Key measures
3.3 Key measures
Our management and Board use a number of financial and operational measures to assess our performance.
Overall financial success — We use several financial measures to measure the success of our overall strategy. The two key measures are profit attributable to members of the BHP Billiton Group and Underlying EBIT. Profit attributable to members of the BHP Billiton Group for FY2008 was US$15.4 billion, an increase of US$2.0 billion, or 14.7 per cent, from FY2007. Underlying EBIT for FY2008 was US$24.3 billion compared with US$20.1 billion in FY2007, an increase of 21.0 per cent. Underlying EBIT is the internally defined, key financial measure used by management for monitoring the performance of our operations. We explain the calculations and why we use this measure in section 3.6.1. Other measures in addition are as follows:
| 30 June 2008 | 30 June 2007 | 30 June 2006 | |
|---|---|---|---|
| Underlying EBIT margin (1) | 47.50% | 48.40% | 44.40% |
| Return on capital employed (1) | 37.50% | 38.40% | 36.60% |
| Net operating cash flow (US$M) | 18,159 | 15,957 | 11,325 |
| Gearing (1) | 17.80% | 25.00% | 27.20% |
| Basic earnings per share (US cents) | 275.3 | 229.5 | 173.2 |
- Refer to section 10 ‘Glossary’ for definitions.
All measures show a strong performance in the context of a challenging supply environment. Refer to section 3.6 for a detailed analysis of the operating results.
The following are other measures that assist us to monitor our overall performance.
People and Licence to operate — These foundational strategic drivers bring together health, safety, environment and community related measures. These measures are a subset of the HSEC Targets Scorecard, which can be found in our full Sustainability Report at www.bhpbilliton.com.
On 1 July 2007, we introduced new five-year Health, Safety, Environment and Community targets; this is the first year we report against these targets.
We experienced 11 fatalities in seven separate incidents during FY2008, compared to eight fatalities in FY2007. We remain determined to do all in our power to eliminate fatalities from our operations. While low injury frequency rates do not mean low fatality rates, during FY2008, we improved our injury frequency rate. Our Total Recordable Injury Frequency Rate decreased by 20 per cent, from 7.4 per million hours worked for FY2007 to 5.9.
During FY2008, 207 new cases of occupational illness were reported Group-wide. This represents a 26 per cent reduction in the rate of illnesses per 10,000 employees against the target of a 30 per cent reduction by June 2012. There has been a 4.0 per cent increase in potential employee exposures over the occupational exposure limit (excluding noise) since 2007. Occupational exposure relates to instances where our people would be exposed if they were not wearing personal protection equipment. Refer to section 10 'Glossary' for definitions.
Our five-year targets include a six per cent reduction in greenhouse gas emissions per unit of production and a 13 per cent reduction in carbon-based energy use per unit of production, both by 30 June 2012. In FY2008, our carbon based energy intensity increased by one per cent. In FY2008, we experienced a five per cent increase in the greenhouse gas emissions intensity index for BHP Billiton’s global sites. This was due, in part, to the switching of fuels used by third party electricity generators that serve our operations in Chile.
We have set a target to improve our use of recycled water relative to our use of high-quality water from the environment. Our aggregate target is to see a 10 per cent improvement by 2012 in the ratio of water recycled to high-quality water consumed. During the FY2008 period we made an improvement of seven per cent towards our target.
We have a five-year target to improve by 10 per cent the ratio of land rehabilitated compared to land disturbed. The FY2008 ratio has not changed since last year.
We continue to invest one per cent of our pre-tax profits (on a three-year rolling average) in community programs to ensure our host communities share in our success. During FY2008, this voluntary investment totalled US$141 million, comprising cash, in-kind support and administration costs. This is equivalent to 1.0 per cent of pre-tax profits, based on a three-year average of the profit before tax, as publicly reported in each of those years.
During the reporting period, our sites received 536 community complaints, a decrease from 543 during FY2007. Similar to the previous reporting year, the most common type of community complaints were related to noise and dust.
World-class assets — Our diversified and high-margin portfolio, with an abundance of tier one resources in fiscally stable regimes, provides us with an unique set of options to deliver growth. In FY2008, annual production records were set in seven commodities and production increased in a further six. This provides a stable platform as we continue to develop and deliver world-class projects that are expected to add significant shareholder value.
Actual production volumes for this year and the previous two years are shown below. Further details appear in section 2.3 of this Report.
| 30 June 2008 | 30 June 2007 | 30 June 2006 | |
|---|---|---|---|
| World-class assets | |||
| Production | |||
| Total petroleum products (millions of barrels of oil equivalent) | 129.50 | 116.19 | 117.36 |
| Alumina (‘000 tonnes) | 4,554 | 4,460 | 4,187 |
| Aluminium (‘000 tonnes) | 1,298 | 1,340 | 1,362 |
| Copper cathode and concentrate (‘000 tonnes) | 1,375.5 | 1,250.1 | 1,267.8 |
| Nickel (‘000 tonnes) | 167.9 | 187.2 | 176.2 |
| Iron ore (‘000 tonnes) | 112,260 | 99,424 | 97,072 |
| Metallurgical coal (‘000 tonnes) | 35,193 | 38,429 | 35,643 |
| Energy coal (‘000 tonnes) | 80,868 | 87,025 | 85,756 |
Financial strength and discipline — Financial strength is measured by attributable profit and Underlying EBIT as overall measures, along with liquidity and capital management. Our solid ‘A’ credit rating and net gearing and net debt are discussed in section 3.7.3 of this Report. The final dividend declared for FY2008 represents the thirteenth consecutive dividend increase, and the second consecutive year in which we have rebased our dividend. Since August 2004 we have announced capital management initiatives totalling US$17 billion, under which 680 million shares have been repurchased.
Project pipeline and growth options — Our project pipeline focuses on high-margin commodities that are expected to create significant future value. The details of our project pipeline are located in section 3.7.2 of this Report, with a summary presented below.
| 30 June 2008 | 30 June 2007 | 30 June 2006 | |
|---|---|---|---|
| Project pipeline and growth options (major projects) | |||
| Number of projects approved during the year (1) | 8 | 3 | 7 |
| Number of projects currently under development approved in prior years | 6 | 12 | 6 |
| Number of completed projects (2) | 11 | 1 | 4 |
| Budgeted capital expenditure for projects approved in the year (US$M) (1) | 5,800 | 2,355 | 5,048 |
| Budgeted capital expenditure for projects under development approved in prior years (US$M) | 6,265 | 10,426 | 4,455 |
| Capital expenditure of completed projects (US$M) (2) | 7,967 | 1,100 | 1,405 |
- Includes projects approved between end of the financial year and date of profit release.
- Includes projects completed between end of the financial year and date of profit release
In addition to the above projects the Board approved pre-expenditure of US$930 million for Rapid Growth Project 5 (Western Australia Iron Ore).