5.6 FACTIBILIDAD ADMINISTRATIVA
5.7.5. Lineamiento para evaluar la propuesta
2015 US$m 2014 US$m 2013 US$m Iron Ore 1,726 4,211 6,814 Aluminium 1,682 2,021 2,226
Copper & Coal 1,564 2,128 3,392
Diamonds & Minerals 446 562 1,162
Other Operations (36) (56) 278
Reportable segments total 5,382 8,866 13,872
Other items 65 (416) 145
Less: capital expenditure of equity accounted units (859) (1,032) (1,073)
Capital expenditure per financial information by business units 4,588 7,418 12,944
Add: Proceeds from disposal of property, plant and equipment 97 744 57
Capital expenditure per cash flow statement 4,685 8,162 13,001
Rio Tinto’s management structure is based on the principal product groups in the table above together with the global functions that support the business. The chief executive of each product group reports to the chief executive of Rio Tinto. The chief executive of Rio Tinto monitors the performance of each product group based on a number of measures, including capital expenditure and operating cash flows, with underlying earnings being the key financial performance indicator. Finance costs and net debt are managed on a Group basis.
In 2015 the Energy product group as presented in previous periods was split, with the coal assets taken to the newly formed Copper & Coal product group and the uranium assets to the Diamonds & Minerals product group.
Generally, business units are allocated to product groups based on their primary product. The Diamonds & Minerals product group includes businesses with products such as uranium, borates, salt and titanium dioxide feedstock together with diamond operations and the Simandou iron ore project, which is the responsibility of the Diamonds & Minerals product group chief executive. The Copper & Coal group includes certain gold operations in addition to copper and coal.
The financial information by business unit provided on page 194 of these financial statements provides additional voluntary disclosure which the Group considers useful to the users of the financial statements.
(a) Gross sales revenue
Gross sales revenue includes the sales revenue of equity accounted units (after adjusting for sales to subsidiaries) of US$2,115 million
(2014: US$2,533 million, 2013: US$3,757 million) which are not included in consolidated sales revenue. Consolidated sales revenue includes subsidiary sales of US$160 million (2014: US$156 million, 2013: US$353 million) to equity accounted units which are not included in gross sales revenue.
(b) Depreciation and amortisation
Product group depreciation and amortisation totals include 100 per cent of subsidiaries’ depreciation and amortisation and include Rio Tinto’s share of the depreciation and amortisation of equity accounted units. Rio Tinto’s share of the depreciation and amortisation charge of equity accounted units is deducted to arrive at depreciation and amortisation, excluding equity accounted units, as shown in note 4. These figures exclude impairment charges and reversals, which are excluded from underlying earnings.
(c) Underlying earnings
Underlying earnings is reported by Rio Tinto to provide greater understanding of the underlying business performance of its operations and to enhance comparability of reporting periods.
The measure of underlying earnings is used by the chief executive of Rio Tinto to assess the performance of the product groups. Underlying earnings and net (loss)/earnings both represent amounts net of tax attributable to owners of Rio Tinto. The following items are excluded from net (loss)/earnings in arriving at underlying earnings in each period irrespective of materiality:
– Net (losses)/gains on disposal and consolidation of interests in businesses.
– Impairment charges and reversals.
– Profit/(loss) after tax from discontinued operations.
– Exchange and derivative gains and losses. This exclusion includes exchange gains/(losses) on US dollar net debt and intragroup balances, gains/(losses) on currency and interest rate derivatives not qualifying for hedge accounting and gains/(losses) on commodity derivatives not qualifying for hedge accounting.
In addition, there is a final judgmental category which includes, where applicable, other credits and charges that, individually or in aggregate if of a similar type, are of a nature or size to require exclusion in order to provide additional insight into underlying business performance.
Product group earnings include earnings of subsidiaries and equity accounted units stated before finance items but after the amortisation of discount.
Rio Tinto’s share of the underlying profits of equity accounted units amount to US$390 million in 2015 (2014: US$626 million, 2013: US$710 million). This amount is attributable as follows: US$307 million profit to the Copper & Coal product group and US$83 million profit to other product groups (2014: US$551 million profit attributable to the Copper & Coal product group and US$75 million profit to other product groups; 2013: US$705 million profit attributable to the Copper & Coal product group and US$5 million to other product groups). These amounts are included in underlying earnings of the relevant product groups and include the underlying earnings of the Group’s tolling entities which process alumina. Tolling entities recharge the majority of their costs and generally have minimal earnings.
The Copper & Coal product group’s underlying earnings in 2013 included a US$131 million impairment after tax in relation to the product group’s investment in Northern Dynasty Minerals Ltd following a strategic review of this shareholding by the product group.
