Investors

Ladies and Gentlemen, 2005 was another year of strong prices for most of our commodities. This contributed to a 39% increase in underlying earnings. Given the strong cash generation achieved for the period, the Board is pleased to recommend an increase in the normal dividend to 90 US cents - an increase of 29% - together with a special dividend of 33 US cents per share. In addition we have commenced a share buy-back programme of $2 billion to be implemented during this year.

As the Chief Executive will outline in greater detail, during 2005 the Board carried out a strategic review that will result in the most significant change in the shape of our business since our listing in London. Over the last six years we have divested some $9 billion of non-core assets as part of a strategy of concentrating on our core natural resources businesses and of upgrading the quality of our assets. The decisions taken at the end of last year will move this strategy on to the next stage and will result in the creation of a more focussed mining and quarrying business.

Our management team under Tony Trahar's strong leadership, has been making good progress with the implementation of this strategy. We expect all the key milestones to have been achieved well before next year's AGM. Tony is determined to drive through the completion of this programme. He has indicated to the Board that with the completion of this phase of the Group's development he believes it would be appropriate for him to make way for a new leader to oversee the next phase of our plans for growth. Since Tony will by then be approaching his normal retirement age, the Board has accepted the logic of this view. It provides us with the prospect of securing a smooth and orderly transition and of creating a leadership group with the prospect of many years in the job. We have, therefore, commenced a process of identifying a successor. Nevertheless, Tony's continuing commitment as Chief Executive to the completion of our strategic restructuring means that this is not the moment for valedictories, save to note the enormous contribution which Tony has made and continues to make to Anglo American's development and success.

Governance

During the year there were an unusually large number of changes to the Board. At last year's AGM you elected three new Executive Directors, David Hathorn, Rene Medori and Simon Thompson and one new Non-Executive, Ralph Alexander.

At the end of 2005 two Executive Directors, Tony Lea and Barry Davison, retired from the Board. Tony Lea was our Finance Director from the time of the formation of Anglo American in 1999 having previously served the Group for many years in both Anglo American Corporation and Minorco. He played a pivotal role in establishing the company's credibility with the investment community. Tony successfully handed over his role as Finance Director to Rene Medori last September, but continues to be available for advice. Barry Davison joined the Board in 2001 as Executive Chairman of Anglo Platinum. Barry is a man with a real passion for his product and he has played a major role in the rapid expansion of global platinum demand as well as in negotiations with the South African Government around the evolving black economic empowerment agenda. He continues as non-Executive Chairman of Anglo Platinum. We are grateful to both Tony and Barry for their contributions to the success of the Group.

From 1 January, Peter Woicke joined the Board and is proposed for election today. He has had a distinguished career in finance including as a Managing Director of the World Bank and as Chief Executive Officer of the International Finance Corporation.

It is with regret that I report the decision of Dr Maria Silvia Bastos Marques to step down from the Board after two and a half years. I would like to thank her for her distinctive and valued contribution to our deliberations. I am also delighted to recommend the election of Dr Mamphela Ramphele who has previously served as a Non-Executive Director of Anglo American Corporation of South Africa and as Vice Chancellor of the University of Cape Town. Dr Ramphele also brings a distinguished record of public service outside of South Africa including as a Managing Director of the World Bank.

These changes will bring the Board back into compliance with the Combined Code requirement that at least half of the Board should be made up of independent non-Executives - excluding myself.

For the coming year we will be making some changes to the composition of our Board Committees. Mr Phaswana will step down from the Remuneration Committee. Mr Margetts will be leaving the Audit Committee and will be replaced by Mr Woicke. Dr Ramphele and Mr Woicke will join the Nominations Committee. Mr Alexander and Dr Ramphele will join the Safety and Sustainable Development Committee.

I should like to thank those Directors who have chaired Board Committees: David Challen, Chairman of the Audit Committee; Chris Fay, who chairs the Safety and Sustainable Development Committee; Fred Phaswana who chairs the Nominations Committee; and Rob Margetts who has led our work on remuneration. I am grateful for the experience and judgement which each has brought to these important areas of our work.

