REG - South32 Limited - Final Results <Origin Href="QuoteRef">S32.AX</Origin> - Part 3
25/08/2016 07:08
- Part 3: For the preceding part double click ID:nRSY0873Ib
Cash and cash equivalents, net of overdrafts, at the beginning of the financial year 644 145
Foreign currency exchange rate changes on cash and cash equivalents (8) (9)
Change in cash and cash equivalents on commencement of equity accounting - (23)
Cash and cash equivalents, net of overdrafts, at the end of the financial year 1,225 644
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2016
Attributable to ordinary equity holders of South32 Limited
US$M Share capital Treasury shares Reserves Retained earnings/ (accumulated losses) Total Non- controlling interests Total equity
Balance as at 1 July 2015 14,958 - (3,557) (365) 11,036 (1) 11,035
Profit/(loss) for the year - - - (1,615) (1,615) - (1,615)
Other comprehensive income/(loss) - - (22) 3 (19) - (19)
Total comprehensive income/(loss) - - (22) (1,612) (1,634) - (1,634)
Transactions with owners:
Accrued employee entitlement for unexercised awards - - 24 - 24 - 24
Purchase of shares by ESOP trusts - (3) - - (3) - (3)
Balance as at 30 June 2016 14,958 (3) (3,555) (1,977) 9,423 (1) 9,422
Balance as at 1 July 2014 561 - - 552 1,113 - 1,113
Profit/(loss) for the year - - - (919) (919) - (919)
Other comprehensive income/(loss) - - 32 2 34 - 34
Total comprehensive income/(loss) - - 32 (917) (885) - (885)
Transactions with owners:
Proceeds from issue of shares 14,397 - - - 14,397 - 14,397
Accrued employee entitlement for unexercised awards - - 1 - 1 - 1
Acquisition and divestment of subsidiaries and operations - - (3,569) - (3,569) 453 (3,116)
Disposal on change from control to joint control of South Africa Manganese and Samancor AG - - - - - (454) (454)
Other movements - - (21) - (21) - (21)
Balance as at 30 June 2015 14,958 - (3,557) (365) 11,036 (1) 11,035
SEGMENT INFORMATION
(a) Description of segments
The operating segments (also referred to as "operations"), are organised and managed separately according to the nature of
products produced. The members of the executive management team (the "chief operating decision maker") and the Board of
Directors monitor the segment results regularly for the purpose of making decisions about resource allocation and
performance assessment. The segment information for the manganese operations are presented on a proportional consolidation
basis, which is the measure used by South32's management to assess their performance.
The principal activities of each operating segment as the South32 Group is currently structured are summarised as follows:
Operating segment Principal activities
Worsley Alumina Integrated bauxite mine and alumina refinery in Western Australia
South Africa Aluminium Aluminium smelter in Richards Bay
Brazil Alumina Alumina refinery in Brazil
Mozal Aluminium Aluminium smelter in Mozambique
South Africa Energy Coal Open-cut and underground energy coal mines and processing operations in South Africa
Illawarra Metallurgical Coal Underground metallurgical coal mines in New South Wales
Australia Manganese Integrated producer of manganese ore in the Northern Territory and manganese alloys in Tasmania
South Africa Manganese Integrated producer of manganese ore and alloy in South Africa
Cerro Matoso Integrated laterite ferronickel mining and smelting complex in Colombia
Cannington Silver, lead and zinc mine in Queensland
All operations are operated or jointly operated by South32 except Alumar (which forms part of Brazil Alumina), which is
operated by Alcoa.
(b) Segment results
Segment performance is measured on Underlying EBIT and Underlying EBITDA. Underlying EBIT is profit before net finance
cost, taxation and other earnings adjustment items including impairments. Underlying EBITDA is Underlying EBIT, before
depreciation and amortisation. A reconciliation of Underlying EBIT, Underlying EBITDA and the South32 Group's consolidated
profit after taxation from continuing operations is set out below. Segment revenue is measured on the same basis as in the
consolidated income statement.
