REG - Rio Tinto - Rio Tinto 2015 full year results <Origin Href="QuoteRef">RIO.L</Origin> - Part 3
11/02/2016 07:10
- Part 3: For the preceding part double click ID:nRSK7276Ob
outstanding of 1,398.1
million (2014: 1,413.0 million) and the weighted average number of Rio Tinto
Limited shares of 426.6 million (2014: 435.4 million). In 2015, no Rio Tinto
Limited shares were held by Rio Tinto plc (2014: nil). The profit and loss
figures used in the calculation of basic and diluted earnings per share are
based on the profits and losses for the year attributable to owners of Rio
Tinto.
For the purposes of calculating diluted earnings per share, the effect of
dilutive securities is added to the weighted average number of shares. This
effect is calculated using the treasury stock method. The effect of dilutive
securities has not been taken into account when calculating diluted loss per
share for the year ended 31 December 2015.
Group statement of comprehensive income
Years ended 31 December
2015US$m 2014US$m
(Loss)/profit after tax for the year (1,719) 6,499
Other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Actuarial gains/(losses) on post retirement benefit plans 619 (735)
Tax relating to these components of other comprehensive income (175) 215
444 (520)
Items that have been/may be subsequently reclassified to profit or loss:
Currency translation adjustment (a) (2,395) (2,004)
Currency translation on companies disposed of, transferred to the income statement (2) 53
Fair value movements:
- Cash flow hedge losses (41) (48)
- Cash flow hedge losses transferred to the income statement 32 55
- Losses on revaluation of available for sale securities (19) (36)
- Losses on revaluation of available for sale securities transferred to the income statement 11 6
Share of other comprehensive loss of equity accounted units, net of tax (57) (44)
Tax relating to these components of other comprehensive income (3) (9)
Other comprehensive loss for the year, net of tax (2,030) (2,547)
Total comprehensive (loss)/income for the year (3,749) 3,952
- attributable to owners of Rio Tinto (2,443) 4,322
- attributable to non-controlling interests (1,306) (370)
(a) Excludes a currency translation charge of US$503 million (31 December
2014: US$376 million) arising on Rio Tinto Limited's share capital for the
year ended 31 December 2015, which is recognised in the Group statement of
changes in equity. Refer to Group statement of changes in equity on page 36.
Group cash flow statement
Years ended 31 December
2015US$m 2014US$m
Cash flows from consolidated operations(a) 12,102 18,896
Dividends from equity accounted units 210 298
Cash flows from operations 12,312 19,194
Net interest paid (827) (981)
Dividends paid to holders of non-controlling interests in subsidiaries (310) (309)
Tax paid (1,792) (3,618)
Net cash generated from operating activities 9,383 14,286
Cash flows from investing activities
Acquisitions of subsidiaries, joint ventures and associates (3) -
Disposals of subsidiaries, joint ventures and associates (b) (38) 887
Purchases of property, plant and equipment and intangible assets (4,685) (8,162)
Sales of financial assets 65 172
Purchases of financial assets (49) (24)
Net funding of equity accounted units 11 (117)
Other investing cash flows (c) 99 741
Net cash used in investing activities (4,600) (6,503)
Cash flows before financing activities 4,783 7,783
Cash flows from financing activities
Equity dividends paid to owners of Rio Tinto (4,076) (3,710)
Proceeds from additional borrowings 1,837 442
Repayment of borrowings (3,518) (3,476)
Proceeds from issue of equity to non-controlling interests 103 1,291
Own shares purchased from owners of Rio Tinto (2,028) -
Other financing cash flows 12 17
Net cash flow used in financing activities (7,670) (5,436)
Effects of exchange rates on cash and cash equivalents (159) (156)
Net (decrease)/increase in cash and cash equivalents (3,046) 2,191
Opening cash and cash equivalents less overdrafts 12,400 10,209
Closing cash and cash equivalents less overdrafts (d) 9,354 12,400
(a) Cash flows from consolidated operations
(Loss)/profit from continuing operations (1,719) 6,499
Adjustments for:
Taxation 993 3,053
Finance items 4,702 3,008
Share of profit after tax of equity accounted units (361) (625)
Impairment reversals after tax of investments in equity accounted units - (589)
Net (gains)/losses on disposal and consolidation of interests in businesses (64) 563
Impairment charges net of reversals 2,791 1,062
Depreciation and amortisation 4,645 4,860
Provisions (including exchange differences on provisions) 726 712
Utilisation of provisions (585) (973)
Utilisation of provision for post retirement benefits (230) (296)
Change in inventories 526 937
Change in trade and other receivables 1,404 962
Change in trade and other payables (431) (380)
Other items (e) (295) 103
12,102 18,896
Group cash flow statement (continued)
(b) Disposals of subsidiaries, joint ventures and associates in 2015
related principally to amounts received following the disposal of the interest
in SouthGobi Resources by Turquoise Hill Resources.
