Wrap Text
Reviewed group financial results for the year ended 31 December 2012
ArcelorMittal South Africa Limited
(ArcelorMittal South Africa, the company or the group)
Registration number: 1989/002164/06
Share code: ACL
ISIN: ZAE 000134961
Reviewed group financial results for the year ended 31 December 2012
Condensed group statement of comprehensive income
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 In millions of rands Reviewed Audited
6 885 7 614 7 258 Revenue 32 291 31 453
(3 754) (4 731) (5 672) Raw materials and consumables used (18 760) (19 886)
(814) (820) (758) Employee costs (3 356) (3 164)
(684) (932) (653) Energy (3 156) (3 177)
Movement in inventories of finished
(335) 365 932 goods and work in progress (467) 1 733
(420) (389) (363) Depreciation (1 582) (1 409)
(5) (4) (4) Amortisation of intangible assets (16) (14)
(1 456) (1 258) (1 025) Other operating expenses (5 431) (5 239)
(583) (155) (285) (Loss)/profit from operations (477) 297
Finance and investment income
108 4 5 (Note 4) 60 31
(83) (108) (106) Finance costs (Note 5) (334) (168)
Income/(loss) from equity accounted
(53) 61 120 investments (net of tax) 59 (34)
(611) (198) (266) (Loss)/profit before tax (692) 126
149 50 82 Income tax credit/(expense) (Note 6) 184 (118)
(462) (148) (184) (Loss)/profit for the period (508) 8
Other comprehensive income
Exchange differences on translation of
50 (16) 14 foreign operations 61 315
Losses on available-for-sale
(9) (10) investment taken to equity (33) (12)
Share of other comprehensive income
44 (6) of equity accounted investments 36 7
Total comprehensive (loss)/income
(368) (179) (180) for the period (444) 318
(Loss)/profit attributable to:
(462) (148) (184) Owners of the company (508) 8
Total comprehensive (loss)/income
attributable to:
(368) (179) (180) Owners of the company (444) 318
Attributable (loss)/earnings
per share (cents)
(115) (37) (46) - basic (127) 2
(115) (37) (46) - diluted (127) 2
Condensed group statement of financial position
As at As at As at
31 December 30 September 31 December
2012 2012 2011
In millions of rands Reviewed Unaudited Audited
Assets
Non-current assets 19 419 19 323 19 573
Property, plant and equipment 16 068 16 017 16 618
Intangible assets 121 117 126
Equity accounted investments 3 204 3 165 2 772
Other financial assets 26 24 57
Current assets 11 479 12 629 12 849
Inventories 8 761 9 038 9 935
Trade and other receivables 1 669 3 282 2 374
Taxation 154 11 100
Other financial assets 11 14 1
Cash and cash equivalents 884 284 439
Total assets 30 898 31 952 32 422
Equity and liabilities
Shareholders equity 22 242 22 605 22 669
Stated capital 37 37 37
Non-distributable reserves (2 178) (2 137) (2 231)
Retained income 24 383 24 705 24 863
Non-current liabilities 4 091 4 450 4 474
Borrowings and other payables (Note 7) 270 259 241
Finance lease obligations 426 464 451
Deferred income tax liability 2 031 2 166 2 310
Provision for post-retirement medical costs 9 7 7
Non-current provisions 1 355 1 554 1 465
Current liabilities 4 565 4 897 5 279
Trade and other payables 3 922 4 186 4 644
Borrowings and other payables 157 155 107
Finance lease obligations 77 53 57
Taxation 97
Current provisions 312 280 471
Bank overdraft 223
Total equity and liabilities 30 898 31 952 32 422
Condensed group statement of changes in equity
Treasury
share
Stated equity Other Retained
In millions of rands capital reserve reserves earnings Total
Nine months ended 30 September 2011 (unaudited)
Balance as at 1 January 2011 37 (3 918) 1 443 24 994 22 556
Total comprehensive income/(loss) 306 192 498
Management share trust: net of treasury share purchases (7) (7)
