BHP Group Limited (BHP) Q1 2013 Earnings Report, Transcript and Summary

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 budget. We've made good progress on the ongoing simplification of our portfolio, and we remain confident of the outlook for our business. This focused approach and our well-established and unchanged strategy ensures that BHP Billiton is very well positioned to continue to outperform its peer group. But let me begin, as I always do, by discussing one of our core charter values, sustainability. The basic premise of putting health and safety first, being environmentally responsible and providing support for the communities in which we operate is intrinsically tied to our license to operate. In this regard, our total recordable injury frequency rate for the December 2012 half year improved by further 2% from the already record-low level achieved in our 2012 financial year. And considering a slightly longer time horizon, our total recordable injury frequency rate over the last 5 years has declined by 38%. Regrettably, however, we suffered the tragic loss of 2 of our colleagues during the financial year. The impact of these losses on family, friends and colleagues is -- are immeasurable and only reinforces the continuing need to eliminate fatal risks in our business. Turning to our financial results, the first half of our 2013 financial year was characterized by slowing global growth and a heightened sense of economic uncertainty. Commodity markets were volatile and a substantial reduction in our realized prices, as well as a persistent strength in producer currencies, weighed heavily on profitability. Strong operating performance across our assets and a material reduction in cash cost were not sufficient to offset these price and currency imposts. More specifically, EBITDA declined by 29% to $13.2 billion, while underlying EBIT declined by 38% to $9.8 billion. Attributable profit declined by 58% to $4.2 billion, and that is inclusive of exceptional items totaling $1.4 billion. Net operating cash flow declined by 48% to $6.4 billion. Pleasingly, however, cash generated from operations before working capitals declined by a more modest 29%, a strong performance, particularly relative to profit variance or price driven profit variance, and this again, illustrates the strength of our portfolio and strategy, which emphasizes asset quality and diversification. Ongoing portfolio simplification realized significant value for shareholders, with transactions totaling $4.3 billion announced or completed during the period. Consistent with our disciplined approach, these transactions were priced at a substantial premium to what the value -- to the values ascribed to these assets by the market. Capital and exploration expenditure was according to plan at $12.2 billion, and our full year guidance is unchanged at $22 billion. Our 20 relatively low-risk, largely brownfield projects, remain on budget and on schedule, with the majority, as previously scheduled, to commence production before the end of our 2015 financial year. With gearing of 31% at the end of the December 2012 half year, the capital structure remains strong and within the parameters defined by our solid A credit rating. And today, we declared an interim dividend of $0.57 per share, extending the unbroken track record of our progressive dividend. I would now like to discuss our production results in a little bit more detail, which continue to meet or exceed previous guidance. The chart on this slide shows and clearly illustrates the strong and consistent performance of our operations in the December 2012 half year. At Escondida, copper and concentrate production increased by 70% as we transitioned to higher ore grade and as we completed major maintenance programs. We're confident that we will achieve our targeted 20% copper production increase at this asset this financial year, and confident that we will grow production to over 1.3 million tonnes in our 2015 financial year. In our petroleum business, liquids volumes increased by 4% during the period. Development drilling at Shenzi, the recommencement of production in our Gulf of Mexico joint interest operations, and a more than 100% increase in the liquids contribution of our Onshore U.S. business, offset natural field decline elsewhere. Our plan to increase total petroleum production to 240 million barrels of oil equivalent this financial year is unchanged. At Queensland Coal, metallurgical coal production had largely recovered to supply chain capacity by the end of the year -- by the end of the calendar year, I should say. The associated increase in productivity, broader economies of scale and closure of high-cost capacity is expected to deliver significant reduction in unit cost over the remainder of the financial year. Substantial effort is underway to ensure that this business returns to profitability even in the absence of higher prices. Our single largest earnings contributor, Western Australia Iron Ore, maintained its strong momentum, delivering a 12th consecutive December half year production record. The recent commissioning of our fifth car dumper at Port Hedland ensures that this business remains well positioned for future growth. In this regard, we now estimate that car dumper, ship loader and rail capacity to be about -- around 300 million tonnes per annum, and in due course, we look forward to approving what could be one of the lowest capital cost expansion opportunities in the industry as we add mining capacity to match that logistics chain. We are, therefore, on track to grow our copper equivalent production volumes at a compound annual growth rate of 10% this year and next year -- financial year, that is, in line with previous guidance. More broadly, record production at 5 operations, together with the release of latent capacity that I just referred to, as well as the decisive action that we've taken to arrest and then reverse cost inflation will continue to support margins and returns. While external factors, particularly price, were therefore less than supportive in the reporting period, we continue to deliver on those things we can control: safety, volume and costs. And with that, I'd like to hand over to Graham, who will discuss our financial results with a particular focus on the progress that we have made in reducing our operating costs and discretionary spend. Graham?