Disposals of subsidiaries, joint ventures and associates in 2014 related
primarily to the disposal of the Clermont Joint Venture.
(c) Other investing cash flows in 2015 mainly relates to the disposal of
property, plant and equipment across the Group. In 2014, this included the
disposal of the Group's St James's Square properties.
(d) Closing cash and cash equivalents less overdrafts at 31 December 2015
differ from cash and cash equivalents on the balance sheet as they include
overdrafts of US$12 million (31 December 2014: US$23 million) reported within
'Borrowings and other financial liabilities'.
(e) Includes a cash outflow of US$227 million (2014: inflow of US$66
million) mainly relating to derivative contracts transacted for operational
purposes and not designated in a hedge relationship.
Group balance sheet
At 31 December
2015US$m 2014US$m
Non-current assets
Goodwill 892 1,228
Intangible assets 3,336 5,880
Property, plant and equipment 61,057 68,693
Investments in equity accounted units 4,941 4,868
Inventories 253 397
Deferred tax assets 3,309 3,540
Trade and other receivables 1,356 1,304
Tax recoverable 78 70
Other financial assets (including loans to equity accounted units) 788 722
76,010 86,702
Current assets
Inventories 3,168 4,350
Trade and other receivables 2,386 3,623
Tax recoverable 118 146
Other financial assets (including loans to equity accounted units) 223 271
Cash and cash equivalents 9,366 12,423
15,261 20,813
Assets of disposal groups held for sale (a) 293 312
Total assets 91,564 107,827
Current liabilities
Borrowings and other financial liabilities (2,484) (2,684)
Trade and other payables (6,237) (7,437)
Tax payable (135) (800)
Provisions including post retirement benefits (1,190) (1,299)
(10,046) (12,220)
Non-current liabilities
Borrowings and other financial liabilities (21,140) (22,535)
Trade and other payables (682) (871)
Tax payable (295) (370)
Deferred tax liabilities (3,286) (3,574)
Provisions including post retirement benefits (11,876) (13,303)
(37,279) (40,653)
Liabilities of disposal groups held for sale (a) (111) (360)
Total liabilities (47,436) (53,233)
Net assets 44,128 54,594
Capital and reserves
Share capital (b)
- Rio Tinto plc 224 230
- Rio Tinto Limited 3,950 4,535
Share premium account 4,300 4,288
Other reserves 9,139 11,122
Retained earnings 19,736 26,110
Equity attributable to owners of Rio Tinto 37,349 46,285
Attributable to non-controlling interests 6,779 8,309
Total equity 44,128 54,594
Group balance sheet (continued)
(a) Assets and liabilities held for sale at 31 December 2015 comprise Rio
Tinto's interests in the Blair Athol coal project, Carbone Savoie, Bengalla,
and Molybdenum Autoclave Process.
Assets and liabilities held for sale as at 31 December 2014 comprised Rio
Tinto's interests in the Blair Athol coal project and SouthGobi Resources
Ltd.
(b) At 31 December 2015, Rio Tinto plc had 1,374.0 million ordinary
shares on issue and held by the public, and Rio Tinto Limited had 424.2
million shares on issue and held by the public. No shares in Rio Tinto Limited
were held by Rio Tinto plc at 31 December 2015 (31 December 2014: nil). As
required to be disclosed under the ASX Listing Rules, the net tangible assets
per share amounted to US$18.42 (31 December 2014: US$21.18).
