Mittal Steel South Africa Limited

1
Mittal Steel South Africa Limited

• Annual Financial Results for the 12 months ended
  December 2005

2
market operations

• Davinder Chugh

3
Overview

• Record full year earnings of R5 079m
• Earnings per share of 1 139c up 12
• Operating margin of 29 unchanged on 2004
• Return on equity of 29 down from 32
• Higher average international steel prices
• Cost increases contained
• Liquid steel production up 3
• Safety remains priority
• 13 reduction in injury rate
• Delivering on R9bn capital investment programme

Earnings up 12
4
Key Result Drivers
2005 vs 2004
4
Increase in HRC US export price
4
Increase in HRC Rand domestic price
unchanged
Total sales volume
17
Export sales volume up
(10)
Slowdown in domestic sales volume
11
Increase in HRC Rand cash cost per tonne
11
Labour productivity up
1
Strengthening of ZAR

Strong export effort countered slowdown in
domestic market
5
Export Prices
Mittal Steel South Africa invoice prices (cf)
US/t
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

Prices remained above historical trends, though
off peak
6
Global Market Trends

• Global steel supply outstripped demand in 2005
• Slackening demand in 2005 caused steel prices to
  fall
• World economic growth is expected to remain
  positive at 4.3 according to the IMF
• Global consolidation amongst steel companies
  continues
• Steelmakers input costs remain high will still
  increase in 2006, albeit at a lower rate
• Chinese economy still growing at high rate,
  notwithstanding measures to cool down the economy
  (2005 10)
• In 2005 China accounted for
• 30.9 of world steel production
• 30.1 of world steel consumption

China continues to influence world markets
7
Chinese Market Trends

• China a 3 million tonne net exporter of finished
  steel products in 2005
• This trend is likely to continue in 2006
• A small imbalance in the Chinese market can
  impact world markets

Chinese import/export tonnes 1998 - 2005
Million tonnes

China became net exporter in 2005
8
Chinese Market Trends

• Chinese market saw substantial price reduction in
  Q2 and Q3 of 2005
• Strong recovery late in 2005 recouped a third of
  the loss
• Price recovery expected
• Prices dipped to below marginal cost
• Inventory levels are low
• Seasonal factors turn positive in the USA EU
• Chinese government to moderate the industry
• Steel prices remained firm in the EU

Chinese cost structure support higher steel prices
9
Chinese Cost Trends

• Chinas advantage of low labour cost is mitigated
  by
• Dependence on imported raw material
• Inadequate iron ore reserves
• Require imported good quality coking coal
• Future capacity growth moderated by government
  policy water shortage
• Logistics constraints of port rail capacity

Overall high operating cost
10
Global Benchmark Price
Based to 100

Margins under pressure due to increased input
costs
11
Global Input Cost Trends

• BF iron ore fines price for 2005 increased by 72
  (higher
  increases for lump pellets)
• Metallurgical coking coal contracts for 2005/2006
  settled at 120
• Scrap prices freight rates stabilised during
  2005, but still above historical trend
• Diverging price trends for base metals alloys
• Zinc price increased by 58 in 2005

Raw materials continue to exert upward pressure
on cost
12
Input Cost Positioning
Imported
Domestic supply agreements
Backward integrated
Tonnes 000
6
-
94
7 981
Iron ore
-
-
100
1 155

• DRI

-
40
60
1 858
Scrap (Purchase Internal)
1
-
99
2 157
Coke (Metallurgical)
66
22
12
2 866
Coking coal (Metallurgical)
-
100
-
709
Coking coal (Market)
-
100
-
2 122
Other coal anthracite

Coal remains the biggest exposure
13
Input Cost Developments
2004
2005

Raw materials now constitute 44 of cash cost
14
Key Performance Indicators
2005
2004
105
1 053
CI savings (Rm)
1 487
1 698
Employees per mt produced
2 302
2 019
Revenue per head (R000)
1 949
1 756
HRC cash cost - R/t
307
273
- US/t
94
83
Percentage value-add exports - flat
79
87
- long

