Ferrexpo : Annual Report and Accounts 2022

Resilience & commitment

Ferrexpo plc

Annual Report & Accounts 2022

STRATEGIC REPORT

Contents & At a Glance

Looking towards a low emissions future and the shift to Green Steel1

At Ferrexpo, we are focused on the future - both the future of Ukraine and the future of low emissions steelmaking. We are long-term investors in Ukraine, which has demonstrated its resilience throughout Russia's invasion, and we have demonstrated our resilience as a business in Ukraine. Despite the war, we have maintained supplies to our European customers throughout 2022, and we are committed to provide stability, where possible, for our stakeholders in these difficult times.

References to Ferrexpo plc

References in this report to "Ferrexpo", the "Company", the "Group", "we", "us" and "our" are all references to Ferrexpo, Ferrexpo subsidiaries and those that work for Ferrexpo, albeit not a singular entity or person. Such terms are provided as a writing style in this report, and are not indicative of how Ferrexpo or its subsidiaries are structured, managed or controlled.

Words with the symbol A are defined in the Alternative Performance Measures section of the Annual Report on pages 212 to 213.

1. "Green Steel" is considered to be the production of crude steel without greenhouse gas emissions. Please see page 15 of the Group's Climate Change Report for more information.

Strategic Report	01
Chair's Statement	02
War in Ukraine	04
CEO's Review	06
Market Review	08
Our Business Model	12
Our Stakeholders	14
Strategic Framework	16
Key Performance Indicators	18
Financial Review	22
Operational Review	26
Responsible Business Review
Introduction	30
Chair's Review	31
Safety and Our People	32
Environmental Stewardship	34
TCFD Disclosures	37
Diversity, Equity and Inclusion	42
Communities	44
Governance	46
Non-Financial Information Statement	47
Stakeholder Engagement - Section 172	48
Risk Management	56
Principal Risks	58
Viability Statement	75

Corporate Governance	77
Financial Statements	138
Additional Disclosures	211
Alternative Performance Measures	212
Glossary	214

STRATEGIC REPORT

CORPORATE GOVERNANCE

FINANCIAL STATEMENTS

High grade production continues

Despite the war in Ukraine, we continued to produce in 2022, demonstrating the resilience of our operational and marketing teams. We remain committed to high grade iron ore, which represented 100% of our production.

6.1MT

See page 26

Pivoting to direct	% Fe
reduction pellets
Output of higher grade, 67% Fe direct	67
reduction pellets, which represent a low
emissions pathway to making steel, rose to 6%
of total pellet production in 2022 (2021: 4%).
See page 6
Net cash position	M
supports balance
sheet resilience	US$106
Strong balance sheet metrics developed
through resilient business model, prudent
capital allocation and a focus on quality.
See page 22

Our values

Responsibility

Make it happen

Integrity

Diversity within one team

Continuous innovation

See page 32

See page 31

See page 46

See page 42

See page 29

Ferrexpo plc Annual Report & Accounts 2022

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STRATEGIC REPORT

Chair's Statement

Resilience and

1. commitment to Ukraine

US$3.3BN

Committed to Ukraine with more than 15 years of investment since our IPO in 2007, amounting to over US$3.3 billion.

3%

Generating 3% of Ukraine's export revenues in 2022 (2021: 4%), despite a decline in production and iron ore prices.

70+

The Ferrexpo Humanitarian Fund has supported more than 70 projects since the outset of the war in Ukraine, providing direct assistance.

Image on the cover:

Championing selected members of our Ukrainian workforce

Thank you to all members of our Ukrainian workforce for their resilience and commitment since the start of the Russian invasion.

02	Ferrexpo plc Annual Report & Accounts 2022

STRATEGIC REPORT

CORPORATE GOVERNANCE

FINANCIAL STATEMENTS

The year 2022 will long be remembered as a consequence of Russia's escalation of its invasion of Ukraine. It is a significant moment in the history of our planet, and we remain committed to Ukraine and our people at this difficult time.

At Ferrexpo, we are proudly Ukrainian. Ferrexpo has successfully operated in Ukraine for more than 15 years since our listing, and we have consistently invested in Ukraine, our people and our assets. Over this time, our constructive relationships have helped us build a company that is capable of producing some of the highest quality forms of iron ore that are commercially available.

