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

(3) Throughout this report, EBIT is earnings before interest and tax. EBITDA is EBIT before depreciation, impairments and amortisation of US$2,018 million (comprising Group depreciation, impairments and amortisation of US$1,867 million and joint venture and associate depreciation, impairments and amortisation of US$151 million) for the year ended 30 June 2004 and US$1,882 million (comprising Group depreciation, impairments and amortisation of US$1,721 million and joint venture and associate depreciation, impairments and amortisation of US$161 million) for the year ended 30 June 2003. We believe that EBIT and EBITDA provide useful information, but should not be considered as an indication of, or alternative to, attributable profit as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.

(4) Available cash flow is operating cash flow including dividends from joint ventures and associates and after net interest and tax.

(5) For this purpose, net interest includes capitalised interest and excludes the effect of discounting on provisions and other liabilities, and exchange differences arising from net debt.

The Group set new records this year, both in terms of its operations and its financial results. Attributable profit (before exceptional items) increased by 82.8% to US$3.5 billion. Attributable profit (after exceptional items - refer page 4) of US$3.4 billion, was a 77.7% increase from last year's results and production records were set at many operations across our business. This record result is reflective of strong market conditions and the successful execution of our business strategy. Since the creation of BHP Billiton, we have consistently focused on maximising the operating performance of our world class assets and reducing costs and improving the efficiencies of our businesses. We have utilised the growing cash flows generated from these businesses to invest in value accretive organic growth projects which have enabled us to benefit from the market conditions we are now experiencing.

Record production volumes were achieved at a number of our businesses as seven new projects came on stream and other projects ramped up to full production. Our Operating Excellence initiatives also contributed to the increased production, allowing us to take full advantage of strong market demand. Western Australian iron ore, Queensland coal and Groote Eylandt manganese (all Australia) operations produced record volumes of iron ore, coking coal and manganese ore, respectively. Escondida (Chile) produced record copper volumes, Cannington (Australia) produced record silver volumes and Ekati (Canada) achieved record diamond volumes. Record alumina, aluminium, nickel and natural gas volumes were also achieved during the current year.

Including other efficiency gains of US$70 million and US$115 million of additional cost savings achieved during the year, the total benefits since the merger reached US$780 million. This exceeds, 12 months ahead of schedule, the target set in April 2002 of US$770 million. EBIT margin, excluding exceptional items and third party product sales, improved to 29.8% compared to 24.3% for financial year 2003.

Available cash flow (after interest and tax) for the year was a record US$5.2 billion. This strength in cash flow enabled the continuing development of our project pipeline. The seven projects successfully commissioned during the year required a capital investment of approximately US$1.9 billion. The Board also approved five major projects during the year; the Worsley Development Capital Projects, Escondida Sulphide Leach, Panda Underground, Ravensthorpe Nickel and the Yabulu Extension projects, representing a combined capital expenditure of US$2.2 billion. In total, the Group currently has 14 major growth projects under development, 12 of which are tracking within Board approved budget and schedule. Refer further details on page 8 and 9.

BHP Billiton has consistently stated that the priorities for its cash flow are:

• to finance growth opportunities with attractive rates of return;
• to maintain a capital structure in line with an A credit rating; and
• to return cash to shareholders, either through its progressive dividend policy or by other means.

The Board of BHP Billiton remains committed to demonstrating strong capital discipline whilst ensuring that BHP Billiton is able to finance its strong and growing organic growth pipeline.

Following a review of its current and anticipated cash flows, the Board approved a number of actions associated with capital management activities. The Board has today declared a final dividend of 9.5 US cents per share, an increase of 26.7% over last year's final dividend. This brings the total dividends for the 2004 financial year to 26 US cents per share. Additionally, the Board approved plans to pursue additional capital management initiatives with a target amount of up to US$2 billion. BHP Billiton is currently reviewing various means of returning capital, including the use of share buy-backs, so as to optimise value, with the exact amount and timing of any return being dependent upon market conditions.

Turnover (including turnover from third party products) rose by 42.5% to US$24,943 million. Turnover from sales of Group product increased by 29.4% to US$18,283 million, mainly due to higher prices for copper, nickel, petroleum products, aluminium, export energy coal, ferrochrome and iron ore, together with increased sales volumes for our major minerals commodities, natural gas and LPG. This was partly offset by lower volumes for petroleum liquids and titanium products. Sales of third party products increased by US$3,278 million to US$6,660 million.

