Unaudited Nine Month Results to 30 September 2014

RNS Number : 4776C

Ferrexpo PLC

19 January 2015

Ferrexpo plc

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

Unaudited Nine Month Results to 30 September 2014

Ferrexpo today announces key unaudited financial information as of and for the nine months ended 30 September 2014. The Company is releasing this information in connection with the announcement by Ferrexpo Finance Plc of an exchange offer for its US$500,000,000 7.875 per cent. Guaranteed Notes due 2016 and the commencement of the exchange offer period.

Michael Abrahams, Chairman of Ferrexpo commented:

"These good operating results highlight our resilient business model. We continue to benefit from increased production of high quality product which receives a price premium, and lower costs, driven by production efficiencies as a result of the investments we have made over the last four years combined with the fall in the value of the Hryvnia."

Highlights for the unaudited nine months ended 30 September 2014 are presented below:

Financial

§ Turnover of US$1,079 million (9M 2013: US$1,109 million)

§ Net profit before taxation of US$199 million (9M 2013: US$211 million)

§ EBITDA of US$404 million (9M 2013: US$346 million)

§ Group consolidated shareholder equity as of 30 September 2014 of US$954 million (30 September 2013 : US$1,648 million)

§ Net financial indebtedness as of 30 September 2014 US$712 million (30 September 2013: US$677 million)

§ Cash and cash equivalents of US$608 million as of 30 September 2014 (30 September 2013: US$339 million)

One off Impacts

§ US$56 million non-cash increase in EBITDA from the revaluation of US dollar receivables at the Group's Ukrainian subsidiaries

§ US$82 million impairment of Ferrous Resources reflecting the iron ore market environment

Sales and Marketing

§ Average Platts China CFR 62% Fe iron ore price was US$104 per tonne for 9M 2014 (9M 2013: US$136 per tonne)

§ Sales volumes were 8.3 million tonnes of pellets (9M 2013: 7.6 million tonnes of pellets)

§ Ferrexpo's DAF/FOB realized price 15% lower on average in 9M 2014 compared to 9M 2013. Benchmark iron ore price 23% lower on average in 9M 2014 compared to 9M 2013

Operations

§ Most regrettably there was one fatality during the period at the Group's operations

§ 9M 2014 total pellet production 8.3 million tonnes (9M 2013: 8.0 million tonnes)

§ Production of 65% Fe pellets increased 10% to 4.1 million tonnes (9M 2013: 3.7 million tonnes)

§ 9M 2014 average C1 cost per tonne US$47.1 (9M 2013: US$60.1 per tonne)

§ Lower costs driven by the depreciation of the Hryvnia, increased volume, improved efficiency, lower cost FYM ore and reduced commodity prices

Capital Investment

§ 9M 2014 capital investment US$191 million (9M 2013: US$214 million)

§ Growth projects substantially complete at 31 December 2014 to increase output to 12 million tonnes per year and produce mostly 65% Fe pellets

§ FYM concentrator project on hold

VAT / Prepaid Corporate Profit Tax

§ Gross VAT receivable in Ukraine of US$66 million as of 30 September 2014 (US$302 million as of 30 September 2013; US$ 318 million as of 31 December 2013)

§ Fair value of VAT bonds held at 30 September 2014 of US$72 million (30 September 2013: nil)

§ VAT balance as of 30 September 2014 reduced by US$149 million since 31 December 2013 due to foreign exchange losses and fair value adjustments to VAT bonds, of which US$115 million was recorded in reserves

§ VAT refunds in respect of the nine-month period to 30 September 2014 subject to prepayment of corporate profit tax

§ Prepaid corporate profit tax as of 30 September 2014 totaled US$91 million (as of 30 September 2013: US$90 million; as of 31 December 2013: US$87 million)

4Q 2014 Update

§ Average benchmark iron ore price in 4Q 2014 US$74 per tonne (average 9M 2014: US$104 per tonne)

§ The Group received no VAT refunds in November and December 2014, all remaining VAT bonds sold at fair value

§ 4Q 2014 production of 2.8 million tonnes of pellets (Q4 2013: 2.8 million tonnes of pellets)

§ 4Q 2014 production reduced by 144 thousand tonnes of pellets as a result of power restrictions (4Q 2013: nil)

§ 4Q 2014 capital investment approximately c.US$40 million (Q4 2013: US$64 million)

§ Cash and cash equivalents as of 31 December 2014 c.US$627 million (of which c.US$162 million held in Ukraine)

Key financial information for the nine months ended 30 September 2014 is summarised in the table below

US$ million (unless otherwise stated)	9 months ended 30.09.14	9 months ended 30.09.13	Change	Year ended 31.12.13
Total pellet production (kt)	8,258	8,048	3%	10,813
Sales volumes (kt)	8,257	7,582	9%	10,689
Revenue	1,079	1,109	(3%)	1,581
EBITDA	404	346	17%	506
Profit before tax	199	211	(6%)	305
Diluted EPS (US cents per share)	24.77	30.09	(18%)	44.69
Working capital movements	(54)	(86)	(37%)	(103)
Net cash flow from operating activities	211	132	60%	233
Capital investment	191	214	(11%)	278
Cash and cash equivalents	608	339	79%	390
Net debt	(712)	(677)	5%	(639)
Net debt to LTM ⁽¹⁾ EBITDA	1.2x	1.5x	(20%)	1.3x

(1) Last twelve months

For further information contact:

Ferrexpo:
Ingrid McMahon	+44 207 389 8304
Maitland:
Peter Ogden	+44 207 379 5151
Liz Morley

Notes to Editors:

Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine 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 5^th largest supplier of pellets to the global steel industry and the largest producer and exporter of pellets from the Former Soviet Union. In 2014, it produced 11 million tonnes of pellets, a 2% increase compared to 2013 and a record for the Company. Ferrexpo has a diversified customer base supplying steel mills in Austria, China, Japan, Germany as well as other European and Asian countries. Ferrexpo is listed on the main market of the London Stock Exchange under the ticker FXPO. For further information, please visit www.ferrexpo.com

Interim Consolidated Income Statement

US$'000	Notes	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
		(unaudited)	(unaudited)	(audited)
Revenue	4	1,078,834	1,108,546	1,581,385
Cost of sales	3/5	(491,378)	(555,977)	(773,221)
Gross profit		587,456	552,569	808,164
Selling and distribution expenses		(239,200)	(231,894)	(335,718)
General and administrative expenses	6	(35,501)	(38,083)	(54,839)
Other income		4,896	3,547	6,662
Other expenses		(36,694)	(17,186)	(23,457)
Operating foreign exchange gains	7	55,891	352	622
Operating profit from continuing operations before adjusted items		336,848	269,305	401,434
Under recovery and write-down of VAT receivable	13	(6,419)	-	(36,421)
Write-offs and impairment losses	8	(83,733)	(50)	(854)
Share of profit from associates		3,295	2,903	3,551
Losses on disposal of property, plant and equipment		(4,389)	(3,988)	(8,492)
Profit before tax and finance		245,602	268,170	359,218
Finance income	9/13	18,360	1,698	2,372
Finance expense	9	(51,431)	(65,421)	(65,953)
Non-operating foreign exchange (losses)/gains	7	(13,603)	6,114	9,755
Profit before tax		198,928	210,561	305,392
Income tax expense	10	(48,737)	(33,690)	(41,608)
Profit for the period/year		150,191	176,871	263,784

Attributable to:
Equity shareholders of Ferrexpo plc		145,322	176,380	261,984
Non-controlling interests		4,869	491	1,800
		150,191	176,871	263,784

Earnings per share:
Basic (US cents)	11	24.82	30.14	44.76
Diluted (US cents)	11	24.77	30.09	44.69

Interim Consolidated Statement of Comprehensive Income

US$ 000	Notes	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
		(unaudited)	(unaudited)	(audited)
Profit for the period/year		150,191	176,871	263,784
Items that may subsequently be reclassified to profit or loss:
Exchange differences on translating foreign operations		(910,718)	(212)	(437)
Income tax effect		58,085	-	-
Net losses on available-for-sale financial assets		(102)	(126)	(138)
Income tax effect		18	23	30
Net other comprehensive income to be reclassified to profit or loss in subsequent periods		(852,717)	(315)	(545)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement (losses)/gains on defined benefit pension liability		(2,264)	259	498
Income tax effect		267	(24)	(58)
Net other comprehensive income not being reclassified to profit or loss in subsequent periods		(1,997)	235	440
Other comprehensive income for the period/year, net of tax		(854,714)	(80)	(105)

