(1) Including the Group's share of joint ventures.

The above financial results are prepared in accordance with UK generally accepted accounting principles (GAAP) and are unaudited. Financial results in accordance with Australian GAAP are provided on page 28. All references to the corresponding period are to the half year ended 31 December 2003.

Commentary on the Group Interim Results

The record financial result for the half year ended 31 December 2004 is a reflection of the continued consistent execution of our strategy. The focus on the efficient operation of our high quality, diversified asset base, the development of short and long term growth options and our customer focused marketing has enabled us to fully capture the opportunity provided from strong demand conditions. Attributable profit was US$2.8 billion (excluding exceptional items), an increase of 127% on the corresponding period.

The commissioning of a number of growth projects in recent years has provided leverage to strong customer demand. Along with operational improvements resulting from the continued deployment of our Operating Excellence initiatives, these new projects contributed to the achievement of half yearly production records for six major commodities within our portfolio at a time when customer demand has strengthened considerably. With completion of the fourth processing train in the North West Shelf, the commissioning of an additional five projects commencing production in recent weeks and the approval of two major new projects during the current period, our capacity to respond to the growth in demand for raw materials is further enhanced and augurs well for future periods.

We currently have ten major projects and four smaller projects in development across a range of commodities, and an additional twelve projects where feasibility studies are underway. In total our project pipeline, which includes approved projects and projects in feasibility, now represents US$10.2 billion of value accretive investment options. Notwithstanding this sizeable planned investment, our strong cash flow allowed us to execute the first stage of our planned US$2 billion capital management programme, returning US$1.78 billion to shareholders during the half year, via an off-market share buy-back of BHP Billiton Limited shares. The remaining US$220 million (3.6 US cents per share) will be distributed as part of the interim dividend, which the Board declared today at 13.5 US cents per share. This is an increase of 69% over last year's interim dividend and a 42% increase from the dividend declared in August 2004. BHP Billiton intends to continue with its progressive dividend policy using this rebased dividend level as the starting reference point for future periods. This rebasing of the dividend is a sign of the confidence we have in the medium term outlook and our ability to consistently deliver earnings and cash flow to support this higher level of dividend payment.

Earnings before interest, tax, depreciation, impairments and amortisation (EBITDA) excluding exceptional items, increased by 66.6% to US$5.2 billion from US$3.1 billion in the corresponding period. Earnings before interest and taxation (EBIT), excluding exceptional items, were US$4.3 billion compared with US$2.2 billion for the corresponding period. 

The following table and commentary detail the approximate impact of the principal factors that affected earnings before interest and taxation for the current half year compared with the corresponding period were:

Net interest expense fell from US$294 million to US$259 million, despite higher US dollar interest rates during the period. This was principally driven by lower average debt levels and increased interest income from higher average cash balances compared to the corresponding period. This was partially offset by higher expense from discounting of provisions, and lower capitalisation of interest as several projects move into production phase. Included in net interest were exchange losses on net debt of US$69 million, mainly relating to the translation of rand denominated debt. This compares with losses of US$89 million in the corresponding period.

The tax charge on earnings was US$1,131 million, representing an effective rate of 28.3%. Excluding the impacts of non tax-effected foreign currency adjustments, translation of tax balances and other functional currency translation adjustments, mainly attributable to the strengthening of both the rand and Australian dollar against the US dollar during the period, the effective rate was 27.3%. When compared to the UK and Australian statutory tax rate (30%), the underlying effective tax rate benefited 4.4% due to the recognition of tax losses (US$175 million) in the US. In addition, investment incentives and development entitlements were recognised during the period offset by non-deductible accounting depreciation and amortisation, non-deductible expenditures, overseas tax rate differential and other items.

Exceptional items

Earnings before interest and tax were increased by an exceptional item of US$56 million from the completion of the sale in December 2004 of an equity participation in the North West Shelf (NWS) Project in Western Australia to China National Offshore Oil Corporation (CNOOC). Under the agreement, CNOOC purchased an interest in a new joint venture that has been established within the NWS Project to supply LNG to the Guangdong LNG Project in China. CNOOC has acquired a 5.3% title interest in NWS Project production licences, retention leases and the exploration permit relating to natural gas, but excluding oil (equivalent to 5.8% of BHP Billiton's share of current remaining proved natural gas reserves). CNOOC paid each joint venture partner US$59 million, resulting in a profit on sale of US$56 million (no tax effect). CNOOC's rights to process its gas and associated LPG and condensate through the NWS Project offshore and onshore infrastructure are contained in a separate agreement.

