TIDMFXPO
RNS Number : 4319O
Ferrexpo PLC
27 May 2015
28 May 2015
Ferrexpo plc
("Ferrexpo", the "Group" or the "Company")
Unaudited First Quarter Results to 31 March 2015
Ferrexpo is today releasing its unaudited financial statements
as of and for the three months ended 31 March 2015 in connection
with the announcement today by Ferrexpo Finance Plc of an exchange
offer and consent solicitation in respect of the remaining
US$285,669,000 of its US$500,000,000 7.875 per cent. Guaranteed
Notes due 2016 and the commencement of the exchange offer
period.
Summary of the unaudited three months financial results for the
period ended 31 March 2015:
Financial
-- Turnover of US$258 million (1Q 2014: US$413 million)
-- Profit before tax of US$72 million (1Q 2014: US$145
million)
-- EBITDA of US$112 million (1Q 2014: US$190 million)
-- Group consolidated shareholder equity as of 31 March 2015 of
US$363 million (31 December 2014 : US$709million)
-- Net financial indebtedness as of 31 March 2015: US$695
million (31 December 2014: US$678 million)
-- Cash and cash equivalents of US$494 million as of 31 March
2015 (31 December 2014: US$627 million)
-- US$23 million non-cash increase in EBITDA from the
revaluation of US dollar receivables at the Group's Ukrainian
subsidiaries
Sales and Marketing
-- Average Platts China CFR 62% Fe iron ore price was US$63 per
tonne for 1Q 2015 (1Q 2014: US$120 per tonne)
-- Sales volumes were 2,793 thousand tonnes of pellets (1Q 2014:
2,844 thousand tonnes of pellets)
Operations
-- 1Q 2015 total pellet production 2,885 thousand tonnes (1Q
2014: 2,816 thousand tonnes)
-- Production of 65% Fe pellets increased 81% to 2.5 million
tonnes (1Q 2014: 1.4 million tonnes)
-- 1Q 2015 average C1 pellet cost US$33.2 per tonne (1Q 2014:
US$50.5 per tonne)
Capital Investment
-- 1Q 2015 capital investment US$12 million (1Q 2014: US$78
million)
Key financial information for the three months ended 31 March
2015 is summarised in the table below
US$ million (unless otherwise 3 months 3 months Change Year ended
stated) ended 31.03.15 ended 31.03.14 31.12.14
------------------------------- ---------------- ---------------- ------- -----------
Total pellet production (kt) 2,885 2,816 2% 11,021
------------------------------- ---------------- ---------------- ------- -----------
Sales volumes (kt) 2,793 2,844 (2%) 11,167
------------------------------- ---------------- ---------------- ------- -----------
Revenue 258 413 (38%) 1,388
------------------------------- ---------------- ---------------- ------- -----------
EBITDA 112 190 (41%) 496
------------------------------- ---------------- ---------------- ------- -----------
Profit before tax 72 145 (50%) 254
------------------------------- ---------------- ---------------- ------- -----------
Diluted EPS (US cents per
share) 9.76 20.46 (52%) 30.39
------------------------------- ---------------- ---------------- ------- -----------
Dividend (US cents per share) - - - 13.2
------------------------------- ---------------- ---------------- ------- -----------
Net cash flow from operating
activities 46 82 (44%) 288
------------------------------- ---------------- ---------------- ------- -----------
Capital investment 12 78 (85%) 235
------------------------------- ---------------- ---------------- ------- -----------
Net debt (695) (679) 2% (678)
------------------------------- ---------------- ---------------- ------- -----------
Net debt to LTM(1) EBITDA 1.7x 1.2x 42% 1.4x
------------------------------- ---------------- ---------------- ------- -----------
(1) Last twelve months
For further information contact:
Ferrexpo:
Ingrid McMahon +44 207 389 8304
Maitland:
Peter Ogden +44 207 379 5151
Notes to Editors:
Ferrexpo is a Swiss headquartered iron ore company with assets
in Ukraine and transport and sales operations throughout the world.
It has been mining and processing high quality iron ore pellets for
the global steel industry for over 35 years. Ferrexpo's resource
base is one of the largest iron ore deposits in the world. The
Group is the 4th largest supplier of pellets to the global steel
industry and the largest producer and exporter of pellets from the
Former Soviet Union. In 2014, it produced 11 million tonnes of
pellets, a 2% increase compared to 2013 and a record for the
Company. Ferrexpo has a diversified customer base supplying steel
mills in Austria, China, Japan, Germany as well as other European
and Asian countries. Ferrexpo is listed on the main market of the
London Stock Exchange under the ticker FXPO. For further
information, please visit www.ferrexpo.com
Interim Consolidated Income Statement
Notes 3 months ended 3 months ended Year ended
US$'000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Revenue 4 257,597 413,499 1,388,285
Cost of sales 3/5 (109,946) (179,742) (647,960)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Gross profit 147,651 233,757 740,325
--------------------------------------------------------------- ------ --------------- --------------- -----------
Selling and distribution expenses (57,145) (91,003) (311,514)
General and administrative expenses 6 (9,693) (10,951) (48,642)
Other income 906 2,643 9,094
Other expenses (9,599) (5,421) (57,014)
Operating foreign exchange gains 7 23,039 36,313 76,372
--------------------------------------------------------------- ------ --------------- --------------- -----------
Operating profit from continuing operations before adjusted
items 95,159 165,338 408,621
--------------------------------------------------------------- ------ --------------- --------------- -----------
Under recovery and write-down of VAT receivable 13 - (2,063) (6,790)
Write-offs and impairment losses 8 (3) (76) (83,534)
Share of profit from associates 936 1,713 4,878
Losses on disposal of property, plant and equipment (1,054) (2,109) (4,825)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Profit before tax and finance 95,038 162,803 318,350
--------------------------------------------------------------- ------ --------------- --------------- -----------
Finance income 9/13 798 2,674 19,250
Finance expense 9 (18,929) (16,622) (68,472)
Non-operating foreign exchange losses 7 (4,776) (3,867) (14,846)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Profit before tax 72,131 144,988 254,282
--------------------------------------------------------------- ------ --------------- --------------- -----------
Income tax expense 10 (13,703) (21,741) (70,442)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Profit for the period/year 58,428 123,247 183,840
--------------------------------------------------------------- ------ --------------- --------------- -----------
Attributable to:
Equity shareholders of Ferrexpo plc 57,274 120,035 178,316
Non-controlling interests 1,154 3,212 5,524
--------------------------------------------------------------- ------ --------------- --------------- -----------
58,428 123,247 183,840
--------------------------------------------------------------- ------ --------------- --------------- -----------
Earnings per share:
Basic (US cents) 11 9.78 20.51 30.46
Diluted (US cents) 11 9.76 20.46 30.39
Interim Consolidated Statement of Comprehensive Income
Notes 3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Profit for the period/year 58,428 123,247 183,840
Items that may subsequently be reclassified to profit
or loss:
Exchange differences on translating foreign operations (449,905) (627,624) (1,205,667)
Income tax effect 36,372 38,677 80,394
Net gains on available-for-sale financial assets 20 41,800 (41) -
Income tax effect - 7 -
---------------------------------------------------------- ------ --------------- --------------- ------------
Net other comprehensive income to be reclassified to
profit or loss in subsequent periods (371,733) (588,981) (1,125,273)
---------------------------------------------------------- ------ --------------- --------------- ------------
Reclassification to profit or loss relating to
available-for-sale investments impaired - - (712)
---------------------------------------------------------- ------ --------------- --------------- ------------
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement (losses)/gains on defined benefit pension
liability (449) (32) 1,649
Income tax effect 43 3 (195)
---------------------------------------------------------- ------ --------------- --------------- ------------
Net other comprehensive income not being reclassified to
profit or loss in subsequent periods (406) (29) 1,454
---------------------------------------------------------- ------ --------------- --------------- ------------
Other comprehensive income for the period/year, net of
tax (372,139) (589,010) (1,124,531)
---------------------------------------------------------- ------ --------------- --------------- ------------
Total comprehensive income for the period/year, net of
tax (313,711) (465,763) (940,691)
---------------------------------------------------------- ------ --------------- --------------- ------------
Total comprehensive income attributable to:
Equity shareholders of Ferrexpo plc (307,635) (458,537) (926,422)
Non-controlling interests (6,076) (7,226) (14,269)
---------------------------------------------------------- ------ --------------- --------------- ------------
(313,711) (465,763) (940,691)
---------------------------------------------------------- ------ --------------- --------------- ------------
Interim Consolidated Statement of Financial Position
Notes As at As at As at 31.12.14
US$'000 31.03.15 31.03.14
(unaudited) (unaudited) (audited)
Assets
Property, plant and equipment 12 644,181 1,177,792 926,433
Goodwill and other intangible assets 40,851 86,791 60,468
Investments in associates 6,601 11,333 8,569
Available-for-sale financial assets 20 41,828 82,658 46
Inventories 14 61,581 54,161 81,987
Other non-current assets 13,029 40,275 18,211
Income taxes recoverable and prepaid 10 54,449 61,163 73,782
Other taxes recoverable and prepaid 13 1,038 45,060 1,519
Deferred tax assets 44,808 32,588 32,358
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total non-current assets 908,366 1,591,821 1,203,373
------------------------------------------------------------ ------ ------------ ------------ ---------------
Inventories 14 96,454 127,886 124,722
Trade and other receivables 84,137 115,006 87,226
Prepayments and other current assets 15,349 28,277 21,057
Income taxes recoverable and prepaid 10 - 33,233 -
Other taxes recoverable and prepaid 13 45,032 140,329 71,982
Cash and cash equivalents 3/15 493,902 366,364 626,509
------------------------------------------------------------ ------ ------------ ------------ ---------------
734,874 811,095 931,496
------------------------------------------------------------ ------ ------------ ------------ ---------------
Assets classified as held for sale 23 106 26
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total current assets 734,897 811,201 931,522
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total assets 1,643,263 2,403,022 2,134,895
------------------------------------------------------------ ------ ------------ ------------ ---------------
Equity and liabilities
Share capital 16 121,628 121,628 121,628
Share premium 185,112 185,112 185,112
Other reserves 16 (1,817,393) (925,717) (1,452,988)
Retained earnings 1,873,917 1,834,543 1,855,690
------------------------------------------------------------ ------ ------------ ------------ ---------------
Equity attributable to equity shareholders of the parent 363,264 1,215,566 709,442
------------------------------------------------------------ ------ ------------ ------------ ---------------
Non-controlling interest 2,083 15,202 8,159
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total equity 365,347 1,230,768 717,601
------------------------------------------------------------ ------ ------------ ------------ ---------------
Interest-bearing loans and borrowings 3/17 939,451 880,423 1,056,253
Defined benefit pension liability 21,319 39,807 28,557
Provision for site restoration 1,602 2,147 2,345
Deferred tax liability 326 2,031 841
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total non-current liabilities 962,698 924,408 1,087,996
------------------------------------------------------------ ------ ------------ ------------ ---------------
Interest-bearing loans and borrowings 3/17 249,253 165,282 248,374
Trade and other payables 24,341 30,263 32,351
Accrued liabilities and deferred income 24,509 31,625 34,191
Income taxes payable 4,605 2,300 5,898
Other taxes payable 12,510 18,376 8,484
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total current liabilities 315,218 247,846 329,298
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total liabilities 1,277,916 1,172,254 1,417,294
------------------------------------------------------------ ------ ------------ ------------ ---------------
Total equity and liabilities 1,643,263 2,403,022 2,134,895
------------------------------------------------------------ ------ ------------ ------------ ---------------
The financial statements were approved by the Board of Directors
on the 27 May 2015.
