BHP Billiton reduces its 2016 interim dividend by 75%

DividendMax Ltd.

BHP Billiton reduces its 2016 interim dividend by 75%

The health and safety of our people and the communities in which we operate always come first. We are committed to addressing the consequences of the tragedy at our joint venture, Samarco.

Underlying EBITDA(1) of US$6.0 billion and an Underlying EBITDA margin(2) of 40% for the December 2015 half year, despite significantly weaker commodity prices which had a negative impact of US$7.8 billion.

Productivity continues to improve. Black Hawk well costs declined by 30%, Western Australia Iron Ore and Queensland Coal unit cash costs declined by 25% and 17%, respectively, and grade-adjusted unit cash costs at Escondida(3) were broadly unchanged.

Capital and exploration expenditure(4) decreased by 40% to US$3.6 billion. Reflecting the Group's rising capital productivity and lower spend in Onshore US, we now expect to invest US$7.0 billion in the 2016 financial year and US$5.0 billion in the 2017 financial year.

Robust operating performance, the flexibility of our investment program and a targeted reduction of working capital supported free cash flow(2) of US$1.2 billion.

Our strong balance sheet has been maintained, with net debt(2) of US$25.9 billion broadly unchanged from December 2014 despite weaker prices and significant dividend payments.

While we were prepared for lower prices across our commodities, we now believe the period of weaker prices and higher volatility will be prolonged. From a position of strength, we have adopted a dividend policy that further protects our balance sheet and ensures financial flexibility.

The dividend policy provides a minimum 50% payout of Underlying attributable profit at every reporting period. The Board will assess, every reporting period, the ability to pay amounts additional to the minimum payment, in accordance with the capital allocation framework.

The Board has determined to pay an interim dividend of 16 US cents per share which is covered by free cash flow. This comprises the minimum payout of 4 US cents per share and an additional amount of 12 US cents per share, reflecting differences between Underlying attributable profit and free cash flow during the period.

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