Unaudited First Quarter Results to 31 March 2015

RNS Number : 4319O
Ferrexpo PLC
27 May 2015
 

28 May 2015

Ferrexpo plc

("Ferrexpo", the "Group" or the "Company")

Unaudited First Quarter Results to 31 March 2015

 

Ferrexpo is today releasing its unaudited financial statements as of and for the three months ended 31 March 2015 in connection with the announcement today by Ferrexpo Finance Plc of an exchange offer and consent solicitation in respect of the remaining US$285,669,000 of its US$500,000,000 7.875 per cent. Guaranteed Notes due 2016 and the commencement of the exchange offer period.

 

Summary of the unaudited three months financial results for the period ended 31 March 2015:

 

Financial

§ Turnover of US$258 million (1Q 2014: US$413 million)

§ Profit before tax of US$72 million (1Q 2014: US$145 million)

§ EBITDA of US$112 million (1Q 2014: US$190 million)

§ Group consolidated shareholder equity as of 31 March 2015 of US$363 million (31 December 2014 : US$709million)

§ Net financial indebtedness as of 31 March 2015: US$695 million (31 December 2014: US$678 million)

§ Cash and cash equivalents of US$494 million as of 31 March 2015 (31 December 2014: US$627 million)

§ US$23 million non-cash increase in EBITDA from the revaluation of US dollar receivables at the Group's Ukrainian subsidiaries

 

Sales and Marketing

§ Average Platts China CFR 62% Fe iron ore price was US$63 per tonne for 1Q 2015 (1Q 2014: US$120 per tonne)

§ Sales volumes were 2,793 thousand tonnes of pellets (1Q 2014: 2,844 thousand tonnes of pellets)

 

Operations

§ 1Q 2015 total pellet production 2,885 thousand tonnes (1Q 2014: 2,816 thousand tonnes)

§ Production of 65% Fe pellets increased 81% to 2.5 million tonnes (1Q 2014: 1.4 million tonnes)

§ 1Q 2015 average C1 pellet cost US$33.2 per tonne (1Q 2014: US$50.5 per tonne)

 

Capital Investment

§ 1Q 2015 capital investment US$12 million (1Q 2014: US$78 million)

 

Key financial information for the three months ended 31 March 2015 is summarised in the table below

 

US$ million (unless otherwise stated)

3 months ended 31.03.15

3 months ended 31.03.14

Change

Year ended 31.12.14

Total pellet production (kt)

2,885

2,816

2%

11,021

Sales volumes (kt)

2,793

2,844

(2%)

11,167

Revenue

258

413

(38%)

1,388

EBITDA

112

190

(41%)

496

Profit before tax

72

145

(50%)

254

Diluted EPS (US cents per share)

9.76

20.46

(52%)

30.39

Dividend (US cents per share)

13.2

Net cash flow from operating activities

46

82

(44%)

288

Capital investment

12

78

(85%)

235

Net debt

(695)

(679)

2%

(678)

Net debt to LTM(1) EBITDA

1.7x

1.2x

42%

1.4x

 

(1)    Last twelve months

For further information contact:

 

Ferrexpo:                            

 

Ingrid McMahon

+44 207 389 8304

 

Maitland:

 

Peter Ogden

+44 207 379 5151

 

Notes to Editors:

Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine and transport and sales operations throughout the world. It has been mining and processing high quality iron ore pellets for the global steel industry for over 35 years. Ferrexpo's resource base is one of the largest iron ore deposits in the world. The Group is the 4th largest supplier of pellets to the global steel industry and the largest producer and exporter of pellets from the Former Soviet Union. In 2014, it produced 11 million tonnes of pellets, a 2% increase compared to 2013 and a record for the Company. Ferrexpo has a diversified customer base supplying steel mills in Austria, China, Japan, Germany as well as other European and Asian countries.  Ferrexpo is listed on the main market of the London Stock Exchange under the ticker FXPO. For further information, please visit www.ferrexpo.com

 

 Interim Consolidated Income Statement

US$'000

Notes

3 months ended

31.03.15

3 months ended

 31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Revenue

4

257,597

413,499

1,388,285

Cost of sales

3/5

(109,946)

(179,742)

(647,960)

Gross profit

 

147,651

233,757

740,325

Selling and distribution expenses

 

(57,145)

(91,003)

(311,514)

General and administrative expenses

6

(9,693)

(10,951)

(48,642)

Other income

 

906

2,643

9,094

Other expenses

 

(9,599)

(5,421)

(57,014)

Operating foreign exchange gains

7

23,039

36,313

76,372

Operating profit from continuing operations before adjusted items

 

95,159

165,338

408,621

Under recovery and write-down of VAT receivable

13

(2,063)

(6,790)

Write-offs and impairment losses

8

(3)

(76)

(83,534)

Share of profit from associates

 

936

1,713

4,878

Losses on disposal of property, plant and equipment

 

(1,054)

(2,109)

(4,825)

Profit before tax and finance

 

95,038

162,803

318,350

Finance income

9/13

798

2,674

19,250

Finance expense

9

(18,929)

(16,622)

(68,472)

Non-operating foreign exchange losses

7

(4,776)

(3,867)

(14,846)

Profit before tax

 

72,131

144,988

254,282

Income tax expense

10

(13,703)

(21,741)

(70,442)

Profit for the period/year

 

58,428

123,247

183,840

 

 

 

 

 

Attributable to:

 

 

 

 

Equity shareholders of Ferrexpo plc

 

57,274

120,035

178,316

Non-controlling interests

 

1,154

3,212

5,524

 

 

58,428

123,247

183,840

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic (US cents)

11

9.78

20.51

30.46

Diluted (US cents)

11

9.76

20.46

30.39

 

Interim Consolidated Statement of Comprehensive Income

US$ 000

Notes

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Profit for the period/year

 

58,428

123,247

183,840

Items that may subsequently be reclassified to profit or loss:

 

 

 

 

Exchange differences on translating foreign operations

 

(449,905)

(627,624)

(1,205,667)

Income tax effect

 

36,372

38,677

80,394

Net gains on available-for-sale financial assets

20

41,800

(41)

Income tax effect

 

7

Net other comprehensive income to be reclassified to profit or loss in subsequent periods

 

(371,733)

(588,981)

(1,125,273)

Reclassification to profit or loss relating to available-for-sale investments impaired

 

(712)

Items that will not be reclassified subsequently to profit or loss:

 

 

 

 

Remeasurement (losses)/gains on defined benefit pension liability

 

(449)

(32)

1,649

Income tax effect

 

43

3

(195)

Net other comprehensive income not being reclassified to profit or loss in subsequent periods

 

(406)

(29)

1,454

Other comprehensive income for the period/year, net of tax

 

(372,139)

(589,010)

(1,124,531)

 

 

 

 

 

Total comprehensive income for the period/year, net of tax

 

(313,711)

(465,763)

(940,691)

 

 

 

 

 

Total comprehensive income attributable to:

 

 

 

 

Equity shareholders of Ferrexpo plc

 

(307,635)

(458,537)

(926,422)

Non-controlling interests

 

(6,076)

(7,226)

(14,269)

 

 

(313,711)

(465,763)

(940,691)

 

 

 

 

 

             

 

Interim Consolidated Statement of Financial Position

US$'000

Notes

As at

 31.03.15

As at

31.03.14

As at   31.12.14

 

 

(unaudited)

(unaudited)

 (audited)

Assets

 

 

 

 

Property, plant and equipment

12

644,181

1,177,792

926,433

Goodwill and other intangible assets

 

40,851

86,791

60,468

Investments in associates

 

6,601

11,333

8,569

Available-for-sale financial assets

20

41,828

82,658

46

Inventories

14

61,581

54,161

81,987

Other non-current assets

 

13,029

40,275

18,211

Income taxes recoverable and prepaid

10

54,449

61,163

73,782

Other taxes recoverable and prepaid

13

1,038

45,060

1,519

Deferred tax assets

 

44,808

32,588

32,358

Total non-current assets

 

908,366

1,591,821

1,203,373

Inventories

14

96,454

127,886

124,722

Trade and other receivables

 

84,137

115,006

87,226

Prepayments and other current assets

 

15,349

28,277

21,057

Income taxes recoverable and prepaid

10

33,233

Other taxes recoverable and prepaid

13

45,032

140,329

71,982

Cash and cash equivalents

3/15

493,902

366,364

626,509

 

 

734,874

811,095

931,496

Assets classified as held for sale

 

23

106

26

Total current assets

 

734,897

811,201

931,522

Total assets

 

1,643,263

2,403,022

2,134,895

Equity and liabilities

 

 

 

 

Share capital

16

121,628

121,628

121,628

Share premium

 

185,112

185,112

185,112

Other reserves

16

(1,817,393)

(925,717)

(1,452,988)

Retained earnings

 

1,873,917

1,834,543

1,855,690

Equity attributable to equity shareholders of the parent

 

363,264

1,215,566

709,442

Non-controlling interest

 

2,083

15,202

8,159

Total equity

 

365,347

1,230,768

717,601

Interest-bearing loans and borrowings

3/17

939,451

880,423

1,056,253

Defined benefit pension liability

 

21,319

39,807

28,557

Provision for site restoration

 

1,602

2,147

2,345

Deferred tax liability

 

326

2,031

841

Total non-current liabilities

 

962,698

924,408

1,087,996

Interest-bearing loans and borrowings

3/17

249,253

165,282

248,374

Trade and other payables

 

24,341

30,263

32,351

Accrued liabilities and deferred income

 

24,509

31,625

34,191

Income taxes payable

 

4,605

2,300

5,898

Other taxes payable

 

12,510

18,376

8,484

Total current liabilities

 

315,218

247,846

329,298

Total liabilities

 

1,277,916

1,172,254

1,417,294

Total equity and liabilities

 

1,643,263

2,403,022

2,134,895

The financial statements were approved by the Board of Directors on the 27 May 2015.

