21 March 2018

Ferrexpo plc

("Ferrexpo", the "Group" or the "Company")

2017 Full Year Results: significant increase in profitability, strengthened balance sheet and total full year dividends of 16.5 US cents.

Ferrexpo plc today announces its financial results for the year ended 31 December 2017.

Steve Lucas, Non-executive Chairman, said:

"An excellent set of results demonstrating strong demand for Ferrexpo's high quality iron ore pellets from the world's leading steel mills.

"The Group's quality upgrade programme, completed in 2015, allowed Ferrexpo to fully capture the increase in market premiums for higher quality iron ore, with its 65% Fe pellet product.

" In 2018, Ferrexpo expects further rationalisation of steel capacity in China which should support global steel margins, and in turn encourage a continued focus on iron making productivity. These dynamics, together with a continued focus by Chinese authorities on the environment and a reduction of air emissions, should provide a favourable setting for iron ore pellets .

"Reflecting our confidence in the business profile and outlook, the Board has proposed a final and special dividend of 9.9 US cents bringing the total dividend for the year to 16.5 US cents."

Extract of 2017 Financial Performance:

US$ million (unless otherwise stated)	Year ended 31.12.17	Year ended 31.12.16	Change
Total pellet production (kt)	10,444	11,201	-7%
Sales volumes (kt)	10,467	11,697	-11%
Average CFR 62% iron ore fines price (US$/t)	71.3	58.3	22%
Revenue	1,197	986	21%
C1 cash cost of production (per tonne)	32.3	27.7	17%
Underlying EBITDA ^A	551	375	47%
Underlying EBITDA margin ^A	46%	38%	8 ppts
Profit for the year	394	189	108%
Diluted EPS	66.85	31.91	109%
Dividend per share (US cents)	16.5	6.6	150%
Net cash flow from operating activities	353	332	6%
Capital investment ^A	103	48	115%
Net debt	403	589	-32%
Total liquidity ^A	312	145	114%
Net debt to Underlying EBITDA ^A	0.73x	1.57x	-54%

Health and Safety

· We deeply regret to report one work related fatality in 2017 (2016: two)

· Group Lost Time Injury Frequency Rate 1.17x in line with 2016

Market Environment

· Strong market environment for high grade iron ore products including pellets

· Increase in pellet premiums reflected market conditions

Financial

· Revenue up 21% to US$1.2BN (2016: US$986M) reflecting higher iron ore prices and pellet premiums

· Underlying EBITDA ^A up 47% to US$551M (2016: US$375M) on higher revenues offset by higher costs and lower production

· Profit before tax up 95% US$450M (2016: US$231M)

· Net cash flows from operating activities US$353M (2016: US$332M) reflected higher EBITDA less working capital normalization

· Net debt reduced 32% to US$403M as of 31 December 2017 (31 December 2016: US$589M)

· Net debt to EBITDA ^A 0.73x as of 31 December 2017 (as of 31 December 2016: 1.57x)

· Group liquidity ^A US$312M as of 31 December 2017 (31 December 2016: US$145M)

· Final ordinary dividend of 3.3 US cents per share proposed (2016: 3.3 US cents) and special dividend of 6.6 US cents per share (2016: 3.3 US cents)

· Total interim and final dividend for 2017 of 16.5 US cents (total interim and final 2016: 6.6 US cents)

Operational

· Production of 10.4MT (2016: 11.2MT) reflected pellet line refurbishment and a general increase in maintenance levels

· 65% Fe pellets represented 95% of total production (2016: 94%)

· C1 cash cost of production ^A of US$32.3 per tonne (2016: US$27.7 per tonne) reflected higher commodity prices, increased mining and maintenance activity and lower production volumes

· Iron ore stockpile increased by 11.4 million tonnes during the year to 49 million tonnes

Outlook

· Ferrexpo expects to benefit from higher pellet premiums in 2018, reflecting agreements with customers and strong demand for high quality pellets

· 2018 production volumes to reflect a 65 day pellet line shutdown in 2Q 2018. 1H 2018 production is expected to be in line with 1H 2017. Production in 2H 2018 is expected to be ahead of 2H 2017.

· Costs remain subject to commodity prices, the Hryvnia exchange rate and local inflation

Alternative Performance Measures:

Words with the symbol ^A are defined in the Alternative Performance Measures section on page 49.

Notes to Editors:

Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine. It has been mining, processing and selling high quality iron ore pellets to the global steel industry for 40 years. Ferrexpo's resource base is one of the largest iron ore deposits in the world. In 2017, the Group produced 10.4 million tonnes of pellets ranking it as the 3^rd largest exporter of pellets to the global steel industry with a market share of approximately 8.5%. Ferrexpo has a diversified customer base supplying steel mills in Austria, Germany, Japan, South Korea, Taiwan, China, Slovakia, the Czech Republic, Turkey and Vietnam. Ferrexpo has a premium listing on the main market of the London Stock Exchange under the ticker FXPO. For further information, please visit www.ferrexpo.com

Analyst meeting:

There is an analyst and investor meeting at 09.00 GMT today at the offices of Deutsche Bank at Winchester House, 75 London Wall, London EC2N 2DB. A live video webcast and slide presentation of this event will be available on www.ferrexpo.com . It is recommended that participants register by 08.45. The presentation will be hosted by Steve Lucas (Chairman), Kostyantin Zhevago (CEO) and Chris Mawe (CFO).

Webcast link: https://edge.media-server.com/m6/go/livestream_demo_mmc6

For further information contact:

Ferrexpo:
Ingrid McMahon	+44 207 389 8304
Maitland:
James Isola	+44 207 379 5151

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report another excellent set of results demonstrating strong demand for Ferrexpo's high quality iron ore pellets from the world's leading steel manufacturers.

In 2017 the Group almost doubled its pre-tax profit to US$450 million (2016: US$231 million) while Underlying EBITDA^A increased by 47% to US$551 million (2016: US$375 million).

Net debt was reduced by 32% to US$403 million, its lowest level since 2011, with the net debt to EBITDA^A ratio falling comfortably below 1 times to 0.73 times compared to 1.57 times as of 31 December 2016.

Ferrexpo achieved a record pellet premium for its product in 2017. Its average received price outperformed the average Platts 62% Fe iron ore fines price by 40%.

Driving the improvement in pricing was an increasing divergence during the year for prices paid for different qualities of iron ore, with high quality iron ore producers, including pellet producers, receiving significant premiums to the benchmark iron ore price, while low quality producers realised substantial discounts. Ferrexpo, as a pellet producer, was very well placed to benefit from this market development given its strategy of producing and selling a high quality iron ore product to the best steel mills in the world.

Although Ferrexpo's cost of pellet production per tonne did increase during the year, it is still a low cost producer relative to its peers, and remains in the bottom quartile of the pellet cost curve.

Dividends

In view of this increase in profitability, the Board was pleased to resume its previous practice of paying an interim ordinary and a special dividend during the year, and today we have announced a final ordinary dividend of 3.3 US cents per share as well as a special dividend of 6.6 US cents per share. If the final ordinary dividend is approved by shareholders, the total dividend relating to 2017 will be 16.5 US cents per share (2016: 6.6 US cents per share).

Health and Safety

We deeply regret a fatality at Ferrexpo Poltava Mining ('FPM') in 2017 (2016: two). Our goal remains firmly focused on achieving zero fatalities or injuries. On behalf of the Group, I would like to express our sincere condolences to the family of our valued colleague.

For further information on health and safety performance, see page 16.

Industry

The steel industry experienced strong profitability in 2017 primarily due to global demand growth and capacity rationalisation in the Chinese steel sector. As such, steel mills looked to increase their utilisation rates while in China mills also sought to decrease their air emissions by reducing sintering and using higher quality inputs. These factors resulted in increased demand for high-grade ore, including pellet. Meanwhile, additional supply of high grade iron ore, including pellet, was limited, resulting in pellet premiums trading at nine-year highs.

For further information on the market environment see Market Review on pages 12 - 14.

Strategy

Since its IPO in 2007, Ferrexpo has established itself as a high quality producer and exporter of iron ore pellets to the best steel mills in the world. It has done this by investing more than US$2.15 billion into its operations to access additional ore, upgrade its processing facilities to improve the quality of its pellet, and establish reliable and cost effective transportation routes to European and seaborne markets. As a result, it has more than doubled production of its high quality 65% Fe pellets, and today it is the third largest exporter of blast furnace pellets by volume.

At the same time, Ferrexpo is one of the lowest cost pellet producers in the world. Going forward, the Group will look to maintain its low cost position within the industry, further improve the quality of its output and increase its production volume.

In 2017, production volumes were primarily impacted by the refurbishment of one of the Group's pelletising lines as well as a general increase in maintenance levels. The Group's refurbishment programme of its pellet lines will continue into 2018 and 2019.

Ferrexpo, however, has compelling brownfield projects to incrementally increase its production volumes subject to available cash flows.

The Group's capital allocation strategy is to maintain an appropriate balance between a strong balance sheet, attractive shareholder returns (in the form of dividends) and investment in growth opportunities. This strategy has been designed to reduce the risks inherent in operating in an emerging market while selling our product in a volatile commodities market.

Over the past two years the Group has focused on strengthening its balance sheet and during this time has reduced net debt by US$465 million. Given this strong reduction and the improvement in Group profitability, total dividends of 16.5 US cents have been declared for 2017. Going forward, the Group will continue to focus on debt reduction.

Following the reduction in capital investment in 2015, due to the low iron ore price environment, investment was gradually increased in 2017. Ferrexpo is implementing a project to increase output of pellet feed by approximately 1.5 million tonnes. Once completed in 2020, it will allow the Group to produce sufficient concentrate to feed all four of its pelletising lines and increase pellet production to 12 million tonnes per annum. Ferrexpo also commenced detailed engineering studies regarding the expansion of its pelletising capacity. Capital will be invested subject to cash flows and market conditions.

Looking to the future, I am confident that Ferrexpo will make further progress by improving the quality of its product and increasing production volumes within the constraints of its capital allocation strategy.

Board Changes

During 2017, Sir Malcolm Field and Oliver Baring retired as planned. The Board is most grateful to both of them for the valuable contributions they have made. Simon Lockett, who has wide experience of natural resource operations in emerging markets, joined the Board in June and took over as Senior Independent Director in September.

The Board's refreshment programme is now complete.

Social Responsibility

For the year ended 2017, it is expected that Ferrexpo's pellet exports will be approximately 1.9% of Ukraine's total export revenue. The Board believes it is fundamental to ensure that Ferrexpo continues to make a positive contribution to the society in which it operates, aiding the long-term development of Ukraine and creating a stable operating environment for the Group.

Ferrexpo provides financial support for a broad array of social programmes across the country and in 2017 invested approximately 2.4% of total Group revenue in these programmes, in line with 2016. These programmes underpin Ferrexpo's licence to operate and ensure that the community is supported when required.

Ukraine

The National Bank of Ukraine expects 2017 GDP growth of approximately 2%, in line with 2016.

Over the year there were various encouraging developments. The government implemented several reforms to reduce the regulatory burden on businesses operating within the country. The World Bank's Doing Business report for the period from 30 June 2016 to 30 June 2017 ranked Ukraine four places higher at 76th out of 190 countries in terms of overall ease of doing business. In August 2017, Moody's rating agency upgraded Ukraine's sovereign rating from Caa3 to Caa2 with a positive outlook. The driver for the upgrade was based on the cumulative impact of structural reforms that, if sustained, are expected to improve the government's financial position. The rating upgrade was constrained by the government's heavy debt maturity profile over the next several years that is expected to require additional foreign currency lending.

In terms of IMF funding, Ukraine received a US$1 billion tranche in April 2017, as part of the US$17.5 billion programme agreed in March 2015. To date, US$7.7 billion has been paid out. The IMF has stressed that further progress is required in the fight against corruption, including the establishment of an independent anti-corruption court.

Against this background of GDP growth, improvements to the regulatory environment and a credit rating upgrade, the Board of Ferrexpo believes Ukraine is gradually moving in the right direction although challenges remain.

Outlook

In 2018, Ferrexpo expects further rationalisation of steel capacity in China which should support global steel margins, and in turn encourage a continued focus on iron making productivity. These dynamics, together with a continued focus by Chinese authorities on the environment and a reduction of air emissions, provide a favourable environment for higher quality iron ore, including pellets.

Ferrexpo expects to benefit from higher pellet premiums compared to 2017 reflecting agreements already reached with customers and the prevailing strength in demand for high quality pellets.

From an operational point of view, costs remain subject to commodity prices, the Hryvnia exchange rate and inflation levels in Ukraine. Production volumes will reflect a 65 day pellet line shutdown in the second quarter of 2018. As such first half 2018 production is expected to be in line with the first half of 2017. Production in the second half of 2018 is expected to be ahead of the second half of 2017.

Steve Lucas

Chairman

FINANCIAL REVIEW

Summary

Strong demand for high quality iron ore in 2017 enabled Ferrexpo to achieve a record pellet premium for its product. The Group's Quality Upgrade Programme, completed in 2015, allowed it to fully capture the increase in market premiums for its 65% Fe pellet product, which represented a record 95% of total pellet output during the year.

While pellet premiums reached a record for the Group, costs per tonne increased from a ten-year low in 2016. The increase reflected higher costs for commodity priced inputs as well as the impact of a 7% decline in production volumes due to maintenance activities.

Underlying EBITDA^A increased by 47% to US$551 million (2016: US$375 million) reflecting higher revenue partly offset by cost inflation. Profit for the year increased by US$205 million to US$394 million (2016: US$189 million). This was driven by the US$176 million increase in Underlying EBITDA^A as well as a lower net finance expense and lower write offs and special items.

Ferrexpo continued to focus on further debt reduction in 2017. During the year, the Group repaid US$239 million of debt and net debt declined by US$186 million to US$403 million as of 31 December 2017 (31 December 2016: US$589 million).

Net debt has reduced by US$465 million since it peaked at US$868 million as of 31 December 2015, while net debt to Underlying EBITDA^A is at a six-year low and sits comfortably below 1x at 0.73x (2016: 1.57x).

Given its improved profitability and cash generation, the Group is pleased to announce an increase in dividends, and if the final ordinary dividend is approved by shareholders, dividends will total 16.5 US cents per share for the full year (2016: 6.6 US cents).

Revenue

Group revenue increased 21% to US$1.2 billion compared to US$986 million in 2016.

The Group's long-term contracts are all based on a spot index iron ore fines price using various reference periods and takes into account the cost of international freight, typically the C3 index from Brazil to China. Pellet premiums are typically negotiated annually, half-yearly or quarterly.

Ferrexpo's achieved price in 2017 increased by US$27 per tonne compared to 2016. This takes into account price movements in the benchmark Platts 62% Fe iron ore fines price as well as movements in pellet premiums and C3 freight.

In 2017, the 62% Fe iron ore fines spot price increased 22% with an average price of US$71 per tonne compared to US$58 per tonne in 2016.

Due to strong market demand for high grade pellets the Group achieved a record average pellet premium. Overall, the Group's net pellet premium increased 86% compared to 2016 levels.

The cost of international freight increased in 2017 due to strong demand and rising oil prices. The average C3 freight rate increased US$6 per tonne to US$15 per tonne. As such, turnover from international freight services increased to US$73 million compared to US$66 million in 2016.

