Anglo American Annual Report 2012
Anglo American Annual Report 2012
Anglo American Annual Report 2012
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negligible margins being realised uponthe subsequent sale of inventory heldat the acquisition date. The reversalof fair value uplifts on inventory soldin <strong>2012</strong> 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 <strong>2012</strong>.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 $41 million in <strong>2012</strong>.Non-operating special itemsIn May <strong>2012</strong>, the CompetitionCommission approved the formationof a 50:50 joint venture between theGroup and Lafarge combining theircement, aggregates, ready-mixconcrete, asphalt and asphaltsurfacing, maintenance services, andwaste services businesses in the UKsubject to a number of prior conditions.Full year underlying operating profit variances$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 <strong>2012</strong> 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 ($0.4bn) operating profit vs. 2011is included within Volume.(4)Includes stripping and inventory movements.(5)Lost sales volume measured at forgone <strong>2012</strong> cash contribution.(6)De Beers was acquired on 16 August <strong>2012</strong>. Variance reflects all movements associated with De Beersin <strong>2012</strong>.Reconciliation of loss for the year to underlying earnings$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 review<strong>Anglo</strong> <strong>American</strong> plc <strong>Annual</strong> <strong>Report</strong> <strong>2012</strong> 45