The world has supported Ukraine as it defends itself from Russia's invasion. We have remained committed to Ukraine throughout this conflict, through providing vital humanitarian support to those in need, whilst continuing production and our contribution to the Ukrainian economy. We have nearly 10,000 people in our workforce, with 95% normally based in Ukraine, and we have strived to support them, their families and local communities throughout this conflict. On a national scale, Ferrexpo represents a significant contributor to the Ukrainian economy through taxes and royalties, as well as our consistent use of Ukraine's infrastructure and serving as a major employer in our region of Ukraine. We are proud that our resilient business model, and focus on high quality products, has enabled us to continue shipments to our European customers throughout 2022.

Resilience and commitment

In reviewing what we have learnt from the past year, two key themes are evident: resilience and commitment. Ukraine's resilience has been apparent in newspapers around the world for more than 380 days. At our operations, we have seen our workforce come together with local communities.

In an effort to streamline our support, we established a dedicated humanitarian fund early in the conflict, as it quickly became apparent that large businesses would need to support communities. Through more than 70 individual projects, I am proud to reflect on the direct support that we have been able to provide, and will continue to offer, with over US$19 million of humanitarian aid provided to date. I am also proud that Ferrexpo has supported 3,500 internally displaced people fleeing the war as they pass through our area.

As the war enters its second year, we are mindful of the wellbeing of our workforce and the effects of living in a war zone. As

such, we are offering free support services to those at our operations.

I am proud of the commitment that we have shown to our stakeholders, and indeed the commitment that they have shown

us. In Ukraine, we have worked closely with communities to provide support through our newly formed humanitarian fund and the long-standing Ferrexpo Charity Fund. Resilience is also evident in our operations and marketing teams, with their efforts enabling us to continue shipping throughout 2022. As a modern company, we are increasingly reliant on electronic equipment for managing our operations, and therefore protecting our IT infrastructure from cyberattacks has been critical since the war began - more on our efforts here on page 72.

More broadly, we have also continued our decarbonisation strategy in publishing our Climate Change Report as scheduled in 4Q 2022, as well as providing clear and timely communications with stakeholders throughout the war. We are also grateful to our customers, who have shown commitment to our products, and I would like to thank them for their continued support, which is only possible through long-standing positive relationships.

Understanding our role in Ukraine

We are a major business in Ukraine and, as such, we are a significant contributor to the local economy and economy of Ukraine. In 2022, we contributed US$164 million in taxes and royalties, and we have continued supporting our workforce through our continued operations. We are frequent and consistent users of Ukraine's utilities and infrastructure, helping to contribute to the functioning of Ukraine beyond our own operations. Through our position as one of the world's largest iron ore pellet producers, we are able to be a significant contributor to Ukraine's exports, representing 3% of total exports by value in 2022, despite a 46% decline in production and 25% lower iron ore prices in 2022.

Our footprint in Ukraine extends beyond our own operations, and we are proud to support local businesses and local communities. Of the people that we employ in Ukraine, almost all are based in local communities, and 79% of our recruitment in 2022 was from local communities.

Board developments

The past year has brought a number of changes to strengthen the Board; we welcomed Fiona MacAulay into the role of Senior Independent Director, Ann- Christin Andersen in the role of Chair of the Health, Safety, Environment and Community ("HSEC") Committee and Natalie Polischuk joined the Board in December 2021. Furthermore, Jim North was appointed as permanent CEO in February 2022. In addition, Non-executive Director Kostyantin Zhevago stepped down from the Board in December 2022.

Looking to the future

Reflecting on our long-term strategy as a business, we remain committed to Ukraine and its potential. There is a significant challenge ahead, once the war ends, for companies and communities to help with the rebuilding and healing of Ukraine.

More broadly, we are pleased to see the global shift in the steel market towards higher grade, higher quality materials as a route to lower emissions across the steel value chain. High grade iron ore has been a strategic priority of Ferrexpo's since listing in 2007, and we are proud to be able to help facilitate decarbonisation in the steel industry, which accounts for 7% of global greenhouse gas emissions1.

The coming period will be difficult given the continued war in Ukraine, but if we are to look beyond the war, we continue to be excited by Ukraine's potential and the future that lies ahead in Green Steel. Through working with our stakeholders, we are proud to have built the business that we have today, and the potential that it has for the future.

Finally, I would like to thank all of our stakeholders, particularly those in Ukraine, for their continued commitment to Ferrexpo. I am hopeful that we will soon see an end to the conflict, and then we can look towards a brighter future for Ukraine.

Slava Ukraini.

Lucio Genovese

Chair, Ferrexpo plc

1. Source: International Energy Agency ("IEA"), link. (Accessed February 2023.)

Ferrexpo plc Annual Report & Accounts 2022

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