Rio Tinto - half year results
Rio Tinto PLC
02 August 2007
Record cash flow from volume growth in strong markets
• Cash flow from operations was at record levels for a first half, at
$5,641 million, 11 per cent higher than the first half of 2006.
• Underlying EBITDA* was a record $6,613 million, seven per cent above
the first half 2006 level of $6,174 million.
• Underlying earnings* of $3,529 million were six per cent below the
corresponding period of 2006, which included $257 million from recognition of
additional net tax assets.
• Net earnings* were $3,253 million, down 14 per cent on the 2006 level
of $3,796 million, mainly as a result of an impairment of Argyle.
• Increased volumes from investment in additional capacity, particularly
in iron ore, contributed $302 million to earnings.
• Rising prices and strong demand for most products increased underlying
earnings by $513 million.
• Industry wide cost pressures impacted the business in the first half,
reducing underlying earnings by $503 million, adjusted for inflation.
• The Group's extensive organic growth pipeline led to record first half
capital expenditure of $1.9 billion in 2007. The major iron ore expansions in
Western Australia are on track, and studies are underway targeting further
significant growth.
• The approval in July of a two million tonne per annum expansion of the
Yarwun alumina refinery in Queensland will strengthen the Group's position in
alumina.
• The accelerated expansion of the Hope Downs mine development to 30
million tonnes per annum was approved.
• Recommended cash offer for Alcan to create a global aluminium industry
leader was announced on 12 July 2007.
Six months to 30 June 2007 2006 Change
(All dollars are US$ millions unless otherwise stated)
Cash flow from operations (incl. dividends from equity accounted units) 5,641 5,085 +11%
Underlying EBITDA* 6,613 6,174 +7%
Underlying earnings* 3,529 3,751 -6%
Net earnings* 3,253 3,796 -14%
Underlying earnings per share - US cents 272.6 278.7 -2%
Earnings per share - US cents 251.3 282.0 -11%
* Net earnings and underlying earnings relate to profit attributable to equity
shareholders of Rio Tinto. Underlying earnings is defined and reconciled to net
earnings on page 4. Underlying EBITDA excludes the same items that are excluded
from underlying earnings.
Chairman's comments
Rio Tinto chairman Paul Skinner said, 'Demand for our products strengthened
during the period, supported by a continued positive growth trend in the global
economy and favourable demand conditions in China in particular. On the supply
side, even though the mining industry is now into the fifth year of a broad
cyclical upswing, its ability to meet that demand is still constrained by a
scarcity of critical mining inputs and, in some cases, a lack of infrastructure
and quality orebodies. These constraints are unlikely to ease in the near term.
'Against this background, the Group's operations performed well, although
continuing industry-wide cost pressures impacted our margins and we remain
focused on this key area.
'Rio Tinto's underlying earnings of $3,529 million in the first half of 2007
were our second highest first half results ever recorded. They were slightly
below the previous half year when we recognised one-off tax benefits in excess
of $250 million. The Group generated excellent cash flows of $5.6 billion from
operations for the period, an average of almost one billion dollars per month,
including dividends from equity accounted units.
'Our financial position is very strong, and our priority remains to use our
financial resources for the value enhancing expansion of the business,
consistent with our strategy of investing in large, long life resources capable
of sustaining competitive advantage over time.
'In line with this strategy, we recently announced a recommended cash offer to
acquire Alcan, the leading Canadian aluminium company, with an outstanding
competitive smelting position based on hydro-power in the provinces of Quebec
and British Columbia. We believe that Alcan's assets and culture fit well with
our own, and that our offer, while compelling for Alcan shareholders, will
create a global leader and add value for our own shareholders in the years to
come. Not only does Alcan bring with it some of the world's lowest cost smelting
operations and sizeable bauxite assets complementary to our own, but it also
adds considerably to our growth pipeline in aluminium.
'The hydro-power assets of Alcan also complement our existing focus on
positioning the Group to compete in a low-carbon environment, which saw the
announcement in May of a major decarbonised energy joint venture with BP -
Hydrogen Energy.
'Following the Alcan acquisition, which we aim to complete in the fourth quarter
of 2007, our balance sheet will be more highly geared than currently, and we
have therefore discontinued our existing capital management programme to focus
on reinforcing our financial position. Since the start of 2005, we have returned
$6.4 billion to shareholders through buybacks and a special dividend.
'We believe that the outlook for aluminium demand, and indeed demand for our
other products, will remain positive while global economic growth remains
strong. While there are concerns about the state of the credit markets,
particularly in the USA, we do not anticipate that these will have a material
short term impact on our markets.'
Chief Executive's comments
Tom Albanese, Rio Tinto's chief executive, said, 'Rio Tinto's long standing
strategy, which is founded on the creation of long term shareholder value
through the pursuit and operation of the world's best orebodies, remains
unchanged.
'Rio Tinto has an industry leading pipeline of organic growth opportunities with
in excess of $9 billion of committed projects across our portfolio and further
significant projects under consideration. Our record programme of investment in
organic growth continued in the first half of 2007, with particular emphasis on
the expansion of our iron ore business in Australia. We are on target and
schedule to reach 220 million tonnes per annum of managed iron ore production in
the Pilbara in 2009, and are now undertaking studies into the potential to
increase annual production capacity to 320 million tonnes.
'The long term growth trend in Chinese iron ore import demand will require
continuing investment by the Group, and will open up further supply
opportunities outside Australia, such as our high quality resource at Simandou
in Guinea, where we are looking at developing a 70 million tonne per annum
operation.
'Our portfolio of copper development projects made progress during the year,
with the Oyu Tolgoi project moving a step closer to development approval, when
the Mongolian Government announced its completion of a draft investment
agreement in June.
'We are pleased that the Alcan board has recommended our cash offer to its
shareholders. Our position in the global aluminium industry will be transformed
by this transaction, which will make us number one global producer of aluminium
and bauxite. We will be a leading alumina producer with the capability to become
number one through organic expansion, such as our recently announced two million
tonne per annum expansion of the Yarwun alumina refinery in Queensland. Our
ongoing investment in common systems across Rio Tinto will accelerate the
integration of Alcan into the wider Group.
'Following completion, we will be a bigger group and will be undertaking a
strategic review to determine which of our businesses have the long term
competitive position to be part of the enlarged Rio Tinto. The proceeds of any
disposals, which are expected to exceed $10 billion, will be used to de-leverage
our balance sheet.
'Operationally, the first six months of 2007 were demanding, as we again pushed
our existing businesses to respond to strong market conditions by maximising
production.
'At Argyle we have taken an impairment reflecting the impacts of industry cost
pressures in Western Australia and difficult ground conditions. The revised
capital budget of the project is now likely to be of the order of $1.5 billion.
'On balance, all our businesses have performed well, but we are alert to
continuing industry-wide cost pressures, notably in Western Australia and in
Queensland. Our iron ore business has experienced higher contractor and
transportation costs particularly following the cyclones earlier this year,
whilst infrastructure related costs at Rio Tinto Coal Australia have impacted
margins in the Energy group. We are putting in place measures to mitigate the
future impact of costs through productivity improvements, the sharing of best
practice and a review of our functional and support costs.'
Net earnings and underlying earnings
To provide insight into the underlying performance of its business, Rio Tinto
presents underlying earnings. The differences between underlying earnings and
net earnings are set out in the table below.
Six months ended 30 June 2007 2006
US$m US$m
Underlying earnings 3,529 3,751
Items excluded from underlying earnings
Impairment charges (314) -
Other 38 45
Net earnings 3,253 3,796
Commentary on the Group financial results
Underlying earnings of $3,529 million and net earnings of $3,253 million were
$222 million and $543 million below the comparable measures for the first half
of 2006. The principal factors explaining the movements are set out in the
table below.
Six months ended 30 June
Underlying Net
earnings earnings
US$m US$m
First half 2006 3,751 3,796
Prices 513
Exchange rates (118)
Inflation (85)
Volumes 302
Costs (503)
Tax (370)
Other 39
(222) (222)
Impairment charges (314)
Other (7)
First half 2007 3,529 3,253
Prices and exchange rates
Prices for major products were above those experienced in 2006. Compared with
the first half of 2006 average copper prices were 13 per cent higher and average
aluminium prices ten per cent higher. The strength of the global iron ore
market was reflected in the 9.5 per cent increase in the benchmark price, which
was mainly effective from 1 April 2007. The seaborne thermal and coking coal
markets were also strong.
Higher copper prices contributed $32 million to underlying earnings compared
with the first half of 2006. This included the impact of changes in the copper
price on the amount realised from provisionally priced sales, mostly at
Escondida and Northparkes, which resulted in a contribution of $109 million to
underlying earnings in the first half of 2007. This compared with a contribution
of $291 million for the corresponding period of 2006.
Molybdenum prices averaged $28 per pound in the first half of 2007, an increase
of 19 per cent compared with the same period of 2006.
There was movement in the US dollar in the first half of 2007 relative to the
currencies in which Rio Tinto incurs the majority of its costs. The average
Australian dollar rate was nine per cent stronger, the South African rand 14 per
cent weaker and the Canadian dollar was relatively unchanged. The effect of
these currency movements was to decrease underlying earnings relative to the
first half of 2006 by $118 million.
