REG - Rio Tinto - Annual Financial Report <Origin Href="QuoteRef">RIO.L</Origin>

Rio TintoAnnouncement

06/03/2015 08:03

RNS Number : 7440G
Rio Tinto PLC
06 March 2015
2014 Annual report and Strategic report, 2015 annual general meetings and 2014 Annual report on Form 20-F
6 March 2015
Rio Tinto has today posted the following documents on its website at: www.riotinto.com/results-and-reportsand www.riotinto.com/agm2015
 2014 Annual report
 2014 Strategic report
 2015 Notices of annual general meetings
Rio Tinto plc will hold its 2015 annual general meeting in London on 16 April 2015 and Rio Tinto Limited will hold its annual general meeting in Perth on 7 May 2015.
Rio Tinto Limited has released the 2014 Annual report, 2014 Strategic report and its 2015 Notice of annual general meeting to the ASX and they will be available shortly on the ASX's Market Announcements Platform. 
Likewise, Rio Tinto plc will submit the 2014 Annual report, 2014 Strategic report and Rio Tinto plc 2015 Notice of annual general meeting to the UK Listing Authority and they will be available shortly for public inspection on the National Storage Mechanism (NSM): www.morningstar.co.uk/uk/NSM. 
These documents are expected to be sent to shareholders on 13 March 2015 in accordance with their communication elections.
Rio Tinto will also file its 2014 Annual report on Form 20-F with the United States Securities and Exchange Commission today. American Depositary Receipt holders will shortly be able to view Rio Tinto's 2014 Annual report, Rio Tinto plc's 2015 Notice of annual general meeting and the 2014 Annual report on Form 20-F on the Rio Tinto website at: www.riotinto.com/agm2015
Rio Tinto has also today posted its 2014 Sustainable development report on its website at: www.riotinto.com/sd2014
Hard copies of these documents can be obtained free of charge on request from the company secretaries, whose contact details are as follows:
Joint Company Secretary
Rio Tinto Limited
120 Collins Street
Melbourne, 3000
Australia
Company Secretary
Rio Tinto plc
2 Eastbourne Terrace
London W2 6LG
United Kingdom
In accordance with the requirements of Rules 4.1 & 6.3.5of the UK Listing Authority's Disclosure and Transparency Rules, a description of the principal risks and uncertainties affecting the Group and a responsibility statement are set out in appendix 1 to this announcement.
Contacts
media.enquiries@riotinto.com
www.riotinto.com 
 Follow @RioTinto on Twitter 
Media Relations, EMEA/Americas
Illtud Harri
T +44 20 7781 1152
M +44 7920 503 600
David Outhwaite
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M +44 7787 597 493
David Luff
T + 44 20 7781 1177
M + 44 7780 226 422
Investor Relations, EMEA/Americas
John Smelt
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David Ovington
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Grant Donald
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Media Relations, Australia/Asia
Ben Mitchell
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Bruce Tobin
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Matthew Klar
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Investor Relations, Australia/Asia
Rachel Storrs
T +61 3 9283 3628
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Galina Rogova
T +86 21 6103 3550 
M +86 152 2118 3942
Rio Tinto plc
2 Eastbourne Terrace
London W2 6LG
United Kingdom
T +44 20 7781 2000
Registered in England 
No. 719885
Rio Tinto Limited
120 Collins Street
Melbourne 3000
Australia 
T +61 3 9283 3333
Registered in Australia
ABN 96 004 458 404
Appendix 1
Risk factors
Rio Tinto's business units and functions assess the potential economic and non-economic consequences of their respective risks using the framework defined by the Group's Risk policy and standard. Principal risks and uncertainties are those that the Risk Management Committee, business unit or function determine to have potential material consequences at a Group level. They also include factors that may trigger a succession of events that, in aggregate, become material to the Group. Once identified, each principal risk or uncertainty is reviewed by the relevant internal experts and by the Risk Management Committee.
Pages 15 to 17 describe the currently-known principal risks and uncertainties that could materially affect Rio Tinto or its ability to meet its strategic objectives. There may be additional risks unknown to Rio Tinto and other risks, currently not believed to be material, which could turn out to be material. The risk factors outlined do not include the management detail on how each is managed and mitigated, or the controls established to decrease the likelihood or impact of these risks occurring. This is discussed in more detail on page 62.
Risksmaymaterialiseindividually,simultaneouslyorincombinationandcould significantlyaffecttheGroup's:
- short,mediumandlong-termbusinessandprospects;
- earnings,cashflowandfinancialposition;
- overallfinancialresultsandproductdemand;
- currentassetvalues;
- futureassetvaluesandgrowthpotential;
- safetyrecordandthelong,mediumandshort-termhealthofits employees;
- environmentalandsocialimpactonneighbouringcommunities;
- sociallicencetooperate;or
- Grouporbusinessunitreputation.
