9th May 2005 10:46
Anglo American PLC9 May 2005 PART 2 7. INDEPENDENT REVIEW REPORT TO THE BOARD OF DIRECTORS OF ANGLO AMERICAN PLC ON THE PRELIMINARY FINANCIAL INFORMATION AND PRO FORMA FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2004 In accordance with our engagement letter dated 6th May 2005, we have reviewed: • the accompanying preliminary International Financial ReportingStandards ("IFRS") consolidated financial information of Anglo American plc forthe six months ended 30 June 2004, excluding the impact of IAS 32 and IAS 39,which comprises the consolidated income statement, the consolidated balancesheet, the consolidated statement of changes in equity, consolidated cash flowstatement, the reconciliation of equity, the statement of changes in equity, thestatement of recognised income and expense and related notes 1 to 11(hereinafter referred to as "the preliminary financial information"); and • the pro forma consolidated financial information, including the impactof IAS 32 and IAS 39, which comprises the consolidated income statement andconsolidated balance sheet (hereinafter referred to as "the pro forma financialinformation"). This preliminary financial information and pro forma financial information isthe responsibility of the Company's directors. They have been prepared bymanagement as part of the Company's conversion to IFRS in accordance with the "Basis of Preparation" set out in Section 3, which describes how IFRSs have beenapplied under IFRS 1, including the assumptions management has made about thestandards and interpretations expected to be effective, and Section 5 which describes the accounting policies expected to be adopted, when managementprepares its first complete set of IFRS financial statements as at 31 December2005. In preparing that first complete set of IFRS financial statementsmanagement expects to take the option in IFRS 1 not to restate the 2004comparatives for IAS 32 and IAS 39. However, in order to provide comparableinformation management has chosen to prepare the pro forma financial informationwhich assumes the application of IAS 32 and IAS 39 to transactions and financialinstruments to entities other than those disposed of in 2004 and to contractsother than those containing embedded derivatives that no longer existed as at 1January 2005 and the application of hedge accounting where management believesit is appropriate to assume the relevant accounting criteria regardingdocumentation and testing of effectiveness could have been met even though thenecessary documentation was not in place. Our responsibility is to express an opinion on this financial information andpro forma financial information based on our review. Our report has beenprepared solely for the exclusive use of the directors and solely for thepurpose of assisting them in connection with Anglo American plc's conversion ofthe basis of the preparation of the financial statements to IFRSs. Our work hasbeen undertaken so that we might state to the directors those matters we arerequired to state to them in a review report and for no other purpose. We donot accept or assume responsibility to anyone other than the directors for ourwork, for this report, or for the conclusions we have formed. Review work performed We conducted our review in accordance with Bulletin 1999/4 issued by theAuditing Practices Board. A review consists principally of making enquiries ofgroup management and applying analytical procedures to the preliminary financialinformation and pro forma financial information and underlying financial dataand, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of control and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the preliminary financial information or the pro forma financialinformation. Emphasis of matter Without modifying our review opinion, we draw attention to the fact that thereis a possibility that the accompanying preliminary financial information and proforma financial information may require adjustment before constituting the finalfinancial information and final pro forma financial information for inclusion inthe IFRS interim information for the six months ending 30 June 2005. This isbecause, as set out in section 1, International Accounting Standards are subjectto on going review and possible amendment. Moreover, we draw attention to thefact that, under IFRSs, only a complete set of financial statements comprisingan income statement, balance sheet, statement of changes in equity, cash flowstatement, together with comparative financial information and explanatorynotes, can provide a fair presentation of the group's financial position,results of operations and cash flows in accordance with IFRSs. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the accompanying preliminary financial information and proforma financial information for the six months ended 30 June 2004 which has beenprepared in accordance with the basis set out in the "Basis of preparation" setout in Section 3 and accounting policies set out in Section 5. Deloitte & Touche LLP Chartered Accountants London 9th May 2005 8. INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF ANGLO AMERICANPLC ON THE PRELIMINARY FINANCIAL INFORMATION AS AT 1 JANUARY 2004 In accordance with our engagement letter dated 6th May 2005, we have audited theaccompanying preliminary International Financial Reporting Standards ("IFRS")consolidated financial information of Anglo American plc as at 1 January 2004,excluding the impact of IAS 32 and 39, which comprises the consolidated balancesheet and reconciliation of equity (hereinafter referred to as "the preliminaryfinancial information"). This financial information is the responsibility of theCompany's directors. It has been prepared as part of the Company's conversionto IFRS in accordance with the "Basis of Preparation" set out in Section 3,which describes how IFRSs have been applied under IFRS 1, including theassumptions management has made about the standards and interpretations expectedto be effective, and Section 5 which describes the accounting policies expectedto be adopted, when management prepares its first complete set of IFRS financialstatements as at 31 December 2005. Our responsibility is to express an opinionon this financial information based on our audit. Our report has been prepared solely for the exclusive use of the directors andsolely for the purpose of assisting them in connection with Anglo American plc'sconversion of the basis of the preparation of the financial statements to IFRSs.Our work has been undertaken so that we might state to the directors thosematters we are required to state to them in an auditors' report and for no otherpurpose. We do not accept or assume responsibility to anyone other than thedirectors for our work, for this report, or for the opinions we have formed. Basis of audit opinion We conducted our audit in accordance with United Kingdom auditing standardsissued by the Auditing Practices Board. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the preliminaryfinancial information is free from material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe preliminary financial information. An audit also includes assessing theaccounting principles used and significant estimates made by management, as wellas evaluating the overall presentation of the preliminary financial information. We believe that our audit provides a reasonable basis for our opinion. Emphasis of matter Without qualifying our audit opinion, we draw attention to the fact that thereis a possibility that the accompanying preliminary financial information mayrequire adjustment before constituting the final financial information. This isbecause, as set out in section 1, International Accounting Standards are subjectto on going review and possible amendment. Moreover, we draw attention to thefact that, under IFRS, only a complete set of financial statements comprising anincome statement, balance sheet, statement of changes in equity, cash flowstatement, together with comparative financial information and explanatorynotes, can provide a fair presentation of the Group's financial position,results of operations and cash flows in accordance with IFRSs. Opinion In our opinion, the accompanying preliminary financial information as at 1January 2004 has been prepared, in all material respects, in accordance with thebasis set out in the "Basis of preparation" set out in Section 3 and accountingpolicies set out in Section 5. Deloitte & Touche LLP Chartered Accountants London 9th May 2005 Appendix I - Pro forma IAS 32 and 39 Financial Information Accounting policies Financial assets and financial liabilities are recognised on the Group's balancesheet when the Group becomes a party to the contractual provisions of theinstrument. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. Investments Investments, other than investments in joint ventures and associates, areinitially recorded at cost. At subsequent reporting dates, financial assetsthat the Group has the expressed intention and ability to hold to maturity ("held-to-maturity") are measured at amortised cost, less any impairment. Theamortisation of any discount or premium on the acquisition of a held-to-maturityinvestment is recognised in the income statement in each period using theeffective interest method. Investments other than those classified as held-to-maturity are classified aseither "fair value through profit or loss" which includes investments held fortrading as a sub-category or "available-for-sale" investments, other than "held-to-maturity" investments, are measured at each reporting date at fairvalue. Where investments are held for trading purposes, unrealised gains andlosses are included in the income statement account for the period. Foravailable-for-sale investments, unrealised gains and losses are recognised inequity, until the security is disposed or impaired, at which time the cumulativegain or loss previously recognised in equity is included in the income statementaccount. Financial liability and equity Financial liabilities and equity instruments are classified and accounted for asdebt or equity according to the substance of the contractual arrangementsentered into. An equity instrument is any contract that evidences a residualinterest in the assets of the group after deducting all of its liabilities. Convertible bonds Convertible bonds denominated in the functional currency of the entity issuingthe bond, are regarded as compound instruments, consisting of a liability and anequity component. At the date of issue, the fair value of the liabilitycomponent is estimated using the prevailing market interest rate for similarnon-convertible debt and is recorded within borrowings. The difference betweenthe proceeds of issue of the convertible bond and the fair value assigned to theliability component, representing the embedded option to convert the liabilityinto equity of the Group, is included in equity. Where the embedded option is in a convertible bond denominated in a currencyother than the functional currency of the entity issuing the bond, the option isclassified as a liability, in accordance with IFRIC guidance issued in theirpublished update following their April 2005 meeting. The option is marked tomarket with subsequent gains and losses being recorded through the incomestatement within "net finance costs". Issue costs are apportioned between the liability and equity components of theconvertible bonds where appropriate based on their relative carrying amounts atthe date of issue. The portion relating to the equity component is chargeddirectly against equity. The interest expense on the liability component is calculated by applying theprevailing market interest rate for similar non-convertible debt to theliability component of the instrument. The difference between this amount andthe interest paid is added to the carrying amount of the convertible bond. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct transaction costs. Finance charges, including premiumspayable on settlement or redemption and direct issue costs, are accounted for onan accruals basis and charged to the income statement using the effectiveinterest method and are added to the carrying amount of the instrument to theextent that they are not settled in the period in which they arise. Derivative financial instruments and hedge accounting In order to hedge its exposure to foreign exchange, interest rate and commodityprice risk, the Group enters into forward, option and swap contracts. The Groupdoes not use derivative financial instruments for speculative purposes. All derivatives are held at fair value in the balance sheet within "otherfinancial assets" or "other financial liabilities", and are classified ascurrent or non current depending on the maturity of the derivative. Changes in the fair value of derivative financial instruments that aredesignated and effective as hedges of future cash flow are recognised directlyin equity. The gain or loss relating to the ineffective portion is recognisedimmediately in the income statement account. If the cash flow hedge of a firmcommitment or forecasted transaction results in the recognition of an asset or aliability, then, at the time the asset or liability is recognised, theassociated gains or losses on the derivative that had previously been recognisedin equity are included in the initial measurement of the asset or liability. Forhedges that do not result in the recognition of an asset or a liability, amountsdeferred in equity are recognised in the income statement in the same period inwhich the hedged item affects net profit or loss. For an effective hedge of an exposure to