Group statement of changes in equity
Year ended 31 December 2015 Attributable to owners of Rio Tinto
Share capital Share Other Retained Total Non-controlling Total
US$m premium reserves earnings US$m interests equity
US$m US$m US$m US$m US$m
Opening balance 4,765 4,288 11,122 26,110 46,285 8,309 54,594
Total comprehensive loss for the year (a) - - (2,020) (423) (2,443) (1,306) (3,749)
Currency translation arising onRio Tinto Limited's share capital (503) - - - (503) - (503)
Dividends - - - (4,076) (4,076) (315) (4,391)
Share buyback (b) (88) - 6 (1,946) (2,028) - (2,028)
Companies no longer consolidated - - - - - 5 5
Own shares purchased from Rio Tinto shareholders to satisfy share options - - (25) (28) (53) - (53)
Change in equity interest held by Rio Tinto - - - 20 20 (17) 3
Treasury shares reissued and other movements - 12 - 1 13 - 13
Equity issued to holders of non-controlling interests - - - - -- 103 103
Employee share options and other IFRS 2 charges to the income statement - - 56 78 134 - 134
Closing balance 4,174 4,300 9,139 19,736 37,349 6,779 44,128
Year to 31 December 2015US$ Year to 31 December 2014US$
Dividends per share: paid during the year 226.5c 204.5c
Dividends per share: proposed in the announcement of the results for the year 107.5c 119.0c
Year ended 31 December 2014 Attributable to owners of Rio Tinto
Share capital Share Other Retained Total Non-controlling Total
US$m premium reserves earnings US$m interests equity
US$m US$m US$m US$m US$m
Opening balance 5,141 4,269 12,871 23,605 45,886 7,616 53,502
Total comprehensive income for the year (a) - - (1,689) 6,011 4,322 (370) 3,952
Currency translation arising on Rio Tinto Limited's share capital (376) - - - (376) - (376)
Dividends - - - (3,710) (3,710) (304) (4,014)
Companies no longer consolidated - - - - - (18) (18)
Own shares purchased from Rio Tinto shareholders to satisfy share options - - (129) (31) (160) - (160)
Change in equity interest held by Rio Tinto - - - 36 36 (29) 7
Treasury shares reissued and other movements - 19 - 3 22 - 22
Newly consolidated operations - - - - - 6 6
Equity issued to holders of non-controlling interests (c) - - - - - 1,291 1,291
Employee share options and other IFRS 2 charges to the income statement - - 69 196 265 117 382
Closing balance 4,765 4,288 11,122 26,110 46,285 8,309 54,594
Group statement of changes in equity (continued)
(a) Refer to the Group statement of comprehensive income for further
details. Adjustments to other reserves include currency translation
attributable to owners of Rio Tinto, other than that arising on Rio Tinto
Limited share capital.
(b) Total amount of US$2,028 million includes own shares purchased from
owners of Rio Tinto as part of the share buy-back programme.
(c) Equity issued to holders of non-controlling interests during 2014
included US$1.2 billion of proceeds from a rights issue to Turquoise Hill
Resources in January 2014.
Reconciliation with Australian Accounting Standards
The financial information in this report has been prepared in accordance with
IFRS as defined in the accounting policies' notes in this report, which
differs in certain respects from the version of International Financial
Reporting Standards that is applicable in Australia, referred to as Australian
Accounting Standards (AAS).
Prior to 1 January 2004, the Group's financial statements were prepared in
accordance with UK GAAP. Under IFRS, goodwill on acquisitions prior to 1998,
which was eliminated directly against equity in the Group's UK GAAP financial
statements, has not been reinstated. This was permitted under the rules
governing the transition to IFRS set out in IFRS 1. The equivalent Australian
Standard, AASB 1, does not provide for the netting of goodwill against equity.
As a consequence, shareholders' funds under AAS include the residue of such
goodwill, which amounted to US$560 million at 31 December 2015 (2014: US$553
million).
Save for the exception described above, the financial information in this
report drawn up in accordance with IFRS is consistent with the requirements of
AAS.