Volumes
Higher sales volumes increased earnings by $302 million compared with the first
half of 2006. The main contributors were the ramp-up of iron ore from the
continued expansion of the Pilbara mines, in particular Yandicoogina, higher
volumes of refined copper following the commissioning of the Escondida sulphide
leach plant in the latter half of 2006 and higher gold production from higher
grades at Grasberg.
Costs
Excluding the effects of inflation, higher costs reduced earnings by $503
million. Rio Tinto Coal Australia experienced intense cost pressures from
infrastructure constraints and increased contractor and equipment hire charges
while cyclones in the Pilbara raised contractor and transportation rates at the
iron ore operations. Higher non-cash costs reduced earnings by $76 million. This
was mostly attributable to the impairment reversal at Kennecott Utah Copper in
2006 which is now being depreciated.
Tax
The effective tax rate on underlying earnings, excluding equity accounted units,
was 32 per cent compared with 22 per cent in the first half of 2006. The tax
rate for the first half year of 2006 was reduced by 6.4 percentage points
following recognition of $211 million of additional deferred tax assets,
reflecting improved projections of long term taxable earnings from the Group's
US operations; and following a $46 million reduction in deferred tax provisions
as a result of a reduction in Canadian tax rates.
Items excluded from underlying earnings
A further impairment charge of $314 million after tax has been recognised at
Argyle. The deterioration in value is mainly due to large increases in the
estimated capital cost of the underground project including the effect of
over-heated Western Australian construction industry conditions.
In full year 2006, there was a net reversal of impairments of $44 million.
Other exclusions from underlying earnings were net gains of $38 million ($45
million for the six months to 30 June 2006: $56 million in full year 2006).
Cash flow
Cash flow from operations, including dividends from equity accounted units, was
a first half record at $5,641 million, 11 per cent higher than the first half of
2006.
The Group continued to invest at high levels to grow the business. Net
expenditure on property, plant and equipment and intangible assets was a first
half record at $1,916 million during the first half of 2007. This included the
major port, rail infrastructure and iron ore mine expansions in Western
Australia, the ilmenite mine in Madagascar and the Diavik A418 dike
construction.
Dividends paid in the first half of 2007 of $837 million were $1,187 million
lower than dividends paid in the first half of 2006, which included the special
dividend totalling $1.5 billion. Capital management activity in the first half
of 2007 comprised a $1,417 million buy back of Rio Tinto plc shares from the
2006/07 programme (net of $11 million proceeds from the exercise of options). In
the first half of 2006 capital management totalled $1,098 million through the
on-market buy back of Rio Tinto plc shares.
Balance sheet
The balance sheet remained strong during the period, despite record capital
expenditure, with net debt increasing from $2,437 million at 31 December 2006 to
$2,862 million at 30 June 2007. Debt to total capital remained at 11 per cent
and interest cover was 77 times.
In the first half of 2007, net assets increased by $2,562 million. The Rio Tinto
plc share buy back reduced shareholder equity by $1,361 million.
International Financial Reporting Standards (IFRS)
IFRS require that the profit for the period reported in the income statement
should also include earnings attributable to outside shareholders in
subsidiaries. For the first half of 2007, the profit for the period was $3,401
million (2006 first half $3,968 million) of which $148 million (2006 first half
$172 million) was attributable to outside shareholders, leaving $3,253 million
(2006 first half $3,796 million) of net earnings attributable to Rio Tinto
shareholders. Both net earnings and underlying earnings, which are the focus of
the commentary in this report, deal with amounts attributable to equity
shareholders of Rio Tinto.
Dividends
Dividends are determined in US dollars. The interim dividend is set at one half
of the total dividends declared for the previous year excluding any special
dividends. Therefore, interim dividends equivalent to 52 US cents per share
(2006: 40 US cents per share) have been declared by Rio Tinto plc and Rio Tinto
Limited.
Rio Tinto plc dividends are declared and paid in pounds sterling and Rio Tinto
Limited dividends are declared and paid in Australian dollars, converted at
exchange rates applicable on Tuesday 31 July 2007.
Rio Tinto plc shareholders will be paid an interim dividend of 25.59 pence per
ordinary share (2006: 21.42 pence per share). Rio Tinto Limited shareholders
will be paid an interim dividend of 60.69 Australian cents per ordinary share
(2006: 52.48 Australian cents per share), which will be fully franked. The
Board expects Rio Tinto Limited to be in a position to pay fully franked
dividends for the reasonably foreseeable future.
The respective dividends will be paid on Thursday 6 September 2007 to Rio Tinto
plc shareholders on the register at the close of business on Friday 10 August
2007 and to Rio Tinto Limited shareholders on the register at the close of
business on Tuesday 14 August 2007. The ex-dividend date for both Rio Tinto plc
and Rio Tinto Limited will be Wednesday 8 August 2007. Dividends will be paid to
Rio Tinto ADR holders on Friday 7 September 2007.
As usual, Rio Tinto will operate its Dividend Reinvestment Plan, details of
which can be obtained from the Company Secretaries' offices and from the Rio
Tinto website (www.riotinto.com). The last date for receipt of the election
notice for the Dividend Reinvestment Plans is Wednesday 15 August 2007.
Rio Tinto financial information by business unit
Six months ended 30 June Rio Tinto Gross sales revenue EBITDA (b) Net earnings (c)
US$ millions interest (a)
% 2007 2006 2007 2006 2007 2006
Iron Ore
Hamersley (inc. HIsmelt) 100.0 2,564 1,889 1,398 1,088 861 698
Robe River 53.0 761 608 460 393 233 197
Iron Ore Company of Canada 58.7 379 435 103 168 28 54
Rio Tinto Brasil 100.0 32 43 2 14 (1) 6
Other - - (22) (11) (22) (11)
3,736 2,975 1,941 1,652 1,099 944
Energy
Rio Tinto Energy America 100.0 727 714 139 150 46 90
Rio Tinto Coal Australia (d) 1,127 1,149 306 500 177 272
Rossing 68.6 215 74 110 20 44 7
Energy Resources of Australia 68.4 92 114 25 38 2 8
Other - - (34) (3) (24) (3)
2,161 2,051 546 705 245 374
Aluminium (e) 1,749 1,658 739 673 406 369
Copper
Kennecott Utah Copper 100.0 1,736 1,562 1,267 1,136 785 1,033
Escondida 30.0 1,655 1,311 1,364 1,144 835 700
Grasberg joint venture (f) 183 149 127 140 63 65
Palabora 57.7 352 276 116 105 32 38
Kennecott Minerals 100.0 171 101 93 56 56 45
Northparkes 80.0 227 245 148 208 93 124
Other - - (72) (8) (46) (7)
4,324 3,644 3,043 2,781 1,818 1,998
Diamonds & Minerals
Diamonds (g) 445 411 232 230 93 113
Iron and Titanium 783 664 247 204 79 83
Rio Tinto Minerals (h) 595 588 128 109 60 54
Other - - (23) (19) (20) (17)
1,823 1,663 584 524 212 233
Other operations 137 120 (6) 17 (4) 16
Other items (289) (118) (260) (116)
Exploration and evaluation 55 (60) 25 (53)
Net interest - - (12) (14)
Underlying EBITDA / earnings 6,613 6,174 3,529 3,751
Items excluded from underlying earnings 10 45 (276) 45
Total 13,930 12,111 6,623 6,219 3,253 3,796
Depreciation and amortisation in subsidiaries (865) (706)
Impairment charges (449) -
Depreciation and amortisation in equity accounted units (140) (122)
Taxation and finance items in equity accounted units (507) (427)
Profit on ordinary activities before finance items and tax 4,662 4,964
References above are to notes on page 28
Rio Tinto financial information by business unit (continued)
Six months ended 30 June Rio Tinto Capital Depreciation Operating assets
US$ millions interest expenditure & (k)
(i) amortisation
(j)
% 2007 2006 2007 2006 2007 2006
Iron Ore
Hamersley (inc. HIsmelt) 100.0 854 790 153 98 5,530 3,531
Robe River 53.0 73 36 49 44 1,805 1,587
Iron Ore Company of Canada 58.7 36 37 34 26 755 594
Rio Tinto Brasil 100.0 10 11 3 4 112 88
973 874 239 172 8,202 5,800
Energy
Rio Tinto Energy America 100.0 104 177 63 56 1,139 1,097
Rio Tinto Coal Australia (d) 85 104 85 80 1,592 1,366
Rossing 68.6 17 16 5 4 19 64
Energy Resources of Australia 68.4 17 19 22 16 192 160
Other - - - - 25 -
223 316 175 156 2,967 2,687
Aluminium (e) 120 114 146 125 3,866 3,291
Copper
Kennecott Utah Copper 100.0 86 119 126 75 1,656 1,421
Escondida 30.0 87 103 50 37 1,102 916
Grasberg joint venture (f) 26 22 19 26 359 346
Palabora 57.7 9 12 19 22 55 (245)
Kennecott Minerals 100.0 39 35 12 11 233 162
Northparkes 80.0 22 6 15 30 215 137
Other 13 10 - - 566 39
282 307 241 201 4,186 2,776
Diamonds & Minerals
Diamonds (g) 232 104 81 79 987 1,238
Iron and Titanium 188 86 57 55 1,619 1,349
Rio Tinto Minerals (h) (5) 63 46 37 1,129 1,122
415 253 184 171 3,735 3,709
Other operations 7 15 - - 213 170
Other items 41 75 20 3 324 (344)
Less: equity accounted units (145) (171) (140) (122)
Total 1,916 1,783 865 706 23,493 18,089
Less: net debt (2,862) (2,623)
Total shareholders' equity 20,631 15,466
References above are to notes on page 28
REVIEW OF OPERATIONS
Comparison of underlying earnings
First half 2007 underlying earnings of $3,529 million were $222 million below
the first half underlying earnings of 2006. The table below shows the
difference by product group. All financial amounts in the tables below are US$
millions unless indicated otherwise.
