REG - Rio Tinto - Rio Tinto 2017 half year results <Origin Href="QuoteRef">RIO.L</Origin> - Part 3
02/08/2017 07:30
- Part 3: For the preceding part double click ID:nRSB8514Mb
3000Australia T +61 3 9283 3333Registered in AustraliaABN 96 004 458 404
Registered in England No. 719885
Investor Relations, Australia/Asia
Natalie WorleyT +61 3 9283 3063M +61 409 210 462 Rachel StorrsT +61 3 9283 3628M +61 417 401 018
Rio Tinto plc
6 St James's SquareLondon SW1Y 4ADUnited Kingdom T +44 20 7781 2000
Registered in England No. 719885
Rio Tinto Limited
120 Collins StreetMelbourne 3000Australia T +61 3 9283 3333Registered in AustraliaABN 96 004 458 404
Group income statement
Six monthsto 30 June2017US$m Six monthsto 30 June2016US$m
Continuing operations
Consolidated sales revenue 19,319 15,500
Net operating costs (excluding items shown separately) (12,652) (13,478)
Impairment charges(a) (357) (9)
Net (losses)/gains on disposal of interests in businesses (13) 331
Exploration and evaluation costs (175) (267)
Profit relating to interests in undeveloped projects 1 7
Operating profit 6,123 2,084
Share of profit after tax of equity accounted units 40 179
Profit before finance items and taxation 6,163 2,263
Finance items
Net exchange (losses)/gains on external debt and intragroup balances (455) 531
Net (losses)/gains on derivatives not qualifying for hedge accounting (7) 7
Finance income 68 36
Finance costs(b),(c) (595) (576)
Amortisation of discount (218) (163)
(1,207) (165)
Profit before taxation 4,956 2,098
Taxation (1,669) (357)
Profit for the period 3,287 1,741
- attributable to owners of Rio Tinto 3,305 1,713
- attributable to non-controlling interests ((loss)/profit) (18) 28
Basic earnings per share(d) 184.0c 95.3c
Diluted earnings per share(d) 182.7c 94.9c
(a) In light of the current market conditions for uranium, no substantive expenditure is now budgeted or planned to
evaluate the Roughrider deposit in Canada. These circumstances have been identified as an impairment trigger under IFRS 6.
The recoverable amount for the evaluation and exploration assets has been determined to be US$nil due to the significant
uncertainty over whether commercially viable quantities of mineral resources could be identified at a future date.
Accordingly an impairment charge of US$357 million has been recorded to fully write-off the mineral interests recognised on
acquisition.
(b) Finance costs in the income statement include hedging adjustments and are net of amounts capitalised of US$93 million
(30 June 2016: US$35 million).
Group income statement (continued)
(c) Rio Tinto completed a bond buy-back programme in June 2017 for US$2.5 billion (nominal value).The early redemption of
these bonds accelerated the recognition of future interest payments associated with them. Included in finance costs in the
six months ended 30 June 2017 is a net charge of US$256 million attributable to early redemption of these bonds.
Rio Tinto completed two bond buy-back programmes during April 2016 and June 2016 for $1.5 billion and $3 billion (nominal
values) respectively. The early redemption of these bonds accelerated the recognition of future interest payments
associated with them. Included in finance costs in the six months ended 30 June 2016 was a net charge of US$175 million
attributable to early redemption of bonds.
(d) For the purpose of calculating basic earnings per share, the weighted average number of Rio Tinto plc and Rio Tinto
Limited shares outstanding during the period was 1,796.3 million (30 June 2016: 1,797.1 million), being the average number
of Rio Tinto plc shares outstanding of 1,372.6 million (30 June 2016: 1,373.5 million), plus the average number of Rio
Tinto Limited shares outstanding of 423.7 million (30 June 2016: 423.6 million). The profit figures used in the calculation
of basic and diluted earnings per share are the profits attributable to owners of Rio Tinto.
For the purpose of calculating diluted earnings per share, the effect of dilutive securities is added to the weighted
average number of shares. This effect is calculated under the treasury stock method.
