Annual Financial Report

RNS Number : 0659A

Rio Tinto PLC

15 March 2013

 



2012 Annual report and Annual review, 2012 Form 20-F and 2013 Annual General Meetings

15 March 2013

Rio Tinto has today posted the following documents on its website at: www.riotinto.com/agm2013

·      2012 Annual report

·      2012 Annual review

·      2013 Notices of annual general meetings

Rio Tinto plc will hold its 2013 annual general meeting in London on 18 April 2013 and Rio Tinto Limited will hold its annual general meeting in Sydney on 9 May 2013.

Rio Tinto plc has submitted the 2012 Annual report, 2012 Annual review and Rio Tinto plc 2013 Notice of annual general meeting to the UK Listing Authority and they will be available shortly for public inspection on the National Storage Mechanism (NSM): www.hemscott.com/nsm.do

Rio Tinto will file its 2012 Annual report on Form 20-F with the United States Securities and Exchange Commission today.  American Depositary Receipt holders will shortly be able to view Rio Tinto's 2012 Annual report, Rio Tinto plc's 2013 Notice of annual general meeting and the 2012 Annual report on Form 20-F on the Rio Tinto website at: http://www.riotinto.com/financialreports2012

Hard copies of these documents can be obtained free of charge on request from the company secretaries, whose contact details are as follows:

The Company Secretary Rio Tinto plc 2 Eastbourne Terrace London W2 6LG United Kingdom

The Company Secretary Rio Tinto Limited 120 Collins Street Melbourne, 3000 Australia

In accordance with the requirements of Rules 4.1 & 6.3.5 of the UK Listing Authority's Disclosure and Transparency Rules, a description of the principal risks and uncertainties affecting the Group and a responsibility statement are set out in the appendix to this announcement.

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.

Cont…/

For further information, please contact:

Media Relations, EMEA / Americas Illtud Harri Office: [phone] Mobile: [phone] David Outhwaite Office: [phone] Mobile: [phone] Christina Mills Office:  [phone] Mobile: [phone]	Investor Relations, London Mark Shannon Office:  [phone] Mobile: [phone] David Ovington Office:  [phone] Mobile: [phone]
Media Relations, Australia / Asia David Luff Office:  [phone] Mobile: [phone] Bruce Tobin Office: [phone] Mobile: [phone]	Investor Relations, Australia Christopher Maitland Office: [phone] Mobile: [phone]
Media Relations, Canada Bryan Tucker Office: [phone] Mobile: [phone]	Investor Relations, North America Jason Combes Office:  [phone] Mobile: [phone]

Website:	www.riotinto.com
Email:	[e-mail]
Twitter:	Follow @riotinto on Twitter

High resolution photographs and media pack available at: www.riotinto.com/media

Appendix

Risk factors

Rio Tinto's business units and functions assess the potential economic and non-economic consequences of their respective risks using the framework defined by the Group's Risk policy and standard. Principal risks and uncertainties are identified when the Risk Management Committee, business unit or function determines that the potential consequences are material at a Group level or where the risk is connected and may trigger a succession of events that, in aggregate, become material to the Group. Once identified, each principal risk or uncertainty is reviewed by the relevant internal experts and by the Risk Management Committee.

The following describes all known principal risks and uncertainties that could materially affect Rio Tinto. There may be additional risks unknown to Rio Tinto and other risks, currently believed to be immaterial, which could turn out to be material. The risk factors outlined below omit the management detail on how each is managed and mitigated.

For further information about our approach to risk management, please see page 80 of the Group's 2012 Annual report. Risks may materialise individually, simultaneously or in combination and could significantly affect the Group's:

·  short, medium and long-term business and prospects;

·  earnings, cash flow and financial position;

·  overall financial results and product demand;

·  current asset values;

·  future asset values and growth potential;

·  safety record and the long, medium and short-term health of its employees;

·  environmental effects; or

·  Group or business unit reputation.

The principal risks and uncertainties should be considered in connection with any forward-looking statements in this document and the cautionary statement on the inside front cover.

