Anglo American plc

Mark Cutifani - Chief Executive Officer Rene Medori - Finance Director Bruce Cleaver - Chief Executive Officer, De Beers

Liam Fitzpatrick - Credit Suisse Jason Fairclough - Bank of America Merrill Lynch Menno Sanderse - Morgan Stanley Myles Allsop - UBS Anna Mulholland - Deutsche Bank Hunter Hillcoat - Investec Fraser Jamieson - JP Morgan Tyler Broda - RBC Capital Markets N Ravi - Citigroup Kieran Daly - UBS Heath Johnson - Citibank Jack Lambert - Bank of America Merrill Lynch

Good morning everyone, and thank you very much for joining us this morning for our results. I think first step I'd like to acknowledge my colleagues today here with us today.

Firstly, Rene will be presenting the financials for the last time. And so I know you'll give him a rousing reception.

Stephen Pearce joins us for the first time. He actually gets to enjoy the set of results from here on and he'll be singing for his supper.

Tony here as well, Norman, Nick, Seamus, Bruce, Didier, Peter and Duncan are all here in the audience. So one thing I would suggest or encourage you to do is make sure you talk to the team members for us.

I think it's very important to be respectful to you guys and give you the opportunity to talk to people in the business that are actually driving the business and driving the challenge, and please to take the opportunity to tap them on the shoulder and get their perspectives on what we're doing, because at the end of the day we get somewhat used to presenting here and I think it's important that you hear it from the guys of actually doing the hard work on the ground it’s a very tight thing. We've done a lot of hard work and still have a lot of hard work to do.

So we're good to see people here and hopefully you'll take advantage of the opportunity to be able to talk to the guys. Jumping straight into the key issues; you'll see that we've used the word delivering change and building resilience and we're making a very clear statement of intent with those words.

They can be no doubt I think today in presenting these results that we've done a lot of work in terms of change and our focus has to be to continue to improve the business to ensure that we deliver free cash flow under literally any market scenario that is thrown at us. And I will talk to and point to a couple of points during the presentation to reinforce that key issue for us.

And to me and to us that is the definition of a resilient business your ability to handle anything the market throws at you. Now in developing and talking to the 2016 story, we’ll actually use this floor will talk about delivery on commitments.

We'll talk to the operational improvement go to the balance sheet, Rene will obviously pick up the financials and I will point specifically to the portfolio approach towards the end of the conversation obviously will then have Q&A and I'm sure you'll have quite a few questions. I think firstly on commitments.

Free cash flow significant for the year $2.6 billion versus $0.4 billion. For us the importance of that number, I think is best considered when you look at our average prices 2015 versus 2016.

In fact, we saw a better 3% drop in our average prices on our commodity basket, and so the work that we've done is substantially stuff that we've driven. And I think that's an important point to make through the presentation.

Clearly the free cash flow drove the net debt performance and that number is obviously being considered on a number of fronts and again Rene will pick that up, but certainly we're below the $10 billion target, and yes disposals did make a material contribution, but we didn't have to go as far as we originally indicated to achieve those numbers, so we're pleased with progress a lot more to be done. On the operating side, we’ve seen continuing improvements through each of the operations and in particular when you look at EBITDA margin despite a 3% drop in prices for the full year.

EBITDA margins actually going from 21% to 26%. So we're very pleased with that aspect of the performance for us.

Probably one of the most important numbers to focus on in terms of what we've done and also where we need to go to continue to improve the quality of the results that we're delivering. On the balance sheet, again from our point of view very important to get to investment grade writing, in the end the numbers getting in that territory for us, we can't forecast when the writing agents might look forward point of change and Rene will give his views on that for us will do everything to make sure we get there as quick as we can.

More specifically we are targeting a reinstatement of the dividend by a year-end to be paid in 2018. On the portfolio, we'll continue to cleanup - continue the cleanup work that we defined when we talked about the portfolio back in 2013 and 2014.

Our recently announced Union style is an example of that continuing cleanup, but at the same time I’d like to point that as far as the leveraging the balance sheet, we are not required to make disposals to help us position, because we see a free cash flow and the work that we're doing inside the business with the ability to deliver on our debt targets. So it will be about portfolio cleanup, and again I’ll talk a little bit about that to give you more color through the presentation.

Finally, and to be very specific, we will retain Moranbah/Grosvenor and the Nickel assets as well, and as I said I'll pick that conversation up around the portfolio a little bit later. On the results and going straight to the numbers, I think these numbers best describe these six numbers, best describe Anglo American in 2016 EBITDA a good result again considering their basket price have dropped 3%, so at a 25% improvement on where we were in 2015.

Cost and volume improvements actually represent around a $200 billion improve - $2 billion improvement for the full year. We did have some headwinds of net were about $1.5 billion, $1.6 billion in cash terms and we had a $100 million adjustment due to platinum inventories again we'll pick that up a little bit later, but on a cash basis we actually hit the $1.6 billion.

On capital, we continue to hold our discipline across the organization, I think that's critical and you'll see what we're forecasting for 2017. The attributable free cash flow reflects the volume and cost work we did across the business, the net debt EBITDA versus right calculation and obviously the net debt number is certainly for us a very important number that we were focusing on for the full year.

We've made good progress, but there's still a lot for us to do and certainly we're not going down to the next phase of improvement during the course of this year, we'll talk about that a little bit later. I'm going to size it across the business the one disappointment that we've reported is in safety with the eleven fatalities it's both disappointing or if I could say more importantly it's unacceptable.

The focus on critical controls, the planning of the work through the operating model is where our focus is, and we still obviously have a lot of work to do. The good news is a 24% improvement in our total recorded injury rates was encouraging at the end of the day if we're not managing the key risks then we remain exposed and it's unacceptable.

On the environmental side we’ve done a lot of work. We’ve really focused on measuring what we’re doing and how we're performing, and the reduction almost a 95% reduction in the incidents reported, I think does talk to the planning work and the focus on the data and for us it goes with cost reductions productivity improvements and the overall business performance, so we're going to get the safety right lot of work going into that by everyone in this room and through the organization.

On production, if I work from the right hand side, 2% overall nickel with the commissioning the parallel to furnace if we actually hit the full rights during Q3, so pleased with the good progress there. On iron ore obviously supported by the continuing ramp up at Minas-Rio, guys have done some good work there.

Kumba with all of the restructuring during the course of the year, we're pretty happy with the numbers that were ultimately delivered. Chris and the guys continue to do very well on the Finnish platinum side, yes we had a couple of problems during the year, but overall the performance was solid.

The base reflecting the market making sure that we're balancing our production to market demand, so a good recovery from 2015. In both the coal regions of the three coal regions really solid work restructuring and even with some sales done a good job on the operating side, productivity has continued to improve and so some really good work across the portfolio.

On copper, I won't talk too much about the mid-year issues that we talked on responses. Since then the guys have delivered the numbers.

The good news, I think from the copper side and we saw those in the half year numbers was the cost would. And so Duncan and guys were able to improve their EBITDA contribution, and that was really a function with a very good work done on the copper side.

So overall we’re happy with the results. Yes, we could do better in terms of the areas that we had a few headwinds.

But overall the numbers were pretty solid and supported a much better performance on the cost side, and that's really where our focus was. On a full basis, we've reflected 9% which is normalized for the portfolio changes; I think you'll see a headline number of 10% reduction that's just have the numbers actually landed for the full year.

Nickel reflecting Barro Alto’s contribution very good progress in iron ore particularly at Kumba and you know that we've come from the $77 a ton breakeven process to $29 for the year I’ll talk to that a little bit later, so good performance there. Minas-Rio also making the contribution, which Seamus and guys made good progress, so even with the constrained footprint some good work on the cost side.

De Beers, Bruce and the team focusing on the efficiency work obviously helped by getting the volumes out caller stagger again good focus on cost and come along way don't forget in Australia in particular we're down more than 50%, so continuing good work in South Africa, some good progress SA export coal I’ll pick that up and copper as I said, despite the volume challenges good work on the cost side. For us the words we use the relentless pursuit of operations improvement and I think at the end of the day courses where the rubber really hits around, I think we might be progress the lot more work to be done in terms of underlying efficiencies.

On the EBTDA cost and volume improvement, you can see that on the cost side, we were forecasting around $900 million contribution, we actually delivered about $1.2 billion. So we're pleased with the progress.

On the volume side, we were expecting a bit of a higher contribution particularly with De Beers, we did see some headwinds with the smelter failure the water smelter failure and the Los Bronces in copper which we don't with the half year. So net-net we sure a $400 million contribution on the volume side that got us on a cash basis to a $1.6 billion performance improvement across the portfolio.

