Final Results - Part 2

Anglo American PLC 22 February 2006 PART 2 1. Segmental information Based on risks and returns the directors consider the primary reporting format is by business segment and the secondary reporting format is by geographical segment. The analysis of associates' revenue by business segment is provided here for completeness and consistency. Primary reporting format - by business segment Segment result before Segment result special items after Segment and special items revenue remeasurements and (1)(2) (3) remeasurements US$ million 2005 2004 2005 2004 2005 2004 Subsidiaries and joint ventures Platinum 3,646 3,065 835 527 835 527 Gold 2,629 2,396 332 296 (50) 295 Coal 2,766 1,914 752 321 753 321 Base Metals 3,647 3,232 1,678 1,280 1,667 1,160 Industrial Minerals 4,043 3,833 366 416 350 407 Ferrous Metals and Industries 6,030 5,137 1,308 591 1,312 746 Paper and Packaging 6,673 6,691 484 575 401 575 Exploration - - (150) (120) (150) (120) Corporate Activities - - (261) (245) (261) (245) Total subsidiaries and joint 29,434 26,268 5,344 3,641 4,857 3,666 ventures Net income from associates Platinum 68 55 12 4 12 4 Gold 15 13 - - (2) - Diamonds 3,316 3,177 386 319 257 329 Coal 583 468 192 118 192 118 Base Metals - 88 - (4) - (85) Industrial Minerals 30 25 3 4 3 4 Ferrous Metals and Industries 743 1,526 96 191 189 191 Paper and Packaging 283 228 7 (12) 6 (12) Corporate Activities - 90 - 1 - 1 Total associates 5,038 5,670 696 621 657 550 Total Group operations including net income from associates 34,472 31,938 6,040 4,262 5,514 4,216 Net profit on disposals 87 1,015 Total profit from operations and 5,601 5,231 associates As further additional information, a segmental analysis of associates' operating profit is set out below to show operating profit for total Group operations including associates. Operating Operating profit profit before after special items special items and and remeasurements remeasurements US$ million 2005 2004 2005 2004 Total subsidiaries and joint ventures 5,344 3,641 4,857 3,666 Associates Platinum 19 9 19 9 Gold - - (2) - Diamonds 583 573 431 573 Coal 267 176 267 176 Base Metals - (4) - (121) Industrial Minerals 4 5 4 5 Ferrous Metals and Industries 148 296 149 296 Paper and Packaging 11 (6) 11 (6) Corporate Activities - 7 - 7 Total associates 1,032 1,056 879 939 Total Group operations including 6,376 4,697 5,736 4,605 operating profit from associates 1. Segmental information (continued) Primary reporting format - by business segment (continued) (1) Revenue is measured at the fair value of consideration received or receivable for all significant products. Where a by-product is not regarded as significant, then revenue may be credited against cost of sales. The amount credited to cost of sales for the 12 months ended 31 December 2005 was $76 million (December 2004: $81 million) and related principally to AngloGold Ashanti who credit uranium, silver and acid to cost of sales in accordance with the Gold Industry Standard on production cost. (2) Base Metals' turnover is stated net of treatment and refining charges on concentrate sales to external parties and refining charges on copper anode sales from Chagres to refineries. (3) Segment result is defined as being segment revenue less segment expense; that is operating profit and gains and losses from foreign currency derivatives that have been recycled in the income statement in cash flow hedges of sales and purchases. In addition net income from associates is shown by segment. There are no material inter-segment transfers or transactions that would affect the segment result. Special items are set out in note 4. Associates' operating profit is reconciled to 'Net income from associates' as follows: 2005 2004 US$ million Operating profit from associates before special items and 1,032 1,056 remeasurements Operating special items and remeasurements (see note 4) (153) (117) Operating profit from associates after special items and 879 939 remeasurements Net profit on disposals (see note 4) 98 10 Other special items and remeasurements (see note 4) 7 - Net finance costs (before remeasurements) (51) (100) Income tax expense (after special items and (274) (280) remeasurements) Underlying minority interest (after special items and (2) (19) remeasurements) Net income from associates 657 550 The segment result and associates' operating profit before special items and remeasurements, as shown above, is reconciled to 'Profit for the financial year' as follows: 2005 2004 US$ million Operating profit, including associates, before special items and remeasurements 6,376 4,697 Operating special items and remeasurements (see note 4): Subsidiaries and joint ventures (487) 25 Gold (382) (1) Coal 1 - Base Metals (11) (120) Industrial Minerals (16) (9) Ferrous Metals and Industries 4 155 Paper and Packaging (83) - Associates (153) (117) Gold (2) - Diamonds (152) - Base Metals - (117) Ferrous Metals and Industries 1 - Operating profit, including associates, after special items and remeasurements 5,736 4,605 Net profit on disposals Subsidiaries and joint ventures 87 1,015 Associates 98 10 Associates' financing remeasurements 7 - Associates' net finance costs (51) (100) Associates' income tax expense (274) (280) Associates' underlying minority interests (2) (19) Total profit from operations and associates 5,601 5,231 Financing remeasurements 35 (112) Net finance costs before remeasurements (428) (255) Profit before tax 5,208 4,864 Income tax expense (1,275) (923) Profit for the financial year 3,933 3,941 1. Segmental information (continued) Primary reporting format - by business segment (continued) Primary segment disclosures for segment assets, liabilities and capital expenditure are as follows: Segment Segment Net segment Capital assets(1) liabilities(2) assets expenditure(3) US$ million 2005 2004 2005 2004 2005 2004 2005 2004 Platinum 7,550 7,939 (532) (379) 7,018 7,560 685 910 Gold 7,890 7,693 (908) (569) 6,982 7,124 721 3,653 Coal 3,024 3,087 (780) (784) 2,244 2,303 331 271 Base Metals 5,358 5,415 (573) (463) 4,785 4,952 273 505 Industrial Minerals 5,041 5,381 (1,059) (901) 3,982 4,480 312 365 Ferrous Metals and 5,341 6,364 (902) (1,062) 4,439 5,302 376 432 Industries Paper and Packaging 7,400 8,140 (1,035) (1,544) 6,365 6,596 703 1,546 Exploration - - (3) - (3) - - - Corporate 251 177 (310) (272) (59) (95) 27 11 Activities 41,855 44,196 (6,102) (5,974) 35,753 38,222 3,428 7,693 Unallocated Investment in associates 3,165 3,486 - - 3,165 3,486 Financial/fixed asset 915 1,086 - - 915 1,086 investments Deferred tax assets/ 337 128 (5,201) (5,810) (4,864) (5,682) (liabilities) Cash and cash equivalents 3,430 2,955 - - 3,430 2,955 Other financial assets/ (liabilities) - (derivatives) 930 - (1,794) - (864) - Other non-operating assets/ (liabilities) 1,258 1,600 (2,420) (2,384) (1,162) (784) Provisions - - (356) (370) (356) (370) Borrowings - - (8,439) (11,200) (8,439) (11,200) Net assets 51,890 53,451 (24,312) (25,738) 27,578 27,713 Segment assets at 31 December 2005 are operating assets and consist primarily of tangible assets ($30,796 million), intangible assets ($2,572 million), biological assets ($350 million), environmental rehabilitation trusts ($288 million), inventories ($3,569 million), pension and post-retirement healthcare assets ($77 million) and operating receivables ($4,203 million). Segment assets at 31 December 2004 consist of tangible assets ($33,172 million), intangible assets ($2,644 million), biological assets ($374 million), inventories ($3,549 million), pension and post-retirement healthcare assets ($2 million) and operating receivables ($4,455 million). (2) Segment liabilities are operating liabilities and consist primarily of non-interest bearing current liabilities, restoration and decommissioning provisions and provisions for post-retirement benefits. (3) Capital expenditure reflects cash payments and accruals in respect of additions to tangible assets and intangible assets $3,377 million (2004: $3,631 million) and includes additions resulting from acquisitions through business combinations $51 million (2004: $4,062 million). Other primary segment items included in the income statement are as follows: Depreciation and (Impairments)/ Other non cash amortisation reversal(1) expense(2) US$ million 2005 2004 2005 2004 2005 2004 Platinum 428 313 - - 55 39 Gold 538 398 (96) (1) 50 27 Coal 188 150 - - 14 39 Base Metals 312 339 1 (120) 68 8 Industrial Minerals 248 217 (16) (9) 36 12 Ferrous Metals and Industries 300 274 8 155 56 7 Paper and Packaging 411 400 (83) - 17 25 Exploration - - - - 1 1 Corporate Activities 16 16 - - 41 28 2,441 2,107 (186) 25 338 186 (1) See operating special items in note 4. (2) Other non cash expenses include share-based payments and charges in respect of environmental, rehabilitation provisions and other provisions. 1. Segmental information (continued) Secondary reporting format - by geographical segment The Group's geographical analysis of revenue, allocated based on the country in which the customer is located, is as follows. The geographical analysis of the Group's attributable revenue from associates is provided for completeness and consistency. Revenue US$ million 2005 2004 Subsidiaries and joint ventures South Africa 5,280 4,768 Rest of Africa 505 485 Europe 13,629 12,610 North America 2,740 3,062 South America 1,723 1,355 Australia and Asia 5,557 3,988 Total subsidiaries and joint ventures 29,434 26,268 Associates South Africa 169 340 Rest of Africa 40 21 Europe 1,500 1,476 North America 1,768 2,222 South America 29 66 Australia and Asia 1,532 1,545 Total associates 5,038 5,670 Total Group operations including associates 34,472 31,938 The Group's geographical analysis of segment assets, liabilities and capital expenditure, allocated based on where assets and liabilities are located is: Segment assets Segment liabilities Net segment assets Capital expenditure US$ million 2005 2004 2005 2004 2005 2004 2005 2004 South Africa 18,965 19,978 (2,689) (2,550) 16,276 17,428 1,890 2,471 Rest of Africa 4,142 4,260 (298) (168) 3,844 4,092 261 2,814 Europe 10,048 11,319 (1,926) (2,273) 8,122 9,046 658 1,500 North America 500 674 (59) (93) 441 581 28 104 South America 5,124 4,819 (543) (423) 4,581 4,396 317 501 Australia and Asia 3,076 3,146 (587) (467) 2,489 2,679 274 303 41,855 44,196 (6,102) (5,974) 35,753 38,222 3,428 7,693 Additional disclosure of secondary segmental information by origin is as follows: Operating profit before special items Operating profit and remeasurements after special items Revenue (1) and remeasurements US$ million 2005 2004 2005 2004 2005 2004 Subsidiaries and joint ventures South Africa 11,981 10,279 2,651 1,217 2,482 1,117 Rest of Africa 1,193 804 63 44 (156) 44 Europe 9,748 9,449 694 783 600 774 North America 531 1,018 27 21 (11) 175 South America 3,873 3,176 1,732 1,418 1,704 1,398 Australia and Asia 2,108 1,542 177 158 238 158 Total subsidiaries and joint ventures 29,434 26,268 5,344 3,641 4,857 3,666 Associates South Africa 1,479 1,565 217 170 193 53 Rest of Africa 2,138 1,972 468 356 356 356 Europe 753 969 47 166 30 166 North America - 461 - 32 - 32 South America 525 447 189 249 189 249 Australia and Asia 143 256 111 83 111 83 Total associates 5,038 5,670 1,032 1,056 879 939 Total Group operations including associates 34,472 31,938 6,376 4,697 5,736 4,605 (1) Special items and remeasurements are set out in note 4. 2. Profit for the financial year The table below analyses the contribution of each business segment to the Group's operating profit including operating profit from associates for the financial year and its underlying earnings, which the directors consider to be a useful additional measure of the Group's performance. A reconciliation from profit for the financial year to underlying earnings is given in note 7. Group operating profit including operating profit from associates is reconciled to ' Profit for the financial year' in the table below: 2005 Operating Operating profit before profit after Special items Net special items special items and Net interest, US$ million and and remeasurements: profit on Financing tax and remeasurements remeasurements operating(2) disposals remeasurements minority (1) (2) and other(2) interests Total By business segment Platinum 854 854 - - - (371) 483 Gold 332 (52) 384 - - (227) 105 Diamonds 583 431 152 - - (153) 430 Coal 1,019 1,020 (1) - - (295) 724 Base Metals 1,678 1,667 11 - - (438) 1,240 Industrial Minerals 370 354 16 - - (103) 267 Ferrous Metals and 1,456 1,461 (5) - - (699) 757 Industries Paper and Packaging 495 412 83 - - (199) 296 Exploration (150) (150) - - - 35 (115) Corporate Activities (261) (261) - - - (190) (451) Total/Underlying earnings 6,376 5,736 640 - - (2,640) 3,736 Underlying earnings adjustments (note 7) (640) 185 42 198 (215) Profit for the financial 3,521 year(3) 2004 Net Operating Operating interest, profit before profit after Special items Net Financing tax and special items special items and profit on minority US$ million and and remeasurements: disposals remeasurements interests remeasurements remeasurements operating(2) (2) and other(2) Total (1) By business segment Platinum 536 536 - - - (296) 240 Gold 296 295 1 - - (157) 139 Diamonds 573 573 - - - (193) 380 Coal 497 497 - - - (140) 357 Base Metals 1,276 1,039 237 - - (240) 1,036 Industrial Minerals 421 412 9 - - (133) 288 Ferrous Metals and 887 1,042 (155) - - (411) 476 Industries Paper and Packaging 569 569 - - - (202) 367 Exploration (120) (120) - - - 29 (91) Corporate Activities (238) (238) - - - (270) (508) Total/Underlying earnings 4,697 4,605 92 - - (2,013) 2,684 Underlying earnings adjustments (note 7) (92) 1,025 (112) (4) 817 Profit for the financial 3,501 year (1) Operating profit includes associates' operating profit which is reconciled to 'Net income from associates' in note 1. (2) Special items and remeasurements are set out in note 4. (3) Profit for the financial year is the amount attributable to equity shareholders. 