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 with a softening in producer currencies, with direct benefits to our cost base. However, as you can see from this slide, this historical relationship broke down during the period as the continued strength that produced the currencies led to a $418 million reduction in underlying EBIT. Notwithstanding the significant external influences, what should be a particular interest is a $1.1 billion positive earnings contribution from the 2 major drivers that we directly influence: volume and controllable cash cost. I will expand on both of these items in a moment. Included in noncash and one-off items were a number of charges which relate to the group's restructuring initiatives. For example, we incurred over $50 million in costs associated with the closure of Norwich Park in Gregory metallurgical coal mines in the Bowen Basin. The curtailment of these high-cost mines is an example of the targeted measures that we have implemented as part of our ongoing cost reduction program. Also included in one-off items were costs associated with the recovery of potline capacity at our Hillside operations following the major technical outage that occurred in the March 2012 quarter. The variance for new and acquired and ceased and sold operations reflected a $222 million one-off gain in the prior period that related to legacy U.S. gas derivatives in our onshore U.S. business. I would now like to discuss the strong contribution of volumes before expanding upon the significant progress we have made in reducing controllable cash costs during the period. As Marius has mentioned, the release of lighting capacity at a number of our highest margin businesses and strong growth across the broader portfolio is expected to deliver a compound annual production growth rate of 10% in copper equivalent terms over the 2 years to the end of our 2014 financial year. This unchanged guidance is underpinned by the strong production performance that is reflected on this slide. Record sales volumes at 5 of our operations contributed to a $435 million volume-related increase in underlying EBIT. Looking ahead, higher margin volume growth for our core businesses will continue to drive earnings momentum. Notwithstanding the general level of improvement recorded across the group, lower diamonds production at EKATI reduced underlying EBIT by $131 million. I should note here that we recently announced the sale of our diamonds business to Harry Winston. I will comment further on this in a moment. Finally, you will see that we have again treated our petroleum business separately in a waterfall chart as oil fields, by their very nature, decline over time. In this context, natural field decline, most notably at our successful operated Pyrenees field, largely accounted for the negative volume variance in petroleum. Now I would like to turn our attention to costs. Almost 15 months ago, we initiated an internal process to respond to general inflationary pressure and the persistent strength of producer currencies that continued to compress margins in the industry. Since that time, as part of a series of group-wide initiatives, we have implemented significant measures to reduce discretionary spend and overhead costs across the group. In fact, our early recognition of these challenges and our targeted response has enabled us to reduce our controllable cash costs by $944 million in the December 2012 half, or $1.9 billion on an annualized basis. This included operating cost efficiencies of $397 million, a reduction in overheads of $87 million and a decline in exploration and business development expenditure of $557 million. Let me now spend some time expanding on each of these categories so I can help you appreciate the extent to which these targeted initiatives have delivered real benefits across the portfolio. The operating cost savings of $397 million includes a general reduction of consumable spend across the portfolio and a significant reduction in contractor usage and rights with our Queensland Coal operations. The $87 million reduction in overheads reflects a number of optimization initiatives which includes the combination of the aluminium and nickel CSGs as well as a general reduction in functional headcount across the group. In fact, since we initiated our group-wide cost reduction programs, we have already delivered a 20% reduction in actual overhead numbers. In contrast, volume-related efficiencies achieved across the broader portfolio were more than offset by $164 million in higher costs associated with our decision to increase operating capability at Western Australia Iron Ore prior to the full ramp-up of expanded capacity. We will benefit from this spend in future periods. The efficiencies we achieved to date will further support us through the second half of our financial year, as we continue to benefit from the release of latent capacity at Escondida and Queensland Coal, and the ongoing ramp-up of production at Western Australia Iron Ore. The $557 million decline in exploration and business development expenditure, which includes an overall reduction in expense and capitalized activity reflects the targeted nature of exploration program and the ongoing rationalization of nonessential expenditure. Greenfield minerals activity is now solely focused on advancing copper targets within Chile and Peru. While in petroleum, exploration is principally targeting high-value prospects in the Gulf of Mexico