External risks

Factor		Nature
Commodity prices and global demand for the Group's products are expected to remain uncertain.		Commodity prices and demand are volatile and strongly influenced by world economic conditions. The Group's normal policy is to sell its products at prevailing market prices and not to enter into price hedging arrangements. Recent volatility in commodity prices and demand may continue, which could adversely affect the Group's earnings, cash flow and reserves.
Past strong demand for the Group's products in China could be affected by future developments in that country.		The Group is heavily reliant on the Chinese market and if China experiences an economic downturn, or if Chinese customers source products from elsewhere, this could adversely affect demand and pricing for the Group's products. Furthermore, the basis on which the Group prices iron ore in Asia is evolving and to the extent this results in prices or pricing mechanisms that are less favourable to the Group, its earnings and cash flow could be adversely affected.
Rio Tinto is exposed to fluctuations in exchange rates.		The great majority of the Group's sales are denominated in US dollars, which is also the currency used for holding surplus cash, financing operations, and presenting external and internal results. Although many costs are incurred in US dollars, a significant portion is influenced by the local currencies of the countries where the Group operates, principally the Australian dollar and Canadian dollar. The Group's normal policy is to avoid hedging of foreign exchange rates and so the Group may be adversely affected by appreciation in the value of other currencies against the US dollar, or to prolonged periods of exchange rate volatility. These fluctuations may negatively impact the Group's profitability.
Political, legal and commercial changes in the places where the Group operates.		The Group has operations in jurisdictions where governments and communities are seeking a greater share of mineral wealth. In some jurisdictions commercial instability can arise from a culture of bribery and corruption. Some operations are conducted under specific agreements with respective governments and associated acts of relevant legislative bodies. In several countries, land title and rights to land and resources (including Indigenous title) may be unclear. Political and administrative change, policy reform, and changes in law or government regulation can result in expropriation, or nationalisation of the Group's rights or assets. In its operations and development projects, Rio Tinto is exposed to: ·  renegotiation, unilateral variation or nullification of existing agreements, leases and permits; ·  changes in government ownership of operations; ·  significant restoration and environmental clean-up costs; ·  currency and foreign investment restrictions; ·  changes in taxation rates, regimes or international tax agreements; ·  limitations to power, water, energy and infrastructure access; and ·  general increases in regulation, including compliance costs. Political instability and uncertainty or government changes to terms applicable to the Group's operations may result in increased costs for the Group, may curtail or negatively impact existing operations and prevent the Group from making future investments.
Community disputes in the countries and territories in which the Group operates.		Some of the Group's current and potential operations are located in or near communities that may regard these operations as being detrimental to them. Community expectations are typically complex with the potential for multiple inconsistent stakeholder views that may be difficult to resolve. Stakeholder opinion and community acceptance can be subject to many influences, for example, related industries, operations of other groups, or local, regional or national events in other places where we operate. These disputes can disrupt our operations and may increase our costs, thereby potentially impacting our revenue and profitability. In the extreme, our operations may be a focus for civil unrest or criminal activity, which can impact our operational and financial performance, as well as our reputation.
Increased regulation of greenhouse gas emissions could adversely affect the Group's cost of operations.		Rio Tinto's operations are energy-intensive and depend on fossil fuels. Worldwide, there is increasing regulation of greenhouse gas emissions, tighter emission reduction targets and progressive introduction of carbon pricing mechanisms. These are likely to raise significantly worldwide energy, production and transport costs over the medium to long terms, which will increase the Group's cost base and, potentially, negatively impact the Group's profitability.
Regulations, standards and stakeholder expectations regarding health, safety, environment and community evolve over time and unforeseen changes could have an adverse effect on the Group's business and reputation.		The resources sector is subject to extensive health, safety and environmental laws, regulations and standards alongside community and stakeholder expectations. Evolving regulation, standards and stakeholder expectations could result in increased costs, litigation or, in extreme cases, threaten the viability of an operation.