Sales volumes for the year were 10.5 million tonnes compared to 11.7 million tonnes in 2016. Sales volumes in 2016 benefitted from a one-off destocking of approximately 400,000 tonnes of pellets which did not repeat in 2017. Sales volumes in 2017 were also impacted by lower production volumes. Pellet stocks as of 31 December 2017 were 390,000 tonnes compared to 369,000 tonnes at the end of 2016.

Costs

Cost of Goods Sold

Ferrexpo's total cost of goods sold was US$411 million in 2017 compared to US$400 million in 2016. The 3% increase primarily reflected higher commodity price inputs and an increase in maintenance activities and costs partly reduced by lower production levels.

C1 Cash Cost of Production^A

The Group's C1 cash cost of production was US$32.3 per tonne compared to a ten-year low of US$27.7 per tonne in 2016. The US$4.6 per tonne increase reflected higher commodity prices, increased maintenance activity, increased mining activity and lower production volumes.

Costs of approximately US$53 million (or US$5 per tonne of pellet output) were incurred in the mining of lean (lower grade) ore which is currently being stockpiled and has, therefore, not been reported within the C1 cash cost of production, but is reflected in working capital. It is planned that this lean ore will be utilised once the Group has installed additional processing capacity.

For further information see Capital Investment on page 19.

The C1 Cash Cost of Production is regarded as an Alternative Performance Measure ('APM'). For further information see page 49.

Selling and Distribution Costs

Selling and distribution costs were US$220 million compared to US$210 million in 2016. The increase primarily reflected higher seaborne freight rates (see Revenue) as such, international freight increased by US$7 million to US$73 million.

Rail costs to transport pellets to border points for export increased marginally during the year, reflecting a 15% increase in domestic railway tariffs. This increase was partially offset by a slight depreciation of the Ukrainian Hryvnia against the US Dollar.

Currency

Ferrexpo prepares its accounts in US Dollars, whereas the functional currency of the Ukrainian operations is the Hryvnia.

During 2017, the Hryvnia devalued 3% from UAH27.19 per US Dollar as of 1 January 2017 to UAH28.07 per US Dollar as of 31 December 2017.

Ukrainian Hryvnia vs. US Dollar

	1 January	31 December	Average	Average
	2017	2017	2017	2016
UAH per
US$	27.19	28.07	26.60	25.55

Source: National Bank of Ukraine.

Local balances at 31 December 2017 are converted into the Group's reporting currency at the prevailing exchange rate. The devaluation of the Hryvnia during the financial year 2017 resulted in a US$41 million reduction in net assets, as reflected in the translation reserve.

Operating Foreign Exchange Gains/Losses

Given the functional currency of the Ukrainian subsidiaries is the Hryvnia, a devaluation of the Hryvnia against the US Dollar results in foreign exchange gains on the subsidiaries' US Dollar denominated receivable balances (from the sale of pellets). The lower operating foreign exchange gains in 2017 of US$6.7 million (2016: US$13.8 million) reflected a relatively stable Hryvnia against the US Dollar during the year.

Non-operating Foreign Exchange Gains/Losses

Non-operating foreign exchange gains/ losses are mainly due to the conversion of loans in currencies different to the functional currency of certain subsidiaries of the Group, and are the net effect from a lower devaluation of the Hryvnia to the US Dollar in 2017 compared to 2016 and a significantly stronger appreciation of the Euro to the US Dollar. The Euro appreciated from 0.956 per US Dollar to 0.838 per US Dollar in 2017.

Profit Before Tax and Finance

Profit before tax and finance increased by US$187 million to US$496 million compared to US$309 million in 2016, principally reflecting a US$177 million increase in operating profit to US$490 million (2016: US$314 million) due to higher sales prices partly offset by lower sales volumes and cost inflation.

Interest and Debt

Gross debt reduced by 32% in 2017 and as of 31 December 2017 was US$501 million (31 December 2016: US$734 million). This reflected repayment of US$194 million of the Group's outstanding Pre-Export Finance ("PXF") facility, US$26 million Export Credit Agency debt and a US$19 million repayment of trade finance facilities.

In November 2017, the Group secured a new PXF facility of US$195 million. The interest rate on this facility is 450 basis points + 3-month US$ LIBOR.

Due to the fall in gross debt, finance expense was US$55 million during the period (2016: US$67 million). The average cost of debt for the period ended 31 December 2017 was 8.0% (average 2016: 6.7%). The increased average rate reflected amortisation of the Group's PXF facilities which have a lower cost compared to the Group's outstanding US$346 million Eurobond, partly offset by lower average borrowings.

With the first redemption of the Group's Eurobond in April 2018 for US$173 million (the second and final redemption is in 2019 for US$173 million), Ferrexpo expects its interest expense to reduce in 2018 and 2019 subject to increases in LIBOR. As of 31 December 2017, approximately 26% of its debt was floating and 74% fixed.

For further details see Liquidity and Debt Maturity Profile below.

Tax

In 2017, the Group's tax charge was US$55 million, resulting in an effective tax rate of 12.3% compared to 18.2% in 2016, or US$42 million.

The effective tax rate in 2017 reflected a partial de-recognition of the deferred tax asset on the provision for restricted cash balances as well as recognition of a deferred tax asset at Ferrexpo Yeristovo Mining ('FYM') related to losses incurred in prior periods. This was partially consumed in 2017 and is expected to be fully offset against future taxable profits.

For further information see Note 9 of the financial statements.

Profit for the Year from Continuing Operations

Profit for the year increased by US$205 million to US$394 million (2016: US$189 million). This was primarily driven by a strong year-on-year increase in Underlying EBITDA of US$176 million, as well as a US$12 million reduction in net finance expense, a US$19 million year-on-year increase in non-operating forex gains, and a US$11 million reduction in write-offs and allowances (recorded as special items) offset by a US$13 million increase in corporate profit taxes.

For further information on special items see Note 7 respectively of the financial statements.

Cash Flows

Net cash flows from operating activities were US$353 million in 2017 compared to US$332 million in 2016. This reflected a working capital outflow of US$110 million during the year compared to an inflow of US$9 million in 2016.

In 2017, working capital included an outflow of US$53 million (2016: US$42 million) related to the increase in stocks of lower grade iron ore. This ore is expected to be processed once the Group has additional beneficiation capacity in place.

In 2016, working capital benefitted from a US$29 million pre-payment from two customers. This pre-payment was reversed in 2017, and in addition, balances due from customers increased by US$3 million during the year due to higher market prices and timing of sales which were weighted towards December.

Inventories increased by US$26 million in 2017 partly due to higher commodity cost inflation as well as higher spare parts and raw materials due to an increase in maintenance activities and a restocking of items to normal levels following a destocking in 2015 and 2016.

During the year, Ferrexpo received all VAT outstanding on a regular monthly basis. In 2016, Ferrexpo received a refund of US$27 million of pre-paid corporate profit tax relating to prior years which was reflected in a decrease in VAT recoverable and other taxes recoverable and payable in the cash flow statement.

Capital Investment ^A

Capital expenditure in 2017 was US$103 million compared to US$48 million in 2016. Of this, US$79 million was sustaining capex (2016: US$48 million) with US$20 million related to development stripping at FYM. Investment into growth projects was US$24 million (2016: nil).

In 2017, the Group re-commenced Phase 1 of its concentrate expansion programme which was postponed in 2015. The project will increase production of pellet feed by approximately 1.5 million tonnes per annum and is expected to cost an additional US$65 million to complete by 2020. The total cost of the project is US$120 million, of which US$48 million was incurred prior to deferment and US$7 million was incurred in 2017.

During 2017, Ferrexpo invested US$4.4 million in the development and exploration of the Belanovo, Galeschyno and the Northern Deposits (2016: US$0.5 million).

Ferrexpo also commenced engineering studies to expand its pelletising capacity above its current nameplate capacity of 12 million tonnes per annum.

For further information see Capital Investment in the Chairman's Statement on page 5 and Capital Investment in the Operations Review on page 19.

Dividends

A final ordinary dividend of 3.3 US cents per share is being proposed (2016: 3.3 US cents), as well as a final special dividend for the year of 6.6 US cents (2016: 3.3 US cents). If the final ordinary dividend is approved by shareholders, the total dividend related to 2017 will be 16.5 US cents per share (2016: 6.6 US cents per share).

The special dividend announced today will be paid on 16 April 2018 to shareholders on the register at the close of business on 3 April 2018. Subject to approval at the Group's AGM, payment of the final ordinary dividend will be made on 27 June 2018 to shareholders on the register at the close of business on 1 June 2018. The dividend will be paid in UK Pounds Sterling with an election to receive US Dollars.

Liquidity ^A and Debt Maturity Profile

As of 31 December 2017, Ferrexpo's total available liquidity was US$312 million (2016: US$145 million) consisting of US$98 million cash and US$214 million in committed facilities (including a new US$195 million PXF and available facilities of US$19 million on an existing PXF). In addition, the Group has up to US$80 million of unused trade finance facilities.

Net debt declined by US$186 million to US$403 million as of 31 December 2017 (31 December 2016: US$589 million). Net debt to Underlying EBITDA^A for the last 12 months was 0.73x compared to 1.57x as of 31 December 2016.

Total debt outstanding, as of 31 December 2017, was US$501 million (31 December 2016: US$734 million). This comprised of US$113 million drawn under a 2013 PXF facility with three quarterly instalments of US$38 million remaining (completing in 3Q 2018); a US$346 million Eurobond maturing in equal parts in April 2018 and April 2019, and US$39 million of Export Credit Agency ("ECA") funding maturing over the next four years.

In 2018, the Group has US$309 million of debt amortisations consisting of a US$173 million Eurobond redemption, US$113 million PXF repayment and US$23 million of ECA amortisations.

The PXF facility of US$195 million will amortise over eight quarters with final repayment on 31 December 2020. During 2017, Ferrexpo considerably strengthened its balance sheet and improved its liquidity. This was reflected by credit rating upgrades on Ferrexpo's long-term corporate and debt rating from B- to B with a positive outlook from Fitch and stable outlook for S&P. S&P, Fitch and Moody's all rate Ferrexpo's debt one notch above the Ukraine sovereign rating.

Following the successful closure of a new PXF in 2017, Ferrexpo may look to further extend its debt maturity profile in 2018 using the PXF market or other debt capital markets.

MARKET REVIEW

Overview of the Iron Ore Market in 2017

Key developments in the steel and iron ore industry in 2017 included: (1) a significant increase in the anti-dumping duties imposed on steel products by many countries around the world; (2) ongoing Chinese government rationalisation of the steel industry as well as implementation of environmental controls to reduce emissions from the local production of pig iron and sintering; and (3) a widening price differential between low grade and high grade raw materials.

While anti-dumping duties gave traditional steel-producing countries good reason to lift their own steel production, in China around 50 million tonnes of steel capacity was closed during the year. At the same time, World Steel Association figures show that China increased its overall crude steel production to 832 million tonnes in 2017 (up from 787 million tonnes in 2016), which included a 30% reduction in steel exports, indicating healthy domestic demand.

The elimination of less efficient capacity in the Chinese steel industry increased the profitability of incumbent mills. Higher profitability led mills to maximize their steelmaking capacity, demanding higher-quality inputs which also help to limit emissions.

Overall, global crude steel production expanded in 2017 by approximately 5.3% due to strong industrial demand and improving steel profitability (at a high since the global financial crisis in 2007). In terms of the markets most important to global iron ore, besides China, European steel output (including CIS countries) increased 3.8% to 313 million tonnes while North East Asia increased steel production by 1.7% to 175 million tonnes (Source: WSA).

Higher steel production combined with high rates of productivity meant demand for iron ore pellet was strong throughout the year. While a limited supply of seaborne pellet resulted in pellet premiums trading at nine-year highs.

The average Platts 62% Fe iron ore fines price rose 22% in 2017 to US$71 per tonne (2016: average US$58 per tonne). While the average Platts 65% index increased 35% to US$88 per tonne (2016: average US$65 per tonne), implying strong demand for high grade products through the year. Conversely, the Platts 58% Fe price index decreased 4% in 2017 to an average of US$43 per tonne for the year (2016 average: US$45 per tonne) as low grade products were heavily discounted through most of the year.

The Iron Ore Pellet Market

According to CRU, in 2017 iron ore pellets accounted for approximately 22% (443 million tonnes) of total iron ore consumption, while lump accounted for 16% (321 million tonnes) and fines 62% (1.2 billion tonnes).

The proportion of actively traded pellets on global markets, however, comprises only around 8% of total exported iron ore, or the equivalent of 124 million tonnes in 2017 (compared to over 1.1 billion tonnes of traded iron ore fine). The majority of pellets are captive to certain steel mills or regions, while iron ore fines and lump are mined remotely and predominantly traded on the open (seaborne) market.

The largest consumers of pellets are in China, Russia, India, USA and Iran (accounting for 65% of total pellet consumption in 2017). The largest importers of pellet are China, Japan, Germany, Saudi Arabia and Turkey, with Europe importing approximately 47 million tonnes, followed by North East Asia which imported approximately 21 million tonnes in 2017.

Despite representing approximately 28% of global pellet usage, the 124 million tonne pellet export market, sets the price for pellets through negotiations between a limited supply of independent pellet producers and steel mills.

The supply of actively traded pellets increased by a net 5 million tonnes in 2017 (2016: 119 million tonnes) from producers in India, Russia and Brazil, while pellet premiums were trading at a nine-year high. This would suggest that most pelletising plants elsewhere were already operating near capacity and could only increase production marginally despite attractive pellet premiums.

According to CRU, since 2010 exports of lump and fines have increased by 62% and 44% respectively while the supply of pellets has decreased by nearly 20%. 2010 marked the peak of pellet availability on the export market with 151 million tonnes, 27 million tonnes higher than 2017 levels, of which Samarco accounted for 25 million tonnes.

Breakeven cost curve for pellet exporters

The graph below shows the breakeven pellet cost curve for delivery to China. Market concentration in the pellet export market is high, with the two largest suppliers of pellets by volume (coloured red and pink in) holding a market share of approximately 45%. In terms of their breakeven cost, both these exporters sit in the first, second, third and fourth quartile of the cost curve while the higher cost pellet producers require a breakeven 62% Fe CFR fines price of around US$70 per tonne. Ferrexpo is well positioned in the bottom half of the cost curve.

CRU Breakeven cost curve for pellet producers to China

http://www.rns-pdf.londonstockexchange.com/rns/3699I_-2018-3-21.pdf

The largest supplier has announced that it will bring back capacity in 2018 with the restart of operations which have been idled since 4Q 2012, and sit in the fourth quartile of the cost curve. CRU expects that this could add an additional 8 million tonnes to the seaborne market once in full operation (approximately 5 million tonnes in 2018).

The capacity restart of further seaborne supply remains uncertain in terms of timing and the volume to be produced.

Barriers to entry into the pellet market are high with significant capital investment required. When developing a greenfield pellet operation it is usually necessary to invest in mining, beneficiation, pelletising and logistics capability. The table: Recent Capacity Additions to the Pellet Market, shows the cost of the most recent capacity additions to the seaborne pellet market.

