Ferrexpo auditor eyes 'discrepancies' at linked Ukraine charity

Iron ore pellet producer Ferrexpo expects full-year profits will be down less than in the first half but that it is investigating payments made to a connected charitable foundation called Blooming Land in Ukraine.

For the full year, earnings before interest, tax, depreciation and amortisation is expected to come in at €500m, down from €551m the previous year - subject to audit. In the first half of the year EBITDA fell 18% to €234,150.

As part of the auditor Deloitte's process to verify the use of contributions made by Ferrexpo to Blooming Land, a Ukrainian charity set up to co-ordinate the FTSE 250 group's corporate social responsibility programme, the auditors received copies of bank statements directly from the charity.

The copies of the Blooming Land's bank statements contained, Ferrexpo said, "as yet unexplained discrepancies" and so the board of has decided to conduct a "comprehensive independent review".

Ferrexpo donated US$9.5m to Blooming Land in the first half of the year, as detailed in the interim results, but has not made any further donations since last May.

The charity was formed to provide medical and social services to local, regional and national communities throughout Ukraine. Blooming Land and its sub-funds are separately managed.

Ferrexpo intends to announce its full-year results on 20 March, as planned, though if the review is not complete by then, Deloitte has indicated that it "may qualify or otherwise modify its audit opinion".

Following the Group's 4Q 2018 trading update, as announced on 8 January 2019, Ferrexpo expects full year 2018 EBITDA to be approximately US$500 million (subject to audit).