Wrap Text
Quarterly Unaudited Financial Results
Evraz Highveld Steel and Vanadium Limited
(Incorporated in the Republic of South Africa)
(Registration No: 1960/001900/06)
Share code: EHS ISIN: ZAE000146171
("the Company" or "the Group")
GROUP UNAUDITED RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2014
Chairman and CEO's Review
- Net loss R519 million (September YTD 2013: loss R222 million)
- EBITDA loss R262 million (September YTD 2013: profit R93 million)
1. Safety
The Lost Time Injury Frequency Rate increased to 3.0 in Q3 2014 from 2.0 in Q2 2014. YTD is
2.4. The number of Lost Time Injuries increased to 8 in Q3 2014 from 5 in Q2 2014. YTD is 18.
Total number of injuries increased to 63 in Q3 2014 from 51 in Q2 2014. YTD is 179.
Safety is a high priority for the company and safety concerns
will thus be addressed as a matter of urgency.
2. Key Financials
The operating loss for the 2014 period was R483 million, compared to a loss of R149 million for
the same period in 2013, mainly attributed to increased maintenance costs, poor rolling mill yields
and SEIFSA strike action in July that affected the company's ability to dispatch material. The
EBITDA for the period was a negative of R262 million, compared to a R93 million profit for the
same period in 2013.
During the nine month period in 2014, sales revenue of R4 444 million was up by 8.9% and
reflected higher average market prices compared to the same period in 2013. Revenue from sale
of goods increased to R4 438 million, compared to R4 078 million for the previous period. This
increase in revenue is as a result of favourable steel product pricing.
Domestic demand remains steady for our structural range of products, whilst demand for flat
products has decreased, especially in the plate market. Production operations are still
recovering from the adverse effects of operational challenges in the first half of the year. The
Company continues to utilise a credit line from shareholders that is committed to 31 December
2014. Significant progress is being made to secure commercial funding.
The financial statements are prepared on the basis of accounting policies applicable to a going
concern. The Board believes that the Company remains a going concern, taking cognisance of
any matters that may cast doubt about the ability of the Company to continue as a going concern
and its ability to realise its assets and discharge its liabilities in the ordinary course of business.
3. Operations
Mining
Production of lump ore increased by 3.74% from 1 131 920 to 1 173 705 tons for the period when
compared to the same period in 2013, and fines ore increased by 3.64% from 506 333 to 524 655
tons for the nine month period. Output stabilised in the third quarter as a result of a plant
maintenance shut down in Q 1 and increased ongoing maintenance effort.
In addition to the strip mining operations, commercial large scale pit mining has also commenced
in the second quarter of 2014 and it is showing to be beneficial to the overall operating
performance.
Steel
Iron output increased by 4.2% to 497 713 tons for the nine-month period compared to the previous
year, mainly due to improved plant efficiencies. Steel output decreased by 3.84% from 478 707 tons
for the nine-month period in 2013 to 460 683 tons for the same period in 2014, primarily
due to operational problems experienced in the Steel Plant. The planned replacement of the BOF
water cooled hoods in Q1 2015 is expected to improve plant production volumes.
Production of long products increased by 3.94% to 158 121 tons during H1 2014, compared to 152
113 for the 2013 period, due to an improved order book and supply of cast steel to the mill.
Production of flat products decreased by 5.9% from 233 082 to 219 402 tons for the period. The
reduction in performance was due to lack of cast steel slabs.
Vanadium
A total 40 667 tons of vanadium slag was produced containing 5 097 tons V for the period,
compared to 36 892 tons slag containing 5 012 tons V for the same period last year. Vanadium
Yield improved by 1.34% compared to the same period last year.
4. Markets
Global and local markets
The global economy continues to show little sign of supporting a strong recovery in the global
steel market and will remain weak into 2015. International pricing has started to soften and Far
East producers have significantly lowered pricing in Q3 with price offers into the domestic market
falling by as much as 5.0%. Reports indicate a likely global steel demand increase by 2.0% in
2015.
Following the various instances of industrial action and constrained power supply seen during
2014 to date, South African GDP forecasts for 2014 have been revised to 1.5%. The trend of the
weak Rand seen in H1 2014 has continued during Q3 and this has supported the shift in
market purchasing trends from imports to domestic supply during this period.
