必和必拓 (BHP) 2013 Q2 法說會逐字稿

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 are also joined on the telephone line by other members of the management team.

I would like to thank you for accommodating the one hour delay that is required, as our 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 result. I will then conclude by discussing commodity outlook, as well as our unchanged strategy, which has been the cornerstone of our performance 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, 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 recognised a change in the environment earlier than others in our industry. As a result, our usual focus on costs has been intensified over the last year and on annualised basis we we've already reduced controllable cash costs by $1.9 billion.

Our projects slate remains on schedule and budget. We've made good progress on the ongoing certification of our portfolio and we remain confident of the outlook for our business. This focussed approach and our well established and unchanged strategy ensures that BHP Billiton is very well positioned to continue to outperform its peer group.

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 licence to operate. In this regard, our total recordable injury frequency rate for the December 2012 half year improved by a further 2% from the already record low level achieved in our 2012 financial year.

Considering a slightly longer time horizon, our total recordable injury frequency rate over the last five years has declined by 38%. Regrettably however, we suffered the tragic loss of two our colleagues during the financial year and the impact of these losses on family, friends and colleagues are unmeasurable 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 characterised by slowing global growth and a heightened sense of economic uncertainty. Commodity markets were volatile and substantial reduction in our realised prices, as well the persistent strength in producer currencies, weighed heavily on profitability. Strong operating performance across our assets and a material reduction in cash costs were not sufficient to offset these price and currency imposts.

To 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 totalling $1.4 billion. Net operating cash flow declined by 48% to $6.4 billion. Pleasingly however, cash generated from operations before working capital is declined by a more modest 29%. A strong performance, particularly relative to profit variance or price driven profit variance and this again is a strength of our portfolio and strategy, which emphasises asset quality and diversification.

Ongoing portfolio certification realised significant value for shareholders with transactions totalling $4.3 billion announced or completed during the period. Consistent with our disciplined approach these transactions were priced at a substantial premium to the values ascribed to these assets by the market.

Capital in 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 brand fuelled projects remain on budget and on schedule for the majority and 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. 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 consistent performance of our operations in the December 2012 half year. That is (inaudible) 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 US 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 costs 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 Australian Iron Ore, maintained its strong momentum, delivering 12 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, shift loader and rail capacity to be about -- around 300 million tonnes per annum and in due course we look forward to improving 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 [five] operations, together with the release of latent capacity that I just referred to, as well as the decisive action we have taken to arrest and then reverse cost inflation will continue to support margins and returns.

While external factors, particularly price, where therefore less than supportive in the reporting period, we continue to deliver on those things that we can control -- safety, volume and costs. With that I'd like to hand over to Graham who will discuss our financial results with a particularly focus on the progress that we have made in reducing our operating cost and discretionary spend. Graham?

Thank 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 characterised by significantly weaker commodity prices which has affected the profitability of the industry. While our profits have declined as a result of these weaker prices, I hope that my 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'd like to cover four major topics. Our solid financial results were built on the foundations of strong operating performance, the substantial $1.9 billion annualised reduction in controllable cash costs that we have delivered in the period and the ongoing initiatives that are expected to realise additional gains. Our well-defined growth pipeline, 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 the significant destocking cycle temporarily disrupted the supply demand balance. Weak demand and a 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 million(sic) 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 of producer currencies led to a $418 million reduction in underlying EBIT. Notwithstanding these significant external influences, what should be of particular interest is a $1.1 billion positive earnings contribution from the two major drivers that we directly influence -- volume and controllable cash costs. I will expand on both of these items in a moment.

Included in non-cash 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 and 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 pipeline capacity at our Hillside aluminium operations following the major technical outage that occurred in the March 2012 quarter. The variants for new and acquired and ceased and sold operations reflected a $222 million one-off gain in the prior period that related to legacy US gas derivatives in our onshore US 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 latent 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 two 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 five of our operations contributed to a $435 million volume related increase in underlying EBIT.

Looking ahead, higher volume margin 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 not 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 the waterfall chart, as oilfields 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 continue 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 million(sic-see presentation slides "$1.9 billion") on an annualised 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 rate at our Queensland coal operations. The $87 million reduction in overheads reflects a number of optimisation initiatives which includes the combination of the aluminium and nickel CSGs as well as a general reduction in functional head count across the Group. In fact, since we initiated our Group wide costs 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 capacity at Western Australian Iron Ore prior to the full ramp up of expanded capacity. We will benefit from this spend in future periods. The efficiencies we have achieved to date will be further supported through the second half of the 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 Australian Iron Ore. The $557 million decline in exploration and business development expenditure, which includes an overall reduction in expense and capitalised activity, reflects the targeted nature of our exploration program and the ongoing rationalisation of non-essential 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 a 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 other 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 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 optimisation 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 links and fuel and energy costs, which we deem to be uncontrollable, the total cash cost savings for the period equates to over $2.2 billion on an annualised basis.

