KPMG Audit
Churchillplein 6
Financial Services
2517 JW The Hague
P.O. Box 29761
The Netherlands
2502 LT The Hague
Telephone
+31 (0)70 338 2222
The Netherlands
Fax
+31(0)70 350 3191
BHP Billiton Finance B.V.
Attn.: Mr W. Murray
Verheeskade 25
2521 BE THE HAGUE
Ourref
J.7.0016
The Hague, 2 November 2006
Dear Sirs,
Financial Statements BHP Billiton Finance B.V. for the year ended 30 June 2006
We confirm our agreement for you to include the auditors' report below in the 'Other
information' accompanying the Directors' report and financial statements. These financial
statements and Directors' report should be issued in accordance with the final draft presented to
us, of which an initialled copy is enclosed.
"Auditors' report
Introduction
We have audited the financial statements of BHP Billiton Finance B.V., The Hague for the year
ended 30 June 2006 as set out on pages 3 to 16. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
Scope
We conducted our audit in accordance with auditing standards generally accepted in the Netherlands.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the company financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the company
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the company
financial statements. We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, these financial statements give a true and fair view of thefinancialposition of the
company as at 30 June 2006 and of the result for the year then ended in accordance with accounting
principles generally accepted in the Netherlands and also comply with the financial reporting
requirements included in Part 9 of Book 2 of the Netherlands Civil Code.
KPMG Accountants N.V., registered with the trade register in the
Netherlands under number 33263683 end a member firm of the
KPMG network of independent member firms affiliated with KPMG
International, a Swiss cooperative.
All our services are subject to our general conditions, which are filed
at the Amsterdam District Court under number 32/2004, and which
we will send to you on request.
BHP BUliton Finance B. V.
Financial Statements BHP BUliton Finance B. V. for
the year ended 30 June 2006
The Hague, 2 November 2006
Furthermore we have established to the extent of our competence that the Directors' Report is
consistent with the financial statements.
The Hague, 27 October 2006
KPMG ACCOUNTANTS N.V.
CJ.M. Coremans RA"
We also confirm our permission to include the text of our auditors' report in the 'Other
information' accompanying the financial statements that are presented to the shareholders for
the adoption by the General Meeting of Shareholders.
We also confirm our permission to publish at the Trade register the text of our auditors' report,
provided the prepared financial statements are unchanged for the adoption by the General
Meeting of Shareholders and subsequent filing occurs at the trade register within one month
(from the date of this letter).
If you present the Directors' report, financial statements and the auditors' report on the internet,
you should ensure that the financial statements are properly separated from other information on
the internet site. Separation can be achieved, for example, by presenting the financial statements
in an unchangeable format, stored as a separate file or by issuing a warning if the reader
switches from the financial statements ("you are leaving the secured zone of the audited
financial statements").
A copy of the financial statements should be signed by Board of Directors and be presented to
the shareholders). These financial statements should be adopted in a General Meeting of
Shareholders and the adoption should be recorded in the minutes.
Incidentally, we should point out that, until the General Meeting of Shareholders, if
circumstances arise that necessitate the amendment of the financial statements, such an
amendment has to be made before the meeting in accordance with the provisions of section
362:6 and section 2:392 part lg of the Netherlands Civil Code. In this situation, of course, we
withdraw our permission granted above.
No later than 8 days after the adoption by the shareholder(s), and in any event before (13
months after the end of the financial year), the prepared financial statements should have been
filed at the Trade register of the Chamber of Commerce of The Hague. In an accompanying
letter to the Chamber of Commerce, you should report that the original financial statements
have been signed Board Directors and adopted by the General Meeting of Shareholders,
including the date on which this occurred. This can be omitted if it is clearly prefaced in the
filed financial statements that, for example, you file a signed copy of the financial statements.
J.7.0016
BHP Billiton Finance B. V.
Financial Statements BHP Billiton Finance B. V. for
the year ended 30 June 2006
The Hague, 2 November 2006
We would like to remind you that the filing of the Directors' report and financial statements is a
statutory requirement, and that failing to file them is a punishable offence. In certain
circumstances, the failure to file could even lead to the members of the Board of Directors being
made personally liable.
We will be happy to provide any further information you may require.
Yours sincerely,
KPMG ACCOUNTANTS N.V.
A
C.J.M. Coremans RA
Enclosure(s):
Financial Statements BHP Billiton Finance B.V. for the year ended 30 June 2006
Initials for identification purposes
J.7.0016
-o
BHP Billiton Finance BV
Financial Statements
for the year ended 30 June 2006
KPMG Audit
the Appendix pertaining to the letter of
-2N0V
Initiate for identification
KPMG Accountants N.V.
BHP Billiton Finance BV
Financial statements for the year ended 30 June 2006
Table of contents
Directors' report
Page no.