Evraz Highveld Sales
Steel sales volumes increased by 3.0% from 381 075 tons for the 2013 period to 392 566 tons for
the same period in 2014.
The Steel and Engineering Industries Federation of South Africa (SEIFSA) strike during Q3
further compounded weak domestic sales seen YTD 2014 and as a result domestic steel sales
decreased by 11.7% from 367 893 to 324 995 tons for the period, while export steel sales volumes
increased to 67 571 tons for the nine months against 13 182 tons for previous reporting period.
Ferrovanadium sales for the 2014 period remained flat at 3 609 tons V compared to 3 603 tons V
for the same period in 2013. Total vanadium slag sales were 627 tons V for the period compared
to 285 tons V for the 2013 year.
5. Outlook
The domestic market has shown some signs of recovering sales lost during 2014. Unfortunately,
given the current slow economic growth and the pace of government infrastructure spending,
the domestic steel industry is not expected to expand significantly in the near future. The
industry will be further impacted by a volatile labour market, continuing difficulties with
security of electricity supply and increased input costs. Dialogue between all stakeholders
with regard to developmental pricing is imperative given the importance of steel in
the economy of South Africa.
Global steel markets will continue to be under pressure during the last quarter of 2014 as
the market struggles with overcapacity and over supply, prices are predicted to soften slightly
during the remainder of 2014 and a marked recovery in global steel demand is not expected for 2015.
The turnaround of the Company is deemed achievable for a number of reasons, including the
strategic importance of a significant proportion of its products, the dedicated low cost vanadium
bearing iron ore resource base held by Mapochs Mine and the Company's unique processing
capability to extract vanadium slag from the ore. The turnaround is however dependent on the
urgent sourcing of capital and much needed operational skills.
The new leadership team has made significant progress with the development of a focussed
turnaround strategy to return the Company to a profitable leading niche steel and
vanadium producer.
B Petersen IJ Burger
(Chairman) (Chief Executive Officer)
24 November 2014
GROUP UNAUDITED FINANCIAL RESULTS
Basis of preparation
The Group's (Group includes all consolidated entities) financial results for the nine months ended 30 September 2014 set out below have been prepared in
accordance with the principal accounting policies of the Group which comply with International Financial Reporting Standards (IFRS) and in the manner
required by the Companies Act in South Africa and are consistent with those applied in the Group's most recent annual financial statements including the
Standards and Interpretations as listed below.
These results are presented in terms of International Accounting Standards (IAS) 34 applicable to Interim Financial Reporting.
The unaudited financial statements were prepared under the going concern basis.
The Group incurred a net loss of R519 for the nine month period during 2014, (2013: loss R222 million).
Domestic demand remains steady for our structural range of products, whilst demand for flat products has decreased, especially in the plate market.
Production operations are still recovering from the adverse effects of operational challenges in the first half of the year. The Company continues to utilise a
credit line from shareholders that is committed to 31 December 2014. Significant progress is being made to secure commercial funding.
The financial statements are prepared on the basis of accounting policies applicable to a going concern. The Board believes that the Company remains a
going concern, taking cognisance of any matters that may cast doubt about the ability of the Company to continue as a going concern and its ability to
realise its assets and discharge its liabilities in the ordinary course of business.
Significant accounting policies
i) The Group has adopted the following new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB)
and the International Financial Reporting Interpretation Committee (IFRIC) of the IASB, that are relevant to its operations and effective for accounting
periods beginning on 1 January 2014. These Standards had no impact on the results or disclosures of the Group.
- IAS 32, Amended - Offsetting financial assets and financial liabilities (effective from 1 January 2014);
- IFRS 10, IFRS 12 and IAS 27, Amended - Investment entities (effective from 1 January 2014);
- IFRIC 21, Levies (effective from 1 January 2014);
- IAS 36, Amended - Recoverable amount disclosures for non-financial assets (effective from 1 January 2014);
- IAS 39, Amended - Novation of derivatives and continuation of hedge accounting (effective from 1 January 2014)
ii) The following Standards, amendments to the Standards and Interpretations, effective in future accounting periods have not been adopted in these
financial statements:
- IFRS 9, Financial instruments - classification and measurement (1 January 2015 effective date has been deferred until the issue date of the completed
version of IFRS 9 is known);
- IFRS 9 and IFRS 7, Amended - Mandatory effective date and transition disclosures (IFRS 9 effective date deferred, IFRS 7 depends on when IFRS 9 is
adopted);
- IFRS 14, Regulatory deferral accounts (effective from 1 January 2016);
- IAS 19, Amended - Defined benefit plans: employee contributions (effective from 1 July 2014);
- Improvements to IFRS – issued December 2013 (effective from 1 July 2014).
