2016 financial statements - Rio Tinto

1 2016 financial statementsContentsPagePrimary financial statementsGroup income statement110 Group statement of comprehensive income111 Group cash flow statement112 Group balance sheet113 Group statement of changes in equity114 Reconciliation with Australian Accounting Standards115 Outline of dual listed companies structure and basis offinancial statements115 Notes to the 2016 financial statementsGroup income statement and cash flow statementNote 1 Principal accounting policies116 Note 2 Operating segments128 Note 3 Operating segments additional information131 Note 4 Net operating costs (excluding items shown separately)132 Note 5 Employment costs132 Note 6 Impairment charges and reversals133 Note 7 Share of profit after tax of equity accounted units134 Note 8 Finance income and finance costs134 Note 9 Taxation135 Note 10 Earnings/(loss) per ordinary share136 Note 11 Dividends136 Group balance sheetNote 12 Goodwill137 Note 13 Intangible assets138 Note 14 Property, plant and equipment139 Note 15 Investments in equity accounted units140 Note 16 Inventories141 Note 17 Deferred taxation141 Note 18 Trade and other receivables142 Note 19 Assets and liabilities held for sale143 Note 20 Other financial assets (including non-quasi equityloans to equity accounted units)

2 143 Note 21 Cash and cash equivalents143 Note 22 Borrowings and other financial liabilities144 Note 23 Capitalised finance leases145 Note 24 Consolidated net debt145 Note 25 Trade and other payables146 Note 26 Provisions (including post-retirement benefits)146 PageCapital and reservesNote 27 Share capital Rio Tinto plc147 Note 28 Share capital Rio Tinto Limited147 Note 29 Other reserves and retained earnings148 Additional disclosuresNote 30 financial instruments and risk management149 Note 31 Contingencies and commitments157 Note 32 Average number of employees159 Note 33 Principal subsidiaries160 Note 34 Principal joint operations162 Note 35 Principal joint ventures163 Note 36 Principal associates164 Note 37 Purchases and sales of subsidiaries, joint ventures,associates and other interests in businesses165 Note 38 Directors and key management remuneration165 Note 39 Auditors remuneration166 Note 40 Related-party transactions167 Note 41 Exchange rates in US$167 Note 42 Bougainville Copper Limited (BCL)

3 167 Note 43 Events after the balance sheet date167 Note 44 Share-based payments168 Note 45 Post-retirement benefits170 Note 46 Rio Tinto Limited parent company disclosures176 Note 47 Related undertakings177 Rio Tinto plc company information195 Rio Tinto financial information by business unit199 Australian Corporations Act Summary of ASIC relief204 Directors declaration205 Auditor s independence declaration206 Independent auditors report of PricewaterhouseCoopers LLP tothe members of Rio Tinto plc and PricewaterhouseCoopers to themembers of Rio Tinto Limited207 financial summary 2007-2016215 Summary financial data in Australian dollars, sterling andUS dollars2172016 Annual REPORTDIRECTORS REPORTFINANCIAL STATEMENTSMETALS AND MINERALSPRODUCTIONADDITIONAL INFORMATIONG roup income statementYears ended 31 DecemberNote2016US$m2015US$m2014US$mCons olidated operationsConsolidated sales revenue2,333,78134,82947,664 Net operating costs (excluding items shown separately)4(26,799)(27,919)(33,910)Impa irment charges net of reversals6(249)(2,791)(1,062)Net gains/(losses) on disposal of interests in businesses2,3751564(563)Exploration and evaluation costs13(497)(576)(747)Profit/(loss) relating to interests in undeveloped projects13448(36)

4 Operating profit6,7953,61511,346 Share of profit after tax of equity accounted units7321361625 Impairment reversals of investments in equity accounted units after tax6 589 Profit before finance items and taxation7,1163,97612,560 Finance itemsNet exchange gains/(losses) on external debt and intragroup balances24611(3,538)(1,995)Net losses on derivatives not qualifying for hedge accounting(24)(88)(46)Finance income8895264 Finance costs8(1,111)(750)(649)Amortisation of discount(338)(378)(382)(773)(4,702)(3,00 8)Profit/(loss) before taxation6,343(726)9,552 Taxation9(1,567)(993)(3,053)Profit/(loss ) after tax for the year4,776(1,719)6,499 attributable to owners of Rio Tinto (net earnings/(loss))4,617(866)6,527 attributable to non-controlling interests (net earnings/(loss))159(853)(28)Basic earnings/(loss) per ( ) earnings/(loss) per ( ) notes on pages 116 to 194 are an integral part of these consolidated financial Annual reportGroup statement of comprehensive incomeYears ended 31 DecemberNote2016US$m2015US$m2014US$mProf it/(loss) after tax for the year4,776(1,719)6,499 Other comprehensive (loss)/income:Items that will not be reclassified to profit or loss:Actuarial (losses)/gains on post retirement benefit plans45(90)619(735)Tax relating to these components of other comprehensive (loss)/income929(175)215(61)444(520)Item s that have been/may be subsequently reclassified to profit or loss:Currency translation adjustment(a)(157)(2,395)(2,004)Currency translation on companies disposed of, transferred to the income statement99(2)53 Fair value movements.

