ARRIUM LIMITED ASX APPENDIX 4E ABN 63 004 410 833 PRELIMINARY FINAL REPORT ARRIUM LIMITED RESULTS FOR ANNOUNCEMENT TO THE MARKET FINANCIAL YEAR ENDED 30 JUNE 2014 Comparison to previous corresponding period (pcp) Movement % Change A$ million Total revenue from ordinary activities up 2.4% to 7,006.6 Profit from ordinary activities after tax attributable up NC* to 205.4 to ordinary equity holders Net profit for the period attributable to ordinary up NC* to 205.4 equity holders * NC = Not comparable Dividends Final Dividend 2014 Interim Dividend 2014 Amount per security 3.0c 6.0c Franked amount per security 0.0c 0.0c Amount per security declared to be conduit 0.0c 0.0c foreign income Total dividend and dividend payment (A$ million) 41.0 81.7 Date Ex-dividend date for Final Dividend 10 September 2014 Record date for determining entitlement to Final Dividend 12 September 2014 Last day to elect to participate in the Dividend Reinvestment Plan (DRP) 15 September 2014 Date payable (on or around) 16 October 2014 Net tangible assets 30 June 2014 30 June 2013 Net Tangible Assets per security ($) 1.29 1.19 For personal use only ARRIUM LIMITED ASX APPENDIX 4E ABN 63 004 410 833 PRELIMINARY FINAL REPORT Details of Associates and Joint Venture Entities Name of associate or joint venture entity Associate or Joint Percentage Percentage Venture Entity holding holding June 2014 June 2013 BOSFA Pty Ltd Joint Venture 50% 50% GenAlta Recycling Inc. Joint Venture 50% 50% Details of entities over which control was gained during the period Name of entity Date Arrium Mining Sales Asia Limited 30 July 2013 Arrium Mining Services Asia Limited 26 July 2013 Moly-Cop Finance UK Limited 19 May 2014 There were no entities over which control was lost during the period. Dividend Reinvestment Plan The Dividend Reinvestment Plan (DRP) provides eligible shareholders with an option to use dividend entitlements to acquire Arrium Limited ordinary shares. Participation is optional. The DRP price is the arithmetic average of the daily volume weighted average market price during the 10 Trading Days (or any other number of Trading Days as the Board may determine) commencing on second Trading Day immediately after the Record date (rounded to two decimal places). The DRP will operate for the final dividend. The last date of receipt of DRP election notices is 5.00 pm on 15 September 2014. No discount applies to the DRP. Other disclosures Further ASX Appendix 4E disclosures are located in the Arrium Limited Financial Report and Operating and Financial Review. This report is based on a Financial Report that has been audited and is not subject to any dispute or qualification. For personal use only ASX RELEASE 19 August 2014 STRONG FY14 RESULTS THROUGH SUCCESSFUL STRATEGY EXECUTION ARRIUM HIGHLIGHTSi,ii,iii,iv . Sales revenue $7,007 million, up 2% pcp . Underlying NPAT $296 million, up 83% pcp . Underlying EPS 21.8c, up 79% pcp . Strong cash generation Statutory operating cash flow $679 million Proceeds from divestments $240 million . Net debt reduced by $407 million to $1,708 million and leverage ratiov substantially improved to 2x . Record Mining EBITDA $686 million, up 86% pcp . Mining Consumables continued to deliver strong earnings and cash . Steel EBITDA and cash positive despite ongoing weakness in domestic demand . Recycling – significant positive turnaround ARRIUM FINANCIAL RESULTS . Record underlying EBITDA $864 million, up 38% pcp . Underlying NPAT $296 million, up 83% from $162 million pcp . Underlying EPS 21.8c up 79% from 12.2c pcp . Record statutory EBITDA $781 million, up 47% pcp . Statutory NPAT $205 million, up from NLAT $701 million pcp . Statutory EPS 15.1c up from -52.0c pcp . Statutory operating cash flow $679 million, up 4% from $653 million pcp . Statutory net debt $1,708 million, reduced $407 million from $2,115 million end FY13 . Statutory gearing 31.4%, down 5.3 percentage points from 36.7% end FY13 . Underlying leverage ratio 2x down from 3.4x pcp . Final dividend 3 cents per share Arrium Mining . Full benefits of recent Mining and Whyalla Port expansions . Record export hematite sales of 12.5Mt, up 51% from 8.3Mt pcp . Record EBITDA of $686 million, up 86% from $368 million pcp . Average loaded cash costvi A$48/wmt . Realised average price US$111/dmt (91% of average Platts 62% Fe index price) . Average grade ~60% Fe . Completed $86 million magnetite project on time and on budget . Expect to be at ~13Mtpa run rate in Q1 FY15 Arrium Mining Consumables . Underlying EBITDA $187 million – strong earnings and cash . Continued strong demand for grinding media in North and South America . Maintained stable grinding media margins . Australasia – weaker demand for rail wheels, grinding media sales impacted by new tax in Indonesia . Grinding media production in Indonesia now ramping up . Grinding media capacity expansion at Kamloops, Canada progressing to schedule . 