Kostyantin Zhevago

Christopher Mawe

Chief Executive Officer

Chief Financial Officer

 

Interim Consolidated Statement of Cash Flows

US$'000

Notes

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Profit before tax

 

72,131

144,988

254,282

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment and amortisation of intangible assets

 

15,416

22,558

82,269

Interest expense

 

18,174

15,381

64,166

Under recovery and write-down of VAT receivable

13

2,063

6,790

Interest income

9

(798)

(2,674)

(19,250)

Share of profit from associates

 

(936)

(1,713)

(4,878)

Movement in allowance for doubtful receivables

 

316

181

8,011

Losses on disposal of property, plant and equipment

 

1,054

2,109

4,825

Write-offs and impairment losses

8

3

76

83,534

Site restoration provision

 

27

77

1,180

Employee benefits

 

1,866

2,010

6,531

Share based payments

 

98

152

530

Operating foreign exchange gains

2/7

(23,039)

(36,313)

(76,372)

Non-operating foreign exchange losses

2/7

4,776

3,867

14,846

Operating cash flow before working capital changes

 

89,088

152,762

426,464

Changes in working capital:

 

 

 

 

Decrease/(increase) in trade and other receivables

 

3,419

(22,198)

5,395

Increase in inventories

 

(20,467)

(7,682)

(96,554)

Decrease in trade and other accounts payable

 

(9,963)

(11,366)

(11,083)

Decrease/(increase) in VAT recoverable and other taxes recoverable and payable 1

 

3,164

12,195

86,950

Cash generated from operating activities

 

65,241

123,711

411,172

Interest paid

 

(13,234)

(4,931)

(61,307)

Income tax paid

 

(5,405)

(35,450)

(58,077)

Post-employment benefits paid

 

(481)

(1,091)

(3,340)

Net cash flows from operating activities

 

46,121

82,239

288,448

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(12,135)

(77,945)

(232,809)

Proceeds from disposal of property, plant and equipment

 

14

5,322

Purchase of intangible assets

 

(199)

(256)

(1,711)

Purchase of available-for-sale investment

 

(17)

(17)

Interest received

 

787

497

2,376

Dividends from associates

 

2,755

Net cash flows used in investing activities

 

(11,547)

(77,707)

(224,084)

Cash flows from financing activities

 

 

 

 

Proceeds from borrowings and finance

 

14,091

392,515

Repayment of borrowings and finance

 

(116,415)

(7,210)

(119,009)

Arrangement fees paid

 

(3,135)

(1,473)

(3,580)

Dividends paid to equity shareholders of Ferrexpo plc 2

 

(31,863)

(31,930)

(76,904)

Net cash flows used in financing activities

 

(151,413)

(26,522)

193,022

Net (decrease)/increase in cash and cash equivalents

 

(116,839)

(21,990)

257,386

Cash and cash equivalents at the beginning of the period/year

 

626,509

390,491

390,491

Effect of exchange rate changes on cash and cash equivalents

 

(15,768)

(2,137)

(21,368)

Cash and cash equivalents at the end of the period/year

15

493,902

366,364

626,509

1 The movement in the comparative period ended 31 December 2014 includes the effect of a VAT receivable balance amounting to US$97,067 thousand recovered through VAT

   bonds. See also note 13

2 Net of withholding taxes paid subsequent to the end of the periods ended 31 March 2015 and 2014. See note 11 for further details. 

 

Interim Consolidated Statement of Changes in Equity

For the financial year 2014 and the three months ended 31 March 2015

Attributable to equity shareholders of the parent

 

 

US$ 000

Issued capital

Share  premium

Uniting of interest reserve (note 16)

Treasury share reserve  (note 16)

Employee Benefit Trust reserve

(note 16)

Net unreali-sed gains reserve (note 16)

Translation reserve  (note 16)

Retained earnings

Total capital and reserves

Non-controlling interests

Total equity

At 1 January 2014

121,628

185,112

31,780

(77,260)

(6,542)

712

(296,016)

1,753,200

1,712,614

22,428

1,735,042

Profit for the period

178,316

178,316

5,524

183,840

Other comprehensive income

(712)

(1,105,480)

1,454

(1,104,738)

(19,793)

(1,124,531)

Total comprehensive income for the period

(712)

(1,105,480)

179,770

(926,422)

(14,269)

(940,691)

Equity dividends paid to shareholders of Ferrexpo plc

(77,280)

(77,280)

(77,280)

Share-based payments

530

530

530

At 31 December 2014 (audited)

121,628

185,112

31,780

(77,260)

(6,012)

(1,401,496)

1,855,690

709,442

8,159

717,601

Profit for the period

57,274

57,274

1,154

58,428

Other comprehensive income

41,800

(406,303)

(406)

(364,909)

(7,230)

(372,139)

Total comprehensive income for the period

41,800

(406,303)

56,868

(307,635)

(6,076)

(313,711)

Equity dividends paid to shareholders of Ferrexpo plc

(38,641)

(38,641)

(38,641)

Share-based payments

98

98

98

At 31 March 2015 (unaudited)

121,628

185,112

31,780

(77,260)

(5,914)

41,800

(1,807,799)

1,873,917

363,264

2,083

365,347

 

 For the three months ended 31 March 2014

 

 Attributable to equity shareholders of the parent 

 

 

US$ 000

Issued capital

Share  premium

Uniting of interest reserve  (note 16)

Treasury share reserve  (note 16)

Employee Benefit Trust reserve

(note 16)

Net unreali-sed gains reserve (note16)

Translation reserve (note16)

Retained earnings

Total capital and reserves

Non-controlling interests

Total equity

At 1 January 2014

121,628

185,112

31,780

(77,260)

(6,542)

712

(296,016)

1,753,200

1,712,614

22,428

1,735,042

Profit for the period

120,035

120,035

3,212

123,247

Other comprehensive income

(34)

(578,509)

(29)

(578,572)

(10,438)

(589,010)

Total comprehensive income for the period

(34)

(578,509)

120,006

(458,537)

(7,226)

(465,763)

Equity dividends paid to shareholders of Ferrexpo plc

(38,663)

(38,663)

(38,663)

Share-based payments

152

152

152

At 31 March 2014 (unaudited)

121,628

185,112

31,780

(77,260)

(6,390)

678

(874,525)

1,834,543

1,215,566

15,202

1,230,768

                         

 

Notes to the Interim Condensed Consolidated Financial Statements

 

Note 1: Corporate information

Organisation and operation

Ferrexpo plc (the "Company") is incorporated in the United Kingdom, which is considered to be the country of domicile, with its registered office at 2-4 King Street, London, SW1Y 6QL, UK. Ferrexpo plc and its subsidiaries (the "Group") operate two mines and a processing plant near Kremenchug in Ukraine, an interest in a port in Odessa and sales and marketing activities around the world including offices in Switzerland, Dubai, Japan, China, Singapore and Ukraine. The Group also owns logistics assets in Austria which operates a fleet of vessels operating on the Rhine and Danube waterways and an ocean going vessel which provides top off services and operates on international sea routes. The Group's operations are vertically integrated from iron ore mining through to iron ore concentrate and pellet production and subsequent logistics. The Group's mineral properties lie within the Kremenchug Magnetic Anomaly and are currently being extracted at the Gorishne-Plavninskoye and Lavrikovskoye ("GPL ") and Yeristovskoye deposits.

The majority shareholder of the Group is Fevamotinico S.a.r.l. ("Fevamotinico"), a company incorporated in Luxembourg and ultimately owned by The Minco Trust, of which Kostyantin Zhevago, the Group's Chief Executive Officer, is a beneficiary. At the time this report was published, Fevamotinico held 50.3% (2014: 50.3%) of Ferrexpo plc's issued share capital.

The Group comprises of Ferrexpo plc and its consolidated subsidiaries as set out below:

 

Equity interest owned

Name

Country of incorporation

Principal activity

31.03.15

%

31.03.14

%

31.12.14

%

OJSC Ferrexpo Poltava Mining

Ukraine

Iron ore mining

97.3

97.3

97.3

Ferrexpo AG

Switzerland

Sale of iron ore pellets

100.0

100.0

100.0

DP Ferrotrans

Ukraine

Trade, transportation services

97.3

97.3

97.3

United Energy Company LLC

Ukraine

Holding company

97.3

97.3

97.3

Ferrexpo Finance plc

England

Finance

100.0

100.0

100.0

Ferrexpo Services Limited

Ukraine

Management services & procurement

100.0

100.0

100.0

Ferrexpo Hong Kong Limited

China

Marketing services

100.0

100.0

100.0

LLC Ferrexpo Yeristovo GOK

Ukraine

Iron ore mining

100.0

100.0

100.0

LLC Ferrexpo Belanovo GOK

Ukraine

Iron ore mining

100.0

100.0

100.0

Nova Logistics Limited

Ukraine

Service company (dormant)

51.0

51.0

51.0

Ferrexpo Middle East FZE

U.A.E.

Sale of iron ore pellets

100.0

100.0

100.0

Ferrexpo Singapore PTE Ltd

Singapore

Marketing services

100.0

100.0

100.0

First-DDSG Logistics Holding GmbH

Austria

Holding company

100.0

100.0

100.0

EDDSG GmbH

Austria

Barging company

100.0

100.0

100.0

DDSG Tankschiffahrt GmbH

Austria

Barging company

100.0

100.0

100.0

DDSG Services GmbH 1

Austria

Barging company

100.0

100.0

100.0

DDSG Mahart Kft.

Hungary

Barging company

100.0

100.0

100.0

Pancar Kft.

Hungary

Barging company

100.0

100.0

100.0

Ferrexpo Port Services GmbH

Austria

Port services

100.0

100.0

100.0

Ferrexpo Shipping International Ltd.

Marshall Islands

Holding company

100.0

100.0

100.0

Iron Destiny Ltd.

Marshall Islands

Holding company

100.0

100.0

100.0

Transcanal SRL

Romania

Port services

77.6

77.6

77.6

Helogistics Asset Leasing Kft.

