SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER 

Pursuant to Rule 13a-16 or 15d-16 

under the Securities Exchange Act of 1934

 

For the Month of October, 2021

 

Commission File Number: 001-37668

 

FERROGLOBE PLC 

(Name of Registrant)

 

5 Fleet Place 

London, EC4M7RD 

(Address of Principal Executive Office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  x Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes  ¨ No  x

 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

 

 

 

 

 

 

Updates to the Interim Financial Statements of Ferroglobe PLC

 

On October 6, 2021, Ferroglobe PLC (“Ferroglobe” or the “Company”) provided updated unaudited interim condensed consolidated statements of financial position, income, comprehensive income, changes in equity and cash flows as of and for the three months ended March 31, 2021 and the three months ended June 30, 2021, respectively (the “Updated Interim Financial Statements”). The Updated Interim Financial Statements reflect the following relevant changes to the financial information of the Company previously included with the Company’s Form 6-K, furnished to the Securities and Exchange Commission (the “Commission”) on May 17, 2021, and the Company’s Form 6-K, furnished to the Commission on August 17, 2021:

 

·The cash used to purchase the European free CO2 rights for 2020 has been reclassified to be presented as cash flow from operating activities to be consistent with how this item was presented in 2020. Previously, this cash flow item was presented as cash flow from investing activities.

 

·The $350 million aggregate principal amount of senior notes due 2022 (the “Senior Notes”) have been reclassified as current liabilities. Previously, the Senior Notes were presented as non-current liabilities.

 

The Updated Interim Financial Statements are attached as Exhibits 99.1 and 99.2 hereto.

 

Incorporation by Reference

 

Exhibits 99.1 and 99.2 to this Report on Form 6-K shall be incorporated by reference into the prospectus included in our registration statement on Form F-3 (File No. 333-259445), filed with the Commission on September 10, 2021; the prospectus included in our registration statement on Form F-3 (File No. 333-258254), filed with the Commission on July 29, 2021, as amended by our F-3/A filed with the Commission on August 10, 2021; and the prospectus included in our registration statement on Form F-3 (File No. 333-255973), filed with the Commission on May 10, 2021, as amended by our F-3/A filed with the Commission on June 11, 2021, in each case to the extent not superseded by information subsequently filed or furnished (to the extent we expressly state that we incorporate such furnished information by reference) by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.

 

Exhibits

 

Reference is made to the Exhibit Index included hereto.

 

 

 

 

EXHIBIT INDEX

 

Exhibit
No.
  Description
     
99.1   Ferroglobe PLC unaudited interim condensed consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows as of and for the three months ended March 31, 2021
     
99.2   Ferroglobe PLC unaudited interim condensed consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows as of and for the three months ended June 30, 2021

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: October 6, 2021

 

  FERROGLOBE PLC
   
  By: /s/ Marco Levi
    Name: Marco Levi
    Title: Chief Executive Officer

 

 

 

Exhibit 99.1

 

  

Ferroglobe PLC and Subsidiaries

 

Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2021 and December 31,
2020 and for the three months ended March 31, 2021 and March 31, 2020.

  

 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

Thousands of US dollars

 

       March 31,   December 31, 
   Notes   2021   2020 
ASSETS
Non-current assets               
Goodwill   Note 4    29,702    29,702 
Other intangible assets   Note 5    79,526    20,756 
Property, plant and equipment   Note 6    593,355    620,034 
Other non-current financial assets   Note 16    4,984    5,057 
Deferred tax assets   Note 14    620     
Non-current receivables from related parties   Note 18    2,345    2,454 
Other non-current assets        11,765    11,904 
Total non-current assets        722,297    689,907 
Current assets               
Inventories   Note 7    228,145    246,549 
Trade and other receivables   Note 8    276,633    242,262 
Current receivables from related parties   Note 18    3,063    3,076 
Current income tax assets        12,277    12,072 
Other current financial assets   Note 16    1,004    1,008 
Other current assets        45,028    20,714 
Current restricted cash and cash equivalents   Note 9    6,069    28,843 
Cash and cash equivalents   Note 9    78,298    102,714 
Total current assets        650,517    657,238 
Total assets        1,372,814    1,347,145 
EQUITY AND LIABILITIES
Equity               
Share capital        1,784    1,784 
Reserves        450,568    696,774 
Translation differences        (205,206)   (206,759)
Valuation adjustments        5,511    5,755 
Result attributable to the Parent        (67,382)   (246,339)
Non-controlling interests        113,697    114,504 
Total equity   Note 10    298,972    365,719 
Non-current liabilities               
Deferred income        42,959    620 
Provisions   Note 11    106,220    108,487 
Bank borrowings   Note 12    4,509    5,277 
Lease liabilities   Note 13    11,942    13,994 
Debt instruments   Note 15    -    346,620 
Other financial liabilities        37,530    29,094 
Other non-current liabilities        16,727    16,767 
Deferred tax liabilities   Note 14    26,834    27,781 
Total non-current liabilities        246,721    548,640 
Current liabilities               
Provisions   Note 11    110,930    55,296 
Bank borrowings   Note 12    74,498    102,330 
Lease liabilities   Note 13    7,596    8,542 
Debt instruments   Note 15    349,966    10,888 
Other financial liabilities        24,983    34,802 
Payables to related parties   Note 18    5,042    3,196 
Trade and other payables        171,052    149,201 
Current income tax liabilities        3,947    2,538 
Other current liabilities        79,107    65,993 
Total current liabilities        827,121    432,786 
Total equity and liabilities        1,372.814    1,347,145 

 

Unaudited data at March 31, 2021

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements

 

1 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Thousands of US dollars

 

       Three Months Ended 
       March 31, 
   Notes   2021   2020 
Sales   Note 19    361,390    311,223 
Cost of sales        (250,165)   (243,360)
Other operating income        15,321    7,768 
Staff costs        (95,267)   (55,097)
Other operating expense        (50,243)   (40,067)
Depreciation and amortization charges, operating allowances and write-downs        (25,285)   (28,668)
Other gains and losses        66    (671)
Impairment losses   Note 6         
Operating (loss)        (44,183)   (48,872)
Net finance expense        (15,864)   (16,484)
Financial instruments gain   Note 15        3,168 
Exchange differences        (9,314)   2,436 
(Loss) before taxes        (69,361)   (59,753)
Income tax benefit (expense)        844    10,696 
(Loss) for the period        (68,517)   (49,057)
Loss attributable to non-controlling interests        1,135    1,159 
(Loss) attributable to the Parent        (67,382)   (47,898)
                
         Three Months Ended 
         March 31,  
From continued and discontinued operations   Notes    2021    2020 
                
(Loss) attributable to the Parent        (67,382)   (47,898)
Weighted average basic shares outstanding (thousands)        169,291    169,249 
Basic (loss) per ordinary share   Note 10    (0.40)   (0.28)
Weighted average basic shares outstanding (thousands)        169,291    169,249 
Effect of dilutive securities (thousands)             
Weighted average diluted shares outstanding (thousands)        169,291    169,249 
Diluted (loss) per ordinary share   Note 10    (0.40)   (0.28)

 

Unaudited data at March 31, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

2 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Thousands of US dollars

 

   Three Months Ended 
   March 31, 
   2021   2020 
Loss for the period   (68,517)   (49,057)
           
Items that may be reclassified subsequently to profit or loss:          
Arising from cash flow hedges       11,147 
Translation differences   1,881    (33,888)
Total income and expense recognized directly in equity   1,881    (22,741)
           
Items that have been reclassified to income or loss in the period:          
Arising from cash flow hedges   (244)   (6,109)
Tax effect        
Total transfers to income or (loss)   (244)   (6,109)
           
Other comprehensive income (loss) for the period, net of income tax   1,637    (28,850)
           
Total comprehensive (loss) income for the period   (66,880)   (77,907)
           
Attributable to the Parent   (66,073)   (74,039)
Attributable to non-controlling interests   (807)   (3,868)

 

Unaudited data at March 31, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

3 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Thousands of US dollars

 

Total Amounts Attributable to Owners
                           Non-     
   Shares   Share       Translation   Valuation   Result for   controlling     
   (thousands)   capital   Reserves   differences   adjustments   the period   interests   Total 
Balance at December 31, 2019   170,864    1,784    975,358    (210,152)   (2,169)   (280,601)   118,077    602,297 
Total comprehensive (loss) income               (31,179)   5,038    (47,898)   (3,868)   (77,907)
Share-based compensation           728                    728 
Distribution of 2019 profit           (280,601)           280,601         
Balance at March 31, 2020   170,864    1,784    695,485    (241,331)   2,869    (47,898)   114,209    525,118 

 

Total Amounts Attributable to Owners
                           Non-     
   Shares   Share       Translation   Valuation   Result for   controlling     
   (thousands)   capital   Reserves   differences   adjustments   the period   interests   Total 
Balance at December 31, 2020   170,864    1,784    696,774    (206,759)   5,755    (246,339)   114,504    365,719 
Total comprehensive (loss) income               1,553    (244)   (67,382)   (807)   (66,880)
Share-based compensation           133                    133 
Application of 2020 loss           (246,339)           246,339         
Balance at March 31, 2021   170,864    1,784    450,568    (205,206)   5,511    (67,382)   113,697    298,972 

 

Unaudited data at March 31, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

4 

 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR

THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

Thousands of US dollars

 