Earnings before interest, tax, depreciation and amortisation, excluding exceptional items, increased by 40.0% to US$7,506 million from US$5,363 million in the corresponding period.

Earnings before interest and tax excluding exceptional items were US$5,488 million compared with US$3,481 million in the corresponding period, an increase of 57.7%. This increase was due to higher commodity prices, net benefits from portfolio management activities, higher sales volumes, cost savings and efficiency gains. Offsetting factors were higher A$/US$ and rand/US$ exchange rates, price-linked costs, inflation and exploration costs. Further analysis of the factors affecting turnover and EBIT is set out on page 10 and 11.

Net interest on borrowings and cash fell from US$403 million to US$355 million, principally driven by lower average debt levels and active management of the Group's debt portfolio which has resulted in lower average interest rates. Exchange losses on net debt, mainly relating to the translation of rand denominated debt, were US$133 million compared with losses of US$140 million in the corresponding period.

The tax charge on earnings, excluding exceptional items, was US$1,379 million, representing an effective rate of 27.7%. The underlying effective rate was 26.4% when taking into account 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. When compared to the UK and Australian statutory tax rate (30%), the underlying effective tax rate benefited 2.0% due to the recognition of tax losses (US$100 million) in the US. In addition, investment incentives, development entitlements and other unbenefited tax losses and tax credits were recognised during the year. These benefits were offset by non-deductible accounting depreciation and amortisation and non-tax effected losses.

Attributable profit excluding exceptional items (after minority interests of US$97 million) was US$3,510 million, an increase of 82.8% from US$1,920 million last year (after minority interests of US$40 million).

Basic earnings per share (excluding exceptional items) were 56.4 US cents per share against 30.9 US cents per share in the corresponding period, an increase of 82.5%.

Exceptional items reduced attributable profit by US$131 million (after tax) during the year, as follows.

The Group refined its plans in relation to certain closed operations. This resulted in a charge of US$534 million (US$512 million after tax) comprising:

• At Southwest Copper (US), a charge of US$425 million resulting from a re-estimation of short-term closure costs and the inclusion of residual risks, longer-term costs, (including overhead and water management) and an increase in the residual value of certain assets; and,
• At other closed sites, a charge of US$109 million (before a tax benefit of US$22 million), in relation to the Island Copper mine (Canada), the Newcastle steelworks (Australia), the Selbaie copper mine (Canada), and several other smaller sites.

The Group announced it was part of a consortium that had reached a settlement with Dalmine SpA with respect to a claim brought against Dalmine in April 1998. The claim followed the failure of an underwater pipeline installed in 1994 in the Liverpool Bay area of the UK continental shelf. As a result of the settlement, BHP Billiton has recorded an exceptional gain of US$66 million (US$48 million after tax).

BHP Billiton elected to consolidate its Australian subsidiaries under the Australian tax consolidation regime, as introduced by the Australian Federal Government. Under the transitional rules, the Group has chosen to reset the tax cost base of certain depreciable assets which will result in additional tax depreciation over the lives of the assets. This resulted in the restatement of deferred tax balances and an exceptional tax benefit of US$95 million being recorded in accordance with UK Generally Accepted Accounting Principles.

The level of certainty regarding potential benefits arising from prior period taxation deductions and foreign tax credits available in the US and Canada has increased to the extent that some of the provisions against deferred tax assets established in prior years are no longer necessary. This is a result of higher income generation, changes in legislation and effective utilisation of tax credits during the year, along with increasing confidence regarding the ability to realise benefits in the future. Accordingly, the Group has recorded an exceptional tax benefit of US$238 million.

Attributable profit including exceptional items (after minority interests of US$97 million) was a record at US$3,379 million, an increase of 77.7% from US$1,901 million (after minority interests of US$40 million).

Basic earnings per share, including exceptional items, of 54.3 US cents was also a record, and is 77.5% higher than the 30.6 US cents in the corresponding period.

Available cash flow (after interest and tax) was a record US$5,235 million.