The platinum non-cash inventory adjustment we do the inventories on an annual basis in 2015 it was $190 million contribution, this year it was $80 million. So the difference in the $100 million is what we've record a day and so we do that inventory adjustment it’s in the range of expected outcome, so there were no big surprises there.

But it does have an impact and it shows as a non-cash, but it is something we should report on the basis it talks to a run right that we talked to earlier this year so with the numbers are. For us when we look at what we can do, and I’ve talked about the words or used the words resilient.

We recorded a 3% drop in our commodity basket price, and I notice some of the press step this morning was signed. We got side by commodity prices in fact during 2016 our basket was actually on average below the 2015 numbers.

Certainly a great recovery in the second half and we're enjoying that and still enjoying some of that recovery, but the improvement from 21% to 26% I think makes the most important and important statements for the business. Three years ago we talked about improving our margins in tougher environments and for us that's where we're going to keep doing as much work as we can.

And the second last bullet the marketing activities and marketing contribution to that margin improvement has been also very strong, and very pleased with the progress that Peter and his team have made in their work and they've delivered more than the $400 million we were targeting back in 2013. So it’s a very pleased with their contribution.

On a commodity by commodity basis, diamonds as you would expect with the market starting to stabilize and certainly providing movement for products we were able to deliver volume and cost improvement on the business. In looking forward, we'll continue to work closely with our customers to make sure that we were in the right conversations and understanding how the market is balanced so that we’re making the right decisions.

And the quality side Gahcho Kué make a bigger contribution this year and for us a very important part of the quality improvement that we're looking for across the portfolio to support margin improvement, and our production range forecast for the year is 31 million to 33 million carats. And that's based on what we believe the market will certainly support in its current configuration.

I think we’re going to be a bit careful with the first sight is there was some stock movement in those numbers, so I don't want people to get too excited, we've made the point, Bruce has made the point, just going to keep an eye on the market, and we'll make sure that we’re staying very close to customers in particular. On platinum, we’ve been working right across the portfolio on improvement; Chris you'll see is here, jumping up and down in terms of the results.

The sale of Rustenburg for us was a very important milestone for the year. And I have to give Chris full credit for the hard work that he put in with the rest of the team in making sure that that got through.

For us the quality of the portfolio and making sure that we're positioned on the left hand side of the cost curve is where I think we need to be as we still see a bit of platinum around. And overtime as the market moves our way we should be the beneficiaries particularly with our assets on the right side - on the left hand side literally of the cost curve, but there is still some more work to be done good progress and certainly very good progress on the portfolio restructuring front.

On copper, on volumes when I able to rely on volumes to help us with our efficiencies, but really good work on the cost side. As I said I won't get back through the half year challenges, we had other than the side that the guys have done a good job in the last six months continuing on the cost reduction front and making a very solid contribution.

Our production guidance for 2017 reminds in similar ballpark we're more focused on the margins on copper and make sure we've got the right things happening in the business. On El Soldado some of you would have heard that there is a debate with the government regarding some of the approvals, if remember back 18 months ago, we were on the wrong side of cash flow at El Soldado some $100 million.

We've restructured met a lot of challenges and is now making a positive contribution and would have made a positive contribution back at prices at that time. So there's been significant improvement.

I think it'll be next three or four weeks where we'll sort out what we need to do to get approvals going forward. But at the same time, if we're not able to agree and we've don’t believe that the operation will be making a contribution then we want to continue going forward with the operation.

We'd like to think that we can work something through with the government and get the right laws is in place, but if not we'll make the right decisions in with regard to each asset has to pull its way to make a contribution. On coal, the Australian operations again have been lead to see an improvement across the business and certainly doing very well on any comparative basis.

Unit costs the lowest we've seen since 2006. Grosvenor is made its first contribution; it's seven months ahead of schedule so that's significant.

We've continued to clean up the portfolio through Callide and Foxleigh. And so I should make one other comment on Grosvenor.

We’re still in the first long wall block. We have experienced technical challenges that we're getting on top of it's quite normal in your first block where you've got what we call virgin crushes around the world to see some challenges hugely things get better in the second and third blocks, but we're making good progress, so we'll watch that closely and keep people updated on the progress that we're making.

In terms of going forward where we're forecasting somewhere between 19 million and 21 million ton again the guys are doing really good work on the cost side Grosvenor will obviously be an important part of that production recovery, and production forecast over the next 12 months. In South Africa and in Colombia good progress, certainly in South Africa, the productivity work has been exceptional.

We've actually up 45% on the last three years, so again good progress there. As a consequence we've actually kept our costs to 2013 levels, there is still more we can do, and that Seamus with the team is focusing on the continuing improvements that we can make, but I’d have to say that what it does demonstrate is that in South Africa we can be competitive with anyone in the world.

We’re still got a long way to go to match numbers that we’re delivering elsewhere, but the progress has been very good, and so from my point of view very pleased with the progress and critics of the team for doing the hard work and we still see lots of opportunities in Colombia as well. Again the forecast of the real focus for us is productivity improvements getting a cost and continuing to improve our cost to make sure we can handle anything in the market throw status.

Kumba most people are aware of the amount of restructuring that we’ve done. It has been a bit of a journey taking a bit longer than we would like, but at the same time if you go back to where we started at the $77 a ton breakeven price, we delivered for the full year $29 a ton breakeven price.

I will put a cautionary point around the $29, it is a volatile number depending on where foreign exchanges and oil prices are and so it can move anywhere between $30 and $40. The team is focused on continuing to improve the underlying performance, and so that we’re doing the best we can with what we’ve got, but the move from $77 to $29 substantially reflects the good work of the team and in particular in 2016, we got a lot of help in 2015 on FX and oil.

But in 2016, it’s primarily been the restructuring and the changes that we’ve made inside the business, for example to downsizing by 40% were the important part of the improvements that have been delivered this year. So for me, that’s a really important point to make and credit to the team in the progress they’ve made, we all understand there’s a lot more work to be done, but so far we’re very pleased with progress and we’ll certainly continue to encourage the guys for look for every opportunity to improve the business.

So that may good progress, they pulled out over hedge and indirect costs will continue to focus on getting that configuration right. And once we get a bit more pit room, we end up getting a bit of balance in the fleet, and so there’s an opportunity to improve as costs once we happen to pit up, but we’re expecting net losses to come through and I turned a very important milestone that will keep you posted on the progress as we go through that.

Finally, for those that get really excited when people talk about nickel. It has been an important transition for us as we’ve brought Barro Alto one today for those that check these things in the wrap up of curves for the new generation of laterites deposits it’s been the best performer based on the new laterites and that’s in the last six or seven years.

We’ve still got some performance improvement we can deliver through consistency.

I think with that, I’ll hand across to Rene to unpack the financials based on that performance and then I’ll pick up the strategy after Rene.

Good morning, everybody. And I would like to start by thanking the management team for this strong performance and allowing me to present a very strong set of result.

So first goes to the key financial for 2016, so a very strong EBITDA number of $6.1 billion an increase of 25%. Lower tax rate at 25% that’s really on the back of two special items, first in Australia we were able to use and organize a tax losses especially in the strong performance in the coking coal in the second half of 2016.

But also the charge in a tax regime in Chile for tax and the impact on the deferral tax assets. Going forward we expect the tax rate to be between 30% and 32% obviously depending of the structure of the portfolio.

CapEx down to $2.5 billion and as you know we commission two projects in 2016, Gahcho Kue in Canada in De Beers and Grosvenor is a new longwall operation in Australia we still have some spending in Minas-Rio in Brazil. Very strong shift in cash flow from negative cash flow for $1 billion in 2015 to a positive cash flow of $2.6 billion in 2016.

Disposal proceed of $1.8 billion pretty much in the second half of this year, and we closed we completed the sale of Niobium and Phosphate and the sale of our 10% stake in Exxaro in South Africa for $200 million. So net debt down to $8.5 billion at the end of December, which represent a net debt to EBITDA of 1.4 times on the pro forma basis.

We maintained the same focus on cost operational performance and CapEx and we keep getting the benefit obviously of higher, high commodity prices that end of January, our net debt proceed slight down to $8.1 billion. So continue to make good progress in term of strengthening as the balance sheet.

Turning to EBITDA waterfall, on the left hand side, you see uncontrollable elements. Mark, mentioned the slight year-on-year basket price decline 3% negative impact of $100 million, but there was a strong recovery as you know in the second half of the year.