changes in fair value, the hedged itemis adjusted for changes in fair value attributable to the risk being hedged withthe corresponding entry in profit or loss. Gains or losses from re-measuring thederivative, or for non-derivatives the foreign currency component of itscarrying amount, are recognised in profit or loss. The gain or loss on hedging instruments relating to the effective portion of anet investment hedge is recognised in equity. The ineffective portion isrecognised immediately in the income statement account. Gains or lossesaccumulated in equity are included in the income statement account when theforeign operations are disposed of. Changes in the fair value of any derivative instrument that are not hedgeaccounted are recognised immediately in the income statement account. Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated, or exercised, or no longer qualifies for hedge accounting. At thattime, any cumulative gain or loss on the hedging instrument recognised in equityis retained in equity until the forecast transaction occurs. If a hedgetransaction is no longer expected to occur, the net cumulative gain or losspreviously recognised in equity is included in the income statement of theperiod. Derivatives embedded in other financial instruments or other host contracts aretreated as separate derivatives when their risks and characteristics are notclosely related to those of their host contracts and the host contracts are notcarried at fair value with unrealised gains or losses reported in the incomestatement. Appendix I Pro forma IAS 32 and IAS 39 financial information Pro forma consolidated income statement for the year ended 31 December 2004 IAS 32 and 39 IFRSUS$ million IFRS(1) adjustments pro formaGroup turnover 26,268 57 26,325Total operating costs (22,627) (185) (22,812)Operating exceptional items 25 (66) (41)Group operating profit 3,666 (194) 3,472Net income from associates 550 1 551Total profit from operations and associates 4,216 (193) 4,023Non-operating exceptional items 1,015 (23) 992Net finance costs (367) (56) (423)Profit before tax 4,864 (272) 4,592Income tax expense (923) 78 (845)Profit for the financial year 3,941 (194) 3,747 Attributable toMinority interests 440 (55) 385Equity shareholders of the Company 3,501 (139) 3,362Total dividends paid and proposed (827) - (827)Retained profit 2,674 (139) 2,535 (1) Excludes the impact of IAS 32 and IAS 39. Pro forma IAS 32 and IAS 39 consolidated balance sheet as at 31 December 2004 IAS 32 and 39 IFRSUS$ million IFRS(1) adjustments pro formaIntangible fixed assets 2,644 - 2,644Tangible fixed assets 33,172 (153) 33,019Biological assets 374 - 374Environmental rehabilitation trust 237 - 237Investments in associates 3,486 4 3,490Financial asset investments 1,084 58 1,142Deferred tax assets 128 (1) 127Other financial assets (derivatives) - 675 675Other non current assets 66 - 66Total non current assets 41,191 583 41,774Stocks 3,549 - 3,549Trade and other receivables 5,534 (86) 5,448Current tax assets 220 - 220Other financial assets (derivatives) - 670 670Current asset investments 2 - 2Cash and cash equivalents 2,955 - 2,955Total current assets 12,260 584 12,844Total assets 53,451 1,167 54,618 Short term borrowings 3,383 56 3,439Trade and other payables 5,368 (78) 5,290Current tax liabilities 831 (1) 830Other financial liabilities (derivatives) - 635 635Total creditors due within one year 9,582 612 10,194Medium and long term borrowings 7,817 143 7,960Retirement benefit obligations 1,201 - 1,201Other financial liabilities (derivatives) - 611 611Deferred tax liabilities 5,566 (86) 5,480Provisions for liabilities and charges 1,328 - 1,328Total long term liabilities 15,912 668 16,580Total liabilities 25,494 1,280 26,774Net assets 27,957 (113) 27,844EquityCalled-up share capital 747 - 747Share premium account 1,633 - 1,633Other reserves 3,091 222 3,313Retained earnings 17,898 (187) 17,711Total shareholders' equity 23,369 35 23,404Minority interests 4,588 (148) 4,440Total equity 27,957 (113) 27,844 (1) Excludes the impact of IAS 32 and IAS 39. Pro forma IAS 32 and IAS 39 consolidated income statement for the six monthsended 30 June 2004 IAS 32 and 39 IFRSUS$ million adjustments pro forma IFRS(1)Group turnover 12,346 11 12,357Total operating costs (10,588) (90) (10,678)Operating exceptional items - (1) (1)Group operating profit 1,758 (80) 1,678Net income from associates 330 14 344Total profit from operations and associates 2,088 (66) 2,022Non-operating exceptional items 1,005 (18) 987Net finance costs (161) (20) (181)Profit before tax 2,932 (104) 2,828Income tax expense (516) 55 (461)Profit for the financial period 2,416 (49) 2,367 Attributable toMinority interests 190 (13) 177Equity shareholders of the Company 2,226 (36) 2,190Total dividends paid and proposed (554) - (554)Retained profit 1,672 (36) 1,636 (1) Excludes the impact of IAS 32 and IAS 39. Pro forma IAS 32 and IAS 39 consolidated balance sheet as at 30 June 2004 IAS 32 and 39 IFRS adjustments pro formaUS$ million IFRS(1)Intangible fixed assets 2,501 - 2,501Tangible fixed assets 30,227 (89) 30,138Biological assets 374 - 374Environmental rehabilitation trust 182 - 182Investments in associates 3,386 22 3,408Financial asset investments 1,197 53 1,250Deferred tax assets 97 5 102Other financial assets (derivatives) - 354 354Total non current assets 37,964 345 38,309Stocks 3,148 - 3,148Trade and other receivables 5,041 (12) 5,029Current tax assets 192 - 192Other financial assets (derivatives) - 379 379Current asset investments 75 - 75Cash and cash equivalents 2,495 - 2,495Total current assets 10,951 367 11,318Total assets 48,915 712 49,627 Short term borrowings 3,266 (1) 3,265Trade and other payables 4,732 6 4,738Current tax liabilities 679 - 679Other financial liabilities (derivatives) - 482 482Total creditors due within one year 8,677 487 9,164Medium and long term borrowings 8,258 (115) 8,143Retirement benefit obligations 1,081 - 1,081Other financial liabilities (derivatives) - 465 465Deferred tax liabilities 5,049 (23) 5,026Provisions for liabilities and charges 1,155 (87) 1,068Total long term liabilities 15,543 240 15,783Total liabilities 24,220 727 24,947Net assets 24,695 (15) 24,680EquityCalled-up share capital 746 - 746Share premium account 1,609 - 1,609Other reserves 1,300 176 1,476Retained earnings 16,900 (78) 16,822Total shareholders' equity 20,555 98 20,653Minority interests 4,140 (113) 4,027Total equity 24,695 (15) 24,680 (1) Excludes the impact of IAS 32 and IAS 39. Pro forma IAS 32 and IAS 39 reconciliation with detailed adjustments -consolidated income statement for the year ended 31 December 2004 US$ million IFRS(1) Financial Cash flow Convertible Other IFRS asset fair hedge Derivatives debt adjustments pro forma value (2)Group turnover 26,268 - - 10 - 47 26,325 Total operating costs (22,627) 2 - (140) - (47) (22,812)Operating exceptional items 25 - - (66) - - (41)Group operating profit 3,666 2 - (196) - - 3,472 Net income from associates 550 (4) 15 (10) - - 551Total profit from operations and 4,216 (2) 15 (206) - - 4,023associates Non-operating exceptional items 1,015 (51) - - - 28 992Net finance costs (367) - - (47) (14) 5 (423)Profit before tax 4,864 (53) 15 (253) (14) 33 4,592 Income tax expense (923) 8 1 64 8 (3) (845)Profit for the financial year 3,941 (45) 16 (189) (6) 30 3,747 Attributable to Minority interests 440 1 1 (62) 6 (1) 385 Equity shareholders of the Company 3,501 (46) 15 (127) (12) 31 3,362 Total dividends paid and proposed (827) - - - - - (827) Retained profit 2,674 (46) 15 (127) (12) 31 2,535 (1) Excludes the impact of IAS 32 and IAS 39. (2) Includes any resulting write down to asset carrying values following therecognition of embedded derivatives. Pro forma IAS 32 and IAS 39 reconciliation with detailed adjustments -consolidated net assets as at 31 December 2004 US$ million IFRS(1) Financial Cash Fair Convertible Other IFRS asset fair flow value Derivatives debt adjustments pro forma value hedge hedge (2) Intangible fixed assets 2,644 - - - - - - 2,644Tangible fixed assets 33,172 - (2) - (151) - -33,019Biological assets 374 - - - - - - 374Environmental rehabilitation trust 237 - - - - - - 237Investments in associates 3,486 2 - - 2 - - 3,490Financial asset investments 1,084 58 - - - - - 1,142Deferred tax assets 128 - - - (1) - - 127Other financial assets (derivatives) - - 187 2 486 - - 675Other non current assets 66 - - - - - - 66Total non current assets 41,191 60 185 2 336 - -41,774 Stocks 3,549 - - - - - - 3,549Trade and other receivables 5,534 - 8 (5) (80) - (9) 5,448Current tax assets 220 - - - - - - 220Other financial assets (derivatives) - - 31 4 635 - - 670Current asset investments 2 - - - - - - 2Cash and cash equivalents 2,955 - - - - - - 2,955Total current assets 12,260 - 39 (1) 555 - (9) 12,844 Total assets 53,451 60 224 1 891 - (9) 54,618 Short term borrowings 3,383 - - - 56 - - 3,439Trade and other payables 5,368 - (12) (1) (64) - (1) 5,290Current tax liabilities 831 - - - (1) - - 830Other financial liabilities - - 17 12 614 - (8) 635(derivatives)Total creditors due within one year 9,582 - 5 11 605 - (9)10,194 Medium and long term