Theprincipalrisksanduncertaintiesshouldbeconsideredinconnection withanyforward-lookingstatementsinthisdocumentandthecautionary statementontheinsidefrontcover.
Externalrisks

Factor
Nature
Commoditypricesandglobal demandfortheGroup's productsareexpectedtoremain uncertain
Commoditypricesanddemandarevolatileandstronglyinfluencedbyfluctuatingworldeconomicconditions.TheGroup's policyistosellitsproductsatpricesthatreflectthevalueofourproductsinthemarketandnottoenterintopricehedging arrangements.
Paststrongdemandforthe Group'sproductsinChinacould beaffectedby future developmentsin thatcountry
TheGroupishighlyexposedtotheChinesemarket.China'sdemandforanyoftheGroup'sproducts,andironorein particular,couldbesubstantiallyaffectedby:
- aneconomicslowdowninChina;
- financialorbankingmarketconditionsimpactinginvestment;
- anacceleratedshiftfrominfrastructure-ledtoservice-orientedgrowth;or
- amaterialchangeinenergypolicy.
AnyorallofthesemayadverselyaffecttheGroup'sprofitabilityandcashposition.
RioTintois exposedto fluctuationsin exchangerates
ThevastmajorityoftheGroup'ssalesaredenominatedinUSdollars,whichisalsothecurrencyusedforholdingsurplus cash,financingoperations,andpresentingexternalandinternalresults.AlthoughmanycostsareincurredinUSdollars, asignificantportionareincurredin,orinfluencedby,thelocalcurrenciesofthecountrieswheretheGroupoperates, principallytheAustraliandollarandCanadiandollar.TheGroup'snormalpolicyisnottohedgeforeignexchangeratesand sotheGroupmaybeadverselyaffectedbyappreciationinthevalueofothercurrenciesagainsttheUSdollar,orto prolongedperiodsofexchangeratevolatility.CurrencyfluctuationsmaynegativelyimpacttheGroup'sprofitabilityand dividendpaymentsaswellasratingagencymetricsandassetcarryingvalues.
Political,legalandcommercial changesin theplaces wherethe Groupoperates
TheGroupoperatesacrossalargenumberofjurisdictions,resultinginexposuretoabroadspectrumofeconomies,political andlegalframeworksandsocietalnorms.Eachjurisdictionposesuniquecomplexitiesandchallengesthatinturnimpose risksonthevaluechain,fromnewbusinessdevelopmentthroughtoclosureandrehabilitation,andonassetcarryingvalues.
Thesecaninclude:
- difficultyinobtainingagreements,leasesorpermitsfornewactivities;
- renegotiation,unilateralvariationornullificationofexistingagreements,leasesandpermits;
- changesingovernmentownershiplevelsinGroupbusinesses;
- changesintaxationrates,regimesorinternationaltaxagreements;
- currencyandforeigninvestmentrestrictions;
- limitationstopower,water,energyandinfrastructureaccess;and
- generalincreasesinregulationandcompliancerequirements.
Jurisdiction-specificbehaviourorcircumstancemayalsopresentuncertaintiestoouroperatingenvironment:unclearland titleandrightstolandandresources(includingIndigenoustitle);politicalandadministrativechange,policyreform,and changesinlaworgovernmentregulation;aninherentcultureofbriberyandcorruption;violentcriminalorsectarian tensions.AnysuchjurisdictionalinstabilityorlegislativeuncertaintythatimpactstheGroup'soperationsmayresultin increasedcosts,curtailornegativelyimpactexistingoperationsand/orpreventtheGroupfrommakingfutureinvestments.
Communitydisputesin the countriesandterritoriesin whichtheGroupoperates
SomeoftheGroup'scurrentandpotentialoperationsarelocatedinornearcommunitiesthatmayregardtheseoperations asbeingdetrimentaltothem.Communityexpectationsaretypicallycomplex,withthepotentialformultipleinconsistent stakeholderviewsthatmaybedifficulttoresolve.Stakeholderopinionandcommunityacceptancecanbesubjecttomany influences,forexample,relatedindustries,operationsofothergroups,orlocal,regionalornationaleventsinanyofthe placeswhereweoperate.Thesedisputescandisruptouroperationsandmayincreaseourcosts,therebypotentially impactingourrevenueandprofitability.Intheextreme,ouroperationsmaybeafocusforcivilunrestorcriminalactivity, whichcanimpactouroperationalandfinancialperformance,aswellasourreputation.
