Business Request: 100002145, Equity Accounting

Context

In August 2014 BHP Billiton entered into a joint control arrangement with Anglo, where the existing
ownership percentage of BHPB 60% and Anglo 40% remains. The effective date in which control is
joined will be determined by the completion date of the condition precedents, expected to be around
October 2014. As a result of this we will no longer be able to consolidate into the BHPB group 100%
of the result with a 40% non-controlling interest (NCI) for:

 Groote Eylandt Mining Company Pty Ltd (Gemco),

 Samancor Holdings (Proprietary) Limited (Samancor) and
 Samancor AG (SAMAG).
As a result of the joint control arrangement the above entities/sub groups fall into the IFRS11
requirements. This specifically includes:

 IFRS11 Joint arrangements and amended IAS28 (specifically on joint ventures and associates);
 IFRS11 results in some specific previously proportionally consolidated entities moving to be
equity accounted and adjustments being required by their intercompany counterparties to move
intercompany transactions to external.
 It should be noted that IFRS 11’s disclosures should be read in conjunction with the measurement
criteria of IAS 28 Investments in Associates and Joint Ventures. Also future references to IFRS 11
mean both IFRS 11 and IAS 28.

From an operational perspective BHPB will continue to be the operator for all the entities concerned
and the underlying operational processes will not change. In general from 1SAP perspective the
activities, transactional and processes in ECC will not change. The change affects the statutory and
management consolidation process into the BHPB Group in BCS.

Timeline

- November 2014 – Hierarchy structure changes in place.

- December 2014 – BCS Equity Accounting changes in place.
- January 2015 – ECC Equity Accounting changes in place.
- February 2015 – B&F Equity Accounting changes in place.

Budget and Forecasting impacts (B&F)

The current budget and forecast values should be re-used for the equity accounting solution in terms
of level of detail

High level assessment: (23 days)

- Configuration tasks

o Master data replication from ECC

o Routing rules changes in PI
o Asset interface changes for master data
o Asset interface changes to upload (implementation target February and will use new
solution via BI-IP)
- Estimates including resubmission (+deletion and conversion) before February:

o UT/IT/UAT: 15 days
o CR1: 4 days
o ACO: 4 days
ECC Impacts
Once the conditions precedents are met transactions outside of the Manganese Groups which were
previously intercompany will be reclassified to external by both parties.

In ECC the trading partner options need to be amended and switched off to ensure no intercompany
posting is permitted between Manganese and the wider BHPB.

As this solution requires a complete load of data from ECC to the A1 hierarchy the current ECC
solution for all entities in the Manganese Group remains as is. Sub ledgers and all modules will
continue to be used.

The joint control arrangement for GEMCO, Samancor and SAMAG by BHP Billiton triggers fair value
evaluation of the Net Asset position of the sub groups for BHP Billiton. The change does not affect
Anglo as it is triggered for BHPB by the loss of control.

High level assessment: (51 days)

- Configuration tasks
o Intercompany 3 days
- Creation of customers/vendors, lifting of validations (one side entry for IC), reclassification of
balances (including the loans), update variants for mismatch report:
o Planning/Analysis: 5 days
o CR1: 5 days
o ACO: 5 days
- Change on the sweeping structure due to loan change to external

o Analysis: 5 days
o Configuration: 3 days
o Testing: 3 days
- Fair Value Change – Fixed Assets
o New WREF spec: 3 days
o UT/IT/UAT: 5 days
o CR1: 3 days
o ACO: 3 days
o Development (to be done by ABAP): 8 days

BCS Impacts

To accommodate a sub-consolidation under purchase method of Gemco, Samancor and SAMAG as

the Manganese Business, a new standalone cons unit hierarchy will be added to BCS called A1
“Manganese Consolidation”.
In the A1 hierarchy, the entities will be consolidated up to Manganese to 100% in terms of financial
data. This includes eliminating of all intercompany transactions within the Manganese structure and
creating a non-controlling interest, generated due to Hotazel being owned to 91% by Samancor
Holdings.
The results of the sub groups Gemco, Samancor and SAMAG (PL00 – PL30) will be copied across to
PL00 to the S1 / M1 & T1 hierarchies to its new created mirror cons units at 100% and equity
accounted to its investors at 60% and to the reporting unit (based on the ownership % of BHPB - as
per current BCS solution).

It is a management reporting requirement (M1), that the equity accounted entries/result is reflected at
the appropriate asset level, Gemco, Samancor and SAMAG.
High level assessment: (73 days)

- Build, test preparation, testing and documentation

o MD - Cons Unit / Cons Group - 9 Days
o Work Flow - 2 Days
o Data Load - 1 Day
o Manual Document - 0.5 Day
o Reclassification - 12 Days
o Cons Monitor tasks - 1 Day
o Data Conversion - 2 Days

BI Reporting Impacts

The A1 hierarchy is to be included in the BI Reporting:

- Consolidated Financials
- DVR Reporting
- Financial Statements
- External Briefing Papers
- GMC
On a monthly basis a report is required to be run to ensure the S1 and M1 hierarchy are aligned with the A1
hierarchy in terms of sub groups Gemco, Samancor and SAMAG are aligned excluding any CJE’s for the fair
value uplift.
The current equity accounting solution should be applied to the equity accounting solution for Manganese. An
impact assessment is required by GBIS to provide solution options, how this can be achieved.

High level assessment: (73 days)

- Build, test preparation, testing and documentation

o BI 60 days and ABAP 5 Days

ARIS Reporting Impacts

Update consolidation process to include references to the new hierarchy and new tasks.

High level assessment: (5 days)