Notes to the Financial Statements
1. Corporate Information
The consolidated financial statements were authorised for issue in accordance with a directors’ resolution on 18 March 2008. The ultimate parent entity of the Group, Xstrata plc, is a publicly traded limited company incorporated in England and Wales and domiciled in Switzerland. Its ordinary shares are traded on the London and Swiss stock exchanges. The principal activities of the Group are described in note 9.
2. Statement of compliance
The consolidated financial statements of Xstrata plc and its subsidiaries (the Group) are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Union, effective for the Group’s reporting for the year ended 31 December 2007.
3. Basis of preparation
The consolidated financial statements are presented in US dollars, which is the parent’s functional and presentation currency, and all values are rounded to the nearest million except where otherwise indicated. The accounting policies in note 6 have been applied in preparing the consolidated financial statements.
4. Significant accounting judgements and estimates
Estimates
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the year. Actual outcomes could differ from these estimates. The below are the most critical estimates and assumptions:
Estimated recoverable reserves and resources
Estimated recoverable reserves and resources are used to determine the depreciation of mine production assets, in accounting for deferred stripping costs and in performing impairment testing. Estimates are prepared by appropriately qualified persons, but will be impacted by forecast commodity prices, exchange rates, production costs and recoveries amongst other factors. Changes in assumptions will impact the carrying value of assets and depreciation and impairment charges recorded in the income statement.
Environmental rehabilitation costs
The provisions for rehabilitation costs are based on estimated future costs using information available at the balance sheet date. To the extent the actual costs differ from these estimates, adjustments will be recorded and the income statement may be impacted (refer to note 31).
Impairment testing
Note 15 outlines the significant assumptions made in performing impairment testing of goodwill and certain intangible assets. Similar assumptions are made when testing other non-current assets. Changes in these assumptions may alter the results of impairment testing, impairment charges recorded in the income statement and the resulting carrying values of assets.
Defined benefit pension plans and post retirement medical plans
Note 34 outlines the significant assumptions made when accounting for defined benefit pension plans and post retirement medical plans. Changes to these assumptions may alter the resulting accounting and ultimately the amount charged to the income statement.
5. Changes in accounting policies, new standards and interpretations not applied
Changes in accounting policies
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2006, except for the adoption of the following new standards and interpretations:
- IFRIC 7 ‘Applying the restatement approach under IAS 29’
The Group adopted IFRIC Interpretation 7 which details the requirements of applying IAS 29 where an entity identifies the existence of hyperinflation in the economy of its functional currency, when that economy was not hyperinflationary in the prior period, and the entity therefore restates its financial statements in accordance with IAS 29. The adoption of this interpretation has had no impact on Group earnings or equity in the current or prior years. - IFRIC 10 ‘Interim Financial Reporting and Impairment’
The Group adopted IFRIC Interpretation 10 which requires that an entity must not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. The adoption of this interpretation has had no impact on Group earnings or equity in the current or prior years.
The Group has also adopted the following disclosure standards from 1 January 2007, both of which affect disclosures in the financial statements but neither of which have had any impact on Group earnings or equity in the current or prior periods:
- IFRS 7 ‘Financial Instruments: Disclosures’ (refer to note 36)
- IAS 1 ‘Amendment: Capital disclosures’
New standards and interpretations not applied
The IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements, consequently these pronouncements will impact the Group’s financial statements in future periods.
| Effective date | ||
|---|---|---|
| (Revised) ‘Business Combinations’ | 1 July 2009 |
| ‘Consolidated and Separate Financial Statements’ | 1 July 2009 |
| (Revised) ‘Borrowing Costs’ | 1 January 2009 |
| ‘Operating segments’ | 1 January 2009 |
| ‘Group and treasury share transactions’ | 1 March 2007 |
| ‘The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction’ | 1 January 2008 |
The directors do not anticipate that the adoption of these standards and interpretations on their effective dates will have a material impact on the Group’s financial statements in the period of initial application, notwithstanding IFRS 3 (Revised) ‘Business Combinations’ may impact the financial statements should there be an acquisition in the period.
Upon adoption of IFRS 8, the Group will be required to disclose segment information based on the information management uses for internally evaluating the performance of operating segments and allocating resources to those segments. This information may be different from that reported in the balance sheet and income statement but the Group will provide an explanation for such differences. There will be no impact on the income, net assets or equity.
6. Principal Accounting Policies
Basis of consolidation
The financial statements consolidate the financial statements of Xstrata plc (the Company) and its subsidiaries (the Group). All inter-entity balances and transactions, including unrealised profits and losses arising from intra-group transactions, have been eliminated in full. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passes. Control is achieved where the Group has the power to govern the financial and operating policy of an entity so as to obtain benefits from its activities. This occurs when the Group has more than 50% voting power through ownership or agreements, except where minority rights are such that a minority shareholder is able to prevent the Group from exercising control. In addition control may exist without having more than 50% voting power through ownership or agreements, or in the circumstances of enhanced minority rights, as a consequence of de facto control. De facto control is control without the legal right to exercise unilateral control, and involves decision making ability that is not shared with others and the ability to give directions with respect to the operating and financial policies of the entity concerned. Where there is a loss of control of a subsidiary, the financial statements include the results for the part of the reporting period during which Xstrata plc has control. Subsidiaries use the same reporting period and same accounting policies as Xstrata plc.
Interests in Joint Ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. The financial statements of the joint ventures are generally prepared for the same reporting period as the Company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist in the underlying records of the joint venture.
Jointly controlled operations
A jointly controlled operation involves the use of assets and other resources of the Group and other venturers rather than the establishment of a corporation, partnership or other entity. The Group accounts for the assets it controls and the liabilities it incurs, the expenses it incurs and the share of income that it earns from the sale of goods or services by the joint venture.
Jointly controlled assets
A jointly controlled asset involves joint control and ownership by the Group and other venturers of assets contributed to or acquired for the purpose of the joint venture, without the formation of a corporation, partnership or other entity. The Group accounts for its share of the jointly controlled assets, any liabilities it has incurred, its share of any liabilities jointly incurred with other ventures, income from the sale or use of its share of the joint venture’s output, together with its share of the expenses incurred by the joint venture, and any expenses it incurs in relation to its interest in the joint venture.
Jointly controlled entities
A jointly controlled entity involves the establishment of a corporation, partnership or other legal entity in which the Group has an interest along with other venturers. The Group recognises its interest in jointly controlled entities using the proportionate method of consolidation, whereby the Group’s share of each of the assets, liabilities, income and expenses of the joint venture are combined with the similar items, line by line, in its consolidated financial statements.
When the Group contributes or sells assets to a joint venture, any gain or loss from the transaction is recognised based on the substance of the transaction. When the Group has transferred the risk and rewards of ownership to the joint venture, the Group only recognises the portion of the gain or loss attributable to the other venturers, unless the loss is reflective of an impairment, in which case the loss is recognised in full. When the Group purchases assets from the joint venture, it does not recognise its share of the profits of the joint venture from the transaction until it resells the assets to an independent party. Losses are accounted for in a similar manner unless they represent an impairment loss, in which case they are recognised immediately.
Joint ventures are accounted for in the manner outlined above, until the date on which the Group ceases to have joint control over the joint venture.
Investments in Associates
Entities in which the Group has significant influence and which are neither subsidiaries nor joint ventures, are associates, and are accounted for using the equity method of accounting. Under the equity method of accounting, the investment in the associate is recognised on the balance sheet on the date of acquisition at the fair value of the purchase consideration and therefore includes any goodwill on acquisition. The carrying amount is adjusted by the Group’s share of the post-acquisition profit or loss; depreciation, amortisation or impairment arising from fair value adjustments made at date of acquisition and certain inter-entity transactions together with a reduction for any dividends received or receivable from the associate. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes in equity.
The financial statements of the associates are generally prepared for the same reporting period as the Company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist in the underlying records of the associate. Adjustments are made in the consolidated financial statements to eliminate the Group’s share of unrealised gains and losses on transactions between the Group and its associates.
