(1)    From continuing operations, excluding the results of the Group's Steel business, which was demerged in July 2002. Refer pages 16, 17 and 19.

(3)    Excluding exceptional items.

Commentary on the Group Results

Global economic conditions remained weak during the year ended 30 June 2003. In what has been a challenging climate, BHP Billiton's operating and financial results clearly demonstrate our ability to consistently generate stable cash flows, improve underlying profitability and increase returns to shareholders whilst still continuing our investment in value accretive growth projects.

Attributable profit from continuing operations and excluding exceptional items was US$1,920 million, 2.9% above last year's result of US$1,866 million. Compared with the corresponding period, the financial results reflect an unfavourable non-cash exchange impact of approximately US$560 million arising mainly from the translation of non US dollar denominated net monetary liabilities. Excluding this non-cash impact, attributable profit was 36.4% higher than the corresponding period reflecting generally higher prices and sales volumes and the benefits from our cost savings program.

Production of all major minerals commodities was higher than, or in line with, the prior period and a number of production records were achieved during the year. Record Western Australian iron ore production of 76.5 million tonnes (100 per cent terms) and shipments of 80.3 million tonnes (100 per cent terms) reflect strong demand in all Asian markets, particularly China. Record nickel production at both QNI Yabulu refinery (Australia) and Cerro Matoso (Colombia), and record plant throughput at Ekati^TM (Canada) all reflect the benefits of Operating Excellence programs. Fourth quarter production of all petroleum and major minerals commodities was higher than, or in line with, the third quarter. It is significant to note that a general improvement in our safety results accompanied the solid production performance.

Our diversified asset base generated US$3,590 million in available cash flow (after interest and tax) during the year, which allowed us to progress investment in sanctioned growth projects. Following the recent commissioning of Zamzama (Pakistan) and Mozal 2 (Mozambique), there are now 14 major capital projects under development. 13 of these are either on or under budget and are currently tracking on or ahead of schedule. Three projects, representing US$1,657 million of capital expenditure (BHP Billiton share) were sanctioned during the year. Our ability to deliver projects on or ahead of budgeted parameters is illustrated by the five projects commissioned since 1 July 2002, all on or under budget, and on or ahead of schedule. The projects commissioned since 1 July 2002 involved capital expenditures amounting to US$1,073 million.

At the time of the merger, a target was set to capture US$270 million of merger benefits by 30 June 2003. US$285 million of on-going annual benefits had been achieved by 31 December 2002, six months ahead of schedule. Cost saving initiatives continued, with total annual savings (including merger benefits) of US$375 million being achieved in the current year. Of this total, US$65 million were merger benefits achieved in the first half of the current year and US$310 million represents steady progress towards our cost savings target of US$500 million by 30 June 2005.

The confidence of the Board of Directors in the stable cash generating ability of the business allowed an increase in dividends declared to shareholders for the full year from 13.0 US cents per share last year to 14.5 US cents per share in the full year ended 30 June 2003, an increase of 11.5%.

During the period, the Group's Steel business was demerged. In order to provide meaningful comparison the discussion in this section is based on the Group's continuing operations, excluding exceptional items and the Group's Steel business.

Turnover (including turnover from third party products) rose by 15.0% to US$17,506 million, mainly due to higher sales volumes of iron ore, energy coal, copper, aluminium, diamonds and manganese and higher prices for petroleum products, nickel, ferrochrome, copper, hot briquetted iron and manganese alloy. These factors were partly offset by lower sales volumes of petroleum products and lower prices for export energy coal and iron ore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 9.2% to US$5,129 million from US$4,697 million in the corresponding period.

Earnings before interest and tax (EBIT) were US$3,481 million compared with US$3,102 million in the corresponding period, an increase of 12.2%. This increase was due to generally higher commodity prices, increased sales volumes, cost savings, lower exploration expense and increased profits from new and acquired operations. Offsetting factors were inflationary pressures, principally in South Africa, exchange rate impacts, increased price linked costs, lower profits from ceased and sold operations and profits from asset sales recorded in the corresponding period. Please refer to pages 9 and 10 for further analysis of the factors affecting turnover and EBIT.