Group statement of comprehensive income
Six monthsto 30 June2017US$m Six monthsto 30 June2016US$m
Profit after tax for the period 3,287 1,741
Other comprehensive (loss)/income:
Items that will not be reclassified to profit or loss:
Actuarial losses on post-retirement benefit plans (99) (885)
Tax relating to these components of other comprehensive income 33 232
(66) (653)
Items that have been/may be reclassified subsequently to profit or loss:
Currency translation adjustment(a) 2,120 762
Currency translation on companies disposed of, transferred to the income statement - 48
Fair value movements:
- Cash flow hedge gains/(losses) 17 (78)
- Cash flow hedge (gains)/losses transferred to the income statement (39) 58
- Gains on revaluation of available for sale securities 9 2
- Losses on revaluation of available for sale securities transferred to the income statement 8 2
Share of other comprehensive income of equity accounted units net of tax 24 22
Tax relating to these components of other comprehensive income - 3
Other comprehensive income for the period, net of tax 2,073 166
Total comprehensive income for the period 5,360 1,907
- attributable to owners of Rio Tinto 5,257 1,801
- attributable to non-controlling interests 103 106
(a) Excludes a currency translation gain of US$243 million (30 June 2016: charge of US$77 million) arising on Rio Tinto
Limited's share capital for the period ended 30 June 2017, which is recognised in the Group statement of changes in equity.
Refer to Group statement of changes in equity on page 40.
Group cash flow statement
Six monthsto 30 June2017US$m Six monthsto 30 June2016US$m
Cash flows from consolidated operations(a) 8,022 4,551
Dividends from equity accounted units 169 22
Cash flows from operations 8,191 4,573
Net interest paid(b) (609) (685)
Dividends paid to holders of non-controlling interests in subsidiaries (132) (103)
Tax paid (1,144) (545)
Net cash generated from operating activities 6,306 3,240
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (1,758) (1,318)
Disposals of subsidiaries, joint ventures and associates(c) 135 556
Purchases of financial assets (16) (12)
Sales of financial assets 35 27
Sales of property, plant and equipment and intangible assets 79 115
Net funding of equity accounted units (2) (5)
Net cash used in investing activities (1,527) (637)
Cash flows before financing activities 4,779 2,603
Cash flows from financing activities
Equity dividends paid to owners of Rio Tinto (2,248) (1,916)
Proceeds from additional borrowings 9 4,366
Repayment of borrowings(b) (2,595) (6,280)
Proceeds from issue of equity to non-controlling interests 143 69
Own shares purchased from owners of Rio Tinto (252) -
Purchase of non-controlling interests(d) (194) -
Other financing cash flows (18) 37
Net cash flows used in financing activities (5,155) (3,724)
Effects of exchange rates on cash and cash equivalents (27) 1
Net decrease in cash and cash equivalents (403) (1,120)
Opening cash and cash equivalents less overdrafts 8,189 9,354
Closing cash and cash equivalents less overdrafts(e) 7,786 8,234
Group cash flow statement (continued)
Six monthsto 30 June2017US$m Six monthsto 30 June2016US$m
(a) Cash flows from consolidated operations
Profit after tax for the period 3,287 1,741
Adjustments for:
- Taxation 1,669 357
- Finance items 1,207 165
- Share of profit after tax of equity accounted units (40) (179)
- Net losses/(gains) on disposal of interests in businesses 13 (331)
- Impairment charges(f) 357 9
- Depreciation and amortisation 2,117 2,283
- Provisions (including exchange differences on provisions) 168 887
Utilisation of provisions (338) (286)
Utilisation of provision for post-retirement benefits (171) (148)
Change in inventories (331) 119
Change in trade and other receivables 464 478
Change in trade and other payables (456) (637)
Other items 76 93
8,022 4,551
(b) Rio Tinto completed a US$2.5 billion bond buy-back programme in June 2017. Net interest paid includes US$259 million
being the payment of the premiums and the accelerated interest associated with the bond redemption.