Total comprehensive income for the period/year, net of tax		(704,523)	176,791	263,679

Total comprehensive income attributable to:
Equity shareholders of Ferrexpo plc		(694,250)	176,301	261,888
Non-controlling interests		(10,273)	490	1,791
		(704,523)	176,791	263,679

Interim Consolidated Statement of Financial Position

US$'000	Notes	As at 30.09.14	As at 30.09.13	As at 31.12.13
		(unaudited)	(unaudited)	(audited)
Assets
Property, plant and equipment	12	1,071,826	1,484,440	1,533,819
Goodwill and other intangible assets		73,564	118,908	117,086
Investments in associates		8,582	19,898	20,546
Available-for-sale financial assets	20	139	82,785	82,778
Inventories	14	69,729	27,481	58,303
Other non-current assets		40,770	36,438	34,575
Income taxes recoverable and prepaid	10	91,320	54,242	54,242
Other taxes recoverable and prepaid	13	-	141,689	78,281
Deferred tax assets		30,953	37,087	37,612
Total non-current assets		1,386,883	2,002,968	2,017,242
Inventories	14	144,043	200,396	180,863
Trade and other receivables		93,877	90,245	102,498
Prepayments and other current assets		21,709	40,931	25,073
Income taxes recoverable and prepaid	10	-	35,848	33,233
Other taxes recoverable and prepaid	13	67,196	126,198	182,863
Marketable securities	13/20	72,480	-	-
Cash and cash equivalents	3/15	608,075	339,219	390,491
		1,007,380	832,837	915,021
Assets classified as held for sale		92	479	106
Total current assets		1,007,472	833,316	915,127
Total assets		2,394,355	2,836,284	2,932,369
Equity and liabilities
Share capital	16	121,628	121,628	121,628
Share premium		185,112	185,112	185,112
Other reserves	16	(1,184,534)	(347,437)	(347,326)
Retained earnings		1,819,223	1,667,391	1,753,200
Equity attributable to equity shareholders of the parent		941,429	1,626,694	1,712,614
Non-controlling interest		12,155	21,127	22,428
Total equity		953,584	1,647,821	1,735,042
Interest-bearing loans and borrowings	3/17	1,114,419	962,545	928,196
Defined benefit pension liability		37,520	52,597	53,154
Provision for site restoration		1,904	2,571	2,871
Deferred tax liability		2,012	1,531	2,031
Total non-current liabilities		1,155,855	1,019,244	986,252
Interest-bearing loans and borrowings	3/17	205,440	54,059	101,043
Trade and other payables		28,744	50,612	50,001
Accrued liabilities and deferred income		30,901	25,052	35,508
Income taxes payable		4,051	25,766	12,554
Other taxes payable		15,780	13,730	11,969
Total current liabilities		284,916	169,219	211,075
Total liabilities		1,440,771	1,188,463	1,197,327
Total equity and liabilities		2,394,355	2,836,284	2,932,369

The financial statements were approved by the Board of Directors on the 5 January 2015.

Kostyantin Zhevago	Christopher Mawe
Chief Executive Officer	Chief Financial Officer

Interim Consolidated Statement of Cash Flows

US$'000	Notes	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
		(unaudited)	(unaudited)	(audited)
Profit before tax		198,928	210,561	305,392
Adjustments for:
Depreciation of property, plant and equipment and amortisation of intangible assets		63,811	72,565	99,645
Interest expense		47,963	61,284	60,466
Under recovery and write-down of VAT receivable	13	6,419	-	36,421
Interest income	9	(18,360)	(1,698)	(2,372)
Share of profit from associates		(3,295)	(2,903)	(3,551)
Movement in allowance for doubtful receivables		8,317	500	661
Losses on disposal of property, plant and equipment		4,389	3,988	8,492
Write-offs and impairment losses	8	83,733	50	854
Site restoration provision		213	204	503
Employee benefits		5,091	6,483	8,654
Share based payments		367	933	1,266
Operating foreign exchange gains	2/7	(55,891)	(352)	(622)
Non-operating foreign exchange losses/(gains)	2/7	13,603	(6,114)	(9,755)
Operating cash flow before working capital changes		355,288	345,501	506,054
Changes in working capital:
(Increase)/decrease in trade and other receivables		(665)	27,598	27,485
Increase in inventories		(65,594)	(75,879)	(88,482)
Decrease in trade and other accounts payable		(15,865)	(39,230)	(29,489)
Decrease/(increase) in VAT recoverable and other taxes recoverable and payable ¹		27,633	1,324	(12,516)
Cash generated from operating activities		300,797	259,314	403,052
Interest paid		(32,120)	(32,543)	(57,037)
Income tax paid		(54,751)	(91,572)	(108,321)
Post-employment benefits paid		(2,761)	(3,503)	(4,768)
Net cash flows from operating activities		211,165	131,696	232,926
Cash flows from investing activities
Purchase of property, plant and equipment		(189,472)	(205,393)	(270,534)
Proceeds from disposal of property, plant and equipment		1,583	5,577	910
Purchase of intangible assets		(1,974)	(8,343)	(7,268)
Purchase of available-for-sale investment		-	(81,235)	(82,382)
Interest received		1,538	1,604	2,090
Dividends from associates		2,755	-	-
Net cash flows used in investing activities		(185,570)	(287,790)	(357,184)
Cash flows from financing activities
Proceeds from borrowings and finance		392,515	-	26,279
Repayment of borrowings and finance		(112,242)	(16,683)	(19,308)
Arrangement fees paid		(3,578)	(9,857)	(10,643)
Dividends paid to equity shareholders of Ferrexpo plc ²		(73,686)	(74,510)	(77,882)
Dividends paid to non-controlling shareholders		-	-	(1)
Net cash flows used in financing activities		203,009	(101,050)	(81,555)
Net increase/(decrease) in cash and cash equivalents		228,604	(257,144)	(205,813)
Cash and cash equivalents at the beginning of the period/year		390,491	596,560	596,560
Effect of exchange rate changes on cash and cash equivalents		(11,020)	(197)	(256)
Cash and cash equivalents at the end of the period/year	15	608,075	339,219	390,491

¹ The movement in the current period includes the effect of a VAT receivable balance amounting to US$24,594 thousand recovered through VAT bonds. See also note 13

² Net of withholding taxes paid subsequent to the end of the periods ended 30 September 2014 and 2013. See note 10 for further details.

Interim Consolidated Statement of Changes in Equity

For the financial year 2013 and the nine months ended 30 September 2014		Attributable to equity shareholders of the parent
US$ 000	Issued capital	Share premium	Uniting of interest reserve (note 16)	Treasury share reserve (note 16)	Employee Benefit Trust reserve (note 16)	Net unreali-sed gains reserve (note 16)	Translation reserve (note 16)	Retained earnings	Total capital and reserves	Non-controlling interests	Total equity
At 1 January 2013	121,628	185,112	31,780	(77,260)	(7,808)	820	(295,588)	1,568,077	1,526,761	20,637	1,547,398
Profit for the period	-	-	-	-	-	-	-	261,984	261,984	1,800	263,784
Other comprehensive income	-	-	-	-	-	(108)	(428)	440	(96)	(9)	(105)
Total comprehensive income for the period	-	-	-	-	-	(108)	(428)	262,424	261,888	1,791	263,679
Equity dividends paid to shareholders of Ferrexpo plc	-	-	-	-	-	-	-	(77,301)	(77,301)	-	(77,301)
Share-based payments	-	-	-	-	1,266	-	-	-	1,266	-	1,266
At 31 December 2013 (audited)	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	-	-	-	-	-	-	-	145,322	145,322	4,869	150,191
Other comprehensive income	-	-	-	-	-	(84)	(837,491)	(1,997)	(839,572)	(15,142)	(854,714)
Total comprehensive income for the period	-	-	-	-	-	(84)	(837,491)	143,325	(694,250)	(10,273)	(704,523)
Equity dividends paid to shareholders of Ferrexpo plc	-	-	-	-	-	-	-	(77,302)	(77,302)	-	(77,302)
Share-based payments	-	-	-	-	367	-	-	-	367	-	367
At 30 September 2014 (unaudited)	121,628	185,112	31,780	(77,260)	(6,175)	628	(1,133,507)	1,819,223	941,429	12,155	953,584