The corresponding period included an exceptional gain relating to the settlement of a litigation matter with Dalmine SpA of US$66 million (before tax expense of US$18 million) and an exceptional tax benefit of US$78 million relating to the introduction of the tax consolidation regime in Australia.

Basic earnings per share excluding exceptional items were 44.5 US cents per share compared to 19.5 US cents per share in the corresponding period, an increase of 128.2%.

Basic earnings per share including exceptional items were 45.4 US cents per share compared to 21.5 US cents per share in the corresponding period, an increase of 111.2%.

Available cash flow after interest and tax increased by 116.2% to US$3.5 billion. The key components of this increase were increased cash generated from operating activities (mainly due to higher profits), partly offset by increased taxation payments.

Spending on capital, exploration and investment expenditures totalled US$1,740 million for the period. Expenditure on growth projects and investments amounted to US$1,111 million, including US$433 million on petroleum projects and US$678 million on minerals projects. Sustaining and maintenance capital expenditure was US$430 million. In addition, the current period includes US$1.78 billion distributed to shareholders as part of the US$2 billion capital management programme.

Net debt at 31 December 2004 was US$5.5 billion, an increase of US$0.6 billion for the period.  Net debt at 31 December 2003 was US$6.5 billion. Gearing, which is the ratio of net debt to net debt plus net assets, was 27.2% at 31 December 2004, compared with 32.8% at 31 December 2003.

An interim dividend for the half year ended 31 December 2004 of 13.5 US cents per share will be paid to shareholders on 23 March 2005. This dividend includes US$220 million (3.6 US cents per share) to complete the US$2 billion capital management programme announced in August 2004. BHP Billiton intends to continue with its progressive dividend policy using this rebased dividend level as the starting reference point for future periods. This rebasing of the dividend is also a sign of the confidence we have in the ability to consistently deliver earnings and cash flow to support this higher level of dividend payment in the years ahead.

The dividend paid by BHP Billiton Limited will be fully franked for Australian taxation purposes. Dividends for the BHP Billiton Group are determined and declared in US dollars.  However, BHP Billiton Limited dividends are mainly paid in Australian dollars and BHP Billiton Plc dividends are mainly paid in pounds sterling to shareholders on the UK section of the register and South African rand to shareholders on the South African section of the register.  The foreign currency exchange rates applicable two business days before the declaration of the dividend were used for conversion of currencies. These rates are detailed in the table below.

The timetable in respect of this dividend will be:

Currency conversion - 14 February 2005

Last day to trade Johannesburg Stock Exchange (JSE) - 25 February 2005

Ex-dividend Australian Stock Exchange (ASX) - 28 February 2005

Ex-dividend Johannesburg Stock Exchange (JSE) - 28 February 2005

Ex-dividend London Stock Exchange (LSE) - 2 March 2005

Record - 4 March 2005

Payment - 23 March 2005

American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly.

BHP Billiton Plc shareholders registered on the South African section of the register will not be able to dematerialise or rematerialise their shareholdings, nor will transfers between the UK register and the South African register be permitted, between the dates of 28 February 2005 and 4 March 2005.

The following table details the currency exchange rates applicable for the dividend:

In October 2004, Moody's Investor Services upgraded BHP Billiton's credit rating from A2 to A1, reflecting the Group's strengthened financial risk profile.

On 23 November 2004, the first phase of a US$2 billion capital management programme was completed through an off-market share buy-back of 180.72 million BHP Billiton Limited shares. The total amount of capital repurchased was US$1.78 billion, or 2.9% of the issued BHP Billiton Group share capital. The buy-back price of A$12.57 per share, represented a discount of 12% to the volume weighted average price of BHP Billiton Limited shares over the five days up to and including buy-back closing date. The remaining US$220 million will be returned to shareholders as part of the interim dividend declared today.

EBIT was US$909 million, an increase of US$307 million or 51% compared with the corresponding period. The increase was a result of higher realised prices, where the average realised oil price per barrel was US$44.85 compared to US$29.40, and the average realised natural gas price per thousand standard cubic feet was US$2.94 compared with US$2.37 in the corresponding period. In addition, lower exploration expenditure and a smaller loss on third party trading activities also had a favourable impact. The increase was offset by the unfavourable effect of increased taxes on petroleum products, lower production volumes, with total production for the period of 57.4 million barrels of oil equivalent, compared with 62.4 million barrels of oil equivalent in the corresponding period, and the translation impact of a stronger A$/US$ exchange rate on net monetary assets and liabilities.

