Wrap Text
Provisional reviewed condensed consolidated financial statements for the year ended 31 December 2014
ArcelorMittal South Africa Limited
Registration number: 1989/002164/06
Share code: ACL
ISIN: ZAE 000134961
(“ArcelorMittal South Africa”, “the company” or “the group”)
Provisional reviewed condensed consolidated financial statements for the year ended 31 December 2014
- R1.8 billion investment in reline of blast furnace at Newcastle completed
- Net loss decreased to R158 million compared to R2 147 million in the prior year
- Focus on zero fatalities and injuries
Overview
Despite a strengthening economy in the United States, the demand for steel in China, the biggest consumer of steel,
dropped for the first time in 14 years. This drop influenced the overall world demand for steel and aggravated the global
excess capacity which led to stronger exports out of China, Europe and Japan. International prices for steel and
commodities declined, and currency parities shifted. Export markets faced particularly unsatisfactory profit margins. Overall
these developments accelerated the need for steel producers to reduce cost in order to stay competitive.
Locally, the ongoing load shedding by Eskom, slow implementation of the large infrastructure development projects, the
protracted mining and metals and engineering strikes put severe pressure on the steel industry. As noted, due to the
worldwide excess capacity of steel, cheaper imports from China continued to enter the local market despite the devaluation
of the rand.
Our liquid steel production was 4.5 million tonnes, a decrease of 578 000 tonnes compared to last year reflecting the
effect of the planned blast furnace reline at Newcastle. The decrease in tonnes was partly countered by higher
production volumes at Vanderbijlpark which was negatively impacted by the fire incident in the prior year.
Although total sales volumes were on the same level as last year as billets were imported to ensure that our long
steel customers’ demands were satisfied during the blast furnace reline at Newcastle, domestic sales decreased by 4% mainly
due to the lower demand for steel, aggravated by the protracted strike in the mining sector in the first half of the
year, followed by the metal and engineering strike. Our exports increased by 12% to counter our losses in the local market.
Notwithstanding our quest to achieve zero fatalities and injuries, four fatal incidents occurred last year. We are
focused on ensuring that we rapidly turn around our safety performance for our employees and the contractors who work for
us.
Headline loss was R227 million or 57 cents a share compared to a loss of 56 cents a share last year. EBITDA was R1 258
million, a decrease of R510 million compared to last year. The temporary suspension of production during the reline
resulted in an EBITDA opportunity loss of approximately R1 200 million which included the cost of sourced in material to
maintain despatches to the local market. Our higher overall operating costs were partially offset by higher local prices,
following a weaker R/US dollar exchange rate.
Overall, our net loss of R158 million is an improvement of R1 989 million when compared to the prior year net loss of
R2 147 million driven primarily by the impairment of the Thabazimbi assets in 2013.
The company invested approximately R1 800 million to reline the blast furnace. This significant investment signals
management’s confidence in the future of the company. The net borrowing position of R546 million at the end of 2014
compared to a net cash position at the end of 2013 primarily reflects the effects of the capex spend for the reline.