During April 2016 and June 2016, Rio Tinto completed two bond buy-back programmes for US$1.5 billion and US$3 billion
(nominal values) respectively. Net interest paid included US$266 million being the payment of the premiums and the
accelerated interest associated with these bond redemptions.
(c) Disposal proceeds in the six months to 30 June 2017 mainly relate to receipt of the second and final instalment of
funds for Rio Tinto's disposal of its 100 percent interest in Lochaber, which was completed in November 2016.
Disposal proceeds in the six months to 30 June 2016 mainly related to Rio Tinto's disposal of its 40 per cent interest in
the Bengalla Joint Venture for US$617 million.
(d) In May 2017, the Group's subsidiary Simfer Jersey Limited (Rio Tinto 53%) purchased a 4.25% interest in Simfer SA from
International Finance Corporation for US$194 million.
Group cash flow statement (continued)
(e) Closing cash and cash equivalents less overdrafts for the purposes of the cash flow statement differs from cash and
cash equivalents on the Group balance sheet as per the following reconciliation:
30 June2017US$m 31 December2016US$m 30 June 2016US$m
Cash and cash equivalents per Group balance sheet 7,746 8,201 8,250
Bank overdrafts (reported within 'borrowings and other financial liabilities') (30) (12) (16)
Cash and cash equivalents included in assets of disposal groups held for sale 70 - -
Cash and cash equivalents less overdrafts per Group cash flow statement 7,786 8,189 8,234
(f) This includes impairment charges net of reversals of cash generating units consistent with the disclosure in the
Group income statement.
Group balance sheet
30 June2017US$m 31 December2016US$m
Non-current assets
Goodwill 1,000 951
Intangible assets 2,987 3,279
Property, plant and equipment 60,324 58,855
Investments in equity accounted units 4,714 5,019
Inventories 162 143
Deferred tax assets 3,759 3,728
Trade and other receivables 1,562 1,342
Tax recoverable 18 38
Other financial assets (including loans to equity accounted units) 776 822
75,302 74,177
Current assets
Inventories 3,331 2,937
Trade and other receivables 2,901 3,460
Tax recoverable 74 98
Other financial assets (including loans to equity accounted units) 353 359
Cash and cash equivalents 7,746 8,201
14,405 15,055
Assets of disposal groups held for sale(a) 1,144 31
Total assets 90,851 89,263
Current liabilities
Borrowings and other financial liabilities (742) (922)
Trade and other payables (5,964) (6,361)
Tax payable (1,267) (764)
Provisions including post-retirement benefits (1,133) (1,315)
(9,106) (9,362)
Non-current liabilities
Borrowings and other financial liabilities (15,106) (17,470)
Trade and other payables (877) (789)
Tax payable (273) (274)
Deferred tax liabilities (3,165) (3,121)
Provisions including post-retirement benefits (12,634) (12,479)
(32,055) (34,133)
Liabilities of disposal groups held for sale(a) (865) (38)
Total liabilities (42,026) (43,533)
Net assets 48,825 45,730
Capital and reserves
Share capital(b)
- Rio Tinto plc 223 224
- Rio Tinto Limited 4,158 3,915
Share premium account 4,305 4,304
Other reserves 11,240 9,216
Retained earnings 22,365 21,631
Equity attributable to owners of Rio Tinto 42,291 39,290
Attributable to non-controlling interests 6,534 6,440
Total equity 48,825 45,730
Group balance sheet (continued)
(a) Assets and liabilities held for sale at 30 June 2017 comprise Rio Tinto's interests in Coal & Allied and certain
contractual obligations, and certain separate assets at Rio Tinto Kennecott.
(b) At 30 June 2017, Rio Tinto plc had 1,368.7 million ordinary shares in issue and held by the public, and Rio Tinto
Limited had 424.2 million shares in issue and held by the public. No shares in Rio Tinto Limited were held by Rio Tinto plc
at 30 June 2017 (31 December 2016: nil). As required to be disclosed under the ASX Listing Rules, the net tangible assets
per share amounted to US$21.36 (31 December 2016: US$19.49).