So point-to-point increase so far end of June to end of December for our basket price was 27%. So this 25% increase in EBITDA was we driven by the cost and volume improvement a net impact of $1.5 billion as that Mark covered earlier and the impact of platinum non-cash inventory adjustment and the impact of the disposal both in 2015 and 2016.

Turning to the reduction in net debt, so overall reduction of $4.4 billion from $12.9 billion to $8.5 billion at the end of December, I will cover you more detail working capital and CapEx, just maybe clarify on what happened with the tax side and on interest side. On the tax side, we had also the benefit initially of accelerating tax depreciation and we had tax return of close to $200 million in 2016.

So I think some of you were surprised by the much lower cash impact on the tax line that’s what’s beyond this lower number. On the interest side also need some explanation.

On the cap and the cash standpoint we will get the benefit of lower debt in 2017 that will reduce from cash standpoint by adjust by $200 million. But from the P&L stand point, as we have now commission Grosvenor and Minas-Rio we will capitalize less and the net impact of the P&L standpoint will be in fact an increase of $200 million.

So net debt down to a $8.5 billion obviously is to the net debt to EBITDA between one and one point five times using long term prices. Our EBITDA number using both our internal forecast and the market consultants in a big year roughly around $6.5 billion.

So we would like to level of net debt to be closer to $6 billion to $6.5 billion as we agree that we need to run the business probably a more conservative balance sheet. Turning to what happened in term of gross debt and where we are in terms of liquidity.

So 27% decline in gross debt in 2016, so we are obviously the impact of maturity in 2016, but also the liquidity management into size we did earlier in the year and the repayment for BNDES slowed in Brazil for one $1.7 billion, so that will help us reduce the level the short that I mentioned earlier in 2017. Liquidity has been critical over the rest two years that was very important for us as we were going to the downturn and under pressure.

We had maintained a very strong liquidity close to $16 billion as we - there are still some volatility in term of prices and we continue to make progress on the daily bulging balance sheet. But we expect the level of liquidity to be adjusted going forward as we make more progress in term of when you reducing the level of net debt.

And you see the maturity over the next three years to around $6 billion of bond maturing in 2017, 2018 and 2019. Working capital so a net reduction of $ million and that to impact of the higher prices in specially in the last two months of 2016.

We got to the feet of optimizing our level of inventory in De Beers the benefit of $300 million as well as our ability to renegotiate some debt to - some deal with some trials [ph] involving some prepayment and also some supplier payment terms. CapEx, so down to $2.5 billion compared to $4 billion in 2015 and in excess of $6 billion in the prior years.

We expect the level of CapEx to be maintain as its level in 2017 and 2018 the benefit of the commissioning of the projects that I mentioned earlier, but there will be an increase in SIB CapEx as we commissioned some new projects for example Minas-Rio and Grosvenor. And then in term of disposal, so $3.5 billion over the last two years so including $1.8 billion in 2016 and you have the breakdown between Niobium and Phosphates back that we completed in September and the sale of our stake in Exxaro in December.

Thank you.

Thank you very much, Rene. I will just quickly give a bit more flavor in the progress we've made, talk a little bit about portfolio and then just update you on guidance and give you few final comments.

Firstly, in terms of change overall since we started the significant work we've been doing since 2013. On the organization front, we've basically streamlined and reduced the numbers across the business.

But as a consequence of focusing on the assets so you can add material value, the way we run those assets, the way we operate, and the way we work together as an organization. And so there’s been a lot of work done, still more to be done, but from our point of view that was a very important part of the strategy that we had lined back in 2013 and we've made good progress, but again looking to continue to improve that work to support our productivity improvements across the board.

On the portfolio front, we with the sold/close 27 assets reducing the portfolio to 41, I think it's been overly simplistic to say we're dealing with the tail clearly that $600 million conversation we had back in December in 2015 when we talked about $600 million the costs associated with those operations is down to $100 million. So we have dealt with the tail, but there will always be some assets that are in different phases that you have to deal with.

But certainly from our point of view that's been a big part of the work we've done. But as well as that the ongoing improvements to the portfolio have been absolutely key in helping improve the overall quality of the business that we're running, and certainly been very important in improving the margins across the business as we go forward.

Having said that today, we've also added five new projects to the portfolio. So when we talk about margin improvement it is the function of the work we've done in the portfolio and it's a function of the efficiency work we've done within - to the assets.

And so from our perspective it has been strategic in the why we've gone about the business with still more to be done, particularly on the cleaning up of the portfolio and the efficiency work in particular. We want go through the future smart work, we'll save that conversation for another day.

But for those that still what we were doing in December and understand what we're trying to do with cost base on a go forward basis there still a lot of opportunities across the business. And finally the operating model is about the way we operate, is more of an industrial approach to the why we run our assets.

Certainly it's not about one or two years game, this is a long game that we applying and operating and improving the business. As we use the marketing model and as I said earlier Peter and the team have contributed more than $400 million worth of improvements which is the number we’ve talked to a few years back, and that's from literally from the resource right the way through to customers improving logistics, maturity in cost and improving the realize prices that we achieve and certainly we’ll continue to work on that model, which is different to a trading model or sales model.

It's a very different approach. A lot to learn from De Beers and what we're doing in platinum applied to other parts of the business including.

So for us the whole improvement strategy was not simply a bad cost, it's a bad improving every part of the business drive our margins, drive returns and make sure that from our point of view we're doing the best for our shareholders on a sustainable improvement basis. On safety and environment again, we've made significant progress 50% down since we first stood up in 2013, clearly disappointed with how 2016 shaped up a lot of work going on to make sure that we recover and keep going forward and continue the broader improvement trends.

Similar for environment, in the end knowing that we're doing the work, I think the important phase these things really Andy come to the four when you have a problem what we're going to try to do is continue to improve the discipline, the planning and the work we're doing in improving incidents, so that we don't have any large incidents, and so that's a wish something that we all have to pay attention to in this type of business. On the operating side, a copper-equivalent production from where we were actually up eight 8%.

Now that's from 40% less assets so clearly the cleanup has been around the smaller assets and getting a lot more added the largest scale margin type assets, and so as a consequence of all of that work our copper-equivalent unit costs are down 31% and that's in normal terms so from our point of view that's an important number. And cash generation from flows from those improvements, for those that do track back to what we talked about in 2013.

The underlying EBITDA improvement is $3.1 billion delivered against the targets, so we've done well, against those original targets and in fact, we've exceeded on most fronts. And capital expenditure now that the major projects through we've seen a 55% reduction in capital, and in terms of underlying capital we've seen on average 20% to 30% efficiency improvements, which are consistent with what we've done inside the operations with our general operating improvements.

In talking to the story in its most stock of terms, the blue represents the actual copper-equivalent production that we've delivered on a year-on-year basis, so while we’ve been restructuring the portfolio, selling or closing assets, and bringing assets into play. We’ve actually held the production of slightly improved production over that five year period.

As a consequence of the portfolio work and the efficiency work the production per person is up 41% from where we were back in 2012 and as a consequence our actual reported operating cost in US$, 69% now when we talk inflation in effects there’s been making generally of those numbers. So the underlying improvements and portfolio charges are going to side the both making significant contribution has improved the quality of the business.

That’s where our focus will remind going forward to keep driving those numbers to improve their margins and with the marketing work and the other elements that that where it working through including the focus on being disciplined on the capital stock looking to improve their returns on a consistent basis as we go forward, and put of much - put as much of efforts through in our hands and as we do in terms of commodity prices. On the portfolio side, I think we need to make a few key points.

First, we’ve been committed to the cleanup, and so when we talk back in 2014 if coming down to around 35, 37 assets that was about improving the quality and making sure that we were focused on those assets that could drive value and that we were putting our capital in place at the delivered the best returns over the long term, a lot of that work or in fact most of that work has been pretty well done. Second, we identify to be to go further on our restructuring program I mean as everybody knows the story.

In 2015, pretty dramatic drop in commodity prices, we were confronting a real challenge in diamonds of the pipeline having filled probably in the prior 12 months the prognosis for China, was a bit open and so from our point of view we took the decision to drive and effectively put in place a self-help program. Accelerated the improvements across the business in terms of costs pull their capital in hard, but still making sure we remain committed to things like innovation where we knew that we’d have benefits longer term and we sold some assets.