The Group discontinues its use of the equity method from the date on which it ceases to have significant influence, and from that date, accounts for the investment in accordance with IAS 39 (with its initial cost being the carrying amount of the associate at that date), provided the investment does not then qualify as a subsidiary or joint venture. The Group’s income statement reflects the share of associates’ results after tax and the Group’s statement of recognised income and expense includes any amounts recognised by associates outside of the income statement.
Business Combinations
On the acquisition of a subsidiary, the purchase method of accounting is used, whereby the purchase consideration is allocated to the identifiable assets, liabilities and contingent liabilities (identifiable net assets) on the basis of fair value at the date of acquisition. Those mining rights, mineral reserves and resources that are able to be reliably valued are recognised in the assessment of fair values on acquisition. Other potential reserves, resources and mineral rights, for which in the directors’ opinion, values cannot be reliably determined, are not recognised.
When the cost of acquisition exceeds the fair values attributable to the Group’s share of the identifiable net assets the difference is treated as purchased goodwill, which is not amortised but is reviewed for impairment annually or where there is an indication of impairment. If the fair value attributable to the Group’s share of the identifiable net assets exceeds the cost of acquisition the difference is immediately recognised in the income statement.
Minority interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented in equity in the consolidated balance sheet, separately from the parent shareholders’ equity.
When a subsidiary is acquired in a number of stages, the cost of each stage is compared with the fair value of the identifiable net assets at the date of that purchase. Any excess is treated as goodwill, or any discount is immediately recognised in the income statement. On the date control is obtained, the identifiable net assets are recognised in the Group balance sheet at fair value and the difference between the fair value recognised and the value on the date of the purchase is recognised in the asset revaluation reserve.
Similar procedures are applied in accounting for the purchases of interests in associates. Any goodwill arising on such purchases is included within the carrying amount of the investment in the associates, but not thereafter amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is included in income in the period of the purchase.
Foreign currencies
Financial statements of subsidiaries, joint ventures and associates, are maintained in their functional currencies and converted to US dollars for consolidation of the Group results. The functional currency of each entity is determined after consideration of the primary economic environment of the entity.
Transactions in foreign currencies are translated at the exchange rates ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at year-end exchange rates. All differences that arise are recorded in the income statement. Non-monetary assets measured at historical cost in a foreign currency are translated using the exchange rates at the date of the initial transactions. Where non-monetary assets are measured at fair value in a foreign currency, they are translated at the exchange rates when the fair value was determined. Where the exchange difference relates to an item which has been recorded in equity, the related exchange difference is also recorded in equity.
On consolidation of foreign operations into US dollars, income statement items are translated at weighted average rates of exchange where this is a reasonable approximation of the exchange rate at the dates of the transactions. Balance sheet items are translated at closing exchange rates. Exchange differences on the re-translation of the investments in foreign subsidiaries, joint ventures and associates at closing rates, together with differences between income statements translated at average and at closing rates, are recorded in a separate component of equity. Exchange differences relating to quasi equity inter-company loan balances with the foreign operations which form part of the net investment in the foreign operation are also recognised in this component of equity. On disposal or partial disposal of a foreign entity or on repayment of loans forming part of the net investment in the foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.
Exchange differences on foreign currency borrowings to finance net investments and tax charges/credits attributable to those exchange differences are also recorded in a separate component of equity to the extent that the hedge is effective. Upon full or partial disposal or repayment of the net investment in the foreign operation (including loans that form part of the net investment), the cumulative amount of the exchange differences is recognised in the income statement when the gain or loss on disposal or the loan repayment is recognised.
The following exchange rates to the US dollar (US$) have been applied:
| 31 December 2007 | Average 12 months 2007 | 31 December 2006 | Average 12 months 2006 | |
|---|---|---|---|---|
| Argentine pesos (US$:ARS) | 3.1500 | 3.1155 | 3.0610 | 3.0745 |
| Australian dollars (AUD:US$) | 0.8751 | 0.8389 | 0.7886 | 0.7535 |
| Canadian dollars (US$:CAD) | 0.9984 | 1.0740 | 1.1659 | 1.1342 |
| Chilean pesos (US$:CLP) | 497.95 | 522.21 | 532.32 | 530.54 |
| Colombian pesos (US$:COP) | 2,018.00 | 2,075.16 | 2,240.00 | 2,359.39 |
| Euros (EUR:US$) | 1.4590 | 1.3708 | 1.3200 | 1.2566 |
| Great Britain pounds (GBP:US$) | 1.9849 | 2.0020 | 1.9589 | 1.8437 |
| Peruvian nuevo sol (US$:PEN) | 2.9980 | 3.1285 | 3.1950 | 3.2737 |
| South African rand (US$:ZAR) | 6.8626 | 7.0506 | 7.0061 | 6.7701 |
| Swiss francs (US$:CHF) | 1.1335 | 1.2000 | 1.2190 | 1.2529 |
Revenue
Revenue associated with the sale of commodities is recognised when all significant risks and rewards of ownership of the asset sold are transferred to the customer, usually when insurance risk has passed to the customer and the commodity has been delivered to the shipping agent. Revenue is recognised, at fair value of the consideration receivable, to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured. Sales revenue is recognised at the fair value of consideration received, which in most cases is invoiced amounts, with most sales being priced free on board (FOB), free on rail (FOR) or cost, insurance and freight (CIF). Revenues from the sale of by-products are also included in sales revenue. Revenue excludes treatment and refining charges unless payment of these amounts can be enforced by the Group at the time of the sale.
For some commodities the sales price is determined provisionally at the date of sale, with the final price determined at a mutually agreed date, generally at a quoted market price at that time. In order to ensure that revenue is recorded at the fair value of consideration to be received, adjustments are made to the invoice price based on the forward metal prices published at the balance sheet date.
Interest income
Interest income is recognised as earned on an accruals basis using the effective interest method in the income statement.
Exceptional items
Exceptional items represent significant items of income and expense which due to their nature or the expected infrequency of the events giving rise to them, are presented separately on the face of the income statement to give a better understanding to shareholders of the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance. Exceptional items include, but are not limited to, goodwill impairments, acquisition and integration costs which have not been capitalised, profits and losses on the sale of investments, profits and losses from the sale of operations, recycled gains and losses from the foreign currency translation reserve, foreign currency gains and losses on borrowings, restructuring and closure costs, loan issue costs written-off on facility refinancing and the related tax impacts of these items.
Property, plant and equipment
Land and buildings, plant and equipment
On initial acquisition, land and buildings, plant and equipment are valued at cost, being the purchase price and the directly attributable costs of acquisition or construction required to bring the asset to the location and condition necessary for the asset to be capable of operating in the manner intended by management. In subsequent periods, buildings, plant and equipment are stated at cost less accumulated depreciation and any impairment in value, whilst land is stated at cost less any impairment in value and is not depreciated.
Depreciation is provided so as to write off the cost, less estimated residual values of buildings, plant and equipment (based on prices prevailing at the balance sheet date) on the following bases:
Mine production assets are depreciated using a unit of production method based on estimated economically recoverable reserves, which results in a depreciation charge proportional to the depletion of reserves. Buildings, plant and equipment unrelated to production are depreciated using the straight-line method based on estimated useful lives. Where parts of an asset have different useful lives, depreciation is calculated on each separate part. Each item or part’s estimated useful life has due regard to both its own physical life limitations and the present assessment of economically recoverable reserves of the mine property at which the item is located, and to possible future variations in those assessments. Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates which affect unit of production calculations are accounted for prospectively.
The expected useful lives are as follows:
| Buildings | 15 - 40 years |
| Plant and Equipment | 4 - 30 years |
The net carrying amounts of land, buildings, plant and equipment are reviewed for impairment either individually or at the cash-generating unit level when events and changes in circumstances indicate that the carrying amount may not be recoverable. To the extent that these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined.
Expenditure on major maintenance or repairs includes the cost of the replacement of parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will be available to the Group, the expenditure is capitalised and the carrying amount of the item replaced derecognised. Similarly, overhaul costs associated with major maintenance are capitalised and depreciated over their useful lives where it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognised. All other costs are expensed as incurred.
