ARCELORMITTAL SOUTH AFRICA LIMITED - Reviewed condensed consolidated financial statements for the six months ended 30 June 2018

Release Date: 01/08/2018 07:05
Code(s): ACL
 
Wrap Text
Reviewed condensed consolidated financial statements for the six months ended 30 June 2018

ArcelorMittal South Africa Limited 
(Incorporated in the Republic of South Africa)
(Registration number: 1989/002164/06) 
Share code: ACL 
ISIN: ZAE 000134961 
(ArcelorMittal South Africa, the company or the group)

Reviewed condensed consolidated financial statements for the six months ended 30 June 2018


Salient features
- Ebitda improved by R2 121 million from a loss of R534 million to a profit of R1 587 million                                                                                                                                                                          
- Liquid steel production increased by 8%                                                                                                                                                                                                                            
- Steel sale volumes up by 10% despite apparent steel consumption at a nine-year low                                                   
- The disposal of the investment in Macsteel International Holdings BV (MIHBV) progressing well                                                                                                                                                                       
- Net debt improved by R1 374 million from R3 262 million in December 2017 to R1 888 million 
  before proceeds from the sale of MIHBV    
- Imports declined by 31%                                                                         
- Higher international steel prices                                                               
- Cash cost per tonne of liquid steel produced decreased by 6%                                    
- Results negatively impacted by the strengthening of the average rand/US dollar exchange rate    
- Buoyant international market with exports up by 26%                                             
                                                                                                          
The analysis relates to the six months ended 30 June 2018 (current year) compared to the six months ended 30 June 2017
(prior year) except where otherwise indicated.

Overview 
The group's results were positively impacted by the higher realised steel prices on the back of higher international
steel prices and higher steel sale volumes in spite of a weakening South African economy and relative strong average
rand/US dollar exchange rate. Greater political stability and Moody's decision to maintain an investment-grade credit 
rating was positive for business confidence in South Africa. Low inflation and higher real wages should support stronger
household spending, while the government's new drive to attract investment should help bolster capital outlays.
 
The domestic steel market in which the group operates remains constrained following minimal local investment and
infrastructure spending and the volatility of the rand/US dollar exchange rate, while international demand remains strong.
Local apparent steel consumption decreased by 3% as a result of subdued economic growth. South Africa and key African
markets continue to face the threat of steel imports, mainly from China. Although we have seen a decrease in imports, 
392 000 tonnes of primary carbon steel were still imported into South Africa in the first half of the year, despite import
duties, selective safeguarding and the designation of local steel.
 
ArcelorMittal South Africa's operating profit turned around from a loss of R983 million to a profit of R1 224 million
while headline loss also improved by R1 673 million to a profit of R54 million compared to the same period last year.

The turnaround is on the back of a favourable international steel pricing environment together with higher steel sales
volumes, despite a relatively strong average rand/US dollar exchange rate in the first half of the year. 

As part of its strategy, the group has implemented various initiatives to return to profitability and generate
positive cash flows. Further initiatives are being investigated to address the ongoing sustainability of the group.

As part of the above initiatives, the board has approved the sale of the group's 50% investment in MIHBV for USD220 million 
(circa R3 billion) to strengthen the group's statement of financial position. Since the last announcement on this
proposed transaction, the sale of shares agreement and marketing agreement have been signed and are subject to the
fulfilment of certain conditions precedent.

Safety remains the group's number one priority. Notwithstanding the intention to achieve zero fatalities and injuries,
the group regrettably experienced one fatal incident on 3 June 2018 at the Saldanha Works. The board and management
extend their deepest condolences to the family and colleagues of the deceased. The lost time injury frequency rate (LTIFR)
weakened from 0.62 to 0.83, while total injury frequency rate (TIFR) improved to 6.33 from 7.49. 

Markets
Growth in global steel demand maintained its momentum from 2017 into the first half of 2018, attributable to a
broad-based economic expansion. Hot rolled coil (HRC) and rebar prices gained 6% and 3% respectively, compared to the second
half of 2017. The cost of iron ore and coking coal increased on average by USD2 (2%) and USD12 (6%) per tonne respectively
compared to the second half of 2017.

The positive market sentiment in most African markets flowed from 2017 into 2018 driven primarily by the continued
focus on infrastructure investment. However, South Africa was an exception to this growth story with the first half of 2018
showing a weaker demand, especially in mining, construction and manufacturing, than the second half of 2017. 

Despite the continued strength in global steel demand and the stability of steel pricing, the domestic economy is
lacking the major infrastructure investment that could provide a spur to growth. As the South African steel industry
continues to struggle with low demand, developing effective responses to combat the flow of imports, especially of finished
goods, remains an urgent task.