Therefore, in summary, our early recognition of the 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 annualised 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 that are often difficult to model. As I touched upon earlier, exchange rate movement had a negative impact on our underlying EBIT during the period. The Australian dollar strengthened in December 2012 half year, despite the 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 over time should unwind as producer currencies mean revert.

Now, let me move away from earnings for a moment so I can update you on the Group's capital expenditure program. Capital expenditure for our Minerals and conventional Oil and Gas business totalled $9.3 billion for the period in line with our unchanged full year guidance of $18 billion. This includes major projects spend, exploration, minor and sustaining capital. In addition, our onshore US 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 focussed 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 six months ago to highlight the progress we have made in the December 2012 half-year. Projects that achieved first production include the Western Australian 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 and execution, the depth of high return development options 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 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 totalling $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, realising 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 non-cash expense associated with the revaluation of deferred Australian resource rent tax balances. In future periods excluding the impact of non-cash 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 instalment of Minerals Resource Rent Tax to the Australian Government in respect of our 2013 financial year. This instalment 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 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 recognised 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 recognised the challenges in the aluminium and nickel industry early and as you will note from our project pipeline, for some time now we have deprioritised these commodities for further investment. While we are pleased we've 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 aluminium 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 Australian 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 of our Western Australian Iron Ore business. These included, one, an increased understanding of the potential capacity of the Port Hedland Inner Harbour, along with greater clarity as to how unutilised capacity will be allocated. Two, the Port Hedland Port Authority granted us the option to develop two new berths in the Inner Harbour. Three, as Marius mentioned earlier, with installed card number, ship loader and rail capacity now approaching around 300 million tonnes per annum the significant de-bottlenecking and optimisation 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 to be directed towards a high returning Inner Harbour option in the first instance.

As a consequence of this value driven decision to defer the Outer Harbour development beyond our five year planning horizon, we have written off all associated investment despite the inherent value of the environmental studies and design and engineering works that form part of our dual harbour strategy. Finally I would like to note that we have donated more than $1 billion in the communities in which we operate over five-and-a-half year period consistent with our commitment to voluntarily invest 1% of pre-tax profits.

So let me summarise before I hand back to Marius. We have delivered strong and predictable operating performance. The $1.9 billion annualised 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 characterised 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 some time ago during the reporting period, in particular citing rising inflation in the real estate bubble, our view on China has remained largely unchanged throughout. We continue to believe that measured stimulus, rebalancing of the Chinese economy and the underlying trends of urbanisation and industrialisation 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 a 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 broad 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 rate 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. Given those growth rates that we'd expect and 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, 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 with 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 supplies to meet demand suggest 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 the development, particularly greenfield capacity and the timeframe. 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 -- of the capability of the low cost producers to expand. Instead, higher cost capacity was induced, 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 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 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. 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 suppliers, primarily located in the United States, as we can see here. As a result, the market rebalanced and the price declined. 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 dollar and the very significant increase in Queensland royalty rights. Any sustained price increase beyond what we've got today, however, is likely to just draw US 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 and 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 over-capacity throughout the forecast period. Whereas the next generation of copper mines are likely to be lower grade and higher copper -- sorry, operating and capital cost, 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 an expectation that over-capacity will constrain the price, on average, to below the marginal cost of production, will be quite impactful for producers given the relatively capital intensive nature of the aluminium industry and hence our longstanding approach to deprioritise these areas for investment.

These differences in supply and demand fundamentals, as we look through the various commodities, explain why it is 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 her as copper-equivalent units in our 2012 financial year. The shade of the bubble represents the rate of production growth in that two year plan that we've outlined for you. In simple terms, blue denotes rapid growth.

What should be immediately apparent when looking at this slide is the dominant contribution of our major bases in four key commodities that are key to current production and future growth. Those are Western Australian iron ore, the Queensland metallurgical coal operations, Escondida copper and our US conventional and unconventional oil and gas business.

Perhaps another way of just looking at the importance of these key assets and where 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. 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 to these 20 projects is directed towards customer sector groups that have generated an average underlying EBITDA margin of 40% or more over the last five financial years. Again, illustrating those businesses which we've deprioritised 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.