Where an item of property, plant and equipment is disposed of, it is derecognised and the difference between its carrying value and net sales proceeds is disclosed as a profit or loss on disposal in the income statement. Any items of property, plant or equipment that cease to have future economic benefits expected to arise from their continued use or disposal are derecognised with any gain or loss included in the income statement in the financial year in which the item is derecognised.
Exploration and evaluation expenditure
Exploration and evaluation expenditure relates to costs incurred on the exploration and evaluation of potential mineral reserves and resources and includes costs such as exploratory drilling and sample testing and the costs of pre-feasibility studies. Exploration and evaluation expenditure for each area of interest, other than that acquired from the purchase of another mining company, is carried forward as an asset provided that one of the following conditions is met:
- such costs are expected to be recouped in full through successful development and exploration of the area of interest or alternatively, by its sale; or
- exploration and evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in relation to the area are continuing, or planned for the future.
Purchased exploration and evaluation assets are recognised as assets at their cost of acquisition or at fair value if purchased as part of a business combination.
An impairment review is performed, either individually or at the cash-generating unit level, when there are indicators that the carrying amount of the assets may exceed their recoverable amounts. To the extent that this occurs, the excess is fully provided against, in the financial year in which this is determined. Exploration and evaluation assets are reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions outlined above is met. Expenditure is transferred to mine development assets or capital work in progress once the work completed to date supports the future development of the property and such development receives appropriate approvals.
Mineral properties and mine development expenditure
The cost of acquiring mineral reserves and mineral resources is capitalised on the balance sheet as incurred. Capitalised costs (development expenditure) include costs associated with a start-up period where the asset is available for use but incapable of operating at normal levels without a commissioning period.
Mineral reserves and capitalised mine development expenditure are, upon commencement of production, depreciated using a unit of production method based on the estimated economically recoverable reserves to which they relate or are written off if the property is abandoned. The net carrying amounts of mineral reserves and resources and capitalised mine development expenditure at each mine property are reviewed for impairment either individually or at the cash-generating unit level when events and changes in circumstances indicate that the carrying amount may not be recoverable. To the extent that these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined.
Capital work in progress
Assets in the course of construction are capitalised in the capital work in progress account. On completion, the cost of construction is transferred to the appropriate category of property, plant and equipment. The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. Costs associated with a start-up period are capitalised where the asset is available for use but incapable of operating at normal levels without a commissioning period.
Capital work in progress is not depreciated.
The net carrying amounts of capital work in progress at each mine property are reviewed for impairment either individually or at the cash-generating unit level when events and changes in circumstances indicate that the carrying amount may not be recoverable. To the extent that these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined.
Leasing and hire purchase commitments
The determination of whether an arrangement is, or contains a lease is based in the substance of the arrangement at inception date, including whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or whether the arrangement conveys a right to use the asset. A reassessment after inception is only made in specific circumstances.
Assets held under finance leases, where substantially all the risks and rewards of ownership of the asset have passed to the Group, and hire purchase contracts are capitalised in the balance sheet at the lower of the fair value of the leased property or the present value of the minimum lease payments during the lease term calculated using the interest rate implicit in the lease agreement. These amounts are determined at the inception of the lease and are depreciated over the shorter of their estimated useful lives or lease term. The capital elements of future obligations under leases and hire purchase contracts are included as liabilities in the balance sheet. The interest elements of the lease or hire purchase obligations are charged to the income statement over the periods of the leases and hire purchase contracts and represent a constant proportion of the balance of capital repayments outstanding.
Leases where substantially all the risks and rewards of ownership have not passed to the Group are classified as operating leases. Rentals payable under operating leases are charged to the income statement on a straight-line basis over the lease term.
Deferred stripping costs
In open pit mining operations, it is necessary to remove overburden and other waste in order to access the ore body. During the pre-production phase, these costs are capitalised as part of the cost of the mine property and depreciated based on the mine’s strip ratio (refer below). The costs of removal of the waste material during a mine's production phase are deferred, where they give rise to future benefits. The deferral of these costs, and subsequent charges to the income statement are determined with reference to the mine's strip ratio.
The mine’s strip ratio represents the ratio of the estimated total volume of waste, to the estimated total quantity of economically recoverable ore, over the life of the mine. These costs are deferred where the actual stripping ratios are higher than the average life of mine strip ratio. The costs charged to the income statement are based on application of the mine’s strip ratio to the quantity of ore mined in the period. Where the ore is expected to be evenly distributed, waste removal is expensed as incurred.
Biological assets
Biological assets, being cattle, are carried at their fair value less estimated selling costs. Any changes in fair value less estimated selling costs are included in the income statement in the period in which they arise.
Intangible assets
Purchased intangible assets are recorded at the cost of acquisition including expenses incidental to the acquisition, less accumulated amortisation and any impairment in value. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the asset is separable or arises from contractual or legal rights and the fair value can be measured reliably on initial recognition.
Internally generated goodwill is not recognised.
Intangible assets are amortised over their estimated useful lives, except goodwill and those intangible assets which the directors regard as having indefinite useful lives, which are not amortised but are reviewed for impairment at least annually, and whenever events or circumstances indicate that the carrying amount may not be recoverable. Intangible assets are regarded as having an indefinite life when, based on an analysis of all the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash flows. Such analyses are performed annually. Estimated useful lives are determined as the period over which the Group expects to use the asset or the number of production (or similar) units expected to be obtained from the asset by the Group and for which the Group retains control of access to those benefits.
For intangible assets with a finite useful life, the amortisation method and period are reviewed annually and impairment testing is undertaken when circumstances indicate the carrying amount may not be recoverable. Where an intangible asset is disposed of, it is derecognised and the difference between its carrying value and the net sales proceeds is reported as a profit or loss on disposal in the income statement in the financial year the disposal occurs.
Coal export rights
Coal export rights are carried at cost and amortised using a units-of-production method based on the reserves that exist in the location that has access to such rights.
Software and technology patents
Software and technology patents are carried at cost and amortised over a period of 3 years and 20 years respectively.
Hydroelectricity rights
Hydroelectricity rights acquired in connection with the acquisition of the Falconbridge Group (refer to note 7) have been recorded at fair value at the date of acquisition and will be amortised over the expected life of the operation following the completion of construction.
Long-term feed contract
A long-term feed contract acquired in connection with the acquisition of the Falconbridge Group (refer to note 7) has been recorded at fair value at the date of the acquisition and is being amortised over the remaining contract term.
Impairment of assets
The carrying amounts of non-current assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. If there are indicators of impairment, a review is undertaken to determine whether the carrying amounts are in excess of their recoverable amounts. An asset’s recoverable amount is determined as the higher of its fair value less costs to sell and its value in use. Such reviews are undertaken on an asset by asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the cash-generating unit level.
Where a cash-generating unit, or group of cash-generating units, has goodwill allocated to it (excluding goodwill recognised as a result of the requirement to recognise deferred tax liabilities on acquisitions), or includes intangible assets which are either not available for use or which have an indefinite useful life (and which can only be tested as part of a cash-generating unit), an impairment test is performed at least annually or whenever there is an indication that the carrying amounts of such assets may be impaired.
If the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recorded in the income statement to reflect the asset at the lower amount. In assessing the recoverable amount of assets, the relevant future cash flows expected to arise from the continuing use of such assets and from their disposal are discounted to their present value using a market-determined pre-tax discount rate which reflects current market assessments of the time value of money and asset-specific risks for which the cash flow estimates have not been adjusted.
An impairment loss is reversed in the income statement if there is a change in the estimates used to determine the recoverable amount since the prior impairment loss was recognised. The carrying amount is increased to the recoverable amount but not beyond the carrying amount net of depreciation or amortisation which would have arisen if the prior impairment loss had not been recognised. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Goodwill impairments are not reversed.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the assets or disposal groups are available for immediate sale in their present condition. The Group must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year of the date of classification.