   March 31,   March 31, 
   2021   2020 
Cash flows from operating activities:          
(Loss) for the period   (68,517)   (49,057)
Adjustments to reconcile net loss to net cash used by operating activities:          
Income tax (benefit)   (844)   (10,696)
Depreciation and amortization charges, operating allowances and write-downs   25,285    28,668 
Net finance expense   15,864    16,484 
Financial derivative (loss)       (3,168)
Exchange differences   9,314    (2,436)
Gain due to changes in the value of asset   (21)    
Gain on disposal of non-current assets   (43)    
Share-based compensation   133    722 
Other adjustments   (2)   671 
Changes in operating assets and liabilities:          
(Increase) decrease in inventories   11,446    51,577 
(Increase) decrease in trade receivables   (41,692)   83,832 
Increase (decrease) in trade payables   26,152    (25,504)
Other changes in operating assets and liabilities   37,773    (11,598)
Income tax paid   (57)   10,119 
Net used cash provided by operating activities   14,791    89,614 
Cash flows from investing activities:          
Interest and finance income received   35    254 
Payments due to investments:          
Other intangible assets        
Property, plant and equipment   (5,683)   (4,606)
Disposals:          
Other        
Net cash provided (used) by investing activities   (5,648)   (4,352)
Cash flows from financing activities:          
Payment for debt issuance cost   (6,598)   (1,576)
Increase (decrease) in bank borrowings:          
Borrowings   127,690     
Payments   (157,464)   (44,880)
Amounts paid due to leases   (2,856)    
Other amounts received due to financing activities       1,147 
Interest paid   (17,015)   (18,824)
Net cash (used) provided by financing activities   (56,243)   (64,133)
Total net cash flows for the period   (47,100)   21,129 
Beginning balance of cash and cash equivalents   131,557    123,175 
Exchange differences on cash and cash equivalents in foreign currencies   (90)   185 
Ending balance of cash and cash equivalents   84,367    144,489 
Ending balance of cash and cash equivalents from statement of financial position   78,298    116,316 
Current restricted cash and cash equivalents   6,069    28,173 
Cash and restricted cash in the statement of financial position   84,367    144,489 

 

Unaudited data at March 31, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

5

 

  

Ferroglobe PLC and Subsidiaries

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

 

As of March 31, 2021 and December 31, 2020
and for the three months ended March 31, 2021 and 2020

(U.S. Dollars in thousands as otherwise indicated, except share and per share data)

 

1.General information

 

Ferroglobe PLC and subsidiaries (the “Company” or “Ferroglobe”) is among the world’s largest producers of silicon metal and silicon and manganese-based alloys, important ingredients in a variety of industrial and consumer products. The Company’s customers include major silicone chemical, aluminum and steel manufacturers, auto companies and their suppliers, ductile iron foundries, manufacturers of photovoltaic solar cells and computer chips, and concrete producers.

 

Ferroglobe PLC (the “Parent Company” or “the Parent”) is a public limited company that was incorporated in England and Wales on February 5, 2015 (formerly named ‘Velonewco Limited’). The Parent’s registered office is 5 Fleet Place, London, England, EC4M7RD.

 

On December 23, 2015, Ferroglobe PLC consummated the acquisition (“Business Combination”) of Globe Specialty Metals, Inc. and subsidiaries (“GSM” or “Globe”) and Grupo FerroAtlántica, S.A.U. or “FerroAtlántica”.

 

2.Basis of preparation and changes to the Company’s accounting policies

 

2.1 Basis of preparation

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the audited consolidated financial statements of Ferroglobe as of December 31, 2020.

 

The unaudited interim condensed consolidated financial statements as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020 have been prepared assuming that the Company will continue as a going concern.

 

All accounting policies and measurement basis with effect on the consolidated financial statements were applied in their preparation.

 

The consolidated financial statements were prepared on a historical cost basis, with the exceptions disclosed in the notes to the consolidated financial statements, where applicable, and in those situations where IFRS requires that financial assets and financial liabilities are valued at fair value.

 

The consolidated financial statements for the year ended December 31, 2020 were prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. In connection with the preparation of our consolidated financial statements, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to the entity’s ability to continue as a going concern within one year after the date of the issuance of our consolidated financial statements. As of March 31, 2021, as reflected in our consolidated financial statements, the Company had cash and cash equivalents of $84.4 million, of which $6.1 million was restricted. The Company had an operating loss of $44.1 million and a net loss of $68.5 million for the year ended March 31, 2021.

 

COVID-19 has been and continues to be a complex and evolving situation, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation; limitations on the size of in-person gatherings, restrictions on freight transportations, closures of, or occupancy or other operating limitations on work facilities, and quarantines and lock-downs.

 

As a result of this pandemic and the strict confinement and other public health measures taken around the world, the demand of our products in the second and third quarters of 2020 was reduced significantly compared with the first and fourth quarters of the year. During the fourth quarter of 2020, demand level for our products increased to levels similar to those prior to the outbreak. In first quarter of 2021, demand for our products has increased even further than in the fourth quarter of 2020. However, COVID-19 has negatively impacted, and will in the future negatively impact to an extent we are unable to predict, our revenues.

 

6

 

 

The main source of finance for the Company are the Senior Notes (the “Notes”) amounting $350,000 thousand due March 1, 2022. The Indenture governing the Notes includes provisions which, in the event of a change of control, would require the Company to offer to redeem the outstanding Notes at a cash purchase price equal to 101% of the principal amount of the Notes, plus any accrued and unpaid interest. Based on the provisions cited above, a change of control as defined in the indenture is unlikely to occur, but the matter it is not within the Company’s control. If a change of control were to occur, the Company may not have sufficient financial resources available to satisfy all of its obligations. Management is pursuing additional sources of financing to increase liquidity to fund operations.

 

The Company has announced occurence of “transaction effective date” under lock-up agreement dated March 27, 2021 and completion of refinancing transactions.

 

Management acknowledges that the events and conditions relating to the uncertainty the potential repayment of the outstanding balance of the Notes should a change of control occur, and the difficulties in forecasting net cash flows in the current economic conditions because of the Covid-19 pandemic, together in aggregate give rise to a material uncertainty that may cast substantial doubt on the ability of the Company to continue as a going concern for a period of twelve months following the date our consolidated financial statements are issued. Notwithstanding the material uncertainty described above, management believes that the Group has adequate resources and considers it likely that the exchange of the Notes and additional capital will be completed, that will allow the Group to continue in operational existence for the foreseeable future. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as going concern.

 

These unaudited interim condensed consolidated financial statements were authorized for issue by the Company on September 30, 2021.

 

In determining the disclosures to be made on the various items in the financial statements or other matters, the Company, in accordance with IAS 34, considered their materiality in relation to the unaudited interim condensed consolidated financial statements for the period.

 

2.2 New standards, interpretations, and amendments adopted by the Company

 

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2020.

 

No new standards effective on January 1, 2021 have a material impact on the unaudited interim condensed consolidated financial statements. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

2.3 Responsibility for the information and use of estimates

 

The information in these consolidated financial statements is the responsibility of Ferroglobe’s Management.

 

Certain assumptions and estimates were made by management in the preparation of these unaudited interim condensed consolidated financial statements, including:

 

The impairment losses on goodwill.
   
The assumptions taken over forecast recovery in trading activity and cash liquidity management that mitigates any substantial doubt as to the Company’s ability to continue as a going concern.
   
The useful life of property, plant and equipment and intangible assets.
   
The fair value valuation of the plants, impairment losses on property, plant and equipment and intangible assets, determined by value in use or by fair value less cost of disposal methods.
   
The fair value of certain unquoted financial assets.
   
The fair value of financial instruments.
   
The fair value of acquired assets and liabilities as a result of the business combinations.
   
The assumptions used in the actuarial calculation of pension liabilities.
   
The discount rate used to calculate the present value of certain collection rights and payment obligations.
   
Provisions for contingencies and environmental liabilities.

 

7

 

 

The Company based its estimates and judgments on historical experience, known or expected trends and other factors that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates. Changes in accounting estimates are applied in accordance with IAS 8.

 

At the date of preparation of these unaudited interim condensed consolidated financial statements no events had taken place that might constitute a significant source of uncertainty regarding the accounting effect that such events might have in future reporting periods.

 

3. Segment reporting

 

Operating segments are based upon the Company’s management reporting structure.

 

Ferroglobe has four reportable business segments, which are: Electrometallurgy - North America, Electrometallurgy - Europe, Electrometallurgy - South Africa, and Other segments.