Kostyantin Zhevago Christopher Mawe
Chief Executive Officer Chief Financial Officer
Interim Consolidated Statement of Cash Flows
Notes 3 months ended 3 months ended Year ended
US$'000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Profit before tax 72,131 144,988 254,282
Adjustments for:
Depreciation of property, plant and equipment and
amortisation of intangible assets 15,416 22,558 82,269
Interest expense 18,174 15,381 64,166
Under recovery and write-down of VAT receivable 13 - 2,063 6,790
Interest income 9 (798) (2,674) (19,250)
Share of profit from associates (936) (1,713) (4,878)
Movement in allowance for doubtful receivables 316 181 8,011
Losses on disposal of property, plant and equipment 1,054 2,109 4,825
Write-offs and impairment losses 8 3 76 83,534
Site restoration provision 27 77 1,180
Employee benefits 1,866 2,010 6,531
Share based payments 98 152 530
Operating foreign exchange gains 2/7 (23,039) (36,313) (76,372)
Non-operating foreign exchange losses 2/7 4,776 3,867 14,846
--------------------------------------------------------------- ------ --------------- --------------- -----------
Operating cash flow before working capital changes 89,088 152,762 426,464
--------------------------------------------------------------- ------ --------------- --------------- -----------
Changes in working capital:
Decrease/(increase) in trade and other receivables 3,419 (22,198) 5,395
Increase in inventories (20,467) (7,682) (96,554)
Decrease in trade and other accounts payable (9,963) (11,366) (11,083)
Decrease/(increase) in VAT recoverable and other taxes
recoverable and payable (1) 3,164 12,195 86,950
--------------------------------------------------------------- ------ --------------- --------------- -----------
Cash generated from operating activities 65,241 123,711 411,172
--------------------------------------------------------------- ------ --------------- --------------- -----------
Interest paid (13,234) (4,931) (61,307)
Income tax paid (5,405) (35,450) (58,077)
Post-employment benefits paid (481) (1,091) (3,340)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Net cash flows from operating activities 46,121 82,239 288,448
--------------------------------------------------------------- ------ --------------- --------------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (12,135) (77,945) (232,809)
Proceeds from disposal of property, plant and equipment - 14 5,322
Purchase of intangible assets (199) (256) (1,711)
Purchase of available-for-sale investment - (17) (17)
Interest received 787 497 2,376
Dividends from associates - - 2,755
--------------------------------------------------------------- ------ --------------- --------------- -----------
Net cash flows used in investing activities (11,547) (77,707) (224,084)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Cash flows from financing activities
Proceeds from borrowings and finance - 14,091 392,515
Repayment of borrowings and finance (116,415) (7,210) (119,009)
Arrangement fees paid (3,135) (1,473) (3,580)
Dividends paid to equity shareholders of Ferrexpo plc (2) (31,863) (31,930) (76,904)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Net cash flows used in financing activities (151,413) (26,522) 193,022
--------------------------------------------------------------- ------ --------------- --------------- -----------
Net (decrease)/increase in cash and cash equivalents (116,839) (21,990) 257,386
Cash and cash equivalents at the beginning of the
period/year 626,509 390,491 390,491
Effect of exchange rate changes on cash and cash
equivalents (15,768) (2,137) (21,368)
--------------------------------------------------------------- ------ --------------- --------------- -----------
Cash and cash equivalents at the end of the period/year 15 493,902 366,364 626,509
--------------------------------------------------------------- ------ --------------- --------------- -----------
(1) The movement in the comparative period ended 31 December
2014 includes the effect of a VAT receivable balance amounting to
US$97,067 thousand recovered through VAT
bonds. See also note 13
(2) Net of withholding taxes paid subsequent to the end of the
periods ended 31 March 2015 and 2014. See note 11 for further
details.
Interim Consolidated Statement of Changes in Equity
For the financial year
2014 and the three months
ended 31 March 2015 Attributable to equity shareholders of the parent
---------------------------------------------------------------------------------------------------
Issued Share Uniting Treasury Employee Net Translation Retained Total Non-controlling Total
capital premium of share Benefit unreali-sed reserve earnings capital and interests equity
interest reserve Trust gains (note 16) reserves
reserve (note 16) reserve reserve
US$ 000 (note 16) (note 16) (note 16)
At 1 January
2014 121,628 185,112 31,780 (77,260) (6,542) 712 (296,016) 1,753,200 1,712,614 22,428 1,735,042
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
Profit for the
period - - - - - - - 178,316 178,316 5,524 183,840
Other
comprehensive
income - - - - - (712) (1,105,480) 1,454 (1,104,738) (19,793) (1,124,531)
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
Total
comprehensive
income for
the period - - - - - (712) (1,105,480) 179,770 (926,422) (14,269) (940,691)
Equity
dividends
paid to
shareholders
of Ferrexpo
plc - - - - - - - (77,280) (77,280) - (77,280)
Share-based
payments - - - - 530 - - - 530 - 530
At 31 December
2014
(audited) 121,628 185,112 31,780 (77,260) (6,012) - (1,401,496) 1,855,690 709,442 8,159 717,601
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
Profit for the
period - - - - - - - 57,274 57,274 1,154 58,428
Other
comprehensive
income - - - - - 41,800 (406,303) (406) (364,909) (7,230) (372,139)
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
Total
comprehensive
income for
the period - - - - - 41,800 (406,303) 56,868 (307,635) (6,076) (313,711)
Equity
dividends
paid to
shareholders
of Ferrexpo
plc - - - - - - - (38,641) (38,641) - (38,641)
Share-based
payments - - - - 98 - - - 98 - 98
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
At 31 March
2015
(unaudited) 121,628 185,112 31,780 (77,260) (5,914) 41,800 (1,807,799) 1,873,917 363,264 2,083 365,347
--------------- ---------- -------- ---------- ---------- ---------- ------------ ------------ ---------- ------------- ---------------- ------------
For the three
months ended
31 March 2014 Attributable to equity shareholders of the parent
----------------------------------------------------------------------------------------------------
Issued Share Uniting Treasury Employee Net Translation Retained Total capital Non-controlling Total
capital premium of share Benefit unreali-sed reserve earnings and reserves interests equity
interest reserve Trust gains (note16)
reserve (note 16) reserve reserve
US$ 000 (note 16) (note 16) (note16)
At 1 January
2014 121,628 185,112 31,780 (77,260) (6,542) 712 (296,016) 1,753,200 1,712,614 22,428 1,735,042
--------------- -------- -------- ---------- ---------- ---------- ------------ ------------ ---------- -------------- ---------------- ----------
Profit for the
period - - - - - - - 120,035 120,035 3,212 123,247
Other
comprehensive
income - - - - - (34) (578,509) (29) (578,572) (10,438) (589,010)
--------------- -------- -------- ---------- ---------- ---------- ------------ ------------ ---------- -------------- ---------------- ----------
Total
comprehensive
income for
the period - - - - - (34) (578,509) 120,006 (458,537) (7,226) (465,763)
Equity
dividends
paid to
shareholders
of Ferrexpo
plc - - - - - - - (38,663) (38,663) - (38,663)
Share-based
payments - - - - 152 - - - 152 - 152
--------------- -------- -------- ---------- ---------- ---------- ------------ ------------ ---------- -------------- ---------------- ----------
At 31 March
2014
(unaudited) 121,628 185,112 31,780 (77,260) (6,390) 678 (874,525) 1,834,543 1,215,566 15,202 1,230,768
--------------- -------- -------- ---------- ---------- ---------- ------------ ------------ ---------- -------------- ---------------- ----------
Notes to the Interim Condensed Consolidated Financial
Statements
Note 1: Corporate information
Organisation and operation
Ferrexpo plc (the "Company") is incorporated in the United
Kingdom, which is considered to be the country of domicile, with
its registered office at 2-4 King Street, London, SW1Y 6QL, UK.
Ferrexpo plc and its subsidiaries (the "Group") operate two mines
and a processing plant near Kremenchug in Ukraine, an interest in a
port in Odessa and sales and marketing activities around the world
including offices in Switzerland, Dubai, Japan, China, Singapore
and Ukraine. The Group also owns logistics assets in Austria which
operates a fleet of vessels operating on the Rhine and Danube
waterways and an ocean going vessel which provides top off services
and operates on international sea routes. The Group's operations
are vertically integrated from iron ore mining through to iron ore
concentrate and pellet production and subsequent logistics. The
Group's mineral properties lie within the Kremenchug Magnetic
Anomaly and are currently being extracted at the
Gorishne-Plavninskoye and Lavrikovskoye ("GPL ") and Yeristovskoye
deposits.
The majority shareholder of the Group is Fevamotinico S.a.r.l.
("Fevamotinico"), a company incorporated in Luxembourg and
ultimately owned by The Minco Trust, of which Kostyantin Zhevago,
the Group's Chief Executive Officer, is a beneficiary. At the time
this report was published, Fevamotinico held 50.3% (2014: 50.3%) of
Ferrexpo plc's issued share capital.
