Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.

Less Ads, More Data, More Tools Register for FREE

Pin to quick picksFerrexpo Regulatory News (FXPO)

Share Price Information for Ferrexpo (FXPO)

London Stock Exchange
Share Price is delayed by 15 minutes
Get Live Data
Share Price: 43.66
Bid: 43.84
Ask: 43.90
Change: 0.42 (0.97%)
Spread: 0.06 (0.137%)
Open: 43.30
High: 44.90
Low: 43.30
Prev. Close: 43.24
FXPO Live PriceLast checked at -

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

2014 Full Year Results

11 Mar 2015 07:00

RNS Number : 1017H
Ferrexpo PLC
11 March 2015
 



 

11 March 2015

 

FERREXPO plc

("Ferrexpo" or the "Group")

 

2014 Full Year Results

 

Ferrexpo plc, a top five supplier of iron ore pellets to the global steel industry, today announces its financial results for the year ended 31 December 2014.

 

Michael Abrahams, Non-Executive Chairman, said:

 

"Ferrexpo has had a successful year against a backdrop of a dramatic fall in iron ore prices and significant political upheaval in Ukraine. The Group increased pellet production, including the output of its premium 65% Fe pellets, completed its modernisation and expansion programme reaching 12 million tonnes per year annualised capacity, agreed further long term contracts with premium international steel mills and moved all customers to a sustainable index linked pricing mechanism.

 

Pricing has proved to be challenging with the benchmark iron ore price falling by 47% to US$72 per tonne from US$135 per tonne at the start of 2014, on average 28% below 2013. EBITDA has, however, been maintained at levels in line with the prior year as a result of strong pellet premiums, increased production and lower costs.

 

Iron ore pricing is likely to remain subdued in 2015 and Ferrexpo, along with the general consensus of market observers, expects that the average CFR 62% Fe China benchmark price will be materially below 2014.

 

The significant investments the Group has made over the past five years, along with strong pellet premiums, reduced operating costs, as a result of the devaluation of the local currency, as well as lower freight and energy costs, should enable the Group to remain strongly competitive in the world pellet market.

 

The Company's operations in Ukraine are remote from the current conflict area. The current year has started well both in production and sales. In January 2015, Ferrexpo produced a record one million tonnes of pellets, while in February all of the Group's output was in the form of premium 65% Fe pellets, another record for the Group. Sales volumes continue to be at or above base contract levels. Ukraine, however, has a weak banking and financial system and the overall situation in the country, remains uncertain and subject to change.

 

The Board would like to express its sincere appreciation to all of the Group's employees, especially in Ukraine, for their contribution to this strong set of results and for their continued dedication during a challenging time in the country and in the iron ore industry.

 

Ferrexpo's performance in 2014 demonstrated the resilience and strength of its business and gives the Board confidence in its ability to deliver further profitability when external conditions improve."

 

2014 Financial Highlights:

 

US$ million (unless otherwise stated)

 

Year ended 31.12.14

Year ended 31.12.13

Change

Total pellet production (kt)

11,021

10,813

2%

Sales volumes (kt)

11,167

10,689

4%

Revenue

1,388

1,581

(12%)

EBITDA

496

506

(2%)

Profit before tax

254

305

(17%)

Diluted EPS (US cents per share)

30.39

44.69

(32%)

Dividend (US cents per share)

13.2

13.2

-

Net cash flow from operating activities

288

233

24%

Capital investment

235

278

(15%)

Net debt

(678)

(639)

6%

Net debt to EBITDA

1.4x

1.3x

8%

 

2014 Summary of Operations and Financial Results

 

· Most regrettably there were three fatalities during the period at the Group's operations. Ferrexpo enforces strict compliance with health and safety standards. The prevention of incidents and injuries is the highest priority of the Board and management, who follow the principle that all accidents are avoidable.

 

· Production volumes grew 2% to a record 11 million tonnes. Output of 65% Fe pellets increased 16% to 5.8 million tonnes, which reflected the ramp up of the Group's Quality Upgrade project following the commissioning of two new floatation and fine grinding units in 2014.

 

· Strong customer demand underpinned a 4% increase in sales volumes to 11.2 million tonnes.

 

· Higher pellet premiums and an excellent marketing performance, resulting in improved price realisations, partly offset a lower iron ore benchmark price. Ferrexpo's net realised FOB price declined by 18% compared to a 28% decline in the iron ore fines benchmark price.

 

· The cash cost of production reduced by 23%, or US$14 per tonne, to US$46 per tonne of pellets (2013: US$60 per tonne) as a result of local currency devaluation as well as increased operating efficiencies.

 

· EBITDA of US$496 million was in line with 2013 (US$506 million). The strong performance was achieved in the light of significantly lower selling prices and included a non-cash operating foreign exchange gain of US$76 million.

 

· Due to the lower iron ore price environment, Ferrexpo has fully impaired its investment in Ferrous Resources resulting in a non-cash charge of US$82 million.

 

· The Group completed its investment programme during the year to improve the quality and quantity of its pellet output to 65% Fe and 12 million tonnes respectively.

 

· Cash at 31 December 2014 was US$627 million (31 December 2013: US$390 million) of which liquidity inside Ukraine was US$160 million (31 December 2013: US$143 million)

 

· Net debt as of 31 December 2014 was US$678 million (31 December 2013: US$639 million).

 

· Net cash flow from operations increased 24%, and given Ferrexpo's continued strong financial performance in 2014, the Board is proposing to maintain total dividends in line with the prior year at US 13.2 cents per ordinary share. 2015 has started well with one million tonnes of pellet production in January and 100% of the pellet output in February was 65% Fe Ferrexpo premium pellets.

There will be an analyst and investor meeting at 09.00 (UK time) today at the offices of Deutsche Bank, Winchester House, 1 Great Winchester Street, EC2N 2DB. A live video webcast and slide presentation of this event will be available on www.ferrexpo.com. It is recommended that participants register at 08.45. The presentation will be hosted by Michael Abrahams (Chairman), Kostyantin

Webcast link: http://edge.media-server.com/m/p/udpvn95p

 

Webcast access on mobile devices:

For access to the live and on demand webcast from any IOS Apple or Android mobile devices.

 

For further information contact:

 

Ferrexpo:

Ingrid McMahon

+44 207 389 8304

 

Maitland:

Peter Ogden

+44 207 379 5151

Liz Morley

 

Notes to Editors:

Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine. It has been mining, processing and selling high quality iron ore pellets to 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 5th largest supplier of pellets to the global steel industry and the largest exporter of pellets from the CIS. In 2014, it produced a record 11 million tonnes of pellets, a 2% increase compared to 2013. Ferrexpo has a diversified customer base supplying steel mills in Austria, Slovakia, the Czech Republic, Germany and other European states, as well as in China, India, Japan, Taiwan and South Korea. Ferrexpo is listed on the main market of the London Stock Exchange under the ticker FXPO. For further information, please visit www.ferrexpo.com

 

Performance Review

 

2014 has proved to be a challenging but successful year for Ferrexpo. Against a backdrop of lower commodity prices and increasing political uncertainty in Ukraine, where the Group's mining facilities are located, Ferrexpo has successfully:

 

· Increased pellet production and improved product quality

· Completed the quality and capacity upgrade projects on time and below budget

· Increased production of ore from the Yeristovo mine

· Improved the efficiency of its mining, processing and pelletizing operations, reducing costs in constant currency

· Moved all customers to a sustainable index linked pricing mechanism

· Agreed further long term contracts with premium international steel mills

 

In addition, Ferrexpo has seen an improvement in its margins compared to 2013, when the benchmark iron ore price was on average 28% higher at US$135 per tonne compared to an average of US$97 per tonne in 2014, as a result of:

· Improved pellet premiums

· Local currency devaluation

· Higher production

· Lower freight costs

 

Significant investment over the past five years has resulted in increased production and lower costs in constant currency. In 2014, the Company reached annualised installed capacity of 12 million tonnes, a 30% increase compared to 2007 the year of the Group's IPO. Ferrexpo's improved position on the global cost curve for pellets is as a result of this investment programme, along with the weaker local currency, and is supporting margins and competitiveness in the current low iron ore price environment.

 

The Group's mining operations are in the Poltava region of central Ukraine, 425 kilometres to the North West of the conflict in the East of the country.

 

Results

Ferrexpo is pleased to report a good set of results reflecting the strength of the assets and the business model. EBITDA for the year ended 31 December 2014 was only slightly lower than 2013 at US$496 million (2013: US$506 million). Significantly lower iron ore prices were mostly offset by the positive factors described above.

 

In 2014, Ferrexpo Poltava Mining (FPM) became the single largest producer and exporter of iron ore pellets in the Former Soviet Union producing a record 11 million tonnes of pellets, a 2% increase compared to 2013. The Group increased the average quality of its production delivering a 16% increase in the output of 65% Fe Ferrexpo Premium Pellets (FPP). FPP represented approximately 53% of total production in 2014 (2013: 46%), reflecting ramp up following the commissioning of two new floatation and fine grinding units in 2014.

 

The Group now operates from two mines. This has significantly extended its mining capability and production flexibility.

 

During the month of December 2014, production was reduced by 144 thousand tonnes of pellets due to disruptions in electricity supply. Ferrexpo's production facilities and its export routes are currently operating at full capacity and one million tonnes of pellets were produced in January 2015, a new record for the Group.

 

Ferrexpo continued to develop its long standing marketing strategy of targeting and strongly supporting key steel producers around the world. Ferrexpo developed its position as a key exporter of pellets to the global steel industry increasing sales to Japan and Germany by 40% compared to 2013.

 

During the past years, the industry has been characterised by an increase in the supply of lower grade iron ore fines. The major Australian iron ore producers again increased their supply in 2014, reaching an inflection point in the iron ore price cycle. As a result of this increased supply, the benchmark price for 62% Fe fines CFR China declined by 47% from US$135 per tonne as of 1 January 2014 to US$72 per tonne as of 31 December 2014. The average price was 28% lower at US$97 per tonne compared to an average of US$135 per tonne in 2013. The average price for the two months ended February 2015 declined further to US$65 per tonne.

 

Ferrexpo is a producer of iron ore pellets which sells at a premium to iron ore fines and lump. Incremental additions of pelletising capacity have not grown at the same rates as for iron ore fines and, as a result, average pellet premiums increased in 2014.

 

During the year Ferrexpo was able to improve its sales mix which was supported by all long term customers being priced on a sustainable index linked pricing mechanism for the full year. As a result of this and higher pellet premiums, Ferrexpo was able to materially offset the effect of the 47% decline in the industry's benchmark price, a testament to the strong business model the Group has developed.

 

Revenue

Total revenue for the period decreased by 12% to US$1,388 million compared to US$1,581 million in 2013. This reflected a 28% reduction in the average China CFR Platt's 62% Fe fines price.

 

Ferrexpo's net realised DAP/FOB price, in contrast, fell by only 18% compared to the Platts 62% Fe fines price. The lower sales price was compensated, in part, by higher sales volumes increasing 4% to 11.2 million tonnes. The Group's marketing arm also achieved an increase in the premium paid for iron ore pellets compared to iron ore fines and moved all long term contract pricing to relevant iron ore indexes (2013: 60% linkage), further offsetting the underlying fall in price. All of the Group's revenue is in US Dollars.

 

Operating Profit from Continuing Operations before Adjusted Items

Operating profit from continuing operations before adjusted items increased to US$409 million in 2014 compared to US$401 million in 2013. The margin was 29%, an increase of 4% compared to 2013. The strong performance was achieved in light of significantly lower selling prices. The Group's cost base benefittedfrom a lower C1 cost of production, which reduced by US$14 per tonne compared to 2013, and lower transportation costs, both as a result of the weaker local currency as well as efficiency improvements. The Hryvnia devaluation also resulted in a non-cash operating foreign exchange gain of US$76 million.

 

EBITDA

EBITDA for the year reduced modestly by 2% to US$496 million (2013: US$506 million) reflecting lower depreciation compared to the prior year. See note 3 to the accounts.

 

Ferrous Resources

Due to the lower iron ore price environment, Ferrexpo has fully impaired its investment in Ferrous Resources resulting in a non-cash charge of US$82 million. The Company is currently looking at opportunities to unlock value in this investment.

 

Interest and Tax

Finance expense was US$69 million (2013: US$66 million). The increase reflected the drawdown of debt facilities during the period, principally held as additional cash liquidity, which was considered necessary given the volatile operating environment in 2014.

As of 31 December 2014, gross debt was US$1.3 billion compared to US$1.0 billion as of 31 December 2013. Net new facilities of US$300 million were drawn, demonstrating the strength of the business amid a difficult environment in Ukraine.

 

The average cost of Group debt for the period was 4.85% compared to an average of 5.15% in 2013. The reduction in the average cost of debt reflected lower rates on the new facilities compared to the average interest rate in the prior year.

 

The headline Group taxation charge increased to 28% (2013: 14%). The increase was as a result of impairment charges and higher charitable donations, both of which were non-deductible for taxation purposes. Eliminating these, the tax charge was 18%. This was higher than 2013 as a result of an increased proportion of profits earned in Ukraine and a higher level of disallowed costs. The tax paid is now in line with Ukraine's statutory tax rate. As in the prior year, the majority of tax paid by the Group is inside Ukraine.

 

There is a requirement in Ukraine for exporters to prepay a certain percentage of VAT refunds in the form of Corporate Profit Tax (CPT). In 2014, this reduced to an average of 28% (2013: 50%). CPT paid under this arrangement is in excess of the tax due, resulting in a prepaid CPT balance. The devaluation of the local currency during the year reduced this prepaid tax balance expressed in US Dollars by US$57 million. At the year-end, US$73 million of CPT had been prepaid (31 December 2013: US$88 million). The US$58 million loss on devaluation was recorded in the translation reserve. Full details on pre-paid corporate profit tax are disclosed in note 12 to the accounts.

 

Currency

Ferrexpo prepares its accounts in US Dollars. The functional currency of the Ukrainian operations is the Hryvnia. During the year the Hryvnia devalued from UAH7.99 per US Dollar as of 31 December 2013 to UAH15.8 per US Dollar as of 31 December 2014. The average rate during the year was UAH11.9 per US Dollar. Balances at the year-end are converted at the prevailing rate. This has resulted in a reduction in the net assets of the Group by US$1,206 million and has been reflected in the translation reserve. Since the year end, the Hryvnia has further devalued by 76% to a level of around UAH27.8 per US Dollar as of 28 February 2015. This will result in reduced operating costs and corresponding reductions in the net assets of the Group expressed in US Dollars. For further information please see the section on Ukraine on page 17.