3. Exploration expenditure US$ million 2005 2004 By business segment Platinum 21 13 Gold 45 43 Coal 13 9 Base Metals 50 41 Ferrous Metals and Industries 21 14 150 120 4. Special items and remeasurements 'Special items' are those items of financial performance that the Group believes should be separately disclosed on the face of the income statement to assist in the understanding of the underlying financial performance achieved by the Group and its businesses. Such items are material by nature or amount to the period's results and require separate disclosure in accordance with IAS 1.86. Special items that relate to the operating performance of the business are classified as special operating items and include impairment charges and reversals and other exceptional items including significant legal provisions. Non-operating special items include profits and losses on disposals of investments and businesses. The Group believes that items which were previously referred to as 'exceptional items' under UK GAAP fall within the scope of special items under IFRS. Remeasurements comprise other items which the Group believes should be reported separately to aid an understanding of the underlying performance of the Group. This category includes unrealised gains and losses on non-hedge derivative instruments that are recorded in the income statement, and foreign exchange gains and losses on dollar denominated De Beers' preference shares held by a Rand functional currency subsidiary of the Group. Remeasurements are defined as operating, non-operating or financing according to the nature of the underlying expense. 4. Special items and remeasurements (continued) 2005 2004 US$ million Subsidiaries and joint ventures Operating special items Impairment of Corrugated assets, goodwill and restructuring costs (77) - Impairment of Bibiani (38) - Closure of Ergo (31) - Reversal of impairment of Terra Industries Inc - 154 Impairment of Black Mountain Mineral Development - (100) Other impairments and write downs (40) (29) Total operating special items (186) 25 Taxation 14 6 Minority interests 38 (1) Total attributable to equity shareholders (134) 30 Operating remeasurements Unrealised losses on non-hedge derivatives (301) - Taxation 22 - Minority interests 130 - Total attributable to equity shareholders (149) - Financing remeasurements Fair value loss on AngloGold Ashanti convertible bond (32) - Foreign exchange gain/(loss) on De Beers' preference shares 72 (112) Unrealised gains and losses on non-hedge derivatives (5) - Total financing remeasurements 35 (112) Taxation (2) - Minority interests 16 - Total attributable to equity shareholders 49 (112) Profits and (losses) on disposals Formation of Marikana JV 27 - Sale of Acerinox 25 - Disposal of Wendt 21 - Disposal of Boart Longyear 21 - Disposal of Elandsfontein 18 - Sale of Columbus 14 - Disposal of Hope Downs (57) - Part disposal of Mondi Packaging South Africa (12) - Part disposal of Western Areas 14 45 Disposal of interest in Gold Fields Ltd - 464 Gains on deemed disposal of AngloGold - 415 Disposal of remaining interest in FirstRand Limited - 32 Disposal of interest in Nkomati - 28 Disposal of interest in Avgold - 25 Other items 16 6 Net profit on disposals 87 1,015 Taxation (26) (44) Minority interests (3) (1) Total attributable to equity shareholders 58 970 Total special items and remeasurements before tax and minority interests (365) 928 Taxation 8 (38) Minority interests 181 (2) Total special items and remeasurements attributable to equity shareholders (176) 888 2005 2004 US$ million Associates' special items and remeasurements Operating impairment charge - Palabora Mining Company Limited - (117) Other impairments and restructurings (24) - Share of De Beers' class action payment (113) - Unrealised losses on non-hedge derivatives - operating (16) - Operating special items and remeasurements (153) (117) Unrealised gains on non-hedge derivatives - financing 7 - Disposal of Samancor Chrome 52 - Disposal of Wonderkop joint venture interest 20 - Other items 26 10 Net profit on disposals 98 10 Total associates' special items and remeasurements (48) (107) Taxation 7 36 Minority interests 2 - Net associates' special items and remeasurements (39) (71) 4. Special items and remeasurements (continued) Operating special items and remeasurements 2005 2004 US$ million Operating special items (186) 25 Operating remeasurements (301) - (487) 25 Associates' operating special items and remeasurements (153) (117) (640) (92) Operating special charges of $186 million (2004: gain of $25 million) relates principally to impairment and closure costs. Following difficult market conditions, Paper and Packaging have recorded impairment and restructuring costs of $77 million in relation to the Corrugated division. A review of the expected life of mine at AngloGold Ashanti's Bibiani operation has led to a $38 million special charge to operating profit. One-off costs and charges of $31 million were incurred following the decision to close AngloGold Ashanti's Ergo operation. Unrealised losses of $301 million on non-hedge derivatives (2004: nil) have been included in operating remeasurements. These unrealised losses were recorded principally at AngloGold Ashanti. Associates' operating special items and remeasurements includes $113 million for share of De Beers' legal settlement. Financing remeasurements AngloGold Ashanti records the option element of its convertible bond at fair value in the income statement following the adoption of IAS 32 and IAS 39. As a result, a charge of $32 million (2004: nil) has been included in financing remeasurements. The Group holds US dollar preference shares issued by De Beers which are held in a Rand functional currency subsidiary of the Group. As a result of the adoption of IAS 21 and 28, these shares have been reclassified as 'non-current investments' and are retranslated at each period end. As a result, a gain of $72 million (2004: loss of $112 million) has been included in financing remeasurements. Profits and losses on disposals Anglo Platinum has entered into the Marikana Pooling and Sharing agreement with Aquarius Platinum to jointly mine contiguous properties. A gain of $27 million arose on transfer of assets to the joint venture. The sale of Boart Longyear's subsidiary Wendt was concluded in March 2005 for proceeds of $62 million, realising a profit on sale of $21 million. In July 2005 the remainder of the Boart Longyear Group was sold for $383 million, with a profit on sale of $21 million. In the first half of the year, proceeds of $116 million were received on the sale of Acerinox leading to a profit on disposal of $25 million. Under the terms of an agreement between Kumba Resources Ltd ('Kumba') and Hancock Prospecting Pty Limited ('Hancock'), Hancock purchased Kumba's interest in the Hope Downs project on 1 July 2005. The proceeds of $176 million led to a loss on sale of $57 million for the Group owing to value assigned to the Hope Downs project on the acquisition of Kumba by the Group in 2003. 5. Net finance costs Finance costs and foreign exchange gains/(losses) are presented net of effective cash flow hedges for respective interest bearing and foreign currency borrowings. Fair value gains/(losses) on derivatives, presented below, include the mark-to- market value changes of interest rate and currency derivatives designated as fair value hedges, net of fair value changes in the associated hedged risk; and fair value changes of non-hedge derivatives of non-operating items, including the mark-to-market of the conversion option within the AngloGold Ashanti convertible bond. Before After Before After US$ million remeasurements remeasurements remeasurements remeasurements 2005 2005 2004 2004 Investment income Interest and other financial income 227 227 249 249 Expected return on defined benefit arrangements 241 241 257 257 Foreign exchange gains 20 92 120 120 Dividend income from financial/fixed asset 10 10 93 93 investments Total investment income 498 570 719 719 Interest expense Amortisation discount relating to provisions (42) (42) (62) (62) Bank loans and overdrafts (320) (320) (394) (394) Other loans (167) (167) (194) (194) Interest paid on convertible bonds (71) (71) (42) (42) Unwinding of discount on convertible bonds (53) (53) - - Interest on defined benefit arrangements (270) (270) (298) (298) Foreign exchange losses (33) (33) (66) (178) Fair value losses on derivatives (19) (24) - - Other fair value losses - (32) - - (975) (1,012) (1,056) (1,168) Less: interest capitalised 49 49 82 82 Total interest expense (926) (963) (974) (1,086) Net finance cost (428) (393) (255) (367) The weighted average interest rate applicable to interest on general borrowings capitalised was 8.7% (2004: 8.4%). Financing remeasurements are set out in note 4. 6. Tax on profit on ordinary activities a) Analysis of charge for the year from continuing operations US$ million 2005 2004 United Kingdom corporation tax at 30% 15 61 South Africa taxation 580 253 Other overseas taxation 721 347 Current tax (excluding tax on special items and remeasurements) 1,316 661 Deferred taxation (33) 224 Total deferred tax (excluding tax on special items and remeasurements) (33) 224 Total tax on special items and remeasurements (8) 38 Total tax charge 1,275 923 b) Factors affecting tax charge for the year The effective tax rate for the year of 24.5% (2004: 19.0%), after adjusting profits for the net income from associates, is lower than the standard rate of corporation tax in the United Kingdom (30%). The differences are explained below: 2005 2004 including including special items special items US$ million (unless otherwise stated) and and remeasurements remeasurements Profit on ordinary activities before tax 5,208 4,864 Tax on profit on ordinary activities calculated at United Kingdom corporation tax rate of 30% (2004: 30%) 1,562 1,459 Tax effect of net income from associates (197) (165) Tax effects of: Expenses not deductible for tax purposes: Operating special items and remeasurements 110 (14) Exploration costs 45 36 Other non-deductible expenses (3) 9 Non-taxable income: Profits and losses on disposals and remeasurements (9) (227) Temporary difference adjustments: Changes in tax rates (187) - Movement in tax losses (30) - Other temporary differences (23) (72) Other adjustments: South African secondary tax on companies 240 87 Effect of differences between local and UK rates (257) (174) Other adjustments 24 (16) Tax charge for the year 1,275 923 IAS 1 requires income from associates to be presented net of tax on the face of the income statement. The associates' tax is no longer included within the Group's total tax charge. Associates' tax included within 'Net income from associates' for the year ended 31 December 2005 is $274 million (2004: $280 million). The effective rate of taxation before special items and remeasurements including share of associates' tax before special items and remeasurements was 26.5%. This was a decrease from the equivalent effective rate of 27.7% in the year ended 31 December 2004. The reduction in the effective tax rate was principally due to a reduction in the South African statutory rate from 30% to 29% and a reduction in the Ghanaian tax rate, which resulted in a $187 million reduction in deferred tax, the benefit of which was taken in 2005. Without this one off benefit the effective tax rate for the period would have been 29.7%. In future periods it is expected the effective tax rate, including associates' tax, will remain at or above current levels. 7. Earnings per share US$ million (unless otherwise stated) 2005 2004 Profit for the financial year attributable to equity shareholders Basic earnings per share (US$) 2.43 2.44 Diluted earnings per share (US$) 2.36 2.35 Headline earnings for the financial year(1): Basic earnings per share (US$) 2.43 1.79 Diluted earnings per share (US$) 2.36 1.73 Underlying earnings for the financial year(1): Basic earnings per share (US$) 2.58 1.87 Diluted earnings per share (US$) 2.50 1.81 (1) Basic and diluted earnings per share are shown based on headline and underlying earnings, which the directors believe to be useful additional measures of the Group's performance. The calculation of the basic and diluted earnings per share is based on the following data: US$ million (unless otherwise stated) 2005 2004 Earnings Basic earnings, being profit for the financial year attributable to equity 3,521 3,501 shareholders Effect of dilutive potential ordinary shares: Interest on convertible bonds (net of tax) 29 29 Unwinding of discount on convertible bonds (net of tax) 20 - Diluted earnings 3,570 3,530 Number of shares (million) Basic number of ordinary shares outstanding(1) 1,447 1,434 Effect of dilutive potential ordinary shares(2): Share options 18 18 Convertible bonds 48 48 Diluted number of ordinary shares outstanding(1) 1,513 1,500 (1) Basic and diluted number of ordinary shares outstanding represent the weighted average for the period. The average number of ordinary shares in issue excludes the shares held by the employee benefit trust. (2) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. 