Anglo American Annual Report 2012

OPERATING AND FINANCIAL REVIEW GROUP FINANCIAL PERFORMANCEwell as the industrial action at Kumbaand Platinum and the extended banand subsequent loss of miningconcessions at Loma de Níquel.Industry-wide, above-CPI costpressures continued, particularly inSouth Africa and Australia, althoughwere mitigated by the continuedpositive performance of our assetoptimisation and procurementprogrammes.Group underlying earnings were$2,839 million, a 54% decreaseon 2011, which reflects the operationalresults above and a reduction inour shareholding in Anglo AmericanSur (AA Sur), partially offset by theincreased holding in Kumba Iron Ore.Net finance costs, beforeremeasurements, excludingassociates, were $288 million(2011: $20 million).The effective rate of tax, before specialitems and remeasurements andincluding attributable share ofassociates’ tax, increased from 28.3%in 2011 to 29.0%.Group underlying earnings per sharewere $2.26 compared with $5.06in 2011.Special items andremeasurementsOperating special itemsMinas-RioAn impairment charge of$4,960 million has been recorded inrelation to the Minas-Rio iron oreproject (Iron Ore Brazil). Of this charge,$1,105 million has been recordedagainst goodwill and $3,855 millionhas been recorded against miningproperties, with an associated deferredtax credit of $960 million. The post-taximpairment charge is $4,000 million.Platinum operationsThe impairment charge of $860 millionrelates to certain Platinum projectsand other assets, not in use, that arenot considered economically viable inthe current market environment. Thecharge includes a write-off of fair valueuplifts associated with these assetsheld at a Group level of $89 million.Reversal of De Beers inventory upliftInventory held by De Beers at the dateof the acquisition is required to berecognised at fair value underInternational Financial ReportingStandards (IFRS). This results inSummary income statement$ millionYear ended31 Dec 2012Year ended31 Dec 2011Operating profit before special items5,405 9,668and remeasurementsOperating special items (6,977) (164)Operating remeasurements (116) (65)Operating (loss)/profit from subsidiaries and joint (1,688) 9,439venturesNon-operating special items and remeasurements 1,394 183Share of net income from associates432 977(see reconciliation below)Total profit from operations and associates 138 10,599Net finance costs before remeasurements (288) (20)Financing remeasurements (89) 203(Loss)/profit before tax (239) 10,782Income tax expense (375) (2,860)(Loss)/profit for the financial year (614) 7,922Non-controlling interests (879) (1,753)(Loss)/profit for the financial year attributable(1,493) 6,169to equity shareholders of the CompanyBasic earnings per share ($) (1.19) 5.10Group operating profit including associatesbefore special items and remeasurements (1) 6,164 11,095Operating profit from associates before special itemsand remeasurements759 1,427Operating special items and remeasurements (58) (18)Net profit on disposals – 20Net finance costs (before special items and remeasurements) (58) (48)Financing special items and remeasurements 1 (7)Income tax expense (after special items and remeasurements) (205) (384)Non-controlling interests (after special items and remeasurements) (7) (13)Share of net income from associates 432 977(1)Operating profit before special items and remeasurements from subsidiaries and joint ventureswas $5,405 million (2011: $9,668 million) and attributable share from associates was $759 million(2011: $1,427 million). For special items and remeasurements, see note 5 to the financial statements.44 Anglo American plc Annual Report 2012