Total capital and investment expenditure amounted to US$2,624 million, including US$952 million on petroleum projects, and US$1,672 million on minerals and other minor projects. Of the total capital and investment expenditure, sustaining capital expenditure was US$926 million. In addition, exploration expenditure was US$454 million, comprising petroleum exploration of US$340 million and minerals exploration of US$114 million. Disposals of fixed assets, sale of subsidiaries and investments, and repayments of loans by joint ventures generated US$425 million.

Net cash flow before dividend payments was US$2,582 million. Dividends paid in the period were US$1,501 million compared with US$830 million in the corresponding period. Net debt of US$4,769 million at 30 June 2004 represents 24.9% of net debt plus net assets. Net debt comprises US$6,587 million of total debt offset by US$1,818 million of cash, including money market deposits.

A final dividend for the year ended 30 June 2004 of 9.5 US cents per share will be paid to shareholders on 22 September 2004. The BHP Billiton Limited dividend will be fully franked for Australian taxation purposes.

A first interim dividend of 8.0 US cents per share was paid on 3 December 2003 and a second interim dividend of 8.5 US cents per share was paid on 5 May 2004. This brings the total dividends declared for the year to 26.0 US cents compared to 14.5 US cents in the prior year. Three dividends were declared for the year ended 30 June 2004 as a result of the Group's decision to realign dividend declaration dates to coincide with the announcements of our interim and full year results. In future years, BHP Billiton will declare an interim dividend at the time of its interim results announcement, and a final dividend at the time of its full year results announcement.

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 rand to shareholders on the South African section of the register. The rates of exchange applicable two business days before the announcement date are used for conversion, and are detailed below.

The timetable in respect of this dividend will be:

Currency conversion - 16 August 2004

Last day to trade Johannesburg Stock Exchange (JSE) - 27 August 2004

Ex-dividend Australian Stock Exchange (ASX) - 30 August 2004

Ex-dividend Johannesburg Stock Exchange (JSE) - 30 August 2004

Ex-dividend London Stock Exchange (LSE) - 1 September 2004

Record - 3 September 2004

American Depositary Shares (ADSs) each represent two fully paid ordinary shares and receive dividends accordingly. The record date for both the BHP Billiton Limited ADSs and BHP Billiton Plc ADSs is 3 September 2004.

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 30 August 2004 and 3 September 2004.

The following table details the exchange rates applicable for conversion of the dividend payable on 22 September 2004:

These programs and initiatives have been embedded in the way the BHP Billiton Group does business. As a result, we expect to see continued improvements in future periods, although there is growing pressure on input costs based on the current strong demand environment.

In November 2003, Standard & Poor's upgraded the Group's long term credit rating from A to A+, and in May 2004, Moody's Investors Service changed the Group's outlook from A2 (stable) to A2 (positive). The benefit of a diversified portfolio, strong financial performance, disciplined financial policies, the integration of the Group's operations following the merger and the lengthening track record in successfully executing our substantial growth projects underpinned our continued positive ratings performance.

In addition, the Group has announced a capital management program as outlined in further detail on page 2.

A number of portfolio management activities were finalised during the current year. Sales of non-core assets, including the sale of our interest in the Highland Valley Copper mine (Canada) and the Robinson copper/gold mine (US) by Base Metals, the sale of our interest in Mamore (Bolivia) by Petroleum, sale of a non-core royalty interest by Diamonds and Specialty Products, and sales of non-core mineral rights by Stainless Steel Materials, generated total proceeds of US$277 million.

Seven projects reached the commissioning stage during the current period. With costing yet to be finalised on some of those projects, total capital expenditure throughout the development phase of these projects was approximately US$1,857 million, which is US$80 million or 4.1% below budget.

(1) All references to capital expenditure and production volumes are BHP Billiton's share unless noted otherwise.

There are 14 major projects under development (defined as BHP Billiton capital expenditure share of greater than US$100 million). Full details on these are given in the quarterly Exploration and Development Report, released on Friday 28 July 2004.

(1) All references to capital expenditure and production volumes are BHP Billiton's share unless noted otherwise.

(1) All references to capital expenditure and production volumes are BHP Billiton's share unless noted otherwise.

(3) Following delays in procurement of some equipment and materials, and below expected construction productivity, first oil is now scheduled for Q4 2004 (original target Q1 2004).