Non-current assets (or disposal groups) held for sale are carried at the lower of the carrying amount prior to being classified as held for sale, and the fair value less costs to sell. A non-current asset is not depreciated while classified as held for sale. A non-current asset held for sale is presented separately in the balance sheet. The assets and liabilities of a disposal group classified as held for sale are presented separately as one line in the assets and liabilities sections on the face of the balance sheet.
Discontinued operations
A discontinued operation is a component of an entity, whose operations and cash flows are clearly distinguished both operationally and for financial reporting purposes from the rest of the entity, that has been disposed of or classified as held for sale. To be classified as a discontinued operation one of the following criteria must be met:
- the operation must represent a separate major line of business or geographical area of operations; or
- the operation must be part of a single coordinated plan to dispose of a separate major line of business or geographical areas of operations; or
- the operation must be a subsidiary acquired exclusively with a view for resale.
Where the operation is discontinued at the balance sheet date, the results are presented in one line on the face of the income statement, and prior period results are represented as discontinued.
Financial instruments
Financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition. Where as a result of a change in intention or ability, it is no longer appropriate to classify an investment as held to maturity, the investment is reclassified into the available-for-sale category. When financial assets are recognised initially, they are measured at fair value on the trade date, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. All financial liabilities are initially recognised at their fair value. Subsequently, all financial liabilities with the exception of derivatives are carried at amortised cost.
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as and are effective hedging instruments. Gains or losses on these items are recognised in income.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Other long term investments that are intended to be held-to-maturity, such as bonds, are measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in income when the investments are derecognised or impaired, as well as through the amortisation process.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or available-for-sale. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Trade and other receivables are recognised and carried at their original invoiced value or their recoverable amount if this differs from the invoiced amount. Where the time value of money is material receivables are discounted and are carried at their present value. A provision is made where the estimated recoverable amount is lower than the carrying amount.
Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other three stated categories. After initial recognition available-for sale financial assets are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement. Listed share investments are carried at fair value based on stock exchange quoted prices at the balance sheet date. Unlisted shares are carried at fair value where it can be reliably obtained, otherwise they are stated at cost less any impairment.
Fair values
The fair value of quoted financial assets is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. These include recent arm’s length market transactions; reference to current market value of another instrument which is substantially the same; discounted cash flow analysis and pricing models.
Derivative financial instruments are valued using applicable valuation techniques such as those outlined above.
De-recognition of financial assets and liabilities
Financial assets
A financial asset is derecognised where:
- the rights to receive cash flows from the asset have expired;
- the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a “pass-through” arrangement; or
- the Group has transferred its rights to receive cash flows from the asset and either has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Group has transferred its right to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, it continues to recognise the financial asset to the extent of its continuing involvement in the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Gains and losses on de-recognition are recognised within finance income and finance costs respectively. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.
Impairment of financial assets
The Group assesses at each balance sheet date whether a financial asset is impaired.
Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables and held to maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. Objective evidence of impairment of loans and receivables exists if the borrower is experiencing significant financial difficulty, there is a breach of contract, concessions are granted to the borrower that would not normally be granted or it is probable that the borrower will enter into bankruptcy or a financial reorganisation.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Assets carried at cost
If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Available-for-sale financial assets
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the income statement. Reversals in respect of equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
Rehabilitation Trust Fund
Investments in the rehabilitation trust funds are measured at fair value based on the market price of investments held by the trust. In accordance with IFRIC 5, movements in the fair value are recognised in the income statement. Such amounts relate to trusts in South Africa which receive cash contributions to accumulate funds for the Group’s rehabilitation liability relating to the eventual closure of the Group’s coal operations.
Derivative financial instruments and hedging
The Group uses derivative financial instruments such as interest rate swaps, forward currency and commodity contracts to hedge its risks associated with interest rate, foreign currency and commodity price fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to profit or loss for the year. The fair value of forward currency and commodity contracts is calculated by reference to current forward exchange rates and prices for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.
For the purpose of hedge accounting, hedges are classified as:
- fair value hedges;
- cash flow hedges; or
- hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Hedges that are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Fair value hedges
Fair value hedges are hedges of the Group’s exposure to changes in the fair value of a recognised asset or liability that could affect profit or loss. The carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is re-measured at fair value and gains and losses from both are taken to profit or loss.
For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through profit or loss over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is amortised to profit or loss.
Amortisation begins when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation.
Cash flow hedges
Cash flow hedges are a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss.
Amounts taken to equity are transferred to the income statement when the hedged transaction affects profit or loss. Where the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to profit or loss.
Hedges of a net investment
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised directly in equity while any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to profit or loss.
Own shares
The cost of purchases of own shares held by the Employee Share Ownership Plan (ESOP) trust are deducted from equity. Where they are issued to employees or sold, no gain or loss is recognised in the income statement. Any proceeds received on disposal of the shares or transfer to employees are recognised in equity.
Own shares purchased under the Equity Capital Management Programme (ECMP) are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of such shares. Such gains and losses are recognised directly in equity.
Interest-bearing loans and borrowings
Loans are recognised at inception at the fair value of proceeds received, net of directly attributable transaction costs. Subsequently, they are measured at amortised cost using the effective interest method. Finance costs are recognised in the income statement using the effective interest method.
Convertible borrowings
On issue of a convertible borrowing, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis until extinguished on conversion or redemption. The remainder of the proceeds are allocated to a separate component of equity, net of issue costs, which remains constant in subsequent periods. Issue costs are apportioned between the liability and equity components based on their respective carrying amounts when the instrument was issued.
On conversion, the liability is reclassified to equity and no gain or loss is recognised in the profit or loss. Where the convertible borrowing is redeemed early or repurchased in a way that does not alter the original conversion privileges, the consideration paid is allocated to the liability and equity components. The consideration relating to the equity component is recognised in equity and the amount of gain or loss relating to the liability element in profit or loss.
The finance costs recognised in respect of the convertible borrowings includes the accretion of the liability component to the amount that will be payable on redemption.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis or using a first-in-first-out basis and includes all costs incurred in the normal course of business including direct material and direct labour costs and an allocation of production overheads, depreciation and amortisation and other costs, based on normal production capacity, incurred in bringing each product to its present location and condition. Cost of inventories includes the transfers from equity of gains and losses on qualifying cash flow hedges in respect of the purchase of materials. Inventories are categorised, as follows:
- Raw materials and consumables: Materials, goods or supplies (including energy sources) to be either directly or indirectly consumed in the production process.
- Work in progress: Items stored in an intermediate state that have not yet passed through all the stages of production.
- Finished goods: Products and materials that have passed all stages of the production process.
Net realisable value represents estimated selling price in the ordinary course of business less any further costs expected to be incurred to completion and disposal.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, cash in hand and short term deposits with an original maturity of three months or less. For the cash flow statement, cash and cash equivalents include certain bank overdrafts where the facility forms part of the working capital cash management activities.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all the attaching conditions will be complied with. Government grants in respect of capital expenditure are credited to the carrying amount of the related asset and are released to the income statement over the expected useful lives of the relevant assets. Grants which are not associated with an asset are credited to income so as to match them with the expense to which they relate.
Environmental protection, rehabilitation and closure costs
Provision is made for close down, restoration and for environmental rehabilitation costs (which include the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the financial period when the related environmental disturbance occurs, based on the estimated future costs using information available at the balance sheet date. The provision is discounted using a current market-based pre-tax discount rate and the unwinding of the discount is included in interest expense. At the time of establishing the provision, a corresponding asset is capitalised, where it gives rise to a future benefit, and depreciated over future production from the operations to which it relates.
The provision is reviewed on an annual basis for changes to obligations, legislation or discount rates that impact estimated costs or lives of operations. The cost of the related asset is adjusted for changes in the provision resulting from changes in the estimated cash flows or discount rate and the adjusted cost of the asset is depreciated prospectively. Rehabilitation trust funds holding monies committed for use in satisfying environmental obligations are included within Other financial assets on the balance sheet.
Employee Entitlements
Provisions are recognised for short-term employee entitlements, on an undiscounted basis, for services rendered by employees that remain unpaid at the balance sheet date. Provisions for long-term employee entitlements are measured using the projected unit credit method and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the liabilities.