Key statistics
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited Reviewed Audited
16 925 17 927 16 531 Revenue (R million) 34 852 32 421
7 432 7 237 6 923 Average net realisable price (R/t) (unaudited) 7 332 6 840
448 810 791 EBITDA (R million) 1 258 1 768
219 369 375 EBITDA/tonne (R/t) (unaudited) 297 418
2.7 4.5 4.8 EBITDA margin (%) 3.6 5.5
(143) (15) (2 007) Net loss (R million) (158) (2 147)
(36) (4) (500) Loss per share (cents) (39) (535)
(221) (6) (101) Headline loss (R million) (227) (224)
(55) (2) (25) Headline loss per share (cents) (57) (56)
(546) (594) 285 Net (borrowings)/cash (546) 285
Unaudited information
2 132 2 386 2 615 Liquid steel production (‘000 tonnes) 4 518 5 096
2 045 2 195 2 107 Steel sales (‘000 tonnes) 4 240 4 230
1 468 1 534 1 420 - Local 3 002 3 126
577 661 687 - Export 1 238 1 104
258 208 335 Commercial coke sales (‘000 tonnes) 466 545
65 74 80 Capacity utilisation (%) 70 76
0.62 0.54 0.45 Lost-time injury frequency rate 0.58 0.56
Market review
International
The global steel industry experienced strong volatility in 2014. The year started on a good note as signs of improved
economic growth were noted in the USA, while Europe was in the process of resolving its sovereign debt woes. In the USA,
there was a setback in the first quarter due to tough weather conditions. Some of the steel plants experienced
unplanned power outages, impacting negatively on cost due to various shutdowns and repairs. The economy picked up in the second
quarter with consumer demand in durable goods showing tremendous growth. Steel demand from the automobile and
construction sector kept the order books for steel in good shape. There were positive developments on trade actions filed by steel
companies. The anti-dumping duty imposed on the import of all countries’ tubular goods into the USA was a big relief to
the steel industry. However, the Chinese economy slowed down significantly. At large, the world markets seemed to
accept this as a new trend for the Chinese economy.
Towards the end of year, the cycle turned downwards for the global steel industry. There were increasing concerns
about growth in China and Europe, with overall steel demand dropping. Despite these developments which were mainly in
advanced countries, the landscape for the African market remained positive, with infrastructure development activities in the
sub-Saharan region being the key steel demand driver.
Domestic
The South African economy has been through a turbulent time in 2014 as evidenced by a contraction in the first quarter
of 2014. Although some improvements emerged later in the year, with improved PMI data, the prolonged strikes in the
mining sector and disruptions that occurred in some key manufacturing segments, including the metals and engineering
industry, hampered the recovery of economic growth. The growth patterns in the construction industry remained relatively weak
and failed to stimulate higher and sustained steel demand.
Despite a favourable currency environment, the uncompetitive manufacturing landscape and the overall high costs of
doing business limited the export potential for domestic steel producers and end-user segments of the market. Several
market segments were impacted by cheap steel imports, negatively affecting the sales of domestic producers.
Financial review
Year ended 31 December 2014 compared to year ended 31 December 2013
Revenue increased 8% to R34.9 billion following a 7% increase in average net realised prices. Domestic prices were 9%
higher, while exports rose 5%. Prices for flat and long steel rose 6% and 10% respectively. Total steel shipments
remained in line with the previous year with export shipments up 12%, while local shipments were down 4% in line with reduced
local market activity. Flat steel shipments were up 8%, while long steel shipments dropped 14% as a result of the
planned blast furnace reline in Newcastle. Revenue from the Coke and Chemicals business of R2.0 billion was 6% higher than the
previous year. This was driven by better prices for both major by-products; prices for commercial coke and tar products
increased by 9% and 13% respectively. Sales volumes for commercial coke dropped by 14%, while tar sales volumes
remained flat.
Cash costs per ton of liquid steel produced increased by 7% year-on-year. Raw materials, consisting of iron ore, coal and scrap,
which together account for approximately 48% of costs, increased by 5%. Consumables and auxiliaries, which account for approximately
28% of costs, increased by 15%, while fixed costs per ton increased by 3% despite being impacted by a volume decrease of 11% on
liquid steel produced. The new Kumba agreement had resulted in iron ore costs remaining constant in rand terms. Tshikondeni costs
increased sharply as the mine neared its end of life, with production stopped at the end of quarter three.
Liquid steel production was 578 000 tonnes lower, of which long steel production was down 50%, while flat steel was up
11%. Capacity utilisation for flat steel improved from 74% to 85% due to the adverse effect of the blast oxygen furnace
fire in 2013. Long steel capacity utilisation decreased from 81% to 41% following the planned blast furnace reline in
Newcastle in 2014.