The Group comprises of Ferrexpo plc and its consolidated
subsidiaries as set out below:
Equity interest owned
-------------------------------
Name Country of incorporation Principal activity 31.03.15 31.03.14 31.12.14
% % %
OJSC Ferrexpo Poltava
Mining Ukraine Iron ore mining 97.3 97.3 97.3
Ferrexpo AG Switzerland Sale of iron ore pellets 100.0 100.0 100.0
Trade, transportation
DP Ferrotrans Ukraine services 97.3 97.3 97.3
United Energy Company LLC Ukraine Holding company 97.3 97.3 97.3
Ferrexpo Finance plc England Finance 100.0 100.0 100.0
Management services &
Ferrexpo Services Limited Ukraine procurement 100.0 100.0 100.0
Ferrexpo Hong Kong Limited China Marketing services 100.0 100.0 100.0
LLC Ferrexpo Yeristovo GOK Ukraine Iron ore mining 100.0 100.0 100.0
LLC Ferrexpo Belanovo GOK Ukraine Iron ore mining 100.0 100.0 100.0
Nova Logistics Limited Ukraine Service company (dormant) 51.0 51.0 51.0
Ferrexpo Middle East FZE U.A.E. Sale of iron ore pellets 100.0 100.0 100.0
Ferrexpo Singapore PTE Ltd Singapore Marketing services 100.0 100.0 100.0
First-DDSG Logistics
Holding GmbH Austria Holding company 100.0 100.0 100.0
EDDSG GmbH Austria Barging company 100.0 100.0 100.0
DDSG Tankschiffahrt GmbH Austria Barging company 100.0 100.0 100.0
DDSG Services GmbH (1) Austria Barging company 100.0 100.0 100.0
DDSG Mahart Kft. Hungary Barging company 100.0 100.0 100.0
Pancar Kft. Hungary Barging company 100.0 100.0 100.0
Ferrexpo Port Services
GmbH Austria Port services 100.0 100.0 100.0
Ferrexpo Shipping
International Ltd. Marshall Islands Holding company 100.0 100.0 100.0
Iron Destiny Ltd. Marshall Islands Holding company 100.0 100.0 100.0
Transcanal SRL Romania Port services 77.6 77.6 77.6
Helogistics Asset Leasing
Kft. Hungary Asset holding company 100.0 100.0 100.0
Universal Services Group
Ltd. Ukraine Asset holding company 100.0 100.0 100.0
LLC DDSG Ukraine Holding Ukraine Holding company 100.0 100.0 100.0
LLC DDSG Invest Ukraine Asset holding company 100.0 100.0 100.0
LLC DDSG Ukraine Shipping
Management Ukraine Barging company 100.0 100.0 100.0
LLC DDSG Ukraine Shipping Ukraine Asset holding company 100.0 100.0 100.0
Arlington Ltd. (2) Guernsey Holding company 100.0 100.0 100.0
--------------------------- -------------------------- ---------------------------- --------- --------- ---------
(1) Formerly Helogistics Transport GmbH
(2) The entity was acquired in February 2014
The Group's interests in the entities listed above are held
indirectly by the Company.
At 31 March 2015, the Group also holds through OJSC Ferrexpo
Poltava Mining an interest of 48.6% (31 March 2014: 48.6%; 31
December 2014: 48.6%) in TIS Ruda, a Ukrainian port located on the
Black Sea. As this is an associate, it is accounted for using the
equity method of accounting.
Note 2: Summary of significant accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the
three months period ended 31 March 2015 have been prepared in
accordance with International Accounting Standard ('IAS') 34
Interim Financial Reporting. The interim condensed consolidated
financial statements do not include all of the information and
disclosures required in the annual financial statements, and should
be read in conjunction with the Group's annual financial statements
for the year ended 31 December 2014.
The interim condensed consolidated financial statements do not
constitute statutory accounts as defined in section 435 of the
Companies Act 2006. The financial information for the full year is
based on the statutory accounts for the financial year ended 31
December 2014. A copy of the statutory accounts for that year,
which were prepared in accordance with International Financial
Reporting Standards ('IFRS') issued by the International Accounting
Standard Board ('IASB'), as adopted by the European Union as they
apply to financial statements of the Group for the year ended 31
December 2014, will be delivered to the Register of Companies
before the required filing deadline. The auditors' report under
section 495 of the Companies Act 2006 in relation to those accounts
was unqualified and did not contain a statement under 498(2) or
498(3) of the Companies Act 2006.
During the period ended 31 March 2015, the Ukrainian Hryvnia has
devalued by approximately 49% compared to the US Dollar; from
15.769 as at 31 December 2014 to 23.443 as at the end of this
reporting period. As a result of this devaluation, the total equity
decreased by US$449,905 thousand as of 31 March 2015 due the
exchange differences on translating foreign operations, which is
reflected in the translation reserve. Further details are provided
in note 7 and note 16.
The Group continues to generate positive free cash flow under
the lower iron ore price environment. The principal repayments
under the Group's debt facilities take place in 2Q 2016 and the
Group has sufficient liquidity to operate until this time. The fall
in the iron ore price and the lower cash generation of the business
is, however, likely to require certain debt facilities to be
renewed or rolled over with extended repayment terms in order to
ensure that the Group has sufficient working capital in 2016 (see
note 17 for further information).
The Directors are of the view that further refinancing and or
extension of debt repayment maturities will be available and as
such the Directors are of the view that the Group is a going
concern and the interim consolidated financial statements have been
drawn up on this basis.
Accounting policies adopted
The accounting policies and methods of computation adopted in
the preparation of the interim condensed consolidated financial
statements are the same as those followed in the preparation of the
Group's annual financial statements for the year ended 31 December
2014.
The following new standards and interpretations have been
applied from 1 January 2015, with no effect on reported results,
financial position or disclosure in the interim financial
statements:
Annual Improvements to IFRSs - 2010-2012 Cycle
Annual Improvements to IFRSs - 2011-2013 Cycle
IFRIC 21 Levies
Seasonality
The Group's operations are not affected by seasonality.
Note 3: Segment information
The Group is managed as a single entity, which produces,
develops and markets its principal product, iron ore pellets, for
sale to the metallurgical industry. While the revenue generated by
the Group is monitored at a more detailed level, there are no
separate measures of profit reported to the Group's Chief Operating
Decision-Maker ('CODM'). In accordance with IFRS 8 Operating
Segments, the Group presents its results in a single segment, which
are disclosed in the income statement for the Group. The management
monitors the operating result of the Group based on a number of
measures including EBITDA, C1 costs and the net financial
indebtedness.
EBITDA
The Group presents EBITDA because it believes that EBITDA is a
useful measure for evaluating its ability to generate cash and its
operating performance. The Group's full definition of EBITDA is
disclosed in the Glossary on page 24.
Notes 3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Profit before tax and finance 95,038 162,803 318,350
Under recovery and write-down of VAT receivable 13 - 2,063 6,790
Write-offs and impairment losses 8 3 76 83,534
Share based payments 98 152 530
Losses on disposal of PPE 1,054 2,109 4,825
Depreciation and amortisation 15,416 22,558 82,269
--------------------------------------------------- ------ --------------- --------------- -----------
EBITDA 111,609 189,761 496,298
--------------------------------------------------- ------ --------------- --------------- -----------
C1 costs
C1 costs represent the cash costs of production of iron ore
pellets from own ore divided by production volume of own ore, and
excludes non-cash costs such as depreciation, pension costs and
inventory movements, costs of purchased ore and concentrate and
production cost of gravel.
3 months ended 3 months ended Year ended
US$'000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Cost of sales - pellet production 5 104,224 170,834 586,653
Depreciation and amortisation 5 (11,846) (18,451) (64,137)
Purchased concentrate and other items for resale 5 (8,446) (9,243) (27,110)
Inventory movements 5 9,668 (1,675) 10,127
Other (3,270) (4,455) (15,546)
---------------------------------------------------- --------------- --------------- -----------
C1 cost 90,330 137,010 489,987
---------------------------------------------------- --------------- --------------- -----------
Own ore produced (tonnes) 2,723,230 2,714,136 10,670,445
---------------------------------------------------- --------------- --------------- -----------
C1 cash cost per tonne US$ 33.2 50.5 45.9
---------------------------------------------------- --------------- --------------- -----------
Net financial indebtedness
Net financial indebtedness as defined by the Group comprises
cash and cash equivalents, short-term deposits less interest
bearing loans and borrowings.
US$ 000 Notes As at 31.03.15 As at 31.03.14 As at 31.12.14
(unaudited) (unaudited) (audited)
Cash and cash equivalents 15 493,902 366,364 626,509
Interest bearing loans and borrowings - current 17 (249,253) (165,282) (248,374)
Interest bearing loans and borrowings - non-current 17 (939,451) (880,423) (1,056,253)
------------------------------------------------------- ------ --------------- --------------- ---------------
Net financial indebtedness (694,802) (679,341) (678,118)
------------------------------------------------------- ------ --------------- --------------- ---------------
Note 4: Revenue
Revenue for the three months period ended 31 March 2015
consisted of the following:
3 months ended Year ended
US$ 000 31.03.15 3 months ended 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Revenue from sales of ore pellets:
Export 243,586 395,554 1,290,695
------------------------------------------------------------ --------------- ------------------------ -----------
Total revenue from sale of iron ore pellets and
concentrate 243,586 395,554 1,290,695
------------------------------------------------------------ --------------- ------------------------ -----------
Revenue from logistics and bunker business 13,094 16,246 90,661
Revenue from other sales and services provided 917 1,699 6,929
Total revenue 257,597 413,499 1,388,285
------------------------------------------------------------ --------------- ------------------------ -----------
No sales were made in Ukraine during the periods presented.
Export sales of iron ore pellets and concentrate by geographical
destination were as follows:
3 months ended 3 months ended Year ended
US$'000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Traditional Market 125,512 206,158 594,045
Growth Market 71,842 130,675 493,964
Natural Market 46,232 58,721 202,686
Total export revenue 243,586 395,554 1,290,695
------------------------- --------------- --------------- -----------
Information about the composition of the markets is provided in
the Glossary.
Note 5: Cost of sales
Cost of sales for the three months period ended 31 March 2015
consisted of the following:
3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Energy 50,008 74,376 262,936
Personnel 8,582 15,442 50,851
Materials 15,737 23,052 85,043
Repairs and maintenance 10,112 15,605 59,780
Depreciation and amortisation 11,846 18,451 64,137
Royalties and levies 3,858 6,216 22,801
Purchased concentrate and other items for resale 8,446 9,243 27,110
Inventory movements (9,668) 1,675 (10,127)
Logistics and bunker business 5,722 8,908 61,307
Other 5,303 6,774 24,122
Total cost of sales 109,946 179,742 647,960
----------------------------------------------------- --------------- --------------- -----------
Thereof for pellet production 104,224 170,834 586,653
Thereof for logistics and bunker business 5,722 8,908 61,307
----------------------------------------------------- --------------- --------------- -----------
Note 6: General and administrative expenses
General and administrative expenses for the three months period
ended 31 March 2015 consisted of the following:
3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Personnel 4,738 7,358 28,406
Office, maintenance and security 1,202 1,704 6,780
Professional fees 2,336 1,500 6,990
Audit fees 329 330 1,593
Non-audit fees 1 45 418
Depreciation and amortisation 421 (454) 2,084
Other 666 468 2,371
Total general and administrative expenses 9,693 10,951 48,642
---------------------------------------------- --------------- --------------- -----------
Note 7: Foreign exchange gains and losses
Foreign exchange gains and losses for the three months period
ended 31 March 2015 consisted of the following:
3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Operating foreign exchange gains
Revaluation of trade receivables 23,736 36,912 78,827
Revaluation of trade payables (672) (601) (2,265)
Others (25) 2 (190)
------------------------------------------------ --------------- --------------- -----------
Total operating foreign exchange gains 23,039 36,313 76,372
------------------------------------------------ --------------- --------------- -----------
Non-operating foreign exchange losses
Revaluation of interest-bearing loans (38,910) (29,124) (76,517)
Revaluation of cash and cash equivalents 41,189 43,055 81,192
Others (7,055) (17,798) (19,521)
------------------------------------------------ --------------- --------------- -----------
Total non-operating foreign exchange losses (4,776) (3,867) (14,846)
------------------------------------------------ --------------- --------------- -----------
Total foreign exchange gains 18,263 32,446 61,526
------------------------------------------------ --------------- --------------- -----------
Operating foreign exchange gains and losses are those items that
are directly related to the production and sale of pellets (e.g.
trade receivables, trade payables on operating expenditure).