 

The unaudited interim condensed consolidated income statements for the three months ended March 31, 2021 and 2020, by segment, are as follows:

 

   Three Months Ended March 31, 2021 
   Electro-     Electro-          
   metallurgy -  Electro-  metallurgy -     Elim-    
   North  metallurgy -  South  Other  inations    
   America  Europe  Africa  segments  (*)  Total 
Sales  127,460  210,270  24,624  8,085  (9,049) 361,390 
Cost of sales  (80,682) (155,061) (16,268) (5,973) 7,819  (250,165)
Other operating income  865  1,877  112  4,976  (5,917) 1,913 
Staff costs  (20,390) (68,702) (3,243) (2,932)   (95,267)
Other operating expense  (10,260) (19,205) (2,634) (11,883) 7,147  (36,835)
Depreciation and amortization charges, operating allowances and write-downs  (14,087) (9,443) (1,597) (158)   (25,285)
Other gains and (losses)    2        2 
Impairment losses             
(Loss) due to changes in the value of assets        21     21 
(Loss) gain on disposal of non-current assets  43           43 
Operating (loss) profit  2,949  (40,262) 994  (7,864)   (44,183)
Net finance expense  (233) (2,669) (818) (12,144)   (15,864)
Exchange differences  249  4,251  (275) (13,539)   (9,314)
(Loss) before taxes  2,965  (38,680) (99) (33,547)   (69,361)
Income tax (expense) benefit  (73) (877) (98) 1,892    844 
(Loss) for the period  2,892  (39,557) (197) (31,655)   (68,517)
Loss attributable to non-controlling interests  1,113  11  (2) 13    1,135 
(Loss) attributable to the Parent  4,005  (39,546) (199) (31,642)   (67,382)

 

   Three Months Ended March 31, 2020 
   Electro-     Electro-          
   metallurgy -  Electro-  metallurgy -     Elim-    
   North  metallurgy -  South  Other  inations    
   America  Europe  Africa  segments  (*)  Total 
Sales  114,872  179,373  21,421  7,901  (12,344) 311,223 
Cost of sales  (74,966) (160,024) (14,920) (5,943) 12,493  (243,360)
Other operating income  516  7,212  41  610  (611) 7,768 
Staff costs  (21,175) (29,223) (3,565) (1,134)   (55,097)
Other operating expense  (13,336) (18,290) (3,928) (4,975) 462  (40,067)
Depreciation and amortization charges, operating allowances and write-downs  (17,185) (9,466) (1,601) (416)   (28,668)
Other gains and losses  (373) 184    (482)   (671)
Impairment losses             
Operating (loss)  (11,647) (30,234) (2,552) (4,439)   (48,872)
Net finance expense  (116) (5,528) (829) (10,011)   (16,484)
Financial instruments gain        3,168    3,168 
Exchange differences  1,597  1,084  1,582  (1,827)   2,436 
(Loss) before taxes  (10,166) (34,678) (1,799) (13,109)   (59,753)
Income tax benefit (loss)  1,946  7,133  317  1,300    10,696 
(Loss) for the period  (8,220) (27,545) (1,482) (11,809)   (49,057)
Loss attributable to non-controlling interests  1,163  (2) (60) 58    1,159 
(Loss) attributable to the Parent  (7,057) (27,547) (1,542) (11,751)   (47,898)

 

8

 

 

The total assets and liabilities by reportable segment as of March 31, 2021 and December 31, 2020 are as follows:

 

   March 31, 2021 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Total assets   1,131,877    1,018,668    105,904    2,322,332    (3,259,602)   1,319,179 
Total equity and liabilities   (1,131,877)   (1,018,668)   (105,904)   (2,322,332)   (3,259,602)   (1,319,179)

 

   December 31, 2020 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Total assets   1,081,792    906,036    114,872    1,057,414    (1,812,969)   1,347,145 
Total equity and liabilities   (1,081,792)   (906,036)   (114,872)   (1,057,414)   1,812,969    (1,347,145)

 

(*) These amounts correspond to transactions between segments that are eliminated in the consolidation process.

 

Sales by product line for the three months ended March 31, 2021 and 2020 are as follows:

 

   Three Months Ended 
   March 31, 
   2021   2020 
Silicon Metal   140,017    117,946 
Silicon-based Alloys   102,552    89,814 
Manganese-based Alloys   85,223    71,733 
Other   33,598    31,730 
Total   361,390    311,223 

 

Information about major customers

 

Total sales of $157,159 and $152,790, were attributable to the Company's top ten customers for the three months ended March 31, 2021 and 2020, respectively.

 

During the three months ended March 31, 2021, the Company had two customers that represented more than 10% of sales, with sales to Dow Corning, representing 13.52% of the total amount and Arcelor Mittal, representing 10.41%. During the three months ended March 31, 2020, the Company had one customer that represented more than 10% of sales, it corresponds to Dow Corning, representing 11.21% of the total amount.

 

4. Goodwill

 

   December 31,
2020
   Impairment   Exchange
Differences
   March 31,
2021
 
US Cash generating units   29,702            29,702 

 

In accordance with the requirements of IAS 36, goodwill is tested for impairment annually and if a triggering event that would indicate the carrying amount of a cash-generating unit may be impaired occurs. Impairment testing for goodwill is performed at a cash-generating unit level. The estimate of the recoverable value of the cash-generating units requires significant judgment in evaluation of overall market conditions, estimated future cash flows, discount rates and other factors, and are calculated based on management’s business plans.

 

9

 

 

  

5.Other intangible assets

 

Changes in the carrying amount of other intangible assets between December 31, 2020 and June 30, 2021 and 2020 are as follows:

 

                                 
   Develop-   Power           Other   Accumu-         
   ment   Supply           Intan-   lated         
   Expen-   Agree-   Rights   Computer   gible   Depre-   Impair-     
   diture   ments   of Use   Software   Assets   ciation   ment   Total 
Balance at December 31, 2019   50,326    37,836    16,533    5,149    42,670    (82,283)   (18,964)   51,267 
Additions                   10,825    (1,688)       9,137 
Disposals                   (8,525)           (8,525)
Exchange differences   (1,466)       (126)   (27)   (2,530)   1,683    960    (1,506)
Balance at March 31, 2020   48,860    37,836    16,407    5,122    42,440    (82,288)   (18,004)   50,373 

 

                                 
   Develop-   Power           Other   Accumu-         
   ment   Supply           Intan-   lated         
   Expen-   Agree-   Rights   Computer   gible   Depre-   Impair-     
   diture   ments   of Use   Software   Assets   ciation   ment   Total 
Balance at December 31, 2020   54,874    37,836    17,049    5,249    18,872    (93,042)   (20,082)   20,756 
Additions   70                6,926    (1,693)       5,303 
Disposals                   (3)           (3)
Exchange differences   (2,488)       (126)   (52)   (201)   1,942    760    (165)
Balance at March 31, 2021   52,456    37,836    16,923    5,197    25,594    (92,793)   (19,322)   25,891 

 

Additions in other intangible assets in 2021 primarily relate to the acquisition of rights held to emit greenhouse gasses by certain Spanish and French subsidiaries.

 

6.Property, plant and equipment

 

The detail of Property, plant and equipment, between December 31, 2020 and June 30, 2021 and 2020 are as follows:

 

           Other   Adv-                             
           Fixt-   ances                             
           ures,   and           Other   Other             
   Land   Plant   Tools   PPE   Min-   Other   Items of   Items of   Accu-         
   and   and   and   under   eral   Items   Leased   Leased   mulated         
   Build-   Mach-   Fur-   Const-   Res-   of   Land   Plant   Depre-   Impair-     
   ings   inery   niture   ruction   erves   PPE   & Buildings   & Machinery   ciation   ment   Total 
Balance at December 31, 2019   196,586    1,273,837    8,819    106,651    59,502    34,463    13,298    21,333    (865,937)   (107,646)   740,906 
Additions or charges       115        2,877        3    536    106    (26,980)   1    (23,342)
Disposals or reductions   (239)   (2,093)   (3)   (1,348)                   1,958        (1,725)
Transfers from/(to) other accounts   109    4,818    (16)   (4,927)                           (16)
Exchange differences   (4,795)   (45,980)   (1,312)   (3,403)   (872)   (1,093)   (254)   (470)   30,177    1,562    (26,440)
Balance at March 31, 2020   191,661    1,230,697    7,488    99,850    58,630    33,373    13,580    20,969    (860,782)   (106,083)   689,383 

 

10

 

  

           Other   Adv-                             
           Fixt-   ances                             
           ures,   and           Other   Other             
   Land   Plant   Tools   PPE   Min-   Other   Items of   Items of   Accu-         
   and   and   and   under   eral   Items   Leased   Leased   mulated         
   Build-   Mach-   Fur-   Const-   Res-   of   Land   Plant   Depre-   Impair-     
   ings   inery   niture   ruction   erves   PPE   & Buildings   & Machinery   ciation   ment   Total 
Balance at December 31, 2020   208,025    1,331,585    8,422    124,029    59,325    33,188    17,588    24,446    (995,507)   (191,066)   620,035 
Additions or charges   321    934    4    3,883        2    17    (15)   (23,592)       (18,446)
Disposals or reductions       (1,230)   (120)   (679)                   1,166    601    (262)
Transfers from/(to) other accounts   (279)   9,431        (9,152)                            
Exchange differences   (5,452)   (25,475)   (127)   (4,712)   (29)   498    (621)   (847)   24,832    3,961    (7,972)
Balance at March 31, 2021   202,615    1,315,245    8,179    113,369    59,296    33,688    16,984    23,584    (993,101)   (186,504)   593,355 

 

7.Inventories

 

Inventories at March 31, 2021 and December 31, 2020, are as follows:

 

   March 31,   December 31, 
   2021   2020 
Finished industrial goods   90,454    100,711 
Raw materials in progress and industrial supplies   89,282    99,259 
Other inventories   42,978    46,274 
Advances to suppliers   5,431    305 
Total   228,145    246,549 

 

8.Trade and other receivables

 

Trade and other receivables at March 31, 2021 and December 31, 2020, are as follows:

 

   March 31,   December 31, 
   2021   2020 
Trade receivables   224,229    203,930 
Doubtful trade receivables   (1,423)   (1,697)
Trade receivables - net   222,806    202,233 
Tax receivables   18,296    13,166 
Government grant receivables   27,760    23,016 
Other receivables   7,771    3,847 
Total   276,633    242,262 

  

On February 6, 2020, the Company entered into an amended and restated accounts receivables securitization program via which trade receivables generated by certain of the Company’s subsidiaries in Spain and France are financed both directly through the existing Irish special purpose vehicle (“SPE”) and indirectly through a French “fonds commun de titrisation”. The incorporation of the “fonds commun de titirsation” into the program has allowed for the sale of certain Euro-denominated receivables that were not eligible under the previous structure and increased the available funding. The senior lender’s commitments under the amended and restated securitization program are $150,000 thousand. Finacity remained as intermediate subordinated lender providing a cash consideration of $2,808 thousand, and the Company’s European subsidiaries continued as senior subordinated and junior subordinated lenders as well as, having interests in the senior and intermediate subordinated loan tranches.