A headline loss of R227 million was in line with the previous year’s R224 million and included the following items:
- EBITDA was R1 258 million compared to R1 768 million in 2013, mainly due to the impact of the reline of the blast
furnace in Newcastle offset to an extent by the improvement at Vanderbijlpark;
- Once-off items for restructuring the cost base of R149 million, mainly relating to provisions for reducing
administrative cost and for the ongoing closure of the mine in Tshikondeni. In the prior year, a provision of R158 million
was raised relating to the closure costs of the Tshikondeni mine;
- Net financing costs of R588 million for the year compared to R260 million in the prior year. This was due to the
increased borrowing following the reline and a change in discount rate for determining the present value of long-term
liabilities;
- Share of profit from equity-accounted investments after taxation of R191 million compared with a loss of R35 million
in 2013. This relates to improved results from Macsteel International Holding BV and Coal of Africa; and
- A tax credit of R460 million compared to a prior year tax credit of R51 million primarily due to a credit of
R360 million relating to energy efficiency initiatives undertaken in terms of section 12L of the South African
Income Tax Act.
EBITDA: Half-year ended 31 December 2014 compared to half-year ended 31 December 2013 (unaudited)
Revenue increased 2% to R16.9 billion following a 7% increase in average net realised prices. Domestic prices were 6%
higher, while exports rose 7%. Prices for flat and long steel rose 5% and 13% respectively. Total steel shipments were
down 3% with local shipments up 3%, while exports were down 16% following the reline of the Newcastle blast furnace
during which period export shipments were curtailed. Shipments for flat products increased 5%, while exports decreased 2%.
Revenue from the Coke and Chemicals business of R1 025 million was 8% lower following a 23% decrease in commercial coke
sales volumes and a 9% increase in net realised prices. Tar sales volumes remained flat, while prices increased 9%.
Cash costs per ton of liquid steel produced increased by 7% period-on-period. Raw materials, consisting of iron ore, coal and
scrap, which together account for approximately 48% of costs, increased by 5%. Consumables and auxiliaries, which accounted for
28% of costs, increased by 17%, while fixed costs remained constant on a per ton basis despite being impacted by a volume
decrease of 19% on liquid steel produced.
Liquid steel production was 483 000 tonnes or 18% lower, of which long steel production was down 71%, while flat steel
was up 10%. Capacity utilisation for flat steel was higher at 88% against 80%, while long steel was at 23% against 80%.
As a result of the above, EBITDA was down by R343 million to R448 million from R791 million.
EBITDA: Half-year ended 31 December 2014 compared to half-year ended 30 June 2014 (unaudited)
Revenue decreased 6% to R16.9 billion following a 7% decrease in steel shipments. Local shipments remained subdued and
decreased 4%, while exports decreased 13%. Shipments for flat and long steel decreased 2% and 18% respectively. Overall
steel prices rose 3%, with local and export prices rising 2% and 4% respectively. Flat steel prices rose 2% and long
steel 6%. Revenue from the Coke and Chemicals business of R1 025 million remained flat following a 24% increase in
commercial coke sales volumes and a 5% decrease in net realised prices. Tar sales volumes increased 8%, while prices
decreased 1%.
Cash costs per ton of liquid steel produced decreased by 2% period-on-period. Raw materials, consisting of iron ore,
coal and scrap, which together account for approximately 48% of costs, decreased by 5%. Consumables and auxiliaries, which
account for approximately 28% of costs, increased by 9%, while fixed costs per ton decreased by 8% despite being impacted by
a volume decrease of 11% on liquid steel produced.
Liquid steel production was 254 000 tonnes or 11% lower, of which long steel production was down 60%, while flat steel was up 9%.
Capacity utilisation for flat steel was higher at 88% against 83%, while long steel was at 23% against 58%.
As a result of the above, EBITDA was down by R362 million to R448 million from R810 million.
Environment (unaudited)
Notwithstanding the tough economic conditions the company operates under, key environmental projects remain a focus
area in order to ensure environmental compliance. The key project during 2014 was the Newcastle zero-effluent discharge
project which entailed the improvement of effluent treatment. This project was completed in 2014 at a total cost of
R430 million.
Following a judgement by the Supreme Court of Appeal on 26 November 2014, which ruled that the company must provide
historical environmental information regarding its Vanderbijlpark and Vereeniging operations to the Vaal Environmental
Justice Alliance (VEJA), the company decided not to challenge this matter further and the requested information was handed
over to the VEJA on 17 December 2014. The company seeks to pursue a path of open and transparent engagement with the
VEJA and all other stakeholders for that matter.