US$m
First half 2006 underlying earnings 3,751
Iron ore 155
Energy (129)
Aluminium 37
Copper (180)
Diamonds & Minerals (21)
Other operations (20)
Exploration and evaluation 78
Interest 2
Other (144)
First half 2007 underlying earnings 3,529
All subsequent references to earnings within the business unit section refer to
underlying earnings. Production numbers represent the Rio Tinto share.
IRON ORE
First half First half Change Full year
2007 2006 2006
Production (million tonnes) 69.4 62.0 +12% 132.8
Gross sales revenue ($ millions) 3,736 2,975 +26% 6,938
Underlying earnings ($ millions) 1,099 944 +16% 2,251
EBITDA ($ millions) 1,941 1,652 +17% 3,936
Capital expenditure ($ millions) 973 874 +11% 1,981
Market conditions
Global iron ore demand remained extremely strong in all markets during the first
half of 2007, with the Chinese market very robust. In light of this continued
strong demand, Rio Tinto announced its intention to undertake studies into a
further expansion of its Pilbara operations' annual production capacity to
around 320 million tonnes.
Hamersley
First half 2007 earnings of $861 million were $163 million above the first half
of 2006. Production in the first half of 2007 was at record levels as
Yandicoogina and other brownfield expansions continued to deliver additional
tonnage.
Increased production rates were achieved during the first half, despite
scheduled shutdowns associated with the integration of major capacity upgrades.
These recently completed major upgrades at Tom Price, Paraburdoo and Dampier
Port performed well.
Hamersley's first half earnings included a net loss of $24 million for HIsmelt
(first half 2006 $13 million net loss) due to scheduled pre-production and
marketing costs.
Robe River
First half earnings of $233 million were $36 million above the first half of
2006. Higher prices and volumes were partially offset by higher costs from
increased demurrage and contractor rates.
Iron Ore Company of Canada
Earnings of $28 million were $26 million below the first half of 2006.
Production of concentrates and pellets was 30 per cent below the first half of
2006 as a result of industrial disruption which lasted for approximately 52
days, and ended on 25 April.
Rio Tinto Brasil
Rio Tinto Brasil reported a loss of $1 million in the first half of 2007
compared with earnings of $6 million in the first half of 2006, as sales volumes
were affected by low availability of third party transport.
Other
Iron ore projects are now reported within the product group. Higher expenditure
was reported at the Simandou project in Guinea as the pre-feasibility study
advanced.
ENERGY
First half First half Change Full year
2007 2006 2006
Production Coal (million tonnes)
US 60.7 61.2 -1% 125.3
Hard coking coal 3.1 2.7 +15% 5.9
Other Australian 12.9 15.7 -18% 31.2
Uranium (000 lbs) 6,006 5,525 +9% 12,561
Gross sales revenue ($ millions) 2,161 2,051 +5% 4,240
Underlying earnings ($ millions) 245 374 -34% 707
EBITDA ($ millions) 546 705 -23% 1,366
Capital expenditure ($ millions) 223 316 -29% 582
US Coal - Rio Tinto Energy America (RTEA)
RTEA's first half 2007 earnings of $46 million were $44 million below the first
half of 2006. Improved prices were offset by higher cash costs, notably higher
stripping costs, increased haul profiles and higher maintenance costs. In the
first half of 2006 a $14 million tax credit was recognised as a deferred tax
asset. There was no such credit recognised in 2007.
US coal production during the first half of 2007 was consistent with the first
half of 2006, with unusually wet spring weather slowing rail shipments and coal
production.
Asia Pacific seaborne coal markets
Following severe wet weather in the Hunter Valley region of New South Wales in
June 2007, Asian seaborne thermal coal prices rose sharply to peak at $70 per
tonne in the first half of 2007. Issues relating to infrastructure controlled by
external parties are likely to maintain market tightness for the foreseeable
future.
Rio Tinto Coal Australia
Earnings of $177 million were $95 million below the first half of 2006, with
higher coking coal volumes unable to compensate for lower thermal coal volumes,
which were constrained by infrastructure issues and wet weather.
Production of hard coking coal benefited from an improvement in the coking coal
market but was restricted due to external infrastructure problems in Queensland.
The New South Wales operations were impacted by heavy rains in June which
resulted in the declaration of force majeure by Rio Tinto's subsidiary Coal &
Allied. Reduced port throughput from infrastructure limitations led to continued
delays in shipping and a resultant decrease in production as the effects were
felt along the Hunter Valley coal chain.
Uranium markets
The uranium market has softened from its recent price highs of $135 per pound.
Market sentiment continues to be positive, with supply disruptions likely to
persist for longer than previously expected.
Rossing
Earnings of $44 million were $37 million above the first half of 2006,
reflecting the benefit of higher realised prices. These more than compensated
for reduced production volumes due to lower grades.
Energy Resources of Australia
The Rio Tinto share of ERA reported earnings of $2 million in the first half of
2007 was $6 million below the first half of 2006, due to lower sales volumes and
higher costs associated with the heavy rains during the first quarter of 2007.
The subsequent flooding of the operational pit 3 led to the declaration of force
majeure on ERA's sales contracts.
The full impact of rising uranium prices will only flow through to sales as new
contracts come into effect.
Other
Energy projects are now reported within the product group. The increased charge
in the first half of 2007 includes Rio Tinto's share of expenditure for the
Hydrogen Energy joint venture.
ALUMINIUM
First half First half Change Full year
2007 2006 2006
Production Bauxite (000 tonnes) 8,462 7,658 +10% 16,139
Alumina (000 tonnes) 1,346 1,632 -18% 3,247
Aluminium (000 tonnes) 428.2 413.7 +3% 844.7
Gross sales revenue ($ millions) 1,749 1,658 +5% 3,493
Underlying earnings ($ millions) 406 369 +10% 746
EBITDA ($ millions) 739 673 +10% 1,365
Capital expenditure ($ millions) 120 114 +5% 236
Prices
The average aluminium price of 126 cents per pound was ten per cent above the
first half 2006 average price. The alumina market remained tight with spot
prices trading at around $365 per tonne. Recent supply disruptions have not had
any strong impact on the spot alumina market. The rate of Chinese alumina
imports has decreased, as domestic production continues to grow rapidly. These
effects, together with the impacts of other price movements, increased earnings
by $79 million.
Bauxite
Half year bauxite production was ten per cent above the first half of 2006
reflecting severe weather conditions that occurred in the prior year and the
commissioning of the second shiploader in late 2006.
Alumina
Alumina production at the Yarwun alumina refinery in the first half of 2007 was
seven per cent higher than the corresponding period of 2006 due to improved
process stability. Rio Tinto's overall share of alumina production in the first
half of 2007 was 18 per cent lower than the same quarter of 2006 following the
sale of its interest in the Eurallumina refinery in October 2006.
Aluminium
Production at the aluminium smelters during the first half of 2007 was three per
cent above the corresponding half of 2006. Much of this improvement was
attributable to the Tiwai Point smelter where production was eight per cent
higher than the first half of 2006 when low rainfall in the hydropower catchment
area resulted in cells being taken out of circuit.
Production costs were adversely affected by higher input prices.
COPPER
First half First half Change Full year
2007 2006 2006
Production Mined copper (000 tonnes) 384.5 410.8 -6% 803.5
Refined copper (000 tonnes) 202.3 169.5 +19% 299.2
Mined molybdenum (000 tonnes) 8.5 7.9 +7% 16.8
Mined gold (000 oz) 606 461 +32% 1,003
Gross sales revenue ($ millions) 4,324 3,644 +19% 7,079
Underlying earnings ($ millions) 1,818 1,998 -9% 3,538
EBITDA ($ millions) 3,043 2,781 +9% 5,118
Capital expenditure ($ millions) 282 307 -8% 697
Prices
The average copper price of 307 cents per pound was 13 per cent above the first
half 2006 average price. This increased earnings by $32 million, net of the
effects of provisional pricing movements, which were a credit to earnings of
$109 million in the first half of 2007 compared with a credit of $291 million in
the corresponding period of 2006.
Kennecott Utah Copper
First half earnings of $785 million were $248 million lower than the first half
of 2006 due to lower volumes of molybdenum sales, higher non-cash costs and the
absence of tax credits. In 2006 the operation benefited from a tax credit of
$215 million, following recognition of deferred tax assets.
Lower grades of copper and gold at Bingham Canyon, which were in line with the
operation's expectations, resulted in mined copper production declining by 16
per cent compared with the first half of 2006. Molybdenum production increased
by seven per cent compared with the corresponding half of 2006 as a result of
higher recoveries, with molybdenum inventories replenished following a draw down
in 2006. The smelter continued to operate at targeted levels with refined
production of copper and gold consistent with the first half of 2006.