Recent Capacity Additions to the Pellet Market

New pellet capacity	Duration	Tonnes	Cost/tonne of pellet capacity	Description
Samarco	2011-2014 8.3Mt	R$6.459bn (US$3.251bn equivalent)	US$391/ tonne	Construction of 9.5mt concentrator Construction of slurry pipeline with 20Mt capacity Construction of 8.3Mt pelletiser 9mt increase in port capacity
Vale Tubarão VIII	2011-2015 7.5Mt	US$1.3bn	US$176/tonne	Construction of pellet plant
Metalloinvest	2012-2015 5Mt	RUB16bn (US$460m equivalent)	US$92/tonne	Construction of pellet plant
NMLK	2011-2016 6Mt	RUB41bn (US$1.4bn equivalent)	US$233/tonne	Construction of pellet plant US$680m or US$113/tonne Expanded mining and beneficiation capacity

Source: Company announcements

As a pellet exporter, which has established operations and is well positioned geographically to supply major import markets, Ferrexpo benefits from operating in a niche sub-sector of the iron ore market with high barriers to entry, at a low cost relative to the competition.

Pellet Utilisation Rates and Forecast Pellet Demand Growth

Pellet utilisation rates in a blast furnace vary regionally across the world. The table: Consumption of Iron Ore per tonne of Hot Metal, shows the consumption of pellet, lump and fines per tonne of hot metal in Europe, North East Asia and China. Europe remains a large and globally important market for pellets whilst the proportion of sintering in China is high at close to 80% and North East Asia utilises a higher proportion of lump.

Consumption of Iron Ore per tonne of Hot Metal

Kg of Fe/tonne of hot metal	Europe	% of mix	NE Asia	% of mix	China	% of mix
Pellets	522	33%	171	11%	180	11%
Lump	119	7%	371	23%	213	13%
Fines	949	60%	1,069	66%	1,271	76%
Total	1,590		1,611		1,664

Source: CRU statistical review January 2018

Sintering is generally the most polluting part of steel making and has been targeted as part of the Chinese government's anti-pollution controls. In Europe and North East Asia, steel plants have limited sintering capacity while lump contains a higher level of impurities compared to pellets and, given it is naturally occurring, has an inconsistent form, making it a less reliable input compared to pellet. These factors limit the overall proportion of lump that can be used in a blast furnace and support the consumption of pellets going forward.

As with fines and lump, the largest consumer of pellet is China, consuming 144 million tonnes in 2017 compared to 135 million tonnes in 2016. In 2017, China produced approximately 125 million tonnes of pellet internally (2016: 120 million tonnes) and imported 19 million tonnes (2016: 15 million tonnes). China's own production of pellets peaked in 2010 at 140 million tonnes. CRU estimates that since 2016 China has closed approximately 60 million tonnes of pelletising capacity which was considered to be obsolete. Ferrexpo believes there is a large range of mining operations in China with a wide spectrum of cost structures; however, the marginal cost to produce concentrate in China is estimated to be approximately US$70 per tonne compared to the average 62% Fe fines price in 2017 of US$71 per tonne. As China is a large consumer of pellet, the high local cost of marginal pellet supply should support demand for imports of pellet.

The consumption of iron ore in 2017 was approximately 2 billion tonnes, a 1% increase in the proportion of pellet in the blast furnace burden mix would lead to an additional 20 million tonnes of pellet demand.

OPERATIONAL REVIEW

Marketing

Total sales volumes in 2017 were 10.5 million tonnes (2016: 11.7 million tonnes) with the Group's premium 65% Fe pellet representing a record 95% of total pellet output during the year (2016: 94%).

Completion of the Group's Quality Upgrade Programme in 2015 has allowed Ferrexpo to improve its price realisations. Ferrexpo's pellet revenue per tonne of pellets sold has allowed it to narrow the price gap between itself and the benchmark pellet price.

Due to lower production levels in 2017, Ferrexpo focused on servicing its existing long-term customer portfolio. The table: Sales Volume by Market Region, shows that the customer mix remained stable compared to 2016. The countries the Group sells the most to are Austria, Germany and Japan.

Sales Volume by Market Region

	2017	2016
Central Europe	49%	48%
North East Asia	16%	17%
Western Europe	15%	16%
China and South East Asia	12%	13%
Turkey, Middle East, India	8%	6%
Total sales volume (million tonnes)	10,467	11,697

The Group's pricing formula for its long-term contracts are all based on a spot index iron ore fines price, usually the Platts 62% Fe iron ore fines price, for various reference periods, and takes into account the cost of international freight, typically the C3 index, as well as a pellet premium which is typically negotiated.

The table: Sales Volume by Average Reference Period for Iron Ore Fines, shows the split of sales volume agreed according to the average reference period used for the iron ore fines price calculation. Most of the Group's contracts are based on the average iron ore fines price for the month of sale or for the quarter of sale.

Sales Volume by Average Reference Period for Iron Ore Fines Calculation

	2017	2016
Current month	61%	66%
One month forward	8%	12%
Current quarter	20%	11%
Lagging 3-month quarter	9%	10%
Spot fixed on day	2%	1%
Total sales volume (million tonnes)	10,467	11,697

In terms of the reference period used for pellet premiums calculations in the sales price formula, it is common practice in the industry for long term pellet supply contracts to fix a pellet premium on annual basis. There are some exceptions, for example spot sales, however, in 2017 and historically, the majority of Ferrexpo's pricing has been based on annual pellet premiums.

PRODUCTION

Health and Safety

Most regrettably there was a fatality at FPM during the year when a truck driver was fatally injured whilst performing maintenance. The circumstances have been thoroughly investigated with findings shared across the Group and further safety procedures put in place. In 2016, there were two work-related fatalities at the Group's operations.

There were a total of 23 lost time injuries ("LTIs") across the Group in 2017 (2016: 22), equating to an LTI frequency rate ("LTIFR") of 1.17, in line with 2016. The table below details the LTIFR as per million man hours worked across the Company's mining and processing operations in Ukraine and its barging subsidiary for 2017 and 2016.

FYM was LTI free for 19 months from February 2016 to August 2017 while the Group's barging subsidiary, DDSG, was LTI free for nine months from October 2016 to June 2017, a record for DDSG. Unfortunately, the barging operations experienced five minor accidents in the second half of 2017, with the principal cause being slips, trips and falls. DDSG is working to eliminate such incidents.

Lost Time Injury Frequency Rate

LTIFR	2017	2016
- FPM	1.03	1.14
- FYM	0.74	0.38
- FBM	0.00	0.00
Mining entities	0.98	1.01
Barging	4.32	3.70
Group	1.17	1.17

Most of the accidents reported have been traced back to non-compliance with internal safety procedures. The Group leadership is focused on improving understanding of safety protocols and adherence to standards, combined with training to ensure better awareness of the consequences of risk-taking in the operational environment.

Pellet Production

Pellet production in 2017 was 10.4 million tonnes, compared to 11.2 million tonnes in 2016. The Group's 65% Fe pellet represented a record 95% of total pellet output during the year (2016: 94%); however, overall production levels were impacted by constraints in the processing and pelletising plants.

In 2017, production was impacted by an increase in required maintenance (planned and unplanned). In the first half of the year, output reflected a 55-day refurbishment of pellet line number 4. This is part of a programme to refurbish all four of the Group's pellet lines, as is required approximately every 15 to 20 years. FPM completed the refurbishment of line number 3 in 2014. Due to the low iron ore price environment in 2015 and 2016 further refurbishments were deferred until 2017. The third line will be refurbished over approximately 65 days in 2Q 2018 and refurbishment of the remaining line is planned for the first half of 2019.

The Group has a project underway to expand its concentrate capacity to increase its output of pellets to nameplate capacity of 12 million tonnes per annum. For further details see Capital Investment on page 19.

The table below summarises production in 2017 and 2016.

Production statistics

(000't unless otherwise stated)	2017	2016	Change
Iron ore processed	27,230	29,335	-7.2%
Average Fe content	33.69%	33.74%	-0.05ppt
Concentrate produced ("WMS")	12,807	14,006	-8.6%
Average Fe content	63.12%	62.78%	0.34ppt
Pellets produced from own ore	10,394	11,071	-6.1%
FBP	559	666	-16.1%
Average Fe content	62.58%	62.44%	0.14ppt
FPP	6,789	7,070	-4.0%
Average Fe content	64.85%	64.88%	-0.03ppt
FPP+	3,046	3,336	-8.7%
Average Fe content	64.85%	64.88%	-0.03ppt
Pellets produced from purchased concentrate	50	129	-61.2%
Total pellet production	10,444	11,201	-6.8%
Total Group stripping volume (million m³)	33,826	22,623	49.5%

Note: Ferrexpo Basic Pellets ("FBP"), Ferrexpo Premium Pellets ("FPP") and Ferrexpo Premium Pellets plus ("FPP+"). In 2017, Ferrexpo produced 37,000 tonnes of pellet feed for sale with an average Fe content of 67.2% (2016: 123,000 tonnes, average Fe 67.5%).

In July 2017, FPM's mining licence was renewed for a further 20 years until 2037. FYM's mining licence was renewed in 2012 and will expire in 2032.

Production Costs

The Group's C1 cash cost of production was US$32.3 per tonne compared to a ten-year low of US$27.7 per tonne in 2016.

Approximately 60% of Ferrexpo's C1 cash cost of production is commodity related, including fuel, electricity, gas, explosives and steel grinding media. In times of relatively high iron ore prices the cost of production tends to increase due to commodity cost inflation; however, during periods of low commodity prices the cash cost is reduced.

Of the US$4.6 per tonne increase in the C1 cash cost in 2017 compared to 2016, approximately 36% (or US$1.65 per tonne) reflected higher commodity prices, while increased maintenance activity represented 20% (or US$0.9 per tonne) of the increase and approximately 16% (or US$0.73 per tonne) was due to lower production volumes. Increased stripping activity at FYM, in preparation for future expansion, represented c.18% (or US$0.83 per tonne) of the cost increase.

Ukrainian producer price inflation was approximately 16.5%¹ on average compared to 2016. Local cost inflation, specifically related to higher electricity tariffs and wages, increased the C1 cost by US$1.3 per tonne. The Hryvnia was relatively stable against the US Dollar, depreciating by 3%, and it did not impact costs of production materially.

Approximately half of the Group's cost of sales is incurred in Hryvnia, with electricity costs the largest component. However, the electricity cost also has exposure to the US Dollar as approximately 35% of electricity generation in Ukraine comes from thermal coal which is priced in US Dollars. In terms of logistics costs incurred within Ukraine, approximately 90% are in Hryvnia. Overall, roughly 55% of the Group's total cost base is denominated in Hryvnia.

The table below shows the Group's C1 cash cost ^A by raw material input.

¹ Source: www.ukrstat.gov.ua
Breakdown of C1 cash cost per tonne	2017	2016
Electricity	28%	31%
Fuel	9%	7%
Gas	10%	12%
Materials	14%	16%
Spare parts	7%	6%
Maintenance	8%	6%
Personnel	8%	6%
Grinding bodies	9%	8%
Royalties	5%	5%
Explosives	2%	3%

CO₂ Emissions

The table below shows the Group's CO₂ intensity ratio was 242 kilograms per tonne of pellet produced in 2017 compared to 235 kilograms per tonne of pellet produced in 2016.

Emissions in tonnes	2017	2016	Change
Total CO₂ emissions	2,614,449	2,703,272	-3.3%
Scope 1 (direct emissions generated by Ferrexpo from natural gas, diesel, coal, oil, explosives etc)	554,763	550,591	0.76%
Scope 2 (indirect emissions purchased by Ferrexpo from electricity and steam)	1,974,997	2,079,329	-5.0%
Pellets produced	10,444	11,201	-6.8%
Intensity ratio (kilogram per tonne of pellet produced) (Scope 1 & 2 only)	242.22	234.79	3.2%
Scope 3 (emissions derived from living matter such as biofuels)	84,689	73,352	15.5%

Note: Calculation for the Group's Scope 2 CO₂ emissions for 2016 has been amended due to a correction to the conversion factor applied for the calculation of emissions from steam.

Electricity, which the Group purchases from the national grid in Ukraine, represented approximately 75% of the Group's total emissions in 2017. CO₂ from this source reduced 5% due to increased use of lower carbon inputs in Ukraine's electricity generation (as calculated by EBRD²), such as nuclear and hydro power, as well as due to a 7% decline in production levels. Gas, which represented 9% of the Group's total emissions in 2017, reduced 14% due to lower production volumes as well as an increase in substitution with sunflower husks. In 2017, sunflower husks replaced 19% of gas consumption with the Group consuming 116,000 tonnes of husks compared to 100,000 tonnes in 2016. Diesel consumption represented 8% of the Group's total CO₂ emissions in 2017. Emissions from diesel increased 22% during the year due to increased mining activities.

Overall, Ferrexpo's intensity ratio increased 3% year-on-year due to higher mining activity, while production volumes reduced, reflecting increased maintenance activities in the processing plant.

^{2 European Bank for Reconstruction and Development}

Mining and Production Efficiencies

The Group has several projects underway which contribute to cost savings, efficiency improvements and enhanced health and safety standards. These include efficiency gains in shovel and dragline dig rates as well as a transition to 100% liquid emulsion blasting media. The transition to emulsion blasting media has resulted in increased rock fragmentation. This has improved excavator and shovel dig rates and reduces equipment wear and tear. It also yields power savings and reduced maintenance cost in the crushing plant. Other efficiency projects include the use of automatic pit drills, drones for automatic surveys of the pit area and the commencement of the creation of a centralised mining control hub for FYM and FPM. This follows the consolidation of FPM and FYM's maintenance centre for mobile equipment. The Group is also focused on improving its fixed plant maintenance processes and procedures to ensure they are best in class and deliver improved reliability.

Ferrexpo will continue to implement small scale projects aimed at improving productivity and efficiency to reduce operating costs.

Capital Investment ^A

Capital investment during the year focused primarily on sustaining capex, including refurbishment of pelletiser line number 4. For further information see Pellet Production on page 16.

In 2017, following deferral of growth projects in 2015, FPM gradually recommenced Phase 1 of its concentrate expansion programme to address bottlenecks in the concentrator. Once completed, by 2020, the Group will be able process an additional 6 million tonnes

of raw ore, producing approximately 1.5 million tonnes of pellet equivalent concentrate. To date, approximately US$55 million has been spent on purchase of equipment and long-lead items and it is expected that it will cost an additional US$65 million to complete.

Exploration and initial pre-stripping activities at Ferrexpo Belanovo Mine, the Group's next mining deposit to be developed, occurred during the year. The project will be accelerated subject to market conditions and demands for additional high quality ore, in line with requirements of the Group's growth projects.

Ferrexpo has initiated studies to expand its pelletising capacity from 12 million tonnes to over 20 million tonnes by increasing the capacity of each of its four pelletising lines, together with the required increases to mining and concentrate capacity to support a higher level of production.

The Group has multiple options to increase its mining, processing and pelletising capacity. However, any investment will be subject to cash flows and market conditions.

Principal Risks

The list of the principal risks and uncertainties facing Ferrexpo's business that are listed below is based on the Board's current understanding.

Due to the very nature of risk it cannot be expected to be completely exhaustive. New risks may emerge and the severity or probability associated with known risks may change over time.

In order to provide a more concise overview of the principal risks facing Ferrexpo, it has grouped the risks into nine categories compared to 17 risks reported in 2016. Most of the principal risks reported in 2016 are still present but have been grouped under more general headings. Interest rate risk, however, is no longer considered to be principal and has been removed.

