ArcelorMittal South Africa : Annual Financial Statements 2021

Annual financial statements 2021

Contents to the financial report

Report contents

1

Directors' responsibility and approval of the group and company annual financial statements

• 2 Statement by the chief executive officer and interim chief financial officer in terms of the JSE's Listings Requirements paragraph 3.84(k)

• 2 Certificate by the company secretary

• 3 Directors' report

• 7 Audit and risk committee report

• 10 Shareholders' analysis

• 12 Independent auditor's report

• 16 Group and company statements of comprehensive income

• 17 Group and company statements of financial position

• 18 Group and company statements of cash flows

• 19 Group and company statements of changes in equity

• 22 Notes to the group and company annual financial statements

• 104 Corporate information

Additional online reporting

The full 2021 financial statements provide comprehensive insight into the financial position and performance of the company for the year. These are available athttps://arcelormittalsa.com/investorrelations/annualfinancialstatements.aspx.

Our King IV* application statement is also available online athttps://www.arcelormittalsa.com/Sustainability/CorporateGovernance.aspx

* Copyright and trademarks are owned by the Institute of Directors South Africa NPC and all of its

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Audited annual financial statemenrtsig2h0t2s 1are reserved.

ArcelorMittal 2022_PF8A - 7 April 2022

Audited annual financial statements 2021

Directors' responsibility and approval of the group and company annual financial statements

To the shareholders of ArcelorMittal South Africa Ltd

The board of directors (directors) is required to maintain adequate accounting records and is responsible for the content and integrity of the consolidated group and company annual financial statements (annual financial statements) and related financial information included in this report. It is their responsibility to ensure that the annual financial statements, comprising the statements of financial position as at 31 December 2021, the statements of comprehensive income, cash flows, changes in equity for the year then ended, and the notes to the annual financial statements, which include a summary of significant accounting policies and other explanatory notes, are prepared in accordance with International Financial Reporting Standards (IFRS), the South African Institute of Chartered Accountants (SAICA), Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, audited in accordance with International Standards on Auditing, the requirements of the Companies Act 71 of 2008, as amended (Companies Act) and the Johannesburg Stock Exchange (JSE) Listings Requirements. The annual financial statements have been prepared by the finance staff of ArcelorMittal South Africa Ltd, headed and supervised by SM van Wyk CA(SA), the group's interim chief financial officer.

In order for the directors to discharge their responsibilities, management has developed and continues to maintain a system of internal control aimed at reducing the risk of error or loss in a cost-effective manner. The directors, primarily through the audit and risk committee, which consists of independent non-executive directors, meet periodically with the external and internal auditors, as well as executive management to evaluate matters concerning accounting policies, internal control, auditing and financial reporting. The group's internal auditors independently evaluate the internal controls. The external auditors are responsible for reporting on the financial statements. The external and internal auditors have unrestricted access to all records, property and personnel as well as to the audit and risk committee. The directors are not aware of any material breakdown in the functioning of these controls and systems during the period under review.

The directors are of the opinion, based on the information and explanations given by management and the internal auditors, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the group and company annual financial statements.

The directors have reviewed the group and company's financial budgets for the year to 31 December 2022. In light of their review of the current financial position and existing borrowing facilities, they consider it appropriate that the group and company annual financial statements continue to be prepared on the going concern basis. Refer to note 40 and the directors' report for further details.

The financial statements for the year ended 31 December 2021 have been audited by Deloitte & Touche, the company's independent external auditors, whose report can be found on pages 12 to 15 .

