Review of the fair value adjustments at 31 December 2006 versus previously reported
The review of the fair value of the Falconbridge assets and liabilities acquired will continue for 12 months from the acquisition date. A summary of the changes made between the fair value adjustments reported in the financial statements above and as reported in the Xstrata plc Rights Issue prospectus dated October 2006 is as follows:
| US$m | As reported in Rights Issue Prospectus | Provisional amounts reported in 2006 financial statements | Changes |
|---|---|---|---|
| Fair value adjustments: | |||
| Intangible assets | 220 | 154 | (66) |
| Property, plant and equipment | 12,225 | 12,255 | 30 |
| Inventories | - | (34) | (34) |
| Trade and other receivables | - | (8) | (8) |
| Investments in associates | - | 95 | 95 |
| Trade and other payables | - | 23 | 23 |
| Interest-bearing loans and borrowings | (50) | (35) | 15 |
| Provisions | (300) | (391) | (91) |
| Deferred tax liabilities | (1,405) | (2,688) | (1,283) |
| Income tax payable | - | (13) | (13) |
| Other | (45) | - | 45 |
| Attributable net assets acquired (including cash) | 4,212 | 4,006 | (206) |
| 14,857 | 13,364 | (1,493) | |
| Goodwill relating to deferred tax | 1,500 | 2,859 | 1,359 |
| Fair value of net assets including goodwill | 16,357 | 16,223 | (134) |
| 80.1% share of net assets acquired | 13,085 | 12,995 | 90 |
| Cash paid for 80.1% acquired (including acquisition costs) | 17,104 | 19 | 17,085 |
| Goodwill arising on purchase of 80.1% interest | 4,000 | 4,109 | 109 |
The increase in the deferred tax liability and the goodwill related to deferred tax is primarily the result of the change in the method in applying deferred tax to acquisition fair value adjustments to reflect the intention to realise the asset’s values through use. The increase in the provisions adjustment is mainly due to adjustments to the defined benefit pension plan deficits following updated reported received from independent actuaries and updated rehabilitation cost estimates.