Share-based payment reserve 16 16
Transfer of equity accounted earnings (162) 162
Dividend paid (221) (221)
Balance as at 30 September 2011 (unaudited) 37 (3 918) 1 596 25 127 22 842
Quarter ended 31 December 2011 (unaudited)
Balance as at 30 September 2011 37 (3 918) 1 596 25 127 22 842
Total comprehensive income/(loss) 4 (184) (180)
Management share trust: net of treasury share purchases (5) (5)
Share-based payment reserve 12 12
Transfer of equity accounted earnings 80 (80)
Balance as at 31 December 2011 (audited) 37 (3 918) 1 687 24 863 22 669
Six months ended 30 June 2012 (reviewed)
Balance as at 31 December 2011 37 (3 918) 1 687 24 863 22 669
Total comprehensive income/(loss) 1 102 103
Management share trust: net of treasury share purchases
Share-based payment reserve 10 10
Transfer of equity accounted earnings 51 (51)
Balance as at 30 June 2012 (reviewed) 37 (3 918) 1 749 24 914 22 782
Quarter ended 30 September 2012 (unaudited)
Balance as at 30 June 2012 (reviewed) 37 (3 918) 1 749 24 914 22 782
Total comprehensive income/(loss) (31) (148) (179)
Management share trust: net of treasury share purchases
Share-based payment reserve 2 2
Transfer of equity accounted earnings 61 (61)
Dividend paid
Balance as at 30 September 2012 (unaudited) 37 (3 918) 1 781 24 705 22 605
Quarter ended 31 December 2012 (unaudited)
Balance as at 30 September 2012 37 (3 918) 1 781 24 705 22 605
Total comprehensive income/(loss) 94 (462) (368)
Management share trust: net of treasury share purchases 5 5
Share-based payment reserve
Transfer of equity accounted earnings (140) 140
Balance as at 31 December 2012 (reviewed) 37 (3 918) 1 740 24 383 22 242
Condensed group statement of cash flows
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 In millions of rands Reviewed Audited
Cash in/(out) flows from operating
1 313 (146) (61) activities 1 794 (1 412)
Cash generated from/(utilised in)
1 379 (97) 73 operations 2 040 (879)
1 3 4 Interest income 10 29
(44) (36) (42) Finance costs (170) (103)
Dividend paid (221)
(32) (81) Income tax paid (52) (243)
9 (16) (15) Realised foreign exchange movement (34) 5
Cash outflows from investing
(432) (284) (513) activities (1 146) (1 212)
(419) (194) (450) Investment to maintain operations (809) (924)
(14) (21) (75) Investment to expand operations (66) (266)
Shares acquired in associate and equity
(88) (71) (144) accounted investment (366) (180)
1 1 106 Proceeds on disposal of assets 5 106
1 1 Investment income - interest 3 2
Dividend from equity accounted
87 50 investments 87 50
Cash outflows from financing
(58) (77) (267) activities (228) (616)
Repayment of borrowings, finance
(58) (77) (267) lease obligations and other payables (228) (616)
Increase/(decrease) in cash and
823 (507) (841) cash equivalents 420 (3 240)
Effect of foreign exchange rate
18 4 changes 25 173
Cash and cash equivalents at
61 550 1 276 beginning of period 439 3 506
Cash and cash equivalents at end
884 61 439 of period 884 439
Segment information
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 In millions of rands Reviewed Audited
Flat Steel Products
4 708 4 996 5 549 Revenue (R million) 20 991 21 793
4 456 4 732 5 284 - External 20 192 21 092
252 264 265 - Internal 799 701
(306) 11 (152) EBITDA (R million) (266) 597
(346) 316 (292) Depreciation and amortisation (R million) (1 294) (1 133)
(652) (305) (444) (Loss)/profit from operations (R million) (1 560) (536)
19 713 21 050 21 322 Assets 19 713 21 322
Unaudited information
720 958 989 Liquid steel production (000 tonnes) 3 554 4 060
702 733 806 Steel sales (000 tonnes) 3 138 3 424
475 550 554 - Local 2 223 2 468
