23 August 2006
Number 26/06

BHP BILLITON RESULTS FOR THE
YEAR ENDED 30 JUNE 2006

Commentary on the Group Results

Our Underlying EBIT of US$15.3 billion has increased 54.0% over last year and almost fivefold since our June 2002 results. Over the last five years, the Group has invested US$15 billion on organic growth projects and acquisitions. This has resulted in an average volume increase across our key commodities of approximately 38%. The Company's global footprint, diverse product range and visibility to global markets have allowed the Company to invest through the business cycle in value adding opportunities. This has positioned our business to take full advantage of the current robust demand and price environment that underpins these record financial results. Full year operational records were also accomplished, with record production achieved for five major and two minor commodities.

Our Underlying EBIT margins increased during the year to 44.4%, from 39.6% in 2005 driven by price and volume increases. Return on Capital Employed remained very strong at 34.6%. Raw material, contractor and labour costs are all under pressure but our global procurement and business excellence initiatives are helping to mitigate these increased costs. Our Business Excellence program has been invigorated during the year with some good gains being recorded. Management of cost pressures continues to be a key focus across the Group.

We continue our strategy of delivering value enhancing growth with the completion of four and approval of seven major growth projects during the year. The seven new projects have an expected cost of US$5.0 billion (BHP Billiton share), bringing our current project pipeline to 23 projects with an expected investment of US$13.8 billion. Despite continued cost and schedule challenges to the delivery of our project pipeline, we remain confident in the value these projects will deliver to our shareholders given market fundamentals, the need for new supply and our stringent approval and monitoring processes.

We are also laying the foundation for future growth via our global exploration and development program. Our Petroleum exploration program continues to be successful, in particular in the Gulf of Mexico (US). We also have over 200 minerals exploration and development opportunities ongoing in approximately 35 countries across Asia, Africa, Russia, the Americas and Australasia. Our long history of successfully operating in both developed and more challenging jurisdictions together with our proven risk management framework underpins our ability to move discoveries through to operations.

The exceptional diversity of our businesses by commodity, geography and customer base underpins the strength of our cash flows and continues to support our ability to both identify and invest in growth opportunities whilst continuing to deliver outstanding returns to shareholders in the form of our progressive dividend policy and other capital management initiatives.

The Board today declared a final dividend of 18.5 US cents per share. This represents an increase of 27.6% over last year's final dividend of 14.5 US cents per share. This brings the total dividends for the 2006 financial year to 36.0 US cents per share, an increase of 8.0 US cents per share, or 28.6%, over the 2005 year. Today's declaration represents our ninth consecutive dividend increase and means that today's dividend has increased almost threefold since the final dividend paid in 2002. We intend to continue with our progressive dividend policy, with further increases dependent upon the expectations for future investment opportunities and market conditions.

We are also announcing today a further capital return of US$3.0 billion to shareholders over the next 18 months through a series of share buy-backs, and it is yet to be decided the extent to which these will be on or off market. We expect this will commence with an on-market buy-back in BHP Billiton Plc.

This program brings the total buy-back programs to US$5.0 billion for the year following the US$2.0 billion capital management program completed in May. Under that initiative 114.8 million shares, or 1.9% of the issued share capital of the BHP Billiton Group, was repurchased.

At the conclusion of today's announced initiative, BHP Billiton will have returned US$15.5 billion in total to shareholders through capital initiatives and dividends since June 2001.

BHP Billiton adopted International Financial Reporting Standards (IFRS) for reporting purposes from 1 July 2005. We have restated comparative amounts in accordance with the Group's transition to IFRS as outlined in the Financial Information. The measurement differences from previous GAAP are set out in note 10 of the Financial Information. IFRS also has presentational differences from previous GAAP, including the treatment of income from jointly controlled entities and exceptional items, as noted below, and the treatment of royalty and petroleum related taxes of US$572 million (prior period US$601 million) which are presented as taxation, rather than operating costs.