Increasedregulationof greenhousegasemissionscould adverselyaffecttheGroup's costofoperations
RioTinto'soperationsareenergy-intensiveanddependonfossilfuels.Innumerousjurisdictions,thereisincreasing regulationofgreenhousegasemissions,tighteremissionreductiontargetsandprogressiveintroductionofcarbonpricing mechanisms.Thesemayraiseworldwideenergy,productionandtransportcostsoverthemediumtolongterm,whichmay increasetheGroup'scostbaseandpotentiallynegativelyimpacttheGroup'sprofitability.
Regulations,standardsand stakeholderexpectations regardinghealth,safety, environmentandcommunity evolveovertimeandunforeseen changescouldhaveanadverse effectontheGroup'ssocial licencetooperate,business viabilityandreputation
Theresourcessectorissubjecttoextensivehealth,safetyandenvironmentallaws,regulationsandstandardsalongside communityandstakeholderexpectations.Evolvingregulation,standardsandstakeholderexpectationscouldresultin increasedcosts,regulatoryaction,litigationor,inextremecases,threatentheviabilityofanoperation.
Strategicrisks

Factor
Nature
TheGroup'sexplorationand developmentofnewprojects mightbeunsuccessful
RioTintoidentifiesneworebodiesandminingpropertiesthroughitsexplorationprogramme,anddevelopsorexpandsother operationsasameansofgeneratingshareholdervalue.Explorationisnotalwayssuccessfulandthereisahighdegreeof competitionforworld-classorebodies.TheGroupmayalsonotbeabletosourceormaintainadequatefinancing,ormaybe unabletofindwillingandsuitablejointventurepartnerstosharethecostofdevelopinglargeprojects.Furthermore,project executionmaynotproceedasplannedandprojectbudgetsandschedulesmayproveinaccurate,allofwhichmaynegatively impacttheGroup'sprofitabilityandthemineralresourcesfromwhichfuturecashflowsshouldcome.
RioTintomayfailto successfullyexecute divestmentsandacquisitions
PotentialacquisitionsmaynotsucceedandtheGroupmaynotbeabletosuccessfullydivestassetsitwishestosell,resulting inunforeseenpressureontheGroup'scashpositionorreducingtheGroup'sabilitytoexpandoperationsasameansof generatingshareholdervalue.Allbusinesscombinationsoracquisitionsentailanumberofrisks,includingthecostof effectivelyintegratingacquisitionstorealisesynergies,significantwrite-offsorrestructuringcharges,andunanticipatedcosts andliabilities.TheGroupmayalsobeliableforthepastacts,omissionsorliabilitiesithasacquiredthatwereunforeseenor greaterthananticipated.TheGroupmayalsofaceliabilitiesfordivestedentitiesifthebuyerfailstohonourallcommitments ortheGroupagreestoretaincertainliabilities.
Largeoutsourcingprogrammes mayresultinexposuretothird- partyfailure,orlossof intellectualproperty
TheGroupisimplementingbusinesstransformationprogrammestoincreaseefficiency.Theseincludeoutsourcingandoff- shoringelementsofimportantbusinesssupportdeliveryaswellasincreasingprocurementofgoodsandservicesfrom emergingmarketsuppliers.TheGroupmaybeexposedtobusinesscontinuityfailureimpactingfinancialperformance,lossof intellectualpropertyordata,dataprivacyviolationsand/orreputationaldamageasaresultofthird-partyfailureoractions.
Financialrisks

Factor
Nature
TheGroup'sreportedresults couldbeadverselyaffectedby theimpairmentofassets includinggoodwill
TheGroupmayberequiredtorecordimpairmentchargesasaresultofadversedevelopmentsintherecoverablevaluesofits assets(includinggoodwill).Significantassumptionsinthedeterminationofrecoverablevalueinclude,butarenotlimitedto: pricingoftheGroup'scommoditiesandproducts,reservesandresources,infrastructureavailability,discountandforeign currencyexchangerates,operatinganddevelopmentcostprojections,andthetimingofexpenditureandrevenuesrelatedto majorprojects.Inaddition,theoccurrenceofunexpectedevents,oreventsbeyondtheGroup'scontrolthatadverselyimpact itsbusiness,mayhaveanimpactontheassumptionsunderlyingtherecoverablevalueofitsassets.Theforegoingitems arenotexhaustiveandimpairmentsmaybecausedbyfactorscurrentlyunknowntotheGroup.Totheextentthatthe recoverablevalueofanassetisimpaired,suchimpairmentwillnegativelyimpacttheGroup'sprofitabilityduringthe relevantperiod.