The proposed implementation of a carbon tax by the National Treasury remains a concern as the company’s
competitiveness may be affected particularly as imported steel does not have this in its cost base. Very limited
opportunities exist to reduce carbon emissions in the iron and steel production process and no feasible low carbon
alternatives exist at this stage to produce steel from iron ore. Therefore, the intention of the carbon tax to change
behaviour is difficult to realise within the iron and steel industry. ArcelorMittal will actively participate in the
Department of Environmental Affairs’ DERO (Desired Emission Reduction Outcomes) setting process during 2015, which will
seek alignment with the proposed carbon tax.
Contingent liabilities
As reported in prior periods, and dating back to 2007, the Competition Commission (the Commission) has referred five
cases against ArcelorMittal South Africa Limited (ArcelorMittal South Africa) to the Competition Tribunal for
prosecution. ArcelorMittal South Africa rejects the allegations made in each of these cases and is accordingly defending
itself.
In addition, the Commission is formally investigating one further complaint against ArcelorMittal South Africa
relating 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 ArcelorMittal South Africa for the
period May 2010 to July 2010. ArcelorMittal South Africa is cooperating fully with the Commission in this investigation and
continues to deliver all information and documentation as and when called upon to do so.
Dividends
No dividends were declared for the year ended 31 December 2014.
Changes to the board of directors
Paul O’Flaherty was appointed chief executive officer and executive director with effect from 1 July 2014.
Matthias Wellhausen has resigned as chief financial officer and executive director of the company with effect from
15 March 2015. Gerhard van Zyl has been appointed as acting chief financial officer with effect from 15 March 2015.
Sudhir Maheshwari has resigned as non-executive director with effect from 31 March 2015.
Outlook for the first half of 2015 (unaudited)
We expect higher production and sales volumes following the completion of the reline of the blast furnace at Newcastle
and the seasonal slowdown in the fourth quarter of 2014. Although we expect International steel prices to remain low
for the first half of the year, these factors, together with ArcelorMittal producing to full capacity and reducing costs,
should contribute positively to the results.
On behalf of the board of directors
PS O’Flaherty MJ Wellhausen
Chief executive officer Chief financial officer
2 February 2015
Independent auditor’s review report on condensed consolidated financial statements
TO THE SHAREHOLDERS OF ARCELORMITTAL SOUTH AFRICA LIMITED
Introduction
We have reviewed the condensed consolidated financial statements of ArcelorMittal South Africa Limited, contained in
the accompanying provisional report, which comprise the condensed consolidated statement of financial position as at 31
December 2014 and the condensed consolidated statements of comprehensive income, changes in equity, and cash flows for
the year then ended, and selected explanatory notes.
Directors’ responsibility for the condensed consolidated financial statements
The directors are responsible for the preparation and presentation of these condensed consolidated financial
statements in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, as set out in
note 1 to the financial statements, and the requirements of the Companies Act of South Africa, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
The Listings Requirements require condensed consolidated financial statements contained in a provisional report to be
prepared in accordance with the framework concepts, the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the
information required by International Accounting Standard (IAS) 34, Interim Financial Reporting.
Auditor’s responsibility
Our responsibility is to express a conclusion on these financial statements. We conducted our review in accordance
with the International Standard on Review Engagements (ISRE) 2410, which applies to a review of historical information
performed by the independent auditor of the entity. ISRE 2410 requires us to conclude whether anything has come to our
attention that causes us to believe that the financial statements are not prepared in all material respects in accordance
with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical
requirements.
A review of financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying
analytical procedures, and evaluate the evidence obtained.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance
with International Standards on Auditing. Accordingly, we do not express an audit opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated
financial statements of ArcelorMittal South Africa Limited for the year ended 31 December 2014 are not prepared, in all
material respects, in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, as
set out in note 1 to the financial statements, and the requirements of the Companies Act of South Africa.
