Anglo American Annual Report 2012

negligible margins being realised uponthe subsequent sale of inventory heldat the acquisition date. The reversalof fair value uplifts on inventory soldin 2012 of $421 million has beenexcluded from the Group’s underlyingearnings so as not to distort theoperating margins of De Beers andto provide more useful informationabout the performance of the Group.OtherA charge of $159 million has arisenat Loma de Níquel due to thecancellation of its mining concessionsin November 2012.Other impairments and relatedcharges of $230 million(2011: $70 million) relates to variousimpairments across the Group,including an impairment of $42 millionof fixed assets relating to onerouscontracts at Callide (MetallurgicalCoal); an impairment of $44 millionrelating to Wesizwe, an available forsale asset held in Platinum where thefair value has had a significant andprolonged decline; and $50 millionof asset impairments recognised inSamancor, an associate investment.The charge of $386 million inrelation to onerous contractsprincipally reflects a provisionincrease of $292 million for coalsupply agreements inherited onacquisition of Callide in 2000.Operating remeasurementsOperating remeasurements reflect anet loss of $112 million (2011: loss of$74 million) principally in respect ofnon-hedge derivatives related tocapital expenditure in Iron Ore Brazil.Derivatives which have been realisedduring the period had a cumulative netgain since their inception of $71 million(2011: $383 million). The depreciationcharge arising due to the fair valueuplift on the pre-existing 45%shareholding of De Beers, which wasrequired on acquisition of a controllingstake, is $41 million in 2012.Non-operating special itemsIn May 2012, the CompetitionCommission approved the formationof a 50:50 joint venture between theGroup and Lafarge combining theircement, aggregates, ready-mixconcrete, asphalt and asphaltsurfacing, maintenance services, andwaste services businesses in the UKsubject to a number of prior conditions.Full year underlying operating profit variances$bn12.011.010.09.08.07.06.05.04.03.02.01.00Actual 2011 11.1Bulks (2.9)Traded (1.0)Price (1) (3.9)Exchange 0.9Inflation (2) (0.6)7.6Sales volume (3) 0.2Cash costs (4) (0.3)Strikes (5) (0.5)Depreciation (0.2)Associates (0.3)De Beers (6) (0.2)Other (0.1)Actual 2012 6.2Price (1) (3.9)Exchange 0.9Inflation (2) (0.6)Sales volume (3) 0.2Cash costs (4) (0.3)Strikes (5) (0.5)Depreciation (0.2)Associates (0.3)De Beers (6) (0.2)Other (0.1)(1)Price variance calculated as increase/decrease in price multiplied by current period sales volume.(2)Inflation variance calculated using CPI on prior period cash operating costs that have been impacteddirectly by inflation.(3)Volume variance calculated as the increase/decrease in sales multiplied by prior period profit margin;Full impact of Los Bronces expansion project ($0.6bn) and Kolomela ($0.4bn) operating profit vs. 2011is included within Volume.(4)Includes stripping and inventory movements.(5)Lost sales volume measured at forgone 2012 cash contribution.(6)De Beers was acquired on 16 August 2012. Variance reflects all movements associated with De Beersin 2012.Reconciliation of loss for the year to underlying earnings$m7,0006,0005,0004,0003,0002,0001,0000-1,000-2,000(1,493)7,039112594(1,988)88(1,110)(403)2,839Loss for the year (1,493)Operating special items 7,039Operating remeasurements 112Non-operating special items 594Non-operating remeasurement (1,988)Financing remeasurements 88Special items and remeasurements tax (1,110)Non-controlling interests on special items (403)Underlying earnings 2,839Operating and financial reviewAnglo American plc Annual Report 2012 45