 

Cash Flows

Net cash flows from operating activities were US$288 million. The strong performance compared to 2013 (US$233 million) reflected receipt of VAT receivables from prior years.

 

In 2014, the Group received ten VAT re-payments, which amounted to US$141 million, all of which were subject to an average 28% prepayment of the refund as corporate profit tax. During the year, the Group sold VAT bonds, received in part as lieu of long outstanding VAT obligations with a face value of US$135 million for US$97 million (22% discount to face value in local currency). Due to the devaluation of the Hryvnia, a US$117 million loss on remaining VAT balances was also incurred which was recorded in the translation reserve. In total, VAT losses as a result of the Hryvnia devaluation and the loss on sale of the VAT bonds, amounted to US$156 million in 2014.

 

The Ukrainian gross VAT balance as of 31 December 2014 was US$73 million (31 December 2013: US$318 million).

 

Full details of the movement on VAT is included in note 14 to the accounts.

 

Investment

During 2014, the Group completed its investment programme to improve the quality and quantity of pellet output to 65% Fe and 12 million tonnes respectively. US$235 million was spent on capital projects in the existing and new mines as well as on the Group's logistics infrastructure in 2014 (2013: US$278 million). For further information see Capital Investment on pages 15 and 16.

 

Debt and Liquidity

Ferrexpo has continued to maintain its financial discipline. Net debt to EBITDA remained healthy at 1.4x (1.3x as of 31 December 2013). At the period end, Ferrexpo had net debt of US$678 million (2013: US$639 million). Had the Group been able to recoup its prior year VAT balances on time (see above), net debt would have been US$156 million lower.

 

As a result of the losses on VAT and the reduced iron ore price outlook for the coming years, the current amortization profile of the Company's debt facilities did not optimally match the net cash flow generation of the business taking into account its inherent operational risks.

 

To remedy the situation based on the current outlook, on 23 February 2015, the Company extended US$160 million of its US$500 million Eurobond due for repayment in April 2016 equally into April 2018 and April 2019 and prepaid US$54 million of the outstanding liability at par value. This helps to better match the liability profile of the business with forecast cash flows.

 

The business operates a significant liquidity buffer to ensure that it can continue to operate in a volatile commodity price and country environment. The Group will therefore be looking to further manage the liability profile of its debt should opportunities arise. Management believe the Company has sufficient cash flows and liquid resources to meet it debt repayment obligations as they fall due and the accounts have been drawn up on a going concern basis, however attention is drawn to the risks facing the business on page 20.

 

For further information also see Financial Management on page 18.

 

Market Environment

The 47% price decline in the benchmark iron ore price in the calendar year 2014 primarily reflected a significant increase in supply from three of the major iron ore producers, namely Rio Tinto, BHP Billiton and Fortescue. Together these producers increased exports of all iron ore products by 85 million tonnes in calendar year 2014 (100% basis).

 

 

The increase in supply of iron ore exports between 2000 and 2014 has principally come from the production of iron ore fines, as can be seen from the following table.

 

Exports of iron ore (Mt)

2000

2014

Increase (Mt)

Proportion of increase

Pellets

106

144

+38

4%

Lump

93

207

+114

12%

Sinter Fines

265

1,016

+751

78%

Pellet feed

18

73

+55

6%

Total

482

1440

+958

Average annual world GDP growth rate between from 2000 to 2014

3.7%

 

The four largest producers - Rio Tinto, BHP Billiton, Fortescue (all in Australia) and Vale in Brazil - together account for over 60% of the world export market and have increased their exports by a combined 729 million tonnes or 321% since 2000. With a slowdown in demand from China in 2014 this significant increase in supply, with the largest single year increase seen in 2014, eventually culminated in the significant decline of the iron ore market price. The iron content of the new supply from Rio Tinto and BHP Billiton has been between 61% Fe to 62% Fe. The increase in supply from Fortescue (approximately 146 million tonnes since 2000) has an average iron content of approximately 58%.

 

By contrast, total pellet exports have only increased by 38 million tonnes or 36% since 2000, reflecting the capital intensive nature of establishing pellet operations and the high barriers to entry.

 

Ferrexpo believes that the increase in comparatively lower grade iron ore products in relation to pellets has driven an increase in the premium paid for higher quality iron units in 2014, which has become relatively more limited in supply.

 

Pellet production

Pellet production for the seaborne market comes from seven principal suppliers including Ferrexpo.

CRU believe the largest pellet exporters in 2014 were as follows.

Pellet exports (million tonnes)

2014

Vale (Brazil)

26.8

Samarco (Brazil)

23.2

LKAB (Sweden)

17.0

Metalloinvest (Russia)

13.9

Ferrexpo (Ukraine)

11.0

Rio Tinto (IOC) (Canada)

8.3

Cliffs Natural Resources (USA)

6.0

Total Exports

143.7

% of top 7 exporters

74%

 

CRU's 2014 cost curve highlights the weighted average business costs for Samarco, Vale, LKAB, Ferrexpo, IOC and Cliffs Natural Resources. Of these producers, according to CRU, the two Brazilian operations were the lowest cost, followed by Ferrexpo. The estimates are based on the average currency exchange rates for the full year and therefore only partially reflect the further devaluation of the Ukrainian Hryvnia that took place during 2014 and in 2015. According to CRU, it is likely that the relative cost position of Ferrexpo has improved over the course of 2014 and this will have been further improved due to the devaluation in February 2015. Labour and other Hryvnia-denominated components of cost have become relatively cheaper, although the devaluation may lead to significant inflation in future years.

 

In 2014, Vale completed construction of new pelletising capacity of 8.3 million tonnes per annum and Samarco added another 7.5 million tonnes per annum. It is expected that at least half of this production will go to the Middle East steel market to produce direct reduced iron for use in electric arc furnaces and as such not compete in the traditional blast furnace steel market. Overall, CRU expects Brazilian pellet exports to increase by 17 million tonnes from an estimated 48 million tonnes in 2014 to 65 million tonnes by 2018. No other significant increase in pellet supply is expected.

 

Industry Outlook

Following significant supply additions to the global iron ore market in 2014, further additions are expected in the coming 12 months. Rio Tinto, BHP and Vale have announced that they expect to produce an additional 65 million tonnes in calendar year 2015 (consisting of 35 million tonnes, 20 million tonnes and 10 million tonnes respectively). Further iron ore supply is expected from Anglo American's 25 million tonnes per annum Minas Rio project in Brazil, which shipped its first iron ore to the international market in 4Q14, and Hancock Prospecting's 55 million tonne per annum Roy Hill project in Australia, which is expected to commence production in September 2015. While some high cost supply has exited the market, and more may follow, the Group expects that 2015 will witness another year of price pressure as excess supply of iron ore units outweighs demand and higher cost producers take time to exit the market.

 

Marketing

Despite the significant fall in iron ore prices during 2014, average pellet premiums remained robust. The annual long term contract premium paid for iron ore pellets in the key markets of Western Europe and North East Asia increased significantly, from US$28 per tonne in calendar year 2013 to US$38 per tonne in calendar year 2014. Average Chinese spot market pellet premiums for 65% Fe pellets also increased from approximately US$21 per tonne for the year ended 2013 to over US$27 per tonne for the year ended 2014 (source: Chinese spot market pellet premium derived from the Metal Bulletin 65% Pellet Index).

 

In 2014, the Group improved its pricing realisations as it completed the move to sustainable index based pricing for all long term contracts over a full year of sales, for the first time. As a result of the higher pellet premiums, improved pricing terms and favourable customer mix, Ferrexpo's average realised price outperformed the benchmark fines price by 10% declining by 18% compared to a 28% decline for the 62% Fe fines benchmark price.

 

Sales are priced compared to the index using several different quotation periods in line with market practice. These quotation periods are negotiated at the start of each long term contract and can be monthly, quarterly in arrears or current quarter.

Total sales volumes in 2014 were 11.2 million tonnes, a 4% increase compared to 2013 (10.7 million tonnes). Sales of FPP increased 14% to 5.7 million tonnes from 5 million tonnes in 2013, a record for the Group, while sales of FBP declined 7% to 5.4 million tonnes (2013: 5.8 million tonnes) as the Group focused on increasing output of its premium product in line with its Quality Upgrade Programme ("QUP"). Demand from the Group's customers was strong throughout the period with long term contracts performing at or above base volume levels.

 

The Group sells in a variety of markets targeting premium steel mills who themselves supply premium customers.

The table below shows the breakdown of sales volumes by key regions.

 

Year ended 31.12.2014

Year ended 31.12.2013

Eastern and Central Europe

49%

47%

China

25%

27%

North East Asia

10%

8%

Western Europe

8%

5%

Turkey, Middle East and India

8%

13%

Total sales volume (million tonnes)

11,167

10,689

 

The Group's fastest growing markets were Germany and Japan, where sales volumes increased by 58% and 28% respectively. In 2014, new long term contracts were signed with two steel mills who are top five steel producers globally and produce sophisticated flat steel products requiring premium iron ore inputs. 91% of sales were made under long term framework agreements (2013: 83%) while 9% of sales were on a spot basis (2013: 17%). In addition, market development activity continued with first cargoes shipped to new customers in Western Europe, North East Asia and Turkey.

 

Selling and Distribution

Total selling and distribution expenses decreased by 7%, or US$24 million, to US$312 million for the year ended 31 December 2014, compared to US$336 million in 2013.

 

CFR sales made up the vast majority of Ferrexpo business to non-traditional markets during 2014. CFR deliveries to the Far East, Turkey and Germany saw a 4% increase in volumes year on year. International freight costs for CFR sales amounted to US$123 million (2013: US$114 million). Ferrexpo's long term sales contracts in 2014 which do not utilise physical ocean freight were worked back to a FOB equivalent price using the Baltic Exchange C3 freight prices (Capesize route from Tubarao to Qingdao). This key index price declined slightly to US$20.64 per tonne in 2014 compared to US$20.97 in 2013, and Ferrexpo capesize loadings were unchanged against 2013 levels at 22 vessels.

 

By year-end, the cost of international shipping on the C3 route dropped dramatically to approximately US$14.5 per tonne following the 65% fall in crude oil price to US$54 per barrel as of 31 December 2014. The freight outlook for 2015 remains weak supporting FOB net-back prices.

 

Short haul deliveries helped push throughput from the Group's loading facilities at Yuzhny TIS Ruda on the Ukrainian Black Sea to a record volume of 6.3 million tonnes (awaiting advice on 2013 equivalent) with CFR shipments to Romania (which can connect with the Group's barging fleet on the Danube River) and Croatia broadening the Group's logistics options to traditional markets.

 

Distribution costs incurred in delivering pellets to the Ukrainian border for export decreased by 6% to US$145 million (2013: US$154 million). Rail tariff inflation was 5% in 2014, however, rail costs were significantly reduced in Dollar terms due to the devaluation of the Hryvnia during the year, 100% of rail costs are incurred in local currency. The Group also receives tariff discounts from the Ukrainian rail authorities for the Group using its own rail wagons of 3% to 6% depending on the route. As of 31 December 2014, the Group owned 2,200 rail cars. Another 300 rail cars were ordered in February 2014 and were due for delivery in the second half of the financial year 2014. As a consequence of the ongoing conflict in eastern Ukraine, only 25 rail cars were delivered in 2014. Due to the uncertainty surrounding the delivery of the remaining rail cars, the Group has recorded a provision of US$8 million as of 31 December 2014.

 

Ferrexpo owns and operates barges which deliver iron ore and other products through Europe via inland waterway. Deliveries are principally made via the Danube River. The Group's barging operations delivered 1.1 million tonnes of iron ore via 139 barges to customers in Central Europe in 2014 (2013: 1.5 million tonnes).

 

Mining and Production

In 2014, pellet production from own ore, increased 2% to 10.7 million tonnes compared to 10.5 million tonnes in 2013. Approximately one third of the pellets produced, or 3.4 million tonnes, were from FYM ore as the mine completed its ramp up in 2013. Including third party materials, total pellet production increased 2% to 11 million tonnes (2013: 10.8 million tonnes). This represented record production for the Group, however, production was constrained in the second quarter of 2014, due to a scheduled refurbishment of pellet line number three, and from reductions in electricity supply in December 2014, which resulted in the loss of 144 kilotonnes of production.

 

Total production of 65% Fe pellets increased by 16%, to 5.8 million tonnes, compared to 5 million tonnes in 2013. Following the completion of FPM's quality upgrade programme as of 31 December 2014 we expect to produce an increasing amount of 65% Fe pellets in 2015, once ramp up is finished in the first quarter of 2015.

 

FPM successfully integrated FYM ore into its production facilities and completed a major modernisation and refurbishment programme of its production facilities whilst increasing output. As result it has increased its output capacity by approximately one third compared to 2007. The processing and pelletising facilities can now produce 1 million tonnes of pellets per month. This level of output was achieved in January 2015.

 

In 2015, the Group is aiming to optimise output from the FPM and FYM pits so that it can maximise production and minimise costs per tonne.

 

Production Statistics

 

(000't unless otherwise stated)

2014

2013

Change %

Iron ore processed from FPM &FYM

29,957

30,599

(2.1%)

Average Fe content

33.38%

32.26%

3.5%

Concentrate produced ('WMS')

13,726

13,195

4.0%

Weighted average Fe content %

62.7%

62.8%

(0.2%)

Pellets produced from FPM & FYM

10,670

10,466

2.0%

Higher grade

5,544

4,725

17.3%

Average Fe content %

64.9%

64.9%

(0.1%)

Lower grade

5,126

5,741

(10.7%)

Average Fe content %

62.2%

62.2%

-

Purchased concentrate

405

401

1.0%

Average Fe content %

65.8%

65.9%

(0.2%)

Pellets produced from purchased concentrate

351

347

1.0%

Higher grade

259

263

(1.6%)

Average Fe content %

64.9%

64.9%

0.1%

Lower grade

92

84

9.1%

Average Fe content %

62.2%

62.2%

-

Total pellet production

11,021

10,813

1.9%

Pellet sales volume

11,167

10,689

4.5%

Gravel output

1,819

2,281

(20.3%)

Total Group stripping volume (million m3)

 

49,697

49,208

1.0%

 

Health and Safety

Most regrettably there were three fatalities during the period two at FPM and one at FBM. These incidents were due to breaches of existing risk control measures designed to prevent accidents. Following these tragic events Ferrexpo has strengthened its focus on ensuring compliance of existing standards whilst reviewing leading practice in order to implement the highest standards in all operating areas. The prevention of all incidents and injuries to employees is the highest priority of the Board and management, who follow the principle that all accidents are avoidable.

