The Directors present their report together with the consolidated financial statements for the half year ended

31 December 2001 and the auditors' review report thereon.

On 29 June 2001, BHP Limited and Billiton Plc completed the formation of a Dual Listed Companies structure, or DLC. To effect the DLC, BHP Limited and Billiton Plc entered into certain contractual arrangements which are designed to place the shareholders of both companies in substantially the same position as if they held shares in a single enterprise which owns all of the assets and is subject to all of the liabilities of both companies. Coincident with the formation of the DLC, BHP Limited changed its name to BHP Billiton Limited and Billiton Plc changed its name to BHP Billiton Plc.

Under the DLC merger, BHP Billiton Limited and BHP Billiton Plc each continue as separate public companies retaining their existing separate stock exchange listings, including the primary listings on the Australian and London stock exchanges, the secondary listings of BHP Billiton Plc on the Johannesburg and Paris stock exchanges, and an American Depositary Receipt listing of BHP Billiton Limited on the New York Stock Exchange.

BHP Billiton Limited and BHP Billiton Plc have identical boards and are run by a unified management team, with headquarters in Melbourne, Australia, and with a significant corporate management centre in London. Shareholders in BHP Billiton Limited and BHP Billiton Plc have equivalent economic and voting rights in both groups, as if they held shares in a single company.

A full description of the DLC merger (including management, equalisation of economic and voting rights, dividends, voting, matching actions, cross guarantees, takeover provisions and the bonus issue) is provided in the "BHP Billiton Limited Annual Report 2001 - Description of Business and Financial Statements" commencing on page 100.

In accordance with Australian Securities and Investments Commission ("ASIC") Practice Note 71 "Financial Reporting by Australian Entities in Dual-Listed Company Arrangements", this interim financial report discloses the combined financial results of the BHP Billiton Group as well as the consolidated financial results of the BHP Billiton Limited Group.

References throughout this document are as follows:

• BHP Billiton and BHP Billiton Group refers to the combined entity including both BHP Billiton Limited and its subsidiary companies and BHP Billiton Plc and its subsidiary companies;
• BHP Billiton Limited Group refers to BHP Billiton Limited and its subsidiary companies; and
• BHP Billiton Plc Group refers to BHP Billiton Plc and its subsidiary companies.

Australian regulatory requirements do not allow the combination of the results of the BHP Billiton Limited Group with those of the BHP Billiton Plc Group for periods prior to consummation of the DLC merger on 29 June 2001. Consequently, no comparative financial information is presented for the BHP Billiton Group prior to that date.

The profit after tax attributable to BHP Billiton shareholders for the half year ended 31 December 2001 was $2,293 million (US$1,177 million). Earnings per share were 38.1 cents (19.5 US cents). There were no significant items in the half year ended 31 December 2001.

BHP Billiton's financial results for the half year ended 31 December 2001 demonstrate the substantial benefits of commodity and market diversification that characterise the merged Group.

The financial results for the half year are a pleasing outcome in a market environment where depressed prices for copper, oil, nickel, chrome, steel products and aluminium were apparent.

For many companies in the natural resources sector, this alignment of weaker commodity prices would present a major threat to both earnings and the ability to fund future growth. In BHP Billiton's case, stronger price performances in Carbon Steel Materials (iron ore and metallurgical coal), Energy Coal and natural gas have partially offset the adverse impact of price declines elsewhere. Furthermore, our operating base in countries with depreciating currencies, notably the South African rand and Australian dollar benefited our result substantially. In addition, BHP Billiton has had the flexibility in adverse market conditions to temporarily reduce copper output.

Sales revenue for the half year ended 31 December 2001 was $15,730 million (US$8,067 million). This mainly reflects the effect of lower prices for crude oil, stainless steel materials, base metals, aluminium, alumina, diamonds and steel products. These factors were partly offset by the higher prices for metallurgical coal, energy coal, iron ore and gas, and the inclusion of a full half year's results of Rio Algom, the energy coal operations in Colombia, the additional 29% interest in the Ekati^TM diamond mine (Canada) and the additional 56% interest in Worsley alumina refinery (Australia).

The significant decline in commodity sales prices related to crude oil, nickel, chrome, copper, aluminium, alumina, diamonds, silver and zinc. This impact was partly offset by higher energy coal, metallurgical coal, iron ore and gas prices.

Exploration charged to profit was $337 million (US$172 million) which includes the write-off of La Granja copper exploration activities (Peru), and petroleum exploration activities in the Gulf of Mexico.