This abridged report was prepared under supervision of the Financial Director, Mr Valery Borisov.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited as at Reviewed as at
30 Sept 2014 31 Dec 2013
Notes Rm Rm
ASSETS
Non-current assets 1 662 1 723
Property, plant and equipment 1 558 1 621
Restricted cash 14 42 40
Deferred tax asset 5 62 62
Current assets 2 081 1 865
Inventories 980 1 059
Trade and other receivables and prepayments 6 733 522
Income tax receivable 1 2
Cash and short-term deposits 367 282
TOTAL ASSETS 3 743 3 588
EQUITY AND LIABILITIES
Total equity 955 1 461
Non-current liabilities 783 757
Interest-bearing loans and borrowings 7 11 11
Provisions 772 746
Current liabilities 2 005 1 370
Trade and other payables 1 543 935
Interest-bearing loans and borrowings 7 332 304
Income tax payable - -
Provisions 130 131
TOTAL EQUITY AND LIABILITIES 3 743 3 588
Net cash 66 7
Net asset value - cents per share 963 1 474
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited for Unaudited for the Unaudited for the
the three three months nine months Unaudited for the Reviewed for the
months ended ended ended nine months ended year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Note Rm Rm Rm Rm Rm
Revenue 1 245 1 215 4 444 4 081 5 192
Sale of goods 1 243 1 214 4 438 4 078 5 190
Cost of sales (1 331) (1 274) (4 503) (3 855) (4 990)
Gross (loss)/profit 8 (88) (60) (65) 223 200
Other operating income 9 33 2 57 28 77
Selling and distribution costs (68) (63) (232) (190) (273)
Administrative expenses (80) (59) (212) (181) (242)
Other operating expenses 9 (9) (14) (31) (25) (55)
Operating loss (212) (194) (483) (145) (293)
Finance costs (14) (18) (42) (55) (69)
Finance income 2 1 6 3 2
Loss before tax (224) (211) (519) (197) (360)
Income tax credit/(expense) 10 7 (1) * (25) (19)
Loss for the period/year (217) (212) (519) (222) (379)
(*)Less than R1 million.
Cents Cents Cents Cents Cents
Loss per share - basic and diluted (219.2) (213.9) (523.4) (224.0) (382.2)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited for Unaudited for the Unaudited for the
the three three months nine months Unaudited for the Reviewed for the
months ended ended ended nine months ended year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
Loss for the period/year (217) (212) (519) (222) (379)
Other comprehensive income:
Other comprehensive (loss)/income to be reclassified to profit or
loss in subsequent periods:
Exchange differences on translation of foreign operations (1) 17 1 105 104
Other comprehensive income not to be reclassified to profit or loss
in subsequent periods:
Actuarial gain on defined benefit plan, net of tax - - - - 12
Total comprehensive loss for the period/year (218) (195) (518) (117) (263)
Cents Cents Cents Cents Cents
Comprehensive loss per share - basic and diluted (220.2) (196.8) (522.4) (118.1) (265.3)
HEADLINE EARNINGS PER SHARE
Unaudited for Unaudited for the Unaudited for the
the three three months nine months Unaudited for the Reviewed for the
months ended ended ended nine months ended year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
Reconciliation of headline loss
Loss for the period/year (217) (212) (519) (222) (379)
(Deduct)/add after tax effect of:
(Profit)/loss on disposal and scrapping of property, plant and
equipment 1 * 1 * 5
Headline loss (216) (212) (518) (222) (374)
(*)Less than R1 million.
Cents Cents Cents Cents Cents
Loss per share - headline and diluted (217.9) (213.9) (522.4) (224.0) (377.2)
Million Million Million Million Million
Number of shares
Ordinary shares in issue as at reporting date *† 99.2 99.2 99.2 99.2 99.2
(*)Rounded to nearest hundred thousand.