For the nine months ended 30 September 2013		Attributable to equity shareholders of the parent
US$ 000	Issued capital	Share premium	Uniting of interest reserve (note 16)	Treasury share reserve (note 16)	Employee Benefit Trust reserve (note 16)	Net unreali-sed gains reserve (note16)	Translation reserve (note16)	Retained earnings	Total capital and reserves	Non-controlling interests	Total equity
At 1 January 2013	121,628	185,112	31,780	(77,260)	(7,808)	820	(295,588)	1,568,077	1,526,761	20,637	1,547,398
Profit for the period	-	-	-	-	-	-	-	176,380	176,380	491	176,871
Other comprehensive income	-	-	-	-	-	(103)	(211)	235	(79)	(1)	(80)
Total comprehensive income for the period	-	-	-	-	-	(103)	(211)	176,615	176,301	490	176,791
Equity dividends paid to shareholders of Ferrexpo plc	-	-	-	-	-	-	-	(77,301)	(77,301)	-	(77,301)
Share-based payments	-	-	-	-	933	-	-	-	933	-	933
At 30 September 2013 (unaudited)	121,628	185,112	31,780	(77,260)	(6,875)	717	(295,799)	1,667,391	1,626,694	21,127	1,647,821

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

The majority shareholder of the Group is Fevamotinico S.a.r.l. ('Fevamotinico'), a company 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% (30 September 2013: 51.0%; 31 December 2013: 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	30.09.14 %	30.09.13 %	31.12.13 %
OJSC Ferrexpo Poltava Mining	Ukraine	Iron ore mining	97.3	97.3	97.3
Ferrexpo AG	Switzerland	Sale of iron ore pellets	100.0	100.0	100.0
DP Ferrotrans	Ukraine	Trade, transportation services	97.3	97.3	97.3
United Energy Company LLC	Ukraine	Holding company	97.3	97.3	97.3
Ferrexpo Finance plc	England	Finance	100.0	100.0	100.0
Ferrexpo Services Limited	Ukraine	Management services & procurement	100.0	100.0	100.0
Ferrexpo Hong Kong Limited	China	Marketing services	100.0	100.0	100.0
LLC Ferrexpo Yeristovo GOK	Ukraine	Iron ore mining	100.0	100.0	100.0
LLC Ferrexpo Belanovo GOK	Ukraine	Iron ore mining	100.0	100.0	100.0
Nova Logistics Limited	Ukraine	Service company (dormant)	51.0	51.0	51.0
Ferrexpo Middle East FZE	U.A.E.	Sale of iron ore pellets	100.0	100.0	100.0
Ferrexpo Singapore PTE Ltd	Singapore	Marketing services	100.0	100.0	100.0
First-DDSG Logistics Holding GmbH	Austria	Holding company	100.0	100.0	100.0
EDDSG GmbH	Austria	Barging company	100.0	100.0	100.0
DDSG Tankschiffahrt GmbH	Austria	Barging company	100.0	100.0	100.0
DDSG Services GmbH²	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 Holding¹	Ukraine	Holding company	100.0	100.0	100.0
LLC DDSG Invest¹	Ukraine	Asset holding company	100.0	100.0	100.0
LLC DDSG Ukraine Shipping Management¹	Ukraine	Barging company	100.0	100.0	100.0
LLC DDSG Ukraine Shipping¹	Ukraine	Asset holding company	100.0	100.0	100.0
Arlington Ltd.³	Guernsey	Holding company	100.0	-	-

¹ The entities were incorporated in February and March 2013.

² Formerly Helogistics Transport GmbH.

³ The entity was acquired in February 2014.

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

At 30 September 2014, the Group also holds through OJSC Ferrexpo Poltava Mining an interest of 48.6% (30 September 2013: 48.6%; 31 December 2013: 48.6%) in TIS Ruda, a Ukrainian port located on the Black Sea. As this is an associate, it is accounted for using the equity method of accounting.

Note 2: Summary of significant accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the nine months period ended 30 September 2014 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 as at 31 December 2013.

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 2013. 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 2013, has been delivered to the Register of Companies. 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 30 September 2014, the Ukrainian Hryvnia has devalued by approximately 62% compared to the US Dollar; from 7.993 as at 31 December 2013 to 12.949 as at the end of this reporting period. As a result of this devaluation, the total equity decreased by US$852,633 thousand as of 30 September 2014 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 such 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.

Changes in accounting policies

During the period ended 30 September 2014, the Group received VAT bonds issued by the Ministry of Finance of Ukraine to settle certain accumulated VAT liabilities. These VAT bonds were designated as financial assets at fair value through profit or loss ("FVTPL"). As disclosed in accounting policies in the Annual Report and Accounts 2013, the Group did not have such financial assets in previous periods.

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 2013 except for the adoption of new amendments and improvements to IFRSs effective as of 1 January 2014, noted below:

Standards adopted affecting reported results, financial position or disclosures

IFRS 12 Disclosure of involvement with other entities

The new standard covers the disclosures that were previously required in consolidated financial statements under IAS 27 Consolidated and separate financial statements as well as those included in IAS 31 Interests in joint ventures and IAS 28 Investments in associates. The new standard became mandatory in the EU for financial years beginning on or after 1 January 2014. A number of additional disclosures will be required in the next Annual Report and Accounts under the new standard. There is no impact on these interim condensed consolidated financial statements to be considered.

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

IFRS 10 Consolidated financial statements

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

IFRS 11 Joint arrangements

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

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

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

IAS 36 Impairment of assets - recoverable amount disclosures

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

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

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

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 25.

US$ 000	Notes	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
		(unaudited)	(unaudited)	(audited)
Profit before tax and finance		245,602	268,170	359,218
Under recovery and write-down of VAT receivable	13	6,419	-	36,421
Write-offs and impairment losses	8	83,733	50	854
Share based payments		367	933	1,266
Losses on disposal of PPE		4,389	3,988	8,492
Depreciation and amortisation		63,811	72,565	99,645
EBITDA		404,321	345,706	505,896

C1 costs

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

US$'000		9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
		(unaudited)	(unaudited)	(audited)
Cost of sales - pellet production	5	445,350	526,240	726,960
Depreciation and amortisation	5	(49,781)	(57,243)	(78,690)
Purchased concentrate and other items for resale	5	(17,566)	(22,770)	(34,805)
Inventory movements	5	12,308	44,858	25,476
Other		(11,027)	(20,447)	(13,213)
C1 cost		379,284	470,638	625,728
Own ore produced (tonnes)		8,052,754	7,766,300	10,465,606
C1 cash cost per tonne US$		47.1	60.6	59.8

Net financial indebtedness

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

US$ 000	Notes	As at 30.09.14	As at 30.09.13	As at 31.12.13
		(unaudited)	(unaudited)	(audited)
Cash and cash equivalents	15	608,075	339,219	390,491
Interest bearing loans and borrowings - current	17	(205,440)	(54,059)	(101,043)
Interest bearing loans and borrowings - non-current	17	(1,114,419)	(962,545)	(928,196)
Net financial indebtedness		(711,784)	(677,385)	(638,748)

Note 4: Revenue

Revenue for the nine months period ended 30 September 2014 consisted of the following:

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Revenue from sales of ore pellets:
Export	1,004,921	1,050,089	1,494,899
Total revenue from sale of iron ore pellets and concentrate	1,004,921	1,050,089	1,494,899
Revenue from logistics and bunker business	69,011	51,764	76,321
Revenue from other sales and services provided	4,902	6,693	10,165
Total revenue	1,078,834	1,108,546	1,581,385

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

US$'000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Traditional Market	476,333	473,367	663,950
Growth Market	371,926	381,694	565,901
Natural Market	156,662	195,028	265,048
Total export revenue	1,004,921	1,050,089	1,494,899

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

Note 5: Cost of sales

Cost of sales for the nine months period ended 30 September 2014 consisted of the following:

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Materials	65,077	83,683	107,530
Purchased concentrate and other items for resale	17,566	22,770	34,805
Electricity	95,373	119,194	158,849
Personnel costs	39,531	52,325	66,194
Spare parts and consumables	4,083	13,532	15,921
Depreciation and amortisation	49,781	57,243	78,690
Fuel	53,339	60,807	74,653
Gas	54,393	60,134	82,028
Repairs and maintenance	42,705	53,049	72,299
Royalties and levies	18,793	14,826	23,162
Cost of sales from logistics business	16,538	9,294	16,531
Bunker fuel	29,490	20,443	29,731
Inventory movements	(12,308)	(44,858)	(25,476)
Other	17,017	33,535	38,304
Total cost of sales	491,378	555,977	773,221

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Cost of sales - pellet production	445,350	526,240	726,960
Cost of sales - logistics and bunker business	46,028	29,737	46,261
Total cost of sales	491,378	555,977	773,221

Note 6: General and administrative expenses

General and administrative expenses for the nine months period ended 30 September 2014 consisted of the following:

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Personnel costs	21,301	23,462	31,972
Buildings and maintenance	1,761	2,105	2,571
Taxes other than income tax and other charges	215	143	184
Professional fees	4,804	3,181	6,715
Depreciation and amortisation	1,626	2,812	4,022
Communication	957	973	1,328
Vehicles maintenance and fuel	1,116	1,134	1,584
Repairs	369	690	982
Audit fees	1,148	1,157	1,606
Non-audit fees	75	68	900
Security	440	351	497
Other	1,689	2,007	2,478
Total general and administrative expenses	35,501	38,083	54,839

Note 7: Foreign exchange gains and losses

Foreign exchange gains and losses for the nine months period ended 30 September 2014 consisted of the following:

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Operating foreign exchange gains
Revaluation of trade receivables	57,282	1	1
Revaluation of trade payables	(1,372)	30	30
Others	(19)	321	591
Total operating foreign exchange gains	55,891	352	622
Non-operating foreign exchange gains
Revaluation of interest-bearing loans	(53,383)	1,560	2,892
Revaluation of cash and cash equivalents	57,208	4,929	7,329
Others	(17,428)	(375)	(466)
Total non-operating foreign exchange (losses)/gains	(13,603)	6,114	9,755
Total foreign exchange gains	42,288	6,466	10,377

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 30 September 2014, the Ukrainian Hryvnia has devalued by approximately 62% compared to the US Dollar; from 7.993 as at 31 December 2013 to 12.949 as at the end of this reporting period. This has affected mainly the opening balances of property plant and equipment (note 12), income taxes recoverable and prepaid and other taxes recoverable and prepaid (note 13).

Note 8: Write-offs and impairment losses

Impairment losses relate to adjustments made against the carrying value of assets where this is higher than the recoverable amount. Write-offs and impairment losses for the nine months period ended 30 September 2014 consisted of the following:

US$ 000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Impairment loss on available-for-sale financial assets	82,382	-	-
Write-off of VAT receivables	1,351	-	-
Write-off of property, plant and equipment	-	50	326
Write-off of inventories	-	-	528
Total write-offs and impairment losses	83,733	50	854

The impairment loss on available-for-sale financial assets 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 30 September 2014 consisted of the following:

US$000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Finance income
Interest income	1,501	1,539	2,062
Other finance income	16,859	159	310
Total finance income	18,360	1,698	2,372
Finance expense
Interest expense on financial liabilities measured at amortised cost	(41,062)	(41,052)	(53,340)
Effect from capitalised borrowing costs	6,901	6,811	8,966
Interest on defined benefit plans	(3,481)	(4,137)	(5,487)
Bank charges	(11,891)	(7,795)	(10,976)
Other finance costs	(1,898)	(19,248)	(5,116)
Total finance expense	(51,431)	(65,421)	(65,953)
Net finance expense	(33,071)	(63,723)	(63,581)

Other finance income includes a US$16,497 thousand release of a discount recorded in the prior years for VAT in dispute that was expected to be recovered over a protracted period of time. Further information is provided in note 13.

This discount was built up in prior periods and recorded as a finance cost. The amount recorded for the nine months ended 30 September 2013 and the year ended 31 December 2013 were US$18,000 thousand and US$3,695 thousand respectively.

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 and Dubai, as well as the level of non-deductible expenses for tax purposes in each of these jurisdictions. For the period ended 30 September 2014, the income tax expense was based on an expected tax rate of 24.5% for the financial year 2014, which is significantly above the effective tax rate for the financial year 2013 of 13.6%.

The increase of the tax rate during the period ended September 2014 was a result of a change in the mix of profits within the Group and significantly higher 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 financial years 2013 and 2014, current VAT receivable balances in Ukraine were mainly recovered in exchange for prepayments of corporate profit tax. As at 30 September 2014, the Group prepaid corporate profit tax totalling US$91,320 thousand (30 September 2013: US$85,889 thousand; 31 December 2013: US$87,514 thousand) and it is management's view that this balance will be either offset with future profits or recovered through an issuance of bonds by the Ministry of Finance as happened during the financial year 2014 for overdue VAT receivable balances (see note 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.

	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Profit for the period / year attributable to equity shareholders:
Basic earnings per share (US cents)	24.82	30.14	44.76
Diluted earnings per share (US cents)	24.77	30.09	44.69

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

Thousands	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Weighted average number of shares
Basic number of ordinary shares outstanding	585,413	585,275	585,294
Effect of dilutive potential ordinary shares	1,258	947	926
Diluted number of ordinary shares outstanding	586,671	586,222	586,220

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

Dividends

US$000	9 months ended 30.09.14	9 months ended 30.09.13	Year ended 31.12.13
	(unaudited)	(unaudited)	(audited)
Dividend proposed
Final dividend for 2013: 3.3 US cents	-	-	19,317
Special dividend for 2013: 6.6 US cents	-	-	38,633
Total dividends proposed	-	-	57,950

Paid per ordinary share
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	-	-
Interim dividend for 2013: 3.3 US cents	-	19,692	19,692
Final dividend for 2012: 3.3 US cents	-	19,441	19,441
Special dividend for 2012: 6.6 US cents	-	38,749	38,749
Total dividends paid during the period	76,904	77,882	77,882

The interim dividends paid for 2014 and 2013 include withholding taxes of US$3,218 thousand and US$3,372 thousand paid subsequent to the periods ended 30 September 2014 and 30 September 2013 respectively.

Note 12: Property, plant and equipment

During the nine months period ended 30 September 2014, the Group acquired property, plant and equipment with a cost of US$192,668 thousand (30 September 2013: US$230,191 thousand; 31 December 2013: US$319,320 thousand) and disposed of property, plant and equipment with original costs of US$22,771 thousand (30 September 2013: US$17,358 thousand; 31 December 2013: US$32,782 thousand). The total depreciation charge for the period was US$77,350 thousand (30 September 2013: US$83,550 thousand; 31 December 2013: US$116,677 thousand).

During the reporting period, the Ukrainian Hryvnia has devalued compared to the US Dollar from 7.993 as of 31 December 2013 to 12.949 as of 30 September 2014 reducing property, plant and equipment by US$569,998 thousand. This effect is reflected in the translation reserve included in shareholder's equity. See also note 16.

Property, plant and equipment include capitalised borrowing costs on qualifying assets of US$13,811 thousand (30 September 2013: US$8,319 thousand; 31 December 2013: US$10,474 thousand).

Note 13: Other taxes recoverable and prepaid

As at 30 September 2014 taxes recoverable and prepaid comprised:

US$000	As at 30.09.14	As at 30.09.13	As at 31.12.13
	(unaudited)	(unaudited)	(audited)
VAT receivable	67,082	125,574	182,628
Other taxes prepaid	114	624	235
Total other taxes recoverable and prepaid - current	67,196	126,198	182,863
VAT receivable	-	141,689	78,281
Total other taxes recoverable and prepaid - non-current	-	141,689	78,281
Total other taxes recoverable and prepaid	67,196	267,887	261,144

As at 30 September 2014, US$66,412 thousand of the VAT receivable before discount relates to the Group's Ukrainian business operations (30 September 2013: US$302,493 thousand; 31 December 2013: US$318,213 thousand).

The Ukrainian Hryvnia devalued compared to the US Dollar from 7.993 as at 31 December 2013 to 12.949 as at 30 September 2014 reducing the gross balance of VAT outstanding expressed in US Dollar by US$121,793 thousand and the associated provision of US$36,421 thousand by US$11,798 thousand. These net differences are reflected in the translation reserve. See also note 15.