Net interest on borrowings and cash fell from US$432 million to US$403 million, principally driven by lower market interest rates, lower average debt levels and management of the Group's debt portfolio.

Exchange losses on net debt were US$140 million compared with gains of US$180 million in the corresponding period, mainly in relation to the translation of rand denominated debt of companies which account in US dollars as their functional currency. The rand appreciated by 27% during the current period compared with depreciation of 27% in the corresponding period.

The tax charge was US$984 million, representing an effective rate of 33.4%. Excluding the impacts on tax of non tax-effected foreign currency adjustments, translation of tax balances and other functional currency translation adjustments, the effective rate was 26.3%. The Group recognises tax losses to the extent that it can reasonably foresee future profits which can absorb those losses. Following promising progress in the Group's Gulf of Mexico (US) projects, previously unrecognised tax losses in the US have been recouped and have been recognised this year resulting in a reduction in the effective tax rate of approximately 3%. If and when the projects reach appropriate milestones that provide greater certainty over projected future profits, further benefits in respect of past losses may be recognised.

Basic earnings per share was 30.9 US cents per share against 31.0 US cents per share in the corresponding period, reflecting the increased number of shares on issue (including the equalisation issue associated with the BHP Steel demerger).

The demerger of the Group's Steel business became unconditional on 1 July 2002. The contribution of the Group's Steel business in the corresponding period has been disclosed as discontinued operations. The 6% interest in BHP Steel retained by BHP Billiton was sold in July 2002 for US$75 million and the loss of US$19 million associated with this sale has been recognised in the current year and is disclosed as an exceptional item in relation to discontinued operations. The demerger was effected through a Court approved capital reduction of A$0.69 per BHP Billiton Limited share totalling approximately US$1.5 billion (A$2.6 billion) via the transfer of BHP Steel Limited shares to BHP Billiton Limited shareholders. Consequently, BHP Billiton Plc shareholders received approximately 149 million BHP Billiton Plc equalisation shares.

After including discontinued operations and exceptional items, the attributable profit for the period was US$1,901 million, US$211 million higher than the US$1,690 million for the corresponding period, which included profits from discontinued operations of US$68 million, together with exceptional losses of US$244 million. Basic earnings per share, including discontinued operations and exceptional items, was 30.6 US cents per share, 9.3% higher than the 28.0 US cents per share of the corresponding period.

Available cash flow (after interest and tax) remained strong at US$3,590 million.

Expenditure on growth projects and investments amounted to US$1,995 million, including US$814 million on petroleum projects and US$1,181 million on minerals and other corporate projects. Maintenance capital expenditure was US$671 million and exploration expenditure was US$348 million, whilst disposals of fixed assets, sale of investments and associates and repayments of loans by joint ventures generated US$792 million.

Additionally, a net cash inflow of US$272 million was derived from the proceeds on demerger of the Group's Steel business. Whilst not reflected in cash flows, Group debt further declined by US$232 million which was retained by BHP Steel upon demerger.

Net cash inflow before dividend payments was US$1,640 million. After dividend payments of US$830 million (up from US$811 million in the prior year), net cash inflow (before management of liquid resources and financing) amounted to US$810 million.

Net debt of US$5,772 million at 30 June 2003 was 15.4% (US$1,050 million) lower than last year and represents 31.9% of net debt plus net assets. Net debt comprises US$7,324 million of total debt offset by US$1,552 million of cash, including money market deposits.

An interim dividend of 7.0 US cents per fully paid ordinary share was paid in December 2002 and a final dividend of 7.5 US cents per fully paid ordinary share was paid in July 2003, bringing the declared total for the year to 14.5 US cents. This compares to total dividends declared in the corresponding period of 13.0 US cents per share. The BHP Billiton Limited dividends were 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.

During the year, a number of portfolio management activities were finalised.