International Context

The Chief Executive will report upon the Company's operational performance, but I would like to preface this with some comments on the changing international context in which we are working and to touch on some of the issues contained in our Report to Society 2005 – which was published last week and is available here today if you would like a copy.

Some 70% of our operations are in developing countries. In many of them government capacities are limited or lacking, institutions are often weak and poverty is a major challenge. The sectors in which we are active have a number of distinct characteristics. These include:

• Firstly, our operations have significant environmental and social impacts that need to be carefully managed;
• Secondly, since mining involves the extraction of a non-renewable natural resource it presents distinct challenges in relation to sustainable development. We therefore seek to ensure that during the lifetime of a mine we balance the depletion of a natural resource through growing the stock of social, human and man-made capital. This is not too difficult where there is an effective State that makes good use of tax revenues – but that is not always the case;
• Thirdly, the revenues that we generate are often volatile and may cause macro-economic difficulties and extractive revenues have sometimes been subject to wholesale embezzlement by government; and
• Fourthly, our assets are immobile and once we have committed to the development of an operation we have a clear incentive to manage relations with stakeholders in such a way as to minimise conflict and to promote stability and prosperity.

These distinctive challenges involve us in having to manage a wide range of increasingly salient social and political risks. These issues are not peripheral, but are fundamental to our continuing access to land and resources and to our ability to attract investors and the best talent.

Moreover, I think we are seeing a retreat from some of the protections of fiscal and regulatory stability that inward investors enjoyed in many countries during the late 1990s and the early years of the twenty-first Century. Fuelled in part by an increase in nationalism around the exploitation of natural resources and by the current boom in commodity prices, some governments have been seeking a proportionately higher tax take. In such situations, governments need to recall that investor confidence is important at times of famine as well as feast and they should avoid tax models which do not reflect market lows or which, through reducing margins, lessen the resources which can be viably developed.

However, there is an important risk management point here for extractive companies. Whilst we cannot and should not take on responsibilities that are properly those of governments, we also cannot stand aloof from major governance and social issues in the countries where we operate.

Thus, it is important for our industry to be actively engaged in maximising our beneficial impacts in areas like poverty reduction and to support good governance measures, such as the Extractive Industries Transparency Initiative or the International Council on Mining and Metals' Resource Endowment project. At a community level it is crucial too for us to understand the needs, priorities and concerns of the communities where we work through structured engagement and to seek, through our work in areas like training and supply chain development, to ensure that other skills and enterprises are generated to take the strain when mining stops in a locality. In all these areas, working alone and through initiatives like the International Council on Mining and Metals, the Global Compact, the Global Business Coalition on HIV/AIDS, and the new NEPAD Investment Climate Facility, I believe Anglo American to be at the forefront of addressing these strategic risks to our business.

Climate Change

I want to highlight one other area that relates to sustainable development, namely climate change. As a company with energy use equivalent to that of Finland, we have a corporate responsibility to manage and reduce our carbon impacts and to anticipate the likely regulatory developments and costs of carbon which society will impose. This is highly relevant to us as a major energy user – and hence our recent decision to increase our targeted energy saving from 12% to 15% by 2014, relative to our 2004 baseline – and to use an attributed cost of carbon in all new investment decisions. This makes sound commercial sense as well as being environmentally responsible.

We are also looking at the immediate commercial opportunities created by carbon trading; by instruments such as the Clean Development Mechanism and from power generation through the use of methane drained from coal beds before they are mined - contributing to safer mining as well as to prevention of greenhouse gas emissions. We are looking too to be closely involved in technological innovations designed to mitigate the effects of climate change through, for example, our membership of the US Government led public-private partnership FutureGen project; through investigating the potential impact of carbon capture and storage via our Monash project in Australia; and through Anglo Platinum's involvement in the development and application of fuel cell technologies.

Anglo American is a long-term business and it is essential that we understand the strategic and policy imperative which will impact upon our business going forward.

In closing I would like to place on record - on your behalf - the thanks of the Board to the Chief Executive and his management team and to all our staff for their efforts, ingenuity and commitment in delivering another fine set of results.

I will now ask Tony Trahar to provide an account of the financial and operational performance of the business and of progress in implementing our strategy.