Group statement of changes in equity
Period ended
30 June 2017
Attributable to owners of Rio Tinto
Share capital Share Other Retained Total Non-controlling Total
US$m premiumaccount reserves earnings US$m interests equity
US$m US$m US$m US$m US$m
Opening balance 4,139 4,304 9,216 21,631 39,290 6,440 45,730
Total comprehensive income for the period(a) - - 2,014 3,243 5,257 103 5,360
Currency translation arising on
Rio Tinto Limited's share capital 243 - - - 243 - 243
Dividends - - - (2,248) (2,248) (132) (2,380)
Share buy-back(b) (1) - 1 (300) (300) - (300)
Own shares purchased from Rio Tinto shareholders to satisfy share options(c) - - (17) (9) (26) - (26)
Treasury shares reissued and other movements - 1 - - 1 - 1
Change in equity interest held by Rio Tinto - - - 20 20 (20) -
Equity issued to holders of non-
controlling interests - - - - - 143 143
Employee share options and other IFRS 2 charges taken to the income statement - - 26 28 54 - 54
Closing balance 4,381 4,305 11,240 22,365 42,291 6,534 48,825
Six monthsto 30 June2017US$ Six monthsto 30 June2016US$
Dividends per share: paid during the period 125.0c 107.5c
Dividends per share: proposed in the announcement of the results for the period 110.0c 45.0c
(a) Refer to Group statement of comprehensive income for further details.
(b) Total amount of US$300 million includes own shares purchased from owners of Rio Tinto plc as per the cash flow
statement and a financial liability recognised in respect of an irrevocable contract to cover the share buy-back
programme.
(c) Net of contributions received from employees for share options.
Group statement of changes in equity (continued)
Period ended
30 June 2016
Attributable to owners of Rio Tinto
Share capital Share Other Retained Total Non-controlling Total
US$m premium reserves earnings US$m interests equity
US$m US$m US$m US$m US$m
Opening balance 4,174 4,300 9,139 19,736 37,349 6,779 44,128
Total comprehensive income for the period(a) - - 728 1,073 1,801 106 1,907
Currency translation arising on
Rio Tinto Limited's share capital 77 - - - 77 - 77
Dividends - - - (1,916) (1,916) (96) (2,012)
Own shares purchased from Rio Tinto shareholders to satisfy share options(b) - - (6) (5) (11) - (11)
Treasury shares reissued and other movements - 4 - - 4 - 4
Change in equity interest held by Rio Tinto(c) - - 107 18 125 (291) (166)
Equity issued to holders of non-
controlling interests - - - - - 69 69
Employee share options and other IFRS 2 charges taken to the income statement - - 30 34 64 - 64
Closing balance 4,251 4,304 9,998 18,940 37,493 6,567 44,060
(a) Refer to Group statement of comprehensive income for further details.
(b) Net of contributions received from employees for share options.
(c) The restructure of Coal & Allied Industries Limited completed on 3 February 2016. The restructure involved the
exchange of a 32.4 per cent interest in Hunter Valley Operations mine for an additional 20 per cent shareholding in Coal &
Allied Industries Limited, increasing Rio Tinto's shareholding of Coal & Allied Industries Limited from 80 per cent to 100
per cent.
Reconciliation with Australian Accounting Standards
The Group's financial statements have been prepared in accordance with IFRS as defined on page 52, which differs in certain
respects from the version of IFRS 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$559 million at 30 June 2017 (31 December 2016:
US$561 million).
Save for the exception described above, the Group's financial statements drawn up in accordance with IFRS are consistent
with the requirements of AAS.
Consolidated net debt
30 June2017US$m 31 December2016US$m
Analysis of changes in consolidated net debt
Opening balance (9,587) (13,783)
Adjustment on currency translation (440) (103)
Exchange gains credited to the income statement 426 193
Cash movements excluding exchange movements 2,170 3,915
Other movements (140) 191
Closing balance (7,571) (9,587)
Total borrowings(a) (15,355) (17,630)
Derivatives related to net debt (included in "Other financial assets/liabilities") (211) (408)
Adjusted total borrowings (15,566) (18,038)
Cash and cash equivalents 7,746 8,201
Other investments(b) 249 250
Consolidated net debt (7,571) (9,587)
(a) Total borrowings are combined with balance sheet items of other current financial liabilities of US$66 million (31
December 2016: US$205 million) and non-current financial liabilities of US$427 million (31 December 2016: US$557 million)
in the balance sheet.