(d) Reconciliation of net (losses)/earnings to underlying earnings
Exclusions from underlying earnings
Pre-tax(m) 2015 US$m Taxation 2015 US$m Non- controlling interests 2015 US$m Net amount 2015 US$m Net amount 2014 US$m Net amount 2013 US$m
Impairment charges net of reversals (note 6) (2,791) (57) 1,046 (1,802) (138) (3,428) Net gains/(losses) on consolidation and disposal of interests in
businesses(e) 64 (2) (14) 48 (349) 847
Exchange and derivative (losses)/gains:
– Exchange losses on US dollar net debt and intragroup balances(f) (3,518) 269 (33) (3,282) (1,858) (2,929)
– (Losses)/gains on currency and interest rate derivatives not qualifying
for hedge accounting(g) (86) (1) (1) (88) (22) 2
– Gains on commodity derivatives not qualifying for hedge accounting(h) 146 (58) – 88 30 196
Restructuring costs including global headcount reductions (344) 86 – (258) (82) (367)
Increased closure provision for legacy operations (262) 29 – (233) – –
Recognition of deferred tax assets relating to planned divestments – 250 (16) 234 – – Write off of deferred tax asset following the MRRT repeal – – – – (362) – Gain on disposal of the Group’s St James’s Square properties – – – – 356 –
Clermont/Blair Athol(i) – – – – – (173)
Deferred tax asset write off – – – – – (114)
Rio Tinto Kennecott(j) 21 (3) – 18 – (283)
Simandou and QMM IFRS 2 charge(k) (11) – – (11) (116) –
Other exclusions(l) (179) 54 5 (120) (237) (303)
Total excluded from underlying earnings (6,960) 567 987 (5,406) (2,778) (6,552)
Net (loss)/earnings (726) (993) 853 (866) 6,527 3,665
Underlying earnings 6,234 (1,560) (134) 4,540 9,305 10,217
(e) Pre-tax gain of US$64 million arose mainly from the reduction in shareholding in SouthGobi Resources, the sale of the Group’s interest in Murowa Diamonds and Sengwa Colliery on the 17 June 2015 and from the Aluminium product group’s divestment of ECL on 9 July 2015 and Alsea on 24 November 2015.
Net loss on disposal and consolidation of interests in businesses during 2014 mainly related to further adjustments in respect of contractual obligations for product sales and delivery which remain with the Group following the sale of the Group’s interest in the Clermont mine on 29 May 2014, the disposal of the Group’s interest in Rio Tinto Mozambique on 7 October 2014 and indemnities provided in respect of prior disposals.
(f) Net exchange losses in 2015 comprise post-tax foreign exchange losses of US$1,197 million on US dollar denominated net debt in non-US dollar functional currency companies (on borrowings of approximately US$23.1 billion), and US$2,085 million losses on intragroup balances, as the Australian dollar, Canadian dollar and the euro all weakened against the US dollar.
In late 2015 the Group restructured certain internal group borrowings to reduce the income statement volatility resulting from the retranslation of US dollar denominated debt issued by entities with a non-US dollar functional currency.
(g) Valuation changes on currency and interest rate derivatives, which are ineligible for hedge accounting, other than those embedded in commercial contracts, and the currency revaluation of embedded US dollar derivatives contained in contracts held by entities whose functional currency is not the US dollar.
(h) Valuation changes on commodity derivatives, including those embedded in commercial contracts, that are ineligible for hedge accounting, but for which there will be an offsetting change in future Group earnings.
(i) Adjustments in relation to Clermont and Blair Athol arose in 2013 following reclassification to disposal groups held for sale, and reflect contractual obligations for product sales and funding of closure activities, which will remain with the Group following completion of the divestments.
(j) On 10 April 2013, Rio Tinto Kennecott’s Bingham Canyon mine experienced a slide along a geological fault line of its north-eastern wall. Charges relating to the slide, which have been excluded from underlying earnings, primarily comprise the write off of certain deferred stripping assets and damaged equipment. In 2015, adjustments for settlement of insurance claims have been made to the amount excluded from underlying earnings, and will continue as insurance claims are settled.
(k) In 2015, the charge of US$11 million (after non-controlling interests and tax), calculated in accordance with IFRS 2 “Share-based Payment”, reflects the recapitalisation of QIT Madagascar Minerals S.A. In 2014, the charge of US$116 million (after non-controlling interests and tax), calculated in accordance with IFRS 2 “Share-based Payment”, reflects the discount to an estimate of fair value at which shares are transferrable to the Government of Guinea under the Simandou project Investment Framework ratified on 26 May 2014.
(l) Other credits and charges that, individually, or in aggregate if of similar type, are of a nature or size to require exclusion in order to provide additional insight into underlying business performance. In 2015, other exclusions included a provision relating to the uncompleted divestment of Carbone Savoie within the Rio Tinto Aluminium product group, divestment costs and an increase in provision relating to the Gove refinery. In 2014, other exclusions included adjustments relating to the five-year community support package for the Nhulunbuy area and community following the Gove refinery curtailment. In 2013, other exclusions included adjustments relating to inventory sold by Richards Bay Minerals during the period, which had been recognised at fair value on initial consolidation in 2012. (m)Exclusions from underlying earnings relating to equity accounted units are stated after tax and are included in the column “Pre-tax”.
STRATEGIC REPORT DIRECTORS’ REPORT FINANCIAL STATEMENTS PRODUCTION, RESERVES AND OPERATIONS ADDITIONAL INFORMATION