Antofagasta Regulatory News (ANTO)

13 Sep 2005 07:03

Antofagasta PLC13 September 2005 ANTOFAGASTA PLC Adoption of International Financial Reporting Standards and Restatements for 2004 London, 13 September 2005 Introduction For 2004 and previous years, Antofagasta plc has prepared its consolidatedfinancial statements under UK generally accepted accounting principles ("UK GAAP"). In accordance with EU Regulations, Antofagasta is required to adoptInternational Financial Reporting Standards ("IFRS") for accounting periodsbeginning on or after 1 January 2005 and prepare its consolidated financialstatements on an IFRS basis. Antofagasta will report under IFRS, for the first time, in its interim resultsfor the six months to 30 June 2005 (due for release on 13 September 2005). Itsfirst full financial statements under IFRS will be in its 2005 Annual Report.The IFRS results for the 2005 half year and the 2005 full year will includecomparative IFRS information for the relevant corresponding periods in 2004. This statement is a brief summary of how Antofagasta's 2004 consolidatedresults, both for the half year and full year, are affected by the change toIFRS. The introduction of IFRS does not affect the cash flow generation ofAntofagasta's businesses or its borrowing arrangements and therefore will notaffect any commercial decisions taken by the Group. Headline impacts The impact of the transition from UK GAAP to IFRS on headline numbers is asfollows: 2004 Half Year 2004 Full Year UK GAAP Adjustments IFRS UK GAAP Adjustments IFRS US$'m US$'m US$'m US$'m US$'m US$'mTurnover 767.7 (14.3) 753.4 1,908.7 33.4 1,942.1EBITDA 524.6 (18.9) 505.7 1,328.8 27.9 1,356.7Profit before tax 438.9 (23.5) 415.4 1,162.7 35.8 1,198.5Net earnings 222.3 (14.8) 207.5 558.3 21.2 579.5 US$'m US$'m US$'m US$'m US$'m US$'mNet assets 1,539.4 27.8 1,567.2 1,911.6 158.4 2,070.0Net equity 1,079.5 29.1 1,108.6 1,322.7 142.8 1,465.5 cents cents cents cents cents centsEarnings per share 112.7 (7.5) 105.2 283.1 10.8 293.9 Principal adjustments to net earnings and net equity The principal adjustments to net earnings (profit after tax and minorities) andnet equity (excluding minority interests) are as follows: 2004 Half Year 2004 Full Year Net Net Net Net earnings equity earnings equity US$'m US$'m US$'m US$'mUK GAAP 222.3 1,079.5 558.3 1,322.7Mark-to-market of provisionally priced (11.7) 2.0 12.0 25.7salesMark-to-market of financial 4.3 (3.1) 6.2 (1.2)derivativesExchange differences on (7.7) - 0.5 -intra-group itemsReversal of proposed ordinary - 29.6 - 126.2dividendsOther items 0.3 0.6 2.5 (7.9)IFRS 207.5 1,108.6 579.5 1,465.5 The principal adjustments to the Group's reported financial information from theadoption of IFRS are: • Mark-to-market of provisionally priced sales Under IFRS, copper and molybdenum sales, which remain open as to pricing at aperiod end, are marked-to-market at each balance sheet date. Under UK GAAP, theGroup's accounting treatment was to value sales, which remain open as to finalpricing at the period end, in aggregate at the lower of provisional invoiceprices and mark-to-market prices at the balance sheet date. Such sales mayremain open for up to six months from initial invoicing and this change inaccounting treatment mainly results in short-term timing differences in profitrecognition. • Mark-to-market of financial derivatives The Group uses derivative financial instruments to reduce exposure to foreignexchange, interest rate and commodity price movements, and does not use suchinstruments for trading or speculative purposes. The Group has not adopted thehedge accounting provisions of IAS 39 "Financial Instruments: Recognition andMeasurement"; therefore under IFRS, the Group marks-to-market all financialderivatives at each balance sheet date with gains and losses included in netprofit. Under UK GAAP, derivatives were held off the balance sheet, and gainsand losses were matched in the income statement against items intended to behedged. This change also affects the timing of profit recognition, depending onthe maturity period of any derivative instruments held. • Exchange differences taken to the income statement Under IFRS, certain exchange gains or losses previously taken to reserves arenow required to be taken to the income statement. These include exchangedifferences on intra-group financing balances (subject to certain limitedexceptions), retranslation of preference share capital and settlement of thoseordinary dividends which are paid in sterling. Under UK GAAP, the Group tooksuch differences to reserves. This change has no effect on the balance sheet ornet equity, as such gains or losses are offset by corresponding exchangedifferences on the translation of any foreign currency balance sheets of Groupentities included in the consolidated financial statements. • Reversal of proposed ordinary dividends Under IFRS, ordinary dividends are recognised only when they are legallypayable. Therefore proposed dividends previously included in the balance sheetunder UK GAAP have been reversed and are accounted for in the period in whichthey are formally approved. This change has no effect on net earnings in anyperiod. • Other adjustments Further explanations of other adjustments are given in the detailed IFRSRestatement. These include: - use of historical rates rather than period end closing rates to translate non-US dollar denominated ordinary share capital and share premium;- reclassification of preference shares to borrowings and of preference dividends to finance costs;- use of actuarial valuations to measure severance indemnity provisions;- change of functional currency of the Group's Chilean railway operation to the US dollar;- recording acquisition fair value adjustments in the functional currency of the subsidiary acquired;- inclusion of translation differences after the transition date for net assets of foreign currency subsidiaries in a separate translation reserve and recycling cumulative differences on any eventual disposals through the income statement;- provision of deferred tax on items for which provision was not required under UK GAAP; principally on acquisition fair value adjustments and inflation-based adjustments;- reporting income from associates in the income statement as a single line net of financing items, tax and underlying minorities;- reclassification of the Group's forestry assets as investment property held at cost;- treating previous revaluations of the Chilean Railway network as deemed cost;- reclassification of short-term cash investments as cash equivalents in the balance sheet and cash flow statement. The Group does not operate any funded defined benefit schemes, nor does it haveany share option schemes in operation. It also did not have any goodwill at anybalance sheet date in 2004. The adoption of IFRS therefore has no impact on theGroup in any of these areas. The full restatement document "Adoption of International Financial ReportingStandards and Restatements for 2004" will be available on the Company's websitefrom 13 September 2005, or from the Company's registered office, 5 Princes Gate,London SW7 1QJ. Enquiries - London Enquiries - SantiagoAntofagasta plc Antofagasta Minerals S.A.Tel: +44 20 7808 0988 Tel +562 377 5145 Desmond O'Conor Alejandro RiveraEmail: doconor@antofagasta.co.uk Chief Financial Officer Email: arivera@aminerals.cl Hussein BarmaChief Financial Officer (UK) Jorge MarinEmail: hbarma@antofagasta.co.uk Corporate Financial Controller Email: jmarin@aminerals.cl www.antofagasta.co.uk Issued by Keith Irons Email: keith@bankside.com Tel: +44 20 7367 8873 This information is provided by RNS The company news service from the London Stock Exchange