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a n n u a l r e s u l t s

a n n u a l r e s u l t s. f o r t h e 1 2 m o n t h s e n d e d d e c e m b e r 2 0 0 4. (formerly Iscor Limited) A member of Mittal Steel Company. Davinder Chugh c h i e f e x e c u t i v e o f f i c e r. Overview. Record earnings of R4 541m (1 019c per share)

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a n n u a l r e s u l t s

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  1. a n n u a l r e s u l t s f o r t h e 1 2 m o n t h s e n d e d d e c e m b e r 2 0 0 4 (formerly Iscor Limited) A member of Mittal Steel Company

  2. Davinder Chugh c h i e f e x e c u t i v e o f f i c e r

  3. Overview • Record earnings of R4 541m (1 019c per share) • International steel prices attain all time high levels • Strong domestic demand growth • Cost escalations successfully contained • New business strategy gains momentum • Member of the most global & largest steel group in the world Created substantial shareholder value

  4. Key Result Drivers • Increase in HRC US$ price 50% • Growth in domestic sales volume 22% • Increase in HRC cash cost per tonne (Rand) 3% • Strengthening of Rand (average exchange rate) 17% • Operating margin* 32% * Excluding BAA remuneration (1H’04) Captured benefits of market while containing costs

  5. Invoiced Export Prices Ispat Iscor invoiced prices (c&f) US$/t 700 Hot rolled coil Low carbon wire rod 600 500 400 300 200 100 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: Ispat Iscor Paradigm shift in steel price cycle

  6. Global Market Tonnes x 1 000 000 1 170 Supply Demand 1 120 1 070 1 020 970 920 870 820 2000 2001 2002 2003 2004 2005 2006 2007 Source: World Steel Dynamics/CRU Note: Apparent Steel Demand and Supply Stable 2005 expected

  7. Global Market Trends • Global steel demand may continue to outstrip supply in 2005 • Chinese economy growing at slower rate • World economic growth is expected to continue • Consolidation amongst steel companies globally gains momentum • Steelmakers’ input costs will remain high 2005 average prices expected to remain firm

  8. 2003 2004 Geographic Sales South Africa Rest of Africa Total Africa Far East European Union North America Middle East % 80% 0% 10% 20% 30% 40% 50% 60% 70% Market optimisation

  9. Domestic Market Imports % ’000t 1 700 14% Quarterly consumption Steel imports 12% Consumption trend 1 500 10% 1 300 8% 1 100 Imports Consumption 6% 900 4% 700 2% 500 0% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Source: SAISI Domestic sales up 22% in 2004

  10. Global Input Cost Based to 100 140 Coking coal – Contract Iron ore fines – Contract 130 120 110 100 90 80 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Source: Coal Rush report/Tex report Bulk commodity costs drive high steel prices

  11. Global Input Cost Based to 100 700 Freight rates Coke 600 Scrap 500 400 300 200 100 0 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Source: Baltic Exchange/Tex report/Metal Bulletin Other process inputs also maintaining high levels

  12. Global Input Cost Trends • Iron ore expected to increase substantially in 2005 • 05/06 Metallurgical coking coal contracts settled at approx +125% • Freight rates more stable, but at high levels • Coke stabilising around $250/t after peaking at > $400/t in 2004 • Scrap prices expected to remain firm in 2005 • Supply chain bottle-necks addressed through various expansion projects internationally Source: World Steel Dynamics High input costs likely to support firm steel prices

  13. 9 470 Iron ore 91% 4% 5% 1 401 - DRI 99% 1% - 1 818 Scrap 78% 22% - 1 754 Other Coal - 100% - Input Cost Positioning Domestic supply agreements Imported Tonnes ’000 Backward integrated 2 184 Coke 96% 3% 1% 2 673 - Coking Coal 15% 22% 63% Actual 2004 data Cost benefit from integration on most inputs

  14. Key Performance Indicators % change 2003 2004 1 053 +233 CI savings (Rm) 316 8.0 +248 - percentage 2.3 -9 11 416 Number of full-time employees 12 539 3.7 -10 Man hours per ton steel 4.1 2 019 +37 Revenue per head (R000) 1 474 1 756 +3 HRC cash cost - R/t 1 696 275 +22 - US$/t 226 1 613 +7 Billet cash cost - R/t 1 509 253 +26 - US$/t 201 57 +39 Percentage value-add exports- flat 41 74 +21 - long 61 Continuous productivity improvement

  15. Liquid Steel Production ’000t 7 085 7 033 7 500 6 000 4 500 3 681 3 628 3 000 2 153 2 178 1 251 1 227 1 500 0 2003 2004 2003 2004 2003 2004 2003 2004 Vanderbijlpark Saldanha Long products Total Production affected by Conarc burn-through & planned shutdowns