2
Financial statements
Balance sheet as at 30 June 2006
3
Profit and loss account for the year ended 30 June 2006
4
Notes to the financial statements 30 June 2006
5
Other information
Statutory rules regarding appropriation of profits
17
Appropriation of result
17
Auditors' report
18
KPMG Audit
the Appendix pertaining to the Setter c-
- 2 HOV 2008
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KPMG Accountants N.V^
f)
y
BHP Billiton Finance BV
Directors' report
The management, herewith, submits the financial statements of BHP Billiton Finance BV ('the Company')
for the year ended 30 June 2006.
General
The Company is the principal finance company of the BHP Billiton Group, responsible for funding,
liquidity management and financial risk management, including hedging of currencies and interest
exposure positions, in addition to its role as an intermediate Dutch holding company.
Result for the period
The result before taxation, excluding profit on sale of fixed assets, increased by USD 676 million
compared to the previous reporting year. Major changes in the profit and loss account include:
Dividends income of USD 255 million, no income last year;
Higher net interest income of USD 66 million mainly due to higher net balances loaned to Group
Companies;
Write down on investments in BHP Billiton Group companies of USD 355 million last year.
Further note that the Company issued 1 share with a nominal value of EUR 1,000 against payment in cash
of an aggregate amount of USD 741.1 million.
Future outlook
Looking at the year ahead, the main source of income of the Company will be interest and dividends from
equity participations. Because these sources of income are dependent on the financing needs and results of
the BHP Billiton Group, the Company refrains from providing cash flow and/or result forecasts.
Tax status
The Company obtained a Group finance company status under article 15b Corporate Income Tax Act
1969, effective from 1 July 1997 for a ten-year period, maturing July 2007. Currently legislative proposals
are underway to introduce a new regime for the taxation of intercompany interest income, with the
expected result that intercompany interest income is effectively taxed at a 5% corporate tax rate.
Risks and risk management
The Company is exposed to interest, foreign exchange, liquidity and credit risks for the Group. The
Company may enter into various types of financial instruments such as forward exchange contracts,
foreign exchange swaps and interest-rate caps for the purpose of managing risk exposures for the Group.
The Company uses derivatives, such as interest-rate swaps and forward rate agreements to manage the
exposure to movements in interest rates and thus to help achieve target levels of interest income or
expense. Foreign exchange derivatives, including forward exchange contracts, currency swaps and
currency options are used for managing currency exposure and cash management. The Company manages
and executes all foreign exchange transactions of the BHP Billiton Group. Limited positions are taken
based on the one month mandates approved by the BHP Billiton Groups' Financial Risk Management
Committee (FRMC).
All counterparty limits are approved according to the guidelines provided by the FRMC and Banks credit
worthiness are continually reviewed.
The Hague, 27 October 2006
Board of Directors
P.A. Koppelman
KPMG"AuBit
the Appendix pertaining to the letter
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A.T. Cornfield
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KPMG Accountants N.V.
BHP Billiton Finance BV
Balance sheet as at 30 June 2006
(before appropriation of net result)
USD ('000)
Notes
Financial fixed assets
Current assets
Receivables from BHP Billiton Group
companies
10
Prepayments and other debtors
Cash and cash equivalents
11 & 14
30-06-2006
30-06-2005
5,776,690
5,951,915
2,433,997
542,571
7,432
3,703
176,496
845,905
1,392,179
2,617,925
Total Current assets
Current liabilities
Bank loans, overdrafts and facilities
Payables and deposits from BHP Billiton
Group companies
14
12
764,559
2,557,356
67,225
3,207,784
9,576
15,188
Accruals and other creditors
3,331,491
3,290,197
(713,566)
(1,898,018)
741,100
741,100
4,322,024
3,312,797
Total current liabilities
Total current assets less current liabilities
Non-Current Liabilities
Medium Term Notes
15
Net assets
Shareholder's funds
Paid up share capital
Share premium
Retained earnings
Result for the period
Total shareholder's funds
13
13
13
13
10,196
10,197
2,118,032
1,929,668
264,127
1,372,933
(1,509,873)
3,439,541
4,322,024
3,312,797
j.-'MG Audit
the Appendix pertaining to the
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KPMG Accountants N.V.
~
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BHP Billiton Finance BV
Profit and loss account for the 12 months period ended 30 June 2006
USD ('000)
Notes
12 months
period ended
30-06-2006
12 months
period ended
30-06-2005
Income from operations
Dividend income
9
Interest income
4
254,900
241,844
132,878
Interest expense
5
(186,008)
(143,023)
(7,200)
(5,785)
(18,143)
(19,017)
FX gains & (losses)
Provision against loans to BHP Billiton Group
companies
9&10
(354,585)
Write-down investments in BHP Billiton
Group companies
General and administrative expenses
285,393
(389,532)
(13,462)
(14,693)
3,850,048
Profit on sale of financial fixed assets
Result before taxation
Taxation
Net result for the year
13
271,931
3,445,823
(7,804)
(6,282)
264,127
3,439,541
KPMG Audit
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2008
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y
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Notes to the financial statements 30 June 2006
1. Group affiliation and principal activity
BHP Billiton Finance BV ('the Company') was incorporated in the Netherlands with limited liability
on 5 May 1994. The Company is a wholly owned subsidiary of BHP Billiton Company BV. The
company forms part of the BHP Billiton Group headed by BHP Billiton Pic and BHP Billiton Ltd.