Discountratesusedin determiningprovisionsand assetvaluationsmaychange, causingchangestoprovisions, assetcarryingvaluesand capitalallocation
Discountratesareutilisedtodetermineprovisionsforcostsofknownfutureobligations(suchasclose-downand remediation)aswellasvaluingassetsforimpairmenttestingandcapitalallocationpurposes.Discountratesmayvaryover timeasunderlyingassumptionschange.Theseassumptionsincludeobservablelongtermgovernmentbondyields,market riskpremiums,andothersituationalchanges(suchaschangeinpoliticalstabilityinaparticularjurisdiction).
Changestothediscountratemayimpactthesizeofprovisionsrecognised,leadtochangesinthecarryingvalueofassets,or alterthecapitalallocatedtovariousprojects.
TheGroup'sliquidityand cashflowexpectationsmay notberealised,inhibiting plannedexpenditure
BoththeGroup'sabilitytofundplannedexpendituresuchascapitalgrowth,mergersandacquisitions,innovationandother objectivesorobligationsaswellastheabilitytoweatheramajoreconomicdownturncouldbecompromisedbyinadequate accesstosufficientliquidity,includingexternalfinancingsourcessuchasbankfinancingorcapitalmarkets.
Failuretoreducecostsmay resultin reducedmargins
Failuretoreducecostsmayhaveanadverseimpactonouroperatingmarginsandtheviabilityofourcapital expansionprojects.
Operationalrisks

Factor
Nature
Estimatesoforereservesare basedonuncertainassumptions that, ifchanged,couldresultin theneedtorestateorereserves
Therearenumerousuncertaintiesinherentinestimatingorereserves,includingsubjectivejudgmentsanddeterminations thatarebasedonavailablegeological,technical,contractandeconomicinformation.Previouslyvalidassumptionsmay changesignificantlywithnewinformation,whichmayresultinchangestotheeconomicviabilityofsomeorereservesand theneedforthemtoberestated.Inaddition,volatilityincommoditypricescanresultinsubstantialadjustmentsinthe Group'srecognitionoforereserves.
Labourdisputescouldlead tolostproductionand/or increasedcosts
SomeoftheGroup'semployees,includingemployeesinnon-managedoperations,arerepresentedbylabourunionsunder variouscollectivelabouragreements.TheGroupmaynotbeabletorenegotiateagreementssatisfactorilywhentheyexpire andmayfacedifficultnegotiations,higherwagedemandsorindustrialaction.Inaddition,labouragreementsmaynot preventastrikeorworkstoppageandlabourdisputesmayariseevenincircumstanceswheretheGroup'semployeesarenot representedbylabourunions
SomeoftheGroup's technologiesareunprovenand failurescouldadverselyimpact costsand/orproductivity
TheGrouphasinvestedinandimplementednewtechnologiesbothininformationsystemsandinoperationalinitiatives, someofwhichareunprovenandtheireventualviabilitycannotbeassessedwithcertainty.Theactualbenefitsofthese technologiesmaydiffermateriallyfromexpectations.
TheGroupmaybeexposedto majorfailuresin thesupply chainforspecialistservices, equipmentandmaterials
RioTintooperateswithinacomplexsupplychaindependingonsuppliersofmaterials,services,equipment,and infrastructure,andonprovidersoflogistics.Supplychainfailures,orsignificantlyincreasedcostswithinthesupplychain, forwhateverreason,couldhaveanadverseeffectontheGroup'sbusiness.
Jointventures,strategic partnershipsornon-managed operationsmaynotbe successfulandmaynotcomply withtheGroup'sstandards
TheGroupparticipatesinseveraljointventureandpartnershiparrangements,anditmayenterintoothers,allofwhich involverisk.WhetherornottheGroupholdsmajorityinterestsormaintainsoperationalcontrolinitsjointventures,its partnersmay:
- haveeconomicorbusinessinterestsorgoalsthatareinconsistentwith,oropposedto,thoseoftheGroup;
- exercisevetorightstoblockactionsthattheGroupbelievesareinitsorthejointventure'sbestinterests;or
- beunableorunwillingtofulfiltheirobligationsunderthejointventureorotheragreements,suchascontributingcapital toexpansionormaintenanceprojects.
Where these joint ventures are controlled and managed by others, the Group may provide expertise and advice but has limited control over compliance with its standards and objectives. Controlling partners may take action contrary to the Group's interests or policies, resulting in adverse impact to the Group's operations, financial performance, legal liability or reputation.