Escondida
Earnings of $835 million were $135 million above the first half of 2006. Refined
copper production increased by 180 per cent compared with the first half of 2006
due to the ramp up of sulphide leach production in the latter half of 2006.
Grasberg joint venture
Earnings of $63 million were $2 million below the first half of 2006. Changes in
the metal sharing rate for 2007 were a major factor in lowering Rio Tinto's
share of copper production and increasing its share of gold production in the
first half of 2007, compared with the same half of 2006. Higher gold grades also
contributed to this positive variance.
Kennecott Minerals
Earnings of $56 million were $11 million above the first half of 2006. Higher
volumes and higher prices were partly offset by the absence of a $10 million
deferred tax asset recognised in 2006.
Palabora
Earnings of $32 million were $6 million below the first half of 2006, with
improved volumes offset by higher cash costs.
Northparkes
Earnings of $93 million were $31 million below the first half of 2006. Copper
production was 27 per cent below the first half of 2006, in line with an
expected decline in grades in the E26 block cave as this resource nears the end
of life ahead of bringing the new E48 block cave into production.
Other
Copper projects are now reported within the product group. Higher costs
associated with projects including La Granja and Resolution reduced earnings by
$39 million compared with the first half of 2006.
The Oyu Tolgoi copper-gold project moved a step closer to development approval
with the Mongolian Government's announcement that it had completed the draft
Investment Agreement on 26 June 2007. The Agreement has been submitted to the
Mongolian National Parliament. This is expected to be the final step in the
Government's approval process. Approval will also be needed from the boards of
Rio Tinto and Ivanhoe Mines, the Canadian joint venture partner. The agreement
provides for the Mongolian Government to own a 34 per cent stake in the project.
DIAMONDS AND MINERALS
First half First half Change Full year
2007 2006 2006
Production Diamonds (000 carats) 11,446 15,530 -26% 35,162
Titanium dioxide (000 tonnes) 718 697 +3% 1,415
Borates (000 tonnes) 274 271 +1% 553
Salt (000 tonnes) 2,075 2,650 -22% 5,405
Talc (000 tonnes) 679 727 -7% 1,392
Gross sales revenue ($ millions) 1,823 1,663 +10% 3,461
Underlying earnings ($ millions) 212 233 -9% 407
EBITDA ($ millions) 584 524 +11% 1,062
Capital expenditure ($ millions) 415 253 +64% 617
This restructures the previous Diamonds and Industrial Minerals product groups
from May 2007.
Diamond markets
Stocks accumulated by cutting centres in 2006 continued to be drawn down and
some shortages of higher quality rough diamonds are starting to emerge. This is
driving increasingly positive sentiment in the rough market, although
expectations for the lower quality product are more subdued.
Argyle
Earnings of $29 million were $12 million below the first half of 2006. Lower
prices for rough diamonds were only partly compensated by higher sales volumes
and lower non-cash costs.
Diavik
Earnings of $64 million were $6 million below the first half of 2006. Record
production at Diavik was achieved during the first half with strong throughput
and continued higher grades contributing to the 30 per cent increase in
production compared with the first half of 2006. 2006 earnings included a $21
million release of deferred tax provisions following a reduction in the Canadian
corporate tax rate.
Murowa
Murowa broke even in the first half of 2007, compared with earnings of $2
million for the same period of 2006.
Iron & Titanium
Earnings of $79 million were $4 million below the first half of 2006. Global
demand for titanium dioxide feedstocks remained firm in the first half of 2007
due to domestic shortages and heightened demand for use in the pigment industry.
In 2006, a reduction in the Canadian corporate tax rate resulted in an $18
million release of deferred tax provisions. This did not recur in 2007.
Rio Tinto Minerals
Earnings of $60 million were $6 million above the first half of 2006 with higher
prices and property sales offsetting the impact of a stronger Euro, lower
volumes and increased costs.
Other
Diamonds and Minerals projects are now reported within the product group. This
includes the potash project in Argentina which is in the final stages of
feasibility study.
OTHER OPERATIONS
First half First half Change Full year
2007 2006 2006
Underlying earnings ($ millions) (4) 16 -125% 33
The sale of the last remaining gold inventories at Kelian generated earnings of
$15 million in the first half of 2006, accounting for much of the above
variance. At Kennecott Land's Project Daybreak, land sales remained constant.
During the first half of 2007, over 300 residential lots were sold, in line with
the corresponding period of 2006.
OTHER ITEMS
First half First half Change Full year
2007 2006 2006
Underlying earnings ($ millions) (260) (116) -124% (243)
The increase in other items can be attributed to a higher technology spend, a
higher settlement of claims by the captive insurer and the absence of accounting
policy changes in 2007, compared with a positive impact on the first half of
2006.
EXPLORATION AND EVALUATION
First half First half Change Full year
2007 2006 2006
Post-tax credit / (charge) ($ millions) 25 (53) +147% (84)
Central exploration and evaluation credits of $25 million, on a post-tax basis,
were 147 per cent lower than the first half of 2006. Higher greenfield
expenditure was offset by increased divestments including the sale of the
Penasquito royalty rights. A summary of activity for the period is as follows:
Product Group Advanced projects Greenfield programmes
Aluminium Curua, Brazil: Government-sponsored Brazil, Australia
environmental management plans expected to
take two to three years.
Copper Sulawesi nickel, Indonesia: Contract of Russia (RioNor JV), Kazakhstan, US,
Work negotiations continued Mexico, Chile, Peru, Argentina
Lakeview nickel-copper, US: resource
estimation work underway
Diamonds & Minerals Bunder diamonds, India; India, Canada, Russia, Mauritania and Mali
Xai Xai and Inhambane ilmenite, (diamonds); Australia, Canada, US and
Mozambique; Turkey (industrial minerals)
Jarandol and Jadar borates,Serbia
Namekara vermiculite, Uganda:order of
magnitude studies underway
Energy Chapudi thermal coal, South Africa: order Colombia, Canada, US, South Africa and
of magnitude study completed Mongolia
Whitehorse thermal coal and Sweetwater
uranium, US: order of magnitude studies
underway
Iron Ore Pilbara, Australia: delineation drilling Brazil and Guinea; title applications in
underway at several advanced prospects several new countries
Capital projects
Project Estimated Status/Milestones
cost
(100%)
Ongoing
Copper - Kennecott Utah Copper (Rio Tinto 100%) $170m The project was approved in February
East 1 pushback. The project extends the life of 2005 and work on the pushback
the open pit to 2017 while retaining options for continues. The pebble crushing unit
further underground or open pit mining thereafter. was commissioned in the third quarter
of 2006.
Diamonds - Construction at Diavik (Rio Tinto 60%) $265m The project was approved in 2004. The
of the A418 dike, and funding for further study of A418 dike was closed off in late 2005
the viability of underground mining, including the with dewatering completed in 2006.
construction of an exploratory decline. Pre-stripping commenced in 2006 with
production from the A418 pipe
expected to begin in late 2007.
Construction of the exploratory
decline is complete.
Iron ore - Brownfields mine expansion of $530m The project was approved in October
Hamersley's (Rio Tinto 100%) Yandicoogina mine from 2005 and completion is expected by
36 million tonnes per annum to 52 million tonnes the end of the third quarter of 2007
per annum ahead of schedule and on budget.
Iron ore - Expansion of Hamersley's (Rio Tinto $803m This project was also approved in
100%) Dampier port (Phase B) from 116 million October 2005 and completion is
tonnes per annum to 140 million tonnes per annum expected by the end of 2007 on
capacity and additional rolling stock and schedule and on budget.
infrastructure.
Titanium dioxide - Construction by QMM (Rio Tinto $850m Basic infrastructure is being put in
80%) of a greenfield ilmenite operation in place and the port construction
Madagascar and associated upgrade of processing contract was awarded in 2006. First
facilities at QIT. production is scheduled for 2008.
Gold - Development of Cortez Hills (Rio Tinto 40%) $504m Approved in September 2005, the
project continues to focus on
permitting requirements. The project
is on time and on budget.
Energy - Rossing (Rio Tinto 68.6%) uranium mine $82m Approved in December 2005, works are
life extension to 2016 on schedule and on budget to prolong
the life of the mine to 2016 and
beyond.
Diamonds - Argyle (Rio Tinto 100%) development of Of the order of Approved in December 2005, the
underground mine, extending the life of the mine to $1.5 billion underground development is
2018. transitioning from single exploratory
decline to multi-phase tunnelling.
Iron ore - Hope Downs development (Rio Tinto share: $980m Construction is well advanced. First
50% of mine and 100% of infrastructure). production is expected in early 2008.
Construction of 22 million tonnes per annum mine
and related infrastructure.
Copper - Northparkes (Rio Tinto 80%) E48 block cave $160m Approved in November 2006.
project extending mine life to 2016 Underground development has commenced
and is on schedule for May 2009
production start.
Project Estimated Status/Milestones
cost
(100%)
Recently approved
Energy - Clermont (Rio Tinto 50.1%) will produce $750m Approved in January 2007, first
12.2 million tonnes per annum, replacing Blair shipments are expected in the second
Athol. quarter of 2010 with full capacity
being reached in 2013.
Iron ore - Cape Lambert port expansion (Rio Tinto $860m Approved in January 2007, the project
share 53%) from 55 to 80 million tonnes per annum. is forecast to be complete by the end
of 2008, with progressive capacity
ramp up in the first half of 2009.