The one thing, we promised our shareholders in all of those conversations and the questions were asked you’re going to sell for value, we’ve said that we would hold ourselves to very strict value criteria. And I think that we held true to that in the case of niobium and phosphates, so one point we’ve made is that niobium we didn’t see a long term opportunity to improve their position there given the choice of competitors in the industry.

The phosphate business was very much a local market and therefore from our point of view, the priced we realized was almost double consensus numbers and we thought that that was a solid price. It was subject to an open bidding process that plus the cleanup work helped deliver about $1.8 billion with the $1.7 billion before helped us get to the net debt number.

So from our point of view, whilst we had solid offers on the table for other assets, those offers didn’t match our value criteria at the time and therefore we didn’t make the side. From our point of view, it was appropriate, and we made I think the right calls, in the end it’s easy to reflect back now.

But from our point of view, it was the right thing to do at the time and certainly has given us the flexibility in going forward. And certainly from an organization point of view helped demonstrate the changes that we’re going to talking to in the restructuring we’ve done could be achieved and certainly from our point of view was a real rallying moment for the organization very important one and very positive one.

Consistent with that, we will maintain Moranbah, Grosvenor and nickel assets in the portfolio. So I guess the conversation around the portfolio is important, so I’ll put the materials or so I’m trying talk this through to help you get an insight into how we’re thinking.

Firstly, three global commodities, diamonds is a global business. Not all of the assets are Tier 1 assets, but each of the assets add value to the value proposition that we present to our customers.

Bruce has configured the organization to deliver sustainable performance and results for the diamond industry and he has support on a number of fronts whether it’s technical or in other areas that business has been configured to perform and deliver on a global scale. Similarly platinum, although it’s not the same industry and there are lots of learning’s that are going on between the two businesses again Chris has the most significant platinum business in the world and we run and set that up as a platinum business and it is on a global scale.

Copper is not yet at the scale, we’d like it to be. But it’s certainly with the assets we have we believe we can improve the business both in terms of the quality and the contribution that makes that will take time, we will be patient, we will be discipline.

But it is a business that has global scale potential. The fourth part of the portfolio, we’d call very deliberately bulks and other minerals around 18 months ago.

Our assets that have technical similarities, operational similarities, Seamus as aligned the operations and he’s sharing best practices across the bulk assets the thermal coal, the met coal, the iron ore businesses Minas-Rio at the learning’s that we have from each of those business are going to share as we continue to improve the performance. Very different in nature, but the most important point we make is they good assets.

They aren’t in of themselves globally in scale so it’s not like global met coal business or global thermal coal business or global iron ore business that’s relative to competitors. And so we configure them differently because we find setting this up is far more efficient and effective in terms of the why we’ve structured the overall business and for us that work.

So the focus will be on quality assets, so it’s an asset quality strategy. But it’s also a strategy that pays attention to the nature of the commodities we’re in looking to drive returns in those businesses that are appropriate for the scale and the way we’ve positioned the business in those markets.

We’ve articulated those points in these bullets, and I’ll let you read those. But I do will make one observation in relation to South Africa.

In defining the strategy going forward, we talked about what we would do in South Africa and where our focus would be. The first thing I would say about South Africa is that we’ve restructured the business as we have the global business and we’ve improved productivities in South Africa by more than 40%.

We’ve reduced their cost in the same sort of 30% range, learning from all parts of the business. And that improvement has been done with stakeholders even though they’ve been tough conversations the government has been constructive albeit tough as you’d expect them to be.

And with our other stakeholders in the country we’ve been able to navigate significant change in the Kumba scenario, the thermal coal scenario, Chris is restructuring of platinum. All of those conversations have been tough, but required have been necessary and we’ve improved all of their businesses, they’re all making cash, they’re all making a contribution and that’s the first or that was a starting point in terms of make sure we have a good business in South Africa.

The third point, that when I talk about South Africa and I think we are in an important moment in terms of policy certainty. The focus on the MPIDI, the mining charter and general fiscal arrangements to make sure that we encourage inward investment to South Africa are all important issues for us.

As we stand here today, we can manage our assets, manage our operations for the long term and make a real contribution to Anglo American. If at the same time there are conversations around opportunity to do something different where open to those conversations.

One key criteria, it has to add value for all of their shareholders and that’s the position we take. So we’re happy with what we’ve got we believe we can continue to improve and make a contribution, and that’s where we stand.

If there is another opportunity for another conversation to more open, but it has to be on the basis of delivers value for all shareholders. I’m sure I’ll probably get a few more questions on that point.

Targeting further improvement as we said for 2017, a lot of opportunities we have identified, and we will continue to improve and as many of you know the quest to improve never ends. We’ve been quite specific so far we’ve identified for $0.5 billion or $500 million that we’ve hardwired into each of the operating plans.

We’ve also identified another $250 million of opportunity that have been worked on as we speak in terms of plans and we’re working to identify and bring for book another $250 million to deliver on EBITDA during the course of the - it’s certainly a stretch. I won’t underestimate the challenge we see.

I certainly believe on a cash basis, we can deliver that part of number certainly on a much more confident basis, but for us we want to drive that EBITDAR improvement and continue that improvement basis that we've got going through the business and everyone's focused on delivering those improvements. And I think that's an important piece of work for us and certainly will be an important update that we give at the half year.

In terms of guidance on the full year numbers again Rene is unpacked the numbers, EBITDA improvements that we're targeting, capital be around the same number. The free cash flow you have to adjust for compared to last year you have to adjust for working capital and some international again Rene has provided reconciliation so those numbers should land.

We would certainly see the net debt at less than seven as Rene I pointed out, we're making good progress, but this part of the year bulks are obviously helping us at the moment and so I think it's a bit too early for us to book that on a full year basis. But certainly we've had a good start and we thought it was appropriate to advise you where we're up to in general given what we've seen on the bulks in particular.

And that range that we're looking for I think is very important and certainly will be making sure that friends of the writing I just is aware of where we are. Finally in terms of the team delivering change building resistance - resilience through.

We're building a portfolio of high quality long life assets. We will continue to roll out the operating model because at the end of the day the disciplines, the structure, the process that required does require us to think differently and operate differently, and it really does provide, I think a very solid platform for longer term improvement and so the conversation each year has to be about how much better can we do.

We've got the foundations in place, still a lot of work to be done. Free cash flow generation reminds the imperative.

We need to keep generating and making sure that we've got the flexibility to deliver on the potential we have in terms of our next phase of evolution. This year is about the discipline and making sure that we're doing things right get the balance sheet where it needs to be in this world, I think volatility will be the key word of the day and therefore we need to have a much more flexible balance sheet.

On capital management we will maintain our discipline, returns to our shareholders our high priority and from my point of view shareholders come first in terms of dividends, so by the end of the year we want to be a position to make that commitment and hold that commitment and from my point of view the discipline as expressed through the balance sheet is absolutely critical. So there the numbers, before I open the conversation up to questions, I did want to make a couple of points.

First, I'd like to thank Rene for the contribution that he's made to the organization. I think his contribution making sure that we kept our liquidity in the right place as we navigated the major projects, I think it’s been very important point, one that might have been missed a little bit in 2015, but again Rene thank you for the contribution that you've made to the group.

I think for many one the clock back I did months it was a fairly tough set of conversations and appropriately sharp. What I would like to do is acknowledge the work of everyone in the room here the executives, my colleagues and all of our employees many of our employees are watching this presentation, so I think it's important to acknowledge them.

The one thing they all know and we all know is we still have a long way to go in delivering on the potential in the business, so we just see it a modest state a lot of work to be done. We've still got I think a lot of catch up to get ourselves to the front of the industry.

But we've made some good going, we've got a lot more work to be done. And I think it was important to make that point to yourselves.

And then finally, to thank many of you for the support that you provided and in some cases the tough conversations have been the right conversations, and certainly from our point of view people of my district differently and we've continued to evolve the business, and I'd like to thank that today we’re little bit better than we were at 12 months ago, and I hope I can say that again next year and beyond. So I thanks for the support.

Thank you for being here today and we're very happy to take questions. Liam?

Good morning Mark. Liam Fitzpatrick from Credit Suisse.

Two questions predictably on South Africa. The first one I just want to understand how that your thinking has changed, because last year you made two points, one was around the capital controls and political uncertainty causing issues around or inefficiencies around capital allocation.

And secondly you made a point of wanting to focus on long life assets. So what has changed in terms of your thinking around the thermal and Kumba assets and is it just a case of you appreciating the diversification more?

And then secondly based on your comments of retaining now being an option, are you still actively looking at disposal of these assets or you now just sitting there and waiting for any potential offers that may come?