In some of the Group’s Australian operations, long-service leave (an employee entitlement for which a provision is recorded) is administered by an independent fund. The fund collects levies from employers throughout the industry based on the expected cost of future liabilities. When the Group makes long-service leave payments to employees covered by the fund, it is reimbursed for the majority of the payment. To reflect the expected reimbursement for future long-service leave payments from the fund, a receivable is recorded based on the present value of the future amounts expected to be reimbursed.
Other Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive), as result of past events, and it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. Where the effect is material, the provision is discounted to net present value using an appropriate current market-based pre-tax discount rate and the unwinding of the discount is included in finance costs.
Taxation
Current tax
Current tax for each taxable entity in the Group is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the balance sheet date and includes adjustments to tax payable or recoverable in respect of previous periods.
Deferred tax
Deferred tax is recognised using the balance sheet method in respect of all temporary differences between the tax bases of assets and liabilities, and their carrying amounts for financial reporting purposes, except as indicated below:
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
- where the deferred income tax liability arises from the initial recognition of goodwill, or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised, except:
- where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. To the extent that an asset not previously recognised fulfils the criteria for recognition, a deferred income tax asset is recorded.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realised or the liability is settled, based on tax rates and tax laws enacted or substantively enacted at the balance sheet date. Current and deferred tax relating to items recognised directly in equity are recognised in equity and not in the income statement. Mining taxes and royalties are treated and disclosed as current and deferred taxes if they have the characteristics of an income tax.
Pensions and other post-retirement obligations
The Group’s contributions to defined contribution pension plans are charged to the income statement in the year to which they relate. The Group contributes to separately administered defined benefit pension plans.
For defined benefit funds, plan assets are measured at fair value, while plan liabilities are measured on an actuarial basis using the projected unit credit method and discounted at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the plan liabilities. The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market returns on scheme assets, adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year. In measuring its defined benefit liability-past service costs are recognised as an expense on a straight-line basis over the period until the benefits become vested. To the extent that the benefits vest immediately following the introduction of, or changes to, a defined benefit plan, the past service costs are recognised immediately. When a settlement (eliminating all obligations for part or all of the benefits that have already accrued) or a curtailment (reducing future obligations as a result of material reduction in the scheme membership or a reduction in future entitlement) occurs, the obligation and related plan assets are re-measured using current actuarial assumptions and the resultant gain or loss is recognised in the income statement during the period in which the settlement or curtailment occurs.
The service cost of providing pension benefits to employees for the year is determined using the projected unit method and is recognised in the income statement. The difference between the expected return on plan assets and the unwinding of the discount on plan liabilities is recognised in the income statement.
Actuarial gains or losses are recognised directly in equity through the statement of recognised income and expenses. The full pension surplus or deficit is recorded in the balance sheet, with the exception of the impact of any recognition of past service costs. Surpluses recorded are restricted to the sum of any unrecognised past service costs and present value of any amounts the Group expects to recover by way of refunds from the plan or reductions in future contributions.
The Group also provides post-retirement healthcare benefits to certain employees in Canada, the Dominican Republic, South Africa and the United States. These are accounted for in a similar manner to the defined benefit pension plans. These benefits are unfunded.
Ordinary share capital
Ordinary shares issued by the Company are recorded at the net proceeds received, which is the fair value of the consideration received less costs that are incurred in connection with the share issue. The nominal par value of the shares issued is taken to the share capital account and any excess is recorded in the share premium account, including the costs that were incurred with the share issue.
Share-based compensation plans
The Group makes share-based awards, including free shares and options, to certain employees.
Equity-settled awards
For equity-settled awards, the fair value is charged to the income statement and credited to retained earnings, on a straight line basis over the vesting period, after adjusting for the estimated number of awards that are expected to vest (taking into account the achievement of non-market based performance conditions). The fair value of the equity-settled awards is determined at the date of the grant. In calculating fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (market conditions). The fair value is determined by external experts using option pricing models. At each balance sheet date prior to vesting, the cumulative expense representing the extent to which the vesting period has expired and management’s best estimate of the awards that are ultimately expected to vest, is computed (after adjusting for non-market performance conditions). The movement in cumulative expense is recognised in the income statement with a corresponding entry within equity.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified over the original vesting period. In addition, an expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification, over the remainder of the new vesting period.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. Any compensation paid up to the fair value of the awards at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the income statement. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the new awards are treated as if they are a modification of the original award, as described in the previous paragraph.
Cash-settled awards
For cash-settled awards, the fair value is re-calculated at each balance sheet date until the awards are settled, based on the estimated number of awards that are expected to vest adjusting for market and non-market based performance conditions. During the vesting period, a liability is recognised representing the portion of the vesting period which has expired at the balance sheet date times the fair value of the awards at that date. After vesting, the full fair value of the unsettled awards at each balance date is recognised as a liability. Movements in the liability are recognised in the income statement. The fair value is re-calculated using an option pricing model (refer to note 34).
Borrowing costs
Borrowing costs are recognised as an expense in the financial period incurred, except to the extent they are related to the establishment of a loan facility. In such cases they are capitalised and amortised over the life of the facility.
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the same basis as current period figures, for the finalisation of the acquisition accounting (refer to note 7) and discontinued operations and disposals (refer to note 8).
7. Acquisitions
Current year business combinations
In January 2007, the Group exercised an option to obtain a 73.7% interest in the Frieda River copper-gold porphyry in Papua New Guinea for US$14 million.
Following an announcement in late 2006, in March 2007 the Group completed the exercise of its option to acquire a 62.5% interest in Sagittarius Mines Inc (SMI) for US$47 million. SMI is the holder of Tampakan copper-gold project. The Group now has management control of the Tampakan project.
In August 2007, the Group acquired the remaining 50% interest in the Narama thermal coal mine in Australia from Iluka Resources Limited (Iluka) for US$58 million.
In September 2007, the Group acquired the 16% of Cumnock Coal Limited which it previously did not own for US$22 million. Cumnock Coal Limited is a coal mining company, which was listed on the Australian Stock Exchange.
In October 2007, the Group acquired 85.85% of Austral Coal Limited (Austral) and obtained control of the company. By 21 December 2007, the Group had acquired the remaining 14.15% of the company. The total cost of these purchases was US$542 million. Austral owns the Tahmoor underground coking coal operation in the southern coalfields of New South Wales, Australia. The provisional fair values of the identifiable assets and liabilities of Austral as at the date of obtaining control were:
| US$m | IFRS carrying value | Fair value adjustments | Provisional fair value to Group |
|---|---|---|---|
| Property, plant and equipment | 166 | 563 | 729 |
| Deferred tax assets | 42 | (38) | 4 |
| Prepayments | 6 | – | 6 |
| Inventories | 14 | – | 14 |
| Trade and other receivables | 18 | – | 18 |
| 246 | 525 | 771 | |
| Trade and other payables | (23) | (1) | (24) |
| Interest-bearing loans and borrowings | (167) | – | (167) |
| Provisions | (16) | (23) | (39) |
| Deferred tax liabilities | – | (169) | (169) |
| Net assets | 40 | 332 | 372 |
| Goodwill arising on acquisition | 169 | ||
| 541 | |||
| Consideration: | |||
| Net cash acquired with the subsidiary | (1) | ||
| Cash paid | 512 | ||
| Contingent consideration | 30 | ||
| 541 |
The fair values are provisional due to the complexity and timing of the acquisition. The review of the fair value of the assets and liabilities acquired will continue for 12 months from the acquisition date. The Group’s share of Austral’s loss from the date of acquisition amounted to US$4 million. The goodwill balance is the result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities acquired and their tax bases.