and offshore Western Australia. The reduction in business development expenditure reflects the focused manner in which shareholder capital is being deployed across the business. For example, following the identification of substantial latent capacity in the Inner Harbour at Port Hedland, we have significantly reduced the spend associated with our Outer Harbour and West Africa iron ore development options. In metallurgical coal, the persistent strength of the Australian dollar, higher royalties and weaker market outlook have also led to a reduction in business development expenditure. Our streamlined approach in this coal business is now focused on the successful delivery of projects in execution, along with the ongoing optimization of our existing operating footprint in Queensland and New South Wales. Finally, I should note that price-linked costs declined by $270 million during the period, largely reflecting a reduction in royalty-related payments in our iron ore and metallurgical coal business. This is partially offset by a $98 million increase in fuel and energy input costs. If I include price-linked and fuel and energy costs, which we deem to be uncontrollable, the total cash cost savings of the period equates to over $2.2 billion on an annualized basis. Therefore, in summary, our early recognition of challenges facing the industry has enabled us to act decisively, and I'm pleased to report the real progress we have made in delivering a $1.9 billion annualized reduction in controllable cash costs. In talking to you about cost savings, I hope you have noted the emphasis on delivery, not aspiration, and our effort to be fully transparent. Clearly, I think it is important that our shareholders can track our performance in this area, given its potential to become a substantial value driver for the company. Looking ahead, reducing our discretionary spend and overhead costs will remain a core objective, along with the continued safety of our people and delivery of high-margin production growth as these priorities are the key measures of success for this management team. Now I would like to highlight some other factors in our financial results so they're often difficult to model. As I touched upon earlier, exchange rate movements had a negative impact on our underlying EBIT during the period. This Australian dollar strengthened in December 2012 half year despite a significant decline in average iron ore and coal prices, while the Chilean peso continued to reflect the compelling longer-term fundamentals of the copper market. The period end restatement of monetary items in the balance sheet associated with the general strength of these and other producer currencies reduced underlying EBIT by $574 million. It is important to note that in a stable currency environment, this significant reduction to earnings would not reoccur and overtime, should unwind as producer currencies may revert. Now let me move away from earnings for moment, so I can update you on the group's capital expenditure program. Capital expenditure for our minerals and conventional oil and gas business totaled $9.3 billion for the period, in line with our unchanged full year guidance of $18 billion. This includes major project spend, exploration, minor and sustaining capital. In addition, our Onshore U.S. drilling and development expenditure for the period was $2.1 billion and guidance for our 2013 financial year remains unchanged at $4 billion. Over 80% of this expenditure will be focused on the liquids-rich areas of the Eagle Ford and Permian. In this chart, I have rolled forward the project pipeline I presented to you 6 months ago to highlight the progress we have made in the December 2012 half year. Projects that achieved first production include the Western Australia Iron Ore Port Hedland Inner Harbour expansion and the Orebody 24 project. In our Bass Strait oil and gas business, the Kipper project was completed while the Longford gas conditioning plant was approved. The 20 relatively low-risk, high-return projects currently in development remain on schedule and budget, with the majority expected to deliver first production before the end of our 2015 financial year. The level of spend associated with these major projects declines relatively quickly from the end of our current financial year, affording the company significant flexibility. As we look beyond the current suite of projects in execution, the depth of high return development options that we have in our core OECD basins means that if the returns in any one project don't stack up, we will not invest. In summary, I would like -- I would again like to confirm that capital expenditure guidance remains unchanged for our 2013 financial year. While our development activities continue to drive strong returns for our shareholders, we are also delivering substantial value through our ongoing divestment program. Consistent with our commitment to simplify the portfolio, we continue to selectively pursue asset divestment opportunities with a firm focus on value. Asset sales totaling $4.3 billion were either announced or completed during the period. These included the $1.7 billion sale of our 37% interest in Richards Bay Minerals, the $430 million sale of our Yeelirrie uranium deposit, the sale of our diamonds business for $500 million and our agreement to sell our interest in the East and West Browse joint ventures for a cash consideration of $1.6 billion. Notably, these transactions have been