On capital allocation obviously focused on the right assets best return, so it’s very healthy capital competition across the portfolio. We do take into account a global commodity position in thinking about that.

But all of the assets will have in our view the right capital make sure we delivering good returns, but we'll take that commodity point into account. In terms of long life asset, what we say it is, there are assets that to do have long life in a very competitive that we said we need to consider putting on the block to managed debt.

Very clear that debt was the imperative. We still have those three global commodities very much in focus and I will continue to get our support.

But what we have said we've got another set of assets that are high quality, long life and we’ll continue to make you contribution, and I have a place in the portfolio. Because we've got the debt to where we wanted it and they've got right potential.

In the case of Kumba more specifically, I think the technical opportunities that we've been working on for a couple of years around the DMS plant and those opportunities suggest to substitutions go better than 20 years left, still to be worked through, but certainly good potential. So from my point of view it has certainly the potential to remain in the portfolio, they’re going to continue to improve.

Another asset we continue to make improvements and so we think what we've identified in the portfolio fits with the focus on asset quality on long life and areas that we can add value, and therefore they can remain in the portfolio. We will continue to do some cleanup as we go as assets get to an age we don't think there's much more we can do.

We will sell I think that discipline is something that we have to be much tougher on, and turning asset service of managing the portfolio. I think that's very important for us.

And in terms of South Africa, the point I’ve made is fairly clear that for us with the portfolio we have, we can operate and manage that portfolio and manage the financial issues quite effectively in our current configuration. It's my view of the time the bulk will probably come off a bit in terms of the relative contribution, and so the difference in the two jurisdictions will change a little bit overtime, but we can operate very happily in our current configuration.

At the same time if there are otherwise or opportunities to improve how South African sits in the portfolio. Then we're also very out then to having a conversation, but it has to deliver value to all of that shareholders.

Okay. Jason?

Thanks Mark, it's Jason Fairclough of Bank of America Merrill Lynch. I mean you've had a quite a year, right I mean it's impressive, I followed through it so, I do want to take away from that with this question.

That’s okay.

In terms of strategy, I'm not quite sure what the strategy is here, it seems like either we're looking at is this the third strategy in 15 months. I mean what is the strategy today what is the path forward?

Have we gone back to the old strategy before core Anglo? And I guess along with that what is the investment case for Anglo today, how is it differentiated from your mining peers?

Okay. So firstly on strategy, and by the way I've got no problem with the Jason.

When we stood up in 2013, we talked about strategy in four parts. We talked about cleaning up the portfolio and getting our sales back in the game being competitive that was driving value.

We've delivered and you see that in productivity costs capital efficiencies that part I think from our point of view we've made good progress. Secondly, we said that we needed to restructure the business in the change the way we were running the assets and so significant leadership change the way we've organized the functional model, the whole approach to running the business is very different.

Third, which we actually changed our key prices, is the industrial the adoption of a more of an industrial model, the marketing model is very different to what the majors we’re doing in this space you’ve got a trading model, a sales model. We’ve tried to pitch and we saw the big opportunity to improve our margins across the board in a marketing model, it was the third element.

The fourth element was portfolio, where we said that we would look to focus on those quality assets because you remember we did a comparison of margins against major competitors and I see it where we’ll behind our competitors in terms of margins. And we’re going to have to change the nature of the way we run the business, the first three and the portfolio to close that gap.

So we’re closing the gap, we’re not dig it. We’ve certainly had to take a more aggressive approach to the portfolio restructuring hence to get the balance straight down.

So if you like the way I talk to it, and I’ve used the word before and you can use we would have like what we said is we tried to we pivoted to deal with the debt, which I think was the right thing to do, and we’re pivoting back. So we would certainly argue that we’ve adjusted the strategy to deal with a tough set of circumstances which was appropriate, and we’ve now pivoted back to where we were which is an asset focused strategy, cognizant of the portfolio that we have and the commodities we have.

And to get to your final point, I think the commodity mix we have is actually quite unique. So you might think about that little bit differently to where we are against our competitors.

But secondly, the real gap between ourselves and our competitors on margins. We’re closing the gap, we’re going to a lot more work to do, but what we want to do and provide to our shareholders is a different set of options in terms of the commodities I can be exposed to and that’s just a nature - a function of the assets you have, but the quality of the assets is the driver.

There was a scope that I heard the other day which I quite like. There are no bad commodities, only bad projects.

For us it’s about the quality of the assets and what we’ve tried to do is preserve those assets in the portfolio that we think we can add value in overtime and continue improve margins and returns. And that’s what we think we can do and make a difference and people who make the right decisions about the commodities that like to be exposure.

So I think I’ve tried to cover that full sweep. I’ll go here in our company.

Good morning. It’s [indiscernible] from Barclays.

Just have two questions. And just a follow-up from Liam on the asset disposals in South Africa, I know you’ve been sort of reports suggested you were ongoing in a prices for the domestic assets.

Does that mean you’re not going to dispose of them now or just the thinking around the timeline for that? And then secondly, I noticed in your sort of list of assets you had Quellaveco in bold and it’s there any Greenfield’s projects that’s in bold.

Just your plans and timelines around that I think there was some price reports in the recent months from the Peruvian minister saying you’re going to make a decision in 2018 maybe just comment on that as well please.

My comment was more around Kumba and export thermal coal, our Anglo top assets, but at the same time, we’re open to a conversation and therefore from our point of view, the stable that we’re making is we’re confident than overtime, we can continue to navigate be successful in South Africa. That’s a commitment, but at the same time, if there are other opportunities to create value for our shareholders we’re open.

We’re making those positions pretty clear, but we’re supporters, but we want to see as more certainty and we will be positive and constructive contributors to the debate.

So we’re not yet convinced that coppers in the right direction and from our point of view we would need to be convinced that it’s the right thing for copper and that’s certainly want be in 2017 from our perspective, if we’ve got a lot of work to do. We’ll take that up in 2018, but it will be a really serious consideration around the market.

We’re in a good dialogue with our colleagues in Peru, and so we’ll continue engage and trying to do the right thing, but not before time. The other one that we did well there was Sakatti.

Sakatti is small operation long time before reached you there’s little licensing be done. But for us we’re not talking the jwood [ph].

We have no intention to talk to the jwood, we’ve got a lot of clean up, we’ve got to do with focused on doing the right things get the capital disciplines right. If the market is moving in the right direction in future periods then we’ll give that consideration, but not before we finish the really important tasks at hand.

On that question, the first question around these assets and I mean now that you are looking at keeping the let’s say exports and Kumba for the leveraging. I mean that the limit of all the cash building up in South Africa and you’re only able to say used that to employ that for the dividend payments I mean what’s your thinking around that?

I made a sliding reference to that very simply put we think over time probably the bulks come back a bit. Other opportunities we start to balance things up.

We think that that’s just a timing issue and we can manage that overtime. So from our point of view, we’re not in a position where we have to do anything.

I think we’re giving ourselves the flexibility with the balance sheet to do all that with that in a constructive way so that from our point of view we don’t think that creates a major problem.

Good morning. It’s Menno with Morgan Stanley.

I had two questions, the first one is on South Africa and the mining charter. Can just remind us where we stand on the discussions there?

And if one’s bid is not equal to two bid, where the risks lie within the portfolio?

On the mining charter, there is a conversation between the chamber and the minister regarding the mining charter might take care Roger Baxter in the team, Norman is leading our input, but across the chamber we’ve also got Chris, Timber and others making a contribution Philip as well. And so we’re hopeful that we get something constructive, something workable and that’s the point I was making it in Durban a couple of weeks ago what policy should be MBIDI has been debated for five years.

It’s original construct, over the construct of two years ago we are very supportive of, there is talk of some changes, if there are changes the chamber willing great aggressively and I think it would be fair to say that if we see something that we’re not happy with we will make that now. And we’ll challenge it if it’s inappropriate.

But I’m hopeful that people will listen to what we’ve been saying and will come up with something constructive something that encourages inward investment into South Africa. That’s our position.

We’ve been very strong and we’ll continue to debate that from our point of view we don’t see significant risk across our portfolio. We’ve delivered 26% plus in fact, we’re north of 27% on our ownership, so we think we’re in good shape.

The only area where we’re down near the 26, I think was in thermal coal on a technical glitch on production so for us not an exposure in terms of the assets. So we’re pretty happy with our position.

It really is making sure to go forward position is the right one.

And second one is on the Slide with the buckets and the portfolio. If you look at the numbers, Anglo American really a coal company, then iron ore company and after that into a 2016 it’s all the rest.

