Slide 1: Ferrexpo 2014 Full Year Results Presentation
F E R R E X P O 2 0 1 4 F U L L Y E A R R E S U LT S P R E S E N TAT I O N
Slide 2: Disclaimer
DISCLAIMER This document is being supplied to you solely for your information and does not constitute or form any governmental or regulatory body without the prior written consent of the Company. part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to Cert
Slide 3: Introduction – Michael Abrahams, Chairman
INTRODUCTION MICHAEL ABRAHAMS CBE DL, CHAIRMAN 3
Slide 4: 2014 Financials – Chris Mawe, CFO
2 0 1 4 F I N A N C I A L S R E S U LT S C H R I S M AW E , C F O 4
Slide 5: 2014: Strong Performance
2014: STRONG PERFORMANCE US$M (unless otherwise stated) 2014 2013 % Change Benchmark iron ore price down 47% in 2014 from US$135/t to US$72/t, however Total production (kt) 11,021 10,813 2% Strong performance highlights strength of business model Sales volumes (kt) 11,167 10,689 5% Average CFR 6
Slide 6: Higher volumes, index based pricing, improved pellet premiums and lower costs supported 2014 EBITDA
HIGHER VOLUMES, INDEX BASED PRICING, IMPROVED PELLET PREMIUMS AND LOWER COSTS SUPPORTED 2014 EBITDA REVENUE 2014 VS. 2013 (US$M) EBITDA 2014 VS. 2013 (US$M) 1600 430 64 11 1400 62 1200 164 600 1000 500 800 76 1,581 1,388 400 43 600 430 35 104 300 45 23 496 400 506 200 164 200 100 0 0 2013 Spot 62% F
Slide 7: Lower Costs
LOWER COSTS C1 CASH US$ PER TONNE BREAKDOWN OF C1 CASH COST 60 4% Royalites 3% Explosives 6% Spares 55 7% Maintenance 25% Electricity 50 -23% US$ per tonne 7% Grinding 45 bodies 60 10% 46 Personnel 15% Gas 40 -22% 10% Materials 35 13% Fuel 36 30 2013 2014 Jan/Feb 2015 45% = FPP1 52% = FPP1 81% = FPP
Slide 8: Major Capex Programmes Completed – 12 MTPA Capacity Achieved
MAJOR CAPEX PROGRAMMES COMPLETED – 1 2 M T PA C A PA C I T Y A C H I E V E D MAJOR CAPEX PROGRAMMES DELIVERED Project (US$M) 2014 2013 Status CUP: modernisation complete QUP: final of 3 floatation units commissioned in 1Q 15 (c. US$3M) Capacity upgrade project 37 20 Complete Sustaining capex (in
Slide 9: Cash Flows 2014 vs. 2013
CASH FLOWS 2014 VS. 2013 US$M (unless otherwise stated) 2014 2013 % Change EBITDA flat year on year EBITDA 496 506 (2%) Working capital reflects VAT refunds Non cash operating forex gain (76) (1) n/a Sustaining capex in-line with historic run rate Interest, tax & working capital (132) (272) (5
Slide 10: Liquidity and Financing 2014 vs. 2013
LIQUIDITY AND FINANCING 2014 VS. 2013 US$M (unless otherwise stated) Net debt Gross debt Debt maturity flat Opening net debt - 1 January 2014 (639) (1,029) Net debt increased by US$39M – losses on VAT Movement in net debt (39) Debt facilities repaid 119 Main debt maturity US$286M April 2016 Eu
Slide 11: Conclusion to Financial Review
CONCLUSION TO FINANCIAL REVIEW Strong financial performance Market weakness mitigated by: Higher volume & quality Improved pellet premiums Index based pricing Improved efficiency Currency devaluation Growth projects successfully completed Net debt reflects completion of projects
Slide 12: Business Update – Kostyantin Zhevago, CEO
B U S I N E S S U P D AT E K O S T YA N T I N Z H E VA G O , C E O 12
Slide 13: 2014: Decline in iron ore fines prices but pellet premiums increase
2014: DECLINE IN IRON ORE FINES PRICES BUT PELLET PREMIUMS INCREASE INCREASE IN PRICE GAP BETWEEN FINES & PELLETS IN 2014 Increase Proportion of Exports of Iron Ore (MT) 2000 2014 180 65% Fe fines FOB 65% Fe pellets FOB (MT) increase 160 Pellets 106 144 38 4% 140 US$ per tonne 120 Lump 93 207 144 12
Slide 14: US$2 billion re-invested into the business since IPO in 2007
SIGNIFICANT PROGRESS SINCE IPO: REVENUE & EBITDA DOUBLED, ASSET BASE WELL INVESTED 2007 2014 Mines FPM FPM & FYM Pellet output 9MT 11MT (31% from FYM) 110 rail cars 2,200 rail cars Acquired berth at TIS Ruda port in May 2007 (5MTPA capacity) Shipped a record 6.3MT through port Logistics 0 capes load
Slide 15: Ferrexpo well positioned to continue to generate positive cashflow
F E R R E X P O W E L L P O S I T I O N E D T O C O N T I N U E T O G E N E R AT E POSITIVE CASHFLOW BEHAVIOUR OF MARGIN & COSTS THROUGH THE CYCLE: Stable pellet premiums CRU historic price curve for 65% Fe FOB Tubarao pellets1 250 C3 freight 2015 forward curve c. US$14 per tonne, improving net
Slide 16: Ukraine
UKRAINE POLAND RUSSIA MOSTYSKA OVAKIA HUNGARY MOLDOVA PORT sara YUZHNY ; ROMANIA DANUBE RIVER : SEA OF AZOV PORT RENI PORT IZMAIL (|) FERREXPO © porT CONSTANTA
Slide 17: Ukraine
UKRAINE Uncertain operating environment but progress has been made: Introduction of flexible exchange rate VAT refunds reintroduced But still some difficulties: Prepaid corporate profit tax Inflation Weak Ukrainian banking sector International support IMF US$17.5 billion loan packa
Slide 18: Strategy in the current environment
S T R AT E G Y I N T H E C U R R E N T E N V I R O N M E N T IN LINE WITH OUR CASH GENERATION ABILITY, OUR PRIORITIES ARE TO: Increase production & quality Improve operating costs, efficiency and competitiveness of the operations Continue to finalise new long term contracts with premium steel
Slide 19: Appendix
APPENDIX () FERREXPO i
Slide 20: Gorishne-Plavninskoye: a world class pellet producer
A WORLD CLASS PELLET PRODUCER LONG LIFE RESOURCE ESTABLISHED LOGISTICS CAPABILITY PRODUCTION DEVELOPMENT LICENCE MAINTENANCE 4.0BT BROVARIKOVSKOYE 3.4BT MANUILOVSKOYE 2.8BT KHARCHENKOVSKOYE 1.4BT VASILIEVSKOYE 1.5BT ZARUDENSKOYE GALESCHINSKOYE BELANOVSKOYE 1.2BT MINE LIFE – 23 YEARS YERISTOVSKOYE 0.
Slide 21: Reconciliation of EBITDA to profit from continuing operations before adjusted items
R E C O N C I L I AT I O N O F E B I T D A T O P R O F I T F R O M C O N T I N U I N G O P E R AT I O N S B E F O R E A D J U S T E D I T E M S US$M (unless otherwise stated) 2014 2013 EBITDA 496.3 505.9 Share-based payments (0.5) (1.3) Losses on disposal of PPE (4.8) (8.5) Write-down of VAT receiva