(b) Other investments include US$249 million of highly liquid financial assets held in managed investment funds classified
as held for trading.
Geographical analysis (by destination)
Adjusted Adjusted
Consolidated sales revenue by destination(a) Six monthsto 30 June2017 % Six monthsto 30 June(b))2016% Six monthsto 30 June2017US$m Six monthsto 30 June(b)2016US$m
China 43.1 42.4 8,327 6,570
United States of America 14.6 14.2 2,822 2,207
Asia (excluding China and Japan) 14.0 15.6 2,704 2,413
Japan 11.3 10.2 2,186 1,578
Europe (excluding UK) 7.9 8.1 1,526 1,257
Canada 2.7 3.4 524 528
Australia 2.4 2.1 455 322
UK 0.7 1.0 142 155
Other 3.3 3.0 633 470
Consolidated sales revenue 100.0 100.0 19,319 15,500
The financial information by business unit and the geographic analysis of sales by destination 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.
(a) Consolidated sales revenue by geographical destination is based on the ultimate country of destination of the product,
if known. If the eventual destination of the product sold through traders is not known then revenue is allocated to the
location of the product at the time when the risks and rewards of ownership are transferred. Rio Tinto is domiciled in both
the UK and Australia.
(b) The 2016 figures have been amended to correct the allocation of revenues by region. The impact is to decrease the
amount allocated to Canada by US$165 million and to increase other regions in aggregate by the same amount.
Prima facie tax reconciliation
Six monthsto 30 June 2017US$m Six monthsto 30 June2016US$m
Profit before taxation 4,956 2,098
Deduct: share of profit after tax of equity accounted units (40) (179)
Parent companies' and subsidiaries' profit before tax 4,916 1,919
Prima facie tax payable at UK rate of 19 per cent (2016: 20 per cent) 934 384
Higher rate of tax on Australian underlying earnings at 30 per cent 501 189
Impact of items excluded from underlying earnings(a)
- Impairment charges (32) -
- Gains and losses on disposal of businesses (6) 72
- Foreign exchange on excluded finance items 41 (92)
- Onerous port and rail contracts - (71)
- Other exclusions 16 (29)
Impact of changes in tax rates and laws 17 12
Other tax rates applicable outside the UK and Australia on underlying earnings (19) (146)
Resource depletion and other depreciation allowances (19) (9)
Research, development and other investment allowances (4) (7)
Recognition of previously unrecognised deferred tax assets - (3)
Write-down of previously recognised deferred tax assets(b) 203 -
Unrecognised current period operating losses 9 31
Other items(c) 28 26
Total taxation charge(d) 1,669 357
(a) The impact for each item includes the effect of tax rates applicable outside the UK.
(b) The write-down of previously recognised deferred tax assets primarily relates to a reduction in recognised deferred
tax assets on brought forward losses in Grasberg.
(c) Other items include various adjustments to provisions for taxation of prior periods.
(d) This tax reconciliation relates to the Group's parent companies, subsidiaries and joint operations, and excludes
equity accounted units. The Group's share of profit of equity accounted units is net of tax charges of US$20 million (30
June 2016: US$111 million).
Fair value disclosure for financial instruments
Except where stated, the information given below relates to the financial instruments of the parent companies and their
subsidiaries and joint operations, and excludes those of equity accounted units.
Fair values of financial instruments
The carrying amounts and fair values of all of the Group's financial instruments which are not carried at an amount which
approximates their fair value at 30 June 2017 and 31 December 2016 are shown in the following table. The fair values of the
Group's cash and loans to equity accounted units approximate their carrying values as a result of their short maturity or
because they carry floating rates of interest.