Exploration expenditure charged to profit was US$55 million representing a capitalisation rate of 59.9% compared to a charge to profit of US$77 million and a capitalisation rate of 49.7% in the corresponding period, and reflects timing of exploration and appraisal activities.

EBIT was US$458 million, an increase of US$151 million or 49%, compared with the corresponding period.  The increase was mainly due to higher realised prices for aluminium and alumina, and increased aluminium sales volumes. Average LME aluminium prices increased to US$1,764 per tonne, compared with US$1,474 per tonne in the corresponding period. Higher aluminium sales volumes resulted from the full commissioning of Mozal 2 (Mozambique) and Hillside 3 (South Africa) in August 2003 and December 2003 respectively, and from the return to full production at the Alumar smelter following the July 2003 power supply failure.

This was partially offset by a once-off US$36 million charge for the agreed cancellation of a discounted aluminium supply agreement, the unfavourable impact on operating costs of strengthening A$/US$, rand/US$ and Brazilian real/US$ average exchange rates, higher LME price-linked costs, increased production input costs and pot relining activity.

EBIT was US$1,041 million, an increase of US$708 million or 213% compared with the corresponding period. This increase was mainly attributable to higher average realised prices for copper of US$1.46/lb, compared with US$0.96/lb in the corresponding period, higher copper sales volumes as well as higher average realised prices for silver, lead and zinc. Record silver and lead production was achieved for the current period and was a result of the continuation of the Cannington (Australia) de-bottlenecking programme. These factors were partially offset by higher input costs as well as the unfavourable translation impact on operating costs and net monetary assets and liabilities of stronger A$/US$ and Chilean peso/US$ average and closing exchange rates.

EBIT was US$1,007 million, an increase of US$502 million or 99% compared with the corresponding period. This increase was mainly attributable to stronger commodity prices for all products combined with record production and sales volumes for iron ore and manganese ore operations. Operating cost performance at Australian and South African operations was unfavourably impacted by stronger A$/US$ and rand/US$ average exchange rates and inflationary pressures compared with the corresponding period. Queensland Coal operations (Australia) incurred higher price-linked royalty costs, stripping costs linked to expansion projects and increased demurrage costs. Western Australian iron ore operations (Australia) also incurred higher demurrage costs as well as increased depreciation charges for recently commissioned expansion projects offset by higher capitalisation of stripping costs. Compared with the prior period, ceased production at Boodarie Iron in Western Australia also had an unfavourable impact on EBIT. Operations at Boodarie Iron are currently being transitioned to care and maintenance status.

BHP Billiton has settled commercial terms for approximately three quarters of its annually priced metallurgical coal contracts with prices increasing by an average of 120% across all markets. For 70% of our contracts by volume the increase is effective from 1 April 2005.

EBIT was US$317 million, an increase of US$122 million or 63% compared with the corresponding period. The increase was mainly attributable to higher realised prices and sales volumes for diamonds and Integris Metals (US) products. These factors were partially offset by higher price-linked costs at Integris, the unfavourable impact of stronger Canadian$/US$ and rand/US$ average exchange rates on operating costs, and higher diamond royalties arising from increased profits. Additionally the half year ended 31 December 2003 included profits realised on the sale of a non-core royalty interest (US$37 million).

The second half of the 30 June 2005 financial year will be negatively impacted by the processing of lower grade, lower value material at Ekati (Canada) and the cessation of earnings from Integris Metals following its sale in January 2005.

EBIT was US$308 million, an increase of US$223 million or 262% compared with the corresponding period. The increase was mainly due to higher export prices resulting from continued strong demand in both the Atlantic and Pacific markets, increased export sales volumes from Hunter Valley Coal (Australia) following the successful ramp-up of the Mt Arthur North project, and cost efficiencies gained at Hunter Valley Coal from increased volumes. This was partially offset by the unfavourable impact on net operating costs of a stronger rand/US$ average exchange rate, higher unit costs at Ingwe (South Africa) reflecting higher operating costs, and South African inflationary pressures.

EBIT was US$340 million, an increase of US$147 million or 76% compared with the corresponding period. The increase was mainly driven by higher realised prices for nickel, ferrochrome and cobalt. Nickel prices averaged US$6.38/lb in the current period, up 35% from US$4.72/lb in the corresponding period. This was partially offset by the impact of stronger currencies on operating costs and translation of net monetary assets and liabilities, higher cost of production inputs for chrome operations in South Africa and increased shipping costs.