Non-operating gains and losses are those associated with the
Group's financing and treasury activities and with local income tax
payables.
During the period ended 31 March 2015, the Ukrainian Hryvnia has
devalued by approximately 49% compared to the US Dollar; from
15.769 as at 31 December 2014 to 23.443 as at the end of this
reporting period resulting in translation differences of balances
denominated in Hryvnia, such as property plant and equipment (note
12), income taxes recoverable and prepaid and other taxes
recoverable and prepaid (note 13), with the effects recognised in
the translation reserve (see note 16).
Note 8: Write-offs and impairment losses
Impairment losses relate to adjustments made to the carrying
value of assets where this is higher than the recoverable amount.
Write-offs and impairment losses for the three months period ended
31 March 2015 consisted of the following:
3 months ended 3 months ended Year ended
US$ 000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Write-off of VAT receivables - - 1,351
Write-off of inventories - - 48
Write-off of property, plant and equipment - - 47
Impairment of available-for-sale investments, net of amounts
reclassified from other comprehensive
income - - (294)
Impairment of available-for-sale investments 3 76 82,382
Total write-offs and impairment losses 3 76 83,534
--------------------------------------------------------------------- --------------- --------------- -----------
The impairment loss on available-for-sale financial assets shown
for the comparative period ended 31 December 2014 is related to the
15.5% equity investment in Ferrous Resources. Further information
is provided in note 20.
Note 9: Finance income and expense
Finance income and expense for the period ended 31 March 2015
consisted of the following:
3 months ended 3 months ended Year ended
US$000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Finance income
Interest income 731 447 2,299
Other finance income 67 2,227 16,951
Total finance income 798 2,674 19,250
--------------------------------------------------------------------- --------------- --------------- -----------
Finance expense
Interest expense on financial liabilities measured at amortised
cost (16,485) (13,547) (58,371)
Effect from capitalised borrowing costs 1,135 2,538 8,748
Interest on defined benefit plans (755) (1,242) (4,306)
Bank charges (2,614) (3,639) (13,490)
Other finance costs (210) (732) (1,053)
--------------------------------------------------------------------- --------------- --------------- -----------
Total finance expense (18,929) (16,622) (68,472)
--------------------------------------------------------------------- --------------- --------------- -----------
Net finance expense (18,131) (13,948) (49,222)
--------------------------------------------------------------------- --------------- --------------- -----------
Other finance income for the comparative period ended 31
December 2014 includes a US$16,497 thousand release of a discount
recorded in the prior years to reflect changes in the estimated
timing of receipts for VAT receivable balances in dispute that were
previously expected to be recovered over a protracted period of
time. Further information is provided in note 13.
The discount was built up in periods prior to those presented in
these interim consolidated financial statements and was recorded as
finance cost as reflecting the time value of money of these VAT
receivable balances at the respective end of the reporting
periods.
Note 10: Taxation
The Group pays corporate profit tax in a number of jurisdictions
and its tax rate is influenced by the mix of profits primarily
between Ukraine, Switzerland, the United Kingdom and Dubai, as well
as the level of non-deductible expenses for tax purposes in each of
these jurisdictions. For the period ended 31 March 2015, the income
tax expense was based on an expected tax rate of 19.0% for the
financial year 2015, which is below the effective tax rate of 27.7%
for the financial year 2014.
The lower expected tax rate for the period ended 31 March 2015
compared to the effective tax rate for the financial year 2014 is
mainly a result of lower non-deductible expenses expected during
the financial year 2015. The effective tax rate for the financial
year 2014 included significant non-deductible expenses in Ukraine
and Switzerland including the discount recorded on the VAT bonds
sold prior to their maturity and the impairment loss recorded on an
equity investment (see note 20 for further details).
During the last three financial years, current VAT receivable
balances in Ukraine were mainly recovered in exchange for
prepayments of corporate profit tax resulting in a substantial
balance of outstanding prepaid corporate profit tax. This balance
decreased to US$73,782 thousand during the financial year 2014 as a
result of the Ukrainian Hryvnia devaluation compared to the US
Dollar (31 March 2014: US$94,396 thousand) and a reduction of the
percentage of the corporate profit tax to be prepaid for obtaining
VAT refunds. During the three months period ended 31 March 2015,
the Hryvnia further devalued from 15.769 at the beginning of the
year to 23.443 as at the end of this reporting period resulting in
a further decrease of the outstanding balance to US$54,449
thousand.
It is management's view that this balance will be either offset
with future profits or recovered through an issuance of bonds by
the Ministry of Finance, which are expected to trade with a
discount to face value, as happened during the financial year 2014
for overdue VAT receivable balances (see note 13). As at the date
of the preparation of these consolidated interim financial
statements, there is an uncertainty as to the timing of the
recovery of this balance. In light of this uncertainty, it was
considered most appropriate to classify the entire balance as
non-current in the consolidated statement of financial
position.
Note 11: Earnings per share and dividends paid and proposed
Basic EPS is calculated by dividing the net profit for the
period attributable to ordinary equity shareholders of Ferrexpo plc
by the weighted average number of Ordinary Shares.
Diluted earnings per share are calculated by adjusting the
weighted average number of Ordinary Shares in issue on the
assumption of conversion of all potentially dilutive Ordinary
Shares. All share awards are potentially dilutive and have been
considered in the calculation of diluted earnings per share.
3 months ended 3 months ended Year ended
31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Profit for the period / year attributable to equity shareholders:
Basic earnings per share (US cents) 9.78 20.51 30.46
Diluted earnings per share (US cents) 9.76 20.46 30.39
--------------------------------------------------------------------- --------------- --------------- -----------
The calculation of the basic and diluted earnings per share is
based on the following data:
3 months ended 3 months ended Year ended
Thousands 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Weighted average number of shares
Basic number of ordinary shares outstanding 585,462 585,336 585,413
Effect of dilutive potential ordinary shares 1,253 1,267 1,258
-------------------------------------------------- --------------- --------------- -----------
Diluted number of ordinary shares outstanding 586,715 586,603 586,671
-------------------------------------------------- --------------- --------------- -----------
The basic number of ordinary shares is calculated by subtracting
the shares held in treasury from the total number of ordinary
shares in issue.
Dividends
3 months ended 3 months ended Year ended
US$000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Dividend proposed
Final dividend for 2014: 3.3 US cents 19,320 - 19,320
Special dividend for 2014: 6.6 US cents - - 38,640
Final dividend for 2013: 3.3 US cents - 19,317 -
Total dividends proposed 19,320 19,317 57,960
-------------------------------------------- --------------- --------------- -----------
Paid per ordinary share
Special dividend for 2014: 6.6 US cents 38,667 - -
Interim dividend for 2014: 3.3 US cents - - 19,011
Final dividend for 2013: 3.3 US cents - - 19,279
Special dividend for 2013: 6.6 US cents - 38,614 38,614
Total dividends paid during the period 38,667 38,614 76,904
-------------------------------------------- --------------- --------------- -----------
The interim dividends paid for 2014 and 2013 include withholding
taxes of US$6,804 thousand and US$6,684 thousand paid subsequent to
the periods ended 31 March 2015 and 2014, respectively.
Note 12: Property, plant and equipment
During the three months period ended 31 March 2015, the Group
acquired property, plant and equipment with a cost of US$17,402
thousand (31 March 2014: US$67,372 thousand; 31 December 2014:
US$262,252 thousand) and disposed of property, plant and equipment
with original costs of US$2,995 thousand (31 March 2014: US$5,472
thousand; 31 December 2014: US$30,683 thousand). The total
depreciation charge for the period was US$15,679 thousand (31 March
2014: US$24,502 thousand; 31 December 2014: US$97,901
thousand).
During the reporting period, the Ukrainian Hryvnia has devalued
compared to the US Dollar from 15.769 as of 31 December 2014 to
23.443 as of 31 March 2015 reducing property, plant and equipment
by US$280,981 thousand. This effect is reflected in the translation
reserve included in shareholder's equity. See also note 16.
The carrying value of property, plant and equipment includes
capitalised borrowing costs on qualifying assets of US$9,795
thousand (31 March 2014: US$9,885 thousand; 31 December 2014:
US$13,162 thousand).
Note 13: Other taxes recoverable and prepaid
As at 31 March 2015 taxes recoverable and prepaid comprised:
US$000 As at 31.03.15 As at 31.03.14 As at 31.12.14
(unaudited) (unaudited) (audited)
VAT receivable 44,931 140,124 71,859
Other taxes prepaid 101 205 123
------------------------------------------------------------ --------------- --------------- ---------------
Total other taxes recoverable and prepaid - current 45,032 140,329 71,982
------------------------------------------------------------ --------------- --------------- ---------------
VAT receivable 1,038 45,060 1,519
------------------------------------------------------------ --------------- --------------- ---------------
Total other taxes recoverable and prepaid - non-current 1,038 45,060 1,519
------------------------------------------------------------ --------------- --------------- ---------------
Total other taxes recoverable and prepaid 46,070 185,389 73,501
------------------------------------------------------------ --------------- --------------- ---------------
As at 31 March 2015, US$44,347 thousand of the VAT receivable
relates to the Group's Ukrainian business operations (31 March
2014: US$181,718 thousand; 31 December 2014: US$71,127 thousand).
The table below provides a reconciliation of the VAT receivable
balances in Ukraine:
3 months ended 3 months ended Year ended
US$000 31.03.15 31.03.14 31.12.14
(unaudited) (unaudited) (audited)
Opening balance 72,837 318,213 318,213
Net VAT incurred 22,553 40,261 153,345
VAT received in cash (25,724) (51,232) (141,126)
VAT recovered through sale of VAT bonds - - (97,067)
Discount on sale of VAT bonds - - (29,333)
VAT write-off through the income statement - - (1,351)
VAT write-off capitalised - - (3,430)
Translation difference (23,609) (81,873) (126,414)
Closing balance, gross 46,057 225,369 72,837
----------------------------------------------- --------------- --------------- -----------
Discount (1,710) (43,651) (1,710)
Closing balance, net 44,347 181,718 71,127
----------------------------------------------- --------------- --------------- -----------
The Ukrainian Hryvnia devalued compared to the US Dollar from
15.769 as at 31 December 2014 to 23.443 as at 31 March 2015
reducing the outstanding VAT balances expressed in US Dollar by
US$23,609 thousand, which is reflected in the translation reserve.