Revenue is not reduced for royalties and other taxes payable from group production.
The South32 Group separately discloses sales of group production from sales of third party products because of the
significant difference in profit margin earned on these sales.
It is the South32 Group's policy that inter-segment transactions are made on a commercial basis.
Group and unallocated items/eliminations represent group centre functions and consolidation adjustments. Group financing
(including finance expense and finance income) and income taxes are managed on a South32 Group basis and are not allocated
to operating segments.
Total assets and liabilities for each operating segment represent operating assets and liabilities which predominately
exclude the carrying amount of equity accounted investments, cash, interest bearing liabilities and tax balances. The
carrying amount of investments accounted for using the equity method represents the balance of the South32 Group's
investment in equity accounted investments, with no adjustment for cash, interest bearing liabilities and tax balances of
the equity accounted investment.
FY16 sEGMENT information
FY16 Worsley Alumina South Africa Aluminium Mozal Aluminium Brazil South Africa Energy Coal Illawarra Metallurgical Coal Australia Manganese(a) South Africa Manganese(a) Cerro Matoso Cannington Group and unallocated items/ elimination Statutory adjustment(a) Group
Alumina
US$M
Revenue
Group production 542 1,161 431 323 1,009 642 476 230 333 786 - (706) 5,227
Third party products(b) - - - - - - - - - - 587 (2) 585
Inter-segment revenue 469 - - 23 - - - 4 - - (492) (4) -
Total revenue 1,011 1,161 431 346 1,009 642 476 234 333 786 95 (712) 5,812
Underlying EBITDA 199 147 35 140 182 132 154 (11) 2 330 (13) (166) 1,131
Depreciation and amortisation (157) (65) (35) (62) (87) (193) (89) (36) (90) (56) (30) 125 (775)
Underlying EBIT 42 82 - 78 95 (61) 65 (47) (88) 274 (43) (41) 356
Comprising:
Group production 42 82 - 78 94 (60) 65 (47) (88) 274 (49) (18) 373
Third party products(b) - - - - - - - - - - 6 - 6
Share of profit/(loss) of equity accounted investments(c) - - - - 1 (1) - - - - - (23) (23)
Underlying EBIT from continuing operations 42 82 - 78 95 (61) 65 (47) (88) 274 (43) (41) 356
Net finance cost (125)
Income tax (expense)/benefit (93)
Underlying earnings 138
Earnings adjustments(d) (1,753)
Profit/(loss) after taxation from continuing operations (1,615)
Capital expenditure(e) 44 19 7 12 63 185 68 11 18 27 8 (79) 383
Equity accounted investments - - - - 13 - - - - - - 557 570
Total assets(f) 3,647 1,334 656 874 728 1,745 577 517 889 401 2,654 (648) 13,374
Total liabilities(f) 439 275 91 167 827 229 236 175 206 159 1,796 (648) 3,952
(a) The segment information reflects South32's interest in the manganese operations and is presented on a proportional
consolidation basis, which is the measure used by South32's management to assess their performance. The manganese
operations are equity accounted in the consolidated financial statements. The statutory adjustment column reconciles the
proportional consolidation to equity accounting position.
(b) Third party product sold comprises US$264 million for aluminium, US$59 million for alumina, US$72 million for coal,
US$90 million for freight services and US$100 million for aluminium raw materials. Underlying EBIT on third party products
comprise US$3 million for aluminium, (US$3) million for alumina, US$5 million for coal, US$1 million for freight services
and US$ nil for aluminium raw materials.
(c) Share of profit/(loss) of equity accounted investments includes the impacts of earnings adjustments to Underlying
EBIT.
(d) Refer to Earnings adjustments.
(e) Capital expenditure excludes the purchase of intangibles and capitalised exploration expenditure.
(f) Total assets and liabilities for each operating segment represent operating assets and liabilities which
predominately exclude the carrying amount of equity accounted investments, cash, interest bearing liabilities and tax
balances.