Proceeds of US$345 million were received from the sale of our indirect 2.1% interest in Companhia Vale do Rio Doce (CVRD), during March 2003. Our interests in the Agua Rica prospect and Alumbrera mine in Argentina were also sold during the year, which generated US$136 million in cash proceeds, with an additional US$63 million deferred for receipt until June 2005.

Moody's Investor Services upgraded our long-term credit rating to A2 from A3 and our short-term rating to P-1 from P-2 during the year ended 30 June 2003. This was as a result of the successful integration of the Group's operations following the merger, the benefits of our substantially diversified portfolio and our focus on maintaining disciplined financial policies.

The Group's stronger credit profile enabled further diversification of funding sources, resulting in the issuance of our inaugural Euro 750 million Eurobond under the US$1.5 billion Euro Medium Term Note program and issuance of our inaugural US$850 million Global Bond with a 10 year maturity.

In February 2003, a US$2 billion commercial paper program was established and issuance from this program commenced during June 2003. This provides additional diversification of our short term funding programs and enhances flexibility.

At the time of the merger, a target was set to capture US$270 million of merger benefits by 30 June 2003. US$285 million of on-going annual benefits had been achieved by 31 December 2002, six months ahead of schedule.

A further target, to achieve additional cost savings and efficiency gains of US$500 million by 30 June 2005, was set in our Strategic Framework in April 2002. This target is to be measured by comparing commodity-based unit costs against base year costs for the year ended 30 June 2001. During the current year, US$310 million of annual cost savings and efficiency gains were achieved, which is additional to the US$285 million of merger benefits captured as detailed above. These additional savings have been largely driven through the continuation of our Operating Excellence program and resulting productivity improvements across most divisions, and ongoing strategic sourcing and marketing initiatives.

For the third consecutive year global economic growth has been anaemic. The fragile economic recovery felt the impact of a number of adverse developments including the conflict in Iraq, Severe Acute Respiratory Syndrome (SARS), a weakening US dollar and the ongoing threat of deflation. Across the industrial economies, a combination of lower interest rates and expansionary fiscal policies was insufficient to raise consumer and business confidence and expectations were consistently revised downwards during the year as the forward momentum faltered. In contrast, despite a feared SARS induced slowdown, Asian economies have demonstrated growth, driven in particular by strong demand for commodities in China.

In spite of the generally weak economic environment, commodity markets made some notable gains. Nickel and aluminium prices rose and stock levels for copper and nickel fell, average West Texas Intermediate (WTI) oil prices were just under US$30 per barrel for the year and prices for steel making raw materials were generally stronger, reflecting record global steel production.

China appears set for another year of strong growth. The outlook for other key commodity markets remains fragile, although there are some promising early signs that the more expansionary fiscal policies in some markets are starting to create increased demand for our products. The diversity of our portfolio, and in particular the exposure we have to the stronger Asian economies, places us well to benefit from any global economic upturn. In the meantime, the strength of our cash flows allows us to respond to opportunities as and when they arise and to build on the progress we have made over the last two years.

The Annual General Meeting of BHP Billiton Plc will be held at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London, on Friday 24 October 2003 commencing at 10:30 am. The Annual General Meeting of BHP Billiton Limited will be held at the Melbourne Concert Hall, St Kilda Road, Melbourne, on Thursday 13 November 2003 commencing at 11:00 am. The Annual Report and details of the business to be conducted at the meetings will be mailed to shareholders in early October 2003.

Dr John Buchanan and Mr Miklos (Mike) Salamon were appointed as Directors during the year. Shareholders will be asked to approve these appointments at the Annual General Meetings. Mr Charles Goodyear was appointed Chief Executive Officer on 5 January 2003 following the resignation of Mr Brian Gilbertson.

Of the 14 projects currently in development, 13 are on or under budget and are currently tracking on or ahead of schedule.