227 183 252 - Export 915 956
61 67 70 Capacity utilisation (%) 65 71
Long Steel Products
2 343 2 742 2 216 Revenue (R million) 11 474 9 514
1 968 2 459 1 384 - External 10 289 8 044
375 283 832 - Internal 1 185 1 470
(8) 54 74 EBITDA (R million) 770 500
(79) 75 (67) Depreciation and amortisation (R million) (299) (269)
(87) (21) 7 (Loss)/profit from operations (R million) 471 231
6 142 6 202 6 965 Assets 6 142 6 965
Unaudited information
323 362 209 Liquid steel production (000 tonnes) 1 536 1 393
286 364 187 Steel sales (000 tonnes) 1 484 1 284
221 252 171 - Local 1 113 1 039
65 112 16 - Export 371 245
56 63 36 Capacity utilisation (%) 67 61
Coke and Chemicals
479 429 604 Revenue (R million) 1 856 2 378
461 423 590 - External 1 810 2 317
18 6 14 - Internal 46 61
143 110 225 EBITDA (R million) 503 870
(4) (9) (15) Depreciation and amortisation (R million) (32) (52)
139 101 210 Profit from operations (R million) 471 818
1 003 1 003 1 082 Assets 1 003 1 082
Unaudited information
125 54 154 Commercial coke produced (000 tonnes) 446 633
117 110 163 Commercial coke sales (000 tonnes) 460 631
29 25 30 Tar sales 109 117
Corporate and other
13 63 (65) EBITDA (R million) 114 (247)
Depreciation and amortisation credit
4 (7) 7 (R million) 27 31
17 70 (58) Profit/(loss) from operations (R million) 141 (216)
4 040 3 693 3 053 Assets 4 040 3 053
Salient features
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 In millions of rands Reviewed Audited
Reconciliation of earnings before
interest, taxation, depreciation
and amortisation (EBITDA)
(583) (155) (285) (Loss)/profit from operations (477) 297
Adjusted for:
420 389 363 - Depreciation 1 582 1 409
5 4 4 - Amortisation of intangible assets 16 14
(158) 238 82 EBITDA for the period 1 121 1 720
Reconciliation of headline
(loss)/earnings
(462) (148) (184) (Loss)/profit for the period (508) 8
Adjusted for:
- (Profit)/loss on disposal or scrapping
9 (18) (104) of assets (4) (82)
(3) (2) 28 - Tax effect (6) 22
Headline (loss)/earnings for
(456) (168) (260) the period (518) (52)
Headline (loss)/earnings per
share (cents)
(114) (42) (65) - basic (129) (13)
(114) (42) (65) - diluted (129) (13)
Return on ordinary shareholders
equity per annum
(8.2) (2.6) (3.2) - Attributable earnings (%) (2.3) 0.0
(8.1) (3.0) (4.6) - Headline earnings (%) (2.3) (0.2)
2.1 (0.6) 0.4 - Net cash to equity (%) 2.1 0.4
Share Statistics
Ordinary shares (000)
401 202 401 202 401 202 - in issue 401 202 401 202
401 202 401 202 401 202 - weighted average number of shares 401 202 401 202
401 202 401 202 401 271 - diluted weighted average number 401 202 401 444
of shares
36.00 41.00 68.58 Share price (closing) (rand) 36.00 68.58
14 443 16 449 27 514 Market capitalisation (R million) 14 443 27 514
55.44 56.3 56.5 Net asset value per share (rand) 55.44 56.50
Dividend per share (cents)
- interim 55
Overview
The global steel industry continued to struggle during 2012 as slow global economic growth put pressure on steel
demand across all regions. Overall business confidence levels and manufacturing activities continued to be strained by
prolonged uncertainty from the European debt crisis coupled with a sharper-than-expected slowdown in the Chinese economy, the
worlds largest steel producer and consumer. This has resulted in a softening in global steel demand and a decline in
steel prices. Despite production cutbacks by a number of steel producers, the industry globally remains in an oversupply
position. The situation has been somewhat positive for Africa, especially within the sub-Saharan region, as a result of
infrastructure-related projects and increased mining activities.