(†)Agree to weighted average and diluted number of ordinary
shares.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued capital and
share premium Other reserves Retained earnings Total
Note Rm Rm Rm Rm
2013
Balance at 1 January 2013 - Reviewed(#) 585 264 860 1 709
Profit for the period 30 30
Other comprehensive income for the quarter 47 47
Share-based payment reserve 11 3 3
Balance at 31 March 2013 - Unaudited 585 314 890 1 789
Loss for the period (40) (40)
Other comprehensive income for the quarter 41 41
Share-based payment reserve 11 3 3
Balance at 30 June 2013 - Unaudited 585 358 850 1 793
Loss for the period (212) (212)
Other comprehensive income for the quarter 17 17
Share-based payment reserve 11 3 3
Balance at 30 September 2013 - Unaudited 585 378 638 1 601
Loss for the period (157) (157)
Other comprehensive loss for the quarter (1) (1)
Actuarial gain on defined benefit plan 12 12
Share-based payment reserve 11 6 6
Balance at 31 December 2013 - Reviewed 585 383 493 1 461
2014
Balance at 1 January 2014- Reviewed 585 383 493 1 461
Loss for the period (105) (105)
Other comprehensive income for the quarter 8 8
Share-based payment reserve 11 4 4
Balance at 31 March 2014 - Unaudited 585 395 388 1 368
Loss for the period (197) (197)
Other comprehensive loss for the quarter (6) (6)
Share-based payment reserve 11 4 4
Balance at 30 June 2014 - Unaudited 585 393 191 1 169
Loss for the period (217) (217)
Other comprehensive loss for the quarter (1) (1)
Share-based payment reserve 11 4 4
Balance at 30 September 2014 - Unaudited 585 396 (26) 955
(#)Restated
Unaudited for the
three months Unaudited for the Unaudited for the Unaudited for the Reviewed for the
ended three months ended ni ine months ended nine months ended year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Cents Cents Cents Cents Cents
Dividends per share
Dividends declared and paid - - - - -
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited for Unaudited for Unaudited for Unaudited for the
the three the three months the nine nine months Reviewed for the
months ended ended months ended ended year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
Cash flows from operating activities
Loss before tax (224) (211) (519) (197) (360)
Non-cash items 113 87 388 227 419
Net movement in working capital 175 19 343 (310) (385)
Net interest received/(paid) 1 (7) 4 (22) (28)
Income tax paid - (1) (1) (3) (4)
Net cash generated by/(used in) operating activities 65 (113) 215 (305) (358)
Cash flows from investing activities
Proceeds from sale and scrapping of property, plant and
equipment 1 * 2 1 3
Additions to property, plant and equipment (33) (37) (130) (105) (140)
Net cash used in investing activities (32) (37) (128) (104) (137)
Cash flows from financing activities
(Decrease) / increase in long-term interest-bearing loans and
borrowings - - - - (6)
(Decrease)/increase in short-term interest-bearing loans and
borrowings - (97) - 186 204
Net cash (repaid)/generated by financing activities - (97) - 186 198
Net increase/(decrease) in cash and cash equivalents 33 (247) 87 (223) (297)
Cash and cash equivalents at the beginning of the
period/year 335 630 282 527 527
Cash transferred to restricted cash * (31) (1) (31) (40)
Effects of exchange rate changes on cash held in foreign
currencies (1) 27 (1) 106 92
Cash and cash equivalents at the end of the period/year 367 379 367 379 282
* Less than R1 million.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 Companies Act and JSE Limited Listings Requirements
Compliance with the Companies Act, No 71 of 2008, as well as the Listings Requirements of the JSE Limited has been maintained throughout the reporting periods.
2 Related party transactions
Sales to East Metals A.G. (a fellow subsidiary) amounted to R302 million (September 2013 YTD: R168 million) for the 9 months ended 30 September 2014. This constitutes 7% of total
revenue for the period, compared to 4% for the period ended 30 September 2013. During 2013 a loan was received from East Metals A.G., a related party, amounting to R 332 million
(December 2013: R304 million) which is repayable by 31 December 2014 and interest is charged at market rate. Technical services (slag tolling agreement) and other services with
EVRAZ Vametco Alloys Proprietary Limited (a fellow subsidiary) amounted to R30 million for the 9 months ended September 2014 (September 2013 YTD: R50 million).
3 Segment information
The Group is organized into business units based on their products and has two reportable segments as follows:
Steelworks
The major products of the steel segment are magnetite iron ore, structural steel, plate and coil.