New and acquired operations that contributed to the current period result included increased ownership interests in the Worsley alumina refinery, a full six months contribution from Carbones del Cerrejon and Cerrejon Zona Norte Coal (Colombia), the fully commissioned Mozal aluminium smelter (Mozambique), a full six months contribution from Rio Algom base metals businesses, the acquisition of an additional 29% interest in the Ekati^TM diamond business, commencement of production of petroleum products from Typhoon (America), Zamzama (Pakistan) and Keith (North Sea), and improved operating performance at Boodarie^TM Iron (Western Australia). These factors were partially offset by a downturn in the Metals Distribution (US) business.

Lower price linked costs for London Metals Exchange (LME) listed commodities together with lower royalties and taxes for petroleum products resulted in cost reductions totalling approximately $245 million (US$125 million). Costs increased during the period due to operational issues at energy coal operations (New Mexico) and metallurgical coal operations (Australia) together with higher business development costs at Petroleum, partly offset by transport costs savings at Iron Ore operations (Western Australia).

Foreign currency fluctuations had a favourable effect on EBIT mainly due to the impact of lower Rand/US$ and A$/US$ exchange rates on related operating costs, including translation of provision balances, partly offset by increased losses on legacy A$/US$ currency hedging. Exchange gains on interest bearing liabilities were approximately $475 million (US$242 million), primarily arising on the period end translation of Rand denominated debt of companies which account in US dollars as their functional currency. The Rand depreciated by 32% during the current period.

Profits from asset sales were approximately $110 million (US$55 million) mainly due to the profit on sale of PT Arutmin Energy Coal operations in Indonesia.

The depreciation and amortisation charge for the half year ended 31 December 2001 was $1,724 million (US$884 million). This included the impact of the commissioning of Cerro Matoso Line 2 (Stainless Steel Materials), the additional 29% interest acquired in Ekati^TM (Exploration Technology and New Business) and the additional 56% interest in the Worsley alumina refinery (Aluminium) and increased production across various petroleum businesses. These factors were partly offset by reduced depreciation charges from ceased, sold and discontinuing operations, including the effect on depreciation of the write-off in the year ended 30 June 2001 of Ok Tedi.

Borrowing costs for the half year ended 31 December 2001 were $503 million (US$259 million). This includes the benefit of lower market interest rates, partly offset by additional interest on higher net borrowing levels.

The tax charge for the half year ended 31 December 2001 of $967 million (US$497 million) represents an effective tax rate of 29.3%. This is lower than the nominal Australian tax rate of 30% primarily due to non-tax effected foreign exchange gains and other functional currency translation adjustments, and recognition of prior year tax losses. These factors were partly offset by non-tax effected operating losses and exploration expenditure, non-deductible accounting depreciation and amortisation, and secondary taxes on dividends paid and payable by South African entities.

Outside equity interests' share of net profit for the half year ended 31 December 2001 was $44 million (US$22 million).

To comply with UK regulatory requirements, the BHP Billiton Group has also produced an Interim Report for BHP Billiton Plc. The BHP Billiton Plc Interim Report complies with UK GAAP and reports the 2001 financial year and the corresponding period on a combined BHP Billiton Group basis. It includes financial statements (and certain notes to financial statements) presented in US dollars. The BHP Billiton Plc Interim Report can be viewed on the BHP Billiton web site (www.bhpbilliton.com).

As a consequence of the DLC merger, the BHP Billiton Limited Group and the BHP Billiton Plc Group have aligned accounting policies, as far as is possible, to minimise differences and simplify determination and reporting of the combined results. The item where alignment is not possible in terms of UK and Australian GAAP and which impacts the half year ended 31 December 2001 is described below:

Under UK GAAP, until 30 June 1998 goodwill arising upon acquisition was written off directly against equity. Subsequently and currently under UK GAAP, goodwill is to be retained as an asset and amortised. This current treatment is consistent with that required under Australian GAAP. As of 30 June 1998, the BHP Billiton Plc Group had written off a gross amount of goodwill of US$704 million directly against equity. For Australian GAAP reporting on a combined basis, this goodwill is reinstated on the statement of financial position as an intangible asset, with a corresponding credit to equity. The net balance at 31 December 2001 (after amortisation) is $962 million (US$492 million) and the impact on the Australian GAAP statement of financial performance is a charge to profit of $41 million (US$21 million)(no tax effect) for the half year ended 31 December 2001. Thus, the attributable profit of the combined BHP Billiton Group of $2,334 million (US$1,198 million) under UK GAAP compares to that recorded by the combined BHP Billiton Group of $2,293 million (US$ 1,177 million) for the same period under Australian GAAP.