'Underlying earnings' is an alternative earnings measure, which the directors believe provides a clearer picture of the underlying financial performance of the Group's operations following the adoption of IAS 32 and IAS 39. Underlying earnings is presented after minority interest and excludes special items and remeasurements (see note 4). Underlying earnings is distinct from 'headline earnings', which is a Johannesburg Stock Exchange ('JSE Ltd') defined performance measure. The calculation of basic and diluted earnings per share, based on underlying earnings, uses the following earnings data: Earnings (US$ million) Basic earnings per share (US$) 2005 2004 2005 2004 Profit for the financial year attributable to equity 3,521 3,501 2.43 2.44 shareholders Special items: operating 186 (25) 0.13 (0.02) Net loss/(profit) on disposals (87) (1,015) (0.06) (0.71) Special items: associates (74) 107 (0.05) 0.08 Related tax 6 2 - - Related minority interest (36) 2 (0.02) - Headline earnings for the financial year 3,516 2,572 2.43 1.79 Unrealised losses on non-hedge derivatives 315 - 0.22 - Fair value loss on AngloGold Ashanti convertible 32 - 0.02 - bond Exchange (gain)/loss on DBI preference shares (72) 112 (0.05) 0.08 Share of De Beers' legal settlement 113 - 0.08 - Related tax (21) - (0.02) - Related minority interest (147) - (0.10) - Underlying earnings for the financial year 3,736 2,684 2.58 1.87 For information underlying earnings for the 6 months to 30 June 2005 and 30 June 2004 is set out in the appendix. 7. Earnings per share (continued) The following instruments are potentially dilutive but have not been included in the calculation of diluted earnings per share because they are anti-dilutive for the periods presented: 2005 2004 Number of shares (million) Share options - 8 Potentially dilutive shares - 8 8. Capital expenditure on fixed assets and biological assets US$ million 2005 2004 Platinum 616 633 Gold 722 585 Coal 331 218 Base Metals 271 367 Industrial Minerals 274 304 Paper and Packaging 691 758 Ferrous Metals and Industries 373 284 Other 28 17 Purchase of tangible fixed assets 3,306 3,166 Investment in biological assets 55 67 3,361 3,233 Capital expenditure shown above comprises cash expenditure on fixed assets and biological assets. Segmental capital expenditure shown in note 1 also includes accruals and expenditure on acquisitions and intangible assets, but excludes expenditure on biological assets. 9. Reconciliation of changes in equity Attributable to equity shareholders of the Company Fair Share- Cumulative value US$ million Total based translation and share Retained payment adjustment other Minority Total capital earnings(2) reserve reserve(3) reserves interests equity (1) (3) Balance at 1 January 2004 2,022 15,012 25 - 772 3,365 21,196 Total recognised income and expense - 3,474 - 2,247 - 755 6,476 Dividends paid - (827) - - - - (827) Shares issued 358 - - - - - 358 Share-based payments - 12 30 - - 3 45 Subsidiary shares issued - - - - - 890 890 Issue of shares to minority interests - - - - - (402) (402) Dividends paid to minority interests - - - - - (178) (178) Deemed disposal of AngloGold - - - - - 155 155 Balance at 31 December 2004 2,380 17,671 55 2,247 772 4,588 27,713 Adoption of IAS 32 and IAS 39 (see note - (231) - - 226 (122) (127) 13) Balance at 1 January 2005 2,380 17,440 55 2,247 998 4,466 27,586 Total recognised income and expense - 3,364 - (1,908) (162) 82 1,376 Dividends paid - (1,137) - - - - (1,137) Shares issued 4 - - - - - 4 Share-based payments - - 100 - - 6 106 Disposal of businesses - - - - - (3) (3) Issue of shares to minority interests - - - - - 16 16 Dividends paid to minority interests - - - - - (421) (421) Exercise of employee share options - 240 - - - - 240 Buy out of minority interests - - - - - (189) (189) Balance at 31 December 2005 2,384 19,907 155 339 836 3,957 27,578 (1) Total share capital comprises called-up share capital $747 million (2004: $747 million) and the share premium account $1,637 million (2004: $1,633 million). (2) Retained earnings is stated after deducting $456 million (2004: $622 million) of treasury shares. Treasury shares comprise shares of Anglo American plc held in the employee benefit trust to meet certain of the Group's employee share remuneration schemes. 17,516,652 million of shares ($240 million) (2004: 1,600,926 million ($12 million)) were issued from the trust during the year. (3) Other reserves of $1,330 million (2004: $3,074 million) on the balance sheet comprise share-based payment reserve $155 million (2004: $55 million), cumulative translation adjustment reserve of $339 million (2004: $2,247 million) and fair value and other reserves of $836 million (2004: $772 million). Fair value and other reserves are further analysed below. Fair value and other reserves comprise: Total Cash fair Convertible Available flow value and debt for sale hedge Other other US$ million reserve reserve reserve reserves(1) reserves Balance at 1 January 2004 - - - 772 772 Balance at 31 December 2004 - - - 772 772 Adoption of IAS 32 and IAS 39 (see note 128 48 50 - 226 13) Balance at 1 January 2005 128 48 50 772 998 Total recognised income and expense 3 6 (171) - (162) Balance at 31 December 2005 131 54 (121) 772 836 (1) Other reserves comprise $685 million (2004: $685 million) legal reserve and $87 million (2004: $87 million) capital redemption reserve. 10. Consolidated cash flow analysis a) Reconciliation of profit before tax to cash inflows from operations US$ million 2005 2004 Profit before tax 5,208 4,864 Depreciation and amortisation 2,441 2,107 Share option expense 92 50 Special items and remeasurements of subsidiaries and joint ventures 365 (928) Net finance costs before remeasurements 428 255 Fair value gains before special items and remeasurements (278) - Net income from associates (657) (550) Provisions 113 17 Increase in inventories (453) (279) Increase in operating debtors (600) (444) Increase in operating creditors 539 113 Other adjustments 67 86 Cash inflows from operations 7,265 5,291 b) Cash and cash equivalents US$ million 2005 2004 Cash and cash equivalents per balance sheet 3,430 2,955 Bank overdrafts (111) (174) Net cash and cash equivalents per cash flow statement 3,319 2,781 c) Movement in net debt Debt due within Debt due after(4) one year one year US$ million Current Cash and financial Total cash Carrying Carrying asset net debt equivalents value(2) Hedge(3) value Hedge(3) investments (5) (1)(2) Balance at 1 January 2004 2,186 (4,143) - (6,997) - 25 (8,929) Cash flow 486 1,830 - (392) - (23) 1,901 Acquisitions excluding cash and cash equivalents - (249) - (314) - - (563) Disposals excluding cash and cash equivalents - 6 - 23 - - 29 Other non-cash movements - (4) - (15) - - (19) Reclassifications - (309) - 309 - - - Currency movements 109 (340) - (431) - - (662) Balance at 31 December 2004 2,781 (3,209) - (7,817) - 2 (8,243) IAS 32 and IAS 39 adjustments - (63) 55 (144) 302 - 150 Balance at 1 January 2005 2,781 (3,272) 55 (7,961) 302 2 (8,093) Cash flow 602 1,356 25 632 - (13) 2,602 Acquisition/disposal of business - 2 - 5 - - 7 Unwinding of discount of convertible - - - (53) - - (53) debt Reclassifications - (300) - 299 - 1 - Movement in fair value - - (67) 12 (302) - (358) Other non-cash movements - - - - - 29 29 Currency movements (64) 249 - 703 - (3) 885 Closing balance at 31 December 2005 3,319 (1,965) 13 (6,363) - 16 (4,980) (1) The Group operates in certain countries (principally South Africa and Venezuela) where the existence of exchange controls may restrict the use of certain cash balances. These restrictions are not expected to have any material effect on the Group's ability to meet its ongoing obligations. (2) Excludes overdrafts, which are included as cash and cash equivalents. Short term borrowings on the balance sheet of $2,076 million (2004: $3,383 million) include $111 million (2004: $174 million) of overdrafts. (3) Derivatives of net debt items that have been designated as hedged and are effective are included within this table to give a true reflection of the Group's net debt position at period end. These derivatives are classified within other financial assets/(liabilities) (derivatives). (4) Debt due after one year includes convertible debt of $1,975 million (2004: $2,081 million). (5) Net debt as shown on the balance sheet totalling $4,993 million (2004: $8,243 million) excludes the effect of hedge instruments. 11. EBITDA by business segment US$ million 2005 2004 By business segment Platinum 1,282 853 Gold 871 694 Diamonds 655 655 Coal 1,243 687 Base Metals 1,990 1,625 Industrial Minerals 618 638 Ferrous Metals and Industries 1,779 1,231 Paper and Packaging 916 978 Exploration (150) (120) Corporate Activities (245) (210) EBITDA 8,959 7,031 EBITDA is stated before special items and is reconciled to 'Total profit from operations and associates' as follows: US$ million 2005 2004 Total profit from operations and associates 5,601 5,231 Special items (including associates) 633 92 Net profit on disposals (including associates) (185) (1,025) Depreciation and amortisation: subsidiaries and joint ventures 2,441 2,107 Share of associates' interest, tax, depreciation, amortisation and underlying minority interest 469 626 EBITDA 8,959 7,031 EBITDA is reconciled to cash inflows from operations as follows: US$ million 2005 2004 EBITDA(1) 8,959 7,031 Share of operating profit of associates, before special items (1,032) (1,056) Underlying depreciation and amortisation in associates (142) (227) Share option expense 92 50 Fair value gains before remeasurements (278) - Provisions 113 17 Increase in inventories (453) (279) Increase in operating debtors (600) (444) Increase in operating creditors 539 113 Other adjustments 67 86 Cash inflows from operations 7,265 5,291 (1) EBITDA is operating profit before special items and remeasurements plus depreciation and amortisation in subsidiaries and joint ventures and share of EBITDA of associates: US$ million 2005 2004 Operating profit includes associates' operating profit before special items and remeasurements 6,376 4,697 Depreciation and amortisation Subsidiaries and joint ventures 2,441 2,107 Associates 142 227 8,959 7,031 12. Reconciliation between UK GAAP and IFRS Reconciliation of equity The Group published financial information in accordance with IFRS for 2004, as required by IFRS 1, on 9 May 2005 in its news release entitled 'International Financial Reporting Standards (IFRS) restatements for 2004 and update on adoption of IFRS'. The news release is published on the Company's website, www.angloamerican.co.uk, and includes explanations of the significant UK GAAP to IFRS differences and reconciliations for: â€¢ total equity as at 1 January 2004 (date of transition to IFRS), 30 June 2004 and 31 December 2004; â€¢ profit attributable to shareholders for the period ended 30 June 2004 and the year ended 31 December 2004; and â€¢ pro forma IAS 32 and IAS 39 information for the period ended 30 June 2004 and the year ended 31 December 2004. The news release also included detailed IFRS accounting policies and supplementary notes to provide more information for understanding the restatements. A summary of the detailed information presented in the news release is provided below: As at As at 01.01.04 31.12.04 US$ million Total equity presented under UK GAAP 19,772 24,998 Reclassification of UK GAAP minority interests within 3,396 4,620 equity Proposed dividend adjustment 622 815 Recognition of deferred tax on fair value adjustments(1) (1,712) (1,899) Defined benefit pension obligations (576) (628) Translation of goodwill arising post 1 January 2004 - 21 Treatment of De Beers' preference shares (130) (218) Net impairment of goodwill (214) (214) Reversal of goodwill amortisation - 221 Fair value of biological assets 26 14 Share-based payments 6 1 Net impact of other IFRS adjustments 6 (18) Total equity and reserves presented under IFRS 21,196 27,713 Reconciliation of profit attributable to equity shareholders of the Company Year ended US$ million 31.12.04 Attributable profit under UK GAAP 2,913 Reclassification of unrealised gains 427 Deferred tax on fair value adjustments 41 Defined benefit schemes - Recycling of currency translation adjustments 30 Treatment of De Beers' preference shares (69) Reversal of goodwill amortisation 205 Fair value of biological assets (21) Share-based payments (21) Net impact of other IFRS adjustments (4) Attributable profit under IFRS 3,501 (1) Since the release of the Group's restated IFRS information on 9 May 2005, an additional deferred tax liability of $227 million (Â£126 million) has been recognised on transition to IFRS in respect of underlying fair value adjustments. This adjustment was taken to opening retained earnings in accordance with IFRS 1. Reconciliation of cash flows The material adjustments made to the presentation of the Group's consolidated cash flow statement were the inclusion of cash flows from joint venture entities on a line-by-line basis in accordance with proportionate consolidation rules set out in IAS 31; and the inclusion of short term cash investments maturing within 90 days of deposit previously disclosed as current asset investments as cash equivalents in accordance with IAS 7 Cash Flow Statements. Explanation of reconciling items between UK GAAP and IFRS The more significant areas of accounting change are: IAS 1 - Reclassification of UK GAAP minority interest within equity Minority interests were reclassified from long term liabilities to equity in accordance with IAS 1. Although this increased reported net assets by $4.6 billion at 31 December 2004 and $3.4 billion at 1 January 2004, it has no impact on total shareholders' equity. IAS 1 - Reclassification of unrealised gains The international accounting framework provides no distinction between unrealised and realised gains for financial reporting. As such, all unrealised gains, with the exception of actuarial gains or losses on post-retirement schemes and currency translation differences, are recorded through the income statement and not through the statement of total recognised gains and losses, as was required under UK GAAP. Although this reclassification has increased reported profit for the year to 31 December 2004 by $0.4 billion, there is no change to net assets. 