Since 1 July 2002, five projects reached commissioning stage, all either on or under budget and on or ahead of schedule. With costing yet to be finalised on two projects, total capital expenditure throughout the development stage is assessed at approximately US$1,073 million, which is US$168 million or 13.5% below budget.

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

(3)    Total project costs yet to be finalised. Share of actual capital expenditure is indicative only.

(1)    All references to capital expenditure and production volumes are BHP Billiton's share unless noted otherwise.
(2)    References to quarters are based on calendar years.
(3)    Some delays have been experienced against the project's original schedule, where first gas production was expected in the first quarter of 2004.

Higher sales volumes of iron ore, energy coal, copper, aluminium, diamonds and manganese were partly offset by lower sales volumes of petroleum products, resulting in a positive net volume impact on EBIT of approximately US$235 million.

Higher realised prices for petroleum products, nickel, ferrochrome, copper, hot briquetted iron and manganese alloy increased turnover by approximately US$785 million. This increase was partly offset by lower prices for export energy coal and iron ore that decreased turnover by approximately US$240 million.

Favourable unit operating cost performance increased EBIT by approximately US$360 million compared with the corresponding period. The Group's cost reduction initiatives together with increased production lowered costs by approximately US$480 million. These factors were partially offset by higher costs at Escondida (Chile) from processing lower grade ore due to the voluntary production cut-backs and higher depreciation from the start-up of the Phase IV expansion project.

Increases in price-linked costs depressed EBIT by approximately US$160 million, mainly due to higher royalties and taxes for petroleum products and higher nickel ore supply costs to the QNI Yabulu refinery (Australia).

Inflationary pressures, principally in South Africa, and to a lesser extent in Australia, increased costs by approximately US$275 million.

New and acquired operations increased EBIT by approximately US$25 million due to the commencement of commercial production at Antamina (Peru) in October 2001 and the increased ownership interest in Cerrejon Coal Company (Colombia) from February 2002.

EBIT was impacted unfavourably by approximately US$95 million mainly due to the disposal of PT Arutmin (Indonesia), divested in November 2001 and the Rietspruit energy coal mine (South Africa), which was closed in May 2002, together with higher pension and medical plan costs at Southwest Copper (US).

The impact of asset sales is a reduction in EBIT of approximately US$30 million mainly from the profit on divestment of PT Arutmin in the corresponding period, partly offset by profits on sale of BHP Billiton's interests in Alumbrera and Agua Rica, during the current year.

The impact of stronger A$/US$, rand/US$ and Canadian$/US$ exchange rates on operating costs had an unfavourable impact on EBIT of approximately US$390 million. The conversion of rand and Australian dollar denominated net monetary liabilities at balance sheet date also had an unfavourable impact (approximately US$60 million) on EBIT. This was partly offset by reduced losses on legacy A$/US$ currency hedging compared with the corresponding period of approximately US$220 million. In addition, the lower average Colombian peso/US$ and Brazilian real/US$ exchange rates had a favourable impact (approximately US$40 million) on operating costs.

Exploration expense was down by approximately US$45 million compared with the corresponding period, which included the write off of exploration expenditure at La Granja (Peru).

Petroleum contributed EBIT of US$1,178 million, up from US$1,073 million, an increase of 9.8% compared with the corresponding period.

Aluminium contributed EBIT of US$581 million, up from US$492 million, an increase of 18.1% compared with the corresponding period.

The increase in EBIT was mainly attributable to improved operational cost performance resulting from reduced maintenance costs, lower costs of consumables and increased production. Lower maintenance costs at Hillside (South Africa) were mainly a result of a lower number of pots being relined in the current period, combined with the absence of the net costs associated with the September 2001 power outage. Lower costs at Worsley (Australia) were due to reduced costs of consumables. Increased production at Alumar (Brazil) and Valesul (Brazil) was due to the end of power restrictions in Brazil and increased production at Hillside, Worsley and Suriname was mainly attributable to the continued success of Operating Excellence projects. The weakening of Brazilian real/US$ average exchange rate also had a favourable impact on operating costs.

