- Annual Review 2006
- Overview
- Chairman's message
- Interview with the chief executive
- Selected financial data
- Features
- Review of operations
- Financial information by business unit
- Summary financial statements
- Australian Corporations Act - summary of ASIC relief
- Independent auditors' statement
- Management overview
- Directors' report
- Remuneration report
- Corporate governance
- Audit committee charter
- Shareholder information
- Useful addresses
- Investor calendar
- Publications
Part 2
Dividends
Final dividends of 32.63 pence or 82.84 Australian cents per share will be paid on 13 April 2007. Full details of dividends paid and the dividend policy can be found on the Shareholder information page.
Annual general meetings
The 2007 annual general meetings will be held on 13 April in London and on 27 April in Perth. Notices of the 2007 annual general meetings are set out in separate letters to the shareholders of each Company.
Directors
The names of the directors who served during the year, together with their biographical details, directorships of other companies in the past three years and the period of each directorship are shown on the Management overview .
In December 2006 the board announced that Tom Albanese will succeed Leigh Clifford as chief executive of Rio Tinto with effect from 1 May 2007. Leigh Clifford will retire as a director at the conclusion of the annual general meetings in 2007.
Michael Fitzpatrick, who was appointed a non executive director on 6 June 2006, retires and offers himself for election at the 2007 annual general meetings. Ashton Calvert, Guy Elliott, Lord Kerr and Sir Richard Sykes retire by rotation and, being eligible, offer themselves for re-election. Sir Richard is standing for re-election for another term of office at the 2007 annual general meetings but it is his intention to retire at the conclusion of the annual general meetings in 2008.
Details of directors' service contracts and letters of appointment can be found on the Service contracts page and Chairman and non executive director remuneration page respectively. A table of directors' attendance at board and committee meetings is in part 3 of the Directors' report.
Remuneration of directors and executives
A discussion of the Group's policy for determining the nature and amount of remuneration of directors and senior executives, and of the relationship between that policy and the Group's performance, appears in the Remuneration report. The Remuneration report forms part of the Directors' report and includes details of the nature and amount of each element of the remuneration (including options) of each of the directors and of each of the product group chief executives, being the key management personnel and highest paid executives below board level in respect of whom disclosures are required in 2006.
Secretaries
Details of the company secretary of each of Rio Tinto plc and Rio Tinto Limited together with their qualifications and experience are set out on the Product group chief executives page.
Indemnities and insurance
The articles of association and constitution of the Companies require them to indemnify officers of the Companies, including officers of wholly owned subsidiaries, against liabilities arising from the conduct of the Group's business, to the extent permitted by law.
The Group has therefore purchased directors' and officers' insurance during the year. In broad terms, the insurance indemnifies individual directors' and officers' personal legal liability and costs for claims arising out of actions taken in connection with Group business. It is a condition of the insurance policy that detailed terms and premiums paid cannot be disclosed.
Employment policies and communication
The average number of people employed during the year by Rio Tinto, including the Group's proportionate share of consolidated companies and equity accounted units, was approximately 35,000 (2005: 32,000). Of these, about 14,000 were located in Australia and New Zealand, around 10,000 in the US and Canada and 1,000 in the United Kingdom.
Rio Tinto's employment policies are set out in its statement of business practice, The way we work.
Rio Tinto is committed to equality of opportunity for all, as set out in The way we work, and applies this philosophy to recruitment, development and promotion of individuals. Within this philosophy, each operating company is further encouraged to develop its own policies and practices to suit individual circumstances. Group companies employ disabled people and accept the need to maintain and develop careers for them. If an employee becomes disabled and, as a result, is unable to perform his or her current duties, every effort is made to offer suitable alternative employment and to assist with retraining.
Rio Tinto respects the right of employees worldwide to choose whether or not they wish to be represented collectively.
Group companies actively promote a healthy and safe working environment through training and communication with employees. For further information about Group staff and health and safety initiatives, please see page 19.
Post retirement benefits are provided by Rio Tinto and its major subsidiaries in accordance with local conditions and good practice in the countries concerned.