Financial results
Revenue
Revenue increased by 19.4% to R22 868 million primarily as a result of an 8.5% increase in average net realised steel
prices, from R8 138 per tonne to R8 827 per tonne and higher sales volumes of 10.2%, with local sales and exports
increasing by 5% and 26% respectively. Revenue from the Coke and Chemicals business was in line with the comparable 
period last year. Commercial coke sales volumes decreased by 4 000 tonnes or 4.3% while tar sales volumes increased by 
6 000 tonnes or 16.2%. Commercial coke and tar prices increased by 4.3% and 8.9% respectively.

Operating expenses
Cash cost per tonne of liquid steel produced decreased by 6% to R7 396, raw materials, namely iron ore, coal and
scrap, which accounted for 48% of total costs, decreased by 7%. Consumables and auxiliaries, which represented approximately
29% of costs, decreased by 3%, and fixed costs per tonne decreased by 8%.

The lower raw material cost was mainly driven by lower iron ore and coking coal prices, aided by the stronger exchange
rate, while the cost of scrap was higher. 

Profit/(loss) from operations
The profit/(loss) from operations improved by R2 207 million to R1 224 million, given the higher international steel
pricing environment and increased sales. Depreciation decreased due to the impairment of the Vanderbijlpark, Saldanha and
long product cash-generating units in 2017. 

Loss for the period            
The loss for the period decreased by R621 million. This was largely attributable to the profit from operations, an
improvement of R2 207 million. This was partly offset by the fair value adjustment on the MIHBV investment reclassified as
an asset held-for-sale of R1 652 million.

Financing costs were R707 million higher, driven by unrealised exchange rate losses resulting from the devaluation of
the rand against the US dollar at the end of the period. 

Income from equity-accounted investments increased by R151 million due to improved results from joint ventures. 

Cash position
The cash position improved from a net borrowing position of R2 577 million to a net borrowing position of R1 888
million, following a better operational performance which was somewhat negated by financing costs and capital spend. 
Against the financial year-end of December 2017, the net borrowing position improved by R1 374 million. 

Operational
The group's capacity utilisation was 85% compared to 79% the previous year. Liquid steel production for the year was
2.6 million tonnes, an increase of 185 000 tonnes (7.8%).

Flat products' liquid steel production increased by 165 000 tonnes and plant utilisation increased to 87% compared to
79% in 2017. This was due to better plant performance at Vanderbijlpark Works of 176 000 tonnes.
 
Long products' liquid steel production increased by 20 000 tonnes and plant utilisation increased to 79% compared to
77% in 2017.

Sustainability 
The group identified various initiatives that are aimed at ensuring its sustainability and licence to operate:
- Air emissions are currently a key focus area. Significant challenges regarding sinter and coke emissions at
  Vanderbijlpark Works and blast furnace emissions at Newcastle Works are being addressed 
- Newly installed water treatment facility at Newcastle Works is performing as expected, while Vanderbijlpark Works
  is making good progress to achieve ‘zero effluent' status
- Water saving measures at Saldanha Works are ready for implementation pending the issue of all required
  authorisations
- Further engagement with government on duties for tin products
- Reopening of the Vereeniging meltshop in 2019
- Feasibility study for a new electric arc furnace at Vanderbijlpark Works
- Completed a detailed top-down diagnostic resulting in a target of USD50/t cost saving
- The sale of the group's interest in MIHBV
- Successfully renegotiated the covenant level of the borrowing-based facility

The group continues its focus on its environmental compliance, and its engagement with the authorities on certain
environmental concerns.

Changes to the board of directors and company secretary
- Mr HJ Verster was appointed as chief executive officer and executive director with effect from 1 February 2018
- Mr WA de Klerk retired as chief executive officer and executive director with effect from 31 January 2018
- Mr HMA Blaffart retired as non-executive director with effect from 31 March 2018
- Mr BE Aranha was appointed as non-executive director with effect from 31 March 2018
- Mr D Subramanian resigned as chief financial officer and executive director with effect from 31 July 2018. 
- PremCorp Consulting Services was appointed as interim company secretary with effect from 26 January 2018

Dividends
No dividends were declared for the six months ended 30 June 2018.

Outlook for the second half of 2018
ArcelorMittal South Africa has implemented various initiatives to return the group to profitability and to generate
positive cash flows. The group will continue to drive the implementation of interventions to address the challenges it
faces. Management will also focus on the conclusion of the MIHBV transaction.

In the second half of the year, domestic steel demand and exports are expected to remain stable apart from the
seasonal slowdown during December. Sales prices are expected to remain stable, with the volatility in the rand/US dollar
exchange rate continuing to have an impact on the group's results. 