The impact of the global economic slowdown took its toll on the South African economy, driven by poor demand in the
euro zone and domestic challenges relating to strikes and reduced infrastructure development expenditure negatively
affecting GDP trends in key steel consuming sectors, primarily building and construction, manufacturing and mining. The
building and construction sector, which accounts for the largest share of steel consumption, remains weak with building
completions and plans in the pipeline being sluggish. The increased flow of finished steel product imports remains a challenge
for domestic downstream producers. The poor underlying demand together with destocking activities resulted in a decline
in domestic sales partially offset by higher net realised prices, mainly due to a weaker exchange rate. Prices of key
raw materials such as coking coal, pellets and scrap softened while electricity tariffs again increased sharply. There
was a steep decline in commercial coke sales caused by the shutdown of smelters by ferrochrome producers participating in
the Eskom electricity buyback scheme.
ArcelorMittal South Africa posted a headline loss of R518 million for the year ended 31 December 2012 compared to the
headline loss of R52 million in the previous financial year while EBITDA decreased by 35% year-on-year to R1.1 billion.
Liquid steel production was down 7% with capacity utilisation at 66%, which was marginally lower than the 68% achieved
in the prior year. Environmental compliance combined with high electricity tariff increases led to the closure of the
electric arc furnaces ("EAFs") in Vanderbijlpark during October. This effectively reduces the companys liquid steel capacity
from 8.0 to 6.5 million tonnes per annum.
We are pleased to report an all-time record safety performance, with zero fatalities and a lost time injury frequency
rate per million man-hours worked of 0.61 against 1.24 recorded in the previous year, which is getting close to the world
benchmark. The safety of our employees and our contractors is our first priority and we consider this to be fundamental to
sustainability.
Key statistics
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 Reviewed Audited
6 885 7 614 7 258 Revenue (R million) 32 291 31 453
(158) 238 82 EBITDA (R million) 1 121 1 720
(160) 217 83 EBITDA/tonne (R/tonne) 243 365
(2.3) 3.1 1.1 EBITDA margin (%) 3.5 5.5
(583) (155) (285) (Loss)/profit from operations (R million) (477) 297
(462) (148) (184) Net (loss)/profit (R million) (508) 8
(456) (168) (260) Headline loss (R million) (518) (52)
(114) (42) (65) Headline loss per share (cents) (129) (13)
1 043 1 320 1 198 Liquid steel production (000 tonnes) 5 090 5 453
988 1 097 993 Steel sales (000 tonnes) 4 622 4 708
696 802 725 - Local 3 336 3 507
292 295 268 - Export 1 286 1 201
0.50 0.52 0.88 Lost time injury frequency rate 0.61 1.24
Financial review
Full year ended 31 December 2012 compared to full year ended 31 December 2011
Revenue of R32.3 billion was 3% higher than reported a year ago. Total steel shipments decreased by 2%, with domestic
shipments down 5% partly offset by 7% higher exports. Flat steel shipments declined by 8% while long steel products rose 16%
due to a strong recovery after the major production outage in 2011. Average net realised prices rose 7% with domestic and
export prices increasing by 7% and 9% respectively. Prices for flat steel were up 5% and long steel 10%. Revenue from
the Coke and Chemicals business of R1.9 billion was 23% lower following a 27% fall in commercial coke sales volumes and a
3% drop in net realised prices.