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 are tradable and mature over a period of five years in 10 equal instalments. The bonds carry a 9.5% annual coupon payable semi-annually. As at 30 September 2014, the Group had sold VAT bonds with a face value of UAH391,485 thousand at an average discount of 18.7% resulting in net proceeds of UAH318,256 thousand (US$24,594 thousand at the exchange rate at the date of sale). Subsequent to the end of the reporting period ended 30 September 2014, the remaining VAT bonds outstanding at the balance sheet date were sold resulting in additional proceeds of UAH934,544 thousand (US$72,473 thousand at the exchange rate at the date of sale). The average discount of all VAT bonds sold during the second half of the financial year 2014 was 21.8% resulting in net proceeds totalling UAH1,256,800 thousand (US$97,067 thousand at the exchange rate at the date of sale).

As at the end of the comparative period ended 31 December 2013, part of the VAT balance was in the court system and management estimated that these balances would be recovered over a protracted period of time. As a result a discount of US$23,696 thousand was recorded and charged to finance expense during the financial years 2012 and 2013. From this balance, US$16,497 was released to finance income in 2014 (note 9) with the remainder reflected in the translation reserve. As at 30 September 2014, management expect amounts in the court system to be recovered inside one year through a further issuance of bonds which will trade at a similar discount to face value and a provision of US$1,710 thousand has been recorded in the income statement to reflect this.

Note 14: Inventories

Inventories are held at the lower of cost or net realisable value. As at 30 September 2014 ore stockpiles amounting to US$69,729 thousand (30 September 2013: US$27,481; 31 December 2013: US$58,303 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 30 September 2014 the Group held cash and cash equivalents of US$608,075 thousand (30 September 2013: US$339,219 thousand; 31 December 2013: US$390,491 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 37 of the Annual Report and Accounts 2013. 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 30 September 2014 was 613,967,956 (30 September 2013: 613,967,956; 31 December 2013: 613,967,956) Ordinary Shares at par value of £0.10 paid for cash, resulting in share capital of US$121,628 thousand which is unchanged since the Group's Initial Public Offering in June 2007. This balance includes 25,343,814 shares (30 September 2013: 25,343,814 shares; 31 December 2013: 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 (30 September 2013: 3,275,435 shares; 31 December 2013: 3,275,435 shares).

The translation reserve includes the effect from the exchange differences arising on translation of foreign non-US Dollar functional currency operations (mainly in Ukrainian Hryvnia). During the period ended 30 September 2014, the Ukrainian Hryvnia devalued from 7.993 as at the beginning of the year to 12.949 as at 30 September 2014 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 2 of these financial statements for further details. As at 30 September 2014 other reserves attributable to equity shareholders of Ferrexpo plc comprised.

For the financial year 2013 and the nine months ended 30 September 2014
US$ 000	Uniting of interest reserve	Treasury share reserve	Employee Benefit Trust reserve	Net unreali-sed gains reserve	Translation reserve	Total other reserves
At 1 January 2013	31,780	(77,260)	(7,808)	820	(295,588)	(348,056)
Foreign currency translation differences	-	-	-	-	(428)	(428)
Loss on available-for-sale financial assets	-	-	-	(138)	-	(138)
Tax effect	-	-	-	30	-	30
Total comprehensive income for the period	-	-	-	(108)	(428)	(536)
Share based payments	-	-	1,266	-	-	1,266
At 31 December 2013 (audited)	31,780	(77,260)	(6,542)	712	(296,016)	(347,326)
Foreign currency translation differences	-	-	-	-	(895,576)	(895,576)
Loss on available-for-sale financial assets	-	-	-	(102)	-	(102)
Tax effect	-	-	-	18	58,085	58,103
Total comprehensive income for the period	-	-	-	(84)	(837,491)	(837,575)
Share based payments	-	-	367	-	-	367
At 30 September 2014 (unaudited)	31,780	(77,260)	(6,175)	628	(1,133,507)	(1,184,534)


For the nine months ended 30 September 2013
US$ 000	Uniting of interest reserve	Treasury share reserve	Employee Benefit Trust reserve	Net unreali-sed gains reserve	Translation reserve	Total other reserves
At 1 January 2013	31,780	(77,260)	(7,808)	820	(295,588)	(348,056)
Foreign currency translation differences	-	-	-	-	(211)	(211)
Gain on available-for-sale financial assets	-	-	-	(126)	-	(126)
Tax effect	-	-	-	23	-	23
Total comprehensive income for the period	-	-	-	(103)	(211)	(314)
Share based payments	-	-	933	-	-	933
At 30 September 2013 (unaudited)	31,780	(77,260)	(6,875)	717	(295,799)	(347,437)

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 30.09.14	As at 30.09.13	As at 31.12.13
		(unaudited)	(unaudited)	(audited)
Current
Syndicated bank loans - secured		157,500	17,500	70,000
Bank loans - secured		22,664	13,360	16,775
Obligations under finance leases		4,619	3,931	4,523
Interest accrued		20,657	19,268	9,745
Total current interest bearing loans and borrowings	3	205,440	54,059	101,043

Non-current
Eurobond issued		495,726	493,162	493,810
Syndicated bank loans - secured		525,000	402,500	350,000
Other bank loans - secured		79,407	50,075	66,129
Obligations under finance leases		14,286	16,808	18,257
Total non-current interest bearing loans and borrowings	3	1,114,419	962,545	928,196
Total interest bearing loans and borrowings		1,319,859	1,016,604	1,029,239

As at 30 September 2014 the Group has a syndicated US$420 million pre-export finance facility, of which US$332.5 million is available and drawn, and a new fully drawn syndicated US$350 million pre-export finance facility. Both are revolving facilities with commitment amortisation over the final 24 months to the final maturity dates of 31 July 2016 and 8 August 2018 respectively. Subject to additional bank commitments, the new US$350 million facility can be further increased up to an amount of US$500 million within one year of the effective date, which was 8 August 2014.

As at 30 September 2014 the major bank debt facilities were guaranteed and secured as follows:

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

· OJSC Ferrexpo Poltava Mining assigned all of its rights of certain export contracts for the 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 and is due for repayment on 7 April 2016. The bond has a 7.875% coupon and interest is payable on a semi-annual basis.

Further information on the Group's exposure to interest rate, foreign currency and liquidity risk is provided in note 37 of the Annual Report and Accounts 2013.

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 following tables:

Revenue, expenses, finance income and finance expenses

	9 months ended 30.09.14 (unaudited)			9 months ended 30.09.13 (unaudited)			Year ended 31.12.13 (audited)
US$ 000	Entities under common control	Asso-ciated compa- nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties
Other sales ^a	530	-	305	481	-	329	647	-	491
Total related party transactions within revenue	530	-	305	481	-	329	647	-	491
Materials ^b	9,538	-	19	9,915	-	-	13,897	-	43
Purchased concentrate and other items for resale ^c	0	-	-	6,208	-	-	7,053	-	-
Spare parts and consumables ^d	1,872	-	1	2,213	-	-	2,838	-	2
Gas ^e	30,684	-	-	23,712	-	-	33,581	-	-
Total related parties transactions within cost of sales	42,094	-	20	42,048	-	-	57,369	-	45
Selling and distribution expenses ^f	8,383	18,499	3,881	8,157	16,766	5,715	11,183	22,582	8,335
General and administration expenses ^g	1,039	-	-	1,551	-	13	1,747	-	12
Total related parties transactions within expenses	51,516	18,499	3,901	51,756	16,766	5,728	70,299	22,582	8,392
Finance income ^h	1,312	-	-	1,194	-	-	1,673	-	-
Finance expenses ^h	(43)	-	-	(174)	-	-	(184)	-	-
Net finance income/(expenses)	1,269	-	-	1,020	-	-	1,489	-	-

Entities under common control

The Group entered into various related party transactions with entities under common control. A description of the most material transactions which are in aggregate over US$200 thousand (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$119 thousand (30 September 2013: US$104 thousand; 31 December 2013: US$149 thousand) and income from premises leased to Kislorod PCC of US$200 thousand (30 September 2013: US$176 thousand; 31 December 2013: US$238 thousand).

^b Purchases of compressed air, oxygen and metal scrap from Kislorod PCC for US$4,080 thousand (30 September 2013: US$4,415 thousand; 31 December 2013: US$5,988 thousand); and

^b Purchases of cast iron balls from AutoKraZ Holding Co. for US$4,453 thousand (30 September 2013: US$4,874 thousand; 31 December 2013: US$6,865 thousand).