The investments also illustrate that we are focussing them on largely 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. 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 in a different way, where margins and returns will no longer be supported by a tailwind of higher prices, our focus on cost and our disciplined allocation of capital will only intensify.

Price reduction guidance remains unchanged, Western Australian iron ore is expected to 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 today 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 financial year and the next.

Before I conclude, I would like to highlight our strong track record. Over the last five-and-a-half years, the distribution of a significant portion 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 ten-and-a-half year period, we have 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 centred on low cost and diversified assets, coupled with the on-going 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've got strong and predictable operating results, our production guidance remains intact. We recognised 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've really worked at it. On an annualised basis, we've -- Graham has taken you through great detail of how we have already reduced controllable cash costs by $1.9 billion off a known base. Our major projects remain on schedule and 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 organisation 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 the joint venture context, where I was the BHP representative and Andrew was the Rio Tinto representative. We had a particularly sticky problem to resolve 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 the 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. 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 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's going to give me a signal that it's time and I will invite Andrew onto 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?

Yes, hi Marius, it's Paul Young from Deutsche Bank. A couple of questions. First one is on cost. If I look at your cost reduction targets, to me it's all about reducing control or 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 utilisations -- so if I look at your fixed controllable cost base, which in FY12 was around $20 billion and the majority of your fixed costs were met coal, iron ore and copper which are about $3.5 billion each --

That's correct.

-- just like to know what programs you have in place to reduce that $3.5 billion for both -- for those three divisions? And can you actually quantify your targets?

And second question is actually on growth and high returning growth, because I note the bubble chart you put up there really is just projects and execution. I just want to understand the thinking and this is where probably Andrew -- into the Q&A as well -- is about high returning growth such as the Permian in spent hydrogen in which, on my numbers are 15%, 20% plus IRRs plus. Where do they fit in? Why aren't they achieving incremental dollars and where do they fit into the future of the Company and that could be -- probably represent all the high returning growth going forward?

Yes, 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 prioritised our capital. I remember spending a lot of time with Warren, going through the details of the bottom up program on capital allocation. We're just entering into that part of our budgetary cycle again and at the full year result that's going to result in the capital budget.

One of the things I've spoken about passionately, is a very boring topic which is the systems to create cost transparency from the bottom up. So you must understand that our process is perhaps -- that we are following for cost reductions -- is perhaps different 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 organisation.

We expressed a desire to do two 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 US dollar flat terms. Now if you go and do the numbers today and you strip out the implementation costs that Graham has spoken about for those closure costs, you will see and which is not a large amount, you will see that we achieved about a 2.5% nominal US dollar cost reduction target.

Perhaps one or two 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 -- 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 cost savings, because we're all working on the same price deck. What is not in that underlying EBIT number is the nearly $600 million of adverse DIE on the balance sheet that Graham said is once off; $164 million of cost 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 in, 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 measureable 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're going from here. We really wouldn't like to nominate the numbers 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 six months again and increase on the $2 billion number. I also want to note that our approach is not to include the non-controllable costs in that target. I mean energy royalties quite frankly are just things that are -- 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 delivering 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 US 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 generated 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 five 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 regeneration we do want to pay some debt down on the balance sheet. Again, that remains unchanged.

So I think that you know these options for growth, we are blessed to have options for growth that substantially exceed what we believe our cost of capital to be. They will keep. We're not to over extend 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 year in our FY14 than we're seeing in FY13. I'm sorry for the comprehensive answer, but I'm hoping that I've covered off some of the questions that others want to ask as well. So if we can have the next question please.

It's Lyndon Fagan at J.P. Morgan. First question is on the US onshore business. After you made the acquisitions you outlined a plan of over $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 for 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 backwardated oil, and he looks at another curve that is in Contango gas. So he concludes that what he wants to do is he wants to produce the barrels in the commodity that is backwardated 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. That's what's resulted in the prioritisation that we see.

We reassess that all the time. If I look at where the Contango and Backwardation curves look and where the well yields and 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 prioritise oil and we've continued to deprioritise gas over the next financial year. Again, I don't want to make an exact prediction of that because things will change between now and then. But that is what is to happen. Which means that the activity rates that you see at the moment is kind of the activity rates that at least for the foreseeable future you should model at that for, 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. You know there is some more appraisal to be done? 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 is still some appraisal to be done. And I should stress that in the Permian and the Eagle Ford combined, we've probably had 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. I hope that helps. Craig.