The Company's principal activity is to act as the central treasury department and finance vehicle, as
well as to hold certain investments for the BHP Billiton Group.
2. Basis of preparation
The financial statements, which are expressed in US Dollars, the principal currency of the Company's
business, have been prepared under the historic cost convention in accordance with accounting
principles generally accepted in the Netherlands and comply with the provisions of the Netherlands
Civil Code, Book 2, Title 9.
Application has been made of the facilities under Article 408 of the Netherlands Civil Code, Book 2.
The financial statements of the wholly owned subsidiaries of the Company will be consolidated in the
financial statements of BHP Billiton Pic. Based on the exemption under Article 408 no cash flow
statement has been included in the financial statement.
Related parties
The Company has related party relationships with its investments, group companies, the parent
company and its directors. Related party transactions and balances are identified in the notes to these
accounts. In principle, all related party transactions are discussed and approved by the shareholders
prior to entering into the transaction. As a basis for the pricing of these transactions the arms' length
principle is applied.
3. Summary of significant accounting policies
3.1 Financial fixed assets
The Company carries its investments in Group companies at historic cost less provision for any
diminution in value deemed to be of a permanent nature. Provisions for losses on disposal or
liquidation of investments are made when such losses can reasonably be foreseen. The value of the
Company's investment portfolio is assessed on an individual basis and provisions for any other
permanent diminution in value is made on this basis.
Information regarding the Company's interest in the net asset value and its share in the earnings of
Group companies is given in note 9.
Interest bearing loans and receivables included in financial fixed assets are accounted for at their
nominal amount, with provisions for reduction in value if appropriate. Loans granted to exploration
companies are fully provided for. These provisions may be reversed if an exploration project becomes
commercially viable.
3.2 Foreign currencies
Assets and liabilities denominated in foreign currencies are translated into US Dollars at the rate of
exchange prevailing at the balance sheet date. Transactions in foreign currencies during the year are
translated at the prevailing daily exchange rate. The resulting gains and losses from foreign currency
translation are reflected in the profit and loss account.
3.3 Financial instruments
The accounting method used for derivative financial instrumeft^llW^?TQ|wW'd«exc^nge contracts,
and foreign exchange swaps) is determined by whether or not the instramen^j^d^y^^j|«sgatfredgetter c*
and, if so, by the accounting method used for the item being hedged. Financial instruments used to
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Initials for identification purposes
KPMG Accountants N.V.
BHP Billiton Finance BV
hedge recognized items are included at fair value with the resulting gains and losses taken to income.
Derivative financial instruments used to hedge forecasted transactions are included at fair value with
gains and losses deferred and recognized when the gains or losses on the hedged transactions are
recognised. Outstanding positions are included under "Accruals and other creditors". Refer to note 15
for further details on the outstanding positions.
3.4 Deferred taxation
Deferred taxation is calculated, using the liability method, in respect of timing differences arising
from the difference between accounting and taxable profits.
3.5 Other assets and liabilities
All assets and liabilities, other than those for which the basis of valuation is indicated on the face of
the balance sheet or notes thereto, are shown at face value less provisions deemed necessary.
3.6 Income and expense recognition
Interest income, interest expenses and general and administrative expenses are accounted for in the
period to which they relate.
4.
Interest income
USD ('000)
12 months
period ended
30-06-2006
Inter-company (BHP Billiton Group) interest receivables
Pool benefit (refer note 13)
Bank balances & deposits
12 months
period ended
30-06-2005
146,187
50,883
44,774
62,604
30,128
40,146
241,844
132,878
The increase in the Inter-company (BHP Billiton Group) interest receivable is mainly due to higher
balances loaned to Group Companies.
5.
Interest expense
12 months
period ended
30-06-2006
USD ('000)
Inter-company (BHP Billiton Group) interest payable
Bank loans and overdraft
6.
12 months
period ended
30-06-2005
114,885
92,723
71,123
50,300
186,008
143,023
General and administrative expenses
USD ('000)
Service and other fees from BHP Billiton Group
companies
Political risk insurance
Other financing costs
l
ir
12 months
period ended
30-06-2006
12 months
period ended
30-06-2005
11,174
12,154
2,205
2,205
83
334
133462
14,693
the Appendix pertaining to the letter oi
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KPMG A c c o u n t a n t s N.V,
BHP Billiton Finance BV
7.
Profit on sale of financial fixed assets
In June 2005 a restructuring of companies in the BHP Billiton Group was implemented. The transaction involved a number of steps and with the following effect in the Company:
- The Company sold 100% of the shares in BHP Billiton Holdings BV to BHP Billiton Company
BV at a market value of USD 3,850 million, which resulted in a profit of USD 3,850 million
(book value of investment in the books of the Company was nil). This amount is fully reflected in
the profit and loss account under profit on sale of fixed assets.
The Company used the proceeds of the sale to redeem the discounted security issued to BHP
Billiton Waterloo CV (USD 3,005 million).