Consolidated net debt
At 31 December
2015US$m 2014US$m
Analysis of changes in consolidated net debt (a)
Opening balance (12,495) (18,055)
Adjustment on currency translation 1,586 1,039
Exchange losses charged to the income statement (1,630) (1,070)
Cash movements excluding exchange movements (1,109) 5,357
Other movements (135) 234
Closing balance (13,783) (12,495)
Total borrowing in balance sheet (b) (23,063) (25,075)
Derivatives related to net debt (included in "Other financial assets/liabilities") (86) 146
Equity accounted unit funded balances excluded from net debt (c) - (11)
Adjusted total borrowings (23,149) (24,918)
Cash and cash equivalents 9,366 12,423
Consolidated net debt (13,783) (12,495)
(a) Consolidated net debt is stated net of the impact of certain funding
arrangements between equity accounted units and partially owned subsidiaries
(equity accounted unit funded balances). This adjustment is required in order
to avoid showing borrowings twice in the net debt disclosure, where funding
has been provided to an equity accounted unit by the Group and subsequently on
lent by the equity accounted unit to a consolidated Group subsidiary.
(b) Total borrowings are combined with other current financial
liabilities of US$231 million (31 December 2014: US$20 million) and other
non-current financial liabilities of US$330 million (31 December 2014: US$124
million) in the balance sheet.
(c) Equity accounted unit funded balances are defined as amounts owed by
partially owned subsidiaries to equity accounted units, where such funding was
provided to the equity accounted unit by the Group.
Geographical analysis (by destination)
Years ended 31 December
2015 % 2014% 2015US$m 2014US$m
Gross sales revenue by destination (a)
China 41.3 38.2 15,206 19,101
Japan 11.2 15.4 4,119 7,719
Other Asia 14.4 15.8 5,307 7,913
United States of America 15.1 12.9 5,565 6,439
Europe (excluding UK) 8.2 8.8 3,016 4,407
Canada 3.2 2.8 1,167 1,421
Australia 2.6 2.2 968 1,114
United Kingdom 1.0 1.0 341 481
Other 3.0 2.9 1,095 1,446
Gross sales revenue 100.0 100.0 36,784 50,041
Share of equity accounted units' sales (1,955) (2,377)
Consolidated sales revenue 34,829 47,664
(a) Gross sales revenue is used by the Group in monitoring business
performance (refer to the financial information by business unit on page 11).
Gross sales revenue includes the sales revenue of equity accounted units
(after adjusting for sales to subsidiaries) in addition to consolidated sales.
Consolidated sales revenue includes subsidiary sales to equity accounted units
which are not included in gross sales revenue.
Prima facie tax reconciliation
Years ended 31 December
2015US$m 2014US$m
(Loss)/profit before taxation (726) 9,552
Deduct: share of profit after tax of equity accounted units (361) (625)
Deduct: impairment reversal after tax of investment in equity accounted units (a) - (589)
Parent companies' and subsidiaries' (loss)/profit before tax (1,087) 8,338
Prima facie tax (receivable)/payable at UK rate of 20 per cent (2014: 21 per cent) (217) 1,751
Higher rate of taxation on Australian earnings 506 1,038
Impact of items excluded in arriving at underlying earnings (b):
Impairment charges net of reversals 615 (112)
Gains and losses on disposal and consolidation of businesses (11) (85)
Foreign exchange on excluded finance items 481 231
Recognition of deferred tax assets relating to planned divestments (250) -
Impact of tax law changes on recognition of deferred tax assets (c) - 401
Other exclusions (17) (35)
Impact of changes in tax rates and laws (3) (11)
Other tax rates applicable outside the UK and Australia (68) 5
Resource depletion and other depreciation allowances (15) (121)
Research, development and other investment allowances (21) (34)
Recognition of previously unrecognised deferred tax assets (40) (106)
Unrecognised current year operating losses 45 73
Other items (d) (12) 58
Total taxation charge (e) 993 3,053
Prima facie tax reconciliation (continued)
(a) For the year ended 31 December 2014, the impairment reversal in
investments in equity accounted units is net of a tax charge of US$252
million.
(b) The impact for each item includes the effect of tax rates applicable
outside the UK.
(c) For the year ended 31 December 2014, the remaining Minerals Resource
Rent Tax (MRRT) starting base deferred tax asset was derecognised on repeal of
the tax in Australia.