borrowings 7,817 - - (11) 288 (134) - 7,960Retirement benefit obligations 1,201 - - - - - - 1,201Other financial liabilities - - 481 2 73 55 - 611(derivatives)Deferred tax liabilities 5,566 3 (103) - (7) 19 2 5,480Provisions for liabilities and charges 1,328 - - - - - - 1,328Total long term liabilities 15,912 3 378 (9) 354 (60) 2 16,580 Total liabilities 25,494 3 383 2 959 (60) (7) 26,774 Net assets 27,957 57 (159) (1) (68) 60 (2) 27,844 (1) Excludes the impact of IAS 32 and IAS 39. (2) Includes any resulting write down to asset carrying values following therecognition of embedded derivatives. Pro forma IAS 32 and IAS 39 reconciliation with detailed adjustments -consolidated income statement for the six months ended 30 June 2004 US$ million IFRS(1) Financial Cash flow Embedded Convertible Other IFRS asset fair hedge derivatives debt adjustments pro forma value (2) (3)Group turnover 12,346 - - (13) - 24 12,357 Total operating costs (10,588) 1 - (67) - (24) (10,678)Operating exceptional items - - - - - (1) (1)Group operating profit 1,758 1 - (80) - (1) 1,678 Net income from associates 330 (3) 15 2 - - 344Total profit from operations and associates 2,088 (2) 15 (78) - (1) 2,022 Non-operating exceptional items 1,005 (48) - - - 30 987Net finance costs (161) - 3 (41) 21 (3) (181)Profit before tax 2,932 (50) 18 (119) 21 26 2,828 Income tax expense (516) 7 - 39 4 5 (461)Profit for the financial period 2,416 (43) 18 (80) 25 31 2,367 Attributable to Minority interests 190 - - (33) 17 3 177 Equity shareholders of the Company 2,226 (43) 18 (47) 8 28 2,190 Total dividends paid and proposed (554) - - - - - (554) Retained profit 1,672 (43) 18 (47) 8 28 1,636 (1) Excludes the impact of IAS 32 and IAS 39. (2) Includes any resulting write down to asset carrying values following therecognition of embedded derivatives. (3) Primarily comprises $30 million exceptional gain arising on deemed disposalof AngloGold. Pro forma IAS 32 and IAS 39 reconciliation with detailed adjustments -consolidated net assets as at 30 June 2004 US$ million IFRS(1) Financial Cash Fair Embedded Convertible Other IFRS asset fair flow value derivatives debt adjustments pro forma value hedge hedge (2)Intangible fixed assets 2,501 - - - - - - 2,501Tangible fixed assets 30,227 - - - (89) - - 30,138Biological assets 374 - - - - - - 374Environmental rehabilitation trust 182 - - - - - - 182Investments in associates 3,386 3 - - 18 - 1 3,408Financial asset investments 1,197 54 - - - - (1) 1,250Deferred tax assets 97 - 4 - 1 - - 102Other financial assets (derivatives) - - 142 9 203 - - 354Total non current assets 37,964 57 146 9 133 - - 38,309 Stocks 3,148 - - - - - - 3,148Trade and other receivables 5,041 - (8) 5 (8) - (1) 5,029Current tax assets 192 - - - - - - 192Other financial assets (derivatives) - 1 50 13 315 - - 379Current asset investments 75 - - - - - - 75Cash and cash equivalents 2,495 - - - - - - 2,495Total current assets 10,951 1 42 18 307 - (1) 11,318 Total assets 48,915 58 188 27 440 - (1) 49,627 Short term borrowings 3,266 - - - (1) - - 3,265Trade and other payables 4,732 - (2) 7 1 - - 4,738Current tax liabilities 679 - - - - - - 679Other financial liabilities - - 125 13 344 - - 482(derivatives)Total creditors due within one year 8,677 - 123 20 344 - - 9,164 Medium and long term borrowings 8,258 - (14) (44) 99 (156) - 8,143Retirement benefit obligations 1,081 - - - - - - 1,081Other financial liabilities - - 300 49 74 42 - 465(derivatives)Deferred tax liabilities 5,049 6 19 2 (74) 24 - 5,026Provisions for liabilities and charges 1,155 - (72) - (15) - - 1,068Total long term liabilities 15,543 6 233 7 84 (90) - 15,783 Total liabilities 24,220 6 356 27 428 (90) - 24,947 Net assets 24,695 52 (168) - 12 90 (1) 24,680 (1) Excludes the impact of IAS 32 and IAS 39. (2) Includes any resulting write down to asset carrying values following therecognition of embedded derivatives. Appendix II Reconciliation from UK GAAP to IFRS with detailed adjustments -consolidated income statement for the year ended 31 December 2004 As IAS IAS IAS IAS IAS IAS IFRS De Other Other IFRS(6) previously 10 12 19 21(1) 36(2) 41 2 Beers reclassif-adjustments reported IAS UK GAAP (3) ication (5) under 31 revised (4)US$ million UK GAAP Group turnover 24,930 1,195 26,125 - - - - - - - - - 143 26,268Total operating (21,869) (749) (22,618) - (30) (1) - 179 (20) (24) - 33 (146) (22,627)costsOperating 25 - 25 - - - - - - - - - - 25exceptional itemsGroup operating 3,086 446 3,532 - (30) (1) - 179 (20) (24) - 33 (3) 3,666profitShare of joint 446 (446) - - - - - - - - - - - -ventures' operatingprofitShare