^b Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas for US$816 thousand (30 September 2013: US$398 thousand; 31 December 2013: US$711 thousand).

^c No purchases of concentrate and other items for resale from Vostok Ruda Ltd in the period ended 30 September 2014 (30 September 2013: US$6,208 thousand; 31 December 2013: US$7,053 thousand).

^d Purchases of spare parts from CJSC Kiev Shipbuilding and Ship Repair Plant ('KSRSSZ') in the amount of US$576 thousand (30 September 2013: US$671 thousand; 31 December 2013: US$864 thousand);

^d Purchases of spare parts from Valsa GTV of US$671 thousand (30 September 2013: US$1,018 thousand; 31 December 2013: US$1,226 thousand);

^d Purchases of ferromanganese from Raw and Refined Commodities AG for US$353thousand (30 September 2013: US$239 thousand; 31 December 2013: US$354 thousand).

^e Procurement of gas for US$30,684 thousand (30 September 2013: US$23,712thousand; 31 December 2013: US$33,581 thousand) from OJSC Ukrzakordongeologia.

^f Purchases of advertisement, marketing and general public relations services from FC Vorskla of US$8,332 thousand (30 September 2013: US$8,101 thousand; 31 December 2013: US$11,000 thousand).

^g Insurance premiums of US$478 thousand (30 September 2013: US$541 thousand; 31 December 2013:US$728 thousand) paid to ASK Omega for workmen's insurance and general cover;

^g Fees of US$349thousand (30 September 2013: US$339 thousand; 31 December 2013: US$ 433 thousand) paid to Bank Finance & Credit (Bank F&C) for bank services.

^h Transactional banking services are provided to certain subsidiaries of the Group by Bank 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 19.

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$18,499 thousand (30 September 2013: US$16,766 thousand; 31 December 2013: US$22,582 thousand) relating to port operations, including port charges, handling costs, agent commissions and storage costs.

Other related parties

The Group entered into various transactions with 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$295 thousand (30 September 2013: US$329 thousand; 31 December 2013: US$491 thousand).

^f Purchases of logistics management services from Slavutich Ruda Ltd. relating to customs clearance services and the coordination of rail transit. Total billings amounted to US$3,881 thousand (30 September 2013: US$5,715 thousand; 31 December 2013: US$8,335 thousand). Slavutich Ruda Ltd. earned commission income of US$419 thousand on these services (30 September 2013: US$731 thousand; 31 December 2013: US$979 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.

	9 months ended 30.09.14 (unaudited)			9 months ended 30.09.13 (unaudited)			Year ended 31.12.13 (audited)
US$ 000	Entities under common control	Asso-ciated compa-nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties
Purchases with independent fair and reasonable confirmation	458	-	-	-	-	-	-	-	-
Purchases with shareholder approval	-	-	-	13,527	-	-	18,141	-	-
Purchases in the ordinary course of business	2,263	-	4	3,624	-	-	3,741	-	-
Total purchases of property, plant and equipment ⁱ	2,721	-	4	17,151	-	-	21,882	-	-

Entities under common control

Current year

i During the first nine months of the financial year 2014, the Group entered in various transactions of a capital nature with related parties totalling to US$2,267 thousand. These transactions were in the ordinary course of business. Individual transactions of a capital nature which exceeded US$200 thousand are listed below.

· During the period ended 30 September 2014, the Group procured goods and services totaling US$1,659 thousand from OJSC Berdichev Machine-Building Plant Progress for various ongoing projects.

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

In February 2014, the Group ordered through its subsidiary LLC Ferrexpo Yeristovo GOK 300 rail cars from PJSC Stakhanov Railcar Company with a total value of US$15.9 million, of which 233 rail cars were under the authority of the shareholder approval obtained on 24 May 2012. A further 67 rail cars were ordered in the ordinary course of business. A prepayment of US$8.0 million (at current exchange rate) was made in relation to these rail cars. The rail cars were due for delivery in the second half of the financial year 2014. However, as a consequence of the ongoing conflict in the Eastern part of Ukraine, PJSC Stakhanov Railcar Company halted its production in the Lugansk region and declared force-majeure on 24 October 2014, which was confirmed by the Ukrainian Chamber of Commerce and Industry. At the point of time of preparation of these interim financial statements, there is uncertainty surrounding the delivery of the rail cars or recovery of the prepayment. As a consequence, the Group recorded an allowance for the full amount as at 30 September 2014.

Prior periods:

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

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

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

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

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

Balances with related parties

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

	9 months ended 30.09.14 (unaudited)			9 months ended 30.09.13 (unaudited)			Year ended 31.12.13 (audited)
US$ 000	Entities under common control	Asso-ciated compa-nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties	Entities under common control	Asso- ciated compa- nies	Other related parties
Available-for-sale financial assets ^j	139	-	-	402	-	-	396	-	-
Other non-current assets ^k	5,809	-	-	7,407	-	-	7,438	-	-
Prepayments for property, plant and equipment ^l	793	-	-	1,527	-	-	1,548	-	-
Total non-current assets	6,741	-	-	9,336	-	-	9,382	-	-
Trade and other receivables ^m	785	-	27	965	-	97	1,150	-	31
Prepayments and other current assets ⁿ	1,206	1,225	380	4,633	2,293	603	136	1,172	186
Cash and cash equivalents ^o	162,364	-	-	127,259	-		143,005	-	-
Total current assets	164,355	1,225	407	132,857	2,293	700	144,291	1,172	217
Trade and other payables ^p	1,125	-	39	1,762	-	299	3,099	-	275
Current liabilities	1,125	-	39	1,762	-	299	3,099	-	275

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 of the values in the table above are related 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$139 thousand as at 30 September 2014 related to the investment in PJSC Stakhanov Railcar Company (30 September 2013: US$403 thousand; 31 December 2013: US$396 thousand). The investment in Vostok Ruda Ltd. was fully impaired in a previous period.

k As at 30 September 2014, other non-current assets related to a deposit of US$5,809 thousand with bank F&C (30 September 2013: US$7,407 thousand; 31 December 2013: US$7,438 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 A prepayments of US$7,983 thousand (at current exchange rate) was made in relation to rail cars purchased from PJSC Stakhanov Railcar Company (30 September 2013: nil; 31 December 2013: nil) during the period ended 30 September 2014 in relation to 300 rail cars ordered. Due to uncertainty surrounding the delivery of the rail cars or recovery of the prepayment, the Group recorded an allowance for the full amount as at 30 September 2014 (see section Purchases of property, plant, equipment and investments above for further details). The prepayments made as at 30 September 2013 are in relation to 267 rail cars ordered in 2013 and received in full until August 2013. Prepayments of US$669 thousand were made to OJSC Berdichev Machine-Building Plant Progress (30 September 2013: US$1,271 thousand; 31 December 2013: US$1,397 thousand).

m As at 30 September 2014, trade and other receivables included outstanding amounts of US$282 thousand due from Vorskla Steel Ltd. (30 September 2013: US$359 thousand; 31 December 2013: US$387 thousand) in relation to other sales and US$338 thousand (30 September 2013: US$451thousand; 31 December 2013: US$540 thousand) from Kislorod PCC for the sale of power, steam and water.

n Prepayments and other current assets include US$993 thousand prepayment made to OJSC Ukrzakordongeologia for gas (30 September 2013: US$736 thousand; 31 December 2013: nil). The balance as at end of the period ended 30 September 2013 included an amount of US$ 3,691 for prepayments for concentrate made to Vostok Ruda.

o As at 30 September 2014, cash and cash equivalents with Bank F&C were US$162,259 thousand (30 September 2013: US$127,259 thousand; 31 December 2013: US$143,005 thousand). Further information is provided under Transactional banking arrangements below.

p Trade and other payables amounting to US$530 thousand for compressed air and oxygen purchased from Kislorod PCC (30 September 2013: US$592 thousand; 31 December 2013: US$639 thousand). US$71 thousand (30 September 2013: US$276 thousand; 31 December 2013: US$215 thousand) are due to AutoKraZ Holding Co. and US$107 thousand (30 September 2013: US$106 thousand; 31 December 2013: US$258 thousand) OJSC Berdichev Machine-Building Plant Progress for the procurement of spare parts. The balance as at end of the period ended 30 September 2013 included an amount of US$409 thousand payable to PJSC Stakhanov Railcar Company related to rail car deliveries. The balance as at end of the period ended 31 December 2013 included an amount US$1,690 thousand for procurement of gas from OJSC Ukrzakordongeologia.