These factors were partially offset by the unfavourable impact of the strengthening of the rand/US$ and A$/US$ average exchange rates on operating costs and the effect of inflationary pressure on costs in South Africa.

Base Metals contributed EBIT of US$286 million, up from US$192 million, an increase of 49% compared with the corresponding period.

The increase in EBIT was mainly attributable to the higher average realised copper price at US$0.73 per pound for the year ended 30 June 2003, compared to US$0.69 per pound in the corresponding period and increased production from Escondida as a result of the Escondida Phase IV expansion which was completed in October 2002. EBIT was also favourably impacted by lower exploration expense with US$38 million relating to the write off of La Granja included in the corresponding period and the gain on sale of US$23 million of BHP Billiton's interests in Alumbrera and Agua Rica, realised in June 2003. EBIT also benefited from a full year of operations from Antamina, which commenced commercial production in October 2001.

These factors were partially offset by increased unit costs at Escondida due to the mining of lower grade ore (due to voluntary production cut-backs), costs associated with the start up of Phase IV production and higher depreciation charges associated with the Phase IV expansion project. Higher pension and medical plan costs at Southwest Copper, together with costs incurred in the current year associated with the development of the Alliance Copper prototype plant and lower realised lead and zinc prices also had an unfavourable impact on EBIT.

Carbon Steel Materials contributed EBIT of US$1,045 million, down from US$1,084 million, a decrease of 3.6% compared with the corresponding period.

The decrease in EBIT was mainly attributable to the unfavourable impact of stronger A$/US$ average exchange rates on operating costs compared to the corresponding period and inflationary pressures on costs in Australia and South Africa. Lower iron ore prices, following the contract settlements announced in May 2002, also negatively impacted EBIT.

Diamonds and Specialty Products contributed EBIT of US$299 million, up from US$272 million, an increase of 9.9% compared with the corresponding period.

Energy Coal contributed EBIT of US$190 million, down from US$536 million, a decrease of 64.6% compared with the corresponding period.

The decrease in EBIT was primarily due to a 15% decline in South African export market prices. The divestment of PT Arutmin in November 2001 and the closure of the Rietspruit mine in May 2002 had an unfavourable impact on EBIT with both the exclusion of the results of these operations in the current period and the US$64 million profit on sale of PT Arutmin recorded in the corresponding period. The conversion of rand denominated net monetary liabilities at balance date, in addition to the impact of stronger rand/US$ average exchange rates on operating costs, also had an unfavourable impact on EBIT. Furthermore, costs in South Africa have been affected unfavourably by inflationary pressures.

These factors were partially offset by higher sales volumes at Ingwe (South Africa), and at Hunter Valley (Australia) with the Mount Arthur North project ramping up production. Cost improvement initiatives across all Energy Coal operations and the inclusion of profits from the additional share of the Cerrejon Coal Company operation, acquired in February 2002, also had a favourable impact on EBIT. The impact of weaker Colombian peso/US$ average exchange rates on operating costs together with improved results at New Mexico Coal (US) generated by increased customer demand also favourably impacted EBIT.

Stainless Steel Materials contributed EBIT of US$150 million, up from US$3 million, an increase of US$147 million.

The increase in EBIT was driven by higher realised prices for nickel, up by 29% from US$2.69 per pound to US$3.46 per pound. In addition, the realised price for ferrochrome was higher in the current period in response to strong demand in a more balanced market. Benefits from ongoing improvement programs at both Cerro Matoso and QNI Yabulu refinery, an increase in nickel production, reflecting the ramp-up of production from Cerro Matoso Line 2, and an increase in ferrochrome production, associated with the restart of idle furnaces, also had a favourable impact on EBIT.

These factors were partially offset by the unfavourable impact of inflationary pressures on costs in South Africa, higher nickel ore supply costs to the QNI Yabulu refinery and the unfavourable impact of stronger rand/US$ and A$/US$ average exchange rates on operating costs.