FY15 segment information
FY15 Worsley Alumina South Africa Aluminium Mozal Aluminium Brazil Alumina South Africa Energy Coal Illawarra Metallurgical Coal Australia Manganese(c) South Africa Manganese(c) Cerro Matoso Cannington New Mexico Coal(b) (discontinued) Group and unallocated items/ elimination Statutory adjustment(c) Group
US$M
Revenue
Group production 292 610 250 459 523 803 204 140 197 346 133 - (344) 3,613
Third party products(d) - - - - - - - - - - - 363 - 363
Inter-segment revenue 239 - - - - - - - - - - (239) - -
Total revenue 531 610 250 459 523 803 204 140 197 346 133 124 (344) 3,976
Underlying EBITDA 67 91 21 240 165 156 60 (11) 17 137 22 (37) (86) 842
Depreciation and amortisation (26) (27) (10) (72) (76) (197) (27) (33) (40) (22) (12) (5) 60 (487)
Underlying EBIT 41 64 11 168 89 (41) 33 (44) (23) 115 10 (42) (26) 355
Comprising:
Group production 41 64 11 168 89 (41) 33 (44) (23) 115 10 (49) 5 379
Third party products(d) - - - - - - - - - - - 7 - 7
Share of profit/(loss) of equity accounted investments(e) - - - - - - - - - - - - (31) (31)
Underlying EBIT 41 64 11 168 89 (41) 33 (44) (23) 115 10 (42) (26) 355
Underlying EBIT from discontinued operations (10)
Underlying EBIT from continuing operations 345
Net finance cost (74)
Income tax (expense)/benefit (192)
Underlying earnings from continuing operations 79
Earnings adjustments(f) (1,005)
Profit/(loss) after taxation from continuing operations (926)
Capital expenditure(g) 15 23 6 7 29 308 22 17 13 23 9 30 (39) 463
Equity accounted investments - - - - 12 - - - - - - - 1,695 1,707
Total assets(h) 3,720 1,475 730 1,039 1,414 1,782 1,649 748 997 453 - 2,271 (789) 15,489
Total liabilities(h) 359 324 104 111 1,019 264 265 218 234 173 - 2,202 (819) 4,454
(a) Refer to page 47 for the FY15 Pro Forma Segment Information.
(b) The New Mexico Coal segment was transferred from the South32 Group to the BHP Billiton Group as part of the demerger
process.
(c) The segment information reflects South32's interest in the manganese operations and is presented on a proportional
consolidation basis, which is the measure used by South32's management to assess their performance. The manganese
operations are equity accounted in the consolidated financial statements. The statutory adjustment column reconciles the
proportional consolidation to equity accounting position.
(d) Third party product sold comprises US$141 million for aluminium, US$89 million for alumina, US$37 million for coal,
US$40 million for freight services and US$56 million for aluminium raw materials. Underlying EBIT on third party products
comprise (US$16) million for aluminium, US$19 million for alumina, US$4 million for coal, US$ nil for freight services and
US$ nil for aluminium raw materials.
(e) Share of profit/(loss) of equity accounted investments includes the impacts of earnings adjustments to Underlying
EBIT.
(f) Refer to Earnings adjustments.
(g) Capital expenditure excludes the purchase of intangibles and capitalised exploration expenditure.
(h) Total assets and liabilities for each operating segment represent operating assets and liabilities which
predominately exclude the carrying amount of equity accounted investments, cash, interest bearing liabilities and tax
balances.