Deloitte & Touche
Registered Auditor
Per: DA Steyn
Partner
9 February 2015
Buildings 1 and 2, Deloitte Place, The Woodlands, Woodlands Drive, Woodmead, Sandton, South Africa
National Executive: LL Bam (Chief Executive)*, AE Swiegers (Chief Operating Officer)*, GM Pinnock (Audit)*, DL Kennedy (Risk Advisory),
NB Kader (Tax)*, TP Pillay (Consulting), K Black (Clients & Industries)*, JK Mazzocco (Talent and Transformation)*, MJ Jarvis (Finance)*,
M Jordan (Strategy)*, S Gwala (Managed Services), TJ Brown (Chairman of the Board)*, MJ Comber (Deputy Chairman of the Board)*.
A full list of partners and directors is available on request. *Partner and registered auditor
B-BBEE rating: Level 2 contributor in terms of the Chartered Accountancy Profession Sector Code.
Member of Deloitte Touche Tohmatsu Limited
Condensed consolidated statement of comprehensive income
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited In millions of rands Reviewed Audited
16 925 17 927 16 531 Revenue 34 852 32 421
(10 567) (10 772) (10 145) Raw materials and consumables used (21 339) (19 652)
(1 891) (1 873) (1 714) Employee costs (3 764) (3 408)
(1 805) (1 661) (1 694) Energy (3 466) (3 288)
355 (63) 526 Movement in inventories of finished goods and work 292 1 196
in progress
(747) (639) (808) Depreciation (1 386) (1 544)
(12) (12) (11) Amortisation of intangible assets (24) (19)
(2 718) (2 748) (2 871) Other operating expenses (5 466) (5 659)
(460) 159 (186) (Loss)/profit from operations (301) 47
(1 950) Impairment charges (1 950)
(28) 45 92 Finance and investment income 17 108
(353) (252) (156) Finance costs (605) (368)
80 Gain recognised on loss of interest over former associate 80
89 102 113 Income/(loss) from equity-accounted investments 191 (35)
(net of tax)
(672) 54 (2 087) (Loss)/profit before tax (618) (2 198)
529 (69) 80 Income tax credit/(expense) 460 51
(143) (15) (2 007) Loss for the period (158) (2 147)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit
or loss:
402 43 282 Exchange differences on translation of foreign operations 445 561
(26) (3) (14) Losses on available-for-sale investments taken to equity (29) (9)
(247) (6) (35) Share of other comprehensive (loss)/income (253) 28
of equity-accounted investments
(14) 19 (1 774) Total comprehensive (loss)/income for the period 5 (1 567)
Loss attributable to:
(143) (15) (2 007) Owners of the company (158) (2 147)
Total comprehensive (loss)/income attributable to:
(14) 19 (1 774) Owners of the company 5 (1 567)
Attributable loss per share (cents)
(36) (4) (500) - basic (39) (535)
(36) (4) (500) - diluted (39) (535)
Condensed consolidated statement of financial position
As at
31 December 30 June 31 December
2014 2014 2013
In millions of rand Reviewed Reviewed Audited
Assets
Non-current assets 20 225 18 923 18 602
Property, plant and equipment 16 001 14 936 14 702
Intangible assets 135 143 146
Equity-accounted investments 4 031 3 830 3 737
Other financial assets 58 14 17
Current assets 12 801 13 668 14 113
Inventories 10 684 10 396 10 553
Trade and other receivables 1 562 2 791 2 194
Taxation 64 72 51
Other financial assets 37 3 17
Cash and bank balances 454 406 1 298
Total assets 33 026 32 591 32 715
Equity and liabilities
Shareholders’ equity 20 722 20 723 20 694
Stated capital 37 37 37
Non-distributable reserves (1 294) (1 521) (1 614)
Retained income 21 979 22 207 22 271
Non-current liabilities 3 441 4 036 4 099
Other payables 261 258 267
Finance lease obligations 256 289 757
Deferred income tax liability 1 204 1 754 1 747
Non-current provisions 1 720 1 735 1 328
Current liabilities 8 863 7 832 7 922
Trade payables 6 400 5 589 5 720
Borrowings 1 000 1 000 906
Bank overdraft 107
Finance lease obligations 92 96 95
Taxation 18 59 6
Current provisions 573 355 408
Other payables 769 732 680
Other financial liabilities 11 1
Total equity and liabilities 33 026 32 591 32 715
Condensed consolidated statement of cash flows
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited In millions of rands Reviewed Audited
1 845 (101) 56 Cash inflows/(outflows) from operating 1 744 1 084
activities
2 096 109 310 Cash generated from operations 2 205 1 595
5 7 3 Interest income 12 7