Alumina - Expansion of Yarwun Alumina Refinery from $1.8bn Approved in July 2007, the expansion
1.4 to 3.4 million tonnes per annum. will more than double annual
production at Yarwun and is expected
to come onstream by 2011.
Iron ore - Expansion of Hope Downs South (Rio Tinto $350m Approved in August 2007, the
share 50%) from 22 to 30 million tonnes per annum. expansion will be complete by early
2009.
Price & exchange rate sensitivities
The following sensitivities give the estimated effect on underlying earnings
assuming that each individual price or exchange rate moved in isolation. The
relationship between currencies and commodity prices is a complex one and
movements in exchange rates can cause movements in commodity prices and vice
versa. The exchange rate sensitivities quoted below include the effect on
operating costs of movements in exchange rates but exclude the effect due to the
revaluation of foreign currency working capital. They should therefore be used
with care.
Average price/exchange rate for Change Effect on full year
first half 2007 underlying earnings
US$m
Copper 307c/lb +/- 31c/lb 436
Aluminium 126c/lb +/-13c/lb 198
Gold $659/oz +/- $66/oz 43
Molybdenum $28/lb +/- $3/lb 69
Australian dollar 81USc +/-8USc 409
Canadian dollar 88USc +/-9USc 74
South African rand 14USc +/-1USc 22
CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements with respect to the
financial condition, results of operations and business of the Rio Tinto Group.
The words 'intend', 'aim', 'project', 'anticipate', 'estimate', 'plan', '
believes', 'expects', 'may', 'should', 'will', or similar expressions, commonly
identify such forward looking statements. Examples of forward looking statements
in this announcement include, without limitation, those regarding anticipated
production or construction dates, costs, outputs and productive lives of assets
or similar factors. Forward looking statements involve known and unknown risks,
uncertainties, assumptions and other factors set forth in this document that are
beyond the Group's control. For example, future ore reserves will be based in
part on market prices that may vary significantly from current levels. These may
materially affect the timing and feasibility of particular developments. Other
factors that could affect the Group's results include the ability to produce and
transport products profitably, demand for our products, the effect of foreign
currency exchange rates on market prices and operating costs, and activities by
governmental authorities, such as changes in taxation or regulation, and
political uncertainty.
In light of these risks, uncertainties and assumptions, actual results could be
materially different from any future results expressed or implied by these
forward looking statements which speak only as at the date of this report.
Except as required by applicable regulations or by law, the Group does not
undertake any obligation to publicly update or revise any forward looking
statements, whether as a result of new information or future events. The Group
cannot guarantee that its forward looking statements will not differ materially
from actual results.
For further information, please contact:
LONDON AUSTRALIA
Media Relations Media Relations
Christina Mills Ian Head
Office: +44 (0) 20 8080 1306 Office: +61 (0) 3 9283 3620
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Nick Cobban Amanda Buckley
Office: +44 (0) 20 8080 1305 Office: +61 (0) 3 9283 3627
Mobile: +44 (0) 7920 041 003 Mobile: +61 (0) 419 801 349
Investor Relations Investor Relations
Nigel Jones Dave Skinner
Office: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628
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Office: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639
Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792
Website: www.riotinto.com
High resolution photographs available at: www.newscast.co.uk
Group income statement
Six months Six months Year to 31
to 30 June to 30 June December
2007 2006 2006
US$m US$m US$m
Gross sales revenue (including share of equity accounted units) (a) 13,930 12,111 25,440
Consolidated sales revenue 12,055 10,621 22,465
Net operating costs (excluding items shown separately below) (7,746) (6,344) (13,650)
Impairment (charges)/net reversals (449) - 396
Exploration and evaluation costs (b) (63) (113) (237)
Operating profit 3,797 4,164 8,974
Share of profit after tax of equity accounted units 865 800 1,378
Profit before finance items and taxation 4,662 4,964 10,352
Finance items
Exchange gains on external net debt and intragroup balances 65 29 46
Gains/(losses) on currency and interest rate derivatives not
qualifying
for hedge accounting 23 (18) 35
Interest receivable and similar income 46 64 106
Interest payable and similar charges (67) (104) (160)
Amortisation of discount related to provisions (70) (56) (139)
(3) (85) (112)
Profit before taxation 4,659 4,879 10,240
Taxation (1,258) (911) (2,373)
Profit for the period 3,401 3,968 7,867
- attributable to outside equity shareholders 148 172 429
- attributable to equity shareholders of Rio Tinto (Net earnings) 3,253 3,796 7,438
Basic earnings per ordinary share (c) 251.3c 282.0c 557.8c
Diluted earnings per ordinary share 250.4c 280.9c 555.6c
Dividends paid during the period (US$m) 837 2,024 2,573
Dividends per share: paid during the period
- ordinary dividend 64.0c 41.5c 81.5c
- special dividend - 110.0c 110.0c
Dividends per share: declared in the announcement of the results for the period
- ordinary dividend 52.0c 40.0c 64.0c
(a) Gross sales revenue includes the sales revenue of equity accounted units
of US$1,875 million (half year 2006: US$1,490 million; full year 2006: US$2,975
million) in addition to Consolidated sales revenue, which relates only to
subsidiary companies.
(b) Exploration and evaluation costs are stated net of gains on disposal of
undeveloped properties totalling US$131 million (half year 2006: US$nil; full
year 2006: US$46 million).
(c) For the purpose of calculating basic earnings per ordinary share, the
weighted average number of Rio Tinto plc and Rio Tinto Limited shares
outstanding during the period was 1,294.4 million, being the weighted average
number of Rio Tinto plc shares outstanding (1,008.7 million) plus the weighted
average number of Rio Tinto Limited shares outstanding not held by Rio Tinto plc
(285.7 million).
Group cash flow statement
Six months Six months Year to 31
to 30 June to 30 June December
2007 2006 2006
US$m US$m US$m
Cash flow from consolidated operations 4,950 4,297 9,196
Dividends from equity accounted units 691 788 1,727
Cash flow from operations 5,641 5,085 10,923
Net interest paid (69) (49) (128)
Dividends paid to outside shareholders (71) (122) (193)
Tax paid (1,747) (1,615) (2,799)
Cash flow from operating activities 3,754 3,299 7,803
Cash used in investing activities
(Acquisitions)/disposals of subsidiaries, joint ventures and (17) 3 (279)
associates
Purchase of property, plant and equipment and intangible assets (1,942) (1,778) (3,992)
Sales of other financial assets 18 286 293
Purchases of other financial assets (197) (30) (167)
Other investing cash flows 243 6 56
Cash used in investing activities (1,895) (1,513) (4,089)
Cash flow before financing activities 1,859 1,786 3,714
Cash used in financing activities
Equity dividends paid to Rio Tinto shareholders (837) (2,024) (2,573)
Own shares purchased from Rio Tinto shareholders (1,417) (1,098) (2,370)
Proceeds from issue of ordinary shares in Rio Tinto 10 30 31
Proceeds from issue of new borrowings 1,383 38 483
Repayment of borrowings (843) (142) (1,102)
Other financing cash flows 23 5 142
Cash used in financing activities (1,681) (3,191) (5,389)
Effects of exchange rates on cash and cash equivalents (10) (3) 30
Net increase/(decrease) in cash and cash equivalents 168 (1,408) (1,645)
Opening cash and cash equivalents 722 2,367 2,367
Closing cash and cash equivalents 890 959 722
Cash flow from consolidated operations
Profit for the period 3,401 3,968 7,867
Adjustments for:
Taxation 1,258 911 2,373
Finance items 3 85 112
Share of profit after tax of equity accounted units (865) (800) (1,378)
Impairment (reversals) less charges 449 - (396)
Depreciation and amortisation 865 706 1,509
Provisions 133 (11) 60
Utilisation of provisions (116) (148) (271)
Change in inventories (77) (269) (454)
Change in trade and other receivables 132 (232) (394)
Change in trade and other payables (88) 38 116
Other items (145) 49 52
4,950 4,297 9,196
Group balance sheet
30 June 30 June 31 December
2007 2006 2006
US$m US$m US$m
Non current assets
Goodwill 883 1,022 841
Intangible assets 518 247 384
Property, plant and equipment 24,045 19,178 22,207
Investments in equity accounted units 2,761 2,014 2,235
Loans to equity accounted units 123 139 136
Inventories 104 82 99
Trade and other receivables 1,304 770 983
Deferred tax assets 144 281 225
Tax recoverable 4 127 135
Other financial assets 647 238 374
30,533 24,098 27,619
Current assets
Inventories 2,724 2,300 2,540
Trade and other receivables 2,840 2,727 2,938
Loans to equity accounted units 19 15 15
Tax recoverable 79 31 79
Other financial assets 252 545 567
Cash and cash equivalents 926 989 736
6,840 6,607 6,875
Current liabilities
Bank overdrafts repayable on demand (36) (30) (14)
Borrowings (1,793) (2,275) (1,490)
Trade and other payables (2,633) (2,169) (2,693)
Other financial liabilities (341) (227) (193)
Tax payable (676) (642) (1,024)
Provisions (407) (301) (366)
(5,886) (5,644) (5,780)
Net current assets 954 963 1,095
Non current liabilities
Borrowings (1,957) (1,686) (2,007)
Trade and other payables (369) (240) (362)
Other financial liabilities (224) (448) (233)
Tax payable (38) (91) (86)
Deferred tax liabilities (2,453) (2,214) (2,339)
Provisions (4,499) (4,043) (4,302)
(9,540) (8,722) (9,329)
Net assets 21,947 16,339 19,385
Capital and reserves
Share capital
- Rio Tinto plc 172 172 172
- Rio Tinto Limited (excluding Rio Tinto plc interest) 1,178 1,029 1,099
Share premium account 1,929 1,918 1,919
Other reserves 1,647 (435) 641
Retained earnings 15,705 12,782 14,401
Equity attributable to Rio Tinto shareholders 20,631 15,466 18,232
Attributable to outside equity shareholders 1,316 873 1,153
Total equity 21,947 16,339 19,385
(a) On 12 July 2007, Rio Tinto and Alcan Inc. announced an agreement for Rio
Tinto to make an offer to acquire all of Alcan's outstanding common shares for
US$101 per common share in a recommended all cash transaction. The offer
represents a total consideration of approximately US$38.1 billion for the equity
of Alcan.
