REG - Rio Tinto - Rio Tinto 2015 half year results <Origin Href="QuoteRef">RIO.L</Origin> - Part 4
06/08/2015 07:30
- Part 4: For the preceding part double click ID:nRSF2757Vc
Rio Tinto plc guarantee to the
Rio Tinto 2009 pension fund, with no limit on liabilities.
In February 2011 an agreement between Alcan Holdings Switzerland and the Alcan Schweiz pension fund was executed whereby
the funding deficit as at 31 December 2010 in relation to the pensioner population will be funded by Alcan Holdings
Switzerland over a six year period.
Events after the balance sheet date
Share buy-back programme
In July, a further US$0.2 billion of Rio Tinto plc shares were purchased as part of the ongoing share buy-back programme.
The programme is ongoing in the second half of 2015.
Rio Tinto corporate bonds repurchase
On 11 July Rio Tinto Finance (USA) Limited repurchased US$1.2 billion of own issued corporate bonds, which had original
maturity dates of May and September 2016.
Other than the items noted above, no events were identified after the balance sheet date which could be expected to have a
material impact on the consolidated financial statements.
Basis of preparation
The condensed consolidated interim financial statements included in this interim report have been prepared in accordance
with International Accounting Standard ('IAS') 34 'Interim financial reporting' as adopted by the European Union ('EU'),
the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority ('FCA') applicable to interim financial
reporting and an Order under section 340 of the Australian Corporations Act 2001 issued by the Australian Securities and
Investments Commission on 15 May 2015.
These condensed interim financial statements represent a 'condensed set of financial statements' as referred to in the DTR
issued by the FCA. Accordingly, they do not include all of the information required for a full annual financial report and
are to be read in conjunction with the Group's annual financial statements for the year ended 31 December 2014. These
annual financial statements were prepared on a going concern basis in accordance with the Companies Act 2006 applicable to
companies reporting under International Financial Reporting Standards and in accordance with applicable UK law, applicable
Australian law as amended by the Australian Securities and Investments Commission Order dated 9 January 2015 and 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 (IFRIC) both as adopted by the European
Union and which were mandatory for EU reporting as at 31 December 2014;
- IFRIC 21 "Levies" which had been adopted by the EU and is mandatory as at 31 December 2015 for EU reporting and is
available for early adoption; and
- International Financial Reporting Standards as issued by the IASB and interpretations issued from time to time by the
IFRIC which were mandatory as at 31 December 2014.
The condensed financial statements are unaudited and do not constitute statutory accounts as defined in Section 434 of the
United Kingdom Companies Act 2006. The financial information for the year to 31 December 2014 included in this report has
been extracted from the full financial statements filed with the Registrar of Companies and does not constitute statutory
accounts as defined in section 434 of the Companies Act 2006. The Auditors' report on these full financial statements was
unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter
and did not contain statements under section 498 (2) (regarding adequacy of accounting records and returns), or under
section 498 (3) (regarding provision of necessary information and explanations) of the Companies Act 2006.
Accounting policies
The condensed consolidated interim financial statements have been drawn up on the basis of accounting policies, methods of
computation and presentation consistent with those applied in the financial statements for the year ended 31 December 2014
except for the adoption of a number of amendments issued by the International Accounting Standards Board ('IASB') and
endorsed by the EU which apply for the first time in 2015. This basis of accounting is referred to as 'IFRS' in this
report. The new pronouncements do not have a significant impact on the accounting policies, methods of computation or
presentation applied by the Group and therefore the prior period consolidated financial statements have not been restated.
The Group has not early adopted any amendments, standards or interpretations that have been issued but are not yet
effective.
The critical accounting judgements and key sources of estimation uncertainty for the half year are the same as those
disclosed in the Group's consolidated financial statements for the year ended 31 December 2014.
The financial information by business unit and the geographic analysis of sales by destination provided on pages 10 to 12
and 41 of this press release respectively, satisfy the disclosure requirements of IFRS 8 'Operating Segments' for interim
financial statements and also provide additional voluntary disclosure which the Group considers is useful to the users of
the financial statements.