A loan of USD 1,000 million payable at call was issued by BHP Billiton Company BV to the
Company.
An interim dividend of USD 1,896 million was declared by the Company to BHP Billiton
Company BV.
8.
Taxation
The tax charge can be analyzed as follows:
USD ('000)
12 months
period ended
Notes
30-06-2006
12 months
period ended
30-06-2005
Corporate tax charge
7,804
6,282
Current year
7,804
6,282
7,804
6,282
Withholding tax claim
LI The Company obtained a Group finance company status under article 15b Corporate Income Tax Act
1969, effective from 1 July 1997 for a ten-year period. Also, as from 1 July 1997 the Company forms
part of a fiscal unity in the Netherlands which is headed by BHP Billiton Company BV The tax
accounting for the Company is on a stand-alone basis. In this respect it should be noted that the
provision for exploration loans is not treated as a taxable reduction, and net interest income (of some
USD (5) million as accounted for by the Company) which eliminates within the fiscal unity has not
been regarded as taxable income.
i.2 Under the terms of the finance company ruling the Company is entitled to make a tax free contribution
to a "risk reserve" of an amount up to 80 per cent of its profits derived from Group financing activities.
However the financing income is limited to 80 per cent of the taxable income of the fiscal unity. The
remaining 20 per cent will be taxed at the average rate for the period of 30.55 per cent. The risk
reserve can be released tax free when the Company makes qualifying investments.
.3 The Company, as a member of the fiscal unity, is jointly and severally liable for the payment of any
tax liability of the fiscal unity.
.4 The 30 June 2006 tax payable has been recorded as a payable to BHP Billiton Company BV as head of
the fiscal unity (this balance is included in the net position with BHP Billiton Company BV as
reflected in note 10).
;\
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KPMQ Accountants N.V.
BHP Billiton Finance BV
9.
Financial fixed assets
USD ('000)
Statutory seat
Note
Share
30-06-2006 30-06-2005
9.1
3,591,056
430,961
3,591,056
430,961
Shares
BHP Billiton SA Investment Ltd
London
Billiton Nickel Holdings BV
The Hague
100%
100%
Billiton Coal Australia Holdings BV
The Hague
100%
219,511
219,511
Billiton Metals Canada Inc
Toronto
10%
100,000
100,000
Billiton Manganese Holdings BV
The Hague
100%
87,957
87,957
Billiton Suriname Holdings BV
The Hague
100%
4,000
4,000
BHP Billiton Aluminium Vietnam UK Ltd
London
100%
3,500
3,500
Billiton Investment 14 BV
The Hague
100%
0
0
Billiton Investment 7 BV
The Hague
100%
285
285
Billiton Investment BV companies
The Hague
100%
40
40
BHP Billiton South Africa (Jersey) Ltd
Jersey
18%
33
33
Billiton Development BV
The Hague
100%
0
0
4,437,343
4,437,343
Billiton Metals Canada Inc.
597,542
570,034
Billiton Aluminium Australia Pty Ltd.
552,288
524,393
Billiton Manganese Australia (Pty) Ltd.
166,430
158,576
9.2
9.3
Total Investments
Interest bearing loans and receivables from BHP Billiton Group Companies
Billiton Development BV *1
9.3
135,972
96,901
BHP Billiton Metais S.A.
9.3
23,082
23,356
San Felipe Mining Ltd. * 1
11,378
11,652
Billiton Investment 14 BV
5
170,985
Billiton Investment 3 BV
9.4
5
-
Billiton Investment 8 BV
9.4
-
46,788
Billiton Investment 15 BV
9.4
-
21,813
1,486,697
1,624,503
(147,350)
(130,370)
1,339,347
1,494,133
Total
Provision against loans
9.5
Total loans and receivables from BHP
Billiton Group Companies
External interest bearing loans
Kermas Ltd
Total Investments, loans and receivables
20,439
9.6
5,776,690
5,951,915
*1 Exploration loan - Contingent Interest
9.1 In November 2005 the Company received a dividend of US
Investment Ltd. The funds received were used to partly repa
BV.
pn form BHP Billiton SA
BHP Billiton Company
KPMG Audit
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9.2 The Billiton Investment BV companies' principal activity is to act as intermediate holding companies
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BHP Billiton Finance BV
for the BHP Billiton Group.
9.3 Billiton Development BV, a wholly owned subsidiary of the Company, is used as a vehicle to fund
exploration activities worldwide. Contingent interest on loans to BHP Billiton Development BV
amounted to USD 6.5 million (30 June 2005 - USD 5.0 million).
The loan to BHP Billiton Metais S.A. is secured on its export sales. The average interest earned on
this loan during the 12 months to 30 June 2006 was 5.76% (30 June 2005 - 4.38%). For further
details on applicable interest rates and repayment terms, refer note 10 to the financial statements.
9.4 As part of a restructuring of companies in the BHP Billiton Group in May 2006, the loans with Billiton
Investment 3 BV, Billiton Investment 8 BV and Billiton Investment 15 BV were repaid.