On behalf of the board of directors
HJ Verster                        D Subramanian
Chief executive officer           Chief financial officer
27 July 2018


Key statistics 
                                                                     Six months ended                                                                                                               
                                                              30 June 2018      30 June 2017                                                                                            
Unreviewed information                                                                          
Operational                                                                                     
Liquid steel production (000 tonnes)                                 2 559             2 374    
Total steel sales (000 tonnes)                                       2 366             2 147    
Local steel sales (000 tonnes)                                       1 715             1 629    
Export steel sales (000 tonnes)                                        651               518    
Capacity utilisation (%)                                                85                79    
Commercial coke sales (000 tonnes)                                      88                92    
Average net realised price (R/t)                                     8 827             8 138    
Safety                                                                                          
Lost time injury frequency rate                                       0.83              0.62    
Reviewed information                                                                            
Financial                                                                                       
Revenue (R million)                                                 22 868            19 151    
Profit/(loss) from operations (R million)                            1 224              (983)   
Loss for the period (R million)                                     (1 602)           (2 223)   
Loss per share (cents)                                                (147)             (203)   
Headline earnings/(loss) (R million)                                    54            (1 619)   
Headline earnings/(loss) per share (cents)                               5              (148)   
Net borrowings (R million)                                          (1 888)           (2 577)   
Ratios                                                                                          
Return on ordinary shareholders' equity per annum:                                              
- Attributable earnings/(loss) (%)                                   (43.4)            (36.1)   
- Headline earnings/(loss) (%)                                         1.4             (26.3)   
- Net borrowings (%)                                                 (28.1)            (23.2)   
Share statistics                                                                                
Ordinary shares (thousands):                                                                    
- in issue                                                       1 138 060         1 138 060    
- outstanding                                                    1 093 510         1 093 510    
- weighted average number of shares                              1 093 510         1 093 510    
- diluted weighted average number of shares                      1 093 510         1 093 510    
Share price (closing) (Rand)                                          2.12              5.30    
Market capitalisation (R million)                                    2 318             5 796    
Net asset value per share (Rand)                                      6.14             10.15    


Reconciliation of earnings before interest, taxation, depreciation and amortisation (EBITDA)
                                                                     Six months ended                                                                                                 
                                                              30 June 2018      30 June 2017    
In millions of rand                                               Reviewed          Reviewed                                                                                            
Profit/(loss) from operations                                        1 224              (983)   
Adjusted for:                                                                                   
- Depreciation                                                         355               437    
- Amortisation of intangible assets                                      8                12    
EBITDA                                                               1 587              (534)   


Independent auditor's review report on interim financial statements
To the shareholders of ArcelorMittal South Africa Limited
We have reviewed the condensed consolidated financial statements of ArcelorMittal South Africa Limited, contained 
in the accompanying interim report, which comprise the condensed consolidated statement of financial position as at 
30 June 2018 and the condensed consolidated statement of comprehensive income, changes in equity and cash flows for 
the six months then ended, and selected explanatory notes. 

Directors' responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these interim financial statements in accordance
with International Financial Reporting Standard (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting
Guides, as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting
Standards Council 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 interim financial statements that are free from material
misstatement, whether due to fraud or error.

Auditor's responsibility
Our responsibility is to express a conclusion on these interim financial statements. We conducted our review in
accordance with International Standard on Review Engagements (ISRE) 2410 Review of Interim Financial 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 interim 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 interim 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 and differ in nature from 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 accompanying condensed
consolidated financial statements of ArcelorMittal South Africa Limited for the six months ended 30 June 2018 are not
prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting, the SAICA Financial Reporting 
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting 
Standards Council and the requirements of the Companies Act of South Africa.

Emphasis of matter - going concern
We draw attention to note 12 of the condensed consolidated financial statements which sets out the directors' initiatives. 
These conditions indicate the existence of a material uncertainty which may cast significant doubt on the group's ability 
to continue as a going concern. Our conclusion is not modified in respect of this matter. 