See also note 16.
During the second half of the financial year 2014, bonds were
received by the Group with a face value of UAH1,607,101 thousand
(US$135,573 thousand at the exchange rate at the date of issuance)
in settlement for VAT due of the same amount. The bonds were issued
by the Ministry of Finance to settle certain accumulated VAT
liabilities and the Group had sold all VAT bonds prior to the end
of the financial year 2014 with an average discount of 21.8%
resulting in net proceeds totalling UAH1,256,800 thousand
(US$97,067 thousand at the exchange rate at the date of sale).
As at 31 March 2015, management expect certain overdue
receivable balances to be recovered inside one year through a
further issuance of bonds, which will trade at a discount to face
value. The adjustment of the discount at the end of the comparative
periods ended 31 March 2014 and 31 December 2014 resulted in
charges of US$2,063 thousand and US$6,790 thousand,
respectively.
Note 14: Inventories
Inventories are held at the lower of cost or net realisable
value. As at 31 March 2015 ore stockpiles amounting to US$61,581
thousand (31 March 2014: US$54,161 thousand; 31 December 2014:
US$81,987 thousand) were classified as non-current as this ore is
not planned to be processed within one year.
Note 15: Cash and cash equivalents
As at 31 March 2015 the Group held cash and cash equivalents of
US$493,902 thousand (31 March 2014: US$366,364 thousand; 31
December 2014: US$626,509 thousand).
The Group's exposure to liquidity, counterparty and interest
rate risk as well as a sensitivity analysis for financial assets
and liabilities are disclosed in note 30 of the Annual Report and
Accounts 2014. See also note 18 of these interim condensed
consolidated financial statements for further information in
respect of transactional banking arrangements with a related
party.
Note 16: Share capital and reserves
The share capital of Ferrexpo plc at 31 March 2015 was
613,967,956 (31 March 2014: 613,967,956; 31 December 2014:
613,967,956) Ordinary Shares at par value of GBP0.10 paid for cash,
resulting in share capital of US$121,628 thousand, which is
unchanged since the Group's Initial Public Offering in June 2007.
This balance includes 25,343,814 shares (31 March 2014: 25,343,814
shares; 31 December 2014: 25,343,814 shares), which are held in
treasury, resulting from a share buyback that was undertaken in
September 2008, and 3,162,399 shares held in the employee benefit
trust reserve (31 March 2014:3,196,064 shares; 31 December 2014:
3,162,399 shares).
The translation reserve includes the effect from the exchange
differences arising on translation of non-US Dollar functional
currency operations (mainly in Ukrainian Hryvnia). During the
period ended 31 March 2015, the Ukrainian Hryvnia devalued from
15.769 as at the beginning of the year to 23.443 as at 31 March
2015 and the exchange differences arising on translation of the
Group's foreign operations are initially recognised in the other
comprehensive income. See also the Interim Consolidated Statement
of Comprehensive Income on page 4 of these financial statements for
further details.
As at 31 March 2015 other reserves attributable to equity
shareholders of Ferrexpo plc comprised.
For the financial
year 2014 and the
three months ended
31 March 2015
Uniting of Treasury Employee Net Translation Total other
interest share reserve Benefit Trust unrealised reserve reserves
US$ 000 reserve reserve gains reserve
At 1 January 2014 31,780 (77,260) (6,542) 712 (296,016) (347,326)
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Foreign currency
translation
differences - - - - (1,185,874) (1,185,874)
Transfer to profit
and loss - - - (712) - (712)
Loss on - - - - - -
available-for-sale
financial assets
Tax effect - - - - 80,394 80,394
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Total comprehensive
income for the
period - - - (712) (1,105,480) (1,106,192)
Share based
payments - - 530 - - 530
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
At 31 December 2014
(audited) 31,780 (77,260) (6,012) - (1,401,496) (1,452,988)
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Foreign currency
translation
differences - - - - (442,675) (442,675)
Gain/(loss) on
available-for-sale
financial assets - - - 41,800 - 41,800
Tax effect - - - - 36,372 36,372
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Total comprehensive
income for the
period - - - 41,800 (406,303) (364,503)
Share based
payments - - 98 - - 98
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
At 31 March 2015
(unaudited) 31,780 (77,260) (5,914) 41,800 (1,807,799) (1,817,393)
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
For the three
months ended 31
March 2014
Uniting of Treasury Employee Net Translation Total other
interest share reserve Benefit Trust unrealised reserve reserves
US$ 000 reserve reserve gains reserve
At 1 January 2014 31,780 (77,260) (6,542) 712 (296,016) (347,326)
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Foreign currency
translation
differences - - - - (617,186) (617,186)
Gain on
available-for-sale
financial assets - - - (41) - (41)
Tax effect - - - 7 38,677 38,684
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Total comprehensive
income for the
period - - - (34) (578,509) (578,543)
Share based
payments - - 152 - - 152
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
At 31 March 2014
(unaudited) 31,780 (77,260) (6,390) 678 (874,525) (925,717)
-------------------- -------------- -------------- -------------- -------------- --------------- ---------------
Note 17: Interest bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest bearing loans and borrowings, which are
measured at amortised cost and denominated in US Dollars.
US$ 000 As at 31.03.15 As at 31.03.14 As at 31.12.14
(unaudited) (unaudited) (audited)
Current
Syndicated bank loans - secured 207,500 122,500 210,000
Other bank loans - secured 21,150 18,867 22,906
Other bank loans - unsecured 1,503 - -
Obligations under finance leases 4,230 4,566 4,644
Interest accrued 14,870 19,349 10,824
----------------------------------------------------------- --------------- --------------- ---------------
Total current interest bearing loans and borrowings 3 249,253 165,282 248,374
----------------------------------------------------------- --------------- --------------- ---------------
Non-current
Eurobond issued 439,420 494,435 496,392
Syndicated bank loans - secured 420,000 297,500 472,500
Other bank loans - secured 60,220 71,409 73,736
Other bank loans - unsecured 7,477 - -
Obligations under finance leases 12,334 17,079 13,625
----------------------------------------------------------- --------------- --------------- ---------------
Total non-current interest bearing loans and borrowings 3 939,451 880,423 1,056,253
----------------------------------------------------------- --------------- --------------- ---------------
Total interest bearing loans and borrowings 1,188,704 1,045,705 1,304,627
----------------------------------------------------------- --------------- --------------- ---------------
As at 31 March 2015 the Group has a syndicated US$420 million
pre-export finance facility, of which US$277.5 million is available
and drawn, and a fully drawn syndicated US$350 million pre-export
finance facility. Both are revolving facilities with commitment
amortisation over the final 24 months to the final maturity dates
of 31 July 2016 and 8 August 2018 respectively. Subject to
additional bank commitments being secured, the US$350 million
facility can be further increased up to an amount of US$500 million
within one year of the effective date, which was 8 August 2014.
As at 31 March 2015 the major bank debt facilities were
guaranteed and secured as follows:
-- Ferrexpo AG and Ferrexpo Middle East FZE assigned the rights
to revenue from certain sales contracts;
-- OJSC Ferrexpo Poltava Mining assigned all of its rights of
certain export contracts for the pellets sales to Ferrexpo AG and
Ferrexpo Middle East FZE; and
-- the Group pledged bank accounts of Ferrexpo AG and Ferrexpo
Middle East FZE into which all proceeds from the sale of certain
iron ore pellet contracts are received.
In addition to the Group's major bank debt facilities listed
above, an unsecured US$500 million Eurobond was issued on 7 April
2011, subsequent to the exchange transaction mentioned below,
US$285,669 thousand remains due for repayment on 7 April 2016. This
bond has a 7.875% coupon and interest is payable on a semi-annual
basis.
On 24 February 2015, the Group exchanged and cancelled
US$214,331 thousand of the aforementioned US$500 million Eurobond
and issued new notes with a par value totalling US$160,724 thousand
and repaid US$53,607 thousand in cash. The new notes are repayable
in two equal instalments on 7 April 2018 and 7 April 2019 and have
a 10.375% interest coupon payable semi-annually.
Further information on the Group's exposure to interest rate,
foreign currency and liquidity risk is provided in note 30 of the
Annual Report and Accounts 2014.
Note 18: Related party disclosure
During the periods presented the Group entered into arm's length
transactions with entities under the common control of the majority
owner of the Group, Kostyantin Zhevago and with associated
companies and with other related parties. Management considers that
the Group has appropriate procedures in place to identify and
properly disclose transactions with the related parties.
Entities under common control are those under the control of
Kostyantin Zhevago. Associated companies refer to TIS Ruda LLC, in
which the Group holds an interest of 48.6%. This is the only
associated company of the Group. Other related parties are
principally those entities controlled by Anatoly Trefilov who is a
member of the supervisory board of OJSC Ferrexpo Poltava Mining.
Related party transactions entered into by the Group during the
periods presented are summarised in the tables on the following
pages.
During the period ended 31 March 2015, the Ukrainian Hryvnia has
devalued by approximately 49% compared to the US Dollar; from
15.769 as at 31 December 2014 to 23.443 as at the end of this
reporting period. This devaluation had an effect on the totals of
the transactions and the balances denominated in Hryvnia when
translating into US Dollar.
Revenue, expenses, finance income and finance expenses
3 months ended 31.03.15 (unaudited) 3 months ended 31.03.14 (unaudited) Year ended 31.12.14 (audited)
------------------------------------ ------------------------------------ ----------------------------------
Entities Associated Other Entities Associated Other Entities Associated Other
under companies related under companies related under companies related
common parties common parties common parties
US$ 000 control control control
Other sales (a) 86 - 214 146 - 168 696 - 524
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total related
party
transactions
within revenue 86 - 214 146 - 168 696 - 524
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Materials (b) 1,508 - 4 3,609 - 9 12,334 - 26
Purchased
concentrate
and other
items for
resale (c) 277 - - - - - 769 - -
Spare parts and
consumables
(d) 180 - - 528 - - 2,423 - 2
Gas (e) 7,886 - - 7,763 - - 39,259 - -
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total related
parties
transactions
within cost of
sales 9,851 - 4 11,900 - 9 54,785 - 28
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Selling and
distribution
expenses (f) 2,731 4,927 2,018 2,920 5,944 2,465 11,201 24,130 5,984
General and
administration
expenses (g) 194 - - 299 - - 1,267 - -
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total related
parties
transactions
within
expenses 12,776 4,927 2,022 15,119 5,944 2,474 67,253 24,130 6,012
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Finance income
(h) 619 - - 388 - - 1,804 - -
Finance
expenses (h) (17) - - (10) - - (99) - -
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Net finance
income 602 - - 378 - - 1,705 - -
---------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Entities under common control
The Group entered into various related party transactions with
entities under common control. A description of the most material
transactions, which are in aggregate over US$200 thousand (on an
expected annualised basis) in the current or comparative periods is
given below. All transactions were carried out on an arm's length
basis in the normal course of business.