Hungary

Asset holding company

100.0

100.0

100.0

Universal Services Group Ltd.

Ukraine

Asset holding company

100.0

100.0

100.0

LLC DDSG Ukraine Holding

Ukraine

Holding company

100.0

100.0

100.0

LLC DDSG Invest

Ukraine

Asset holding company

100.0

100.0

100.0

LLC DDSG Ukraine Shipping Management

Ukraine

Barging company

100.0

100.0

100.0

LLC DDSG Ukraine Shipping

Ukraine

Asset holding company

100.0

100.0

100.0

Arlington Ltd. 2

Guernsey

Holding company

100.0

100.0

100.0

1 Formerly Helogistics Transport GmbH

2 The entity was acquired in February 2014

The Group's interests in the entities listed above are held indirectly by the Company.

At 31 March 2015, the Group also holds through OJSC Ferrexpo Poltava Mining an interest of 48.6% (31 March 2014: 48.6%; 31 December 2014: 48.6%) in TIS Ruda, a Ukrainian port located on the Black Sea. As this is an associate, it is accounted for using the equity method of accounting.

 

Note 2: Summary of significant accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the three months period ended 31 March 2015 have been prepared in accordance with International Accounting Standard ('IAS') 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all of the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2014.

The interim condensed consolidated financial statements do not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the full year is based on the statutory accounts for the financial year ended 31 December 2014. A copy of the statutory accounts for that year, which were prepared in accordance with International Financial Reporting Standards ('IFRS') issued by the International Accounting Standard Board ('IASB'), as adopted by the European Union as they apply to financial statements of the Group for the year ended 31 December 2014, will be delivered to the Register of Companies before the required filing deadline. The auditors' report under section 495 of the Companies Act 2006 in relation to those accounts was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

During the period ended 31 March 2015, the Ukrainian Hryvnia has devalued by approximately 49% compared to the US Dollar; from 15.769 as at 31 December 2014 to 23.443 as at the end of this reporting period. As a result of this devaluation, the total equity decreased by US$449,905 thousand as of 31 March 2015 due the exchange differences on translating foreign operations, which is reflected in the translation reserve. Further details are provided in note 7 and note 16.

The Group continues to generate positive free cash flow under the lower iron ore price environment. The principal repayments under the Group's debt facilities take place in 2Q 2016 and the Group has sufficient liquidity to operate until this time. The fall in the iron ore price and the lower cash generation of the business is, however, likely to require certain debt facilities to be renewed or rolled over with extended repayment terms in order to ensure that the Group has sufficient working capital in 2016 (see note 17 for further information).

The Directors are of the view that further refinancing and or extension of debt repayment maturities will be available and as such the Directors are of the view that the Group is a going concern and the interim consolidated financial statements have been drawn up on this basis.

Accounting policies adopted

The accounting policies and methods of computation adopted in the preparation of the interim condensed consolidated financial statements are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2014.

The following new standards and interpretations have been applied from 1 January 2015, with no effect on reported results, financial position or disclosure in the interim financial statements:

Annual Improvements to IFRSs - 2010-2012 Cycle

Annual Improvements to IFRSs - 2011-2013 Cycle

IFRIC 21 Levies

Seasonality

The Group's operations are not affected by seasonality.

Note 3: Segment information

The Group is managed as a single entity, which produces, develops and markets its principal product, iron ore pellets, for sale to the metallurgical industry. While the revenue generated by the Group is monitored at a more detailed level, there are no separate measures of profit reported to the Group's Chief Operating Decision-Maker ('CODM'). In accordance with IFRS 8 Operating Segments, the Group presents its results in a single segment, which are disclosed in the income statement for the Group. The management monitors the operating result of the Group based on a number of measures including EBITDA, C1 costs and the net financial indebtedness.

EBITDA

The Group presents EBITDA because it believes that EBITDA is a useful measure for evaluating its ability to generate cash and its operating performance. The Group's full definition of EBITDA is disclosed in the Glossary on page 24.

US$ 000

Notes

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Profit before tax and finance

 

95,038

162,803

318,350

Under recovery and write-down of VAT receivable

13

2,063

6,790

Write-offs and impairment losses

8

3

76

83,534

Share based payments

 

98

152

530

Losses on disposal of PPE

 

1,054

2,109

4,825

Depreciation and amortisation

 

15,416

22,558

82,269

EBITDA

 

111,609

189,761

496,298

 

C1 costs

C1 costs represent the cash costs of production of iron ore pellets from own ore divided by production volume of own ore, and excludes non-cash costs such as depreciation, pension costs and inventory movements, costs of purchased ore and concentrate and production cost of gravel.

US$'000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Cost of sales - pellet production

5

104,224

170,834

586,653

Depreciation and amortisation

5

(11,846)

(18,451)

(64,137)

Purchased concentrate and other items for resale

5

(8,446)

(9,243)

(27,110)

Inventory movements

5

9,668

(1,675)

10,127

Other

 

(3,270)

(4,455)

(15,546)

C1 cost

 

90,330

137,010

489,987

Own ore produced (tonnes)

 

2,723,230

2,714,136

10,670,445

C1 cash cost per tonne US$

 

33.2

50.5

45.9

Net financial indebtedness

Net financial indebtedness as defined by the Group comprises cash and cash equivalents, short-term deposits less interest bearing loans and borrowings.

US$ 000

Notes

As at 31.03.15

As at 31.03.14

As at 31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Cash and cash equivalents

15

493,902

366,364

626,509

Interest bearing loans and borrowings - current

17

(249,253)

(165,282)

(248,374)

Interest bearing loans and borrowings - non-current

17

(939,451)

(880,423)

(1,056,253)

Net financial indebtedness

 

(694,802)

(679,341)

(678,118)

Note 4: Revenue

Revenue for the three months period ended 31 March 2015 consisted of the following:

US$ 000

 

3 months ended

31.03.15

3 months ended   31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Revenue from sales of ore pellets:

 

 

 

 

Export

 

243,586

395,554

1,290,695

Total revenue from sale of iron ore pellets and concentrate

 

243,586

395,554

1,290,695

Revenue from logistics and bunker business

 

13,094

16,246

90,661

Revenue from other sales and services provided

 

917

1,699

6,929

Total revenue

 

257,597

413,499

1,388,285

No sales were made in Ukraine during the periods presented. Export sales of iron ore pellets and concentrate by geographical destination were as follows:

US$'000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Traditional Market

 

125,512

206,158

594,045

Growth Market

 

71,842

130,675

493,964

Natural Market

 

46,232

58,721

202,686

Total export revenue

 

243,586

395,554

1,290,695

Information about the composition of the markets is provided in the Glossary.

Note 5: Cost of sales

Cost of sales for the three months period ended 31 March 2015 consisted of the following:

US$ 000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Energy

 

50,008

74,376

262,936

Personnel

 

8,582

15,442

50,851

Materials

 

15,737

23,052

85,043

Repairs and maintenance

 

10,112

15,605

59,780

Depreciation and amortisation

 

11,846

18,451

64,137

Royalties and levies

 

3,858

6,216

22,801

Purchased concentrate and other items for resale

 

8,446

9,243

27,110

Inventory movements

 

(9,668)

1,675

(10,127)

Logistics and bunker business

 

5,722

8,908

61,307

Other

 

5,303

6,774

24,122

Total cost of sales

 

109,946

179,742

647,960

Thereof for pellet production

 

104,224

170,834

586,653

Thereof for logistics and bunker business

 

5,722

8,908

61,307

Note 6: General and administrative expenses

General and administrative expenses for the three months period ended 31 March 2015 consisted of the following:

US$ 000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Personnel

 

4,738

7,358

28,406

Office, maintenance and security

 

1,202

1,704

6,780

Professional fees

 

2,336

1,500

6,990

Audit fees

 

329

330

1,593

Non-audit fees

 

1

45

418

Depreciation and amortisation

 

421

(454)

2,084

Other

 

666

468

2,371

Total general and administrative expenses

 

9,693

10,951

48,642

Note 7: Foreign exchange gains and losses

Foreign exchange gains and losses for the three months period ended 31 March 2015 consisted of the following:

US$ 000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

Operating foreign exchange gains

 

 

 

 

Revaluation of trade receivables

 

23,736

36,912

78,827

Revaluation of trade payables

 

(672)

(601)

(2,265)

Others

 

(25)

2

(190)

Total operating foreign exchange gains

 

23,039

36,313

76,372

Non-operating foreign exchange losses

 

 

 

 

Revaluation of interest-bearing loans

 

(38,910)

(29,124)

(76,517)

Revaluation of cash and cash equivalents

 

41,189

43,055

81,192

Others

 

(7,055)

(17,798)

(19,521)

Total non-operating foreign exchange losses

 

(4,776)

(3,867)

(14,846)

Total foreign exchange gains

 

18,263

32,446

61,526

Operating foreign exchange gains and losses are those items that are directly related to the production and sale of pellets (e.g. trade receivables, trade payables on operating expenditure). Non-operating gains and losses are those associated with the Group's financing and treasury activities and with local income tax payables.

During the period ended 31 March 2015, the Ukrainian Hryvnia has devalued by approximately 49% compared to the US Dollar; from 15.769 as at 31 December 2014 to 23.443 as at the end of this reporting period resulting in translation differences of balances denominated in Hryvnia, such as property plant and equipment (note 12), income taxes recoverable and prepaid and other taxes recoverable and prepaid (note 13), with the effects recognised in the translation reserve (see note 16).

Note 8: Write-offs and impairment losses

Impairment losses relate to adjustments made to the carrying value of assets where this is higher than the recoverable amount. Write-offs and impairment losses for the three months period ended 31 March 2015 consisted of the following:

US$ 000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

Write-off of VAT receivables

 

1,351

Write-off of inventories

 

48

Write-off of property, plant and equipment

 

47

Impairment of available-for-sale investments, net of amounts reclassified from other comprehensive income

 

(294)

Impairment of available-for-sale investments

 

3

76

82,382

Total write-offs and impairment losses

 

3

76

83,534

The impairment loss on available-for-sale financial assets shown for the comparative period ended 31 December 2014 is related to the 15.5% equity investment in Ferrous Resources. Further information is provided in note 20.

