Towards the Future
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ArcelorMittal South Africa Integrated Annual Report 2014 TOWARDS THE FUTURE Integrated Annual Report 2014 WorldReginfo - a41a9815-bac4-42f1-b62f-e63a4964e1ed About this report This is our fourth integrated annual report (IAR). With this report Content and presentation of information in this year’s IAR were we aim to provide all stakeholders with a transparent and informed by a third-party analysis of our 2013 report, which COPY TO BE SUPPLIEDbalanced appraisal of the material issues that faced our business was adjudged “excellent” in the 2014 Ernst & Young Excellence during the year under review. in Integrated Reporting Awards, an appraisal that was echoed by the Nkonki Top 100 Integrated Reporting Awards which placed The report should be read in conjunction with the full financial the report in its top 10. statements. In presenting a shorter printed report we have sought to fulfil This year we have elected not to produce a separate online the International <IR> Framework’s guiding principle of sustainability report, believing that our level of integrated conciseness. We aim to align our systems so that our reporting reporting has reached such a point as to make a report on processes achieve full compliance with the Framework by 2015. “non-financial” or non-operational issues redundant. We accept, however, that various stakeholders have particular interests in Assurance “sustainability” aspects of our company, interests that require To further enhance the integrity of our report we have opted for a deeper level of disclosure than can be accommodated in this, limited assurance of certain key performance indicators (KPIs). more concise, report. Such detail, particularly as it relates to our The number of indicators assured this year increased from seven social, human and natural capital, is given in our expanded online in 2013 to 12. This assurance process will be further improved integrated report. in future, in line with the refining of our controls and governance around these measures to withstand the same level of scrutiny Scope and boundary of this report as financial information. The limited assurance statement is on This IAR covers the period from 1 January 2014 to page 79. 31 December 2014. The previous IAR covered the 2013 financial year. Regarding the summarised consolidated financial statements 2014 This IAR provides an account of the group’s operational, financial, We have provided summarised consolidated financial statements economic, social and environmental performance, as well as in our printed report, in accordance with International Financial governance, during the period reviewed. Reporting Standards (IFRS) and Interpretations issued respectively by the International Accounting Standards Board It covers the operations of ArcelorMittal South Africa which (IASB) and the International Financial Reporting Interpretation include Vanderbijlpark Works, Vereeniging Works, Saldanha Committee (IFRIC) of the IASB, in particular International Works, Newcastle Works, Pretoria Works and our Coke and Accounting Standard (IAS) 34 Interim Financial Reporting, the Chemicals operation. SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Pronouncements as Although this report is considerably more concise than those of issued by the Financial Reporting Standards Council, and the previous years, there has been no material change in the scope requirements of the Companies Act of South Africa as applicable and boundary of the IAR compared to the prior year. to summary financial statements. Forward looking statements An independent audit was performed by Deloitte & Touche, Certain statements in this document constitute “forward looking expressing an unmodified opinion. The opinion on the statements” which involve known and unknown risks and summarised consolidated financial statements, included in the opportunities, other uncertainties and important factors that IAR, is on page 84. could turn out to be materially different following the publication of actual results. Board responsibility The board, together with the audit committee, takes These forward looking statements speak only as of the date responsibility for this IAR. The report was prepared by a of this document. The company undertakes no obligation representative team of the company, assisted by outside to update publicly or release any revisions to these forward experts, which reported to the chief executive officer (CEO) and looking statements, to reflect events or circumstances after chief financial officer (CFO). All directors were given at least two the date of this document, or to reflect the occurrence of opportunities to review and comment on the contents and to anticipated events. ensure the report’s integrity. In the board’s opinion, this report addresses the material issues and accurately presents Progressing integrated reporting the integrated performance of the organisation and its impacts. This report has been prepared in accordance with the The board authorised this report for release on 10 March 2015. recommendations of principle 9.1 of the King Code and the International Integrated Reporting (<IR>) Framework Signed by the CEO, who has been duly authorised thereto by as published in December 2013 by the International the board. Integrated Reporting Council. This report contains Standard Disclosures from the GRI Sustainability Reporting Guidelines. A G3.1 content index appears on this website. We have self-assessed this report as meeting the GRI 3.1 Level C. Paul O’Flaherty Chief executive officer WorldReginfo - a41a9815-bac4-42f1-b62f-e63a4964e1ed ArcelorMittal South Africa Integrated Annual Report 2014 Our two reports Contents Integrated Our business Corporate governance COPY TO BE annual report 2 Determining what really matters and risk management SUPPLIED (IAR) 3 Our footprint 62 Company leadership 4 About us 64 Corporate governance 6 Our stakeholders and how we 68 Risk management report engage them 72 Remuneration report 9 Company structure 79 Limited assurance report 10 Our value creation model 12 Our sustainable business journey Reports and financial 14 Performance on achieving our results strategic objectives 82 Audit and risk committee report 16 2014 highlights and 10-year This printed IAR (also available online, with 84 performance review Independent auditor’s report on additional information, at our company’s integrated summarised consolidated 16 Five-year benchmarking against report website www.arcelormittalsa.com/ financial statements peers integratedreport2014, is intended to provide 85 Basis of preparation 18 Key indicators readers with an overview of our operations during 86 Summarised consolidated the year, about our ability to create value over the statement of comprehensive short, medium and long term, and our performance Leadership reports income in managing our most material issues, which are 22 Message from the chairman 87 Summarised consolidated listed as strategic objectives in this report. It 25 Message from the chief statement of financial position includes messages from leadership, operational executive officer 88 Summarised consolidated reviews, corporate governance and risk 28 Message from the chief financial statement of cash flows management reports, summarised financial officer statements and information for shareholders. 88 Summarised consolidated statement of changes in equity Achieving our objectives 89 Notes to the summarised 34 Our operating context consolidated financial statements 38 The 2014 Newcastle blast Annual furnace reline Shareholders’ financial 40 Protecting the health and safety information, AGM and statements of our people proxy 43 Driving profitability 94 Analysis of ordinary shareholders 48 Maintaining our licence to 96 Notice of annual general meeting operate 99 Proxy form 57 Creating a high-performance 100 Instructions and notes to the culture form of proxy IBC Corporate information The full financial statements, available on the disk that is packaged with this printed IAR as well as at www.arcelormittalsa.com/integratedreport2014, provide a comprehensive insight into the financial position of the company for the year under review. Please provide us with your feedback We value feedback from our stakeholders and use it to ensure that we are reporting on the issues that are relevant to them. Please take the time to give us your feedback on this report. Visit the web link: www.arcelormittalsa. com/investorrelations/emailus.aspx 1 WorldReginfo - a41a9815-bac4-42f1-b62f-e63a4964e1ed ArcelorMittal South Africa Integrated Annual Report 2014 Determining what really matters Stakeholder inclusiveness is central to determining our most material issues. This engagement happens through formal platforms ( pages 6 to 8) which deal directly with stakeholder engagement. Explicit and perceived stakeholder concerns are regularly reported to the executive committee for consideration, while the company’s policies and actions are reported to stakeholders for input. In addition to the concerns of stakeholders, we consider the macro-economic, political, social and legislative environments in which we operate and do business, as well as the risk register which is informed by our ongoing enterprise risk management systems and overseen by the audit and risk committee. This combined approach helps us to develop a comprehensive picture of the various issues facing the company. We determine Our four key strategic objectives are: the relative materiality of these issues according to