Earnings adjustments
The following table shows earnings adjustments in determining Underlying earnings:
Earnings adjustments
US$M FY16 FY15
Adjustments to Underlying EBIT
Significant items(a) 24 (770)
Exchange rate (gains)/losses on restatement of monetary items(b) (43) (18)
Impairment losses(b) 1,386 1,389
Fair value (gains)/losses on derivative instruments(b) 60 (12)
Major corporate restructures(b) 63 46
Impairment losses included in profit/(loss) of equity accounted investments(c) 291 -
Earnings adjustments included in profit/(loss) of equity accounted investments(c) 16 41
Total adjustments to Underlying EBIT 1,797 676
Adjustments to net finance cost
Significant items(a) 9 -
Exchange rate variations on net debt (30) (7)
Total adjustments to net finance cost (21) (7)
Adjustments to income tax expense
Significant items(a) 31 419
Tax effect of earnings adjustments to Underlying EBIT (187) (179)
Tax effect of earnings adjustments to net finance cost 9 2
Exchange rate variations on tax balances 124 94
Total adjustments to income tax expense (23) 336
Total earnings adjustments 1,753 1,005
(a) Refer to Significant items.
(b) Recognised in "expenses excluding net finance cost" in the consolidated income statement.
(c) Recognised in "share of loss of equity accounted investments" in the consolidated income statement.
Major corporate restructures
In February 2016 the South32 Group announced a number of major restructuring initiatives which included redundancy and
related costs associated with a reduction in the number of employees and contractors across several operations. In the
second half of the financial year additional major restructuring activities occurred within the functional support areas
with further redundancy and related costs incurred.
Earnings adjustments (continued)
Impairments recognised
As a result of significant and continued weakening of commodity markets, the South32 Group recognised the following
impairments and associated tax effect in the year ended 30 June 2016. The forecast weakening of commodity prices has also
impacted the probability of generating longer term taxable income for certain operations and therefore resulted in the
derecognition of specific deferred tax asset balances in the year ended 30 June 2016. An impairment at the Brazil Aluminium
Smelter was as a result of the continued and indefinite suspension of smelting operations. The following table shows the
categorisation of the amounts within earnings adjustments:
Adjustments to Underlying EBIT Adjustments to income tax expense
30 June 2016US$M Impairments Significant items Earnings adjustments included in share of (profit)/loss of equity accounted investments Total Significant items Tax effect of earnings adjustments to Underlying EBIT
Australia Manganese equity accounted investment 726 - 190 916 - -
South Africa Manganese equity accounted investment - - 97 97 - -
Manganese Marketing equity accounted investment 64 - - 64 - -
South Africa Energy Coal - Wolvekrans Middelburg Complex 322 - - 322 - (89)
South Africa Energy Coal - Klipspruit 120 - - 120 - (33)
Available for sale investments 76 - - 76 - (18)
South Africa Energy Coal deferred tax asset derecognition - - - - 126 -
Brazil Aluminium Smelter 65 32 - 97 (11) (22)
Other 13 - 4 17 - (2)
Total 1,386 32 291 1,709 115 (164)
Impairments recognised in the year ended 30 June 2015 primarily related to the impairment of South Africa Manganese of
US$740 million and the Wolvekrans Middelburg Complex cash generating unit as part of South Africa Energy Coal of US$551
million.
Significant items
Significant items are those items, not separately identified in Earnings adjustments, where their nature and amount is
considered material to the consolidated financial statements. Such items included within the South32 Group's
(income)/expense for the year are detailed below:
Year ended 30 June 2016
US$M Gross Tax Net
Set-up costs(a) 60 (17) 43
Adjustment to Australian tax balances post-demerger including reset of tax assets - (85) (85)
Derecognition of deferred tax assets - 126 126
Brazil Aluminium Smelter impairment(b) 32 (11) 21
Brazil Alumina tax accounting adjustments - 20 20
Change in discount rate(c) 9 (1) 8
Closure and rehabilitation provisions(a) (68) (1) (69)
Total significant items 33 31 64
(a) Recognised in "expenses excluding net finance cost" in the consolidated income statement.
(b) Refer Earnings adjustments "Impairments recognised".
(c) Recognised in "net finance cost" in the consolidated income statement.
Year ended 30 June 2015
US$M Gross Tax Net
Set-up costs(a) 59 (17) 42
Adjustment to Australian tax balances post-demerger including reset of tax assets - 221 221
Repeal of Minerals Resource Rent Tax Legislation - 96 96
Fair value uplift on equity accounted investments(b) (921) - (921)
Brazil Alumina tax accounting adjustments - 103 103
Demerger related dividend withholding tax paid - 16 16
Demerger related stamp duty paid(a) 92 - 92
Total significant items (770) 419 (351)
(a) Recognised in "expenses excluding net finance cost" in the consolidated income statement.