12. Reconciliation between UK GAAP and IFRS (continued) IAS 10 - Proposed dividend adjustment Dividends proposed are recognised in the period in which they are formally approved for payment. This is also in accordance with the Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004, which is effective for financial years commencing on or after 1 January 2005. The change in timing of recognising proposed dividends and the related tax thereon increased reported net assets of the Group as at 31 December 2004 by $815 million, being the final 2004 proposed dividends to the Group's shareholders and its minority interests and by $622 million as at 1 January 2004, being the final 2003 proposed dividends. IAS 12 - Recognition of deferred tax on fair value adjustments Deferred tax is recognised at acquisition as part of the assessment of the fair value of assets and liabilities acquired and is provided on balances previously excluded from provision under UK GAAP such as revaluations of tangible fixed assets. The largest temporary difference requiring additional deferred tax provision on transition arose between the carrying value of mineral reserves and the respective tax base. Upon adoption of IFRS, the Group recognised a deferred tax liability of $1.7 billion in respect of additional temporary differences arising on previous acquisitions. In accordance with IFRS 1 the Group took the exemption from restating acquisitions prior to 1 January 2004, and as such this adjustment was made to reserves at 1 January 2004. Deferred tax provided on temporary differences for acquisitions made after 1 January 2004 either increases the value attributed to mineral reserves or goodwill, depending on the nature of the temporary difference giving rise to it. Any deferred tax raised will unwind through the consolidated income statement as the underlying temporary difference is amortised. The net impact from the recognition of additional temporary differences on acquisitions was to increase profit after tax by $41 million for the year ended 31 December 2004. IAS 19 - Defined benefit pension obligation IAS 19 requires companies to recognise the full deficit (or surplus, subject to restrictions) of post-retirement benefits under defined benefit arrangements on the balance sheet. The Group adopted the amendment to IAS 19 and has recognised all actuarial gains or losses directly through equity. This accounting change reduced consolidated net assets by approximately $0.6 billion (net of deferred tax) as at 31 December 2004 and 1 January 2004, as the full actuarial gains and losses of defined benefit arrangements are now reflected in reserves. There is no material impact on net profit for the year ended 31 December 2004. IAS 21 - Recycling of currency translation adjustment IAS 21 requires cumulative currency translation adjustments (CTA) arising on translation of a foreign operation to be recycled through the income statement when that entity is disposed of. Previously, under UK GAAP, the CTA was not included in the gain or loss calculated if that operation was sold. In accordance with IFRS 1, the Group took the exemption from recycling foreign currency gains or losses arising before 1 January 2004. The accounting policy change increased reported profit on disposal of non US dollar operations by $30 million for the year to 31 December 2004 which represented recycled CTA gains arising since 1 January 2004. This accounting change had no impact on consolidated net assets, as it is effectively recycling gains and losses reported previously in reserves back through the income statement. IAS 21 - Translation of goodwill arising post 1 January 2004 In accordance with IFRS 1, the Group translates non US dollar goodwill arising on acquisitions after 1 January 2004 to the closing US dollar exchange rate. This accounting adjustment increased net assets at 31 December 2004 by $21 million. The resulting foreign exchange gain arising on consolidation has been taken to the CTA reserve. IAS 28 and IAS 21 - Translation of De Beers' preference shares Previously, under UK GAAP, US dollar preference shares held in De Beers with a redemption value of $701 million were considered part of the Group's long term equity ownership in the entity. As such, the preference shares were held at historical cost and included in the total carrying value of the associate in the consolidated balance sheet. Under IFRS, the US dollar preference shares, which are held by a Rand functional currency entity and are redeemable by 2010, no longer qualify as quasi-equity and consequently were reclassified as non-current financial asset investments: equity, and retranslated at each period end. The resulting Rand:US dollar foreign exchange gains and losses are reported through the income statement. Under IAS 21 a currency loss of $112 million was recorded for the year ended 31 December 2004. Consequently the 2004 $44 million exceptional currency loss recognised on the partial redemption of the preference shares under UK GAAP reporting was reversed. The net impact from this accounting policy difference also reduced net assets by $130 million as at 1 January 2004. After the partial redemption in June 2004 of 25% of the shares, the residual carrying value of the remaining US dollar preference shares held as at 31 December 2004 was $526 million. IAS 36 - Replacement of goodwill amortisation with an annual impairment test and elimination of centrally held goodwill IFRS does not permit the amortisation of goodwill, but requires the carrying amount to be supported by an annual impairment test. 12. Reconciliation between UK GAAP and IFRS (continued) For the purposes of impairment testing, goodwill is allocated to cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. The group of CGUs to which the goodwill is allocated represents the lowest level at which the goodwill is monitored for internal management purposes and is not larger than a geographical or business segment. On transition to IFRS as at 1 January 2004, approximately $260 million of strategic goodwill arising on the formation of Anglo American plc in 1999 was eliminated. In accordance with FRS 11, this goodwill reflected the increase in future shareholder value arising from the merger of the AACSA and Minorco companies and not the intrinsic value of Minorco assets existing at the date of restructure and was held centrally. IFRS, however, requires that all goodwill is allocated to cash generating units. The cash generating units to which this strategic goodwill would have been allocated to on formation of the Group did not support its carrying value, due to disposals or impairments made since 1999 up to IFRS transition date. As a result, the goodwill was written off through retained earnings at transition date. In addition, approximately $50 million of negative goodwill was written back in accordance with IFRS 3 in the opening balance sheet. Together these adjustments give rise to a net reduction to the carrying value of goodwill on transition of $0.2 billion. The replacement of goodwill amortisation with an annual impairment test has increased reported profits for the Group by $0.2 billion for the year to 31 December 2004. This accounting change does not impact headline earnings, as headline earnings were stated before goodwill amortisation for UK GAAP. IAS 32 and IAS 39 - Financial instruments In accordance with the exemption provided under IFRS 1, the Group has adopted IAS 32 and IAS 39 prospectively from 1 January 2005. As such, the financial information presented for the year ended 31 December 2004 excludes any adjustments required from adoption of these two standards. Details of the restatement and the more significant changes is set out in note 13 Adoption of IAS 32 and IAS 39. IAS 41 - Fair value of biological assets Afforestation and other agricultural assets, primarily forests within our Paper and Packaging business, were previously held at historical cost. These assets are now recorded at fair value in accordance with IAS 41, with fair value changes reported through the income statement up until the point at which the assets are harvested. The historical cost of such assets was previously classified within fixed assets. This accounting change has resulted in the reclassification of afforestation and other agricultural asset costs from tangible assets to the separate asset category biological assets, and the resultant fair value has increased net assets by $14 million as at 31 December 2004 and $26 million as at 1 January 2004. The effect of recognising fair value gains from growing afforestation and other agricultural assets earlier than under UK GAAP has reduced reported net profit for the year ended 31 December 2004 by approximately $21 million. IFRS 2 - Share-based remuneration schemes IFRS 2 Share-based payments requires options granted by the Group to employees, for example under Employee Share Option Schemes and Save As You Earn schemes, to be fair valued at grant date using an option pricing model and charged through the income statement over the vesting period of the options. UK GAAP required the intrinsic valuation method to be applied whereby a charge was made if the exercise price of the option at grant date was below the market price. This accounting change reduced consolidated net profit by $21 million for the year to 31 December 2004. Group employee remuneration schemes have now replaced option schemes with share schemes. Consequently the impact of this accounting policy change will diminish. 13. Adoption of IAS 32 and IAS 39 The Group took the exemption not to restate its comparative information for IAS 32 and IAS 39 and adopted the standards prospectively from 1 January 2005. The consolidated balance sheet as at 31 December 2004 has been adjusted to apply IAS 32 and IAS 39 prospectively from 1 January 2005 as set out below: Pro forma Effect of restated adoption of IAS IFRS 32 IFRS US$ million Footnotes 31.12.04 and IAS 39 01.01.05 Intangible assets 2,644 - 2,644 Tangible assets (1) 33,172 (173) 32,999 Biological assets 374 - 374 Environmental rehabilitation trusts 237 - 237 Investments in associates 3,486 4 3,490 Fixed asset investments (2) 1,084 (1,084) - Financial asset investments (2) - 1,142 1,142 Deferred tax assets 128 (1) 127 Other financial assets (derivatives) (3) - 675 675 Other non-current assets 66 - 66 Total non-current assets 41,191 563 41,754 Inventories 3,549 - 3,549 Trade and other receivables 5,534 (86) 5,448 Current tax assets 220 - 220 Other current financial assets (3) - 670 670 (derivatives) Current asset investments (2) 2 (2) - Current financial asset investments (2) - 2 2 Cash and cash equivalents 2,955 - 2,955 Total current assets 12,260 584 12,844 Total assets 53,451 1,147 54,598 Short term borrowings (4) (3,383) (63) (3,446) Trade and other payables (5,368) 78 (5,290) Current tax liabilities (831) 1 (830) Other current financial liabilities (3) - (628) (628) (derivatives) Total current liabilities (9,582) (612) (10,194) Medium and long term borrowings (4) (7,817) (144) (7,961) Retirement benefit obligations (1,201) - (1,201) Other financial liabilities (derivatives) (3) - (610) (610) Deferred tax liabilities (5,810) 92 (5,718) Provisions (1,328) - (1,328) Total non-current liabilities (16,156) (662) (16,818) Total liabilities (25,738) (1,274) (27,012) Net assets 27,713 (127) 27,586 Equity Called-up share capital 747 - 747 Share premium account 1,633 - 1,633 Other reserves 3,074 226 3,300 Cash flow hedge reserve (3) - 50 50 Convertible debt reserve (5) - 128 128 Available for sale reserve (2) - 48 48 Other 3,074 - 3,074 Retained earnings (5) 17,671 (231) 17,440 Equity attributable to equity shareholders of the Company 23,125 (5) 23,120 Minority interests 4,588 (122) 4,466 Total equity 27,713 (127) 27,586 