Now actually that’s a bit of a saving grace, because it allows you to lever, but it’s not really where you want to be 12 months ago. The global commodities are also not without their problems clearly these are in platinum.

How do you think about this? How do you see these develop in the next two years?

At the end of the day, none of us can forecast were any of those commodities that we have used. If I can say it a little bit differently, and I made the point and maybe if I emphasize a little bit differently in diamonds, in platinum and in copper.

We think we’ve got assets that all the time, we can improve margins and deliver returns as good as if not better than others in the industry in the commodities industry. That’s our view of those positions.

We’ve also got good assets in met coal, thermal coal and iron ore that we can continue to improve. So we think about the portfolio, we were not trying to pick prices and the forecasts of process, but control what we can control, get our cost down, deliver good returns and if you've got met coal or it's iron ore then so be it.

And that diversified portfolio, so why we've structured the organization with the functional model means that we can be quite flexible in Nigeria's make sure we've got a common language and we're sharing best practices across the business. And a long way to go before we get the best practice, so lot of improvement still left in the business in model.

I work my way across.

Hi it’s [indiscernible] from Macquarie. Just to ask the question on corporate strategy again and in a slightly different way.

Just six months ago we were still talking about the new Anglo American and the three coal pillars, now we have the additional box and the nickel assets and the way you characterize those assets as being low cost albeit not scalable that has really changed from six months ago. So what's really informed decision to keep them aside from you not necessarily receiving the puts that you thought you would?

And have you taken them permanently off the table in terms of disposals or would you consider settling them if you did getting answer listed bid which was fairly attractive that's question number one? And just question number two on the dividend which you plan to have you reinstate in respect of 2H17.

Can you give us your thinking around top of dividend policies you're considering what you might adopt?

Very simply put on the portfolio direct, we didn't get the bids that we felt would have reflected value back to shareholders therefore we didn't sell the assets. That was the first point.

But we got to add debt targets so we've said we're not going to sell assets simply to get the debt down. We've got the self-help as work.

We go back to the original strategy where we started before we did the pivot to do with the balance sheet, its quality assets, margins returns, can we do as well as if not better than anyone else in the industry. We think we've got a running start with the three commodities I talk to, but we've also got other assets for example, the long haul assets best performing productivities, margins we've taken 50% out of the cost, Kumba we've gone from 77% down to 29% a lot more stuff we can do.

We think the good assets there's more value we can extract. And at the moment no one's been willing to pay the price, therefore we'll run them.

And we've got to give the guy the certainty in the business that they're going to run them for value, and that's what we've done. In the longest scheme of things people stand up and so from time to time assets as they get close to their life you consider selling.

But that's the normal life cycle in this business, so we won't be any different other than we're going to be pretty tough on the portfolio. We have to deliver the outcomes and we will turn the portfolio from time to time.

Every one of our colleagues in this industry have assets that they've held in their portfolios, because they might not have been able to achieve an outcome from our point of view we want to be very clear. We're not running processes on those assets.

We're running them to deliver returns to shareholders period. Okay.

Dividend, Rene do you want to pick up?

Yes, we clarify few months ago that when we reinstate the dividend we’ll move to a payout ratio policy. We didn't specify what would be the payout level, that's something we will clarify when we reinstate the dividend.

Thanks, Myles Allsop from UBS. Just a few quick questions.

Going back to your comments on kind of the South African business and making sure you deliver value for all shareholders, is that - are you effectively ruling out the option of spinning out those assets, because there's clearly a risk of more value leakage to PLC shareholders? Also with the dividend if not debt below $7 billion by June will you bring that forward?

And then maybe a question for Rene as well, because he has a chance and this is last time here. What's your advice to Stephen, I mean in terms of the big challenges left, what do you think he should really focus this time on?

So let me do the - let me do it, I’ll answer the question, and I’ll hand across through Rene. Look I think I don't think I've ever used the word spin out.

What I’ve said if we would be looking open to looking at a different structure in South Africa as long as I could demonstrate to shareholders that were something in their best interest. That hasn’t change.

So have you rule that happen, no, but what we've been clear about is we're very happy to run the business as it is and continue to improve, and that's where we are. I don't think you can never rule out things in most circumstances, so I leave that position there.

But from my point of view we are getting on with life and improving us business make every post to win it. With that I’ll hand across to Rene and let him deal with a really tough question.

Difficult question. I think my key point to I mean is Stephen is very familiar with the many industry, but my key point will be we operating in this is highly volatile and very difficult to predict and we saw gain this year what happened from the positive standpoint.

So it probably means you need to run the business with the high level of liquidity to protect your position because we’re downturn. We need to run the business with the conservative balance sheet.

In the same time in term of CapEx as you take long commitments so most of our projects takes two, three, four years to deliver, and so it most impossible to stop them, once we have to talked. So you need to make sure that you don't take too many points in the same time, and maybe something that the mining industry has not done very well and which has done the oil and gas industry syndicates some of these products.

I think the really important points from our point of view in terms of the why we manage the capital structure in the business, and that is a very different approach to where we were previously and as part of the strategic changes we've made in the way we run the business, which are absolutely critical that I don't get to be apply portfolio tends to be used as a surrogate for strategy when it's just one element of strategy in our view.

The dividend as well, that's below $7 billion by June would that be the trigger to bring forward the decision to return cash?

In input, but we'd have to look at what the prognosis was for the market, and so all of those factors would be taken into account, but it would be a board call as it should be and those issues would be taken into account at that time, one here and back.

Thanks, its Anna Mulholland from Deutsche Bank. Two questions, the first is on platinum.

If we think about safety and then about productivity, I would guess in terms of your productivity improvement a lot of that came from exiting Rustenburg within this time period. Do you think it's a significant headwind for continuing to improve your productivity if you remain in some of the deeper underground conventional mining operations you've got in platinum equally on the safety side of obviously the platinum track record is a big headwind as well, thinking more around your Amandelbult operations, can you exit those are you looking at that in terms of the platinum side of things?

I think first point to make you is most of the 41% we talk about wasn't associated with Rustenburg, because Rustenburg only came out of the numbers October, November. Yeah, so we haven't got a substantial lift off Rustenburg, as you would expect their productivity numbers were improving significantly towards year end, so we’re above the 40%.

I was going to leave that as conversation of the half year. Certainly there'll be a material contribution from that, but there's a lot of work we’re going to do.

Secondly on the safety side, Chris I think we had five fatalities or four fatalities in Rustenburg, we're very disappointed, I think the restructuring and the uncertainty may have had an impact, but one we're very conscious of, and so we worked with Neil and the guys on things that we were doing, and I know they have taken stuff on and doing other things to improve the performance. But Amandelbult looking at technical challenges, looking at what we could make a nice in overtime, so Chris has got a long term incremental strategy to improve the contribution from Amandelbult and so I don't think it part of the reason we left him in the portfolio, which we think certain parts of the business if not all business could be mechanized.

So we've got a long term view and the two great resources are in Amandelbult, Twickenham on key itself and a couple of the other assets. We've kept those in the portfolio with a view to the long term.

And the second question is, I think your ownership of the wind farm might come into its own this year. What are you doing to celebrate your 100 years?

I had to be very careful, when I was in vocalic and I said look from our point of view it's a great historical asset for South Africa. We take that responsibility very seriously.

Yes at some point if it would be better in other people’s hand we’d consider that but only if, it could be delivered to the right people who would look after the legacy. And secondly, as long as people didn’t see that we were backing away from South Africa as a consequence of that conversation we have handled it very carefully.

I’ve got the chairman in the front row, and he’s doing a wonderful job. It’s looking after it.

So it is in fact South Africa’s largest environmental project. And so there are a lot of things we say, but clearly we think about where it fits it will play a part of the centenary celebrations as well.

But again it’s in context.

Invitation please.

It’s Hunter Hillcoat from Investec here.

Yeah.

Just two questions. One is at the site visit last year, I think you wrote it down.

You said the single most important conversation you have to have this year is one with the South African government regarding allocation of capital out of South Africa, so I’m try to get an idea if you’ve had that and it’s got the door closed. And the second question is gross amongst all the asset classes growth tends to be pretty flat in terms of guidance other than diamonds.

Is that not a bit of undue pressure on Bruce given what’s happening in India?

Look on the South African conversation. We’ve made our position very clear to the government on policy certainty and for those it’s almost speech, it obviously got the intention of the minister, we came back and said, he was little unhappy with what I said.

