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Ferrexpo probe into charity donations yet to find any conclusive evidence of wrongdoing

Published: 07:57 07 Jun 2019 BST

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Ferrexpo: a story of shock and ore....and charity donations

Ferrexpo PLC (LON:FXPO), the iron ore miner, had some much needed good news for its shareholders in the form of an upbeat trading statement and an apparent clean bill of health over charity donations it made.

Ahead of its annual general meeting today, the company said the group’s underlying earnings (EBITDA) in the first half of 2019 are expected to be materially higher than in the same period of last year.

READ Liberum sees value in Ferrexpo shares after drop over charity discrepancies probe

In the year to date, the improvement in profitability has been driven by higher pricing, production and sales volumes.

While the average cash cost – C1 cost in the industry jargon – of production is likely to increase in the first half of the current fiscal year compared to last year, cost inflation has been lower than expected due to a fall in the Brent oil price and the European gas price partially offset by an appreciation of the Ukrainian hryvnia versus the US dollar.

The company, which fell out with its former auditor, Deloitte, over a review into controversial donations to the Blooming Land charity in Ukraine, said it has appointed an independent non-executive director, Graeme Dacomb, to chair the audit committee and lead the search for a new auditor. Dacomb will be a member of the independent review committee that is looking into matters relating to Blooming Land.

Dacomb was a partner at Deloitte rival, Ernst and Young, for 26 years.

"Ferrexpo continues to be well positioned to supply a high quality iron ore product to the top steel mills in the world receiving a record price premium for its product. The group's balance sheet remains strong with net debt expected to further reduce compared to 31 December 2018,” said Steve Lucas, the chairman of Ferrexpo.

“The independent review into how Ferrexpo's donations to a third party charity in Ukraine were used remains ongoing,” he added.

“To date, after a significant amount of work on the part of our forensic accountants and legal advisors, there has been no conclusive evidence of any wrongdoing,” Lucas said.

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