 

Areas that Ferrexpo is specifically focusing on within health and safety include:

· Significant risk controls and reporting culture

· Review and implementation of best practice safety standards

· Continued implementation of behavioural based safety program

 

The lost-time injury frequency rate ('LTIFR') at FPM (including contractors) decreased to 0.49 per million man hours in 2014 (2013: 0.60 per million man hours). FYM experienced no lost time injuries during the period. Since its inception FYM has experienced only one lost time injury. Ferrexpo's total LTIFR in Ukraine was 0.47 per million man hours compared to 0.58 per million man hours in 2013.

 

LTIFR for the Group's barging operation, DDSG, including leased crews, was 9.08 per million man hours worked (2013: 12.80 per million man hours worked). The difference in LTIFR between the mining and barging operations principally reflects the lower hours worked at the barging operations compared to the mining operations.

 

LTIFR

2014

2013

Mining operations

0.47

0.58

Barging operations

9.08

12.80

Total Group

0.86

1.07

 

2013 numbers have been restated to include the Group's barging activities as well as re-instatement of contractor hours worked at the mining operations.

 

Production Costs

The C1 cash cost of production (1) from own ore improved by US$14 per tonne to US$45.9 per tonne in 2014 compared to US$59.8 per tonne in 2013. The 23% reduction per tonne was largely driven by a 97% fall in the value of the Hryvnia per US Dollar from UAH 7.8 per US Dollar to UAH15.8 per US Dollar by year end. The Group also benefitted from a 15% decline in gas prices and improved consumption norms due to higher production volumes and positive contribution from FYM ore. This was offset by increased royalty payments following an increase in royalty rates for iron ore miners. The mining royalty increased between two and three times, in local currency, depending on the grade of the iron ore product. The Group also experienced local electricity price inflation of 14%.

 

(1) The C1 cash cost of production per tonne is defined as the cash costs of production of 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, concentrate and production cost of gravel.

 

The following table shows the % breakdown of the Group's cost base by category:

 

Input

% of C1 cash cost

Electricity

25%

Gas

15%

Fuel

13%

Materials

10%

Personnel

10%

Grinding bodies

7%

Maintenance

7%

Spares

6%

Royalties

4%

Explosives

3%

 

Business Improvement Programme

The BIP aims to increase process efficiencies and reduce consumption norms in the production process thereby reducing the cash cost of production by up to 2% per annum.

 

Specific focus areas include increasing plant throughput, increasing mobile mining fleet utilisation, debottlenecking processing activities, and improving process control.

 

As gas and electricity represent approximately 40% of the cash cost of production, a major focus of the BIP is to identify and implement material energy savings projects in the mining and processing operations.

 

For the year ended 31 December 2014, FPM reduced its average consumption per tonne in electricity, gas and grinding bodies by 23%, 24% and 31% respectively, compared to 2005 which was the year before the BIP was initiated.

 

The average C1 cost for the year ended 31 December 2014 was US$45.9 per tonne and it is estimated that the cumulative productivity gains since the inception of the BIP are approximately US$8.2 per tonne of pellets. As such, the BIP has reduced the C1 cost of production by 18% using 2014 average prices.

 

Consumption norms

2014

2005

% change

Electricity kWh/t

159.2

205.5

(23%)

Gas m3/t

 

16.8

22

(24%)

Grinding bodies kg/t

4.4

6.4

(31%)

 

Resource Savings under BIP since Inception in 2006

Resource

Savings

Power (million kWh)

155

Steam (Gcal)

14,333

Grinding media (tonnes)

3,499

Diesel fuel (million litres)

4.23

Gas (th. m3)

 

19,186

Lining (tonnes)

165

Haul truck tyres (pcs)

80

Ancillary fleet tyres (pcs)

205

Bentonite (tonnes)

257

 

The Group undertook 36 BIP projects in2014.

Examples of some of the initiatives are:

Power consumption reduction

· Use of dewatering wells in the north-eastern part of the FPM pit reduced the power required to pump water from intermediate levels compared to from the pit floor. Savings for the year amounted to 3,275 thousand KWh of electricity.

· Installation of a level control system in the magnetic hydro-separators within the beneficiation plant as well as installation of controllers to manage rotation more effectively enabled automation of the process. This initiative extended component life and achieved reductions in power consumption of 5,891 thousand KWh.

 

Diesel fuel reduction

· Installation of an automated fleet control system with GPS navigators allowed for optimization of the mobile mining fleet. This reduced fuel consumption by 456 kilo litres per year. The GPS also reduced the travel distance of the fleet increasing tyre life and saving 205 tyres.

 

Reduced grinding media consumption

· Optimization of beneficiation plant grinding mills rotation and grinding media addition from the installing new mill gears with a lower gear ratio has resulted in a drop in the consumption of grinding media by 620 tonnes per annum whilst maintaining the same level of grinding to ensure product quality.

 

Environmental Impact

As in 2013, the Group is pleased to report that there were no reportable environmental incidents during the year.

 

Gas Emissions

 

Emissions in tonnes

2014

2013

Total gas emissions

6,474

5,815

Of which:

 Nitrogen dioxide

3,755

2,762

 Carbon monoxide

2,391

2,107

 Sulphur dioxide

328

946

Total solid emissions

6,087

5,828

Total emissions

12,561

11,643

 

Please note 2013 numbers have been restated to include sulphur dioxide and solid emissions from FYM.

 

The increase in emissions is due to a due to a 2% increase in Group pellet production volumes and a 6% increase in waste material compared to 2013. The increase in waste material reflects the continued development of the new FYM pit resulting in additional volumes of overburden and waste rock.

 

CO2 Emissions

The table below shows the Group's carbon intensity ratio which is in line with 2013. FPM, FYM, FBM and the barging operations collected information on greenhouse gas emissions created by solid, liquid, and gaseous fuels, as well as refrigerants, explosives, purchased steam and electricity.

 

2014

2013

CO2 emissions

 

2,356,907

2,282,614 (2)

Pellets produced (kt)

11,021

10,813

Intensity ratio

0.21

0.21

(2) 2013 restated to include barging activities

 

CO2 emissions directly generated by the operations were 0.43 million tonnes in 2014 compared to 0.39 million tonnes in 2013. Emissions generated from indirect sources were 1.93 million tonnes in 2014 compared to 1.90 million tonnes in 2013. The 2013 numbers have been restated to include the Group's barging operations.

 

Capital Investment

As of 31 December 2014, Ferrexpo has substantially completed its investment programme to increase the quality and quantity of its pellet output.

 

The Group has spent approximately US$2 billion since its IPO in 2007 developing additional iron ore mining capacity at FYM as well as executing a major modernisation of FPM's mining and production facilities to increase the beneficiation and pelletising capacity to 12 million tonnes per annum of output.

 

Capital investment in 2014 amounted to US$235 million, 15% below 2013 (US$278 million). The reduction reflects the phasing and completion of the Group's programme to upgrade the existing FPM facilities and the development of the FYM pit and the associated infrastructure. As of 31 December 2014, these programmes were substantially completed, with the final sections of the floatation facilities at FPM expected to be commissioned in the first quarter of 2015 at a cost of approximately US$3 million.

As a result, in 2015, the Group expects to reach production of 12 million tonnes of pellets per annum with an increased volume of higher grade 65% Fe pellets. The Group expects to produce only 65% Fe pellets in 2016, however, depending on the relative economics of lower grade pellets these may also be produced from time to time. The increase in volume, combined with higher average iron content of the pellets, should enable Ferrexpo to further expand its high quality customer base and achieve higher pricing and margins compared to the 62% Fe pellet product.

 

Sustaining capital expenditure required to maintain this level of output will depend on the cycle of maintenance capital for FPM's production facilities, and are estimated to be in the range of US$50 million to US$100 million annually. If appropriate, capital investment could include small scale, high return projects that will incrementally increase production capacity.

 

The next phase of investment at FYM will be commenced at an appropriate time in accordance with the Group's overall strategy. This phase will principally involve additional stripping works, following which the Group will have mining capacity in excess of its processing capabilities. Subject to appropriate economics and funding, Ferrexpo will construct a 10 million tonne per annum concentrator. This will be supplied by FYM ore which at full capacity, following further investment, can yield approximately 10 million tonnes of pellet equivalent output in the form of high quality 67% Fe concentrate.

 

In the current low priced iron ore market environment, however, Ferrexpo is not pursuing any significant new growth projects until appropriate gearing levels are reached.

 

Capital expenditure breakdown:

 

US$ million

2014

2013

FPM

136

149

Sustaining (incl. logistics)

43

67

Capacity upgrade project

37

20

Mine life extension

12

15

Quality upgrade project

44

47

FYM

73

100

Stripping and infrastructure

62

98

Concentrator

11

2

FBM, other deposits

9

9

Logistics

17

20

Total

235

278

 

CSR

Ferrexpo is the largest employer in the Poltava region of Ukraine. Approximately 99% of the Group's employees are based in Ukraine, representing 9,541 people. Given the fragile state of Ukraine's economy and the ongoing conflict in the east of the country, leading to much social upheaval, the Group increased its support for local and regional communities during this difficult period. As a result, community support donations increased from US$10 million in 2013 to US$39 million in 2014. The majority of the spend was used to support local and regional public organisations whose finances were under strain. Examples of donations made include the purchase of medical equipment for hospitals, care for the elderly, heating and lighting equipment for local infrastructure and general repairs to schools and hospitals. Future community support spending will be subject to iron ore pricing and the Group's ability to fund such spend along with its other commitments.

 

People

Ferrexpo is pleased to report that it continues to maintain a good relationship with its workforce and that there was no labour related disruption to production during the year. There have been no significant industrial actions or labour disputes at FPM since its privatisation in 1995, or at FYM since its inception.

 

In 2014, the Group employed on average 9,658 staff and 1,927 contractors (2013 average: 9,696 staff and 2,220 contractors). Ferrexpo expects to employ fewer contractors in 2015, as it has completed its investment programmes at FPM and FYM and any further significant investment is on hold in the current low price iron ore environment.

 

Average personnel costs at the Group's Ukrainian operations accounted for 10% of the cash cost of production per tonne of pellets (2013:11%). In 2014, the Group experienced wage inflation of 12% in local currency.

 

Ferrexpo believes it is important to attract, retain and develop skilled workers. In 2014, approximately 86% of the local workforce underwent training initiatives, principally related to safety and professional training.

 

The Board would like to express its sincere appreciation to all of the Group's employees, especially in Ukraine, for their contribution to this strong set of results and for their continued dedication during a challenging time in the country and in the iron ore industry.

 

In November 2014, Jim North joined the Company as Group Chief Operating Officer. Jim was previously Chief Operating Officer of London Mining. Prior to this he held a variety of senior operational management roles with Rio Tinto, BHP Billiton and Mount Isa Mines, in Africa, South America and Australia.

 

Ukraine

In 2014, GDP growth in Ukraine declined by 7.5% while foreign currency reserves as of 31 December 2014 were approximately two months of import cover at about US$6 billion. The Ukrainian Hryvnia devalued by 97% from UAH 8.0 per US Dollar to UAH15.8 per US Dollar in 2014.

 

On 5 February 2015, the National Bank of Ukraine ceased interventions in the foreign exchange market and the Hryvnia devalued by 45% to approximately UAH24 per US Dollar, and is currently trading around the UAH23 per US Dollar level. The Board of Ferrexpo notes this recent fall in the value of the Hryvnia. Ferrexpo continues to hold liquidity inside Ukraine amounting to approximately US$160 million for daily operating activities in a mix of local currency and US Dollars to cover operating costs and capital investment.

 

This recent devaluation has put further strain on the Ukrainian banking sector. The Board is aware of liquidity constraints inside the banking system both in local and in hard currency. Ferrexpo is not experiencing any difficulties in making or receiving payments and at the current time the Board is not looking to significantly reduce the level of cash held locally or to review its banking relationships until the situation stabilises.

 

The National Bank of Ukraine is undertaking measures to stabilise the banking sector including the provision of liquidity and the requirement for shareholders of certain banks to inject new capital following the recent sharp devaluation in the currency. In order to ensure that Ferrexpo's operations remain as far as possible unaffected by the recent troubles, the Board continues to hold funds required for operations in Ukraine with Ferrexpo's long-standing transactional bank, Bank Finance & Credit. This bank, which is controlled by Ferrexpo's CEO and majority shareholder Kostyantin Zhevago, has recently received liquidity support from the National Bank. The Board continues to monitor the situation closely.

 

On 12 February 2015, the IMF announced a new four year loan package of approximately US$17.5 billion to Ukraine. This is expected to help stabilise the country's balance of payments and financial system.

 

Dividends

Ferrexpo aims to maintain stable and sustainable dividend payments throughout the business cycle. The prospects of the Company remain sound following the completion of over US$2 billion of investment since its IPO in 2007. The Group operates in a premium sector of the iron ore market with a first-class customer portfolio and has a competitive low cost base. In light of Ferrexpo's continued strong financial performance in 2014, the Board is maintaining total dividends for the year in line with 2013 at US 13.2 cents per ordinary share (1H 2014/1H 2013 interim dividend: 3.3 US cents per ordinary share).

 

In accordance with this, a final ordinary dividend of US 3.3 cents per share is being proposed (2013 final ordinary dividend: US3.3 cents per ordinary share), as well as a special dividend of US 6.6 cents, as paid in the previous two years. The Group will target to maintain dividends at this level in future. The total average annual dividend yield for the Group has been 4.7% since 2012.

 

Payment of the final ordinary dividend will be made on 29 May 2015 to shareholders on the register at the close of business on 1 May 2015. The dividend will be paid in UK Pounds Sterling with an election to receive US dollars.