Deloitte & Touche 
Registered auditor

Per: SI Rajcoomar
Partner 
27 July 2018

Reviewed condensed consolidated statement of comprehensive income 
                                                                                           Six months ended                                                                                                                                                    
                                                                                     30 June 2018      30 June 2017    
In millions of rand                                                       Notes          Reviewed          Reviewed                                                                                                                          
Revenue                                                                                    22 868            19 151    
Raw materials and consumables used                                                        (12 617)          (13 322)   
Employee costs                                                                             (2 275)           (2 080)   
Energy                                                                                     (2 037)           (2 052)   
Movement in inventories of finished goods and work-in-progress                               (613)            1 012    
Depreciation                                                                                 (355)             (437)   
Amortisation of intangible assets                                                              (8)              (12)   
Other operating expenses                                                                   (3 739)           (3 243)   
Profit/(loss) from operations                                                               1 224              (983)   
Impairment of property, plant, equipment and intangible assets                                  -              (600)   
Impairment of other assets                                                                     (5)               (4)   
Fair value adjustment on asset held-for-sale                                  8            (1 652)                -    
Finance and investment income                                                                  47                24    
Finance costs                                                                 7            (1 353)             (646)   
Income/(loss) after tax from equity-accounted investments                                     137               (14)   
Loss before taxation                                                                       (1 602)           (2 223)   
Income tax (expense)/credit                                                  10                 -                 -    
Loss for the period                                                                        (1 602)           (2 223)   
Other comprehensive profit/(loss)                                                                                      
Items that may be reclassified subsequently to profit or loss:                                                         
Exchange differences on translation of foreign operations                                     286              (194)   
Cash flow hedges - effective portion of changes in fair value                                 (28)                -    
Income on available-for-sale investment taken to equity                                       (16)              (18)   
Share of other comprehensive income/(loss) of equity-accounted          
investments                                                                                    47               (26)   
Total comprehensive loss for the period                                                    (1 313)           (2 461)   
Loss attributable to:                                                                                                  
Owners of the company                                                                      (1 602)           (2 223)   
Total comprehensive loss attributable to:                                                                              
Owners of the company                                                                      (1 313)           (2 461)   
Attributable loss per share (cents)                                                                                    
- basic                                                                                      (147)             (203)   
- diluted                                                                                    (147)             (203)   
                                                                        

Reviewed condensed consolidated statement of financial position
                                                                                      As at                                                                                                                                                          
                                                                30 June 2018    30 June 2017    31 December 2017    
In millions of rand                                  Notes          Reviewed        Reviewed             Audited                                                                                                               
Assets                                                                                                              
Non-current assets                                                     8 840          15 192              13 065    
Property, plant and equipment                                          8 480          10 196               8 474    
Intangible assets                                                         75              91                  82    
Equity-accounted investments                                             227           4 447               4 424    
Non-current receivable                                                    19              40                  30    
Other financial assets                                                    39             418                  55    
Current assets                                                        21 907          18 837              18 131    
Inventories                                                           10 449          11 694              11 519    
Trade and other receivables                                            4 522           3 342               2 988    
Asset classified as held-for-sale                        8             3 018               -                   -    
Taxation                                                                  58              65                  58    
Other financial assets                                                   198              13                 428    
Cash and bank balances                                  11             3 662           3 723               3 138                                                                                                            
Total assets                                                          30 747          34 029              31 196    
Equity and liabilities                                                                                              
Shareholders' equity                                                   6 717          11 098               8 058    
Stated capital                                                         4 537           4 537               4 537    
Non-distributable reserves                                               751             345                 363    
Retained income                                                        1 429           6 216               3 158    
Non-current liabilities                                                5 938           6 167               5 792    
Borrowings                                                             2 700           2 700               2 700    
Other payables                                                           387             317                 399    
Finance lease obligations                                                 35              88                  54    
Provisions                                                             1 959           1 970               1 826    
Other financial liabilities                                              857           1 092                 813    
Current liabilities                                                   18 092          16 764              17 346    
Trade payables                                                        12 599          11 382              11 300    
Taxation                                                                  81               -                  82    
Borrowings                                                             2 850           3 600               3 700    
Finance lease obligations                                                 53              70                  70    
Provisions                                                               260             269                 304    
Other payables                                                         1 596           1 025                 984    
Other financial liabilities                                              653             418                 906                                                                                                             
Total equity and liabilities                                          30 747          34 029              31 196    


Reviewed condensed consolidated statement of cash flows
                                                                                         Six months ended                                                                                                                                              
                                                                                  30 June 2018      30 June 2017    
In millions of rand                                                     Note          Reviewed          Reviewed                                                                                                                       
Cash flows from operating activities                                                     1 998            (1 596)   
Cash generated from/(utilised in) operations                              14             2 552            (1 117)   
Interest income                                                                             42                20    
Finance cost                                                                              (372)             (373)   
Income tax paid                                                                             (1)               (7)   
Realised foreign exchange movement                                                        (223)             (119)   
Cash flows from investing activities                                                      (587)             (599)   
Investment to maintain and expand operations                                              (600)             (601)   
Investment in associates and joint ventures                                                 (2)               (4)   
Proceeds on disposal or scrapping of assets                                                 10                 6    
Interest income from investments                                                             5                 -    
Cash flows from financing activities                                                      (896)            4 254    
Borrowings (repaid)/raised                                                                (850)            4 289    
Finance lease obligation repaid                                                            (44)              (35)   
Cash settlement on Management Share Trust                                                   (2)                -    
Increase in cash and cash equivalents                                                      515             2 059    
Effect of foreign exchange rate changes on cash 
and cash equivalents                                                                         9                 4    
Cash and cash equivalents at the beginning of the period                                 3 138             1 660    
Cash and cash equivalents at the end of the period                                       3 662             3 723                                                                                                                       