13. Adoption of IAS 32 and IAS 39 (continued) The IFRS news release issued on 9 May 2005 set out a detailed reconciliation by adjustment type on adoption of IAS 32 and IAS 39. The pro forma information presented in the news release however assumed application of IAS 32 and IAS 39 from 1 January 2004. As such, it is slightly different to the information restated here, for statutory purposes, which applies the standards prospectively from 1 January 2005. The detailed accounting policies for the Group's financial instruments are set out in note 14. The key changes in accounting policy on adoption of IAS 32 and IAS 39 are: â€¢ recognition and fair value of derivatives, including embedded derivatives; â€¢ fair value of investments that were previously cost accounted; and â€¢ the separation of the equity conversion option within convertible debt instruments. The following notes explain the material adjustments made at 1 January 2005 to the Group's balance sheet at 31 December 2004 to reflect the adoption of IAS 32 and IAS 39. (1) The reduction in tangible fixed assets was largely due to a $171 million impairment triggered by the recognition of an embedded derivative. The derivative was in a commercial purchase contract in a Base Metals' operation and the resulting financial asset increased the carrying value of total assets over their recoverable amount, being their value in use. The value in use of the Base Metals operation was calculated using forecast cash flows discounted using a pre-tax discount rate equivalent to a real post-tax discount rate of six per cent, adjusted for any risks that were not reflected in the underlying cash flows. The resulting impairment provision, net of deferred tax, was taken through retained earnings as at 1 January 2005 in accordance with transitional provisions set out in IFRS 1. (2) On adoption of the two standards, loans and equity investments that were previously classified as fixed asset investments were reclassified as financial asset investments and accounted for as available for sale, fair value through profit or loss, held to maturity or loans and receivables as defined by IAS 39. On transition, equity investments meeting the definition of available for sale were restated to their fair values. The respective $58 million adjustment, being the difference in carrying values between fixed asset investments and the reclassified financial asset investments, was taken to the available for sale reserve, net of deferred tax of $10 million. No items were classified as fair value through profit or loss or as held to maturity. The Group's $526 million investment in DBI 10% non-cumulative, redeemable preference shares were reclassified from equity to loans and receivables as they meet the definition of debt within IAS 32. No further adjustment was required on reclassification of all other loans to loans and receivables, as their carrying value under UK GAAP was equivalent to amortised cost under IAS 39. (3) All outstanding derivatives, other than commodity contracts which meet the normal sale exemption criteria of IAS 39, are now recognised on the balance sheet at their mark-to-market value and are disclosed within other financial assets (derivatives) or other financial liabilities (derivatives). Derivatives designated as hedges are classified as current or non-current depending on the maturity of the derivative. Derivatives not designated as hedges are classified as current in accordance with IAS 1. Derivative financial instruments that were designated and effective as hedges of future cash flows as at 1 January 2005 were fair valued through the cash flow hedge reserve at that date. Derivatives not designated as cash flow hedges as at 1 January 2005 were fair valued through retained earnings. (4) The $63 million increase in short term borrowings follows the separate presentation of foreign currency derivatives within other financial assets/ (liabilities) (derivatives). The net $144 million increase in medium and long term borrowings is due to the separate presentation of foreign currency derivatives and the inclusion of the fair value of the interest rate risk that is being hedged, in the carrying amount of the debt. This is partially offset by a $143 million reduction in liabilities following the separation of the conversion option from the Group's convertible debt instruments. (5) The conversion option within the convertible bond issued by the Company was fair valued at the date of issue and is included in equity, net of deferred tax. The conversion option within the convertible bond issued by AngloGold Ashanti is classified as a liability within other financial liabilities (derivatives). This accounting treatment follows recent IFRIC guidance. Notes to financial information 14. Basis of preparation 14.1 The financial information set out herein does not constitute the Company's statutory accounts for the year ended 31 December 2005, but is derived from those accounts which were approved by the board of directors on 21 February 2006. Statutory accounts for the year ended 31 December 2004 have been delivered to the Registrar of Companies, and those for 2005 will be delivered following the Company's annual general meeting convened for 25 April 2006. The auditors have reported on these accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 14.2 Accounting policies The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations for the first time and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The disclosure required by IFRS 1 First-time adoption of International Financial Reporting Standards concerning the transition from UK GAAP to IFRSs is given in notes 12 and 13. Accordingly the Group complies with all IFRSs including those adopted for use in the EU. The financial information has been prepared under the historical cost convention as modified by the revaluation of biological assets and certain financial instruments. A summary of the principal Group accounting policies is set out below, together with an explanation of where changes have been made to previous IFRS policies on the adoption of new accounting standards in the year. The preparation of financial information in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Early adoption of standards The Group, as a first-time IFRS reporter, has adopted early with effect from 1 January 2004 the following standards and interpretations as at 31 December 2005, the reporting date of the Group's first IFRS financial statements. â€¢ IAS 19 Employee Benefits amendments â€¢ IFRS 6 Exploration for and Evaluation of Mineral Resources â€¢ IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities â€¢ IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments â€¢ IFRIC 4 Determining Whether an Arrangement Contains a Lease â€¢ IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds We note that IFRS 6 does not impact the Group's existing policy for exploration and evaluation expenditure. Changes in accounting policies The following IFRS accounting policy changes have been made with effect from 1 January 2005: 1) Financial instruments; and 2) Held for sale assets and discontinued operations. 1) Financial instruments The Group has taken the exemption under IFRS 1 to apply IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement prospectively from 1 January 2005. As such, the financial information presented for the year ended 31 December 2004 excludes any adjustments required from adoption of these two standards. As set out in note 13, the consolidated balance sheet as at 31 December 2004 has been adjusted to apply IAS 32 and IAS 39 prospectively from 1 January 2005. The accounting policies for financial instruments are set out below. 2) Held for sale assets and discontinued operations The Group has applied IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations prospectively from 1 January 2005. Application of the policy change is in accordance with transitional provisions set out in the standard. Previously, the Group applied IAS 35 Discontinuing Operations which required the restatement of comparative information once an operation was identified as discontinuing. Non-current assets (and disposal groups) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets (and disposal groups) and associated liabilities held for sale are measured at the lower of carrying amount and fair value less costs to sell. Any resulting impairment is reported through the income statement as a special item. On classification as held for sale, the assets are no longer depreciated. Comparative amounts are not adjusted. Discontinued operations are classified as held for sale and are either a separate major line of business or geographical area of operations that have been sold or are part of a single co-ordinated plan to be disposed of, or is a subsidiary acquired exclusively with a view to sale. Once an operation has been identified as discontinued, or is reclassified as continuing, the comparative information is restated. Notes to financial information (continued) 14. Accounting policies (continued) $757 million of assets and $283 million of liabilities associated with disposal groups were reclassified as held for sale during the year. These disposal groups were sold prior to year end and no new disposal groups were identified as at 31 December 2005. Impairment charges of $36 million, after tax and minority assets, were recorded on the reclassification of these assets. Basis of consolidation The financial information incorporates a consolidation of the financial information of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of subsidiaries, joint ventures and associates to bring their accounting policies into line with those used by the Group. Intra-group transactions, balances, income and expenses are eliminated on consolidation, where appropriate. The interest of minority shareholders is initially stated at the minority's proportion of the fair values of the assets and liabilities recognised on acquisition. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent. Associates Associates are investments over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Typically the Group owns between 20% and 50% of the voting equity of its associates. Investments in associates are accounted for using the equity method of accounting except when classified as held for sale. Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. Where the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition exceeds the cost of the acquisition, the surplus, which represents the discount on the acquisition, is credited to the income statement in the period of acquisition. The Group's share of associates' profit or loss is based on their most recent audited financial statements or unaudited interim statements drawn up to the Group's balance sheet date. The total carrying values of investments in associates represent the cost of each investment including the carrying value of goodwill, the share of post-acquisition retained earnings, any other movements in reserves and any long term debt interests which in substance form part of the Group's net investment. The carrying values of associates are reviewed on a regular basis and if an impairment in value has occurred, it is written off in the period in which those circumstances are identified. The Group's share of an associate's losses in excess of its interest in that associate is not recognised unless the Group has an obligation to fund such losses. Joint venture entities A joint venture entity is an entity in which the Group holds a long term interest and shares joint control over the strategic, financial and operating decisions with one or more other venturers under a contractual arrangement. The Group's share of the assets, liabilities, income, expenditure and cash flows of jointly controlled entities are accounted for using proportionate consolidation. Proportionate consolidation combines the Group's share of the results of the joint venture entity on a line by line basis with similar items in the Group's financial information. Joint venture operations The Group has contractual arrangements with other participants to engage in joint activities other than through a separate entity. The Group includes its assets, liabilities, expenditure and its share of revenue in such joint venture operations with similar items in the Group's financial statements. Revenue recognition Revenue is derived principally from the sale of goods and is measured at the fair value of consideration received or receivable, after deducting discounts, volume rebates, value added tax and other sales taxes. A sale is recognised when the significant risks and rewards of ownership have passed. This is when title and insurance risk has passed to the customer, and the goods have been delivered to a contractually agreed location. Revenue from metal mining activities is based on the payable metal sold. Revenues from the sale of material by-products are included within revenue. Where a by-product is not regarded as significant, revenue may be credited against the cost of sales. The amount credited to cost of sales for the year ended 31 December 2005 was $76 million and $81 million for the year ended 31 December 2004 and relates principally to AngloGold Ashanti which credits uranium, silver and acid to cost of sales in accordance with the Gold Industry Standard on production costs. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Notes to financial information (continued) 14. Accounting policies (continued) Dividend income from investments is recognised when the shareholders' rights to receive payment have been established. Business combinations and goodwill arising thereon At the date of acquisition, the identifiable assets, liabilities and contingent liabilities of a subsidiary, joint venture entity or an associate which can be measured reliably are recorded at their provisional fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is attributed to goodwill. Provisional fair values are finalised within 12 months of the acquisition date. Goodwill in respect of subsidiaries and joint ventures is included within intangible fixed assets. Goodwill relating to associates is included within the carrying value of the associate. Where the fair values of the identifiable net assets acquired exceeds the cost of the acquisition, the surplus, which represents the discount on the acquisition, is credited to the income statement in the period of acquisition. Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP carrying value subject to being tested for impairment at that date. Subsequent impairment tests are performed in accordance with the impairment policy set out below. Goodwill that was eliminated against reserves under UK GAAP prior to 1998 has not been reinstated and will not be included in determining any profit or loss on disposal. Negative goodwill arising on acquisitions prior to 31 December 2003 has been eliminated against retained earnings at that date. Tangible assets Mining properties and leases include the cost of acquiring and developing mining properties and mineral rights. Mining properties are depreciated down to their residual values using the unit-of-production method based on proven and probable reserves. Depreciation is charged on new mining ventures from the date that the mining property is capable of commercial production. When there is little likelihood of a mineral right being exploited, or the value of the exploitable mineral right has diminished below cost, a write-down to the recoverable amount is charged to the income statement. Stripping costs incurred during the production phase to remove additional overburden or waste ore are deferred when they give access to future economic benefits and charged to operating costs using the expected average stripping ratio over the average life of the area being mined. The average stripping ratio is calculated as the number of tonnes of waste material expected to be removed during the life of mine, per tonne of ore mined. The average life of mine cost per tonne is calculated as the total expected costs to be incurred to mine the orebody divided by the number of tonnes expected to be mined. The average life of mine stripping ratio and the average life of mine cost per tonne is recalculated annually in light of additional knowledge and changes in estimates. The cost of stripping in any period will therefore be reflective of the average stripping rates for the orebody as a whole. Changes in the life of mine stripping ratio are accounted for prospectively as a change in estimate. Land and properties in the course of construction are carried at cost, less any recognised impairment. Depreciation commences when the assets are ready for their intended use. Buildings and plant and equipment are depreciated down to their residual values at varying rates, on the straight-line basis over their estimated useful lives or the life of mine, whichever is shorter. Estimated useful lives normally vary from up to 20 years for items of plant and equipment to a maximum of 50 years for buildings. Residual values and useful economic lives are reviewed at least annually. Assets held under finance leases are depreciated over the shorter of the lease term and the expected useful lives of the assets. Licences and other intangibles Licences and other intangibles are measured initially at purchase cost and are amortised on a straight line basis over their estimated useful lives. Estimated useful lives vary between 3 and 5 years. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment is recognised immediately as an expense. Where an impairment subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment is recognised as income immediately. Notes to financial information (continued) 14. Accounting policies (continued) Impairment of goodwill Goodwill arising on business combinations is allocated to the group of cash-generating units that are expected to benefit from the synergies of the combination and represents the lowest level at which goodwill is monitored by the Group's board of directors for internal management purposes. The recoverable amount of the group of cash-generating units to which goodwill has been allocated is tested for impairment annually on a consistent date during each financial year, or when such events or changes in circumstances indicate that it may be impaired. Any impairment is recognised immediately in the income statement. Impairments of goodwill are not subsequently reversed. Research and exploration expenditure Research and exploration expenditure is written off in the year in which it is incurred. When a decision is taken that a mining property is economically feasible and should be developed for commercial production, all further directly attributable, pre-production expenditure is capitalised within tangible assets. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Capitalised pre-production expenditure prior to commercial production is assessed for impairment in accordance with the Group accounting policy stated above. Biological assets: afforestation and other agricultural activity Afforestation and other agricultural assets are measured at their fair values less estimated selling costs during the period of biological transformation, from initial recognition up to the point of harvest. The fair values are determined based on current market prices for the assets in their present location and condition. Changes in fair value are recognised in the income statement within other gains and losses for the period between planting and harvest. At point of harvest, the carrying value of afforestation and other agricultural assets is transferred to inventory. Directly attributable costs incurred during the period of biological transformation are capitalised and presented within cash flows from investing activities in the cash flow statement. Inventory Inventory and work-in-progress are valued at the lower of cost and net realisable value. The production cost of inventory includes an appropriate proportion of depreciation and production overheads. Cost is determined on the following bases: â€¢ raw materials and consumables are valued at cost on a first-in, first-out (FIFO) basis; â€¢ finished products are valued at raw material cost, labour cost and a proportion of manufacturing overhead expenses; â€¢ metal and coal stocks are included within finished products and are valued at average cost. Retirement benefits The Group operates both defined benefit and defined contribution schemes for its employees as well as post retirement medical plans. For defined contribution schemes the amount charged to the income statement is the contributions paid or payable during the year. For defined benefit pension and post-retirement medical plans, full actuarial valuations are carried out every three years using the projected unit credit method and updates are performed for each financial year end. The average discount rate for the plans' liabilities is based on AA rated corporate bonds of a suitable duration and currency. Pension plans' assets are measured using period end market values. The Group has adopted the amendment to IAS 19 and as such actuarial gains and losses, which can arise from differences between expected and actual outcomes or changes in actuarial assumptions, are recognised immediately in the consolidated statement of recognised income and expense. Any increase in the present value of plan liabilities expected to arise from employee service during the period is charged to operating profit. The expected return on plan assets and the expected increase during the period in the present value of plan liabilities are included in investment income and interest expense. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service costs and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the plan. Taxation The tax expense represents the sum of the current tax charge and the movement in deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Notes to financial information (continued) 14. Accounting policies (continued) Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or an asset or liability in a transaction (other than in a business combination) that affects neither the tax profit nor accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, joint ventures, and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also taken directly to equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Leases Rental costs under operating leases are charged to the income statement in equal annual amounts over the lease term. Assets held under finance leases are recognised as assets of the Group on inception of the lease at the lower of fair value or the present value of the minimum lease payments derived by discounting at the interest rate implicit in the lease. The interest element of the rental is charged against profit so as to produce a constant periodic rate of interest on the remaining balance of the liability, unless it is directly attributable to qualifying assets, in which case it is capitalised in accordance with the Group's general policy on borrowing costs (see below). Discontinuing operations (pre 1 January 2005) Discontinuing operations are significant, distinguishable components of an enterprise that have been sold, abandoned or are the subject of formal plans for disposal or discontinuance. Once an operation has been identified as discontinuing, or is reclassified as continuing, the comparative information is restated. Non-current assets held for sale and discontinued operations (post 1 January 2005) Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets (and disposal groups) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when it is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets are classified as held for sale from the date these conditions are met and are measured at the lower of carrying amount and fair value less costs to sell. Any resulting impairment is reported through the income statement as a special item. On classification as held for sale the assets are no longer depreciated. Comparative amounts are not adjusted. Discontinued operations are classified as held for sale and are either a separate major line of business or geographical area of operations that have been sold or are part of a single co-ordinated plan to be disposed of, or is a subsidiary acquired exclusively with a view to sale. Once an operation has been identified as discontinued, or is reclassified as continuing, the comparative information is restated. Restoration, rehabilitation and environmental costs An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mining property. Such costs arising from the installation of plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged against profits over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses. Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to, or deducted from, the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in the income statement. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy above. Notes to financial information (continued) 14. Accounting policies (continued) For some South African operations annual contributions are made to dedicated environmental rehabilitation trusts to fund the estimated cost of rehabilitation during and at the end of the life of the relevant mine. The Group exercises full control of these trusts and therefore the trust is consolidated. The trusts' assets are recognised separately on the balance sheet as non-current assets at fair value. Interest earned on funds invested in the environmental rehabilitation trusts are accrued on a time proportion basis and recognised as interest income. Foreign currency transactions and translation Foreign currency transactions by Group companies are booked in their functional currencies at the exchange rate ruling on the date of transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in profit or loss for the period and are classified as either operating or financing depending on the nature of the monetary item giving rise to them. On consolidation, the assets and liabilities of the Group's overseas operations are translated into the presentation currency of the Group at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period where these approximate the rates at the dates of transactions. Exchange differences arising, if any, are classified within equity and transferred to the Group's currency translation reserve. The Group elected to set the currency translation reserve to zero at 1 January 2004 in accordance with IFRS 1. Exchange differences on foreign currency loans that form part of the Group's net investment in these foreign operations are offset in the currency translation reserve. Cumulative translation differences arising after the transition date to IFRS are recognised as income or as expenses in the period in which the operation they relate to is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets of the foreign entity and translated at the closing rate. Where applicable, the Group has elected to treat goodwill arising on acquisitions before the date of transition to IFRS as US dollar denominated assets. Borrowing costs Interest on borrowings directly relating to the financing of qualifying capital projects under construction is added to the capitalised cost of those projects during the construction phase, until such time as the assets are substantially ready for their intended use or sale which, in the case of mining properties, is when they are capable of commercial production. Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the period. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Share-based payments The Group has applied the requirements of IFRS 2 Share-based payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that had not vested as at 1 January 2005. The Group makes equity-settled share-based payments to certain employees, which are measured at fair value at the date of grant. For those share schemes which do not include non-market vesting conditions, the fair value is determined using the Monte Carlo method at the grant date and expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. 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 relevant charge. Vesting assumptions are reviewed during each reporting period to ensure they reflect current expectations. Employee benefit trust The carrying value of shares held by the employee benefit trust are recorded as treasury shares, shown as a reduction in retained earnings within shareholders' equity. Presentation currency As permitted by UK company law, the Group results are presented in US dollars, the currency in which most of its business is conducted. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with short term, highly liquid investments that are readily convertible to a known amount of cash and that are subject to an insignificant risk of changes in value. Bank overdrafts are also included as a component of cash and cash equivalents. Bank overdrafts are shown within short term borrowings in current liabilities on the balance sheet. Cash and cash equivalents in the cash flow statement are shown net of overdrafts. Trade receivables Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Notes to financial information (continued) 14. Accounting policies (continued) Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Investments (pre 1 January 2005) Investments, other than investments in subsidiaries, joint ventures and associates, are fixed asset investments and are included at cost less provision for any impairment in value. Hedging transactions (pre 1 January 2005) In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Group enters into forward, option and swap contracts. Gains and losses on these contracts are recognised in the period to which the gains and losses of the underlying transactions relate. Net income or expense associated with interest rate swap agreements is recognised on the accrual basis over the life of the swap agreements as a component of interest. Where commodity option contracts hedge anticipated future production or purchases, the Group amortises the option premiums paid over the life of the option and recognises any realised gains and losses on exercise in the period in which the hedged production is sold or commodity purchases are made. Convertible debt (pre 1 January 2005) Convertible bonds are recorded entirely as liabilities, irrespective of the probability of future conversion, until either converted or redeemed. Investments (post 1 January 2005) Investments, other than investments in subsidiaries, joint ventures and associates, are financial asset investments and are initially recorded at fair value. At subsequent reporting dates, financial assets that the Group has the expressed intention and ability to hold to maturity ('held-to-maturity') as well as 'loans and receivables' are measured at amortised cost, less any impairment. The amortisation of any discount or premium on the acquisition of a held-to-maturity investment is recognised in the income statement in each period using the effective interest method. Investments other than those classified as held-to-maturity or loans and receivables are classified as either fair value through profit or loss, which includes investments held for trading, or available for sale investments. Both sub categories are measured at each reporting date at fair value. Where investments are held for trading purposes, unrealised gains and losses for the period are included in the income statement for the period within other gains and losses. For available for sale investments, unrealised gains and losses are recognised in equity until the security is disposed or impaired, at which time the cumulative gain or loss previously recognised in equity is included in the income statement. Current financial asset investments (post 1 January 2005) Current financial asset investments consist mainly of bank term deposits and fixed and floating rate debt securities. Debt securities that are intended to be held to maturity are recorded on the amortised cost basis. Debt securities that are not intended to be held to maturity are recorded at the lower of cost and market value. Convertible debt (post 1 January 2005) Convertible bonds denominated in the functional currency of the entity issuing the shares 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 Group, is included in equity. Where the embedded option is in a convertible bond denominated in a currency other than the functional currency of the entity issuing the shares, the option is classified as a liability, in accordance with IFRIC guidance issued in their published update following their April 2005 meeting. The option is marked to market with subsequent gains and losses being recorded through the income statement within net finance costs. 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 convertible bond. Financial liabilities and equity instruments (post 1 January 2005) Financial liabilities and equity instruments are classified and accounted for as debt or equity according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Bank borrowings Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct transaction costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis and charged to the income statement using the effective interest method. They are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Notes to financial information (continued) 14. Accounting policies (continued) Derivative financial instruments and hedge accounting (post 1 January 2005) In order to hedge its exposure to foreign exchange, interest rate and commodity price risk, the Group enters into forward, option and swap contracts. The Group does not use derivative financial instruments for speculative purposes. Commodity based (normal purchase or normal sale) contracts that meet the requirements of IAS 39 are recognised in earnings when they are settled by physical delivery. All derivatives are held at fair value in the balance sheet within other financial assets (derivatives) or other financial liabilities (derivatives), and, when designated as hedges, are classified as current or non-current depending on the maturity of the derivative. Derivatives that are not designated as hedges are classified as current, in accordance with IAS 1, even when their actual maturity is expected to be greater than one year. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects profit or loss. For an effective hedge of an exposure to changes in fair value, the hedged item is adjusted for changes in fair value attributable to the risk being hedged with the corresponding entry in profit or loss. Gains or losses from remeasuring the associated derivative are recognised in profit or loss. The gain or loss on hedging instruments relating to the effective portion of a net investment hedge is recognised in equity. The ineffective portion is recognised immediately in the income statement. Gains or losses accumulated in equity are included in the income statement when the foreign operations are disposed of. Changes in the fair value of any derivative instruments that are not hedge accounted are recognised immediately in the income statement and are classified within other gains and losses or net finance costs or income depending on the type of risk the derivative relates to. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, revoked, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss previously recognised in equity is included in the income statement of the period. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. Production statistics The figures below include the entire output of consolidated entities and the Group's share of joint ventures, joint arrangements and associates where applicable, except for Collahuasi in Base Metals which is quoted on a 100% basis. 2005 2004 Anglo Platinum (troy ounces)(1)(2) Platinum 2,502,000 2,498,200 Palladium 1,376,700 1,331,800 Rhodium 333,500 258,600 Platinum Group Metals (PGM's) 4,212,200 4,088,600 Nickel (tonnes) 20,900 22,700 AngloGold Ashanti (gold in troy ounces)(2) South Africa 2,676,000 2,857,000(3) Argentina 211,000 211,000 Australia 455,000 410,000 Brazil 346,000 334,000 Ghana 680,000 485,000 Guinea 246,000 83,000 Mali 528,000 475,000 Namibia 81,000 66,000 Tanzania 613,000 570,000 USA 330,000 329,000 Zimbabwe - 9,000 6,166,000 5,829,000 Gold Fields (gold in troy ounces)(4) Gold - 207,000 Anglo Coal (tonnes) South Africa: Eskom 34,327,900 33,668,300 Trade - Thermal 20,281,100 18,648,600 Trade - Metallurgical 2,268,800 2,143,700 56,877,800 54,460,600 Australia: Thermal 16,710,300 17,378,800 Metallurgical 9,390,300 8,203,800 26,100,600 25,582,600 South America: Thermal 10,066,000 9,589,600 93,044,400 89,632,800 Anglo Coal (tonnes) South Africa: Bank 3,202,200 2,733,100 Greenside 2,730,000 2,754,800 Goedehoop 6,298,600 6,462,100 Isibonelo 1,358,300 - Kriel 12,030,900 11,059,500 Kleinkopje 4,483,500 4,691,600 Landau 3,682,900 3,474,100 New Denmark 4,139,400 4,975,800 New Vaal 17,100,000 17,312,000 Nooitgedacht 794,400 676,600 Mafube 1,057,600 321,000 56,877,800 54,460,600 (1) Includes Anglo Platinum's share of Northam Platinum Limited, 48,800 ounces (2004: 44,500 ounces). (2) See the published results of Anglo American Platinum Limited, Northam Limited, AngloGold Ashanti Limited and Gold Fields Limited for further analysis of production information. (3) Excludes production at Ergo which has been closed. Production statistics (continued) 2005 2004 Anglo Coal (tonnes) (continued) Australia: Callide 9,500,000 9,355,300 Drayton 4,099,000 4,278,800 Dartbrook 1,495,500 2,268,100 German Creek 3,560,000 4,047,600 Jellinbah East 851,100 925,200 Moranbah 3,432,800 1,125,900 Dawson Complex 3,162,200 3,581,700 26,100,600 25,582,600 South America: Carbones Del Guasare 1,409,700 1,677,600 Carbones Del Cerrejon 8,656,300 7,912,000 10,066,000 9,589,600 Anglo Base Metals Copper(1) Collahuasi 100% basis (Anglo American 44%) Ore mined tonnes 40,705,000 50,342,000 Ore processed Oxide tonnes 6,461,000 6,610,000 Sulphide tonnes 36,659,000 34,844,000 Ore grade processed Oxide % Cu 0.9 0.9 Sulphide % Cu 1.0 1.3 Production Copper concentrate dmt 1,234,000 1,280,400 Copper cathode tonnes 60,700 58,200 Copper in concentrate tonnes 366,400 422,800 Total copper production for Collahuasi tonnes 427,100 481,000 Minera Sur Andes Los Bronces mine Ore mined tonnes 22,146,000 20,995,000 Marginal ore mined tonnes 27,936,000 29,187,000 Las Tortolas concentrator Ore processed tonnes 21,034,000 20,572,000 Ore grade processed % Cu 1.0 1.1 Average recovery % 88.3 89.5 Production Copper concentrate dmt 510,000 549,000 Copper cathode tonnes 38,800 31,800 Copper in concentrate tonnes 188,500 199,800 Total tonnes 227,300 231,600 El Soldado mine Ore mined Open pit - ore mined tonnes 2,907,000 4,971,000 Open pit - marginal ore mined tonnes 384,000 1,061,000 Underground (sulphide) tonnes 1,996,000 2,687,000 Total tonnes 5,287,000 8,719,000 Ore processed Oxide tonnes 665,000 661,000 Sulphide tonnes 7,004,000 6,976,000 Ore grade processed Oxide % Cu 1.3 1.4 Sulphide % Cu 1.1 1.1 Production Copper concentrate dmt 210,500 216,700 Copper cathode tonnes 6,500 8,100 Copper in concentrate tonnes 60,000 60,700 Total tonnes 66,500 68,800 (1) 2005 copper production figures exclude Palabora and Hudson Bay. Production statistics (continued) 2005 2004 Anglo Base Metals (continued) Chagres Smelter Copper concentrate smelted tonnes 144,800 170,400 Production Copper blister/anodes tonnes 138,100 165,000 Acid tonnes 371,900 440,500 Total copper production for 293,800 Minera Sur Andes group tonnes 300,400 Mantos Blancos Mantos Blancos mine Ore processed Oxide tonnes 4,535,000 4,476,000 Sulphide tonnes 3,954,000 4,103,000 Marginal ore mined tonnes 5,337,000 9,359,000 Ore grade processed Oxide %Cu (soluble) 0.8 0.7 Sulphide %Cu (insoluble) 1.1 1.0 Marginal ore %Cu (soluble) 0.4 0.4 Production Copper concentrate dmt 105,300 94,400 Copper cathode tonnes 48,600 58,200 Copper in concentrate tonnes 39,100 36,700 Total tonnes 87,700 94,900 Mantoverde mine Ore processed Oxide tonnes 9,439,000 9,017,000 Marginal ore tonnes 3,625,000 7,028,000 Ore grade processed Oxide %Cu (soluble) 0.7 0.7 Marginal ore %Cu (soluble) 0.3 0.3 Production Copper cathode tonnes 62,000 60,100 Black Mountain and Hudson Bay tonnes 3,200 79,500 Other tonnes - 19,400 Total attributable copper production tonnes 634,600 766,000 Nickel, Niobium and Mineral Sands Nickel Codemin Ore mined tonnes 528,600 403,000 Ore processed tonnes 521,400 521,300 Ore grade processed % Ni 2.1 1.4 Production tonnes 9,600 6,500 Loma de Niquel Ore mined tonnes 1,317,000 1,265,000 Ore processed tonnes 1,169,000 1,204,000 Ore grade processed % Ni 1.6 1.7 Production tonnes 16,900 17,400 Other tonnes - 100 Total attributable nickel production tonnes 26,500 24,000 Niobium Catalao Ore mined tonnes 723,100 568,100 Ore processed tonnes 672,300 572,500 Ore grade processed Kg Nb/tonne 11.00 11.04 Production tonnes 4,000 3,500 Mineral Sands Namakwa Sands Ore mined tonnes 18,100,000 18,618,000 Production Ilmenite tonnes 316,100 320,600 Rutile tonnes 29,100 23,700 Zircon tonnes 128,600 119,100 Smelter production Slag tapped tonnes 164,400 169,300 Iron tapped tonnes 105,400 105,900 Production statistics (continued) 2005 2004 Anglo Base Metals (continued) Zinc and Lead Black Mountain Ore mined tonnes 1,413,000 1,518,000 Ore processed tonnes 1,350,000 1,500,000 Ore grade processed Zinc % Zn 3.3 2.7 Lead % Pb 3.7 3.0 Copper % Cu 0.4 0.5 Production Zinc in concentrates tonnes 32,100 28,200 Lead in concentrates tonnes 42,200 37,500 Copper in concentrates tonnes 3,200 5,200 Hudson Bay Ore mined tonnes - 2,484,000 Ore processed tonnes - 2,419,000 Ore grade processed Copper % Cu - 2.2 Zinc % Zn - 5.2 Concentrate treated Copper tonnes - 274,900 Zinc tonnes - 216,500 Production (domestic) Copper tonnes - 40,000 Zinc tonnes - 105,200 Production (total) Copper tonnes - 74,300 Zinc tonnes - 107,000 Gold ounces - 73,400 Silver ounces - 1,020,900 Lisheen Ore mined tonnes 1,527,000 1,475,000 Ore processed tonnes 1,461,000 1,460,000 Ore grade processed Zinc % Zn 12.0 11.7 Lead % Pb 2.0 1.8 Production Zinc in concentrate tonnes 159,300 156,300 Lead in concentrate tonnes 20,800 17,200 Skorpion Ore mined tonnes 1,199,000 1,304,000 Ore processed tonnes 1,280,000 1,187,000 Ore grade processed Zinc % Zn 12.4 12.3 Production Zinc tonnes 132,800 119,200 Total attributable zinc production tonnes 324,200 410,700 Anglo Industrial Minerals (tonnes) Aggregates 83,333,400 70,448,300 Lime products 1,428,100 1,185,700 Concrete (m3) 8,353,200 8,310,800 Sodium tripolyphosphate 106,000 115,700 Phosphates 1,036,200 1,169,300 Production statistics (continued) 2005 2004 Anglo Paper and Packaging Mondi Packaging Packaging papers tonnes 2,705,691 2,600,291 Corrugated board and boxes m m2 2,253 2,103 Paper sacks m units 3,282 3,251 Coating and release liners m m2 1,688 1,661 Pulp - external tonnes 170,420 153,045 Mondi Business Paper Uncoated wood free paper tonnes 1,890,079 1,881,851 Newsprint tonnes 186,929 182,351 Pulp - external tonnes 127,745 53,142 Wood chips green metric tonnes 1,747,290 2,125,858 Mondi Packaging South Africa Packaging papers tonnes 372,992 365,557 Corrugated board and boxes m m2 330 335 Newsprint Joint Ventures Newsprint (attributable share) tonnes 316,459 368,635 Anglo Ferrous Metals and Industries (tonnes) Kumba Resources Limited Iron ore production Lump 18,747,000 18,248,000 Fines 12,240,000 11,864,000 Total iron ore 30,987,000 30,112,000 Coal Power station coal 14,573,000 14,017,000 Coking coal 2,273,000 2,409,000 Steam coal 2,993,000 3,018,000 Total coal 19,839,000 19,444,000 Zinc metal 119,000 116,000 Heavy minerals(1) Ilmenite 356,000 498,000 Scaw Metals Rolled products 386,500 458,000 Cast products 133,900 110,000 Grinding media 461,400 429,000 Highveld Steel Rolled products 684,000 674,013 Continuous cast blocks 874,900 922,477 Vanadium slag Samancor 66,800 67,587 Manganese ore (mtu m) Manganese alloys 88 106 Tongaat- Hulett 309,000 321,100 Sugar 861,000 756,000 Aluminium 192,000 162,000 Starch and glucose 595,000 576,000 Hippo Valley Sugar 194,000 200,000 (1) Further details of heavy minerals production are available in Kumba's annual report. Reconciliation of subsidiaries' and associates' headline earnings to the underlying earnings included in the consolidated financial statements For the year ended 31 December 2005 Note only key reported lines are reconciled AngloGold Ashanti Limited 2005 US$ million IFRS adjusted headline earnings (published) 200 Exploration 45 Other adjustments 1 246 Minority interest (121) Depreciation on assets fair valued on acquisition (net of tax) (20) Contribution to Anglo American plc underlying earnings 105 Anglo Platinum Limited 2005 US$ million IFRS headline earnings (US$ equivalent of published) 664 Exploration 21 Other adjustments (2) 683 Minority interest (173) Depreciation on assets fair valued on acquisition (net of tax) (51) Impact of change in South African corporate tax rate on assets fair valued on 24 acquisition Contribution to Anglo American plc underlying earnings 483 DB Investments (DBI) 2005 US$ million DBI headline earnings before class action payment (100%) 824 Adjustments(1) 34 DBI headline earnings before class action payment - AA plc basis (100%) 858 AA plc's 45% ordinary share interest 386 Income from preference shares 44 Contribution to Anglo American plc underlying earnings 430 (1) Adjustments include the reclassification of the actuarial gains and losses booked to the income statement by Dbsa under the corridor mechanism of IAS 19. As AA plc has early adopted the amended version of IAS 19, this charge has been included in the deficit booked to reserves in prior years. Kumba Resources Limited 2005 US$ million IFRS headline earnings (US$ equivalent of published) 373 Depreciation on assets fair valued on acquisition (net of tax) (16) Impact of change in South African corporate tax rate on assets fair valued on 10 acquisition Exploration 21 Other adjustments (6) 382 Minority interest (130) STC credit on special dividends 9 Contribution to Anglo American plc underlying earnings 261 Reconciliation of subsidiaries' and associates' headline earnings to the underlying earnings included in the consolidated financial statements (continued) Highveld Steel and Vanadium Corporation Limited 2005 US$ million IFRS headline earnings (US$ equivalent of published) 270 Other adjustments 4 274 Minority interest (57) STC credit on special dividends 15 Contribution to Anglo American plc underlying earnings 232 The Tongaat-Hulett Group Limited 2005 US$ million IFRS headline earnings (US$ equivalent of published) 73 Other adjustments 11 84 Minority interest (40) 44 Add AA plc's share of Hulett Aluminium 5 Contribution to Anglo American plc underlying earnings 49 Exchange rates and commodity prices US$ exchange rates 2005 2004 Average spot prices for the year South African rand 6.37 6.44 Sterling 0.55 0.55 Euro 0.80 0.80 Australian dollar 1.31 1.36 Chilean peso 559 609 Closing spot prices South African rand 6.35 5.65 Sterling 0.58 0.52 Euro 0.85 0.74 Australian dollar 1.36 1.28 Chilean peso 512 556 Commodity prices Average market prices for the year 2005 2004 Gold - US$/oz 445 409 Platinum - US$/oz 897 847 Palladium - US$/oz 201 231 Rhodium - US$/oz 2,056 991 Copper - US cents/lb 167 130 Nickel - US cents/lb 668 628 Zinc - US cents/lb 63 48 Lead - US cents/lb 44 40 European eucalyptus pulp price (CIF) - US$/tonne 582 520 Key financial data US$ million (unless stated otherwise) 2005 2004 Group revenue including associates 34,472 31,938 Less: share of associates' revenue (5,038) (5,670) Group revenue 29,434 26,268 Operating profit including associates before special items and remeasurements 6,376 4,697 Special items and remeasurements (447) 1,030 Net financing, taxation and minority interests of (328) (496) associates Total profit from operations and 5,601 5,231 associates Net finance costs (393) (367) Profit before tax 5,208 4,864 Income tax expense (1,275) (923) Profit for the financial year 3,933 3,941 Minority interests (412) (440) Profit attributable to equity shareholders of the Company 3,521 3,501 Underlying earnings(1) 3,736 2,684 Earnings per share ($) 2.43 2.44 Underlying earnings per share ($) 2.58 1.87 Ordinary dividend per share (US cents) 90.0 70.0 Special dividend per share (US cents) 33.0 - Weighted average number of shares outstanding 1,447 1,434 (million) EBITDA(2) 8,959 7,031 EBITDA interest cover(3) 20.0 18.5 Operating margin (before special items and 18.5% 14.7% remeasurements) Ordinary dividend cover (based on 2.9 2.7 underlying earnings) Balance Sheet Intangible and tangible fixed assets 33,368 35,816 Other non-current assets and 5,375 5,375 investments Working capital 3,719 3,715 Other net current liabilities (1,473) (611) Other non-current liabilities and (8,418) (8,339) obligations Net debt (4,993) (8,243) Net assets 27,578 27,713 Minority interests (3,957) (4,588) Equity attributable to the equity shareholders of the Company 23,621 23,334 Total capital(4) 32,571 35,945 Cash inflows from operations 7,265 5,291 Dividends received from associates and investments 470 396 Return on capital employed(5) 19.2% 14.6% EBITDA/average total capital 26.0% 21.2% Net debt to total capital(6) 17.0% 25.4% (1) Underlying earnings is net profit attributable to equity shareholders, adjusted for the effect of special items and remeasurements, and any related tax and minority interests. (2) EBITDA is operating profit before exceptional items plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates. (3) EBITDA interest cover is EBITDA divided by net finance costs, excluding other net financial income, exchange losses and gains on monetary assets and liabilities and special items and financial remeasurements but including share of associates' net interest expense. (4) Total capital is the sum of net assets and net debt. (5) Return on capital employed is calculated as total operating profit before impairments for the year divided by the average total capital less other investments and adjusted for impairments. (6) Net debt to total capital is calculated as net debt divided by net assets plus net debt less investment in associates. Summary by business segment Turnover(1) EBITDA(2) Operating profit/(loss) Underlying earnings/ (3) (loss) US$ million 2005 2004 2005 2004 2005 2004 2005 2004 Platinum 3,714 3,120 1,282 853 854 536 483 240 Gold 2,644 2,409 871 694 332 296 105 139 Diamonds 3,316 3,177 655 655 583 573 430 380 Coal 3,349 2,382 1,243 687 1,019 497 724 357 South Africa 1,441 1,109 519 299 463 252 329 163 Australia 1,383 840 451 183 316 78 221 78 South America 525 433 273 205 240 167 174 116 Base Metals 3,647 3,320 1,990 1,625 1,678 1,276 1,240 1,036 Copper 2,597 2,154 1,590 1,252 1,381 1,048 983 855 Collahuasi 712 611 468 412 397 346 257 280 Minera Sur Andes 1,306 991 824 608 724 512 529 413 Mantos Blancos 579 464 299 225 261 195 195 163 Palabora and other - 88 (1) 7 (1) (5) 2 (1) Nickel, Niobium, Mineral Sands 609 528 296 272 249 224 202 177 Catalao 49 44 20 28 18 26 17 29 Codemin 136 89 75 48 69 44 68 27 Loma de Niquel 249 247 153 158 132 137 92 108 Namakwa Sands 175 146 48 37 30 16 25 12 Nkomati and other - 2 - 1 - 1 - 1 Zinc 441 638 157 131 102 38 100 37 Black Mountain 80 49 12 2 10 (3) 10 3 Hudson Bay - 405 - 78 - 37 - 31 Lisheen 147 111 62 29 50 17 54 15 Skorpion 214 73 83 22 42 (13) 36 (12) Other - - (53) (30) (54) (34) (45) (33) Industrial Minerals 4,073 3,858 618 638 370 421 267 288 Tarmac 3,784 3,596 570 556 340 354 256 259 Copebras 289 262 48 82 30 67 11 29 Ferrous Metals and Industries 6,773 6,663 1,779 1,231 1,456 887 757 476 Kumba 1,936 1,416 734 328 568 203 261 80 Highveld Steel 1,127 775 472 223 436 169 232 93 Scaw Metals 1,029 910 145 110 121 85 85 59 Samancor Group 634 817 164 265 144 241 103 157 Tongaat-Hulett 1,423 1,267 188 114 131 69 49 25 Boart Longyear 618 872 87 103 67 72 35 37 Terra - 598 - 92 - 55 - 29 Other 6 8 (11) (4) (11) (7) (8) (4) Paper and Packaging 6,956 6,919 916 978 495 569 296 367 Mondi Packaging 3,798 3,751 528 530 293 297 194 193 Mondi Business Paper 2,050 2,028 310 320 163 180 100 123 Other 1,108 1,140 78 128 39 92 2 51 Exploration - - (150) (120) (150) (120) (115) (91) Corporate(4) - 90 (245) (210) (261) (238) (451) (508) 34,472 31,938 8,959 7,031 6,376 4,697 3,736 2,684 (1) Turnover includes share of turnover of joint ventures and associates. Base Metals' turnover is shown after deduction of treatment charges and refining charges (TC/RCs). (2) EBITDA is operating profit before special items plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates. (3) Operating profit includes operating profit before special items and remeasurements from subsidiaries and joint ventures and share of operating profit (before interest, tax, minority interest, special items and remeasurements) of associates. (4) Includes Gold Fields. The Group disposed of its holdings in Gold Fields in March 2004. This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOW FR TBMBTMMATTRF

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