Anglo American Annual Report 2012

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FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS27. DEFERRED TAX continuedThe amount of deferred tax credited/(charged) to the income statement is as follows:US$ million 2012 2011Capital allowances in excess of depreciation (22) (615)Fair value adjustments (133) (118)Tax losses 11 167Derivatives 99 36Provisions 41 82Chilean withholding taxes 86 (137)Other temporary differences(1)1,008 351,090 (550)(1)In 2012 this principally relates to Minas-Rio ($960 million credit). This is made up of a deferred tax credit of $1,360 million in relation to the impairment of Minas-Rio and a deferred tax charge of$400 million in relation to the partial derecognition of a deferred tax asset for enhanced tax depreciation in Minas-Rio.The current expectation regarding the maturity of deferred tax balances is as follows:US$ million 2012 2011Deferred tax assetsRecoverable within one year 131 52Recoverable after one year 1,092 4781,223 530Deferred tax liabilitiesPayable within one year (368) (505)Payable after one year (5,701) (5,225)(6,069) (5,730)The Group has the following balances in respect of which no deferred tax asset has been recognised:Taxlosses –revenueTaxlosses –capitalOthertemporarydifferences2012 2011Taxlosses –revenueTaxlosses –capitalOthertemporarydifferencesUS$ millionTotalTotalExpiry dateWithin one year 17 – – 17 – – – –Greater than one year, less than five years 286 – – 286 – – – –Greater than five years 3 – 2,997 3,000 111 – – 111No expiry date 4,467 1,097 1,953 7,517 3,082 1,067 403 4,5524,773 1,097 4,950 10,820 3,193 1,067 403 4,663The Group also has unused tax credits of $16 million (2011: $18 million) for which no deferred tax asset is recognised in the balance sheet. All of these creditsexpire within five years.No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries, branches and associates and interestsin joint ventures where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differenceswill not reverse in the foreseeable future. The aggregate amount of temporary differences associated with such investments in subsidiaries, branches andassociates and interests in joint ventures is represented by the contribution of those investments to the Group’s retained earnings and amounted to$22,442 million (2011: $25,876 million).28. RETIREMENT BENEFITSThe Group operates a number of defined contribution and defined benefit pension plans. It also operates post employment medical arrangements,principally in southern Africa.Defined contribution plansThe defined contribution pension and medical cost represents the actual contributions payable by the Group to the various plans. At 31 December 2012 therewere no material outstanding or prepaid contributions and so no accrual or prepayment has been disclosed in the balance sheet in relation to these plans.The assets of the defined contribution plans are held separately in independently administered funds. The charge in respect of these plans is calculated on thebasis of the contribution payable by the Group in the financial year. The charge for the year for defined contribution pension plans (net of amounts capitalised)was $262 million (2011: $254 million) and for defined contribution medical plans (net of amounts capitalised) was $69 million (2011: $57 million).Defined benefit pension plans and post employment medical plansFollowing the Group’s acquisition of De Beers on 16 August 2012, the Group has consolidated the defined benefit pension and post employment healthcareplans of De Beers.The majority of the defined benefit pension plans are funded. The assets of these plans are held separately from those of the Group, in independentlyadministered funds, in accordance with statutory requirements or local practice throughout the world. The unfunded liabilities are principally in relation totermination indemnity plans in South America.The post employment medical arrangements provide health benefits to retired employees and certain dependants. Eligibility for cover is dependent uponcertain criteria. The majority of these plans are unfunded, and are principally in southern Africa.The Group’s provision of anti-retroviral therapy to HIV positive staff has not significantly impacted the post employment medical plan liability.Independent qualified actuaries carry out full valuations every three years using the projected unit credit method. The actuaries have updated the valuationsto 31 December 2012.174 Anglo American plc Annual Report 2012