Reviewed condensed consolidated statement of changes in equity                                                                                                                                                                                                                                                                                              
                                                                Treasury        
                                                Stated      share equity         Other      Retained                                        
In millions of rand                            capital           reserve      reserves      earnings        Total                                                                                                
Six months ended 30 June 2017 (reviewed)                                                                             
Balance as at 31 December 2016                   4 537            (3 918)        4 499         8 425       13 543    
Total comprehensive loss                             -                 -          (238)       (2 223)      (2 461)   
Share-based payment reserve                          -                 -            16             -           16    
Transfer of equity-accounted earnings                -                 -           (14)           14            -    
Balance as at 30 June 2017 (reviewed)            4 537            (3 918)        4 263         6 216       11 098    
Six months ended 31 December 2017                                                                                    
Balance as at 30 June 2017                       4 537            (3 918)        4 263         6 216       11 098    
Total comprehensive loss                             -                 -          (177)       (2 905)      (3 082)   
Cash settlement on management share trust            -                 -            (9)            -           (9)   
Share-based payment reserve                          -                 -            51             -           51    
Transfer of equity-accounted earnings                -                 -           153          (153)           -    
Balance as at 31 December 2017 (audited)         4 537            (3 918)        4 281         3 158        8 058    
Six months ended 30 June 2018 (reviewed)                                                                             
Balance as at 31 December 2017                   4 537            (3 918)        4 281         3 158        8 058    
Total comprehensive income/(loss)                    -                 -           289        (1 602)      (1 313)   
Share-based payment reserve                          -                 -           (26)            -          (26)   
Transfer of equity-accounted earnings                -                 -           127          (127)           -    
Cash settlement on Management Share Trust            -                 -            (2)            -           (2)   
Balance as at 30 June 2018 (reviewed)            4 537            (3 918)        4 669         1 429        6 717    


Notes to the reviewed condensed consolidated financial statements
 1. Corporate information                                                                                                                                                                                                                                                                                                                                                                                                              
    ArcelorMittal South Africa Limited is a public company domiciled in the Republic of South Africa and listed 
    on the JSE Limited. These condensed consolidated financial statements for the six months ended 30 June 2018 
    comprise the company and its subsidiaries (together referred to as the group). The group is one of the largest 
    steel producers on the African continent. 
    
 2. Basis of preparation                                                                                                                                                                                                                                                                                                                                                                                                               
    The condensed consolidated interim financial statements for the period ended 30 June 2018 have been prepared 
    in accordance with and containing the information required by International Financial Reporting Standards (IFRS),
    IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides, as issued by the Accounting Practices 
    Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and in accordance 
    with the requirements of the JSE Limited Listings Requirements for interim reports as well as the requirements 
    of the Companies Act of South Africa. The accounting policies applied in the preparation of the condensed 
    consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous 
    consolidated annual financial statements.   
    
    The condensed consolidated financial statements were prepared under the supervision of Mr D Subramanian CA(SA), 
    the chief financial officer. 
    
 3. Accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                
    The group has adopted IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. These new 
    standards did not have a material effect on the group's results for the period ended 30 June 2018.
    
    Apart from the standards mentioned, no other or revised accounting standards were adopted that could have a 
    material impact on the condensed consolidated financial statements.                                                                                                                                                                                                                                                    
 