(211) (161) (106) Finance cost (372) (169)
(53) (31) (73) Income tax paid (84) (221)
8 (25) (78) Realised foreign exchange movement (17) (128)
(1 793) (815) (908) Cash outflows from investing activities (2 608) (1 545)
(1 794) (846) (926) Investment to maintain operations (2 640) (1 500)
(53) (20) (41) Investment to expand operations (73) (69)
42 (5) (15) Decrease/(increase) in equity-accounted 37 (53)
investment
1 71 Proceeds from disposal of assets 1 72
3 3 3 Investment income - interest 6 5
8 53 Dividend from equity-accounted investments 61
(14) 91 138 Cash (outflows)/inflows from financing 77 674
activities
(14) 91 138 (Decrease)/increase in borrowings and 77 674
finance lease obligations
38 (825) 71 Increase/(decrease) in cash and (787) 213
cash equivalents
10 40 40 Effect of foreign exchange rate changes 50 94
406 1 191 1 080 Cash and cash equivalents at beginning 1 191 884
of period
454 406 1 191 Cash and cash equivalents at end of period 454 1 191
Notes to the reviewed condensed group financial results
1. Basis of preparation
The reviewed condensed consolidated financial statements are prepared in accordance with the requirements of the
JSE Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa.
The Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by
the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34
Interim Financial Reporting. The accounting policies applied in the preparation of these condensed consolidated
financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual
financial statements.
The reviewed condensed consolidated financial statements were prepared under the supervision of Mr MJ Wellhausen,
the group’s chief financial officer.
2. Significant accounting policies
These reviewed condensed consolidated financial statements for the year ended 31 December 2014 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 2013, except for the following new or revised standards, amendments thereto
and interpretations as issued by the International Accounting Standards Board, which are effective for the current
reporting period that were adopted:
- IFRIC 21 Levies
- IAS 36 Impairment of assets
The adoption of these new and revised accounting standards did not have a material impact on the consolidated
financial statements and as such there is no change to comparative information resulting from the adoption of
these standards.
3. Change in accounting estimates
The useful lives of certain items of property, plant and equipment were reassessed and revised to reflect the current
estimated life over which the group has the ability and intention to use such assets. The effect of these changes
on the actual depreciation expense for the year ended 31 December 2014 is a reduction of approximately R109 million,
of which R53 million relates to the first six months ended 30 June 2014. In addition, the company revised the method
of estimation of net realisable value relating to general spare parts from that based on age to that based on the
actual observed condition of the spares. This change resulted in the reversal of the previous write-down of inventory
of R120 million.
4. Independent review by the auditors
Any reference to future financial performance and expectations included in this announcement has not been reviewed
or reported on by the company’s auditors.
5. Capital expenditure commitments
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Audited In millions of rands Reviewed Audited
377 1 077 1 170 Contracted 377 1 170
798 761 1 258 Authorised but not contracted 798 1 258
6. Related party transactions
The group is controlled by ArcelorMittal Holdings AG which effectively owns 52.02% of the company’s 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.
7. Corporate governance (unaudited)
The group subscribes to and substantially complies with the King Code on Corporate Governance for South Africa.
8. Fair value measurements
Some of the group’s financial assets and financial liabilities are measured at fair value at the end of each
reporting period. The following table gives information about how the fair values of these financial assets and
financial liabilities are determined, particularly the valuation techniques and inputs used.