(a) Sales of power, steam and water and other materials for
US$23 thousand (31 March 2014: US$43 thousand; 31 December 2014:
US$160 thousand) and income from premises leased to Kislorod PCC of
US$38 thousand (31 March 2014: US$64 thousand; 31 December 2014:
US$258 thousand).
(b) Purchases of compressed air, oxygen and metal scrap from
Kislorod PCC for US$970 thousand (31 March 2014: US$1,541 thousand;
31 December 2014: US$5,347 thousand); and
(b) Purchases of cast iron balls from AutoKraZ Holding Co. for
US$266 thousand (31 March 2014: US$1,744 thousand; 31 December
2014: US$5,530 thousand).
(b) Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas
for US$249 thousand (31 March 2014: US$251 thousand; 31 December
2014: US$1,209 thousand).
(c) Purchases of concentrate and other items for resale from
Vostok Ruda Ltd for US$277 thousand (31 March 2014: nil; 31
December 2014: US$769 thousand).
(d) Purchases of spare parts from CJSC Kiev Shipbuilding and
Ship Repair Plant ('KSRSSZ') in the amount of US$49 thousand (31
March 2014: US$90 thousand; 31 December 2014: US$821 thousand);
(d) Purchases of spare parts from Valsa GTV of US$24 thousand
(31 March 2014: US$284 thousand; 31 December 2014: US$749
thousand);
(d) Purchases of ferromanganese from Raw & Refined
Commodities AG for US$56 thousand (31 March 2014: US$110 thousand;
31 December 2014: US$512 thousand).
(e) Procurement of gas from OJSC Ukrzakordongeologia for
US$7,886 thousand (31 March 2014: US$7,763 thousand; 31 December
2014: US$39,259 thousand).
(f) Purchases of advertisement, marketing and general public
relations services from FC Vorskla for US$2,722 thousand (31 March
2014: US$2,898 thousand; 31 December 2014: US$11,137 thousand).
(g) Insurance premiums paid to ASK Omega for workmen's insurance
and general cover of US$103 thousand (31 March 2014: US$145
thousand; 31 December 2014: US$574 thousand);
(g) Fees paid to Bank Finance & Credit (Bank F&C) for
bank services of US$69 thousand (31 March 2014: US$118 thousand; 31
December 2014: US$ 439 thousand).
(h) Transactional banking services are provided to certain
subsidiaries of the Group by Bank Finance & Credit (Bank
F&C) Finance income and expenses relate to these transactional
banking services. Further information is provided under
transactional banking arrangements on page 20.
Associated companies
The Group entered into related party transactions with its
associated company TIS Ruda LLC, which were carried out on an arm's
length basis in the normal course of business for the members of
the Group (see note 1). A description of the most material
transactions which are in aggregate over US$200 thousand (on an
expected annualised basis) in the current or comparative periods is
given below:
(f) Purchases of logistics services in the amount of US$4,927
thousand (31 March 2014: US$5,944 thousand; 31 December 2014:
US$24,130 thousand) relating to port operations, including port
charges, handling costs, agent commissions and storage costs.
Other related parties
The Group entered into various transactions with other related
parties. A description of the most material transactions which are
in aggregate over US$200 thousand (on an expected annualised basis)
in the current or comparative periods is given below:
(a) Sales of material and services to Slavutich Ruda Ltd. for
US$203 thousand (31 March 2014: US$168 thousand; 31 December 2014:
US$508 thousand).
(f) Purchases of logistics management services from Slavutich
Ruda Ltd. relating to customs clearance services and the
coordination of rail transit. Total billings amounted to US$2,018
thousand (31 March 2014: US$2,465 thousand; 31 December 2014:
US$5,984 thousand). Slavutich Ruda Ltd. earned commission income of
US$104 thousand on these services (31 March 2014: US$222 thousand;
31 December 2014: US$1,350 thousand).
Purchases of property, plant, equipment and investments
The table below details the transactions of a capital nature
which were undertaken between Group companies and entities under
common control, associated companies and other related parties
during the periods presented.
3 months ended 31.03.15 (unaudited) 3 months ended 31.03.14 (unaudited) Year ended 31.12.14 (audited)
------------------------------------ ------------------------------------ ----------------------------------
US$ 000 Entities Associated Other Entities Associated Other Entities Associated Other
under companies related under companies related under companies related
common parties common parties common parties
control control control
Purchases - - - - - - 458 - -
with
independent
confirmation
Purchases - - - - - - 887 - -
with
shareholder
approval
Purchases in
the ordinary
course of
business 76 - - 1,167 - - 2,724 - 5
-------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total
purchases of
property,
plant and
equipment
(i) 76 - - 1,167 - - 4,069 - 5
-------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Entities under common control
Individual transactions of a capital nature which exceeded
US$200 thousand are described below.
Current year
i During the first three months period ended 31 March 2015, the
Group entered in various transactions of a capital nature with
related parties totalling US$76 thousand. These transactions were
in the ordinary course of business. No transaction exceeded the
US$200 thousand threshold set for a detailed description.
Subsequent to the reporting period ended 31 March 2015, the
Group received an additional 27 rail cars totalling US$1,431
thousand (US$842 thousand at the prevailing exchange rate at
delivery), which were ordered back in February 2014. See below for
further information.
Prior periods:
i During the financial year 2014, the Group entered into various
transactions of a capital nature with related parties totalling to
US$2,724 thousand, which were in the ordinary course of
business.
-- The Group procured goods and services totalling US$1,807
thousand from OJSC Berdichev Machine-Building Plant Progress for
various ongoing projects and
design documentation services from OJSC DIOS totalling US$597
thousand.
In August 2014, the Group acquired in two separate transactions
a railway line and an associated power line from LLC Vorskla Steel
totalling US$458 thousand. The transaction was not considered to be
in the ordinary course of business and an independent confirmation
was obtained and an announcement made in accordance with the UK
Listing Rules.
In February 2014, the Group ordered 300 rail cars from PJSC
Stakhanov Railcar Company, of which 233 rail cars amounting to
US$12,349 thousand were under the authority of the shareholder
approval obtained on 24 May 2012 obtained under the listing rules
applicable at that time and an additional 67 rail cars amounting
to
US$3,551 thousand were ordered in the ordinary course of
business. A total prepayment of US$11,925 thousand (US$4,410
thousand at current exchange rate) was made in relation to these
rail cars. The rail cars were scheduled for delivery in the second
half of the financial year 2014. As a consequence of the ongoing
conflict in the eastern part of Ukraine, 25 rail cars totalling
US$1,325 thousand (US$887 thousand at the prevailing exchange rate
at delivery) were delivered during the financial year 2014 with the
remainder outstanding at the period end against a prepayment of
US$4,458 thousand (at current exchange rate). A further 27 rail
cars were received after the reporting date.
Balances with related parties
The outstanding balances, as a result of transactions with
related parties, for the periods presented are shown in the table
below:
3 months ended 31.03.15 (unaudited) 3 months ended 31.03.14 (unaudited) Year ended 31.12.14 (audited)
------------------------------------ ------------------------------------ ----------------------------------
Entities Associated Other Entities Associated Other Entities Associated Other
under companies related under companies related under compa nies related
common parties common parties common parties
US$ 000 control control control
Available-for-sale
financial assets
(j) 28 - - 276 - - 46 - -
Other non-current
assets (k) 3,109 - - 5,487 - - 4,726 - -
Prepayments for
property, plant
and equipment (l) 4,895 - - 9,993 - - 604 - -
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total non-current
assets 8,032 - - 15,756 - - 5,376 - -
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Trade and other
receivables (m) 627 - 73 890 - 74 712 - 91
Prepayments and
other current
assets (n) 697 32 304 859 1,336 248 164 - 595
Cash and cash
equivalents (o) 164,681 - - 138,817 - - 161,473 - -
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Total current
assets 166,005 32 377 140,566 1,336 322 162,349 - 686
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Trade and other
payables (p) 2,156 - 189 1,201 - 255 1,429 151 490
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
Current liabilities 2,156 - 189 1,201 - 255 1,429 151 490
-------------------- --------- ----------- ------------ --------- ----------- ------------ --------- ----------- ----------
A description of the most material balances which are over
US$200 thousand in the current or comparative periods is given
below:
Entities under common control
j The balance of the available-for-sale financial assets
comprised shareholdings in PJSC Stakhanov Railcar Company (1.1%)
and Vostok Ruda Ltd. (1.1%). The ultimate beneficial owner of these
companies is Kostyantin Zhevago. PJSC Stakhanov Railcar Company is
further listed on the Ukrainian stock exchange. The changes in
value in the table above relate to fair value adjustments recorded
during the respective reporting periods. The shareholdings for all
available-for-sale financial assets remained unchanged during the
periods disclosed above. The balance of US$28 thousand as at 31
March 2015 related to the investment in PJSC Stakhanov Railcar
Company (31 March 2014: US$276 thousand; 31 December 2014: US$46
thousand). The investment in Vostok Ruda Ltd. was fully impaired in
a previous period.
k As at 31 March 2015, other non-current assets related to a
deposit of US$3,109 thousand with bank F&C (31 March 2014:
US$5,487 thousand; 31 December 2014: US$4,726 thousand) as a
security in respect of loans made to employees under the Group's
social loyalty programme. Further information is provided under
transactional banking arrangements below.
l As at 31 March 2015, a prepayment of US$4,458 thousand (at
current exchange rate) remained in connection with an advance
payment made in February 2014 for 300 rail cars ordered from PJSC
Stakhanov Railcar Company (31 March 2014: US$9,437 thousand; 31
December 2014: US$6,007 thousand). As at 31 March 2015, the Group
received 25 rail cars and another 27 rail cars subsequent to the
reporting date. Due to continued uncertainty surrounding the
delivery of the remaining number of rail cars or recovery of the
prepayment, the Group recorded an allowance for the full
outstanding amount as at 31 March 2015 and 31 December 2014 (see
section Purchases of property, plant, equipment and investments
above for further details). Prepayments of US$407 thousand were
made to OJSC Berdichev Machine-Building Plant Progress (31 March
2014: US$445 thousand; 31 December 2014: US$527 thousand).
m As at 31 March 2015, trade and other receivables included
outstanding amounts of US$176 thousand due from Vorskla Steel Ltd.