  

On October 2, 2020, the Company ended the receivables funding agreement and cancelled the securitization program, signing a new factoring agreement with a Leasing and Factoring Agent, for anticipating the collection of receivables of the Company’s European entities (Grupo FerroAtlántica, S.A. and FerroPem S.AS). As a result of the agreement, the Leasing and Factoring Agent provided a cash consideration of circa $48.8 million, repurchased the receivables portfolio sold to the SPE on September 28, and consequently assumed the loan tranche of the senior borrower to the SPE. Also, the senior loan and intermediate subordinate loan tranches were paid with internal sources of funds, terminating the financing structure of the securitization program.

 

11

 

 

During the year ended December 31, 2020, the Company repaid $107,657 thousand (EUR 95,695 thousand) in order to, prior to the termination of receivables funding agreement, optimize the level of borrowings of the SPE with the level of receivables in the securitization, and cancel all commitments in respect of loan tranches held by the Company.

 

Regarding the new factoring agreement, during the three months ended March 31, 2021, provided upfront cash consideration of approximately $127,690 thousand. The Company repaid $126,164 thousand, showing at March 31, 2021, an on-balance sheet bank borrowing debt of $73,713 thousand

 

At March 31, 2021, the Company held $86,308 thousand of accounts receivables recognized in consolidated balance sheet in respect of the factoring agreement. Finance costs incurred during the three months ended March 31, 2021, amounts $782 thousand, recognized in finance costs in the consolidated income statement.

 

During the three months ended December 31, 2020, the new factoring agreement provided upfront cash consideration of approximately $169,105 thousand. The Company has repaid $95,800 thousand, showing at December 31, 2020, an on-balance sheet bank borrowing debt of $74,844 thousand.

 

At December 31, 2020, the Company held $89,154 thousand of accounts receivables recognized in consolidated balance sheet in respect of factoring agreement. Finance costs incurred during the year ended December 31, 2020, amounts $916 thousand, recognized in finance costs in the consolidated income statement.

 

Judgements relating to the recognition criteria

 

The Company has assessed whether it has transferred substantially all risks and rewards, continuing to be exposed to the variable returns from its involvement in the factoring agreement as it is exposed to credit risk, so the conclusion is that the derecognition criteria is not applicable and therefore, the account receivables sold is presented in the balance and a obligation is recognized as bank borrowings for the amount of cash advanced by the Leasing and Factoring Agent. The amount repayable under the factoring agreement is presented as on-balance sheet factoring and the debt assigned to factoring is showed as bank borrowings.

 

9. Cash and cash equivalents

 

Cash and cash equivalents comprise the following at March 31, 2021 and December 31, 2020:

 

         
   March 31,   December 31, 
   2021   2020 
Cash and cash equivalents   78,298    102,714 
Current restricted cash presented as Cash   6,069    28,843 
Escrow: Hydro-electric assets sale   5,863    6,137 
ABL restricted cash       22,500 
Other   206    206 
Total   84,367    131,557 

 

At March 31, 2021, Cash and cash equivalents comprises the guarantees taken over escrow account. The escrow was constituted in August 30, 2019, in consideration of previous FerroAtlántica; under agreement terms, the Purchaser and the Seller deposited in a restricted bank account a part of the share purchase price, guaranteeing any compensation to the purchaser for any claim under the contract. At December 31, 2020 in relation to the ABL Restricted cash, the amount constituted is fixed by agreement as liquidity covenants $22,500 (see Note 12). During the first quarter ABL was repayment as part of the overall refinancing.

 

10.Equity

 

Share capital

 

At March 31, 2021, the Company’s issued share capital consisted of 170,863,773 ordinary shares of $0.01. The Company held 1,659,669 ordinary shares in treasury. Therefore, at March 31, 2021 the total number of voting rights in the Company was 169,204,104.

 

At March 31, 2021, the largest shareholder was as follows:

  

   Number of Shares   Percentage of 
Name  Beneficially Owned   Outstanding Shares 
Grupo Villar Mir, S.A.U.   91,125,521    53.8%

 

12

 

 

Dividends

 

There were no dividends distributed by Ferroglobe PLC to ordinary shareholders for the three months ended March 31, 2021.

 

(Loss) profit per ordinary per share

 

Basic (loss) profit per ordinary share is calculated by dividing the consolidated (loss) profit for the period attributable to the Parent by the weighted average number of ordinary shares outstanding during the period, excluding the average number of treasury shares held in the period, if any.

  

   Three Months Ended 
From continued and discontinued operations  March 31, 
   2021   2020 
Basic (loss) profit per ordinary share computation          
Numerator:          
(Loss) profit attributable to the Parent   (67,382)   (47,898)
Denominator:          
Weighted average basic shares outstanding (thousands)   169,291    169,249 
Basic (loss) profit per ordinary share   (0.40)   (0.28)
           
Diluted (loss) profit per ordinary share computation          
Numerator:          
(Loss) profit attributable to the Parent   (67,382)   (47,898)
Denominator:          
Weighted average basic shares outstanding (thousands)   169,291    169,249 
Effect of dilutive securities (thousands)        
Weighted average dilutive shares outstanding (thousands)   169,291    169,249 
Diluted (loss) profit per ordinary share   (0.40)   (0.28)

 

Potential ordinary shares of 64,185 and 472,480 were excluded from the calculation of diluted profit (loss) per ordinary share for the three months ended March 31, 2021, and 2020, because the effect would be anti-dilutive.

 

After the closing, at July 29, 2021, the company issued 8,913,872 shares par value $0.01 per share, of Ferroglobe PLC.

 

11. Provisions

 

Non-current and current Provisions comprise the following at March 31, 2021 and December 31, 2020:

 

   March 31, 2021   December 31, 2020 
   Non- Current   Current   Total   Non- Current   Current   Total 
Provision for pensions   55,045    206    55,251    56,395    191    56,586 
Environmental provision   2,907    1,237    4,144    2,910    1,256    4,166 
Provisions for litigation       1,103    1,103        1,355    1,355 
Provisions for third-party liability   10,257        10,257    10,759        10,759 
Provisions for C02 emissions allowances   722    46,699    47,421        40,161    40,161 
Other provisions   37,289    48,276    85,565    38,423    12,333    50,756 
Total   106,220    97,521    203,741    108,487    55,296    163,783 

 

In the ordinary course of business, the Company is subject to various loss contingencies arising from lawsuits, investigations, claims and proceedings, including, but not limited to, labor and employment, commercial, environmental, safety, and health matters, as well as claims and indemnities associated with its historical acquisitions and divestitures. The nature and frequency of these contingencies, as well their effect on future operations and earnings, are unpredictable and inherently difficult to estimate.

 

13

 

 

12.Bank borrowings

 

Non-current and current Bank borrowings comprise the following:

 


   March 31, 2021 
                 
       Non-Current   Current     
   Limit   Amount   Amount   Total 
Borrowings carried at amortised cost:                    
Borrowings from receivable factoring facility   70,350        73,713    73,713 
Other loans       4,509    785    5,294 
Total        4,509    74,498    79,007 

 

   December 31, 2020 
                 
       Non-Current   Current     
   Limit   Amount   Amount   Total 
Borrowings carried at amortised cost:                    
Credit facilities   100,000        27,237    27,237 
Borrowings from receivable factoring facility   73,626        74,844    74,844 
Other loans       5,277    249    5,526 
Total        5,277    102,330    107,607 

  

Credit Facilities

 

On October 11, 2019, Ferroglobe closed a new $100,000 North-American asset-based revolving credit facility (the “ABL Revolver”), with Globe Specialty Metals, Inc., and QSIP Canada ULC, each a subsidiary of the Company, and PNC Bank, as lender.

 

The maximum advances granted by the lender were up to the lesser of $100 million and the Formula Amount. Under the ABL Revolver, and in respect of LIBOR Rate Loans, the interest to be paid was LIBOR plus applicable margin, and in respect of Domestic Rate Loans, the interest was ABR plus applicable margin. ABR shall mean the highest of (i) the PNC Bank prime rate, (ii) overnight bank funding rate plus 0.5% and (iii) daily LIBOR plus 1.0%.

 

With respect to the covenants, at 31 December 2020, under the ABL Revolver, Globe Specialty Metals, Inc., and QSIP Canada ULC pledged assets as collateral to PNC Bank as follows: eligible third party receivables in the sum of $31M, and eligible inventory including raw materials, WIP, finished goods, spare parts and packaging in the sum of $25M. Deducted from the eligible assets were outstanding letters of credit equaling $6M, reserves $0.6M and a minimum undrawn availability of $10M, leaving a total ABL Revolver balance of $38M as at December 31, 2020.

  

On March 16, 2021, the Company has repaid in its entirety the remaining balance at the date for an amount equal to $3931,299 thousand, cancelling its obligations derived from the contract.

 

Borrowings from receivable factoring facility

 

On October 2, 2020, the Company ended the receivables funding agreement over European receivables, signing a new factoring agreement with a Leasing and Factoring Agent, for anticipating the collection of receivables of the Company’s European entities. As a result of the agreement, the Agent provided a cash consideration of circa $48.8 million, repurchased the receivables portfolio sold to the SPE on September 28, and consequently assumed the loan tranche of the senior borrower to the SPE. Also, the senior loan and intermediate subordinate loan tranches were paid with internal sources of funds, terminating the financing structure of the securitization program.