Note 9: Finance income and expense

Finance income and expense for the period ended 31 March 2015 consisted of the following:

US$000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Finance income

 

 

 

 

Interest income

 

731

447

2,299

Other finance income

 

67

2,227

16,951

Total finance income

 

798

2,674

19,250

Finance expense

 

 

 

 

Interest expense on financial liabilities measured at amortised cost

 

(16,485)

(13,547)

(58,371)

Effect from capitalised borrowing costs

 

1,135

2,538

8,748

Interest on defined benefit plans

 

(755)

(1,242)

(4,306)

Bank charges

 

(2,614)

(3,639)

(13,490)

Other finance costs

 

(210)

(732)

(1,053)

Total finance expense

 

(18,929)

(16,622)

(68,472)

Net finance expense

 

(18,131)

(13,948)

(49,222)

Other finance income for the comparative period ended 31 December 2014 includes a US$16,497 thousand release of a discount recorded in the prior years to reflect changes in the estimated timing of receipts for VAT receivable balances in dispute that were previously expected to be recovered over a protracted period of time. Further information is provided in note 13.

The discount was built up in periods prior to those presented in these interim consolidated financial statements and was recorded as finance cost as reflecting the time value of money of these VAT receivable balances at the respective end of the reporting periods.

Note 10: Taxation

The Group pays corporate profit tax in a number of jurisdictions and its tax rate is influenced by the mix of profits primarily between Ukraine, Switzerland, the United Kingdom and Dubai, as well as the level of non-deductible expenses for tax purposes in each of these jurisdictions. For the period ended 31 March 2015, the income tax expense was based on an expected tax rate of 19.0% for the financial year 2015, which is below the effective tax rate of 27.7% for the financial year 2014.

The lower expected tax rate for the period ended 31 March 2015 compared to the effective tax rate for the financial year 2014 is mainly a result of lower non-deductible expenses expected during the financial year 2015. The effective tax rate for the financial year 2014 included significant non-deductible expenses in Ukraine and Switzerland including the discount recorded on the VAT bonds sold prior to their maturity and the impairment loss recorded on an equity investment (see note 20 for further details).

During the last three financial years, current VAT receivable balances in Ukraine were mainly recovered in exchange for prepayments of corporate profit tax resulting in a substantial balance of outstanding prepaid corporate profit tax. This balance decreased to US$73,782 thousand during the financial year 2014 as a result of the Ukrainian Hryvnia devaluation compared to the US Dollar (31 March 2014: US$94,396 thousand) and a reduction of the percentage of the corporate profit tax to be prepaid for obtaining VAT refunds. During the three months period ended 31 March 2015, the Hryvnia further devalued from 15.769 at the beginning of the year to 23.443 as at the end of this reporting period resulting in a further decrease of the outstanding balance to US$54,449 thousand.

It is management's view that this balance will be either offset with future profits or recovered through an issuance of bonds by the Ministry of Finance, which are expected to trade with a discount to face value, as happened during the financial year 2014 for overdue VAT receivable balances (see note 13). As at the date of the preparation of these consolidated interim financial statements, there is an uncertainty as to the timing of the recovery of this balance. In light of this uncertainty, it was considered most appropriate to classify the entire balance as non-current in the consolidated statement of financial position.

Note 11: Earnings per share and dividends paid and proposed

Basic EPS is calculated by dividing the net profit for the period attributable to ordinary equity shareholders of Ferrexpo plc by the weighted average number of Ordinary Shares.

Diluted earnings per share are calculated by adjusting the weighted average number of Ordinary Shares in issue on the assumption of conversion of all potentially dilutive Ordinary Shares. All share awards are potentially dilutive and have been considered in the calculation of diluted earnings per share.

 

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Profit for the period / year attributable to equity shareholders:

 

 

 

 

Basic earnings per share (US cents)

 

9.78

20.51

30.46

Diluted earnings per share (US cents)

 

9.76

20.46

30.39

The calculation of the basic and diluted earnings per share is based on the following data:

 Thousands

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Weighted average number of shares

 

 

 

 

Basic number of ordinary shares outstanding

 

585,462

585,336

585,413

Effect of dilutive potential ordinary shares

 

1,253

1,267

1,258

Diluted number of ordinary shares outstanding

 

586,715

586,603

586,671

The basic number of ordinary shares is calculated by subtracting the shares held in treasury from the total number of ordinary shares in issue.

Dividends

US$000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Dividend proposed

 

 

 

 

Final dividend for 2014: 3.3 US cents

 

19,320

19,320

Special dividend for 2014: 6.6 US cents

 

38,640

Final dividend for 2013: 3.3 US cents

 

19,317

Total dividends proposed

 

19,320

19,317

57,960

 

 

 

 

 

Paid per ordinary share

 

 

 

 

Special dividend for 2014: 6.6 US cents

 

38,667

Interim dividend for 2014: 3.3 US cents

 

19,011

Final dividend for 2013: 3.3 US cents

 

19,279

Special dividend for 2013: 6.6 US cents

 

38,614

38,614

Total dividends paid during the period

 

38,667

38,614

76,904

The interim dividends paid for 2014 and 2013 include withholding taxes of US$6,804 thousand and US$6,684 thousand paid subsequent to the periods ended 31 March 2015 and 2014, respectively.

Note 12: Property, plant and equipment

During the three months period ended 31 March 2015, the Group acquired property, plant and equipment with a cost of US$17,402 thousand (31 March 2014: US$67,372 thousand; 31 December 2014: US$262,252 thousand) and disposed of property, plant and equipment with original costs of US$2,995 thousand (31 March 2014: US$5,472 thousand; 31 December 2014: US$30,683 thousand). The total depreciation charge for the period was US$15,679 thousand (31 March 2014: US$24,502 thousand; 31 December 2014: US$97,901 thousand).

During the reporting period, the Ukrainian Hryvnia has devalued compared to the US Dollar from 15.769 as of 31 December 2014 to 23.443 as of 31 March 2015 reducing property, plant and equipment by US$280,981 thousand. This effect is reflected in the translation reserve included in shareholder's equity. See also note 16.

The carrying value of property, plant and equipment includes capitalised borrowing costs on qualifying assets of US$9,795 thousand (31 March 2014: US$9,885 thousand; 31 December 2014: US$13,162 thousand).

Note 13: Other taxes recoverable and prepaid

As at 31 March 2015 taxes recoverable and prepaid comprised:

 US$000

 

As at 31.03.15

As at 31.03.14

As at 31.12.14

 

 

(unaudited)

(unaudited)

 (audited)

VAT receivable

 

44,931

140,124

71,859

Other taxes prepaid

 

101

205

123

Total other taxes recoverable and prepaid - current

 

45,032

140,329

71,982

VAT receivable

 

1,038

45,060

1,519

Total other taxes recoverable and prepaid - non-current

 

1,038

45,060

1,519

Total other taxes recoverable and prepaid

 

46,070

185,389

73,501

As at 31 March 2015, US$44,347 thousand of the VAT receivable relates to the Group's Ukrainian business operations (31 March 2014: US$181,718 thousand; 31 December 2014: US$71,127 thousand). The table below provides a reconciliation of the VAT receivable balances in Ukraine:

US$000

 

3 months ended

31.03.15

3 months ended

31.03.14

Year ended
31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Opening balance

 

72,837

318,213

318,213

Net VAT incurred

 

22,553

40,261

153,345

VAT received in cash

 

(25,724)

(51,232)

(141,126)

VAT recovered through sale of VAT bonds

 

(97,067)

Discount on sale of VAT bonds

 

(29,333)

VAT write-off through the income statement

 

(1,351)

VAT write-off capitalised

 

(3,430)

Translation difference

 

(23,609)

(81,873)

(126,414)

Closing balance, gross

 

46,057

225,369

72,837

Discount

 

(1,710)

(43,651)

(1,710)

Closing balance, net

 

44,347

181,718

71,127

 

The Ukrainian Hryvnia devalued compared to the US Dollar from 15.769 as at 31 December 2014 to 23.443 as at 31 March 2015 reducing the outstanding VAT balances expressed in US Dollar by US$23,609 thousand, which is reflected in the translation reserve. See also note 16.

During the second half of the financial year 2014, bonds were received by the Group with a face value of UAH1,607,101 thousand (US$135,573 thousand at the exchange rate at the date of issuance) in settlement for VAT due of the same amount. The bonds were issued by the Ministry of Finance to settle certain accumulated VAT liabilities and the Group had sold all VAT bonds prior to the end of the financial year 2014 with an average discount of 21.8% resulting in net proceeds totalling UAH1,256,800 thousand (US$97,067 thousand at the exchange rate at the date of sale).

As at 31 March 2015, management expect certain overdue receivable balances to be recovered inside one year through a further issuance of bonds, which will trade at a discount to face value. The adjustment of the discount at the end of the comparative periods ended 31 March 2014 and 31 December 2014 resulted in charges of US$2,063 thousand and US$6,790 thousand, respectively.

Note 14: Inventories

Inventories are held at the lower of cost or net realisable value. As at 31 March 2015 ore stockpiles amounting to US$61,581 thousand (31 March 2014: US$54,161 thousand; 31 December 2014: US$81,987 thousand) were classified as non-current as this ore is not planned to be processed within one year.

Note 15: Cash and cash equivalents

As at 31 March 2015 the Group held cash and cash equivalents of US$493,902 thousand (31 March 2014: US$366,364 thousand; 31 December 2014: US$626,509 thousand).