(d) Other items include various adjustments to provisions for taxation of
prior periods.
(e) This tax reconciliation relates to the Group's parent companies,
subsidiaries and joint operations. The Group's share of profit of equity
accounted units is net of tax charges of US$239 million (31 December 2014:
US$404 million).
Acquisitions and Disposals
2015 and 2014 Acquisitions
There were no material acquisitions during the years ended 31 December 2015
and 2014.
2015 Disposals
On 23 April 2015, TRQ completed the block sale of 48.7 million common shares
in SouthGobi Resources Ltd and with further divestments has reduced its
interest to below 20%. As at 31 December 2015 TRQ's interest in SouthGobi
Resources Ltd is no longer consolidated as a subsidiary and has been
classified as an available for sale investment.
On 17 June 2015, Rio Tinto disposed of its 77.8 per cent interest in Murowa
Diamonds and 50 per cent interest in Sengwa Colliery Ltd (Sengwa) to RZ Murowa
Holdings Limited.
Rio Tinto completed the sale of ECL to Fives on 9 July 2015 and the sale of
Alesa to Groupe Reel on 24 November 2015.
2014 Disposals
During 2014 Rio Tinto completed the sales of: the Clermont Joint Venture to GS
Coal; Rio Tinto Coal Mozambique to International Coal Ventures Private
Limited; Søral to Hydro Aluminium ASA; and Alucam to the Government of
Cameroon.
Events after the balance sheet date
On January 27, 2016 the Group announced it had reached a binding agreement for
the sale of its Mount Pleasant thermal coal assets to MACH Energy Australia
Pty Ltd for US$224 million plus royalties.
The agreement includes a payment on completion of US$83 million, two
unconditional deferred payments of US$58 million each payable 8 and 16 months
from completion, a conditional payment of US$25 million, and royalties,
payable quarterly at two per cent of Gross FOB Revenue for coal sold from the
first 625 million tonnes of Run of Mine coal (equivalent to 474 million tonnes
of marketable reserves) when prices exceed US$72.50/tonne. The proceeds of the
sale will be used for general corporate purposes.
Except as disclosed above, no significant events were identified after the
balance sheet date.
Accounting policies
The financial information included in this report has been prepared in
accordance with applicable UK law, applicable Australian law as amended by the
Australian Securities and Investments Commission Order dated 14 December 2015,
Article 4 of the European Union IAS regulation and with:
- International Financial Reporting Standards as issued by the International
Accounting Standards Board (IASB) and interpretations issued from time to time
by the IFRS Interpretations Committee (IFRS IC) both as adopted by the
European Union (EU) and which are mandatory for EU reporting as at 31 December
2015; and
- International Financial Reporting Standards as issued by the IASB and
interpretations issued from time to time by the IFRS IC which are mandatory as
at 31 December 2015.
The above accounting standards and interpretations are collectively referred
to as 'IFRS' in this report. The Group has not early adopted any other
amendments, standards or interpretations that have been issued but are not yet
mandatory.
The financial information has been prepared on the basis of accounting
policies consistent with those applied in the financial statements for the
year ended 31 December 2014 except for the implementation of a number of minor
amendments issued by the IASB and endorsed by the EU which applied for the
first time in 2015. These new pronouncements do not have a significant impact
on the accounting policies, methods of computation or presentation applied by
the Group and therefore prior period financial information has not been
restated.