 

The main characteristics of the agreement are the following:

 

·the maximum cash consideration advanced for the financing facility is up to EUR 60,000 thousand;
   
·over collateralization of 10% of accounts receivable as guarantee provided to the Agent until payment has been satisfied;
   
·annual fee of 0.15% applied to the annual revenues ceded to the Agent;
   
·financing commission of 1% charged annually.

 

14

 

 

 

Other conditions are set in relation to credit insurance policy has been structured in an excess of loss policy where the first EUR 5,000 thousand of bad debt losses are not covered by the insurance provider. The Company has assumed the cash collateralization for the entire excess of loss, as agreed in contractual terms.

 

Judgements relating to the recognition criteria

 

The Company has assessed whether it has transferred substantially all risks and rewards, continuing to be exposed to the variable returns from its involvement in the factoring agreement as it is exposed to credit risk as, the conclusion is that the derecognition criteria is not applicable and therefore, the account receivables sold is presented in the balance as the cash received is presented as an obligation to be repaid as bank borrowings.

 

As of December 31, 2020 and March 31, 2021, the Company has exceeded the limit; the lender has agreed a temporary increase of the limit.

 

Other Loans

 

Include loans held by The Company to finance their current activities in France, signed in July for an amount of $5,042 thousand.

 

13.Leases

 

Leases are shown as follows in the balance sheet at March 31, 2021 and December 31, 2020:

 

   March 31, 2021   December 31, 2020 
Non-current assets          
Leased land and buildings   16,985    17,588 
Leased plant and machinery   23,585    24,446 
Total   40,570    42,034 
           
Non-current liabilities          
Lease liabilities   (11,942)   (13,994)
Current liabilities          
Lease liabilities   (7,596)   (8,542)
Total   (19,538)   (22,536)

 

In relation to leases under IFRS 16, the Company has recognized depreciation and interest costs instead of operating lease expense. During the three months ended March 31, 2021, the Company recognized $2,381 thousand of depreciation charges ($9,947 at December 31, 2020). and $270 ($1,358 at December 31, 2020).

 

14.Tax matters

 

The components of current and deferred income tax expense (benefit) are as follows:

 

   March 31,   December 31, 
   2021   2020 
Consolidated income statement          
Current income tax          
Current income tax charge/(credit)   1,464    4,307 
Adjustment in current income tax in respect of prior years       901 
Total   1,464    5,208 
           
Deferred tax          
Origination and reversal of temporary differences   (2,308)   (20,961)
Impact of tax rates changes        
Impairment of deferred tax assets       37,660 
Adjustments in deferred tax in respect of prior years       33 
Total   (2,308)   16,732 
           
Income Tax benefit   (844)   21,939 

 

15

 

 

Management of tax risks

 

The Company is committed to conducting its tax affairs consistent with the following objectives:

 

(i)to comply with relevant laws, rules, regulations, and reporting and disclosure requirements in whichever jurisdiction it operates;
   
(ii)to maintain mutual trust, transparency and respect in its dealings with all tax authorities; and
   
(iii)to adhere with best practice and comply with the Company's internal corporate governance procedures, including but not limited to its Code of Conduct.

 

For further details please refer to the group's tax strategy which can be found here: http://investor.ferroglobe.com/corporate-governance.

 

The Group's tax department maintains a tax risk register on a jurisdictional basis.

 

In the jurisdictions in which the Company operates, tax returns cannot be deemed final until they have been audited by the tax authorities or until the statute-of-limitations has expired. The number of open tax years subject to examination varies depending on the tax jurisdiction. In general, the Company has the last four years open to review. The criteria that the tax authorities might adopt in relation to the years open for review could give rise to tax liabilities which cannot be quantified.

 

15.Debt instruments

 

   March 31, 2021   December 31, 2020 
Unsecured notes carried at amortised cost          
Principal amount   350,000    350,000 
Unamortised issuance costs   (2,690)   (3,380)
Accrued coupon interest   2,656    10,888 
Total   349,966    357,508 
           
Amount due for settlement within 12 months   349,9666    10,888 
Amount due for settlement after 12 months   -    346,620 
Total   349,966    357,508 

 

On February 15, 2017, Ferroglobe and Globe (together, the "Issuers") issued $350,000 aggregate principal amount of 9.375% Senior unsecured Notes due March 1, 2022 (the "Notes"). Issuance costs of $12,116 were incurred. The principal amounts of the Notes issued by Ferroglobe and Globe were $150,000 and $200,000, respectively. Interest on the Notes is payable semi-annually on March 1 and September 1 of each year, commencing on September 1, 2017.

 

The Notes are senior unsecured obligations of the Issuers and are guaranteed on a senior basis by certain subsidiaries of Ferroglobe. The Notes are listed on the Irish Stock Exchange. The associated Indenture contains certain negative covenants. Additionally, if the Issuers experience a change of control the Indenture requires the Issuers to offer to redeem the Notes at 101% of their principal amount. Grupo Villar Mir S.A.U. owns 53.9% of the Company's outstanding shares and has pledged them to secure its obligations to certain banks. The Company would experience a change in control and would be required to offer redemption of bonds in accordance with the Indenture if Grupo Villar Mir S.A.U. defaults on the underlying loan.

 

The fair value of the Notes, determined by reference to the closing market price on the last trading day of March 31, 2021 was $343,469 thousand (December 31, 2020: $268,538 thousand).

 

16.Other Financial Assets

 

   March 31, 2021   December 31, 2020 
   Non- Current   Current   Total   Non- Current   Current   Total 
Other Financial Assets   4,984    1,004    5,988    5,057    1,008    6,065 

 

Other financial assets comprise assets at amortised cost, that mainly includes deposits given to French government by Ferropem, a Ferroglobe subsidiary, in respect of effort de construction, and listed equity comprises investments held by Globe Argentina Metales in Pampa Energía.

 

16

 

 

17.Financial instruments and fair values

 

Assets and liabilities measured at fair value by level are as follows:

 

   March 31, 2021 
   Level 1   Level 2   Level 3   Total 
Other current financial assets                    
Listed equity securities   2,625            2,625 
Other non-current liabilities:                    
Contingent consideration           (16,632)   (16,632)

 

   December 31, 2020 
   Level 1   Level 2   Level 3   Total 
Other financial assets                    
Listed equity securities   2,609            2,609 
Other liabilities:                    
Contingent consideration           (16,632)   (16,632)

 

Contingent consideration is related to the acquisition of Kintuck (France) SAS and Kintuck (Norway) AS, which requires the Company to pay the former owners a sliding scale commission based on the silicomanganese and ferromanganese sales spreads of Ferroglobe Mangan Norge and Ferroglobe Manganèse France, up to a maximum amount of $60,000 thousand (undiscounted). The contingent consideration applies to sales made up to eight and a half years from the date of acquisition (February 1, 2018). The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 thousand and $60,000 thousand. The fair value of the contingent consideration arrangement of $16,632 thousand ($16,632 thousand in December, 2020) was estimated by applying the income approach based on a Monte Carlo simulation considering various scenarios of fluctuations of future manganese alloy spreads as well as the cyclicality of manganese alloy pricing. The fair value measurement is based on significant inputs that are not observable in the market, which IFRS 13 Fair Value Measurement refers to as Level 3 inputs. Key assumptions include discount rates of 12.5 percent and 11.5 percent for Ferroglobe Mangan Norge and Ferroglobe Manganèse France respectively, process, spread and cost assumptions

 

18.Related party transactions and balances

 

Balances with related parties are as follows:

 

   March 31, 2021 
   Receivables   Payables 
   Non-Current   Current   Non-Current   Current 
Inmobiliaria Espacio, S.A.       2,941         
Villar Mir Energía, S.L.U.   2,345            3,955 
Espacio Information Technology, S.A.U.               966 
Aurinka Photovoltaic Group, S.L.       124         120 
Other related parties       (2)       1 
Total   2,345    3,063        5,042 

 

   December 31, 2020 
   Receivables   Payables 
   Non-Current   Current   Non-Current   Current 
Inmobiliaria Espacio, S.A.       3,078         
Villar Mir Energía, S.L.U.   2,454            2,458 
Espacio Information Technology, S.A.U.               701 
Other related parties       (2)       37 
Total   2,454    3,076        3,196 

 

17

 

 

Transactions with related parties and other related parties are as follows:

 

   Three Months Ended March 31, 
   2021   2020 
   Sales and       Other       Sales and       Other     
   Oper-       Oper-       Oper-       Oper-     
   ating   Cost of   ating   Finance   ating   Cost of   ating   Finance 
   Income   Sales   Expenses   Income   Income   Sales   Expenses   Income 
Inmobiliaria Espacio, S.A.                               16 
Villar Mir Energía, S.L.U.       14,286    226            8,533    184     
Espacio Information Technology, S.A.U.           1,003                872     
Enérgya VM Generación, S.L.                                
Enérgya VM Gestión S.L.           27                24     
Aurinka Photovoltaic Group, S.L.           109                99     
Other related parties           28                2     
Total       14,286    1,393            8,533    1,181    16 

 

   Three Months Ended March 31, 
   2021   2020 
   Sales and       Other       Sales and       Other     
   Oper-       Oper-       Oper-       Oper-     
   ating   Cost of   ating   Finance   ating   Cost of   ating   Finance 
   Income   Sales   Expenses   Income   Income   Sales   Expenses   Income 
Inmobiliaria Espacio, S.A.               (17)           1    (51)
Villar Mir Energía, S.L.U.       27,346    464            51,233    980     
Espacio Information Technology, S.A.U.           2,425                2,339     
Enérgya VM Generación, S.L.                   13,230        152     
Enérgya VM Gestion S.L.           56            75    81     
Aurinka Photovoltaic Group, S.L.           130                9,509     
Other related parties           2        (142)       6     
Total       27,346    3,077    (17)   13,088    51,308    13,068    (51)

 

Cost of sales related to Villar Mir Energía, S.L.U represents purchases of power by the Company related to European electrometallurgy operations.