The Group's exposure to liquidity, counterparty and interest rate risk as well as a sensitivity analysis for financial assets and liabilities are disclosed in note 30 of the Annual Report and Accounts 2014. See also note 18 of these interim condensed consolidated financial statements for further information in respect of transactional banking arrangements with a related party.

Note 16: Share capital and reserves

The share capital of Ferrexpo plc at 31 March 2015 was 613,967,956 (31 March 2014: 613,967,956; 31 December 2014: 613,967,956) Ordinary Shares at par value of £0.10 paid for cash, resulting in share capital of US$121,628 thousand, which is unchanged since the Group's Initial Public Offering in June 2007. This balance includes 25,343,814 shares (31 March 2014: 25,343,814 shares; 31 December 2014: 25,343,814 shares), which are held in treasury, resulting from a share buyback that was undertaken in September 2008, and 3,162,399 shares held in the employee benefit trust reserve (31 March 2014:3,196,064 shares; 31 December 2014: 3,162,399 shares).

The translation reserve includes the effect from the exchange differences arising on translation of non-US Dollar functional currency operations (mainly in Ukrainian Hryvnia). During the period ended 31 March 2015, the Ukrainian Hryvnia devalued from 15.769 as at the beginning of the year to 23.443 as at 31 March 2015 and the exchange differences arising on translation of the Group's foreign operations are initially recognised in the other comprehensive income. See also the Interim Consolidated Statement of Comprehensive Income on page 4 of these financial statements for further details.

As at 31 March 2015 other reserves attributable to equity shareholders of Ferrexpo plc comprised.

For the financial year 2014 and the three months ended 31 March 2015

 

 

 

 

 

 

US$ 000

Uniting of interest reserve

Treasury share reserve

Employee Benefit Trust reserve

Net

 unrealised gains reserve

Translation reserve

Total other reserves

At 1 January 2014

31,780

(77,260)

(6,542)

712

(296,016)

(347,326)

Foreign currency translation differences

(1,185,874)

(1,185,874)

Transfer to profit and loss

(712)

(712)

Loss on available-for-sale financial assets

Tax effect

80,394

80,394

Total comprehensive income for the period

(712)

(1,105,480)

(1,106,192)

Share based payments

530

530

At 31 December 2014 (audited)

31,780

(77,260)

(6,012)

(1,401,496)

(1,452,988)

Foreign currency translation differences

(442,675)

(442,675)

Gain/(loss) on available-for-sale financial assets

41,800

41,800

Tax effect

36,372

36,372

Total comprehensive income for the period

41,800

(406,303)

(364,503)

Share based payments

98

98

At 31 March 2015 (unaudited)

31,780

(77,260)

(5,914)

41,800

(1,807,799)

(1,817,393)

 

For the three months ended 31 March 2014

 

 

 

 

 

 

US$ 000

Uniting of interest reserve

Treasury share reserve

Employee Benefit Trust reserve

Net

unrealised gains reserve

Translation reserve

Total other reserves

At 1 January 2014

31,780

(77,260)

(6,542)

712

(296,016)

(347,326)

Foreign currency translation differences

-

-

-

-

(617,186)

(617,186)

Gain on available-for-sale financial assets

-

-

-

(41)

-

(41)

Tax effect

-

-

-

7

38,677

38,684

Total comprehensive income for the period

-

-

-

(34)

(578,509)

(578,543)

Share based payments

-

-

152

-

-

152

At 31 March 2014 (unaudited)

31,780

(77,260)

(6,390)

678

(874,525)

(925,717)

Note 17: Interest bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest bearing loans and borrowings, which are measured at amortised cost and denominated in US Dollars.

US$ 000

 

As at 31.03.15

As at 31.03.14

As at 31.12.14

 

 

(unaudited)

(unaudited)

 (audited)

Current

 

 

 

 

Syndicated bank loans - secured

 

207,500

122,500

210,000

Other bank loans - secured

 

21,150

18,867

22,906

Other bank loans - unsecured

 

1,503

Obligations under finance leases

 

4,230

4,566

4,644

Interest accrued

 

14,870

19,349

10,824

Total current interest bearing loans and borrowings

3

249,253

165,282

248,374

 

 

 

 

 

Non-current

 

 

 

 

Eurobond issued

 

439,420

494,435

496,392

Syndicated bank loans - secured

 

420,000

297,500

472,500

Other bank loans - secured

 

60,220

71,409

73,736

Other bank loans - unsecured

 

7,477

Obligations under finance leases

 

12,334

17,079

13,625

Total non-current interest bearing loans and borrowings

3

939,451

880,423

1,056,253

Total interest bearing loans and borrowings

 

1,188,704

1,045,705

1,304,627

As at 31 March 2015 the Group has a syndicated US$420 million pre-export finance facility, of which US$277.5 million is available and drawn, and a fully drawn syndicated US$350 million pre-export finance facility. Both are revolving facilities with commitment amortisation over the final 24 months to the final maturity dates of 31 July 2016 and 8 August 2018 respectively. Subject to additional bank commitments being secured, the US$350 million facility can be further increased up to an amount of US$500 million within one year of the effective date, which was 8 August 2014.

As at 31 March 2015 the major bank debt facilities were guaranteed and secured as follows:

·      Ferrexpo AG and Ferrexpo Middle East FZE assigned the rights to revenue from certain sales contracts;

·      OJSC Ferrexpo Poltava Mining assigned all of its rights of certain export contracts for the pellets sales to Ferrexpo AG and Ferrexpo Middle East FZE; and

·      the Group pledged bank accounts of Ferrexpo AG and Ferrexpo Middle East FZE into which all proceeds from the sale of certain iron ore pellet contracts are received.

In addition to the Group's major bank debt facilities listed above, an unsecured US$500 million Eurobond was issued on 7 April 2011, subsequent to the exchange transaction mentioned below, US$285,669 thousand remains due for repayment on 7 April 2016. This bond has a 7.875% coupon and interest is payable on a semi-annual basis.

On 24 February 2015, the Group exchanged and cancelled US$214,331 thousand of the aforementioned US$500 million Eurobond and issued new notes with a par value totalling US$160,724 thousand and repaid US$53,607 thousand in cash. The new notes are repayable in two equal instalments on 7 April 2018 and 7 April 2019 and have a 10.375% interest coupon payable semi-annually.

Further information on the Group's exposure to interest rate, foreign currency and liquidity risk is provided in note 30 of the Annual Report and Accounts 2014.

Note 18: Related party disclosure

During the periods presented the Group entered into arm's length transactions with entities under the common control of the majority owner of the Group, Kostyantin Zhevago and with associated companies and with other related parties. Management considers that the Group has appropriate procedures in place to identify and properly disclose transactions with the related parties.

Entities under common control are those under the control of Kostyantin Zhevago. Associated companies refer to TIS Ruda LLC, in which the Group holds an interest of 48.6%. This is the only associated company of the Group. Other related parties are principally those entities controlled by Anatoly Trefilov who is a member of the supervisory board of OJSC Ferrexpo Poltava Mining. Related party transactions entered into by the Group during the periods presented are summarised in the tables on the following pages.

During the period ended 31 March 2015, the Ukrainian Hryvnia has devalued by approximately 49% compared to the US Dollar; from 15.769 as at 31 December 2014 to 23.443 as at the end of this reporting period. This devaluation had an effect on the totals of the transactions and the balances denominated in Hryvnia when translating into US Dollar.

Revenue, expenses, finance income and finance expenses

 

3 months ended 31.03.15 (unaudited)

3 months ended 31.03.14 (unaudited)

Year ended 31.12.14 (audited)

US$ 000

Entities under common control

Associated companies

Other related parties

Entities   under common control

Associated companies

Other related parties

Entities under common control

Associated companies

Other  related parties

Other sales a

86

-

214

146

-

168

696

-

524

Total related party transactions within revenue

86

-

214

146

-

168

696

-

524

Materials b

1,508

-

4

3,609

-

9

12,334

-

26

Purchased concentrate and other items for resale c

277

-

-

-

-

-

769

-

-

Spare parts and consumables d

180

-

-

528

-

-

2,423

-

2

Gas e

7,886

-

-

7,763

-

-

39,259

-

-

Total related parties transactions within cost of sales

9,851

-

4

11,900

-

9

54,785

-

28

Selling and distribution expenses f

2,731

4,927

2,018

2,920

5,944

2,465

11,201

24,130

5,984

General and administration
expenses g

194

-

-

299

-

-

1,267

-

-

Total related parties transactions within expenses

12,776

4,927

2,022

15,119

5,944

2,474

67,253

24,130

6,012

Finance income h

619

-

-

388

-

-

1,804

-

-

Finance expenses h

(17)

-

-

(10)

-

-

(99)

-

-

Net finance income

602

-

-

378

-

-

1,705

-

-

Entities under common control

The Group entered into various related party transactions with entities under common control. A description of the most material transactions, which are in aggregate over US$200 thousand (on an expected annualised basis) in the current or comparative periods is given below. All transactions were carried out on an arm's length basis in the normal course of business.

a   Sales of power, steam and water and other materials for US$23 thousand (31 March 2014: US$43 thousand; 31 December 2014: US$160 thousand) and income from premises leased to Kislorod PCC of US$38 thousand (31 March 2014: US$64 thousand; 31 December 2014: US$258 thousand).

b   Purchases of compressed air, oxygen and metal scrap from Kislorod PCC for US$970 thousand (31 March 2014: US$1,541 thousand; 31 December 2014: US$5,347 thousand); and

b   Purchases of cast iron balls from AutoKraZ Holding Co. for US$266  thousand (31 March 2014: US$1,744 thousand; 31 December 2014: US$5,530 thousand).

b   Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas for US$249 thousand (31 March 2014: US$251 thousand; 31 December 2014: US$1,209 thousand).

c   Purchases of concentrate and other items for resale from Vostok Ruda Ltd for US$277 thousand (31 March 2014: nil; 31 December 2014: US$769 thousand).

d   Purchases of spare parts from CJSC Kiev Shipbuilding and Ship Repair Plant ('KSRSSZ') in the amount of US$49 thousand (31 March 2014: US$90 thousand; 31 December 2014: US$821 thousand);

d   Purchases of spare parts from Valsa GTV of US$24 thousand (31 March 2014: US$284 thousand; 31 December 2014: US$749 thousand);

d   Purchases of ferromanganese from Raw & Refined Commodities AG for US$56 thousand (31 March 2014: US$110 thousand; 31 December 2014: US$512 thousand).

e   Procurement of gas from OJSC Ukrzakordongeologia for US$7,886 thousand (31 March 2014: US$7,763 thousand; 31 December 2014: US$39,259 thousand).

f   Purchases of advertisement, marketing and general public relations services from FC Vorskla for US$2,722 thousand (31 March 2014: US$2,898 thousand; 31 December 2014: US$11,137 thousand).

g   Insurance premiums paid to ASK Omega for workmen's insurance and general cover of US$103 thousand (31 March 2014: US$145 thousand; 31 December 2014: US$574 thousand);

g   Fees paid to Bank Finance & Credit (Bank F&C) for bank services of US$69 thousand (31 March 2014: US$118 thousand; 31 December 2014: US$ 439 thousand).

h   Transactional banking services are provided to certain subsidiaries of the Group by Bank Finance & Credit (Bank F&C) Finance income and expenses relate to these transactional banking services. Further information is provided under transactional banking arrangements on page 20.

