bold spirit - ArcelorMittal South Africa
bold spirit - ArcelorMittal South Africa
bold spirit - ArcelorMittal South Africa
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182<br />
<strong>ArcelorMittal</strong> <strong>South</strong> <strong>Africa</strong><br />
Annual Report 2010<br />
26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT continued<br />
26.8 Liquidity risk management continued<br />
(iii) Derivative financial instruments<br />
The following table details the liquidity analysis for derivative financial instruments.<br />
The table has been drawn up based on the undiscounted net cash inflows/(outflows) on the derivative<br />
instruments that settle on a net cash-settled basis. No derivative financial instruments are settled on a gross<br />
basis. When the amount payable or receivable is not fixed, the amount disclosed has been determined by<br />
reference to the projected interest rate and foreign currency forward curves existing at the reporting date.<br />
Financial assets/(liabilities)<br />
0 – 6<br />
months<br />
Rm<br />
7 – 12<br />
months<br />
Rm<br />
1 – 5<br />
years<br />
Rm<br />
>5 years<br />
Rm<br />
Discount<br />
Rm<br />
Carrying<br />
amount<br />
Rm<br />
Group and company<br />
For the year ended<br />
31 December 2010<br />
Embedded derivatives 54 63 161 (27) 251<br />
Total 54 63 161 (27) 251<br />
For the year ended<br />
31 December 2009<br />
Embedded derivatives 39 46 180 (32) 233<br />
Total 39 46 180 (32) 233<br />
26.9 Capital risk management<br />
The group and company objectives when managing capital are:<br />
• to safeguard the ability to continue as a going concern, so as to be able to continue to provide returns for<br />
shareholders and benefits for other stakeholders; and<br />
• to provide an adequate return to shareholders by pricing products and services commensurately with the<br />
level of risk.<br />
The amount of capital is set in proportion to risk. The capital structure is managed and adjusted in light of<br />
changes in economic conditions within the domestic and global steel industry and the risk characteristics<br />
of the underlying assets.<br />
The group and company overall strategy remained unchanged for 2010.<br />
Consistent with others in the industry, the group and company monitor capital on a debt-to-total<br />
shareholders’ equity basis.<br />
Net debt is total interest-bearing borrowings including finance lease obligations less cash and cash<br />
equivalents. Total shareholders’ equity is as per the statement of financial position.<br />
Group<br />
2010<br />
Rm<br />
2009<br />
Rm<br />
2010<br />
Rm<br />
Company<br />
2009<br />
Rm<br />
Cash and cash equivalents 3 506 4 348 3 155 4 222<br />
Less: total interest-bearing borrowings<br />
and finance lease obligations (604) (655) (434) (467)<br />
Net cash and cash equivalents 2 902 3 693 2 721 3 755<br />
Total shareholders’ equity 22 556 21 925 24 837 24 081<br />
Gearing ratio % 0 0 0 0