Cash costs of hot rolled coil increased by 5% and those of billets by 11%. Thabazimbi iron ore rose 19% while Sishen
iron ore remained flat on a US Dollar basis but increased by 10% in rand terms. Electricity prices were 16% higher while
the price of imported coking coal decreased by 15% on a US Dollar FOB basis and by 4% in rand terms. Scrap prices
dropped marginally. Liquid steel production was 363 000 tonnes lower or 7%. Capacity utilisation for flat steel was 65% (EAFs
included 62%) compared to 71% last year and for long steel 67% compared to 61%. Operating profit fell by R774 million to
a loss of R477 million.
Financing costs of R334 million for the year are R166 million more than the corresponding period due to higher
interest paid of R71 million on bank overdrafts and net foreign exchange losses of R9 million compared to a gain of R124
million in 2011.
Our share of the profit from equity accounted investments after taxation of R59 million compares with a loss of R34
million a year earlier. The profit relates to higher income from Macsteel International Holdings BV and a decline in the
loss from Coal of Africa Limited.
Quarter ended 31 December 2012 compared with quarter ended 31 December 2011 (unaudited)
Revenue decreased by 5% to R6.9 billion for the quarter. Total steel shipments were down marginally on the back of a
4% drop in domestic shipments while exports were up 9%. Flat steel shipments declined by 13% while long steel products
rose by 53% following a strong recovery from the structural failure affecting the 2011 corresponding period. Average net
realised prices decreased by 3% with domestic and export prices decreasing by 1% and 5% respectively. Prices for flat
steel dropped 3% and long steel 6%. Revenue from the Coke and Chemicals business of R479 million was 21% lower following a
28% decrease in commercial coke sales volumes and 4% drop in net realised prices.
Cash costs of hot rolled coil increased by 6% and those of billets by 7%. Sishen iron ore prices remained flat on a US
Dollar basis but increased by 10% in rand terms. Electricity and natural gas prices climbed by 18% and 17% respectively
while import coal and pellets decreased by 34% and 38% on a US Dollar FOB basis and 29% and 33% in rand terms
respectively. Scrap prices decreased by 2%. Liquid steel production was 154 000 tonnes lower or 13%. Capacity utilisation for
flat steel was 61% (EAFs included 51%) compared to 70% in the prior year and 56% for long steel compared to 36%. Operating
profit declined by R298 million to a loss of R583 million.
Financing cost of R83 million for the quarter is R23 million lower than the corresponding period due to a decrease in
the discount rate used to determine the present value of long-term liabilities such as environmental obligations and
onerous contract provisions in the corresponding period.
Our share of the loss from equity accounted investments after taxation of R53 million compares with a profit of R120
million a year ago mainly due to a higher loss from Coal of Africa Limited.
Quarter ended 31 December 2012 compared with quarter ended 30 September 2012 (unaudited)
Revenue decreased by 10% to R6.9 billion for the quarter on the back of a 10% drop in steel shipments. Domestic
shipments were down 13% following the seasonal slowdown in December while exports were flat. Flat steel shipments declined by
4% and long steel by 21% while average net realised prices were marginally lower. Prices for flat steel were down 2%,
while long steel rose slightly. Revenue from the Coke and Chemicals business of R479 million was 12% higher due to a 7%
rise in commercial coke sales volumes and a marginal increase in net realised prices.
Cash costs of hot rolled coil increased by 7% with billets increasing by 2%. The price of imported coking coal
decreased by 8% on a US Dollar FOB basis and 3% on a rand basis. Thabazimbi iron ore was up 11% while Sishen iron ore remained
flat on a US Dollar basis but climbed 6% in rand terms. Local coking coal and scrap increased by 19% and 6%
respectively. Electricity fell 25% following the high prices that prevailed during the winter months. Liquid steel production was
277 000 tonnes lower or 21% as a result of the interim repair of blast furnace C in Vanderbijlpark and the taphole repair
of blast furnace N5 in Newcastle. Capacity utilisation for flat steel was 61% (51% with EAFs included) compared to 67% in
the previous quarter and 56% for long steel compared to 63%. Operating profit declined by R428 million to a loss of
R583 million.