It's Craig Sainsbury here from Goldman Sachs. Two questions. One's just on Jansen. It's sort of fallen off the bubble chart as probably the only mega project that you haven't yet totally walked away from. I hear there's meant to be a Board approval or Board of Management on some (inaudible) this year. Just wondering if you can give a bit of an update on where Jansen is sitting in the growth profile?

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 pay ratios, progressive dividend, but I'm 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? Is it 60%, 65%? Is there a grey band there you would start to say look that dividend payout is actually getting a little bit too high, we'd step back from it. Cheers.

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, 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 set.

So you are correct in assessing that the teams are working tirelessly there 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 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 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. I think that from the dividend announcement today you are correctly assuming that we're saying, well, perhaps we've just go to see where everything is going before we take another step here, because we have a finite appetite for CapEx. 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 will come into that as well.

Let me perhaps just go to the lines for just one or two 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.

Hi Marius. Just a couple of questions that are sort of further to your comments on the markets; that mean reversion in the iron ore prices, do you think that has changed at all in terms of the timeframe 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 comments on aluminium, obviously quite various comments on the market. In terms of maintaining the aluminium assets within the Company, it clearly doesn't fit with those comments, so what sort of options would fit with the (inaudible) aluminium take? Would you look at it in species or an IPO of those assets to 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.

So no change in that. We do believe in the mean reversion; our long term prices take that into account. We haven't material updated either the long run edition of capacity nor have we made any changes as a result of remodelling to the long run demand. We're more or less where we were six months ago and six months ago we were more or less where we were 12 months ago. A little bit shorter term, order of magnitude I think in this year, our expectations are -- and we don't want to make any forecasts -- is that there will be from this level onwards quite a substantial increase in steel-making capacity in China over the next six months. But overall, across the year and across future years, we think that the steel demand growth rate will be at that a 0.5% of GDP in China that we've articulated to you earlier.

That means order of magnitude is maybe, I don't know, 60 million tonnes of incremental iron ore required on that trend growth. 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 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. We'll have higher prices nearby and the price supplying following that because this is a non-storable commodity and therefore volume and -- you know, there's no intertemporal arbitrage here. So that's 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 work 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 here to say that they are not core 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.

Per?

Good afternoon gentlemen. Thank you for this opportunity to ask questions. I was wondering if you could perhaps comment a bit further on the capital management, following on from that previous question on dividends. 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 mid-term?

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 dividends, return surplus cash. That has always been our priority and that is going to continue to be our priority. We've reprioritised our CapEx. We're going to reprioritise 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's the capacity available for additional buybacks.

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 equivalent. Mandates differ; some funds cannot sell into a buyback and therefore would like a dividend. On balance the value maximising equation for us, given Per the peculiarities of the Australian franking credit system which is available only to Australian taxpayers but can be utilised in a buyback in a way that it benefits all shareholders, on balance our bias it towards that. 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.

Hi Marius, it's Paul McTaggart from Credit Suisse.

Paul.

We talked a little about aluminium and whether it should be in the portfolio. I just wanted to get a sense, please, of how you're thinking about bauxite. Earlier you talked about China expanding aluminium production. Obviously, it's 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 the aluminium assets plus alumina might change?

Paul, I think your best guidance here 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 -- you know, the retrospectroscope is a remarkably effective instrument. But I did pull out some time ago an email that I wrote to our aluminium team, long before I became CEO, more 10 years ago now. It basically said, through decreasing capital cost, things that didn't -- that aren't considered as resourcing, China will become a resource, which in hindsight is exactly what happened in the alumina business.

Now, a personal view, perhaps not a Company view, I do think that we've probably reached some sort of an endpoint in that process, or we're perhaps a little bit closer to an endpoint 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. 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 where that product becomes a smaller proportion of the portfolio over time? Yes. So no change there.

Thanks Marius. It's 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 guide us to where you view an appropriate level of gearing for the Company? That's my first question.

A second question on met coal. You highlighted in the presentation there 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 price, versus your own cost structure?

Yes. Sorry Phil -- my brain goes. I wrote down a note here that I can't -- what did the first part of the -- gearing. So yes, our gearing is within the parameters. We always say strong aim and if you run our beta through a conventional model you will find that we're very comfortable with that. However, we've had volatile times and I think while the world has 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, on balance paying down some debt -- and I don't want to say we're going to stop investing and pay down all of the debt, because we're comfortable with the gearing -- but on balance I think that we probably want to carry a few more options. 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 or prudence, given what volatility we've seen.