Associated companies

The Group entered into related party transactions with its associated company TIS Ruda LLC, which were carried out on an arm's length basis in the normal course of business for the members of the Group (see note 1). A description of the most material transactions which are in aggregate over US$200 thousand (on an expected annualised basis) in the current or comparative periods is given below:

f   Purchases of logistics services in the amount of US$4,927 thousand (31 March 2014: US$5,944 thousand; 31 December 2014: US$24,130 thousand) relating to port operations, including port charges, handling costs, agent commissions and storage costs.

Other related parties

The Group entered into various transactions with other related parties. A description of the most material transactions which are in aggregate over US$200 thousand (on an expected annualised basis) in the current or comparative periods is given below:

a   Sales of material and services to Slavutich Ruda Ltd. for US$203 thousand (31 March 2014: US$168 thousand; 31 December 2014: US$508 thousand).

f   Purchases of logistics management services from Slavutich Ruda Ltd. relating to customs clearance services and the coordination of rail transit. Total billings amounted to US$2,018 thousand (31 March 2014: US$2,465 thousand; 31 December 2014: US$5,984 thousand). Slavutich Ruda Ltd. earned commission income of US$104 thousand on these services (31 March 2014: US$222 thousand; 31 December 2014: US$1,350 thousand).

Purchases of property, plant, equipment and investments

The table below details the transactions of a capital nature which were undertaken between Group companies and entities under common control, associated companies and other related parties during the periods presented.

 

3 months ended 31.03.15 (unaudited)

3 months ended 31.03.14 (unaudited)

Year ended 31.12.14 (audited)

US$ 000

Entities    under  common control

Associated companies

Other related parties

Entities   under common control

Associated companies

Other related parties

Entities under common control

Associated companies

Other  related parties

Purchases with independent confirmation

-

-

-

-

-

-

458

-

-

Purchases with shareholder approval

-

-

-

-

-

-

887

-

-

Purchases in the ordinary course of business

76

-

-

1,167

-

-

2,724

-

5

Total purchases of property, plant and equipment i

76

-

-

1,167

-

-

4,069

-

5

Entities under common control

Individual transactions of a capital nature which exceeded US$200 thousand are described below.

Current year

i   During the first three months period ended 31 March 2015, the Group entered in various transactions of a capital nature with related parties totalling US$76 thousand. These transactions were in the ordinary course of business. No transaction exceeded the US$200 thousand threshold set for a detailed description.

Subsequent to the reporting period ended 31 March 2015, the Group received an additional 27 rail cars totalling US$1,431 thousand (US$842 thousand at the prevailing exchange rate at delivery), which were ordered back in February 2014. See below for further information.

Prior periods:

i   During the financial year 2014, the Group entered into various transactions of a capital nature with related parties totalling to US$2,724 thousand, which were in the ordinary course of business.

• The Group procured goods and services totalling US$1,807 thousand from OJSC Berdichev Machine-Building Plant Progress for various ongoing projects and

design documentation services from OJSC DIOS totalling US$597 thousand.

In August 2014, the Group acquired in two separate transactions a railway line and an associated power line from LLC Vorskla Steel totalling US$458 thousand. The transaction was not considered to be in the ordinary course of business and an independent confirmation was obtained and an announcement made in accordance with the UK Listing Rules.

In February 2014, the Group ordered 300 rail cars from PJSC Stakhanov Railcar Company, of which 233 rail cars amounting to US$12,349 thousand were under the authority of the shareholder approval obtained on 24 May 2012 obtained under the listing rules applicable at that time and an additional 67 rail cars amounting to

US$3,551 thousand were ordered in the ordinary course of business. A total prepayment of US$11,925 thousand (US$4,410 thousand at current exchange rate) was made in relation to these rail cars. The rail cars were scheduled for delivery in the second half of the financial year 2014. As a consequence of the ongoing conflict in the eastern part of Ukraine, 25 rail cars totalling US$1,325 thousand (US$887 thousand at the prevailing exchange rate at delivery) were delivered during the financial year 2014 with the remainder outstanding at the period end against a prepayment of US$4,458 thousand (at current exchange rate). A further 27 rail cars were received after the reporting date.

Balances with related parties

The outstanding balances, as a result of transactions with related parties, for the periods presented are shown in the table below:

 

3 months ended 31.03.15 (unaudited)

3 months ended 31.03.14 (unaudited)

Year ended 31.12.14 (audited)

US$ 000

Entities under common control

Associated companies

Other related parties

Entities   under common control

Associated companies

Other related parties

Entities under common control

Associated compa nies

Other  related parties

Available-for-sale financial assets j

28

-

-

276

-

-

46

-

-

Other non-current assets k

3,109

-

-

5,487

-

-

4,726

-

-

Prepayments for property, plant and equipment l

4,895

-

-

9,993

-

-

604

-

-

Total non-current assets

8,032

-

-

15,756

-

-

5,376

-

-

Trade and other receivables m

627

-

73

890

-

74

712

-

91

Prepayments and other current assets n

697

32

304

859

1,336

248

164

-

595

Cash and cash equivalents o

164,681

-

-

138,817

-

-

161,473

-

-

Total current assets

166,005

32

377

140,566

1,336

322

162,349

-

686

Trade and other payables p

2,156

-

189

1,201

-

255

1,429

151

490

Current liabilities

2,156

-

189

1,201

-

255

1,429

151

490

A description of the most material balances which are over US$200 thousand in the current or comparative periods is given below:

Entities under common control

j   The balance of the available-for-sale financial assets comprised shareholdings in PJSC Stakhanov Railcar Company (1.1%) and Vostok Ruda Ltd. (1.1%). The ultimate beneficial owner of these companies is Kostyantin Zhevago. PJSC Stakhanov Railcar Company is further listed on the Ukrainian stock exchange. The changes in value in the table above relate to fair value adjustments recorded during the respective reporting periods. The shareholdings for all available-for-sale financial assets remained unchanged during the periods disclosed above. The balance of US$28 thousand as at 31 March 2015 related to the investment in PJSC Stakhanov Railcar Company (31 March 2014: US$276 thousand; 31 December 2014: US$46 thousand). The investment in Vostok Ruda Ltd. was fully impaired in a previous period.

k  As at 31 March 2015, other non-current assets related to a deposit of US$3,109 thousand with bank F&C (31 March 2014: US$5,487 thousand; 31 December 2014: US$4,726 thousand) as a security in respect of loans made to employees under the Group's social loyalty programme. Further information is provided under transactional banking arrangements below.

l   As at 31 March 2015, a prepayment of US$4,458 thousand (at current exchange rate) remained in connection with an advance payment  made in February 2014 for 300 rail cars ordered from PJSC Stakhanov Railcar Company (31 March 2014: US$9,437 thousand; 31 December 2014: US$6,007 thousand). As at 31 March 2015, the Group received 25 rail cars and another 27 rail cars subsequent to the reporting date. Due to continued uncertainty surrounding the delivery of the remaining number of rail cars or recovery of the prepayment, the Group recorded an allowance for the full outstanding amount as at 31 March 2015 and 31 December 2014 (see section Purchases of property, plant, equipment and investments above for further details). Prepayments of US$407 thousand were made to OJSC Berdichev Machine-Building Plant Progress (31 March 2014: US$445 thousand; 31 December 2014: US$527 thousand).

m As at 31 March 2015, trade and other receivables included outstanding amounts of US$176 thousand due from Vorskla Steel Ltd. (31 March 2014: US$304 thousand; 31 December 2014: US$244 thousand) in relation to other sales and US$343 thousand (31 March 2014: US$399 thousand; 31 December 2014: US$317 thousand) from Kislorod PCC for the sale of power, steam and water.

n  Prepayments and other current assets include US$582 (31 March 2014: nil; 31 December 2014: nil) for concentrate made to Vostok Ruda. The comparative as at 31 March 2014 includes US$607 thousand of prepayment made to OJSC Ukrzakordongeologia for gas, no such prepayments as at 31 March 2015 and 31 December 2014.

o  As at 31 March 2015, cash and cash equivalents with Bank F&C were US$164,681 thousand (31 March 2014: US$138,817 thousand; 31 December 2014: US$161,473 thousand). Further information is provided under Transactional banking arrangements below.

p Trade and other payables amounting to US$1,529 thousand for gas purchased from OJSC Ukrzakordongeologia (31 March 2014: nil; 31 December 2014: nil) , US$446 thousand for compressed air and oxygen purchased from Kislorod PCC (31 March 2014: US$528 thousand; 31 December 2014: US$483 thousand) and US$22 thousand due to Valsa GTV (31 March 2014: US$214 thousand; 31 December 2014: US$92 thousand)  The balance as at the end of the period ended 31 March 2014 included an amount of US$242 thousand (31 December 2014: US$192 thousand) due to AutoKraZ Holding Co.. The balance as at the end of the period ended 31 December 2014 included an amount of US$397 thousand payable to PJSC Stakhanov Railcar Company, no amounts were due as at 31 March 2015 and 31 March 2014.