 

The special dividend will be paid on 27 March 2015 to shareholders on the register at the close of business on 20 March 2015 and will amount to US$38 million, bringing the total final ordinary and special dividend to US$58 million. (2013: US$58 million).

 

Financial Management

As described under results, on 23 February 2015, the Company extended the maturity of US$161 million of its US$500 million Eurobond due in April 2016 equally into April 2018 and April 2019 and prepaid US$54 million of the outstanding liability at par value. This has improved the liability profile of the business. For further information please see http://www.ferrexpo.com/investor-relations/news/press-releases.

 

As of 31 December 2014, the Group held cash of US$627 million (31 December 2013: US$390 million) and net debt of US$678 million (31 December 2013: US$639 million).

 

The Group will continue to proactively manage its debt repayment schedule and it aims to progressively reduce its absolute debt levels.

 

Corporate Governance and Board

The Board of Ferrexpo remains committed to maintaining high standards of governance and integrity throughout the Group, and being compliant with the UK Corporate Governance Code and all the relevant regulations and guidelines. In 2014, initiatives included the establishment of an Executive Compliance Committee which is responsible for compliance risk assessment and management throughout the Group.

 

As reported last year, the Board has begun the task of refreshing its membership, and has appointed external recruitment consultants to search for suitable candidates who can provide the necessary diversity and balance, including the appointment of a female director. The Group is seeking a replacement for the Chairman, Michael Abrahams, who is planning to retire at the Group's AGM in 2016. In August 2014, Bert Nacken joined the Board in succession to Lucio Genovese, and the Board hopes to make further appointments in due course. The Board would like to thank Lucio for the contribution he has made as a Non-Executive Director over the past seven years, especially as Chairman of the Remuneration Committee.

 

Bert Nacken previously spent 34 years at Billiton and then BHP Billiton, working in various operational and management roles throughout the world, notably as President of the Cerro Matoso ferro-nickel operation in Colombia (1997-2001), as President of the Minera Escondida copper mine in Chile (2004-2007), and most recently as the Chief Operating Officer of BHP Billiton Western Australia Iron Ore (2009-2011). Since 2011 he has worked as a mining consultant.

 

Ferrexpo's principal shareholder and CEO, Kostyantin Zhevago, holds 50.3% of the shares in the Company, and his interests remain aligned with those of the other shareholders. His relationship with the Company is governed by a relationship agreement that is fully compliant with the requirements of the recently revised Listing Rules.

 

Outlook

Iron ore pricing is likely to remain subdued and Ferrexpo, along with the general consensus of market observers, expects the average 62% Fe CFR China benchmark price to be materially below 2014. The significant investments the Group has made over the past several years totalling US$2 billion is resulting in higher production volumes, increased quality and lower costs in constant currency. The Group's cost base is also benefitting from lower energy costs and the devaluation of the Hryvnia, although this may be offset be inflation in future periods. While strong pellet premiums and reduced freight rates are helping to partially offset lower benchmark pricing. As a result, the Group expects to remain profitable and strongly competitive in the world pellet market as one of the lowest cost producers.

 

Ukraine currently holds approximately two months of foreign currency reserves and has a very weak banking and financial system. Failure to secure continued financial support in March 2015 from the IMF could disrupt currency flows and the availability of operational financial assets held in country as well as potentially disrupt VAT refunds. The Group believes it has made all necessary plans to ensure smooth and continued operations.

 

The Company's operations in Ukraine are remote from the current conflict area. The situation generally, however, remains uncertain and subject to change.

 

The current year has started well both in production and sales. In January 2015, Ferrexpo produced a record one million tonnes of pellets, while in February all of the Group's output was in the form of premium 65% Fe pellets, another record for the Group. Sales volumes continue to be at or above base contract levels.

 

Principal risks

 

The list of the principal risks and uncertainties facing the Group's business that follows below is basedon the Board's current understanding. Due to the very nature of risk it cannot be expected to be completely exhaustive. New risks may emerge and the severity orprobability associated with known risks may change over time.

 

Risks Relating to Operations in Ukraine

 

POLITICAL AND LEGAL (SEE NOTE 16 IN THE ACCOUNTS)

Possible Impact

Recent civil conflict, political instability and ongoing military action in parts of the Donetsk and Luhansk regions of Ukraine have negatively impacted the economy and relations with the Russian Federation resulting in recent Ukraine sovereign risk rating downgrades by all credit agencies.

 

Ukraine has a large external debt refinancing requirement in 2015 and 2016, while foreign reserves were reported at US$5.6 billion as of 1 March 2015. The country currently holds approximately two months of foreign currency reserves and has a very weak banking and financial system. Failure to secure continued financial support in March 2015 from the IMF could disrupt currency flows and the availability of operational financial assets held in country.

 

In addition, escalating geopolitical tensions have had an adverse effect on the Ukrainian financial market. The ability of local companies and financial institutions to obtain funding from the international capital markets has been hampered as a result of decreased appetite for Ukrainian credit exposure. Any continuing or escalating military action in eastern Ukraine could have a further adverse effect on the economy.

 

The current situation in Ukraine, could also affect the ability of Ferrexpo to obtain financing or re-financing or the ability of Ferrexpo to use its cash held in Ukraine or the Government's ability to meet its payment obligations to Ferrexpo on amounts due, such as VAT refunds. For further information see note 2 on page 32.

 

Other risks could include a weak judicial system that is susceptible to outside influence, and can take an extended period of time for the courts to reach final judgement. The Group faces a legal claim over a shareholding in FPM. The case has been running for more than seven years in Ukraine. On 16 February 2015, the High Commercial Court of Ukraine rejected the case of the claimants and upheld the decisions of the Commercial Courts of the first and second instances, reconfirming the validity of the SPA. The Claimants have a right of appeal to the Supreme Court of Ukraine but after taking legal advice, the Board believes that any appeal that the claimants bring will be without merit and that the SPA will remain valid.

 

Mitigation

· The Group holds significant liquidity on and offshore to ensure smooth operations should the economic weakness of the country disrupt the financial system.

· At the time of writing, Ferrexpo's operations remain largely unaffected by the civil conflict in the east of Ukraine. The Group experienced a minor electricity shortage in December due to lack of coal availability from the conflict zone for electricity generation. Ferrexpo is monitoring the situation and has contingency plans in place to purchase natural gas or heavy duty fuel on behalf of a local power station to generate emergency electricity should a shortfall occur again. The electricity vulnerability is mostly a winter concern when overall demand for electricity is high.

· Ukraine relies on Russia to supply approximately 15% of its gas requirements. In 2014, Ferrexpo sourced some natural gas from Slovakia. 

 

UKRAINIAN BANKING SECTOR

Possible Impact

The Ukrainian banking sector is considered weak and undercapitalised according to credit rating agencies. The substantial devaluation of the Hryvnia since 1 January 2014 has required many banks to inject new capital. The devaluation of the Hryvnia has also weakened confidence in the banking sector causing large outflows of deposits and the need for liquidity support from the National Bank of Ukraine. Also see Ukrainian Currency Risk.

 

As of 31 December 2014, Ferrexpo had c.US$627 million in cash and cash equivalents, of which c.US$160 million was held in Ukraine to shield operations from disruptions. The liquidity held in Ukraine can fund up to three months of operating and capital expenditures at current exchange rates and liquidity outside Ukraine is sufficient for eight months. The Group's Ukrainian liquidity is held in Bank Finance and Credit, which is controlled by Kostyantin Zhevago, the Chief Executive Officer and the ultimate beneficial owner of 50.3% of Ferrexpo's shares. Bank Finance and Credit is subject to these risks facing the Ukrainian banking sector following the devaluation to date in 2015. For further details see note 16 to the accounts, Related Party Transactions.

 

Mitigation

· The vast majority of the Group's financial transactions and cash flows originate in Ukraine and flow through the banking system. The Group regularly reviews its banking relationship, and the stability, service and reliability of its partners, in the context of the overall banking sector within the country. To date, the Group has not experienced unusual disruptions to its banking service.

 

UKRAINIAN CURRENCY

Possible Impact

Fluctuations in the Group's operational currency can impact its profitability and the book value of its assets.

 

During the year the Hryvnia devalued from UAH7.9 per US Dollar as of 31 December 2013 to UAH15.8 per US Dollar as of 31 December 2014. The average rate during the year was UAH11.9 per US Dollar. Balances at the year-end are converted at the prevailing rate. The devaluation has significantly reduced the Group's cash cost of production, however, it has also reduced the net assets of the Group as of 31 December 2014 by US$1,206 million compared to 31 December 2013 (see statement of Other Comprehensive Income).

 

On 5 February 2015, the National Bank of Ukraine ceased interventions in the foreign exchange market and the Hryvnia devalued by 45% to UAH23.1 per US Dollar, and is currently trading around the UAH23.0 per US Dollar level and has traded in a range between 15.7 and 30.0 to date in 2015. For further detail of the impact of the Hryvnia on the economy please see Ukrainian Banking Sector risk.

 

Mitigation

· The Group's revenue is all received in US Dollars while approximately 55% of the Group's cost to deliver a tonne of pellets to boarder dispatch points are in Hryvnia. Ferrexpo benefits from a devaluation through lower costs, although the benefits may be eroded over time due to inflation.

 

The accounting value of the fixed assets in Ukraine reduce due to a devaluation, however, this has no effect on the underlying ability of the assets to generate future cash flows.

 

UKRAINIAN PRODUCER PRICE INFLATION (PPI)

Possible Impact

As approximately 55% of the Group's cost to produce and deliver a tonne of pellets to border dispatch points for export are in Hryvnia, the Group is exposed to local cost inflation.

 

Following the substantial devaluation of the Hryvnia in 2014 and in the first two months of 2015, the Group expects inflation to increase to increase significantly over the next few years. In 2015, the Group anticipates that most of the local costs will still be lower in US Dollar terms but that this situation will reverse over time and could lead to hyperinflation.

 

Mitigation

· The Group's BIP has achieved continuing efficiency improvements and cost reductions over many years. Since inception of BIP in 2006, the cash cost of production has reduced by US$8.2 per tonne of pellets. The Group also has a consistent track record of producing at full capacity to achieve maximum overhead absorption and is set to expand production output in 2015.

 

UKRAINIAN VAT RECEIVABLE (SEE NOTE 14 IN THE ACCOUNTS)

Possible Impact

As nearly all of the Group's output is exported, it does not collect substantial amounts of VAT on local sales (which could otherwise be offset against VAT incurred on purchases of goods and services). The Ukrainian government refunds the outstanding balance of VAT, although not always on a timely basis and repayment can be dependent on the overall health of the government's finances. See political and legal risk, particularly surrounding IMF support for the country.

 

The late repayment of VAT results in increased working capital, which must be funded from operating cash flows and debt. As Ukrainian VAT balances are in local currency the balances in US Dollar terms are exposed to the devaluation of the UAH.

 

In 2014, Ferrexpo received VAT bonds as payment for outstanding balances prior to 2014. The Group subsequently sold these bonds for US$97 million cash which reflected a discount to par value of 22%. Due to the devaluation of the Hryvnia during 2014, a US$117 million loss on VAT was incurred which was recorded in the translation reserve, which together with the US$21 million loss of the sale of VAT bonds resulted in a total loss on VAT of US$156 million.

 

The VAT balance as of 31 December 2014 was US$73 million (31 December 2013: US$318 million). The Group did not receive VAT repayments in November and December of 2014, however, it has received VAT repayments in January and February 2015. Full details of the movement on VAT is included in note 14 to the accounts.

 

Mitigation

· The Group maintains an open dialogue with the government and operates to best international standards, ensuring the validity of the VAT claims.

 

· Ferrexpo also plans working capital requirements and available liquidity to ensure that there is sufficient headroom. It reduces capital investment as far as possible to ensure non-payment is mitigated.

 

UKRAINIAN TAXES

Possible Impact

As part of an ongoing agreement with the majority of industry players in Ukraine, the tax authorities have been remitting regular VAT refunds in 2014 in exchange for the pre-payment of corporate profit tax in respect of future periods. This can result in significant amounts of taxation being paid in advance of the profits being earned, which as a result of falling prices, increasing costs, changes in tax legislation or financial difficulties experienced by the country, may not result in the Group recovering or being able to offset these amounts against future profits. In 2014, Ferrexpo paid US$40 million in this respect resulting in a year-end balance of US$73 million (2013: US$88 million).

 

Mitigation

· The Group takes regular advice on tax matters from Ukraine tax experts and complies with all known requirements. The Group maintains a transparent and open relationship with local, regional and national tax authorities.

 

COUNTERPARTY RISK (SEE NOTE 16 IN THE ACCOUNTS)

Possible Impact

The Group operates in Ukraine which has a weak country credit profileas defined by international credit rating agencies. Financial instability of the Group's counterparties, including its major suppliers, the government, local banks which operate in a weak banking sector can absorb high amounts of working capital, or result in material financial loss.

 

Counterparty risk could also lead to lower sales volumes, delays in projects and interruption of production or financial loss in the event of a default by counterparties and adversely affect its future financial results.

 

In February 2014, 300 rail cars were ordered for delivery in the second half of the year. As a consequence of the ongoing conflict in eastern Ukraine, where the rail cars are manufactured, only 25 rail cars were delivered in 2014, and a prepayment amounting to US$8 million was impaired. For further information see Related Party Disclosure note 16.

 

Poor relations with the Russian Federation can impact the ability of Ukrainian companies to import oil and gas from Russia as well as have a general negative impact on Ukrainian GDP growth.

 

As a result of the annexation of Crimea by the Russian Federation, certain Russian individuals and organisations were sanctioned by the European Union, the United States and other countries. This could have a negative impact on Ferrexpo if any of these individuals or organisations were customers or suppliers to the Group.

 

Mitigation

· The financial strength of all of the Group's counterparties is subject to regular and thorough review. The results of these reviews are used to determine appropriate levels of exposures consistent with benefits obtained, and available alternatives in context of the Group's operations, in order to mitigate the potential risk of financial loss. To date, the Group has not experienced any financial losses from transactions with its counterparties.

· The Group develops its supplier base in order to avoid excessive dependence on any supplier, actively encouraging a diversity of supply where reasonable and practical.

· The Group does not sell any of its product into Russia or have any financial arrangements with Russian banks.