Going concern
After making enquiries and having reassessed the principal risks, the directors considered it appropriate to adopt the
going concern basis of accounting in preparing the interim financial information.
Non-GAAP measures
The Group presents certain non-GAAP financial measures, including underlying earnings, which are reconciled to directly
comparable IFRS financial measures on page 57 of this report. These non-GAAP measures are used internally by management to
assess the performance of the business. They are not a substitute for the IFRS measures and should be considered alongside
those measures.
Directors' statement of responsibility
In the directors' opinion:
The condensed consolidated interim financial statements on pages 30 to 50 including the notes have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, the Disclosure and Transparency
Rules ('DTR') of the Financial Conduct Authority in the United Kingdom, applicable accounting standards and the Australian
Corporations Act 2001 as modified by an order of the Australian Securities and Investments Commission issued on 15 May
2015, using the most appropriate accounting policies for Rio Tinto's business and supported by reasonable and prudent
judgements.
The condensed consolidated interim financial statements give a true and fair view of the Rio Tinto Group's financial
position as at 30 June 2015 and of its performance, as represented by the results of its operations, comprehensive income
and expense and its cash flows for the six months then ended.
There are reasonable grounds to believe that each of the Rio Tinto Group, Rio Tinto Limited and Rio Tinto plc will be able
to pay its debts as and when they become due and payable.
The interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during the first six months and their impact on the condensed
set of consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six
months of the financial year; and
- material related-party transactions in the first six months and any material changes in the related-party
transactions described in the last annual report.
Signed in accordance with a resolution of the Board of Directors.
Sam Walsh
Chief executive
6 August 2015
Jan du Plessis
Chairman
6 August 2015
Auditor's Independence Declaration
As lead auditor for the review of Rio Tinto Limited for the half-year ended 30 June 2015, I declare that to the best of my
knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
b) no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Rio Tinto Limited and the entities it controlled during the period.
Paul Bendall
Partner
PricewaterhouseCoopers
Melbourne
6 August 2015
Liability limited by a scheme approved under Professional Standards Legislation
Independent review report of PricewaterhouseCoopers LLP to the members of Rio Tinto plc and PricewaterhouseCoopers to the
members of Rio Tinto Limited
Introduction
For the purpose of this report, the terms 'we' and 'our' denote PricewaterhouseCoopers LLP in relation to UK legal,
professional and regulatory responsibilities and reporting obligations to Rio Tinto plc and PricewaterhouseCoopers in
relation to Australian legal, professional and regulatory responsibilities and reporting obligations to Rio Tinto Limited.
We have been engaged by Rio Tinto plc and Rio Tinto Limited (the 'Companies') to review the interim financial information
in the interim report of the Rio Tinto Group comprising the Companies and their subsidiaries, associates and joint ventures
(the 'Group') for the six months ended 30 June 2015, which comprises the Group income statement, Group statement of
comprehensive income, Group cash flow statement, Group balance sheet, Group statement of changes in equity and related
notes (including the financial information by business unit). We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material inconsistencies with the information in
the interim financial information.
PricewaterhouseCoopers has also reviewed the directors' declaration set out on page 51 in relation to Australian regulatory
requirements.
Directors' responsibilities
The interim report is the responsibility of, and has been approved by, the directors of the Companies. The directors are
responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority and the Corporations Act 2001 in Australia as amended by the Australian Securities
and Investments Commission Order dated 15 May 2015 (the 'ASIC Order' described in the Australian Corporations Act - Summary
of ASIC relief) and for such internal control as the directors determine necessary to enable the preparation of the interim
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
As disclosed in Note 1 Principal Accounting Policies of the 2014 Annual Report, the financial statements of the Group are
prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The
interim financial information included in this interim report has been prepared in accordance with International Accounting
Standard IAS 34, Interim Financial Reporting, as adopted by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Our responsibility
Our responsibility is to express a conclusion on the interim financial information in the interim report based on our
review. PricewaterhouseCoopers LLP have prepared this review report, including the conclusion, for and only for Rio Tinto
plc for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and PricewaterhouseCoopers
have prepared this review report, including the conclusion, for and only for Rio Tinto Limited for the purpose of the
Corporations Act 2001 in Australia as amended by the ASIC Order and for no other purpose. We do not, in producing this
report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) ISRE 2410, Review
of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board
for use in the United Kingdom and the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report
Performed by the Independent Auditor of the Entity. As the auditor of the Group, ISRE 2410 and ASRE 2410 require that we
comply with the ethical requirements relevant to the audit of the annual financial report.