delivered at an overall premium to average market valuations with minimal impact to future earnings. As we continue to simplify the portfolio, realizing value will remain a core objective. This successful divestment program has supplemented the strong cash flow generating capacity of the group with a gearing ratio of 31% at period end, the company's capital structure remains strong and within the parameters defined by our solid A credit rating. Finally, our robust cash flow has enabled us to grow our interim dividend at a compound annual growth rate of 24% over the last 10 years. For the December 2012 half year, we declared an interim dividend of $0.57 per share, a 4% increase from the prior corresponding period. It is the careful planning and disciplined application of our unchanged capital management priorities that has enabled us to maintain our progressive dividend policy despite significant volatility in commodity markets. While we don't target a particular dividend payout ratio, it is significant to note that our interim dividend represents a payout ratio of 53%. To close my section of the presentation, I would like to touch on royalties, taxes and exceptional items. During the period, the company paid $6.1 billion in the form of federal and state taxes and production royalties. Our underlying effective tax rate for the period, including royalty-related taxation, was 38%. This also included a $150 million noncash expense associated with the revaluation of deferred Australian resource rent tax balances. In future periods, excluding the impact of noncash variations to deferred tax balances, our underlying effective tax rate, including royalty-related taxation, should average between 34% and 36%. As an aside, in January 2013, we paid a $77 million installment of minerals resource rent tax to the Australian government in respect of our 2013 financial year. This installment is based on our view of the Australian dollar and iron ore and coal prices over the remainder of the financial year. More broadly, we paid $4.8 billion of taxes, production royalties and resource rent taxes on Australian-based earnings in the December 2012 half year. Exceptional items reduced attributable profit by $1.4 billion during the period. These included gains on sale of $1.6 billion, following the completion of the Richards Bay Minerals and the Yeelirrie divestments; a $211 million impairment charge associated with the yet to be completed sale of our diamonds business; a tax benefit arising from the announced sale of our interest in East and West Browse joint ventures; impairment charges recognized at our Worsley and Nickel West assets and other impairments arising from the group's capital project review. The impairment charges at Worsley and Nickel West reflect the continued challenges of a strong Australian dollar coupled with the persistent weakness in alumina and nickel prices. We recognized that challenges in the aluminium and nickel industry early, and as you will note from our project pipeline, for some time now, we have de-prioritized these commodities for further investment. While we are pleased of correctly predicted the influence that the new Chinese capacity would have on the aluminium and nickel markets, in hindsight, we would have liked to identify the changes in the alumina market earlier on. The major charge reflected in the group's capital review of projects relates to an impairment of early works associated with our Western Australia iron ore Outer Harbour development option. As you may recall, late last year, we detailed a number of factors that have positively influenced the potential growth path at our Western Australia Iron Ore business. This included: one, an increased understanding of the potential capacity of the Port Hedland Inner Harbour, along with greater clarity as to how unutilized capacity will be allocated; two, the Port Hedland Port Authority granted us the option to develop 2 new berths in the Inner Harbour; and three, as Marius mentioned earlier, with installed car dumper, ship loader and rail capacity now approaching around 300 million tonnes per annum, the significant de-bottlenecking and optimization potential that exists in the Inner Harbour has only become more clear. Therefore, in due course, we look forward to approving one of the lowest capital cost expansion opportunities in the iron ore industry. In this regard, our incremental iron ore dollar is likely be directed towards a high return in Inner Harbour option in the first instance. As a consequence of this value-driven decision to defer the Outer Harbour development beyond our their 5-year planning horizon, we have written off all associated investments despite the inherent value of the environmental studies and design and engineering works that form part of our dual harbor strategy. Finally, I would like to note that we have donated more than $1 billion in the communities in which we operate over 5.5-year period, consistent with our commitment to voluntarily invest 1% of pretax profits. So let me summarize before I hand back to Marius. We have delivered strong and predictable operating performance. The $1.9 billion annualized reduction in controllable cash costs delivered during the period is real, is measurable and sets the platform for future gains. Our major projects are on schedule and budget and our ongoing divestment program continues to create substantial shareholder value. With that, I would like to hand back to Marius.