 

Risks Relating to the group's operations

 

IRON ORE PRICES AND MARKET

Possible Impact

Fluctuations in iron ore prices as well as in demand have negatively impacted the financial result of the Group in 2014. The benchmark price for 62% Fe fines CFR China declined 47% from US$135 per tonne as of 1 January 2014 to US$72 per tonne as of 31 December 2014. The average price was 28% lower at US$97 per tonne compared to an average of US$135 per tonne in 2013. The average price for the two months ended February 2015 declined further to US$65 per tonne. There continues to be a risk associated with lower iron ore prices, however, the price is now trading from a lower base and the Group's costs have been significantly reduced in 2014.

 

Mitigation

· Ferrexpo has a competitive cost base which has enabled it to produce at full capacity and remain profitable throughout past commodities cycles.

· Ferrexpo has a well invested asset base which together with its low cost base ensures its resilience in a low price environment.

· The Group has an established, broad customer base and logistics infrastructure which can service regional and seaborne markets. This provides flexibility should a particular region experience a decline in demand.

 

MINING RISKS AND HAZARDS

Possible Impact

Mining risks and hazards may result in employee and contractor fatalities as well as material mine or plant shutdowns or periods of reduced production. Such events could damage the Group's reputation and operating results.

 

Mitigation

· Safety, environmental and operational performance is regularly and rigorously reviewed throughout the organisation including the COO, the Executive Committee and the Board.

· Through its capital investment programme Ferrexpo has and is modernising its mining and production facilities which is improving safety, environmental and operational performance.

· All accidents are fully investigated and lessons are drawn and implemented.

· Appropriate safety training is regularly provided to employees.

· Employee remuneration is linked to safety performance

 

RELIANCE ON STATE MONOPOLIES

Possible Impact

The Group purchases certain goods and services from state-owned enterprises, and changes in the related tariffs affect the Group's cost base. Availability of services can also be limited, which could affect the Group's ability to produce and deliver pellets.

 

During December 2014, Ferrexpo experienced reductions in the supply of electricity during certain times of the day. This resulted in the loss of 144 thousand tonnes of pellet production. To date, these disruptions have not continued in January or February 2015.

 

The supply of gas to Ukraine predominantly comes from Russia. The recent geopolitical tension has increased the risk of disruption to supply.

 

Other areas of reliance on state monopolies include railway tariffs and availability of rail wagons, supply of gas and electricity and associated tariffs, and mining royalties.

 

Mitigation

· The factors affecting the Group's future cost structure are closely managed.

· Cost reduction initiatives are planned and reported to the Board.

· Since inception of BIP in 2006, it has reduced the C1 cash cost by US$8.2 per tonne of pellets.

· The Group has purchased its own rail wagons to reduce reliance on state-owned rail cars.

· Ferrexpo has contingency plans in place to purchase natural gas or heavy duty fuel on behalf of a local power station to generate emergency electricity should there be an electricity shortfall in 2015 (see Political and Legal risk on page 20).

· Ferrexpo has begun to diversify its sources of gas supply and in 2014 purchased some natural gas from Slovakia.

· To date, the Group has not experienced any material supply disruption of key inputs since its IPO in 2007.

· Ferrexpo actively looks to invest in areas to reduce reliance on state monopolies, subject to funding availability.

 

LOGISTICS

Possible Impact

The Group's logistics capability is dependent on services provided by third parties and state-owned organisations, mainly in relation to rail and port services. Logistical bottlenecks may affect the Group's ability to distribute its products on time, impacting customer relationships.

 

As at 31 December 2014, Ferrexpo owned 2,200 rail cars. Another 300 rail cars were ordered in February 2014 and were due for delivery in the second half of the financial year 2014. As a consequence of the ongoing conflict in eastern Ukraine, no rail cars were delivered and there is uncertainty about the timing of delivery of these rail cars

 

Mitigation

· The Group continues to invest in its logistics facilities in order to ensure available capacity, better service its customers, lower costs and to reduce reliance on third-party providers. Beside considerable investment in the rail car fleet over recent years, Ferrexpo owns 139 barges operating on the Danube/Rhine River corridor. It also owns a 48.6% in the port of TIS Ruda which guarantees the Group independent access to the seaborne markets avoiding reliance on the state port.

 

RISKS RELATED TO THE GROUP'S STRATEGY

 

EXPANSION CAPITAL INVESTMENT

Possible Impact

The Group's growth depends on its ability to upgrade existing facilities and develop its iron ore resource base. For any major capital project there is a risk of insufficient controls, cost overruns, shortage of required skills, and unexpected technical problems affecting the time taken to complete the project and the return on the capital invested.

 

Mitigation

· The Group has established strict procedures to control, monitor and manage this expenditure which is regularly reviewed by the Investment and Executive Committee and the Board.

 

GOVERNMENT APPROVALS OF EXPANSION

Possible Impact

The Group does not yet have all the governmental approvals required to develop future deposits. Although all approvals that have been applied for have been granted, there is no guarantee that others will be granted in the future.

 

Mitigation

· Ferrexpo maintains an open and proactive relationship with various governmental authorities and is fully aware of the importance of compliance with local legislation and standards.

· The Group monitors and reviews its commitments under its various mining licences in order to ensure that the conditions contained within the licences are fulfilled or the appropriate waivers obtained. Ferrexpo maintains strict compliance with the Ukrainian mining code and execution of work in accordance with the project design through active engagement of Ukrainian and international legal advisers.

 

INVESTMENT OPPORTUNITIES

Possible Impact

Ferrexpo evaluates and, if it believes appropriate, enters into net present value opportunities which it believes are potentially value accretive to the Company and can reduce future operating risk.

 

There is a risk that Ferrexpo may make acquisitions or investments, which may not be accretive to earnings or otherwise meet its operational or strategic expectations. In addition such an investment or acquisition may divert management's attention away from ongoing business activities.

 

Due to the lower iron ore price environment, Ferrexpo fully impaired its investment in Ferrous Resources in the third quarter of 2014, resulting in a non-cash charge of US$82 million. The Company is currently looking at opportunities to unlock value in this investment.

 

Mitigation

· Management has procedures in place to ensure any potential investment opportunity undergoes thorough due diligence and meets strict financial criteria. All investment decisions are approved by the Board.

 

Statement of Directors' Responsibilities

Statement by the Directors under the UK Corporate Governance Code

The Directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of their profit or loss for that period. In preparing those financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

 

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Board considers that the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

 

Responsibility Statement of the Directors in Respect of the Annual Report and Accounts

We confirm on behalf of the Board that to the best of our knowledge:

(a) the financial statements give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

(b) the Strategic Report and the Directors' Report includes a fair review of the development and performance of the undertakings included in the consolidation as a whole, and the principal risks and uncertainties that they face.

 

For and on behalf of the Board

 

Michael Abrahams

Chairman

 

Christopher Mawe

Chief Financial Officer

 

10 March 2015

 

 

 

 

Consolidated Income Statement

US$'000

Notes

Year ended

31.12.14

Year ended 31.12.13

Revenue

4

1,388,285

1,581,385

Cost of sales

3/5

(647,960)

(773,221)

Gross profit

740,325

808,164

Selling and distribution expenses

6

(311,514)

(335,718)

General and administrative expenses

7

(48,642)

(54,839)

Other income

9,094

6,662

Other expenses

8

(57,014)

(23,457)

Operating foreign exchange gains

9

76,372

622

Operating profit from continuing operations before adjusted items

408,621

401,434

Underrecovery and write-down of VAT receivable

14

(6,790)

(36,421)

Write-offs and impairment losses

10

(83,534)

(854)

Share of profit from associates

4,878

3,551

Losses on disposal of property, plant and equipment

(4,825)

(8,492)

Profit before tax and finance from continuing operations

318,350

359,218

Finance income

11

19,250

2,372

Finance expense

11

(68,472)

(65,953)

Non-operating foreign exchange (losses)/gains

9

(14,846)

9,755

Profit before tax

254,282

305,392

Income tax expense

12

(70,442)

(41,608)

Profit for the year from continuing operations

183,840

263,784

Profit attributable to:

Equity shareholders of Ferrexpo plc

178,316

261,984

Non-controlling interests

5,524

1,800

Profit for the year from continuing operations

183,840

263,784

Earnings per share:

Basic (US cents)

13

30.46

44.76

Diluted (US cents)

13

30.39

44.69

 

 

Consolidated Statement of Comprehensive Income

 

US$ 000

Notes

Year ended 31.12.14

Year ended 31.12.13

Profit for the year

183,840

263,784

Items that may subsequently be reclassified to profit or loss:

Exchange differences on translating foreign operations

(1,205,667)

(437)

 Income tax effect

15

80,394

-

Net losses on available-for-sale investments

-

(138)

 Income tax effect

-

30

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

(1,125,273)

(545)

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 gains on defined benefit pension liability

1,649

498

Income tax effect

(195)

(58)

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

1,454

440

Other comprehensive loss for the year, net of tax

(1,124,531)

(105)

Total comprehensive (loss)/income for the year, net of tax

(940,691)

263,679

Total comprehensive (loss)/income attributable to:

Equity shareholders of Ferrexpo plc

(926,422)

261,888

Non-controlling interests

(14,269)

1,791

(940,691)

263,679

 

 

Consolidated Statement of Financial Position

US$'000

Notes

As at

31.12.14

As at

31.12.13

Assets

Property, plant and equipment

926,433

1,533,819

Goodwill and other intangible assets

60,468

117,086

Investments in associates

8,569

20,546

Available-for-sale financial assets

46

82,778

Inventories

81,987

58,303

Other non-current assets

18,211

34,575

Income taxes recoverable and prepaid

12

73,782

54,242

Other taxes recoverable and prepaid

14

1,519

78,281

Deferred tax assets

32,358

37,612

Total non-current assets

1,203,373

2,017,242

Inventories

124,722

180,863

Trade and other receivables

87,226

102,498

Prepayments and other current assets

21,057

25,073

Income taxes recoverable and prepaid

12

-

33,233

Other taxes recoverable and prepaid

14

71,982

182,863

Cash and cash equivalents

626,509

390,491

931,496

915,021

Assets classified as held for sale

26

106

Total current assets

931,522

915,127

Total assets

2,134,895

2,932,369

Equity and liabilities

Issued capital

121,628

121,628

Share premium

185,112

185,112

Other reserves

(1,452,988)

(347,326)

Retained earnings

1,855,690

1,753,200

Equity attributable to equity shareholders of Ferrexpo plc

709,442

1,712,614

Non-controlling interests

8,159

22,428

Total equity

717,601

1,735,042

Interest-bearing loans and borrowings

3/15

1,056,253

928,196

Defined benefit pension liability

28,557

53,154

Provision for site restoration

2,345

2,871

Deferred tax liabilities

841

2,031

Total non-current liabilities

1,087,996

986,252

Interest-bearing loans and borrowings

3/15

248,374

101,043

Trade and other payables

32,351

50,001

Accrued liabilities and deferred income

34,191

35,508

Income taxes payable

12

5,898

12,554

Other taxes payable

14

8,484

11,969

Total current liabilities

329,298

211,075

Total liabilities

1,417,294

1,197,327

Total equity and liabilities

2,134,895

2,932,369

 

The financial statements were approved by the Board of Directors on 10 March 2015.

 

Kostyantin Zhevago

Christopher Mawe

Chief Executive Officer

Chief Financial Officer

 

 

Consolidated Statement of Cash Flows

US$'000

Notes

Year ended

 31.12.14

Year ended 31.12.13

Profit before tax

254,282

305,392

Adjustments for:

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

82,269

99,645

Interest expense

11

64,166

60,466

Write-down of VAT receivable

14

6,790

36,421

Interest income

11

(19,250)

(2,372)

Share of profit from associates

(4,878)

(3,551)

Movement in allowance for doubtful receivables

8,011

661

Loss on disposal of property, plant and equipment

4,825

8,492

Write-offs and impairment losses

10

83,534

854

Site restoration provision

1,180

503

Employee benefits

6,531

8,654

Share-based payments

530

1,266

Operating foreign exchange gains

9

(76,372)

(622)

Non-operating foreign exchange gains

9

14,846

(9,755)

Operating cash flow before working capital changes

426,464

506,054

Changes in working capital:

Decrease in trade and other receivables

5,395

27,485

Increase in inventories

(96,554)

(88,482)

Decrease in trade and other accounts payable

(11,083)

(29,489)

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

14

86,950

(12,516)

Cash generated from operating activities

411,172

403,052

Interest paid

(61,307)

(57,037)

Income tax paid

12

(58,077)

(108,321)

Post-employment benefits paid

(3,340)

(4,768)

Net cash flows from operating activities

288,448

232,926

Cash flows from investing activities

Purchase of property, plant and equipment

(232,809)

(270,534)

Proceeds from sale of property, plant and equipment and intangible assets

5,322

910

Purchases of intangible assets

(1,711)

(7,268)

Acquisition of subsidiary/purchase of available-for-sale investment

(17)

(82,382)

Interest received

2,376

2,090

Dividends from associates

2,755

-

Net cash flows used in investing activities

(224,084)

(357,184)

Cash flows from financing activities

Proceeds from borrowings and finance

392,515

26,279

Repayment of borrowings and finance

(119,009)

(19,308)

Arrangement fees paid

(3,580)

(10,643)

Dividends paid to equity shareholders of Ferrexpo plc

(76,904)

(77,882)

Dividends paid to non-controlling shareholders

-

(1)

Net cash flows from financing activities

193,022

(81,555)

Net increase/(decrease) in cash and cash equivalents

257,386

(205,813)

Cash and cash equivalents at the beginning of the year

390,491

596,560

Currency translation differences

(21,368)

(256)

Cash and cash equivalents at the end of the year

626,509

390,491

 

1 The movement in the current year includes the effect of VAT receivable balance amounting to US$97,067 thousand recovered through VAT bonds. See also note 14.