(4) Following a review of contractual arrangements relating to the design and construction of the Minerva development, initial production is now expected in Q4 2004 (original target end Q1 2004), and BHP Billiton's share of capital expenditure was increased from US$123 million to US$150 million.

Higher sales volumes of copper, iron ore, aluminium, natural gas, LPG, manganese ore, metallurgical coal and diamonds were partially offset by lower oil and titanium feedstock product volumes. This resulted in a net positive impact on EBIT of approximately US$180 million.

Higher commodity prices increased EBIT by approximately US$3,145 million with copper, nickel, petroleum products, aluminium, export energy coal, ferrochrome and iron ore prices having significant contributions.

Higher price-linked costs decreased EBIT by approximately US$325 million, mainly due to increased taxes on petroleum products, and higher LME-linked costs. Inflationary and other input cost pressures, principally in South Africa and Australia, increased costs by approximately US$300 million. These factors were partially offset by favourable operating cost performance of approximately US$70 million.

New operations increased EBIT by approximately US$55 million mainly due to the commencement of commercial production from the Ohanet wet gas development in Algeria from October 2003.

Ceased and sold operations had a favourable impact on EBIT of approximately US$75 million. This mainly reflects the impact of divested assets including the Group's petroleum assets in Bolivia, the Alumbrera copper/gold mine in Argentina, and our 33.3% interest in the Highland Valley Copper mine.

Asset sales favourably impacted EBIT by approximately US$60 million mainly due to the sale of non-core assets in the current period, including a non-core royalty interest in December 2003 and sales of non-core mineral rights.

The unfavourable exchange rate impact on EBIT of US$775 million was primarily due to stronger A$/US$ and rand/US$ average exchange rates on operating costs which had an unfavourable impact on EBIT of approximately US$915 million. The conversion of rand and Australian dollar denominated net monetary liabilities at balance sheet date had a favourable impact of approximately US$65 million on EBIT, which was mainly due to the closing A$/US$ exchange rate appreciating 3.4% during the current period compared with an appreciation of 17.7% in the corresponding period. Gains on legacy A$/US$ currency hedging of US$39 million in the current period had a favourable impact of US$125 million compared to losses of US$86 million in the corresponding period.

Exploration expense was approximately US$85 million higher than the prior period. Gross exploration expenditure was US$454 million, comprising petroleum exploration of US$340 million and minerals exploration of US$114 million, compared with US$348 million in the corresponding period.

Aluminium contributed EBIT of US$776 million, up from US$581 million, an increase of 33.6% compared with the corresponding period.

The increase in EBIT was mainly attributable to higher realised prices for aluminium and alumina. Average LME aluminium prices increased to US$1,570 per tonne, compared with US$1,360 per tonne in the corresponding period. Higher sales volumes from Mozal 2 (Mozambique) and Hillside 3 (South Africa) following full commissioning in August 2003 and December 2003 respectively, also had a favourable impact on EBIT.

These factors were partially offset by 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 transportation costs and inflationary pressure in Brazil.

Base Metals contributed EBIT of US$1,156 million, up from US$286 million, an increase of US$870 million compared with the corresponding period.

This increase in EBIT is mainly attributed to higher average realised prices for copper (2004 - US$1.14lb; 2003 - US$0.73lb), silver, lead and zinc. Record production was achieved at Escondida where de-bottlenecking continues as the operation moves towards full capacity. The improvement in the copper market allowed sulphide operations at Tintaya (Peru) to resume in August 2003, returning to full capacity during the current calendar year. Record production was also achieved at Cannington, and production of zinc at Antamina (Peru) was significantly higher.

These factors were partially offset by the unfavourable impact on operating costs of stronger A$/US$ and Chilean peso/US$ average exchange rates, higher operating and maintenance costs at Escondida, and higher production costs at Antamina. The prior year included the results of the Alumbrera mine, which was sold effective April 2003.

Carbon Steel Materials contributed EBIT of US$1,137 million, up from US$1,045 million, an increase of 8.8% compared with the corresponding period.

The increase in EBIT was mainly attributable to stronger commodity prices, record production and sales volumes at Western Australian iron ore operations, and higher sales at both Queensland coal and Australian manganese ore operations. Local currency unit cost performance improved at Western Australian iron ore, as a result of ongoing cost efficiency programs and increased production.