  16. Liquid Steel Production Loss Liquid steel (‘000t) • Planned production stoppages • Blast Furnace C throat armour repair at Vanderbijlpark 64 • Blast Furnace D interim repair at Vanderbijlpark 207 • Unplanned production stoppages • Conarc burn-through at Saldanha 67 • Production recovered & other efficiency improvements 286 • Production not recovered 52

  17. Sales Volumes ’000t 7 000 Export 6 259 6 201 Domestic 6 000 5 000 3 086 2 323 4 000 3 173 3 166 3 000 1 310 943 1 894 1 899 2 000 1 187 1 141 743 943 3 173 3 878 1 000 833 637 1 151 1 863 2 224 956 354 503 2003 2004 2003 2004 2003 2004 2003 2004 Vanderbijlpark Saldanha Long products Total Strong domestic sales growth

  18. Environmental • Iscor Coke & Chemical (ICC) achieved ISO 14001 in 2004 • Now all operations ISO 14001 certified • Major environmental projects in progress: • Vanderbijlpark • Cleaning of coke ovens gas 306 1H/06 • Zero effluent discharge (main treatment plant)222 2H/05 • New sinter plant off-gas system 210 2H/07 • Newcastle • Coke oven repair project 231 completed • Reverse osmosis plant 50 1H/06 • Total planned environmental spend of R964m Planned Completion Cost Rm Environmental improvement gains momentum

  19. Other Major Projects Planned completion Cost Rm • Newcastle • Pulverised coal injection (on schedule) 211 1H/05 • Vanderbijlpark • BOF control systems 112 completed • Blast Furnace C – throat armour repair 23 completed • Blast Furnace D – interim repair 139 completed • Sinter plant repair and upgrade (Phase 1-3) 42 completed • New DRI kilns 432 1H/06 • Blast Furnace D –stoves (2 months behind) 318 2H/06 • Saldanha • Third roll grinder 30 completed • Iscor Coke & Chemicals • Market coke expansion 455 2H/06 * Still to be approved Significant drive for efficiency improvements

  20. Vaidya Sethuraman e x e c u t i v e d i r e c t o r f i n a n c e

  21. Headline Earnings % change Rm 2003 2004 +25 Revenue 18 487 23 053 7 399 +119 Comparable operating profit 3 375 36 Financing cost - net interest expense (47) # (170) -110 - long-term provision top-up (81) (2 465) -124 Tax (1 100) 258 +124 Equity earnings* 115 (6) Minority interest (2) 5 052 +124 Comparable earnings 2 260 793 +163 - in US$m 301 (511) +19 BAA remuneration* (429) Restructuring costs* (116) (110) Power contract settlement* +183 Headline earnings 1 605 4 541 * After tax # Lower discount rate accounts for R100m Record earnings

  22. Comparable Headline Earnings Trend Rm 1 800 1 575 1 600 1 415 1 393 1 400 1 200 1 000 800 669 657 655 596 600 352 400 200 0 4Q/04 1Q/03 2Q/03 3Q/03 4Q/03 1Q/04 2Q/04 3Q/04 Quantum jump in quarterly earnings

  23. Saldanha Steel 379 1 147 +203 Long products 777 1 769 +128 Coke & Chemicals 172 462 +169 Other 10 42 +320 Corporate (142) (150) -6 Operating Profit % change Rm 2003 2004 Vanderbijlpark 2 179 4 129 +89 Comparable operating profit 3 375 7 399 +119 BAA remuneration (613) (731) +19 Restructuring costs (166) Power contract settlement (157) Operating profit 2 439 6 668 +173 Steel prices & cost containment boost profits

  24. Cash Flow Rm 2003 2004 Cash profit from operations 4 245 8 563 Working capital (219) (1 410) BAA remuneration (613) (731) Cash from operations 3 413 6 422 Asset sales 84 14 Capex (1 278) (1 254) Finance cost (43) 36 Tax (1 135) (886) Dividends (892) (339) Net cash flow 149 3 993 Strong cash flow

  25. Inventories 36 (288) Debtors 57 (1 128) Creditors (312) 6 Total (219) (1 410) Working Capital Rm 2003 2004 Higher working capital driven by local volume & prices

  26. Financial Ratios 2003 2004 13 Operating margin (%) 29 18 - on comparative basis (%) * 32 18 EBITDA margin (%) 33 23 - on comparative basis (%) * 36 Revenue/invested capital (times) 1.3 1.5 13 Return on equity (%) 31 18 - on comparative basis (%) * 35 Net cash/equity (%) 0.2 24.8 * Adjusted for once-off items Continuous improvement in performance

  27. Share Performance % Movement 140 Iscor All shares 120 Top 40 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -20 Source: Standard Bank Outperforming the market

  28. BAA Update Rm • Annualised cost saving for 2H/04 926 • Payments to Mittal Steel NIL • Cumulative realised saving 2002 to 2004 1 985 • Payments to Mittal Steel 1 344 • Management will review & recommend to the Board, a new contract to replace expired one, which will be subject to approval of shareholders, other than Mittal Steel Sterling contribution to our cost reduction programme