In October 2007, the Group acquired the Anvil Hill coal project from Centennial Coal Company Limited for US$468 million. The Anvil Hill coal project is located in the Upper Hunter Valley, Australia. The provisional fair values of the identifiable assets and liabilities of Anvil Hill as at the date of acquisition were:
| US$m | IFRS carrying value | Fair value adjustments | Provisional fair value to Group |
|---|---|---|---|
| Property, plant and equipment | 228 | 274 | 502 |
| Deferred tax assets | – | 14 | 14 |
| 228 | 288 | 516 | |
| Provisions | – | (48) | (48) |
| Deferred tax liabilities | (23) | 23 | – |
| Net assets | 205 | 263 | 468 |
| Consideration: | |||
| Cash paid | 445 | ||
| Contingent consideration | 23 | ||
| 468 |
The fair values are provisional due to the timing of the acquisition. The review of the fair value of the assets and liabilities acquired will continue for 12 months from the acquisition date.
Eland Platinum Holdings Limited
In November 2007, the Group acquired 100% of Eland Platinum Holdings Limited (Eland). Eland was previously listed on the Johannesburg stock exchange and holds an indirect 65% interest in the Elandsfontein platinum project. The Group also acquired an additional 9% interest in the Elandsfontein platinum project increasing the Group’s interest in the project to 74%. In addition to the Elandsfontein platinum project, Eland has controlling interests in Madibeng Platinum (Pty) Ltd and Beestkraal Platinum Mines (Pty) Ltd. These companies own the rights to other platinum resources in South Africa. The total cost of the acquisition was US$1,113 million. The provisional fair values of the identifiable assets and liabilities of Eland (including the additional interest in the Elandsfontein Project) as at the date of acquisition were:
| US$m | IFRS carrying value | Fair value adjustments | Provisional fair value to Group |
|---|---|---|---|
| Property, plant and equipment | 185 | 1,371 | 1,556 |
| Inventories | 16 | – | 16 |
| Trade and other receivables | 4 | – | 4 |
| 205 | 1,371 | 1,576 | |
| Trade and other payables | (13) | – | (13) |
| Interest-bearing loans and borrowings | (86) | – | (86) |
| Provisions | (5) | – | (5) |
| Deferred tax liabilities | (2) | (398) | (400) |
| Income taxes payable | (1) | – | (1) |
| Net assets | 98 | 973 | 1,071 |
| Minority interests | (37) | (369) | (406) |
| Net attributable assets | 61 | 604 | 665 |
| Goodwill arising on acquisition | 398 | ||
| 1,063 | |||
| Consideration: | |||
| Net cash acquired with the subsidiary | (50) | ||
| Cash paid | 1,113 | ||
| 1,063 |
The fair values are provisional due to the timing and complexity of the acquisition. The review of the fair value of the assets and liabilities acquired will continue for 12 months from the acquisition date. The Group’s share of Eland’s loss from the date of acquisition amounted to US$4 million. The goodwill balance is the result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities acquired and their tax bases.
If the above combinations had taken place at the beginning of 2007, the Group’s results would have been:
| US$m | 2007 |
|---|---|
| Revenue | 29,256 |
| Profit before interest, taxation, depreciation and amortisation | 11,314 |
| Profit before interest and taxation | 9,141 |
| Profit for the year | 5,866 |
Prior year business combinations
Falconbridge Limited
The Group obtained control of Falconbridge Limited (Falconbridge) in August 2006 for a total cash cost of US$18,819 million including transaction costs. As at 31 December 2006 the fair values of the identified assets and liabilities acquired were provisional, due to the timing and complexity of the acquisition. During 2007, these values were finalised as follows in accordance with IFRS 3 ‘Business Combinations’:
| US$m | Provisional fair value as previously reported | Fair value adjustments(a) | Fair value at acquisition |
|---|---|---|---|
| Intangible assets | 267 | 701 | 968 |
| Property, plant and equipment | 18,692 | (648) | 18,044 |
| Inventories | 2,306 | (1) | 2,305 |
| Trade and other receivables | 1,372 | 3 | 1,375 |
| Investments in associates | 134 | – | 134 |
| Available-for-sale financial assets | 140 | 10 | 150 |
| Derivative financial assets | 56 | – | 56 |
| Other financial assets | 125 | (83) | 42 |
| Prepayments | 61 | 2 | 63 |
| 23,153 | (16) | 23,137 | |
| Trade and other payables | (1,804) | (15) | (1,819) |
| Interest-bearing loans and borrowings | (3,800) | – | (3,800) |
| Derivative financial liabilities | (125) | – | (125) |
| Provisions | (1,239) | (164) | (1,403) |
| Pension deficit | (235) | (76) | (311) |
| Deferred tax liabilities | (3,081) | (331) | (3,412) |
| Income tax payable | (339) | (14) | (353) |
| Net assets | 12,530 | (616) | 11,914 |
| Minority interests | (45) | (426) | (471) |
| Net attributable assets | 12,485 | (1,042) | 11,443 |
| Goodwill* | 2,859 | 486 | 3,345 |
| Net attributable assets including goodwill | 15,344 | (556) | 14,788 |
| Provisional | Adjustments | Final | |
|---|---|---|---|
| Total consideration: | |||
| Net cash acquired with the subsidiary | (879) | – | (879) |
| Acquisition costs | 68 | – | 68 |
| Cash paid for 19.9% acquired in 2005 | 1,715 | – | 1,715 |
| Cash paid for 80.1% acquired in 2006 | 17,036 | – | 17,036 |
| 17,940 | – | 17,940 |
| US$m | Provisional | Adjustments | Final |
|---|---|---|---|
| Goodwill arising on acquisition on 19.9% interest in Falconbridge in 2005: | |||
| Cash paid | 1,715 | – | 1,715 |
| Less fair value of the 19.9% share of the attributable net assets acquired** | (1,715) | – | (1,715) |
| Goodwill | – | – | – |
| Goodwill arising on acquisition on 80.1% interest in Falconbridge in 2006: | |||
| 80.1% of net cash acquired with the subsidiary | (704) | – | (704) |
| Acquisition costs | 68 | – | 68 |
| Cash paid | 17,036 | – | 17,036 |
| 16,400 | – | 16,400 | |
| Less 80.1% share of the attributable net assets acquired | (12,291) | 446 | (11,845) |
| Goodwill on 80.1% acquisition*** | 4,109 | 446 | 4,555 |
| Goodwill from above* | 2,859 | 486 | 3,345 |
| Total goodwill(b) | 6,968 | 932 | 7,900 |
| * This goodwill balance is the result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities and their tax bases. | |||
| ** In accordance with IFRS, this represents 19.9% of the fair value of the net assets at the date of acquisition in 2005. | |||
| *** Included in this goodwill are certain intangible assets that cannot be individually separated or reliably measured from the acquisition due to their nature. These items include the expected value of synergies and an assembled workforce. | |||
| (a) The fair values of identified assets and liabilities acquired have been finalised in 2007. This has resulted in updates to a number of fair values reflected at 31 December 2006. The main adjustments relate to:
| |||
| (b) As required by IFRS 3, all adjustments made in finalising the acquisition accounting have been presented as if the accounting had been completed on the acquisition date. Accordingly, the additional goodwill recorded as a result of the finalisation of the acquisition accounting is subject to impairment testing at 31 December 2006. This has resulted in an additional impairment charge of US$446 million which, in accordance with IFRS 3, has been recognised in the income statement for the year ended 31 December 2006, increasing the total impairment charge to US$1,824 million. There was no other significant income statement impact arising as a result of finalising the acquisition accounting. | |||
From the date of acquisition to 31 December 2006, Falconbridge contributed a profit of US$1,218 million to the Group prior to the impairment expense of US$1,824 million.
