Conclusions of the Independent Review CommitteeSource: RNS
30 August 2019
("Ferrexpo", the "Group" or the "Company")
Conclusions of the Independent Review Committee
As previously announced, the Company established the Independent Review Committee (IRC) to carry out an independent review into the use of funds donated by Ferrexpo to the Blooming Land Charity (the "Charity"). The work of the IRC and its advisers has been conducted in accordance with terms of reference approved by the Board (as detailed in the Group's 2018 Annual Report and Accounts) and has included a forensic review undertaken by BDO LLP, a review of relevant documentation, interviews with Ferrexpo employees and directors, correspondence with the Charity and other third parties and advice from legal counsel in the UK and Ukraine.
Whilst a significant amount of work has been undertaken by the IRC and its advisers, it has not been possible to explain a number of discrepancies outlined in the 2018 Annual Report relating to the Charity and its use of funds donated by Ferrexpo. As a result, the IRC has been unable to conclude as to the ultimate use of all of the funds by the Charity, a third party. Indications therefore remain that some of the funds could have been misappropriated. The Board is considering further steps in this regard.
To assist the Committee in its deliberations, the IRC has received a report from its advisers. After careful consideration of the report together with the work of the IRC itself, the IRC is satisfied that none of Ferrexpo's directors, management or employees have had any involvement in any possible misappropriation of funds.
The IRC re-affirms that the Charity is not a related party of the Group, its Chief Executive Officer (the majority shareholder of Ferrexpo) or its executive management, as defined under applicable accounting standards or Chapter 11 of the Listing Rules.
The IRC has now completed its work. The Company is aware of various tax and other investigations in Ukraine in connection with the above matters. The monitoring of these, and any other ongoing matters arising from the report, will now be taken forward by the Committee of Independent Directors. The Company will keep the market informed of any developments, as appropriate.
The Board of Ferrexpo is committed to the highest levels of corporate governance and transparency. Having suspended donations to the Charity in May 2018, the Group has now terminated its relationship with the Charity. Should the Company resume any national CSR programme in Ukraine, the Board will ensure adherence to the highest standards of diligence, oversight, governance and reporting.
Since the establishment of the IRC in February 2019, the Company has appointed two new Independent directors to the Board, both of whom joined the IRC: Graeme Dacomb as Chair of the Audit committee and Fiona MacAulay as Chair of the Remuneration committee. The Company also appointed Vitalii Lisovenko as Senior Independent director. In July 2019, Ferrexpo appointed Baker Tilly International as its new auditor.
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Notes to Editors:
Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine. It has been mining, processing and selling high quality iron ore pellets to the global steel industry for 40 years. Ferrexpo's resource base is one of the largest iron ore deposits in the world. In 2018, the Group produced 10.6 million tonnes of pellets, a 2% increase compared to 2017, ranking it as the 3rd largest exporter of pellets to the global steel industry with a market share of approximately 8%. Ferrexpo has a diversified customer base supplying steel mills in Austria, Germany, Japan, South Korea, Taiwan, China, Slovakia, the Czech Republic, Turkey, Vietnam and America. Ferrexpo has a premium listing on the main market of the London Stock Exchange under the ticker FXPO. For further information, please visit www.ferrexpo.com
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