28. RETIREMENT BENEFITS continuedActuarial assumptionsThe principal assumptions used to determine the actuarial present value of benefit obligations and pension charges and credits under IAS 19 EmployeeBenefits are detailed below (shown as weighted averages):SouthernAfricaTheAmericas2012 2011SouthernAfricaTheAmericas%EuropeEuropeDefined benefit pension plansAverage discount rate for plan liabilities 8.1 6.9 4.3 8.5 7.8 4.8Average rate of inflation 6.3 3.5 2.8 6.5 3.6 2.7Average rate of increase in salaries 8.3 6.2 2.9 7.8 6.5 n/aAverage rate of increase of pensions in payment 6.3 3.2 3.1 6.5 3.3 3.0Average long term rate of return on plan assets (3) 8.4 10.2 4.2 9.2 12.8 5.0Post employment medical plansAverage discount rate for plan liabilities 8.0 n/a 3.7 8.5 n/a n/aAverage rate of inflation 6.3 n/a 2.3 6.5 n/a n/aExpected average increase in healthcare costs 7.7 n/a 7.0 7.9 n/a n/a(1) (2) (1) (2)(1)With the exception of De Beers, plans in southern Africa have ceased future accrual of benefits but some benefits remain linked to salary increases.(2)With the exception of De Beers, European plans have ceased future accrual of benefits.(3)The long term expected return on plan assets has been set with reference to current market yields on government and corporate bonds, plus expected equity and corporate bondoutperformanceover government bonds in the relevant jurisdictions. The expected return on cash assets has been set with reference to current bank base rates. The overall long termexpected rate of return for each asset class is weighted by the asset allocation to the asset class at the balance sheet date.Mortality assumptions are determined based on standard mortality tables with adjustments, as appropriate, to reflect experience of conditions locally.In southern Africa, the PA90 tables (2011: PA90 tables) are used. The main plans in Europe use the SAPS tables with plan specific adjustments basedon mortality investigations (2011: SAPS tables). The main plans in the Americas use the RV2009 and AT2000 tables (2011: RV2009 and AT2000 tables).The mortality tables used imply that a male or female aged 60 at the balance sheet date has the following future life expectancy:MaleFemaleYears 2012 2011 2012 2011Southern Africa 20.1 20.9 24.9 25.8The Americas 23.3 23.2 27.4 27.2Europe 28.5 27.4 30.1 30.0Summary of plans by geographyThe Group’s plans in respect of pension and post employment healthcare are summarised as follows:SouthernAfricaTheAmericas Europe Total2012 2011SouthernAfricaTheAmericas Europe TotalUS$ millionAssets (1)Defined benefit pension plans in surplus 176 – – 176 70 – – 70Financial statementsLiabilitiesDefined benefit pension plans in deficit – (225) (603) (828) – (181) (171) (352)Post employment medical plans in deficit (573) – (8) (581) (287) – – (287)(573) (225) (611) (1,409) (287) (181) (171) (639)(1)Amounts are included in ‘Other non-current assets’.Five year summary of plan assets and liabilitiesUS$ million 2012 2011 2010 2009 2008Defined benefit pension plansFair value of plan assets 5,327 2,583 2,732 2,731 2,073Present value of plan liabilities (5,862) (2,792) (2,840) (2,975) (2,157)Net deficit (535) (209) (108) (244) (84)Surplus restriction (117) (73) (59) (106) (61)Net deficit after surplus restriction (652) (282) (167) (350) (145)Actuarial gain/(loss) on plan assets (1) 151 (32) 76 184 (392)Actuarial gain/(loss) on plan liabilities (2) 66 (135) 19 (361) 208Post employment medical plansFair value of plan assets 21 22 25 20 17Present value of plan liabilities (602) (309) (337) (322) (241)Net deficit (581) (287) (312) (302) (224)Actuarial gain on plan assets (3) – 1 2 – 1Actuarial (loss)/gain on plan liabilities (4) (35) (22) (13) (10) 16(1)Net experience gains on pension plan assets were $151 million (2011: losses of $32 million; 2010: gains of $76 million; 2009: gains of $184 million; 2008: losses of $392 million).(2)Net experience losses on pension plan liabilities were $123 million (2011: losses of $10 million; 2010: gains of $38 million; 2009: losses of $17 million; 2008: losses of $29 million).(3)Net experience gains on medical plan assets were nil (2011: gains of $1 million; 2010: gains of $2 million; 2009: nil; 2008: gains of $1 million).(4)Net experience losses on medical plan liabilities were $32 million (2011: losses of $1 million; 2010: gains of $5 million; 2009: losses of $3 million; 2008: losses of $7 million).Anglo American plc Annual Report 2012 175
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A BALANCEDPORTFOLIOWITH THE FUTURE
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Anglo American plc20 Carlton House
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Anglo American Annual Report 2012

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