Strategic risks

Factor		Nature
The Group's exploration and development of new projects might be unsuccessful, expenditures may not be fully recovered and depleted ore reserves may not be replaced.		Rio Tinto identifies new orebodies and mining properties through its exploration programme, and develops or expands other operations as a means of generating shareholder value. Exploration is not always successful and there is a high degree of competition to develop world-class orebodies. The Group may also not be able to source or maintain adequate project financing, or may be unable to find willing and suitable joint venture partners to share the cost of developing large projects.
Rio Tinto may fail to make or successfully integrate acquisitions, or to complete divestment agreements.		Business combinations entail a number of risks including the cost of effectively integrating acquisitions to realise synergies, significant write-offs or restructuring charges, and unanticipated costs and liabilities. The Group may also be liable for the past acts, omissions or liabilities it has acquired that are unforeseen or greater than anticipated. The Group may also retain unforeseen liabilities for divested entities if the buyer fails to honour all commitments or the Group agrees to retain certain liabilities.

Financial risks

Factor		Nature
The Group's reported results could be adversely affected by the impairment of assets and goodwill.		The Group may be required to record impairment charges as a result of adverse developments in the recoverable values of its assets (including goodwill). Significant assumptions in the determination of recoverable value include, but are not limited to: pricing of the Group's commodities and products, reserves and resources, infrastructure availability, discount and exchange rates, operating cost projections, and timing of expenditure on major projects. In addition, the occurrence of unexpected events or events beyond the Group's control that adversely impact its business may have an impact on the assumptions underlying the recoverable value of its assets. The foregoing items are not exhaustive and impairments may be caused by factors currently unknown to the Group. To the extent that the recoverable value of an asset is impaired, such impairment may negatively impact the Group's profitability during the relevant period.
The Group's liquidity and cash flow expectations may not be realised, inhibiting planned expenditure.		The Group's ability to fund planned expenditure such as capital growth, mergers and acquisitions, innovation and other obligations may falter if its cash position proves inadequate. Our ability to weather a major economic shock - for example, in the eurozone - could be compromised by insufficient cash reserves, a reduction in the value of existing reserves, or restricted access to these and other sources of cash, including the international capital markets.
General cost inflation in the resources sector is affecting both operations and projects, resulting in significant pressure on capital and operating costs.		Input costs in the resources sector have risen at a disproportionate rate, adversely affecting the economics of current operations and increasing the cost of our capital expansion projects. Many of these input costs are linked to commodity prices and in the case of capital expansion projects the time lag between incurring project costs and receiving revenue can result in additional exposure to commodity markets. Failure to contain costs may have an adverse impact on our operating margins and the viability of our capital expansion projects.

