Rio Tinto Annual Report 2007 - Rio Tinto Financial information by business unit

Rio Tinto Financial information by business unit

**Year ended 31 December 2007**
	Gross sales revenue (a)			EBITDA (b)		Net earnings (c)
	Rio Tinto interest %	2007 US$m	2006 US$m	2007 US$m	2006 US$m	2007 US$m	2006 US$m
Iron Ore
Hamersley Iron (including HIsmelt®)	100.0	6,155	4,416	3,427	2,611	2,151	1,673
Robe River (d)	53.0	1,640	1,379	991	902	503	461
Iron Ore Company of Canada	58.7	943	1,051	298	441	104	145
Rio Tinto Brasil	100.0	61	92	(1)	27	(12)	13
Product group operations		8,799	6,938	4,715	3,981	2,746	2,292
Evaluation projects/other		-	-	(98)	(45)	(95)	(41)
		8,799	6,938	4,617	3,936	2,651	2,251
Energy
Rio Tinto Energy America	100.0	1,560	1,428	331	302	132	177
Rio Tinto Coal Australia	(e)	2,272	2,344	510	920	246	490
Rössing	68.6	486	229	235	71	95	27
Energy Resources of Australia	68.4	303	239	135	79	38	17
Product group operations		4,621	4,240	1,211	1,372	511	711
Evaluation projects/other		-	-	(29)	(14)	(27)	(5)
		4,621	4,240	1,182	1,358	484	706
Aluminium
Rio Tinto Aluminium	(f)	3,511	3,493	1,314	1,389	695	763
Alcan		3,798	-	415	-	424	-
Product group operations		7,309	3,493	1,729	1,389	1,119	763
Evaluation projects/other		-	-	(28)	(24)	(22)	(17)
		7,309	3,493	1,701	1,365	1,097	746
Copper
Kennecott Utah Copper	100.0	3,539	2,829	2,614	2,111	1,649	1,810
Escondida	30.0	3,103	2,575	2,510	2,105	1,525	1,250
Grasberg joint venture	(g)	461	373	296	258	159	122
Palabora	57.7	689	588	202	203	58	52
Kennecott Minerals	100.0	338	277	175	139	106	105
Northparkes	80.0	371	437	212	346	137	229
Product group operations		8,501	7,079	6,009	5,162	3,634	3,568
Evaluation projects/other		-	-	(200)	(44)	(155)	(30)
		8,501	7,079	5,809	5,118	3,479	3,538
Diamonds and Industrial Minerals
Diamonds	(h)	1,020	838	539	491	280	211
Iron and Titanium		1,673	1,449	471	428	164	152
Rio Tinto Minerals	(i)	1,228	1,174	227	196	84	91
Product group operations		3,921	3,461	1,237	1,115	528	454
Evaluation projects/other		-	-	(46)	(54)	(40)	(48)
		3,921	3,461	1,191	1,061	488	406
Other operations		367	229	30	39	15	33
		33,518	25,440	14,530	12,877	8,214	7,680
Other items				(635)	(252)	(526)	(241)
Exploration and evaluation				25	(101)	20	(84)
Net interest						(265)	(17)
Underlying earnings				13,920	12,524	7,443	7,338
Items excluded from Underlying earnings				(309)	42	(131)	100
Total		33,518	25,440	13,611	12,566	7,312	7,438
Depreciation and amortisation in subsidiaries				(2,115)	(1,509)
Impairment reversal/(charges)				(58)	396
Depreciation and amortisation in equity accounted units				(310)	(275)
Taxation and finance items in equity accounted units				(973)	(826)
Profit on ordinary activities before finance items and tax				10,155	10,352

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.

The following changes have been made to the way Rio Tinto presents its financial information by business unit. Full year 2006 results have been restated accordingly.

During 2007, Industrial Minerals and Diamonds were combined to form the Diamonds and Industrial Minerals Product group.

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.

Capital expenditure by Product group now includes capitalised evaluation costs.