Tintaya
In June 2006, the Group acquired 100% of the Tintaya copper mine in Peru. At 31 December 2006, the fair value of the identifiable assets and liabilities was provisional due to the complexity of the acquisition. In 2007, the acquisition accounting was finalised as follows:
| US$m | Provisional fair value as previously reported | Fair value adjustments(a) | Fair value at acquisition |
|---|---|---|---|
| Property, plant and equipment | 791 | 26 | 817 |
| Prepayments | 1 | – | 1 |
| Inventories | 90 | – | 90 |
| Trade and other receivables | 139 | – | 139 |
| 1,021 | 26 | 1,047 | |
| Trade and other payables | (33) | – | (33) |
| Provisions | (94) | – | (94) |
| Deferred tax liabilities | (139) | (8) | (147) |
| Income tax payable | (33) | – | (33) |
| Net assets | 722 | 18 | 740 |
| Goodwill arising on acquisition(b) | 125 | 8 | 133 |
| Cost | 847 | 26 | 873 |
| Consideration: | |||
| Net cash acquired with the subsidiary | (5) | – | (5) |
| Cash paid | 816 | – | 816 |
| Contingent consideration | 36 | 26 | 62 |
| 847 | 26 | 873 | |
| (a) These adjustments arose due to the finalisation of valuations of property, plant and equipment that increased the contingent consideration payable by an equivalent amount. | |||
| (b) The goodwill balance is a result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities and their tax bases. As discussed above, this balance was subject to impairment testing as at 31 December 2006 and it has been determined that no impairment existed. There were no other significant income statement impacts arising as a result of finalising the acquisition accounting. | |||
From the date of acquisition to 31 December 2006, Tintaya contributed a profit of US$189 million to the Group.
Cerrejón
The Group purchased a 331/3% interest in the Cerrejón thermal coal operation in Colombia in April 2006. The acquisition accounting was provisional at 31 December 2006 due to the complexity of the acquisition. In 2007, the acquisition accounting was finalised as follows:
| US$m | Provisional fair value as previously reported | Fair value adjustments(a) | Fair value at acquisition |
|---|---|---|---|
| Investment in associates | – | – | – |
| Derivative financial assets | 70 | – | 70 |
| Inventories | 44 | – | 44 |
| Trade and other receivables | 85 | – | 85 |
| 1,887 | – | 1,887 | |
| Trade and other payables | (79) | – | (79) |
| Provisions | (3) | – | (3) |
| Deferred tax liabilities | (477) | – | (477) |
| Income tax payable | (17) | – | (17) |
| Derivative financial liabilities | (60) | – | (60) |
| Net assets | 1,251 | – | 1,251 |
| Goodwill arising on acquisition(b) | 464 | – | 464 |
| Cost | 1,715 | – | 1,715 |
| Consideration: | |||
| Net cash acquired with the joint venture interest | (9) | – | (9) |
| Acquisition costs | 5 | – | 5 |
| Cash paid | 1,719 | – | 1,719 |
| 1,715 | – | 1,715 | |
| (a) The fair values of identified assets and liabilities acquired have been finalised. There were no changes to the provisional fair values at 31 December 2006. | |||
| (b) The goodwill balance is a result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities and their tax bases. As discussed above, this balance was subject to impairment testing as at 31 December 2006 and it has been determined that no impairment existed. | |||
From the date of acquisition to 31 December 2006, Cerrejon contributed a profit of US$76 million to the Group.
Tavistock TESA Joint Venture
On 1 December 2006, the Group agreed to purchase the remaining 50% interest in the Tavistock TESA joint venture in South Africa from its joint venture partner, Total Coal South Africa (Pty) Ltd for US$49 million.
If the above combinations had taken place at the beginning of 2006, the Group’s results would have been:
| US$m | 2006 |
|---|---|
| Revenue | 26,877 |
| Profit before interest, taxation, depreciation and amortisation | 9,680 |
| Profit before interest and taxation | 6,381 |
| Profit for the year | 3,477 |
Consolidated information
The below information is provided in aggregate for all business combinations in 2007 and 2006:
| US$m | 2007 | 2006 |
|---|---|---|
| Intangible assets | – | 968 |
| Property, plant and equipment | 2,997 | 20,575 |
| Inventories | 30 | 2,439 |
| Trade and other receivables | 38 | 1,601 |
| Investments in associates | – | 134 |
| Financial assets | – | 318 |
| Prepayments | 6 | 64 |
| 3,071 | 26,099 | |
| Trade and other payables | (46) | (1,931) |
| Interest-bearing loans and borrowings | (301) | (3,800) |
| Derivative financial liabilities | – | (185) |
| Provisions | (92) | (1,500) |
| Pension deficit | – | (311) |
| Deferred tax liabilities | (572) | (4,036) |
| Income tax payable | (1) | (403) |
| Net assets | 2,059 | 13,933 |
| Minority interests | (429) | (471) |
| Net attributable assets | 1,630 | 13,462 |
| Goodwill | 589 | 8,497 |
| Net attributable assets including goodwill | 2,219 | 21,959 |
| Consideration: | ||
| Net cash acquired with the subsidiary | (52) | (914) |
| Acquisition costs | 3 | 73 |
| Cash paid in prior year | – | 1,715 |
| Cash paid in current year | 2,179 | 19,620 |
| Contingent consideration | 89 | 62 |
| 2,219 | 20,556 |
Interests in joint ventures
Prior year interests in joint ventures
Effective 1 July 2006, the Group concluded an agreement with African Rainbow Minerals Limited (ARM), to establish a new black majority owned company, ARM Coal, to be 51% owned by ARM and 49% by Xstrata. ARM is listed on the Johannesburg Stock Exchange and is controlled by historically disadvantaged South Africans (HDSAs).
ARM Coal holds a 20% participation share in the Group’s existing South African coal business, and a majority 51% interest in the Goedgevonden project, through a joint venture with the Group. ARM contributed ZAR400 million (US$56 million) in cash for its 51% shareholding in ARM Coal. The Group facilitated ARM Coal’s entry by funding the acquisition of 51% of the Goedgevonden project for ZAR 765 million (US$107 million) and will provide all the funding required to commission this project. The Group’s funding, including debt allocated to the existing South African coal business, was on preferential terms through the use of interest and capital repayment holidays. ARM Coal receives a proportion of the cash flows from operations with the balance used to repay debt. In August 2006, ARM exercised an option to acquire a further 10% direct interest in the Group’s coal operations in South Africa, excluding the Goedgevonden project, for ZAR400 million (US$56 million) and an effective interest in Xstrata’s South African coal business of 36%.
During 2006, the Mototolo joint venture, the terms of which were agreed with Anglo Platinum in 2005, was completed. During the first half of 2006, the Group and Kagiso Trust Investments (Kagiso) formed a black economic empowerment partnership in respect of Xstrata’s 50% interest in the Mototolo joint venture. Kagiso acquired 26% of the Group’s 50% interest, resulting in Kagiso owning a fully participative 13% interest in the earnings of the Mototolo joint venture. The Group retained a 37% interest in the Mototolo joint venture. To acquire this interest, Kagiso agreed to fund the joint venture expenditure costs (both incurred and in the future) in proportion to its interest.
8. Discontinued operations and disposals
Disposals
Aluminium
The Aluminium business was sold on 18 May 2007 to Apollo Management LP. The disposal proceeds amounted to US$1,150 million before disposal costs of US$24 million, resulting in the Group realising a gain of US$1 million after tax of US$12 million. The results of the aluminium business for the periods ended are presented below:
| US$m | 01.01.07 to 18.05.07 | 15.08.06 to 31.12.06 |
|---|---|---|
| Revenue | 542 | 530 |
| Cost of sales (before depreciation and amortisation) | (406) | (396) |
| Distribution costs | (9) | (11) |
| Administrative expenses | (7) | – |
| Profit before interest, taxation, depreciation and amortisation | 120 | 123 |
| Depreciation and amortisation – cost of sales | (31) | (25) |
| Profit before interest and taxation | 89 | 98 |
| Finance income | 2 | 2 |
| Finance costs | (2) | (7) |
| Profit before taxation | 89 | 93 |
| Income tax expense | (37) | (29) |
| Profit for the period from discontinued operation | 52 | 64 |
| Gain on disposal of the discontinued operation | 1 | – |
| Profit after tax for the period from discontinued operations | 53 | 64 |
The carrying value of the major classes of assets and liabilities at the date of the sale were:
| US$m | at 18.05.07 |
|---|---|
| Intangible assets | 139 |
| Property, plant and equipment | 1,011 |
| Inventories | 215 |
| Trade and other receivables | 176 |
| Other financial assets | 31 |
| Trade and other payables | (92) |
| Interest-bearing loans and borrowings | (1) |
| Provisions | (37) |
| Pension deficit | (19) |
| Deferred tax liabilities | (298) |
| Income tax payable | (6) |
| Net assets | 1,119 |
| Cash inflow on disposal: | |
| Cash disposed of with the subsidiary | (6) |
| Cash received | 1,150 |
| Disposal costs | (24) |
| Net cash inflow | 1,120 |
| Gain on disposal of the discontinued operation | 1 |
Earnings per share from discontinued operations:
| US$ | 2007 | 2006 |
|---|---|---|
| Basic earnings per share | 0.06 | 0.08 |
| Diluted earnings per share | 0.05 | 0.08 |
The cash flows arising from the aluminium business unit up to the date of sale were operational in nature and were materially the same as its profits.