Continued efficiency productivity improvement
15
Liquid Steel Production
000 tonnes
Several production records at all plants
16
Sales Volumes
6230
6223
3166
3123
000 tonnes
1947
1894
1160
1163
Vanderbijlpark
Saldanha
Long Products
Total
Inventory adjustment impacted on domestic sales
17
Mittal Steel South Africa - Geographic Sales

Focus will remain on Africa
18
Revenue Drivers in Relation to the Economy

Three sectors make up 70 of steel consumption
19
Safety Remains our Priority
Disabling injuries per million man hours
worked(employees contractors)

• Du Pont safety evaluation completed safety
  improvement in progress
• Four major units certified under OHSAS 18001
  health safety management system

Disabling injury frequency rate (DIFR)
Our safety record compares with global standards
20
Vanderbijlpark now a Zero Effluent Discharge
FacilityWater treatment plant commissioned in
December 2005
R222m
21
Investment Programme
Rm
1 600
Relines
930
Maintain capability
100
Galvanising line 5
1 200
Automotive galv. line other downstream projects
620
Coke strategy related
937
Other value adding
1 100
Completed in 2005

Expansion plans on track
22
finance
23
Headline Earnings
2005
2004
Rm
24 032
23 053
Revenue
6 855
7 458
Comparable operating profit
246
(52)
Gains losses on foreign exchange rate
financial instruments
169
31
Financing cost - net interest income
(140)
(170)
- imputed interest on non-current provisions
5
5
Income from investments
(2 329)
(2 465)
Tax
275
258
Equity earnings
(2)
(6)
Minority interest
5 079
5 059
Comparable headline earnings
807
- in USm
794
(511)
BAA remuneration
5 079
4 548
Headline earnings
After tax

Earnings up 12
24
Comparable Headline Earnings Trend
Rm
2003
2004
2005
Earnings remain healthy, though off previous highs
25
Operating Profit
2005
2004
Rm
3 688
4 137
Vanderbijlpark
785
1 173
Saldanha Steel
2 100
1 783
Long products
301
462
Coke Chemicals
56
43
Other
(75)
(140)
Corporate
6 855
7 458
Comparable operating profit
(731)
BAA remuneration
6 855
6 727
Total

Long products increased its contribution
26
Cash Flow
2005
2004
Rm
8 402
8 572
Cash profits from operations
20
(1 410)
Working capital
(731)
BAA remuneration
(1 568)
(1 254)
Capex
168
31
Net interest income
43
11
Investment income
(2 977)
(886)
Tax
(2 853)
(339)
Dividends
1 235
3 994
Net cash flow
5 160
3 973
Net cash

Strong cash flow before tax dividends
27
Financial Ratios
2005
2004
29
29
Operating margin
29
32
- on comparative basis ()
33
33
EBITDA margin ()
33
37
- on comparative basis ()
1.5
1.5
Revenue/invested capital (times)
29
32
Return on equity ()
29
35
- on comparative basis ()
26.4
25.0
Net cash/equity ()
Adjusted for once-off items

Ratios support good investment case
28
Share Performance

Excellent medium term share performance
29
Dividend

• Dividend policy
• Distributing one third of headline earnings
• Dividend declared
• Interim dividend of 240 cents per share - 12
  September 2005
• Final dividend of 140 cents per share - 20 March
  2006
• Total dividend of 380 cents covered 3 times by
  EPS of 1 139 cents

Dividend yield of 5.8
30
outlook
31
Outlook for Q106

• Business environment
• Local demand expected to improve
• Stable international steel prices
• Off-take to improve as inventory cycle completed
• Higher input prices will influence production
  costs
• Exchange rate will have an important influence
• Earnings
• Earnings to remain robust and in line with Q405,
  
• but exchange rate may have influence

Continuous focus on cost control
32
Mittal Steel Company NV
33
Mittal Steel Company NV

• Continue to reshape the global steel industry
  through consolidation
• Revenues of almost US30bn
• Net profit US3.4bn
• 1 steel producer - Output at 69mtpa
• Strong strategic vertical integration
• Potentially the first 100mtpa steel producer if
  Mittal Arcelor combine
• Revenue US70bn
• Net profit US7.4bn
• Steel output at 115mtpa

IBES estimates
Creating the most admired steel institution
34
Mittal Steel South Africa Limited

• Annual Financial Results for the 12 months ended
  December 2005