Annual Report 2005

We will grow and manage a diversified portfolio of metals and mining businesses with the single aim of delivering industry-leading returns for our shareholders.

We can achieve this only through genuine partnerships with employees, customers, shareholders, local communities and other stakeholders, which are based on integrity, co-operation, transparency and mutual value-creation.

Key Financial Results

Annual Report 2005: Key Financial Results

US$m	Year ended 31.12.05	Year ended 31.12.04††	% Change
Revenue	8,049.8	6,462.4	25
EBITDA†	3,092.8	2,066.6	50
EBIT†	2,509.2	1,499.0	67
Attributable profit	1,706.4	1,067.1	60
Earnings per share (basic)	279¢	170¢	64
Cash generated from operations	2,779.9	1,784.9	56
Net debt to equity	32.1%	20.1%	60
Net assets	8,137.2	7,325.2	11
Net assets per share	$13.57	$11.74	16
Dividends per share:
– interim dividend (paid)	9.0¢	8.0¢	13
– final dividend (proposed)	25.0¢	16.0¢	56
Total 2005 dividends per share	34.0¢	24.0¢	42
†Excludes discontinued operations
††As restated for the effect of the transition to International Financial Reporting Standards (IFRS) with the exception of IAS 32 and IAS 39 whereby financial instruments and hedges have continued to be accounted for under UK GAAP prior to 1 January 2005

Highlights

• Attributable profit up by 60% to $1.7 billion
• Operational cash flows of $2.8 billion and free cash flow of $1.9 billion after sustaining capital expenditure
• Real unit cost savings of $19 million, despite spiralling prices for key industry inputs
• $1.7 billion acquisition of one-third stake in Cerrejón thermal coal operation, a large scale, cost competitive asset with an exceptional reserve base and access to the high growth US and European markets
• Purchase of 19.9% of Falconbridge Limited for C$28 per share, with unrealised post-tax profit at year end of $316 million
• Rolleston thermal coal mine commissioned on time and within budget, with first coal railed in October 2005
• Phase One of Project Lion ferrochrome smelting complex on budget and on track to commission in the second half of 2006
• Meaningful and sustainable empowerment ownership secured in Xstrata's South African coal assets through the creation of ARM Coal with African Rainbow Minerals
• Final dividend increased by 56% to 25¢ per share to bring the full year dividend to 34¢ per share, reflecting increased confidence in the medium term commodity price outlook

Xstrata at a Glance

Xstrata is a major global diversified mining group, listed on the London and Swiss stock exchanges. The Group is headquartered in Zug, Switzerland and has approximately 24,000 employees world-wide, including contractors.

Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The Group's operations and projects span four continents and eight countries: Australia, South Africa, Spain, Germany, Argentina, Peru, Canada and the UK.