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 at a multiple of GDP. As a result, demand growth rates for many of our core products within China are expected to remain within a range of 2% to 4% per annum, as illustrated on the bottom part of this slide. And given those growth rates that we've expected, that are unchanged essentially from what we've articulated before, the differential supply response across the various commodities is likely to play an increasingly important role in price formation. For copper, a robust supply growth in the very near term is expected to result in a more balanced market despite numerous past project delays and curtailments. The longer-term outlook for copper price, however, continues to be underpinned by operating and capital cost pressure associated the rising strip ratios and declining grade at existing operations, as well as the scarcity of advanced, high-quality development opportunities. As such, the demand for new copper capacity, if supply is to meet demand, suggests that the price in the medium- to long-term will need to be supported at a level high enough to induce these lower grade, higher cost supplies. In iron ore, there is no apparent scarcity of high-quality resource. Rather, the barrier to entry relates to the large scale -- the substantial cost of developing, particularly greenfield capacity and the time frame. The rate of underlying growth is, therefore, particularly important as it governs the ability of low-cost producers to keep pace with demand. Over the last decade, high demand growth rates in China, associated with that steel-intensive phase of development, at times overwhelmed the capacity of the -- or the capability of the low-cost producers to expand. And instead, higher cost capacity was induced, sort of in an opportunistic manner. This led to a steepening of the global cost curve as schematically illustrated on the top right-hand side. This steepening of the cost curve and the addition of low-cost capacity since then has led to the accentuated price volatility as cost customer stocking cycles now have a more significant impact on price formation. Now given our belief in the continuing decline in steel intensity per unit of GDP growth, that we referred to previously, significant low-cost supply planned in Australia and Brazil, particularly in the second half of this year and beyond, will eventually meet and then exceed incremental Chinese demand. As this trend becomes increasingly established, high-cost supply will continue to be displaced off the top of the cost curve -- the cost curve will flatten and prices will tend to mean revert over time. The supply side equation is arguably even more important for metallurgical coal, given the relatively low demand growth rates of the traditional markets. And as you can see on this slide, the sharp rise in the price of metallurgical coal in 2011 induced a substantial production response from the traditionally higher cost swing supplies, primarily located in the United States, as we can see here. As a result, the market rebalanced and the price declined. And at today's level, the price appears to be well supported by the cost of Australian production which is, of course, increased quite dramatically given the strong Australian dollars and the very significant increase in Queensland royalty rates. Any sustained price increase beyond what we've got today, however, is likely to just draw U.S. supply back into the market. This suggests that in the absence of a very major supply disruption of some kind, the price of metallurgical coal is likely to be range-bound going forward. The longer term supply-demand fundamentals for aluminium, if we contrast it to what we've just discussed in copper, stand in stark contrast. Whereas 1 million tonnes of new copper capacity will be required each year, the aluminium market is forecast to remain in overcapacity throughout the forecast period. Whereas the next generation of copper mines are likely to be lower grade and higher copper -- sorry, operating and capital costs, actually, in contrast, Chinese aluminium capacity appears to be progressively moving down the global cost curve. The likelihood of a further flattening of the aluminium cost curve and in expectation that overcapacity will constrain the price on average to below the marginal cost of production to be quite impactful for producers, given the relatively capital-intensive nature of the aluminium industry, enhance our long-standing approach to de-prioritize these areas for investment. These differences in supply and demand fundamentals, as we look through the various commodities explain why it's so important for us to plan for the longer term, and why BHP places such value on both diversification and asset quality. Now talking about that strategy. Our diversified and high-quality asset portfolio is a function of our unique resource endowment, and I should point out again that, that endowment is largely placed within the OECD. On this slide, we've displayed our global operating footprint, the size of the various bubbles reflect the relative contribution of each asset, expressed here as copper equivalent units in our 2012 financial year. And the shade of the bubble represents the rate of production growth in that 2-year plan that we've outlined for you. In simple terms, blue denotes rapid growth. And what should be immediately apparent when looking at this slide is the dominant contribution of our major basins in 4 key commodities that are key to current production and future growth. And those are: Western Australia Iron Ore, the Queensland metallurgical coal operations, Escondida and copper and our U.S. convention and unconventional oil and gas business. Perhaps another way of just looking at the importance of these key assets the way we allocate capital. On the next slide, we have shown the bubbles representing the capital expenditure being allocated to our major projects. The shade of each bubble reflects the historic margin in this case of the customer sector group where the capital is being