Associated companies

n Prepayments and other current assets relate to prepayments of US$1,225 thousand (30 September 2013: US$2,293 thousand; 31 December 2013: US$1,172 thousand) made TIS Ruda LLC for transhipment services.

Other related parties

n Prepayments and other current assets relate to prepayments of US$380 thousand for distribution services made to Slavutich Ruda Ltd. (30 September 2013: US$603 thousand; 31 December 2013: US$186 thousand).

p Trade and other payables amounting to US$39 thousand as at 30 September 2014 are in respect of distribution services provided by Slavutich Ruda Ltd. (30 September 2013: US$299 thousand; 31 December 2013: US$275 thousand).

Transactional banking arrangements

The Group has transactional banking arrangements with Bank Finance & Credit ('Bank F&C') in Ukraine which is under common control of the majority shareholder of Ferrexpo plc. Finance income and expenses are disclosed in the table on page 16.

The Group had an uncommitted multicurrency revolving loan facility agreement with Bank F&C which expired on 16 April 2013. The maximum limit of this facility amounted to UAH80 million and the terms and conditions of the facility were subject of an independent fair and reasonable confirmation at its inception and renewal dates. The loan facility remained undrawn for the entire period of time since its inception.

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 (30 September 2014: US$6,178 thousand; 31 December 2013: US$10,009 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$4,987 thousand as of the date of the signing of the agreements. The terms and conditions of both facilities were the subject of an independent fair and reasonable confirmation.

US$ 000	As at 30.09.14	As at 30.09.13	As at 31.12.13
	(unaudited)	(unaudited)	(audited)
Loan facilities	6,178	10,009	10,009
Amount drawn	-	-	-
Letter of credit facility outstanding	-	476	153
Bank guarantee facility outstanding	-	-	-

Bank F&C provides mortgages and loans to employees of the Group for the acquisition, construction and renovation of apartments in Ukraine. This is part of a social loyalty programme 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$5,809 thousand at Bank F&C as security (30 September 2013: US$7,407 thousand; 31 December 2013: US$7,438 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 2013.

Cash and cash equivalent balances held with Bank F&C are in the normal course of business and are held on call or from time to time on overnight deposit. Interest is paid on balances held. 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 30.09.14	As at 30.09.13	As at 31.12.13
	(unaudited)	(unaudited)	(audited)
Operating lease commitments	52,672	82,917	65,555
Capital commitments on purchase of PPE	125,418	119,795	102,958

Legal

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

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

On 10 April 2010, The Higher Commercial Court of Ukraine upheld judgments of the lower courts on invalidating the share sale and purchase agreement ('SPA') pursuant to which a 40.19% stake in OJSC Ferrexpo Poltava Mining ('FPM') was sold on 20 November 2002 to nominee companies that were previously ultimately controlled by Kostyantin Zhevago.

On 6 October 2011, the sellers under the SPA filed a claim to restore their title to shares in FPM as of 2002 by seeking to invalidate a number of decisions of FPM general shareholders meeting. On 26 March 2013, Kyiv City Commercial Court granted a freezing order against FPM shares whilst the case was considered.

On 20 October 2014, Kyiv City Commercial Court rendered a judgment in the case and dismissed the claims in full. The court concluded amongst other things that restitution of the status quo ante of the shareholding position as sought by claimants is not possible under Ukrainian law. The court also cancelled the injunction granted on 26 March 2013 to suspend trading of FPM shares.

As part of the court process, the claimants filed an appeal against the Judgment on 31 October 2014 which was returned by the appeal court on formal grounds. On 26 November 2014, the claimants re-submitted the appeal. As at the date of the publication of these interim financial statements for the period ended 30 September 2014, the appeal had not been considered and no decision on the merits of the appeal had been made.

On 2 December 2014, the Supreme Court of Ukraine set aside the judgement of the Higher Commercial Court of Ukraine delivered in April 2010 (see above) and remitted the case for new cassation review by the Higher Commercial Court of Ukraine. As at the date of the publication of these interim financial statements for the period ended 30 September 2014, no decision on the merits of the cassation review by the Higher Commercial Court of Ukraine had been made.

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

Tax and other regulatory compliance

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

Recoverable VAT amounting to US$12,130 thousand (30 September 2013: US$99,060 thousand; 31 December 2013: US$101,977 thousand) outstanding at 30 September 2014 is 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 for VAT balances expected to be recovered through VAT bonds. See also disclosure made in note 13. No provision has been made for any related penalties and fines, which would in the case of a final negative ruling become payable.

Note 20: Financial instruments

Fair values

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

	Carrying amount			Fair Value
US$ 000	As at 30.09.14 (unaudited)	As at 30.09.13 (unaudited)	As at 31.12.13 (audited)	As at 30.09.14 (unaudited)	As at 30.09.13 (unaudited)	As at 31.12.13 (audited)
Financial assets
Cash and cash equivalents	608,075	339,219	390,491	608,075	339,219	390,491
Marketable securities	72,480	-	-	72,480	-	-
Trade and other receivables	93,877	90,245	102,498	93,877	90,245	102,498
Available-for-sale financial assets	139	82,785	82,778	139	82,785	82,778
Other financial assets	12,596	6,843	15,054	12,596	6,843	15,054
Total financial assets	787,167	519,092	590,821	787,167	519,092	590,821
Financial liabilities
Trade and other payables	28,744	50,612	50,001	28,744	50,612	50,001
Accrued liabilities	29,570	22,648	32,015	29,570	22,648	32,015
Interest bearing loans and borrowings	1,319,859	1,016,604	1,029,239	1,287,227	996,422	1,035,933
Total financial liabilities	1,378,173	1,089,864	1,111,255	1,345,541	1,069,682	1,117,949

Marketable securities

The marketable securities (VAT bonds) are generally fair valued based on the market price quotation at the reporting date. As at 30 September 2014, the remaining balance of VAT bonds was fair valued through profit or loss. See also note 13 for further information.

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 30 September 2014, the Group held a 15.5% equity investment in Ferrous Resources acquired during the financial year 2013 in various transactions with total transaction costs of US$82,382 thousand, which was also the carrying amount as at the end of the comparative periods ended 30 September 2013 and 31 December 2013. In the quarter to 30 September 2014, the iron ore prices in the global market declined significantly and no recovery is expected in the near future based on available market outlooks. As a consequence of this significant adverse change in the iron ore market and industry, the investment in Ferrous Resources was fully impaired as at 30 September 2014 due to surrounding uncertainties in respect of the current operational activity and the future development of the mining operation.

The available-for-sale equity investment in PJSC Stakhanov Railcar Company in the amount of US$139 thousand (30 September 2013: US$403 thousand; 31 December 2013: US$396 thousand) is 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 30.09.14 (unaudited)
	Level 1	Level 2	Level 3	Total
Financial assets
Marketable securities	72,480	-	-	72,480
Available-for-sale financial assets	139	-	-	139
Total financial assets	72,619	-	-	72,619

US$ 000	As at 30.09.13 (unaudited)
	Level 1	Level 2	Level 3	Total
Financial assets
Marketable securities	-	-	-	-
Available-for-sale financial assets	403	-	82,382	82,785
Total financial assets	403	-	82,382	82,785

US$ 000	As at 31.12.13 (audited)
	Level 1	Level 2	Level 3	Total
Financial assets
Marketable securities	-	-	-	-
Available-for-sale financial assets	396	-	82,382	82,778
Total financial assets	396	-	82,382	82,778

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

As of 30 September 2014 the fair value of the available-for-sale financial assets in Level 1 decreased by US$257 thousand of which US$102 thousand is included in other comprehensive income (30 September 2013: loss of US$150 thousand; 31 December 2013: loss of US$138 thousand) and US$155 thousand as foreign exchange difference in 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 30.09.14	As at 30.09.13	As at 31.12.13
	(unaudited)	(unaudited)	(audited)
Opening balance	82,382	-	-
Total gains or losses:	-	-	-
- in profit or loss	(82,382)	-	-
- in other comprehensive income	-	-	-
Purchases	-	82,382	82,382
Transfer out of Level 3	-	-	-
Closing balance	-	82,382	82,382

Note 21: Events after the reporting period

No material adjusting or non-adjusting events have occurred subsequent to the period end except for the sale of the total balance of VAT bonds in various transactions that were received for the settlement of VAT due by 4 November 2014. Further information is provided in note 13.