9.5 The provision reflected in the table on page 8 is made under the regular policy of providing loans to
exploration companies and other group companies (refer note 3.1). Provision is made for the loans
with Billiton Development BV, San Felipe Mining Ltd, Billiton Investment 14 BV and Billiton
Investment 15 BV.
9.6 Loan was prepaid during the financial year.
9.7 The movements in the book value of the financial fixed assets can be summarised as follows:
USD ('000)
30-06-2006
30-06-2005
5,951,915
7,063,261
-
(1,101,216)
Net movement in loans (refer note 8.9)
(158,245)
(15,738)
Provision against loans (net movement)
(16,980)
5,608
5,776,690
5,951,915
Opening Balance
Net movement in investments
Closing Balance
9.8 The Company's interest in the net equity value of the equity investments as per 30 June 2006 amounts
to approximately USD 6,663 million (30 June 2005 - USD 5,418 million - comparative figures have
been adjusted to IFRS). The book value exceeds the equity value by approximately USD 2,226 million
(As at 30 June 2005 the equity value exceeded the book value by USD 981 million). The Company's
interest in the net equity value has been calculated in accordance with the accounting policies applied
in the consolidated accounts of the BHP Billiton Group.
9.9 The Company's share in the 2006 earnings of the Company's investments amounted to a profit of
approximately USD 1,394 million (30 June 2005 - profit of approximately USD 1,476 million).
Principal subsidiary undertakings and joint ventures of the Company are set out in the table on page 8.
A list of companies drawn up with due observance of the provisions in Article 379, Book 2 of The
Netherlands Civil Code, has been deposited at the Commercial Register in The Hague.
9.10 Interest bearing loans and receivables are unsecured and the borrowers may repay the loans and
receivables or any part thereof at any time. Interest is compounded monthly and charged based on
one-month market rates (unless otherwise stated). Outstanding balances at year-end may include
accrued interest.
KPMG Audit
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10. Receivables from BHP Billiton Group companies
USD ('000)
BHP Billiton Resources Inc.
BHP Billiton Pic
Hunter Valley Energy Coal Ltd
Billiton ESOP Trustee Ltd
BHP Billiton Marketing Investment Ltd
BHP Billiton South Africa Holdings BV
QNI (Pty) Ltd
BHP Billiton Company BV
Billiton RA BV
Billiton Marketing Investments BV
Westralian Bulk Chart. Services
Australian Bulk Chart. Services
Billiton Metal Canada Inc.
Billiton Korea Ltd
Blue Ocean Shipping Ltd
Billiton Australia Holdings BV
Billiton Jersey Ltd
Billiton International Services Ltd
Samancor AG
BHP Billiton Finance Ltd
Rio Algom Mining Corporation
Billiton Japan Ltd
Australian Bulk Chart. Services
Blue Ocean Shipping Ltd
BHP Billiton Holdings Ltd
Total
Provision against loans
Total Receivables from Group Companies
30-06-2006
30-06-2005
1,535,168
428,623
198,490
77,415
62,970
62,162
45,016
11,344
7,659
6,594
1,968
1,387
983
444
368
-
198,467
32,990
59,998
59,229
45,005
7,298
6,265
8
614
47,453
37,358
29,986
12,885
4,755
3,201
1,484
1,179
656
5
2,440,591
(6,594)
2,433,977
548,836
(6,265)
542,571
The receivables included in note 10 are unsecured and repayable on demand. The borrowers may
repay the loans or any part thereof at any time. Interest is compounded monthly and charged based
on one-month market rates.
Amounts receivable from BHP Billiton Group companies include accrued interest for the last month
in the financial year if not settled at balance sheet date.
The provision reflected in the table above is made under the regular policy of providing loans to
exploration companies and other group companies (refer pBpJr^ffl-ovision is made for the loan
with Billiton Marketing Investments BV.
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11. Cash and cash equivalents
USD ('000)
30-06-2006
Money market investments
30-06-2005
176,496
377,977
-
467,928
176,496
845,905
Bank accounts
The money market investments are not freely available to the Company as it serves as security given
to BHP Billiton Group companies.
Short-term money market loans and deposits are used for cash management.
Further reference is made to note 14 - Bank loans, overdrafts and facilities.
KPMG Audit
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12. Payables and deposits from BHP Billiton Group companies
30-06-2006
30-06-2005
Cerro Matoso SA
740,760
550,408
BHP Billiton Marketing AG
425,061
457,730
Billiton (UK) Ltd
278,373
219,441
Billiton Aluminium Holdings BV
281,221
32,232
Alusaf Hillside
279,420
140,433
Compafiia Minera Cerro Colorado Limitada
117,211
387,655
BHP Billiton Holdings BV
86,623
30,004
BHP Billiton Metais S.A.
76,635
5,042
Stein Insurance Ltd.