30 June 2017 31 December 2016
CarryingvalueUS$m FairvalueUS$m CarryingvalueUS$m FairvalueUS$m
Short term borrowings (676) (677) (717) (706)
Medium and long term borrowings (14,679) (16,217) (16,913) (18,437)
Valuation hierarchy of financial instruments carried at fair value on a recurring basis
The table below shows the financial instruments carried at fair value by valuation method at 30 June 2017:
Total Level 1 (a) (h) Level 2 (b) (h) Level 3 (c) (h) Not held at fair value
US$m US$m US$m US$m US$m
Assets
Equity shares and quoted funds 148 82 - 3 63
Other investments, including loans(d) 466 376 - 70 20
Trade receivables(e) 1,909 - 29 - 1,880
2,523 458 29 73 1,963
Derivatives
Forward contracts and option contracts, not designated as hedges(f) 281 - (1) 282 -
Derivatives related to net debt(g) (211) - (211) - -
2,593 458 (183) 355 1,963
Fair value disclosure for financial instruments (continued)
The table below shows the financial instruments carried at fair value by valuation method at 31 December 2016:
Total Level 1 (a) (h) Level 2 (b) (h) Level 3 (c) (h) Not held at fair value
US$m US$m US$m US$m US$m
Assets
Equity shares and quoted funds 156 94 - 3 59
Other investments, including loans(d) 454 363 - 68 23
Trade receivables(e) 2,283 - 143 - 2,140
2,893 457 143 71 2,222
Derivatives
Forward contracts: designated as hedges(f) 1 - 1 - -
Forward contracts and option contracts, not designated as hedges(f) 416 - 8 408 -
Derivatives related to net debt(g) (408) - (408) - -
2,902 457 (256) 479 2,222
(a) Valuation is based on unadjusted quoted prices in active markets for identical financial instruments. This category
includes listed equity shares and other quoted funds.
(b) Valuation is based on inputs that are observable for the financial instruments; these include quoted prices for
similar instruments or identical instruments in markets which are not considered to be active, or inputs, either directly
or indirectly based on observable market data.
(c) Valuation is based on inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
(d) Other investments, including loans, comprise: cash deposits in rehabilitation funds, government bonds, managed
investment funds and royalty amounts receivable. The royalty receivables are valued based on an estimate of forward sales
subject to the royalty agreement.
(e) Trade receivables includes provisionally priced receivables relating to sales contracts where selling price is
determined after delivery to the customer, based on the market price at the relevant quotation point stipulated in the
contract. Revenue is recognised on provisionally priced sales based on the forward selling price for the period stipulated
in the contract. At the end of June 2017, US$29 million (31 December 2016: US$143 million) of embedded derivatives within
provisionally priced receivables were recognised.
(f) Level 3 derivatives consist of derivatives embedded in electricity purchase contracts linked to the LME with terms
expiring between 2017 and 2030 (31 December 2016: 2017 and 2030). The embedded derivatives are measured using discounted
cash flows and option model valuation techniques. Long-term embedded derivatives with a fair value of US$282 million at 30
June 2017 (31 December 2016: US$408 million) are valued using significant unobservable inputs as the term of the derivative
extends beyond the forward curve for aluminium.
Fair value disclosure for financial instruments (continued)
Aluminium prices are flat lined beyond the market forward curve and increased by projected inflation up to the date of
expiry of the contract. The range of market prices are US$2,316 per metric tonne in 2027 to US$2,471 in 2030. (31 December
2016: US$2,136 per metric tonne in 2027 to US$2,300 in 2030).
(g) Interest rate and currency interest rate swaps are valued using applicable market quoted swap yield curves adjusted
for relevant basis and credit default spreads. Currency interest rate swap valuations also use market quoted foreign
exchange rates. A discounted cash flow approach is applied to the cash flows derived from the inputs to determine fair
value.
(h) There were no transfers between Level 1 and Level 2 or between Level 2 and Level 3 for the six months to 30 June 2017
or the year to 31 December 2016.
