Page 20 - Annual Report 2020

1.4.7 Our performance: Financial KPIs continued
Reconciling our financial results to our key performance indicators
Profit Earnings Cash Returns
Measure: Profit after taxation US$M Profit after US$M Net operating US$M Profit after taxation US$M
from Continuing 8,736 taxation from 8,736 cash flows from 15,706 from Continuing 8,736
operations Continuing Continuing operations
operations operations
Made Profit after taxation Profit after taxation Cash generated by the Group’s Profit after taxation
up of: consolidated operations, after
dividends received, interest,
taxation and royalty-related
taxation. It excludes cash flows
relating to investing and
financing activities
Adjusted Exceptional items 1,546 Exceptional items 1,546 Exceptional items 1,546
for: before taxation before taxation before taxation
Tax effect of (241) Tax effect of (241) Tax effect of (241)
exceptional items exceptional items exceptional items
Exceptional items (201) Depreciation 6,112 Net finance costs 818
after tax attributable and amortisation excluding exceptional
to non-controlling excluding items
interests exceptional items
Exceptional items 1,104 Impairments of 85 Income tax expense (267)
attributable to property, plant on net finance costs
BHP shareholders and equipment,
financial assets
and intangibles Profit after taxation 10,592
excluding excluding net finance
exceptional items costs and exceptional
items
Profit after taxation (780) Net finance 818 Net Assets at the
attributable to costs excluding beginning of period 51,824
non-controlling exceptional items
interests
Taxation expense 5,015 Net Debt at the 9,446
excluding beginning of period
exceptional items
Capital employed 61,270
at the beginning
of period
Net Assets at the
end of period 52,246
Net Debt at the end 12,044
of period
Capital employed 64,290
at the end of period
Average capital 62,780
employed

To reach Underlying 9,060 Underlying 22,071 Net operating 15,706 Underlying Return 16.9%
our KPIs attributable profit EBITDA cash flows on Capital Employed
Why do Underlying attributable profit allows Underlying EBITDA is the key Net operating cash flows Underlying Return on Capital
we use it? the comparability of underlying Alternative Performance provide insights into how Employed is an indicator of the
financial performance by excluding Measure that management we are managing costs Group’s capital efficiency and is
the impacts of exceptional items and uses internally to assess the and increasing productivity provided on an underlying basis to
is a performance indicator against performance of BHP’s across BHP. allow comparability of underlying
which short-term incentive segments and make decisions financial performance by excluding
outcomes for our senior executives on the allocation of resources the impacts of exceptional items.
are measured. It is also the basis on and, in our view, is more
which our dividend payout ratio relevant to capital intensive
policy is applied. industries with long-life assets.

Capital management
Free cash flow (Continuing operations), which is net operating cash per share. Recognising the importance of cash returns to
flows less net investing cash flows, was US$8.1 billion in FY2020 shareholders, the Board determined to pay an additional amount
(FY2019: US$10.0 billion) reflecting a US$0.5 billion increase in total of 17 US cents per share, taking the final dividend to 55 US cents
capital and exploration expenditure to US$7.6 billion in FY2020 in per share. In total, US$1.20 per share of dividends to shareholders
line with guidance. The increase in capital expenditure included have been determined for FY2020 (FY2019: US$2.35 per share
continued investment in high-return latent capacity projects, and made up of US$1.33 per share ordinary dividends and US$1.02 per
investment in South Flank, Spence Growth Option and Mad Dog share special dividend relating to the disbursement of Onshore
Phase 2 in FY2020. Capital and exploration expenditure guidance US proceeds). These returns are covered by total free cash flows
is targeted at approximately US$7 billion for FY2021, subject generated of US$8.1 billion in FY2020.
to exchange rate movements. Our Underlying Return on Capital Employed was 16.9 per cent for
Our dividend policy provides for a minimum 50 per cent payout FY2020 (FY2019: 15.9 per cent) reflecting lower capital employed
of Underlying attributable profit at every reporting period. The as a result of the Onshore US disposal in FY2018.
minimum dividend payment for the second half was 38 US cents

18 BHP Annual Report 2020