Operational risks

Factor		Nature
Estimates of ore reserves are based on uncertain assumptions that, if changed, could result in the need to restate ore reserves.		There are numerous uncertainties inherent in estimating ore reserves, including subjective judgments and determinations that are based on available geological, technical, contract and economic information. Previously valid assumptions may change significantly with new information, which may result in changes to the economic viability of some reserves and the need for them to be restated.
Labour disputes could lead to lost production and/or increased costs.		Some of the Group's employees, including employees in non-managed operations, are represented by labour unions under various collective labour agreements. The Group may not be able satisfactorily to renegotiate agreements when they expire and may face difficult negotiations or higher wage demands. In addition, labour agreements may not prevent a strike or work stoppage.
Some of the Group's technologies are unproven and failures could adversely impact costs and/or productivity.		The Group has invested in and implemented new technologies in both information systems and operational initiatives, some of which are unproven and their eventual viability cannot be assessed with certainty. The actual benefits of these technologies may differ materially from expectations.
The Group may be exposed to major failures in the supply chain for specialist equipment and materials.		Rio Tinto operates within a complex supply chain depending on suppliers of materials, services, equipment, and infrastructure, and on providers of logistics. Supply chain failures, or significantly increased costs within the supply chain, for whatever reason, could have an adverse effect on the Group's business.
Joint ventures, strategic partnerships or non-managed operations may not be successful and may not comply with the Group's standards.		The Group participates in several joint venture and partnership arrangements, and it may enter into others, all of which necessarily involve risk. Whether or not the Group holds majority interests or maintains operational control in its joint ventures, its partners may: ·  have economic or business interests or goals that are inconsistent with, or opposed to, those of the Group; ·  exercise veto rights to block actions that the Group believes are in its or the joint venture's best interests; or ·  be unable or unwilling to fulfil their obligations under the joint venture or other agreements, such as contributing capital to expansion or maintenance projects. Where these joint ventures are controlled and managed by others, the Group may provide expertise and advice but has limited control over compliance with its standards and objectives, such that partners may take action contrary to the Group's interests or policies with respect to its investment.
The Group's operations are vulnerable to a range of interruptions, not all of which are covered fully by insurance.		1. Natural disasters and events Mining, smelting, refining and infrastructure installations are vulnerable to natural events including earthquakes, drought, flood, fire, storm and the possible effects of climate change. 2. Sustained operational difficulties Operating difficulties are many and various, ranging from unexpected geological variations that could result in significant ground or containment failure to breakdown of key capital equipment. Reliable roads, rail networks, ports, power generation and transmission, and water supplies are required to access and conduct our operations. Limitations, or interruptions in transport infrastructure, including as a result of third parties gaining access to our integrated facilities, could impede its ability to deliver products. 3. Information technology and cyber security The Group relies heavily on information technology and process control systems to support our business. In common with most large, global companies, the Group has experienced cyber attacks and is faced with ongoing threats to the confidentiality, integrity and availability of such systems. Whilst no material losses related to cyber security breaches have been discovered, given the increasing sophistication and evolving nature of this threat, we cannot rule out the possibility of them occurring in the future. An extended failure of critical system components, caused by accidental, or malicious actions, including those resulting from a cyber security attack, could result in a significant environmental incident, commercial loss or interruption to operations. 4. Major operational failure The Group's operations involve chemicals and other substances stored under high temperature and pressure, with the potential for fire, explosion or other loss of control of the process, leading to a release of hazardous materials. This could occur by accident or a breach of operating standards, and could result in a significant incident. The Group's insurance does not cover every potential loss associated with its operations and adequate coverage at reasonable rates is not always obtainable. In addition, insurance provision may not fully cover its liability or the consequences of any business interruption. Any occurrence not fully covered by insurance could have an adverse effect on the Group's business.
The Group depends on the continued services of key personnel.		The Group's ability to maintain its competitive position is dependent on the services of a wide range of highly skilled and experienced personnel available in the locations where they are needed. Failure to recruit and retain key staff, and the inability to deploy staff worldwide, where they are most needed, could affect the Group's business. Similar constraints may be felt by the Group's key consultants, contractors and suppliers, thereby impacting the Group's expansion plans.
The Group's costs of close-down, reclamation, and rehabilitation could be higher than expected.		Close-down and reclamation works to return operating sites to the community can be extensive and costly. Estimated costs are provided for, and updated annually, over the life of each operation but the provisions might prove to be inadequate due to changes in legislation, standards and the emergence of new reclamation techniques. In addition, the expected timing of expenditure could change significantly due to changes in the business environment that might vary the life of an operation.

Responsibility statements

Each of the current directors, whose names and function are listed on pages 83 to 85 of the Group's 2012 Annual report in the Governance section confirm that, to the best of their knowledge:

·  the Rio Tinto Group financial statements and notes, which have been prepared in accordance with IFRS as adopted by the EU, Corporations Act 2001 as amended by the Australian Securities and Investments Commission Order dated 22 December 2010 (as amended on 17 February 2012), Companies Act 2006 and Article 4 of the IAS Regulation, give a true and fair view of the assets, liabilities, financial position and loss of the Group;

·  the Rio Tinto plc financial statements and notes, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and the Companies Act 2006 give a true and fair view of the assets, liabilities, financial position and profit of the company; and

·  the Overview and Performance sections of the Annual report include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

 

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