Financing costs of R83 million for the quarter are R25 million lower than third quarter due to a change in the
discount rate used to determine the present value of long-term liabilities, such as environmental obligations and onerous
contract provisions.
Our share of the loss from equity accounted investments after taxation of R53 million compares with a profit of R61
million. The loss relates to a higher loss from Coal of Africa Limited and lower income from Macsteel International
Holdings BV.
Environment
Notwithstanding the tough economic conditions under which the company operates, key environmental projects remain a
focus area in order to ensure environmental compliance. The new emission abatement system for Vanderbijlparks sinter
plant achieved sustainable operating results from September 2012 onwards. At a total cost of R250 million, the project can
be regarded as a milestone as particulate emissions from this significant emission source are reduced by approximately
80%.
Another important project that is in progress is the Newcastle zero effluent discharge project, which entails the
improvement of effluent treatment and recovery thereof with a planned completion date of early 2014 at an estimated cost of
R360 million.
On 22 October 2012 a compliance notice was issued by the provincial environmental authority (GDARD) to
Vanderbijlpark Works ordering the closure of the electric arc furnaces, coke batteries, sinter plant and foundry based on findings of
non-compliance with Atmospheric Emission Licence conditions. The EAFs were taken out of operation on 16 October 2012
prior to the notice being issued and the other affected operations continue pending the outcome of an objection that was
submitted to the MEC.
The proposed carbon tax remains a major concern as it may have a significant impact on the production cost of steel.
The reviewed Carbon Tax Discussion Paper that was expected to be published during 2012 will now only be released in 2013
whereafter further discussions will continue with the relevant authorities.
Contingent liabilities
The Competition Commission (the Commission) has thus far referred the following four cases against the company to
the Competition Tribunal (the Tribunal) for prosecution. The company rejects the allegations made in each of these cases
and is defending itself accordingly.
First wire rod matter - alleged price discrimination conduct
In January 2007, the Commission referred a case against the company to the Tribunal relating to alleged price
discrimination on wire rod. The matter is yet to be set down for hearing before the Tribunal.
Second wire rod matter - alleged price discrimination conduct
In November 2012, the Commission referred another case relating to alleged price discrimination in the wire rod market
to the Tribunal. This case is essentially the same as the case referred in January 2007. The parties and the issues are
identical save for the fact that the contravention alleged in this case, is alleged to have taken place during a later
period being 2004 to 2006.
Long steel matter - alleged cartel conduct
In September 2009, the Commission referred a case against the company and three other primary steel manufacturers in
South Africa to the Tribunal for alleged price fixing and market division in respect of certain long steel products.
The Commission requested the Tribunal to find the company guilty of the contraventions as alleged and to impose on it
an administrative penalty of 10% of 2008 turnover. In December 2009 the company filed an application with the Tribunal
for access to the Commissions investigation record to enable it to answer to the case against it.
In September 2010, the Tribunal handed down judgment refusing the company access to the bulk of the documentation in
the Commissions investigation record. The Tribunal based its judgment on the fact that the documentation in question had
been claimed by one of the parties in the matter as confidential. The company subsequently appealed this judgment to
the Competition Appeal Court (the CAC). In April 2012 the CAC ruled essentially that the matter be referred back to the
Tribunal for a hearing to determine the validity of the confidentiality claims. The Commission appealed this ruling to
the Supreme Court of Appeal. The appeal is expected to be heard some time during 2013.
Flat steel matter - alleged conscious parallelism
On 30 March 2012, the Commission referred a case against the company and Evraz Highveld Steel and Vanadium Limited
(Highveld Steel) to the Tribunal for alleged price fixing and market division in respect of certain flat steel products.
The form of price fixing alleged by the Commission in this instance is one based on the conscious parallelism
phenomenon. This mainly relates to Highveld Steel increasing its prices each time the company increases its prices.
The Commission requested the Tribunal to find the company guilty of the contraventions as alleged and to impose on it,
an administrative penalty of 10% of the 2008 turnover.
