Ferrexpo appoints independent director, expects EBITDA jump in 1H19
7 June 2019
Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO
LN) will appoint on June 10 Graeme Dacomb as an independent non-executive
director chairing the Audit Committee, the company announced on June 7 in a
press release together with a statement for the AGM conducted the same day.
Dacomb was a partner at EY for 26 years and was a member of the Financial
Reporting Review Panel from 2011 to 2018. Dacomb will oversee the appointing of
a new auditor, which is currently in process, Ferrexpo said.
Ferrexpo’s statement cited its chairman, Steve Lucas,
saying that the independent review into the Blooming Land affair
has so far produced no conclusive evidence of any wrongdoing. Recall,
Ferrexpo’s previous auditor, Deloitte, resigned after having to qualify its
2018 audit opinion due to two key audit matters related to Blooming Land, an
independent third party charity that was responsible for coordinating
Ferrexpo’s corporate social responsibility program. The key two audit matters
were whether Blooming Land expended donated funds on legitimate business
payments and whether or not it was, in fact, a party related to Ferrexpo and
its CEO, Kostyantyn Zhevago.
In a trading update released as part of the AGM
statement, Ferrexpo said it expects its EBITDA to increase materially yoy in
1H19, driven by higher prices and volumes. The company said its C1 cost of
production rose less than expected due to a fall in oil and gas prices.
Dmytro Khoroshun: Ferrexpo’s strong fundamentals continue to be overshadowed by the
Blooming Land affair. Recall, Deloitte said when explaining its resignation that the investigation into Blooming Land has
identified a significant number of potential associations and linkages adjacent
to Ferrexpo’s CEO, and we think the issue of potential links between Zhevago
and Blooming Land is far more important for Ferrexpo than whether Blooming Land
misappropriated funds. It remains to be seen whether and how the independent
review that is under way is able to come to a conclusion that would differ from
Deloitte’s.