                                                                          Six months ended                                                                                                             
                                                                  30 June 2018      30 June 2017    
    In millions of rand                                               Reviewed          Reviewed                                                                                            
 4. Segment report                                                                                  
    Flat steel products                                                                             
    Revenue (R million)                                                 15 817            13 422    
    - External                                                          15 436            13 321    
    - Internal                                                             381               101    
    EBITDA (R million) (unreviewed)                                      1 183               (69)   
    EBITDA margin (%) (unreviewed)                                         7.5              (0.5)   
    Average net realised price (R/t) (unreviewed)                        8 995             8 413    
    Depreciation and amortisation (R million)                             (173)             (253)   
    Profit/(loss) from operations (R million)                            1 010              (322)   
    Unreviewed information                                                                          
    Liquid steel production (000 tonnes)                                 1 814             1 649    
    Steel sales (000 tonnes)                                             1 616             1 506    
    - Local                                                              1 160             1 167    
    - Export                                                               456               339    
    Capacity utilisation (%)                                                87                79                                                                           
    Long steel products                                                                             
    Revenue (R million)                                                  7 704             5 420    
    - External                                                           6 718             5 130    
    - Internal                                                             986               290    
    EBITDA (R million) (unreviewed)                                        336              (706)   
    EBITDA margin (%) (unreviewed)                                         4.4             (13.0)   
    Average net realised price (R/t) (unreviewed)                        8 465             7 492    
    Depreciation and amortisation (R million)                             (163)             (191)   
    Profit/(loss) from operations (R million)                              173              (897)   
    Unreviewed information                                                                          
    Liquid steel production (000 tonnes)                                   745               725    
    Steel sales (000 tonnes)                                               750               641    
    - Local                                                                555               462    
    - Export                                                               195               179    
    Capacity utilisation (%)                                                79                77                                                                           
    Coke and Chemicals                                                                              
    Revenue (R million)                                                    730               735    
    - External                                                             714               700    
    - Internal                                                              16                35    
    EBITDA (R million) (unreviewed)                                        201               191    
    EBITDA margin (%) (unreviewed)                                        27.5              26.0    
    Depreciation and amortisation (R million)                              (40)              (18)   
    Profit from operations (R million)                                     161               173    
    Unreviewed information                                                                          
    Commercial coke produced (000 tonnes)                                   94               100    
    Commercial coke sales (000 tonnes)                                      88                92    
    Tar sales (000 tonnes)                                                  43                39    
    Corporate and other                                                                             
    EBITDA (R million) (unreviewed)                                       (133)               50    
    Depreciation and amortisation credit (R million)                        13                13    
    (Loss)/profit from operations (R million)                             (120)               63    
 
 5. Related party transactions                                                                                                                                                                                                                                                                                                                                                                                                     
    The group is controlled by ArcelorMittal Holdings AG, which effectively owns 69% (June 2017: 69%) of the 
    group's shares. At 30 June 2018, the outstanding ArcelorMittal Holdings AG subordinated loan amounted to 
    R2 700 million (2017: R2 700 million). Interest is payable at the South African prime lending rate and an 
    amount of R136 million (2017: R139 million) was incurred for the six months ended 30 June 2018. 
    
    During the year, the company and its subsidiaries entered into sale and purchase transactions with joint 
    ventures in the ordinary course of business at arm's length.                                                                                                                                                                                                                                                          
 
 6. Fair value measurements                                                                                                                
    Certain 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              Fair values as at period ended                                                                                        
                                  30 June 2018  30 June 2017       
    In millions of rand               Reviewed      Reviewed   Fair value hierarchy   Valuation techniques and key inputs                                                                                                                                                                                                          
    Available-for-sale                       -            61   Level 1                Quoted prices in an active market        
    Held-for-trading assets                192             -   Level 1                Quoted prices in an active market        
    Held-for-trading liabilities           207           105   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.                                                                                                           
 
 7. Finance cost                                                                                        
                                                                      30 June 2018      30 June 2017    
    In millions of rand                                                   Reviewed          Reviewed                                                                                                       
    Interest expense on loans                                                  534               362    
    Interest expense on finance lease obligations                                8                12    
    Net foreign exchange losses on financing activities                        651                87    
    Discount rate adjustment of the provisions                                  11                22    
    Unwinding of the discounting effect on provisions                           82                94    
    Unwinding of the discounting effect on financial liabilities                67                69    
    Finance cost                                                             1 353               646    
 
 8. Asset classified as held-for-sale                                                                                  
    ArcelorMittal South Africa has entered into an agreement to sell its 50% interest in MIHBV to Macsteel Holdings 
    Luxembourg SARL (MacHold) for USD220 million (circa R3 billion).   
    
    MIHBV is a long-standing joint venture between MacHold and ArcelorMittal South Africa which is largely focused
    on international steel trading and shipping. While it remains an important source of steel products, 
    ArcelorMittal South Africa supplies less than 20% of the total tonnage traded and less than 2% of volumes shipped 
    by MIHBV. Therefore, ArcelorMittal South Africa no longer considers the investment to be a core asset and has 
    decided to sell its interest in line with the group's strategic objectives.    
    
    The commercial relationship between MIHBV and ArcelorMittal South Africa will continue through a new, four-year 
    marketing agreement. The sale of shares and Marketing agreements will be effective once all the conditions
    precedent have been fulfilled.        
    
    The proceeds of this sale will significantly strengthen the statement of financial position and cash flow position. 
    This is an important part of the strategy as the directors work towards building the sustainability of the business 
    in the medium term.                                                                                                                                                                                                                                                                        
  
    Accounting impact of this transaction:                                
                                                      Six months ended                                                                        
                                                          30 June 2018    
    In millions of rand                                       Reviewed                                                                            
    Fair value (USD220 million x R12.52*)                        2 752    
    Equity-accounted investment                                 (4 404)   
    Fair value adjustment on asset held-for-sale                (1 652)   
    Foreign currency translation reserve (FCTR)                  1 862    
    *Exchange rate as at 31 May 2018, when the investment was classified as asset held-for-sale.
    