We believe in debating the policy in an open and sensible way, and we tried these constructive wherever we can be, we think we did. And we’re continuing to give them that feedback both in open for and behind closed doors.

We will never play individuals. It’s not appropriate for us, we’ll talk about policy, and we will debate policy, will debate it hard, but will also be constructive.

So we’ve had those conversations, we’ll continue to have those conversations. Norman has been the barrier force as an Anglo consolidated position in South Africa.

We’ve constructive conversations about what we think should be done. It’s all around policy certainty.

The MPIDI, the mining charter and the fiscal arrangements to encourage in bound investment starts to touch on the flexibility question that I got early. Those reports have been made very strongly.

On growth hunter people know that we’ve got 35 million carat installed capacity and it’s a bit unfair inside of Bruce he could just wiggle his nose and pop it out. The market, we will produce to the market.

We’re not going to get ahead of ourselves or the market. We have other incremental opportunities that make sense, but only when the markets in the right position and that conversation could equally apply to copper, to platinum increases cash, and I think Chris is discipline where you’ve seen a 40% reduction in our own mine production.

So we’ve really focused on the quality of our production and the margins across that part of the business and improving the efficiency of our processing operations, so we improve our margins on part. That’s where the marketing work is also is so important to improve those margins in both parts of the business.

So it’s a common conversation across all of our commodities. That’s where we focus and we don’t want to exacerbate the sorts of issues.

I had one here and then I’ll work my way back up.

Thank you.

Well. I will give you a quick comment.

Let Bruce tell you whether you think some right or wrong. Firstly, we saw a little bit of inventory movement in the first site.

I think we’re pretty well done will be ins and outs during the course of the year. So you’ve probably seen the inventory adjustments in that first sort that would expect but you’ll have pluses and minuses as we go.

We’re watching the Indian demonetization very closely. We’re certainly seeing improve sentiment, but I’ll let Bruce make a comment at that.

And on the second piece, in terms of markets generally we’ve seen pretty well flat demand at the retail level. Bruce, do you want to add something?

Thanks, Mark. So Indian the full impact of Indian demonetization I don’t think has been felt by everybody, yet.

Bear in mind our average production value is higher than the global average. So we less impacted by Indian demonetization which generally affects goods that are $100 a carat and below.

And you’ll see our average for the year was $187 a carat. In terms of difference between the high and the low end, certainly the low end was affected and you saw that in Slide’s 9 and 10, but has Mark said, we had a good site in site one.

Many of the factories in serrate reopen not all of them, but many of them post demonetization. So post to volume none of them reopened, which was what we spoke about in November, a number of them have reopened so they certainly an improvement in the lower end.

But as I say our production is better skewed to the high end in others. So I think we better position to do with demonetization, but as Mark says we have to be cautious and just watch the space for the next few months.

So most of that type of conversation is the way we think about the portfolio and the value proposition that we provide shareholders, it is a different value offering we think, for us I think you got to end up.

Yeah, thanks. Fraser Jamieson from JP Morgan.

Just again apologies coming back to the conversation restructuring.

That’s right.

You said just there is no such thing as a bad commodity if we go back six months ago you were asked in this venue about why given the iron ore prices, coal prices had started moving up by that point. Why it was still the right idea to look to exit those commodities and you gave an answer around long term supply demand fundamentals not being great.

So just in the context of what we’re hearing today about the story seems to be one more around and you’ve been surprised by how far you’ve managed to improve those operations organically? Has the view on the on the commodities changed or force really driving as it coming back to hunter’s point that you’ve explored some options around in South Africa and actually it’s just not feasible to do something that creates any value.

So it’s a question or statement?

Both.

Okay. So let me do with the first part.

Firstly, we’ve not been surprised by the improvements we’ve delivered, we’ve seen all along and I use this is a sort of a stalking horse for the conversation. 4000 hours out of the truck attrition, we’re now at 5700 with a new shift systems will gets 6200.

Best-in-class and this guy was actually working one of those operations are getting 7000 hours of a truck. We’ve still got a long way to go.

So I’m not going to be surprised if we continue to deliver operating improvements, that’s our job. And we now, what we’ve got to do we’re going long way to go, we took water, we took energy.

We’re trying to take a leading position in step change innovation, so that’s important. Second point, on commodities, there is still a lot of iron ore and coal around the world and over the time I don’t think any of the fundamental parameters that we talk to have changed.

But when you get the problems that we saw in China you might give a cyclone in Queensland any other things, there’s one thing that we do observe is the market is pretty funny balanced. And so it can kick either way of over short periods of time pretty dramatically that volatility, I think he’s actually the key word for us in these commodity markets.

The other thing is you have to be flexible. You have to think and watch what’s happening in the marketplace.

We believe, we made the right call in staking out what we had to do to fix the business, and the fact I’m still standing here probably is testament that we might that call generally right. However, what we’ve also say, is we will continue to be a volatile market, that we have to watch it carefully might the right decisions, the key thing that we talked about this time last year was holding true to the value conversation and that has kept us in the right place and that changes in the short term because how do you value the coal asset at 300 bucks a ton.

Is it going to be three months or six months you’re probably got a reasonable chance of estimating wanted to bring you there when you put the numbers together I think we’ve made the right call. So it will continue to try to one thing iron ore, this industry will continue to challenge what we do not if we’ve got some commodities there we’ve got good long term position we’ll continue to nurture them, and we’ll build the strategy off those positions.

We’ve also got some great assets that will continue to improve that will deliver good returns and will certainly we have great long term value for shareholders.

Make a quick follow-up just on working capital, Rene, you talked to about getting some prepayments and from customers there was a good working capital performance you maybe give us some context around high bake those where presumably there are non-recurring in 2017?

Yes we were non-recurring on $200 million.

I think I've got, if I take one up the top then will take one by phone. We’re trying to get a couple of at least from South Africa.

Thank you. It’s Tyler Broda from RBC Capital Markets.

I guess like many companies in this industry you're going very quickly from one set of problems to another one, and it's amazing to have been cash flow negative last year to this year at current commodity prices very largely free cash flow positive. If it is - if your target is $6 billion - $6.5 billion of net debt it's not very long until you're facing the same problem call it a problem that other companies are facing which is that their balance sheet is becoming under geared and as a lot of capital that needs to be allocated, I can't believe I'm asking this, but you know in all seriousness with where your portfolio is sitting today.

Would you be more inclined towards using that capital to rebalance the portfolio through M&A or would have been more likely to be returning cash to shareholders? More CapEx I should say?

Yeah, I think what I'll probably show you in the next presentation we do will be, we think about capital allocation, but let's be clear for us first priority was to get the debt down, second priority is pay a dividend. If at the end of the day we don't have the right options inside the portfolio.

Then we'll give that cash back to shareholders, I think that’s the way company should operate and from our point of view assisting have good days opportunities will depend on the market and how we see things with the top. But we have not a problem giving money to shareholders on the basis the best use of our capital, and we want to get back to that as quick as we can.

We want to make sure that the kept using good shape in terms of its debt. And that we've got some great opportunities inside the business, but that will also depend on how the markets are shaping up and whether you're comfortable that you can forecast those returns on a reasonable basis.

Now that's what we do in the business that's what we've done for 40 years in some cases well, some cases not what we’ll just hope that we have a weak expect to bring the discipline that I don't think the industries had for a long period of time certainly we talk about that would and why we think about capital, and we've got to hold to that discipline in the organization, I think that's important. And so far it’s very obvious we've stuck with that discipline.

And I think that's where we're in a better place. One thing I'll mention you might have an observation, I don't know if you can do this but, you look at the process of volatility we sure and commodities.

If you go to the midpoint of 2016 which was the low point, we think and certainly the most recent cycles. One of the tests we've asked ourselves is can we deliver cash and still make the right decisions in the business at that point.

The answer is yes, this business is a very different business to where we were even I take months ago on the basis of that test. And I think you've got to continually test the business can you make cash at the bottom of the cycle or what you think might be the bottom the cycle.

You're going to make sure your portfolio has geared, and as your efficient and you continually testing yourself both sides. And that's one of the things that I think we have to keep in touch with across the business on a go forward basis process and go both ways.

We want to make sure that we've got a very clear pathway either way in all cases delivering value for shareholders. Can I take a couple of calls I’ll come back in a minute or take this is the last question.

Two quick questions, N Ravi from Citigroup. One you have seen a 20% increase in development and sustaining CapEx in 2017.