The introduction of IFRS has led to us reporting Underlying EBIT, which is a measure used internally and in our Supplementary Information to reflect the underlying performance of BHP Billiton's operations. Underlying EBIT excludes all net finance costs and taxation, including net finance costs and taxation of jointly controlled entities and any exceptional items. Under IFRS, these amounts are included in Profit from operations in the income statement. The differences between Underlying EBIT and EBIT (Profit from operations) are set out in the following table:

Underlying EBITDA increased by 50.0% to US$18.1 billion (from US$12.0 billion last year). Underlying EBIT was US$15.3 billion compared with US$9.9 billion last year, an increase of 54.0%.

The following table and commentary detail the approximate impact of the principal factors that affected Underlying EBIT for the current year compared with the prior year:

New operations increased Underlying EBIT by US$1,295 million, primarily due to a full year's contribution of US$918 million from the ex-WMC Resources Limited (WMC) operations acquired in June 2005. Also included was a full year's production from ROD (Algeria), which commenced commercial production in October 2004, Mad Dog (US) and Angostura (Trinidad and Tobago), which were both commissioned in January 2005.

Stronger commodity prices for most products increased Underlying EBIT by US$6,690 million. Higher prices for most base metals products (copper in particular), metallurgical coal, iron ore, all petroleum products and aluminium contributed approximately US$7,200 million, which was partially offset by lower prices for manganese alloy and the sale of lower quality diamonds.

Strong demand for resources globally has continued, leading to increased costs across the industry for labour, contractors, raw materials, fuel, energy and other input costs. In this environment, costs for the Group have increased by US$1,340 million, inclusive of non cash costs of US$125 million primarily related to increased depreciation due to the commissioning of new projects. Net of non cash costs, this represents an increase on our 2005 cost base of 5.7%.

Specific areas of cost increases include changed mining conditions particularly at Ekati (Canada) where we are mining a lower grade zone and Queensland Coal (Australia) where mine mix changed following the closure of Riverside. Labour and contractor charges, fuel, and consumables, as well as maintenance and other operating costs have also increased. The commissioning of a number of new operations meant depreciation charges also increased.

Higher price-linked costs reduced Underlying EBIT by US$475 million, largely because of higher royalties (particularly for Carbon Steel Materials and Petroleum products), increased treatment charges and refining charges (TCRCs) and price participation charges for copper and higher LME linked power charges in Aluminium.

Exchange rate movements had a net nil impact on Underlying EBIT compared with last year. The translation of monetary items had a favourable impact on Underlying EBIT of US$90 million principally due to exchange gains from the strengthening of the US dollar against the Australian dollar. This compared to losses in the prior period. This was offset by an unfavourable impact on operating costs of US$90 million, primarily due to the strengthening of the Brazilian real against the US dollar.

The following exchange rates against the US dollar have been applied:

(a) Displayed as US$ to A$1 based on common convention.

The impact from the sale of assets and interests on Underlying EBIT was US$10 million lower than for the prior period. The impact amounted to US$128 million for the current period, principally related to the sale of BHP Billiton's interest in the Wonderkop chrome joint venture (South Africa) for US$61 million and the Green Canyon (US) oil fields and the Vincent Van Gogh (Australia) undeveloped oil discovery. This compared to higher profits in the prior year which included the sale of an equity participation in the North West Shelf Project's (Australia) gas reserve to China National Offshore Oil Corporation of US$56 million, the profit of US$22 million on the sale of the Acerinox share investment and the profit on the disposal of our interest in Integris Metals (US) of US$19 million.

The profit on sale of the Tintaya copper mine (Peru) has been included in exceptional items.

Ceased and sold operations had a US$10 million unfavourable impact on Underlying EBIT. The current period was negatively impacted by the loss of earnings from the Chrome business (South Africa) and the Laminaria and Corallina oil fields (Australia) that were divested during the 2005 financial year, and the cessation of production at Typhoon/Boris due to hurricane damage sustained during September 2005. This was partly offset by the favourable impact of US$149 million of higher earnings from Tintaya, which was sold in June 2006, and US$137 million in relation to care and maintenance costs incurred at Boodarie Iron (Australia) in the prior period.