    On 31 May 2018, the group reclassified the investment in MIHBV as an asset held-for-sale. 
    
    The group recognised a fair value adjustment in profit and loss on this reclassification amounting to 
    R1 652 million. Once the disposal has been finalised the related FCTR and other reserves of R1 862 million 
    will be released in profit or loss. The final FCTR to be released in profit or loss will be determined based 
    on the rand/US dollar exchange rate at the date of disposal. Income from the equity-accounted investment in 
    MIHBV of R123 million was recognised for the period before reclassification as an asset held-for-sale.                          
 
9.  Thabazimbi mine          
    On 10 July 2018, the group received a notification from the Department of Mineral Resources that the consent 
    in terms of section 11(1) of the Mineral and Petroleum Resources Development Act, 2002, was approved to cede 
    the mining rights from Sishen Iron Ore Company (Pty) Ltd to Thabazimbi Iron Ore Mine (Pty) Ltd, previously 
    ArcelorMittal South Africa Operations (Pty) Ltd. This has no financial impact on the results for the six months 
    period ended 30 June 2018.   
    
10. Taxation                 
    The effective tax rate of 0% (compared to the statutory tax rate of 28%) for the six months ended 30 June 2018 is 
    primarily as a result of not recognising the deferred tax asset on the available income tax losses. The deferred 
    tax asset was only recognised to the extent of available deferred tax liabilities. Management believes that the 
    turnaround initiatives will result in the group returning to profitability at some point in the future. However, 
    based on considerations presented, management believes it is premature to conclude at this stage that it is more 
    likely than not for sufficient future taxable profits to be available against which the full proposed deferred 
    tax asset can be utilised.   
    
11. Restricted cash and securities          
    At 30 June 2018, ArcelorMittal South Africa has restricted cash of R1 524 million (2017: R1 583). This consists 
    of R922 million (2017: R998 million) regarding the true sales receivables (TSR) facility and R602 million 
    (2017: R585 million) for environmental rehabilitation obligations.    
    
    Eligible inventories and receivables are provided as securities to the lenders of the borrowing-based facility 
    to the extent of the draw down. At 30 June 2018, R2 850 million (2017: R3 350 million) was drawn down on the 
    borrowing-based facility and R1 650 million (2017: R1 150 million) was still available. 
    
    Bank accounts of R310 million (2017: R1 021 million) were ceded in favour of the lenders of the borrowing-based 
    and TSR facilities.          
                             
12. Going concern            
    During the first half of 2018, the group returned back to profitability driven by higher international steel 
    prices, lower costs, higher sale volumes and a weaker rand/US dollar exchange rate during the latter part of 
    the first half of 2018.     
    
    In addition, the group has implemented various initiatives to return to profitability and to generate positive 
    cash flows which are visible in the results for the first half of 2018. In order to ensure sustainability due 
    to the volatility of international steel prices and the exchange rate, the group is in the process of 
    implementing several additional initiatives and exploring others. This includes further cost-saving 
    interventions, assessing the profitability of various product lines and considering potential structural 
    changes. 
    
    As detailed in note 8, the realisation of the proceeds of the sale of the investment in MIHBV will further 
    strengthen the statement of financial position and cash flow of the group by approximately R3 billion.  
    
    As previously reported, the group was in the process of renegotiating the minimum tangible net worth covenant 
    on the borrowing-based facility. The group has completed the renegotiations and the resetting of the level of 
    this covenant. As at 30 June 2018, the group is in compliance with this covenant.   
    
    In light of the improved performance and the continued realisation of initiatives, the board believes that the 
    group will have sufficient funds to pay its debts as they become due over the next 12 months, and will therefore 
    remain a going concern.  
    
    Processes have been established to ensure effective and frequent monitoring of the implementation of these 
    initiatives so that appropriate and timeous action can be taken should the implementation not materialise. 
    The risk of the continued success of these initiatives and the risk of material volatility of exchange rates 
    and international steel prices, without further intervention, indicate the existence of a material 
    uncertainty that may cast significant doubt on the group's ability to continue as a going concern.          