How much more creep should be expect going forward beyond the 2017 guidance of SIB and development CapEx? Secondly, when you think about your less than $7 billion of net debt, do you have an internal target for easily upstreamable net debt like obviously there's a lot of cash that are subject to capital controls, so from a liquidity point of view do you look at upstreamable cash or upstreamable net cash position as a as a metric?

In terms of 2018, 2019 the capital numbers we remain in that ballpark. The only I’ll call it creep what tiny in the team are doing, they’ve identified a number of small scale opportunities with rapid payback that we might look at depending on where the market is, sensible start if you get very quick returns on the water, the energy, we're innovating in every part of the business mostly without capital, but where this is a smart place to put a few dollars, we will always be on the lookout for those sort of opportunity, it’s a good one is the recovery project to call in a flotation, so it’s no brain or stuff twelve month payback quick return sort of things you do a set of target around the tailing stand.

We can bring that to market small scale, but nice return. So in terms of capital creek somebody talked about a capital way.

We don't have a capital way. If you look at what we've done in the portfolio, we've changed the configuration of the business, the capital intensity is reducing, as a consequence of those changes.

So again the portfolio work we've done is strategic in so far as it's uplifting the quality, which includes capital commitments required on an ongoing basis. And the best example is what we've done in platinum.

Well can I take the two calls, there was another - the up streaming question, Rene do you want to take that?

We want to make more progress on the rest of the world balance sheet. So I indicated that’s objective is to have net debt to EBITDA of one to one point five time for the group, so around $6 billion.

But we need also to try and send the balance sheet outside South Africa and we would like the net debt to EBITDA outside South Africa to be below two times. So at end of December so we had net debt of $8.5 billion, but the net debt number outside South Africa of $10 billion and $1.5 billion of cash in South Africa, which probably means that we will be in a position to registered down before we are ready to start investing again if we have the right spot and so that’s in line with what Mark outlined them of fizzing of reinstating with EBTIDA and potential improving which should be towards the end of 2018.

I think by the way I made reference to time in the technical work, but each of the managers of the businesses have incremental opportunities to improve that we’ll continue to support as we shown. Can I take the calls from South Africa?

Hi Mark morning. Sorry to harp on about the staffing and portfolio again.

But you know it's quite clear obviously that you know it's up in the air you are storing all options as you say, but what isn't very clear is what are the key factors that need to fall into place for you to actually make a decision around the South African portfolio and have those some of the key milestones are key things are looking for there, and also to what extent you are actually proactively looking to do things to crystallize those factors or crystallize those milestones?

Kieran thanks for the question. And we did expect to get a few.

I wouldn't call it up in the air, if I make it as simple as I can, and I know it's more complex, but we’re happy to continue to operate with the assets we have in South Africa. We see value and we understand how we can manage all the moving parts, so we don't have a big issue.

Second point that goes with that is if someone has a view on how they would like to see something consolidated in South Africa, where open to the conversation, but I would have to be able to demonstrate to all of our shareholders that it created value. And there are many ways you can look at that.

And so from our point of view we’re open to the conversation we've made that clear to all of the stakeholders in South Africa. We're looking for a win-win story.

It has to be good for South Africa ultimately, but from our point of view it has to deliver value for all the shareholders and that's where we stand. Kieran and I'm not going to put a time frame on it, it is one of those things that will be a conversation when it's appropriate for those that we’re aware, we're going into different conferences during the course of the year, and then elections so it may be fairly noisy.

From our point of view, we're running the businesses, we're going to continue to improve them, if there are some good ideas and where we can create value then we're open to the conversation.

Okay, thanks Mark.

Okay, thanks Kieran.

Good morning Mark. I'm sorry to ask another question on the strategy.

But clearly when you took the role three years ago you put out 16% return on invested capital target by 2016. I think at the time you sort of said you thought that was sort of a low point that the market stream you still needed to achieve that to have a sustainable business.

So I think just couple of questions on that. Going forward, do you think you now have the portfolio in place and you can sort of achieve those sorts of returns or and secondly do you think that actual statement holds true for Anglo’s and the industry more generally young going forward?

Thank you.

I was wondering if someone would ask the question. Look from our point of view, it reminds a critical mission.

We can talk about employee productivity. We can talk about costs, but the commission for us is capital productivity.

If I take prices back in 2013, if we include all the capital that we need included and that includes written down capital. Then our return on capital employed this year would be about - would be over 13% wouldn’t be quite at the 15%, but with all the work we’ve done on driving value, I don’t think it we shut and sold assets so the mix of…

For 2016?

For 2016, yes. We were at about 13% bit over the 13%.

Certainly, not where we wanted to be, but significant progress remembers we started to be over right. So apples for apples, we move from eight to over 13 that’s where we have to keep moving.

So yes, I believe we can get there what we’re doing in the business positions ourselves to deliver it remains a very important metric for us amongst other things that you measure in terms of the resilience in the business. So reminds important certainly a focal point for us and one that I think ultimately people will be judged on across the industry.

Jack Lambert from Bank of America Merrill Lynch. Could you give us a little bit of clarity on what happened in the met coal process there was a lot of press around it seemed like it got too pretty far points there were a lot of numbers being put out in the press.

What was the - what happened a bit ask or can you give us some sort of guidance about what you were looking for and why that the sale did not ultimately complete?

Very simply put, we went to an open bidding process. We had and it was an aggressive process.

We had a number of bid, so I won’t put the number on, and as we looked at the prices we sure are in the marketplace that when I able to make those numbers and we should not. I mean it’s a simple as that did have you on a go forward basis change overtime, well given were I did one stage and 300 and something yes you did as the best.

And in each of the cases, I want meeting our values for self-service or not. We said no when the price was $100 a ton and we said no when the price was much high.

And any sense like where your long term price got your - what your value threshold was?

Yeah. We knew what it of course.

Sorry last question. I think if I can make one point Jack I wasn’t trying to be glib with a bit there was a bit glib in terms of an asset.

We knew what it was. But as we said, it was about solving the balance sheet issue, we would still like to keep quality assets from our point of view that was a quality asset and even though you values just to have a time to better keeping our quality asset in the portfolio given where we are, we’ve said we were retain.

And so it was could be an eye on that longer term decision as well. So I didn’t mean to be glib, but it’s my last I just want to make that point I think because it’s a fair question.

I think to additional top line of trying to find, the equilibrium point yes as soon as volatility short term in term price what it could mean in term of cash origination which is short term very difficult to reach.

The both ways to, I think to be fair to those who are on the other side it was even tougher for them. So we had the, if we can get it right we’ll keep the right assets in the portfolio, but the same time if the price was right you would have done the deal.

We were always going to do the deal with the price was right.

Yes, thank you for taking my questions. Two questions, one last one on retaining assets those iron ore, coal assets that you’re keeping in South Africa.

To what extent the position always South African government authorities have informed your decision to give them. Do they want you to remain owners of his assets and maybe they don’t want someone else to be the owners for whatever reasons maybe they see you as a more sustainable more reliable?

Very simply put we’ve heard differing views from different players within the government. So from that point of view, I don’t think you could define a positioning of government they would like to see transformation continue and in the context of that conversation if we would to do something with someone that was seen to be transformative they would see that as being quite positive.

We said that we would see that as quite positive if it created value for our shareholders and we’ve held that position. And so I think they see some potential, but at the same time we have to come together on something that makes sense both ways.

And from our point of view I made it very clear. It has to create value for our shareholders for us to be able to present that and that’s the position when they’ve said they made time possibilities but the same time we’re not sure what that would look like.

Okay. And second question on your cost guidance.

With $1billion of improvements in terms of cost savings and production growth will you be in a position to keep cost this year flat and number of terms given inflationary pressures and movements in currencies or we’ll see - we’ll likely to see reduction in unit costs in our terms.

It depends. It clearly depends on what we see on if I mean it’s always hard to predict and it depends on commodity prices.

The good news on commodity prices going up as they go up, but certainly FX rates may protect you a little bit as well, but from our point of view or my go against you. So you’ve got to take those factors into account what we’re saying.

Is on our cost price, we think we can deliver efficiencies through volume and costs of around 7% to 10% in our current operations will deliver that commodity prices and exchange rates will do what they will do. We just got to keep improving so that we get the absolute both ways we protect the downside we get the upside of go that way, so in terms of what we can fall not a assuming, I’m not a assuming FX numbers that stuff we can confront that might be the point of the question like a stuff we can control.

Okay.

Guys, I think that’s it. I thank you very much for joining us today and spending some time with us much appreciate it.

And again Rene, thank you.