Exploration expense was US$280 million higher than the prior year. Petroleum expenditure taken to profit increased by US$192 million due to increased activity in the Gulf of Mexico, a US$41 million write-off of expenditure which had previously been capitalised and a US$32 million impairment of the Cascade and Chinook oil and gas prospects which have subsequently been sold. Minerals exploration activity in Africa and Brazil also increased.

Other items decreased Underlying EBIT by US$129 million. These included the one-off cost for adjusting our interest in Valesul (Brazil) to realisable value prior to disposal of US$50 million, as well as a lower contribution from freight activities. The US$60 million sale of an option held over an exploration property in Pakistan partially offset these.

Net finance costs increased to US$505 million, from US$331 million in the prior period. This was driven largely by higher average debt balances following the funding of the acquisition of WMC in June 2005, increased discounting on provisions and a higher average interest rate but was partially offset by higher capitalised interest.

The total taxation expense on profit before tax was US$3,632 million, representing an effective rate of 25.6%.

Excluding the impacts of exceptional items, royalty related taxation, non tax-effected foreign currency adjustments, translation of tax balances and other functional currency translation adjustments, and including the taxation expense of jointly controlled entities, the underlying effective rate was 27.6%. When compared to the UK and Australian statutory tax rate (30%), the underlying effective tax rate included a benefit of 3.4% due to the recognition of US tax losses (US$500 million). Royalty related taxation represents an effective rate of 3.1% for the current year.

Following the transition to IFRS, certain royalty and petroleum resource-related taxes are treated as taxation arrangements when they have the characteristics of a tax. This is considered to be the case when they are imposed under Government authority and the amount payable is calculated by reference to revenue derived (net of any allowable deductions) as determined by relevant legislation. As a result, such royalty costs which in prior years would have been reported as an operating cost in Underlying EBIT are now reported as a taxation expense. Obligations arising from royalty arrangements that do not satisfy these criteria continue to be recognised in operating expenses.

During June 2006, we sold our interest in the Tintaya copper mine in Peru. Gross consideration received was US$853 million, before deducting intercompany trade balances. The net consideration of US$717 million (net of transaction costs) included US$634 million for shares plus the assumption of US$116 million of debt, working capital adjustments and deferred payments contingent upon future copper prices and production volumes. The profit on disposal was US$296 million (net of a taxation charge of US$143 million).

In the prior period exceptional items reduced profit after tax by US$30 million. Refer note 2 in the Financial Information for further details.

Net operating cash flow after interest and tax increased by 25.1% to US$10.5 billion. Higher profits increased cash generated from operating activities, offset by an increase in working capital (principally due to higher prices), and increased taxation payments.

Capital and exploration expenditure totalled US$6,005 million for the period. Expenditure on major growth projects amounted to US$3,292 million, including US$655 million on petroleum projects and US$2,637 million on minerals projects. Other capital expenditure on maintenance, sustaining and minor capital items was US$1,947 million. Investment cash flows included US$596 million primarily due to the purchase of the remaining shares to complete the WMC acquisition. Financing cash flows include the US$2.0 billion capital management program completed in May 2006 and increased dividend payments.

Net debt, comprising cash and interest bearing liabilities, was US$8.2 billion, a decrease of US$0.5 billion, or 5.6%, compared to 30 June 2005. Gearing, which is the ratio of net debt to net debt plus net assets, was 25.2% at 30 June 2006, compared with 32.8% at 30 June 2005.

Underlying net debt (which varies from net debt above as it includes net debt of jointly controlled entities) was US$9.2 billion, down from US$10.0 billion at 30 June 2005. Underlying gearing was 27.2% at 30 June 2006, compared to 35.8% at 30 June 2005.

A final dividend for the year ended 30 June 2006 of 18.5 US cents per share will be paid to shareholders on Wednesday 27 September 2006. Together with the interim dividend of 17.5 US cents per share paid to shareholders on 22 March 2006, this brings the total dividend for the year to 36.0 US cents per share.

