Anglo American Annual Report 2012

FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS32. ACQUISITIONSDe BeersOn 16 August 2012 Anglo American plc acquired an additional 40% of the share capital of De Beers Société Anonyme (De Beers) to bring its totalshareholding to 85%. De Beers is a leading diamond company with expertise in the exploration, mining and marketing of diamonds.The Group funded the acquisition by way of cash consideration of $5.2 billion, less cash acquired of $0.4 billion. The acquisition has been accounted for asa business combination using the acquisition method of accounting with an effective date of 16 August 2012, being the date the Group gained control ofDe Beers.The provisional fair values of identifiable assets and liabilities of De Beers as at the date of acquisition were:US$ million 2012AssetsIntangible assets 1,588Property, plant and equipment (including mineral properties and projects) 8,912Investments in associates 12Deferred tax assets 247Inventory 2,133Other assets (1) 328Total assets 13,220LiabilitiesProvisions for liabilities and charges (including contingent liabilities (2) and retirement benefit obligations) (1,487)Deferred tax liabilities (1,097)Loans and borrowings (1,581)Other liabilities (468)Total liabilities (4,633)Net assets acquired 8,587Non-controlling interests (3) (1,423)Net attributable assets acquired 7,164Goodwill 2,355Net attributable assets including goodwill 9,519ConsiderationCash 5,223Net cash acquired with the subsidiary (407)Book value of existing shareholding 2,686Fair value gain on existing 45% shareholding (4) 2,017Total consideration 9,519(1)The fair value of other assets includes receivables of $202 million.(2)Contingent liabilities of $185 million relating to legal claims in various jurisdictions.(3)Non-controlling interests have been measured at their proportionate share of De Beers’ identifiable net assets.(4)Recognised as a non-operating remeasurement, see note 5.Goodwill recognised arises principally from the significant synergies associated with the Group having control of De Beers, the value associated with theDe Beers’ workforce and the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assetsacquired and their tax bases. No goodwill is expected to be deductible for tax purposes. Intangible assets acquired relate to brand names, customerrelationships and contracts.From the acquisition date, De Beers has contributed $2,353 million of revenue and $159 million of underlying earnings to the Group. If the acquisition hadcompleted on 1 January 2012, De Beers would have contributed revenue of $6,074 million for 2012 (an increase of $3,721 million) and underlying earningsof $399 million (an increase of $87 million).The Group’s attributable share of De Beers’ earnings from the acquisition date after special items and remeasurements (including special items andremeasurements charges of $319 million (after tax) relating to the reversal of fair value uplifts of inventory and depreciation and amortisation on fair valueuplifts of the Group’s pre-existing 45% shareholding) amounted to a $160 million loss. If the acquisition of De Beers had been completed on 1 January 2012,the Group’s attributable share of De Beers’ earnings (including special items and remeasurements charges of $485 million (after tax) relating to the reversalof fair value uplifts of inventory and depreciation and amortisation on fair value uplifts of the Group’s pre-existing 45% shareholding) would have amounted toa $80 million loss (increasing the Group’s loss attributable to equity shareholders by $76 million to $1,569 million).OtherOn 20 July 2012 Anglo American plc increased its shareholding in Kumba Iron Ore Limited by 4.5% through the exercise of options acquired in 2011 and 2012.This increased the Group’s shareholding from 65.2% to 69.7%, for a total cost of $948 million.The Group made no material acquisitions in 2011.182 Anglo American plc Annual Report 2012