Financial assets/liabilities Fair values as at period ended
31 December 30 June 31 December
2014 2014 2013 Fair value Valuation techniques
In millions of rands Reviewed Reviewed Audited hierarchy and key inputs
Available for sale 58 14 17 Level 1 Quoted prices in an active market
Held-for-trading assets 37 3 17 Level 1 Quoted prices in an active market
Held-for-trading liabilities 11 1 Level 1 Quoted prices in an active market
Level 1: Fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets
or liabilities.
9. Subsequent events
The directors are not aware of any matter or circumstances arising since the end of December 2014 to the date of
this report that would significantly affect the operations, the results and the financial position of the group.
Condensed consolidated statement of changes in equity
Treasury
share
Stated equity Other Retained
In millions of rands capital reserve reserves earnings Total
Six months ended 30 June 2013 (Reviewed)
Balance as at 1 January 2013 37 (3 918) 1 740 24 383 22 242
Total comprehensive loss 347 (140) 207
Share-based payment reserve 9 9
Transfer of equity-accounted earnings (148) 148
Balance as at 30 June 2013 (Reviewed) 37 (3 918) 1 948 24 391 22 458
Six months ended 31 December 2013 (Audited)
Balance as at 30 June 2014 37 (3 918) 1 948 24 391 22 458
Total comprehensive income/(loss) 233 (2 007) (1 774)
Share-based payment reserve 10 10
Transfer of equity-accounted earnings 113 (113)
Balance as at 31 December 2013 (Audited) 37 (3 918) 2 304 22 271 20 694
Six months ended 30 June 2014 (Reviewed)
Balance as at 31 December 2013 37 (3 918) 2 304 22 271 20 694
Total comprehensive income/(loss) 34 (15) 19
Share-based payment reserve 10 10
Transfer of equity-accounted earnings 49 (49)
Balance as at 30 June 2014 (Reviewed) 37 (3 918) 2 397 22 207 20 723
Six months ended 31 December 2014 (Reviewed)
Balance as at 30 June 2014 37 (3 918) 2 397 22 207 20 723
Total comprehensive income/(loss) 129 (143) (14)
Share-based payment reserve 13 13
Transfer of equity-accounted earnings 85 (85)
Balance as at 31 December 2014 (Reviewed) 37 (3 918) 2 624 21 979 20 722
Segment information
Flat steel products
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited Reviewed Audited
12 261 12 180 10 653 Revenue (R million) 24 441 20 697
11 385 11 572 10 339 - External 22 957 19 922
876 608 314 - Internal 1 484 775
351 184 160 EBITDA (R million) 535 135
(554) (510) (657) Depreciation and amortisation (R million) (1 064) (1 255)
(203) (326) (497) Loss from operations (R million) (529) (1 120)
Unaudited information
1 867 1 719 1 694 Liquid steel production (‘000 tonnes) 3 586 3 229
1 476 1 505 1 410 Steel sales (‘000 tonnes) 2 981 2 771
982 969 908 - Local 1 951 2 003
494 536 502 - Export 1 030 768
88 83 80 Capacity utilisation (%) 85 74
Long steel products
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited Reviewed Audited
5 855 6 556 5 649 Revenue (R million) 12 411 11 618
4 547 5 364 5 113 - External 9 911 10 616
1 308 1 192 536 - Internal 2 500 1 002
(162) 178 504 EBITDA (R million) 16 1 198
(205) (137) (159) Depreciation and amortisation (R million) (342) (301)
(367) 41 345 (Loss)/profit from operations (R million) (326) 897
Unaudited information
265 667 921 Liquid steel production (‘000 tonnes) 932 1 867
569 690 697 Steel sales (‘000 tonnes) 1 259 1 459
486 565 512 - Local 1 051 1 123
83 125 185 - Export 208 336
23 58 80 Capacity utilisation (%) 41 81
Coke and chemicals
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited Reviewed Audited
1 025 1 019 1 109 Revenue (R million) 2 044 1 937
993 991 1 079 - External 1 984 1 883
32 28 30 - Internal 60 54
223 205 247 EBITDA (R million) 428 514
(18) (17) (18) Depreciation and amortisation (R million) (35) (35)
205 188 229 Profit from operations (R million) 393 479
Unaudited information