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 and South African rands to shareholders on the UK section and the South African section of the register, respectively. Currency conversions were based on the foreign currency exchange rates two business days before the declaration of the dividend.

The timetable in respect of this dividend will be:

Currency conversion - 21 August 2006

Last day to trade Johannesburg Stock Exchange - 1 September 2006

Ex-dividend Australian Stock Exchange - 4 September 2006

Ex-dividend Johannesburg Stock Exchange - 4 September 2006

Ex-dividend London Stock Exchange - 6 September 2006

Record - 8 September 2006

Payment - 27 September 2006

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 4 September 2006 and 8 September 2006.

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

Portfolio activities continued during the year with proceeds amounting to US$928 million realised. We disposed of a number of assets and interests including our Tintaya mine, our 50% interest in the Wonderkop chrome joint venture, the Green Canyon 18 and 60 oil fields, our one third interest in the Hi-Fert fertiliser business (Australia) and our ownership of the Zululand Anthracite Colliery (South Africa). This brings to US$5.6 billion the total proceeds realised on assets and interests over the last five years.

The Annual General Meeting of BHP Billiton Plc will be held at the Royal Horticultural Halls, Lindley Hall, 80 Vincent Square, SW1P 2PE, London, UK, on Thursday 26 October 2006, commencing at 10:30am.

Four major growth projects were completed during the 2006 financial year.

There are 13 major projects (defined as BHP Billiton's share of capital expenditure of greater than US$100 million) under development with a total budgeted investment of US$9,503 million. Full details for these are given in the quarterly Exploration and Development Report, released on 25 July 2006.

The following table provides a summary of the Customer Sector Group results for the year ended 30 June 2006 and the prior period.

Exploration expenditure charged to profit was US$394 million (including the US$32 million impairment of Cascade and Chinook and US$41 million of other exploration expenditure previously capitalised). Gross expenditure on exploration of US$447 million was US$67 million higher than for the 2005 financial year as a result of increased activity in the Gulf of Mexico.

Underlying EBIT was US$1,191 million, an increase of US$232 million, or 24.2%, compared to last year. Higher prices for aluminium and alumina had a favourable impact, with the average LME aluminium price increasing to US$2,244 per tonne (compared with US$1,804 per tonne for the corresponding period). Earnings from third party trading were also higher.

Earnings were adversely impacted mainly by higher charges for LME linked power, raw materials, fuel, labour and pot relining, in line with global supply pressures. Exchange rate movements in the period also had an unfavourable effect on EBIT, particularly on the earnings derived from our Brazilian operations. The write-down of US$50 million of our interest in Valesul to fair value, in line with the value achieved on its subsequent divestment, was also a factor.

Despite the higher costs, EBIT margins improved significantly in the second half of the year. This improved translation of rising aluminium and alumina price into higher net earnings, despite the current environment of rising costs, reflects an intensive focus on cost containment.

Underlying EBIT was US$5,400 million, an increase of US$3,229 million, or 148.7%, compared to last year. This was mainly attributable to higher average LME prices for copper of US$2.28/lb (compared to US$1.43/lb) and higher prices for silver, zinc and lead. Higher production volumes from record copper and silver production at Escondida (Chile), record copper, silver and molybdenum production at Antamina (Peru), record zinc production at Cannington (Australia) and record gold production at Tintaya (Peru) also led to increased earnings. The inclusion of Olympic Dam's (Australia) results for the full period, following its acquisition in June 2005, also contributed positively. The increase was partially offset by higher price linked TCRCs and price participation costs, charges for raw materials, labour and contractors and higher depreciation costs due to the commissioning of Escondida Norte.

Reduced production at Cerro Colorado (Chile) following an earthquake in June 2005 also had an unfavourable impact, although this was partially mitigated by business interruption insurance.