(b) Recognised in "other income" in the consolidated income statement.
Set-up costs
Set-up costs related to the ongoing establishment of South32's corporate and regional offices following the demerger. The
costs primarily related to transitionary contractor and consultant support, information technology infrastructure and
system support. The amount recognised is inclusive of US$30 million (2015: US$12 million) paid to BHP Billiton under an
agreement for information technology services. Those costs relate to all operating segments. All remaining set-up costs
relate to group and unallocated items.
Adjustment to Australian tax balances post-demerger including reset of tax assets
The tax basis of South32 wholly owned Australian operations was reset on demerger from BHP Billiton. The net increase/
(decrease) to tax assets is charged/ (credited) to income tax expense in the consolidated income statement.
Derecognition of deferred tax assets
As a result of the significant and continued weakening of commodity markets, certain deferred tax assets associated with
provisions for closure and rehabilitation were derecognised as utilisation is no longer probable.
Brazil Alumina tax accounting adjustments
South32's cash and profit repatriation practices result in a probable expectation that tax deferrals will ultimately
unwind. This has resulted in the recognition of associated deferred tax balances at a rate closely aligned to the country
statutory rate and the reassessment of future tax losses as a result of revised interpretation of the applicability of
local tax laws.
Significant items (CONTINUED)
Closure and rehabilitation provisions and Change in discount rate
Following a review of cash flow assumptions and discount rates, South32 recognised a net decrease in closure and
rehabilitation provisions of US$59 million. Where this related to closed sites, US$68 million was recognised as a benefit
in expenses and US$9 million as a charge in net finance cost in the consolidated income statement. The benefit recognised
in expenses included US$18 million related to South Africa Energy Coal and US$50 million related to the closed Bayside
operation, formerly part of South Africa Aluminium.
Repeal of Minerals Resource Rent Tax Legislation
On 2 September 2014, legislation to repeal the Minerals Resource Rent Tax ("MRRT") in Australia received the support of
both Houses of Parliament. The repeal took effect on 30 September 2014 and as a result, the South32 Group derecognised a
MRRT deferred tax asset in relation to Illawarra Metallurgical Coal. The impact of this derecognition and all other MRRT
related amounts resulted in an income tax expense of US$96 million.
Fair value uplift on equity accounted investments
South Africa Manganese and Samancor AG were acquired by South32 on 3 February 2015. As a result of the renegotiation of the
agreement between BHP Billiton and Anglo American on 2 March 2015, BHP Billiton Group moved from control to joint control
of the manganese assets. South32 derecognised the carrying amounts of all assets, liabilities and non-controlling interest
attributed to Anglo American and recorded its retained 60 per cent interest at fair value. The uplift in fair value on the
commencement of equity accounting was US$749 million for South Africa Manganese and US$172 million for Samancor AG.
Demerger related dividend withholding tax paid
Dividend withholding tax incurred on repatriation of pre-demerger profits.
Demerger related stamp duty paid
Stamp duty paid by the South32 Group on the acquisition of Australia Manganese from the BHP Billiton Group as part of the
demerger.