Summary financial data in Australian dollars,
Sterling and US dollars
2015A$m 2014A$m 2015£m 2014£m 2015US$m 2014US$m
48,878 55,430 24,063 30,367 Gross sales revenue 36,784 50,041
46,281 52,797 22,784 28,925 Consolidated sales revenue 34,829 47,664
(965) 10,581 (475) 5,797 (Loss)/profit before tax from continuing operations (726) 9,552
(2,284) 7,199 (1,124) 3,944 (Loss)/profit for the year from continuing operations (1,719) 6,499
(1,151) 7,230 (567) 3,961 Net (loss)/ earnings attributable to Rio Tinto shareholders (866) 6,527
6,033 10,307 2,970 5,647 Underlying earnings (a) 4,540 9,305
(63.1)c 391.1c (31.0)p 214.3p Basic (loss)/ earnings per ordinary share (b) (47.5)c 353.1c
330.6c 557.6c 162.8p 305.5p Basic Underlying earnings per ordinary share (a), (b) 248.8c 503.4c
Dividends per share to Rio Tinto shareholders (c)
297.89c 223.23c 146.90p 122.72p - paid 226.5c 204.5c
151.89c 152.98c 74.21p 77.98p - proposed 107.5c 119.0c
6,356 8,621 3,129 4,723 Cash flow before financing activities 4,783 7,783
(18,924) (15,243) (9,294) (8,026) Net debt (13,783) (12,495)
51,280 56,463 25,184 29,729 Equity attributable to Rio Tinto shareholders 37,349 46,285
(a) Underlying earnings exclude net impairment and other charges of
US$5,406 million (31 December 2014: US$2,778 million).
(b) Basic earnings per ordinary share and basic Underlying earnings per
ordinary share do not recognise the dilution resulting from share options on
issue.
(c) Australian dollar and Sterling amounts are based on the US dollar
amounts, retranslated at average or closing rates as appropriate, except for
the dividends which are the actual amounts.
Metal prices and exchange rates
2015 2014 Increase/(decrease)
Metal prices - average for the year
Copper - US cents/lb 249c 310c (20%)
Aluminium - US $/tonne US$1,661 US$1,867 (11%)
Gold - US$/troy oz US$1,160 US$1,266 (8%)
Average exchange rates against the US dollar
Sterling 1.53 1.65 (7%)
Australian dollar 0.75 0.90 (16%)
Canadian dollar 0.78 0.91 (14%)
Euro 1.11 1.33 (17%)
South African rand 0.079 0.092 (14%)
Year end exchange rates against the US dollar
Sterling 1.48 1.56 (5%)
Australian dollar 0.73 0.82 (11%)
Canadian dollar 0.72 0.86 (16%)
Euro 1.09 1.22 (11%)
South African rand 0.064 0.086 (25%)
Reconciliation of Net (losses)/earnings to Underlying earnings
Exclusions from Underlying earnings Pre-tax Taxation Non-controlling Net Net amount 2014
2015 2015 interests amount US$m
US$m US$m 2015 2015
US$m US$m
Impairment charges net of reversals (a) (2,791) (57) 1,046 (1,802) (138)
Net gains/(losses) on consolidation and 64 (2) (14) 48 (349)
disposal of interests in businesses (b)
Exchange and derivative (losses)/gains:
- Exchange losses on US dollar net debt and intragroup balances (c) (3,518) 269 (33) (3,282) (1,858)
- Losses on currency derivatives not qualifying for hedge accounting (d) (86) (1) (1) (88) (22)
- Gains on commodity derivatives not qualifying for hedge accounting (e) 146 (58) - 88 30
Restructuring costs including global headcount reductions (344) 86 - (258) (82)
Increased closure provision for legacy operations (262) 29 - (233) -
Recognition of deferred tax assets relating to planned divestments - 250 (16) 234 -
Write off of deferred tax asset following the MRRT repeal - - - - (362)
Gain on disposal of the Group's St James's Square properties - - - - 356
Rio Tinto Kennecott 21 (3) - 18 -
Simandou and QMM IFRS 2 charge (f) (11) - - (11) (116)
Other exclusions (g) (179) 54 5 (120) (237)
Total excluded from Underlying earnings (6,960) 567 987 (5,406) (2,778)
Net (losses)/earnings (726) (993) 853 (866) 6,527
Underlying earnings 6,234 (1,560) (134) 4,540 9,305
Underlying earnings is reported by Rio Tinto to provide greater understanding
of the underlying business performance of its operations. Underlying earnings
and Net (losses)/earnings both represent amounts attributable to owners of Rio
Tinto. Exclusions from Underlying earnings relating to equity accounted units
are stated after tax and included in the column 'Pre-tax'. Items (a) to (g)
below are excluded from Net (losses)/earnings in arriving at Underlying
earnings.