of associates' 948 - 948 - - - - - - - (586)(362) - -operating profitNet income from - - - - 1 (3) - 42 - - 288 229 (7) 550associatesTotal profit fromoperations andassociates 4,480 - 4,480 - (29) (4) - 221 (20) (24) (298)(100) (10) 4,216Non-operating 520 - 520 - - - 30 - (1) - 33 427 6 1,015exceptional itemsNet finance costs (359) - (359) - - 5 - - - (26) 9 4 (367)Profit before tax 4,641 - 4,641 - (29) 1 30 221 (21) (24) (291) 336 - 4,864Income tax expense (1,279) - (1,279) - 69 (1) - - 6 (1) 209 82 (8) (923)Profit for the 3,362 - 3,362 - 40 - 30 221 (15) (25) (82) 418 (8) 3,941financial year Attributable toMinority interests 449 - 449 - (1) - - 16 6 (4) (13) (5) (8) 440Equity shareholders 2,913 - 2,913 - 41 - 30 205 (21) (21) (69) 423 - 3,501of the CompanyTotal dividends paid (1,007) - (1,007) 180 - - - - - - - - - (827)and proposedRetained profit 1,906 - 1,906 180 41 - 30 205 (21) (21) (69) 423 - 2,674 (1) Recycling of CTA on disposal of non USD operations. (2) Reversal of goodwill amortisation. (3) Comprises the translation of US dollar De Beers' preference shares and thereclassification of profit, interest, tax and underlying minority interest on tothe one line in accordance with IAS 28. (4) Largely comprises the reclassification of $427 million of unrealised gainsthrough the income statement and change in presentation of associates. (5) Other adjustments include the first time consolidation of a partnership thatwas previously proportionally consolidated. (6) IFRS restated information excludes the impact of IAS 32 and IAS 39. Reconciliation of UK GAAP to IFRS with detailed adjustments - consolidated netassets as at 31 December 2004 As IAS IAS IAS IAS IAS IAS 36 IAS IFRS De Other IFRS(6) previously 10 12 19 21(1) 36(2) (3) 41 2 Beers adjustments reported IAS UK GAAP (4) (5) under 31 revised US$ million UK GAAP Intangible fixed assets 2,590 17 2,607 - 47 - 21 (239) 179 - - - 29 2,644Tangible fixed assets 31,155 1,534 32,689 - 819 - - - - (332) - - (4) 33,172Biological assets - - - - - - - - - 374 - - - 374Environmental - - - - - - - - - - - - 237 237rehabilitation trustInvestments in 4,346 1 4,347 - (20) (128) - 25 42 - - (770) (10) 3,486associatesFixed asset investments 889 (21) 868 - (4) - - - - - - 526 (306) 1,084Deferred tax assets - - - - (5) 32 - - - - 5 - 96 128Other non current - - - - - 2 - - - - - - 64 66assetsShare of joint ventures 1,496 (1,496) - - - - - - - - - - - -Total non current 40,476 35 40,511 - 837 (94) 21 (214) 221 42 5 (244) 106 41,191assetsStocks 3,401 137 3,538 - - - - - - (23) - - 34 3,549Trade and other 5,449 219 5,668 - - (176) - - - - 2 26 14 5,534receivablesCurrent tax assets 219 1 220 - - - - - - - - - - 220Current asset 575 - 575 - - - - - - - - - (573) 2investmentsCash and cash 2,086 296 2,382 - - - - - - - - - 573 2,955equivalentsTotal current assets 11,730 653 12,383 - (176) - - - (23) 2 26 48 12,260Total assets 52,206 688 52,894 - 837 (270) 21 (214) 221 19 7 (218) 154 53,451 - - -Short term borrowings 3,333 50 3,383 - - - - - - - - - - 3,383Trade and other 5,984 129 6,113 (815) - - - - - - (2) - 72 5,368payablesCurrent tax liabilities 836 15 851 - - - - - - - - (20) 831Total creditors due 10,153 194 10,347 (815) - - - - - - (2) - 52 9,582within one yearMedium and long term 7,449 368 7,817 - - - - - - - - - - 7,817borrowingsRetirement benefit 753 5 758 - - 448 - - - - - - (5) 1,201obligationsDeferred tax 2,908 130 3,038 - 2,492 (86) - - - 5 (3) - 120 5,566liabilitiesProvisions for 1,325 (9) 1,316 - - (4) - - - - 11 - 5 1,328liabilities and chargesTotal long term 12,435 494 12,929 - 2,492 358 - - - 5 8 - 120 15,912liabilitiesTotal liabilities 22,588 688 23,276 (815) 2,492 358 - - - 5 6 - 172 25,494Net assets(7) 29,618 - 29,618 815 (1,655) (628) 21 (214) 221 14 1 (218) (18) 27,957 (1) Retranslation of non USD goodwill acquired post 1 January 2004. (2) Net adjustment of goodwill impairment and write back of negative goodwill on transition. (3) Reversal of goodwill amortisation. (4) Comprises the reclassification of the US dollar De Beers' preference shares as a fixed asset investment and the currency loss recognised on their translation. (5) Other adjustments include the first time consolidation of a partnership that was previously proportionally consolidated, the reclassification of certain current asset investments as cash equivalents and the reclassification of funds held to cover environmental rehabilitation costs from fixed asset investments. (6) IFRS restated information excludes the impact of IAS 32 and IAS 39. (7) Excludes minority