(Reuters) - Shares of Ferrexpo Plc fell more than 7 percent after the iron ore pellet producer said on Monday an ongoing review of statements of a charitable foundation in Ukraine to which it made donations may affect its books.
Ferrexpo, which has major assets in Ukraine, said the bank statements of the charity Blooming Land, which was set up mainly for its corporate social responsibility (CSR) program, “contained as yet unexplained discrepancies,” but did not give further details.
Funding for Blooming Land’s CSR activities is provided solely by one of the company’s units in Ukraine and Khimreaktiv LLC, an entity ultimately controlled by Ukrainian mogul and Ferrexpo’s Chief Executive Officer and owner Kostyantin Zhevago.
In August, the company said during the first-half of 2018 its board came to know about certain contributions in 2017 by Khimreaktiv into one of the sub-funds of the charity.
Later in 2017, those contributions were repaid by the sub-fund to Khimreaktiv using Ferrexpo’s contributions to the charity, the company had said, adding that these transactions were declared only after the company made enquiries.
The company on Monday reiterated Blooming Land and its sub-funds are separately managed and not controlled by the group.
Ferrexpo also forecast 2018 core earnings below last year. It now expects full-year core earnings to be about $500 million, compared with $551 million last year. In January, Ferrexpo had said it was facing lower shipment volumes and higher production costs.
Shares of the London-listed company were down 7.5 percent at 242.7 pence as of 0853 GMT.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Arun Koyyur