Associated companies

n  Prepayments and other current assets relate to prepayments of US$32 thousand (31 March 2014: US$1,336 thousand; 31 December 2014: nil) made TIS Ruda LLC for transhipment services.

Other related parties

n  Prepayments and other current assets relate to prepayments of US$304 thousand for distribution services made to Slavutich Ruda Ltd. (31 March 2014: US$248 thousand; 31 December 2014: US$595 thousand).

p  Trade and other payables amounting to US$189 thousand as at 31 March 2015 are in respect of distribution services provided by Slavutich Ruda Ltd. (31 March 2014: US$255 thousand; 31 December 2014: US$490 thousand).

Transactional banking arrangements

The Group has transactional banking arrangements with Bank Finance & Credit ('Bank F&C') in Ukraine which is under common control of the majority shareholder of Ferrexpo plc. Finance income and expenses are disclosed in the table on page 17.

On 25 May 2013, the Group entered into a new uncommitted multicurrency revolving loan facility agreement and a documentary credit facility agreement with Bank F&C which will expire on 29 May 2016. The aggregate maximum limit of these facilities amounts to UAH80 million (31 March 2015: US$3,413 thousand; 31 March 2014: US$7,303 thousand; 31 December 2014: US$5,073 thousand) and, as required under Ukrainian legislation, fixed assets are pledged. The total value of pledges under the terms of the loan facility agreements is US$2,639 thousand as at 31 March 2015. The terms and conditions of both facilities were the subject of an independent confirmation. No amounts are drawn and no letters of credit are outstanding under this facility as at 31 March 2015 (31 March 2014: nil; 31 December 2014: nil).

Bank F&C provides mortgages and loans to employees of the Group for the acquisition, construction and renovation of apartments in Ukraine. This is part of a social loyalty programme started by the Group in December 2011 allowing certain employees of the Group to borrow at preferential interest rates. OJSC Ferrexpo Poltava Mining and LLC Ferrexpo Yeristovo GOK act as guarantors for the bank's loans to the employees of the Group and have deposited US$3,109 thousand at Bank F&C as security (31 March 2014: US$5,487 thousand; 31 December 2014: US$4,726 thousand). The interest rate margin earned by Bank F&C covers the costs of administrating the mortgages and loans. Detailed information on the social loyalty programme is provided in the Corporate Social Responsibility Review section of the Annual Report and Accounts 2014.

Cash and cash equivalent balances held with Bank F&C are in the normal course of business in Ukraine and are held on call or from time to time on overnight deposit. Interest is paid on balances held. The interest rates received by the Group were in line with relevant comparable market rates throughout the periods presented.

Note 19: Commitments and contingencies

Commitments

US$ 000

 

As at 31.03.15

As at 31.03.14

As at 31.12.14

 

 

(unaudited)

(unaudited)

 (audited)

Operating lease commitments

 

25,516

66,607

40,738

Capital commitments on purchase of PPE

 

93,260

76,566

108,763

Legal

In the ordinary course of business, the Group is subject to legal actions and complaints. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition or the results of future operations of the Group.

The Group is currently involved in a share dispute which commenced in 2005 and has been disclosed in its various public documents since IPO in 2007. The main chronology of the dispute is below:

On 21 April 2010, the Higher Commercial Court of Ukraine invalidated the share sale and purchase agreement ('SPA') pursuant to which a 40.19% stake in OJSC Ferrexpo Poltava Mining ('FPM') was sold on 18 November 2002 to nominee companies that were previously ultimately controlled by Kostyantin Zhevago, which ultimately sold the shares to Ferrexpo AG.

On 2 December 2014, the Supreme Court of Ukraine set aside the judgement of the Higher Commercial Court of Ukraine delivered in April 2010 and remitted the case for review to the Higher Commercial Court of Ukraine. On 16 February 2015, the Higher Commercial Court of Ukraine confirmed the decisions of the lower courts which dismissed the claim for invalidation of the SPA. As at the date of the publication of these interim financial statements for the period ended 31 March 2015, the original SPA of 18 November 2002 is valid.

In October 2011, the claimants commenced further proceedings for the restoration of their shareholding in FPM. On 20 October 2014, the Kyiv City Commercial Court dismissed the claim in full. This judgment was confirmed by the Kyiv Appeal Commercial Court and the Higher Commercial Court of Ukraine on 28 January 2015 and 14 April 2015, respectively.

After having taken legal advice, the management of the Group believes that risks related to further court proceedings in respect of this case are remote. In light of the risks surrounding the operation and independence of Ukrainian courts, including those associated with the Ukrainian legal system in general, however the claimants may ultimately prevail in this dispute and the Group's ownership of the relevant interest in FPM may be successfully challenged.

Tax and other regulatory compliance

Ukrainian legislation and regulations regarding taxation and customs continue to evolve. Legislation and regulations are not always clearly written and are subject to varying interpretations and inconsistent enforcement by local, regional and national authorities, and other governmental bodies. Instances of inconsistent interpretations are not unusual. The uncertainty of application and the evolution of Ukrainian tax laws, including those affecting cross-border transactions, create a risk of additional tax payments having to be made by the Group, which could have a material effect on the Group's financial position and results of operations. This includes also a transfer pricing law which significantly increased the power of the tax authorities. The Group does not believe that these risks are any more significant than those of similar enterprises in Ukraine.

Recoverable VAT amounting to US$2,413 thousand (31 March 2014: US$61,685 thousand; 31 December 2014: US$3,587 thousand) outstanding at 31 March 2015 and US$3,482 thousand already refunded by the tax authorities during the financial year 2014 are currently in the process of being considered by the Ukrainian court system in several different cases. As the VAT is fully recoverable under the relevant Ukrainian legislation, the Group expects to receive positive court decisions for these ongoing court proceedings and expect these amounts to be recovered in a further issuance of bonds. Consequently, the VAT is recorded at its full amount in the financial statements, net of an estimated discount to reflect the expected difference to the bonds. See also disclosure made in note 13. No provision has been made for any related penalties and fines, which would in the case of a final negative ruling become payable. 

Note 20: Financial instruments

Fair values

Set out below are the carrying amounts and fair values of the Group's financial instruments that are carried in the interim consolidated statement of financial position:

 

Carrying amount

Fair Value

US$ 000

 

As at 31.03.15

(unaudited)

As at 31.03.14

(unaudited)

As at 31.12.14

(audited)

As at 31.03.15

(unaudited)

As at 31.03.14

(unaudited)

As at 31.12.14

(audited)

Financial assets

 

 

 

 

 

 

Cash and cash equivalents

493,902

366,364

626,509

493,902

366,364

626,509

Trade and other receivables

84,137

115,006

87,226

84,137

115,006

87,226

Available-for-sale financial assets

41,828

82,658

46

41,828

82,658

46

Other financial assets

8,196

14,101

8,944

8,196

14,101

8,944

Total financial assets

628,063

578,129

722,725

628,063

578,129

722,725

Financial liabilities

 

 

 

 

 

 

Trade and other payables

24,341

30,263

32,351

24,341

30,263

32,351

Accrued liabilities

22,162

29,949

30,497

22,162

29,949

30,497

Interest bearing loans and borrowings

1,188,704

1,045,705

1,304,627

1,088,985

1,051,191

1,204,836

Total financial liabilities

1,235,207

1,105,917

1,367,475

1,135,488

1,111,403

1,267,684

Other financial assets

The fair values of cash and cash equivalents, trade and other receivables and payables are approximately equal to their carrying amounts due to their short maturity.

Interest bearing loans and borrowings

The fair values of interest-bearing loans and borrowings are based on the discounted cash flows using market interest rates except for the fair value of the Eurobond issued, which is based on the market price quotation at the reporting date.

Available-for-sale financial assets

As at 31 March 2015, the Group held a 15.5% equity investment in Ferrous Resources Limited ("Ferrous"), which was acquired during the financial year 2013 in various transactions with total transaction costs of US$82,382 thousand. This was also the carrying amount as at the end of the comparative period ended 31 March 2014. In the second half of the financial year 2014, the iron ore prices in the global market declined significantly and as no recovery was expected in the near future, the investment in Ferrous was fully impaired due to uncertainties in respect of the current operational activity and the future development of the mining operation. On 29 April 2015, the Group signed an irrevocable tender and support agreement for the disposal of its entire stake in Ferrous for a total cash consideration of US$41,800 thousand, which is management's best estimate of the fair value of the investment as of 31 March 2015. As a result, the fully impaired investment was revalued with a gain of US$41,800 thousand recognised in the statement of other comprehensive income. The completion of the transaction is subject to the satisfaction of various conditions outside of the control of the Group. If the transaction is completed, the amount of the fair value adjustment will be reclassified to the income statement and the asset will be derecognised.

The available-for-sale equity investment in PJSC Stakhanov Railcar Company in the amount of US$28 thousand (31 March 2014: US$276 thousand; 31 December 2014: US$46 thousand) is measured at its fair value based on the quoted market price for its shares on the Ukrainian Stock exchange ('PFTS').