On met coal, last period, 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, two years ago, to extend to 2040 where previously our models had largely gone to 2025. Met coal 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 pops out and then is flat and getting there we've got -- from memory again, please don't quote me but I can supply the exact number if need 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 means that met coal you're in a window, the same as you are in iron ore, which then biases us not to new geographies and new places but really optimising the back yard and so you, me and Steve Dumble and all of the other guys are doing the exactly the same as Jimmy out west which is to say, how do I not build new things but get more of the existing structure? That's a change.

The second huge change is that the royalty structures have been punitive in Australia, punitive. That together with the higher exchange rate has moved the overall Australian met coal business to a different place on the cost curve. That changes your investment behaviour and certainly as we do our bottom up pecking order, changes the pecking order where those products go. The third element is that the US exports have become more competitive, the same way that the Australian exports have become less competitive, the US exports have become more competitive and that means that the cap comes on in a different place.

You add those three things together and we're seeing probably the only real strategic reappraisal of a business over the last 12 months in that business. So I hope that answers your question. Can we 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 of Barclays. Please ask your question.

Hi, Marius. Just a quick question on the timing of the divestment of your assets. The outlook for nickel is not getting any better, at least according to us because of the (inaudible) 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 time line that you've set for these divestments just so that you can clean up the portfolio and look forward?

No, we don't have a time line. 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 exploration results in a business to take into account when maximising value and the nickel business has actually done a great job of both exploration results as well as reducing costs. So that clearly changes -- not that we want to invest fresh capital in that business but it changes our value attribution to that business to the positive.

Okay.

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 earlier in the media briefing we did about my appointment. Look, it's great to see so many familiar faces, so we've already got to know each other quite well and we're going to get to know each other a lot better I'm sure. I'm obviously extremely honoured 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 five years ago and since then of course I've had a huge experience with 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 as a tribute to Marius, we spent a bit more time on the press conference and I strongly believe he's 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, the results, today. I mean, some of the things that I particularly have a passion for because of my background and I'll say more about that in a moment, we built real momentum around issues of cost control, 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 -- and 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 I'm not going to change. I mean, we're very committed to, [I Am], to the strategy, it's served us extremely well, and it's served 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.

Now 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 on our commitment to real capital discipline to drive us, or keep us in many cases, at the bottom of costs per mine tonne and at the upper ranges of capital productivity and there of course I am committing to extended marriages. As he reported through the results, you know, a fantastic track record of sector-leading returns to shareholders.

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'll 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.

The one thing we perhaps didn't mention in our bottom up approach is the importance of forensic benchmarking. The system that Marius has introduced allows us to be extremely detailed in finding the best in class performance in our Company and therefore inducing, causing, 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.

Of course we will 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 peaks, we do have to 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 licence 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 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's referred to and indeed, technology, to make sure that that supply that the world needs, often for peaceful and harmonious reasons, are there and I fully intend to continue that success.

We've heard a little bit more about the process itself. I mean it's obviously perhaps a little bit bias of me to say it was a great process given that I kind of like the result, 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 two and a half, three months, in the job while I kind of get up to speed and I'm going to take the opportunity that is here, it's a great luxury.

I will pay tribute to you. 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 I've built into my thoughts for the future and some of them are yet to come but I want to carrying on listening for just a little bit longer until I sit in the seat. We will meet one and one and we'll meet and enquire and deliberate and really try to refine my ideas. Of course, with my background and experience, I've already got quite a lot of thoughts. Most of them are extensions, but I think they will benefit through further airing, particularly with you and obviously many of our shareholders and owners and I'm looking forward to similar dialogue with other important stakeholders.

Obviously in a job like this, we talk about over 100,000 people working for the Company, as many of you know you get to meet a lot of them when you go on our site tours and so on. They're incredibly talented and it's certainly a real privilege that I'll get to lead them, to inspire them and push them along this direction of productivity, both in the operation 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 and I made the comment that it's probably a little bit insensitive here in Sydney to say that my wife, Liz and I are really pleased that Melbourne's just been voted the most liveable city in the world but we completely understand within our family the tension between the great cities that are next to one another. I'm from Glasgow, my wife's from Edinburgh, and I tend to think Glasgow is more Sydney and Edinburgh is more Melbourne, so even though I'll become Melbourne based, I will, I'm sure 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, 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 too, down to the hard numbers. 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 we look forward to it.

Thanks, Andrew. Andrew and I plan on spending a substantial chunk of our -- with shareholders over the next period as I hand over. So we are obviously 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.