A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on Auditing (UK and Ireland) or Australian Auditing Standards
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 in Australia.
Conclusion of PricewaterhouseCoopers LLP for Rio Tinto plc
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information in
the interim report of the Group for the six months ended 30 June 2015 is not prepared, in all material respects, in
accordance with International Accounting Standard IAS 34 Interim Financial Reporting as adopted by the European Union and
the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Conclusion of PricewaterhouseCoopers for Rio Tinto Limited
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim
report of Rio Tinto Limited is not in accordance with the Corporations Act 2001 in Australia as amended by the ASIC Order,
including:
a) giving a true and fair view of the Group's financial position as at 30 June 2015 and of its performance for the
half-year ended on that date; and
b) complying with International Accounting Standard IAS 34 Interim Financial Reporting as adopted by the European Union
and the Corporations Regulations 2001 in Australia.
PricewaterhouseCoopers LLPChartered AccountantsLondon6 August 2015in respect of Rio Tinto plc Paul Bendall PartnerPricewaterhouseCoopersChartered AccountantsMelbourne6 August 2015in respect of Rio Tinto Limited Liability limited by a schemeapproved under ProfessionalStandards Legislation
Summary financial data in Australian dollars, Sterling and US dollars
30 June2015A$m 30 June 2014A$m 30 June2015£m 30 June 2014£m 30 June2015US$m 30 June 2014US$m
24,569 27,959 12,619 15,324 Gross sales revenue 19,228 25,570
22,975 26,611 11,800 14,585 Consolidated sales revenue 17,980 24,337
2,230 6,661 1,145 3,651 Profit before tax 1,745 6,092
1,021 4,685 524 2,568 Profit for the period 799 4,285
Net earnings attributable to
1,030 4,813 529 2,638 owners of Rio Tinto 806 4,402
3,735 5,594 1,918 3,066 Underlying earnings (a) 2,923 5,116
55.9c 260.3c 28.7p 142.7p Basic earnings per ordinary share (b) 43.8c 238.2c
203.3c 302.7c 104.4p 165.9p Basic Underlying earnings per ordinary share (a), (b) 159.1c 276.8c
Dividends per share to owners of Rio Tinto (c)
152.1c 120.14c 78.1p 65.82p - paid 119.00c 108.50c
144.91c 103.09c 68.92p 56.90p - proposed 107.5c 96.00c
2,577 2,996 1,324 1,642 Cash flow before financing activities 2,017 2,740
30 June 31 December 30 June 31 December 30 June 31 December
2015 2014 2015 2014 2015 2014
A$m A$m £m £m US$m US$m
(17,804) (15,243) (8,693) (8,026) Net debt (13,683) (12,495)
55,492 56,463 27,094 29,729 Equity attributable to owners 42,647 46,285
of Rio Tinto
(a) Underlying earnings exclude impairment charges and other net charges of US$2,117 million (30 June 2014: charges of
US$714 million).
(b) Basic earnings per ordinary share and basic Underlying earnings per ordinary share do not recognise the dilution
resulting from share options on issue.
(c) The Australian dollar and Sterling amounts are based on the US dollar amounts, retranslated at average or closing rates
as appropriate, except for the dividends which are the actual amounts paid or payable.