deployed. Hence in this case, blue denotes strong EBITDA margins. And what should be clear, therefore, is that we're investing most of our capital in the same businesses that dominate our current production and earnings mix. The pie chart embedded in this chart shows that over 95% of our $22 billion project approved capital budget associated with these 20 projects is directed towards customer sector groups that have generated an average underlying EBITDA margin of 40% or more over the last 5 financial years, again, illustrating those businesses which we have de-prioritized for capital allocation. So simply put, we continue to invest in the same assets that have been instrumental to driving our outperformance relative to our peer group in years past. These investments also illustrate that we are focusing them on largely among brownfield projects in the backyard, and as a result, the risk-reward equation on balance is more attractive. As we continue to simplify our business in the manner Graham referred to earlier, these core basins will ensure the benefits of diversity are maintained on the one hand, while our average operating margin is expected to rise and the capital intensity to decline. And given our view that we've entered a new phase in the commodities pricing cycle and that we cannot rely on commodity price appreciation for share price appreciation, or put a different way, where margins and returns will no longer be supported by tailwind of higher prices, our focus on cost and our disciplined allocation of capital will only intensify. Prior production guidance remains unchanged. Western Australia Iron Ore is expected to go -- grow to a run rate of 220 million tonnes per annum before the end of our 2015 financial year, liquids-rich production in the Eagle Ford to 200,000 barrels of oil equivalent per day in the same time frame, and in addition, the release of latent capacity at Escondida and Queensland Coal is expected to underpin unchanged guidance of 10% copper equivalent production growth in each of this year -- this financial year and the next. Before I conclude, I would like to highlight our strong track record. Over the last 5.5 years, the distribution of a significant portions of our earnings to shareholders, together with prudent investment in our business, has contributed to outstanding total shareholder returns of 47%. This compares to a negative return for our peer group overall. Over a 10.5-year period, we've returned $57 billion to shareholders through a combination of dividends and buybacks. That's more than all of our immediate peers combined. I would also like to reiterate my long-term confidence in our business. Long-term planning based on detailed analysis of the various commodity markets, our unchanged strategy centered on low cost and diversified assets, coupled with the ongoing simplification of our portfolio has positioned BHP Billiton to outperform its peer group through the cycle. So in conclusion, I'm proud to say we are delivering on the commitments we've made. We got strong and predictable operating results. Our production guidance remains intact. We recognized the changed environment earlier than our peers, so we got started earlier than our peers on costs and that focus has only intensified over the last 15 months or so that we really worked at it. And on an annualized basis, we've -- Graham has taken you through great detail of how we've already reduced controllable cash costs by $1.9 billion off a known base. Our major projects remain on schedule and on budget, and we've made good progress in simplifying the portfolio. I would now like to come back and say a few words on the important topic of succession, and once again congratulate Andrew Mackenzie. Leadership development and succession planning at all levels within an organization like BHP Billiton is one of the most important tasks. In this regard, with the appointment of Andrew as an internal candidate, I'm very pleased that our process has worked well. Now, perhaps a little bit more anecdotally. I first met Andrew in a joint venture context, where I was the BHP representative and Andrew was the Rio Tinto representative. We had a particularly sticky problem to solve. And at the end of the process, I was absolutely convinced that I wanted him as my colleague, not the usual outcome of what I recall was a pretty intense argument at that time. It took a couple of calls at the beginning of my tenure to convince him to join us, and I made that call right at the start as I was putting together my original team. Andrew eventually said yes, and trusted me enough to sit at home for 12 months while he waited to join the team. Andrew, I'm thankful that you said yes, and I'm thankful that you've trusted me, but what I want to illustrate by this anecdote is that there is nothing accidental about this. And I hope that in due course, Andrew will prove that there's nothing accidental about the process going forward either. As Chief Executive for our non-ferrous business, Andrew has overseen a substantial portion of our portfolio with great impact and success. Notably, Andrew is one of the few, the very few people in our industry with very deep senior level expertise in upstream oil and gas and upstream minerals, a very, very unique combination. As a co-shareholder, I'm happy to know that BHP Billiton is in safe hands, and I would like to wish Andrew the very best. I'm very pleased for you, Andrew. And on that note, I'd like to move to questions on our results, but -- but of course, I understand that everybody wants to hear from Andrew as well, so what I'll do is we'll go through questions for a while, at some point in time, somebody is going to give me a signal that it's time. And I will invite Andrew on to the stage, who will then make a few comments. We'll start here in Sydney, before moving to London and then we'll move to the phone lines. As ever, if you could state your name and address your questions to me in the first instance, I will pass them to Graham as appropriate. May I have the first question, please?