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1:   fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:   fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3:   fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

US$ 000

 

As at 31.03.15 (unaudited)

 

 

 

Level 2

Level 3

Total

Financial assets

 

 

 

 

 

Available-for-sale financial assets

 

28

-

41,800

41,828

Total financial assets

 

28

-

41,800

41,828

 

US$ 000

 

As at 31.03.14 (unaudited)

 

 

 

Level 2

Level 3

Total

Financial assets

 

 

 

 

 

Available-for-sale financial assets

 

276

-

82,382

82,658

Total financial assets

 

276

 -

82,382

82,658

 

US$ 000

 

As at 31.12.14 (audited)

 

 

 

Level 2

Level 3

Total

Financial assets

 

 

 

 

 

Available-for-sale financial assets

 

46

-

-

46

Total financial assets

 

46

-

-

46

There were no transfers between the different levels during the reporting period.

As of 31 March 2015, the fair value of the available-for-sale financial assets in Level 1 decreased by US$18 thousand including a translation and impairment loss (31 March 2014: decrease of US$120 thousand; 31 December 2014: decrease of US$350 thousand). The loss for the period ended 31 March 2014 was initially included in other comprehensive income. As at 31 December 2014, the investment was considered to be impaired and the total effect included in other comprehensive income was reclassified to the income statement.

Reconciliation of recurring fair value measurements categorised within Level 3 of the fair value hierarchy is shown in the table below:

US$ 000

 

As at 31.03.15

As at 31.03.14

As at 31.12.14

 

 

(unaudited)

(unaudited)

(audited)

Opening balance

 

-

82,382

82,382

Total gains or losses:

 

-

-

-

- in profit or loss

 

-

-

(82,382)

- in other comprehensive income

 

41,800

-

-

Purchases

 

-

-

-

Transfer out of Level 3

 

-

-

-

Closing balance

 

41,800

82,382

-

Further information on the Group's exposure to interest rate, foreign currency and liquidity risk is provided in note 30 of the Annual Report and Accounts 2014.

Note 21: Events after the reporting period

No material adjusting or non-adjusting events have occurred subsequent to the period end except for the signing of a tender and support agreement in respect of the Group's 15.5% stake in Ferrous.

On 30 April 2015, the Group announced that it has agreed to unconditionally tender for the disposal of its entire stake in Ferrous for a total cash consideration of US$41,800 thousand. As a result of this, the fully impaired investment in Ferrous has been revalued as of 31 March 2015. See note 20 for further information.

.

Glossary

 

Act

The Companies Act 2006

AGM

The Annual General Meeting of the Company

Articles

Articles of Association of the Company

Audit Committee

The Audit Committee of the Company's Board

Belanovo or Belanovskoye

An iron ore deposit located immediately to the north of Yeristovo

Benchmark Price

Platts 62% Fe iron ore fines price CFR China

Beneficiation Process

A number of processes whereby the mineral is extracted from the crude ore

BIP

Business Improvement Programme, a programme of projects to increase production output and efficiency at FPM

Board

The Board of Directors of the Company

Bt

Billion tonnes

Capesize

Capesize vessels are typically above 150,000 tonnes deadweight. Ships in this class include oil tankers, supertankers and bulk carriers transporting coal, ore, and other commodity raw materials. Standard capesize vessels are able to transit through the Suez Canal

Capital Employed

The aggregate of equity attributable to shareholders, non-controlling interests and borrowings

CFR

Delivery including cost and freight

C1 Costs

Represent the cash costs of production of iron pellets from own ore, divided by production volume, from own ore, and excludes non-cash costs such as depreciation, pension costs and inventory movements, costs of purchased ore, concentrate and production cost of gravel

CIF

Delivery including cost, insurance and freight

CIS

The Commonwealth of Independent States

Code

The UK Corporate Governance Code published in 2012

Company

Ferrexpo plc, a public company incorporated in England and Wales with limited liability

CPI

Consumer Price Index

CSR

Corporate Safety and Social Responsibility

CSR Committee

The Corporate Safety and Social Responsibility Committee of the Board of the Company

DAP

Delivery at place

DFS

Detailed feasibility study

Directors

The Directors of the Company

Dragline Excavators

Heavy machinery used to excavate material. A dragline consists of a large bucket which is suspended from a boom

EBITDA

The Group calculates EBITDA as profit from continuing operations before tax and finance plus depreciation and amortisation and non-recurring exceptional items included in other income and other expenses, share based payment expenses and the net of gains and losses from disposal of investments and property, plant and equipment

EBT

Employee Benefit Trust

EPS

Earnings per share

Executive Committee

The Executive Committee of management appointed by the Company's Board

Executive Directors

The Executive Directors of the Company

FBM

Ferrexpo Belanovo Mining, also known as BGOK, a company incorporated under the laws of Ukraine

Fe

Iron

Ferrexpo

The Company and its subsidiaries

Ferrexpo AG Group

Ferrexpo AG and its subsidiaries including FPM

Fevamotinico S.a.r.l.

A company incorporated with limited liability in Luxembourg

FOB

Delivered free on board, which means that the seller's obligation to deliver has been fulfilled when the goods have passed over the ship's rail at the named port of shipment, and all future obligations in terms of costs and risks of loss or damage transfer to the buyer from that point onwards

FPM

Ferrexpo Poltava Mining, also known as Ferrexpo Poltava GOK Corporation or PGOK, a company incorporated under the laws of Ukraine

FRMC

Financial Risk Management Committee, a sub-committee of the Executive Committee

FTSE 250

Financial Times Stock Exchange top 250 companies

FYM

Ferrexpo Yeristovo Mining, also known as YGOK, a company incorporated under the laws of Ukraine

Group

The Company and its subsidiaries

Growth Markets

These are predominantly in Asia and have the potential to deliver new and significant sales volumes to the Group

HSE

Health, safety and environment

IAS

International Accounting Standards

IASB

International Accounting Standards Board

IFRS

International Financial Reporting Standards, as adopted by the EU

IPO

Initial public offering

Iron ore concentrate

Product of the benefication process with enriched iron content

Iron ore sinter fines

Fine iron ore screened to -6.3mm

Iron ore pellets

Balled and fired agglomerate of iron ore concentrate, whose physical properties are well suited for transportation to and reduction within a blast furnace

JORC

Australasian Joint Ore Reserves Committee - the internationally accepted code for ore classification

K22

GPL ore has been classified as either K22 or K23 quality, of which K22 ore is of higher quality (richer)

KPI

Key Performance Indicator

Kt

Thousand tonnes

LIBOR

The London Inter Bank Offered Rate

LLC

Limited Liability Company

LTIFR

Lost-Time Injury Frequency Rate

LTIP

Long-Term Incentive Plan

m3

Cubic metre

Majority Shareholder

Fevamotinico S.a.r.l., The Minco Trust and Kostyantin Zhevago (together)

Mm

Millimetre

Mt

Million tonnes

Mtpa

Million tonnes per annum

Natural Markets

These include Turkey, the Middle East and Western Europe and are those markets where Ferrexpo has a competitive advantage over more distant producers, but where market share remains relatively low

Nominations Committee

The Nominations Committee of the Company's Board

Non-executive Directors

Non-executive Directors of the Company

NOPAT

Net operating profit after tax

OHSAS 18001

International safety standard 'Occupational Health & Safety Management System Specification'

Ordinary Shares

Ordinary Shares of 10 pence each in the Company

Ore

A mineral or mineral aggregate containing precious or useful minerals in such quantities, grade and chemical combination as to make extraction economic

Panamax

Modern panamax ships typically carry a weight of between 65,000 to 90,000 tonnes of cargo and can transit both Panama and Suez canals

PPI

Ukrainian producer price index

Probable Reserves

Those measured and/or indicated mineral resources which are not yet 'proved', but of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of determination and under specific economic conditions

Proved Reserves

Measured mineral resources of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of determination and under specific economic conditions

Rail car

Railway wagon used for the transport of iron ore concentrate or pellets

Relationship Agreement

The relationship agreement entered into among Fevamotinico S.a.r.l., Kostyantin Zhevago, The Minco Trust and the Company

Remuneration Committee

The Remuneration Committee of the Company's Board

Reserves

Those parts of mineral resources for which sufficient information is available to enable detailed or conceptual mine planning and for which such planning has been undertaken. Reserves are classified as either proved or probable

Sinter

A porous aggregate charged directly to the blast furnace which is normally produced by firing fine iron ore and/or iron ore concentrate, other binding materials, and coke breeze as the heat source

Spot price

The current price of a product for immediate delivery

Sterling/£

Pound Sterling, the currency of the United Kingdom

STIP

Short-Term Incentive Plan

Tailings

The waste material produced from ore after economically recoverable metals or minerals have been extracted. Changes in metal prices and improvements in technology can sometimes make the tailings economic to process at a later date

Tolling

The process by which a customer supplies concentrate to a smelter and the smelter invoices the customer the smelting charge, and possibly a refining charge, and then returns the metal to the customer

Ton

A US short ton, equal to 0.9072 metric tonnes

Tonne or t

Metric tonne

Traditional Markets

These lie within Central and Eastern Europe and include steel plants that were designed to use Ferrexpo pellets. Ferrexpo has been supplying some of these customers for more than 20 years. Ferrexpo has well-established logistics routes and infrastructure to these markets by both river barge and rail. These markets include Austria, Czech Republic, Hungary, Serbia and Slovakia

Treasury Shares

A company's own issued shares that it has purchased but not cancelled

TSF

Tailings storage facility

TSR

Total shareholder return. The total return earned on a share over a period of time, measured as the dividend per share plus capital gain, divided by initial share price

UAH

Ukrainian Hryvnia, the currency of Ukraine

Ukr SEPRO

The quality certification system in Ukraine, regulated by law to ensure conformity with safety and environmental standards

US$/t

US Dollars per tonne

VAT

Value Added Tax

Value-in-use

The implied value of a material to an end user relative to other options, e.g. evaluating, in financial terms, the productivity in the steel making process of a particular quality of iron ore pellets versus the productivity of alternative qualities of iron ore pellets.

WAFV

Weighted average fair value

WMS

Wet magnetic separation

Yeristovo or Yeristovskoye

The deposit being developed by FYM

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
QRFARMLTMBBTBTA

Companies

Ferrexpo (FXPO)
UK 100

Latest directors dealings