Competition Commission investigations
The Commission is formally investigating two complaints against the company. The first involves alleged prohibited
vertical practices in respect of purchases of scrap steel. The second relates to alleged excessive pricing of tinplate and
flat steel in general. Joined to this investigation is an investigation into alleged excessive pricing arising from the
iron ore surcharge introduced by the company for the period May 2010 to July 2010. The company is cooperating fully with
the Commission in all these investigations and continues to deliver all information and documentation as and when
called upon to do so.
Dispute with Sishen Iron Ore Company Proprietary Limited (SIOC)
The appeal application by ICT and the DMR against the High Courts decision delivered in December 2011 that SIOC was
awarded 100% of the mining rights in the Sishen mine and therefore the award to ICT was invalid, will be heard by the
Supreme Court of Appeal in February 2013.
The arbitration regarding the dispute between SIOC and the company relating to the termination of the iron ore supply
agreement by SIOC as a result of the mining rights issue referred to above, remains postponed until the finalisation of
the above appeal process.
In December 2012, following a mediation process facilitated by the Department: Trade and Industry, the company and
SIOC agreed to an Interim Pricing Agreement (IPA) for the period January 2013 to December 2013.
Acquisition
The final approval of the transaction involving the iron ore exploration project in the Northern Cape by the Minister
in terms of the Minerals and Petroleum Resources Development Act, No 28 of 2002, was received. The exploration programme
is progressing according to plan and this should be concluded by the first quarter of 2013.
Dividends
No dividends were declared for the year ended 31 December 2012.
Changes to the Board of Directors
The following appointments and resignations occurred:
- Resignation of Christophe Cornier as non-executive director on 24 January 2012.
- As announced on 20 November 2012, the Board appointed Matthias Wellhausen as Chief Financial Officer and as
executive director on 2 January 2013, freeing Rudolph Torlage to focus on projects of a strategic nature. Rudolph Torlage
resigned as an executive director effective 2 January 2013.
- As announced on 24 January 2013, Johnson Njeke retired as non-executive director and Chariman of the Board on 4
February 2013. Mpho Makwana joins the Board as independent non-executive director with effect from 5 February 2013 and
succeeds Johnson Njeke as Chairman.
Outlook for quarter one 2013
We expect a turnaround from the loss-making position realised in the previous quarter to break-even in the first
quarter. This view is supported by a modest rise in international steel prices and domestic demand. Sales volumes are
expected to be higher amid restocking in the market and increased production volumes. Commercial coke sales on the other
hand will be down due to lower production by some ferrochrome producers participating in Eskoms electricity buy-back
programme.
On behalf of the Board
N Nyembezi-Heita (Chief Executive Officer) MJ Wellhausen (Chief Financial Officer)
1 February 2013
Notes to the reviewed condensed consolidated financial statements
1. Basis of preparation
The condensed reviewed consolidated financial statements have been prepared in compliance with the Listings Requirements of the JSE Limited,
the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the requirements of International
Accounting Standards (IAS) 34, Interim Financial Reporting, SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and the South African Companies Act, No 71 of 2008. These statements were compiled under the supervision of Mr MJ Wellhausen, the Chief Financial Officer.
2. Significant accounting policies
These condensed reviewed group financial results for the year ended 31 December 2012 have been prepared on the historical cost basis, except for the
revaluation of financial instruments. The accounting policies and methods of computation applied in the presentation of the financial results of the group
are consistent with those applied for the year ended 31 December 2011. The results for the year ended 31 December 2012 included the results from
Coal of Africa Limited for the period 1 October 2011 to 30 September 2012.
During 2012 R159 million was transferred from provisions to trade and other payables respectively as there is more certainty on timing and amount due.
On the same basis, R43 million was transferred from provisions to borrowings and other payables.