 

 

Consolidated Statement of Changes in Equity

Attributable to equity shareholders of Ferrexpo plc

 

US$000

Issued capital

Share premium

Uniting of interest reserve

Treasury share reserve

Employee benefit trust reserve

Net unrealised gains reserve

Translation reserve

Retained earnings

Total capital and reserves

Non-controlling interests

Total equity

At 1 January 2013

121,628

185,112

31,780

(77,260)

(7,808)

820

(295,588)

1,568,077

1,526,761

20,637

1,547,398

Profit for the period

-

-

-

-

-

-

-

261,984

261,984

1,800

263,784

Other comprehensive(loss)/income

-

-

-

-

-

(108)

(428)

440

(96)

(9)

(105)

Total comprehensive (loss)/income for the period

-

-

-

-

-

(108)

(428)

262,424

261,888

1,791

263,679

Equity dividends paidto shareholders of Ferrexpo plc

-

-

-

-

-

-

-

(77,301)

(77,301)

-

(77,301)

Share-based payments

-

-

-

-

1,266

-

-

-

1,266

-

1,266

At 31 December 2013

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(loss)/income

-

-

-

-

-

(712)

(1,105,480)

1,454

(1,104,738)

(19,793)

(1,124,531)

Total comprehensive (loss)/income for the period

-

-

-

-

-

(712)

(1,105,480)

179,770

(926,422)

(14,269)

(940,691)

Equity dividends paidto shareholders of Ferrexpo plc

-

-

-

-

-

-

 -

(77,280)

(77,280)

 -

(77,280)

Share-based payments

-

-

-

-

530

-

 -

530

 -

530

At 31 December 2014

121,628

185,112

31,780

(77,260)

(6,012)

-

(1,401,496)

1,855,690

709,442

8,159

717,601

 

 

Notes to the Consolidated Financial Statements

 

Note 1: Corporate information

 

The financial information for the year ended 31 December 2014 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The audited statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting convened for Thursday, 21 May 2015.

 

The auditor has reported on the statutory accounts for year ended 31 December 2014. The auditor's report was unqualified.

 

Ferrexpo plc will publish on or around 31 March 2015 its Annual Report and Accounts for the year ended 31 December 2014 on its corporate website www.ferrexpo.com.

 

Organisation and operation

Ferrexpo plc (the 'Company') is incorporated in the United Kingdom, which is considered to be the country of domicile, with 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, Japan, China, Dubai 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% (2013: 50.3%) of Ferrexpo plc's issued share capital.

 

At 31 December 2014, the Group also holds through OJSC Ferrexpo Poltava Mining an interest of 48.6% (2013: 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

Whilst the preliminary announcement has been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretation Committee ("IFRIC") interpretations adopted for use by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Board approved the full financial statements that comply with IFRS on Tuesday, 10 March 2015. The financial statements have been prepared under the historical cost convention as modified by the recording of pension assets and liabilities and the revaluation of certain financial instruments.

 

During the period ended 31 December 2014, the Ukrainian Hryvnia has devalued by 97% compared to the US Dollar; from 7.993 as at 31 December 2013 to 15.787 as at 31 December 2014. As a result of this devaluation, the total equity decreased by US$1,205,667 thousand as of 31 December 2014 due the exchange differences on translating foreign operations which is reflected in the translation reserve. Further details are provided in the statement of other comprehensive income and note 9.

 

The Group's principal risks likely to affect its future development, performance and position are set out on pages 20 to 25. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Performance Review on pages 5 to 19.

 

The Group continues to generate positive free cash flow in the current iron ore price environment. Taking into account the Group's low cost of production, its premium iron ore product together with its high quality customer base, its available reserve base and increased production capacity following the completion of the recent growth projects along with the current level of liquidity, the Directors are of the view that the Group is a going concern and the consolidated financial statements have been drawn up on this basis.

 

Changes in accounting policies

The accounting policies and methods of computation adopted in the preparation of these consolidated financial statements are consistent with those of the previous year, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of 1 January 2014, noted below:

 

Standards adopted affecting reported results, financial position or disclosures

 

IFRS 12 Disclosure of involvement with other entities

The new standard covers the disclosures that were previously required in consolidated financial statements under IAS 27 Consolidated and separate financial statements as well as those included in IAS 31 Interests in joint ventures and IAS 28 Investments in associates. The new standard became mandatory in the EU for financial years beginning on or after 1 January 2014. A number of additional disclosures are required by this new standard in respect of the judgement required to determine that the Group has control over these entities and the information on which entities accumulated non-controlling interests.

 

Standards and interpretations adopted with no effect on reported results, financial position or disclosures

 

IFRS 10 Consolidated financial statements

The new standard provides additional guidance to assist in the determination of which entities are controlled and are required to be consolidated. This standard replaces the portion of IAS 27 Consolidated and separate financial statements that addresses the accounting for consolidated financial statements. The new standard became mandatory in the EU for financial years beginning on or after 1 January 2014. The new standard did not have an impact on the financial position or performance of the Group.

 

IFRS 11 Joint arrangements

The new standard replaces IAS 31 Interests in joint ventures and SIC 13 Jointly-controlled entities - non-monetary contributions by ventures. The standard defines contractually agreed sharing of control of an arrangement and the accounting for joint operations and joint ventures. The new standard became mandatory in the EU for annual periods beginning on or after 1 January 2014. The new standard did not have an impact on the financial position or performance of the Group.

 

IAS 32 Financial instruments: presentation - offsetting financial assets and financial liabilities

The amendment clarifies existing application issues relating to the offset of financial assets and financial liabilities requirements. The amendment became effective for financial years beginning on or after 1 January 2014 with retrospective application. The amendment did not have an impact on the financial position or performance of the Group.

 

IAS 36 Impairment of assets - recoverable amount disclosures

The amendment to the standard was issued in May 2013 and became effective for financial years beginning on or after 1 January 2014. The amendment removes the requirement to disclose recoverable amounts when there has been no impairment or reversal of impairment. Further to that, the disclosure requirements have been aligned with those under US GAAP for impaired assets. The amendment did not have an impact on the financial position or performance of the Group.

 

IAS 39 Financial instruments: recognition and measurement - novation of derivatives and continuation hedge accounting

The amendment to the standard was issued in June 2013 and provides guidance in respect of the continuation of hedge accounting if a hedging derivative was novated. The amendment became effective for the financial years beginning on or after 1 January 2014 and did not have an impact on the financial position or performance of the Group.

 

New standards and interpretations not yet adopted

 

The Group has elected not to early adopt the following revised and amended standards, which are not yet mandatory in the EU.

 

The list below includes only standards and interpretations that could have an impact on the consolidated financial statements of the Group.

 

IFRS 9 Financial instruments

The complete standard has been issued in July 2014 including the requirements previously issued and additional amendments. The new standard replaces IAS 39 and includes a new expected loss impairment model, changes to the classification and measurement requirements of financial assets as well as to hedge accounting. The new standard becomes effective for financial years beginning on or after 1 January 2018. The Group will assess the impact on its consolidated financial statements.

 

IFRS 15 Revenue from contracts with customers

The new standard was issued in May 2014 and establishes the principles for the disclosure of useful information in the financial statements in respect of contracts with customers. The new standard becomes mandatory for financial years beginning on or after 1 January 2017. The effect from the additional disclosure requirements will be assessed and disclosure will be made once the Group has fully assessed the impact of applying IFRS 15.

 

IFRS 11 Joint arrangements - acquisition of interests in joint operations

The amendment was issued in May 2014 and provides guidance in respect of the accounting for acquisitions in interests of joint operations. The amendment becomes mandatory for financial years beginning on or after 1 January 2016. The Group does not expect an impact on its consolidated financial statements from this amendment.

 

IAS 1 Presentation of Financial Statements - disclosure initiative

The amendment was issued in December 2014 and includes a number of smaller projects aiming to improve the presentation and disclosure principles and requirements in existing standards. The amendment becomes mandatory for financial years beginning on or after 1 January 2016. The Group does not expect a significant impact on its consolidated financial statements arising from the application of this amendment.

 

IAS 16 Property, plant and equipment and IAS 38 Intangible assets - clarification of acceptable methods of depreciation and amortisation

The amendment to the two standards was issued in November 2013 and becomes effective for financial years beginning on or after 1 January 2016. The amendment clarifies the pattern to be applied in case of revenue-based amortisation methods for tangible and intangible assets. The Group does not apply revenue-based amortisation methods and does thus not expect an impact on its consolidated financial statements.

 

IAS 19 Employee benefits - defined benefit plans: employee contributions

The amendment to the standard was issued in November 2013. Whilst the IASB implementation date is for financial years beginning on or after 1 July 2014, the amendment becomes mandatory in the EU at the latest for annual periods beginning on or after 1 February 2015. The amendment provides guidance in respect of the accounting for employee contributions set out in the formal terms of a defined benefit plan. The Group does not expect a significant impact on its consolidated financial statements from this amendment.

 

IAS 27 Separate financial statements - equity method

The amendment to the standard was issued in August 2014 and becomes effective for financial years beginning on or after 1 January 2016. The amendment allows the use of the equity method to account for investments in subsidiaries, associates and joint ventures in an entity's separate IFRS financial statements if local regulation requires using the equity method. This amendment applies only to the separate financial statements of the parent entity and is irrelevant for the consolidated financial statements of the Group.

 

IFRIC 21 Levies

The new interpretation clarifies when to recognise a liability for a levy imposed by governments (including government agencies and similar bodies) in accordance with laws and regulations. The IASB implementation date is for periods beginning on or after 1 January 2014 whereas the interpretation becomes mandatory in the EU at the latest for annual periods beginning on or after 17 June 2014. Income taxes in accordance with IAS 12, fines and other penalties and liabilities arising from trading schemes are not covered by this interpretation. The Group does not expect a significant impact on its consolidated financial statements from this new interpretation.

 

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.

 

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.

 

US$ 000

Notes

Year ended

 31.12.14

Year ended 31.12.13

Profit before tax and finance

318,350

359,218

Write-down of VAT receivable

14

6,790

36,421

Write-offs and impairment losses

10

83,534

854

Share-based payments

530

1,266

Losses on disposal of property, plant and equipment

4,825

8,492

Depreciation and amortisation

82,269

99,645

EBITDA

496,298

505,896

 

'C1' costs

'C1' costs represents the cash costs of production of iron 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

Year ended 31.12.14

Year ended 31.12.13

Cost of sales - pellet production

586,653

726,960

Depreciation and amortisation

(64,137)

(78,690)

Purchased concentrate and other items for resale

(27,110)

(34,805)

Inventory movements

10,127

25,476

Other

(15,546)

(13,213)

C1 cost

489,987

625,728

Own ore produced (tonnes)

10,670,445

10,465,606

C1 cash cost per tonne US$

45.9

59.8

 

Net financial indebtedness

Net financial indebtedness as defined by the Group comprises cash and cash equivalents, term deposits, interest-bearing loans and borrowings and amounts payable for equipment.

 

US$ 000

Notes

As at

31.12.14

As at

31.12.13

Cash and cash equivalents

626,509

390,491

Interest bearing loans and borrowings - current

15

(248,374)

(101,043)

Interest bearing loans and borrowings - non-current

15

(1,056,253)

(928,196)

Net financial indebtedness

(678,118)

(638,748)

 

Disclosure of revenue and non-current assets

The Group does not generate significant revenues from external customers attributable to the United Kingdom, the Company's country of domicile. The information on the revenues from external customers attributed to the individual foreign countries is given in note 4.

 

The Group does not have any significant non-current assets that are located in the country of domicile of the Company. The vast majority of the non-current assets are located in Ukraine.

 

Note 4: Revenue

Revenue for the year ended 31 December 2014 consisted of the following:

 

US$ 000

Year ended 31.12.14

Year ended 31.12.13

Revenue from sales of iron ore pellets and concentrate:

Export

1,290,695

1,494,899

Total revenue from sale of iron ore pellets and concentrate

1,290,695

1,494,899

Revenue from logistics and bunker business

90,661

76,321

Revenue from other sales and services provided

6,929

10,165

Total revenue

1,388,285

1,581,385

 

Export sales of iron ore pellets and concentrate by geographical destination showing separately countries that individually represented more than 10% of export sales in either current or prior year were as follows:

 

US$'000

Year ended

31.12.14

Year ended

31.12.13

Traditional Market

594,045

663,951

Thereof Austria

318,707

381,675

Thereof Slovakia

132,958

127,029

Thereof Others

142,380

155,247

Growth market

493,964

565,900

Thereof China

327,579

435,471

Thereof Japan

166,385

130,429

Natural Market

202,686

265,048

Thereof Turkey

99,192

184,234

Thereof Others

103,494

80,814

Total exports

1,290,695

1,494,899

 

During the year ended 31 December 2014 sales made to three customers accounted for 45.2% of the revenues from export sales of ore pellets (2013: 47.2%).

 

Sales to customers that individually represented more than 10% of total sales in either current or prior year are as follows:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Customer A

318,707

381,675

Customer B

132,958

127,029

Customer C

131,613

139,774

Customer D

61,908

184,234

 

Note 5: Cost of sales

Cost of sales for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Energy

262,936

315,530

Personnel

50,851

66,194

Materials

85,043

107,530

Repairs and maintenance

59,780

88,220

Depreciation and amortisation

64,137

78,690

Royalties and levies

22,801

23,162

Purchased concentrate and other items for resale

27,110

34,805

Inventory movements

(10,127)

(25,476)

Logistics and bunker business

61,307

46,262

Other

24,122

38,304

Total cost of sales

647,960

773,221

Thereof for pellet production

586,653

726,960

Thereof for logistics and bunker business

61,307

46,261

 

Note 6: Selling and distribution expenses

Selling and distribution expenses for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Pellet transportation

249,528

266,730

Personnel

4,833

5,130

Logistics business

26,596

32,991

Advertising

12,070

12,192

Depreciation

14,010

14,135

Other

4,477

4,540

Total selling and distribution expenses

311,514

335,718

 

Note 7: General and administrative expenses

General and administrative expenses for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Personnel

28,406

31,972

Office, maintenance and security

6,780

6,962

Professional fees

6,990

6,715

Audit and non-audit fees

2,011

2,506

Depreciation and amortisation

2,084

4,022

Other

2,371

2,662

Total general and administrative expenses

48,642

54,839

 

Auditor remuneration

Auditor remuneration paid in respect of the audit of the financial statements of the Group and its subsidiary companies and for the provision of other services not in connection with the audit is disclosed below:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Audit services

Ferrexpo plc Annual Report

1,292

1,252

Subsidiary entities

301

354

Total audit services

1,593

1,606

Non-audit services

Assurance related services

47

708

Tax advisory

4

125

Tax compliance

4

-

Other services

363

67

Total non-audit services

418

900

Total auditor remuneration

2,011

2,506

 

Non-audit services totalling US$247 thousand in relation to assurance services for liability management activities of the Group have been capitalised as prepaid arrangement fees and are not included in the table above.