 

“Other operating expenses” mainly relates to service fees paid to Espacio Information Technology, S.A.U. for managing and maintenance services rendered related, basically, to the enterprise resource planning (‘ERP’) that some Company entities use; and other IT development projects.

 

During 2018 and 2017, under the solar joint venture agreement FerroAtlántica and other subsidiaries have purchased property, plant and equipment of $4,252 thousand and $3,611 thousand respectively, from Aurinka and Blue Power Corporation, S.L. Additionally, in 2019 FerroAtlántica paid the sum of $2,800 thousand to Aurinka in satisfaction of any claim Aurinka PV might otherwise have in relation to the termination of the Solar JV in July 2019.

 

19.Sales

 

Sales by segment area for the three months ended March 31, 2021 and 2020 are as follows:

 

   Three Months Ended 
   March 31, 
   2021   2020 
Electrometallurgy - North America   127,460    114,872 
Electrometallurgy - Europe   210,270    179,373 
Electrometallurgy - South Africa   24,624    21,421 
Other segments   8,085    7,901 
Eliminations   (9,049)   (12,344)
Total   361,390    311,223 

 

Sales destination by country for the three months ended March 31, 2021 and 2020 are as follows:

 

         
   Three Months Ended 
   March 31, 
   2021   2020 
USA   125,543    108,158 
Spain   49,609    39,329 
Germany   55,986    53,224 
Italy   16,639    9,467 
Other EU Countries   54,613    59,539 
Rest of World   59,000    41,506 
Total   361,390    311,223 

 

18

 

 

20.Subsequent Events

 

On April 21, 2021, the Company obtained the agreement in principle of 95.92% (by value) of the noteholders to restructure the Senior Notes and extend their maturity to December 2025. In light of this, the Company agreed an amendment to the Lock-Up Agreement to allow it to proceed to implement the transaction by way of an exchange offer instead of an English law scheme of arrangement. Although over 96% of the noteholders have now contractually agreed to support the transaction, there can nonetheless be no assurance that the proposed restructuring will be completed.

 

On April 30, 2021, Mr. José María Alapont resigned from the Board of Directors. Subsequently, on May 13, 2021, Ferroglobe appointed four new board directors and appointed Mr. Bruce Crockett as the Lead Independent Director.

 

On May 10, 2021, the Company filed a Form F-3 with the United States Securities and Exchange Comission to register a total amount of $40 million in securities. It describes the general terms of these securities and the general manner in which these securities will be offered.

 

On May 11, 2021, the Company increased the maximum cash consideration advanced for the borrowings from receivable factoring financing facility in EUR 20,000 thousand.

 

On May 12, 2021, the Company entered into a Note Purchase Agreement with the members of the “Ad Hoc Group” relating to the issuance of an initial $40 million of aggregate $60 million new senior secured notes. The conditions precedent to the Note Purchase Agreement have been satisfied and the initial $40 million is in the process of being settled.

 

On June 11, 2021, the Company filed a Form F-3 orginilly filed on May 10, 2021 with the United States Securities and Exchange Comission to filed solely to (i) amend the title of securities to be registered, (ii) increase the amount of securities that may be issued under the Registration Statement, (iii) revise the Calculation of Registration Fee table to reflect filing fees paid in connection with the additional securities that may be issued under the Registration Statement, (iv) revise the number of ordinary shares that the Board of Directors is authorized to issue without a requirement for further shareholder approval to 85,903,364 additional ordinary shares, (v) update the Description of Share Capital and Articles of Association and (vi) file Exhibits 5.1 and 23.2 and make corresponding updates to the exhibit index of the Registration Statement

 

On June 18, the Company entered into a successful signing of Equity Purchase Agreement relating to the sale of $40 million in aggregate gross proceeds of ordinary shares to certain investors

 

On June 23, the Company lunch of (A) offer to exchange the 9⅜% Senior Notes Due 2022 for a combination of new 9⅜% Senior Secured Notes due 2025 and equity fee, (B) consent solicitation relating to the 9⅜% Senior Notes due 2022 and (C) offer to subscribe for additional 9.0% Senior Secured Notes due 2025.

 

On June 29. the Company entered announcing Notification of ISIN and Common Codes in Connection with Offer to Exchange the 9⅜% Senior Notes Due 2022 and Offer to Subscribe for Additional 9.0% Senior Secured Notes Due 2025

 

On July 8, the Company announcing announcing Extension of Super Senior Notes Offer Subscription Deadline in connection with the Offer to Subscribe for Additional 9.0% Senior Secured Notes Due 2025

 

On July 22, the Company entered announcing (A) results of offer to exchange the 9⅜%  Senior Notes due 2022 for a combination of new 9⅜%  Senior Secures Notes due 2025 and equity fee and consent solicitation relating to the 9⅜% Senior Notes due 2022 and (B) receipt of offers to subscribe for additional 9.0% Senior Secured Notes due 2025 forth in the announcement made by the Parent on June 23, 2021, or in any other manner that the Ad Hoc Group (as defined below) may agree with the Parent.

 

19

 

 

On July 30, 2021, the Company announces the occurrence of “Transaction Effective Date” under Lock-up agreement dated March 27, 2021 and completion of the financing transactions. The financing consisted of:

 

(i) Extension of the maturity date of the Notes from March 31, 2022 to December 31, 2025

 

(ii) Issuance of $60 million of new senior secured notes, and

 

(iii) $40 million of equity issuance (8,918,618 shares)

 

As a result of the closing of the refinancing transactions, the percentage interest in the Company held by our largest shareholder, Grupo Villar Mir, S.A.U., was reduced from 53.8% to 49.3%. As a result, the Company no longer qualifies as a “controlled company” within the meaning of Nasdaq rules; however, the Company continues to follow the rules of the SEC and Nasdaq applicable to foreign private issuers.”

 

20

 

 

 

Exhibit 99.2

   

 

Ferroglobe PLC and Subsidiaries

  

Unaudited Interim Condensed Consolidated Financial Statements as of June 30, 2021 and December 31,
2020 and for the three and six months ended June 30, 2021 and June 30, 2020.

 

 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

Thousands of US dollars

 

      June 30,   December 31, 
   Notes  2021   2020 
ASSETS             
Non-current assets             
Goodwill  Note 4   29,702    29,702 
Other intangible assets  Note 5   87,556    20,756 
Property, plant and equipment  Note 6   587,602    620,034 
Other non-current financial assets  Note 16   5,329    5,057 
Deferred tax assets  Note 14   62     
Non-current receivables from related parties  Note 18   2,377    2,454 
Other non-current assets      13,960    11,904 
Total non-current assets      726,588    689,907 
Current assets             
Inventories  Note 7   239,750    246,549 
Trade and other receivables  Note 8   283,990    242,262 
Current receivables from related parties  Note 18   3,105    3,076 
Current income tax assets      8,826    12,072 
Other current financial assets  Note 16   1,003    1,008 
Other current assets      57,219    20,714 
Current restricted cash and cash equivalents  Note 9   6,149    28,843 
Cash and cash equivalents  Note 9   99,940    102,714 
Total current assets      699,982    657,238 
Total assets      1,426,570    1,347,145 
EQUITY AND LIABILITIES             
Equity             
Share capital      1,784    1,784 
Reserves      451,329    696,774 
Translation differences      (204,056)   (206,759)
Valuation adjustments      5,265    5,755 
Result attributable to the Parent      (65,472)   (246,339)
Non-controlling interests      110,619    114,504 
Total equity  Note 10   299,469    365,719 
Non-current liabilities             
Deferred income      37,570    620 
Provisions  Note 11   107,501    108,487 
Bank borrowings  Note 12   4,061    5,277 
Lease liabilities  Note 13   12,995    13,994 
Debt instruments  Note 15   37,600    346,620 
Other financial liabilities      37,608    29,094 
Other non-current liabilities      16,955    16,767 
Deferred tax liabilities  Note 14   23,956    27,781 
Total non-current liabilities      278,246    548,640 
Current liabilities             
Provisions  Note 11   102,269    55,296 
Bank borrowings  Note 12   85,825    102,330 
Lease liabilities  Note 13   8,709    8,542 
Debt instruments  Note 15   359,318    10,888 
Other financial liabilities      23,732    34,802 
Payables to related parties  Note 18   6,131    3,196 
Trade and other payables      189,449    149,201 
Current income tax liabilities      513    2,538 
Other current liabilities      72,909    65,993 
Total current liabilities      848,855    432,786 
Total equity and liabilities      1,426,570    1,347,145 

 

Unaudited data at June 30, 2021

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements

 

1 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE THREE
AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Thousands of US dollars

 

      Three Months Ended   Six months ended 
      June 30,   June 30, 
   Notes  2021    2020   2021    2020 
Sales  Note 19   418,538    250,004    779,928    561,226 
Cost of sales      (267,939)   (153,291)   (518,104)   (396,651)
Other operating income      37,105    10,160    39,018    17,928 
Staff costs      (63,197)   (48,912)   (158,464)   (104,009)
Other operating expense      (93,171)   (35,953)   (130,006)   (76,020)
Depreciation and amortization charges, operating allowances and write-downs      (23,523)   (27,459)   (48,808)   (56,127)
Other gains and (losses)      608    86    674    (586)
Operating profit (loss)      8,421    (5,365)   (35,762)   (54,239)
Net finance expense      (11,178)   (16,693)   (27,042)   (33,177)
Financial instruments gain  Note 15               3,168 
Exchange differences      3,237    2,634    (6,077)   5,069 
Profit (loss) before taxes      480    (19,425)   (68,881)   (79,179)
Income tax benefit (expense)      250    5,390    1,094    16,086 
Profit (loss) from continuing operations      730    (14,035)   (67,787)   (63,093)
Profit (loss) from discontinued operations                   
Profit (loss) for the period      730    (14,035)   (67,787)   (63,093)
Loss attributable to non-controlling interests      1,180    1,928    2,315    3,087 
Profit (loss) attributable to the Parent      1,910    (12,107)   (65,472)   (60,006)