Losses on legacy A$/US$ currency hedging were US$86 million, compared with US$305 million in the corresponding period. Corporate costs of US$220 million were US$105 million lower than the same period last year. These reductions were partly offset by the unfavourable impact of one-off items.

The financial information in this document for the year ended 30 June 2003 is unaudited, has been derived from the draft financial statements of BHP Billiton Plc and does not constitute the statutory accounts of BHP Billliton Plc for that year.

The financial information set out on pages 16 to 25 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 2002.

In the opinion of the Directors, the financial information for the year ended 30 June 2003 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 2002 has been derived from the audited financial statements of BHP Billiton Plc for that period as filed with the Registrar of Companies and does not constitute the statutory accounts of BHP Billiton Plc for that period. The auditors' report on the statutory accounts of the year ended 30 June 2002 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 2003 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Annual General Meeting.

The combined results for the year ended 30 June 2003, 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. Financial results prepared in accordance with Australian GAAP are provided on page 26.

For the year ended 30 June 2002 BHP Steel's results were reported as discontinued operations due to the demerger of the BHP Steel business in July 2002. There are no exceptional items in net operating costs of discontinued operations for the full year ended 30 June 2002. Net interest shown against discontinued operations includes that amount of net external interest that is directly attributable to the discontinued operations. Taxation is the nominal charge on the profit before taxation.

Under the terms of the DLC merger, the rights to dividends of a holder of an ordinary share in BHP Billiton Plc and a holder of an ordinary share in BHP Billiton Limited are identical. Consequently, earnings per share has been calculated on the basis of the aggregate number of ordinary shares ranking for dividend. The weighted average number of shares used for the purposes of calculating basic earnings per share is calculated after deduction of the shares held by the share repurchase scheme and the Billiton Employee Share Ownership Trust.

The calculation of basic earnings per ordinary share is based on earnings after tax and minority interest of US$1,901 million (30 June 2002: US$1,690 million) and the weighted average number of ordinary shares outstanding of 6,207 million (30 June 2002: 6,029 million). The calculation of diluted earnings per share is based on earnings after tax and minority interest of US$1,901 million (30 June 2002: US$1,690 million) and the weighted average number of shares outstanding of 6,222 million (30 June 2002: 6,042 million). The exceptional loss of US$19 million upon sale of the 6% interest in BHP Steel for US$75 million in July 2002 reduced basic and diluted earnings per share by 0.3 US cents for the year ended 30 June 2003.

For the periods reported, one American Depositary Share (ADS) represents two shares. Earnings per ADS were 61.2 US cents for the year ended 30 June 2003 (30 June 2002: 56.0 US cents).

As at 30 June 2003

Effective July 2002, the BHP Steel business was demerged from the BHP Billiton Group. The Consolidated Balance Sheet as at 30 June 2002 includes BHP Steel assets and liabilities accordingly.

For the year ended 30 June 2003

Effective July 2002, the BHP Steel business was demerged from the BHP Billiton Group. The Consolidated Statement of Total Recognised Gains and Losses for the year ended 30 June 2002 includes the gains and losses of BHP Steel.

For the year ended 30 June 2003

Effective July 2002, the BHP Steel business was demerged from the BHP Billiton Group. The Consolidated Statement of Cash Flows for the year ended 30 June 2002 includes the cash flows of BHP Steel. Available cash flow for BHP Steel for that year amounted to US$282 million.

For the year ended 30 June 2003

(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% interest in BHP Steel which is included in the sale of investments and repayments by joint ventures.

NOTE 2. ANALYSIS BY BUSINESS SEGMENT continued

(a)    For the year ended 30 June 2002 BHP Steel's results were reported as discontinued operations due to the demerger of the BHP Steel business in  July 2002. The year ended 30 June 2002 has been restated accordingly.

(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 2003 the  capitalisation rate was 5.2 per cent (2002: 5.5 per cent).

(b) Net exchange (losses)/gains primarily represent the effect on borrowings of the (appreciation)/depreciation of the South African rand against the US dollar.