7% CAGR FY14-19 – expected grinding media demand in North and South America . Strong customer support for next generation SAG ball For personal use only Arrium Steel . Steel business EBITDA and cash positive despite ongoing weakness in domestic demand . Underlying Steel EBITDA $51 million, down from $64 million pcp – weaker volumes . Continued to lower cost base – includes ~$30 million cost synergies from single Steel business . Well positioned to benefit from increased construction activity, particularly infrastructure . Underlying Recycling EBITDA from continuing operations $12 million – significant improvement 1 Arrium Limited ABN 63 004 410 833 Arrium Head Office: Level 40, 259 George St, Sydney NSW 2000, GPO Box 536, Sydney NSW 2001, Australia Phone: +612 9239 6666 Fax: +612 9251 3042 RESULTS COMMENTARY Mining and materials group, Arrium Limited (ASX:ARI) today announced that underlying net profit after tax (NPAT) for the year ended 30 June 2014 was $296 million, an increase of 83% on underlying NPAT for the prior year of $162 million. Statutory NPAT for the year was $205 million1, up from a statutory net loss after tax (NLAT) of $701 million for the prior year. Statutory operating cash flow was strong at $679 million. The strong cash outcome led to a $407 million reduction in net debt to $1,708 million, from $2,115 million at the end of the prior year. The lower net debt and record EBITDA significantly improved the company’s leverage ratio to 2 times, from 3.4 times for the prior year. Arrium Managing Director and CEO, Mr Andrew Roberts said: “The marked increase in earnings and cash generation for the year reflects the ongoing successful execution of our growth strategy, including the recent expansion of our Mining business. This enabled pleasing outcomes on our priority of reducing debt and improving leverage.” The substantially higher underlying NPAT was due primarily to record earnings in the Mining business, which achieved record and above target export hematite iron ore sales of 12.5 million tonnes. “We are now realising the full benefits from our Mining expansion, and this has underpinned a 79% lift in underlying earnings per share to 21.8 cents, the company’s highest since FY08. “Underlying EBITDA for the year was a record, increasing 38% to $864 million primarily reflecting record earnings in Mining and another strong contribution from the Mining Consumables business. Underlying operating cash flow was strong at $746 million, and an additional $240 million was generated from the sale of non-integrated assets and properties. “Operationally, our Mining business delivered EBITDA of $686 million, an increase of 86% on the prior year and a record for the business. Export hematite iron ore sales were up 51% to 12.5 million tonnes, which was above our post expansion target rate of 12 million tonnes per annum. This was a very pleasing outcome, and one that demonstrates the benefit of increased flexibility in our mining operations and supply chain as a result of the recent expansion. “Our Mining Consumables business contributed a solid $187 million of underlying EBITDA, underpinned by continued strong demand for grinding media in North and South America. In Australasia, earnings were adversely affected by weaker grinding media sales related to the new minerals value added tax in Indonesia, and a decrease in rail wheel sales due to delayed capital investment and maintenance expenditure in the mining sector, and sales to South Africa. Grinding media sales in Indonesia are now ramping up following our major customer placing orders with Moly-Cop Australasia in August 2014 after it reached an agreement with the Indonesian Government on the new tax. “Our Steel business continued to be adversely affected by ongoing weakness in domestic construction markets and a high Australian dollar, however sales volumes increased towards the end of the financial year, and this has continued into the current financial year. The business lowered its cost base further and again delivered a positive underlying EBITDA and cash outcome for the year. The lower cost base positions the business well for increased domestic construction activity, particularly increased infrastructure investment. In Recycling, further cost and operational improvements including repositioning our facility footprint led to a significant lift in underlying EBITDA for the year. “It has been a very pleasing year with the delivery of much stronger earnings, record cash, lower net debt and an improved leverage ratio. Going forward, we remain focused on maximising value for shareholders,” Mr Roberts said. For personal use only 1 Includes