Metal prices and exchange rates
Six months to 30 June2015 Six months to 30 June2014 Increase/(decrease)H1-15 Vs. H1-14 Year to 31December2014
Metal prices - average for the period
Copper - US cents/lb 268c 312c (14)% 310c
Aluminium - US$/tonne US$1,783 US$1,753 2% US$1,867
Gold - US$/troy oz US$1,206 US$1,290 (7)% US$1,266
Average exchange rates in US$
Sterling 1.52 1.67 (9)% 1.65
Australian dollar 0.78 0.91 (14)% 0.90
Canadian dollar 0.81 0.91 (11)% 0.91
Euro 1.12 1.37 (18)% 1.33
South African rand 0.084 0.094 (11)% 0.092
Period end exchange rates in US$
Sterling 1.57 1.70 (8)% 1.56
Australian dollar 0.77 0.94 (18)% 0.82
Canadian dollar 0.81 0.94 (14)% 0.86
Euro 1.12 1.36 (18)% 1.22
South African rand 0.081 0.094 (14)% 0.086
Availability of this report
This report is available on the Rio Tinto website (www.riotinto.com).
Reconciliation of Net earnings to Underlying earnings
Pre-taxHY2015US$m TaxHY2015US$m Non-controllinginterestsHY2015US$m NetamountHY2015US$m Net amount HY2014US$m
Exclusions from Underlying earnings
Impairment charges (a) (439) (103) 121 (421) (843)
Net gains/(losses) on disposal of interests in businesses (b) 23 - (12) 11 (157)
Exchange and derivative (losses)/gains:
- Net exchange (losses)/gains on US dollar net debt and intragroup balances (1,412) 105 (12) (1,319) 480
- Net (losses)/gains on currency and interest rate derivatives not qualifying for hedge accounting (c) (23) 1 (2) (24) 26
- Gains on commodity derivatives not qualifying for hedge accounting (d) 63 (26) - 37 83
Increased closure provision for legacy operations (280) 38 - (242) -
Restructuring costs and global headcount reductions (183) 47 1 (135) (93)
Simandou IFRS 2 charge (e) - - - - (116)
Other exclusions (f) (31) 7 - (24) (94)
Total excluded from Underlying earnings (2,282) 69 96 (2,117) (714)
Net earnings 1,745 (946) 7 806 4,402
Underlying earnings 4,027 (1,015) (89) 2,923 5,116
Underlying earnings is reported by Rio Tinto to provide greater understanding of the underlying business performance of its
operations. Underlying earnings and Net earnings both represent amounts attributable to owners of Rio Tinto. Exclusions
from Underlying earnings relating to equity accounted units ('EAUs') are stated after tax and included in the column
'Pre-tax'. Items (a) to (f) below are excluded from Net earnings in arriving at Underlying earnings.
(a) Charges relating to impairment of non-current assets other than undeveloped projects.
Impairment charges of US$421 million net of tax related to the Group's aluminium and uranium businesses. As a result of the
Rio Tinto Board approval not to progress the Ranger 3 Deeps work to a feasibility study, the value of the Group's
subsidiary Energy Resources of Australia assets diminished. This resulted in a pre-tax write down to property, plant and
equipment and intangible assets of US$260 million and the write off of deferred tax assets of US$123 million. Other
impairment charges during 2015 related to challenging economic conditions at Carbone Savoie and an anticipated disposal in
the Aluminium portfolio.
In 2014, the post-tax impairment charge of US$843 million represents adjustments to reduce the carrying value of assets in
the Aluminium portfolio. This includes the impairment of Kitimat in British Columbia as a result of further revisions to
future capital required to complete the modernisation project.
(b) The 2015 gain related mainly to the sale by Turquoise Hill Resources (TRQ) of 25.7 per cent of its holdings in
SouthGobi Resources (SGR) on 23 April 2015. Rio Tinto also sold its 77.8 per cent interest in Murowa Diamonds and 50 per
cent interest in Sengwa Colliery Ltd (Sengwa) to RZ Murowa Holdings Limited on 17 June 2015.
In 2014 net post-tax losses on disposal of interests in businesses of US$157 million relate mainly to indemnities provided
in respect of prior disposals, and further adjustments in respect of contractual obligations for product sales and delivery
which remain with the Group following sale of the Clermont mine on 29 May 2014.
(c) 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.
Reconciliation of Net earnings to Underlying earnings (continued)
(d) 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.
(e) 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.
(f) Other credits and charges that individually or in aggregate, if of a similar type, are of a nature or size to require
exclusion in order to provide additional insight into business performance.
This information is provided by RNS
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