Page 193 - Annual Report 2020

6 Income tax expense continued

Key judgements and estimates Strategic Report
Income tax classification Uncertain tax matters
Judgements: The Group’s accounting policy for taxation, Judgements: Management applies judgements about the
including royalty-related taxation, requires management’s application of income tax legislation and its interaction with
judgement as to the types of arrangements considered income tax accounting principles. These judgements are subject
to be a tax on income in contrast to an operating cost. to risk and uncertainty, hence there is a possibility that changes
Deferred tax in circumstances will alter expectations, which may impact the
amount of tax assets and tax liabilities, including deferred tax,
Judgements: Judgement is required to determine the amount of recognised on the balance sheet and the amount of other tax
deferred tax assets that are recognised based on the likely timing losses and temporary differences not yet recognised.
and the level of future taxable profits. Judgement is applied
in recognising deferred tax liabilities arising from temporary Where the final tax outcomes are different from the amounts Governance at BHP
differences in investments. These deferred tax liabilities caused that were initially recorded, these differences impact the
principally by retained earnings held in foreign tax jurisdictions current and deferred tax provisions in the period in which
are recognised unless repatriation of retained earnings can be the determination is made.
controlled and is not expected to occur in the foreseeable future. Measurement of uncertain tax and royalty matters considers
Estimates: The Group assesses the recoverability of recognised a range of possible outcomes, including assessments received
and unrecognised deferred taxes, including losses in Australia, from tax authorities. Where management is of the view that
the United States and Canada on a consistent basis, using potential liabilities have a low probability of crystallising, or
estimates and assumptions relating to projected earnings it is not possible to quantify them reliably, they are disclosed
and cash flows as applied in the Group impairment process as contingent liabilities (refer to note 33 ‘Contingent liabilities’).
for associated operations. Remuneration Report

7 Earnings per share

2020 2019 2018
Earnings attributable to BHP shareholders (US$M)
– Continuing operations 7,956 8,648 6,652
– Total 7,956 8,306 3,705
Weighted average number of shares (Million)
– Basic 5,057 5,180 5,323 Directors’ Report
– Diluted 5,069 5,193 5,337
Basic earnings per ordinary share (US cents)
– Continuing operations 157.3 166.9 125.0
– Total 157.3 160.3 69.6
Diluted earnings per ordinary share (US cents)
– Continuing operations 157.0 166.5 124.6
– Total 157.0 159.9 69.4
Refer to note 28 ‘Discontinued operations’ for basic earnings per share and diluted earnings per share for Discontinued operations. 5
Earnings on American Depositary Shares represent twice the earnings for BHP Group Limited or BHP Group Plc ordinary shares.
Recognition and measurement
Diluted earnings attributable to BHP shareholders are equal to the earnings attributable to BHP shareholders.
The calculation of the number of ordinary shares used in the computation of basic earnings per share is the aggregate of the weighted average Financial Statements
number of ordinary shares of BHP Group Limited and BHP Group Plc outstanding during the period after deduction of the number of shares
held by the Billiton Employee Share Ownership Trust and the BHP Billiton Limited Employee Equity Trust.
During December 2018, 266 million BHP Group Limited shares were bought back and then cancelled during the period following an off-market
buy-back program of US$5.2 billion related to the disbursement of proceeds from the disposal of Onshore US.
For the purposes of calculating diluted earnings per share, the effect of 12 million dilutive shares has been taken into account for the year
ended 30 June 2020 (2019: 13 million shares; 2018: 14 million shares). The Group’s only potential dilutive ordinary shares are share awards
granted under the employee share ownership plans for which terms and conditions are described in note 24 ‘Employee share ownership
plans’. Diluted earnings per share calculation excludes instruments which are considered antidilutive. Additional information
At 30 June 2020, there are no instruments which are considered antidilutive (2019: nil; 2018: nil). Shareholder information

BHP Annual Report 2020 191