293 229 181 Commercial coke produced (‘000 tonnes) 522 391
258 208 335 Commercial coke sales (‘000 tonnes) 466 545
57 53 57 Tar sales (‘000 tonnes) 110 109
Corporate and other
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited Reviewed Audited
36 243 (120) EBITDA (R million) 279 (79)
(50) (158) Tshikondeni mine closure costs (50) (158)
(90) Restructuring cost (90)
(9) Onerous contract - Sandton office (9)
Depreciation and amortisation credit
18 13 15 (R million) 31 28
(95) 256 (263) (Loss)/profit from operations (R million) 161 (209)
Additional information
Six months ended Year ended
31 December 30 June 31 December 31 December 31 December
2014 2014 2013 2014 2013
Unaudited Reviewed Unaudited In millions of rands Reviewed Audited
Reconciliation of earnings before interest,
taxation, depreciation and amortisation (EBITDA)
(460) 159 (186) (Loss)/profit from operations (301) 47
Adjusted for:
747 639 808 - Depreciation 1 386 1 544
12 12 11 - Amortisation of intangible assets 24 19
50 158 - Tshikondeni mine closure costs 50 158
90 - Restructuring cost 90
9 - Onerous contract 9
448 810 791 EBITDA for the period 1 258 1 768
Reconciliation of headline (loss)/earnings
(143) (15) (2 007) Loss for the period (158) (2 147)
Adjusted for:
(80) - Gain recognised on loss of interest over former (80)
associate
1 950 - Impairment charges 1 950
16 13 (61) - Loss/(profit) on disposal or scrapping of assets 29 (37)
(16) - Profit on disposal of assets of an associate (16)
2 (4) 17 - Tax effect (2) 10
(221) (6) (101) Headline loss for the period (227) (224)
Headline loss per share (cents)
(55) (2) (25) - basic (57) (56)
(55) (2) (25) - diluted (57) (56)
Return on ordinary shareholders’ equity per annum
(1.4) (0.1) (19.4) - Attributable earnings (%) (0.8) (10.0)
(2.1) (0.1) (1.0) - Headline earnings (%) (1.1) (1.0)
(2.6) (2.9) 1.4 - Net (borrowings)/cash to equity (%) (2.6) 1.4
Share statistics
Ordinary shares (thousands)
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
401 202 401 202 401 202 - diluted weighted average number of shares 401 202 401 202
26.41 31.06 37.30 Share price (closing) (Rand) 26.41 37.30
10 596 12 461 14 965 Market capitalisation (R million) 10 596 14 965
51.65 51.65 51.58 Net asset value per share (Rand) 51.65 51.58
Forward-looking statements
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 risks and uncertainties whose impact could cause actual results and company’s plans and
objectives to differ materially from those expressed or implied in the forward-looking statements (or from past results).
Any reference to future financial performance included in this announcement has not been reviewed or reported on by
the company’s auditors.
Registered office: ArcelorMittal South Africa Limited, Room N3-5, Main Building, Delfos Boulevard, Vanderbijlpark, 1911
Directors: Non-executive: PM Makwana* (Chairman), DK Chugh†, FA du Plessis*, S Maheshwari†, NP Mnxasana*, J Modise*,
LP Mondi, DCG Murray*, G Urquijoº †Citizen of India ºCitizen of Spain *Independent non-executive
Executive: PS O’Flaherty (Chief executive officer), MJ Wellhausen# (Chief financial officer) #Citizen of Germany
Company secretary: Premium Corporate Consulting Services Proprietary Limited
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited, 1 Fricker Road, Illovo, 2196, Private Bag X9936,
Sandton, 2146
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001,
PO Box 61051, Marshalltown, 2107
Release date: 13 February 2015
This report is available on ArcelorMittal South Africa’s website at: http://www.arcelormittal.com/southafrica
Share queries: Please call the ArcelorMittal South Africa share care toll free line on0800 006 960 or +27 11 370 7850
Date: 13/02/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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