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. And I just want to say, we led that. We led that, we made that call first. Embedded in our cost numbers -- so if I step back and I look at our results, we came in at about 3% above consensus on underlying EBIT, which means that we came ahead of analyst average expectations for costs savings, because we're all working on the same price stick. What is not in that underlying EBIT number is that nearly $600 million of adverse DIE on the balance sheet that Graham said is once-off, $164 million of costs in iron ore, which is directly associated with the ramping up stuff, and then $270 million of restructuring costs. If I add all of those things and all of that actually are impacts that in a real underlying sense, I think we feel that we've delivered and we feel that we've delivered on cost targets that are measurable from our results, off a known base. However, that's only the start. The objective here was to arrest and then to decline. And there is no doubt that if you look at the -- for example, wage settlements in Chile. Chile is still coming off the investment peak in copper and wage settlements there were still very strong. What I think the management team's deep, deep transparent systems are going to deliver is very clear transparency on where we -- where we're going from here. We really wouldn't like to nominate a number that cannot be verified from a top line. And we really wouldn't like to put a big target out there. We'd like to stand up here in 6 months again and increase on the $2 billion number. I also want to note that our approach is not to include the noncontrollable costs in that target. I mean, energy and royalties, quite frankly, are just things that are -- yes, unit usage, a little bit, the other things are just not in our control. So we'd like -- we're going to come back here again and again, and I know I speak for Andrew as well, and focus on delivery, verifiable cost savings and we're going to move that on from where we are today. But I don't want to be drawn on more -- elaborating another dollar target. We want to continue to decrease, therefore from this point onwards, our unit cost per copper equivalent unit as expressed in U.S. dollars, which is the currency in which we do our books. In terms of growth, there is no change from what we said in the previous period. Clearly, the near-term cash generation started changing some 18 months ago. And you have seen, we made a significant adjustment in our forward options portfolio. Some of those options are very valuable options, but got pushed out over a 5-year period. We are long options, and given the gearing and given the cash flow in the corporation, we have no change guidance today on a 5% growth rate that we articulated forward in the past. That is unchanged. We did, however, also articulate that on balance, instead of approving new projects this year, and project approvals will come later, and that as part of our cash flow generation, we do want to pay some debt down on the balance sheet. Again, that remains unchanged. So I think that these options for growth, we are blessed to have options for growth, that substantially out -- exceed what we believe our cost of capital to be. They will keep, we're not going to overextend ourselves and we will do them later if time requires. For now, I think I don’t recollect the exact words that Graham used, but he said we don't give guidance at this point in the year because our budgeting cycle is not complete, but given the trends that we see in capital approvals and so on, we see lower CapEx expenditure next in our FY '14 than we've seen in FY '13. I'm sorry for the comprehensive answer, but I'm hoping that I covered off some of the questions that others wanted to ask as well. So if we can have the next question, please.

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 projects that are well advanced. So I think that our base outlook is basically the same for the iron ore business as the market, the now efficient -- or reasonably efficient market tells us that we will have higher prices nearby and the price decline following that, because this is a non-storable commodity and therefore volume and -- there's no inter-temporal arbitrage here. So that's a more or less where we are. In terms of the aluminium assets. For us, value is paramount. We probably, at any given moment in time, worked a dozen transactions. Some of them go on for years, some of them complete very quickly. I wouldn't like to call it on aluminium assets, I think, suffice it to say, that they are not call for new capital addition, but I'd be a foolish CEO if we just hoof assets out of the portfolio at whatever price the market will bear. I mean, you've seen us work some assets for a long time, and I think that that's what we will do in those assets and other assets that we may be looking at. If I can have the next question, please. Operator can I have the next question, please.

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 before, about a 1% rate of met coal growth over the period until it gets to the plateau. That is not a high growth rate. So the combination of changes in our model for steel intensity in India and so on, and so on, the longer-term forecasting meant that met coal you were in a window, the same as you are in iron ore, which then biases us not to new geographies and new places, but really optimizing the backyard. And so Hubie and Steve Dumble, and all of the other guys are doing exactly the same as Jimmy out West which is to say, "How do I not build new things but get more out of the existing structure?" That's a change. The second huge change is that the royalty structures had been punitive in Australia, and punitive. That together with the higher exchange rate has moved the overall Australian met coal business into a different place on the cost curve. That changes your investment behavior and certainly, as we do our bottom up pecking order changes the pecking order where those products go. The third element is that the U.S. exports have become more competitive, the same way the Australia exports have become less competitive, the U.S. exports have become more competitive, and that means that the cap comes on in a different place. You add those 3 things together, and we've seen that -- probably, the only real strategic reappraisal of a business over the last 12 months in that business. So I hope that answers your question. Let's please take one more question here, and then I'll try the phones again. And somebody must just indicate to me when I've got to stop, please. Is there a next question here? Sorry, from the phones, operator?