The EBIT improvements above were partially offset by the unfavourable impact of stronger A$/US$ and rand/US$ average exchange rates and inflationary pressure on Australian and South African operations compared with the corresponding period. Depreciation charges increased at Western Australian iron ore operations following the completion of the Area C and Products and Capacity Expansion projects, and stripping and demurrage costs were higher at Queensland coal and Western Australian iron ore operations.

Diamonds and Specialty Products contributed EBIT of US$410 million, up from US$299 million, an increase of 37.1% compared with the corresponding period.

Energy Coal contributed EBIT of US$234 million, up from US$198 million, an increase of 18.2% compared with the corresponding period.

The increase in EBIT was mainly due to improved export prices resulting from strong demand in both the Atlantic and Pacific markets, cost savings driven by integration synergies and business improvement programs at Cerrejon Coal (Colombia), and increased sales volumes from Australian and Colombian operations.

This was partially offset by the unfavourable impact on net operating costs of stronger rand/US$ and A$/US$ average exchange rates, and higher unit costs at Ingwe (South Africa) reflecting lower export sales volumes, higher contractor costs, and South African inflationary pressures. Increased demurrage costs at Ingwe and Hunter Valley (Australia) also had an unfavourable impact on EBIT. In addition, exploration expenditure previously capitalised has been written off.

Stainless Steel Materials contributed EBIT of US$571 million, up from US$150 million, an increase of US$421 million compared with the corresponding period.

The increase in EBIT was driven by higher realised prices for nickel (2004 - US$5.49lb; 2003 - US$3.46lb), and ferrochrome. Profits from the sale of mineral rights in South Africa (US$30 million), and record production at nickel operations achieved through ongoing improvement programs at both Cerro Matoso (Colombia) and the QNI Yabulu refinery (Australia), also had a favourable impact on EBIT.

These factors were partially offset by the unfavourable impact on operating costs of stronger rand/US$ and A$/US$ average exchange rates, higher price-linked ore supply costs to the QNI Yabulu refinery and higher royalties at Cerro Matoso. In addition, increased shipping costs, higher oil and coking coal prices, and inflationary pressures in South Africa had an unfavourable impact on EBIT.

Net corporate operating costs, excluding gains and losses from legacy A$/US$ currency hedging and other exchange impacts, were US$258 million, a decrease of US$9 million compared to US$267 million in the corresponding period. The underlying decrease in costs was partially offset by the impact of asset sales and other one-off items in the corresponding period.

Gains on legacy A$/US$ currency hedging were approximately US$39 million during the current period, compared with losses of approximately US$86 million in the corresponding period.

The financial information in this document for the year ended 30 June 2004 is unaudited, has been derived from the draft financial statements of BHP Billiton Plc and does not constitute the statutory accounts of BHP Billiton Plc for that year.

The financial information set out on pages 17 to 29 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 2003 except for the change in accounting policy for employee share awards described in Note 1. Where applicable, comparatives have been adjusted to disclose them on the same basis as current period figures.

In the opinion of the Directors, the financial information for the year ended 30 June 2004 presents fairly the financial position, results of operations and cash flows for the year in conformity with UK generally accepted accounting principles (GAAP). The financial information for the year ended 30 June 2003 has been derived from the audited financial statements of BHP Billiton Plc for that period as filed with the UK Registrar of Companies and does not constitute the statutory accounts of BHP Billiton Plc for that period. The auditors' report on the statutory accounts for the year ended 30 June 2003 was unqualified and did not contain statements under Section 237 (2) (regarding adequacy of accounting records and returns) or under Section 237 (3) (provision of necessary information and explanations) of the United Kingdom Companies Act 1985. The statutory accounts for the year ended 30 June 2004 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the UK Registrar of Companies following the Annual General Meeting.

The combined results for the year ended 30 June 2004, prepared in accordance with UK GAAP, are generally consistent with the combined results under Australian GAAP as required by the Australian Securities and Investments Commission in respect of dual listed companies, except for the impact of accounting for deferred taxation. Financial results prepared in accordance with Australian GAAP are provided on page 30 to 31.