All risks and their mitigations are actively considered monthly at the Group's Finance and Risk Management Committee meetings based on detailed analysis.

Ferrexpo operates in the mining industry where there is an inherent level of risk present due to the nature of its operations. In addition, the iron ore fines price (which forms a major component of the Group's received price) is volatile, while the Group's asset base is located in Ukraine, an emerging market. As such, Ferrexpo recognizes and accepts the risks present in its business and looks to mitigate them where possible. In general, the overall level of risk present is similar to prior years and movements in individual risks has not varied significantly compared to 2016.

The Board of Ferrexpo has ultimate responsibility for the identification of risks and associated mitigation strategies. The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Marketing Officer manage specific risks on a day to day basis related to their functions.

1. Realised Price

The pricing formula used for long term contracts in the pellet industry is, in general, based on the Platts 62% Fe iron ore fines prices, a negotiated pellet premium (usually agreed annually) and the cost of international freight (usually referenced to the C3 index) . Ferrexpo's achieved price can vary significantly from period to period as it is dependent on the global price for 62% Fe iron ore fines, pellet premiums and freight (all of which Ferrexpo has little or no control over as a price taker).

1.1. Lower Iron Ore Prices (external risk)

Root Cause and Impact

A decline in the 62% Fe iron ore fines price will reduce Group revenue, profitability and cash generation. A reduction in cash generation could impact the Group's ability to fund maintenance and development capital investment. Lower levels of maintenance investment could result in lower production volumes, further reducing cash generation and impacting balance sheet strength.

The iron ore fines price averaged US$71 per tonne in 2017 compared to US$58 per tonne in 2016. Most market analysts expect the price to fall in 2018 and 2019, averaging US$63 per tonne and US$59 per tonne respectively³. For further information on iron ore prices and the market environment see pages 12 to 14.

^3. ^{As of 14 February 2018 expected average price comprises forecasts from 13 investment banks}

Mitigation

Ferrexpo is a low cost producer and is currently in the lowest quartile of the cost curve. Ferrexpo's operating costs are partly linked to commodity prices. In times of low prices for the end product, costs also typically reduced. Furthermore, the Ukrainian Hryvnia is a commodity-related currency and historically it has depreciated during periods of low commodity prices.

Ferrexpo regularly reviews options to hedge the price of its output, however, its current strategy is to not enter into hedging agreements. Ferrexpo has maintained positive profit through the iron ore price cycle.

1.2. Pellet Premiums and Pellet Supply (external risk)

Root Cause and Impact

Ferrexpo receives a pellet premium for its product in addition to the iron ore fines price. Currently, a substantial portion of its profitability is due to this premium. The average Atlantic pellet premium from 2011 to 2017 was US$35 per tonne.

Average pellet premiums in 2017 were over 70% higher than 2016 and traded at a nine year high. The outlook for premiums in 2018 is good with the average premium expected to increase.

Approximately 10 million tonnes of high cost pellet supply is expected to re-enter the market during 2018 and 2019. Steel mills, however, are currently enjoying high levels of demand and profitability, underpinning pellet demand. Post 2018, it is possible that pellet supply that is currently not in production will re-enter the market. This could coincide with a reduction in steel mill profitability, impacting demand for pellets and resulting in an oversupply of pellets to the market. A decrease in the pellet premium would reduce the Group's revenue, profitability and cash generation.

Mitigation

Ferrexpo sells high quality pellets which underpins demand for its product throughout the commodity cycle. Should the pellet premium decline, Ferrexpo has one of the lowest pellet conversion costs in the industry, which should ensure that it is able to remain a competitive producer.

For further information on pellet premiums and the market environment see pages 12 to 14.

1.3. Seaborne Freight Rates (external risk)

Root Cause and Impact

As iron ore is a bulk commodity, seaborne freight rates are an important component of the cost to deliver product to a customer. An increase in freight rates will reduce the net price received from a customer while a reduction in freight rates will increase the net price received from a customer.

Seaborne freight rates, such as C3, are published by the Baltic Exchange and represents the cost for ocean transportation for iron ore from the Brazilian port of Tubarao (where the largest seaborne pellet supplier is based) to Qingdao, China (the largest steel producer in the world).

As Ferrexpo sells to international customers the price it receives includes reference to C3 or other appropriate global benchmarks.

Freight rates are largely influenced by the price of oil. In 2017, the average C3 freight rate⁴ increased to US$15 per tonne from US$9 per tonne in 2016.

⁴ Seaborne freight rates, such as C3, are published by the Baltic Exchange and represent the cost for ocean transportation of iron ore from the Brazilian port of Tubarão (where the largest seaborne suppliers of pellets are based) to Qingdao, China (the largest steel producing country in the world). As Ferrexpo sells to international customers, the price it receives includes reference to C3 or other global benchmarks.

Mitigation

Ferrexpo has its own in-house freight and distribution specialists who procure freight competitively on behalf of the Group. Ferrexpo's geographic proximity to its European customers is a competitive advantage compared to other iron ore producers.

2. Operating Risks

2.1. Operating Risks and Hazards Incl. Mining, Processing and Logistics (company specific risk)

Root Cause and Impact

Ferrexpo operates large scale mining operations which can pose significant challenges and environmental risks. This may result in production-related shortfalls or shutdowns due to geotechnical incidents, mining or processing equipment failure as well as logistics bottlenecks.

The Group's operations require sustaining capital expenditure and repair and maintenance programmes to ensure availability of equipment. A reduction in sustaining capital or repairs and maintenance expenditure can result in equipment failure.

Production stoppages will increase costs and lower output. It can also reduce the quality of the product and lead to late delivery to customers. Lower volumes, higher costs, financial penalties due to poor quality and late delivery of product can impact the Group's cash generation ability, reducing liquidity levels, impacting capital investment levels as well as balance sheet strength. The late delivery of product can also impact the Group's ability to perform according to customer contracts and impact its ability to renew contracts in the future.

Mitigation

During the year the Group completed a 55-day refurbishment of pelletiser line number 4. Pelletiser line number 3 was refurbished in 2014. The Group plans to refurbish the final two pellet lines in 2018 and 2019 respectively. See page 18 for a description of the factors impacting the Group's operations in 2017.

In 1Q 2015, the Group completed a Quality Upgrade Programme which has allowed Ferrexpo to increase the overall quality of its product. Since 2007, Ferrexpo has invested more than US$2.15 billion, which has included modernisation of existing equipment and investment in its logistics capabilities.

Where possible, Ferrexpo owns its own logistics infrastructure. This includes 2,252 rail cars, which reduce reliance on state rail cars for transportation of pellets to border points, 150 barges for transportation of pellets into Central Europe, and a 49.4% interest in the port of TIS Ruda on the Black Sea which guarantees the Group independent access to seaborne markets, avoiding reliance on the state port.

2.2. Health and Safety Risks (company specific risk)

Root Cause and Impact

The mining and processing of iron ore is often associated with a hazardous working environment as it includes the use of explosives and the operation and repair of heavy machinery, amongst other things. Failure to provide a safe work environment for the Group's workforce and failure to ensure an improved and sustained performance in safety behaviour can impact the Group's social license to operate. Fatalities and lost time injuries also result in production stoppages as well as negatively impact employee moral.

During 2017, there was one fatality compared to two fatalities in 2016. A total of 23 lost time injuries occurred across the Group during the year compared to 22 in 2016. The lost time injury frequency rate per million man hours worked was 1.17, in line with 2016.

Mitigation

Safety performance is regularly reviewed throughout the organisation.

All accidents are fully investigated, using Incident, Cause and Analysis methodology. To eliminate reoccurrence the significant incident register is reviewed six monthly to update controls and develop additional actions.

Safety training is regularly provided to employees to instill a culture of accountability. The goal of these safety workshops is to emphasise and ensure that all employees understand and appreciate the importance of strict adherence to safety procedures and that protection of our employees is paramount.

A "near miss" reporting process has been established to learn from low consequence events.

Employee remuneration is linked to safety performance.

Ferrexpo has modernised its mining and production facilities, improving safety and environmental performance.

2.3. Operating Cost Increases (external risk)

Root Cause and Impact

The production of iron ore pellets is a more capital intensive process than other types of iron ore production as it requires the enrichment of relatively low grade ore into a high grade product. As such, in general, pellet producers have higher operating costs per tonne of output than producers of iron ore fines or lump.

Approximately 60% of Ferrexpo's C1 cash cost of production is commodity related, including fuel, electricity, gas, explosives and steel grinding media. In times of relatively high iron ore prices the cost of production tends to increase due to commodity cost inflation, however, during periods of low commodity prices the cash cost is reduced. In addition, over half of the Group's operating costs, including in-land logistics costs, are incurred in Ukrainian hryvnia.

As such, the Group's cost of production is sensitive to local inflation, exchange rate fluctuations between the hryvnia and the US Dollar and US dollar commodity cost inflation.

In 2017, the Group's C1 cash cost increased from US$28 per tonne to US$32 per tonne. See page 8 and 17 for a description of the factors impacting operating costs.

Mitigation

Ferrexpo sits in the bottom quartile of the pellet cost curve. Many of its costs which relate to commodity prices will impact its peers to a similar extent. As such in times of higher commodity prices the Group should be able to maintain its cost competitiveness relative to its competitors.

Ferrexpo looks to increase production volumes to ensure fixed cost dilution and enable the Group to offset (to some extent) external cost inflation. The Group has a Business Improvement Programme aimed at increasing efficiencies and reducing costs by 1% to 2% per annum.

The Ukrainian Hryvnia is a commodity-related currency and historically has depreciated during periods of low commodity prices.

3. Ukraine Country Risk (external risk)

Root Cause and Impact

Ukraine has been an independent country since 1991. During this time the country has witnessed two revolutions in 2004 and in 2014. It has also been subjected to the annexation of Crimea, and there is an ongoing conflict in Eastern Ukraine. The general political instability has negative social and economic consequences and is capable of damaging Ferrexpo's ability to operate without disruption in Ukraine.

Economic weakness can reduce the government's ability to fund social services, leading to tensions within local communities. It can also impact the government's ability to meet payment obligations to exporters (such as VAT refunds) and/or lead to higher taxes (including increased royalty payments). Services provided by state monopolies such as the supply of electricity, gas and freight transportation can also be disrupted in this environment. This can affect Ferrexpo's ability to export product reliably.

Transparency International ranks Ukraine as 130th out of 176 countries in terms of the level of perceived corruption (with 176^th being regarded as the most corrupt). There is a risk that counterparties are involved in activities that are not in compliance with relevant international standards. Further, a weak judicial system can be susceptible to outside influences and can take an extended period of time for courts to reach final judgment.

The Group holds mining licences and the other permits required to carry out mining operations. If mining licences were to be revoked or not renewed, Ferrexpo's ability to continue to produce pellets would be at risk.

Ukraine is a recipient of IMF funding for which, in return, the government has undertaken to implement a number of systemic reforms. In August 2017, Moody's rating agency upgraded Ukraine's sovereign rating from Caa3 to Caa2 with a positive outlook. The driver for the upgrade was based on the cumulative impact of structural reforms that, if sustained, are expected to improve the government's financial position. The rating upgrade was constrained by the government's heavy debt maturity profile over the next several years that is expected to require additional foreign currency lending.

In 2017, Ferrexpo raised new debt facilities, extended FPM's mining licence for 20 years and received all outstanding VAT.

Also see "Debt maturity profile - impact".

Mitigation

Ferrexpo prioritises sufficient liquidity levels and strong credit metrics to ensure smooth operations should geopolitical or economic weakness disrupt the financial system of the country.

Ferrexpo makes meaningful contributions to national and local communities.

Ferrexpo invests in energy efficiency, including alternative fuels to augment gas consumption, and maintains close contact with electricity suppliers.

Ferrexpo has established several sources of suppliers for key products as well as several supply routes.

Ferrexpo maintains and invests in its logistics capabilities to ensure available capacity to better service its customers, lower costs and reduce reliance on state providers.

Ferrexpo prioritises a strong internal control framework including high standards of compliance and ethics.

Ferrexpo monitors its commitments under its various mining licences in order to ensure conditions contained within the licences are fulfilled or the appropriate waivers are obtained.

4. Tax (external risk)

Root Cause and Impact

Ferrexpo is a large tax payer in Ukraine and also pays tax internationally. The growing complexity of tax legislation around the world can result in unforeseen tax payments. Ferrexpo is subject to transfer pricing regulations both locally and internationally. The Base Erosion and Profit Shifting ('BEPS') project initiated by the G20 and OECD is likely to increase scrutiny of cross border tax transactions and may result in challenges from different jurisdictions.

Legislation and regulations are not always clearly written and are subject to varying interpretations and inconsistent enforcement by local, regional and national Ukrainian tax authorities, and other governmental bodies. The uncertainty of application and the evolution of Ukrainian tax laws, including those affecting cross-border transactions, could result in additional tax payments having to be made by the Group which would reduce cash flows and impact liquidity levels.

For further information see note 12 of the Financial Statements.

Mitigation

Ferrexpo conducts transparent and open dialogue with local, regional and national tax authorities. Its tax strategy is in line with best international standards and it is in compliance with all known requirements. The Group regularly takes advice on tax matters from Ukrainian and international tax experts.

For further information on tax, see note 9 of the financial statements.

5. Debt Maturity Profile (external risk)

Root Cause and Impact

Ferrexpo operates in a volatile commodity market while the majority of its assets are based in Ukraine, which has a weak country credit profile as defined by international credit rating agencies. From 2013 until 2016, the debt capital markets for commodity producers with assets in Ukraine were closed due to geopolitical factors as well as low commodity prices. As such, the Group can experience periods where the capital markets are closed or where the cost of funding increases significantly.

In 2018, Ferrexpo has US$309 million of debt amortisations falling due, and in 2019 US$283 million of amortisations fall due.

In November 2017, Ferrexpo raised a new bank facility of US$195 million at 450 basis points + US LIBOR compared to the Group's 2017 average cost of debt of 8%. As of 31 December 2017, the Group had strong credit metrics with total liquidity of US$312 million (including the new bank debt facility) and net debt to EBITDA of 0.73x.

If the 62% Fe iron ore fines price or the pellet premium was to fall significantly in 2018 or 2019 without any offsetting impact from cost reductions it could affect the Group's cash generation and its ability to meet debt amortisations.

Mitigation

Ferrexpo has a strong balance sheet with prudent credit metrics enabling it to attract additional debt facilities should it be required.

Ferrexpo is a low cost producer and has maintained positive profit through the iron ore price cycle, including an average EBITDA margin of 36% from 2007 to 2017.

Statement of Directors' Responsibilities

Statement by the Directors under the UK Corporate Governance Code

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare such financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and Article 4 of the IAS Regulation, and have also chosen to prepare the Parent Company financial statements in accordance with Financial Reporting Standard 101 (Reduced Disclosure Framework). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of their profit or loss for that period.