 

      Three Months Ended   Six Months Ended 
      June 30,   June 30, 
From continued and discontinued operations  Notes  2021   2020   2021   2020 
Profit (loss) attributable to the Parent      1,910    (12,107)   (65,472)   (60,006)
Weighted average basic shares outstanding (thousands)      169,298    169,254    169,295    169,252 
Basic profit (loss) per ordinary share  Note 10   0.01    (0.07)   (0.39)   (0.35)
Weighted average basic shares outstanding (thousands)      169,298    169,254    169,295    169,252 
Effect of dilutive securities (thousands)                   
Weighted average diluted shares outstanding (thousands)      169,298    169,254    169,295    169,252 
Diluted profit (loss) per ordinary share  Note 10   0.01    (0.07)   (0.39)   (0.35)

 

Unaudited data at June 30, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

2 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Thousands of US dollars

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2021   2020   2021   2020 
Loss for the period   730    (14,035)   (67,787)   (63,093)
                     
Items that may be reclassified subsequently to profit or loss:                    
Arising from cash flow hedges               11,161 
Translation differences   1,701    8,416    3,583    (23,879)
Total income and expense recognized directly in equity   1,701    8,416    3,583    (12,718)
                     
Items that have been reclassified to income or loss in the period:                    
Arising from cash flow hedges   (245)   (222)   (489)   (6,345)
Tax effect               (1,592)
Total transfers to income or loss   (245)   (222)   (489)   (7,937)
                     
Other comprehensive income (loss) for the period, net of income tax   1,456    8,194    3,094    (20,655)
                     
Total comprehensive (loss) income for the period   2,186    (5,841)   (64,693)   (83,748)
                     
Attributable to the Parent   2,814    (5,029)   (63,258)   (79,068)
Attributable to non-controlling interests   (628)   (812)   (1,435)   (4,680)

 

Unaudited data at June 30, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

3 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Thousands of US dollars

 

   Total Amounts Attributable to Owners 
   Shares   Share       Translation   Valuation   Result for   Non-
controlling
     
   (thousands)   capital   Reserves   differences   adjustments   the period   interests   Total 
Balance at December 31, 2019   170,864    1,784    975,358    (210,152)   (2,169)   (280,601)   118,077    602,297 
Total comprehensive (loss) income               (23,878)   4,816    (60,006)   (4,680)   (83,748)
Share-based compensation           1,425                    1,425 
Distribution of 2019 profit           (280,601)           280,601         
Balance at June 30, 2020   170,864    1,784    696,182    (234,030)   2,647    (60,006)   113,397    519,974 

 

   Total Amounts Attributable to Owners 
   Shares   Share       Translation   Valuation   Result for   Non-
controlling
     
   (thousands)   capital   Reserves   differences   adjustments   the period   interests   Total 
Balance at December 31, 2020   170,864    1,784    696,774    (206,759)   5,755    (246,339)   114,504    365,719 
Total comprehensive (loss) income               2,703    (490)   (65,472)   (1,435)   (64,694)
Share-based compensation           894                    894 
Application of 20120 loss           (246,339)           246,339         
Dividends paid to non-controlling interests                           (2,450)   (2,450)
Balance at June 30, 2021   170,864    1,784    451,329    (204,056)   5,265    (65,472)   110,619    299,469 

 

Unaudited data at June 30, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

4 

 

 

 

FERROGLOBE PLC AND SUBSIDIARIES

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Thousands of US dollars

 

         
   June 30,   June 30, 
  2021   2020 
Cash flows from operating activities:        
(Loss) for the period   (67,787)   (63,093)
Adjustments to reconcile net loss to net cash used by operating activities:          
Income tax (benefit)   (1,094)   (16,086)
Depreciation and amortization charges, operating allowances and write-downs   48,808    56,127 
Net finance expense   27,042    33,177 
Financial derivative gain (loss)       (3,168)
Exchange differences   6,077    (5,069)
Loss (gain) due to changes in the value of asset   (264)    
Loss (gain) on disposal of non-current assets   (43)    
Share-based compensation   894    1,426 
Other adjustments   (368)   586 
Changes in operating assets and liabilities:          
(Increase) decrease in inventories   2,676    39,106 
(Increase) decrease in trade receivables   (50,317)   129,369 
Increase (decrease) in trade payables   42,336    (30,379)
Other changes in operating assets and liabilities   4,902    (27,884)
Income tax paid   (1,235)   13,641 
Net used cash provided by operating activities   11,627    127,753 
Cash flows from investing activities:          
Interest and finance income received   163    339 
Payments due to investments:          
Other intangible assets        
Property, plant and equipment   (8,928)   (9,662)
Disposals:          
Other non-current assets   543     
Net cash provided (used) by investing activities   (8,222)   (9,323)
Cash flows from financing activities:          
Payment for debt issuance cost   (17,691)   (1,855)
Proceeds from debt issuance   40,000     
Increase/(decrease) in bank borrowings:          
Borrowings   277,635     
Payments   (302,447)   (65,560)
Amounts paid due to leases   (6,013)   (4,879)
Other amounts received (paid) due to financing activities       3,608 
Interest paid   (20,348)   (19,955)
Net cash (used) provided by financing activities   (28,864)   (88,641)
Total net cash flows for the period   (25,459)   29,789 
Beginning balance of cash and cash equivalents   131,557    123,175 
Exchange differences on cash and cash equivalents in foreign currencies   (9)   278 
Ending balance of cash and cash equivalents   106,089    153,242 
Ending balance of cash and cash equivalents from statement of financial position   99,940    124,876 
Current restricted cash and cash equivalents   6,149    28,366 
Cash and restricted cash in the statement of financial position   106,089    153,242 

 

Unaudited data at June 30, 2021 & 2020

 

Notes 1 to 20 are an integral part of the unaudited interim condensed consolidated financial statements.

 

5 

 

 

Ferroglobe PLC and Subsidiaries

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

 

As of June 30, 2021 and December 31, 2020
and for the three and six months ended June 30, 2021 and 2020

(U.S. Dollars in thousands as otherwise indicated, except share and per share data)

 

1.General information

 

Ferroglobe PLC and subsidiaries (the “Company” or “Ferroglobe”) is among the world’s largest producers of silicon metal and silicon and manganese-based alloys, important ingredients in a variety of industrial and consumer products. The Company’s customers include major silicone chemical, aluminum and steel manufacturers, auto companies and their suppliers, ductile iron foundries, manufacturers of photovoltaic solar cells and computer chips, and concrete producers.

 

Ferroglobe PLC (the “Parent Company” or “the Parent”) is a public limited company that was incorporated in England and Wales on February 5, 2015 (formerly named ‘Velonewco Limited’). The Parent’s registered office is 5 Fleet Place, London, England, EC4M7RD.

 

On December 23, 2015, Ferroglobe PLC consummated the acquisition (“Business Combination”) of Globe Specialty Metals, Inc. and subsidiaries (“GSM” or “Globe”) and Grupo FerroAtlántica, S.A.U. or “FerroAtlántica”.

 

2.Basis of preparation and changes to the Company’s accounting policies

 

2.1 Basis of preparation

 

These unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the audited consolidated financial statements of Ferroglobe as of December 31, 2020.

 

The unaudited interim condensed consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020 have been prepared assuming that the Company will continue as a going concern.

 

All accounting policies and measurement basis with effect on the consolidated financial statements were applied in their preparation.

 

The consolidated financial statements were prepared on a historical cost basis, with the exceptions disclosed in the notes to the consolidated financial statements, where applicable, and in those situations where IFRS requires that financial assets and financial liabilities are valued at fair value.

 

The consolidated financial statements for the year ended December 31, 2020 were prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. As of June 30, 2021, as reflected in our consolidated financial statements, the Company had cash and cash equivalents of $106.1 million, of which $6.1 million was restricted. The Company had an operating profit of $8.4 million and operating loss of $35.8 million, a net profit of $0.7 million and a net loss of $67.8 for the six and three months ended June 30, 2021.

 

COVID-19 has been and continues to be a complex and evolving situation, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation; limitations on the size of in-person gatherings, restrictions on freight transportations, closures of, or occupancy or other operating limitations on work facilities, and quarantines and lock-downs .

 

6 

 

 

As a result of this pandemic and the strict confinement and other public health measures taken around the world, the demand for our products in the second and third quarters of 2020 was reduced significantly compared with the first and fourth quarters of the year. During the fourth quarter of 2020, demand level for our products increased to levels similar to those prior to the outbreak. In first and second quarter of 2021, demand for our products has increased even further than in the fourth quarter of 2020. However, COVID-19 has negatively impacted, and will in the future negatively impact to an extent we are unable to predict, our revenues.

 

The main source of finance for the Company are the Senior Notes (the “Notes”) amounting $350,000 thousand due March 1, 2022. The Indenture governing the Notes includes provisions which, in the event of a change of control, would require the Company to offer to redeem the outstanding Notes at a cash purchase price equal to 101% of the principal amount of the Notes, plus any accrued and unpaid interest. Based on the provisions cited above, a change of control as defined in the indenture is unlikely to occur, but the matter it is not within the Company’s control. If a change of control were to occur, the Company may not have sufficient financial resources available to satisfy all of its obligations. Management is pursuing additional sources of financing to increase liquidity to fund operations.