**Year ended 31 December 2007**
	Capital expenditure (j)		Depreciation & amortisation		Operating assets (k)		Employees
	2007 US$m	2006 US$m	2007 US$m	2006 US$m	2007 US$m	2006 US$m	2007	2006
Iron Ore
Hamersley Iron (including HIsmelt®)	1,597	1,700	352	231	6,133	4,317	4,786	4,161
Robe River	241	104	104	90	1,877	1,593	873	678
Iron Ore Company of Canada	163	151	78	58	869	651	1,939	1,886
Rio Tinto Brasil	30	18	9	8	135	97	657	522
Other	34	8	3	-	24	4	375	-
	2,065	1,981	546	387	9,038	6,662	8,630	7,247
Energy
Rio Tinto Energy America	226	262	131	116	1,163	1,097	2,435	2,297
Rio Tinto Coal Australia	226	251	165	170	1,755	1,397	2,832	2,462
Rössing	57	38	13	6	151	68	1,175	936
Energy Resources of Australia	80	31	50	32	296	201	365	366
Other	-	-	3	-	34	-	71	-
	589	582	362	324	3,399	2,763	6,878	6,061
Aluminium
Rio Tinto Aluminium	295	236	303	266	4,144	3,607	4,448	4,347
Alcan	317	-	315	-	39,702	-	6,980	-
	612	236	618	266	43,846	3,607	11,428	4,347
Copper
Kennecott Utah Copper	282	295	251	151	1,694	1,789	1,854	1,744
Escondida	170	155	98	96	1,045	792	876	1,072
Grasberg joint venture	76	45	24	43	410	412	2,047	1,781
Palabora	27	18	41	40	84	104	2,072	1,811
Kennecott Minerals	84	78	24	26	236	198	457	409
Northparkes	55	16	22	48	151	89	208	182
Other	22	57	1	-	498	341	162	56
	716	664	461	404	4,118	3,725	7,676	7,055
Diamonds and Industrial Minerals
Diamonds	525	257	181	182	1,241	1,058	1,291	1,354
Iron and Titanium	494	252	119	112	2,202	1,522	3,854	3,728
Rio Tinto Minerals	71	108	82	77	1,165	1,160	2,888	3,016
Other	17	-	-	-	24	4	64	-
	1,107	617	382	371	4,632	3,744	8,097	8,098
Other operations	37	23	2	2	139	208	203	309
	5,126	4,103	2,371	1,754	65,172	20,709	42,912	33,117
Net assets held for sale (l)					4,392	-	5,680	-
Other items	144	174	54	30	360	(40)	3,085	2,128
Less: equity accounted units	(302)	(289)	(310)	(275)
Total	4,968	3,988	2,115	1,509	69,924	20,669	51,677	35,245
Less: net debt					(45,152)	(2,437)
Rio Tinto shareholders' equity					24,772	18,232

Notes

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Gross sales revenue includes 100 per cent of subsidiaries’ sales revenue and the Group’s share of the sales revenue of equity accounted units.
EBITDA of subsidiaries and the Group’s share of EBITDA relating to equity accounted units represents profit before: tax, net finance items, depreciation and amortisation.
Net earnings represent profit after tax for the year 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 do not include amounts that are excluded in arriving at Underlying earnings.
The Group holds 65 per cent of Robe River Iron Associates, of which 30 per cent is held through a 60 per cent owned subsidiary. The Group’s net beneficial interest is therefore 53 per cent, net of amounts attributable to outside equity shareholders.
Includes Rio Tinto’s 75.7 per cent interest in Coal & Allied, which is managed by Rio Tinto Coal Australia, a 100 per cent subsidiary of Rio Tinto.
Includes Rio Tinto’s interests in Rio Tinto Aluminium (100 per cent) and Anglesey Aluminium (51 per cent).
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.
Diamonds includes Rio Tinto’s interests in Argyle (100 per cent), Diavik (60 per cent) and Murowa (77.8 per cent).
Includes Rio Tinto’s interests in Rio Tinto Borax (100 per cent), Dampier Salt (68.4 per cent) and Luzenac Talc (100 per cent).
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.
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.
On this line, operating assets deal with Alcan Packaging and other assets held for sale. The remaining data on this line relates only to Alcan Packaging.