                                                                                   Six months ended                                                                                                                                            
                                                                            30 June 2018      30 June 2017    
    In millions of rand                                                         Reviewed          Reviewed                                                                                                                          
13. Headline earnings/(loss)                                                                                  
    Loss for the period                                                           (1 602)           (2 223)   
    Adjusted for:                                                                                             
    - Impairment charge                                                                5               604    
    - Profit on disposal or scrapping of assets                                       (2)                -    
    - Fair value adjustment on asset held-for-sale                                 1 652                 -    
    - Tax effect                                                                       1                 -    
    Headline earnings/(loss) for the period                                           54            (1 619)   
    Headline earnings/(loss) per share (cents)                                                                
    - basic                                                                            5              (148)   
    - diluted                                                                          5              (148)   
                                                                                                              
                                                                                   Six months ended                                                                                                                               
                                                                            30 June 2018      30 June 2017    
    In millions of rand                                                         Reviewed          Reviewed                                                                                      
14. Cash generated from/(utilised in) operations                                                              
    Profit/(loss) from operations                                                  1 224             (983)    
    Adjusted for:                                                                                             
    Depreciation, impairment and amortisation                                        363               449    
    Net realisable value adjustment on inventory                                   (236)               142    
    Other payables raised, released and utilised 
    relating to employee benefits                                                   268                78    
    Other cash movements                                                            (28)              (39)    
    Changes in:                                                                                               
    Decrease/(increase) in inventories                                             1 306             (562)    
    Increase in trade and other receivables                                      (1 524)           (1 535)    
    Increase in trade and other payables                                             889             1 482    
    Utilisation of provisions                                                       (37)              (87)    
    Changes in financial liabilities or assets                                       327              (62)    
    Cash generated from/(utilised in) operations                                   2 552           (1 117)    
                                                                                                              
                                                                                   Six months ended                                                                                                                                           
                                                                            30 June 2018      30 June 2017    
    In millions of rand                                                         Reviewed          Reviewed                                                                                                                      
15. Commitments                                                                                               
    Capital expenditure commitments on property, 
    plant and equipment                                                 
    - Capital expenditure authorised and 
      contracted for                                                               2 859             4 076    
    - Capital expenditure authorised but 
      not contracted for                                                             578             1 348    
    Total                                                                          3 437             5 424    

16. Subsequent events                                                                                         
Apart from note 9, the directors are not aware of any matter or circumstances arising since the end of June 2018 
to the date of this report that would significantly affect the operations, results or financial position of 
the group.                                        

            
Registered office
ArcelorMittal South Africa Limited
Room N3-5, Main Building, Delfos Boulevard, Vanderbijlpark, 1911

Interim company secretary 
PremCorp Consulting Services (Pty) Ltd
33 Kingfisher Road, Fourways, 2191
PO Box 2424, Fourways,2191
Telephone: +27 (0) 11 465 4142/3

Non-executive directors
PM Makwana*(chairman), BE Aranhaº, LC Cele*, GS Gouws, NP Gosa, RK Kothari+, NP Mnxasana*, 
JRD Modise*, KMM Musonda*^, NF Nicolau*
º Citizen of Canada + Citizen of India ^ Citizen of Zambia * Independent non-executive

Executive directors
HJ Verster (chief executive officer)
D Subramanian (chief financial officer)

Sponsor 
ABSA Bank Limited (acting through its Corporate and Investment Banking division)
15 Alice Lane, Sandton, 2196
Private Bag x10056, Sandton, 2146

Auditors 
Deloitte & Touche
Deloitte Place, Building 1, The Woodlands, 20 Woodlands Drive, Woodmead, 2052, South Africa
Telephone: + 27 (0) 11 806 5000
Facsimile: + 27 (0) 11 806 5118

Release date
1 August 2018

Forward looking statements
Statements in this announcement 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 group 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 group's auditors.

Disclaimer
This document may contain forward looking information and statements about ArcelorMittal South Africa and its
subsidiaries. These statements include financial projections and estimates and their underlying assumptions, 
statements regarding plans, objectives and expectations with respect to future operations, products and services, 
and statements regarding future performance.

Forward looking statements may be identified by the words  "believe",  "expect",  "anticipate",  "target" or similar
expressions. Although ArcelorMittal South Africa's management believes that the expectations reflected in such 
forward looking statements are reasonable, investors and holders of ArcelorMittal South Africa's securities are 
cautioned that forward looking information and statements are subject to numerous risks and uncertainties, many of 
which are difficult to predict and generally beyond the control of ArcelorMittal South Africa, that could cause 
actual results and developments to differ materially and adversely from those expressed in, or implied or projected 
by, the forward looking information and statements. 

ArcelorMittal South Africa undertakes no obligation to publicly update its forward looking statements, whether as a
result of new information, future events, or otherwise.

This report is available on ArcelorMittal South Africa's website at: 
https://southafrica.arcelormittal.com/InvestorRelations/InterimResults.aspx

Share queries: Please call the ArcelorMittal South Africa share care 
toll free line on 0800 006 960 or +27 11 370 7850

https://southafrica.arcelormittal.com
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