Level 3 Financial instruments
The table below shows the summary of changes in the fair value of the Group's Level 3 financial assets and financial
liabilities for the six months to 30 June 2017 and the year ended 31 December 2016.
Level 3 Financial assets and liabilities 30 June 31 December
2017 2016
Opening balance 479 456
Currency translation adjustments 15 (2)
Total realised gains/(losses) included in:
- Consolidated sales revenue - 1
- Net operating costs 4 (28)
Total unrealised (losses)/gains included in:
- Net operating costs (143) 11
Additions - 43
Impairment - (2)
Closing balance 355 479
Total (losses)/gains for the period included in the income statement for assets and liabilities held at period end (143) 11
Sensitivity analysis in respect of level 3 derivatives
Forward contracts and options whose fair value is determined using unobservable inputs are calculated using appropriate
discounted cash flow and option model valuation techniques.
The most significant of these assumptions relates to long term pricing where internal pricing assumptions are used after
the 10 year LME curve. A 10 per cent increase in long term metal pricing assumptions would result in a US$29 million (31
December 2016: US$38 million) decrease in carrying value. A 10 per cent decrease in long term metal pricing assumptions
would result in a US$58 million (31 December 2016: US$64 million) increase in carrying value.
Acquisitions and disposals
30 June 2017
Acquisitions
There were no material acquisitions during the six months ended 30 June 2017.
Disposals
There were no material disposals during the six months ended 30 June 2017.
On 24 January 2017, Rio Tinto announced it had reached a binding agreement for the sale of its 100 per cent shareholding in
Coal & Allied Industries Limited and certain contractual obligations to Yancoal Australia Limited. A majority of Rio Tinto
independent shareholders approved the transaction at a general meeting of Rio Tinto plc and Rio Tinto Limited on 27 June
and 29 June 2017 respectively. Subject to all remaining conditions precedent being satisfied it is expected that the
transaction will complete in the third quarter of 2017.
30 June 2016
Acquisitions
There were no material acquisitions during the six months ended 30 June 2016.
Disposals
On 1 March 2016, Rio Tinto disposed of its 40 per cent interest in the Bengalla Joint Venture to New Hope Corporation
Limited for US$617 million.
On 31 March 2016, Rio Tinto disposed of its 100 per cent interest in Carbone Savoie to Alandia Industries.
On 30 June 2016, Rio Tinto transferred its 53.83 per cent shareholding in Bougainville Copper Limited (BCL) to Equity
Trustees Limited (independent trustee) for US$nil consideration. BCL was not a subsidiary of Rio Tinto as the Group did not
control the relevant activities of BCL. Mining at BCL had been suspended since 1989. There was no impact on the financial
statements as a result of the transfer of shareholding.
Other disclosures
Capital commitments at 30 June 2017
Capital commitments, excluding the Group's share of joint venture capital commitments, were US$2,528 million (31 December
2016: US$2,230 million). Capital commitments include open purchase orders for managed operations and expenditure on major
projects authorised to date by the Rio Tinto Investment Committee for non-managed operations. On a legally enforceable
basis, capital commitments would be approximately US$2.1 billion less as many of the contracts relating to the Group's
projects have various cancellation clauses.
The Group's share of joint venture capital commitments was US$57 million (31 December 2016: US$113 million).
Other disclosures (continued)
Contingent liabilities (subsidiaries and joint operations)
Contingent liabilities, indemnities and other performance guarantees were US$447 million at 30 June 2017 (31 December 2016:
US$473 million).
Indemnities and other performance guarantees represent the potential outflow of funds from the Group for the satisfaction
of obligations including those under contractual arrangements (for example undertakings related to supplier agreements) not
provided for in the balance sheet, where the likelihood of the guarantees or indemnities being called is assessed as
possible rather than probable or remote. There were no material contingent liabilities arising in relation to the Group's
joint ventures and associates.
On 9 November 2016, Rio Tinto announced that, following an
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AnnouncementREG - Rio Tinto - Director/PDMR Shareholding
AnnouncementREG - Rio Tinto - Total Voting Rights
Announcement