5 Cashflowhedgelosses(88)(41)(48) Cash flow hedge losses transferred to the income statement1163255 Gains/(losses) on revaluation of available for sale securities13(19)(36) Losses on revaluation of available for sale securities transferred to the income statement 116 Tax relating to these components of other comprehensive (loss)/income94(3)(9)Share of other comprehensive income/(loss) of equity accounted units, net of tax11(57)(44)Other comprehensive loss for the year, net of tax(63)(2,030)(2,547)Total comprehensive income/(loss) for the year4,713(3,749)3,952 attributable to owners of Rio Tinto4,504(2,443)4,322 attributable to non-controlling interests209(1,306)(370)(a) Excludes a currency translation charge of US$35 million (2015: US$503 million; 2014: US$376 million) arising on Rio Tinto Limited s share capital for the year ended 31 December 2016 , which isrecognised in the Group statement of changes in equity.

6 Refer to Group statement of changes in equity on page notes on pages 116 to 194 are an integral part of these consolidated financial Annual REPORTDIRECTORS REPORTFINANCIAL STATEMENTSMETALS AND MINERALSPRODUCTIONADDITIONAL INFORMATIONG roup cash flow statementYears ended 31 DecemberNote2016US$m2015US$m2014US$mCash flows from consolidated operations(a)11,36812,10218,896 Dividends from equity accounted units253210298 Cash flows from operations11,62112,31219,194 Net interest paid(1,294)(827)(981)Dividends paid to holders of non-controlling interests in subsidiaries(341)(310)(309)Tax paid(1,521)(1,792)(3,618)Net cash generated from operating activities8,4659,38314,286 Cash flows from investing activitiesPurchases of property, plant and equipment and intangible assets2(3,012)(4,685)(8,162)Disposals of subsidiaries, joint ventures and associates37761(38)887 Purchases of financial assets(789)(49)(24)Sales of financial assets58265172 Sales of property, plant and equipment and intangible assets35497744 Net funding of equity accounted units(12)11(117)Acquisitions of subsidiaries, joint ventures and associates37 (3) Other investing cash flows122(3)Net cash used in investing activities(2,104)(4,600)(6,503)Cash flows before financing activities6,3614,7837,783 Cash flows from financing activitiesEquity dividends paid to owners of Rio Tinto11(2,725)(4,076)(3,710)Proceeds from additional borrowings4,4131,837442 Repayment of borrowings(9,361)(3,518)(3,476)Proceeds from issue of equity to non-controlling interests1011031,291 Own shares purchased from owners of Rio Tinto (2,028) Purchase of non-controlling interests37(23)

7 Other financing cash flows1041217 Net cash flows used in financing activities(7,491)(7,670)(5,436)Effects of exchange rates on cash and cash equivalents(35)(159)(156)Net (decrease)/increase in cash and cash equivalents(1,165)(3,046)2,191 Opening cash and cash equivalents less overdrafts9,35412,40010,209 Closing cash and cash equivalents less overdrafts218,1899,35412,400(a) Cash flows from consolidated operationsProfit/(loss) after tax for the year4,776(1,719)6,499 Adjustments for: Taxation1,5679933,053 Finance items7734,7023,008 Share of profit after tax of equity accounted units(321)(361)(625) Impairment charges net of reversals of investments in equity accounted units after tax6 (589) Net (gains)/losses on disposal of interests in businesses37(515)(64)563 Impairment charges net of reversals62492,7911,062 Depreciation and amortisation4,7944,6454,860 Provisions (including exchange differences on provisions)261,417726712 Utilisation of provisions26(627)(585)(973)Utilisation of provision for post-retirement benefits26(370)(230)(296)Change in inventories292526937 Change in trade and other receivables(794)1,404962 Change in trade and other payables229(431)(380)Other items(b)(102)(295)10311,36812,10218,896( b) Includes a cash outflow of US$29 million (2015: outflow of US$227 million.)