Net finance cost
US$M FY16 FY15
Finance expenses
Interest on borrowings (10) (32)
Finance lease interest (37) (10)
Discounting on provisions and other liabilities (96) (47)
Change in discount rate on closure and rehabilitation provisions (9) -
Net interest expense on post-retirement employee benefits (7) (5)
Fair value change on financial asset (3) (2)
Exchange rate variations on net debt 30 7
(132) (89)
Finance income
Interest income 28 22
Net finance cost (104) (67)
INCOME TAX EXPENSE
US$M FY16 FY15
Current tax (expense)/benefit (51) (156)
Deferred tax (expense)/benefit (19) (372)
Total tax (expense)/benefit attributable to continuing operations (70) (528)
Australia 54 (338)
Southern Africa (99) 89
Rest of world (25) (279)
Total tax (expense)/benefit attributed to geographical jurisdiction (70) (528)
EQUITY ACCOUNTED Investments
The South32 Group's interests in equity accounted investments with the most significant contribution to the South32 Group's
net profit/(loss) or net assets are as follows:
Significant joint ventures Country of incorporation/ principal place of business Principal activity Reporting date Acquisition date Ownership interest
FY16 FY15
% %
Australia Manganese(a)(b) Australia Integrated producer of manganese ore and alloy 30 Jun 2016 8 May 2015 60 60
South Africa Manganese(a)(c) South Africa Integrated producer of manganese ore and alloy 30 Jun 2016 3 Feb 2015 60 60
(a) The joint ventures were acquired under the Internal Restructure. Whilst the South32 Group holds a greater than 50
per cent interest in the joint ventures, joint control is contractually achieved as joint venture parties unanimously
consent on decisions over the joint venture's relevant activities.
(b) Australia Manganese consists of an investment in Groote Eylandt Mining Company Pty Limited.
(c) South Africa Manganese consists of an investment in Samancor Holdings (Proprietary) Limited.
The following table summarises the financial information of the South32 Group's significant equity accounted investments.
Share of profit/(loss) of equity accounted investments
US$M FY16 FY15
Australia Manganese and South Africa Manganese (339) (72)
Individually immaterial(a) 9 2
Total (330) (70)
(a) Individually immaterial consists of investments in Samancor AG (60 per cent), Samancor Marketing Pte Ltd (60 per
cent), Richards Bay Coal Terminal Proprietary Limited (21.1 per cent) and Port Kembla Coal Terminal Limited (16.7 per
cent).
InterestS in joint operations
Significant joint operations of the South32 Group, which are those with the most significant contributions to the South32
Group's net profit/(loss) or net assets, are as follows:
Effective interest
Significant joint operations Country of operation Principal activity Acquisition date FY16 FY15
% %
Alumar(a) Brazil Alumina refining 3 Jul 2014 36 36
Aluminium smelting 3 Jul 2014 40 40
Mozal SARL(a)(b) Mozambique Aluminium smelting 27 Mar 2015 47.1 47.1
Worsley(a)(c) Australia Bauxite mining and alumina refining 8 May 2015 86 86
(a) These joint operations were acquired under the Internal Restructure.
(b) This joint arrangement is an incorporated entity. However it is classified as a joint operation as the participants
are entitled to receive output, not dividends, from the arrangement.
(c) Whilst the South32 Group holds a greater than 50 per cent interest in Worsley, all the participants approve the
operating and capital budgets and therefore the South32 Group is deemed to have joint control over the relevant activities
of Worsley.
PRO FORMA RECONCILIATIONS and information
BACKGROUND
Effective 15 May 2015, BHP Billiton shares ceased trading with an entitlement to South32 shares. On 18 May 2015, South32
Limited was listed as a separate standalone entity on the Australian Securities Exchange on a deferred settlement basis, on
the London Stock Exchange on a when-issued basis and on the Johannesburg Stock Exchange on a normal settlement basis.
Economic separation and distribution of South32 shares to shareholders became effective from 25 May 2015.
Prior to the demerger, the South32 Group and the BHP Billiton Group were required to undertake a number of internal share
and asset transfers in connection with the corporate restructure (Internal Restructure).
STATUTORY FINANCIAL INFORMATION
As required, comparative statutory financial information for the South32 Group has been presented for the financial year
ended 30 June 2015 (FY15). The South32 Group's FY15 statutory financial information only includes the results of the
current South32 Group operations from their date of acquisition during the year as part of the Internal Restructure. The
exception is Illawarra Metallurgical Coal, which was part of the South32 Group at 1 July 2014. The South32 Group's FY15
statutory financial information also includes:
· The results of New Mexico Coal for the period 1 July 2014 to 27 October 2014, being the date that it ceased to be
part of the South32 Group as a result of the Internal Restructure; and
· Finance charges on internal borrowings from the BHP Billiton Group in the period.