As at 30 June 2004

For the year ended 30 June 2004

For the year ended 30 June 2004

For the year ended 30 June 2004

(a) Net cash inflow from Group operating activities

(b) The impact on the BHP Billiton Group's cash flows of the demerger of the BHP Steel business in July 2002 was a cash inflow of US$347 million. This represents US$294 million from the settlement by BHP Steel of intercompany loans, less US$22 million demerger transaction costs paid, which are both included in net cash inflow from acquisitions and disposals, and US$75 million from the sale of the 6 per cent interest in BHP Steel which is included in the sale of investments and repayments by joint ventures.

The BHP Billiton Group has adopted the provisions of Urgent Issues Task Force (UITF) Abstract 38 'Accounting for Employee Share Ownership Plan (ESOP) Trusts' from 1 July 2003, which has resulted in the adoption of a revised accounting policy for employee share awards.

Under the revised accounting policy, the estimated cost of share awards made by the BHP Billiton Group is charged to profit over the period from grant date to the date of expected vesting or the performance period, as appropriate. The accrued employee entitlement is recorded as an equal credit to shareholders' funds. The estimated cost of awards is based on the market value of shares at the grant date (in the case of Group Incentive Scheme Performance Shares, Performance Rights, the Bonus Equity Plan, the Restricted Share Scheme and Co-Investment Plan) or the intrinsic value of options awarded (being the difference between the exercise price and the market price at the date of granting the award), adjusted to reflect the impact of performance conditions, where applicable. Where awards are satisfied by on market purchases, the cost of acquiring the shares is carried in shareholders' funds as 'Interest in shares of BHP Billiton', and any difference between the cost of awards and the consideration paid to purchase shares on market is transferred to retained earnings when the shares vest to the employees unconditionally. In addition, the assets and liabilities of ESOP trusts utilised by the BHP Billiton Group to hold shares for employee remuneration schemes are consolidated.

In prior years, the estimated cost of share awards was initially charged to profit and recorded as a provision using the market value of shares at the grant date. Where share awards were satisfied by on market purchases, the cost was subsequently adjusted to the actual consideration for shares purchased. Further, shares in BHP Billiton held by the ESOP trusts were shown as a fixed asset investment.

The effects of the accounting policy change on the financial statements for the year ended 30 June 2004 are as follows:

• Opening shareholders' funds increased by US$84 million representing the reclassification from provisions to retained earnings for the accrued employee entitlement on unvested share awards and decreased by US$6 million representing the reclassification of shares held by ESOP trusts from fixed asset investments into 'Interest in Shares of BHP Billiton'; and
• Attributable profit increased by US$12 million representing costs no longer recognised for the excess consideration paid to purchase shares on-market (US$8 million) and the foreign currency translation of the accrued cost of unvested awards now recorded in shareholders' funds (US$4 million).

The impact on prior period profit and loss accounts is immaterial and accordingly these have not been restated.

The accounting policy change in respect of the consideration paid to purchase shares on-market and to include shares held by ESOP trusts in shareholders' funds better represents the nature of the transactions involved, that is, a share buy-back by the Group and a separate issue of shares to employees to satisfy the share awards. This also aligns the amount of expense recorded in the profit and loss account for share awards, irrespective of whether the Group satisfies awards through a new share issue or on-market purchase.

(a) During the year ended 30 June 2004, BHP Billiton elected to consolidate its Australian subsidiaries under the Australian tax consolidation regime, as introduced by the Australian Federal Government. Under the transitional rules, the Group has chosen to reset the tax cost base of certain depreciable assets which will result in additional tax depreciation over the lives of the assets. This resulted in the restatement of deferred tax balances and an exceptional tax benefit of US$95 million being recorded in accordance with UK GAAP.

Effective July 2002, the BHP Steel business was demerged from the BHP Billiton Group. A 6 per cent interest in BHP Steel was retained by the Group upon demerger of the Group's Steel business. This was sold in July 2002 for US$75 million and the loss of US$19 million associated with this sale was recognised in the year ended 30 June 2003 as an exceptional item in relation to Discontinued Operations.

(a) Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalisation rate representing the average borrowing cost of the Group. For the year ended 30 June 2004, the capitalisation rate was 4.6 per cent (2003: 5.2 per cent).