Vanadium
The major products of the vanadium segment are vanadium slag and ferrovanadium. Vanadium slag is a by-product from the steelmaking process, and this slag is transferred from the
steelworks to the vanadium plant, which then forms the input into the business of the vanadium business.
No operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the
purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit.
The following tables present the revenue, operating (loss)/profit and total assets information regarding the Group's operating segments:
Unaudited for the
three months Unaudited for the three Unaudited for the nine Unaudited for the Reviewed for
ended months ended months ended nine months ended the year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
Revenue from customers
Steelworks 1 017 942 3 501 3 162 4 022
Vanadium 312 348 1 208 1 151 1 487
Elimination in intersegmental
revenue (86) (76) (271) (235) (319)
Total 1 243 1 214 4 438 4 078 5 190
Unaudited for the
three months Unaudited for the three Unaudited for the nine Unaudited for the Reviewed for
ended months ended months ended nine months ended the year ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
Operating (loss)/profit
Steelworks (245) (237) (640) (328) (545)
Vanadium 33 43 157 183 252
Total (212) (194) (483) (145) (293)
Unaudited as at Reviewed as at
30 Sept 2014 31 Dec 2013
Rm Rm
Total assets
Steelworks 3 454 3 143
Vanadium 289 445
Total 3 743 3 588
4 Supplementary revenue information - Unaudited
For the three months For the three months For the nine For the nine For the year
ended ended months ended months ended ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Sales volumes of major products
Total steel Tons 109 044 113 976 392 566 380 872 486 706
Ferrovanadium Tons V 1 001 1 228 3 609 3 603 4 827
Modified vanadium oxide Tons V 20 48 72 133 143
Nitrovan Tons V 0 20 331 371 398
Vanadium slag Tons V 252 93 627 285 386
Ore fines Tons 143 691 149 981 480 547 502 303 650 418
Weighted average selling prices achieved for major products
Total steel US$/t 663 708 662 738 718
Ferrovanadium US$/kg V 24 25 25 27 27
Modified vanadium oxide US$/kg V 17 19 23 20 19
Nitrovan US$/kg V 0 24 25 28 28
Vanadium slag US$/kg V 7 8 8 9 9
Ore fines US$/t 50 23 32 33 30
Average R/$ exchange rate 10.77 9.99 10.72 9.48 9.65
5 Deferred tax asset
In light of the Company's own financial performance and the uncertainty of future taxable profits to account against its deferred tax asset, management concluded, following due
assessment, that it was prudent to impair its deferred tax asset as at 31 December 2013 (R195 million) to the extent that it exceeded the deferred taxation liability. Whilst the taxable
income forecast for the Company is based on its most favourable outlook scenario, the current assessed tax loss implies that it will take many years before the Company is in a position
to utilise the tax assets as at 31 December 2013. Following the impairment, a zero balance for deferred taxation is disclosed for the Company. No reversal of the 2012 impairment was
considered necessary as at 31 December 2013. The deferred tax asset position remained the same at 30 September 2014 as at 31 December 2013.
6 Trade and other receivables and prepayments
The increase in comparison to 31 December 2013 can mainly be attributed to increased sales volumes on local steel, improved production and an increase in Vanadium slag sales.
7 Interest-bearing loans and borrowings
The long-term borrowings of R11 million (2013: R11 million) consist of the loan due by Umnotho Iron and Vanadium Proprietary Limited payable to Umnotho weSizwe Group Proprietary
Limited. This loan has no fixed repayment terms and interest is charged at prime rate. The short-term borrowings consists of a Dollar-denominated loan from East Metals A.G. (a related
party) which is payable by 31 December 2014, and carries interest at market rate.
8 Gross (loss)/ profit
The decline in gross profit is mainly attributable to higher production costs in 9m 2014, driven largely by an increase in maintenance spend. A significant increase in export sales volumes
in 9m 2014 compared to 9m 2013 also contributed to the lower gross profit, as export sales attract a lower margin compared to local sales. The SEIFSA industrial action also had a
significant impact on 9m 2014 sales volumes.
9 Other operating income and expenses
The R33 million other operating income for the three months ended 30 September 2014 includes sundry income of R33 million and the R 9 million other operating expense includes
insurance of R 6 million and loss on disposal of fixed assets of R 1 million. The Q3 2013 other operating income of R2 million includes inventory stock count and inventory net realisable
value adjustments of R2 million and the R14 million other operating expense includes foreign exchange losses of R12 million.