The directors of the company accept responsibility for the annual financial statements which were approved by the board of directors on 12 April 2022 and are signed on its behalf by:

HJ Verster

Chief executive officer

SM van Wyk

Interim chief financial officer

ArcelorMittal South Africa Audited annual financial statements 2021

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ArcelorMittal 2022_PF8A - 7 April 2022

Statement by the chief executive officer and interim chief financial officer in terms of the JSE's Listings Requirements paragraph 3.84(k)

The directors, whose names are stated below, hereby confirm that:

• (a) The annual financial statements set out on pages 16 to 103, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS

• (b) No facts have been omitted or untrue statements made that would make the annual financial statements false or misleading

• (c) Internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to prepare the financial statements of the issuer effectively

• (d) The internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function within the combined assurance model pursuant to principle 15 of the King Code. Where we are not satisfied, we have disclosed to the audit and risk committee and the auditors the deficiencies in design and operational effectiveness of the internal financial controls and any fraud that involves directors, and have taken the necessary remedial action

HJ Verster	SM van Wyk
Chief executive officer	Interim chief financial officer
12 April 2022	12 April 2022

Certificate by the company secretary

In terms of section 88(2)(e) of the Companies Act, I certify that, to the best of my knowledge and belief, the company has, in respect of the financial year reported upon, lodged with the Companies Intellectual Property Commission all returns and notices required of a public company and that all such returns are true, correct and up to date.

FluidRock Co Sec (Pty) Ltd

Company secretary

12 April 2022

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ArcelorMittal South Africa Audited annual financial statements 2021

ArcelorMittal 2022_PF8A - 7 April 2022

Audited annual financial statements 2021

Directors' report

for the year ended 31 December 2021

The directors submit their report for the year ended 31 December 2021.

Nature of business

ArcelorMittal South Africa Ltd (ArcelorMittal South Africa or the company) and its subsidiaries (together, the group) manufacture and sell long and flat steel products and beneficiated by-products. The group's operations are primarily concentrated in South Africa with a sales focus domestically and internationally, with a specific emphasis on sub-Saharan Africa.

The company is a public company incorporated and domiciled in South Africa. The address of the registered office is detailed on page 104 of this report.

The company is listed on the main board of the JSE Ltd in Johannesburg, South Africa, and is a subsidiary of ArcelorMittal Holdings AG, which is part of the ArcelorMittal group. The functional and reporting currency is the South African rand (ZAR).

Financial results and activities

The contents of the annual financial statements fairly presents the financial performance of the group for the financial year ended 31 December 2021.

Further detailed reports on the activities and performance of the group and the various segments of the group are contained in the integrated report and environmental, social and governance (ESG) report.

At 31 December 2021, the group had a net asset value per share of 812 cents (2020: 210 cents). The net asset value per share was calculated using a net asset value of R9 053 million (2020: R2 344 million), and total number of shares outstanding of 1 114 612 789 (2020: 1 114 612 789).

Refer to note 12 of the annual financial statements for information on profit/(loss) and headline profit/(loss) per share.

Dividends

Consistent with the group's dividend policy, payment of dividends is subject to the discretion of the board of directors. No dividends were declared for the 2021 financial year (2020: Rnil).

Property, plant and equipment

Details of capital expenditure are provided in note 38.

Compliance with Competition Commission (the Commission) Settlement Agreement

As previously reported, ArcelorMittal South Africa has been engaging the Commission regarding payment of part of the administrative penalty, and the progress against the capital expenditure programme. In line with the Settlement Agreement and as contemplated therein, the company had no option but to revise its capital expenditure programme commitment, as previously reported. However, actual capital expenditure for 2021 has been higher than initially planned (but still below the initial targeted amount) and it should be noted that although the Settlement Agreement came to an end in November 2021, the company's capital expenditure programme has been revised upwards when compared to previous plans, focusing on environmental projects, improving quality, maintenance and structural renovations.

In addition, since May 2021, ArcelorMittal South Africa has been engaging with the Commission regarding the raw material basket methodology for determining earnings before interest and taxation (EBIT) under the Settlement Agreement, which may affect the calculation of the EBIT margin. The company has provided the Commission with supporting information as requested by it, which is being considered by the Commission. To date, the Commission has not noted any objections to either the methodology or the EBIT calculations. ArcelorMittal South Africa expects that all outstanding issues relating to the Settlement Agreement will be resolved after the final compliance report is submitted to the Commission for its evaluation. Subject to the above, ArcelorMittal South Africa has in all other material respects complied with the Settlement Agreement entered into with the Commission.

ArcelorMittal South Africa Audited annual financial statements 2021

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