TheGroup'soperationsare vulnerabletoarangeof interruptions,notallofwhich arecoveredfully by insurance
1.Naturaldisastersandevents
Mining,smelting,refiningandinfrastructureinstallationsarevulnerabletonaturaleventsincludingearthquakes,subsidence, drought,flood,fire,stormandclimatechange.
2.Sustainedoperationaldifficulties
Operatingdifficultiesaremanyandvarious,rangingfromgeologicalvariationsthatcouldresultinsignificantgroundor containmentfailuretobreakdownofkeycapitalequipment.Reliableroads,railnetworks,ports,powergenerationand transmission,andwatersuppliesarerequiredtoaccessandconductouroperationsanddeliverproducttomarket. Limitations,delayeddevelopment,bottlenecksorinterruptionsininfrastructure,includingasaresultofthirdpartiesgaining accesstoourintegratedfacilities,couldimpedeourabilitytodeliverproducts.
3.Informationtechnologyand cybersecurity
TheGroupreliesheavilyoninformationtechnologyandprocesscontrolsystemstosupportourbusiness.Incommonwith mostlargeglobalcompanies,theGrouphasexperiencedcyberattacksandisfacedwithongoingthreatstothe confidentiality,integrityandavailabilityofsuchsystems.Anextendedfailureofcriticalsystemcomponents,causedby accidentalormaliciousactions,includingthoseresultingfromacybersecurityattack,couldresultinasignificant environmental,healthorsafetyincident,commerciallossorinterruptiontooperations.
4.Majoroperationalfailure
TheGroup'soperationsinvolvechemicalsandothersubstancesstoredunderhightemperatureandpressure,withthe potentialforfire,explosionorotherlossofcontroloftheprocess,leadingtoareleaseofhazardousmaterials.Thiscould occurbyaccident,systemsfailureorabreachofoperatingstandards,andcouldresultinasignificantenvironmental,health orsafetyincident.
5.Sustainedpandemic
TheGrouphasexploration,developmentprojectsandoperationsinnumerouscountriesandisreliantoneffectiveglobal shipping/transportationmovementstodeliverproducttomarkets.Thesustainedoutbreakofapandemicmayresultin healthexposuretoourworkforceaswellasthetemporaryclosureofasiteoraccesstoshipping/transportationmovements, adverselyimpactingfinancialperformance.
TheGroup'sinsurancedoesnotcovereverypotentiallossassociatedwithitsoperationsandadequatecoverageatreasonable ratesisnotalwaysobtainable.Inaddition,insuranceprovisionmaynotfullycoveritsliabilityortheconsequencesofany businessinterruption.AnyoccurrencenotfullycoveredbyinsurancecouldhaveanadverseeffectontheGroup'sbusiness.
TheGroupdependson thecontinuedservicesof keypersonnel
TheGroup'sabilitytomaintainitscompetitivepositionisdependentontheservicesofawiderangeofhighly-skilledand experiencedpersonnelavailableinthelocationswheretheyareneeded.Failuretorecruitandretainkeystaff,andthe inabilitytodeploystaffworldwide,wheretheyaremostneeded,couldaffecttheGroup'sbusiness.Similarconstraintsmaybe feltbytheGroup'skeyconsultants,contractorsandsuppliers,therebyimpactingtheGroup'soperations,expansionplansor businessmoregenerally.
TheGroup'scostsofclose- down,reclamation,and rehabilitationcouldbehigher thanexpected
Close-downandreclamationworkstoreturnoperatingsitestothecommunitycanbeextensiveandcostly.Estimatedcosts areprovidedfor,andupdatedannually,overthelifeofeachoperationbuttheprovisionsmightprovetobeinadequatedueto changesinlegislation,standardsandtheemergenceofnew,orincreasesinthecostof,reclamationtechniques.Inaddition, theexpectedtimingofexpenditurecouldchangesignificantlyduetochangesinthebusinessenvironmentthatmightvary thelifeofanoperation.
Responsibility statements
Eachofthecurrentdirectors,whosenamesandfunctionarelistedonpages49to51 of the Group's 2014 Annual report intheGovernancesectionconfirmthat,tothebestoftheirknowledge:
 the Rio Tinto Group financial statements and notes, which have been prepared in accordance with IFRS as adopted by the EU, the Corporations Act 2001 as amended by the Australian Securities and Investments Commission Order dated 9 January 2015, the Companies Act 2006 and Article 4 of the IAS Regulation, give a true and fair view of the assets, liabilities, financial position and loss of the Group;
 the Rio Tinto plc financial statements and notes, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice givea true and fair view of the assets, liabilities, financial position and profit of the company; and
 the Overview and Performance sections of the Annual report include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

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