The Group provides clear and timely communication with its employees concerning business performance and corporate developments. It endeavours to maintain effective channels of communication through an internal communications team, which manages the release of information to employees across the Group's businesses. Information is released through a number of forums including electronic and paper newsletters and bulletins, video and the Group's intranet. Individual operations also invite employees to briefings outlining business performance including results, health, safety and environmental matters.
Rio Tinto operates worldwide share plans which, taking account of local country tax and securities regulation, aim to facilitate employee shareholding. The directors believe that this is a good way for employees to participate in the success of the Group.
Corporate governance
A full report on corporate governance can be found in the Corporate governance section.
Donations
Based on the London Benchmarking Group model, worldwide expenditure on community programmes by Rio Tinto managed businesses amounted to US$96.4 million (2005: US$93.4 million) and is described on page 33 of the 2006 Annual report and financial statements, and more fully in the 2006 Sustainable development review.
Total community spending in Australia amounted to A$87.0 million (2005: A$76.8 million). Donations in the UK during 2006 amounted to £2.5 million (2005: £2.7 million) of which £0.5 million (2005: £0.5 million) was for charitable purposes as defined by the Companies Act 1985 and £2.0 million (2005: £2.2 million) for other community purposes.
As in previous years, no donations were made for political purposes in the EU, Australia or elsewhere, as defined by the UK Companies Act 1985 as amended by the Political Parties, Elections and Referendums Act 2000.
Governmental regulations
Rio Tinto is subject to extensive governmental regulations affecting all aspects of its operations and consistently seeks to apply best practice in all of its activities. Due to Rio Tinto's product and geographical spread, there is unlikely to be any single governmental regulation that could have a material effect on the Group's business.
Rio Tinto's operations in Australia, New Zealand, and Indonesia are subject to state, provincial and federal regulations of general application governing mining and processing, land tenure and use, environmental requirements, including site specific environmental licences, permits and statutory authorisations, workplace health and safety, trade and export, corporations, competition, access to infrastructure, foreign investment and taxation. Some operations are conducted under specific agreements with the respective governments and associated acts of parliament. In addition, Rio Tinto's uranium operations in the Northern Territory, Australia and Namibia are subject to specific regulation in relation to mining and the export of uranium.
US and Canada based operations are subject to local, state, provincial and national regulations governing land tenure and use, environmental aspects of operations, product and workplace health and safety, trade and export administration, corporations, competition, securities and taxation.
The South African Mineral and Petroleum Resources Development Act 2002, as read with the Empowerment Charter for the South African Mining Industry, targets the transfer (for fair value) of 26 per cent ownership of existing South African mining assets to historically disadvantaged South Africans (HDSAs) within ten years. Attached to the Empowerment Charter is a "scorecard" by which companies will be judged on their progress towards empowerment and the attainment of the target transfer of 26 per cent ownership. The scorecard also provides that in relation to existing mining assets, 15 per cent ownership should vest in HDSAs within five years of 1 May 2004. Rio Tinto anticipates that the government of South Africa will continue working towards the introduction of new royalty payments in respect of mining tenements, expected to become effective during 2009.
Environmental regulation
Rio Tinto measures its performance against environmental regulation referred to in the previous section by rating incidents on a low, moderate, high, or critical scale of likelihood and consequence of impacting the environment. High and critical ratings are reported to the Executive committee and the board Committee on social and environmental accountability, including progress with remedial actions. Prosecutions and other breaches are also used to gauge Rio Tinto's performance. In 2006, there were eight reportable incidents, the same number as in 2005. Three of these incidents resulted in spills which caused minor contamination.
Four operations incurred fines in 2006 amounting to US$56,779 (predominantly relating to incidents in 2005) compared with three operations incurring fines of US$67,900 during 2005. The 2006 fines included:
- US$38,500 imposed by the Utah State government's Department of Environmental Quality, Division of Air Quality against Kennecott Utah Copper for exceeding the permissable concentration of emissions of fine particles from its smelter near Salt Lake City, Utah on two occasions. However, the mass emission rate was below the threshold permitted.
- US$12,900 imposed by the United States Environmental Protection Agency following a spill at Greens Creek base and precious metals mine, Alaska of four gallons of diesel fuel during exploration drilling. The company and the drilling contractor have implemented additional controls and training to prevent any further spills.
Further information in respect of the Group's environmental performance is in the 2006 Sustainable development review available on the Rio Tinto website.