(b) At 30 June 2007, Rio Tinto plc had 998.8 million ordinary shares in
issue and Rio Tinto Limited had 285.7 million shares in issue, excluding those
held by Rio Tinto plc.
(c) At 30 June 2007, net tangible assets per share amounted to US$14.97 per
share (half year 2006: US$10.64 per share, full year 2006: US$12.99 per share).
Group statement of recognised income and expense (SORIE)
Attributable Outside Six months Six months to Year to 31
to interests to 30 June 30 June December
shareholders 2007 2006 2006
of Rio Tinto Total Total Total
US$m US$m US$m US$m US$m
Currency translation adjustment 1,051 80 1,131 170 866
Cash flow hedge fair value losses (55) (81) (136) (597) (378)
Gains on available for sale securities 54 2 56 14 19
Cash flow hedge losses transferred to the income
statement 29 30 59 42 137
Gains on available for sale securities transferred
to the income statement (15) - (15) (4) (4)
Actuarial gains on post retirement benefit plans 332 15 347 244 373
Net tax recognised directly in equity (47) 17 (30) 22 102
Net income/(expense) recognised directly in equity 1,349 63 1,412 (109) 1,115
Profit after tax for the period 3,253 148 3,401 3,968 7,867
Total recognised income for the period 4,602 211 4,813 3,859 8,982
Group statement of changes in equity
Attributable Outside Six months Six months to Year to 31
to interests to 30 June 30 June December
shareholders 2007 2006 2006
of Rio Tinto Total Total Total
US$m US$m US$m US$m US$m
Opening balance 18,232 1,153 19,385 15,739 15,739
Total recognised income for the year 4,602 211 4,813 3,859 8,982
Dividends (837) (71) (908) (2,160) (2,766)
Own shares purchased from Rio Tinto -
shareholders
- Under capital management programme (1,361) - (1,361) (1,098) (2,658)
- To satisfy share options (31) - (31) (45) (49)
Ordinary shares issued 10 - 10 30 31
Subsidiary company share issue - 23 23 8 69
Employee share options charged to -
the income statement 16 - 16 11 23
Other movements - - - (5) 14
Closing balance 20,631 1,316 21,947 16,339 19,385
Reconciliation with Australian IFRS
The Group's financial statements have been prepared in accordance with IFRS as
adopted by the European Union ('EU IFRS'), which differs in certain respects
from the version of IFRS that is applicable in Australia ('Australian IFRS').
Prior to 1 January 2004, the Group's financial statements were prepared in
accordance with UK GAAP. Under EU IFRS, goodwill on acquisitions prior to 1998,
which was eliminated directly against equity in the Group's UK GAAP financial
statements, has not been reinstated. This was permitted under the rules
governing the transition to EU IFRS set out in IFRS 1. The equivalent
Australian Standard, AASB 1, does not provide for the netting of goodwill
against equity. As a consequence, shareholders' funds under Australian IFRS
include the residue of such goodwill, which amounted to US$736 million at 30
June 2007 (half year 2006: US$744 million; full year 2006: US$740 million).
Save for the exception described above, the Group's financial statements drawn
up in accordance with EU IFRS are consistent with the requirements of Australian
IFRS.
Reconciliation of Net earnings to Underlying earnings
Pre-tax Taxation Outside Six months Six months Year to 31
interests to 30 June to 30 June December
2007 2006 2006
Net Net Net
amount amount amount
US$m US$m US$m
Exclusions from Underlying earnings
Profits less losses on disposal of interests in
businesses (a) - - - - 10 3
Impairment (charges)/net reversals (b) (449) 135 - (314) - 44
Exchange differences and derivatives:
- Exchange gains/(losses) on external net
debt and intragroup balances (c) 65 (59) - 6 12 (16)
- Gains/(losses) on currency and interest rate
derivatives not qualifying for hedge accounting 23 (8) 4 19 (13) 30
(d), (e)
Other exclusions (f) 12 1 - 13 36 39
Total excluded from Underlying earnings (349) 69 4 (276) 45 100
Net earnings 4,659 (1,258) (148) 3,253 3,796 7,438
Underlying earnings 5,008 (1,327) (152) 3,529 3,751 7,338
'Underlying earnings' is an additional measure of earnings, which is reported by
Rio Tinto to provide greater understanding of the underlying business
performance of its operations. Underlying earnings and Net earnings both
represent amounts attributable to Rio Tinto shareholders. Items (a) to (f)
below are excluded from Net earnings in arriving at Underlying earnings.
(a) Gains and losses arising on the disposal of interests in businesses.
(b) Charges and credits relating to impairment of non-current assets other
than undeveloped properties.
(c) Exchange gains and losses on US dollar debt and intragroup balances.
(d) Valuation changes on currency and interest rate derivatives which are
ineligible for hedge accounting, other than those embedded in commercial
contracts.
(e) The currency revaluation of embedded US dollar derivatives contained in
contracts held by entities whose functional currency is not the US dollar.
(f) Other credits and charges that, individually, or in aggregate if of a
similar type, are of a nature or size to require exclusion in order to provide
additional insight into underlying business performance.
The impairment charge for the six months to 30 June 2007 relates to Argyle
Diamonds and is based on an assessment of fair value less costs to sell. The
deterioration in value is mainly due to large increases in the estimated capital
cost of the underground project.
Consolidated net debt
30 June 30 June 31 December
2007 2006 2006
Net debt Net debt Net debt
US$m US$m US$m
Analysis of changes in consolidated net debt
Opening balance (2,437) (1,313) (1,313)
Adjustment on currency translation (163) (24) (56)
Exchange gains recognised in the income statement 103 7 38
(Losses)/gains on derivatives related to net debt (3) 25 44
Cash movement excluding exchange movements (362) (1,300) (1,146)
Other movements - (18) (4)
Closing balance (2,862) (2,623) (2,437)
Analysis of closing balance
Borrowings (3,750) (3,961) (3,497)
Bank overdrafts repayable on demand (36) (30) (14)
Cash and cash equivalents 926 989 736
Other liquid resources 6 6 6
Derivatives related to net debt (8) 373 332
Consolidated net debt (2,862) (2,623) (2,437)
Primary segmental analysis (by product group)
Six months Six months Year to 31
to 30 June to 30 June December
2007 2006 2006
US$m US$m US$m
Sales revenue
Iron ore 3,736 2,975 6,938
Energy 2,076 1,974 4,070
Aluminium 1,749 1,658 3,493
Copper 2,593 2,291 4,396
Diamonds and Minerals 1,764 1,603 3,339
Other 137 120 229
Consolidated sales revenue 12,055 10,621 22,465
Share of equity accounted units 1,875 1,490 2,975
Gross sales revenue 13,930 12,111 25,440
Consolidated profit before finance items and taxation
Iron ore 1,702 1,480 3,847
Energy 348 523 801
Aluminium 603 500 1,069
Copper 1,472 1,501 3,333
Diamonds and Minerals (79) 330 311
Exploration and evaluation not attributed to product 55 (60) (101)
groups
Other (304) (110) (286)
Operating profit (segment result) 3,797 4,164 8,974
Share of profit after tax of equity accounted units
Copper 842 710 1,271
Other product groups 23 90 107
Profit before finance items and taxation 4,662 4,964 10,352
(a) The product groups shown above reflect the Group's management structure
and are the Group's primary segments in accordance with IAS 14. The analysis
deals with: the sales revenue, profit before finance costs and taxation for
subsidiary companies and proportionally consolidated units. The amounts
presented for each product group exclude equity accounted units, but include the
amounts attributable to outside equity shareholders. The product groups are
consistent with those identified in the financial information by business unit
data included on pages 7 and 8 of this news release. However, that information
includes the results of equity accounted units and presents different financial
measures.
(b) The analysis of profit before finance costs and taxation includes the
profit on disposal of interests in businesses (including investments), and
impairment charges/reversals, which are excluded from Underlying earnings.