3. Independent review by the auditors
The condensed consolidated financial results have been reviewed by the companys auditors, Deloitte & Touche, in accordance with International Standards
on Review Engagements 2410. They expressed an unqualified review opinion on the final financial information. However, their report included an emphasis of
matter relating to the significant uncertain outcome of the dispute resolution process with SIOC regarding the supply of iron ore at cost plus 3%. A copy of
their report is available for inspection at the companys registered office. Any reference to future financial performance included in this announcement, has
not been reviewed or reported on by the companys auditors.
Quarter ended (unaudited) Year ended
31 December 31 December
31 December 30 September 31 December 2012 2011
2012 2012 2011 Reviewed Audited
108 4 5 4. Finance and investment income 60 31
2 3 4 Interest received from banks 10 29
Interest received from joint
1 1 1 ventures 3 2
Discounting rate adjustment of
105 the non-current provisions 47
83 108 106 5. Finance costs 334 168
Interest expense on bank
27 19 24 overdrafts and loans 103 32
Interest expense on finance lease
17 17 17 obligations 67 71
Discounting rate adjustment of
47 25 the non-current provisions 22
Net foreign exchange (gains)/
1 (16) losses on financing activities 9 (124)
Unwinding of the discounting
effect in the present valued
carrying amount of the
38 41 40 non-current provisions 155 167
149 (50) (82) 6. Income tax expense/(credit) 184 118
Current normal and deferred
149 (50) (82) tax expense/(credit) 184 101
Normal and deferred tax expense
recognised in relation to tax of
prior years (5)
Secondary tax on companies 22
7. Borrowings and other payables
417 404 328 Staff related payables 417 328
10 10 20 Loan 10 20
427 414 348 Total 427 348
Disclosed as:
270 259 241 - non-current 270 241
157 155 107 - current 157 107
8. Capital expenditure
433 215 525 Incurred 875 1 190
687 959 887 Contracted 687 887
1 027 977 728 Authorised but not contracted 1 027 728
9. Contingent liabilities
1 1 1 Guarantees 1 1
359 364 278 10. Operating lease commitments 359 278
131 136 83 Less than one year 131 83
More than one year and less than
219 218 190 five years 219 190
9 10 5 More than five years 9 5
10. Related party transactions
The group is controlled by ArcelorMittal Holdings AG which effectively owns 52.02% of the companys shares. During the year the company and its
subsidiaries, in the ordinary course of business, entered into various sale and purchase transactions with associates and joint ventures. These
transactions occurred under terms that are no less favourable than those arranged with third parties.
11. Corporate governance
The group subscribes to the Code on Corporate Practices and Conduct as contained in the second King Report on corporate governance and is taking
the necessary steps to implement the principles as outlined in the third King Report.
Forward looking statements
Certain statements in this release that are neither reported financial results nor other historical information, are
forward looking statements, including but not limited to, statements that are predictions of or indicate future earnings,
savings, synergies, events, trends, plans or objectives. Undue reliance should not be placed on such statements
because, by their nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors,
that could cause actual results and company plans and objectives to differ materially from those expressed or implied in
the forward looking statements (or from past results).
Registered Office: ArcelorMittal South Africa Limited, Room N3-5, Main Building Delfos Boulevard, Vanderbijlpark, 1911
Directors:
Non-executive: MJN Njeke* (Chairman), DK Chugh, FA du Plessis*, M Macdonald*, S Maheshwari, LP Mondi, DCG Murray*, ND Orleyn*, G Urquijoº
Citizen of India º Citizen of Spain * Independent non-executive
Executive: N Nyembezi-Heita (Chief Executive Officer), MJ Wellhausen (Chief Financial Officer)
Company Secretary: Premium Corporate Consulting Services Proprietary Limited
Sponsor: Deutsche Securities (SA) Proprietary Limited, 87 Maude Street, Sandton, 2196, Private Bag X9933, Sandton, 2146
Transfer Secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001,
PO Box 61051, Marshalltown, 2107
This report is available on ArcelorMittal South Africas Web site at:
http://www.arcelormittal.com/southafrica/
Share queries: Please call the ArcelorMittal South Africa share care toll free on 0800 006 960 or +27 11 370 7850
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