 

Assurance related services in the comparative period include fees paid for services provided in relation to raising of new debt for the Group.

 

Note 8: Other expenses

Other expenses for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Community support donations

39,077

10,116

Movements in allowance for doubtful receivables and prepayments made

8,011

661

Other personnel costs

1,601

2,469

Other

8,325

10,211

Total other expenses

57,014

23,457

 

Information on the Group's community support donations is provided in the CSR paragraph in the Performance Review on page 16.

 

The vast majority of the movements in allowance for doubtful receivables and prepayments is related to an allowance recorded for prepayments made for 300 rail cars ordered, but not yet fully delivered due to the ongoing conflict in the eastern part of Ukraine. See also note 16.

 

Note 9: Foreign exchange gains and losses

Foreign exchange gains and losses for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Operating foreign exchange gains

Revaluation of trade receivables

78,827

1

Revaluation of trade payables

(2,265)

30

Other

(190)

591

Total operating foreign exchange gains

76,372

622

 

Non-operating foreign exchange (losses)/gains

Revaluation of interest-bearing loans

(76,517)

2,892

Conversion of cash and cash equivalents

81,192

7,329

Other

(19,521)

(466)

Total non-operating foreign exchange (losses)/gains

(14,846)

9,755

Total foreign exchange gains

61,526

10,377

 

During the financial year 2014, the Ukrainian Hryvnia has devalued by approximately 97% compared to the US dollar; from 7.993 as at 31 December 2013 to 15.769 as at the end of this reporting period. This has had a significant impact on the carrying values of property plant and equipment, income taxes recoverable and prepaid (note 12) and other taxes recoverable and prepaid (note 14).

 

Note 10: Write-offs and impairment losses

Write-offs and impairment losses for the year ended 31 December 2014 consisted of the following:

 

US$'000

 Notes

Year ended 31.12.14

Year ended 31.12.13

Write-off of VAT receivables

14

1,351

-

Write-off of inventories

48

528

Write-off of property, plant and equipment

47

326

Impairment of available-for-sale financial assets reclassified from other comprehensive income

(294)

-

Impairment of available-for-sale financial assets

82,382

-

Total write-offs and impairment losses

83,534

854

 

Note 11: Finance income and expense

Finance income and expense for the year ended 31 December 2014 consisted of the following:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Finance income

Interest income

2,299

2,062

Other finance income

16,951

310

Total finance income

19,250

2,372

Finance expense

Interest expense on financial liabilities measured at amortised cost

(58,371)

(53,340)

Effect from capitalised borrowing costs

8,748

8,966

Interest on defined benefit plans

(4,306)

(5,487)

Bank charges

(13,490)

(10,976)

Other finance costs

(1,053)

(5,116)

Total finance expense

(68,472)

(65,953)

Net finance expense

(49,222)

(63,581)

 

Other finance income 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 in dispute that was previously expected to be recovered over a protracted period of time. Further information is provided in note 14. This discount was built up in prior periods and recorded as a finance cost (2013: US$3,695 thousand). No such effect is included in the finance expense for the financial year ended 31 December 2014.

 

Note 12: Taxation

The effective income tax rate differs from the statutory corporate income tax rates. The weighted average statutory rate was 13.6% for 2014 (2013: 8.3%). This is calculated as the average of the statutory tax rates applicable in the countries in which the Group operates, weighted by the profits and losses before tax of the subsidiaries in the respective countries, as included in the consolidated financial information. The effective tax rate is 27.7% (2013: 13.6%). The increase is a result of the change in the profit mix between the different local jurisdictions and the level of non-deductible expenses for tax purposes according to the enacted local tax legislations. The non-deductible expenses include the impairment in an equity investment, community support donations as well as the discount on VAT bonds sold prior to its maturities (see note 14).

 

A reconciliation between the income tax charged in the accompanying financial information and income before taxes multiplied by the weighted average statutory tax rate for the year ended 31 December 2014 is as follows:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Profit before tax

254,282

305,392

Notional tax computed at the weighted average statutory tax rate of 13.6% (2013: 8.3%)

34,654

25,329

Derecognition of deferred tax asset

-

101

Reassessment of prior year temporary differences

1,489

-

Effect from changes in local tax rates

(3,278)

2,312

Effect from utilisation of non-recognised deferred tax assets

-

94

Expenses not deductible for tax purposes

37,436

8,485

Tax exempted income

(856)

(1,396)

Non-recognition of deferred taxes on current year losses

2,366

4,084

Tax related to prior years

(142)

2,011

Other (including translation differences)

(1,227)

588

Total income tax expense

70,442

41,608

 

The net balance of income tax receivable changed as follows during the financial year 2014:

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Opening balance

74,921

11,197

Income statement charge

(87,372)

(46,562)

Charge through other comprehensive income

80,394

-

Tax paid

58,070

108,321

Reclassification

-

1,876

Translation difference

(58,129)

89

Closing balance

67,884

74,921

 

During the financial year 2014, the Ukrainian Hryvnia has devalued by approximately 97% compared to the US dollar; from 7.993 as at 31 December 2013 to 15.769 as at the end of this reporting period.

 

Split by:

 

US$'000

As at

 31.12.14

As at

 31.12.13

Income tax receivable balance - current

-

33,233

Income tax receivable balance - non-current

73,782

54,242

Income tax payable balance

(5,898)

(12,554)

Net income tax receivable

67,884

74,921

 

During the financial years 2013 and 2014, current VAT receivable balances in Ukraine were mainly recovered in exchange for prepayments of corporate profit tax. As at 31 December 2014, these prepayments totalled US$82,442 thousand (2013: US$87,514 thousand) and 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 as happened during the financial year 2014 for overdue VAT receivable balances (see note 14). As at the date of the preparation of these 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 13: Earnings per share and dividends paid and proposed

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Profit for the year attributable to equity shareholders

Basic earnings per share (US cents)

30.46

44.76

Diluted earnings per share (US cents)

30.39

44.69

 

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

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Weighted average number of shares

Basic number of Ordinary Shares outstanding

585,413

585,294

Effect of dilutive potential Ordinary Shares

1,258

926

Diluted number of Ordinary Shares outstanding

586,671

586,220

 

Dividends paid and proposed

 

US$'000

Year ended 31.12.14

Dividends proposed

Final dividend for 2014: 3.3 US cents per Ordinary Share

19,320

Special dividend for 2014: 6.6 US cents per Ordinary Share

38,640

Total dividends proposed

57,960

Dividends paid during the year

Interim dividend for 2014: 3.3 US cents per Ordinary Share

19,011

Final dividend for 2013: 3.3 US cents per Ordinary Share

19,279

Special dividend for 2013: 6.6 US cents per Ordinary Share

38,614

Total dividends paid

76,904

 

US$'000

Year ended 31.12.13

Dividends proposed

Final dividend for 2013: 3.3 US cents per Ordinary Share

19,317

Special dividend for 2013: 6.6 US cents per Ordinary Share

38,633

Total dividends proposed

57,950

Dividends paid during the year

Interim dividend for 2013: 3.3 US cents per Ordinary Share

19,692

Final dividend for 2012: 3.3 US cents per Ordinary Share

19,441

Special dividend for 2012: 6.6 US cents per Ordinary Share

38,749

Total dividends paid

77,882

 

Note 14: Other taxes recoverable

As at 31 December 2014 other taxes recoverable comprised:

 

US$'000

As at

31.12.14

As at

31.12.13

VAT receivable

71,859

182,628

Other taxes prepaid

123

235

Total other taxes recoverable and prepaid - current

71,982

182,863

VAT receivable

1,519

78,281

Total other taxes recoverable and prepaid - non-current

1,519

78,281

Total other taxes recoverable and prepaid

73,501

261,144

 

As at 31 December 2014, US$72,837 thousand of the VAT receivable before discount relates to the Group's Ukrainian business operations (2013: US$318,213 thousand).

 

The Ukrainian Hryvnia devalued compared to the US Dollar from 7.993 as at 31 December 2013 to 15.769 as at 31 December 2014 reducing the gross balance of VAT outstanding expressed in US dollar by US$156,913 thousand and the associated provision of US$36,421 thousand by US$11,798 thousand. These net differences are reflected in the translation reserve. 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 rates applicable at 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, are tradable and mature over a period of five years in 10 equal instalments carrying a 9.5% annual coupon payable semi-annually. At the date of issuance, the bonds traded with a discount of 22% to face value. All VAT bonds received during the financial year 2014 were subsequently sold at 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 the end of the comparative period ended 31 December 2013, part of the VAT balance was in the court system and management estimated that these balances would be recovered over a protracted period of time. As a result a discount of US$23,696 thousand was recorded and charged to finance expense during the financial years 2012 and 2013. From this balance, US$16,497 was released to finance income in 2014 (note 11) with the remainder reflected in the translation reserve. As at 31 December 2014, management expect amounts in the court system to be recovered inside one year through a further issuance of bonds which will trade at a similar discount to face value and a provision of US$1,710 thousand has been recorded in the income statement to reflect this.

 

The table below provides a reconciliation of the gross VAT receivable balance in Ukraine:

 

US$'000

Notes

Year ended 31.12.14

Year ended 31.12.13

Opening gross balance

318,213

301,536

Net VAT incurred

153,345

187,645

VAT received in cash

(141,126)

(170,967)

VAT recovered through sale of VAT bonds

(97,067)

-

Discount on sale of VAT bonds

(29,333)

-

VAT write-off through income statement

10

(1,351)

-

VAT write-off capitalised

(3,430)

-

Translation differences (including effect on VAT Bonds)

(126,414)

-

Closing gross balance

72,837

318,213

 

Further information on VAT is provided in the Update on Risks section on pages 21 and 22.

 

Note 15: Interest-bearing loans and borrowings

This note provides information about the contractual terms of Group's major finance facilities.

 

US$'000

As at

31.12.14

As at

31.12.13

Current

Syndicated bank loans - secured

210,000

70,000

Other bank loans - secured

22,906

16,775

Obligations under finance leases

4,644

4,523

Interest accrued

10,824

9,745

Total current interest-bearing loans and borrowings

248,374

101,043

Non-current

Eurobond issued

496,392

493,810

Syndicated bank loans - secured

472,500

350,000

Other bank loans - secured

73,736

66,129

Obligations under finance leases

13,625

18,257

Total non-current interest-bearing loans and borrowings

1,056,253

928,196

Total interest-bearing loans and borrowings

1,304,627

1,029,239

 

As at 31 December 2014 the Group has a syndicated US$420 million pre-export finance facility, of which US$332.5 million is available and drawn, and a new fully drawn syndicated US$350 million pre-export finance facility. Both are revolving facilities with commitment amortisation over the final 24 months and the maturities are 31 July 2016 and 8 August 2018 respectively. Subject to additional bank commitments, the new 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 December 2014 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 sale of pellets to Ferrexpo AG and Ferrexpo Middle East FZE; and

· the Group pledged bank accounts of Ferrexpo AG and Ferrexpo Middle East FZE into which sales proceeds from certain assigned sales contracts are exclusively 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 and is due for repayment on 7 April 2016. The bond has a 7.875% coupon and interest is payable on a semi-annual basis.

 

See note 18 in respect of a bond exchange subsequent to the end of the reporting period.

 

Note 16: 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, with associated companies and with other related parties. Management considers that the Group has appropriate procedures in place to identify, control, properly disclose and obtain independent confirmation, when relevant, for 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 partially by Anatoly Trefilov. Anatoly Trefilov 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 following tables:

 

Revenue, expenses, finance income and expense

 

Year ended 31.12.14

Year ended 31.12.13

US$ 000

Entities under common control

Associated companies

Other related parties

Entities under common control

Associated companies

Other related parties

Other sales a

696

-

524

647

-

491

Total related party transactions within revenue

696

-

524

647

-

491

Materials b

12,334

-

26

13,897

-

43

Purchased concentrate and other items for resale c

769

-

-

7,053

-

-

Spare parts and consumables d

2,423

-

2

2,838

-

2

Gas e

39,259

-

-

33,581

-

-

Total related parties transactions within cost of sales

54,785

-

28

57,369

-

45

Selling and distribution expenses f

11,201

24,130

5,984

11,183

22,582

8,335

General and administration expenses g

1,267

-

-

1,747

-

12

Total related parties transactions within expenses

67,253

24,130

6,012

70,299

22,582

8,392

Finance income h

1,804

-

-

1,673

-

-

Finance expenses h

(99)

-

-

(184)

-

-

Net finance income/(expenses)

1,705

-

-

1,489

-

-

 

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 in the current or comparative period 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$160 thousand (2013: US$149 thousand) and Income from premises leased to Kislorod PCC of US$258 thousand (2013: US$238 thousand).

 

b Purchases of compressed air and oxygen and metal scrap from Kislorod PCC for US$5,347 thousand (2013: US$5,988 thousand);

 

b Purchases of cast iron balls from AutoKraZ Holding Co. for US$5,530 thousand (2013: US$6,865 thousand); and

 

b Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas for US$1,209 thousand (2013: 711 thousand).

 

c Purchases of concentrate and other items for resale from Vostok Ruda Ltd. amounting to US$769 thousand (2013: US$7,053 thousand).

 

d Purchases of spare parts from CJSC Kyiv Shipbuilding and Ship Repair Plant ('KSRSSZ') in the amount of US$821 thousand (2013: US$864 thousand);

 

d Purchases of spare parts from Valsa GTV of US$749 thousand (2013: US$1,226 thousand); and

 

d Purchases of ferromanganese from Raw and Refined Commodities AG for US$512 thousand (2013: US$354 thousand).

 

e Procurement of gas for US$39,259 thousand (2013: US$33,581 thousand) from OJSC Ukrzakordongeologia.

 

f Purchases of advertisement, marketing and general public relations services from FC Vorskla of US$11,137 thousand (2013: US$11,000 thousand).

 

g Insurance premiums of US$574 thousand (2013: US$728 thousand) paid to ASK Omega for workmen's insurance and other insurances; and

 

g Fees of US$439 thousand (2013: US$433 thousand) paid to Bank Finance & Credit (Bank F&C) for bank services.

 

h Transactional banking services are provided to certain subsidiaries of the Group by Bank F&C. Finance income and expense relate to these transactional banking services. Further information is provided under transactional banking arrangements on page 47.