64,984
44,524
Samancor Manganese (Pty) Ltd
64,723
-
Billiton Investment 12 BV
50,281
32,175
Aluminium Bayside
46,754
-
BHP Billiton Victoria Ltd
23,381
22,618
Samancor AG
10,169
125,460
BHP Billiton Chile Inversiones Ltda
3,152
720
BM Alliance Marketing Pty Ltd
2,095
818
Billiton Metall GmbH
1,908
1,820
Rio Algom Mining Corporation
1,511
15,164
Billiton Investment 15 BV
1,170
-
CDC Marketing
BHP Billiton International Metals BV (payable - interest free)
1,100
1,300
682
1,355
Billiton Investment 2 BV
36
35
Billiton Investment 7 BV
29
28
BHP Billiton Finance (USA) BV
20
20
Ingwe Colliery Ltd
19
337
BHP Billiton Nickel Holdings BV
18
17
Billiton Investment 13 BV
14
14
Billiton South Africa Ltd
4
181
Billiton Aluminium Vietnam UK Ltd
2
2
BHP Billiton Company BV
-
1,047,605
BHP Billiton Waterloo CV
-
55,070
BHP Chile Inc
-
11,527
BHP Billiton Pic
-
10,634
Chrystal Services Ltd
-
6,260
BHP Billiton Petroleum (Deepwater)
-
5,826
MSI Investments BVI Ltd.
-
1,255
Billiton Brasil Holdings BV
-
55
Billiton Metals Holdings BV
-
19
nn—l^,557,356
3,207,784
USD ('000)
Deposits held with BHP Billiton Group companies are unsecured, repa
interest based on one-month market rates.
- 2 NOV 2006
initials for Identification purpose |
KPMG Accountants N.V.
BHP Billiton Finance BV
Amounts payables from BHP Billiton Group companies include accrued interest for the last month in
the financial year if not settled at balance sheet date.
13. Shareholder's funds
Summary of movements
USD ('000)
Paidup
capital
Share
premium
Retained
earnings
Result for the
period
Total
10,196
1,372,933
437,922
698,053
2,519,104
Appropriation of result
-
-
698,053
(698,053)
-
Result for the period
-
-
-
3,439,541
3,439,541
Interim dividend paid
-
-
(2,645,848)
-
(2,645,848)
10,196
1,372,933
(1,509,873)
3,439,541
3,312,797
Appropriation of result
-
-
3,439,541
(3,439,541)
-
Result for the period
-
-
-
264,127
264,127
Share issue
1
745,099
-
-
745,100
10,197
2,118,032
1,929,668
264,127
4,322,024
Balance as at 30 June 2004
Balance as at 30 June 2005
Balance as at 30 June 2006
On 28 December 2001 the issued 21,001 shares with a nominal value of NLG 1,000 each were
converted into 9,530 shares with a nominal value of EUR 1,000. The increase of EUR 0.615
translated at 0.8814 USD: EUR exchange rate (USD 0.542) due to rounding is reduced from the Share
premium reserve. On 28 June 2004 the Company issued 1 share with a nominal value of EUR 1,000
against a contribution in kind of the shares in BHP Billiton Holdings BV (refer note 9.1). Effective
from 1 January 2006, the Company issued 1 share with a nominal value of EUR 1,000 against
payment in cash of an aggregate amount of USD 745,100,000. The proceeds were used to repay the
loan with BHP Billiton Company BV. The Company's authorised share capital consists of 47,650
shares with a nominal value of EUR 1,000 each.
14. Bank loans, overdrafts and facilities
The Company, together with a number of BHP Billiton Group companies, is party to a Multiparty
Account Pooling Facility, which includes several currency accounts with the USD being the
dominating currency.
Under the Multiparty Account Pooling Facility a 'pool benefit' is received by the Company. This
income is presented under Interest income after allocation of the pool benefit to Interest expenses on
"bank loans and overdrafts" in case the Company has taken an overdraft position to net off the pool.
At 30 June 2006, the net bank balance of the BHP Billiton Group companies party to the pooling
facility was USD 147 million equivalent (30 June 2005 - USD 73 million), of which the Company
contributed a net unfavourable bank balance of USD 765 million equivalent (30 June 2005 - net bank
balance of USD 467 million).
The Company has uncommitted, unsecured bank facilities totaling USD 430 million (30 June 2005 USD 430 million) as well as an overdraft facility with Bank of America of USD 50 million (30 June
2005 - USD 50 million).
In March 2005 the USD 2 billion Revolving Credit Facility was increased to USD 3 billion and an
USD 5.5 billion acquisition facility was put in place to fund *e]iWMeirRlsourees Ltd acquisition by
the BHP Billiton Group. The acquisition facility consists of tjMrfejJftjffiEJUSD 3 billion for a period
of 18 months with a 6 month extension and USD 2.5 billion M^yearsHri^e/ificftlt^^were signed^,. n(
on the 18* of March 2005. The balance of the draw down by BHP Billiton KhialRMrgtePIS'PtWftilfty"'"" "
as at 30 June 2006 is USD 900 million.
- 2 NQV 2008
Initials for identification P ^ P 0 ^ 5 ^
Accountants N.v'13 ';
BHP Billiton Finance BV
15. Financial instruments
The Company may enter into various types of financial instruments such as forward exchange
contracts, foreign exchange swaps and interest-rate caps for the purpose of managing risk exposures.