In preparing the Parent Company financial statements, the Directors are required to:

? select suitable accounting policies and then apply them consistently;

? make judgements and estimates that are reasonable and prudent;

? state whether Financial Reporting Standard 101 (Reduced Disclosure Framework) has been followed, subject to any material departures disclosed and explained in the financial statements; and

? prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that the Directors:

? properly select and apply accounting policies;

? present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

? provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

? make an assessment of the Group's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect of the Annual Report and Accounts

We confirm that to the best of our knowledge:

(a) the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

(b) the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

(c) the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 20 March 2018 and is signed on its behalf by:

Steve Lucas

Chairman

Chris Mawe

Chief Financial Officer

20 March 2018

CONSOLIDATED INCOME STATEMENT

US$000	Notes	Before special items	Special items	Year ended 31.12.17	Before special items	Special items	Year ended 31.12.16
Revenue	4	1,197,494	-	1,197,494	986,325	-	986,325
Operating expenses	3/5/7	(716,947)	(407)	(717,354)	(687,060)	(2,501)	(689,561)
Other operating income		3,238	-	3,238	2,914	-	2,914
Operating foreign exchange gains	6	6,661	-	6,661	13,832	-	13,832
Operating profit		490,446	(407)	490,039	316,011	(2,501)	313,510
Non-operating special items	7	-	-	-	-	(8,525)	(8,525)
Share of profit from associates		5,527	-	5,527	3,726	-	3,726
Profit/(loss) before tax and finance		495,973	(407)	495,566	319,737	(11,026)	308,711
Net finance expense	8	(54,766)	-	(54,766)	(67,002)	-	(67,002)
Non-operating foreign exchange gains/(losses)	6	9,033	-	9,033	(10,311)	-	(10,311)
Profit/(loss) before tax		450,240	(407)	449,833	242,424	(11,026)	231,398
Income tax (expense)/credit	9	(58,787)	3,426	(55,361)	(43,733)	1,535	(42,198)
Profit/(loss) for the year		391,453	3,019	394,472	198,691	(9,491)	189,200
Profit/(loss) attributable to:
Equity shareholders of Ferrexpo plc		389,675	3,254	392,929	196,770	(9,416)	187,354
Non-controlling interests		1,778	(235)	1,543	1,921	(75)	1,846
Profit/(loss) for the year		391,453	3,019	394,472	198,691	(9,491)	189,200
Earnings/(loss) per share:
Basic (US cents)	10	66.53	0.56	67.09	33.60	(1.60)	32.00
Diluted (US cents)	10	66.30	0.55	66.85	33.51	(1.60)	31.91

The presentation of the income statement has been simplified in the current period, with the comparative information re-presented to be on a consistent basis, as set out in Note 2. There has been no restatement of the underlying financial information.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

US$000	Notes	Year ended 31.12.17	Year ended 31.12.16
Profit for the year		394,472	189,200
Items that may subsequently be reclassified to profit or loss:
Exchange differences on translating foreign operations		(41,415)	(126,365)
Income tax effect	9	4,557	16,607
Net other comprehensive loss that may be reclassified to profit or loss in subsequent periods		(36,858)	(109,758)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement gains on defined benefit pension liability		(9,172)	1,075
Income tax effect	9	1,556	(246)
Net other comprehensive (loss)/income not being reclassified to profit or loss in subsequent periods		(7,616)	829
Other comprehensive loss for the year, net of tax		(44,474)	(108,929)
Total comprehensive income for the year, net of tax		349,998	80,271
Total comprehensive income attributable to:
Equity shareholders of Ferrexpo plc		348,686	79,650
Non-controlling interests		1,312	621
		349,998	80,271

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at	As at
US$000	Notes	31.12.17	31.12.16
Assets
Property, plant and equipment		623,359	574,839
Goodwill and other intangible assets		36,858	35,220
Investments in associates		5,947	2,165
Inventories	11	175,831	130,357
Other non-current assets		10,501	2,984
Income taxes recoverable and prepaid	9	5,454	5,630
Deferred tax assets	9	40,408	52,818
Total non-current assets		898,358	804,013
Inventories	11	96,645	78,935
Trade and other receivables		88,327	90,568
Prepayments and other current assets		17,514	12,564
Income taxes recoverable and prepaid	9	14	10,757
Other taxes recoverable and prepaid		23,192	21,389
Cash and cash equivalents	12	97,742	144,751
Total current assets		323,434	358,964
Total assets		1,221,792	1,162,977
Equity and liabilities
Issued capital		121,628	121,628
Share premium		185,112	185,112
Other reserves		(2,020,864)	(1,984,758)
Retained earnings		2,310,226	2,002,153
Equity attributable to equity shareholders of Ferrexpo plc		596,102	324,135
Non-controlling interests		370	(847)
Total equity		596,472	323,288
Interest-bearing loans and borrowings	3/13	186,294	505,641
Defined benefit pension liability		20,514	15,489
Provision for site restoration		2,070	1,071
Deferred tax liabilities	9	381	586
Total non-current liabilities		209,259	522,787
Interest-bearing loans and borrowings	3/13	314,770	228,061
Trade and other payables		48,428	28,807
Accrued liabilities and deferred income		18,196	42,584
Income taxes payable	9	23,715	11,780
Other taxes payable		10,952	5,670
Total current liabilities		416,061	316,902
Total liabilities		625,320	839,689
Total equity and liabilities		1,221,792	1,162,977

The financial statements were approved by the Board of Directors on 20 March 2018.

KOSTYANTIN ZHEVAGO	CHRISTOPHER MAWE
CHIEF EXECUTIVE OFFICER	CHIEF FINANCIAL OFFICER

CONSOLIDATED STATEMENT OF CASH FLOWS

		Year ended	Year ended
US$000	Notes	31.12.17	31.12.16
Profit before tax		449,833	231,398
Adjustments for:
Depreciation of property, plant and equipment and amortisation of intangible assets		46,392	50,671
Interest expense	8	53,044	64,975
Interest income	8	(372)	(175)
Losses on disposal of property, plant and equipment		7,754	4,446
Cash elements included in losses on disposal of property, plant and equipment		(2,953)	-
Operating special items	7	407	2,501
Non-operating special items	7	-	8,525
Share of profit from associates		(5,527)	(3,726)
Movement in allowance for doubtful receivables		576	252
Movement in site restoration provision		1,070	(308)
Employee benefits		(1,632)	3,192
Share-based payments		586	389
Operating foreign exchange gains	6	(6,661)	(13,832)
Non-operating foreign exchange (gains)/losses	6	(9,033)	10,311
Other adjustments		(6,458)	-
Operating cash flow before working capital changes		527,026	358,619
Changes in working capital:
Increase in trade and other receivables		(3,024)	(3,578)
Increase in inventories		(78,892)	(41,540)
(Decrease)/increase in trade and other accounts payable		(27,317)	30,066
(Increase)/decrease in VAT recoverable and other taxes recoverable and payable		(511)	24,345
Cash generated from operating activities		417,282	367,912
Interest paid		(48,576)	(58,793)
Income tax (paid)/refunded	9	(13,721)	24,438
Post-employment benefits paid		(1,539)	(1,466)
Net cash flows from operating activities		353,446	332,091
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets		(102,953)	(48,176)
Proceeds from disposal of property, plant and equipment and intangible assets		138	47
Interest received		358	168
Dividends from associates		4,982	4,203
Net cash flows used in investing activities		(97,475)	(43,758)
Cash flows from financing activities
Proceeds from borrowings and finance	13	-	19,115
Repayment of borrowings and finance	13	(238,670)	(195,918)
Arrangement fees paid		(4,042)	-
Dividends paid to equity shareholders of Ferrexpo plc		(58,316)	-
Net cash flows used in financing activities		(301,028)	(176,803)
Net (decrease)/increase in cash and cash equivalents		(45,057)	111,530
Cash and cash equivalents at the beginning of the year		144,751	35,330
Currency translation differences		(1,952)	(2,109)
Cash and cash equivalents at the end of the year	12	97,742	144,751

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to equity shareholders of Ferrexpo plc
					Total	Non-controlling
	Issued capital	Share premium	Other reserves	Retained	capital and	interests	Total
US$000				earnings	reserves		equity
At 1 January 2016	121,628	185,112	(1,876,624)	1,814,598	244,714	(783)	243,931
Profit for the year	-	-	-	187,354	187,354	1,846	189,200
Other comprehensive (loss)/income	-	-	(108,523)	819	(107,704)	(1,225)	(108,929)
Total comprehensive (loss)/income for the year	-	-	(108,523)	188,173	79,650	621	80,271
Effect from increase of shareholding in subsidiary	-	-	-	(618)	(618)	(685)	(1,303)
Share-based payments	-	-	389	-	389	-	389
At 31 December 2016	121,628	185,112	(1,984,758)	2,002,153	324,135	(847)	323,288
Profit for the year	-	-	-	392,929	392,929	1,543	394,472
Other comprehensive loss	-	-	(36,692)	(7,550)	(44,242)	(230)	(44,472)
Total comprehensive (loss)/income for the year	-	-	(36,692)	385,379	348,687	1,313	350,000
Effect from increase of shareholding in subsidiary	-	-	-	26	26	(96)	(70)
Share-based payments	-	-	586	-	586	-	586
Equity dividends to shareholders of Ferrexpo plc	-	-	-	(77,332)	(77,332)	-	(77,332)
At 31 December 2017	121,628	185,112	(2,020,864)	2,310,226	596,102	370	596,472

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Corporate information

The financial information set out in this statement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The audited statutory accounts for the year ended 31 December 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's annual general meeting convened for Friday, 25 May 2018.

The auditors' report on the 2017 statutory accounts was (i) unqualified, (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying its reports and (iii) did not contain statements under section S498(2) or S498(3) of the Companies Act 2006.

Ferrexpo plc will publish on or around 13 April 2018 its Annual Report and Accounts for the year ended 31 December 2017 on its corporate website www.ferrexpo.com.

Organisation and structure

Ferrexpo plc (the "Company") is incorporated and registered in England, which is considered to be the country of domicile, with its registered office at 55 St James's Street, London SW1A 1LA, UK. Ferrexpo plc and its subsidiaries (the "Group") operate two mines and a processing plant near Kremenchug in Ukraine, have an interest in a port in Odessa and sales and marketing activities around the world including offices in Switzerland, Dubai, Japan, China, Singapore and Ukraine. The Group also owns logistics assets in Austria which operate a fleet of vessels operating on the Rhine and Danube waterways and an ocean going vessel which provides top off services and operates on international sea routes. The Group's operations are vertically integrated from iron ore mining through to iron ore concentrate and pellet production and subsequent logistics. The Group's mineral properties lie within the Kremenchug Magnetic Anomaly and are currently being extracted at the Gorishne-Plavninske and Lavrykivske ("GPL") and Yerystivske deposits.

The majority shareholder of the Group is Fevamotinico S.a.r.l. ("Fevamotinico"), a company incorporated in Luxembourg and ultimately owned by The Minco Trust, of which Kostyantin Zhevago, the Group's Chief Executive Officer, is a beneficiary. At the time this report was published, Fevamotinico held 50.3% (2016: 50.3%) of Ferrexpo plc's issued share capital.

At 31 December 2017, the Group also holds through PJSC Ferrexpo Poltava Mining an interest of 49.5% (2016: 49.4%) in TIS Ruda, a Ukrainian port located on the Black Sea. As this is an associate, it is accounted using the equity method.

Note 2: Basis of preparation

Whilst the preliminary announcement has been prepared in accordance with International Financial Reporting Standards ('IFRS') and International Financial Reporting Interpretation Committee ("IFRIC") interpretations adopted for use by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Board approved the full financial statements that comply with IFRS on Tuesday, 20 March 2018. The financial statements have been prepared under the historical cost convention as modified by the recording of pension assets and liabilities and the revaluation of certain financial instruments.

The Group made changes to the presentation of its consolidated income statement in the consolidated financial statements. These changes included: i) the aggregation of "Cost of sales", "Selling and distribution expenses", "General and administrative expenses", "Other expenses", "Write -offs and impairment losses", and "Losses on disposal of property, plant and equipment" into a single line item "Operating expenses"; and ii) the removal of references to "adjusted items" and "continued operations". These changes simplify the presentation, enhance the understandability of the financial statements and better align with industry practice of other listed mining companies. As a result, comparative period balances have been represented to align with these changes. This presentation was already applied for the interim condensed consolidated financial statements for the period ended 30 June 2017.

The Group's principal risks likely to affect its future development, performance and position are set out on pages 20 to 25. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on pages 7 to 11.

Going concern

The Group has assessed that, taking into account: i) its available cash and cash equivalents available at the date of authorisation of the consolidated financial statements; ii) its cash flow projections for the period of management's going concern assessment; and iii) events and conditions beyond the period of management's going concern assessment, in particular the debt repayments totalling US$177,022 thousand in April and May 2019, it has sufficient liquidity to meet its present obligations and cover working capital needs for the aforementioned period and will remain in compliance with its financial covenants throughout this period. Therefore, the Group continues to adopt the going concern basis of accounting for the preparation of this set of financial statements.

Changes in accounting policies

The accounting policies and methods of computation adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2016 except for the adoption of new amendments and improvements to IFRSs effective as of 1 January 2017. These new standards and interpretations had no effect on reported results, financial position or disclosure in the financial statements:

- Amendment to IAS 7 Statement of cash flow - Disclosure initiative

- Amendment to IAS 12 Income taxes - Recognition of deferred tax assets for unrealised losses

- Annual Improvements to IFRSs 2014-2016 cycle

New standards and interpretations not yet adopted

The Group has elected not to early adopt any revised and amended standards or interpretations, which are not yet mandatory in the EU.

The standards and interpretations below could have an impact on the consolidated financial statements of the Group.

IFRS 9 Financial instruments

The complete standard was issued in July 2014 including the requirements previously issued and additional amendments and becomes effective for financial years beginning on or after 1 January 2018. The new standard replaces IAS 39 and includes a new expected loss impairment model, changes to the classification and measurement requirements of financial assets as well as to hedge accounting. The impact of an expected loss impairment model does not materially impact the Group's consolidated financial statements on the basis (i) the Group does not have a history of credit losses; and (ii) there has not been a significant change in the mix, credit terms, or credit quality of the underlying counterparties as at 31 December 2017. The changes to classification and measurement of financial instruments is unchanged on application of the new standard. The Group does not apply hedge accounting under IAS 39 and does not intend to apply it under IFRS 9.

IFRS 15 Revenue from contracts with customers

The new standard was issued in May 2014 and outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes the current revenue recognition standard. The new standard establishes the principles for the disclosure of useful information in the financial statements about the nature, amount, timing and uncertainties of revenue and cash flows arising from contracts with customers. The Group has assessed the impacts of transitioning to IFRS 15. Under IFRS 15 the revenue recognition model will change from one based on the transfer of risk and reward of ownership to the transfer of control of ownership. The Group's revenue is predominantly derived from sales of iron pellets, where the point of recognition is dependent on the contractual sales terms based on the International Commercial terms (Incoterms). As the time of the transfer of risks and rewards coincides with the transfer of a control, the timing and the amount of revenue recognised is unlikely to be materially affected for the majority of sales. For the Incoterms Cost, Insurance and Freight ("CIF"), and Cost and Freight ("CFR"), the seller must contract for and pay the freight necessary to bring the goods to the named port of destination. Consequently, the freight service on sales contracts with CIF and CFR Incoterms will meet the criteria of a separate performance obligation and a portion of the revenue earned under these contracts, representing the obligation to perform freight service, is deferred and recognised over time as this obligation is fulfilled, along with the associated costs. The Group has assessed the impact of the CIF and CFR sales for the year ending 31 December 2017. If the new standard were applied as of 31 December 2017, freight-related revenue of US$6,006 thousand would have been deferred, reducing revenue and the operating result by the same amount, and US$63,447 thousand would have been disclosed as freight-related revenue in Note 4, without an effect on the operating result. The Group will apply IFRS 15 for the annual reporting periods beginning on 1 January 2018, with the cumulative effect of initially applying IFRS 15, recognised at the date of initial application. Apart from the impact stated above, the Group does not anticipate the application of IFRS 15 to have a material impact on the financial position and/or financial performance.