Glossary

Act	The Companies Act 2006
AGM	The Annual General Meeting of the Company
Articles	Articles of Association of the Company
Audit Committee	The Audit Committee of the Company's Board
Belanovo or Belanovskoye	An iron ore deposit located immediately to the north of Yeristovo
Benchmark Price	Platts 62% Fe iron ore fines price CFR China
Beneficiation Process	A number of processes whereby the mineral is extracted from the crude ore
BIP	Business Improvement Programme, a programme of projects to increase production output and efficiency at FPM
Board	The Board of Directors of the Company
Bt	Billion tonnes
Capesize	Capesize vessels are typically above 150,000 tonnes deadweight. Ships in this class include oil tankers, supertankers and bulk carriers transporting coal, ore, and other commodity raw materials. Standard capesize vessels are able to transit through the Suez Canal
Capital Employed	The aggregate of equity attributable to shareholders, non-controlling interests and borrowings
CFR	Delivery including cost and freight
C1 Costs	Represent the cash costs of production of iron pellets from own ore, divided by production volume, from own ore, and excludes non-cash costs such as depreciation, pension costs and inventory movements, costs of purchased ore, concentrate and production cost of gravel
CIF	Delivery including cost, insurance and freight
CIS	The Commonwealth of Independent States
Code	The UK Corporate Governance Code published in 2012
Company	Ferrexpo plc, a public company incorporated in England and Wales with limited liability
CPI	Consumer Price Index
CSR	Corporate Safety and Social Responsibility
CSR Committee	The Corporate Safety and Social Responsibility Committee of the Board of the Company
DAP	Delivery at place
DFS	Detailed feasibility study
Directors	The Directors of the Company
Dragline Excavators	Heavy machinery used to excavate material. A dragline consists of a large bucket which is suspended from a boom
EBITDA	The Group calculates EBITDA as profit from continuing operations before tax and finance plus depreciation and amortisation and non-recurring exceptional items included in other income and other expenses, share based payment expenses and the net of gains and losses from disposal of investments and property, plant and equipment
EBT	Employee Benefit Trust
EPS	Earnings per share
Executive Committee	The Executive Committee of management appointed by the Company's Board
Executive Directors	The Executive Directors of the Company
FBM	Ferrexpo Belanovo Mining, also known as BGOK, a company incorporated under the laws of Ukraine
Fe	Iron
Ferrexpo	The Company and its subsidiaries
Ferrexpo AG Group	Ferrexpo AG and its subsidiaries including FPM
Fevamotinico S.a.r.l.	A company incorporated with limited liability in Luxembourg
FOB	Delivered free on board, which means that the seller's obligation to deliver has been fulfilled when the goods have passed over the ship's rail at the named port of shipment, and all future obligations in terms of costs and risks of loss or damage transfer to the buyer from that point onwards
FPM	Ferrexpo Poltava Mining, also known as Ferrexpo Poltava GOK Corporation or PGOK, a company incorporated under the laws of Ukraine
FRMC	Financial Risk Management Committee, a sub-committee of the Executive Committee
FTSE 250	Financial Times Stock Exchange top 250 companies
FYM	Ferrexpo Yeristovo Mining, also known as YGOK, a company incorporated under the laws of Ukraine
Group	The Company and its subsidiaries
Growth Markets	These are predominantly in Asia and have the potential to deliver new and significant sales volumes to the Group
HSE	Health, safety and environment
IAS	International Accounting Standards
IASB	International Accounting Standards Board
IFRS	International Financial Reporting Standards, as adopted by the EU
IPO	Initial public offering
Iron ore concentrate	Product of the benefication process with enriched iron content
Iron ore sinter fines	Fine iron ore screened to -6.3mm
Iron ore pellets	Balled and fired agglomerate of iron ore concentrate, whose physical properties are well suited for transportation to and reduction within a blast furnace
JORC	Australasian Joint Ore Reserves Committee - the internationally accepted code for ore classification
K22	GPL ore has been classified as either K22 or K23 quality, of which K22 ore is of higher quality (richer)
KPI	Key Performance Indicator
Kt	Thousand tonnes
LIBOR	The London Inter Bank Offered Rate
LLC	Limited Liability Company
LTIFR	Lost-Time Injury Frequency Rate
LTIP	Long-Term Incentive Plan
m3	Cubic metre
Majority Shareholder	Fevamotinico S.a.r.l., The Minco Trust and Kostyantin Zhevago (together)
Mm	Millimetre
Mt	Million tonnes
Mtpa	Million tonnes per annum
Natural Markets	These include Turkey, the Middle East and Western Europe and are those markets where Ferrexpo has a competitive advantage over more distant producers, but where market share remains relatively low
Nominations Committee	The Nominations Committee of the Company's Board
Non-executive Directors	Non-executive Directors of the Company
NOPAT	Net operating profit after tax
OHSAS 18001	International safety standard 'Occupational Health & Safety Management System Specification'
Ordinary Shares	Ordinary Shares of 10 pence each in the Company
Ore	A mineral or mineral aggregate containing precious or useful minerals in such quantities, grade and chemical combination as to make extraction economic
Panamax	Modern panamax ships typically carry a weight of between 65,000 to 90,000 tonnes of cargo and can transit both Panama and Suez canals
PPI	Ukrainian producer price index
Probable Reserves	Those measured and/or indicated mineral resources which are not yet 'proved', but of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of determination and under specific economic conditions
Proved Reserves	Measured mineral resources of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of determination and under specific economic conditions
Rail car	Railway wagon used for the transport of iron ore concentrate or pellets
Relationship Agreement	The relationship agreement entered into among Fevamotinico S.a.r.l., Kostyantin Zhevago, The Minco Trust and the Company
Remuneration Committee	The Remuneration Committee of the Company's Board
Reserves	Those parts of mineral resources for which sufficient information is available to enable detailed or conceptual mine planning and for which such planning has been undertaken. Reserves are classified as either proved or probable
Sinter	A porous aggregate charged directly to the blast furnace which is normally produced by firing fine iron ore and/or iron ore concentrate, other binding materials, and coke breeze as the heat source
Spot price	The current price of a product for immediate delivery
Sterling/£	Pound Sterling, the currency of the United Kingdom
STIP	Short-Term Incentive Plan
Tailings	The waste material produced from ore after economically recoverable metals or minerals have been extracted. Changes in metal prices and improvements in technology can sometimes make the tailings economic to process at a later date
Tolling	The process by which a customer supplies concentrate to a smelter and the smelter invoices the customer the smelting charge, and possibly a refining charge, and then returns the metal to the customer
Ton	A US short ton, equal to 0.9072 metric tonnes
Tonne or t	Metric tonne
Traditional Markets	These lie within Central and Eastern Europe and include steel plants that were designed to use Ferrexpo pellets. Ferrexpo has been supplying some of these customers for more than 20 years. Ferrexpo has well-established logistics routes and infrastructure to these markets by both river barge and rail. These markets include Austria, Czech Republic, Hungary, Serbia and Slovakia
Treasury Shares	A company's own issued shares that it has purchased but not cancelled
TSF	Tailings storage facility
TSR	Total shareholder return. The total return earned on a share over a period of time, measured as the dividend per share plus capital gain, divided by initial share price
UAH	Ukrainian Hryvnia, the currency of Ukraine
Ukr SEPRO	The quality certification system in Ukraine, regulated by law to ensure conformity with safety and environmental standards
US$/t	US Dollars per tonne
VAT	Value Added Tax
Value-in-use	The implied value of a material to an end user relative to other options, e.g. evaluating, in financial terms, the productivity in the steel making process of a particular quality of iron ore pellets versus the productivity of alternative qualities of iron ore pellets.
WAFV	Weighted average fair value
WMS	Wet magnetic separation
Yeristovo or Yeristovskoye	The deposit being developed by FYM

This information is provided by RNS

The company news service from the London Stock Exchange

END

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Ferrexpo (FXPO)

Friday, 3rd January 2025

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