Certain of our base metal sales agreements provide for provisional pricing based on the LME official price prior to shipment. Final settlement is based on the average applicable price for a specified future quotational period. The common market quotational periods on sales are the average of the calendar month after the month of shipment for cathode and the average of two to four calendar months after the month of shipment for concentrate. We record revenue upon the transfer of risk and title using the applicable sales contracts price (typically the provisional price). The revenue is adjusted to fair value through each profit period using the forward curve until final pricing is determined. We consider this approach to appropriately measure the fair value of the relevant sales agreements at period end. The impact of provisional pricing of copper shipments with a rising LME price favourably impacted finalised and outstanding average copper revenues by US$0.37/lb over the LME average. Average copper revenue for 2006 was US$2.66/lb versus US$1.51/lb in 2005. Outstanding copper volumes, subject to the fair value measurement previously described amounted to 274,280 tonnes at 30 June 2006 compared to 231,874 tonnes in the prior year. These were revalued at a weighted average price of US$3.35/lb compared to US$1.54/lb in the prior year.

Underlying EBIT was US$4,503 million, an increase of US$1,703 million, or 60.8%, compared to last year. This reflects higher prices and volumes and an increased level of spot sales for iron ore, as well as increased prices for metallurgical coal. This was partially offset by lower prices for manganese alloy. Higher operating costs at all operations had an adverse impact during the period and was largely attributable to higher contractor and labour costs, price-linked royalty costs and fuel and energy costs. Queensland Coal (Australia) also experienced extended maintenance outages and a change in mine mix in the period, following the closure of Riverside.

A weaker A$/US$ exchange rate had a favourable impact, as did the closure of the Boodarie Iron plant, announced in June 2005. The same period last year included care and maintenance costs for the plant whilst there was no impact in the current period as all anticipated closure costs were provided for in June 2005.

Depreciation charges increased as new projects were commissioned, as did exploration expenditure to support a higher level of exploration activity largely at Maruwai (Indonesia). Earnings on freight activities were lower.

Underlying EBIT was US$345 million, a decrease of US$215 million, or 38.4%, compared to last year. This was due to a lower value per carat for diamonds (down 24% from last year) because of lower carat quality and higher unit costs in relation to the processing of lower grade material and moving to underground mining areas at Ekati (Canada). The prior year included six months of earnings and the profit on sale from Integris Metals (US), which was sold in January 2005. However, the inclusion of a full year of earnings from Southern Cross Fertiliser operations acquired in June 2005 was positive, as was higher sales volumes for diamonds and titanium feedstock and a reduced depreciation charge primarily as a result of an extension of mine life following approval of the Koala Underground project.

At Ekati, the 2007 financial year will be another transition year, from open pit to underground mining, which will be negatively impacted by lower value diamond production. In the medium term, increasing underground production from Panda and Koala will help restore profitability to historical levels.

Underlying EBIT was US$327 million, a decrease of US$260 million, or 44.3%, compared to last year. Higher fuel and operating costs across all operations, adverse inflationary movements, particularly in South Africa, and higher freight costs were key contributors to the reduced result. Costs increased at Ingwe (South Africa) largely due to higher depreciation resulting from changed estimates of the economic lives of certain underground export operations and the depreciation of rehabilitation assets. Increased demurrage at Cerrejon Coal (Colombia) and lower yields and equipment availability combined with increased strip ratios at Hunter Valley Coal (Australia) also led to higher costs.

The cessation of earnings from the Zululand Anthracite Colliery following its divestment during the year had a negative impact on the result whilst a favourable movement of the rand against the US dollar had a positive impact.

Underlying EBIT was US$901 million, an increase of US$189 million, or 26.5%, compared to last year. The inclusion of a full year of results from the Nickel West operations (Australia), acquired in June 2005, as well as a US$61 million profit on the sale of BHP Billiton's interest in the Wonderkop joint venture effective November 2005 were key factors in the increased result. The impact of slightly higher average realised nickel prices was partially offset by decreased prices for cobalt. The average LME nickel price was US$7.03/lb versus US$6.78/lb in the comparative period.