IFRS 16 Leases

The new standard was issued in January 2016 replacing the previous leases standard, IAS 17 Leases, and related Interpretations. IFRS 16 establishes the principles for the recognition, measurement, presentation and disclosure of leases for the customer ("lessee") and the supplier ("lessor"). IFRS 16 eliminates the classification of leases as either operating or finance as is required by IAS 17. Instead, it introduces a single lessee accounting model requiring a lessee to recognise assets and liabilities for all leases unless the underlying asset has a low value or the lease term is 12 months or less. Currently, the Group leases land and buildings under operating leases. The vast majority of these operating leases are for land used for the extraction of ore and are not within the scope of IFRS 16 and will be accounted for under IFRS 6 Exploration for and evaluation of mineral resources. The Group expects that the new standard will primarily result in the recognition of right-of-use assets and liabilities in respect of the long-term rental contracts for its office premises in London, Dubai and Tokyo, land not used for the direct extraction of ore as well as for lease equipment. This new standard applies to annual reporting periods beginning on or after 1 January 2019 subject to EU endorsement and the Group does not intend to early adopt this standard. If the new standard were applied as of 31 December 2017, right-of-use assets and corresponding lease liabilities of US$ 15,167 thousand, before the effect from discounting, would have been recognised without an effect on the operating result.

IFRIC 23 Uncertainty over income tax treatments

The interpretation was issued in June 2017 and clarifies the accounting treatment for uncertainties in income taxes. The new interpretation is to be applied to the determination of taxable results, tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12, and becomes effective for financial years beginning on or after 1 January 2019 subject to EU endorsement. The Group is in the process of performing the impact assessment and does not intend to early apply the new interpretation.

The Group does not expect an impact on its consolidated financial statements from all other standards, interpretations and amendments issued at the reporting date, but not yet to be adopted for these financial statements.

Use of critical estimates and judgements

The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and judgements that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and judgements are based on information available as at the date of authorising the consolidated financial statements for issue. Actual results could therefore differ from those estimates and judgements. The Group identified a number of areas involving the use of critical estimates and judgements made by management in preparing the consolidated financial statements and supporting information is embedded within the following disclosure notes included in this preliminary announcement :

Critical estimates

- Note 9 Taxation - recoverability of deferred tax assets

- Note 11 Inventories - lean and weathered ore

Critical judgements

- Note 9 Taxation - tax legislation in Ukraine

Note 3: Segment information

The Group is managed as a single segment, which produces, develops and markets its principal product, iron ore pellets, for sale to the metallurgical industry. While the revenue generated by the Group is monitored at a more detailed level, there are no separate measures of profit reported to the Group's Chief Operating Decision Maker ("CODM"). In accordance with IFRS 8 Operating segments, the Group presents its results in a single segment, which are disclosed in the income statement for the Group.

Management monitors the operating result of the Group based on a number of measures, including Underlying EBITDA, gross profit and net debt.

Underlying EBITDA and gross profit

The Group presents the Underlying EBITDA as it is a useful measure for evaluating its ability to generate cash and its operating performance. The Group's full definition of Underlying EBITDA is disclosed in the Glossary on page 50.

		Year ended	Year ended
US$000	Notes	31.12.17	31.12.16
Profit before tax and finance		495,566	308,711
Losses on disposal of property, plant and equipment		7,754	4,446
Share-based payments		586	389
Operating special items	7	407	2,501
Non-operating special items	7	-	8,525
Depreciation and amortisation		46,392	50,671
Underlying EBITDA		550,705	375,243

		Year ended	Year ended
US$000	Notes	31.12.17	31.12.16
Revenue	4	1,197,494	986,325
Cost of sales	5	(411,490)	(400,333)
Gross profit		786,004	585,992

Net debt

Net debt as defined by the Group comprises cash and cash equivalents less interest-bearing loans and borrowings.

		As at	As at
US$000	Notes	31.12.17	31.12.16
Cash and cash equivalents	12	97,742	144,751
Interest-bearing loans and borrowings - current	13	(314,770)	(228,061)
Interest-bearing loans and borrowings - non-current	13	(186,294)	(505,641)
Net debt		(403,322)	(588,951)

The Group made debt repayments of US$238,602 thousand during the year ended 31 December 2017 (2016: US$195,918 thousand). Net debt is an Alternative Performance Measure ("APM"). Further information on the APMs used by the Group, including the definitions, is provided on pages 49 to 51.

Disclosure of revenue and non-current assets

The Group does not generate significant revenues from external customers attributable to the United Kingdom, the Company's country of domicile. The information on the revenues from external customers attributed to the individual foreign countries is given in Note 4. The Group does not have any significant non-current assets that are located in the country of domicile of the Company. The vast majority of the non-current assets are located in Ukraine.

Note 4: Revenue

Revenue for the year ended 31 December 2017 consisted of the following:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Revenue from sales of iron ore pellets and concentrate:
Export	1,126,318	921,861
Total revenue from sale of iron ore pellets and concentrate	1,126,318	921,861
Revenue from logistics and bunker business	68,449	61,207
Revenue from other sales and services provided	2,727	3,257
Total revenue	1,197,494	986,325

Export sales of iron ore pellets and concentrate by geographical destination showing separately countries that individually represented more than 10% of export sales in either the current or prior year were as follows:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Central Europe	536,836	425,079
Austria	328,377	215,479
Others	208,459	209,600
Western Europe	170,295	153,932
Germany	155,508	143,281
Others	14,787	10,651
North East Asia	198,165	155,443
Japan	120,053	96,257
Others	78,112	59,186
China and South East Asia	142,812	129,391
China	123,531	125,788
Others	19,281	3,603
Turkey, Middle East and India	78,210	58,016
Turkey	78,210	58,016
Total exports	1,126,318	921,861

The Group markets its products across various regions. The disclosure of the segmentation reflects how the Group makes its business decisions and monitors its sales.

Information about the composition of the regions is provided in the Glossary.

During the year ended 31 December 2017 sales made to three customers accounted for 45% of the revenues from export sales of ore pellets and concentrate (2016: 40.0%).

Sales to one customer that individually represented more than 10% of total sales in either the current or prior year amounted to US$328,377 thousand (2016: US$215,479 thousand).

Note 5: Operating expenses before special items

Operating expenses for the year ended 31 December 2017 consisted of the following:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Cost of sales	411,490	400,333
Selling and distribution expenses	219,703	209,530
General and administrative expenses	41,954	38,647
Other operating expenses	43,800	38,550
Total operating expenses before special items	716,947	687,060

Operating expenses include:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Inventories recognised as an expense upon sale of goods	367,161	360,503
Employee costs	53,293	47,284
Inventory movements	(1,846)	11,311
Depreciation of property, plant and equipment	45,920	50,233
Amortisation of intangible assets	472	438
Royalties and levies	19,610	15,294
Costs of logistics and bunker business	63,127	55,363
Audit and non-audit services	1,342	1,651
Community support donations	28,384	27,519
Losses on disposal of property, plant and equipment	7,754	4,448

Special items not included in the operating expenses are shown in Note 7.

Information on the Group's community support donations is provided in the social responsibility paragraph in the Chairman's Statement on page 5.

Auditor remuneration paid is in respect of the audit of the financial statements of the Group and its subsidiary companies and for the provision of other services not in connection with the audit. The auditor's remuneration balances related to the comparative period ended 31 December 2016 are for audit and non-audit services provided by the previous audit firm of the Group.

Note 6: Foreign exchange gains and losses

Foreign exchange gains and losses for the year ended 31 December 2017 consisted of the following:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Operating foreign exchange gains/(losses)
Revaluation of trade receivables	7,113	14,240
Revaluation of trade payables	(394)	(388)
Other	(58)	(20)
Total operating foreign exchange gains	6,661	13,832
Non-operating foreign exchange gains/(losses)
Revaluation of interest-bearing loans	10,136	(11,577)
Conversion of cash and cash equivalents	(1,497)	(578)
Other	394	1,844
Total non-operating foreign exchange gains/(losses)	9,033	(10,311)
Total foreign exchange gains	15,694	3,521

The translation differences and foreign exchange gains and losses are predominantly dependent on the fluctuation of the exchange rate of the Ukrainian Hryvnia against the US Dollar. The table below shows the closing and average rate of the most relevant currencies of the Group compared to the US Dollar.

	Average exchange rate		Closing exchange rate
	As at	As at	Year ended	Year ended
US$	31.12.17	31.12.16	31.12.17	31.12.16
UAH	26.597	25.551	28.067	27.191
EUR	0.887	0.903	0.838	0.956

Exchange differences arising on translation of non-USD functional currency operations (mainly in Ukrainian Hryvnia) are included in the translation reserve.

Note 7: Special items

Special items for the year ended 31 December 2017 consisted of the following:

		Year ended	Year ended
US$000	Notes	31.12.17	31.12.16
Operating special items
Write-offs		407	2,501
Total operating special items		407	2,501
Non-operating special items
Allowance for restricted cash	14	-	8,525
Total non-operating special items		-	8,525
Total special items before related tax effect		407	11,026
Tax effect on special items	9	-	(1,535)
Total special items after related tax effect		407	9,491
Special tax items	9	3,426	-

Special tax items totalling US$3,426 thousand were recorded during the financial year 2017 (2016: nil), which is the net effect from the following two events:

- recognition of a deferred tax asset from available tax loss carry forwards and temporary differences totalling US$28,822 thousand for an Ukrainian subsidiary, which become profitable in 2017 and is expected to be profitable in the future periods following the implementation of a new commercial structure. See Note 9 for further information; and

- derecognition of a deferred tax asset of US$25,396 thousand, which was recognised in 2015 in respect of the losses recorded as a result of the insolvency of the Group's transactional bank in Ukraine. The deferred tax asset was derecognised based on the latest developments of ongoing court proceedings in Ukraine. See Note 9 and Note 14 for further information.

During the financial year 2016, a non-operating special item arose in relation to the insolvency of the Group's transactional bank in Ukraine. See Note 14 for further details.

Write-offs for the year ended 31 December 2017 primarily consisted of obsolete inventories and property plant and equipment as outlined below:

	As at	As at
US$000	31.12.17	31.12.16
Write-off of inventories	368	33
Write-off of property, plant and equipment	39	1,822
Write-off of receivables and prepayments	-	634
Other	-	12
Total write-offs	407	2,501

Note 8: Net finance expense

Finance expense and income for the year ended 31 December 2017 consisted of the following:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Finance expense
Interest expense on loans and borrowings	(46,547)	(54,255)
Less capitalised borrowing costs	3,637	5,269
Interest on defined benefit plans	(2,094)	(2,203)
Bank charges	(9,550)	(11,372)
Other finance costs	(584)	(4,616)
Total finance expense	(55,138)	(67,177)
Finance income
Interest income	364	175
Other finance income	8	-
Total finance income	372	175
Net finance expense	(54,766)	(67,002)

Fees related to the Group's refinancing activities totalling US $4,554 thousand were included in other finance costs in the comparative period ended 31 December 2016. There were no such fees for the period ended 31 December 2017.

Note 9: Taxation

The critical estimates used and judgements made by management in terms of the taxation are disclosed below:

Critical estimates

Recoverability of deferred tax assets

Deferred tax assets are recognised on temporary differences and available tax loss carry forwards when it is more likely than not that they will be recovered in a future period. A deviation between expected and effective future taxable profits in the different local jurisdictions may have an adverse impact on the recognised deferred tax balances in the consolidated financial statements of the Group. This is particularly the case for a deferred tax asset totalling US$28,822 thousand that was recognised for available tax loss carry forwards for a Ukrainian subsidiary during the financial year 2017 and with a carrying value of US$13,847 thousand as at 31 December 2017. According to the currently enacted tax legislation, these available losses do not expire. Assumptions about the generation of expected future taxable profits depend on management's estimates of future cash flows, which depend on estimates of future production and sales volumes, commodity prices and operating costs.

Further, the Group derecognised a deferred tax asset of US$25,396 thousand (Note 7) on the basis that the liquidator of the Group's former transactional bank in Ukraine has not recognised all of the Group's claims of cash and deposit balances, for which a loss was recorded by the Group in 2015. The Group is currently in legal dispute to have the claims recognised (Note 14). Assessing the probability of the Group's claims being recognised is highly subjective and will ultimately depend on the outcome of the court proceedings in Ukraine.

Critical judgements

Tax legislation in Ukraine

The Group prices its sales between its subsidiaries using international benchmark prices for comparable products covering product quality and applicable freight. The Group judges these to be on terms which comply with applicable legislation. In August 2017, the State Fiscal Service of Ukraine ("SFS") commenced a tax audit at the Group's major subsidiary in Ukraine with a focus on cross-border transactions in terms of its pellet sales to another subsidiary of the Group. According to the current legislation, the SFS has to complete this audit within 18 months from the commencement. No provision has been booked as at 31 December 2017.

Following a tax audit at PJSC Ferrexpo Poltava Mining ("FPM") claims were made by the Ukrainian tax authorities in relation to allegedly unpaid withholding tax totalling US$6,057 thousand (UAH170 million) and associated fines and penalties of US$1,496 thousand (UAH42 million) in respect of interest paid to a subsidiary of the Group in the United Kingdom in 2013 and 2014. Following the audits for aforementioned years, the Ukrainian tax authorities also initiated tax audits for the years 2015 and 2016. The management of the Group expects to continue to successfully defend any claims made by the tax authorities in the Ukrainian courts. Consequently, no provision has been made for the claimed withholding tax and associated fines and penalties as at 31 December 2017.

The income tax expense for the year ended 31 December 2017 consisted of the following:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Current income tax
Current income tax charge	45,423	40,542
Amounts related to previous years	(4,154)	1,440
Total current income tax	41,269	41,982
Deferred income tax
Origination and reversal of temporary differences	14,092	216
Total deferred income tax	14,092	216
Total income tax expense	55,361	42,198

The amounts related to the prior year shown in table on the previous page are predominantly related to effects from final tax assessments received in Switzerland during the year ended 31 December 2017 and in the United Kingdom during the comparative year ended 31 December 2016. As a result of the final tax assessments received a recorded tax accrual in Switzerland could be released in financial year 2017 whereas in the financial year 2016 an income receivable balance recorded in the United Kingdom in a previous year had to be derecognised.