  29. Dividend • Dividend policy • Considering the cash position, future capital expenditure & working capital requirements • Distributing one third of headline earnings before once-off charges • Dividend declared • Interim dividend of 300 cents per share – 17 December 2004 • Final dividend of 100 cents per share – 8 February 2005 • Total dividend of 400 cents covered 3 times by adjusted EPS of 1 133 cents

  30. Davinder Chugh c h i e f e x e c u t i v e o f f i c e r

  31. Strategic Goals • Industry leading value-creation for our shareholders • Positive EVA over the cycle • Improve operating capabilities • Value-creating throughput increases of 2 Mtpa • 20% reduction in HRC/billet cash cost by 2007 • Build a high performance culture • Create an environment that generates true employee pride & attracts, develops & retains top-performing people • Be a responsible corporate citizen Be among the most admired SA companies

  32. Throughput Strategy • Increase production by ~1Mtpa by end 2007 with modest capex • 325 ktpa – 2 new DRI kilns at Vanderbijlpark by 1H/06 (R432m) • 660 ktpa – efficiency improvements by 2H/06 • Utilise opportunities to increase throughput by further ~1Mtpa with capital expenditure • Expand sinter capacity at Vanderbijlpark by 2H/06 (R460m) • 445 ktpa – Blast furnace D reline at Vanderbijlpark by 2H/06 • Additional DRI kilns at Vanderbijlpark (R600m) • 355 ktpa – Blast furnace C reline at Vanderbijlpark by 2009 • Rationalisation of other facilities to follow

  33. Operating Cost – HRC HRC operating cost US$/t FOB – Q1/04 500 450 400 Vanderbijlpark US$/t 256 350 Saldanha US$/t 247 300 250 200 150 100 50 0 International HRC producers Source: Metal Bulletin Research

  34. Operating Cost – Billet Billet operating cost US$/t FOB – Q1/04 500 450 400 350 Newcastle US$/t 228 300 250 200 150 100 50 0 International billet producers Source: Metal Bulletin Research

  35. Cost Reduction Strategy • To maintain our position in the lowest cost quartile • Initiatives aimed at 43–58 US$/t HRC/billet cash cost reduction by 2007 • 23 – 31 US$/t from operating efficiency improvements • 13 – 20 US$/t from raw materials & procurement initiatives • 4 US$/t from increased labour productivity • 3 US$/t from Newcastle PCI project

  36. DTI & Developmental Pricing • Progress • All price comparison data supplied • Cost benchmarking data analysed. Discussion with the DTI • Developmental pricing principles • Price rebate structure in place to support downstream industry (R450mpa) • Value added steel manufactured product exports • Value added steel manufactured product import replacement • Domestic price parity to be inline with domestic prices elsewhere in world to ensure local competitiveness on an equal base with manufacturers globally • Base prices for all steel commodities to reflect market trends, while all other extras in the price composition to be cost & market driven

  37. Mittal Steel • December 2004: LNM Holdings and Ispat International merge to form “Mittal Steel Company NV” • Listed on NYSE & Euronext Amsterdam • Merger creates the world’s most global steel company • 14 operations on four continents, 45 nationalities, 165 000 employees • Forthcoming acquisition of US-based International Steel Group will create world’s largest steel company • 64 Mtpa capacity “Shaping the future of steel”

  38. Mittal Steel • Renamed company has developed a new corporate identity • Create a globallyadmired brand • Single, universal identity for the group • All subsidiary companies will be rebranded & renamed ‘Mittal Steel’, but differentiated by location The new name for steel

  39. Name Change • Ispat Iscor to be renamed ‘Mittal Steel South Africa Limited’ subject to regulatory and shareholder approval • Commence trade under new name before end March 2005 • New ISIN: ZAE000064044 • New JSE share code: MLA Member of the world’s most global & largest steel company

  40. Outlook for Q1 2005 • Business environment to remain optimistic • Strong steel demand in local market to continue • Local prices to be slightly lower due to price adjustment announced • Strong Rand to affect export earnings • Volumes in line with previous quarter • Earnings • To remain strong, in line with Q4/04, though impacted slightly by lower domestic prices Stable outlook

  41. Facts in Summary • Planned environmental spend of R964m • All operations ISO 14001 certified • Culture of cost control well entrenched in organisation • Direct rebates of R450m for promoting secondary exports & import substitutions • Contribution of R45m to SAISI to promote exports • R15m towards recycling through Collect-a-Can • R4.5bn contribution to state treasury • US$1.2bn gross export revenue • ABE procurement of R1bn

  42. a n n u a l r e s u l t s f o r t h e 1 2 m o n t h s e n d e d d e c e m b e r 2 0 0 4 (formerly Iscor Limited) A member of Mittal Steel Company

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