Negative impacts included lower production and higher fuel costs at the QNI Yabulu refinery (Australia) as a result of lower operational performance, tie-in activity relating to the refinery expansion and delays to the Gas Conversion project. Offsetting the Underlying EBIT increase was US$113 million included in the prior year relating to earnings from the Group's Chrome operations, which were sold effective 1 June 2005.

Underlying net corporate operating costs excluding exchange impacts were US$251 million compared to US$147 million in the prior year, an increase of US$104 million. This was due primarily to higher net insurance costs of US$55 million associated with insurance claims arising from natural disasters and incidents. In addition, higher costs relating to corporate projects, sponsorships and regulatory compliance, including Sarbanes-Oxley, contributed approximately US$32 million.

Lower one-off costs in relation to the acquisition of WMC had a favourable impact in the current period, partially offset by a gain in 2005 in relation to the close out of the cash settled derivatives contracts on the acquisition of WMC shares.

Minerals exploration expenditure has increased from US$67 million to US$115 million, mainly due to increased exploration activity in Africa and Brazil. In addition, the profit on the sale of an option held over an exploration property in Pakistan contributed US$ 60 million.

⁽²⁾ Underlying EBIT is earnings before net finance costs and taxation, and jointly controlled entities' net finance costs and taxation and any exceptional items. Underlying EBITDA is Underlying EBIT before depreciation, impairments, and amortisation of US$2,776 million (comprising Group depreciation, impairments and amortisation of US$2,427 million and jointly controlled entities' depreciation and amortisation of US$349 million) for the year ended 30 June 2006 and US$2,115 million (comprising Group depreciation, impairments and amortisation of US$1,818 million and jointly controlled entities' depreciation and amortisation of US$297 million) for the year ended 30 June 2005. We believe that Underlying EBIT and Underlying 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.

⁽³⁾ Underlying EBIT is used to reflect the underlying performance of BHP Billiton's operations. Underlying EBIT is reconciled to EBIT - Profit from operations on page 3.

⁽⁴⁾ Net operating cash flow includes dividends from jointly controlled entities and is after net interest and taxation.

For the year ended

30 June 2006

Consolidated Income Statement - Page 20

Consolidated Statement of Recognised Income and Expense  - Page 21

Consolidated Balance Sheet - Page 22

Consolidated Cash Flow Statement - Page 23

Notes to the Financial Information - Page 24

The financial information included in this document for the year ended 30 June 2006 is unaudited and has been derived from the draft financial report of the BHP Billiton Group for the year ended 30 June 2006. The financial information does not constitute the Group's full financial statements for the year ended 30 June 2006, which will be approved by the Board and reported on by the auditors and subsequently filed with the registrar of companies and the Australian Securities and Investments Commission.

The financial information set out on pages 20 to 32 for the year ended 30 June 2006 has been prepared in accordance with the requirements of the UK Companies Act 1985 and Australian Corporations Act 2001 and with:

• Australian equivalents to International Financial Reporting Standards (IFRS) as issued by the Australian Accounting Standards Board and interpretations effective as of 30 June 2006;
• IFRSs and interpretations as adopted by the European Union (EU) as of 30 June 2006; and
• those standards and interpretations adopted early as described in the Accounting Policies section of the announcement of the results for the six months ended 31 December 2005.

The above standards and interpretations are collectively referred to as "IFRS" in this report.

The comparative information has also been prepared on this basis, with the exception of certain items, details of which are given below, for which comparative information has not been restated. The comparative figures for the financial year ended 30 June 2005 are not the statutory accounts of BHP Billiton Plc for that financial year. Those accounts, which were prepared under UK Generally Accepted Accounting Principles (GAAP), have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain statements under section 237(2) (regarding adequacy of accounting records and returns) or section 237(3) (regarding provision of necessary information and explanations) of the Companies Act 1985.

The basis of preparation of this financial information is different to that of the most recent comparative year annual financial report due to the first time adoption of IFRS. An explanation of how the transition to IFRS has affected the reported financial position and financial performance of the BHP Billiton Group is provided in note 10. This note includes reconciliations of equity and profit for comparative periods previously reported under UK GAAP and Australian GAAP to those amounts reported under IFRS.