Accordingly, as a result of the Internal Restructure, the statutory financial information for FY15 does not reflect the
performance of the South32 Group as it is currently structured.
PRO FORMA FINANCIAL INFORMATION
To assist shareholders in their understanding of the South32 Group, pro forma financial information for FY15 has been
prepared to reflect the business as it is now structured and as though it was in effect for the period 1 July 2014 to 30
June 2015. The pro forma financial information is not prepared in accordance with IFRS.
The following pro forma adjustments, including the associated tax effect, have been made on a basis consistent with those
contemplated in the South32 Listing Documents:
· Equity accounting of the South32 manganese assets (comprising South Africa Manganese, Australia Manganese and
Samancor AG) from 1 July 2014 (refer note 4(c) of the Group's 2015 financial statements); and
· Excluding net finance costs charged by the BHP Billiton Group.
Additional pro forma adjustments, including the associated tax effect, have also been made in the presentation of pro forma
financial information. These include:
· Reflecting changes in corporate costs associated with South32 Limited becoming a stand-alone group as if those costs
had been incurred from 1 July 2014;
· Excluding demerger related major corporate restructuring costs; and
· Including certain significant tax expense items such as the Brazil Alumina tax accounting adjustments.
A reconciliation between the pro forma financial information and the comparative statutory financial information is
included. The statutory financial information was audited by the Group's external auditor. The reconciliations and pro
forma financial information were subject to an unmodified review report to the Directors of South32 Limited by the Group's
external auditor.
The following table reconciles pro forma and statutory earnings for FY15.
FY15 Statutory consolidated income statement Demerger related pro forma adjustments(a) Pro forma consolidated financial information
US$M
Revenue 3,843 3,900 7,743
Other income 1,143 (882) 261
Expenses excluding net finance cost (5,247) (2,232) (7,479)
Share of profit/(loss) of equity accounted investments (70) 64 (6)
Profit/(loss) from continuing operations (331) 850 519
Net finance cost (67) 7 (60)
Income tax (expense)/benefit (528) 97 (431)
Profit/(loss) after taxation from continuing operations (926) 954 28
Profit/(loss) from discontinued operations, net of taxation 7 (7) -
Profit/(loss) after taxation (919) 947 28
Other financial information
Profit/(loss) from continuing operations (331) 850 519
Earnings adjustments 676 (194) 482
Underlying EBIT from continuing operations 345 656 1,001
Depreciation and amortisation 475 373 848
Underlying EBITDA from continuing operations 820 1,029 1,849
Profit/(loss) after taxation from continuing operations (926) 954 28
Earnings adjustments after taxation 1,005 (458) 547
Underlying earnings from continuing operations 79 496 575
(a) The significant items contained in the demerger related pro forma adjustments comprise:
· The results of the current South32 Group operations between 1 July 2014 and their date of acquisition during the
financial year as part of the Internal Restructure;
· Exclusion of the results of New Mexico Coal for the period 1 July 2014 to 27 October 2014 being the date that it
ceased to be part of the South32 Group as a result of the Internal Restructure;
· Presenting South32 manganese operations (comprising South Africa Manganese, Australia Manganese and Samancor AG)
on an equity accounted basis from 1 July 2014 including associated depreciation;
· Additional corporate costs associated with South32 Limited becoming a stand-alone group of US$46M;
· Exclusion of net finance costs charged by the BHP Billiton Group of US$69M;
· Exclusion of demerger related set up costs, stamp duty on the acquisition of assets, and major corporate
restructuring costs of US$269M;
· Exclusion of the gain that arises on recording South Africa Manganese and Samancor AG at fair value on adoption
of equity accounting of US$921M and their subsequent impairment of US$770M;
· The tax effect of the above items; and
· Excluding certain significant tax expense items such as the impact of the reset
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