Geographical analysis (by destination)
Six months Six months Year to 31
First half First half Year to 30 June to 30 June December
2007 2006 2006 2007 2006 2006
% % % US$m US$m US$m
Gross sales revenue
22.2 23.8 21.9 North America 3,093 2,882 5,575
17.0 17.3 17.2 Europe 2,368 2,095 4,378
18.8 19.8 19.6 Japan 2,620 2,396 4,986
17.3 14.1 16.0 China 2,404 1,709 4,062
14.0 13.6 13.5 Other Asia 1,949 1,643 3,438
5.3 6.0 5.8 Australia and New Zealand 739 723 1,477
5.4 5.4 6.0 Other 757 663 1,524
100.0 100.0 100.0 13,930 12,111 25,440
Prima facie tax reconciliation
Six months Six months Year to 31
to 30 June to 30 June December
2007 2006 2006
US$m US$m US$m
Profit before taxation 4,659 4,879 10,240
Deduct: share of profit after tax of equity accounted units (865) (800) (1,378)
Parent companies' and subsidiaries' profit before tax 3,794 4,079 8,862
Prima facie tax payable at UK and Australian rate of 30% 1,138 1,224 2,659
Impact of items excluded in arriving at Underlying earnings 36 8 201
Other permanent differences
Additional recognition of deferred tax assets (a) - (211) (335)
Utilisation of previously unrecognised deferred tax assets - (68) (140)
Adjustments to deferred tax liabilities following changes in tax rates (10) (46) (46)
(b)
Other tax rates applicable outside the UK and Australia 139 122 242
Resource depletion and other depreciation allowances (86) (105) (187)
Research, development and other investment allowances (8) (9) (21)
Other 49 (4) -
84 (321) (487)
Total taxation charge (c) (d) (e) 1,258 911 2,373
(a) The 'Additional recognition of deferred tax assets' of US$211 million in
half year 2006 (full year 2006: US$335 million) reflected improved prospects for
future earnings from the Group's US operations.
(b) The 'Adjustments to deferred tax liabilities following changes in tax
rates', totalling US$10 million (2006 half year and full year: US$46 million),
resulted from a reduction in Canadian tax rates.
(c) This tax reconciliation relates to the parent companies, subsidiaries
and proportionally consolidated units. The Group's share of profit of equity
accounted units is net of tax charges of US$478 million (2006 half year: US$403
million; 2006 full year: US$770 million).
(d) The tax reconciliation for all periods analyses US tax on a regular tax
basis.
(e) The total taxation charge includes UK - US$(39) million, Australia -
US$596 million and Other - US$701 million (half year 2006: UK - US$33 million,
Australia - US$675 million and Other - US$203 million; full year 2006: UK -
US$41 million, Australia - US$1,420 million, Other - US$912 million).
Other disclosures
Capital commitments
Capital commitments, including those relating to joint ventures and associates,
were US$2,827 million (at 30 June 2006: US$1,846 million; at 31 December 2006:
US$2,413 million).
Contingent liabilities
There were no material changes in contingent liabilities or contingent assets
during the period.
The disagreement with the Australian tax office relating to certain transactions
undertaken in 1997 to acquire franking credits was settled on 14 June 2007,
resulting in an additional tax charge of US$46 million for the six months to 30
June 2007.
Share buyback
Between 1 January 2007 and 30 June 2007, Rio Tinto plc bought back 25,510,000 of
its own shares from public shareholders, to be held in treasury, at an average
buy back price of £29.23. During the year to 31 December 2006, Rio Tinto plc
bought back 46,340,000 shares, to be held in treasury, at an average buyback
price of £27.27 per share and 800,000 shares were bought back at an average
buyback price of £27.36 and cancelled. Between 1 January 2006 and 30 June 2006,
Rio Tinto plc bought back 21,965,000 of its own shares from public shareholders,
to be held in treasury, at an average buyback price of £28.02. The total
consideration paid in half year 2007 was US$1,417 million (half year 2006:
US$1,098 million; full year 2006: US$2,370 million) after deducting proceeds of
US$11 million for treasury shares reissued (half year 2006: nil; full year 2006:
US$24 million).
Related party matters
Transactions and balances with equity accounted units are summarised below.
Purchases relate largely to amounts charged by equity accounted units for toll
processing of bauxite and alumina. Sales relate largely to charges for supply of
coal to jointly controlled marketing entities for onsale to third party
customers.
Six months Six months Year to 31
to 30 June to 30 June December
2007 2006 2006
Income statement items US$m US$m US$m
Purchases from equity accounted units (719) (645) (1,364)
Sales to equity accounted units 692 573 1,497
Balance sheet items US$m US$m US$m
Investments in equity accounted units 2,761 2,014 2,235
Loans to equity accounted units 142 154 151
Loans from equity accounted units (111) (32) (65)
Trade and other receivables: amounts due from equity accounted units 722 521 648
Trade and other payables: amounts due to equity accounted units (103) (112) (143)
Cash flow statement items US$m US$m US$m
Funding of equity accounted units (18) (13) (47)
Accounting policies
The condensed financial information included in this report is unaudited and has
been prepared in accordance with International Financial Reporting Standards
adopted by the European Union ('EU IFRS') under the requirements of IAS 34
'Interim financial reporting', and an Order under section 340 of the Australian
Corporations Act 2001 issued by the Australian Securities and Investments
Commission on 27 January 2006 (as amended on 22 December 2006).
The EU IFRS financial information has been drawn up on the basis of accounting
policies consistent with those applied in the financial statements for the year
to 31 December 2006.
Certain prior year information has been reclassified to conform with the current
year presentation. Exploration and evaluation costs charged against income were
previously included in 'Cash used in investing activities' but are now included
within 'Cash flow from operating activities'. As a result, exploration and
evaluation costs expensed of US$117 million and US$273 million have been
reclassified in the comparative figures for half year 2006 and full year 2006
respectively, within the Cash flow statement.
Status of financial information
These interim financial results do not have the status of statutory accounts
within the meaning of Section 240 of the Companies Act 1985.
Financial information for the year to 31 December 2006 has been extracted from
the full financial statements prepared under the historical cost convention, as
modified by the revaluation of certain derivative contracts and financial
assets, as filed with the Registrar of Companies. The Auditors' report on the
full financial statements for the year to 31 December 2006 was unqualified and
did not contain statements under section 237(2) of the United Kingdom Companies
Act 1985 (regarding adequacy of accounting records and returns), or under 237(3)
(regarding provision of necessary information and explanations).
Directors' declaration
In the directors' opinion:
The financial statements and notes have been prepared in accordance with the
Listing Rules of the Financial Services Authority in the United Kingdom,
applicable accounting standards and the Australian Corporations Act 2001 (as
modified by an order of the Australian Securities and Investments Commission
dated 27 January 2006) (as amended on 22 December 2006) using the most
appropriate accounting policies for Rio Tinto's business and supported by
reasonable and prudent judgements.
The financial statements and notes give a true and fair view of the Rio Tinto
Group's financial position as at 30 June 2007 and of its performance, as
represented by the results of its operations, recognised income and expense and
its cash flows for the half year then ended.
There are reasonable grounds to believe that each of the Rio Tinto Group, Rio
Tinto Limited and Rio Tinto plc, has adequate financial resources to continue in
operational existence for the foreseeable future and to pay its debts as and
when they become due and payable.
By order of the board
G R Elliott
Finance Director
2 August 2007
Auditors' Independence Declaration
As lead auditor for the review of Rio Tinto Limited for the half year ended 30
June 2007, I declare that to the best of my knowledge and belief, there have
been:
a) no contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the review; and
b) no contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of Rio Tinto Limited and the entities it
controlled during the period.
Rob Hubbard Brisbane
Partner 2 August 2007
PricewaterhouseCoopers
Independent review report to Rio Tinto plc and Rio Tinto Limited
('the Companies')
Introduction
We have been instructed by the Companies to review the financial information of
the Rio Tinto Group (comprising the Companies and their subsidiaries, associates
and joint ventures) for the six months ended 30 June 2007 which comprises the
Group interim balance sheet as at 30 June 2007, the Group interim statements of
income, cash flows and recognised income and expense for the six months then
ended and the related notes (including the financial information by Business
Unit). We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors of the Companies.
The directors are responsible for preparing the interim report in accordance
with the Listing Rules of the Financial Services Authority in the United Kingdom
and the Australian Corporations Act 2001 as amended by the Australian Securities
and Investments Commission Order dated 27 January 2006 (as amended on 22
December 2006).
The Listing Rules of the London Stock Exchange require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
This interim report has been prepared in accordance with International
Accounting Standard 34, 'Interim financial reporting' as adopted by the European
Union.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with auditing standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information. This report, including the conclusion, has been
prepared for and only for Rio Tinto plc for the purpose of the Listing Rules of
the Financial Services Authority in the United Kingdom and for Rio Tinto Limited
for the purpose of the Australian Corporations Act 2001 as amended by the
Australian Securities and Investments Commission Order dated 27 January 2006 (as
amended on 22 December 2006) and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
PricewaterhouseCoopers LLP PricewaterhouseCoopers
Chartered Accountants Chartered Accountants
London Brisbane
2 August 2007 2 August 2007
in respect of Rio Tinto plc in respect of Rio Tinto Limited
Notes to financial information by business unit (Pages 7 and 8)
The following changes have been made to the presentation of this information.
Half year 2006 results have been reclassified accordingly.
Product groups/business segments
During 2007, Industrial Minerals and Diamonds were combined to form the Diamonds
and Minerals product group.