During the half year ended 31 December 2001, a dividend of 6.5 US cents per fully paid ordinary share was declared and paid by BHP Billiton Limited and BHP Billiton Plc. The dividend was paid on 5 December 2001. The BHP Billiton Limited dividend was fully franked for Australian taxation purposes.

The corresponding period included a dividend of 12.1 Australian cents (adjusted for bonus issue) per fully paid ordinary share paid to BHP Billiton Limited shareholders and a dividend of 4.0 US cents per fully paid ordinary share paid to BHP Billiton Plc shareholders.

Dividends are determined in US dollars. BHP Billiton Limited dividends are paid in Australian dollars and BHP Billiton Plc dividends are paid in pounds sterling. For the December 2001 dividend, conversion from US currency was at exchange rates applicable on 5 November 2001. BHP Billiton Limited shareholders received 12.8 Australian cents per fully paid ordinary share and BHP Billiton Plc shareholders received 4.46 pence per fully paid ordinary share.

BHP Billiton's final dividend for the year ending 30 June 2002 is intended to be declared at the announcement of the third quarter results on 1 May 2002. The dividend will be paid to shareholders in July 2002.

At 31 December 2001 BHP Billiton's gearing ratio was 37.8% compared to 39.3% at 30 June 2001.

Based on earnings before interest and tax (EBIT), interest cover for the half year was 7.2 times. Based on earnings before interest, tax and depreciation (EBITDA), interest cover for the half year was 10.4 times.

Profit from ordinary activities before tax as a percentage of revenue was 19.2% for the half year ended 31 December 2001.

Net profit as a percentage of equity was 18.6% for the half year ended 31 December 2001.

The profit after tax attributable to BHP Billiton Limited Group shareholders for the half year ended 31 December 2001 was $1,435 million, an increase of 1% or $8 million compared to the corresponding period. Earnings per share were 38.7 cents, consistent with the corresponding period. There were no significant items included in the half year ended 31 December 2001 or the corresponding period.

Sales revenue for the half year ended 31 December 2001 was $9,698 million a decrease of 8% or $808 million compared to the corresponding period. This mainly reflects the effect of lower commodity sales prices compared to the corresponding period and the inclusion of sales revenue from OneSteel Limited in the corresponding period, partly offset by the inclusion of an additional 29% interest in the Ekati^TM diamond mine (Canada). The significant decline in commodity sales prices related to crude oil, copper, diamonds, silver and zinc partly offset by higher energy coal, metallurgical coal, iron ore and gas prices.

The depreciation and amortisation charge for the half year ended 31 December 2001 was $1,114 million, an increase of 5% or $57 million compared to the corresponding period. This included the impact of the additional 29% interest acquired in Ekati^TM (Exploration Technology and New Business) and increased production across various petroleum businesses. These factors were partly offset by reduced depreciation charges from ceased, sold and discontinuing operations, including the effect on depreciation of the write-off in the year ended 30 June 2001 of Ok Tedi.

Borrowing costs for the half year ended 31 December 2001 were $238 million, a decrease of 24% or $74 million compared to the corresponding period. This mainly includes the benefit of lower market interest rates.

The tax charge for the half year ended 31 December 2001 of $630 million represents an effective tax rate of 30.1%. This is higher than the nominal Australian tax rate of 30% primarily due to non-tax effected operating losses and exploration expenditure, non deductible accounting depreciation and amortisation and the tax rate differential on overseas income, partly offset by the recognition of prior year tax losses.

Outside equity interests' share of net profit for the half year ended 31 December 2001 was $26 million compared to $29 million in the corresponding period.

At 31 December 2001 BHP Billiton Limited Group's gearing ratio was 43.7% compared to 38.3% at 30 June 2001.

Based on earnings before interest and tax (EBIT), interest cover for the half year was 8.7 times compared to 7.6 times in the corresponding period. Based on earnings before interest, tax and depreciation (EBITDA), interest cover for the half year was 12.9 times compared to 10.9 times in the corresponding period.

Profit from ordinary activities before tax as a percentage of revenue was 20.5% for the half year ended 31 December 2001 compared to 19.3% in the corresponding period.

Net profit as a percentage of equity was 24.1% for the half year ended 31 December 2001 compared to 27.4% in the corresponding period.

