ArcelorMittal South Africa Annual Report 2009 Finance report This report should be read in conjunction with the financial statements presented on pages 61 to 203 of this annual report. Basis of preparation The group financial results have been prepared on the historical-cost basis, except for the revaluation of financial instruments. The group has adopted all of the new and revised standards, amendments and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, that are relevant to its operationsand effective from 1 January 2009. The principal accounting policies and methods of calculation are consistent with those applied in 2008, except for the early adoption of new revised and amended standards and interpretations as set out in our accounting policies. The new revised and amended statements interpretations did not have a significant impact on our financial results. Headline earnings The following table provides a comparable view of our earnings for 2009. Year ended 31 December 2009 Rm 2008 Rm Revenue 25 598 39 914 Profit from operations 229 12 159 (Losses)/gains on changes in foreign exchange rates and financial instruments (813) 637 Interest received 199 318 Finance costs (276) (238) Income from investments 3 3 Income from equity-accounted investments (net of tax) 206 331 Impairment reversal 9 36 Income tax expense (35) (3 865) (Loss)/profit attributable to owners of the company (478) 9 381 Adjusted for: Loss on disposal or scrapping of assets                  29 39 Impairment charge 26 121 Impairment reversal (9) (36) Tax effect (8) (21) Headline (loss)/earnings (440) 9 484 Headline (loss)/earnings per share (cents) (104) 2 128 A headline loss of R440 million was reported for 2009 as ArcelorMittal South Africa, like most other steel companies, was hit by sharply falling demand and significantly lower prices for its products in the wake of the global economic recession. Amid lower demand and average realised prices that were down by 26% last year, revenue decreased by 35.9% to R25 598 million compared to 2008. Sales volumes were 12% lower than those achieved in 2008, while domestic sales as a percentage of total sales decreased from 86% in 2008 to 69% in 2009. Export sales increased significantly, especially to East and West Africa. Profit from operations declined by 98.1% to R229 million, as lower production volumes combined with expensive raw material costs for most of the year prevailed. In particular, expensive coal contracts entered into in 2008 only ran out during the third quarter of 2009. Liquid steel production was 8% lower than in 2008 and our capacity utilisation levels were reduced from 76% to 66%. The revaluation of the USD-denominated cash, receivables and payables led to a loss of R813 million, of which R529 million was realised. The reason for the loss was the strengthening of the Rand by 21% to R7.40 against the USD during 2009. In 2008 the currency had weakened by 38%, which had led to a profit of R637 million. Interest received was down by 37.4% due to lower interest rates and a reduced cash balance following our R3 918 million share buy-back transaction in 2009. Income from equity- accounted investments decreased from R331 million to R206 million, mainly due to lower income from our marketing and shipping joint venture, Macsteel International Holdings. The impairment reversal of R9 million relates to Pietersburg Iron Company (Proprietary) Limited, an equity-accounted investment, following a mining feasibility study underway at that company.