10 Income tax
Unaudited for the Unaudited for Reviewed for
Unaudited for the Unaudited for the three nine months the nine months the year
three months ended months ended ended ended ended
30 Sept 2014 30 Sept 2013 30 Sept 2014 30 Sept 2013 31 Dec 2013
Rm Rm Rm Rm Rm
South African
Deferred
Current - - - 14 18
Non-South African
Normal
Current (7) 1 * 11 1
Income tax (credit)/expense (7) 1 * 25 19
The period income tax expense is accrued using the estimated average annual effective income tax rate applied to the pre-tax income of the interim report.
11 Share-based payment reserve
Certain key management personnel participate in a Long Term Incentive Plan (LTIP) over shares in EVRAZ plc. The shares are traded on the London Stock Exchange. The vesting of the
shares occur on the 90th day following the announcement of EVRAZ plc financial results. The cost of the LTIP award will be settled in equity by EVRAZ plc. The amount recognized
according to IFRS 2 in 2014 is R12 million (2013 year: R15 million).
12 Guarantees
As required by the Mineral and Petroleum Resources Development Act No.28 of 2002 (the MPRDA), a guarantee amounting to R370 million (2013: R370 million) was issued on 1 September 2013 in favour of the Department of Mineral Resources (DMR) for the unscheduled closure of Mapochs Mine.
As required by certain suppliers of the Group, guarantees were issued in favour of these suppliers to the value of R8 million (2013: R8 million) in the event the Group will not be able to
meet its obligations to the supplier.
13 Contingent liabilities
In terms of the Group's employment policies, certain employees could become eligible for post-retirement medical aid benefits at any time in the future prior to their retirement subject to
certain conditions. The potential liability for the Group, as at 31 December 2013, should they become medical scheme members in the future is R14 million before tax and R10 million
after tax.
On 5 June 2008, the Commission initiated a complaint against the Company for an alleged contravention of section 4(1)(b)(i) of the Competition Act, No. 89 of 1998 (the Competition
Act). The allegations against the Company are that it fixed prices and trading conditions for flat and long steel products. In a letter from the Commission dated 18 September 2009, the
Commission confirmed that it would not be pursuing a case of collusion in the long steel market against the Company. On 30 March 2012 the Commission referred the complaints
relating to the flat steel market to the Competition Tribunal for prosecution. The allegations against the Company contained in the Commission's complaint referral are that the
Company fixed prices and trading conditions for flat steel products, and divided markets in respect of flat steel products, which are contraventions of sections 4(1)(b)(i) and 4(1)(b)(ii) of
the Competition Act respectively. It is further alleged in the Commission's complaint referral that the Company has contravened sections 4(1)(b)(i) and 4(1)(b)(ii), alternatively section
4(1)(a), of the Competition Act by engaging in the exchange of information with a competitor through information exchanges and meetings of the SAISI or its committees. Should the
Competition Commission be successful, it could impose a maximum penalty of R554 million against the Company.
14 Restricted cash
The restricted cash disclosed as a non-current asset consist of R34 million paid to an insurance company as guarantee to the Department of Mineral Resources (DMR) for the Mapochs Mine
environmental rehabilitation obligation. An amount of R8 million is deposited with a commercial bank as security for guarantees issued to two supplier companies. Interest on both
amounts are earned at money market rates.
15 Subsequent events
There are no events to be reported on since 30 September 2014.
DIRECTORS: B Petersen (Chairman), I J Burger (Chief Executive Officer), M Bhabha,
V Borisov (Russian), A P Maralack, T Mosololi, D Šcuka (Czech), P S Tatyanin (Russian),
T I Yanbukhtin (Russian)
Company Secretary: Ms A Weststrate
Registered office: Transfer secretaries:
Portion 93 of the farm Computershare Investor Services
Schoongezicht No. 308JS Proprietary Limited
District eMalahleni 70 Marshall Street
Mpumalanga Johannesburg
PO Box 111 PO Box 61051
Witbank 1035 Marshalltown 2107
Tel: (013) 690 9911 Tel: (011) 370 5000
Fax: (013) 690 9293 Fax: (011) 688 5200
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd.
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