IFRS 1 / AASB 1 "First time adoption of International Financial Reporting Standards", in general requires accounting policies to be applied retrospectively in order to determine an opening balance sheet at the BHP Billiton Group's IFRS transition date of 1 July 2004, and allows certain exemptions on the transition to IFRS which the BHP Billiton Group has elected to apply. Those elections considered significant to the BHP Billiton Group include decisions to:

• not restate previous mergers or acquisitions and the accounting thereof;
• measure property, plant and equipment at deemed cost, being the carrying value of property, plant and equipment immediately prior to the date of transition, with no adjustment made to fair value;
• not apply the recognition and measurement requirements of IFRS 2 / AASB 2 "Share-based Payment" to equity instruments granted before 7 November 2002;
• recognise the cumulative effect of actuarial gains and losses on defined benefit employee schemes in retained earnings as at the transition date; and
• transfer all foreign currency translation differences, previously held in reserves, to retained earnings at the transition date.

In addition, BHP Billiton has applied the exemption available under IFRS 1 / AASB 1 whereby IAS 32 / AASB 132 "Financial Instruments: Disclosure and Presentation" and IAS 39 / AASB 139 "Financial Instruments: Recognition and Measurement" have been applied from 1 July 2005 and not for the year ended 30 June 2005.

The following exchange rates against the US dollar have been applied in the financial information:

(a) Displayed as US$ to A$1 based on common convention.

The accompanying notes form part of this financial information.

The accompanying notes form part of this financial information.

The accompanying notes form part of this financial information.

Group and unallocated items represent Group centre functions and certain comparative data for divested assets and investments and exploration and technology activities.

It is the Group's policy that inter-segment sales are made on a commercial basis.

(1) Other attributable income represents the re-allocation of certain items recorded in the segment result of group & unallocated / eliminations to the applicable CSG / business segment.

1 Business segments continued

(1) Other attributable income represents the re-allocation of certain items recorded in the segment result of group & unallocated / eliminations to the applicable CSG / business segment.

Exceptional items are those items where their nature and amount is considered material and require separate disclosure. Such items included within the BHP Billiton Group profit for the year are detailed below.

Sale of Tintaya copper mine
Effective 1 June 2006, BHP Billiton sold its interests in the Tintaya copper mine in Peru. Gross consideration received was US$853 million, before deducting intercompany trade balances. The net consideration of US$717 million (net of transaction costs) included US$634 million for shares plus the assumption of US$116 million of debt, working capital adjustments and deferred payments contingent upon future copper prices and production volumes.

Disposal of Chrome operations
Effective 1 June 2005, BHP Billiton disposed of its economic interest in the majority of its South African chrome business. The total proceeds on the sale were US$421 million, resulting in a profit before tax of US$127 million (US$1 million tax expense). In addition, the Group sold its interest in the Palmiet chrome business in May 2005 for proceeds of US$12 million, resulting in a profit before tax of US$15 million (US$5 million tax expense).

Provision for termination of operations
The Group decided to decommission the Boodarie Iron operations and a charge of US$266 million (US$80 million tax benefit) relating to termination of the operation was recognised. The charge primarily relates to settlement of existing contractual arrangements, plant decommissioning, site rehabilitation, redundancy and other closure related costs/charges associated with the closure.

Closure plans
As part of the Group's regular review of decommissioning and site restoration plans, the Group reassessed plans in respect of certain closed operations. A total charge of US$121 million (US$104 million after tax) was recorded and included a charge of US$73 million (US$21 million tax benefit) for closed mines at Ingwe in relation to revision of the Group's assessed rehabilitation obligation, predominantly resulting from revised water management plans and a charge of US$48 million (US$4 million tax expense) in relation to other closed mining 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 interest rate on such borrowings. For the year ended 30 June 2006 the capitalisation rate was 5.0 per cent. (2005: 4.6 percent)