As at 31 December 2001 the BHP Billiton Limited Group's Statement of Financial Position includes the following material intercompany balances with the BHP Billiton Plc Group:

• $1,521 million is included in current receivables representing a loan to the BHP Billiton Plc Group; and
• $631 million is included in investments accounted for using the equity method representing a 58% ownership interest in Billiton Marketing Holdings BV.

BHP Billiton's commitment to delivering high quality growth projects was demonstrated with the approval of a number of major projects including the Mozal II aluminium expansion in Mozambique, the Mount Arthur North energy coal mine and the Dendrobium metallurgical coal mine, both in New South Wales (Australia), the Bream Gas Pipeline in Bass Strait, Victoria (Australia), the Hillside III aluminium expansion in South Africa and the Mad Dog oil and gas field development in the US. The depth of the inventory of projects under construction, as well as new projects awaiting sanction, is a clear distinguishing feature of the BHP Billiton portfolio.

Progress has been made on other fronts. The merger integration work has delivered an organisational structure with clear accountabilities and responsibilities, a group wide marketing organisation and an established governance and risk management framework. The process for capturing the US$270 million of merger benefits in financial year 2003 has been established and we are on track to achieving this goal.

While at an early stage of the Group's development, significant progress is being made in addressing the real value propositions from the merger - the sequencing of the deep inventory of high quality growth projects, extracting benefits across the organisation through common business systems, and a rigorous approach to achieving operating cost performance improvements.

A stronger focus on operating performance and cost reduction is taking root in the organisation. Already, an operating excellence programme is being implemented in key businesses, harnessing the ideas and skills of our employees to improve business, safety and community outcomes. Progress in our West Australian iron ore operations in reducing railing and port loading costs over the past year is one example of improvement, and provides a framework for best practices in one area to be transferred across the organisation.

Additional highlights for the period include a credit rating upgrade by Standard & Poors to A/A-1. Also BHP Billiton made its first post merger approach to the debt market for a US$2.5 billion syndicated multi-currency revolving credit facility and then a A$1 billion corporate debt security issue. Both transactions were very successful and contribute to diversifying our debt portfolio as well as improving our cost of funds.

The Customer Sector Groups have developed strategic plans and we expect to announce the BHP Billiton strategic framework to the investment market shortly.

From a portfolio management perspective, we have made significant progress in aligning the combined asset portfolio, including the sell down or divestiture of a number of assets, which are detailed in this report. As recently announced, we have also finalised our responsible exit from the Ok Tedi copper mine in Papua New Guinea, in the process establishing a programme fund to support the future social and economic development of the people of Papua New Guinea and, in particular the Western Province. We also announced the sale of our interest in the PT Arutmin Indonesian coal operations.

The public listing of BHP Steel remains on track. We expect to make an announcement to the market by May 2002 that includes the release of scheme documents, a prospectus and details on the sales facility. Shareholder approvals will be sought by means of Extraordinary Shareholder Meetings in Australia and the United Kingdom, and subject to such approvals, the public listing should be completed around the middle of the year.

In calendar 2001, the global economy experienced the sharpest annual contraction in industrial production since 1975. Production across member countries of the Organisation for Economic Co-Operation and Development (OECD) is estimated to have declined by over 5% in the year to October 2001 as companies reduced production and pared back inventories in the face of falling demand. Growth across the major Asian economies also slowed with only China, South Korea, Indonesia and Thailand managing to avoid a recession. The events of 11 September 2001 only reinforced the downward momentum already evident in major markets. As yet, there is little evidence of a recovery in the major economies. Though demand and prices remain strong for some of our products and in certain markets, others are experiencing challenging conditions. While we are confident of the medium term outlook, the current half year will continue to be difficult. Our robust cash flows and diversified income stream leave us well placed in this downturn and in a strong position to take advantage of the recovery when it comes.

No matter or circumstance has arisen since the end of the half year that significantly affected or may significantly affect the operations, the results of operations or state of affairs of the Company in subsequent financial periods, other than the following:

• On 8 February 2002, BHP Billiton announced it has completed its withdrawal from the Ok Tedi copper mine (Papua New Guinea). BHP Billiton transferred its 52% interest to an independent Program Company that will operate for the benefit of the people of Papua New Guinea. A series of legal releases, indemnities and warranties have been established which will protect BHP Billiton from certain legal liabilities for the period after its exit.

• On 15 February 2002, BHP Billiton Limited announced the Australian High Court allowed by consent its appeal against the majority decision of the Full Federal Court, which was handed down in favour of the Australian Tax Office on 18 October 2000.