Interest rate risk
The Company uses derivatives, such as interest-rate swaps and forward rate agreements to manage
the exposure to movements in interest rates and thus to help achieve target levels of interest income or
expense for the Group.
In October 2002, the Company issued Euro 750 million 4.375 per cent Notes due 2007 guaranteed by
BHP Billiton Pic with the benefit of a cross guarantee from BHP Billiton Ltd. These notes were
issued under the USD 2.0 billion Euro Medium Term Note Program of BHP Billiton Finance Ltd,
BHP Billiton Finance BV, BHP Billiton Pic and BHP Billiton Ltd and were placed at 99.4%. The
Euro commitment (principal and interest) has been swapped into an USD commitment (fixed rate of
3.88%) using 5 year cross currency interest rate swaps. On 10 October 2003 the fixed interest rate
was swapped back to an average 6 months floating rate minus 28 basis points, by entering into
interest rate swaps.
In May 2006 BHP Billiton Finance Ltd. issued an additional tranche of EUR 650 million 4.125%
notes due 2011 under the US$ 2.0 billion Euro Medium Term Note Programme. The proceeds were
used to partially repay debt incurred at the WMC acquisition in June 2005. The Company has
swapped the notes to an average floating and a floating US$ interest rate, by entering into several
cross currency interest rate swaps. The Company entered into an opposite cross currency interest rate
swap with BHP Billiton Finance (USA) Ltd, with no remaining results in the Company.
In April 2003, BHP Billiton Finance (USA) Ltd issued USD 850 million 4.8 per cent Senior Notes
due 2013 guaranteed by BHP Billiton Pic and BHP Billiton Ltd. The bonds were placed at 99.89%.
The net proceeds of the issue have been received in the Company via several Group companies
(including BHP Financial Services (UK) Ltd). The Company has entered into interest rate swaps
(fixed to floating) with external banks for the entire interest obligation. Under the swap arrangement
an upfront swap discount was received of the amount of the bond discount and withheld costs of the
bond issue. This discount is settled via the periodic swap settlements (interest payments). The
Company entered into an opposite interest rate swap (floating to fixed) with BHP Billiton Finance
(USA) Ltd, with no remaining results in the Company.
In December 2005 an additional USD 1,350 million was raised by BHP Billiton Finance (USA) Ltd.
by issuing a 5 year (US$ 600 million) and 10 year tranche (US$ 750 million) of the Global Bond. The
proceeds of this issue were used to repay Tranche A of the Acquisition Facility (US$ 500 million) and
partially redeem US Commercial Paper. The Company has entered into interest rate swaps (fixed to
floating) with external banks for the entire interest obligation. The Company entered into an opposite
interest rate swap (floating to fixed) with BHP Billiton Finance (USA) Ltd, with no remaining results
in the Company.
Foreign exchange risk
Foreign exchange derivatives, including forward exchange contracts, currency swaps and currency
options are used for managing currency exposure and cash management for the Group.
The Company manages and executes all foreign exchange transactions of the BHP Billiton Group.
Limited positions are taken based on the one month mandates approved by the BHP Billiton Groups'
Financial Risk Management Committee (FRMC).
BHP Billiton Group has a policy of hedging non-US$ c^hl|fI3pv l|xposure related to capital
expenditure on projects. Any non-US$ committed exposur|ifpi|IpJP|~^ capital expenditure on
projects requiring hedging are taken out by the Company with the externalBMWte&UFfife Company
then enters into a back-to-back transaction directly with the relevant ass(HediPiwi# BHf^ffifHtSni8ttef
c
- 2 NOV 108
A
Initials for identification purposes I
KPMG Accountants N.v'. ._/
BHP Billiton Finance BV
Finance Limited, who then in turn enters into another back-to-back transaction with the relevant asset
that is undertaking the capital expenditure project.
The total contract/notional value of the Company's forward exchange contracts, currency swaps,
currency options and cash balances at 30 June 2006 is summarised below.
Summary of net positions (30 June 2006)
in thousands*
Internal
Bank/
Total FX
External
MM
Amount
MtM
Amount
(USD)
AUD
(2,260,241)
MtM
Amount
(USD)
MtM
Amount
Total net
position per
currency
Amount
(USD)
(6,534)
2,198,734
4,983
(61,507)
(1,551)
Latest
maturity
(17,559)
(79,066)
Apr-09
Dec-07
CAD
(98,954)
(448)
98,954
445
0
(3)
3
3
CLP
(43,063,153)
1,564
43,063,153
(1,564)
0
0
0
0
Jan-07
EUR
207,762
1,193
(207,821)
(430)
(59)
763
96
37
Jan-08
GBP
60,035
1,696
(62,284)
(1,322)
(2,249)
374
2,057
(192)
Dec-07
ZAR
(275,800)
3,262
257,800
(3,262)
(18,000)
0
357
(17,643)
Jul-07
Total
733
(1,150)
(417)
*Amounts in foreign currencies; negative amounts reflect a future "sell" position for the Company
The carrying amount of the foreign exchange derivatives is equal to the amounts reflected in the table
above.
