

Gearing.

So our gearing is within the parameters. We always say strong A, and if you run our beta through a conventional model, you'll find that we're very comfortable. However, we've had volatile times and I think while the world is on balance poured a lot more money into equities, the reality is that the underlying situation in the world has probably not changed as much as the equity markets reflect. I think that our comments on balance paying down some debt, and I don't want to sort of say we're going to stop investing and pay down all of the debt because we're comfortable with the gearing. But on balance, we probably want to carry a few more options, and one option that you carry is balance sheet capacity. So I wouldn't say that it's from a point of discomfort, but it's more from a point of prudence, given what volatility we've seen. On met coal, last period in the --- particularly in the one-on-ones, we said that met coal is the product where we've had the greatest strategic reappraisal of where that product is heading. Let me just recap. We did a longer-term met coal forecast than we historically had and extended our model, maybe 18 months ago, 2 years ago, to extend to 2040, where previously our models had largely gone to 2025. Met coal curve basically looks the same as the iron ore curve in terms of overall demand. It flattens out in 2025 or 2030, around there. The met coal curve stays flat. So it doesn't decline like iron ore, but it tops out and then is flat. And getting there, we've got about -- from memory again, please don't quote me, but I can supply the exact number if needs be because we shared that…

Your next question comes from the line of Ephrem Ravi from Barclays.

Just a quick question on the timing of the divestments of your assets. The outlook for nickel is not getting any better at least according to us, because of the RKEFs and aluminium, as you mentioned, the Chinese are going down the cost curve. The longer you wait, the more difficult it gets to kind of get a fair price for the assets. Is there any timeline that you've set for these divestments, just so that you can clean up your portfolio and look forward?

No. We don't have a timeline. Our experience is that assets that are sold in distress or in haste, you often repent at your leisure, Ephrem. And I think it's not only the price prognosis, and in nickel I suspect we won't be making big changes to our price protocol this year. There are also things like operational results and expiration results in the business to take into account when maximizing value, and the nickel business has actually done a great job of both exploration results, as well as reducing cost. So that clearly -- not that we want to invest fresh capital in that business, but which changes our value attribution to that business to the positive. If I can have -- I've got a signal here that it's time. My apologies that it's the end of our session. Andrew, do you want to make a few comments?

Okay. Thanks, Marius. I'm just going to make a few remarks. Some of them I covered off earlier in the media briefing we did about my appointment. Look, it's great to see so many familiar faces, so we're obviously -- we've already gotten to know each other quite well, I'm going to get to know each other a lot better, I'm sure. I'm obviously extremely honored by the appointment. BHP Billiton is an enormous and truly great company, so it does humble me greatly. Marius referred to the fact that he persuaded me to join the company about 5 years ago and since then, of course, I've had a huge experience, the great pleasure and privilege working with him, the board, the top team and thousands of talented employees across BHP Billiton. And Marius has prepared me, I believe, exceptionally well for the possibility that I might take over from him. Just a tribute to Marius, we spent a bit more time on the press conference. I mean, I strongly believe, as a great CEO, he has left the company in much better shape than he found it, which is a phenomenal platform on which I can build. And you've heard a bit more about that in the results today. I mean, some of the things that I particularly have a passion for, because of my background, I will say more about that in a moment, we've built real momentum around issues of cost control and capital discipline. And as some of you know, I spent quite a bit of time in the chemicals industry, where we rarely see the kind of margins that occasionally visits parts of the resources industry, and that's where I honed many of my skills. So I'm extremely keen, Paul and others, to your comments…

Thanks, Andrew. Andrew and I plan on spending a substantial chunk of our shift with shareholders over the next period as I hand over. So we, obviously, are going to run into a lot of you around the world and so on. So with that, I'd like to close the session. Thank you again for being with us this morning. Thank you very much.