Other
Project evaluation and other costs specifically attributable to product groups
are now reported as part of product group earnings. Previously, these were
reported centrally in 'Exploration and evaluation and Other items',
respectively.
Capitalised evaluation costs
Capital expenditure by product group now includes capitalised evaluation costs.
Business units have been classified according to the Group's management
structure. Generally, this structure has regard to the primary product of each
business unit but there are exceptions. For example, the Copper group includes
certain gold operations.
(a) Gross sales revenue includes 100 per cent of subsidiaries' sales revenue
and the Group's share of the sales revenue of equity accounted units.
(b) EBITDA of subsidiaries and the Group's share of equity accounted units
represents profit before: tax, net finance items, depreciation and amortisation.
(c) Net earnings represent profit after tax for the period attributable to
the Rio Tinto Group. Earnings of subsidiaries are stated before finance items
but after the amortisation of the discount related to provisions. Earnings
attributable to equity accounted units include interest charges and amortisation
of discount. Earnings attributed to business units exclude amounts that are
excluded in arriving at Underlying earnings.
(d) Includes Rio Tinto's 75.7 per cent interest in Coal and Allied, which is
managed by Rio Tinto Coal Australia, a 100 per cent subsidiary of Rio Tinto.
(e) Includes Rio Tinto's interests in Rio Tinto Aluminum (100 per cent) and
Anglesey Aluminium (51 per cent).
(f) Under the terms of a joint venture agreement, Rio Tinto is entitled to
40 per cent of additional material mined as a consequence of expansions and
developments of the Grasberg facilities since 1998.
(g) Diamonds includes Rio Tinto's interests in Argyle (100 per cent), Diavik
(60 per cent) and Murowa (77.8 per cent).
(h) Includes Rio Tinto's interests in Rio Tinto Borax (100 per cent),
Dampier Salt (64.9 per cent) and Talc (100 per cent).
(i) Capital expenditure comprises the net cash outflow on purchases less
disposals of property, plant and equipment, capitalised evaluation costs and
purchases less disposals of other intangible assets. The details provided
include 100 per cent of subsidiaries' capital expenditure and Rio Tinto's share
of the capital expenditure of equity accounted units. Amounts relating to equity
accounted units not specifically funded by Rio Tinto are deducted before
arriving at total capital expenditure for the Group.
(j) Depreciation figures include 100 per cent of subsidiaries'
depreciation and amortisation and include Rio Tinto's share of the depreciation
and amortisation of equity accounted units. Amounts relating to equity accounted
units are deducted before arriving at the total depreciation and amortisation
charge. Depreciation and amortisation includes US$15 million (2006 half year:
US$15 million; 2006 full year: US$40 million) relating to deferred stripping
costs.
(k) Operating assets of subsidiaries comprise net assets before deducting
net debt, less outside shareholders' interests which are calculated by reference
to the net assets of the relevant companies (i.e. net of such companies' debt).
For equity accounted units, Rio Tinto's net investment is shown.
Summary financial data in Australian dollars, Sterling and US dollars
Six Six Six Six Six Six Year to 31
months months months months months months December
to 30 to 30 to 30 to 30 to 30 to 30 2006
June June June June June June
2007 2006 2007 2006 2007 2006
A$m A$m £m £m US$m US$m US$m
17,198 16,366 7,071 6,766 Gross sales revenue 13,930 12,111 25,440
14,883 14,353 6,119 5,934 Consolidated sales revenue 12,055 10,621 22,465
5,752 6,593 2,365 2,726 Profit before taxation 4,659 4,879 10,240
4,199 5,362 1,726 2,217 Profit for the period 3,401 3,968 7,867
4,016 5,130 1,651 2,121 Net earnings attributable to Rio Tinto 3,253 3,796 7,438
shareholders
4,357 5,069 1,791 2,096 Underlying earnings * 3,529 3,751 7,338
310.2c 381.1c 127.6p 157.6p Basic earnings per ordinary share 251.3c 282.0c 557.8c
336.5c 376.6c 138.4p 155.7p Basic underlying earnings per ordinary 272.6c 278.7c 550.3c
share *
Dividends per share to Rio Tinto
shareholders
82.84c 200.28c 32.63p 85.24p - paid (2006 including special dividend) 64.0c 151.5c 191.5c
60.69c 52.48c 25.59p 21.42p - proposed 52.0c 40.0c 64.0c
2,295 2,414 944 998 Cash flow before financing activities 1,859 1,786 3,714
(3,367) (3,545) (1,431) (1,426) Net debt (2,862) (2,623) (2,437)
24,272 20,900 10,316 8,405 Equity attributable to Rio Tinto 20,631 15,466 18,232
shareholders
* Underlying earnings for the six months to 30 June 2007 are stated after
excluding items totalling US$(276) million (half year 2006: US$45 million, full
year 2006: US$100 million), which are analysed on page 23.
The financial data above have been extracted from the primary financial
statements set out on pages 19 to 22. The Australian dollar and Sterling
amounts are based on the US dollar amounts, retranslated at average or closing
rates as appropriate, except for the dividends which are the actual amounts
payable.
Metal prices and exchange rates
Six months Six months Change Year to 31
to 30 June to 30 June 1H07 v 1H06 December
2007 2006 2006
Metal prices - average for the period
Copper - US cents/lb 307c 271c 13% 306c
Aluminium - US cents/lb 126c 115c 10% 116c
Gold - US$/troy oz US$659 US$588 12% US$602
Molybdenum - US$/lb US$28 US$23 19% US$25
Average exchange rates in US$
Sterling 1.97 1.79 10% 1.84
Australian dollar 0.81 0.74 9% 0.75
Canadian dollar 0.88 0.88 - 0.88
South African rand 0.14 0.16 (14%) 0.15
Period end exchange rates in US$
Sterling 2.00 1.84 9% 1.96
Australian dollar 0.85 0.74 15% 0.79
Canadian dollar 0.95 0.90 6% 0.86
South African rand 0.14 0.14 - 0.14
Availability of this report
This report is available on the Rio Tinto website.
IMPORTANT INFORMATION:
Rio Tinto Canada Holding Inc. (referred to herein as the 'Offeror'), a
corporation incorporated under the laws of Canada, and an indirect wholly-owned
subsidiary of Rio Tinto plc, a public limited company organised under the laws
of England and Wales ('Rio Tinto'), is offering to purchase (the 'Offer'), upon
the terms and subject to the conditions set forth in the Offer and in the
related letter of transmittal, each issued and outstanding common share of Alcan
Inc. ('Alcan'), together with the associated rights (the 'Alcan Rights') (and,
together with the common shares of Alcan, the 'Alcan Common Shares') issued and
outstanding under Alcan's Shareholder Rights Plan which is described in this
take-over bid circular, for U.S.$101 (equivalent to Cdn$105.44 based on the July
20, 2007 Bank of Canada Noon Rate) per Alcan Common Share in cash (less any
applicable withholding taxes and without interest).
The Offer will be open for acceptance until 6:00 p.m., Eastern Time, on
September 24, 2007, unless extended or withdrawn by the Offeror.
This announcement is for information purposes only and does not constitute or
form part of any offer or invitation to purchase, otherwise acquire, subscribe
for, sell, otherwise dispose of or issue, or any solicitation of any offer to
sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for,
any security. The Offer (as the same may be varied or extended in accordance
with applicable law) is being made exclusively by means of, and subject to the
terms and conditions set out in, the take-over bid circular delivered to Alcan
and filed with Canadian provincial securities regulators and the United States
Securities and Exchange Commission (the 'SEC') and mailed to Alcan shareholders.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or distributed
should inform themselves about and observe such restrictions.
In connection with the Offer, Rio Tinto has filed with the Canadian securities
regulatory authorities and the SEC a take-over bid circular as well as ancillary
documents such as a letter of transmittal and a notice of guaranteed delivery
and Alcan has filed a directors' circular with respect to the Offer. Rio Tinto
has also filed with the SEC a Tender Offer statement on Schedule TO (the
'Schedule TO') and Alcan has filed with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (the 'Schedule 14D-9'). SHAREHOLDERS OF ALCAN ARE
URGED TO READ THE TAKE-OVER BID CIRCULAR (INCLUDING THE LETTER OF TRANSMITTAL
AND NOTICE OF GUARANTEED DELIVERY), THE SCHEDULE TO (INCLUDING THE OFFER AND
TAKEOVER BID CIRCULAR, LETTER OF TRANSMITTAL AND RELATED TENDER OFFER DOCUMENTS)
AND THE SCHEDULE 14D-9 AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE OFFER.
The take-over bid circular as well as other materials filed with the Canadian
securities regulatory authorities are available electronically without charge at
www.sedar.com. The Schedule TO and the Schedule 14D-9 are available
electronically without charge at the SEC's website, www.sec.gov. Materials filed
with the SEC or the Canadian securities regulatory authorities may also be
obtained without charge at Rio Tinto's website, www.riotinto.com
While the Offer is being made to all holders of Alcan Common Shares, this
announcement does not constitute an offer or a solicitation in any jurisdiction
in which such offer or solicitation is unlawful. The Offer is not being made in,
nor will deposits be accepted in, any jurisdiction in which the making or
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Rio Tinto may, in its sole discretion, take such action
as they may deem necessary to extend the Offer in any such jurisdiction.
This information is provided by RNS
The company news service from the London Stock Exchange
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