Tax effects on items charged to the statement of other comprehensive income consisted of the following for the year ended 31 December 2017:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Tax effect of exchange differences arising on translating foreign operations	4,557	16,607
Tax effect of remeasurement gains on defined benefit pension liability	1,556	(246)
Total income taxes charged to other comprehensive income	6,113	16,361

The weighted average statutory corporate income tax rate is calculated as the average of the statutory tax rates applicable in the countries in which the Group operates, weighted by the profits and losses before tax of the subsidiaries in the respective countries, as included in the consolidated financial information. The weighted average statutory corporate income tax rate was 13.5% for the financial year 2017 (2016: 8.9%). A reconciliation between the income tax charged in the accompanying financial information and income before taxes multiplied by the weighted average statutory tax rate for the year ended 31 December 2017 is as follows:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Profit before tax	449,833	231,398
Notional tax charge computed at the weighted average statutory tax rate of 13.5% (2016: 8.9%)	60,819	20,594
Derecognition of deferred tax assets¹	25,396	-
Reassessment of prior year temporary differences²	(5,919)	1,148
Effect from capitalisation of tax loss carry forwards³	(24,026)	-
Expenses not deductible for local tax purposes⁴	7,295	7,828
Income exempted for local tax purposes	(2,385)	(1,588)
Income for local tax purposes⁵	1,039	7,767
Effect from change in permanent differences	(1,957)	-
Non-recognition of deferred taxes on current year losses⁶	-	4,552
Tax effect related to previous years⁷	(4,154)	1,440
Effect of higher local tax rate on special items	-	(1,003)
Other (including translation differences)	(747)	1,460
Total income tax expense	55,361	42,198

¹ Derecognition of deferred tax assets includes the effect in the amount of US$25,396 thousand in respect of an allowance recorded on restricted cash and deposits balances. See Note 7 and Note 14 for further information.

² Reassessment of prior year temporary difference in the year ended 31 December 2017 predominantly relates previously unrecognised deferred taxes on temporary differences for a Ukrainian subsidiary, which became profitable in 2017. This effect is expected to be non-recurring. The effect from the reassessment in the comparative year relates to interest expenses from previous years that became deductible in Ukraine in 2017 as the subsidiaries are profitable again. Depending on the level of taxable result in future years, additional interest expenses might become deductible.

³ Effect in the year ended 31 December 2017 is related to the capitalisation of all available tax losses for a Ukrainian subsidiary that become profitable in 2017. As the entire balance of available tax loss carry forwards was recognised as deferred tax asset, the effect is expected to be of a non-recurring nature.

⁴ Effect in the year ended 31 December 2017 predominantly relates to expenses not deductible in Ukraine and Switzerland. The effect in Switzerland is expected to be non-recurring whereas the one in Ukraine is expected to be recurring to a certain extent as a portion of operating expenses is historically not deductible for tax purposes according to the enacted local tax legislation.

⁵ Reconciling item in the year ended 31 December 2017 relates to an income taxable in Switzerland, which is expected to be of a recurring nature, whereas the item in the comparative year relates to an adjustment made in Ukraine in respect of sales of pellets to subsidiaries of the Group abroad in order to address the changes in the local transfer pricing law, which is expected to be non-recurring.

⁶ Non-recognition of deferred taxes on current year losses due to the uncertainty in respect of the timing of the subsidiaries becoming profitable for local tax purposes, which, depending on the level of taxable results of the Group's subsidiaries in the different jurisdictions might be of a recurring nature.

⁷ Effects are related to final tax assessments received in Switzerland in the current and in the United Kingdom in comparative year. Both effects are expected to be of a non-recurring nature.

The net balance of income tax receivable/(payable) changed as follows during the financial year 2017:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Opening balance	4,607	49,150
Income statement charge	(41,269)	(41,982)
Booked through other comprehensive income	4,557	26,966
Tax paid/(refunded)	13,721	(24,438)
Translation differences	138	(5,089)
Closing balance	(18,247)	4,607

During the financial years 2013, 2014 and 2015, VAT receivable balances in Ukraine were mainly recovered in exchange for prepayments of corporate profit tax. US$26,926 thousand of these prepaid taxes were refunded in cash during the financial year 2016 for prepayments made by FPM. The remaining balance FPM's prepayments of US$10,616 thousand as at 31 December 2016 was fully used to offset with a portion of FPM's taxable profits during the financial year 2017. An income tax receivable balance of US$5,454 thousand (2006: US$5,630 thousand) relates to prepayments made by two other Ukrainian subsidiaries and is classified as non-current due to the uncertainty in respect of the timing of the recovery.

The net income tax payable as at 31 December 2017 consisted of the following:

	As at	As at
US$000	31.12.17	31.12.16
Income tax receivable balance - current	14	10,757
Income tax receivable balance - non-current	5,454	5,630
Income tax payable balance	(23,715)	(11,780)
Net income tax (payable)/receivable	(18,247)	4,607

The movement in the deferred income tax balance is as follows:

	Year ended	Year ended
US$000	31.12.17	31.12.16
Opening balance	52,232	70,714
Income statement credit	(14,092)	(216)
Booked through other comprehensive income	1,556	(10,359)
Translation differences	331	(7,907)
Closing balance	40,027	52,232

As at 31 December 2017, the Group had available tax loss carry forwards in the amount of US$97,873 thousand (2016: US$241,070 thousand) for which no deferred tax assets were recognised. US$70,198 thousand (2016: US$217,560 thousand) are related to losses incurred in Ukraine and Austria and those losses do not expire. The remaining balance totalling US$27,675 thousand (2016: US$23,510 thousand) relates to losses incurred in Hungary of which US$22,957 thousand (2016: US$20,564 thousand) expire after more than eight years.

Temporary differences associated with investments in subsidiaries for which deferred tax liabilities have not been recognised amount to US $453,097 thousand (2016: US$491,963 thousand). Other temporary differences of US$26,627 thousand have not been recognised as of 31 December 2017 (2016: US$52,492 thousand), of which the vast majority relates to temporary differences on property, plant and equipment in Ukraine.

Note 10: Earnings per share and dividends paid and proposed

Distributable reserves

Ferrexpo plc (the "Company") is the Group's holding company, with no direct operating business, so its ability to make distributions to its shareholders is dependent on its ability to access profits held in the subsidiaries. The Group's consolidated retained earnings shown in the consolidated statement of changes in equity do not reflect the profits available for distribution in the Group as of 31 December 2017.

	Before	Special	Year ended	Before	Special	Year ended
	special items	items	31.12.17	special items	items	31.12.16
Earnings/(loss) for the year attributable to equity shareholders per share
Basic (US cents)	66.53	0.56	67.09	33.60	(1.60)	32.00
Diluted (US cents)	66.30	0.55	66.85	33.51	(1.60)	31.91

The calculation of the basic and diluted earnings per share is based on the following data:

	Year ended	Year ended
Thousand	31.12.17	31.12.16
Weighted average number of shares
Basic number of Ordinary Shares outstanding	585,674	585,503
Effect of dilutive potential Ordinary Shares	2,074	1,713
Diluted number of Ordinary Shares outstanding	587,748	587,216

Dividends proposed and paid

Taking into account relevant thin capitalisation rules and dividend-related covenants for the Group's major bank debt facilities, the total available distributable reserves of Ferrexpo plc is US$197,236 thousand as of 31 December 2017.

	Year ended
US$000	31.12.17
Dividends proposed
Final dividend for 2017: 3.3 US cents per Ordinary Share	19,328
Special dividend for 2017: 6.6 US cents per Ordinary Share	38,656
Special dividend for 2017: 3.3 US cents per Ordinary Share	19,328
Total dividends proposed	77,312

The special dividend for 2017 of 3.3 US cents per Ordinary Share was declared in December 2017 and paid in January 2018.

	Year ended
US$000	31.12.17
Dividends paid during the year
Interim dividend for 2017: 3.3 US cents per Ordinary Share	19,266
Final dividend for 2016: 3.3 US cents per Ordinary Share	19,679
Special dividend for 2016: 3.3 US cents per Ordinary Share	19,371
Total dividends paid	58,316

	Year ended
US$000	31.12.16
Dividends proposed
Final dividend for 2016: 3.3 US cents per Ordinary Share	19,325
Special dividend for 2016: 3.3 US cents per Ordinary Share	19,325
Total dividends proposed	38,650

No dividends were paid during the financial year 2016.

Note 11: Inventories

The critical estimates used by management in terms of the taxation are disclosed below:

Critical estimates

Lean and weathered ore

Iron ore of various grades is being extracted at the Group's two operating mines GPL and Yerystivske . In order to maximise the operational efficiency and output of the processing facility at FPM, management determines the optimal mix and grade of ore to be delivered to the processing facility from each mine. During the last financial years, including the financial year 2017, ore of a lower iron content was stockpiled due to limited processing capacities.

It is the Group's intention to process the stockpiled ore once additional processing capacities are available. This additional capacity is currently being constructed and expected to be completed during the financial year 2020 and as a consequence the entire balance is classified as non-current.

As at 31 December 2017, the ore valued at costs totalled US$175,831 thousand. Critical estimates in determining the net realisable value of the lean and weathered ore includes i) the expected timing of the completion of the capacity upgrade programme at FPM, ii) forecast iron ore pellet prices, and iii) the estimated cost to process the ore into iron ore pellets. Separate stress tests have been performed, which assumed the lowest forecast iron ore price from a set of brokers, a one year delay in the completion of the additional capacity and 10% increase in processing costs and under each scenario the cost value remained recoverable.

At 31 December 2017, inventories comprised:

	As at	As at
US$000	31.12.17	31.12.16
Raw materials and consumables	34,295	26,847
Spare parts	42,053	35,603
Finished ore pellets	15,482	12,408
Work in progress	2,475	2,522
Other	2,340	1,555
Total inventories - current	96,645	78,935
Lean and weathered ore	175,831	130,357
Total inventories - non-current	175,831	130,357
Total inventories	272,476	209,292

Inventories classified as non-current mainly comprise lean and weathered ore that are, based on the Group's current processing plans, not planned to be processed within the next year. It is the Group's intention to process this ore at a later point of time and it is expected that it will take more than one year to process this stockpile, depending on the Group's future mining activities, processing capabilities and anticipated market conditions.

Note 12: Cash and cash equivalents

As at 31 December 2017, cash and cash equivalents comprised:

	As at	As at
US$000	31.12.17	31.12.16
Cash at bank and on hand	97,742	144,751
Total cash and cash equivalents	97,742	144,751

The debt repayments during the financial year ended 31 December 2017 totalled US$238,602 thousand (2016: US$195,918 thousand) affecting the balance of cash and cash equivalents. Further information on the Group's gross debt is provided in Note 13.

The balance of cash and cash equivalents held in Ukraine amounts to US$10,281 thousand as at 31 December 2017 (2016: US$40,787 thousand).

Note 7 and Note 14 provide details on the Group's balance of restricted cash and deposits which has been fully provided for as currently not available to the Group.

Note 13: Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group's major finance facilities.

	As at	As at
US$000	31.12.17	31.12.16
Current
Eurobond issued	171,202	-
Syndicated bank loans - secured	112,500	175,000
Other bank loans - secured	16,218	18,309
Other bank loans - unsecured	1,523	1,495
Obligations under finance leases	3,969	3,684
Trade finance facilities	-	19,025
Interest accrued	9,358	10,548
Total current interest-bearing loans and borrowings	314,770	228,061
Non-current
Eurobond issued	171,202	337,685
Syndicated bank loans - secured	-	131,250
Other bank loans - secured	9,267	25,434
Other bank loans - unsecured	3,752	5,246
Obligations under finance leases	2,073	6,026
Total non-current interest-bearing loans and borrowings	186,294	505,641
Total interest-bearing loans and borrowings	501,064	733,702

At 31 December 2017, the Group's major external debt facilities comprised:

- a syndicated revolving US$350,000 thousand pre-export finance facility, of which US$131,250 thousand was available (2016: US$306,250 thousand) and US$112,500 thousand are drawn. The amortisation of this facility commenced in November 2016 with eight quarterly amortisations and commitment reductions of US$43,750 thousand to the final maturity date of 8 August 2018; and

- an undrawn syndicated revolving US$195,000 thousand pre-export finance facility signed on 16 November 2017. Following a grace period, the facility will be amortised in eight quarterly instalments. The first instalment is due on 31 March 2019 and the final maturity date is 31 December 2020.

The aforementioned major bank debt facilities were guaranteed and secured as follows:

- Ferrexpo AG and Ferrexpo Middle East FZE assigned the rights to revenue from certain sales contracts;

- PJSC Ferrexpo Poltava Mining assigned all of its rights of certain export contracts for the sale of pellets to Ferrexpo AG and Ferrexpo Middle East FZE; and

- the Group pledged bank accounts of Ferrexpo AG and Ferrexpo Middle East FZE into which sales proceeds from assigned sales contracts are exclusively received.

In addition to the major bank debt facilities listed above, the Group has outstanding unsecured Notes at par value totalling US$346,385 thousand as at 31 December 2017 which fall due in two equal instalments of US$173,193 thousand on 7 April 2018 and 2019, respectively. The Notes have a 10.375% interest coupon payable semi-annually.

As at 31 December 2017, the Group had no open trade finance facilities (2016: US$19,025 thousand). Trade finance facilities are secured against receivables related to these specific trades.

All facilities are shown net of associated arrangement fees, except for the revolving syndicated pre -export finance facilities, for which the fees are presented in prepayments and current assets and other non-current assets based on the maturity of the underlying facility and are amortised over the term of the facility.

The table below shows the movements in the Interest-bearing loans and borrowings:

	Movements during the year ended 31.12.17
US$000	As at 31.12.16	Cash movements	Change of arrangement fees	Interest expense	Other	As at 31.12.17
Eurobond issued	337,685	-	4,720	-		342,405
Syndicated bank loans - secured	306,250	(193,750)	-	-	-	112,500
Other bank loans - secured	43,743	(20,512)	2,254	-	-	25,485
Other bank loans - unsecured	6,741	(1,534)	39	-	28	5,274
Obligations under finance leases	9,710	(3,690)		-	22	6,042
Trade finance facilities	19,025	(19,025)		-	-	-
Interest accrued	10,548	(47,661)	-	46,547	(76)	9,358
Total Interest-bearing loans and borrowings/movements	733,702	(286,172)	7,013	46,547	(26)	501,064

Note 14: Commitments, contingencies and legal disputes

Legal

In the ordinary course of business, the Group is subject to legal actions and complaints. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition or the results of future operations of the Group.

Deposit Guarantee Fund and Liquidator of Bank F&C

The Group's former transactional bank in Ukraine, Bank F&C ("BFC"), is still going through the liquidation process after having been declared insolvent by the National Bank of Ukraine and put under temporary administration on 18 September 2015. The Group has recorded in previous periods a full allowance for its cash and deposit balances (denominated in Ukrainian Hryvnia) held with BFC on the date of introduction of temporary administration, totalling UAH4,262 million (US$151,850 thousand) as at 31 December 2017 (2016: US$156,866 thousand). The Group, through its major subsidiaries in Ukraine, is engaged in various court proceedings with the aim to maximise its recovery in the liquidation process of BFC as disclosed below.

The Group's principal Ukrainian subsidiary, PJSC Ferrexpo Poltava Mining ("FPM"), is claiming the release of UAH217 million (US$7,731 thousand as of 31 December 2017), which was blocked after the introduction of the temporary administration of BFC on 18 September 2015. FPM has filed a cassation appeal in respect of an earlier adverse judgment received from the court. With judgment of 17 October 2017, the relevant court instance dismissed FPM's appeal in full. Based on legal advice obtained, there are no legal grounds for an appeal against this judgement to the Supreme Court of Ukraine.