B C ALBERTS - a Director since January 2000;

P M ANDERSON - Chief Executive Officer and Managing Director since December 1998;

D R ARGUS -- Chairman since April 1999;

D C BRINK - a Director since June 2001;

M A CHANEY - a Director since May 1995;

J C CONDE - a Director since March 1995;

D A CRAWFORD - a Director since May 1994;

B P GILBERTSON - Executive Director since June 2001;

C W GOODYEAR - Executive Director since November 2001;

C A HERKSTRÖTER - a Director since June 2001;

J B JACKSON - a Director since June 2001;

D A JENKINS - a Director since March 2000;

D L KEYS - a Director since June 2001;

R J McNEILLY - Executive Director since July 1991, retired effective October 2001;

J T RALPH - a Director since November 1997;

LORD RENWICK OF CLIFTON - a Director since June 2001;

B D ROMERIL - a Director since June 2001; and

J M SCHUBERT - a Director since June 2000.

Refer pages 1 - 5.

The Company is a company of a kind referred to in Class Order No. 98/0100 dated 10 July 1998 issued by the Australian Securities and Investments Commission. Amounts in this report, unless otherwise indicated, have been rounded in accordance with that Class Order to the nearest million dollars.

Signed in accordance with a resolution of the Board.

D R Argus

Dated in Melbourne this 6^th day of March 2002

Condensed Financial Statements

for the half year ended 31 December 2001

for the half year ended

These statements are general purpose half year consolidated financial statements that have been prepared in accordance with the requirements of the Corporations Act, Australian Stock Exchange Listing Rules, Australian Accounting Standard AASB 1029 "Interim Financial Reporting" and Urgent Issues Group Consensus Views, and give a true and fair view of the matters disclosed. These half year financial statements and reports should be read in conjunction with the annual financial statements for the year ended 30 June 2001 and any public announcements made by the BHP Billiton Group and its controlled entities during the half year in accordance with continuous disclosure obligations arising under the Corporations Act and Australian Stock Exchange Listing Rules. The notes to the financial statements do not include all information normally contained within the notes to an annual financial report.

In accordance with Australian Securities and Investments Commission ("ASIC") Practice Note 71 "Financial Reporting by Australian Entities in Dual-Listed Company Arrangements", this interim financial report discloses the combined financial results of the BHP Billiton Group as well as the consolidated financial results of the BHP Billiton Limited Group.

Australian regulatory requirements do not allow the combination of the results of the BHP Billiton Limited Group with those of the BHP Billiton Plc Group for periods prior to consummation of the DLC merger on 29 June 2001. Consequently, no comparative financial information is presented for the BHP Billiton Group prior to that date.

Accounting policies have been consistently applied by all entities in the BHP Billiton Group and are consistent with those of the previous financial year except for:

The requirements of the revised accounting standard, AASB 1027 "Earnings Per Share" have been applied to these financial statements. In accordance with the requirements of this revised standard, prior period comparatives have been restated accordingly.

Functional currency

With effect from 1 July 2001, the majority of the BHP Billiton Limited Group's businesses changed to US dollars, the functional currency of the combined BHP Billiton Group. This is consistent with the BHP Billiton Plc Group and is the basis on which the combined BHP Billiton Group manages its businesses and records its transactions. Since the majority of the Group's net assets are now denominated in US dollars, an exchange fluctuation is generated on translation to Australian dollars. The effect of this policy change for the half year ended 31 December 2001 has been a decrease in net profit attributable to members of $10 million (US$5 million).

With effect from 1 July 2001, asset impairment tests for the BHP Billiton Limited Group are completed using risk-adjusted market-based discount rates (weighted average cost of capital). Previously, an asset's estimated recoverable amount was determined using expected net cash flows discounted at an interest rate based on the long term interest bearing liabilities of the BHP Billiton Limited Group. The BHP Billiton Plc Group has adopted the same methodology for completion of asset impairment tests. This policy change had $nil (US$nil) effect on net profit attributable to members for the half year ended 31 December 2001.

In accordance with ASIC relief order 02/0169, dated 13 February 2002, the BHP Billiton Group has adopted the following reporting disclosures:

• Disclosure of combined financial data of the BHP Billiton Group on the face of the financial statements and throughout the notes to the financial statements, rather than by way of a note to the financial statements.
• Disclosure of combined financial data of the BHP Billiton Group in US dollars in addition to Australian dollars.

No significant items are included in the results for the half years ended 31 December 2001 or 31 December 2000.