 

The Company has announced occurence of “transaction effective date” under lock-up agreement dated March 27, 2021 and completion of refinancing transactions.

 

Management acknowledges that the events and conditions relating to the uncertainty the potential repayment of the outstanding balance of the Notes should a change of control occur, and the difficulties in forecasting net cash flows in the current economic conditions because of the Covid-19 pandemic, together in aggregate give rise to a material uncertainty that may cast substantial doubt on the ability of the Company to continue as a going concern for a period of twelve months following the date our consolidated financial statements are issued. Notwithstanding the material uncertainty described above, management believes that the Group has adequate resources and considers it likely that the exchange of the Notes and additional capital will be completed, that will allow the Group to continue in operational existence for the foreseeable future. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as going concern.

 

These unaudited interim condensed consolidated financial statements were authorized for issue by the Company on September 30, 2021.

 

In determining the disclosures to be made on the various items in the financial statements or other matters, the Company, in accordance with IAS 34, considered their materiality in relation to the unaudited interim condensed consolidated financial statements for the period.

 

2.2 New standards, interpretations, and amendments adopted by the Company

 

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2020.

 

No new standards effective on January 1, 2021 have a material impact on the unaudited interim condensed consolidated financial statements. The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

2.3 Responsibility for the information and use of estimates

 

The information in these consolidated financial statements is the responsibility of Ferroglobe’s Management.

 

Certain assumptions and estimates were made by management in the preparation of these unaudited interim condensed consolidated financial statements, including:

 

The impairment losses on goodwill;
   
The assumptions taken over forecast recovery in trading activity and cash liquidity management that mitigates any substantial doubt as to the Company’s ability to continue as a going concern;
   
The useful life of property, plant and equipment and intangible assets.
   
The fair value valuation of the plants, impairment losses on property, plant and equipment and intangible assets, determined by value in use or by fair value less cost of disposal methods.
   
The fair value of certain unquoted financial assets.
   
The fair value of financial instruments
   
The fair value of acquired assets and liabilities as a result of the business combinations.
   
The assumptions used in the actuarial calculation of pension liabilities.

 

7 

 

 

The discount rate used to calculate the present value of certain collection rights and payment obligations.
   
Provisions for contingencies and environmental liabilities.

 

The Company based its estimates and judgments on historical experience, known or expected trends and other factors that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates. Changes in accounting estimates are applied in accordance with IAS 8.

 

At the date of preparation of these unaudited interim condensed consolidated financial statements no events had taken place that might constitute a significant source of uncertainty regarding the accounting effect that such events might have in future reporting periods.

 

3.Segment reporting

 

Operating segments are based upon the Company’s management reporting structure.

 

Ferroglobe has four reportable business segments, which are: Electrometallurgy - North America, Electrometallurgy - Europe, Electrometallurgy - South Africa, and Other segments.

 

The unaudited interim condensed consolidated income statements for the three and six months ended June 30, 2021 and 2020, by segment, are as follows:

 

   Three Months Ended June 30, 2021 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Sales   131,251    259,297    30,406    10,420    (12,836)   418,538 
Cost of sales   (84,125)   (168,946)   (20,986)   (8,134)   14,252    (267,939)
Other operating income   1,174    36,079    244    10,467    (10,859)   37,105 
Staff costs   (19,330)   (35,421)   (3,350)   (5,096)       (63,197)
Other operating expense   (11,414)   (81,265)   (3,799)   (6,136)   9,443    (93,171)
Depreciation and amortization charges, operating allowances and write-downs   (14,194)   (8,157)   (963)   (209)       (23,523)
Other gains and (losses)       (4)       12        8 
Impairment losses                        
(Loss) gain due to changes in the value of assets               243        243 
(Loss) gain on disposal of non-current assets   (186)   543                357 
Operating profit   3,176    2,126    1,552    1,567        8,421 
Net finance expense   (311)   (2,400)   (549)   (7,918)       (11,178)
Exchange differences   (150)   (1,024)   (177)   4,588        3,237 
(Loss) profit before taxes   2,715    (1,298)   826    (1,763)       480 
Income tax (expense) benefit   237    691    (298)   (380)       250 
(Loss) profit for the period   2,952    (607)   528    (2,143)       730 
Loss attributable to non-controlling interests   1,081    2    73    24        1,180 
(Loss) profit attributable to the Parent   4,033    (605)   601    (2,119)       1,910 

 

8 

 

 

   Three Months Ended June 30, 2020 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Sales   89,055    153,140    13,119    6,050    (11,360)   250,004 
Cost of sales   (48,102)   (103,005)   (9,053)   (4,329)   11,198    (153,291)
Other operating income   454    9,620        6,734    (6,648)   10,160 
Staff costs   (17,203)   (28,455)   (1,640)   (1,614)       (48,912)
Other operating expense   (10,799)   (19,470)   (3,005)   (9,489)   6,810    (35,953)
Depreciation and amortization charges, operating allowances and write-downs   (16,804)   (9,173)   (1,386)   (96)       (27,459)
Other (loss) gain   (68)           154        86 
Operating (loss) profit   (3,467)   2,657    (1,965)   (2,591)       (5,365)
Net finance expense   (111)   (5,411)   (737)   (10,434)       (16,693)

Exchange differences   (737)   (3,549)   (267)   7,187        2,634 
(Loss) before taxes   (4,315)   (6,303)   (2,969)   (5,838)       (19,425)
Income tax (expense) benefit   1,389    (242)   727    3,516        5,390 
(Loss) for the period   (2,926)   (6,545)   (2,242)   (2,322)       (14,035)
Loss attributable to non-controlling interests   1,749        120    59        1,928 
(Loss) attributable to the Parent   (1,177)   (6,545)   (2,122)   (2,263)       (12,107)

 

   Six Months Ended June 30, 2021 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Sales   258,711    469,567    55,030    18,505    (21,885)   779,928 
Cost of sales   (164,807)   (324,007)   (37,255)   (14,106)   22,071    (518,104)
Other operating income   2,039    37,956    356    15,443    (16,776)   39,018 
Staff costs   (39,720)   (104,123)   (6,592)   (8,029)       (158,464)
Other operating expense   (21,674)   (100,470)   (6,431)   (18,021)   16,590    (130,006)
Depreciation and amortization charges, operating allowances and write-downs   (28,280)   (17,600)   (2,560)   (368)       (48,808)
Other gains and losses               9        9 
(Loss) gain due to changes in the value of assets                  264        264 
(Loss) gain on disposal of non-current assets   (143)   544                401 
Operating (loss) profit   6,126    (38,133)   2,548    (6,303)       (35,762)
Net finance expense   (544)   (5,069)   (1,366)   (20,063)       (27,042)
Exchange differences   99    3,228    (453)   (8,951)       (6,077)
(Loss) profit before taxes   5,681    (39,974)   729    (35,317)       (68,881)
Income tax (expense) benefit   164    (186)   (397)   1,513        1,094 
(Loss) profit for the period   5,845    (40,160)   332    (33,804)       (67,787)
Loss attributable to non-controlling interests   2,194    12    71    38        2,315 
(Loss) profit attributable to the Parent   8,039    (40,148)   403    (33,766)       (65,472)

 

9 

 

 

   Six Months Ended June 30, 2020 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Sales   203,927    332,514    34,540    13,951    (23,706)   561,226 
Cost of sales   (123,068)   (263,030)   (23,973)   (10,834)   24,254    (396,651)
Other operating income   970    16,832        7,388    (7,262)   17,928 
Staff costs   (37,749)   (57,678)   (5,206)   (3,376)       (104,009)
Other operating expense   (24,111)   (37,749)   (6,934)   (13,940)   6,714    (76,020)

Depreciation and amortization charges, operating allowances and write-downs   (33,989)   (18,639)   (2,987)   (512)       (56,127)
Other gains and (losses)   (441)   185        (330)       (586)
Operating (loss)   (14,461)   (27,565)   (4,560)   (7,653)       (54,239)
Net finance expense   (228)   (10,939)   (1,566)   (20,444)       (33,177)
Financial instruments gain               3,168        3,168 
Exchange differences   860    (2,466)   1,315    5,360        5,069 
(Loss) before taxes   (13,829)   (40,970)   (4,811)   (19,569)       (79,179)
Income tax (expense) benefit   3,336    6,891    1,044    4,815        16,086 
(Loss) for the period   (10,493)   (34,079)   (3,767)   (14,754)       (63,093)
Loss attributable to non-controlling interests   2,913    1    59    114        3,087 
(Loss) attributable to the Parent   (7,580)   (34,078)   (3,708)   (14,640)       (60,006)

 

10 

 

 

 

The total assets and liabilities by reportable segment as of June 30, 2021 and December 31, 2020 are as follows:

 

   June 30, 2021 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Total assets   1,199,818    1,038,171    116,206    1,709,559    (2,637,184)   1,426,570 
Total equity and liabilities   (1,199,818)   (1,038,171)   (116,206)   (1,709,559)   2,637,184    (1,426,570)

 

   December 31, 2020 
   Electro-       Electro-             
   metallurgy -   Electro-   metallurgy -       Elim-     
   North   metallurgy -   South   Other   inations     
   America   Europe   Africa   segments   (*)   Total 
Total assets   1,081,792    906,036    114,872    1,057,414    (1,812,969)   1,347,145 
Total equity and liabilities   (1,081,792)   (906,036)   (114,872)   (1,057,414)   1,812,969