interests previously reported under UK GAAP as under IFRS these are presented within equity. Reconciliation from UK GAAP to IFRS with detailed adjustments - consolidatedincome statement for the six months ended 30 June 2004 As IAS IAS IAS IAS IAS IFRS 2 De Other Other IFRS previously 10 12 19 36(1) 41 Beers reclass- adjustments restated reported IAS UK GAAP ification (4) under 31 revised (2) (3)US$ million UK GAAP Group turnover 11,786 496 12,282 - - - - - - - - 64 12,346Total operating costs (10,279) (329) (10,608) - (1) 9 92 (5) (20) - 11 (66) (10,588)Operating exceptional items - - - - - - - - - - - - -Group operating profit 1,507 167 1,674 - (1) 9 92 (5) (20) - 11 (2) 1,758Share of joint ventures' 167 (167) - - - - - - - - - - -operating profitShare of associates' 574 - 574 - - - - - - (350) (224) - -operating profitNet income from associates - - - - - 2 20 - - 165 143 - 330Total profit from operations and associates 2,248 - 2,248 - (1) 11 112 (5) (20)(185) (70) (2) 2,088Non-operating exceptional 535 - 535 - - - - (1) - 42 424 5 1,005itemsNet finance costs (191) - (191) - - - - - 11 18 1 (161)Profit before tax 2,592 - 2,592 - (1) 11 112 (6) (20) (132) 372 4 2,932Income tax expense (686) - (686) - 5 (3) - 1 2 122 43 - (516)Profit for the financial 1,906 - 1,906 - 4 8 112 (5) (18) (10) 415 4 2,416period Attributable toMinority interests 197 - 197 - 2 - 8 (1) (4) (5) (6) (1) 190Equity shareholders of the Company 1,709 - 1,709 - 2 8 104 (4) (14) (5) 421 5 2,226 Total dividends paid and (273) - (273) (281) - - - - - - - - (554)proposedRetained profit 1,436 - 1,436 (281) 2 8 104 (4) (14) (5) 421 5 1,672 (1) Reversal of goodwill amortisation. (2) Largely comprises the reclassification of $424 million of unrealised gainsthrough the income statement and the change in presentation of associates. (3) Other adjustments include the first time consolidation of a partnership thatwas previously proportionally consolidated. (4) IFRS restated information excludes the impact of IAS 32 and IAS 39. Reconciliation of UK GAAP to IFRS with detailed adjustments - consolidated netassets as at 30 June 2004 As IAS IAS IAS IAS IAS IAS IFRS 2 De Other IFRS previously 10 12 19 36(1) 36(2) 41 Beers adjustments (5) reported IAS UK GAAP (3) (4) under 31 revised US$ million UK GAAP Intangible fixed assets 2,600 14 2,614 - 24 - (239) 92 - - - 10 2,501Tangible fixed assets 28,227 1,544 29,771 - 793 - - - (343) - - 6 30,227Biological assets - - - - - - - - 374 - - - 374Environmental - - - - - - - - - - - 182 182rehabilitation trustInvestments in 4,217 (9) 4,208 - (19)(156) 25 20 - - (697) 5 3,386associatesFixed asset investments 844 17 861 - - - - - - - 525 (189) 1,197Deferred tax assets - - - - 14 30 - - - 6 - 47 97Share of joint ventures 1,371 (1,371) - - - - - - - - - - -Total non current 37,259 195 37,454 - 812 (126) (214) 112 31 6 (172) 61 37,964assetsStocks 2,986 131 3,117 - - - - - 3 - - 28 3,148Trade and other 5,034 122 5,156 - - (165) - - - 6 29 15 5,041receivablesCurrent tax assets 191 1 192 - - - - - - - - - 192Current asset 1,393 4 1,397 - - - - - - - - (1,322) 75investmentsCash and cash 1,039 134 1,173 - - - - - - - - 1,322 2,495equivalentsTotal current assets 10,643 392 11,035 - - (165) - - 3 6 29 43 10,951Total assets 47,902 587 48,489 - 812 (291) (214) 112 34 12 (143) 104 48,915 Short term borrowings 3,196 70 3,266 - - - - - - - - - 3,266Trade and other 4,908 107 5,015 (349) - 1 - - - 5 - 60 4,732payablesCurrent tax liabilities 677 6 683 - 3 - - - - - (7) 679Total creditors due 8,781 183 8,964 (349) - 4 - - - 5 - 53 8,677within one yearMedium and long term 7,966 290 8,256 - - - - - - - - 2 8,258borrowingsRetirement benefit 703 6 709 - - 371 - - - - - 1 1,081obligationsDeferred tax 2,606 99 2,705 - 2,364 (77) - - 10 (2) - 49 5,049liabilitiesProvisions for 1,155 9 1,164 - - (4) - - - (5) - - 1,155liabilities and chargesTotal long term 12,430 404 12,834 - 2,364 290 - - 10 (7) - 52 15,543liabilitiesTotal liabilities 21,211 587 21,798 (349) 2,364 294 - - 10 (2) - 105 24,220Net assets(6) 26,691 - 26,691 349 (1,552) (585) (214)112 24 14 (143) (1) 24,695 (1) Net adjustment of goodwill impairment and write back of negative goodwillon transition. (2) Reversal of goodwill amortisation. (3) Comprises the reclassification of the US dollar De Beers' preference sharesas a fixed asset investment and the currency loss recognised on theirtranslation. (4) Other adjustments include the first time consolidation of a partnership thatwas previously proportionally consolidated, the reclassification of certainRelated Shares:
Anglo American