Corporate operating costs were US$135 million compared to US$110 million in the corresponding period. This was primarily due to an increase of US$27 million associated with costs of employee share awards in the current period.

Other items in the corresponding period included gains on legacy A$/US$ currency hedging of US$30 million and benefits from one-off items. 

INDEPENDENT REVIEW REPORT OF THE AUDITOR
TO BHP BILLITON PLC - 13

CONSOLIDATED PROFIT AND LOSS ACCOUNT - 14

CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES - 15

CONSOLIDATED BALANCE SHEET - 16

CONSOLIDATED STATEMENT OF CASH FLOWS - 17

NOTES TO INTERIM FINANCIAL INFORMATION - 19

The interim financial information set out on pages 14 to 27 has been prepared on the same basis and using the same accounting policies as were applied in drawing up the financial information contained in the accounts of BHP Billiton Plc for the year ended 30 June 2004. The interim financial information should be read in conjunction with the accounts of BHP Billiton Plc for the year ended 30 June 2004 and does not include all information normally contained within the notes to annual accounts. Where applicable, comparatives have been adjusted to disclose them on the same basis as current period figures.

The financial information for the half years ended 31 December 2004 and 31 December 2003 has been subject to review by the auditor but is unaudited. In the opinion of the Directors, the financial information for these periods presents fairly the financial position, results of operations and cash flows for the periods in conformity with UK generally accepted accounting principles (GAAP).

For reporting periods beginning on or after 1 January 2005, the Group must comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The Group's DLC structure results in two parent entities with their own statutory reporting obligations, one in Australia and the other in the UK. While Australia and the UK are currently moving to an IFRS-based financial reporting regime in the same timeframe, this structure creates unique IFRS implementation issues, for example:

1. the Australian Accounting Standards Board has approved IFRS-based standards which mandate particular policies that are only optional in the UK; and
2. there is a risk that further changes in IFRS prior to 30 June 2006 attract inconsistent early adoption rules between the two jurisdictions.

The Group has established a formal project, monitored by a steering committee, to manage the transition to IFRS reporting. Regular updates are also provided to the Board Risk Management and Audit Committee. The implementation project consists of three phases:

(i) Scoping and impact analysis phase - Project scoping and impact analysis was substantially complete by 30 June 2004 and produced a high-level view of potential differences to existing accounting and reporting policies and consequential changes to information systems and business processes.

Management of IFRS implementation continued

(ii) Evaluation and design phase - This phase involves specification of changes required to existing accounting policies, information systems and business processes, together with an analysis of policy alternatives allowed under IFRS and development of draft IFRS financial statement content. The evaluation and design phase was well advanced at 31 December 2004 and the Group will continue to evaluate the impact of developments in IFRS through to implementation.

The interim financial information has been prepared in accordance with UK accounting standards and other UK financial reporting requirements (UK GAAP). The differences between UK GAAP and IFRS identified to date as potentially having a significant effect on the Group's financial performance and financial position are summarised below. The summary should not be taken as an exhaustive list of all the differences (significant or not) between UK GAAP and IFRS.

The Group has not quantified the effects of the differences described below. The regulatory bodies that promulgate UK GAAP and IFRS have significant ongoing projects that could affect the ultimate differences between UK GAAP and IFRS and their impact on the Group's financial statements in future years. The future impact of IFRS will also depend on the particular circumstances prevailing in those years.

The key potential implications of the conversion to IFRS on the Group identified to date are as follows:

We have been instructed by the Company to review the financial information for the six months ended 31 December 2004 set out on pages 14 to 27 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the United Kingdom Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the United Kingdom Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts, in which case any changes, and the reasons for them, are to be disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4: "Review of Interim Financial Information" issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed and excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. A review is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 December 2004.

KPMG Audit Plc
Chartered Accountants
London, 16 February 2005

for the half year ended 31 December 2004

The accompanying notes form part of these interim financial statements.

for the half year ended 31 December 2004

The accompanying notes form part of these interim financial statements.

as at 31 December 2004

The accompanying notes form part of these interim financial statements.

for the half year ended 31 December 2004

The accompanying notes form part of these interim financial statements.

for the half year ended 31 December 2004

(a) Net cash inflow from Group operating activities

(b) Restated - refer note 7.

The accompanying notes form part of these interim financial statements.