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Notes to the financial statements

41. Financial statements of the parent company

a) Balance sheet of the Company, Anglo American plc, as at 31 December 2009

US$ million Note 2009 2008
Fixed assets      
Fixed asset investments 41c 13,104 12,925
Current assets      
Amounts due from subsidiaries   4,490 1,305
Prepayments and other debtors   13 138
Cash at bank and in hand   40 2
    4,543 1,445
Creditors due within one year      
Cash held on behalf of subsidiaries   (79) (59)
Amounts owed to subsidiaries   (187) (215)
Other creditors   (15) (8)
    (281) (282)
Net current assets   4,262 1,163
Total assets less current liabilities   17,366 14,088
Liabilities due after more than one year      
Convertible bond   (1,369) -
Net assets   15,997 14,088
       
Capital and reserves      
Called-up share capital 41b 738 738
Share premium account 41b 2,713 2,713
Capital redemption reserve 41b 115 115
Other reserves 41b 1,955 1,955
Share-based payment reserve 41b 15 22
Convertible debt reserve 41b 355 -
Profit and loss account 41b 10,106 8,545
Total shareholders' funds (equity)   15,997 14,088

The financial statements of Anglo American plc, registered number 3564138, were approved by the Board of directors on 18 February 2010.

Cynthia Carroll
Chief executive
René Médori
Finance director

 

b) Reconciliation of movements in equity shareholders' funds

US$ million Called-up share capital Share premium account Capital redemption reserve Other
reserves(1)
Share-based payment reserve Convertible
debt
reserve
Profit and
loss
account(2)
Total
Balance at 1 January 2008 738 2,713 115 1,955 22 - 7,021 12,564
Profit for the financial year - - - - - - 2,936 2,936
Issue of treasury shares under employee share schemes - - - - - - 41 41
Share-based payments - - - - 12 - - 12
Capital contribution to group undertakings - - - - - - 20 20
Transfer between share-based payment reserve and profit and loss account - - - - (12) - 12 -
Share buybacks - - - - - - (259) (259)
Dividends paid(3) - - - - - - (1,226) (1,226)
Balance at 1 January 2009 738 2,713 115 1,955 22 - 8,545 14,088
Profit for the financial year - - - - - - 1,337 1,337
Issue of treasury shares under employee share schemes - - - - - - 31 31
Share-based payments - - - - 7 - - 7
Capital contribution to group undertakings - - - - - - 179 179
Transfer between share-based payment reserve and profit and loss account - - - - (14) - 14 -
Issue of convertible bond - - - - - 355 - 355
Balance at
31 December 2009
738 2,713 115 1,955 15 355 10,106 15,997
(1)
At 31 December 2009 other reserves of $1,955 million (2008: $1,955 million) were not distributable under the Companies Act 2006.
(2)
At 31 December 2009 $405 million (2008: $483 million) of the Company profit and loss account of $10,106 million (2008: $8,545 million) was not distributable under the Companies Act 2006.
(3)
Dividends paid relate only to shareholders on the United Kingdom principal register excluding dividends waived by Greenwood Nominees Limited as nominees for Butterfield Trust (Guernsey) Limited, the trustee for the Anglo American employee share scheme. Dividends paid to shareholders on the Johannesburg branch register are distributed by a South African subsidiary in accordance with the terms of the Dividend Access Share Provisions of Anglo American plc's Articles of Association.

The audit fee in respect of the parent company was $7,000 (2008: $10,000). Fees payable to Deloitte for non-audit services to the Company are not required to be disclosed because they are included within the consolidated disclosure in note 4.

c) Fixed asset investments

  Investments in subsidiaries
US$ million 2009 2008
Cost    
At 1 January 12,933 12,891
Additions - 22
Capital contributions 179 20
At 31 December 13,112 12,933
Provisions for impairment    
At 1 January and 31 December (8) (8)
Net book value
At 31 December
13,104 12,925

d) Accounting policies: Anglo American plc, the Company

The Anglo American plc (the Company) balance sheet and related notes have been prepared in accordance with United Kingdom Generally Accepted Accounting Principles (UK GAAP) and in accordance with UK company law. The financial information has been prepared on a historical cost basis as modified by the revaluation of certain financial instruments.

A summary of the principal accounting policies is set out below.

The preparation of financial statements in accordance with UK GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, following implementation of these standards, actual results may differ from those estimated.

As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Company is not presented as part of these financial statements. The profit after tax for the year of the Company amounted to $1,337 million (2008: $2,936 million).

Significant accounting policies

Deferred tax

Deferred tax is provided in full on all timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, subject to the recoverability of deferred tax assets. Deferred tax assets and liabilities are not discounted.

Share-based payments

The Company has applied the requirements of FRS 20 Share-based Payment. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that had not vested as at 1 January 2005.

The Company makes equity settled share-based payments to the directors, which are measured at fair value at the date of grant and expensed on a straight line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. For those share schemes with market vesting conditions, the fair value is determined using the Monte Carlo method at the grant date. The fair value of share options issued with non-market vesting conditions has been calculated using the Black Scholes model. For all other share awards, the fair value is determined by reference to the market value of the share at the date of grant. For all share schemes with non-market related vesting conditions, the likelihood of vesting has been taken into account when determining the associated charge. Vesting assumptions are reviewed during each reporting period to ensure they reflect current expectations.

The Company also makes equity settled share-based payments to certain employees of certain subsidiary undertakings. Equity settled share-based payments that are made to employees of the Company's subsidiaries are treated as increases in equity over the vesting period of the award, with a corresponding increase in the Company's investments in subsidiaries, based on an estimate of the number of shares that will eventually vest.

Any payments received from subsidiaries are applied to reduce the related increases in investments in subsidiaries.

Accounting for share-based payments is the same as under IFRS 2 and details on the schemes and option pricing models relevant to the charge included in the Company financial statements are set out in note 28 to the consolidated financial statements of the Group for the year ended 31 December 2009.

Investments

Investments represent equity holdings in subsidiaries, joint ventures and associates and are held at cost less provision for impairment.

Convertible debt

Convertible bonds are regarded as compound instruments, consisting of a liability and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt and is recorded within borrowings. The difference between the proceeds of issue of the convertible bond and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Company, is included in equity.

Issue costs are apportioned between the liability and equity components of the convertible bonds where appropriate based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the liability.

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Annual Report 2009