(31 March 2014: US$304 thousand; 31 December 2014: US$244 thousand)
in relation to other sales and US$343 thousand (31 March 2014:
US$399 thousand; 31 December 2014: US$317 thousand) from Kislorod
PCC for the sale of power, steam and water.
n Prepayments and other current assets include US$582 (31 March
2014: nil; 31 December 2014: nil) for concentrate made to Vostok
Ruda. The comparative as at 31 March 2014 includes US$607 thousand
of prepayment made to OJSC Ukrzakordongeologia for gas, no such
prepayments as at 31 March 2015 and 31 December 2014.
o As at 31 March 2015, cash and cash equivalents with Bank
F&C were US$164,681 thousand (31 March 2014: US$138,817
thousand; 31 December 2014: US$161,473 thousand). Further
information is provided under Transactional banking arrangements
below.
p Trade and other payables amounting to US$1,529 thousand for
gas purchased from OJSC Ukrzakordongeologia (31 March 2014: nil; 31
December 2014: nil) , US$446 thousand for compressed air and oxygen
purchased from Kislorod PCC (31 March 2014: US$528 thousand; 31
December 2014: US$483 thousand) and US$22 thousand due to Valsa GTV
(31 March 2014: US$214 thousand; 31 December 2014: US$92 thousand)
The balance as at the end of the period ended 31 March 2014
included an amount of US$242 thousand (31 December 2014: US$192
thousand) due to AutoKraZ Holding Co.. The balance as at the end of
the period ended 31 December 2014 included an amount of US$397
thousand payable to PJSC Stakhanov Railcar Company, no amounts were
due as at 31 March 2015 and 31 March 2014.
Associated companies
n Prepayments and other current assets relate to prepayments of
US$32 thousand (31 March 2014: US$1,336 thousand; 31 December 2014:
nil) made TIS Ruda LLC for transhipment services.
Other related parties
n Prepayments and other current assets relate to prepayments of
US$304 thousand for distribution services made to Slavutich Ruda
Ltd. (31 March 2014: US$248 thousand; 31 December 2014: US$595
thousand).
p Trade and other payables amounting to US$189 thousand as at 31
March 2015 are in respect of distribution services provided by
Slavutich Ruda Ltd. (31 March 2014: US$255 thousand; 31 December
2014: US$490 thousand).
Transactional banking arrangements
The Group has transactional banking arrangements with Bank
Finance & Credit ('Bank F&C') in Ukraine which is under
common control of the majority shareholder of Ferrexpo plc. Finance
income and expenses are disclosed in the table on page 17.
On 25 May 2013, the Group entered into a new uncommitted
multicurrency revolving loan facility agreement and a documentary
credit facility agreement with Bank F&C which will expire on 29
May 2016. The aggregate maximum limit of these facilities amounts
to UAH80 million (31 March 2015: US$3,413 thousand; 31 March 2014:
US$7,303 thousand; 31 December 2014: US$5,073 thousand) and, as
required under Ukrainian legislation, fixed assets are pledged. The
total value of pledges under the terms of the loan facility
agreements is US$2,639 thousand as at 31 March 2015. The terms and
conditions of both facilities were the subject of an independent
confirmation. No amounts are drawn and no letters of credit are
outstanding under this facility as at 31 March 2015 (31 March 2014:
nil; 31 December 2014: nil).
Bank F&C provides mortgages and loans to employees of the
Group for the acquisition, construction and renovation of
apartments in Ukraine. This is part of a social loyalty programme
started by the Group in December 2011 allowing certain employees of
the Group to borrow at preferential interest rates. OJSC Ferrexpo
Poltava Mining and LLC Ferrexpo Yeristovo GOK act as guarantors for
the bank's loans to the employees of the Group and have deposited
US$3,109 thousand at Bank F&C as security (31 March 2014:
US$5,487 thousand; 31 December 2014: US$4,726 thousand). The
interest rate margin earned by Bank F&C covers the costs of
administrating the mortgages and loans. Detailed information on the
social loyalty programme is provided in the Corporate Social
Responsibility Review section of the Annual Report and Accounts
2014.
Cash and cash equivalent balances held with Bank F&C are in
the normal course of business in Ukraine and are held on call or
from time to time on overnight deposit. Interest is paid on
balances held. The interest rates received by the Group were in
line with relevant comparable market rates throughout the periods
presented.
Note 19: Commitments and contingencies
Commitments
US$ 000 As at 31.03.15 As at 31.03.14 As at 31.12.14
(unaudited) (unaudited) (audited)
Operating lease commitments 25,516 66,607 40,738
Capital commitments on purchase of PPE 93,260 76,566 108,763
------------------------------------------- --------------- --------------- ---------------
Legal
In the ordinary course of business, the Group is subject to
legal actions and complaints. Management believes that the ultimate
liability, if any, arising from such actions or complaints will not
have a material adverse effect on the financial condition or the
results of future operations of the Group.
The Group is currently involved in a share dispute which
commenced in 2005 and has been disclosed in its various public
documents since IPO in 2007. The main chronology of the dispute is
below:
On 21 April 2010, the Higher Commercial Court of Ukraine
invalidated the share sale and purchase agreement ('SPA') pursuant
to which a 40.19% stake in OJSC Ferrexpo Poltava Mining ('FPM') was
sold on 18 November 2002 to nominee companies that were previously
ultimately controlled by Kostyantin Zhevago, which ultimately sold
the shares to Ferrexpo AG.
On 2 December 2014, the Supreme Court of Ukraine set aside the
judgement of the Higher Commercial Court of Ukraine delivered in
April 2010 and remitted the case for review to the Higher
Commercial Court of Ukraine. On 16 February 2015, the Higher
Commercial Court of Ukraine confirmed the decisions of the lower
courts which dismissed the claim for invalidation of the SPA. As at
the date of the publication of these interim financial statements
for the period ended 31 March 2015, the original SPA of 18 November
2002 is valid.
In October 2011, the claimants commenced further proceedings for
the restoration of their shareholding in FPM. On 20 October 2014,
the Kyiv City Commercial Court dismissed the claim in full. This
judgment was confirmed by the Kyiv Appeal Commercial Court and the
Higher Commercial Court of Ukraine on 28 January 2015 and 14 April
2015, respectively.
After having taken legal advice, the management of the Group
believes that risks related to further court proceedings in respect
of this case are remote. In light of the risks surrounding the
operation and independence of Ukrainian courts, including those
associated with the Ukrainian legal system in general, however the
claimants may ultimately prevail in this dispute and the Group's
ownership of the relevant interest in FPM may be successfully
challenged.
Tax and other regulatory compliance
Ukrainian legislation and regulations regarding taxation and
customs continue to evolve. Legislation and regulations are not
always clearly written and are subject to varying interpretations
and inconsistent enforcement by local, regional and national
authorities, and other governmental bodies. Instances of
inconsistent interpretations are not unusual. The uncertainty of
application and the evolution of Ukrainian tax laws, including
those affecting cross-border transactions, create a risk of
additional tax payments having to be made by the Group, which could
have a material effect on the Group's financial position and
results of operations. This includes also a transfer pricing law
which significantly increased the power of the tax authorities. The
Group does not believe that these risks are any more significant
than those of similar enterprises in Ukraine.
Recoverable VAT amounting to US$2,413 thousand (31 March 2014:
US$61,685 thousand; 31 December 2014: US$3,587 thousand)
outstanding at 31 March 2015 and US$3,482 thousand already refunded
by the tax authorities during the financial year 2014 are currently
in the process of being considered by the Ukrainian court system in
several different cases. As the VAT is fully recoverable under the
relevant Ukrainian legislation, the Group expects to receive
positive court decisions for these ongoing court proceedings and
expect these amounts to be recovered in a further issuance of
bonds. Consequently, the VAT is recorded at its full amount in the
financial statements, net of an estimated discount to reflect the
expected difference to the bonds. See also disclosure made in note
13. No provision has been made for any related penalties and fines,
which would in the case of a final negative ruling become
payable.
Note 20: Financial instruments
Fair values
Set out below are the carrying amounts and fair values of the
Group's financial instruments that are carried in the interim
consolidated statement of financial position:
Carrying amount Fair Value
------------------------------------------------- -------------------------------------------------
As at 31.03.15 As at 31.03.14 As at 31.12.14 As at 31.03.15 As at 31.03.14 As at 31.12.14
US$ 000 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Financial assets
Cash and cash
equivalents 493,902 366,364 626,509 493,902 366,364 626,509
Trade and other
receivables 84,137 115,006 87,226 84,137 115,006 87,226
Available-for-sale
financial assets 41,828 82,658 46 41,828 82,658 46
Other financial
assets 8,196 14,101 8,944 8,196 14,101 8,944
---------------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total financial
assets 628,063 578,129 722,725 628,063 578,129 722,725
---------------------- --------------- --------------- --------------- --------------- --------------- ---------------
Financial
liabilities
Trade and other
payables 24,341 30,263 32,351 24,341 30,263 32,351
Accrued liabilities 22,162 29,949 30,497 22,162 29,949 30,497
Interest bearing
loans and
borrowings 1,188,704 1,045,705 1,304,627 1,088,985 1,051,191 1,204,836
---------------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total financial
liabilities 1,235,207 1,105,917 1,367,475 1,135,488 1,111,403 1,267,684
---------------------- --------------- --------------- --------------- --------------- --------------- ---------------
Other financial assets
The fair values of cash and cash equivalents, trade and other
receivables and payables are approximately equal to their carrying
amounts due to their short maturity.
Interest bearing loans and borrowings
The fair values of interest-bearing loans and borrowings are
based on the discounted cash flows using market interest rates
except for the fair value of the Eurobond issued, which is based on
the market price quotation at the reporting date.
Available-for-sale financial assets
As at 31 March 2015, the Group held a 15.5% equity investment in
Ferrous Resources Limited ("Ferrous"), which was acquired during
the financial year 2013 in various transactions with total
transaction costs of US$82,382 thousand. This was also the carrying
amount as at the end of the comparative period ended 31 March 2014.
In the second half of the financial year 2014, the iron ore prices
in the global market declined significantly and as no recovery was
expected in the near future, the investment in Ferrous was fully
impaired due to uncertainties in respect of the current operational
activity and the future development of the mining operation. On 29
April 2015, the Group signed an irrevocable tender and support
agreement for the disposal of its entire stake in Ferrous for a
total cash consideration of US$41,800 thousand, which is
management's best estimate of the fair value of the investment as
of 31 March 2015. As a result, the fully impaired investment was
revalued with a gain of US$41,800 thousand recognised in the
statement of other comprehensive income. The completion of the
transaction is subject to the satisfaction of various conditions
outside of the control of the Group. If the transaction is
completed, the amount of the fair value adjustment will be
reclassified to the income statement and the asset will be
derecognised.
The available-for-sale equity investment in PJSC Stakhanov
Railcar Company in the amount of US$28 thousand (31 March 2014:
US$276 thousand; 31 December 2014: US$46 thousand) is measured at
its fair value based on the quoted market price for its shares on
the Ukrainian Stock exchange ('PFTS').