(a) The carrying value of the Simandou project in Guinea has been
affected by the current market conditions and uncertainty over infrastructure
ownership and funding. As a result, the Group has decided that it would be
appropriate to record a pre-tax impairment charge of US$1,655 million to
exploration and evaluation intangible assets and a pre-tax impairment charge
of US$194 million to property, plant and equipment to fully write-down the
long-term assets of the project and a charge of US$7 million in relation to
inventories. A further pre-tax charge of US$183 million has been recognised
as a financial liability for contractual arrangements made in relation to the
development of the project. The Group will expense the cost of further
studies as incurred.
During the year, the carrying value of Energy Resources of Australia Ltd (ERA)
was impaired, following a Rio Tinto Board decision to support ERA's decision
not to progress any future study or development of Ranger 3 Deeps. The cash
inflows from processing low grade stockpile ore are not expected to be
sufficient to meet the cost of rehabilitation and therefore the property,
plant and equipment and intangible assets of ERA have been fully impaired,
resulting in a US$260 million pre-tax charge.
Reconciliation of Net (losses)/earnings to Underlying earnings (continued)
The Roughrider uranium project completed an Order of Magnitude study in late
2015 which provided an updated view of the development concept and geological
model. The cash-generating unit is tested annually for impairment as it
contains goodwill. The impairment test resulted in a pre-tax impairment
charge of US$116 million to fully write off goodwill and a pre-tax impairment
charge of US$113 million to exploration and evaluation intangible assets,
which were capitalised as a result of the Hathor Exploration acquisition in
2012.
Other impairment charges during the year reflect challenging economic
conditions at business units reclassified to assets held for sale during the
period in the Group's Aluminium and Copper and Coal product groups.
In 2014 the Group incurred pre-tax impairment charge (net of reversals) of
US$1,062 million related to impairment charge at Molybdenum Autoclave Process
in the Group's Copper and Coal product group (US$559 million) and impairment
charge net of reversals of US$503 million related to certain Aluminium product
group assets.
Rio Tinto also incurred a post-tax impairment reversal of investments in
equity accounted units of US$589 million in its Aluminium product group.
(b) Net gains on disposal and consolidation of interests in businesses in
2015 related mainly to the reduction in shareholding of SouthGobi Resources,
the sale of the Group's interest in Murowa Diamonds and Sengwa Colliery on 17
June 2015 and in the Aluminium product group's divestment of ECL on 9 July
2015 and Alesa on 24 November 2015.
Net losses on disposal and consolidation of interests in businesses during
2014 related mainly to the disposal of the Clermont Joint Venture on 29 May
2014 and of Rio Tinto Coal Mozambique on 7 October 2014
(c) Net exchange losses in 2015 comprise post-tax foreign exchange losses
of US$1,197 million on US dollar denominated net debt in non-US dollar
functional currency companies (on borrowings of approximately US$23.1
billion), and US$2,085 million losses on intragroup balances, as the
Australian dollar, Canadian dollar and the Euro all weakened against the US
dollar.
(d) Valuation changes on currency and interest rate derivatives, which
are ineligible for hedge accounting, other than those embedded in commercial
contracts, and the currency revaluation of embedded US dollar derivatives
contained in contracts held by entities whose functional currency is not the
US dollar.
(e) Valuation changes on commodity derivatives, including those embedded
in commercial contracts, that are ineligible for hedge accounting, but for
which there will be an offsetting change in future Group earnings.
(f) In 2014, the charge of US$116 million (after non-controlling
interests and tax), calculated in accordance with IFRS 2 'Share-based
Payment', reflects the discount to an estimate of fair value at which shares
are transferrable to the Government of Guinea under the Investment Framework
ratified on 26 May 2014.
(g) Other credits and charges that, individually, or in aggregate, if of
similar type, are of a nature or size to require exclusion in order to provide
additional insight into underlying business performance.
Availability of this report
This report is available on the Rio Tinto website (www.riotinto.com).
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Rio Tinto
See all newsREG - Rio Tinto - Director/PDMR Shareholding
AnnouncementREG - Rio Tinto - Director/PDMR Shareholding
AnnouncementREG - Rio Tinto - Director/PDMR Shareholding
AnnouncementREG - Rio Tinto - Director/PDMR Shareholding
AnnouncementREG - Rio Tinto - Total Voting Rights
Announcement