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 to really continue to build on that momentum as I go forward. Now of course, the strength of that platform means that there's a lot of things that I'm not going to change, I mean, we're very committed to -- I am, to the strategy it served us extremely well, our shareholders well, as well. And as Marius introduced his remarks, we will maintain this undying focus on improving the health and safety of our employees. I mean, what I will do in building on this momentum is really provide an even sharper focus in how we execute against that strategy and extend our pressure on costs and our commitment to real capital discipline to drive us or keep us, in many cases, at the bottom of cost per mined tonne, and at the upper ranges of capital productivity. And there, of course, I am committed to extending Marius', as he reported through the results, fantastic track record of sector leading the terms to shareholders. I mean, a couple of you asked questions about some of the cost issues and targets and clearly, I'm not going to say too much today. I think the only thing that I would add to Marius' comments about -- track us, and we will give you a lot of transparency to track us. And this is probably just the beginning of things that we're going to do. I and the team have lots of new ideas. I mean, the one thing we perhaps didn't mention in our bottom-up approach is the importance of forensic benchmarking. The systems that Marius has introduced allows us to be extremely detailed in finding the best-in-class performance in our company and therefore, inducing, causing and inspiring the people who work for us to move their performance to the best-in-class of the company and therefore, move the mean of the company to best-in-class. And that's not something that requires any new technology or anything like that, it's just about the motivation and the leadership to get there, and you can count on me applying that. And of course, we'll take a lot of that benchmarking well beyond the boundaries of our company into many other competitors and so on, where we can get access to it. And that's probably particularly applicable in the areas of capital, where perhaps unlike some of the operations piece, we do have the think about ways in which we can pull through new technology and change the way for the better in terms of performance that we run our business. The company is unquestionably one of the world's great resources companies. We are, as you all know, the world's biggest mining company. We have, as Marius referred to, the license to operate some of the best ore bodies in the world, some of the best opportunities in oil and gas. So that gives us, if you like, a critical role on a sort of broader stage, if I might, in ensuring that the world has the supplies of the basic commodities it needs to grow, both in terms of its served population and in wealth. And Marius, through his time, has made a very successful contribution that way through applying some of the leading edge management techniques, the systems that he referred to and indeed, technology to make sure that, that supply that the world needs often for peaceful and harmonious reasons is there, and I fully intend to continue that success. We said a little bit more about the process itself. So I mean, it's obviously perhaps a little bit biased of me to say it was a great process, given that I kind of liked the results. But one of the really nice things about it is that Marius is not rushing away. As he said, he's committed to raise the bar relative to Chip, to work with me. He's going to spend the next 2.5, 3 months in the job where I can apply, get up to speed. And I'm going to take the opportunity very seriously, it's a great luxury. I mean, I will pay tribute to you. I mean, I've had a lot of opportunities over the last year to talk to many of you collectively and individually. You've given me a lot of good ideas, I've listened quite hard and some of them are built into my thoughts for the future, and some of them are yet to come. But I want to carry on listening for just a little bit longer, until I sit in the seat. We'll meet one-on-one, and we'll meet and inquire and deliberate, and really try to refine my ideas, of course. With my background experience, I've already got quite a lot of thoughts. Most of them are extensions, but I think they will benefit through further airing, and particularly with you and obviously many of our shareholders and owners. And I'm looking forward to a similar dialogue with other important stakeholders. Obviously, in a job like this, we've talked about over 100,000 people working for the company. As many of you know, you get a meet a lot of them when you go on our site tours and on so, they're incredibly talented and it's certainly a real privilege that I get to lead them, to inspire them and push them along this direction of productivity, both in the operational realm and the capital realm. But we have a broader role to play that I described already about supply, but also to ensuring that we really are a force for good in all the communities in which we operate. I guess, I will see a lot more of you guys because I'm going to move to Melbourne pretty sharply. I kind of made a comment that it's sort of probably a little bit insensitive here in Sydney to say that my wife, Liz, and I are really pleased that Melbourne has just been voted the most livable city in the world, but we completely understand within our family the tension between great cities that are next to one another. I'm from Glasgow, my wife is from Edinburgh, and I tend to think Glasgow is more Sydney, and Edinburgh is more Melbourne. So even though I'll be kind of Melbourne-based, I will still have an interest in sticking up for Sydney and getting to know the city even better as well. I mean, this is a fabulous opportunity for me. This is one of the world's great companies and I want to keep it that way and build on that, and make sure it's appreciated as such because I know you are, and I will be to, down to the hard numbers, so there's a lot of benefits that flow from that, I think, in a global sense, but also I think to our home here in Australia. There's no other job I'd rather do, so I'm really looking forward to the dialogue that's coming up that I'm going to have with you so that we make sure that we extend Marius' track record and run the company with ever-increasing attention to excellence. So thank you, and thank you for listening to us today and I look forward to it.

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.