1H 2015 INTERIM RESULTS PRESENTATION
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IN TR OD U C TION MIC H AEL ABR AH AMS C BE D L, C H AIR MAN 3
CHRIS MAWE, CFO 4
1 H 2 0 1 5 R E S U LT S D E M O N S T R AT E T H E Q U A L I T Y O F T H E F E R R E X P O A S S E T & R E S I L I A N C E O F T H E B U S I N E S S M O D E L SUMMARY FINANCIALS – Strong operational performance US$M (unless otherwise stated) 1H 15 1H 14 Change 2014 • Record 1H production volumes Total production (kt) 5,817 5,369 8% 11,021 • Record output of 65% Fe pellets (87% in 1H 2015) Sales volumes (kt) 5,680 5,498 3% 11,167 • Marketing continues to deliver benefits (11% better than Platts) Avg CFR 62% fines price (US$/t) 61 111 (46%) 97 Revenue 512 759 (33%) 1,388 • Lower C1 costs C1 cash cost (US$/t) 33.4 47.8 (30%) 45.9 – EBITDA margin 34% good performance in low iron ore price environment Operating foreign exchange gains 15 47 (69%) 76 EBITDA 176 321 (45%) 496 – Major Investment programs completed EBITDA less operating forex gains 161 274 (41%) 420 – Capex at sustaining levels Net CF from operating activities 88 138 (36%) 288 – Balance sheet strengthened CAPEX 25 132 (81%) 235 – Net debt to EBITDA of 1.9x at 30 June 2015 1 Net debt at period end 653 694 (6%) 678 – Dividend maintained at 3.3 US cents Gross debt at period end 1,123 1,053 7% 1,305 Cash at period end 471 359 31% 627 1 Last twelve months 5
N I C H E P R E M I U M P R O D U C T, C O S T C O N T R O L A N D S T R O N G M A R K E T I N G M AT E R I A L LY O F F S E T L O W E R P R I C E S REVENUE 1H 2014 VS. 1H 2015 (US$M) EBITDA 1H 2014 VS. 1H 2015 (US$M) 800 350 700 280 300 600 14 19 58 58 250 500 6 280 321 759 512 200 400 37 32 150 300 60 5 176 14 100 200 58 100 50 0 0 1H 2014 Platts 62% Fe Lower C3 Quality Sales volume Freight pass 1H 2015 1H 2014 Platts 62% Lower C3 Quality Sales UAH cost C1 cost Other Operating 1H 2015 revenue fines index through & other revenue EBITDA Fe fines volume reduction reduction: forex gains EBITDA 1 index (net of lower oil & & losses inflation) efficiencies 1 1H 2014 operating forex exchange gain US$47M compared to 1H 2015 operating forex exchange gain US$15M 6
Q U A L I T Y I N C R E A S I N G & C 1 C O S T R E D U C I N G W H I L S T M O N T H O N M O N T H I N F L AT I O N R E D U C E S C1 COST REDUCING IN REAL & CONSTANT CURRENCY TERMS; C1 COST CONTINUES POSITIVE TREND QUALITY INCREASING – Wages & electricity prices reflect local inflation – High CPI absorbed in period 160 Platts 62% Fe iron ore fines price index (US$/t) – Month on Month CPI reducing significantly 1H 2014 C1 COST VS. 1H 2015 100 US$ per tonne 1 st FYM ore 60 CPI =100 CPI =148 50 70 100% 9.0 3.0 47.8 40 3.7 1.0 90% 0.3 87% 60 30 61.8 80% 33.4 50 57.8 55.0 56.6 20 50 70% 49.6 10 47.8 60% 40 57% 0 50% 44.0 C1 cost 1H UAH Oil price Cost Quality Other C1 cost 1H 30 48% 33.4 46% 40% 2014 devaluation effect reduction 2015 44% (net of initiatives 30% 20 inflation) 20% 10 10% MONTH ON MONTH INFLATION RATE 1H 2015 (CPI) 0 0% 1H 2013 2H 2013 1H 2014 2H 2014 1H 2015 115 10.3 21.4 Avg UAH 8.0 8.0 13.5 110 C1 cash cost (US$/t) Avg output of 65% Fe vs. total production Constant currency (UAH8/US$) 105 100 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 7
C A S H G E N E R AT I O N R E M A I N S S T R O N G I N FA C E O F L O W E R P R I C E S – Tax paid lower : VAT / CPT linkage reduced to 10% US$M (unless otherwise stated) 1H 15 1H 14 Change 2014 • US$54M prepaid CPT balance to recover EBITDA 176 321 (45%) 496 – Working capital FX non-cash gain (15) (47) (76) (69%) • VAT stable Interest paid (34) (28) (61) 21% • Higher pellet & ore stocks: marketing & cost optimisation Tax paid (8) (45) (82%) (58) – Capex at sustaining levels Working capital movements & other (31) (63) (51%) (13) Net cash flow from operating activities 88 138 (36%) 288 – Sale of Ferrous Resources for US$42M supported liquidity Capex (25) (132) (81%) (235) – Stable dividend YoY Proceeds from sale of investment 42 - - - – Net debt reduction of US$41M (LTM) whilst increasing liquidity by Dividend (58) (57) - (77) US$111M (LTM) Cash balance at end of period 471 359 31% 627 – Prudent credit metrics maintained in lower iron ore price Net debt (653) (694) (678) (6%) environment Net debt to LTM EBITDA 1.9x 1.2x 1.4x 50% 8
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