•
Liquidity risk
All interest bearing assets and liabilities have in principle floating interest rate terms. The cash-flow
risk as a result of flexible repayment conditions is offset by available borrowing facilities as set out in
note 14.
The BHP Billiton Board approved the establishment of a US$ 2.0 billion US Commercial Paper
Programme in July 2002. In 2005 approval was obtained for an increase of the US Commercial Paper
Programme from US$ 2.0 billion to US$ 3.0 billion. As at 30 June 2006, US$ 1,354 million
Commercial Paper (30 June 2005: US$ 1.6 billion) was outstanding in BHP Billiton Finance
(USA) Ltd. The Company facilitated the issue of Commercial Paper in the external market.
•
Credit risk
All counterparty limits are approved according to the guidelines provided by the FRMC and Banks
credit worthiness are continually reviewed. The total credit exposure as at 30 June 2006 amounted to
USD 1,251 million (30 June 2005 - USD 1,249 million).
16. Fair value of recognised financial instruments
Fair values of recognised financial instruments approximate the carrying amounts as Receivables,
Cash and cash equivalents, Bank loans, overdrafts and facilities and Payables and deposits from BHP
Billiton Group companies mature within 3 months or bear floating interest rates.
17. Employees
The Company had no employees during the period. The entire personnel of the Company is employed
by a Billiton service company. These costs are on charged to
18. Remuneration of directors
No remuneration is paid to directors.
KPMG A u d i t
the Appendix pertaining to the letter c
- 2 NOV 2006
Initials for identification purpos-aps A
KPMG Accountants N.v, 15 V /
BHP Billiton Finance BV
19. Commitments and guarantees
19.1 In May 2005 a counterparty indemnity to BNP Paribas was issued for the work to be performed on
the Oudam (USD 6.8 million) and Hassi Bir Rekaiz (USD 14.5 million) blocks in Algeria, expiring in
November 2008.
19.2 In May 2005 a letter of credit was issued from BNP Paribas facility for the amount of USD 125
thousands with regards to Colombian petroleum exploration in favour of BHP Billiton Petroleum
(Americas) Inc, expiring in March 2007.
19.3 The Company issued in July 2005 a payment performance guarantee to Canadian Imperial Bank of
Commerce, Toronto for debts of Rio Algom Ltd and Rio Algom Mining Corp.
19.4 In April 2006 two letters of credit were issued from the BNP Paribas facility for the amount of USD
225 thousand each. These are in favour of BHP Billiton Petroleum (Colombia) Corporation regarding
two exploration licences and must be in place for a total period of 21 months.
19.5 The Company provided the following guarantees in respect of BHP Billiton Group companies:
• A guarantee in respect of the Dutch fiscal unity as explained in note 8.4.
• A guarantee in respect of the Multiparty Account Pooling Facility, refer to note 14.
• In April 2005 a USD 45 million fronting facility was issued in favour of Stein Insurance Ltd.
The Hague, 27 October 2006
Board of Directors
P.A. Koppefman
Wi- Murtaf
ILL
A.T. Cornfield
\ WiO Audit
the Appendix pertaining to the Setter
- % NOV 2006
Initials for identification purposes
ICPfviG Accountants N. v .
BHP Billiton Finance BV
Other information
Statutory rules regarding appropriation of profits
According to Article 12 of the Company's Articles of Association the profit of the Company shall be at the
disposal of the general meeting of shareholders. No dividends may be declared until accumulated losses
have been recovered.
Appropriation of result
The Board of Directors proposes to appropriate the result for the year ended 30 June 2006 to Shareholder's
funds. This proposal has not yet been included in the financial statements for the 12 months period ended
30 June 2006.
The proposal to add the result for the year ended 30 June 2005 to retained earnings was adopted by the
General Meeting of Shareholders and added to the Retained Earnings in these financial statements.
KPMG Audit
the Appendix pertaining to the letter oi
- 2 NOY 2008
Initials for identification purpcj^68;fj
KPMG Accountants N.V.
|/
BHP Billiton Finance BV
Auditors' report
Introduction
We have audited the financial statements of BHP Billiton Finance B.V., The Hague for the year ended 30
June 2006 as set out on pages 3 to 16. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
Scope
We conducted our audit in accordance with auditing standards generally accepted in the Netherlands.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the company financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the company financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the company financial statements. We believe that our audit
provides a reasonable basis for our opinion.
Opinion
In our opinion, these financial statements give a true and fair view of the financial position of the company
as at 30 June 2006 and of the result for the year then ended in accordance with accounting principles
generally accepted in the Netherlands and also comply with the financial reporting requirements included
in Part 9 of Book 2 of the Netherlands Civil Code.
Furthermore we have established to the extent of our competence that the Directors' Report is consistent
with the financial statements.
The Hague, 27 October 2006
KPMG ACCOUNTANTS N.V.
C.J.M. Coremans RA
K
-'"
' 'rJf
KPMG Audit
the Appendix pertaining to the
2 HOV 2006
Initials lor identification pu'pc
KPMG Accountants h,.v.
18