At least no one died at Ferrexpo 's (FXPO) mines last year. In 2014, there were three work-related fatalities, but average iron ore prices were 73 per cent higher, gross profit was 44 per cent greater at $740m (£518m) and the Ukrainian miner's net debt was only 1.4 times cash profit.
Now, thanks to the collapse of its transactional bank, that ratio has doubled. Bank F&C - which before entering liquidation in December was controlled by Ferrexpo chief executive and largest shareholder Konstantin Zhevago - held $175m of the group's cash, which has now been recorded as a charge in the income statement. What's more, the iron ore miner cannot be certain of recovering the funds, which could result in a $146m loss after expected tax relief.
The indeterminate damage to the balance sheet leaves Ferrexpo in a somewhat perilous position, with just $36m of cash available at the end of February and $203m in debt to pay this year. Despite positive cash flows, such high gearing left the board with little choice but to cut the dividend.
Prior to these results, JPMorgan was forecasting adjusted losses of $59m before tax and 8¢ per share this year, against losses of $25m and 1¢ in 2015.
FERREXPO (FXPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 33.3p | MARKET VALUE: | £196m | |
| TOUCH: | 33.25-34p | 12-MONTH HIGH: | 83p | LOW: 13p |
| DIVIDEND YIELD: | nil | PE RATIO: | 8 | |
| NET ASSET VALUE: | 42¢ | NET DEBT: | $868m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 1.80 | 691.0 | 97.1 | 6.6 |
| 2012 | 1.40 | 266.0 | 37.1 | 6.6* |
| 2013 | 1.60 | 305 | 44.8 | 6.6* |
| 2014 | 1.39 | 254.3 | 30.5 | 6.6* |
| 2015 | 0.96 | 25.4 | 5.7 | nil |
| % change | -31 | -90 | -81 | - |
£1=$1.42 | ||||