Following the acquisition of 100% of the assets of Cumnock Coal in September (refer above), in December 10% of the assets were sold for US$7 million.
Prior year disposals
On 19 October 2006, the Group disposed of its Cook coal operation to Caledon Resources Limited. A gain of $16 million was recognised on the disposal.
Consolidated information
The below information is provided in aggregate for all disposals in both 2007 and 2006:
| US$m | 2007 | 2006 |
|---|---|---|
| Intangible assets | 139 | – |
| Property, plant and equipment | 1,018 | 14 |
| Inventories | 216 | 1 |
| Trade and other receivables | 176 | 1 |
| Financial assets | 31 | – |
| 1,580 | 16 | |
| Trade and other payables | (93) | – |
| Interest-bearing loans and borrowings | (1) | – |
| Provisions | (37) | – |
| Pension deficit | (19) | – |
| Deferred tax liabilities | (298) | – |
| Income tax payable | (6) | – |
| Net assets | 1,126 | 16 |
| Consideration: | ||
| Net cash disposed of with the subsidiary | (6) | – |
| Cash received | 1,150 | 24 |
| Disposal costs | (24) | – |
| Contingent consideration | 7 | 8 |
| Total consideration | 1,127 | 32 |
| Gain on disposal of the discontinued operation | 1 | 16 |
9. Segmental Analysis
The Group’s primary reporting format is business segments and its secondary format is geographical segments. The operating businesses are organised and managed separately according to the nature of the products produced, with each segment representing a strategic business unit that offers different products and serves different markets. Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. The Group’s geographical segments are determined by the location of the Group’s assets and operations.
Business segments
The following tables present revenue and profit information and certain asset and liability information regarding the Group’s business segments for the years ended 31 December 2007 and 2006.
| US$m | Before exceptional items | Exceptional items | 2007 | Before exceptional items | Exceptional items | 2006 |
|---|---|---|---|---|---|---|
| Revenue | ||||||
| External parties: | ||||||
| Coal – Thermal | 3,614 | – | 3,614 | 3,019 | – | 3,019 |
| Coal – Coking | 587 | – | 587 | 598 | – | 598 |
| Coal | 4,201 | – | 4,201 | 3,617 | – | 3,617 |
| Chrome | 1,064 | – | 1,064 | 748 | – | 748 |
| Platinum | 129 | – | 129 | 12 | – | 12 |
| Vanadium | 159 | – | 159 | 199 | – | 199 |
| Copper | 12,794 | – | 12,794 | 7,007 | – | 7,007 |
| Nickel | 5,252 | – | 5,252 | 1,678 | – | 1,678 |
| Zinc Lead | 4,726 | – | 4,726 | 3,721 | – | 3,721 |
| Technology | 217 | – | 217 | 120 | – | 120 |
| Revenue (continuing operations) | 28,542 | – | 28,542 | 17,102 | – | 17,102 |
| Inter-segmental: | ||||||
| Coal | 3 | – | 3 | 3 | – | 3 |
| Copper | 65 | – | 65 | 23 | – | 23 |
| Nickel | 131 | – | 131 | 41 | – | 41 |
| Zinc Lead | 214 | – | 214 | 59 | – | 59 |
| Eliminations | (413) | – | (413) | (126) | – | (126) |
| Group revenues | 28,542 | – | 28,542 | 17,102 | – | 17,102 |
| Discontinued operations: | ||||||
| Aluminium | 542 | – | 542 | 530 | – | 530 |
| Total | 29,084 | – | 29,084 | 17,632 | – | 17,632 |
| US$m | Before exceptional items | Exceptional items | 2007 | Before exceptional items | Exceptional items | 2006 |
|---|---|---|---|---|---|---|
| Profit before interest, taxation,depreciation and amortisation (EBITDA) | ||||||
| Coal – Thermal | 977 | – | 977 | 947 | 16 | 963 |
| Coal – Coking | 214 | – | 214 | 300 | – | 300 |
| Coal | 1,191 | – | 1,191 | 1,247 | 16 | 1,263 |
| Chrome | 310 | – | 310 | 141 | – | 141 |
| Platinum | 66 | (25) | 41 | 11 | – | 11 |
| Vanadium | 72 | – | 72 | 111 | – | 111 |
| Copper | 4,987 | – | 4,987 | 3,349 | – | 3,349 |
| Nickel | 2,577 | 275 | 2,852 | 788 | – | 788 |
| Zinc Lead | 1,810 | – | 1,810 | 1,477 | – | 1,477 |
| Technology | 47 | – | 47 | 26 | – | 26 |
| Segment EBITDA (continuing operations) | 250 | 11,310 | 7,150 | 16 | 7,166 | |
| Share of results from associates | ||||||
| (net of tax, continuing operations): | ||||||
| Coal | 3 | – | 3 | 2 | – | 2 |
| Zinc Lead | 12 | – | 12 | 2 | – | 2 |
| EBITDA (continuing operations) | 11,075 | 250 | 11,325 | 7,154 | 16 | 7,170 |
| Unallocated | (187) | – | (187) | (170) | 13 | (157) |
| 10,888 | 250 | 11,138 | 6,984 | 29 | 7,013 | |
| EBITDA (discontinuing operations): | ||||||
| Aluminium | 120 | 13 | 133 | 123 | – | 123 |
| Total | 11,008 | 263 | 11,271 | 7,107 | 29 | 7,136 |
| US$m | Before exceptional items | Exceptional items | 2007 | Before exceptional items | Exceptional items | 2006 |
|---|---|---|---|---|---|---|
| Depreciation and amortisation | ||||||
| Depreciation: | ||||||
| Coal | 470 | – | 470 | 356 | – | 356 |
| Chrome | 43 | – | 43 | 23 | – | 23 |
| Platinum | 7 | – | 7 | – | – | – |
| Vanadium | 8 | – | 8 | 6 | – | 6 |
| Copper | 820 | – | 820 | 495 | – | 495 |
| Nickel | 349 | – | 349 | 162 | – | 162 |
| Zinc Lead | 292 | – | 292 | 149 | – | 149 |
| Technology | 1 | – | 1 | 1 | – | 1 |
| Depreciation (continuing operations) | 1,990 | – | 1,990 | 1,192 | – | 1,192 |
| Unallocated | 4 | – | 4 | 4 | – | 4 |
| 1,994 | – | 1,994 | 1,196 | – | 1,196 | |
| Discontinued operations: | ||||||
| Aluminium | 31 | – | 31 | 25 | – | 25 |
| Total | 2,025 | – | 2,025 | 1,221 | – | 1,221 |
| Amortisation: | ||||||
| Coal | 34 | – | 34 | 1 | – | 1 |
| Chrome | 1 | – | 1 | – | – | – |
| Copper | 4 | – | 4 | 4 | – | 4 |
| Nickel | 56 | – | 56 | 12 | – | 12 |
| Zinc Lead | 1 | – | 1 | 1 | – | 1 |
| Technology | 3 | – | 3 | 3 | – | 3 |
| Amortisation (continuing operations) | 99 | – | 99 | 21 | – | 21 |
| Unallocated | 3 | – | 3 | 2 | – | 2 |
| 102 | – | 102 | 23 | – | 23 | <