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable.
Level 1: fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
Level 3: fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
US$ 000 As at 31.03.15 (unaudited)
Level 1 Level 2 Level 3 Total
Financial assets
Available-for-sale financial assets 28 - 41,800 41,828
---------------------------------------- --------- --------- --------- -------
Total financial assets 28 - 41,800 41,828
---------------------------------------- --------- --------- --------- -------
US$ 000 As at 31.03.14 (unaudited)
Level 1 Level 2 Level 3 Total
Financial assets
Available-for-sale financial assets 276 - 82,382 82,658
---------------------------------------- --------- --------- --------- -------
Total financial assets 276 - 82,382 82,658
---------------------------------------- --------- --------- --------- -------
US$ 000 As at 31.12.14 (audited)
Level 1 Level 2 Level 3 Total
Financial assets
Available-for-sale financial assets 46 - - 46
---------------------------------------- --------- -------- -------- ------
Total financial assets 46 - - 46
---------------------------------------- --------- -------- -------- ------
There were no transfers between the different levels during the
reporting period.
As of 31 March 2015, the fair value of the available-for-sale
financial assets in Level 1 decreased by US$18 thousand including a
translation and impairment loss (31 March 2014: decrease of US$120
thousand; 31 December 2014: decrease of US$350 thousand). The loss
for the period ended 31 March 2014 was initially included in other
comprehensive income. As at 31 December 2014, the investment was
considered to be impaired and the total effect included in other
comprehensive income was reclassified to the income statement.
Reconciliation of recurring fair value measurements categorised
within Level 3 of the fair value hierarchy is shown in the table
below:
US$ 000 As at 31.03.15 As at 31.03.14 As at 31.12.14
(unaudited) (unaudited) (audited)
Opening balance - 82,382 82,382
Total gains or losses: - - -
- in profit or loss - - (82,382)
- in other comprehensive income 41,800 - -
Purchases - - -
Transfer out of Level 3 - - -
----------------------------------- --------------- --------------- ---------------
Closing balance 41,800 82,382 -
------------------------------------ --------------- --------------- ---------------
Further information on the Group's exposure to interest rate,
foreign currency and liquidity risk is provided in note 30 of the
Annual Report and Accounts 2014.
Note 21: Events after the reporting period
No material adjusting or non-adjusting events have occurred
subsequent to the period end except for the signing of a tender and
support agreement in respect of the Group's 15.5% stake in
Ferrous.
On 30 April 2015, the Group announced that it has agreed to
unconditionally tender for the disposal of its entire stake in
Ferrous for a total cash consideration of US$41,800 thousand. As a
result of this, the fully impaired investment in Ferrous has been
revalued as of 31 March 2015. See note 20 for further
information.
.
Glossary
Act The Companies Act 2006
AGM The Annual General Meeting of the Company
Articles Articles of Association of the Company
Audit Committee The Audit Committee of the Company's Board
Belanovo or Belanovskoye An iron ore deposit located immediately to the north
of Yeristovo
Benchmark Price Platts 62% Fe iron ore fines price CFR China
Beneficiation Process A number of processes whereby the mineral is extracted
from the crude ore
BIP Business Improvement Programme, a programme of projects
to increase production output and efficiency at FPM
Board The Board of Directors of the Company
Bt Billion tonnes
Capesize Capesize vessels are typically above 150,000 tonnes
deadweight. Ships in this class include oil tankers,
supertankers and bulk carriers transporting coal,
ore, and other commodity raw materials. Standard
capesize vessels are able to transit through the
Suez Canal
Capital Employed The aggregate of equity attributable to shareholders,
non-controlling interests and borrowings
CFR Delivery including cost and freight
C1 Costs Represent the cash costs of production of iron pellets
from own ore, divided by production volume, from
own ore, and excludes non-cash costs such as depreciation,
pension costs and inventory movements, costs of purchased
ore, concentrate and production cost of gravel
CIF Delivery including cost, insurance and freight
CIS The Commonwealth of Independent States
Code The UK Corporate Governance Code published in 2012
Company Ferrexpo plc, a public company incorporated in England
and Wales with limited liability
CPI Consumer Price Index
CSR Corporate Safety and Social Responsibility
CSR Committee The Corporate Safety and Social Responsibility Committee
of the Board of the Company
DAP Delivery at place
DFS Detailed feasibility study
Directors The Directors of the Company
Dragline Excavators Heavy machinery used to excavate material. A dragline
consists of a large bucket which is suspended from
a boom
EBITDA The Group calculates EBITDA as profit from continuing
operations before tax and finance plus depreciation
and amortisation and non-recurring exceptional items
included in other income and other expenses, share
based payment expenses and the net of gains and losses
from disposal of investments and property, plant
and equipment
EBT Employee Benefit Trust
EPS Earnings per share
Executive Committee The Executive Committee of management appointed by
the Company's Board
Executive Directors The Executive Directors of the Company
FBM Ferrexpo Belanovo Mining, also known as BGOK, a company
incorporated under the laws of Ukraine
Fe Iron
Ferrexpo The Company and its subsidiaries
Ferrexpo AG Group Ferrexpo AG and its subsidiaries including FPM
Fevamotinico S.a.r.l. A company incorporated with limited liability in
Luxembourg
FOB Delivered free on board, which means that the seller's
obligation to deliver has been fulfilled when the
goods have passed over the ship's rail at the named
port of shipment, and all future obligations in terms
of costs and risks of loss or damage transfer to
the buyer from that point onwards
FPM Ferrexpo Poltava Mining, also known as Ferrexpo Poltava
GOK Corporation or PGOK, a company incorporated under
the laws of Ukraine
FRMC Financial Risk Management Committee, a sub-committee
of the Executive Committee
FTSE 250 Financial Times Stock Exchange top 250 companies
FYM Ferrexpo Yeristovo Mining, also known as YGOK, a
company incorporated under the laws of Ukraine
Group The Company and its subsidiaries
Growth Markets These are predominantly in Asia and have the potential
to deliver new and significant sales volumes to the
Group
HSE Health, safety and environment
IAS International Accounting Standards
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards, as adopted
by the EU
IPO Initial public offering
Iron ore concentrate Product of the benefication process with enriched
iron content
Iron ore sinter fines Fine iron ore screened to -6.3mm
Iron ore pellets Balled and fired agglomerate of iron ore concentrate,
whose physical properties are well suited for transportation
to and reduction within a blast furnace
JORC Australasian Joint Ore Reserves Committee - the internationally
accepted code for ore classification
K22 GPL ore has been classified as either K22 or K23
quality, of which K22 ore is of higher quality (richer)
KPI Key Performance Indicator
Kt Thousand tonnes
LIBOR The London Inter Bank Offered Rate
LLC Limited Liability Company
LTIFR Lost-Time Injury Frequency Rate
LTIP Long-Term Incentive Plan
m3 Cubic metre
Majority Shareholder Fevamotinico S.a.r.l., The Minco Trust and Kostyantin
Zhevago (together)
Mm Millimetre
Mt Million tonnes
Mtpa Million tonnes per annum
Natural Markets These include Turkey, the Middle East and Western
Europe and are those markets where Ferrexpo has a
competitive advantage over more distant producers,
but where market share remains relatively low
Nominations Committee The Nominations Committee of the Company's Board
Non-executive Directors Non-executive Directors of the Company
NOPAT Net operating profit after tax
OHSAS 18001 International safety standard 'Occupational Health
& Safety Management System Specification'
Ordinary Shares Ordinary Shares of 10 pence each in the Company
Ore A mineral or mineral aggregate containing precious
or useful minerals in such quantities, grade and
chemical combination as to make extraction economic
Panamax Modern panamax ships typically carry a weight of
between 65,000 to 90,000 tonnes of cargo and can
transit both Panama and Suez canals
PPI Ukrainian producer price index
Probable Reserves Those measured and/or indicated mineral resources
which are not yet 'proved', but of which detailed
technical and economic studies have demonstrated
that extraction can be justified at the time of determination
and under specific economic conditions
Proved Reserves Measured mineral resources of which detailed technical
and economic studies have demonstrated that extraction
can be justified at the time of determination and
under specific economic conditions
Rail car Railway wagon used for the transport of iron ore
concentrate or pellets
Relationship Agreement The relationship agreement entered into among Fevamotinico
S.a.r.l., Kostyantin Zhevago, The Minco Trust and
the Company
Remuneration Committee The Remuneration Committee of the Company's Board
Reserves Those parts of mineral resources for which sufficient
information is available to enable detailed or conceptual
mine planning and for which such planning has been
undertaken. Reserves are classified as either proved
or probable
Sinter A porous aggregate charged directly to the blast
furnace which is normally produced by firing fine
iron ore and/or iron ore concentrate, other binding
materials, and coke breeze as the heat source
Spot price The current price of a product for immediate delivery
Sterling/GBP Pound Sterling, the currency of the United Kingdom
STIP Short-Term Incentive Plan
Tailings The waste material produced from ore after economically
recoverable metals or minerals have been extracted.
Changes in metal prices and improvements in technology
can sometimes make the tailings economic to process
at a later date
Tolling The process by which a customer supplies concentrate
to a smelter and the smelter invoices the customer
the smelting charge, and possibly a refining charge,
and then returns the metal to the customer
Ton A US short ton, equal to 0.9072 metric tonnes
Tonne or t Metric tonne
Traditional Markets These lie within Central and Eastern Europe and include
steel plants that were designed to use Ferrexpo pellets.
Ferrexpo has been supplying some of these customers
for more than 20 years. Ferrexpo has well-established
logistics routes and infrastructure to these markets
by both river barge and rail. These markets include
Austria, Czech Republic, Hungary, Serbia and Slovakia
Treasury Shares A company's own issued shares that it has purchased
but not cancelled
TSF Tailings storage facility
TSR Total shareholder return. The total return earned
on a share over a period of time, measured as the
dividend per share plus capital gain, divided by
initial share price
UAH Ukrainian Hryvnia, the currency of Ukraine
Ukr SEPRO The quality certification system in Ukraine, regulated
by law to ensure conformity with safety and environmental
standards
US$/t US Dollars per tonne
VAT Value Added Tax
Value-in-use The implied value of a material to an end user relative
to other options, e.g. evaluating, in financial terms,
the productivity in the steel making process of a
particular quality of iron ore pellets versus the
productivity of alternative qualities of iron ore
pellets.
WAFV Weighted average fair value
WMS Wet magnetic separation
Yeristovo or Yeristovskoye The deposit being developed by FYM
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Ferrexpo (LSE:FXPO)
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부터 6월(6) 2024 으로 7월(7) 2024
Ferrexpo (LSE:FXPO)
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부터 7월(7) 2023 으로 7월(7) 2024