Following the commencement of the liquidation process of BFC and in accordance with the applicable local legislation, FPM, LLC Ferrexpo Yeristovo Mining ("FYM") and LLC Ferrexpo Belanovo Mining ("FBM"), collectively referred to as "Ukrainian subsidiaries", submitted on 21 January 2016 their claims for cash and deposit balances held with BFC on the date of introduction of temporary administration totalling UAH4,262 million (US$151,850 thousand as of 31 December 2017).

On 22 April 2016, the liquidator of BFC issued certificates recognising UAH540 million (US$19,240 thousand as of 31 December 2017) of these claims and recognised these claims in the ninth rank. The aforementioned Ukrainian subsidiaries are currently involved in legal proceedings in respect of the under-recognition of the claims amounting to UAH3,722 million (US$132,610 thousand as of 31 December 2017) and the ranking of the claims in the liquidation process. The court proceedings commenced in October 2016 and following various hearings during the financial year 2017, the relevant court instance dismissed on 25 October 2017 FPM's claim in full. FPM filed an appeal on 13 November 2017 and a hearing took place on 21 February 2018. In this hearing, the liquidator of BFC failed to provide certain original documents requested by the court. As a result, the court did not rule on the parties' motions yet, but instead decided to adjourn the hearing. The next hearing is scheduled for 29 March 2018. The claims of FYM and FBM on the same matter are still pending with the relevant courts, but no hearings took place or are scheduled yet.

Note 15: Related party disclosure

During the periods presented, the Group entered into arm's length transactions with entities under the common control of the majority owner of the Group, Kostyantin Zhevago, with associated companies and with other related parties. Management considers that the Group has appropriate procedures in place to identify, control, properly disclose and obtain independent confirmation, when relevant, for transactions with the related parties.

Entities under common control are those under the control of Kostyantin Zhevago. Associated companies refer to TIS Ruda LLC, in which the Group holds an interest of 49.5% (2006: 49.4%). This is the only associated company of the Group. Other related parties are principally those entities controlled partially by Anatoly Trefilov who resigned as a member of the supervisory board of PJSC Ferrexpo Poltava Mining as of 19 April 2017. In accordance with the Listing Rules, all transactions with the entities controlled by Anatoly Trefilov within one year of his resignation from the supervisory board will still be considered as related party transactions and disclosed as such.

Related party transactions entered into by the Group during the periods presented are summarised in the following tables:

Revenue, expenses, finance income and expense

	Year ended 31.12.17			Year ended 31.12.16
	Entities			Entities
	under		Other	under		Other
	common	Associated	related	common	Associated	related
US$000	control	companies	parties	control	companies	parties
Sales of pellets ? ^a	-	-	-	1,975	-	-
Other sales ? ^b	362	-	94	234	-	143
Total related party transactions within revenue	362	-	94	2,209	-	143
Materials ? ^c	7,504	-	8	6,954	-	8
Spare parts and consumables ? ^d	1,382	-	-	1,251	-	-
Gas ? ^e	-	-	-	4,297	-	-
Total related party transactions within cost of sales	8,886	-	8	12,502	-	8
Selling and distribution expenses ? ^f	10,867	18,366	827	10,766	19,803	1,507
General and administration expenses ? ^g	594	-	425	673	-	92
Allowance for restricted cash and deposits ? ^h	-	-	-	8,524	-	-
Total related party transactions within expenses	20,347	18,366	1,260	32,465	19,803	1,607
Finance expense	34	-	-	38	-	-
Total related party finance expense	34	-	-	38	-	-

A description of the most material transactions which are in aggregate over US$200 thousand in the current or comparative period is given below.

Entities under common control

The Group entered into various related party transactions with entities under common control. All transactions were carried out on an arm's length basis in the normal course of business.

a Spot sales of pellets in the amount of US$1,975 thousand as of the end of the comparative period ended 31 December 2016 to VA Intertrading AG. No such sales as of 31 December 2017.

b Sales of power, steam and water and other materials for US$88 thousand (2016: US$37 thousand) and income from premises leased to Kislorod PCC of US$135 thousand (2016: US$135 thousand).

c Purchases of compressed air and oxygen and metal scrap from Kislorod PCC for US$3,911 thousand (2016: US$3,587 thousand);

c Purchases of cast iron balls from AutoKraZ Holding Co. for US$851 thousand (2016: US$1,269 thousand); and

c Purchases of cast iron balls from OJSC Uzhgorodsky Turbogas for US$2,673 thousand (2016: US$2,063 thousand).

d Purchases of spare parts from CJSC Kyiv Shipbuilding and Ship Repair Plant ("KSRSSZ") in the amount of US$96 thousand (2016: US$410 thousand);

d Purchases of spare parts from OJSC Uzhgorodsky Turbogas in the amount of US$294 thousand (2016: US$150 thousand);

d Purchases of spare parts from Valsa GTV of US$756 thousand (2016: US$486 thousand); and

d Purchases of spare parts from OJSC Berdichev Machine-Building Plant Progress of US$211 thousand (2016: US$61 thousand).

e Procurement of gas for US$4,297 thousand from OJSC Ukrzakordongeologia as of the end of the comparative period ended 31 December 2016. No such transaction as of 31 December 2017.

f Purchases of advertisement, marketing and general public relations services from FC Vorskla of US$10,867 thousand (2016: US$10,766 thousand).

g Insurance premiums of US$403 thousand (2016: US$385 thousand) paid to ASK Omega for workmen's insurance and other insurances.

h The Group recorded during the financial year 2016 an additional allowance for its cash and deposits held at Bank F&C resulting in a charge of US$8,525 thousand as a result of the latest developments of the ongoing court case. See Note 14 for further information.

Associated companies

The Group entered into related party transactions with its associated company TIS Ruda LLC, which were carried out on an arm's length basis in the normal course of business for the members of the Group.

f Purchases of logistics services in the amount of US$18,366 thousand (2016: US$19,803 thousand) relating to port operations, including port charges, handling costs, agent commissions and storage costs.

Other related parties

The Group entered into various transactions with related parties other than those under the control of the majority owner of the Group. All transactions were carried out on an arm's length basis in the normal course of business.

f Purchases of logistics management services from Slavutich Ruda Ltd. relating to customs clearance services and the coordination of rail transit totalling US$827 thousand (2016: US$1,502 thousand).

g Legal services in the amount of US$221 thousand (2016: nil) provided by Kuoni Attorneys at Law Ltd., which is controlled by a former member of the Board of Directors of Ferrexpo plc who resigned in November 2016, but still acts as a member of the Board of Directors of one of the subsidiaries of the Group; and

g Consulting services totalling US$205 thousand (2016: US$92 thousand) provided by Nage Capital Management AG, which is controlled by a former member of the Board of Directors of Ferrexpo plc who resigned in August 2014, but still acts a s member of the Board of Directors of one of the subsidiaries of the Group.

Purchases of property, plant and equipment

The table below details the transactions of a capital nature which were undertaken between Group companies and entities under common control, associated companies and other related parties during the periods presented.

	Year ended 31.12.17			Year ended 31.12.16
	Entities			Entities
	under		Other	under		Other
	common	Associated	related	common	Associated	related
US$000	control	companies	parties	control	companies	parties
Purchases in the ordinary course of business	68	-	-	37	-	1
Total purchases of property, plant and equipment	68	-	-	37	-	1

There were no individual transactions which exceeded US$200 thousand in the current period or comparative periods.

Balances with related parties

The outstanding balances, as a result of transactions with related parties, for the periods presented are shown in the table below:

	As at 31.12.17			As at 31.12.16
	Entities			Entities
	under		Other	under		Other
	common	Associated	related	common	Associated	related
US$000	control	companies	parties	control	companies	parties
Prepayments for property, plant and equipment ⁱ	2,981	-	-	-	-	-
Total non-current assets	2,981	-	-	-	-	-
Trade and other receivables ? ^j	118	1,082	37	257	4,576	48
Prepayments and other current assets ? ^k	1,088	-	171	282	-	201
Total current assets	1,206	1,082	208	539	4,576	249
Trade and other payables ? ^l	339	1,367	64	456	1,331	267
Accrued liabilities and deferred income	-	-	51	-	-	-
Current liabilities	339	1,367	115	456	1,331	267

A description of the balances over US$200 thousand in the current or comparative period is given below.

Entities under common control

i As of 31 December 2017, prepayments for property, plant and equipment totalling US$2,722 thousand (2016: nil) were made to OJSC Berdichev Machine-Building Plant Progress and US$256 thousand (2016: nil) to AutoKraZ Holding Co.

k Prepayments and other current assets totalling US$858 thousand as of 31 December 2017 relate to prepayments made to FC Vorskla for advertisement, marketing and general public relations services (2016: nil).

Associated companies

j As at 31 December 2017, trade and other receivables included US$1,082 thousand (2016: US$4,576 thousand) related to dividends declared by TIS Ruda LLC.

l As at 31 December 2017, trade and other payables included US$1,367 thousand (2016: US$1,331 thousand) related to purchases of logistics services from TIS Ruda LLC.

Other related parties

k Prepayments and other current assets totalling US$171 thousand (2016: US$201 thousand) relate to prepayments made to Slavutich Ruda Ltd. for distribution services.

l Trade and other payables of US$59 thousand (2016: US$267 thousand) were in respect of distribution services provided by Slavutich Ruda Ltd.

Note 16: Events after the reporting period

No material adjusting or non-adjusting events have occurred subsequent to the year end other than the proposed dividend disclosed in Note 10.

ALTERNATIVE PERFORMANCE MEASURES

When assessing and discussing the Group's reported financial performance, financial position and cash flows, management may make reference to Alternative Performance Measures ("APMs") that are not defined or specified under International Financial Reporting Standards ("IFRS").

APMs are not uniformly defined by all companies, including those in the Group's industry. Accordingly, the APMs used by the Group may not be comparable with similarly titled measures and disclosures made by other companies. APMs should be considered in addition to, and not as a substitute for or as superior to, measures of financial performance, financial position or cash flows reported in accordance with IFRS.

Ferrexpo makes reference to the following APMs in the 2017 Annual Report.

C1 cash cost of production

Definition: Non-financial measure, which represents the cash costs of production of iron pellets from own ore divided by production volume of own production ore. Non-C1 cost components include non-cash costs such as depreciation, inventory movements and costs of purchased ore and concentrate. The Group presents the C1 cash cost of production because it believes it is a useful operational measure of its cost competitiveness compared to its peer group.

		Year ended
	Year ended	31.12.16
US$'000	31.12.17	(audited)
C1 cash costs	335,451	306,611
Non-C1 cost components	31,745	53,884
Cost of sales - pellet production	367,196	360,495
Own ore produced (tonnes)	10,394,440	11,071,404
C1 cash cost per tonne (US$)	32.3	27.7

Underlying EBITDA

Definition: The Group calculates the Underlying EBITDA as profit before tax and finance plus depreciation and amortisation and net gains and losses from disposal of investments and property, plant and equipment and share-based payments and operating and non-operating special items, including write-offs and impairment losses and other exceptional items. The Underlying EBITDA is presented because it is a useful measure for evaluating the Group's ability to generate cash and its operating performance. See Note 3 for further details.

Closest equivalent IFRS measure: Profit before tax and finance.

Rationale for adjustment: The Group presents the Underlying EBITDA as it is a useful measure for evaluating its ability to generate cash and its operating performance. It excludes the impact of special items that can mask underlying changes in performance. Also it aids comparability across peer groups as it is a measurement that is often used.

Reconciliation to closest IFRS equivalent:

		Year ended	Year ended
US$000	Notes	31.12.17	31.12.16
Underlying EBITDA		550,705	375,243
Losses on disposal of property, plant and equipment		(7,754)	(4,446)
Share-based payments		(586)	(389)
Operating special items	7	(407)	(2,501)
Non-operating special items	7	-	(8,525)
Depreciation and amortisation		(46,392)	(50,671)
Profit before tax and finance		495,566	308,711

Underlying Diluted earnings per share before special items

Definition: Earnings per share excluding special items and calculated using the diluted number of Ordinary Shares outstanding.

Closest equivalent IFRS measure: Diluted earnings per share.

Rationale for adjustment: Excludes the impact of special items that can mask underlying changes in performance.

Reconciliation to closest IFRS equivalent:

	Before	Special	Year ended	Before	Special	Year ended
	special items	items	31.12.17	special items	items	31.12.16
Earnings/(loss) for the year attributable to equity shareholders per share
Basic (US cents)	66.53	0.56	67.09	33.60	(1.60)	32.00
Diluted (US cents)	66.30	0.55	66.85	33.51	(1.60)	31.91

Net debt to underlying EBITDA

Definition: Net debt divided by the Underlying EBITDA (for the last 12 months):

	As at	As at
	31.12.17	31.12.16
Net debt (US$000)	(403,322)	(588,951)
Underlying EBITDA (US$000)	550,705	375,243
Net debt to Underlying EBITDA (%)	73	157

Rationale for adjustment: The ratio is a measurement of the Underlying EBITDA Group's leverage, calculated as a company's interest-bearing liabilities minus cash or cash equivalents, divided by its Underlying EBITDA.

Reconciliation of Net debt:

		As at	As at
US$000	Notes	31.12.17	31.12.16
Cash and cash equivalents	12	97,742	144,751
Interest-bearing loans and borrowings - current	13	(314,770)	(228,061)
Interest-bearing loans and borrowings - non-current	13	(186,294)	(505,641)
Net debt		(403,322)	(588,951)

For a reconciliation of Underlying EBITDA to profit before tax and finance see page 49 .

Underlying EBITDA margin

Definition: Underlying EBITDA divided by revenue:

		As at	As at
	Notes	31.12.17	31.12.16
Underlying EBITDA (US$000)		550,705	375,243
Revenues (US$000)	4	1,197,494	986,325
Net debt to Underlying EBITDA (%)		46	38

Rationale for adjustment: The Group presents the Underlying EBITDA margin as it is a useful measure for evaluating its operating performance as a percentage of total revenue. It excludes the impact of special items that can mask underlying changes in performance. Also it aids comparability across peer groups as it is a measurement that is often used.

Reconciliation to closest IFRS equivalent:

		As at	As at
US$000	Notes	31.12.17	31.12.16
Revenue	4	1,197,494	986,325

For a reconciliation of Underlying EBITDA to profit before tax and finance see page 49 .

Capital investment

Definition: Capital expenditure for the purchase of property, plant and equipment and intangible assets.

Closest equivalent IFRS measure: Purchase of property, plant and equipment and intangible assets (Net cash flows used in investing activities).

Rationale for adjustment: The Group presents the capital investment as it is a useful measure for evaluating the degree of capital invested in its business operations.

Reconciliation to closest IFRS equivalent:

As at

US$000

Notes

31.12.17

31.12.16

Purchase of property, plant and equipment and intangible assets

(Net cash flows used in investing activities

102,953

48,176

Total liquidity

Definition: Sum of cash and cash equivalents and available facilities.

Closest equivalent IFRS measure: Cash and cash equivalents.

Rationale for adjustment: The Group presents total liquidity as it is a useful measure for evaluating its ability to meet short term business requirements.

Reconciliation to closest IFRS equivalent:

		As at	As at
US$000	Notes	31.12.17	31.12.16
Cash and cash equivalents	12	97,742	144,751
Available facilities	13	213,750	-
Total liquidity		311,492	144,751