8 2014: inflow of US$66 million) mainly relating to derivative contractstransacted for operational purposes and notdesignated in a hedge notes on pages 116 to 194 are an integral part of these consolidated financial Annual reportGroup balance sheetAt 31 DecemberNote2016US$m2015US$mNon-current assetsGoodwill12951892 Intangible assets133,2793,336 Property, plant and equipment1458,85561,057 Investments in equity accounted units155,0194,941 Inventories16143253 Deferred tax assets173,7283,309 Trade and other receivables181,3421,356 Tax recoverable3878 Other financial assets (including loans to equity accounted units)2082278874,17776,010 Current assetsInventories162,9373,168 Trade and other receivables183,4602,386 Tax recoverable98118 Other financial assets (including loans to equity accounted units)20359223 Cash and cash equivalents218,2019,36615,05515,261 Assets of disposal groups held for sale1931293 Total assets89,26391,564 Current liabilitiesBorrowings and other financial liabilities22(922)(2,484)Trade and other payables25(6,361)(6,237)Tax payable(764)(135)Provisions including post-retirement benefits26(1,315)(1,190)(9,362)(10,046)N on-current liabilitiesBorrowings and other financial liabilities22(17,470)(21,140)Trade and other payables25(789)(682)Tax payable(274)(295)Deferred tax liabilities17(3,121)(3,286)Provisions including post-retirement benefits26(12,479)(11,876)(34,133)(37,27 9)Liabilities of disposal groups held for sale19(38)(111)Total liabilities(43,533)(47,436)

9 Net assets45,73044,128 Capital and reservesShare capital RioTintoplc27224224 Rio Tinto Limited283,9153,950 Share premium account4,3044,300 Other reserves299,2169,139 Retained earnings2921,63119,736 Equity attributable to owners of Rio Tinto39,29037,349 Attributable to non-controlling interests6,4406,779 Total equity45,73044,128 The notes on pages 116 to 194 are an integral part of these consolidated financial financial statements on pages 109 to 194 were approved by the directors on 1 March 2017 and signed on their behalf byJan du PlessisJean-S bastien JacquesChris LynchChairmanChief executiveChief financial officer2016 Annual REPORTDIRECTORS REPORTFINANCIAL STATEMENTSMETALS AND MINERALSPRODUCTIONADDITIONAL INFORMATIONG roup statement of changes in equityAttributable to owners of Rio TintoYear ended 31 December 2016 Sharecapital(notes 27 and 28)US$mSharepremiumUS$mOtherreserves(not e 29)US$mRetainedearnings(note 29)US$mTotalUS$mNon-controllinginterests US$mTotalequityUS$mOpening balance4,1744,3009,13919,73637,3496,7794 4,128 Total comprehensive income for the year(a) (49)4,5534,5042094,713 Currency translation arising on Rio TintoLimited s share capital(b)(35) (35) (35)Dividends (2,725)(2,725)(352)(3,077)Companies no longer consolidated 88 Own shares purchased from Rio Tintoshareholders to satisfy share options (43)(37)(80) (80)Change in equity interest held by Rio Tinto (c) 10840148(313)(165)

10 Treasury shares reissued and other movements 4 4 4 Equity issued to holders of non-controllinginterests 109109 Employee share options and other IFRS 2charges to the income statement 6164125 125 Closing balance4,1394,3049,21621,63139,2906,4404 5,730 Attributable to owners of Rio TintoYear ended 31 December 2015 Sharecapital(notes 27 and 28)US$mSharepremiumUS$mOtherreserves(not e 29)US$mRetainedearnings(note 29)US$mTotalUS$mNon-controllinginterests US$mTotalequityUS$mOpening balance4,7654,28811,12226,11046,2858,309 54,594 Total comprehensive income for the year(a) (2,020)(423)(2,443)(1,306)(3,749)Currenc y translation arising on Rio TintoLimited s share capital(b)(503) (503) (503)Dividends (4,076)(4,076)(315)(4,391)Share buy-back(88) 6(1,946)(2,028) (2,028)Companies no longer consolidated 55 Own shares purchased from Rio Tintoshareholders to satisfy share options (25)(28)(53) (53)Change in equity interest