 

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. These are described below:

 

f Purchases of logistics services in the amount of US$24,130 thousand (2013: US$22,582 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 related parties other than those under the control of the majority owner of the Group. Descriptions of the material transactions are below:

 

a Sales of material and services to Slavutich Ruda Ltd. for US$508 thousand (2013: US$491 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$5,984 thousand (2013: US$8,335 thousand). Slavutich Ruda Ltd. earned commission income of US$1,350 thousand on these services (2013: US$979 thousand).

 

Purchases of property, plant and equipment

 

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.

 

Year ended 31.12.14

Year ended 31.12.13

US$ 000

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

-

-

18,141

-

-

Purchases in the ordinary course of business

2,724

-

5

3,741

-

-

Total purchase of property, plant and equipmenti

4,069

-

5

21,882

-

-

 

Entities under common control

 

Current year

 

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

 

During the financial year 2014, the Group entered in various transactions of a capital nature with related parties totalling to US$2,724 thousand. These transactions were in the ordinary course of business. Individual transactions of a capital nature which exceeded US$200 thousand are listed below:

 

The Group procured goods and services totaling US$1,807 thousand from OJSC Berdichev Machine-Building Plant Progress for various ongoing projects and design documentation services from OJSC DIOS totaling US$597 thousand.

 

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 previous listing rules (see below).A further 67 rail cars amounting to US$3,551 thousand were ordered in the ordinary course of business. A prepayment of US$5,863 thousand was made in relation to these rail cars. The rail cars were due for delivery in the second half of the financial year 2014. However, as a consequence of the ongoing conflict in the Eastern part of Ukraine, only 25 rail cars were delivered and put into operation during the financial year 2014. These purchased rail cars are under the authority of the shareholder approval mentioned above.

 

Prior year

 

During the financial year 2013, the Group entered into various transactions of a capital nature with related parties totalling US$3,741 thousand. These transactions were in the ordinary course of business and on an arm's length basis. Individual transactions which exceeded US$200 thousand are listed below:

 

In January 2013, the Group procured three railway platforms in the amount of US$218 thousand from PJSC Stakhanov Railcar Company.

 

In April 2013, the Group entered into a contract with OJSC Berdichev Machine-Building Plant Progress and OJSC Uzhgorodsky Turbogas for the production and supply of deslimers for a new flotation section in the amount of US$585 thousand.

 

In June and September 2013, the Group procured metal works from OJSC Berdichev Machine-Building Plant Progress in the amount of US$1,297 thousand and US$1,054 thousand in connection with the construction of a new crushing section.

 

The Group received shareholder approval on 24 May 2012 for an option to purchase up to 500 rail cars from PJSC Stakhanov Railcar Company between the date of the approval and 31 December 2014. In February 2013, the Group exercised the right under this option to order 267 rail cars. These rail cars, amounting to US$18,141 thousand, were delivered and taken into operation during the financial year 2013 and increased the total fleet of rail cars from 1,933 units to 2,200 units as at 31 December 2013.

 

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:

 

As at 31.12.14

As at 31.12.13

US$ 000

Entities under common control

Associated companies

Other related parties

Entities under common control

Associated companies

Other related parties

Investments available-for-salej

46

-

-

396

-

-

Other non-current assetsk

4,726

-

-

7,438

-

-

Prepayments for property, plant and equipmentl

604

-

-

1,548

-

-

Total non-current assets

5,376

-

-

9,382

-

-

Trade and other receivablesm

712

-

91

1,150

-

31

Prepayments and other current assetsn

164

-

595

136

1,172

186

Cash and cash equivalentso

161,473

-

-

143,005

-

-

Total current assets

162,349

-

686

144,291

1,172

217

Trade and other payablesp

1,429

151

490

3,099

-

275

Current liabilities

1,429

151

490

3,099

-

275

 

Entities under common control

 

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

 

j The balance of the investments available-for sale comprised shareholdings in PJSC Stakhanov Railcar Company (1.10%) and Vostok Ruda Ltd. (1.10%). The ultimate beneficial owner of these companies is Kostyantin Zhevago. PJSC Stakhanov Railcar Company is further listed on the Ukrainian stock exchange. The changes of the values in the table above are related to fair value adjustments recorded during the respective reporting periods. The shareholdings for all investments remained unchanged during the periods disclosed above. The balance of US$46 thousand as at 31 December 2014 related to the investment in PJSC Stakhanov Railcar Company (2013: US$396 thousand).

 

k As of 31 December 2014, other non-current assets related to a deposit of US$4,726 thousand with Bank F&C (2013: US$7,438 thousand) as security in respect of loans made to employees under the Group's social loyalty programme. Further information is provided under transactional banking arrangements on page 47.

 

l The balance as at 31 December 2014 includes prepayments of US$6,007 thousand made in relation to rail cars purchased from PJSC Stakhanov Railcar Company (31 December 2013: nil). The prepayments made as at 30 December 2014 are in relation to 300 rail cars ordered. The rail cars were due for delivery in the second half of the financial year 2014. However, as a consequence of the ongoing conflict in the Eastern part of Ukraine, only 25 rail cars were delivered and put into operation. Due to the uncertainty surrounding the delivery of rail cars or recovery of the prepayment, the Group recorded an allowance for the full amount as at 31 December 2014. Prepayments of US$527 thousand were made to OJSC Berdichev Machine-Building Plant Progress (2013: US$1,397 thousand) for various ongoing projects.

 

m As of 31 December 2014, trade and other receivables included outstanding amounts due from Vorskla Steel Ltd. of US$244 thousand (2013: US$387 thousand) in relation to other sales and US$317 thousand (2013: US$540 thousand) from Kislorod PCC for the sale of power, steam and water.

 

o As of 31 December 2014, cash and cash equivalents with Bank F&C were US$161,473 thousand (2013: US$143,005 thousand). Further information is provided under transactional banking arrangements below.

 

p Trade and other payables amounting to US$483 thousand for compressed air and oxygen purchased from Kislorod PCC (2013: US$639 thousand). US$192 thousand (2013: US$215 thousand) are due to AutoKraZ Holding Co. and US$1 thousand (2013: US$258 thousand) OJSC Berdichev Machine-Building Plant Progress for the procurement of spare parts. Trade and other payables also include US$397 (2013: nil) thousand for rail cars received from PJSC Stakhanov Railcar Company. The balance as at end of the period 31 December 2013 included an amount US$1,690 thousand for procurement of gas from OJSC Ukrzakordongeologia.

Associated companies

 

n The prepayments and other current assets balance as at end of the period 31 December 2013 included an amount of US$1,172 thousand made to TIS Ruda LLC for transshipment services.

 

Other related parties

 

n Prepayments and other current assets include an amount of US$595 thousand (2013: US$186 thousand) made to Slavutich Ruda Ltd. for distribution services.

 

p Trade and other payables amounting to US$490 thousand as of 31 December 2014 are in respect of distribution services provided by Slavutich Ruda Ltd. (2013: US$275 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 expense are disclosed in the table on page 44.

 

The transactional banking services provided by Bank F&C include also the conversion of US dollar receipts into Ukrainian Hryvnia for the settlement of liabilities incurred as part of operational activities in local currency.

 

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 (US$5,073 thousand at the exchange rate as of 31 December 2014) 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$3,990 thousand as of 31 December 2014. The terms and conditions of both facilities were the subject of independent confirmation.

 

US$'000

Year ended 31.12.14

Year ended 31.12.13

Loan facilities

5,073

10,009

Amount drawn

-

-

Letter of credit facility outstanding

-

153

Bank guarantee facility outstanding

-

-

 

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 introduced by the Group in December 2011 allowing certain key local 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$4,726 thousand at Bank F&C as security for loans granted or to be granted by Bank F&C to employees of the Group (2013: US$7,438 thousand). The interest rate margin earned by Bank F&C covers the costs of administrating the mortgages and loans.

 

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

 

Note 17: Commitments, contingencies and legal disputes

 

Commitments

 

US$'000

As at

31.12.14

As at

31.12.13

Capital commitments on purchase of property, plant and equipment

108,763

102,958

 

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. As at the date of the publication of these annual financial statements for the period ended 31 December 2014, the original SPA from 18 November 2002 is now valid.

 

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 new 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$3,587 thousand (2013: US$101,977 thousand) outstanding at 31 December 2014 and US$5,178 thousand (2013: nil) refunded by the tax authorities during the financial year are 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 14. No provision has been made for any related penalties and fines, which would in the case of a final negative ruling become payable.

 

Note 18: Events after the reporting period

As part of legal proceedings instigated in 2005, the sale and purchase agreement by which the sale of shares in OJSC Ferrexpo Poltava Mining, subsequently acquired by Ferrexpo AG, was declared invalid on 21 April 2010. On 2 December 2014, this decision was reversed by the Supreme Court of Ukraine and the case was remitted for re-consideration to the Higher Commercial Court of Ukraine. On 16 February 2015, the Higher Commercial Court of Ukraine rejected the claimants' case leaving the share sale and purchase agreement valid. As at the date of the publication of these annual financial statements for the period ended 31 December 2014, the original share sale and purchase agreement remains valid and risk surrounding this legal case and associated legal cases which have been commenced as a result are now very remote. See note 17 for further information on this share dispute.

 

On 4 February 2015, the National Bank of Ukraine ceased their interventions in the foreign exchange market. As a consequence, the Ukrainian Hryvnia has devalued by 38% compared to the US dollar, from 15.769 as of 31 December 2014 to 21.736 as of the date of the publication of these accounts. The Group has assets and liabilities denominated in this currency, which when translated at the current prevailing rates would reduce the reported net assets of the Group. A devaluation of 1% of the Ukrainian Hryvnia reduces the Group's reported net assets by approximately US$13,000 thousand. This effect would decrease proportionately with further devaluation of the Hryvnia to the US Dollar. The underlying US dollar value of the assets and their ability to generate cash flows is not affected.

 

On 24 February 2015, the Group exchanged US$214,331 thousand of its US$500 million Eurobond against 25% cash repayment totalling US$53,583 thousand and issued new bonds in the amount of US$160,724 thousand in order to extend the tenor to April 2018 and April 2019. The remaining balance of US$285,669 thousand of the 2016 Eurobond will become repayable in April 2016. See also note 15.

 

Subsequent to the year end, the Group proposed dividends as disclosed in note 13. Other than disclosed above, no material adjusting or non-adjusting events have occurred.

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR LFFLVVVIILIE
Date   Source Headline
26th Mar 20247:00 amRNSUkrainian Subsidiary Corporate Rights Restrictions
25th Mar 20245:23 pmRNSDirector/PDMR Shareholding
25th Mar 20247:00 amRNSUpdate regarding Ukrainian subsidiary
22nd Mar 20247:00 amRNSTR-1: Notification of major holdings
19th Mar 20245:02 pmRNSTR-1: Notification of major holdings
12th Mar 20245:35 pmRNSUpdates on FY23 Results & Ukrainian Subsidiary
11th Mar 20247:00 amRNSUpdate regarding Ukrainian subsidiary
23rd Feb 20245:00 pmRNSSecond Year Anniversary Letter
20th Feb 202410:58 amRNSUpdate on Interim Dividend
29th Jan 20247:00 amRNSCourt confirms claim against Ukrainian subsidiary
18th Jan 20247:00 amRNSInterim Dividend Announcement
11th Jan 20247:00 amRNSProduction Report for 4Q 2023
28th Dec 20234:30 pmRNSEnd of Year Letter
15th Dec 20234:33 pmRNSPublication of Responsible Business Report
2nd Nov 20233:23 pmRNSInvestigations on use of waste product update
31st Oct 20235:00 pmRNSTR-1: Notification of major holdings
26th Oct 20234:26 pmRNSTR-1: Notification of major holdings
23rd Oct 20237:00 amRNSAppointment of Independent Non-Executive Director
5th Oct 20237:00 amRNSProduction Report for 3Q 2023
21st Sep 20237:00 amRNSRestrictions on Corporate Rights in 2 Subsidiaries
16th Aug 20235:36 pmRNSTR-1: Notification of major holdings
2nd Aug 20237:00 amRNSInterim Results for six months ended 30 June 2023
21st Jul 20237:00 amRNSNotice of Interim Results
17th Jul 202312:25 pmRNSTR-1: Notification of major holdings
6th Jul 20237:00 amRNSProduction Report for 2Q 2023
29th Jun 20237:00 amRNSReport on Payments to Governments for CY2022
14th Jun 202311:01 amRNSTR-1: Notification of major holdings
25th May 20231:35 pmRNSResults of Annual General Meeting
18th May 20233:29 pmRNSTR-1: Notification of major holdings
17th May 20233:21 pmRNSResponse to Media Reports
2nd May 20237:00 amRNSManagement and Board Changes
20th Apr 20239:35 amRNSDirector Declaration – External Appointment
20th Apr 20237:00 amRNSSupreme Court Ruling Dismisses Claim Against FXPO
14th Apr 202311:09 amRNSNotice of Annual General Meeting and 2022 ARA
12th Apr 20232:27 pmRNSTotal Voting Rights
6th Apr 20237:00 amRNSProduction Report for 1Q 2023
29th Mar 202311:45 amRNSDirector/PDMR Shareholding
23rd Mar 20239:30 amRNSDirector/PDMR Shareholding
15th Mar 20237:00 amRNSFull Year Financial Results for 2022
10th Mar 20237:00 amRNSTransfer of Treasury Shares & Total Voting Rights
7th Mar 20234:17 pmRNSResponse to Media Report
2nd Mar 20234:53 pmRNSTR-1: Notification of major holdings
1st Mar 20237:00 amRNSNotice of Full Year Results
7th Feb 20237:00 amRNSUpdate Regarding Subsidiary’s Accounts in Ukraine
11th Jan 20237:00 amRNSProduction Report and Trading Update for 4Q 2022
3rd Jan 20237:00 amRNSResignation of Non-executive Director
29th Dec 20224:54 pmRNSUpdate Regarding Non-executive Director
29th Dec 20227:00 amRNSUpdate Regarding Non-executive Director
23rd Dec 20229:34 amRNSDirector/PDMR Shareholding
21st Dec 20227:00 amRNSOperations Update

Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.

To access our Live RNS you must confirm you are a private investor by using the button below.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.